EXHIBIT 10.8
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ASSET PURCHASE AND SALE AGREEMENT
Among
▇▇▇▇▇▇ COMPANIES INC., and
▇▇▇▇▇▇ BROADCASTING INC.,
as the Purchaser
and
RETLAW ENTERPRISES, INC.,
RETLAW BROADCASTING, L.L.C.,
RETLAW BROADCASTING OF BOISE, L.L.C.,
RETLAW BROADCASTING OF FRESNO, L.L.C.,
RETLAW BROADCASTING OF IDAHO FALLS, L.L.C.,
RETLAW BROADCASTING OF YAKIMA, L.L.C.,
RETLAW BROADCASTING OF EUGENE, L.L.C.,
RETLAW BROADCASTING OF COLUMBUS, L.L.C., and
RETLAW BROADCASTING OF AUGUSTA, L.L.C.,
as the Sellers
November 18, 1998
TABLE OF CONTENTS
Page
ARTICLE I-DEFINITIONS............................................................................................. 2
1.1 Certain Defined Terms.............................................................................. 2
ARTICLE II-PURCHASE AND SALE OF ASSETS; LIABILITIES............................................................... 7
2.1 Purchase and Sale.................................................................................. 7
2.2 Excluded Assets.................................................................................... 9
2.3 Liabilities Assumed by Purchaser................................................................... 9
2.4 Liabilities Not Assumed by the Purchaser........................................................... 10
2.5 Further Assurances................................................................................. 11
2.6 Closing; Effective Time............................................................................ 11
ARTICLE III-PURCHASE PRICE FOR THE ACQUISITION ASSETS............................................................. 11
3.1 Purchase Price..................................................................................... 11
3.2 Purchase Price Adjustment.......................................................................... 11
3.3 Payment of Purchase Price.......................................................................... 13
3.4 Certain Prorations................................................................................. 13
3.5 Allocation of Purchase Price....................................................................... 13
ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF SELLERS.............................................................. 14
4.1 Organization and Good Standing..................................................................... 14
4.2 Authorization of Agreement......................................................................... 15
4.3 Ownership of the Acquisition Assets................................................................ 15
4.4 Financial Statements and Condition................................................................. 15
4.5 Program Rights..................................................................................... 17
4.6 Real Property...................................................................................... 17
4.7 Personal Property.................................................................................. 18
4.8 Intellectual Property.............................................................................. 18
4.9 Agreement Not in Breach of Other Instruments....................................................... 19
4.10 Labor Matters...................................................................................... 19
4.11 Employees.......................................................................................... 20
4.12 Employee Benefit Plans............................................................................. 20
4.13 Litigation......................................................................................... 20
4.14 Contracts.......................................................................................... 20
4.15 Authorizations; License Rights; Station Transmissions.............................................. 21
4.16 Environmental Matters.............................................................................. 23
4.17 FCC Reports and Records............................................................................ 24
4.18 Compliance With Laws............................................................................... 24
4.19 Regulatory Licenses................................................................................ 24
4.20 Taxes.............................................................................................. 24
4.21 Insurance.......................................................................................... 25
4.22 No Brokers......................................................................................... 25
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4.23 Towers.............................................................................. 25
4.24 Accounts Receivable................................................................. 25
4.25 South West Oregon Television........................................................ 25
4.26 Disclosure.......................................................................... 26
4.27 Bankruptcy.......................................................................... 26
4.28 Year 2000 Compliance................................................................ 26
ARTICLE V-REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................................... 26
5.1 Corporate Existence................................................................. 26
5.2 Authority........................................................................... 26
5.3 No Conflicts........................................................................ 27
5.4 Governmental Approvals and Filings.................................................. 27
5.5 Legal Proceedings................................................................... 27
5.6 Brokers............................................................................. 27
5.7 Financing........................................................................... 28
5.8 Disclosure.......................................................................... 28
5.9 FCC Qualification................................................................... 28
ARTICLE VI-COVENANTS OF SELLERS.................................................................... 28
6.1 Regulatory and Other Approvals...................................................... 28
6.2 HSR Filings......................................................................... 28
6.3 FCC Consent......................................................................... 29
6.4 Access.............................................................................. 29
6.5 Conduct of Operation of the Stations................................................ 29
6.6 Financial Statements and Reports.................................................... 30
6.7 Fulfillment of Conditions........................................................... 31
6.8 Consents and Notices................................................................ 31
6.9 Preservation of Assets.............................................................. 31
6.10 Accounts Receivable................................................................. 31
6.11 Termination of Employees............................................................ 32
6.12 Changes of Schedules................................................................ 32
6.13 Title Insurance..................................................................... 32
6.14 Officers' Certificates.............................................................. 32
6.15 Opinions of the Sellers' Counsel.................................................... 32
ARTICLE VII-COVENANTS OF PURCHASER................................................................. 33
7.1 Regulatory and Other Approvals...................................................... 33
7.2 HSR Filings......................................................................... 33
7.3 FCC Consent......................................................................... 33
7.4 Retlaw Name......................................................................... 34
7.5 Fulfillment of Conditions........................................................... 34
7.6 Employees........................................................................... 34
7.7 Compliance with Laws................................................................ 34
7.8 Assumption of Assumed Liabilities................................................... 34
7.9 Preparation of Financial Statements................................................. 34
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7.10 Officers' Certificates.............................................................. 34
7.11 Opinion of the Purchaser's Counsel.................................................. 35
ARTICLE VIII-RISK OF LOSS.......................................................................... 35
8.1 Risk of Loss; Insurance............................................................. 35
ARTICLE IX-INDEMNIFICATION......................................................................... 35
9.1 Indemnification by Sellers.......................................................... 35
9.2 Indemnification by Purchaser........................................................ 35
9.3 Claims for Indemnification.......................................................... 36
9.4 Defense by Indemnifying Party....................................................... 36
9.5 Expiration of Indemnification Obligations........................................... 37
9.6 Thresholds.......................................................................... 37
9.7 Limitation.......................................................................... 37
9.8 Indemnity Escrow Agreement.......................................................... 37
9.9 Exclusive Remedy.................................................................... 37
9.10 Reduction of Indemnity Payments..................................................... 37
ARTICLE X-CONDITIONS TO OBLIGATIONS OF PURCHASER................................................... 37
10.1 Representations and Warranties...................................................... 38
10.2 Performance......................................................................... 38
10.3 Orders and Laws..................................................................... 38
10.4 Regulatory Consents and Approvals................................................... 38
10.5 FCC License Renewal................................................................. 38
10.6 Consents to Assignments of Contracts................................................ 38
10.7 Additional Closing Documents of the Sellers......................................... 38
ARTICLE XI-CONDITIONS TO OBLIGATIONS OF SELLERS.................................................... 39
11.1 Representations and Warranties...................................................... 39
11.2 Performance......................................................................... 39
11.3 Orders and Laws..................................................................... 39
11.4 Regulatory Consents and Approvals................................................... 39
11.5 Additional Closing Documents of Purchaser........................................... 39
ARTICLE XII-DEFAULT AND TERMINATION................................................................ 39
12.1 Termination......................................................................... 39
12.2 Effect of Termination............................................................... 40
12.3 Specific Performance................................................................ 40
ARTICLE XIII-MISCELLANEOUS PROVISIONS.............................................................. 40
13.1 Notices............................................................................. 40
13.2 Survival of Representations and Warranties and Covenants............................ 42
13.3 Joint and Several Obligations....................................................... 42
13.4 Knowledge........................................................................... 42
13.5 Entire Agreement.................................................................... 42
13.6 Expenses............................................................................ 43
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13.7 Public Announcements................................................................ 43
13.8 Confidentiality..................................................................... 43
13.9 Exclusivity......................................................................... 43
13.10 Waiver.............................................................................. 44
13.11 Amendment........................................................................... 44
13.12 No Third Party Beneficiary.......................................................... 44
13.13 No Assignment; Binding Effect....................................................... 44
13.14 Headings............................................................................ 44
13.15 Invalid Provisions.................................................................. 44
13.16 Governing Law....................................................................... 44
13.17 Counterparts........................................................................ 44
13.18 Attorney's Fees..................................................................... 45
13.19 Jurisdiction/Venue.................................................................. 45
13.20 No Jury Trial....................................................................... 45
ARTICLE XIV EXHIBITS AND SCHEDULES................................................................. 45
14.1 Exhibits and Schedules.............................................................. 45
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EXHIBITS AND SCHEDULES
Exhibits
--------
Exhibit 3.3(b) Form of Escrow Indemnity Agreement
Exhibit 6.14(a) Form of Seller's Certificate of Officer
Exhibit 6.14(b) Form of Seller's Corporate Certificate
Exhibit 6.15(a) Form of Opinion of Seller's Counsel
Exhibit 6.15(b) Form of Opinion of Seller's FCC Counsel
Exhibit 7.10(a) Form of Purchaser's Certificate of Officer
Exhibit 7.10(b) Form of Purchaser's Corporate Certificate
Exhibit 7.11 Form of Opinion of Purchaser's Counsel
Exhibit 11.5(b) Form of Assignment and Assumption Agreement
Schedules
---------
Schedule 2.1(a) Real Property
Schedule 2.1(b) Personal Property
Schedule 2.1(c)(i) FCC Authorizations
Schedule 2.1(c)(ii) Regulatory Licenses
Schedule 2.1(d)(i) Affiliation Agreements
Schedule 2.1(d)(ii) Program Rights
Schedule 2.1(e) Cable Carriage Agreements
Schedule 2.1(f) Other Contracts
Schedule 2.1(g) Intellectual Property
Schedule 2.2 Excluded Assets
Schedule 3.2 Normalized Working Capital
Schedule 4.1(b) Jurisdictions of Qualification
Schedule 4.1(e) Broadcast Seller's Subsidiaries
Schedule 4.10(a) Labor Matters
Schedule 4.10(b) Collective Bargaining and Labor Agreements
Schedule 4.11 Employees
Schedule 4.12 Employee Benefit Plans
Schedule 4.13 Litigation
Schedule 4.15(b) FCC Matters
Schedule 4.15(c) Station Transmissions
Schedule 4.15(d) Cable Carriage
Schedule 4.16 Environmental Matters
Schedule 4.18 Compliance with Laws
Schedule 4.19 Other Regulatory Licenses
Schedule 4.20 Taxes
Schedule 4.23 Towers
Schedule 4.25 South West Oregon Television Agreements
Schedule 4.28 Year 2000
Schedule 6.9 Capital Expenditures
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ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made and entered into as of
November 18, 1998 (this "Agreement"), by and among ▇▇▇▇▇▇ COMPANIES INC., a
Washington corporation ("FCI"), and ▇▇▇▇▇▇ BROADCASTING INC., a Washington
corporation ("FBI") (FCI and FBI sometimes are collectively referred to as the
"Purchaser"), and the following parties which sometimes are collectively
referred to as the "Sellers":
RETLAW ENTERPRISES, INC. a California corporation ("REI")
RETLAW BROADCASTING, L.L.C. a Delaware limited liability company
("Broadcasting LLC")
RETLAW BROADCASTING OF BOISE, L.L.C. a Delaware limited liability company
("Boise LLC")
RETLAW BROADCASTING OF FRESNO, L.L.C. a Delaware limited liability company
("Fresno LLC")
RETLAW BROADCASTING OF IDAHO FALLS, L.L.C. a Delaware limited liability company
("Idaho Falls LLC")
RETLAW BROADCASTING OF YAKIMA, L.L.C. a Delaware limited liability company
("Yakima LLC")
RETLAW BROADCASTING OF EUGENE, L.L.C. a Delaware limited liability company
("Eugene LLC")
RETLAW BROADCASTING OF COLUMBUS, L.L.C. a Delaware limited liability company
("Columbus LLC")
RETLAW BROADCASTING OF AUGUSTA, L.L.C. a Delaware limited liability company
("Augusta LLC")
RECITALS
A. The following Sellers (collectively, the "Broadcast Sellers") are the
respective licensees and either directly or through REI or Broadcasting LLC own
or lease or have the right to use all of the assets used in the operation of the
television stations set forth opposite their respective names below:
Seller Station Community
------ ------- ---------
Boise LLC KBCI Boise, Idaho
Fresno LLC KJEO Fresno, California
Idaho Falls LLC KIDK Idaho Falls, Idaho
Yakima LLC KIMA Yakima, Washington
KEPR Pasco, Washington
KLEW Lewiston, Idaho
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▇▇▇▇▇▇ LLC KVAL Eugene, Oregon
KCBY Coos Bay, Oregon
KPIC* ▇▇▇▇▇▇▇▇, Oregon
Columbus LLC WXTX Columbus, Georgia
Augusta LLC WFXG Augusta, Georgia
* Eugene LLC does not own Station KPIC. Eugene LLC owns 50% of the
outstanding stock of South West Oregon Television Broadcasting Corporation,
an Oregon corporation ("South West Oregon Television"), which is the
licensee of Station KPIC and owns, leases or has the right to use the
assets used in the operation of Station KPIC.
B. Broadcast Sellers are wholly-owned subsidiaries of Broadcasting LLC,
which is a wholly-owned subsidiary of REI.
▇. ▇▇▇▇▇▇▇ desire to sell to Purchaser all of the Stations, including all
of the assets, properties and rights owned or held by Sellers and used in the
operation of the Stations (except those hereinafter specifically excluded from
such sale), and Purchaser desires to acquire from Sellers such assets,
properties and rights, all on the terms and subject to the conditions set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following meanings
(such terms to be equally applicable to both the singular and the plural
forms of the terms defined):
"Accounts Receivable" has the meaning set forth in Section 2.1(i).
"Acquisition Assets" has the meaning set forth in Section 2.1.
"Affiliate" means any person that directly, or indirectly through one of
more intermediaries, controls or is controlled by or is under common control
with the person specified. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise and, in
any event and without limitation of the previous sentence, any person owning ten
percent (10%) or more of the voting securities of another person shall be deemed
to control that person.
"Affiliation Agreement" has the meaning set forth in Section 2.1(d)(i).
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"Agreement" means this Agreement and the Exhibits, Schedules and Recitals
hereto.
"Assumed Contracts" means the written contracts, leases and other
agreements which comprise part of the Assumed Liabilities.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Benefit Plans" means any Plan established by REI or any other Seller, or
any predecessor or Affiliate of any of the foregoing, existing at the Closing
Date or at any time since December 31, 1996, to which REI or any Seller
contributes or has contributed, or under which any employee, former employee or
director of REI or other Seller or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"Bonus Letters" means the letter agreements entered into between one or
more of the Sellers and certain of Sellers' Employees providing for bonus
payments upon completion of a sale transaction involving the Stations.
"Broadcast Sellers" has the meaning set forth in Recital A.
"Business Day" means a day other than a Saturday or a Sunday or any other
day on which commercial banks in New York are authorized or required by Law to
close.
"Closing" has the meaning set forth in Section 2.6.
"Closing Date" has the meaning set forth in Section 2.6.
"Code" means the Internal Revenue Code of 1986, as amended.
"DOJ" means the United States Department of Justice.
"Effective Time" has the meaning set forth in Section 2.6.
"Environmental Hazard" means, with respect to any Real Property, any
existing environmental hazard, for which there is a reasonable likelihood of a
future liability for environmental damages or clean up costs.
"Environmental Laws" means, collectively, all Laws relating to the
protection of human health or safety or the environment, including, without
limitation: (i) all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of Hazardous Materials into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use treatment, storage, disposal, transport or handling of Hazardous Materials;
and (ii) all requirements pertaining to the protection of the health and safety
of employees or the public. Without limiting the generality of the foregoing,
"Environmental Laws" includes the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, ("CERCLA") as amended by the Superfund
Amendments and Authorization Act of 1986 ("▇▇▇▇"), 42 U.S.C. 9601 et seq.; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 6901 et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq.; the Safe Drinking Water Act, 42
U.S.C. 300f et seq.; and the Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq., and
all analogous state laws, in each case including the rules and regulations
thereunder, and in each case as supplemented or amended from time to time.
