ASSET PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
AND
MAX TELEVISION COMPANY
MAX MEDIA PROPERTIES LLC
AND
MAX MEDIA PROPERTIES II LLC
TABLE OF CONTENTS
1. DEFINITIONS.................................................................3
2. SALE OF ASSETS/EXCLUDED ASSETS..............................................3
2.1. Sale of Assets.......................................................3
2.2. RESERVED.............................................................3
3. PURCHASE PRICE..............................................................4
3.1. Payment..............................................................4
4. CLOSING.....................................................................4
5. REPRESENTATIONS AND WARRANTIES OF SELLERS...................................4
5.1. RESERVED.............................................................4
5.2. Representations and Warranties as to the Company.....................4
5.3. Representations and Warranties as to the MMP and the FCC Licensee
Entities......................4
a. Organization and Good Standing....................................5
b. Capitalization of MMP.............................................5
c. Organization and Capitalization of the FCC License Entities.......5
d. No Conflicts......................................................6
e. Real Property.....................................................6
f. Personal Property.................................................6
g. Financial Statements..............................................6
h. FCC...............................................................6
i. Intellectual Property.............................................7
j. Employee Benefit Plans............................................7
k. Labor.............................................................8
l. Insurance.........................................................8
m. Material Contracts................................................8
n. Compliance with Laws..............................................8
o. Litigation........................................................9
p. Consents..........................................................9
r. Tax Matters.......................................................9
s. Accounts Receivable..............................................11
t. RESERVED.........................................................11
5.4. RESERVED............................................................11
i
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER................................11
6.1. Organization and Good Standing......................................11
6.2. Execution and Effect of Agreement...................................12
6.3. No Conflicts........................................................12
6.4. Consents............................................................12
6.5. Litigation..........................................................12
6.6. No Brokers..........................................................12
6.7. Purchaser Qualifications............................................13
7. ADDITIONAL PROVISIONS REGARDING REPRESENTATIONS AND WARRANTIES.............13
7.1. Limitation; Survival................................................13
8. TAX MATTERS................................................................13
8.1. RESERVED............................................................13
8.2. Tax Returns.........................................................13
8.3. Apportionment.......................................................14
8.4. Cooperation in Tax Matters..........................................15
8.5. Certain Taxes.......................................................15
8.6. FIRPTA..............................................................15
8.7. [Section 754 Election...............................................15
8.8. Closing Date Actions................................................15
9. ADDITIONAL COVENANTS AND UNDERTAKINGS......................................16
9.1. Further Assurances and Assistance..................................16
9.2. Access to Information..............................................16
9.3. Conduct of Business Prior to Closing...............................16
9.4. H-S-R Act..........................................................19
9.5. FCC Application....................................................19
9.6. Books and Records..................................................20
9.7. RESERVED...........................................................20
9.8. RESERVED...........................................................20
9.9. Interpretation of Certain Provisions...............................20
9.10. RESERVED...........................................................20
9.11. RESERVED...........................................................20
9.12. RESERVED...........................................................20
9.13. RESERVED...........................................................20
9.14. RESERVED...........................................................20
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10. INDEMNIFICATION...........................................................21
10.1. Indemnification of Purchaser by Sellers.............................21
10.2. Indemnification of Sellers by Purchaser.............................21
10.3. Limitations and Other Provisions Regarding Indemnification
Obligations.........................................................22
10.4. Notice of Claim Defense of Action...................................24
10.5 Tax Contests........................................................25
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES TO CLOSE...............26
11.1. Conditions Precedent to the Obligation of Purchaser................26
12. DELIVERIES AT THE CLOSING.................................................29
12.1. Deliveries by Sellers..............................................29
12.2. Deliveries by Purchaser............................................30
13. EXPENSES..................................................................30
14. TERMINATION...............................................................31
14.1 Termination........................................................31
14.2 Procedure and Effect of Termination................................31
15. NOTICES...................................................................32
16. SELLERS' AGENTS...........................................................34
16.1. Sellers' Agents....................................................34
17. MISCELLANEOUS.............................................................35
17.1. Headings..........................................................35
17.2. Schedules and Exhibits............................................35
17.3. Execution in Counterparts.........................................35
17.4. Entire Agreement..................................................35
17.5. Governing Law.....................................................36
17.6. Modification......................................................36
17.7. Successors and Assigns............................................36
17.8. Waiver............................................................36
17.9. Severability......................................................36
17.10. Announcements.....................................................37
17.11. Specific Performance..............................................37
iii
17.12 Fees and Expenses.................................................37
17.13 Third Party Beneficiaries.........................................37
17.14 Interpretation....................................................37
ANNEX 1 - DEFINITIONS
---------------------
ANNEX 2 - SELLERS
-----------------
EXHIBITS
A - MMP II Assignment and
Assumption Agreement
B - Opinion of Counsel,
▇▇▇▇▇ & Stant, P.A.
