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EXHIBIT 10.178
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇ ▇. ▇▇▇▇,
AS CHAPTER 11 TRUSTEE OF THE
CHAPTER 11 DEBTOR ESTATE OF
RIKLIS BROADCASTING CORPORATION,
AKA KADY-TV, AKA PACIFIC RIM VIDEO
AND
▇▇▇▇▇▇ COMMUNICATIONS
OF LOS ANGELES - 63, INC.
As of June 25, 1997
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ASSET PURCHASE AGREEMENT
SUMMARY OF BASIC TERMS
1. Buyer: ▇▇▇▇▇▇ Communications of Los Angeles - 63, Inc.
2. Purchase Price: $8,000,000, all cash
3. Deposit: $350,000, paid at execution of Agreement, Trustee has the right to
use the Deposit: See Section 2.7.
4. Assets Sold: Station Assets, see Section 2.2
5. Assumed Contracts: See Section 1.4 (Station Lease can be subsequently
rejected: See Section 2.6)
6. Assumed Liabilities: See Section 2.5
7. Excluded Assets: See Section 2.3
8. AS IS
9. Conditions Precedent:
(a) Bankruptcy Approval
(b) FCC Approval
10. All sales taxes and transfer fees and costs (including FCC filing costs)
paid by Buyer
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS...................................................................................................... 2
ARTICLE 2 PURCHASE OF ASSETS............................................................................................... 5
2.1 Closing.................................................................................................. 5
2.2 Transfer of Assets....................................................................................... 5
2.3 Excluded Assets.......................................................................................... 6
2.4 Identification of Assumed Contracts...................................................................... 7
2.5 Inspection of Property................................................................................... 8
2.6 Studio Lease............................................................................................. 8
2.7 Deposit.................................................................................................. 8
2.8 Liabilities.............................................................................................. 8
2.9 Purchase Price........................................................................................... 8
2.10 Prorations and Adjustments............................................................................... 9
2.11 Allocation............................................................................................... 9
2.12 Guarantee of PCC......................................................................................... 9
ARTICLE 3 CONSENTS AND APPROVALS........................................................................................... 9
3.1 Court Approval........................................................................................... 9
3.2 FCC Consent.............................................................................................. 10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................... 11
4.1 Organization and Standing................................................................................ 11
4.2 Authorization and Binding Obligation..................................................................... 11
4.3 FCC Qualifications....................................................................................... 11
4.4 Absence of Conflicting Agreements or Required Consents................................................... 11
4.5 Litigation............................................................................................... 11
4.6 Financial Information.................................................................................... 12
4.7 Full Disclosure.......................................................................................... 12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TRUSTEE........................................................................ 12
5.1 Governmental Authorization............................................................................... 12
5.2 Personal Property........................................................................................ 13
5.3 Intellectual Property.................................................................................... 13
5.4 Compliance with Laws..................................................................................... 13
5.5 Operating Statements..................................................................................... 13
5.6 Absence of Changes or Events............................................................................. 13
5.7 Insurance................................................................................................ 13
5.8 Title to and Condition of Real Property.................................................................. 14
5.9 Personnel and Employee Benefits.......................................................................... 14
5.10 Environmental Matters.................................................................................... 14
5.11 Material Contracts....................................................................................... 14
5.12 Governmental Consents.................................................................................... 14
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TABLE OF CONTENTS
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5.13 Full Disclosure.......................................................................................... 14
ARTICLE 6 COVENANTS OF TRUSTEE............................................................................................. 15
6.1 Interim Operation........................................................................................ 15
6.2 Access to Station and Operating Statements............................................................... 15
6.3 Notification............................................................................................. 16
6.4 No Inconsistent Action................................................................................... 16
ARTICLE 7 ADDITIONAL COVENANTS............................................................................................. 16
7.1 Reasonable Best Efforts.................................................................................. 16
7.2 Control of Station....................................................................................... 16
7.3 Certain Employees........................................................................................ 16
7.4 Renewal of Assumed Contracts............................................................................. 17
7.5 Post-Closing Covenants................................................................................... 17
7.6 Approval Order........................................................................................... 17
7.7 Governmental Consents.................................................................................... 17
ARTICLE 8 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.............................................................. 18
8.1 Representations, Warranties and Covenants................................................................ 18
8.2 Court Approval........................................................................................... 18
8.2.1 Title. The Station Assets...................................................................... 18
8.2.2 Taxes........................................................................................... 18
8.2.3 Assumed Contracts............................................................................... 18
8.2.4 Successor Liability............................................................................. 19
8.2.5 Employees....................................................................................... 19
8.2.6 Good Faith Purchaser............................................................................ 19
8.3 FCC Order................................................................................................ 19
8.4 Governmental Consents.................................................................................... 19
8.5 Adverse Proceedings...................................................................................... 19
8.6 Deliveries............................................................................................... 19
ARTICLE 9 CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATION TO CLOSE............................................................ 20
9.1 Representations, Warranties and Covenants................................................................ 20
9.2 Court Approval........................................................................................... 20
9.3 FCC Consent.............................................................................................. 20
9.4 Governmental Consents.................................................................................... 20
9.5 ▇▇▇▇▇▇ Guarantee......................................................................................... 20
9.6 Adverse Proceedings...................................................................................... 20
9.7 Deliveries............................................................................................... 20
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING........................................................................ 20
10.1 Documents to be Delivered by Trustee..................................................................... 20
10.2 Documents to be Delivered by Buyer....................................................................... 21
ARTICLE 11 TAXES; FEES AND EXPENSES........................................................................................ 22
11.1 Transfer Taxes and Similar Charges....................................................................... 22
11.2 Expenses................................................................................................. 22
11.3 Personal Property Taxes.................................................................................. 22
ARTICLE 12 BROKER'S COMMISSION OR FINDER'S FEE............................................................................. 22
12.1 Buyer's Representation and Agreement to Indemnify........................................................ 22
12.2 Trustee's Representation and Estate's Agreement to Indemnify............................................. 22
ARTICLE 13 INDEMNIFICATION................................................................................................. 23
13.1 Indemnification by Buyer................................................................................. 23
13.2 Indemnification by the Estate............................................................................ 23
13.3 Survival; Limitations.................................................................................... 24
13.4 Indemnification Fund; Procedure for Indemnification...................................................... 24
13.5 Procedures for Indemnification........................................................................... 24
13.6 Attorneys' Fees.......................................................................................... 25
13.7 Administrative Expense................................................................................... 25
ARTICLE 14 TERMINATION RIGHTS.............................................................................................. 25
14.1 Termination.............................................................................................. 25
14.2 Liability................................................................................................ 27
ARTICLE 15 REMEDIES UPON DEFAULT........................................................................................... 27
15.1 Buyer's Remedies......................................................................................... 27
15.2 Trustee's Remedies....................................................................................... 27
ARTICLE 16 OTHER PROVISIONS................................................................................................ 28
16.1 Disclaimer of Representations and Warranties; Trustee's Knowledge; As Is................................. 28
16.2 Risk of Loss............................................................................................. 28
16.3 Benefit and Assignment................................................................................... 29
16.4 Entire Agreement; Amendments............................................................................. 29
16.5 Headings................................................................................................. 29
16.6 Choice of Law; Jurisdiction; Venue....................................................................... 29
16.7 Attorneys' Fees.......................................................................................... 29
16.8 Notices.................................................................................................. 30
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TABLE OF CONTENTS
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16.9 Counterparts............................................................................................. 31
16.10 Time of the Essence...................................................................................... 31
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
June __, 1997, by and between ▇▇▇▇▇▇ Communications of Los Angeles-63, Inc.
("Buyer") and ▇▇▇▇ ▇. ▇▇▇▇ ("Trustee") as Chapter 11 Trustee of the Chapter 11
debtor estate of Riklis Broadcasting Corporation, aka KADY-TV, aka Pacific Rim
Video (the "Estate"), now operating under the protection of Chapter ▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Code (the "Code") in Case No. 96-11086-RR (the "Bankruptcy
Proceeding") in the United States Bankruptcy Court for the Central District of
California (the "Bankruptcy Court").
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
RECITALS
A. On March 22, 1996 an involuntary Chapter 11 petition was
filed with the Bankruptcy Court, and the Bankruptcy Court entered the Order for
relief effective July 8, 1996, and appointed the Trustee effective July 9, 1996.
Upon entry of the Order for Relief, all assets of Riklis Broadcasting
Corporation ("RBC") became the property of the Estate pursuant to the Code. On
November 5, 1996, the Bankruptcy Court entered its order substantively
consolidating three affiliates of RBC, to wit, HBC Holdings, Inc., VCNN, and
KADE Broadcasting, Inc., into the Estate, so that their assets comprised
property of the Estate nunc pro tunc to the Petition date.
B. Buyer desires to purchase certain assets and assume certain
liabilities of the Estate as set forth in this Agreement.
C. As soon as is practicable after the execution of this
Agreement, Trustee intends to file with the Bankruptcy Court a Notice of Motion
to approve the sale and over bidding procedures attached hereto as Exhibit A
(the "Sale Procedure Motion").
D. Following the approval of the Sale Procedure Motion, the
Trustee intends to file a motion to seek approval of the Bankruptcy Court of the
transactions contemplated by this Agreement, subject to the overbid procedures
set forth in the Sale Procedure Motion.
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ARTICLE 1
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms
when used herein shall have the meanings assigned to them below:
1.1 "Affiliate" shall mean a Person that is an affiliate (as
defined under Section 101(2) of the Code) of the Person specified.
1.2 "Appointment Date" shall mean July 9, 1996, the date on
which Trustee was appointed as trustee of the Estate by the Bankruptcy Court.
1.3 "Approval Order" shall mean the order of the Bankruptcy
Court approving the sale of the Station Assets to Buyer and the assumption of
the Assumed Liabilities by Buyer pursuant to the terms of this Agreement and
Sections 363(b) and 365 of the Code, which order has not been stayed.
1.4 "Assumed Contracts" shall have the meaning set forth in
Section 2.4.
1.5 "Assumed Liabilities" shall have the meaning set forth in
Section 2.8(a).
1.6 "Broker" shall mean Media Services Group.
1.7 "Business Day" shall mean every day of the week excluding
Saturdays, Sundays and Federal holidays.
1.8 Intentionally omitted.
1.9 "Closing" shall mean the closing of the transactions
contemplated by this Agreement pursuant to Section 2.1.
1.10 "Closing Date" shall mean the date on which the Closing
is completed.