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"EPA" means the United States Environmental Protection Agency, or any
successor agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person who is in the same controlled group of
corporations or who is under common control with any Seller (within the meaning
of Section 414 of the Code).
"Escrow Agent" has the meaning set forth in the Indemnity Escrow Agreement.
"Eugene LLC" has the meaning set forth in Recital A.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" means the debts, liabilities and obligations
described (generally or in particular) in Section 2.4.
"FBI" means ▇▇▇▇▇▇ Broadcasting Inc.
"FCC" means the Federal Communications Commission, or any successor agency.
"FCC Applications" has the meaning set forth in Section 6.3.
"FCC Authorizations" has the meaning set forth in Section 2.1(c).
"FCC Consents" has the meaning set forth in Section 6.3.
"FCC Regulations" means all applicable provisions of the Communications Act
of 1934, as amended, and all applicable published rules, regulations, policies,
orders and decisions of the FCC.
"FCI" means ▇▇▇▇▇▇ Companies Inc.
"Final Order" means any action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended and with respect to which no
actions or requests are pending for administrative or judicial review,
reconsideration, appeal or stay, and the time for filing any such requests and
the time for the FCC to set aside such action on its own motion have expired.
"First Union Bank Loan" means the credit facilities advanced by First Union
National Bank to Sellers.
"FTC" means the Federal Trade Commission or any successor agency.
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government and any tribunal or arbitrator of competent jurisdiction. The term
"Governmental Authority" includes, without limitation, the FCC, the DOJ, the EPA
and the FTC.
"Hazardous Materials" means any wastes, substances, chemicals or materials,
whether solids, liquids or gases, that are defined, listed or regulated as
hazardous wastes, hazardous substances, toxic
4
substances, radioactive materials, pollutants, contaminants or other similar
designations under any Environmental Laws. The term "Hazardous Materials"
includes, but is not limited to, polychlorinated biphenyls (PCBs), petroleum,
pesticides, solvents, explosives, asbestos and lead-based paints.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
"Indemnity Deposit" has the meaning set forth in Section 3.3(b).
"Indemnity Escrow Account" has the meaning set forth in the Indemnity
Escrow Agreement.
"Indemnity Escrow Agreement" means an Indemnity Escrow Agreement, dated as
of the Closing Date, among the Sellers, Purchaser and a party identified as the
Escrow Agent, substantially in the form of Exhibit 3.3(b).
"Intellectual Property" has the meaning set forth in Section 2.1(g).
"Laws" means all applicable provisions of all (i) constitutions, treaties,
statutes, laws, rules, regulations and ordinances of any Governmental Authority,
(ii) authorizations, consents, approvals, permits or licenses issued by, or
registrations or filings with, any Government Authority and (iii) orders,
decisions, judgments, awards and decrees of any Governmental Authority.
"Liens" means any liens, mortgages, pledges, security interests,
restrictions, assignments, claims or encumbrances of any kind or nature
whatsoever.
"Loan Payoff" has the meaning set forth in Section 3.3.
"Material Assumed Contracts" means all (i) Affiliation Agreements, (ii)
those Real Property Agreements identified as "material" on Schedule 2.1(a), and
(iii) those Program Right agreements identified as "material" on Schedule
2.1(d)(ii).
"Normalized Working Capital" means the difference, as of the date of
determination set forth in Schedule 3.2, between current assets (excluding cash)
and current liabilities, in each instance consisting only of those line items
set forth on Section 3.2, or such other line items as may be agreed upon by the
parties.
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent,
(ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other
like Liens arising in the ordinary course of business for amounts which are not
overdue or which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books
of Sellers, in conformity with GAAP; (iii) any minor imperfection of title,
including easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of property or
minor imperfections in title thereto which, in the aggregate, are not material
in amount, and which do not in any case materially detract from the value of the
property subject thereto or interfere with the operation of any Station, (iv)
any Lien which will be released and removed from title effective as of or prior
to the Closing Date; (v) any interest or title of a lessor, including statutory
landlord liens, under any Lease to which a Seller is the tenant, which do not
materially detract from the value of such lease or interfere with the operation
of any Station; and (vi) any extension, renewal or replacement, in whole or in
part, of any Lien referred to in the foregoing clauses (excluding iv); provided
that such
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extension, renewal or replacement Lien shall be limited to all or a part of the
property which secured the Lien so extended, renewed or replaced.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, trust, association or other entity.
"Personal Property" has the meaning set forth in Section 2.1(b).
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any, "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"Program Rights" has the meaning set forth in Section 2.l(d)(ii).
"Purchase Price" means the amount set forth in Section 3.1.
"Purchaser" has the meaning set forth in the preamble.
"Real Property" means all real property and leases of, and other interests
in, the real property described in Schedule 2.1(a).
"Real Property Agreements" has the meaning set forth in Section 2.3(a).
"Regulatory Licenses" has the meaning set forth in Section 2.l(c).
"Returns" means all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes.
"Sellers" has the meaning set forth in the preamble to this Agreement.
"Seller's Employees" means collectively, all employees of Broadcast
Sellers, REI and Broadcasting LLC to the extent the same provide services to the
Stations employed immediately before Closing, including any such employees who
are on vacation or on family, illness or disability leave.
"South West Oregon Stock" has meaning set forth at Section 4.1(d).
"Stations" means the television stations listed in Recital A and, to the
extent applicable, the translators, microwave facilities, earth stations and
other auxiliary facilities associated with the television stations.
"Taxes" means (i) all federal, state, local or foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, gaming, value
added, intangible, unitary, capital gain, transfer, franchise, profits, license,
lease, service, service use, withholding, backup withholding, payroll,
employment, estimated, excise, severance, environmental, stamp, occupation,
premium, property, prohibited transactions, windfall or excess profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, (ii) any liability for payment of amounts
described in clause (i) whether as a result
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of transferee liability, of being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise through operation of law,
and (iii) any liability for the payment of amounts described in clauses (i) or
(ii) as a result of any tax sharing, tax indemnity or tax allocation agreement
or any other express or implied agreement to indemnify any other person.
ARTICLE II
PURCHASE AND SALE OF ASSETS; LIABILITIES
2.1 Purchase and Sale. On the terms and subject to the conditions set forth in
this Agreement, at the Closing, Sellers shall sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser shall acquire, accept and
purchase from Sellers, all of Sellers' right, title and interest in all
assets, properties and rights, whether tangible or intangible, whether
real, personal or mixed, and wherever located, used or usable in the
operation of the Stations (such assets, properties and rights described in
this Section 2.1 are referred to collectively as the "Acquisition Assets"),
including:
(a) Real Property. All right, title and interest in, to or under all real
property and leases of, and other interests in, the real property set
forth on Schedule 2.l(a), in each case together with all buildings,
structures, fixtures and other improvements actually or constructively
attached thereto (the "Real Property") ;
(b) Personal Property. All towers, transmitters and antenna installations
(whether considered real property or personal property), machinery,
equipment, computers, furniture, furnishings, motor vehicles, all
spare parts, tube inventory, vinyl inventory, tapes, disks, supplies
and other inventories, and all other Personal Property of every kind
and character, including replacements and additions occurring after
the date of this Agreement through the Closing, including the Personal
Property set forth on Schedule 2.l(b) (the "Personal Property");
(c) Regulatory Licenses and FCC Authorizations.
(i) All licenses, authorizations, permits or approvals issued by the
FCC and associated with the operation of the Stations, including
those set forth on Schedule 2.1(c)(i) (the "FCC Authorizations"),
and all pending applications and subsequently issued licenses,
authorizations, permits or approvals with respect to the
Stations, and
(ii) All other regulatory licenses, authorizations, permits or
approvals with respect to the Stations issued by any other
Governmental Authority in connection with the operation of the
Stations, including those set forth on Schedule 2.1(c)(ii) (the
"Regulatory Licenses");
(d) Program Rights and Affiliation Agreements.
(i) All contracts, agreements and/or understandings relating to the
affiliation of any of the Stations with any programming network
or organization, and all amendments, extensions, renewals,
substitutions and replacements of, and additions to, such
contracts, agreements and understandings as may be entered into
by Broadcast Sellers from the date of this Agreement through the
Closing in
7
accordance with Section 6.5 including those set forth
on Schedule 2.1(d)(i) (the "Affiliation Agreements"), and
(ii) All broadcast and other rights to films and programs (the
"Program Rights"), all broadcasting facilities contracts,
agreements or arrangements, all programming and production
materials, film libraries, inventories or programming items,
materials or supplies, and all contracts, agreements and writings
with respect to the foregoing, and all amendments, extensions,
renewals, substitutions and replacements of, and additions to,
such contracts, agreements, arrangements and other rights as may
be entered into by Broadcast Sellers from the date of this
Agreement through the Closing in accordance with Section 6.5,
including those set forth on Schedule 2.1(d)(ii);
(e) Cable Carriage. All retransmission consent agreements and copyright
indemnification agreements and similar cable carriage arrangements
entered into by Broadcast Sellers and cable companies serving their
respective designated market areas, and all similar agreements and
arrangements as may be entered into by Broadcast Sellers through
Closing in accordance with Section 6.5, including those set forth on
Schedule 2.1(e);
(f) Other Contracts. All contracts or other rights of Broadcast Sellers
not listed elsewhere in this Section 2.1 and which are used in the
operation of the Stations (other than Excluded Liabilities),
including, without limitation, all contracts for the sale of
advertising time or talent, trade or barter contracts, leases of
personal property, and licenses with BMI, ASCAP or SESAC for use of
copyrighted materials, and all amendments, extensions, renewals,
substitutions and replacements of, and additions to, such contracts
and other rights as may be entered into by Broadcast Sellers from the
date of this Agreement through the Closing in accordance with Section
6.5, including those set forth on Schedule 2.1(f) (the "Other
Contracts");
(g) Intellectual Property. All intellectual property and other intangible
assets of Broadcast Sellers not listed elsewhere in this Section 2.1,
including, without limitation, all software, all works subject to
copyright, patents, trademarks, trade names, Internet domain names,
and service marks used or usable in the operation of the Stations, and
any pending applications, registrations, extensions and renewals for
any of the foregoing, the call letters identified in Recital A above,
and any and all additions to any of the foregoing acquired from the
date hereof through the Closing, including those set forth on Schedule
2.l(g) (the "Intellectual Property");
(h) Deposits. All deposits and prepaid rents, charges or expenses held by
third parties in connection with any contracts, leases or other
agreements held for the benefit of any of the Broadcast Sellers;
(i) Accounts Receivables. All accounts receivable, notes receivable and
other rights to receive payment attributable to the Stations
("Accounts Receivable");
(j) Records. All books, records and files of Broadcast Sellers (including
all historical accounting and financial books and records and all FCC-
related applications, reports, statements and files) relating to the
operation of the Stations, exclusive of corporate records, tax returns
and supporting documents of the Broadcast Sellers;
8
(k) Southwest Oregon Stock. All stock, membership interests and other
ownership interests in any corporation, limited liability company or
other entity owned by any of the Broadcast Sellers, including without
limitation, the Southwest Oregon Stock and the right to receive all
dividends and other distributions applicable to the fiscal year in
which Closing occurs; and
(l) Goodwill. All goodwill attributable to the Stations.
2.2 Excluded Assets. Notwithstanding anything contained in Section 2.1 to the
contrary, Sellers are not selling, and Purchaser is not purchasing, any of
the following assets, properties or rights, all of which shall be retained
by Sellers (the "Excluded Assets"):
(a) cash or cash equivalents;
(b) life insurance policies funding deferred compensation obligations not
assumed by Purchaser;
(c) the books and records of the Sellers that pertain to the corporate
existence or capitalization of the Sellers;
(d) the assets held in the Benefit Plans and the 401(k) Plan maintained by
Sellers for the benefit of Sellers' Employees;
(e) the trademark "Retlaw";
(f) those assets, properties and rights owned or held by REI or
Broadcasting LLC that are not used or useable in the operation of the
Stations; and
(g) those assets listed on Schedule 2.2, regardless if owned by REI,
Broadcasting LLC or Sellers.
2.3 Liabilities Assumed by Purchaser. At the Closing, Purchaser shall assume
and agree to pay and perform when due (or reimburse Sellers, to the extent
applicable, for any liabilities under subsection (d) below paid by Sellers)
the executory liabilities and obligations of the assigning Seller, which
except in the case of subsection (d) below, arise after the Effective Time
with respect to each of the following (the "Assumed Liabilities"):
(a) Real Property. The real property leases, special use permits, access
agreements, options, possessory agreements, and other rights and
agreements listed on Schedule 2.1(a) (the "Real Property Agreements");
(b) Program Rights. The Affiliation Agreements and Program Rights
agreements and other arrangements listed on Schedule 2.1(d)(i) and
Schedule 2.1(d)(ii);
(c) Cable Carriage. The retransmission consent agreements, copyright
indemnification agreements and other cable carriage arrangements
listed on Schedule 2.1(e);
(d) Ordinary Course Liabilities. The current liabilities of Sellers
included in the calculation of Normalized Working Capital in
accordance with Section 3.2 and those
9
incurred in the operation of the Stations in the ordinary course of
business in accordance with Section 6.5 from the date of determination
under Section 3.2; and
(e) Other Contracts. The other agreements, contracts, arrangements,
understandings and rights of Sellers which constitute Acquisition
Assets.
2.4 Liabilities Not Assumed by the Purchaser. Purchaser shall not assume, nor
shall Purchaser be obligated to pay, perform or discharge, any debt,
liability, obligation or commitment of any Seller of any kind (the
"Excluded Liabilities"), unless described in Section 2.3 as an Assumed
Liability. Without limiting the generality of the immediately foregoing
sentence, Purchaser shall not be deemed by anything contained in this
Agreement or otherwise to have assumed any of the following as such
liabilities exist on the Closing Date (each of which is an Excluded
Liability):
(a) except for any of the following which are expressly assumed by
Purchaser under Section 2.3(d), (i) any salaries, wages, severance or
other compensation payments and benefits payable with respect to any
Sellers' Employees, including, without limitation, any deferred
compensation obligations, payments or benefits relating to vacation or
holidays, any COBRA obligations or Benefit Plans, (ii) any bonus,
change of control, severance, termination or other payment or benefit
payable to any Sellers' Employees pursuant to any agreement, program,
commitment or undertaking of any Seller, or (iii) any liabilities,
obligations or expenses (including attorneys' fees) arising out of or
relating to any claim, demand, action or cause of action made or
brought by any Sellers' Employee, union, or Governmental Authority
with respect to or in connection with the employment and/or
termination of any Sellers' Employee;
(b) except for any of the following which are expressly assumed by
Purchaser under Section 2.3(d), any responsibility for, or any
liability or obligation with respect to, any Benefit Plans, or any
liability for contributions or payments to be made in respect of
service for any periods under any other employee benefit plans or
benefit arrangements provided or made available to the Sellers'
Employees, including without limitation as listed on Schedule 4.12;
(c) any debt, claim, liability or obligation (including, without
limitation, any accounts payable) of any nature arising out of,
accruing from or relating to the operations of the Stations before the
Closing, including, without limitation, liabilities or obligations
arising from or relating to benefits or services received or
receivable under the Assumed Liabilities before the Closing, except
for any such obligation incurred in the ordinary course of business
pursuant to Section 6.5 or otherwise expressly assumed by Purchaser
under Section 2.3;
(d) any contract or agreement not validly assigned to Purchaser, except to
the extent Purchaser will receive the benefit of same;
(e) any actions, causes of action, Governmental Authority proceedings,
arbitrations, union grievance proceedings, or other litigation or
similar proceedings arising out of, or relating to, the operations of
the Stations before the Closing, including without limitation those
items listed on Schedule 4.10(a) and Schedule 4.13;
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(f) any liability or obligation of any Seller for Taxes, or any interest
or penalties thereon, except to the extent such Taxes have been
prorated pursuant to Section 3.3;
(g) any obligations pursuant to any expired or existing collective
bargaining agreements, including without limitation as listed on
Schedule 4.10(b), other than any duty to recognize and/or bargain with
those unions listed on Schedule 4.10(b);
(h) any claims, liabilities, actions, causes of actions, investigations,
damages or costs (including attorneys' fees) arising from the
operation of the Stations by Sellers prior to the Closing or in
connection with any condition or circumstance existing prior to the
Closing Date concerning Environmental Laws or Hazardous Materials,
including without limitation any condition or circumstance
constituting a breach of Sellers' representations under Section 4.16;
nor
(i) any liabilities associated with items on any Schedule which the
parties specifically designate on the Schedule as an Excluded
Liability.