C - Opinion of Sellers' FCC Counsel
D - Opinion of Counsel,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
SCHEDULES
2.2 -
5.1 - Encumbrances on Stock
5.2 - Organization of Companies
5.3 - Capitalization of Companies
5.4 - Conflicts
5.5 List of Real Property; Permitted
Exceptions
5.6 - Existing Liens and Security Interests
5.7 - Changes Since 1994
5.8 - FCC
5.9 - Exceptions to Intellectual Property
5.10 - Employee Benefits
5.11 - Employee Matters
5.12 - Insurance
5.13 - Material Contracts
5.14 - Compliance with Law
5.15 - Litigation
5.17 - Consents
5.18 - Environmental
5.19 - Taxes
iv
6.3 -
6.4 - Consents
6.5 -
6.7 -
9.3 - Transactions Prior to Closing
9.7 - Employees
v
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of this
_____ day of January, 1998, is entered into by and among ▇▇▇▇▇▇▇▇
Communications, Inc., a Maryland corporation ("Purchaser"), Max Television
Company, a Virginia corporation ("Seller"), Max Media Properties LLC, a Virginia
limited liability company ("MMP"), and Max Media Properties II LLC, a Virginia
limited liability company ("MMP II").
RECITALS:
---------
WHEREAS, Seller owns 100% of the membership interests of MMP II (the
"Assets"); and
WHEREAS, Seller desires to sell, assign and transfer the Assets, and
Purchaser desires to acquire the Assets, all on the terms described herein; and
WHEREAS, on December 2, 1997, the Purchaser entered into a Stock
Purchase Agreement (the "MRI Agreement") to acquire all of the issued and
outstanding shares of Max Radio Inc. ("MRI"). MRI is the owner of 31% of the
equity of MTR Holding Corp., a Virginia corporation ("MTR"), 3,069,000 Class A
Membership Units (out of a total 11,631,431 Membership Units) of MMP, and a 2%
limited partnership interest in Radio License L.P., a Virginia limited
partnership ("RLLP"), the holder of the FCC Licenses of the Radio Stations (as
defined below); and
WHEREAS, on December 2, 1997, the Purchaser entered into a Stock
Purchase Agreement (the "Investors Agreement") to acquire all of the issued and
outstanding shares of Max Investors, Inc., a Virginia corporation ("Investors").
Investors is the owner of 3,133,897 Class C Membership Units (out of a total
11,631,431 Membership Units) of MMP; and
WHEREAS, on December 2, 1997, the Purchaser entered into an Asset
Purchase Agreement (the "Management Agreement") to acquire from Max Management
LLC, a Virginia limited liability company ("Management"), 188,034 Class C
Membership Units (out of a total of 11,631,431 Membership Units) of MMP; and
WHEREAS, on December 2, 1997, the Purchaser entered into an Asset
Purchase Agreement to acquire from Seller 5,140,500 Class B Membership Units
(out of a total of 11,631,431 Membership Units) of MMP, 69% of the equity of MTR
and a 2% limited partnership interest in the Television Licensees (as defined
below); and
WHEREAS, MTR is the owner of 100,000 Class C Membership Units (out of a
total 11,631,431 Membership Units) of MMP; and
WHEREAS, MMP is the owner of the operating assets (other than the FCC
Licenses) and operator of television stations WSYT-TV in the Syracuse, New York
market, WMMP-TV in the Charleston, South Carolina market, WKEF-TV in the Dayton,
Ohio market, WEMT-TV in Greeneville, Tennessee, KBSI-TV in Cape Girardeau,
Missouri and KETK-TV in the Tyler, Texas market (each a "Television Station" and
collectively, the "Television Stations"); and
WHEREAS, MMP is the owner of the operating assets (other than the FCC
Licenses) and operator of radio stations WMQX-FM, in Winston-Salem, North
Carolina ("WMQX"), WJMH-FM in Reidsville, North Carolina ("WJMH"), WQMG-AM in
Greensboro, North Carolina ("WQMG-AM"), WQMG-FM in Greensboro, North Carolina
("WQMG"; together with WMQX, WJMH, WQMG-AM, the "Greensboro Stations"), WWDE-FM,
in Hampton, Virginia ("WWDE"), WNVZ-FM, in Norfolk, Virginia ("WNVZ"), WPTE-FM,
in Virginia Beach, Virginia ("WPTE"), and WFOG-FM, in Suffolk, Virginia ("WFOG";
together with WWDE, WNVZ and WPTE, the "Norfolk Stations") (each a "Radio
Station" and collectively, the "Radio Stations"); and
WHEREAS, MMP programs television station WDKA-TV, in Paducah, Kentucky,
pursuant to a Time Brokerage Agreement with WDKA Acquisition Corp., television
station WNYS-TV, in Syracuse, New York pursuant to a Time Brokerage Agreement
with RKM Media, Inc. and television station KLSB-TV, in Nacogdoches, Texas
pursuant to a Time Brokerage Agreement with KLSB Acquisition Corp. (the "LMA
Stations" and for purposes of this Agreement, the LMA Stations, the Radio
Stations and the Television Stations shall be collectively referred to as the
"Stations"); and
WHEREAS, MMP owns a 98% general partnership interest in RLLP; and
WHEREAS, MMP owns a 98% general partnership interest in each of Max
Television of Dayton L.P. ("Dayton LP"), Max Television of Girardeau L.P., Max
Television of Syracuse L.P., Max Television of Tri-Cities L.P. ("Tri-Cities
LP"), Max Television of Charleston L.P. and Max Television of Tyler L.P. (each a