1.11 "Confidentiality Agreement" shall mean that certain
Confidentiality Agreement dated as of February 28, 1997 by and between Trustee
and ▇▇▇▇▇▇ Communications Corporation ("PPC").
1.12 "Contracts" shall mean all Real Property Leases,
contracts, agreements, purchase orders and leases of whatever nature, whether
written or oral, used in, held for use in connection with or necessary for the
conduct of, the business or operations of the Station or the Station Assets.
1.13 "Cut-Off Time" shall mean 12:01 a.m., local time, on the
date on which the Estate actually receives the Purchase Price in full.
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1.14 "Deposit" shall mean the sum of $350,000.
1.15 "Employee Costs" shall have the meaning set forth in
Section 7.3.
1.16 "Employee Plans" shall mean all employee or retiree
benefit or compensation plan within Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or compensation, bonus, incentive, deferral, equity
based, severance, termination, retention, change in control, employment or other
similar program, agreement, arrangement, trust or other funding arrangement,
whether or not subject to the provisions of ERISA, to which the Estate is bound
or that is or has been established or maintained or in respect of which the
Estate has ever had any obligation to contribute.
1.17 "Estate Indemnitees" shall have the meaning set forth in
Section 13.1.
1.18 "Excluded Assets" shall have the meaning set forth in
Section 2.3.
1.19 "FCC" shall mean the Federal Communications Commission.
1.20 "FCC Applications" shall mean the application or
applications that the Estate and Buyer must file with the FCC requesting its
consent to the assignment of the Station Licenses from the Estate to Buyer.
1.21 "FCC Consent" shall mean the action by the FCC granting
the FCC Application.
1.22 "FCC Order" shall mean the FCC Consent (i) which has not
been vacated, reversed, stayed, set aside, annulled or suspended, (ii) with
respect to which no timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion, is
pending, and (iii) as to which the time for filing any such appeal, request,
petition, or similar document or for the reconsideration or review by the FCC on
its own motion under the Communications Act of 1934, as amended, and the rules
and regulations of the FCC, has expired.
1.23 "Indemnification Fund" shall have the meaning set forth
in Section 13.4.
1.24 "Information" shall have the meaning set forth in Section
16.1(b).
1.25 "Intellectual Property" shall mean all United States and
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, including registrations and applications to register or renew
the registration of any of the foregoing, United States and foreign letters
patent and patent applications, and inventions, processes, designs, formulae,
trade secrets, jingles, know-how, confidential business and technical
information, computer software, data and documentation, and all similar
intangible property rights, tangible embodiments of any of the foregoing (in any
medium including electronic media), and licenses or permits to use any of the
foregoing used in, held for use in
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connection with or necessary for the conduct of, the business or operations of
the Station or the Station Assets.
1.26 "Material Adverse Effect" shall mean the occurrence of an
event which has or will have a material adverse effect on the Station Assets or
the business or operations of the Station.
1.27 "Operating Statements" shall mean the unaudited monthly
statements of operations of the Station for the period of July 8, 1996 to the
month ended immediately prior to date which is 30 days prior to the Closing
Date.
1.28 "Ordinary Course" shall mean the ordinary course of
business within the meaning of Section 363 of the Code.
1.29 "Person" shall mean an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
1.30 "Personal Property" shall mean all equipment, office
furniture and fixtures, office materials and supplies, inventory, spare parts
and other tangible personal property owned, leased or held by the Estate and
used in, held for use in connection with or necessary for the conduct of, the
business or operations of the Station or the Station Assets.
1.31 "Purchase Price" shall have the meaning set forth in
Section 2.9.
1.32 "Real Property" shall mean any estates or interests in
real property owned by the Estate and used in, held for use in connection with
or necessary for the conduct of, the business or operations of the Station or
the Station Assets.
1.33 "Real Property Leases" shall mean the leases, subleases,
licenses and occupancy agreements, including any amendments thereto, pursuant to
which any the Estate is the lessee, sublessee, licensee or occupant of real
property used in, held for use in connection with or necessary for the conduct
of, the business or operations of the Station or the Station Assets.
1.34 "Settlement Agreement" shall mean that certain Settlement
Agreement between Trustee, KTIE-TV and SDS Investments.
1.35 "Station" shall mean the television broadcast station
KADY-TV, Oxnard, California.
1.36 "Station Assets" shall have the meaning set forth in
Section 2.2.
1.37 "Station Lease" shall have the meaning set forth in
Section 2.6.
1.38 "Station Licenses" shall mean the licenses, permits and
other authorizations issued by the FCC, and any other federal, state or local
governmental or
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regulatory authorities to the Estate and used in, held for use in connection
with or necessary for the conduct of, the business or operations of the Station
or the Station Assets, including, without limitation, those specified in
Schedule 5.1.
1.39 "Tax" shall mean any federal, state, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, unincorporated business, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, environmental, real property, personal
property, ad valorem, occupancy, license, occupation, employment, payroll,
social security, disability, unemployment, workers' compensation, withholding,
estimated or similar tax, duty, fee, assessment or other governmental charge or
deficiencies thereof (including all interest and penalties thereon and additions
thereto).
1.40 "Tax Code" shall mean the Internal revenue code of 1986,
as amended, and all regulations and ruling promulgated thereunder.
1.41 "Trustee's Knowledge" shall mean Trustee's own present
actual knowledge after limited investigation consisting only of consulting with
present employees of the Station and Trustee's representatives, agents and
counsel.
ARTICLE 2
PURCHASE OF ASSETS
2.1 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall take place on a Business Day that is no later than
10 Business Days after the later of (i) receipt of the FCC Order, or (ii)
receipt of the Approval Order, or on such other date as the parties may agree.
Buyer shall designate the date of Closing in accordance with the terms of the
preceding sentence by giving the Estate at least four Business Days prior
written notice of such Closing. The Closing shall be held at 10:00 a.m. in the
offices of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place or time as the parties may
agree.
2.2 Transfer of Assets. At the Closing, the Estate shall
sell, assign, transfer and convey (or cause to be sold, assigned, transferred or
conveyed) to Buyer and Buyer shall purchase from the Estate all of the assets
(whether real, personal and mixed, tangible and intangible) owned or held by the
Estate and used in, held for use in connection with or necessary for the
broadcast or cable transmission from the Station, other than the Excluded Assets
(collectively, the "Station Assets"). The Station Assets shall include:
(a) all of the Estate's rights in and to the Station
Licenses (including renewals or modifications of such licenses and applications
therefor) and all its rights in and to the call letters "KADY";
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(b) all of the Estate's rights in and to the Personal
Property and the Real Property, provided that, in the case of a leasehold
interest, Buyer assumes the underlying lease;
(c) such right to occupy the studio facility of the
Station as the Trustee may assign pursuant to Section II of the Settlement
Agreement;
(d) all of the Estate's rights in and to the Assumed
Contracts (as amended by Section 2.6, as applicable); provided, however, the
Estate shall be entitled to the benefits of the Assumed Contracts which accrue
up to and including the Cut-Off Time;
(e) all manufacturers' and vendors' warranties relating
to the Station Assets;
(f) all of the Estate's rights in and to the Intellectual
Property and any programs and programming materials of whatever form or nature
owned by the Estate and used in, held for use in connection with or necessary
for the conduct of, the business and operations of the Station;
(g) all files, records, books of account, computer
programs and software and logs used in, held for use in connection with or
necessary for the conduct of, the business and operations of the Station,
including, without limitation, receivable records and statements, all traffic
material for media and Contracts, programming information and studies, technical
information and engineering data, news and advertising studies or consulting
reports, marketing and demographic data, sales correspondence, lists of
advertisers, promotional materials, credit and sales reports and the files for
the Station required to be maintained by the FCC.
2.3 Excluded Assets. The Station Assets shall not include,
and Buyer shall not purchase from the Estate, the following (collectively, the
"Excluded Assets"):
(a) all Contracts other than the Assumed Contracts;
(b) all books and records that Trustee or the Estate is
required by law to retain, and all payables records and invoices, provided that,
at Buyer's request, Trustee shall provide Buyer, at the Estate's expense, with
copies of such records covering the period during which the Estate was licensee
of the Station and prior periods to the extent that such records are in the
possession of the Trustee.
(c) all books, records, and other intangible assets
related solely to the Estate's internal corporate matters and not related to the
operation of the Station;
(d) all claims, rights, and interest in and to any
refunds for federal, state, or local franchise, income, or other Taxes or fees
of any nature whatsoever for periods prior to the Cut-Off Time;
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(e) all accounts receivable arising out of or relating to
the operation of the Station which accrue in respect of period prior to the
Cut-Off Time.
(f) the Estate's cash on hand as of the Cut-Off Time and
all other cash in any bank account of the Estate; any and all cash equivalents,
certificates of deposit, bonds, repurchase agreements, letters of credit,
marketable securities, utility deposits and other similar items;
(g) subject to the requirements of Section 6.1(b), all
personal property which is consumed, retired or disposed of by the Estate in the
ordinary course of their businesses up to the Cut-Off Time or as otherwise
permitted by this Agreement;
(h) all insurance policies, except for any rights
thereunder that may be assigned to Buyer pursuant to Section 16.2;
(i) all Employee Plans (other than Employee Costs),
including all trusts and other funding arrangements and the assets thereof;
(j) the benefits of the Assumed Contracts which accrue up
to and including the Cut-Off Time;
(k) any interest in the Estate's right or option to
purchase the television broadcast station KADE-TV from Community Media
Corporation;
(l) any interest in the Estate's claims against ▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ and/or their Affiliates, including, but not limited to, claims
relating to the following: (i) intercompany transfers; (ii) breaches of
fiduciary duty, fraud and mismanagement; and (iii) fraudulent transfers of
conveyances and preferences.
(m) any interest in the Estate's claims with reference to
any avoidance actions under the Code or applicable state law for pre-petition
transfers, including any claims for preferential transfers or fraudulent
transfers or conveyances;
(n) any interest in the Estate's claims against any
insurance company; and
(o) any interest in the Estate's claims against the
Estate's former officers and directors.