2.5 Further Assurances. From time to time after the Closing, each Seller agrees
to execute and deliver to the Purchaser such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of
attorney and other instruments as may be reasonably requested by the
Purchaser or its counsel in order to vest in the Purchaser all right, title
and interest of such Seller in and to the Acquisition Assets and otherwise
in order to carry out the purpose and intent of this Agreement.
2.6 Closing; Effective Time. The purchase and sale of the Acquisition Assets
(the "Closing") shall, unless another date, time or place is agreed to in
writing by the parties, take place at the offices of Milbank, Tweed, ▇▇▇▇▇▇
& ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at
10:00 A.M., local time, the first Business Day of the month following the
month in which the last FCC Consent has become a Final Order and the other
conditions to Closing set forth in Articles X and XI have been satisfied
(the "Closing Date"); provided that the Closing Date shall not occur before
May 1, 1999 without Sellers' consent. The effective time of the transfer to
the Purchaser of the Acquisition Assets and the Stations shall be deemed to
occur at 12:00:01 A.M., local time, on the Closing Date (the "Effective
Time").
ARTICLE III
PURCHASE PRICE FOR THE ACQUISITION ASSETS
3.1 Purchase Price. In consideration for the purchase of the Acquisition
Assets, Purchaser shall pay to Sellers US$215,000,000 (the "Purchase
Price") in immediately available funds by wire transfer in accordance with
this Section 3.1, Section 3.2 and Section 3.3, and shall assume, discharge
and perform when due the liabilities to be assumed by the Purchaser
pursuant to Section 2.3.
3.2 Purchase Price Adjustment.
(a) Sellers shall, at Sellers' expense, cause to be prepared and delivered
to Purchaser, as of the last day of the month which occurs not later
than forty (40) days prior to the Closing Date, a balance sheet for
Sellers' broadcasting operations (the "Closing Balance Sheet"),
11
which shall set forth the Normalized Working Capital in accordance
with Section 1.1 and Schedule 3.2, prepared to the extent applicable,
in accordance with GAAP and on a basis consistent with the preparation
of the audited Balance Sheet of REI for broadcasting operations as of
September 30, 1998. Sellers shall deliver the Closing Balance Sheet to
Purchaser as promptly as practicable but, in any event, not less than
ten (10) days prior to the Closing Date.
(b) Purchaser shall, within five (5) days after delivery of the Closing
Balance Sheet by Sellers, complete its review of the Normalized
Working Capital as set forth on the Closing Balance Sheet. In the
event Purchaser determines that Normalized Working Capital has not
been determined in accordance with Section 1.1 and Schedule 3.2,
Purchaser shall inform Sellers in writing setting forth an explanation
of and the adjustments to Normalized Working Capital which Purchaser
believes should be made. Sellers shall then have two (2) days to
review and respond to Purchaser's adjustments. If Sellers and
Purchaser are unable to resolve such adjustments within three (3) days
prior to the Closing Date, the Closing shall nevertheless take place
as provided in Section 2.6 but the portion of any adjustment which is
disputed in good faith by Purchaser shall be withheld from the payment
of the Purchase Price under Section 3.3 pending a final determination
as provided in subsection 3.2(c) below; provided, that the amount of
the disputed adjustment withheld from the Purchase Price on Closing,
together with any downward adjustment in the Purchase Price on Closing
in accordance with Section 3.2(e), shall not, in any event, be greater
than the amount of the Required Working Capital set forth in Section
3.2(e).
(c) If the parties cannot agree prior to Closing on the amount of the
adjustment to the Purchase Price to be paid on the Closing Date, then
within ten (10) Business Days after Closing, either party can submit
the issue to PricewaterhouseCoopers, LLP, who shall, acting as experts
and not as arbiters, determine on the basis of the standards set forth
in Section 1.1, this Section 3.2 and Schedule 3.2 to what extent, if
any, Normalized Working Capital as reflected on the Closing Balance
Sheet requires adjustment. Sellers and Purchaser shall direct
PricewaterhouseCoopers to use its best efforts to render its
determination within forty-five (45) days. PricewaterhouseCoopers'
determination shall be conclusive and binding upon the parties hereto.
Fees and disbursements of PricewaterhouseCoopers shall be shared
equally by the parties. Purchaser and Sellers shall make readily
available to PricewaterhouseCoopers all relevant nonproprietary books
and records and any work papers (including those of the parties'
respective accountants), relating to the Closing Balance Sheet and all
other items reasonably requested by PricewaterhouseCoopers.
(d) Sellers and Purchaser shall fully cooperate in providing access to
their respective accountants, accounting records and other information
to the extent reasonably necessary for preparation of the Closing
Balance Sheet and the review thereof.
(e) In the event Normalized Working Capital as shown on the Closing
Balance Sheet, subject to any adjustment under Sections 3.2(b) or (c),
is less than $6,000,000 (the "Required Working Capital"), Seller shall
make an adjustment payment to Purchaser in an amount equal to the
difference between (x) the Required Working Capital and (y) the
Normalized Working Capital reflected on the Closing Balance Sheet. Any
payment required by this Section 3.2(e) shall be made by Sellers to
Purchaser, if determined prior
12
to the Closing Date, by a dollar for dollar downward adjustment in the
Purchase Price and, if post-Closing, in cash in immediately available
funds, net of any amount withheld from the Purchase Price on Closing
under Section 3.2(b), within five (5) Business Days after the
determination by PricewaterhouseCoopers.
(f) In the event the Normalized Working Capital as shown on the Closing
Balance Sheet, subject to any adjustment under Sections 3.2(b) or (c),
is more than the Required Working Capital, as reduced by the amount,
if any, withheld from the Purchase Price paid on the Closing Date,
Purchaser shall make an adjustment payment to Sellers in an amount
equal to the difference between (x) the Normalized Working Capital as
shown on the Closing Balance Sheet and (y) the Required Working
Capital. Any payment required by this subsection 3.2(f) shall be made
by Purchaser to Sellers, if determined prior to the Closing Date, by
an upward adjustment of the Purchase Price payable on Closing under
Section 3.3 or, if post-Closing, by payment in cash in immediately
available funds within five (5) Business Days after the determination
by PricewaterhouseCoopers in an amount equal to Normalized Working
Capital plus the amount withheld from the Purchase Price paid on the
Closing Date minus the Required Working Capital.
3.3 Payment of Purchase Price. Purchaser shall pay the Purchase Price, as may
be adjusted in accordance with Section 3.2, to Sellers upon Closing by
executing federal wire transfers as follows :
(a) First Union Loan Payoff. One or more wire transfers in the total
amount required to pay off all existing secured debt on the
Acquisition Assets, including without limitation the balance and any
fees and costs owing under the First Union Bank Loan (the "Loan
Payoff"), to an account and in an amount designated by REI.
(b) Indemnity Escrow Account. One wire transfer equal to $10 million
delivered to the Indemnity Escrow Account administered by the Escrow
Agent in accordance with the Indemnity Escrow Agreement attached to
this Agreement as Exhibit 3.3(b) (the balance held in the Indemnity
Escrow Account is herein referred to as the "Indemnity Deposit").
(c) Sellers' Account. One wire transfer to an account designated by REI
equal to the Purchase Price, as may be adjusted in accordance with
Section 3.2, minus the amounts wired under Subsections (a) and (b)
above.
3.4 Certain Prorations. Sellers and Purchaser shall prorate as of the
Effective Time all real and personal property Taxes, with final settlement
to be made within 60 days of the Closing Date. The Person that paid the Tax
shall be reimbursed within such time period by the Person that owes the Tax
under this Section 3.4.
3.5 Allocation of Purchase Price. Within thirty (30) days of the date of this
Agreement, Purchaser shall provide REI with a statement setting forth the
allocation of the Purchase Price among the Acquisition Assets. REI shall
have twenty (20) days after receipt to accept the statement or to propose
changes. If REI provides no notice of proposed changes within the twenty-
day period, the allocations set forth in the statement shall be deemed
conclusive and the statement shall be the Certificate of Allocation. If
Purchaser accepts any proposed changes, the modified statement shall be the
Certificate of Allocation. If the parties cannot agree on the allocation
within twenty
13
(20) days of Purchaser's receipt of REI's proposed changes, either party
can submit the issue to PricewaterhouseCoopers LLP, whose determination
shall be final and binding on the parties. Each party agrees to file all
elections and returns required or desirable under applicable federal, state
and local Tax laws in accordance with the allocations reflected in the
Certificate of Allocation, including, without limitation, the filing of the
Asset Acquisition Statement on Form 8594 required under Section 1060 of the
Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers represent and warrant to the Purchaser that:
4.1 Organization and Good Standing.
(a) REI is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, with full
corporate power and authority to carry on its business and to own,
lease and operate, its properties as and in the places where such
business is being conducted and such properties are owned, leased or
operated. Broadcasting LLC and each of the Broadcast Sellers are duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to carry on their
respective businesses, and to own, lease and operate their respective
properties as and in the places where such businesses are being
conducted and such properties are owned, leased or operated. South
West Oregon Television is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon,
with full corporate power and authority to carry on its business and
to own, lease and operate, its properties as and in the places where
such business is being conducted and such properties are owned, leased
or operated.
(b) Broadcasting LLC, each of the Broadcast Sellers, and South West Oregon
Television are qualified to do business and are in good standing in
the jurisdictions set forth opposite their respective names on
Schedule 4.1(b), which constitutes all jurisdictions in which each
such company is required to be qualified to do business, except where
the failure to so qualify would not have a material adverse effect on
such company or its assets.
(c) Each Broadcast Seller has delivered to Purchaser true and complete
copies of its certificate of formation, LLC operating agreement, and
other relevant organizational documents, in each case as amended and
in effect on the date hereof. None of the Broadcast Sellers is in
violation of any of the provisions of its certificate of formation,
LLC operating agreement, or other organizational documents.
(d) Eugene LLC has delivered to Purchaser true and complete copies of
South West Oregon Television's articles of incorporation, bylaws and
meeting minutes, in each case as amended and in effect on the date
hereof. South West Oregon Television is not in violation of any of the
provisions of its articles of incorporation, bylaws, corporate
resolutions or any organizational documents. South West Oregon
Television has a capitalization which consists of 100 shares of
authorized common stock, no par value per share (the "South West
Oregon Stock"), all of which is issued and outstanding. All of
14
the South West Oregon Stock has been duly authorized and validly
issued and is fully paid and nonassessable. There are no outstanding
rights, subscriptions, warrants, calls, preemptive rights, options or
other agreements of any kind with respect to the South West Oregon
Stock. Eugene LLC owns 50% (50 shares) of the South West Oregon Stock,
free and clear of any liens, claims or encumbrances, except as will be
removed on or prior to Closing. The only other shareholder of South
West Oregon Television is California Oregon Broadcasting, Inc., which
owns the other 50 shares of the ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Television does not own an interest in any other Person.
(e) Each Broadcast Seller is wholly-owned by Broadcasting LLC, and none of
the Broadcast Sellers owns any interest in any subsidiary or other
entity, except as set forth on Schedule 4.1(e).
(f) Broadcasting LLC and the Broadcast Sellers are the only subsidiaries
of REI other than South West Oregon Television. The term "consolidated
subsidiaries" when used in connection with REI means Broadcasting LLC
and the Broadcast Sellers.
4.2 Authorization of Agreement. The execution and delivery by Sellers of this
Agreement, and the performance by Sellers of their obligations hereunder,
have been duly and validly authorized by the Board of Directors of REI and
by the members of the Broadcast Sellers, and no other action on the part of
the Sellers is necessary other than approval of the REI shareholders. This
Agreement has been duly and validly executed and delivered by the Sellers
and constitutes a legal, valid and binding obligation of the Sellers
enforceable against them in accordance with its terms, except to the extent
such enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally, and (b) is subject to general principles of equity.
4.3 Ownership of the Acquisition Assets. Sellers are the lawful owners of, or
have lawful rights to use and (subject to obtaining the FCC Consents and
the consents to the assignment of the Assumed Contracts and Regulatory
Licenses) transfer to Purchaser, the Acquisition Assets and Sellers have
good and marketable title to the Acquisition Assets, free and clear of all
Liens, except for Permitted Liens. The delivery to Purchaser of the
instruments of transfer of ownership contemplated by Article X will vest in
Purchaser good and marketable title to all of the Acquisition Assets, free
and clear of all Liens except for Permitted Liens. Immediately following
the Closing, Purchaser will own and possess all assets, properties and
rights owned or used by the Sellers in the operation of the Stations, which
assets, properties and rights are necessary in the operation of the
Stations.
4.4 Financial Statements and Condition.
(a) Sellers have delivered to Purchaser true and complete copies of (i)
the audited balance sheets of the broadcast business of REI at
September 30, 1995 and 1996, and the related audited consolidated
statements of operations, stockholders' equity and cash flows for each
of the fiscal years then ended, together with a true and correct copy
of the report on such audited information by Miller, Kaplan, Arase &
Co., LLP, and all letters from such accountants with respect to the
results of such audits; (ii) the audited balance sheets of the
broadcast business of REI at September 30, 1997, and the related
audited consolidated statements of operations, stockholders' equity
and cash flow for the fiscal
15
year then ended, together with a true and correct copy of the report
on such audited information by Price Waterhouse LLP, and all letters
from such accountants with respect to the results of such audits; and
(iii) the unaudited balance sheets of the broadcast business of REI at
September 30, 1997 and 1998, and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for the
portion of the fiscal year then ended.
(b) Except as set forth in the notes to such financial statements, (i) all
such financial statements were prepared in accordance with GAAP; (ii)
fairly present in all material respects the consolidated financial
condition and results of the operations of the Stations as of the
respective dates thereof and for the respective periods covered
thereby; (iii) were prepared from the books and records of REI and its
consolidated subsidiaries; and (iv) contain and reflect adequate
provisions for all liabilities for Taxes, if any, incurred or accrued
by the Broadcast Sellers.
(c) Except for the execution and delivery of this Agreement and except as
disclosed on any Schedule attached hereto, since September 30, 1998,
the Stations and the Acquisition Assets have been operated in the
ordinary course of business and there has not been:
(i) any material adverse change in the business, operations,
condition (financial or otherwise), assets, or liabilities
(whether absolute, accrued, contingent or otherwise);
(ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of the
material tangible Acquisition Assets;
(iii) any sale or transfer of any material portion of the assets used
in the operation of the Stations, other than as permitted under
this Agreement;
(iv) any Lien, or subjection to Lien, of any of the material assets
used in the operation of the Stations, except for Permitted
Liens;
(v) any material amendment to, or termination of, any Material
Assumed Contract;
(vi) any increase in, or commitment to increase, the compensation
payable, or to become payable to, any Sellers' Employees other
than routine increases made in the ordinary course of business
not exceeding four percent (4%) per annum individually and in
the aggregate, excluding any greater increases required by law
or by existing contract or commitment and excluding the amounts
payable to certain employees by REI under the Bonus Letters;
(vii) any adoption of a plan or agreement or amendment to any plan or
agreement providing any new or additional "fringe benefits" for
any Sellers' Employees, excluding the Bonus Letters;
(viii) any material alteration in the manner of keeping the books,
accounts, or records of any of the Sellers, or in the
accounting practices therein reflected; or
(ix) any other event or condition of any character which has a
material adverse effect on the Stations or Acquisition Assets.