"Television Licensee" and collectively, the "Television Licensees" and together
with RLLP the "FCC Licensee Entities"), each of which holds the FCC License of a
Television Station as indicated on Annex A hereto; and
WHEREAS, Seller, MMP and MMP II, pursuant to the terms and conditions
hereof, have agreed to file with the FCC an application to transfer (the "MMP II
Transfers") all partnership interests MMP holds in Dayton LP (the licensee of
WKEF-TV) and Tri-Cities LP (the licensee of WEMT-TV, collectively, "the MMP II
Licensee Entities") to MMP II; and
2
WHEREAS, in connection with the MMP II Transfers, MMP and MMP II have
agreed to enter into a Distribution Agreement and an Assignment and Assumption
Agreement; and
WHEREAS, the parties desire that, after the MMP II Transfers, but
before the Closing, MMP distribute to MTC all of the Assets, which Assets
Purchaser shall acquire pursuant to the terms of this Agreement.
SECTION 1
DEFINITIONS
-----------
As used in this Agreement, capitalized terms shall have the meaning
specified in the text hereof on Annex 1 hereto which are incorporated herein by
reference, and which meaning shall be applicable to both the singular and plural
forms of the terms defined.
SECTION 2
SALE OF ASSETS
--------------
2.1. SALE OF ASSETS. Upon and subject to the terms and conditions
stated in this Agreement, on the Closing Date (as hereinafter defined), Seller
hereby agrees to transfer, convey, assign and deliver to Purchaser, and
Purchaser agrees to acquire, all of Seller's right, title and interest in the
Assets, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever at the Closing (as defined below).
2.2. RESERVED
3
SECTION 3
PURCHASE PRICE
--------------
3.1. PAYMENT. At the Closing (as defined below), in consideration for
the sale of the Assets, Purchaser shall pay to Seller the amount of
$3,000,000.00 (the "Purchase Price").
SECTION 4
CLOSING
-------
The closing of the transaction contemplated by this Agreement (the
"Closing"), subject to fulfillment or waiver of the conditions set forth in
Section 11 hereof, shall be held at the offices of ▇▇▇▇▇ & Stant, P.C., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M. local
time (but shall be deemed to have occurred at the close of business on such
day), on the later to occur of (a) five Business Days after, to the extent a
filing is necessary under the H-S-R Act, all applicable waiting periods under
the H-S-R Act shall have expired or terminated, or (b) five Business Days after
the Final Order (the date of Closing being the "Closing Date"), unless (i)
Purchaser elects to close upon receipt of Initial Grant, in which case Purchaser
shall give Sellers reasonable notice of the Closing, or (ii) the parties shall
mutually agree upon a different date or location; provided, however, that in no
event shall the Closing be held before the Closings under the MMP Acquisition
Documents. In no event shall Closing occur after the Termination Date.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
5.1. RESERVED
5.2. REPRESENTATIONS AND WARRANTIES AS TO SELLER. The representations
and warranties set forth in Section 5.2 of the MTC Agreement are incorporated by
reference herein as if fully set forth.
5.3. REPRESENTATIONS AND WARRANTIES AS TO MMP II AND MMP II LICENSEE
ENTITIES.
Seller and MMP, jointly and severally, hereby represent and warrant to
Purchaser as to MMP II and the MMP II Licensee Entities as follows:
4
a. MMP II ORGANIZATION AND GOOD STANDING. MMP II is a limited
liability company duly organized and validly existing under the laws of Virginia
and has full power and authority to carry on its business. To the extent
required by law, MMP II shall be, as of the Closing Date, qualified as a foreign
limited liability company and shall be in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification. Seller owns 100% of the outstanding
membership interests in MMP II.
b. CAPITALIZATION OF MMP II. MMP owns 100% of the membership
units of MMP II. All membership units have been validly issued and are fully
paid and non-assessable and held of record by MMP. Except as described on
Schedule 5.2b, (i) there are no other issued or outstanding equity securities of
MMP II; (ii) there are no membership or value appreciation rights, phantom
membership rights, profit participation rights or other similar rights with
respect to membership units outstanding; and (iii) there are no other issued or
outstanding membership units or securities of MMP II, convertible or
exchangeable, at any time into equity securities of MMP II. MMP is not subject
to any commitment or obligation that would require the issuance or sale of
additional membership interests or membership units of MMP II at any time under
options, subscriptions, warrants, rights or other obligations. Other than the
MMP II Licensee Entities, MMP II has no other equity interests in any other
corporation, partnership, limited liability company, joint venture or other
entity.