2.4 Identification of Assumed Contracts. Within 15 days of
the execution of this Agreement, Buyer will identify which of the contracts
listed on Schedule 5.11 it wishes to assume and have continued. Between the date
of this Agreement and the Approval Date, Trustee will periodically provide Buyer
with lists of new contracts which Trustee has entered into in the Ordinary
Course, together with copies of such contracts, and Buyer shall likewise have 15
days within which to identify which of the new contracts it wishes to assume and
have continued. All contracts so identified by Buyer (and renewals pursuant to
Section 7.4) at least 21 days prior to the Bankruptcy Court hearing on final
approval of the
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sale of the Station Assets to and assumption of Assumed Liabilities by Buyer
shall be referred to in this Agreement as the "Assumed Contracts."
Notwithstanding the foregoing, the Station Lease will be part of the Assumed
Contracts unless and until Buyer elects not to assume the Station Lease as set
forth in Section 2.6.
2.5 Inspection of Property. Buyer has received an Offering
Memorandum dated January 1997 which contains reports and information about the
Station Assets (including the Personal Property and Real Property) and has had
an opportunity to make a physical inspection of the Personal Property and Real
Property. Trustee shall maintain such Personal Property and Real Property in its
current condition, in the Ordinary Course of the business of the Estate.
2.6 Studio Lease. Pursuant to Part 11.A.7 of the Settlement
Agreement, Buyer has a period of time (the lesser of 90 days after the FCC Order
or 6 months after Closing) to make a final election to assume that certain lease
of the Station studio facilities located at ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
(the "Station Lease"). In the event that Buyer elects not to assume the Station
Lease pursuant to the terms of the Settlement Agreement then the Assumed
Contracts shall be deemed not to include the Station Lease.
2.7 Deposit. Concurrently with the execution of this
Agreement, Buyer has deposited with Trustee the amount of Three Hundred Fifty
Thousand Dollars ($350,000) (the "Deposit"), which Deposit, together with the
balance of the Indemnification Fund, shall be held by Trustee in a segregated,
interest-bearing account and disbursed by the Trustee in accordance with
Sections 13 and 15 of this Agreement; provided, however, that if Trustee accepts
another bid for the Station Assets as described in Section 3.1, Trustee shall
promptly return the Deposit, together with interest, to Buyer.
2.8 Liabilities.
(a) The Station Assets shall be sold and conveyed to Buyer
free and clear of all liens pursuant to Sections 363(b) and (f) of the Code,
except for the Employee Costs assumed by Buyer pursuant to Section 7.3 hereof,
and the burdens of the Assumed Contracts which accrue after the Cut-Off Time,
including, in the event Buyer elects to assume the Station Lease pursuant to
Section 2.4, all Deferred Rent which may be payable pursuant to the Settlement
Agreement and which accrued from and after Cut-Off Time; the foregoing
liabilities, costs and burdens are collectively referred to herein as the
"Assumed Liabilities".
(b) Except for the Assumed Liabilities or as otherwise
expressly stated in this Agreement, Buyer shall not assume or be liable for any
liability or obligation arising out of the business or operations of the Estate,
the Station or the Station Assets prior to the Closing Date.
2.9 Purchase Price. In consideration for the sale, assignment,
transfer and conveyance of the Station Assets by the Estate to Buyer, Buyer
shall pay an additional amount sufficient to make the sum of such additional
amount, plus the Deposit, plus interest accrued on the Deposit to the Closing
Date equal to $8,000,000 as adjusted pursuant to
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Section 2.10, (such sum being referred to herein as the "Purchase Price") to the
Estate at Closing by wire transfer of immediately available funds to such
account of Trustee as Trustee shall have designated to Buyer at least two
Business Days before Closing, and Buyer shall assume the Assumed Liabilities at
the Closing. An aggregate of $500,000 (the "Indemnification Fund") will be held
by the Trustee for the purposes of indemnifying Buyer for any claim Buyer may
have against the Trustee or the Estate under this Agreement, and shall be
disbursed by the Trustee pursuant to Section 13 of this Agreement.
2.10 Prorations and Adjustments. All items of income and
expense which accrue up to the Cut-Off Time and which relate to the Station
Assets shall be for the account of the Estate, and all items of income and
expense which accrue from and after the Cut-Off Time and which relate to the
Station Assets shall be for the account of Buyer. Trustee shall have the sole
and exclusive right to ▇▇▇▇ and collect any receivables accruing up to the
Cut-Off Time with respect to the Assumed Contracts and Buyer shall have the sole
and exclusive right to ▇▇▇▇ and collect any receivables accruing from and after
the Cut-Off Time with respect to the Assumed Contracts. All offsets claimed by
any party to the Assumed Contracts shall be attributed to the particular time
period in respect of which the offset is claimed and no other period. All other
income and expense items (including, without limitation, rents, prepaids
(excluding however non-cash prepayments such as prepayments arising from the
performance of services), deposits, utility charges, commissions, and payables)
shall be prorated at the Closing and shall be an adjustment to the Purchase
Price. All such prorations shall be made on the basis of the actual number of
days elapsed as of the Closing Date and shall be based upon a 365 day year. The
amount of such prorations shall be subject to adjustment, in cash, after the
Closing as and when complete and accurate information becomes available. Trustee
and Buyer agree to cooperate in obtaining such information and all such
adjustments shall be made no later than 60 days after the Closing.
2.11 Allocation. Buyer and Trustee agree to allocate the
Purchase Price for tax and recording purposes in accordance with an appraisal to
be conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets. Buyer and the
Estate shall (i) prepare and file all statements or other information required
to be furnished to any taxing authority pursuant to section 1060 of the Tax Code
or other applicable tax law in a manner consistent with such allocation and (ii)
prepare all tax returns and reports required to be filed by them in a manner
consistent with such allocation, and neither Buyer nor Trustee shall not take
any position contrary to such allocation with any government agency or taxing
authority.
2.12 Guarantee of PCC. Concurrently with the execution and
delivery of this Agreement, PCC will execute and deliver a continuing guarantee,
in form and substance satisfactory to Trustee, guarantying all the obligations
of Buyer under this Agreement.
ARTICLE 3
CONSENTS AND APPROVALS
3.1 Court Approval. As soon as is practicable after the
execution of this Agreement Trustee shall file the Sale Procedure Motion with
the Bankruptcy Court. Trustee
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and Buyer shall prosecute the hearing of the Sale Procedure Motion by the
Bankruptcy Court (the "Hearing") with all reasonable diligence and otherwise use
their reasonable best efforts to obtain the Approval Order. Buyer shall have the
right to bid at the Hearing and to over bid the Purchase Price. In the event
Buyer's overbid is accepted by the Bankruptcy Court this Agreement shall be
modified accordingly. Buyer acknowledges at the Hearing the Trustee may be
required to accept another bid for the Station Assets and in such event this
Agreement shall terminate and the Deposit (with accrued interest) shall be
returned to Buyer. Upon a termination hereof pursuant to the preceding sentence,
Trustee shall pay to Buyer a "breakup" fee of One Hundred Twenty Thousand
Dollars ($120,000), payable out of the successful over-bidder's deposit upon
entry of the Bankruptcy Court's order approving the sale to such overbidder.
Trustee shall use its best efforts to ensure that any other bid which may be
accepted shall be secured by an escrow deposit not less than the amount of
Buyer's Deposit. Trustee hereby agrees not to accept any higher bids for the
Station Assets that do not exceed the amount of the Purchase Price plus
$200,000.
3.2 FCC Consent. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. Buyer and Trustee shall be responsible for the preparation of their
respective portions of the FCC Application and for the filing of the application
with the FCC within seven (7) Business Days after the execution of this
Agreement. Buyer and Trustee shall thereafter prosecute the FCC Application with
all reasonable diligence and otherwise use their reasonable best efforts to
obtain the grant of the FCC Application as expeditiously as practicable. Buyer
and Trustee shall share equally all filing fees required by the FCC in
connection with the FCC Consent with each party bearing its own legal,
accounting, engineering and management costs and expenses. Buyer shall
periodically report to Trustee the progress of the FCC Application. Neither
Trustee nor Buyer shall have any obligation to satisfy any complaint of the FCC
by taking any steps which would have a material adverse effect upon the Estate
or Buyer or upon any Affiliate, but neither the expense nor inconvenience to a
party of defending against a complainant or an inquiry by the FCC shall be
considered a material adverse effect on such party. If the FCC Consent imposes
any condition on any party hereto, such party shall use its reasonable best
efforts to comply with such condition; provided, however, that neither Trustee
nor Buyer shall be required to comply with any condition that would have a
material adverse effect upon the Estate or Buyer or upon any Affiliate and the
party that would otherwise be adversely affected shall have the right to elect
to terminate this Agreement. If reconsideration or judicial review is sought
with respect to the FCC Consent, the party or parties affected shall vigorously
oppose such efforts for reconsideration or judicial review; provided further,
however, such opposition shall be without prejudice to such party's right to
terminate this Agreement pursuant to the preceding sentence.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Estate as follows:
4.1 Organization and Standing. Buyer is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Florida, and as of the Closing Date, will be duly qualified to do business in,
and is in good standing in the State of California. Buyer has all necessary
corporate power and authority to own, lease and operate the Station Assets and
to hold the Station Licenses and to carry on the business of the Station as
proposed to be conducted by Buyer after the Closing Date.
4.2 Authorization and Binding Obligation. Buyer has all
necessary corporate power and authority to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby, and
Buyer's execution, delivery and performance of this Agreement have been duly and
validly authorized by all necessary corporate action on its part. This Agreement
has been duly executed and delivered by Buyer and constitutes its valid and
binding obligations, enforceable against it in accordance with its terms, except
as limited by laws affecting the enforcement of creditors' rights generally or
equitable principles.
4.3 FCC Qualifications. Except as provided in Schedule 4.3, to
the best of Buyer's knowledge, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify Buyer from becoming the assignee of the Station
Licenses or from consummating the transactions contemplated herein within the
times contemplated herein or therein. Buyer is financially qualified (as defined
by the FCC) and in all other respects to consummate the transactions
contemplated hereby.
4.4 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Article 3 with respect to consents and approvals, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
require the consent of any third party; (b) will not violate any provision of
Buyer's articles or bylaws; (c) will not violate any applicable law, judgment,
order, injunction, decree, rule, regulation or ruling of any governmental
authority to which Buyer is a party or is bound; and (d) will not, either alone
or with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under or accelerate or
permit the acceleration of any performance required by the terms of any
agreement, instrument, license or permit to which Buyer is now subject such that
Buyer could not acquire or operate the Station Assets.
4.5 Litigation. There is no claim, litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened, which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken by Buyer in connection with this Agreement.