16
(d) REI is a subchapter S corporation.
(e) Each of the Broadcast Sellers and Broadcast LLC, for federal income
tax purposes, is (i) an entity all of whose equity interests may be
held by a subchapter S corporation without disqualifying such
corporation as such, (ii) and is not treated as a separate
corporation, and (iii) all assets, liabilities, and items of income,
deduction, and credit of each LLC is treated as assets, liabilities
and such items (as the case may be) of REI.
4.5 Program Rights. Schedules 2.1(d)(i) and 2.1(d)(ii) accurately set forth
Sellers' interest in all Affiliation Agreements and Program Rights used or
useable in the business and operation of the Stations as of the date
hereof. All of Sellers' rights, title and interest in such programs and the
Affiliation Agreements are, subject to receipt of any required third party
consents, assignable to Purchaser on the Closing Date. Except as otherwise
expressly disclosed on the appropriate Schedule, as of the date hereof
Sellers have the right to broadcast each program or program segment
presently scheduled for broadcast by any of the Stations, no Seller is in
material default with respect to any Program Right or Affiliation
Agreement, Sellers have no knowledge of any litigation, claim, or
threatened litigation or claim with respect to any Program Right or
Affiliation Agreement, and Sellers have not received any notice of
termination or default with respect to any Affiliation Agreement or Program
Rights.
4.6 Real Property.
(a) Schedule 2.1(a) sets forth by Station a true and complete (i)
description of each parcel of real property used or usable in the
operation of the Stations that Sellers own or purport to own, which
description includes the name of the owner of such parcel, a street
address and a legal description thereof, (ii) description of each
parcel of real property used in the operation of the Stations under
which any Seller is or purports to be either a lessee, lessor,
sublessee or sublessor, which description identifies the applicable
leases or subleases, the names of the parties thereto and the
expiration dates thereof (including any renewal options), and (iii)
description of the easements, rights of way, special use permits,
licenses and other agreements pursuant to which transmitters, towers,
translators and the like used in the operation of the Stations under
which any Seller holds or purports to hold a possessory interest,
which description identifies the applicable easement, right of way,
special use permit, license or other agreement, the names of the
parties thereto and the expiration dates thereof (including any
renewal options). The Real Property constitutes all of the fee,
leasehold, and other possessory interests in real property used or
held for use by the Sellers in connection with, and necessary for, the
operation of the Stations.
(b) Except for Permitted Liens and as otherwise disclosed in Schedule
2.1(a):
(i) Seller has good and marketable fee simple title to all the
owned real property listed in Schedule 2.1(a), free and clear
of all liens, mortgages, pledges, covenants, easements,
restrictions, encroachments, charges, rights of occupancy, and
others claims and encumbrances;
(ii) With respect to each lease, sublease, or other possessory
agreement identified in Schedule 2.1(a), (A) all are in full
force and effect and are valid, binding, and enforceable in
accordance with their respective terms, none is subject to any
17
offset, defense, or counterclaim by any party thereto, and none
is subject to any verbal agreement not contained therein, and
(B) no Seller is, and no Seller has any knowledge that any
other party to any such lease, sublease or possessory agreement
is, in default with respect to any material term or condition
thereof, and no Seller has any knowledge that any event has
occurred which, through the passage of time or the giving of
notice or both, would constitute a material default thereunder
or would cause the acceleration of any obligation of any party
thereto or the creation of any Lien upon any asset of any
Seller;
(iii) All of the buildings, structures, fixtures and other
improvements being conveyed to Purchaser are in good operating
condition and repair for buildings, structures, fixtures, and
improvements of their age and usage, ordinary wear and tear
excepted, and, to the best knowledge of the Sellers, have no
latent defects. All buildings, structures, fixtures and other
improvements were constructed and are operated and used in
conformance, in all material respects, with all setback
requirements, easements, covenants, restrictions, and all
applicable building, fire, zoning, health and safety codes and
other similar laws or regulations; and
(iv) Subject to the receipt of each required consent to the
assignment of any real property lease, sublease, or possessory
agreement, Sellers have the full power and authority to assign
their respective interests under the leases, subleases and
possessory agreements in accordance with this Agreement.
4.7 Personal Property. Schedule 2.1(b) sets forth as of the date hereof a true
and complete (a) list of each material item of Personal Property owned or
held for use by the Sellers, and used in the operation of the Stations,
including a description and identifying the location of each such item, (b)
identification of the owner of, and any agreement relating to the use of,
each such item of Personal Property (other than motor vehicles), the rights
to which are to be transferred to the Purchaser pursuant hereto under
leases or similar agreements or arrangements which provide for rental
payments at a rate in excess of $1,000 per month, and (c) identification of
the owner of, and any agreement relating to the use of each motor vehicle
used in the operation of the Stations, the rights to which are to be
transferred to the Purchaser pursuant hereto. Except as disclosed on
Schedule 2.1(b), the Personal Property subject to FCC regulation is
operating in conformity with FCC Regulations and the FCC Authorizations
(including without limitation all regulations governing human exposure to
radio-frequency radiation) and, to Sellers' knowledge, standards of good
engineering practice.
4.8 Intellectual Property.
(a) Schedule 2.1(g) sets forth as of the date hereof by Station a true and
complete list of all (i) trademarks, trademark registrations, trade
names, service marks, Internet domain registrations, patents, patent
applications, invention disclosures, and applications for any of the
foregoing, used by the Sellers in the operation of the Stations, (ii)
proprietary software used in the operation of the Stations, (iii)
license agreements or similar arrangements to which any Seller is a
party, either as licensee or a licensor, for each such item of
Intellectual Property, and (iv) other items of Intellectual Property
used in and necessary to the operation of the Stations as presently
operated.
(b) Except as indicated in Schedule 2.l(g), as of the date hereof:
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(i) There have not been any actions or other judicial or adversary
proceedings involving any Seller concerning any items of
Intellectual Property, nor, to the knowledge of the Sellers, is
any such action or proceeding threatened;
(ii) Each Broadcast Seller has the right and authority to use all
items of Intellectual Property in the operation of the Stations
in the manner presently operated and to convey such right and
authority to Purchaser, and no Seller has received any notice
that such use conflicts with, infringes upon or violates any
right of any other Person; and
(iii) There are no outstanding nor, to the knowledge of the Sellers,
any threatened disputes or disagreements with respect to any
license agreements or similar agreements with respect to any
Intellectual Property.
(c) Immediately following the Closing, Purchaser will own, or will have
all lawful rights to use, all Intellectual Property set forth on
Schedule 2.1(g), free of any Liens other than Permitted Liens, on the
same terms and conditions as owned or used by Sellers prior to the
Closing.
4.9 Agreement Not in Breach of Other Instruments. Subject to receipt of the
FCC Consents, passage of the waiting period under the HSR Act and receipt
of third party consents required under the Assumed Contracts, the execution
and delivery by each Seller of this Agreement and related agreements to
which each such Seller is a party, the performance of its obligations
hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby, will not result in a breach of any of the
terms and provisions of, or constitute a default under, or conflict with
(a) any Assumed Contract or any other material agreement, indenture or
other instrument to which any Seller is a party or by which any Seller or
its assets are bound, (b) the articles of incorporation or bylaws of REI or
of South West Oregon Television, or the certificate of formation or the LLC
operating agreement of any of the other Sellers, as amended through the
date hereof, or (c) any Law with respect to any Seller, its assets or the
Stations.
4.10 Labor Matters.
(a) Each of the Sellers has complied, and is currently in compliance, in
all material respects with all Laws, publicly available policies,
standards, official interpretations and publicly available guidelines
regarding employment and employment practices, and has not and is not
engaged in any unfair labor practice or unlawful discriminatory act or
other unlawful act with respect to employment or employment practices.
Except as disclosed on Schedule 4.10(a), as of the date hereof, there
is no pending or, to the knowledge of the Sellers, threatened charge,
grievance or complaint by or against any Seller before the National
Labor Relations Board or the Equal Employment Opportunity Commission,
or any other Governmental Authority relating to labor or employment
practices or omissions, decisions or practices, and no labor strike or
other labor trouble is pending or, to the knowledge of the Sellers,
threatened by, against or affecting any Seller.
(b) Except as disclosed in Schedule 4.10(b), as of the date hereof, no
Seller is a party to or bound by any collective bargaining agreement
or other labor agreement, and there is no labor union or other
organization representing, purporting to represent or attempting to
organize or represent any Employees, no Broadcast Seller has
experienced, within the
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past 24 months, nor is any Broadcast Seller now experiencing, any work
stoppage, noticeable slowdown or other labor difficulty, and no Seller
has any reason to believe that any organizational effort by any of its
employees or any union is imminent.
4.11 Employees. Schedule 4.11 sets forth, as of the date hereof, a true and
complete list by Station and corporate office of each employee employed by
any Seller, whether part time or full time, along with the following
information for each: name, identifying code, job title, rate of pay, date
of hire, name of employer, accrued vacation time, and whether such
individual is bound by an employment agreement.
4.12 Employee Benefit Plans. Schedule 4.12 sets forth, as of the date hereof,
a true and complete list and description of each of the Benefit Plans.
(a) Neither any of Sellers, any ERISA Affiliate nor any other corporation
or organization controlled by or under common control with any of the
foregoing within the meaning of Section 4001 of ERISA has at any time
contributed to any "multi-employer plan", as that term is defined in
Section 4001 of ERISA.
(b) Complete and correct copies of the following documents have been made
available to Purchaser prior to the execution of this Agreement: (i)
current summary Plan descriptions of each Benefit Plan subject to
ERISA; and (ii) the most recent Form 5500 and schedules thereto for
each Benefit Plan subject to ERISA reporting requirements.
4.13 Litigation. Except as disclosed in Schedule 4.13 and except for
proceedings of general applicability within the television broadcast
industry, as of the date hereof, (a) there is no legal, administrative,
arbitration or other proceeding, and no governmental investigation of any
kind, pending or, to the knowledge of Sellers, threatened against any
Seller with respect to any of the Acquisition Assets, the Stations, or any
of the officers, directors, shareholders or employees of any Seller, and
(b) no claim, demand or dispute that involves or could reasonably involve
at least $25,000 or more has been made or currently exists against any
Seller with respect to the Acquisition Assets or the Stations.
4.14 Contracts.
(a) Schedules 2.1(a), 2.1(d)(i), 2.1(d)(ii), 2.1(e), 2.1(f), and 2.1(g)
set forth, as of the date hereof, by Station true and complete lists
and descriptions of each material contract (other than contracts for
the sale of advertising time), agreement, understanding, and lease
pertaining to the operation of the Stations, except those which
involve the payment or delivery of services of less than $25,000 in
any twelve month period or which will expire (and not be renewed)
prior to the Closing Date or which do not constitute Acquisition
Assets. The Sellers have previously delivered to the Purchaser true
and complete copies of all such written Contracts and a written
description of all such oral contracts (and all amendments and
modifications thereto).
(b) Except as set forth in such Schedules, (i) each Material Assumed
Contract is in full force and effect, and the Sellers do not have any
knowledge that such Material Assumed Contract is not a valid and
binding agreement of the other parties thereto, (ii) there exists no
payment default or any material non-payment default under any Material
Assumed Contract on the part of any Seller, and the Sellers do not
have any knowledge that any
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payment default or any material non-payment default under any Material
Assumed Contract on the part of the other parties thereto exists,
(iii) the Sellers do not have any knowledge that any event has
occurred which, with the giving of notice or the lapse of time or
both, would constitute any material default under any of the Material
Assumed Contracts, and (iv) there are no outstanding material disputes
under any of the Material Assumed Contracts.
(c) Except as set forth on such schedules, all the Material Assumed
Contracts are assignable (subject to obtaining the FCC Consents,
passage of the waiting period under the HSR Act, and receipt of
certain third party consents) to Purchaser, and upon Closing will be
validly assigned to Purchaser and enforceable by Purchaser in
accordance with its material terms, except to the extent such
enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors' rights generally, and (b) is subject to general principles
of equity.
4.15 Authorizations; License Rights; Station Transmissions.
(a) FCC Authorizations. Except as to Station KPIC, each Broadcast Seller
listed in Recital A holds the valid FCC Authorizations for the
operation of the Station(s) listed in Schedule 2.l(c)(i). South West
Oregon Television holds the valid FCC Authorization for Station KPIC.
Schedule 2.l(c)(i) correctly sets forth, as of the date hereof, the
expiration date of each such FCC Authorization. The FCC Authorizations
permit the operation of the Stations as presently operated and are in
full force and effect. To Sellers' knowledge and except as disclosed
on Schedule 2.1(c)(i), the Stations are being operated in accordance
with (a) the terms and conditions of their FCC Authorizations and (b)
the FCC Regulations, and the Stations will be so operated through and
as of the Closing. The FCC has allocated channels to each of the
eleven Stations listed in Recital A for digital transmissions; and, to
Sellers' knowledge, such allocations are sufficient to permit Sellers,
upon obtaining appropriate construction permits from the FCC, to
construct digital facilities which materially replicate the present
NTSC coverage areas of each Station, using the antenna heights, power
levels, and antenna patterns specified in the FCC's digital Table of
Allotments with respect to such Station.
(b) FCC Matters. Except for proceedings affecting the television
broadcast industry as a whole and except as disclosed on Schedule
2.1(c)(i), no actions, proceedings or investigations are pending or,
to the knowledge of the Sellers, threatened which is reasonably
expected to result in the revocation, cancellation, nonrenewal or
limitation of any of the FCC Authorizations or the denial of any
pending application for renewal of any FCC Authorization or the
imposition of any administrative sanctions with respect to the
Stations or any of their operations. Applications for renewal of the
FCC Authorizations associated with Stations KJEO, KVAL, KPIC, KCBY,
KBCI, KIMA, and KEPR are pending as of the date of this Agreement
before the FCC. Except as disclosed on Schedule 4.15(b), Sellers know
of no reason why said FCC Authorizations will not be renewed for the
full term without imposition of any materially adverse condition to
such renewal. Except for such renewals and as disclosed on Schedule
2.1(c)(i), there are no proceedings, complaints, notices of
forfeiture, claims, or investigations by the FCC pending, or to the
knowledge of Sellers, threatened against or in respect to any of the
Stations that would materially impair the qualifications of Sellers to
perform their obligations under this Agreement or delay the processing
or grant of the FCC Consent.
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(c) Station Transmissions. Except as set forth on Schedule 4.15(c), as of
the date hereof, (i) to the knowledge of the Sellers, the eleven
Stations listed in Recital A are not short-spaced, on a grandfathered
basis or otherwise, to any existing broadcast television station,
outstanding construction permit or pending application therefor,
domestic or international, (ii) neither the Sellers nor any such
Station has, within one (1) year of the date of execution of this
Agreement, received any notice to the effect that any such Station is
causing objectionable interference with the transmissions of any other
television station or communications facility or received any written
complaints with respect thereto, and (iii) to the knowledge of the
Sellers, no other television station or communications facility is
causing objectionable interference with the transmission or the
public's reception of the transmissions of any such Station.