c. ORGANIZATION AND CAPITALIZATION OF THE FCC LICENSE
ENTITIES. Each MMP II Licensee Entity is a limited partnership duly organized
and validly existing under the laws of the Commonwealth of Virginia and has full
partnership power and authority to carry on its business as it is now being
conducted and to own and use the assets owned and used by it. Each MMP II
Licensee Entity is qualified as a foreign limited partnership under the laws of
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification, except where the failure to be so
qualified would not have a material adverse effect. Neither of the MMP II
License Entities own any direct or indirect subsidiaries. MMP II, as of the date
hereof, is the sole general partner and owns ninety-eight percent (98%) of the
partnership interests of each of the MMP Licensee Entities. Seller, as of the
date hereof, is the sole limited partner and owns two percent (2%) of the
partnership interests of each of the MMP II Licensee Entities. All such
partnership interests have been validly issued and are fully paid and
nonassessable and are held of record by the respective partners as set forth
above. There are no (i) other issued or outstanding equity securities of the MMP
II Licensee Entities, (ii) partnership or value appreciation rights, phantom
partnership rights, profit participation rights, or other similar rights with
respect to partnership interests outstanding and (iii) other issued or
outstanding partnership interests or other securities of
5
either of the MMP II Licensee Entities convertible or exchangeable at any time
into equity securities of such MMP II Licensee Entity. Neither MMP II Licensee
Entity is subject to any commitment or obligation that would require the
issuance or sale of additional partnership interests of either MMP II Licensee
Entity at any time under options, subscriptions, warrants, rights or any other
obligations. No MMP II Licensee Entity holds any equity interest in any
corporation, partnership, limited liability company, joint venture or other
entity.
d. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
violate any provision of the articles of organization or operating agreement of
MMP II or the limited partnership agreements of the MMP II Licensee Entities,
(ii) other than with respect to the matters for which waivers are sought in the
FCC Application from the FCC, violate any provision of applicable material law,
rule and regulation, which violation would prevent or interfere with Seller's
ability to perform hereunder, or (iii) conflict with or result in a breach of,
or give rise to a right of termination of, or accelerate the performance
required by the terms of any judgment, court order or consent decree, or any
material agreement, indenture, mortgage or instrument to which either MMP II or
either MMP II Licensee Entity is a party or to which any of their property is
subject, or constitute a default thereunder.
e. REAL PROPERTY. Other than the License Assets, neither MMP
II nor the MMP II Licensee Entities own or lease any real property.
f. PERSONAL PROPERTY. Other than the License Assets, neither
MMP II nor either of the MMP Licensee Entities own nor lease personal property.
g. FINANCIAL STATEMENTS. Neither MMP II nor the MMP II
Licensee Entities prepare or maintain Financial Statements.
h. FCC. MMP II and the MMP II Licensee Entities have been and
currently are operated in material compliance with the terms of the FCC
Licenses, the Communications Act of 1934, as amended, and applicable rules,
regulations and policies of the FCC ("FCC Rules and Regulations"). All FCC
Licenses held by the MMP II Licensee Entities, a true and complete list of which
is set forth on Schedule 5.3h to the MRI Agreement, and true and complete copies
of each of which have been delivered to Purchaser, are valid and in full force
and effect. Except as set forth on Schedule 5.3h to the MRI Agreement, no
application, action or proceeding is pending for the renewal or modification of
any of the FCC Licenses and, to Seller's and MMP's Knowledge, there is not now
before the FCC any investigation or complaint against MMP II or the MMP II
Licensee Entities relating to the MMP II Stations, the unfavorable resolution of
which
6
would impair the qualifications of the MMP II Licensee Entities to hold any FCC
Licenses. Except as set forth on Schedule 5.3h to the MRI Agreement, there is no
proceeding pending before the FCC, and there is no outstanding notice of
violation from the FCC with respect to the MMP II Stations. Except as set forth
on Schedule 5.3h to the MRI Agreement, no order or notice of violation has been
issued by any governmental entity which permits, revocation, adverse
modification or termination of any FCC License. Except as set forth on Schedule
5.3h to the MRI Agreement and except for those conditions or restrictions
appearing on the face of the FCC Licenses, or other licenses, none of the FCC
Licenses or other licenses is subject to any restriction or condition which
would limit the operation of the MMP II Stations as currently operated. The FCC
Licenses listed in Schedule 5.3h to the MRI Agreement are currently in effect
and are not subject to any liens, or other encumbrances. No license renewal
applications are pending with respect to any of the FCC Licenses. As of the date
hereof, Seller, MMP, MMP II and the MMP II Licensee Entities have no reason to
believe that the FCC would not renew the FCC Licenses in the ordinary course for
a full license term without any adverse conditions, upon the timely filing of
appropriate applications and payment of the required filing fee. Other than the
waivers requested in the FCC Application, as of the date hereof, Seller, MMP II,
MMP and the MMP II Licensee Entities have no reason to believe that the FCC
would not grant the FCC Application in the ordinary course without any adverse
conditions. All documents required by 47 C.F.R. Section 73.3526 to be kept in
each of the MMP II Station's public inspection files are in such file, and such
file will be maintained in proper order and complete up to and through the
Closing Date.