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4.6 Financial Information. Buyer has delivered to Trustee a
copy of the 1996 Annual Report of ▇▇▇▇▇▇ Communications Corporation ("PCC"), of
which Buyer is an indirect, wholly owned subsidiary. The financial statements
included in such annual report have been prepared in accordance with United
States generally accepted accounting principles consistently applied and fairly
present the financial condition of PCC as of December 31, 1996, and for the
twelve-month period then ended.
4.7 Full Disclosure. No representation or warranty made by
Buyer in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRUSTEE
Trustee represents and warrants to Buyer as follows:
5.1 Governmental Authorization. Schedule 5.1 contains a true
and complete list of the Station Licenses issued by the FCC or, to Trustee's
Knowledge, any other governmental authority, and, to Trustee's Knowledge there
are no other licenses, permits or other authorizations from governmental or
regulatory authorities required for the lawful conduct of the business and
operations of the Station in the manner and to the full extent it is now
conducted. Trustee has delivered or made available to Buyer true and complete
copies of the Station Licenses listed on Schedule 5.1, including any and all
amendments and other modifications thereto. Except as set forth on Schedule 5.1,
since the Appointment Date the Station has been operated in all material
respects in accordance with the terms and conditions of the Station Licenses and
the rules and regulations of the FCC. All ownership reports, renewal
applications and other reports and documents required to be filed with the FCC
after the Appointment Date by or on behalf of the Estate with respect to the
Station have been timely filed with the FCC, and all such reports, applications
and other documents are true and complete. The Estate maintains an appropriate
public inspection file at the Station in accordance with FCC rules. The Station
Licenses have been validly issued, and the Trustee is the authorized legal
holder thereof. None of the Station Licenses is subject to any restriction or
condition that would limit the full operation of the Station as now operated.
The Station Licenses are in full force and effect, and the conduct of the
business and operations of the Station is in accordance therewith. Trustee has
not received any notice from the FCC or any other granting authority that there
is a problem with respect to renewal of any Station License by the FCC in the
ordinary course. Schedule 5.1 lists all elections of must carry made on or
before December 31, 1996, by Trustee with respect to each cable system located
within the Station's Area of Dominant Influence, and except as disclosed on
Schedule 5.1, no cable system has advised Trustee of any signal quality or
copyright indemnity or other prerequisite to cable carriage of the Station's
signal, and no cable system has declined or threatened to decline such carriage
or failed to respond to a request for carriage or sought any form of relief from
carriage from the FCC.
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5.2 Personal Property. Schedule 5.2 lists all the Personal
Property which has an individual value of $500 or more.
5.3 Intellectual Property. Schedule 5.3 contains a true and
complete list and description of the Intellectual Property. The Intellectual
Property is either owned or validly licensed by the Estate and Schedule 5.3
identifies which Intellectual Property is so owned and which is so licensed.
Schedule 5.3 lists all of the Intellectual Property which have been duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark Office and United States Copyright Office or other filing
offices, domestic or foreign. Trustee has delivered to Buyer copies of all
documents establishing or evidencing all Intellectual Property. The Estate is
not infringing upon or otherwise acting adversely to any trademarks, trade
names, service marks, service names, copyrights, know-how, methods, or other
intellectual property owned by any other persons or persons.
5.4 Compliance with Laws.
(a) Since the Appointment Date, the Estate has operated
and is operating in material compliance with all laws, regulations and
governmental orders applicable to the conduct of the business and operations of
the Station, and its use of the Station Assets does not violate any such laws,
regulations or orders in any material respect. Except as set forth in Schedule
5.4, the Trustee has not received any notice asserting any noncompliance with
any applicable statute, rule or regulation in connection with the business or
operations of the Station.
(b) Since the Appointment Date (i) the Station is not
causing interference in violation of FCC rules to the transmission of any other
broadcast station or communications facility and has not received any complaints
with respect thereto and (ii) no other broadcast station or communications
facility is causing interference in violation of FCC rules to the Station's
transmissions or the public's reception of such transmissions.
5.5 Operating Statements. Schedule 5.5 contains true and
complete copies of the Operating Statements. The Operating Statements set forth
on Schedule 5.5 and the Operating Statements delivered to Buyer pursuant to
Section 6.1 hereof have been and will be prepared in accordance with the
requirements of the Office of the United States Trustee for the Central District
of California. The Operating Statements accurately reflect and fairly present
the financial condition and the results of the operations and cash flows of the
Station for the periods indicated.
5.6 Absence of Changes or Events. Except as disclosed in
Schedule 5.6, since the Appointment Date, the operations and business of the
Station have been conducted in all material respects only in the Ordinary Course
and the Estate has not, except in the Ordinary Course, purchased, sold, assigned
or transferred any of the Station Assets.
5.7 Insurance. The business, properties (including the Station
Assets) and employees of the Station are insured against loss, damage or injury
in amounts listed in Schedule 5.7, which shows all insurance policies held by
the Estate relating to such business, properties and employees, together with
the policy limits, type of coverage, location of the
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property covered, annual premium, premium payment dates and expiration date of
each of the policies. Copies of all such insurance policies have been furnished
or made available to Buyer. All such insurance policies are in full force and
effect.
5.8 Title to and Condition of Real Property. Schedule 5.8
contains a complete and accurate description of all real property used by the
Estate in the operation of the Station, including, specifically, the studio
facilities and the transmitter site, and the Estate's interests therein
(including street address, legal description, owner, and ▇▇▇ and the location of
all improvements thereon). All towers, guy anchors, and buildings and other
improvements included in the Station Assets are located entirely on the real
property listed in Schedule 5.8.
5.9 Personnel and Employee Benefits. Schedule 5.9 contains a
true and complete list of all employees of the Station, their job titles, and
date of hire, and Trustee has delivered to Buyer a schedule of the current
salary and, to Trustee's Knowledge, date and amount of last salary increase of
each such employee.
5.10 Environmental Matters. Except as disclosed in Schedule
5.10 hereto, (i) the Estate's operations with respect to the Station comply in
all material respects with all applicable Environmental Laws; (ii) the Estate
has not used the Real Property for the manufacture, transportation, treatment,
storage or disposal of Hazardous Substances; and (iii) the use of the real
property used in connection with the operation of the Station complies in all
material respects with all applicable Environmental Laws. Except as described in
Schedule 5.10 hereto, no surface impoundments or underground storage tanks are
located on such real property. For purposes of the foregoing, "ENVIRONMENTAL
LAW" means any law pertaining to land use, air, soil, surface water, groundwater
(including the protection, cleanup, removal, remediation or damage thereof), or
any other environmental matter, including, without limitation, the following
laws as the same may be amended from time to time: (a) Clean Air Act (42 U.S.C.
Section 7401, et seq.); (b) Clean Water Act (33 U.S.C. Section 1251, et seq.);
(c) Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.);
(d) Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601, et seq.); (e) Safe Drinking Water Act (42 U.S.C. 300f, et
seq.); and (f) Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.),
and "HAZARDOUS SUBSTANCE" means any pollutant, contaminant, hazardous or toxic
substance, material constituent or waste or any pollutant that is labeled or
regulated as such by any governmental authority pursuant to an Environmental
Law.
5.11 Material Contracts. To Trustee's Knowledge Schedule 5.11
sets forth a list of all material executory Contracts in which the Estate has an
interest.
5.12 Governmental Consents. Schedule 5.12 sets forth a list of
all consents, approvals and waivers, other than those described in Sections 3.1
and 3.2, required in order to transfer the Station Assets to Buyer.
5.13 Full Disclosure. No representation or warranty made by
Trustee in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Trustee pursuant hereto contains or will contain
any untrue statement of a material fact,
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or omits or will omit to state any material fact required to make any statement
made herein or therein not misleading.
ARTICLE 6
COVENANTS OF TRUSTEE
6.1 Interim Operation. Between the date of this Agreement and
the Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of Buyer:
(a) Trustee shall operate the business of the Station in
the Ordinary Course, and Trustee shall take no action which could adversely
effect the ongoing operations and assets of the Station;
(b) Trustee shall not sell, assign, lease or otherwise
transfer or dispose of any of the Station Assets, unless the same shall be
replaced with assets of equal or greater value and utility, if replacement is
necessary to the operation of the Station in the Ordinary Course;
(c) Trustee shall operate the Station in all material
respects in accordance with the FCC's rules and regulations and the Station
Licenses and with all other laws, regulations, rules and orders; and shall not
fail to prosecute with due diligence any pending application to the FCC, and
shall not cause or permit by any act, or failure to act, any of the Station
Licenses to expire, be surrendered, adversely modified, or otherwise terminated,
or the FCC to institute any proceeding for the suspension, revocation or
material adverse modification of any of the Station Licenses;
(d) Trustee shall maintain the insurance policies on the
Station and the Station Assets listed in Schedule 5.7 or their equivalent;
(e) If the broadcast transmissions of the Station from its
main broadcast antenna at full authorized power is interrupted or impaired,
Trustee shall use his reasonable best efforts to restore transmissions at full
authorized power as soon as reasonably possible;
(f) From and after the date of the Approval Order, neither
Trustee nor the Estate will enter into any contract or commitment relating to
the Station or the Station Assets (except time sales agreements in the Ordinary
Course), or amend or terminate any Assumed Contract (or waive any material right
thereunder) without the prior written consent of Buyer.
6.2 Access to Station and Operating Statements. Between the
date of this Agreement and the Closing Date, Trustee shall give Buyer and
Buyer's counsel, accountants, lenders, engineers and other representatives,
reasonable access during normal business hours to all of the Estate's
properties, records and employees relating in any material respect to the
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Station and the Station Assets, including the data underlying the Operating
Statements, and shall furnish Buyer with all information that Buyer reasonably
requests concerning the Station including, without limitation, copies of all
Operating Statements within 25 days of the end of each calendar month occurring
prior to the Closing Date. The rights of Buyer under this Section shall not be
exercised in such a manner as to interfere unreasonably with the business of the
Station and shall be exercised solely for the purpose of (i) verifying the
accuracy of the Trustee's representations and warranties set forth in Article 5,
(ii) verifying Trustee's compliance with Section 6.1, (iii) obtaining financing
with respect to its acquisition of the Station, or (iv) preparing for Closing
and its operation of the Station thereafter.
6.3 Notification. At all times prior to the Closing, Trustee
shall promptly notify Buyer in writing of any fact, condition, event or
occurrence that will or could reasonably be expected to result in the failure of
any representation or warranty of Trustee made in this Agreement to be true and
complete in all material respects, promptly upon becoming aware of the same.