(d) Cable Carriage. Schedule 4.15(d) sets forth (or has appended to it,
in the case of the items described in clauses (iv) and (vi) below), as
of the date hereof, for each of the eleven Stations listed in Recital
A, the following:
(i) a true and complete list of all U.S. cable systems which carry
each such Station's signal;
(ii) a true and complete list of all cable systems located in the
Arbitron ADI television markets recognized by the FCC in which
such Stations are located as to which such Stations have
provided a must-carry or retransmission consent election notice
in accordance with the provisions of the Cable Television
consumer Protection and Competition Act of 1992 and the rules
and regulations promulgated by the FCC relating thereto, as
well as a list of any such cable systems to which such Stations
have not provided any such must-carry or retransmission consent
notice;
(iii) a true and complete list of all retransmission consent and/or
copyright indemnification agreements, if any, entered into by
Sellers with respect to such Stations;
(iv) a true and complete list of each notice, if any, received by
Sellers from any cable system within the last two years
alleging that any such Station does not deliver an adequate
signal level, as defined in Section 76.55(c)(3) of the rules
and regulations of the FCC, to such cable system's principal
head-end (other than any such notice as to which such failure
has been remedied or been determined not to exist), and all
further correspondence between Sellers and such Stations and
any such cable system relating to such notice;
(v) a true and complete list of all pending petitions for special
relief to include any additional community or area of any such
Station's television market, as defined in Section 76.55(e) of
the rules and regulations of the FCC, if any, filed by any of
the Sellers with respect to any such Station; and
(vi) a true and complete list of each pending petition of which any
Seller is aware for special relief requesting the deletion of
any community or area from any such Station's television
market, if any, which is pending before the FCC.
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4.16 Environmental Matters. Except as set forth in Schedule 4.16:
(a) Each Seller is, and at all times has been, in compliance in all
material respects with all Environmental Laws related to the Real
Property, and all current and past activities on the Real Property
comply and have complied in all material respects with all
Environmental Laws;
(b) Each Seller has obtained all permits, authorizations, licenses and
approvals under Environmental Laws which are required in connection
with the operations of its Stations, all of which are in full force
and effect. Each Seller is in compliance in all material respects with
all terms and conditions of such permits, authorizations, licenses and
approvals, no action or proceeding which could result in the
revocation or suspension of any such permits, authorizations, licenses
and approvals is pending or, to the knowledge of the Sellers,
threatened, and such Seller has not, and to the knowledge of the
Sellers, no other Person has, engaged in any conduct or activity which
could likely cause revocation or suspension of any of such permits,
authorizations, licenses or approvals;
(c) No Seller has engaged in or permitted any activity upon any Real
Property in any way involving Hazardous Materials in violation of
Environmental Laws on, under, in or abutting any Real Property or
transported any Hazardous Materials to, from or across any Real
Property in violation of any Environmental Laws. No Hazardous
Materials are currently being produced, constructed, deposited, stored
or otherwise located on, under, in or about any Real Property in
violation of any Environmental Laws;
(d) There are no conditions or circumstances relating to the operation of
the Stations or like condition of Real Property which likely would
give rise to claims, expenses, losses, liabilities, or governmental
action against the Purchaser in connection with any Hazardous
Materials present at or disposed of from the Real Property. Without
limiting the generality of the foregoing:
(i) no Hazardous Materials have migrated or have threatened to
migrate from any Real Property to other properties, and no
Hazardous Materials have migrated or threatened to migrate from
other properties to any Real Property;
(ii) there are no PCB's or any equipment that contains PCB's or
asbestos-containing materials present on or in any Real
Property which violate Environmental Laws; and
(iii) there are no underground storage tanks, or underground piping
associated with such underground tanks, used currently or in
the past, for the management of Hazardous Materials which
violate Environmental Laws.
(e) No portion of any Real Property has been designated, listed, or
identified in any manner by the EPA, or any other federal, state,
local or other Governmental Authority, or under and pursuant to any
Environmental Laws as a Hazardous Materials, hazardous waste or
hazardous substance disposal or removal site, Superfund or clean-up
site, or candidate for clean-up, investigation, removal or closure
pursuant to any Environmental Laws;
23
(f) Other than with respect to items listed on Schedule 4.16, no Seller
has received at any time prior to the date hereof a summons, citation,
notice, directive, letter or other communication, written or oral,
from the EPA or any other federal, state, local or other Governmental
Authority, authorized pursuant to any Environmental Laws, concerning
any intentional or unintentional action or omission by any Seller, or,
to the knowledge of Seller, any previous owner or user of the Real
Property, related to the Real Property or to the operation of the
Stations constituting a violation or potential violation of any
Environmental Laws, including, without limitation, violations relating
to the migration, releasing or spilling of Hazardous Materials into
the environment resulting in damage thereto or to any natural
resources; and
(g) No Seller has received at any time prior to the date hereof any
summons, citation, notice, directive, letter or other communication,
written or oral, of any potential claim or liability under any
Environmental Laws, including, without limitation, any notification as
a potentially responsible party with respect to any Superfund or other
clean-up site. To the knowledge of the Sellers, there are no events,
conditions, circumstances, activities, practices, incidents, actions
or plans at or concerning the Real Property or the operations of the
Sellers which may (i) interfere with or prevent continued compliance
by the Sellers with any Environmental Laws, (ii) give rise to any
claim or liability under any Environmental Laws or (iii) form the
basis for any claim, action, suit, proceeding, hearing or
investigation under any Environmental Laws.
4.17 FCC Reports and Records. All applications, reports and statements
relating to the Stations required to be filed by any Seller with the FCC
have been timely filed and are true and complete in all material respects.
All such applications, reports and statements shall continue to be filed
on a current basis until the Closing, and will be true and complete in all
material respects. All documents required by the rules and regulations of
the FCC to be placed in the Stations' public files have been placed in
such files on a timely basis and, to the extent required, are being held
in such files. All logs and business records of every type and nature
relating to the Stations and required to be maintained by the rules and
regulations of the FCC have been maintained in all material respects in
accordance with such rules and regulations and are located at the
Stations.
4.18 Compliance With Laws. Except as disclosed on Schedule 4.18, each Seller
is currently in compliance in all material respects with all Laws
pertaining to the Acquisition Assets and the operation of the Stations and
has not received any notice asserting any violation or noncompliance in
connection with the business or operations of the Stations or the use of
any of the Acquisition Assets with any Law.
4.19 Regulatory Licenses. In addition to the FCC Authorizations which are
covered by Section 4.15, each Broadcast Seller holds all material valid
permits, licenses, authorizations and approvals from all Governmental
Authorities necessary to operate the Stations and to own, use and maintain
the Acquisition Assets owned, used or maintained by such Broadcast Seller.
Schedule 4.19 sets forth a true and complete list of all material
Regulatory Licenses held by Broadcast Sellers, the Authorities that issued
such license and its expiration date.
4.20 Taxes. Except as disclosed on Schedule 4.20:
(a) Each Seller has filed all Tax Returns required to be filed by it by
Law. With respect to all Taxes imposed upon any Seller, or for which
any Seller is or could be liable, and with
24
respect to all taxable periods or portions of periods ending on or
before the Closing Date, all applicable Tax Laws and agreements have
been fully complied with, and all such amounts required to be paid by
any Seller to taxing authorities or others have been paid as due;
(b) Each Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other
third party;
(c) There are no liens for Taxes (other than for current Taxes not yet due
and payable and other Permitted Liens) upon any assets of any Seller;
and
(d) No Seller is a "foreign person" for purposes of Section 1445 of the
code or any other laws requiring withholding of amounts paid to
foreign persons.
4.21 Insurance. The Sellers have delivered to the Purchaser true and complete
copies of all policies of property, fire, casualty, workers compensation,
and liability insurance, together with all riders and amendments thereto.
Such policies are in full force and effect, and all premiums due thereon
have been paid. The Sellers have complied in all material respects with
the terms and provisions of such policies. The insurance coverage provided
by such policies is sufficient and adequate.
4.22 No Brokers. Except for ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, whose fees, commissions and expenses are the sole
responsibility of REI, all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Sellers directly
with Purchaser without intervention of any other Person on behalf of the
Sellers in such manner as to give rise to any valid claim by any Person
against Purchaser, Sellers, the Stations, or any of the Acquisition Assets
for a finder's fee, brokerage commission, investment banking fee or
similar payment.
4.23 Towers. Except as provided on Schedule 4.23, the Federal Aviation
Administration ("FAA") and each other applicable state, local, or other
agency or authority having jurisdiction over such matters has issued a
determination of no hazard to air navigation with respect to each
communications tower owned or leased by Sellers and used in the operation
of the Stations for which such determination is required. Except as
provided on Schedule 4.23, each communications tower owned or leased by
Sellers and used in the operation of the Stations is properly lighted and
painted, is of the height authorized by the FCC and set forth in the
relevant FAA determination, is located at the unique geographic
coordinates specified in the relevant FCC Authorization and the relevant
FAA determination, and such FCC and FAA heights and geographic coordinates
are accurate and consistent with each other.
4.24 Accounts Receivable. All of Sellers' Accounts Receivable were incurred in
the ordinary course of business and in accordance with GAAP and represent
valid rights to receive payment for services rendered or products
delivered.
4.25 South West Oregon Television. Schedule 4.25 sets forth the terms and
conditions upon which Eugene LLC manages the operations of Station KPIC,
including without limitation (i) the agreements with South West Oregon
Television and California Oregon Broadcasting, Inc. detailing Eugene LLC's
specific management obligations and its rights as a shareholder; (ii) the
agreement with California Oregon Broadcasting, Inc. detailing the
distribution of dividends and
25
other payments to Eugene LLC and California Oregon Broadcasting, Inc.; and
(iii) the allocation of income and expenses among the three Stations
operated by Eugene LLC. Except as described on Schedule 4.25, there is no
shareholder agreement, buy/sell agreement, management agreement, option,
or any other right or agreement of any kind binding upon Eugene LLC's
interests in South West Oregon Television.
4.26 Disclosure. This Agreement and each related agreement and certificate and
other document delivered by or on behalf of the Sellers to the Purchaser
or any of its agents or representatives in connection with transactions
contemplated by this Agreement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein or therein, when taken together in light of
the circumstances in which they were made, not misleading.
4.27 Bankruptcy. No insolvency proceedings of any character, including without
limitation bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, relating to Sellers
or any of the Acquisition Assets, are pending or, to the best of Sellers'
knowledge, threatened, and no Seller has made any assignment for the
benefit of creditors or taken any action in contemplation of or which
would constitute the basis for the institution of such insolvency
proceedings.
4.28 Year 2000 Compliance. Except as disclosed on Schedule 4.28, Seller has no
knowledge of any reason any Seller will fail to timely achieve Year 2000
Compliance before the end of 1999. Except as disclosed on Schedule 4.28,
the costs of achieving Year 2000 Compliance will not have a material
adverse effect on the operations or financial condition of any Station.
For purposes of this Agreement, "Year 2000 Compliance" means that Sellers'
Information Technology will accurately receive, provide and process
date/time data from, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and leap year calculations
and will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data. For purposes of this
Agreement, "Information Technology" means computer software, computer
firmware, computer hardware (whether general or specific purpose) or other
similar or related automated or computerized items (including such items
embedded in broadcast equipment) that are owned, leased, used or relied on
by Sellers in the operation of the Stations.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser represents and warrants to the Seller that:
5.1 Corporate Existence. Purchaser is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of
Washington. Purchaser has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
5.2 Authority. The execution and delivery by Purchaser of this Agreement, and
the performance by Purchaser of its obligations hereunder, have been duly
and validly authorized by the Board of Directors of Purchaser, no other
corporate action on the part of Purchaser or its stockholders
26
being necessary. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with
its terms, except to the extent such enforceability (a) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, and (b) is subject to general
principles of equity.
5.3 No Conflicts. The execution and delivery by Purchaser of this Agreement do
not and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the articles of incorporation or by-laws
of Purchaser;
(b) subject to obtaining the FCC Consents and the HSR Act, conflict with
or result in a violation or breach of any term or provision of any Law
applicable to Purchaser or any of its assets and properties (other
than such conflicts, violations or breaches which could not in the
aggregate reasonably be expected to adversely affect the validity or
enforceability of this Agreement); or
(c) except as could not, individually or in the aggregate, reasonably be
expected to adversely affect the ability of Purchaser to consummate
the transactions contemplated hereby or to perform its obligations
hereunder, (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a
default under, (iii) require Purchaser to obtain any consent, approval
or action of, make any filing with or give any notice to any Person as
a result or under the terms of, or (iv) result in the creation or
imposition of any Lien upon Purchaser or any of its assets or
properties under, any material contract or license to which Purchaser
is a party or by which any of its assets and properties is bound.
5.4 Governmental Approvals and Filings. Except as to the FCC Consents and the
HSR Act, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of Purchaser is required
in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby,
except where the failure to obtain any such consent, approval or action, to
make any such filing or to give any such notice could not reasonably be
expected to adversely affect the ability of Purchaser to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.
5.5 Legal Proceedings. There are no orders outstanding and no actions or
proceedings pending or, to the knowledge of Purchaser, threatened against,
relating to or affecting Purchaser or any of its assets which could
reasonably be expected to result in the issuance of an order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of
any of the transactions contemplated by this Agreement.
5.6 Brokers. Except for Credit Suisse First Boston, whose fees, commissions
and expenses are the sole responsibility of Purchaser, all negotiations
relative to this Agreement and the transactions contemplated hereby have
been carried out by Purchaser directly with Sellers without the
intervention of any Person on behalf of Purchaser in such manner as to give
rise to any valid claim by any Person against Sellers for a finder's fee,
brokerage commission or similar payment.
27
5.7 Financing. Purchaser has sufficient cash and/or available credit
facilities to pay the Purchase Price and to make all other necessary
payments of fees and expenses in connection with the transactions
contemplated by this Agreement, as evidenced by Bank of America's
commitment letter and term sheet dated October 27, 1998, a copy of which
has been delivered to Sellers.
5.8 Disclosure. None of Purchaser's representations and warranties made in
this Agreement or in any other document delivered to Sellers by Purchaser
in connection with the transactions contemplated by this Agreement contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements, when taken together in light of the
circumstances, not misleading.
5.9 FCC Qualification. To Purchaser's knowledge, there is no fact, allegation,
condition or circumstance concerning Purchaser that could reasonably be
expected to prevent the prompt granting of the FCC Consents. Other than the
need to request a single waiver of the FCC's TV "duopoly" rule with respect
to overlapping coverage contours between Purchaser's existing television
station in Portland, Oregon and Station KVAL, Purchaser knows of no fact
that would disqualify Purchaser under the FCC Regulations. There are no
proceedings, complaints, notices of forfeiture, claims, or investigations
by the FCC pending, or to the knowledge of Purchaser, threatened against or
in respect to any of the broadcasting stations licensed to FBI or otherwise
involving Purchaser that would materially impair the qualifications of
Purchaser to acquire the Stations or delay processing of the FCC Consents.
Purchaser will not, prior to Closing, acquire or seek to acquire any media
interests that would pose any material conflict under the FCC Regulations
with its ownership of the Stations.
ARTICLE VI
COVENANTS OF SELLERS
Sellers covenant and agree with Purchaser that Sellers will comply with all
covenants and provisions of this Article, except to the extent Purchaser may
otherwise consent in writing.
6.1 Regulatory and Other Approvals. The Sellers, as appropriate, as promptly
as reasonably practicable will (a) take all commercially reasonable steps
necessary or desirable (including payment of any fees, costs or penalties)
to obtain all consents, approvals or actions of, make all filings with and
give all notices to Governmental or Regulatory Authorities or any other
Person required of any of the Sellers to consummate the transactions
contemplated hereby, (b) provide such other information and communications
to such Governmental or Regulatory Authorities or other Persons as such
Governmental or Regulatory Authorities or other Persons may reasonably
request in connection therewith and (c) provide reasonable cooperation to
Purchaser in connection with the performance of its obligations under
Article VII below. Sellers will provide, or cause to be provided,
notification to Purchaser when any such consent, approval, action, filing
or notice referred to in clause (a) above is obtained, taken, made or
given, as applicable, and will advise Purchaser of any communications (and,
unless precluded by Law, provide copies of any such communications that are
in writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement.