i. INTELLECTUAL PROPERTY. MMP II and the MMP II Licensee
Entities do not own any Intellectual Property.
j. BENEFIT PLANS. MMP II and the MMP II Licensee Entities do
not and have not in the past maintained or contributed to Benefit Plans. Neither
MMP II nor MMP II Licensee Entities, nor any ERISA Affiliate has sponsored,
maintained, or had any liability (direct or indirect, actual or contingent) with
respect to any Benefit Plan subject to Title IV or ERISA. Neither MMP II nor MMP
II Licensee Entities, nor any ERISA Affiliate has ever made or been obligated to
make, or reimbursed or been obligated to reimburse another employer for,
contributions to any multiemployer plan (as defined in ERISA Section 3(37). MMP
II and the MMP II Licensee Entities have no liability (whether actual,
contingent, or otherwise) with respect to any Benefit Plan or Benefit
Arrangement, and no facts exist that could reasonably be expected to result in
such liability, as a result of termination, withdrawal, or funding waiver with
respect to any such plan, program, or arrangement.
k. LABOR. Other than the FCC Employees, neither MMP II nor the
MMP II Licensee Entities have employed or currently employ employees. With
respect
7
to employees of and service providers to MMP II and MMP II Licensee Entities:
(i) MMP II and MMP II Licensee Entities have been in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including without limitation any such laws respecting
employment discrimination, workers' compensation, family and medical leave, the
Immigration Reform and Control Act, and occupational safety and health
requirements, and have not and are not engaged in any unfair labor practice.
(ii) The employees of MMP II and MMP II Licensee
Entities are not and have never been represented by any labor union, and no
collective bargaining agreements are binding and in force against, or currently
being negotiated by MMP II and MMP II Licensee Entities, and to MMP II and MMP
II Licensee Entities' knowledge, no labor representation organization effort
exists nor have there been any such activity within the past three years.
(iii) All Persons classified by MMP II and MMP II
Licensee Entities as independent contractors satisfy and have satisfied the
requirement of law to be so classified, and MMP II and MMP II Licensee Entities
have fully and accurately reported their compensation on IRS Forms 1099 when
required to do so.
(iv) There is no charge or compliance proceeding
actually pending or threatened against MMP II and MMP II Licensee Entities
before the Equal Employment Opportunity Commission or any state, local, or
foreign agency responsible for the prevention of unlawful employment practices.
l. INSURANCE. Other than insurance policies covering the
License Assets, neither MMP II nor the MMP II Licensee Entities maintain
insurance policies.
m. MATERIAL CONTRACTS. There are no material contracts of MMP
II or the MMP II Licensee Entities.
n. COMPLIANCE WITH LAWS. MMP II and the MMP II Licensee
Entities are in material compliance with all material applicable Federal, state
and local laws, rules and regulations, and there are no actions pending or, to
Seller's Knowledge, threatened alleging noncompliance therewith.
o. LITIGATION. There is no suit, claim, action, proceeding or
arbitration pending or, to Seller's Knowledge, threatened against MMP II or the
MMP II Licensee Entities that seeks to enjoin or obtain damages in respect of
MMP II's conduct of its
8
Business, or the transactions contemplated hereby. There is no outstanding
citation, order, judgment, writ, injunction, or decree of any court, government,
or governmental or administrative agency against or affecting the Business, MMP
II or the MMP II Licensee Entities.
p. CONSENTS. Except (a) as set forth on Schedule 5.3p, (b) for
filings pursuant to the H-S-R Act (to the extent required by law), or (c) the
FCC Application, no filing, consent, approval or authorization of any
governmental authority or of any third party on the part of MMP II or the MMP II
Licensee Entities is required in connection with the execution and delivery of
this Agreement by Sellers or the consummation of any of the transactions
contemplated hereby (including any consents required under any MMP II or MMP II
Licensee Entities contract as a result of the change in control contemplated
hereby).
q. RESERVED
r. TAX MATTERS.
(a) Except as set forth on Schedule 5.3r(a) to the MRI
Agreement hereto:
(i) All Tax Returns required to be filed by or with
respect to MMP II and the MMP II Licensee Entities have been filed when due in a
timely fashion, and all Tax Returns, if any, required to be filed by or with
respect to MMP II and the MMP II Licensee Entities for Taxable Periods ending on
or before December 31, 1997 will have been filed prior to the Closing Date, even
if such Tax Returns are not yet due. All Tax Returns filed by or with respect to
MMP II and the MMP II Licensee Entities, if any, are true, correct and complete
in all material respects.