6.4 No Inconsistent Action. Trustee shall not take any action
which is inconsistent with its obligations under this Agreement or that would
hinder or delay the consummation of the transactions contemplated by this
Agreement. Between the date of this Agreement and the Hearing on the Sale
Procedure Motion, Trustee will not seek to enter into and present to the
Bankruptcy Court an agreement with another purchaser for the purchase and sale
of the assets contemplated by this Agreement; provided, however, that at all
times Trustee may solicit additional prospective purchasers to bid at the
Hearing on the Approval Order.
ARTICLE 7
ADDITIONAL COVENANTS
Buyer and Trustee covenant and agree that for the applicable
periods set forth below, they shall act in accordance with the following:
7.1 Reasonable Best Efforts. Prior to the Closing, each party
shall use its reasonable best efforts to cause the fulfillment at the earliest
practicable date of all of the conditions to the obligations of the other party
to consummate the sale and purchase under this Agreement.
7.2 Control of Station. Prior to the Closing, Buyer shall not,
directly or indirectly, control, supervise or direct the operations of the
Station. Such operations shall be the sole responsibility of Trustee and,
subject to the provisions of Article 6, shall be in Trustee's complete
discretion.
7.3 Certain Employees. Buyer shall assume and be liable for
all severance and vacation obligations of the Estate ("Employee Costs") to all
persons currently employed by the Station whom Buyer hires on the Closing Date,
with Trustee reimbursing Buyer as a
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proration under Section 2.10 for the amount of such Employee Costs assumed by
Buyer at Closing.
7.4 Renewal of Assumed Contracts. Prior to the Closing,
Trustee shall use its reasonable best efforts to renew any Assumed Contract
which by its terms expires or terminates between the date of this Agreement and
the Closing Date, provided that any such renewal shall be on terms and
conditions reasonably satisfactory to Buyer. The list of Assumed Contracts
delivered by Buyer pursuant to Section 2.4 shall be amended to reflect such
renewal.
7.5 Post-Closing Covenants. For a period of three years after
the Closing Date, each party agrees to make available to the other party after
Closing, upon request, any records, files, documents and correspondence of the
Station or the Station Assets that are reasonably determined by such party to be
necessary or appropriate in connection with the filing of any report with a
governmental agency or the prosecution or defense of any claim, legal action,
counterclaim, suit, arbitration, governmental investigation, or other legal,
administrative, or tax proceeding, to which the requesting party is a party. The
requesting party shall reimburse the other party for any expenses incurred
pursuant to this Section 7.5, including reimbursement for the time of any of
such party's employees, including any employees of the Station. Each party shall
exercise its rights under this Section 7.5 so as not to unreasonably interfere
with or disrupt the operations of the other party.
7.6 Approval Order. The purchase and sale of the Station
Assets pursuant to this Agreement are subject to the receipt of the Approval
Order. As expeditiously as practicable following the execution of this
Agreement, but in no event later than ten (10) business days after such
execution, the Trustee shall file with the Court the Sale Procedure Motion,
setting forth, among other things, the terms and conditions of this Agreement.
Trustee shall use its best efforts to obtain as expeditiously as possible the
Court's approval of the Sale Procedure Motion and the entry of the Approval
Order. Trustee shall comply with all requirements imposed by the Code and the
Bankruptcy Court in connection with the approval of the Sale Procedure Motion
and the entry of the Approval Order, including, without limitation, providing
appropriate notice of the transactions contemplated by this Agreement to all
known creditors of the Estate (with affidavits of service of such notice being
provided to Buyer). Trustee shall oppose any objections to the issuance of the
Approval Order and any requests for reconsideration or review of the Approval
Order. Trustee shall promptly provide Buyer with a copy of the docket in the
Bankruptcy Proceeding, and Trustee shall promptly provide Buyer with copies, at
Buyer's expense, of any documents on the docket which Buyer may from time to
time specify. Trustee will place Buyer's name and address on the Special Notice
List in the Bankruptcy Proceeding.
7.7 Governmental Consents. Promptly following the execution of
this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any requests for approval or waiver not referred to in
Sections 3.1 and 3.2 that are required from such governmental authorities in
connection with the transactions contemplated hereby and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such requests for approval or waiver and all proceedings
necessary to secure such approvals and waivers.
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ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer at the Closing are subject to
satisfaction of each of the following conditions:
8.1 Representations, Warranties and Covenants.
(a) All representations and warranties of Trustee
made in this Agreement shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of that date.
(b) All of the covenants to be complied with and
performed by Trustee on or prior to Closing Date shall have been complied
with or performed in all material respects.
8.2 Court Approval. The Bankruptcy Court shall have entered
the Approval Order, in form and substance reasonably satisfactory to Buyer and
its counsel, approving the sale of the Station Assets to Buyer. The Approval
Order shall include the following provisions:
8.2.1 Title. The Station Assets shall be sold and conveyed
to Buyer free and clear of all debts, liens, claims, financing leases,
mortgages, security interests, pledges, conditions, charges, encumbrances or
liabilities of any kind or nature except for Assumed Liabilities and liens for
current taxes not yet due and payable pursuant to Section 363 of the Code.
Unless reflected in a document executed by Buyer, Buyer shall not assume or be
liable for (a) any programming contract or other contract, agreement or lease
not expressly assumed by Buyer hereunder, (b) any obligation of Seller arising
out of any contract of insurance, any pension, retirement or profit sharing
plan, or any trust or other benefit plan; (c) any litigation, proceeding, or
claim relating to the business or operation of the Station prior to the Closing,
regardless of whether such litigation, proceeding, or claim is pending,
threatened, or asserted before, on, or after the Closing; or (d) any obligation
(including but not limited to wages, salaries, vacation pay, payroll taxes,
COBRA coverage or severance payments) to or for persons employed by Trustee or
the Station.
8.2.2 Taxes. Buyer shall have no liability for any claims,
obligations or liabilities for taxes, interest and penalties attributable to the
Estate's ownership or operation of the Station or the Estate's ownership or
holding of the Station Assets prior to the Closing Date.
8.2.3 Assumed Contracts. The Assumed Contracts shall be
assigned to and assumed by Buyer pursuant to Section 365 of the Code. As to each
of the Assumed Contracts, the Bankruptcy Court will have entered findings of
fact that Trustee has provided for the prompt cure of all defaults, the prompt
compensation for any actual pecuniary loss resulting from any such defaults and
has provided adequate assurance of future performance
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on the part of Buyer, and the Bankruptcy Court will have entered conclusions of
law that, as of the Closing, all such Assumed Contracts shall be valid, binding,
and enforceable by Buyer in accordance with their respective terms, and the
estate is discharged of any further liability thereunder. Notwithstanding the
foregoing, Buyer's assumption of the Station Lease shall be subject to Section
2.6 of this Agreement.
8.2.4 Successor Liability. Buyer will not be deemed to (a)
be the successor of Riklis Broadcasting Corporation, a/k/a KADY-TV, a/k/a
Pacific Rim Video (the "Debtor") or of the Estate, (b) have de facto or
otherwise merged with or into the Debtor or the Estate or (c) be a continuation
or substantial continuation of the Debtor or the Estate.
8.2.5 Employees. Buyer will have no liabilities (1) for
any taxes or Payments or penalties which have not been paid or made for
employment or persons by Station, (2) for any claims of discrimination or
wrongful termination or hiring, including, without limitation, violations of
federal or state law relating to civil rights, regulations of the United States
Equal Employment Opportunity Commission, or the Americans With Disabilities Act
of 1990, (3) for any claims for severance (recognizing that Buyer has no
obligation to employ any of Station's employees), and (4) for any other claims
by employees of the Station relating to or arising from their employment (or
severance therefrom).
8.2.6 Good Faith Purchaser. The Approval Order shall
provide that the Buyer shall be accorded protection as a "good faith" purchaser
within the meaning of Section 363(m) of the Code.
8.3 FCC Order. The FCC Order shall have been obtained and
shall contain no condition that has or will have a Material Adverse Effect or a
material adverse effect on the business or operations of Buyer.
8.4 Governmental Consents. The governmental approvals and
waivers specified in Section 5.12 shall have been obtained.
8.5 Adverse Proceedings. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any governmental
authority which questions the validity or legality of this Agreement or any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. No injunction or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
8.6 Deliveries. Trustee shall have made all the deliveries set
forth in Section 10.1.
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ARTICLE 9
CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATION TO CLOSE
The obligations of Trustee at the Closing are subject to
satisfaction of each of the following conditions:
9.1 Representations, Warranties and Covenants.
(a) All representations and warranties of Buyer in Article
5 hereof shall be true and complete in all material respects on and as of the
Closing Date as if made on and as of that date.
(b) All the covenants to be complied with and performed by
Buyer on or prior to the Closing Date shall have been complied with or performed
in all material respects.
9.2 Court Approval. The Bankruptcy Court shall have entered
the Approval Order.
9.3 FCC Consent. The FCC Consent shall have been obtained.
9.4 Governmental Consents. The governmental approvals and
waivers specified in Section 5.12 shall have been obtained.
9.5 ▇▇▇▇▇▇ Guarantee. The guarantee of PCC delivered under
Section 2.12 will be in full force and effect, and PCC will have made no attempt
to limit or revoke the guarantee.
9.6 Adverse Proceedings. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any governmental
authority which questions the validity or legality of this Agreement or any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. No injunction or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
9.7 Deliveries. Buyer shall have made all the deliveries set
forth in Section 10.2.
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
10.1 Documents to be Delivered by Trustee. At the Closing,
Trustee shall deliver or cause to be delivered to Buyer the following:
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(a) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Buyer, effecting the sale,
assignment, transfer and conveyance of the Station Assets to Buyer, including,
but not limited to, the following:
(i) assignments of the Station Licenses;
(ii) bills of sale for all Personal Property;
(iii) assignment of the Intellectual Property set
forth on Schedule 5.3;
(iv) assignments of the Assumed Contracts;
(v) assignments of all intangible personal property
of the Estate including all books, records, logs and similar assets which do not
constitute Excluded Assets;
(b) a certificate, dated as of the Closing Date, executed
by Trustee, certifying his fulfillment of the closing condition set forth in
Section 8.1;
(c) opinions of counsel to Trustee, dated the Closing
Date, in form and substance reasonably satisfactory to Buyer;
(d) a certified copy of the Approval Order; and
(e) such other documents as may reasonably be requested by
Buyer's counsel.