6.2 HSR Filings. REI and any of its Affiliates, as necessary, will (a) take
promptly all actions necessary to make the filings required of them under
the HSR Act, (b) comply at the earliest
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practicable date with any request for additional information received from
the FTC or the Antitrust Division of the Department of Justice pursuant to
the HSR Act, and (c) cooperate with Purchaser in connection with
Purchaser's filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by
this Agreement commenced by either the FTC or the Antitrust Division of the
Department of Justice or state attorneys general.
6.3 FCC Consent. Not later than ten (10) Business Days following execution of
this Agreement, Sellers shall join with, and shall cause South West Oregon
Television to join with, Purchaser in the preparation and tendering to the
FCC of one or more application(s) (collectively, the "FCC Applications")
for consent to the assignment of license or transfer of control, as
appropriate, of each of the Stations to Purchaser (collectively, the "FCC
Consents"). Sellers shall conscientiously and in good faith prosecute said
application toward a grant by the FCC, and shall submit such pleadings and
other documents as may reasonably be required in order to obtain prompt
favorable action on said applications without materially adverse impact to
Sellers. Seller shall bear the legal and other costs relating to its
actions seeking FCC consent to the transactions contemplated by this
Agreement. All filing fees imposed by the FCC with respect to the
submission of such applications shall be shared equally by Sellers and
Purchaser.
6.4 Access. Sellers will, upon reasonable prior notice and during normal
business hours, (a) provide Purchaser with full access to the Stations and
the Real Property for the purpose of inspection, including conducting
environmental reviews if Purchaser desires; provided that any Phase II
environmental audit will require the consent of Sellers, which shall not be
unreasonably delayed or withheld; (b) allow Purchaser access to Sellers'
Employees and Sellers' officers, agents and accountants; (c) grant
Purchaser access to Sellers' Records pertaining to the Stations and
Acquisition Assets; and (d) furnish to Purchaser such additional
information and data concerning the Stations and Acquisition Assets as
Purchaser reasonably may request.
6.5 Conduct of Operation of the Stations. From the date of this Agreement
through the Closing, the Sellers shall conduct the operation of the
Stations in the ordinary course of business consistent with all laws and
regulations and with their respective past practices. No Broadcast Seller
may (except with the prior consent of the Purchaser, which shall not be
unreasonably withheld or delayed and except as otherwise required by this
Agreement):
(a) enter into any transaction outside the ordinary course of business
(including, without limitation, merge or consolidate with or into any
other Person), unless otherwise permitted by this Section 6.5;
(b) sell or transfer any of the Acquisition Assets, except in the ordinary
course of business where the same is replaced where appropriate with
an item of equal or greater value;
(c) mortgage, pledge or encumber any of the Acquisition Assets, or permit
to exist any Liens on such assets, except for Permitted Liens or
currently existing Liens that will be released at or prior to the
Closing;
(d) enter into any agreement, contract, lease, commitment or understanding
requiring the payment or delivery of services valued at more than
$25,000 annually, which will not be satisfied on or before Closing,
unless otherwise permitted by this Section 6.5;
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(e) unless otherwise permitted by this Section 6.5, enter into any trade
or barter agreements or similar contracts, commitments or
understandings to provide broadcast time, except those which are in
the ordinary course of business, and which can be and are performed
completely prior to the Closing;
(f) terminate, renew, extend or amend or modify in any material respect
any Material Assumed Contract affecting the operation of the Stations;
(g) take any action which could reasonable jeopardize the validity or
enforceability of or rights under the FCC Authorizations, the
Affiliation Agreements or any other Material Assumed Contract;
(h) make any increase in, or any commitment to increase, the compensation
payable to any of the employees or agents of the Broadcast Sellers,
other than payments required by Law or by existing contract or
commitment as of the date hereof or under the Bonus Letters and
routine increases made in the ordinary course of business which may
not exceed four percent (4%) per annum for any of them individually;
(i) hire any new employees, except for such employees as are replacements
of terminated employees or as required in the reasonable judgment of
Sellers;
(j) materially alter the manner of keeping the books, accounts or records
of the Stations or the accounting practices therein reflected; nor
(k) make any capital expenditures or commitments for additions to
property, plant or equipment other than as set forth in the budget or
in Schedule 6.9 or as should reasonably be made in the ordinary course
of business.
6.6 Financial Statements and Reports.
(a) As promptly as practicable and in any event no later than forty five
(45) days after the end of each fiscal quarter ending after the date
hereof and before the Closing Date (other than the fourth quarter) or
one hundred twenty (120) days after the end of each fiscal year ending
on or after September 30, 1998, and before the Closing Date, as the
case may be, REI will deliver to Purchaser true and complete copies of
(in the case of any such fiscal year) the audited and (in the case of
any such fiscal quarter) the unaudited consolidated balance sheet, and
the related audited or unaudited consolidated statements of
operations, stockholders' equity and cash flows for the broadcasting
operations of REI, Broadcasting LLC and Broadcast Sellers and, in each
case as of and for the fiscal year then ended or as of and for each
such fiscal quarter and the portion of the fiscal year then ended, as
the case may be, together with the notes, if any, relating thereto,
which financial statements shall be prepared on a basis consistent
with the Audited Financial Statements.
(b) As promptly as practicable, REI will deliver to Purchaser true and
complete copies of such other regularly-prepared financial statements,
reports and analyses as may be prepared by REI or any other Seller
relating to the Stations, including monthly financial reports, general
managers' operating reports, and sales reports.
30
6.7 Fulfillment of Conditions. Each of the Sellers (a) will execute and
deliver at the Closing each certificate, document and instrument that they
are required to execute and deliver as a condition to Closing, (b) will
take all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith (i) to satisfy each condition to the
obligations of Purchaser contained in this Agreement and (ii) to consummate
all of the transactions contemplated by this Agreement, and (c) will not
take or fail to take any action (excluding its reasonable decision not to
waive a condition precedent to its obligation to close) that could
reasonably be expected to result in the nonfulfillment of any obligation of
any of the Sellers or Purchaser contained in this Agreement.
6.8 Consents and Notices. The Sellers, as appropriate, as promptly as
reasonably practicable (a) shall take all commercially reasonable steps
necessary or desirable (which may include payment of fees, costs and
penalties) to obtain all consents, approvals or actions of, and give all
notices to all parties to Assumed Liabilities, necessary to consummate the
transactions contemplated by this Agreement, including specifically
obtaining the consent to assignment of all the Affiliation Agreements, (b)
shall take all commercially reasonable steps necessary or appropriate to
extend, with Purchaser's approval, any Program Rights Agreement which is
identified on Schedule 2.1(d)(ii) as material and which, prior to Closing,
comes up for renewal or otherwise expires, and (c) provide such other
information and communications to such parties as they may reasonably
request, subject to the confidentiality requirements of this Agreement.
6.9 Preservation of Assets. From the date of this Agreement to the Closing,
the Sellers shall use their reasonable efforts to (a) preserve the
operation of the Stations and the organization of the Broadcast Sellers;
(b) maintain and preserve the goodwill, business relationships, licenses
and franchises of the Broadcast Sellers; (c) keep all of the Acquisition
Assets in good working order and repair (reasonable wear and tear
excepted); (d) pay all of their obligations as and when they become due and
payable in the ordinary course of business; (e) maintain in full force and
effect all of the existing casualty, liability and other insurance through
the Closing in amounts not less than those in effect on the date hereof;
(f) keep available the services of the present employees of the Broadcast
Sellers provided nothing herein shall preclude termination of any employee
for cause; (g) continue to make capital expenditures in accordance with
Schedule 6.9, subject to the covenants of the First Union Bank Loan; (h)
pay the premiums for, and maintain in full force, all of Sellers' insurance
policies in substantially the same coverage amounts as are in force on the
date of this Agreement.
6.10 Accounts Receivable.
(a) Promptly after the Closing (but no later than twenty (20) days
thereafter), REI shall prepare and deliver to the Purchaser a list of
all Accounts Receivable of each of the Broadcast Sellers outstanding
as of the close of business on the date immediately preceding the
Closing Date.
(b) The Broadcast Sellers authorize Purchaser to open any and all mail
addressed to any Broadcast Seller (if delivered to the Purchaser) if
received on or after the Closing Date and grants to the Purchaser a
power of attorney to endorse and cash any checks or instruments made
payable or endorsed to the Broadcast Sellers or their order and
received by the Purchaser in payment of the Accounts Receivable.
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(c) Any sums received by any Seller in respect of Accounts Receivable
after the Closing Date shall be promptly delivered to Purchaser.
6.11 Termination of Employees. The Sellers shall terminate, as of the
Effective Time, each Seller's Employee who Purchaser indicates in
accordance with Section 7.6 it will hire. Sellers shall be responsible for
the payment of all compensation, severance, benefits, COBRA continuation
coverage and other payments owed to Sellers' Employees in connection with
termination other than Assumed Liabilities. Sellers shall be responsible
for complying with all applicable federal, state and local laws regarding
the termination of its employees including, without limitation,
compliance, if applicable, with the Worker Adjustment and Retraining
Notification Act of 1988, as amended.
6.12 Changes to Schedules. Each Seller shall deliver to Purchaser no later
than three (3) Business Days prior to Closing any changes in the Schedules
prepared by Sellers necessary to render Sellers' representations and
warranties true and complete as of Closing as if all uses of the phrase
"as of the date hereof" in Article IV were deemed to refer to the Closing
Date for purposes of such Schedules. Notwithstanding the foregoing, such
delivery of the Schedule changes shall be for informational purposes only
and shall in no way modify Seller's representations and warranties or
impair or diminish (a) Purchaser's indemnity rights under Section 9.1 as a
result of any breach of a representation or warranty based on the content
of the Schedules prior to such delivery, and (b) Purchaser's obligation to
purchase the Acquisition Assets.
6.13 Title Insurance. Purchaser may, at its option, obtain (i) a commitment
issued by a recognized title insurance company for any of the Real
Property, committing to issue to Purchaser on the Closing Date a fee or
leasehold owner's standard or ALTA extended policy of title insurance with
respect to any of the Real Property Purchaser desires to insure, and (ii)
a current ALTA survey of any of the Real Property Purchaser desires to
insure sufficient for the issuance of the ALTA extended policy of title
insurance. The cost of title insurance and the surveys shall be paid by
Purchaser. Purchaser shall have thirty (30) days after receipt of the
title commitments and surveys to examine the same and to object to any
exceptions for which it cannot obtain satisfactory endorsements from the
title company to cover such exceptions. Purchaser shall make the
objections in writing to Sellers and Sellers shall diligently undertake to
use their best efforts, including without limitation providing affidavits
as may be required by the title company to remove the subject exceptions
from title. Notwithstanding the foregoing, Seller's failure to remove the
subject exceptions shall in no way impair or diminish (a) Purchaser's
indemnity rights under Section 9.1 as a result of any breach of a
representation or warranty, including but not limited to Sellers'
representations contained in Section 4.6, and (b) Purchaser's obligation
to purchase the Acquisition Assets.
6.14 Officers' Certificates. Sellers shall deliver to Purchaser upon the
Closing certificates, dated the Closing Date and executed in the name and
on behalf of each Seller by an executive officer, substantially in the
form and to the effect of Exhibit 6.14(a) attached hereto, and a
certificate, dated the Closing Date and executed by the Secretary or any
assistant Secretary of REI, substantially in the form and to the effect of
Exhibit 6.14(b) attached hereto.
6.15 Opinions of the Sellers' Counsel. Sellers shall cause the following legal
opinions to be delivered to Purchaser at the Closing (i) an opinion of
Milbank Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel to certain shareholders of
REI, or ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, special counsel to
32
Sellers, or other counsel reasonably satisfactory to Purchaser, dated as of
the Closing, addressed to the Purchaser, with respect to the opinions set
forth in Exhibit 6.15(a) and otherwise in form and substance reasonably
satisfactory to the Purchaser, and (ii) an opinion of Wiley, Rein &
Fielding, FCC counsel to the Sellers, dated as of the Closing, with respect
to the opinions set forth in Exhibit 6.15(b) and otherwise in form and
substance reasonably satisfactory to the Purchaser.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that Purchaser will comply
with all covenants and provisions of this Article, except to the extent REI may
otherwise consent in writing.
7.1 Regulatory and Other Approvals. Purchaser will as promptly as practicable
(a) take all commercially reasonable steps necessary or desirable to obtain
all consents, approvals or actions of, make all filings with and give all
notices to Governmental or Regulatory Authorities or any other person
required of Purchaser to consummate the transactions contemplated hereby,
(b) provide such other information and communications to such Governmental
or Regulatory Authorities or other persons as such Governmental or
Regulatory Authorities or other persons may request in connection therewith
and (c) provide cooperation to the Sellers in connection with the
performance of their obligations under Sections 6.1, 6.2 and 6.3 above.
Purchaser will provide prompt written notification to Sellers when any such
consent, approval, action, filing or notice referred to in clause (a) above
is obtained, taken, made or given, as applicable, and will advise Sellers
of any communications (and, unless precluded by Law, provide copies of any
such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement.
7.2 HSR Filings. In addition to and without limiting Purchaser's covenants
contained in Section 7.1 above, Purchaser will (a) take promptly all
actions necessary to make the filings required of Purchaser or its
Affiliates under the HSR Act, (b) comply at the earliest practicable date
with any request for additional information received by Purchaser or its
Affiliates from the Federal Trade Commission or the Antitrust Division of
the Department of Justice pursuant to the HSR Act and (c) cooperate with
the Sellers in connection with the Sellers' filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or
state attorneys general.
7.3 FCC Consent. Not later than ten (10) Business Days following execution of
this Agreement, Purchaser shall join with Sellers and with South West
Oregon Television in the preparation and tendering to the FCC of the FCC
Applications. It is understood and agreed by all parties hereto that waiver
of the FCC's multiple ownership rules may be required in order for the FCC
to consent to the transactions contemplated hereby. Purchaser shall
conscientiously and in good faith seek such waiver and prosecute said
application toward a grant by the FCC, and shall submit such pleadings and
other documents as may reasonably be required in order to obtain prompt
favorable action on said applications without materially adverse impact to
Purchaser, provided, that in no event shall Purchaser be required to divest
any media interest or other business unit in order to qualify to acquire
the Station's or otherwise to comply with its
33
obligations hereunder. Purchaser shall bear the legal and other costs
relating to its actions seeking FCC consent to the transactions
contemplated by this Agreement. All filing fees imposed by the FCC with
respect to the submission of such applications shall be shared equally by
Purchaser and Sellers. Between the date hereof and the Closing Date, the
Purchaser and its employees shall not control or direct, or attempt to
control or direct, the operations of the Stations, such control and
direction being the sole responsibility of the Sellers.
7.4 Retlaw Name. From and after the Closing, neither Purchaser nor any of its
Affiliates will use any trade name, trademark, service ▇▇▇▇, Internet
domain name or other electronic designation which includes the word
"Retlaw" or is confusingly similar thereto. In addition, Purchaser will, as
soon as practicable after the Closing and in no event later than thirty
(30) days after the Closing, not use the word "Retlaw" in advertising or
promotional material of any kind.