(ii) MMP II and each of the MMP II Licensee Entities
has paid in full on a timely basis all Taxes owed by it, whether or not shown on
any Tax Return, and MMP II and each of the MMP II Licensee Entities will have
paid prior to the Closing Date all Taxes payable with respect to Taxable Periods
ending on or before December 31, 1997, even if such Taxes are not yet due.
(iii) Neither MMP II nor the MMP II Licensee Entities
have any liability for any unpaid Taxes.
(iv) MMP II and each of the MMP II Licensee Entities
has withheld and paid over to the proper governmental authorities all Taxes, if
any, required to have been withheld and paid over, and complied with all
information reporting and
9
backup withholding requirements, if any, including maintenance of required
records with respect thereto, in connection with amounts paid to any employee,
independent contractor, creditor or other third party.
(v) No Tax Proceeding is currently pending with
respect to MMP II or either of the MMP II Licensee Entities. Neither MMP II nor
either of the MMP II Licensee Entities have received notice from any Tax
Authority that it intends to commence a Tax Proceeding.
(vi) No waiver or extension of any statute of
limitations is currently in effect or has been requested with respect to the
assessment, collection or payment of Taxes of MMP II or the MMP II Licensee
Entities, or for which MMP II or the MMP II Licensee Entities are liable.
(vii) No extension of the time within which to file
any Tax Return of MMP II or either of the MMP II Licensee Entities is currently
in effect.
(viii) No deficiency for Taxes has been proposed,
asserted or assessed against MMP II or either of the MMP II Licensee Entities.
(ix) There are no liens on the assets of MMP II or
the MMP II Licensee Entities relating or attributable to Taxes (except liens for
Taxes not yet due).
(x) Neither MMP II nor either of the MMP II Licensee
Entities is or has ever been classified as an association or otherwise taxable
as a corporation for United States federal income tax purposes.
(xi) Neither MMP II nor either of the MMP II Licensee
Entities has in effect an election under Section 754 of the Code.
(xii) Neither MMP II nor either of the MMP II
Licensee Entities has agreed to, nor is it required to, make any adjustments
under Section 481(a) of the Code as a result of a change in accounting methods.
(xiii) Neither MMP II nor either of the MMP II
Licensee Entities is or has at any time been a party to a tax sharing, tax
indemnity or tax allocation agreement. Neither MMP II nor either of the MMP II
Licensee Entities has assumed the Tax Liability of any other entity or person
under contract.
(xiv) Neither MMP II nor either of the MMP II
Licensee
10
Entities has any liability for the Taxes of another entity or person as a
transferee or successor, or otherwise.
(xv) Except for the MMP II Licensee Entities, neither
MMP II nor either of the MMP II Licensee Entities is or has at any time been a
party to any joint venture, partnership or other arrangement that is treated as
a partnership for U.S. federal income tax purposes.
(xvi)None of MMP II's assets and none of the assets
of the MMP II Licensee Entities are treated as "tax exempt use property" within
the meaning of Section 168(h) of the Code.
(b) To date, no Tax Returns have been filed by or with
respect to MMP II or the MMP II Licensee Entities. There are no and have not
been any examination reports, statements of deficiencies or closing agreements
with respect to MMP II or the MMP II Licensee Entities relating to Taxes.
(c) Schedule 5.3r(c) to the MRI Agreement contains complete
and accurate descriptions of material Tax elections made by or with respect to
MMP II and the MMP II Licensee Entities.
s. ACCOUNTS RECEIVABLE. Neither MMP II nor the MMP II Licensee
Entities have any accounts receivable.
t. RESERVED
5.4 RESERVED
SECTION 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to Seller, MMP and MMP II
that:
6.1. ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland. Purchaser has full corporate power and authority to carry on its
business as it is now being conducted.
6.2. EXECUTION AND EFFECT OF AGREEMENT. Purchaser has full corporate
power
11
and authority to enter into this Agreement. The consummation of the transactions
contemplated hereby has been duly authorized by all necessary corporate action
on the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and to the exercise of judicial
discretion in accordance with general principles of equity (whether applied by a
court of law or equity).
6.3. NO CONFLICTS. Except as described on Schedule 6.3 to the MRI
Agreement hereof, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) violate any of the
provisions of the articles of incorporation or by-laws of Purchaser, (ii)
violate any provision of applicable law, rule or regulation, which violation
would prevent or interfere with Purchaser's ability to perform hereunder, or
(iii) conflict with or result in a breach of, or give rise to a right of
termination of, or accelerate the performance required by the terms of any
judgment, court order or consent decree, or any agreement, indenture, mortgage
or instrument to which Purchaser is a party or to which its property is subject,
or constitute a default thereunder, except where such conflict, breach, right of
termination, acceleration or default would not have a material adverse effect on
the business or financial condition of Purchaser or prevent or materially
interfere with Purchaser's ability to perform hereunder.