10.2 Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver or cause to be delivered to Trustee the following:
(a) immediately available wire-transferred funds as
provided in Section 2.9;
(b) instruments, in form and substance reasonably
satisfactory to counsel to Trustee, pursuant to which Buyer assumes the Assumed
Contracts and the Assumed Liabilities;
(c) the guarantee of PCC required by Section 2.12;
(d) a certificate, dated as of the Closing Date, executed
by an officer of Buyer, certifying Buyer's fulfillment of the closing condition
set forth in Section 9.1;
(e) opinion of counsel to Buyer, dated the Closing Date,
in form and substance reasonably satisfactory to Trustee;
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(f) certified resolutions of the board of directors of
Buyer, authorizing the execution, delivery and performance of this Agreement;
and
(g) such other documents as may be reasonably requested by
Trustee's counsel.
ARTICLE 11
TAXES; FEES AND EXPENSES
11.1 Transfer Taxes and Similar Charges. Buyer shall pay all
recordation, transfer, sales and documentary taxes and fees in respect of
transferring the Station Assets in accordance with this Agreement.
11.2 Expenses. Except as set forth in Section 12.1, each party
hereto shall be solely responsible for all costs and expenses incurred by it in
connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement.
11.3 Personal Property Taxes. All personal property taxes owed
or prepaid by the Trustee for real or personal property included in the Station
Assets shall be prorated pursuant to Section 2.10.
ARTICLE 12
BROKER'S COMMISSION OR FINDER'S FEE
12.1 Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Trustee that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, nor has it or any person or entity acting on its behalf taken
any action on which a claim for any such payment could be based. Buyer further
agrees to indemnify and hold Trustee and the Estate harmless from and against
any and all claims, losses, liabilities and expenses (including reasonable
attorney's fees) arising out of a claim by any person or entity based on any
such arrangement or agreement made or alleged to have been made by Buyer.
12.2 Trustee's Representation and Estate's Agreement to
Indemnify. Trustee represents and warrants to Buyer that, except for the
agreement with Broker, neither he nor any person or entity acting on its behalf
has agreed to pay a commission, finder's fee or similar payment in connection
with this Agreement or any matter related hereto to any person or entity, nor
has he or any person or entity acting on his behalf taken any action on which a
claim for any such payment could be based. Any commission, fee or payment due
Broker in connection with the transactions contemplated by this Agreement shall
be paid by
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the Estate. Trustee on behalf of the Estate agrees that the Estate shall
indemnify and hold Buyer harmless from and against any and all claims, losses,
liabilities and expenses (including reasonable attorneys' fees) arising out of a
claim by any person or entity based on any such arrangement or agreement made or
alleged to have been made by the Estate.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Buyer. Buyer agrees to indemnify and
hold harmless Trustee and the Estate, their Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
(the "Estate Indemnitees") from and against, and pay or reimburse the Estate
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in connection with the investigation or defense
thereof or in asserting any of their respective rights hereunder resulting from
or arising out of:
(a) any inaccuracy in any representation or warranty made
by Buyer herein or in any certificate, document or instrument delivered to the
Estate hereunder;
(b) any failure of Buyer to perform any covenant or
agreement hereunder or fulfill any other obligation in respect hereof;
(c) any Assumed Liability; and
(d) the ownership of the Station Assets or the operation
of the Station subsequent to the Closing.
13.2 Indemnification by the Estate. Notwithstanding the
Closing, the Estate shall indemnify and hold harmless Buyer, its Affiliates and
the officers, directors, employees, agents, advisers and representatives of each
such Person (the "Buyer Indemnitees") from and against, and pay or reimburse
each Buyer Indemnitee for, any and all claims, liabilities, obligations, losses,
fines, costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or nor resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in connection with the investigation or defense
thereof or in asserting any of their respective rights hereunder resulting from
or arising out of:
(a) any inaccuracy in any representation or warranty made
by Trustee herein or in any certificate, document or instrument delivered to
Buyer hereunder;
(b) any failure of the Trustee or the Estate to perform
any covenant or agreement hereunder or fulfill any other obligation in respect
hereof;
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(c) any liabilities arising under the Station Licenses or
the Assumed Contracts which relate to events occurring prior to the Closing
Date; and
(d) the ownership of the Station Assets or the operation
of the Station prior to the Closing.
13.3 Survival; Limitations. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of six (6) months. Any
amounts remaining in the Indemnification Fund at the end of such six month
period, and not held in reserve for a claim made prior to the expiration of such
period, shall be retained by the Trustee as part of the Purchase Price free of
any further claims by Buyer.
13.4 Indemnification Fund; Procedure for Indemnification. An
aggregate of $500,000, consisting of the Deposit and $150,000 of the Purchase
Price paid to Trustee by Buyer at Closing pursuant to Section 2.9, plus all
interest earned thereon (the "Indemnification Fund") shall be held by the
Trustee and applied to pay Buyer's claims for indemnification under this Section
13 in accordance with the terms of this Section 13. The Indemnification Fund
shall be placed by the Trustee in an interest bearing account and segregated
from all other funds held by the Trustee. The indemnification fund will be
disbursed in accordance with this Section 13, Section 14.2 and Section 15. The
procedure of indemnification shall be as set forth in this Section 13. Buyer's
remedy hereunder for claims against Trustee or the Estate under this Agreement
shall be solely recoverable from the Indemnification Fund, except as approved by
the Bankruptcy Court for claims for which the only recourse is against the
Estate.
13.5 Procedures for Indemnification.
(a) The party claiming indemnification (the "Claimant")
shall promptly give written notice of the claim to the party from whom
indemnification is claimed (the "Indemnifying Party"), whether involving a claim
between the parties or brought by a third party, specifying (i) in reasonable
detail the factual basis for the claim, and (ii) the amount of the
Indemnification Fund to be reserved against the claim (if Buyer is the
Claimant). If the claim relates to an action, suit or proceeding filed by a
third party against the Claimant, such notice shall be given by the Claimant
within ten days after written notice of such action, suit, or proceeding was
given to the Claimant. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the Indemnifying
Party and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If Buyer and Trustee agree at or prior to
the expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, Trustee shall immediately
disburse to Buyer such portion of the Indemnification Fund as shall be necessary
to reimburse Buyer for such claim, if Buyer is the Claimant, or Buyer shall
reimburse the Estate for such claim, if the Estate is the Claimant. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any
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mutually agreed upon extension thereof), the Claimant may seek from the Court an
appropriate remedy at law or inequity.
(b) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(c) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(d) The indemnifications rights provided in this Section shall
extend to the shareholders, directors, officers, employees, and representatives
of any Claimant, although for the purpose of the procedures set forth in this
Section 13.5, any indemnification claims by such parties shall be made by and
through the Claimant.
13.6 Attorneys' Fees. In the event of a default by either
party which results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the other party of its reasonable legal fees and expenses.
13.7 Administrative Expense. In the event that Buyer makes a
claim against the Estate pursuant to this Section 13, Trustee acknowledges and
agrees that such a claim shall constitute an administrative expense under
Section 503 of the Bankruptcy Code.
ARTICLE 14
TERMINATION RIGHTS
14.1 Termination. This Agreement may be terminated by Buyer or
Trustee as set forth below, upon written notice to the other upon the occurrence
of any of the following, provided that the party seeking to terminate is not in
material default or breach of this Agreement:
(a) by either Buyer or Trustee:
(i) if the Closing has not occurred within one year
of the date of the Approval Order.
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(ii) if the Bankruptcy Court fails to issue the
Approval Order in favor of Buyer as provided in Section 3.1 within 6 months of
the date of this Agreement;
(iii) if the FCC denies the FCC Application or any
part thereof or designates any part of it for a trial-type hearing or if either
party elects to terminate this Agreement pursuant to Section 3.2; or
(iv) if there shall be in effect any final judgment,
final decree or order that would prevent or make unlawful the Closing.
(b) by Buyer:
(i) pursuant to Section 16.2;
(ii) if the regular broadcast transmission of the
Station from its main broadcasting antenna at full authorized effective radiated
power is interrupted for a period of more than 5 consecutive days in any 30 day
period;
(iii) if any material representation or warranty of
Trustee made in Article 5 is untrue or incomplete in any respect and such breach
is not cured within 10 Business Days of Trustee's receipt of written notice from
Buyer that such breach exists or has occurred;
(iv) if Trustee defaults in the performance of any
material covenant or agreement hereunder, including, without limitation, its
obligation to close under this Agreement, and such breach is not cured within 10
Business Days of Trustee's receipt of written notice from Buyer that such
default exists or has occurred;
(v) if any other condition contained in Article 8
has not been performed or satisfied; or
(vi) if the final contents of the Sale Procedure
Motion approved by the Bankruptcy Court varies from the contents of the form of
the Sale Procedure Motion attached hereto and such variation has a material
adverse effect on the interests of Buyer.
(c) by Trustee:
(i) if any material representation or warranty of
Buyer made herein or in any certificate, document or instrument delivered by
Buyer hereunder is untrue or incomplete in any respect and such breach is not
cured within 10 Business Days of Buyer's receipt of written notice from Trustee
that such breach exists or has occurred;
(ii) if Buyer defaults in the performance of any
material covenant or agreement hereunder, including, without limitation, its
obligation to close under this Agreement, and such breach is not cured within 10
Business Days, or in the case of
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payment of the Purchase Price one Business Day, of Buyer's receipt of written
notice from Trustee that such default exists or has occurred; or
(iii) if any other condition contained in Article 9
has not been performed or satisfied.
14.2 Liability. In the event of the termination of this
Agreement under Section 14.1, this Agreement shall become void and have no
effect, without any liability to any Person in respect hereof, except that the
provisions of Section 11.2, Article 12, Article 13, Article 15, Sections 16.6,
16.7 and 16.8 and the Confidentiality Agreement shall survive any such
termination. In the event of the termination of this Agreement by Buyer pursuant
to Section 14.1(b) or by Buyer or Trustee pursuant to Section 14.1(a), then
Trustee shall return the Deposit, with accrued interest, to Buyer promptly
following the date of such termination. In the event of any other termination of
this Agreement the Deposit (and accrued interest) shall be non refundable and be
retained by Trustee. The retention of the Deposit by Trustee shall be without
prejudice to Trustee's right to seek any and all other remedies available at
law, including without limitation, a suit for monetary damages, except that the
Deposit (and accrued interest) shall be credited against the amount of any
damages recoverable by Trustee or the Estate from Buyer.