7.5 Fulfillment of Conditions. Purchaser (a) will execute and deliver at the
Closing each certificate, document and instruments that Purchaser is
required to execute and deliver as a condition to the Closing, (b) will
take all commercially reasonable steps necessary or desirable and proceed
in good faith (i) to satisfy each other condition to the obligations of
Sellers contained in this Agreement and (ii) to consummate all of the
transactions contemplated in this Agreement, and (c) will not take or fail
to take any action that could reasonably be expected to result in the
nonfulfillment of any obligation of the Company, any Seller or Purchaser
contained in this Agreement.
7.6 Employees. Upon the Closing Date, Purchaser shall hire not less than 67%
of Sellers' Employees at each Station, including those identified by
Purchaser on Schedule 4.11 as new hires. Each of Sellers' Employees hired
by Purchaser shall receive past-service credit for hours of service with
Sellers for purposes of determining eligibility and vesting under
Purchaser's employee benefit plans available to such employees. Fifteen
(15) Business Days before Closing, Purchaser will indicate in writing on
Schedule 4.11 to REI which of Sellers' Employees Purchaser will hire upon
Closing.
7.7 Compliance with Laws. From and after the Closing, Purchaser shall use
reasonable efforts to comply with all Laws governing employee relations and
unionized labor.
7.8 Assumption of Assumed Liabilities. Purchaser shall assume in accordance
with Section 2.3 and timely perform all Assumed Liabilities.
7.9 Preparation of Financial Statements. Purchaser shall cooperate with
Sellers in the preparation of Sellers' closing financial statements,
including allowing and instructing Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and other
appropriate Sellers' Employees to devote a reasonable amount of time to the
task after the Closing Date to the extent it does not unreasonably
interfere with performance of normal work duties for Purchaser.
7.10 Officers' Certificates. Purchaser shall deliver to Sellers upon Closing, a
certificate, dated the Closing Date and executed in the name and on behalf
of Purchaser by the Chairman of the Board or the President of Purchaser,
substantially in the form and to the effect of Exhibit 7.10(a) as attached
hereto, and a certificate, dated the Closing Date and executed by the
Secretary of Purchaser, substantially in the form and to the effect of
Exhibit 7.10(b) as attached hereto.
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7.11 Opinion of the Purchaser's Counsel. Purchaser shall cause Sellers to be
furnished, at Closing, with an opinion of ▇▇▇▇▇▇ & ▇▇▇▇, P.C., counsel to
the Purchaser, dated as of the Closing Date, addressed to Sellers, with
respect to the opinions set forth in Exhibit 7.11 and otherwise in form and
substance reasonably satisfactory to Sellers.
ARTICLE VIII
RISK OF LOSS
8.1 Risk of Loss; Insurance. The risk of loss or damage by fire or other
casualty or cause to the Acquisition Assets from the date hereof through
the time of the Closing, shall be upon the Sellers, and the Sellers shall
maintain its full existing insurance coverage during such period. In the
event of any material loss, damage or other casualty to the Real Property
or Personal Property included in the Acquisition Assets prior to the
Closing, Sellers shall immediately notify Purchaser of such event and the
extent to which such loss, damage or casualty may be covered by any
insurance policies of the Sellers. Not less than ten (10) days after
receipt of such notice, Purchaser shall either (a) proceed with the
Closing, in which case the Sellers shall assign to the Purchaser at the
Closing all insurance proceeds to which the Sellers would be entitled as a
result of such loss or damage, or (b) postpone the Closing up to 60 days,
in which event Sellers agree to join in all necessary applications for
extension of the effective period of the FCC's Consents, and Sellers shall
expeditiously and diligently effect such repair, replacement or restoration
at Sellers' sole expense without regard for the amount of insurance
coverage. Notwithstanding the foregoing, neither Sellers' failure to timely
effect such repair, replacement or restoration nor any deficiency in the
amount of such insurance proceeds shall in any way impair or diminish (a)
Purchaser's indemnity rights under Section 9.1 as a result of any breach of
a representation or warranty or a covenant or other obligation, including
but not limited to Seller's representations contained in Section 4.21 or
Sellers' covenants contained in Section 6.5, Section 6.9 or this Section
8.1, and (b) Purchaser's obligation to purchase the Acquisition Assets.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Sellers. Subject to the conditions and provisions of
this Article IX, Sellers shall indemnify, defend and hold harmless
Purchaser from and against any and all demands, claims, complaints, actions
or causes of action, suits, proceedings, investigations, arbitrations,
assessments, Liens, losses, damages, liabilities, costs and expenses,
including, but not limited to, interest, penalties and reasonable
attorneys' fees and disbursements, asserted against, imposed upon or
incurred by Purchaser, directly or indirectly, by reason of or resulting
from any (i) breach by any Sellers of any representation or warranty of any
Sellers in this Agreement or in any closing certificate delivered by any of
Sellers in connection herewith, (ii) any breach by any Sellers of any
covenant or other obligation to be performed by any Sellers under the terms
of this Agreement, or (iii) Excluded Liabilities.
9.2 Indemnification by Purchaser. Subject to the conditions and provisions of
this Article IX, Purchaser shall indemnify, defend and hold harmless
Sellers from and against any and all demands, claims, complaints, actions
or causes of action, suits, proceedings, investigations,
35
arbitrations, assessments, Liens, losses, damages, liabilities, costs and
expenses, including, but not limited to, interest, penalties and reasonable
attorneys' fees and disbursements, asserted against, imposed upon or
incurred by them, directly or indirectly, by reason of or resulting from
any (i) breach by Purchaser of any representation or warranty of Purchaser
in this Agreement or in any closing certificate delivered by Purchaser in
connection herewith; (ii) breach by Purchaser of any covenant or other
obligation to be performed by Purchaser under the terms of this Agreement,
(iii) Assumed Liabilities; or (iv) of Purchaser's activities or operations
of the Stations after the Closing Date.
9.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification under this Article IX, the party entitled to
indemnification (the "indemnified party") shall promptly notify the other
party (the "indemnifying party") of the claim and, when known, the facts
constituting the basis for such claim. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the indemnifying party
shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The indemnified party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the
indemnifying party (which shall not be unreasonably withheld), unless suit
shall have been instituted against it and the indemnifying party shall not
have taken control of such suit within a reasonable time after notification
thereof as provided in Section 9.4 of this Agreement.
9.4 Defense by Indemnifying Party. In connection with any claim giving rise to
indemnity hereunder resulting from or arising out of any claim or legal
proceedings by a third party, the indemnifying party at its sole cost and
expense may, upon written notice to the indemnified party, assume the
defense of any such claim or legal proceeding if it acknowledges to the
indemnified party in writing its obligations to indemnify the indemnified
party with respect to all elements of such claim. The indemnified party
shall be entitled to participate in (but not control) the defense,
compromise or settlement of any such action, with its counsel and at its
own expense. Such participation shall include, without limitation, the
right to consult with the indemnifying party and its counsel or other
representatives concerning such claim and the indemnifying party and the
indemnified party and their respective counsel or other representatives
shall cooperate with respect to such claim. The indemnifying party shall
not, without the indemnified party's written consent, settle or compromise
any claim or consent to entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
the indemnified party of a release from all liability in respect of such
claim. If the indemnifying party shall elect not to undertake such defense,
or within a reasonable time after notice of such claim, does not assume the
defense of any such claim or litigation resulting therefrom, (a) the
indemnified party, at the expense of the indemnifying party, may defend
against such claim or litigation, in such manner as the indemnified party
may deem appropriate, including, but not limited to settling such claim or
litigation, after giving notice of the same to the indemnifying party, on
such terms as the indemnified party may deem appropriate, and (b) the
indemnifying party shall be entitled to participate in (but not control)
the defense of such action, with its counsel and at its own expense. If the
indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature
of any such settlement, the indemnifying party shall have the burden to
prove by a preponderance of the evidence that the indemnified party did not
defend or settle such third party claim in a reasonably prudent manner.
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9.5 Expiration of Indemnification Obligations. Any claim or action for
indemnification under this Article IX (excluding any claim based on fraud
which shall survive) must be initiated on or before the first anniversary
of the Closing Date. Except for claims made before such expiration date and
those based on fraud, all rights to claim indemnification under this
Article IX shall expire upon the first anniversary of the Closing Date.
9.6 Thresholds. Notwithstanding anything to the contrary in this Article IX,
the indemnified party shall not be entitled to receive, and the
indemnifying party shall not be obligated to pay, any indemnity obligations
pursuant to Sections 9.1 or 9.2, as applicable, until such amounts
aggregate $250,000, whereupon all amounts exceeding such threshold amount
shall be payable.
9.7 Limitation. In no event shall the indemnifying party's aggregate indemnity
obligations under Sections 9.1 or 9.2, as the case may be, exceed $10
million.
9.8 Indemnity Escrow Agreement. In order to secure Sellers' indemnification
obligations under this Article IX, the Indemnity Deposit will, in
accordance with Section 3.3(b), be deposited to the Indemnity Escrow
Account which shall be held and released in accordance with the Indemnity
Escrow Agreement attached to this Agreement as Exhibit 3.3(b). The initial
amount of the Indemnity Deposit is $10 million. On the first Business Day
six months after the Closing Date, Purchaser and REI shall instruct the
Escrow Agent to release to REI on behalf of Sellers the balance of the
Indemnity Deposit which exceeds the sum of (i) $5 million, and (ii) any
amounts of any pending indemnification claim by Purchaser. On the first
Business Day 12 months after the Closing Date, Purchaser and REI shall
instruct the Escrow Agent to release to REI on behalf of Sellers the
balance of the Indemnity Deposit which exceeds the amount of any pending
indemnification claim by Purchaser, plus an amount reasonably estimated to
cover expenses, not to exceed 10% of the amount of such pending claims.
9.9 Exclusive Remedy. Notwithstanding anything in this Article IX to the
contrary, Purchaser's right to indemnity payments from Sellers under this
Article IX shall be limited to the amount held in the Indemnity Escrow
Account. Sellers shall have no obligation to pay any claims for indemnity
in excess of such amount or from sources other than the Indemnity Escrow
Account and Purchaser's remedies against Sellers under this Agreement are
limited exclusively to those set forth in this Article IX.
9.10 Reduction of Indemnity Payments. Notwithstanding anything in this Article
IX to the contrary, any indemnity payment owed by one party to another
party pursuant to this Article IX shall be reduced by any amounts actually
received by the indemnified party under insurance policies in connection
with the claim for which the indemnification pursuant to this Agreement
relates.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to purchase the Acquisition Assets are subject
to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Purchaser
in its sole discretion):
37
10.1 Representations and Warranties. The representations and warranties made
by Sellers in this Agreement concerning the Affiliation Agreements
(Section 4.5) and the FCC Authorizations (Section 4.15(a), other than the
portion of the last sentence thereof following the semicolon therein)
shall be true and correct in all material respects on and as of the
Closing Date as though made on and as of the Closing Date.
10.2 Performance. Sellers shall have performed and complied with, in all
material respects, the agreements, covenants and obligations required by
this Agreement concerning the Affiliation Agreements (Section 4.5) and the
FCC Authorizations (Section 4.15(a), other than the portion of the last
sentence thereof following the semicolon therein) to be so performed or
complied with by Sellers at or before the Closing.
10.3 Orders and Laws. There shall not be in effect on the Closing Date any
Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
10.4 Regulatory Consents and Approvals. All consents, approvals and actions
of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and Sellers to perform their respective
obligations under this Agreement and to consummate the transactions
contemplated hereby, including, without limitation, the FCC Consents,
shall have been duly obtained, made or given without conditions materially
adverse to Purchaser and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental
or Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement, including under the HSR Act, shall have
occurred.
10.5 FCC License Renewal. The license renewal applications for Stations KJEO,
KVAL, KPIC, KCBY, KBCI, KIDK, KIMA, KEPR and KLEW shall have been granted
for a term of not less than eight (8) years without materially adverse
conditions, and such grants shall have become Final Orders.
10.6 Consents to Assignments of Contracts. The necessary consents to the
assignment and transfer of Affiliation Agreements and Real Property
Agreements which have been designated as Material Assumed Contracts shall
have been obtained by the Sellers in written instruments reasonably
satisfactory to Purchaser, copies of which shall be furnished to
Purchaser.
10.7 Additional Closing Documents of the Sellers. The Purchaser shall have
received at the Closing the following documents, dated the Closing Date:
(a) Copies, certified by the Secretary of each Seller as of the Closing,
of resolutions of the Board of Directors or Members of such Seller
authorizing the execution, delivery and performance of this Agreement
and other related agreements to which such Seller is a party; and
(b) Bills of sale, real property warranty deeds, assignments and other
appropriate instruments of conveyance, in form and substance
reasonably satisfactory to Purchaser, sufficient to convey and assign
the Acquisition Assets in accordance with this Agreement.
38
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of the Sellers hereunder to sell the Acquisition Assets are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by REI in its
sole discretion):
11.1 Representations and Warranties. The representations and warranties made
by Purchaser in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though made on and as of the
Closing Date.
11.2 Performance. Purchaser shall have performed and complied with, in all
material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at or
before the Closing.
11.3 Orders and Laws. There shall not be in effect on the Closing Date any
Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
11.4 Regulatory Consents and Approvals. All consents, approvals and actions
of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Sellers and Purchaser to perform their obligations
under this Agreement and to consummate the transactions contemplated
hereby, including, without limitation, the FCC Consents, shall have been
duly obtained, made or given without conditions materially adverse to
Sellers and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated
by this Agreement, including under the HSR Act, shall have occurred.
11.5 Additional Closing Documents of Purchaser. Sellers shall have received at
the Closing the following documents, dated the Closing Date:
(a) Copy, certified by the Secretary of Purchaser as of the Closing, of
resolutions of the Board of Directors of Purchaser authorizing the
execution, delivery and performance of this Agreement and other
related agreements to which Purchaser is a party; and
(b) An assignment and assumption agreement sufficient to assign to, and
cause the assumption by, Purchaser of the Assumed Liabilities in
accordance with this Agreement in the form attached hereto as Exhibit
11.5(b).
ARTICLE XII
DEFAULT AND TERMINATION
12.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, provided that, in the case of
subsections (b) or (c), the terminating party is not then in material
breach or default of this Agreement:
(a) at any time before the Closing, by mutual written agreement of REI and
Purchaser;
39
(b) at any time before the Closing without liability to the terminating
party, by REI or Purchaser, in the event that any Order or Law
becomes effective restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions
contemplated by this Agreement upon notification of the non-
terminating party by the terminating party;
(c) at any time before the Closing, by REI or Purchaser upon notification
of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations
under this Agreement becomes impossible or impracticable with the use
of commercially reasonable efforts, if the failure of such condition
to be satisfied is not caused by a breach of this Agreement by the
terminating party; or
(d) at any time after December 31, 1999, without liability to the
terminating party, by any Seller or Purchaser upon notification of
the non-terminating party by the terminating party if the Closing
shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the
terminating party.
12.2 Effect of Termination. If this Agreement is validly terminated pursuant
to Section 12.1 above, this Agreement will forthwith become null and void
and, except as set forth in the next sentence, there will be no liability
or obligation on the part of any Seller or Purchaser (or any of their
respective officers, directors, employees, agents or other representatives
or Affiliates), except that the provisions relating to expenses in Section
13.6 and confidentiality in Section 13.8 will continue to apply following
any such termination. Notwithstanding any other provision in this
Agreement to the contrary, upon termination of this Agreement pursuant to
clauses (b), (c) or (d) of Section 12.1 above, Sellers will remain liable
to Purchaser for any material breach of this Agreement by any Seller
existing at the time of such termination, and Purchaser will remain liable
to Sellers for any material breach of this Agreement by Purchaser existing
at the time of such termination, and Sellers or Purchaser, as the case may
be, may seek such remedies, including damages and attorneys' fees against
the other with respect to any such breach as are provided in this
Agreement or as are otherwise available at Law or in equity.