6.4. CONSENTS. Except (i) as set forth on Schedule 6.4 to the MRI
Agreement hereto, (ii) for filings pursuant to the H-S-R Act (to the extent
required by law), or (iii) the FCC Application, no filing, consent, approval or
authorization of any governmental authority or of any third party on the part of
Purchaser is required in connection with the execution and delivery of this
Agreement by Purchaser or the consummation of any of the transactions
contemplated hereby.
6.5. LITIGATION. Except as set forth on Schedule 6.5 to the MRI
Agreement hereto, there is no suit, claim, action, proceeding or arbitration
pending or, to Purchaser's Knowledge, threatened against Purchaser which seeks
to enjoin or obtain damages in respect of the transactions contemplated hereby.
6.6. NO BROKERS. Neither Purchaser nor anyone acting on its behalf has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the purchase of the Stock and
the transactions contemplated by this Agreement.
6.7. PURCHASER QUALIFICATIONS. Except as otherwise disclosed on
Schedule 6.7 to the MRI Agreement, Purchaser is legally and financially
qualified to be the Licensee
12
of, acquire and own and operate the MMP II Stations under the Communications Act
and the rules, regulations and policies of the FCC. Purchaser knows of no fact
that would, under existing law and the existing rules, regulations, policies and
procedures of the FCC, (a) disqualify Purchaser as an assignee of the FCC
Licenses or as the owner and operator of the MMP II Stations, or (b) cause the
FCC to fail to approve in a timely fashion the application for the FCC Consent.
Except as described on Schedule 6.7 to the MRI Agreement, no waiver of any FCC
rule or policy is necessary to be obtained for the grant of the applications for
the assignment of the FCC Licenses to Purchaser, nor will processing pursuant to
any exception or rule or general applicability be requested or required in
connection with the consummation of the transactions contemplated by this
Agreement Purchaser will have on hand at the Closing, adequate financial
resources to consummate the transactions contemplated by this Agreement and the
MMP Acquisition Documents.
SECTION 7
ADDITIONAL PROVISIONS REGARDING REPRESENTATIONS AND
WARRANTIES
----------
7.1. LIMITATION; SURVIVAL. The terms and conditions of Section 7 of the
MTC Agreement are incorporated in this Section 7 as if fully set forth.
SECTION 8
TAX MATTERS
-----------
8.1. RESERVED
8.2. TAX RETURNS.
(a) Seller shall prepare or cause to be prepared and file or
cause to be filed, within the time (including extensions) and manner provided by
law, all Tax Returns of MMP II and the MMP II Licensee Entities, if any, that
are required to be filed on or before the Closing Date. In addition, Seller
shall prepare or cause to be prepared and file or cause to be filed prior to the
Closing Date all Tax Returns, if any, required to be filed for Taxable Periods
of MMP II and the MMP II Licensee Entities for Taxable Periods ending on or
before December 31, 1997, even if such Tax Returns are not yet due. Each of MMP
II and the MMP II Licensee Entities shall pay or cause to be paid all Taxes
shown as due on its Tax Returns. Purchaser shall have an opportunity to review
and consent to the filing of all such Tax Returns, which consent shall not be
unreasonably withheld or delayed.
13
(b) Purchaser shall prepare or cause to be prepared and file
or cause to be filed, within the time and manner provided by law, all Tax
Returns of MMP II and the MMP II Licensee Entities, if any, required to be filed
(i) for Taxable Periods ending on or before the Closing Date that are due after
the Closing Date, except as described in Section 8.2(a), and (ii) for Taxable
Periods beginning before and ending after the Closing Date ("Straddle Periods").
Purchaser shall pay or cause to be paid all Taxes shown as due on such Tax
Returns; provided that this sentence shall not in any way limit or affect
Purchaser's rights to any indemnification to which it may be entitled under
other provisions of this Agreement or under the MMP Acquisition Documents.
Purchaser shall provide Seller a reasonable opportunity to review and consent to
the filing of such Tax Returns, which consent shall not be unreasonably withheld
or delayed. Purchaser shall not file amended Tax Returns with respect to Taxable
Periods ending on or before the Closing Date or Straddle Periods without
Seller's consent; provided, however, that Purchaser may file amended Tax Returns
for such Taxable Periods without Seller's consent if (i) such amended Tax
Returns are filed to correct errors or omissions in previously filed Tax Returns
that either constitute or are related to a breach of any representation or
warranty set forth in Sections 5.2 or 5.3r (determined without regard to the
limitation on the survival of such representations and warranties set forth in
Section 7.1), or (ii) the filing of such amended Tax Return would not increase
the Taxes of Seller or Taxes for which Seller has indemnification responsibility
hereunder or under the MMP Acquisition Documents by more than $25,000.
(c) All Tax Returns prepared and filed pursuant to this
Section 8.2 shall be prepared and filed in accordance with applicable law and in
a manner consistent with past practices of MMP II and the MMP II Licensee
Entities (to the extent consistent with applicable law).