ARTICLE 15
REMEDIES UPON DEFAULT
15.1 Buyer's Remedies. If the transactions contemplated by
this Agreement are not consummated due to the default of Trustee and Buyer shall
not be in material breach or default hereunder, Buyer shall be entitled to (i)
elect to terminate this Agreement under Section 14.1, (ii) recover the Deposit,
with accrued interest, pursuant to Section 14.2, and (iii) seek any remedies at
law or in equity that it may have against the Estate arising from such default
by Trustee, including without limitation, the right to bring a suit for monetary
damages; provided, however, that monetary damages shall be limited to actual
damages and shall be recoverable only against the Estate; and provided, further,
that Buyer may seek specific performance only to require Trustee to consummate
the transaction contemplated by this Agreement if every condition precedent has
been satisfied, but Buyer may not require Trustee to incur any material expenses
or liabilities to satisfy any condition precedent.
15.2 Trustee's Remedies. If the transactions contemplated by
this Agreement are not consummated due to the default of Buyer and Trustee shall
not be in material breach or default hereunder and Trustee shall, on behalf of
the Estate, be entitled to seek any and all remedies available at law, including
without limitation, a suit for monetary damages, except that the Deposit (and
accrued interest) shall be credited against the amount of any damages
recoverable by Trustee or the Estate from Buyer.
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ARTICLE 16
OTHER PROVISIONS
16.1 Disclaimer of Representations and Warranties; Trustee's
Knowledge; As Is.
(a) Trustee is a trustee in bankruptcy and makes no title
warranties as to the Station Assets, but conveys only such right, title, and
interest as is conveyed by the Approval Order.
(b) Other than as expressly set forth in Article 5 hereof
or the Schedules, Trustee does not make, and has not made, any representations
or warranties, express or implied, relating to the Estate, the Station, the
Station Assets, the business or operations of the Station or otherwise in
connection with the transactions contemplated by this Agreement. Trustee
expressly disclaims all other warranties including, but not limited to the
warranties of merchantability and fitness for a particular purpose. Without
limiting the generality of the foregoing, Trustee has not made, and shall not be
deemed to have made, any representations or warranties in any information which
is made available to Buyer or its representatives by or on behalf of Trustee
(including, without limitation, any Confidential Offering Memorandum) prior to
the date hereof in any presentation in connection with the transactions
contemplated hereby (collectively, the "Information"). It is understood that any
revenue or cost estimates, projections or other predictions, any data, any
financial information or any memoranda or offering materials or presentations
included in the Information, are not and shall not be deemed to be or to include
representations or warranties of Trustee except to the extent that such
information is included in the Schedules. No person has been authorized by
Trustee to make any representation or warranty relating to the Estate, the
Station, the Station Assets, the business or operations of the Station or
otherwise in connection with the transactions contemplated by this Agreement and
if made, such representation or warranty must not be relied upon as having been
authorized by Trustee.
(c) Notwithstanding anything to the contrary contained in
this Agreement or in any of the Schedules, any information disclosed in one
Schedule shall be deemed to be disclosed in all Schedules.
16.2 Risk of Loss. The risk of loss or damage to any of the
Personal Property or improvements on Real Property comprising part of the
Station Assets prior to the Closing shall be upon the Estate. The Estate shall
repair, replace and restore to its prior condition any material damage to or
loss of such Personal Property as soon as possible. If the Estate is unable or
fails to restore or replace a lost or damaged material Personal Property prior
to the Closing, Buyer may elect (i) to terminate this Agreement, but only if the
failure to restore or replace a lost or damaged material Station Assets
continues for a period in excess of 60 days from the date that would be the
Closing Date without consideration of this Section 16.2, (ii) to consummate the
transactions contemplated by this Agreement on the Closing Date, in which event
Trustee shall assign to Buyer at Closing the Estate's rights under any insurance
policy or pay over to Buyer all proceeds of insurance covering such Personal
Property's damage, destruction or loss, or (iii) delay the Closing
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Date until a date within 15 Business Days after Trustee gives written notice to
Buyer of completion of the restoration or replacement of such Station Assets. If
the delay in the Closing Date under this Section 16.2 would cause the Closing to
occur at any time after the period permitted by the FCC Consent, Trustee and
Buyer shall file an appropriate request with the FCC for an extension of time
within which to complete the Closing.
16.3 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Buyer may not assign this Agreement without the prior
written consent of Trustee except that Buyer may assign its rights and
obligations under this Agreement to one or more of its Affiliates designated by
Buyer in writing to Trustee prior to the Closing Date; provided, however, that
any such assignment shall not relieve Buyer from any of its obligations under
this Agreement and provided that any such assignment does not delay the Closing
Date.
16.4 Entire Agreement; Amendments. This Agreement, the
Confidentiality Agreement and the exhibits and schedules hereto and thereto
embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein or therein. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any amendment, waiver or consent is
sought.
16.5 Headings. The headings set forth in this Agreement are
for convenience only and will not control or affect the meaning or construction
of the provisions of this Agreement.
16.6 Choice of Law; Jurisdiction; Venue. The construction and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of California without giving effect to principles of
conflicts of law. Each of the parties hereto hereby irrevocably and
unconditionally consents and submits to the exclusive jurisdiction of the
Bankruptcy Court (or if the Bankruptcy Court declines jurisdiction such other
federal or state courts as are located in the County of Ventura, State of
California) for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby (and each of the parties
hereto agrees not to commence any action, suit or proceeding relating thereto
except in such courts), and each of the parties hereto further agrees that
service of any process, summons, notice or document pursuant to Section 16.8
below shall be effective service of process for any action, suit or proceeding
brought against such parties in any such courts. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the foregoing courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such courts that any such action, suit or proceeding brought in any such courts
has been brought in an inconvenient forum.
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16.7 Attorneys' Fees. If any legal action is necessary to
enforce the terms and conditions of this Agreement, the prevailing party shall
be entitled to recover all costs of suit and reasonable attorneys' fees as
determined by a court of competent jurisdiction.
16.8 Notices. All notices, requests, demands, letters, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, or
(c) sent by next-day or overnight mail or delivery as follows:
To the Trustee: ▇▇▇▇ ▇. ▇▇▇▇, Trustee
c/o ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Crossroads V Communications
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
To Buyer: ▇▇▇▇▇▇ Communications of Los Angeles-63, Inc.
c/o Paxson Communications Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Copy to: Dow ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day after such delivery, (x) if by certified
or registered mail, on the fifth Business Day after the mailing thereof, or (y)
if by next-day or overnight mail or delivery, on the day delivered.
16.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
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16.10 Time of the Essence. Time is of the essence of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, Trustee
▇▇▇▇▇▇ Communications
of Los Angeles-63, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: PRESIDENT
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III, ESQ. (Bar No. 94022)
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ. (Bar No. 15889)
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attorneys for ▇▇▇▇ ▇▇▇▇, Chapter 11
Trustee of Riklis Broadcasting Corporation,
aka KADY-TV, aka Pacific Rim Video, and
Consolidated Entities HBC Holdings, Inc.
and KADE Broadcasting, Inc.
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) ▇▇▇▇ ▇▇. ▇▇ ▇▇-▇▇▇▇▇
)
) CHAPTER 11
)
RIKLIS BROADCASTING ) [Memorandum Of Points And Authorities,
CORPORATION, aka KADY-TV, aka ) Declaration Of ▇▇▇▇ ▇. ▇▇▇▇ In Support
PACIFIC RIM VIDEO, ) Thereof, Application for Order
) Shortening Time, Order Shortening Time
) filed concurrently herewith]
)
Debtor. ) [11 U.S.C. section 327]
)
) DATE:
) TIME:
) PLACE: Courtroom 104
) ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________________) ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NOTICE OF MOTION AND TRUSTEE'S MOTION (1) TO APPROVE OVERBID
PROCEDURES AND BREAKUP FEE FOR SALE OF DEBTOR'S BROADCAST
ASSETS AND STATION LICENSE AND TO SCHEDULE SALE HEARING, AND
(2) TO SHORTEN TIME ON THE TRUSTEE'S MOTION TO ASSUME AND
ASSIGN CONTRACTS TO OVERBIDDERS
TO THE ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, UNTIED STATES BANKRUPTCY JUDGE AND ALL
PARTNERS REQUESTING SPECIAL NOTICE, AND THE OFFICE OF THE UNITED STATES
TRUSTEE:
39
PLEASE TAKE NOTICE that on the date set forth in the Court's Order
Shortening Time on this Motion, in Courtroom 104, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇, Chapter 11 Trustee (the "Trustee") of
Riklis Broadcasting Corporation, aka KADY-TV, aka Pacific Rim Video, and
Consolidated Entities HBC Holdings, Inc. ("HBC") and KADE Broadcasting, Inc.
("KBI") will move and does hereby move that the Court enter an order approving
the Trustee's Motion (1) To Approve Overbid Procedures And Breakup Fee For Sale
Of Debtor's Broadcast Assets And Station License And To Schedule Sale Hearing,
And (2) To Shorten time on the Trustee's Motion to Assume And Assign Contracts
To Overbidders ("Motion"). By the Motion, the Trustee seeks to obtain an order
(i) authorizing the overbid procedures ("Overbid Procedures") which are set
forth in paragraph 1 of this Motion and Section 3.1 of the draft Asset Purchase
Agreement between ▇▇▇▇▇▇ Communications of Los Angeles-63, Inc. ("▇▇▇▇▇▇") and
the Trustee ("Asset Purchase Agreement") for the sale of the Debtor's broadcast
license and station assets (all as defined in Section 2.2 of the Asset Purchase
Agreement) used in connection with the broadcast and transmission of KADY-TV,
Oxnard, California ("KADY" or the "Station"); (ii) authorizing the Trustee to
incur and pay a breakup fee obligation ("Breakup Fee") to ▇▇▇▇▇▇ if Paxon is
not the successful purchaser of the station assets as described in paragraph 1
of this Motion and Section 3.1 of the Asset Purchase Agreement; (iii)
scheduling a hearing for August 14, 1997 at 2:00 p.m. on the Trustee's motion
to approve the sale of assets to ▇▇▇▇▇▇ pursuant to the terms of the Asset
Purchase Agreement; and (iv) shortening the time on the Trustee's Motion, if
any, to assume and assign contracts to overbidders to seven (7) calendar days
prior to the hearing on the approval of the sale of the Station (the "Approval
Hearing"), and the extending the time for the filing by any third parties of
objections to the assumption and assignment of such contract to two Court days
prior to the Approval Hearing.