12.3 Specific Performance. Either party may seek specific performance of the
other party's obligations under this Agreement, so long as the party
seeking specific performance is not in material default of its
obligations. The parties acknowledge and agree that the Stations and
Acquisition Assets are unique in nature and that damages resulting from a
breach are not readily ascertainable, and therefore they agree not to
interpose the availability of monetary damages as an appropriate remedy in
defense to a request for specific performance.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Notices. All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
40
If to Purchaser, to:
▇▇▇▇▇▇ Companies Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
with copies to:
▇▇▇▇▇▇ Broadcasting Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and (which shall not constitute notice)
▇▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to Sellers, to:
Retlaw Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with copies to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 31/st /Floor
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇, Esq.
41
and
Hill, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
One California Plaza, 37/th /Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 13.1, be deemed
given upon delivery, (b) if delivered by facsimile transmission to the
facsimile number as provided in this Section 13.1, be deemed given upon
receipt, and (c) if delivered by mail in the manner described above to the
address as provided in this Section 13.1, be deemed given five (5) days
after being so mailed (in each case regardless of whether such notice,
request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered
pursuant to this Section 13.1). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices
to that party by giving notice specifying such change to the other party
hereto, except that Sellers may only change any such information with
respect to copies if confirmed in writing by counsel to receive such
copies.
13.2 Survival of Representations and Warranties and Covenants. All
representations, warranties and covenants made by the parties in this
Agreement shall survive the Closing for a period of one (1) year, except
as to (a) any matter for which any claim has been made in writing prior to
the expiration of such survival period and identified as an
indemnification claim made under this Agreement, and (b) any matter which
is based upon fraud, in which case such matter shall survive until it is
finally resolved; provided, however, that nothing in this Section 13.2
shall negate the fact that Purchaser shall have no liability whatsoever,
under this Agreement or otherwise, for any of the Excluded Liabilities at
any time, whether prior to, during or after the survival period referred
to in this Section 13.2.
13.3 Joint and Several Obligations. The representations, warranties,
covenants, and agreements of Sellers and Purchaser herein are made jointly
and severally by Sellers or FCI and FBI, as applicable.
13.4 Knowledge. The term "to the knowledge of Sellers" or similar term means
the current actual knowledge, after reasonable inquiry, of any of ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the General Manager of each Station or, if no
such position exists, the Station Manager. The term "to the knowledge of
Purchaser" or similar term means the current actual knowledge, after
reasonable inquiry, of any of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇
▇▇▇▇▇. The term "reasonable inquiry" as used in this Section means the
level of investigation into a matter that a reasonably prudent manager in
similar circumstances would make in order to verify the truth of a
representation made by him concerning such matter.
13.5 Entire Agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof
and contains the sole and entire agreement between the parties hereto with
respect to the subject matter hereof.
42
13.6 Expenses.
(a) Generally. Except as otherwise provided in this Agreement, whether
or not the transactions contemplated hereby are consummated,
Purchaser shall pay its own costs and expenses incurred in connection
with the negotiation, execution and closing of this Agreement and the
transactions contemplated hereby including without limitation, any
fees or commissions due to Credit Suisse First Boston Corporation,
and the Sellers shall pay their own costs and expenses incurred in
connection with the negotiation, execution and closing of this
Agreement and the transactions contemplated hereby including without
limitation, any fees or commissions due to ▇▇▇▇▇▇▇▇▇, Lufkin &
▇▇▇▇▇▇▇▇ Securities Corporation.
(b) Transfer Taxes. Purchaser shall pay all personal property sales and
use Taxes arising out of or in connection with the transfer of the
Acquisition Assets and the transactions effected pursuant to this
Agreement. Sellers shall pay all real property transfer or excise,
recording, stock transfer and other like Taxes applicable to the
transfer of real property and stock.
13.7 Public Announcements. Purchaser and Sellers will cooperate and seek the
prior approval of the other party of any press release relating to the
existence of this Agreement or to the transactions contemplated hereby.
13.8 Confidentiality. Each party will hold, and will use its best efforts to
cause its Affiliates and agents to, hold in strict confidence from any
Person, unless (a) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the
necessary approvals of this Agreement or the transactions contemplated
hereby of Governmental or Regulatory Authorities) or by other requirements
of Law or (b) disclosed in an Action or Proceeding brought by a party
hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any
of its Affiliates furnished to it by or on behalf of the other party in
connection with this Agreement or the transactions contemplated hereby,
except to the extent that such documents or information can be shown to
have been (i) previously known by the party receiving such documents or
information, (ii) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of
such receiving party or (iii) later acquired by the receiving party from
another source if the receiving party is not aware that such source is
under an obligation to keep such documents and information confidential;
provided, however, that following the Closing the foregoing restrictions
will not apply to Purchaser's use of documents and information concerning
the Stations or Acquisition Assets. If the transactions contemplated
hereby are not consummated, upon the request of the other party, each
party hereto will, and will cause its Affiliates and agents to, promptly
redeliver all copies of confidential documents and information furnished
by the other party in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon.
13.9 Exclusivity. From and after the date hereof, none of the Sellers or their
Affiliates shall (i) solicit, initiate or encourage the submission of any
proposal or offer from any person related to the direct or indirect sale
or transfer of any of the Acquisition Assets, or (ii) participate in any
discussions or negotiations regarding, furnish any information with
respect to, assist or participate in or facilitate in any manner any
effort or attempt by any person to do or make such
43
an offer or proposal. No Seller shall enter into any agreement or
commitment for the sale or merger of their interest in any Acquisition
Assets (except in ordinary course in accordance with Section 6.5),
Stations, Broadcast Seller, the South West Oregon Stock, or their stock
or membership interests.
13.10 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of
the same or any other term or condition of this Agreement on any future
occasion. All remedies, either under this Agreement or by Law or
otherwise afforded, will be cumulative and not alternative.
13.11 Amendment. This Agreement may be amended, supplemented or modified only
by a written instrument duly executed by Purchaser and Sellers.
13.12 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention
of the parties to confer third-party beneficiary rights upon any other
person.
13.13 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any
attempt to do so will be void, except (a) for assignments and transfers
by operation of Law and (b) that Purchaser may assign any or all of its
rights, interests and obligations hereunder to an Affiliate, provided
that any such Affiliate agrees in writing to be bound by all the terms,
conditions and provisions contained herein, but no such assignment
referred to in clause (b) shall relieve Purchaser of its obligations
hereunder. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns.
13.14 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions
hereof.
13.15 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will
be fully severable, (b) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised a
part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance from this
Agreement.
13.16 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to
the conflicts of laws principles thereof .
13.17 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
44
13.18 Attorneys' Fees. In any dispute between the parties to this Agreement,
the substantially prevailing party in any action or proceeding shall be
entitled to recover from the other party its costs and expenses,
including its reasonable attorneys' fees.
13.19 Jurisdiction/Venue. Any litigation instituted to enforce the terms of
this Agreement shall be venued in the appropriate state or federal courts
located in San Francisco, California, as to which jurisdiction Purchaser
and Sellers hereby consent.
13.20 No Jury Trial. In the event of any litigation under this Agreement, the
parties waive all rights to demand trial by jury.
ARTICLE XIV
EXHIBITS AND SCHEDULES
14.1 Exhibits and Schedules. Notwithstanding any other provision of this
Agreement, the parties hereto acknowledge and agree that the Exhibits and
Schedules referred to in this Agreement are currently in draft form (the
"Draft Exhibits and Draft Schedules"), have not been delivered in final
form and are not attached hereto, and that any and all references to such
Exhibits and Schedules herein shall be deemed to refer to, and be
qualified in their entirety by reference to, the Final Exhibits and Final
Schedules (as defined in this Section). Each of the parties hereto agrees
that it shall use its respective best efforts to complete and finalize
the Draft Exhibits and Draft Schedules as soon as practicable, but in no
event later than November 30, 1998. In the event the parties complete and
finalize the Exhibits and Schedules by such date, or by such later date
as shall be mutually agreed to by REI and FCI, then (a) REI and FCI shall
so acknowledge in a writing attached to such Exhibits and Schedules, (b)
such Exhibits and Schedules shall be affixed to the originally executed
copies of this Agreement, and (c) the term "Final Exhibits and Final
Schedules" shall refer to such Exhibits and Schedules. In the event the
parties are unable to complete and finalize each Exhibit and Schedule by
such date, or by such later date as shall be mutually agreed to by REI
and FCI, then this Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time thereafter by REI or
FCI, without liability to the terminating party, upon notification by the
terminating party to the non-terminating party. Section 12.2 shall apply
to any such termination as if such termination were in accordance with
Section 12.1(d); provided, however, that in such event no party shall
have any liability to any other party with respect to the content or lack
thereof of any Schedule or Exhibit or with respect to any representation
or warranty that is qualified by or that refers to any Schedule or
Exhibit.
[Signatures appear on next page.]
45
PURCHASER
▇▇▇▇▇▇ COMPANIES INC., a Washington corporation
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President and CEO
▇▇▇▇▇▇ BROADCASTING INC., a Washington corporation
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and CEO
SELLERS
RETLAW ENTERPRISES, INC., a California corporation
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Its Vice President
---------------------------------------------
RETLAW BROADCASTING, L.L.C., a Delaware limited liability
company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Its Vice President
---------------------------------------------
RETLAW BROADCASTING OF BOISE, L.L.C., a Delaware limited
liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Its President
---------------------------------------------
RETLAW BROADCASTING OF FRESNO, L.L.C., a Delaware limited
liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Its President
---------------------------------------------
46
RETLAW BROADCASTING OF IDAHO FALLS, L.L.C., a Delaware
limited liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its President
--------------------------------------
RETLAW BROADCASTING OF YAKIMA, L.L.C., a Delaware limited
liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its President
--------------------------------------
RETLAW BROADCASTING OF ▇▇▇▇▇▇, L.L.C., a Delaware limited
liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its President
--------------------------------------
RETLAW BROADCASTING OF COLUMBUS, L.L.C., a Delaware limited
liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its President
--------------------------------------
RETLAW BROADCASTING OF AUGUSTA, L.L.C., a Delaware limited
liability company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Its President
--------------------------------------
47
AMENDMENT NO. 1
To
ASSET PURCHASE AND SALE AGREEMENT
This Amendment No. 1 to Asset Purchase and Sale Agreement (this
"Amendment") is made and entered into as of November 30, 1998 by and among
▇▇▇▇▇▇ Companies Inc., a Washington corporation ("FCI"), ▇▇▇▇▇▇ Broadcasting
Inc., a Washington corporation ("FBI", and collectively with FCI, the
"Purchaser"), Retlaw Enterprises, Inc., a California corporation ("REI"), and
Retlaw Broadcasting, L.L.C., Retlaw Broadcasting of Boise, L.L.C., Retlaw
Broadcasting of Fresno, L.L.C., Retlaw Broadcasting of Idaho Falls, L.L.C.,
Retlaw Broadcasting of Yakima, L.L.C., Retlaw Broadcasting of ▇▇▇▇▇▇, L.L.C.,
Retlaw Broadcasting of Columbus, L.L.C. and Retlaw Broadcasting of Augusta,
L.L.C., each a Delaware limited liability company (collective with REI, the
"Sellers").
RECITALS
WHEREAS, the Purchaser and the Sellers are parties to that certain Asset
Purchase and Sale Agreement dated as of November 18, 1998 (the "Purchase
Agreement"); and
WHEREAS, the Purchaser and the Sellers desire to amend the Purchase
Agreement to extend the deadline for completion of the Exhibits and Schedules.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. Amendment to the Purchase Agreement. Section 14.1 of the
Purchase Agreement is hereby amended by deleting the words "November 30, 1998"
in the second sentence thereof and substituting therefor the words "December 8,
1998". Except as specifically amended by this Amendment, the Purchase Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
Section 2. Miscellaneous. The headings used in this Amendment have been
inserted for convenience of reference only and do not define or limit the
provisions hereof. This Amendment shall be governed by and construed in
accordance with the Laws of the State of Delaware applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[Signatures appear on next page.]
1
PURCHASER
---------
▇▇▇▇▇▇ COMPANIES INC., a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President and CEO
▇▇▇▇▇▇ BROADCASTING INC., a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and CEO
SELLERS
-------
RETLAW ENTERPRISES, INC., a California corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING, L.L.C., a Delaware limited liability
company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF BOISE, L.L.C., a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF FRESNO, L.L.C., a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
2
RETLAW BROADCASTING OF IDAHO FALLS, L.L.C., a Delaware
limited liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF YAKIMA, L.L.C., a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF ▇▇▇▇▇▇, L.L.C., a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF COLUMBUS, L.L.C., a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF AUGUSTA, L.L.C., a Delaware limited
liability company
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
3
AMENDMENT NO. 2
To
ASSET PURCHASE AND SALE AGREEMENT
This Amendment No. 2 to Asset Purchase and Sale Agreement (this
"Amendment") is made and entered into as of December 7, 1998 by and among ▇▇▇▇▇▇
Companies Inc., a Washington corporation ("FCI"), ▇▇▇▇▇▇ Broadcasting Inc., a
Washington corporation ("FBI", and collectively with FCI, the "Purchaser"),
Retlaw Enterprises, Inc., a California corporation ("REI"), and Retlaw
Broadcasting, L.L.C., Retlaw Broadcasting of Boise, L.L.C., Retlaw Broadcasting
of Fresno, L.L.C., Retlaw Broadcasting of Idaho Falls, L.L.C., Retlaw
Broadcasting of Yakima, L.L.C., Retlaw Broadcasting of ▇▇▇▇▇▇, L.L.C., Retlaw
Broadcasting of Columbus, L.L.C. and Retlaw Broadcasting of Augusta, L.L.C.,
each a Delaware limited liability company (collective with REI, the "Sellers").
RECITALS
WHEREAS, the Purchaser and the Sellers are parties to that certain Asset
Purchase and Sale Agreement dated as of November 18, 1998, as amended by that
certain Amendment No. 1 to Asset Purchase and Sale Agreement dated as of
November 30, 1998 (collectively, the "Purchase Agreement"); and
WHEREAS, the Purchaser and the Sellers desire to further amend the Purchase
Agreement to extend the deadline for completion of the Exhibits and Schedules.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. Amendment to the Purchase Agreement. Section 14.1 of the
Purchase Agreement, as amended, is hereby further amended by deleting the words
"December 8, 1998" in the second sentence thereof and substituting therefor the
words "December 15, 1998". Except as specifically amended by this Amendment,
the Purchase Agreement shall remain in full force and effect and is hereby
ratified and confirmed.
Section 2. Miscellaneous. The headings used in this Amendment have been
inserted for convenience of reference only and do not define or limit the
provisions hereof. This Amendment shall be governed by and construed in
accordance with the Laws of the State of Delaware applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[Signatures appear on next page.]
1
PURCHASER
---------
▇▇▇▇▇▇ COMPANIES INC., a Washington corporation
By: /s/
------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President and CEO
▇▇▇▇▇▇ BROADCASTING INC., a Washington corporation
By: /s/
------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and CEO
SELLERS
-------
RETLAW ENTERPRISES, INC., a California corporation
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING, L.L.C., a Delaware limited liability
company
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF BOISE, L.L.C., a Delaware limited
liability company
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF FRESNO, L.L.C., a Delaware limited
liability company
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
2
RETLAW BROADCASTING OF IDAHO FALLS, L.L.C., a Delaware
limited liability company
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF YAKIMA, L.L.C., a Delaware limited
liability company
By: /s/
------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF ▇▇▇▇▇▇, L.L.C., a Delaware limited
liability company
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF COLUMBUS, L.L.C., a Delaware limited
liability company
By: /s/
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
RETLAW BROADCASTING OF AUGUSTA, L.L.C., a Delaware limited
liability company
By: /s/
------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
3