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I.
BACKGROUND
----------
This case was commenced as an involuntary case on March 22, 1996. The
order for relief was entered, a Chapter 11 trustee was ordered appointed, on
July 8, 1996, and immediately thereafter, ▇▇▇▇ ▇. ▇▇▇▇ was appointed Chapter 11
trustee.
The Trustee immediately determined that the appropriate business plan
was to arrange a sale as a going concern of the Debtor's broadcast license and
broadcast assets as a going concern. However, the Trustee needed to resolve
certain operational and legal issues prefatory to arranging a sale, which have
now been accomplished through substantive consolidation of HBC and KBI with RBC
and through the Trustee's efforts to repair deferred maintenance and correct
certain licensing deficiencies.
In November, 1996, the Trustee obtained a Court order authorizing the
retention of a media broker, Media Services Group ("Broker"), to market the
Station, and in February, 1997, the Trustee and the Broker completed marketing
materials. The Broker publicized the availability of the Station and
disseminated marketing materials to approximately 90 interested persons and
groups, each of which signed a confidentiality agreement governing the further
dissemination of such documents.
II.
THE ASSET PURCHASE AGREEMENT
----------------------------
In early April, 1996, the Trustee received two offers to purchase the
broadcast assets of the Station, including its licenses. Upon further
negotiation and due diligence concerning the offers, the Trustee has concluded
that ▇▇▇▇▇▇'▇ offer is the preferable offer.
Pursuant to the Asset Purchase Agreement, Paxon has offered to purchase
the Station assets for a total purchase price of $8,000,000, plus the
assumption of Assumed Contracts as this term is defined in the Asset Purchase
Agreement, including the post-closing obligations due under the personal
property leases related to the operation of the Station, subject to the
election not to assume the Station lease pursuant to Section 2.6 of the Asset
Purchase Agreement and the KTIE Settlement Agreement. The entirety of the
$8,000,000 is
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to be paid in cash at or before the closing, provided, however, that the sum of
$500,000 shall be retained by the Trustee in a separate and segregated account
for a period of six months after the closing to provide a fund for the payment
of indemnity claims arising in favor of ▇▇▇▇▇▇ and against the estate
post-closing, as more particularly set forth in Section 13.4 of the Asset
Purchase Agreement.
The Asset Purchase Agreement contains provisions for overbidding by
qualified third parties that may be interested in offering more consideration
than ▇▇▇▇▇▇ to buy the assets provided that such overbidders comply with the
Overbid Procedures set forth in paragraph 1 below and Section 3.1 of the Asset
Purchase Agreement. In addition, the Asset Purchase Agreement provides for a
$120,000 Breakup Fee to be paid to ▇▇▇▇▇▇ if it is not a successful purchaser
of the Station assets. The Overbid Procedure and Breakup Fee include the
following:
1. The Trustee shall not accept, or be required to accept, any bid
or combination of bids ("Overbid"), except for a Qualifying Overbid (as defined
below) by any overbidder ("Overbidder") for a sale of less than all of the
Station assets. In order to constitute a Qualifying Overbid, and Overbid must
meet the following terms and conditions:
(a) All Overbids shall be in the same form as the Asset
Purchase Agreement and shall show, by appropriate and legible notations of
deletions, insertions and other modifications, all changes from the Asset
Purchase Agreement, provided, however, that there shall be no materials changes
to the Trustee's representation, warranties, covenants, or other obligations
thereunder.
(b) At least 10 calendar days prior to any hearing on the
sale, all Overbidders, in order to qualify, must deposit with the Trustee a
$200,000 cash deposit, unless the Trustee waives the ten (10)-day requirement
as to any one or more bidders, in the Trustee's sole and absolute discretion.
At or before the conclusion of the P Approval Hearing, any such Overbidder must
deliver to the Trustee, by way of a cashiers's check tendered at the Approval
Hearing (or a wire transfer received by the Trustee before the Approval
Hearing) an additional sum of $270,000, to create a total deposit by such
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Overbidder of $470,000. Such deposit will be non-refundable and credited toward
the purchase price if such Overbidder is the successful bidder or will serve as
a damage deposit if such Overbidder is the successful bidder but defaults in
the purchase of the Station assets.
(c) The initial Overbid must exceed the purchase price
offered by ▇▇▇▇▇▇ by at least $200,000, must contain a cash component of at
least $8,200,000, and must (i) identify with the particularity the contracts
which the Overbidder desires to assume (the "Overbidder's Contracts"), (ii)
include either assumption of all of the Assumed Contracts in the Asset Purchase
Agreement or payment of an amount sufficient to satisfy any Assumed Contract(s)
which the Overbidder intends to reject, and (iii) shall contain financial
information sufficient in the sole opinion of the Trustee to enable the Court
to order assumption and assignment of Overbidder's Contracts to the Overbidder.
(d) After the initial Overbid, all Overbids must be in
minimum incremental amounts of $20,000. The Overbidder must seek to acquire all
of the Station assets, on terms and conditions not less favorable to the
Trustee than the terms and conditions set forth in the Asset Purchase
Agreement.
(e) All Overbidders must demonstrate, on or before 10
calendar days prior to the hearing (unless such ten-day requirement is waived
by the Trustee), their financial qualifications to purchase the Station and
provide adequate assurance of future performance of the Overbidder's Contracts
to Trustee's sole satisfaction.
(f) The Trustee shall pay a Breakup Fee to ▇▇▇▇▇▇ if ▇▇▇▇▇▇
is not the successful purchaser of the Station assets by reason of the
Bankruptcy Court's approval of a Qualifying Overbid. The amount of the Breakup
Fee shall be $120,000, payable out of the successful Overbidder's deposit upon
entry of the Bankruptcy Court's order approving the sale to such Overbidder.
The Bankruptcy Court's order approving the sale motion shall specifically
authorize payment of the breakup fee to ▇▇▇▇▇▇.
(g) The Trustee proposes to send notice of the proposed
motion to approve sale to ▇▇▇▇▇▇ and the order setting such motion and
approving overbidding procedures (the "Sale Procedure and Overbid Order") by
first class mail to all creditors and
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parties in interest, and to cause the Broker to send a one-page summary of the
Sale Procedure and Overbid Order to all of the approximately 800 parties on the
Broker's contact list, and take the order actions set forth in the Broker's
letter to ▇▇▇ ▇▇▇▇▇▇▇ dated June 2, 1997, a copy of which is attached as Exhibit
"2" to the Declaration of ▇▇▇▇ ▇. ▇▇▇▇ filed concurrently herewith.
2. In order to facilitate the assumption and assignment to an
Overbidder of such Overbidder's Contracts, the Trustee also requests that the
Court shorten time on the filing of a motion by the Trustee to assume and assign
an Overbidder's Contracts to an Overbidder until seven (7) calendar days before
the Approval Hearing. Overbids are due at least 10 calendar days before
Approval Hearing, and the Trustee believes that this shortening of time will
enable any Overbids to be heard and ruled upon at the time of the Approval
Hearing. Since the Trustee will have already scrutinized the financial
capacity of the Overbidder in determining whether the bid constitutes a
Qualified Bid, and the Court in approving the sale will be making a
determination of an Overbidder's ability to consummate the sale transaction,
the Trustee believes that this provides the third party with an adequate
opportunity to object to the assumption and assignment of the Overbidder's
Contracts. Accordingly, the Trustee requests that the Court shorten the time
for the filing and service by personal delivery of a motion to assume and
assign contracts identified by the Overbidder for assumption and assignment
until seven (7) calendar days prior to the Approval Hearing, and to allow third
parties to such contracts to interpose objections to the Overbidder's adequacy
of assurance of future performance until two Court days prior to the Approval
Hearing.
3. Subject to the possibility of generating an Overbid by other
qualified buyers, the Trustee believes that the ▇▇▇▇▇▇ proposal represents a
good faith and fair offer for the Station assets negotiated at arm's length and
that this is an appropriate time to sell the Station assets. Accordingly, the
Trustee believes that the foregoing Overbid Procedures and Breakup Fee are
reasonable, in the best interest of creditors and the estate, and that they will
ensure the expeditious closing of sale of the assets which will then facilitate
the proposal of a plan in this case.
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4. As the Court is aware, the Trustee has always intended to sell the
Station as a going concern as an integral part of this business plan. The
proposed sale to ▇▇▇▇▇▇, subject to the Overbid Procedures, provides a fair,
reasonable and efficient sale of the Station assets and will facilitate proposal
of a plan in the Debtor's case.
5. This Motion is based upon the Memorandum of Points and Authorities
and Declaration of ▇▇▇▇ ▇. ▇▇▇▇ filed in support hereof, and such other matters
as the Court may consider at or prior to the hearing on the Motion.
PLEASE TAKE FURTHER NOTICE that any party in interest intending to oppose
the relief sought in this Motion must file and serve opposition no later than
the date specified in the order setting the hearing on the Motion. Failure to
file and serve the opposition as set forth above may constitute to the relief
requested.
The Trustee believes that appropriate notice of this Motion would be by
service by facsimile or overnight delivery on parties who received the
application for the order shortening time on this Motion, of the order setting
the hearing on this Motion.
WHEREFORE, the Trustee respectfully requests that the Court enter its
order:
(1) granting this Motion;
(2) approving the Overbid Procedures and the payment of the Breakup
Fee;
(3) setting the hearing on the Trustee's motion to approve the sale of
the Station assets pursuant to the Asset Purchase Agreement;
(4) finding that notice of this Motion is adequate under the
circumstances;
(5) finding that notice of the proposed sale to ▇▇▇▇▇▇ and the Overbid
Procedures as set forth in paragraph 1(f) hereof is appropriate;
(6) shortening the time for the Trustee's motion to assume and assign
the Overbidder's Contracts until seven calendar days prior to
Approval Hearing and for a third party's objection to the adequacy
of assurance of further performance until two Court days prior to
the Approval Hearing, and that any such motions and oppositions be
served by facsimile or overnight delivery; and
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(7) granting such other and further relief as the Court deems just and
proper.
DATED: June __, 1997 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
By:
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
Attorneys for ▇▇▇▇ ▇▇▇▇, Chapter 11 Trustee
of Riklis Broadcasting Corporation, aka
KADY-TV, aka Pacific Rim Video, and
Consolidated Entities HBC Holdings, Inc.
and KADE Broadcasting, Inc.
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