8.3. APPORTIONMENT. The parties agree to cause MMP II and the MMP II
Licensee Entities to file all Tax Returns for any Taxable Period that would
otherwise be a Straddle Period on the basis that the relevant Taxable Period
consists of two periods, one ending as of the close of business on the Closing
Date and one beginning the day after the Closing Date, unless the relevant Tax
Authority will not accept a Tax Return filed on that basis. For purposes of
apportioning any Tax to the portion of any Straddle Period that ends on the
Closing Date, the determination shall be made assuming that there was a closing
of the books as of the close of business on the Closing Date and that the
taxable years of MMP II and the MMP II Licensee Entities ended on that date,
except that real, personal and intangible property Taxes shall be apportioned
ratably on a daily basis between the portions of the Straddle Period in
question.
8.4. COOPERATION IN TAX MATTERS. Seller and Purchaser shall (a)
cooperate
14
fully, as reasonably requested, in connection with the preparation and filing of
all Tax Returns prepared and filed pursuant to Section 8.2; (b) make available
to the other, as reasonably requested, all information, records or documents
with respect to Tax matters pertinent to MMP II and the MMP II Licensee Entities
for all Taxable Periods ending on or before the Closing Date and Straddle
Periods; and (c) preserve information, records or documents relating to Tax
matters pertinent to MMP II and the MMP II Licensee Entities that is in their
possession or under their control until the expiration of any applicable statute
of limitations.
8.5. CERTAIN TAXES. Seller shall timely pay all transfer, documentary,
sales, use, stamp, registration and other similar Taxes and fees arising from or
relating to the sale and transfer of the Assets, and Seller shall at its own
expense file all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other
similar Taxes and fees. If required by applicable law, Purchaser will join in
the execution of any such Tax Returns and other documentation.
8.6. FIRPTA. Seller shall deliver to Purchaser at the Closing a
certificate or certificates in form and substance satisfactory to Purchaser,
duly executed and acknowledged, certifying all facts necessary to exempt the
transactions contemplated hereunder from withholding under Section 1445 of the
Code.
8.7. SECTION 754 ELECTION. Purchaser may at any time after the Closing
Date, in its sole and absolute discretion, cause the MMP II Licensee Entities to
make a Code Section 754 Election with respect to the Taxable Period in which the
Closing occurs or later Taxable Periods.
8.8. CLOSING DATE ACTIONS. Following the Closing, Purchaser shall not
cause MMP II or the MMP II Licensee Entities to take any actions on the Closing
Date other than in the ordinary course of their business, except (i) such
actions as are expressly contemplated by this Agreement, and (ii) such actions
as would not increase Taxes of Seller or Taxes for which Seller has
indemification responsibility hereunder.
15
SECTION 9
ADDITIONAL COVENANTS AND UNDERTAKINGS
-------------------------------------
9.1. FURTHER ASSURANCES AND ASSISTANCE. Each of Purchaser, Seller and
MMP II will (and MMP II shall cause the MMP II Licensee Entities to) execute and
deliver to the other any and all documents, in addition to those expressly
provided for herein, that may be necessary or appropriate to implement the
provisions of this Agreement, whether before, at, or after the Closing. The
parties agree to cooperate with each other to any extent reasonably required in
order to accomplish fully the transactions herein contemplated.
9.2. ACCESS TO INFORMATION. Seller and MMP II, from and after the date
of this Agreement and until the Closing Date or termination pursuant to Section
14.1, shall give Purchaser and Purchaser's employees and counsel full and
complete access upon reasonable notice during normal business hours, to all
officers, employees, offices, properties, agreements, records and affairs of
Seller, MMP II, the MMP II Licensee Entities or otherwise relating to the
Business, shall provide Purchaser with all financial statements of Seller, the
MMP II Licensee Entities and MMP II, if any, prepared in the future, and shall
provide copies of such information concerning Seller, MMP II, the MMP II
Licensees and the Business as Purchaser may reasonably request. Seller will use
its commercially reasonable efforts to obtain the consent of its auditors to
permit inclusion of financial statements, if any, in applicable securities
filings of ▇▇▇▇▇▇▇▇ Broadcast Group, Inc. ("SBGI").
9.3. CONDUCT OF BUSINESS PRIOR TO CLOSING. Except as contemplated by
this Agreement or as consented to by Purchaser (which consent shall not
unreasonably be withheld), from and after the date hereof, Seller and MMP II
shall act and cause the MMP II Licensee Entities to act, as follows:
(a) MMP II will not adopt or cause the MMP II Licensee Entities
to adopt any change in any method of accounting or accounting practice, except
as contemplated or required by GAAP;
(b) Seller shall not change or amend its charter or by-laws and
MMP II shall not change or amend the operating agreement or cause or allow any
of the MMP II Licensee Entities to change or amend any limited partnership
agreement;
(c) Neither MMP II nor the MMP II Licensee Entities shall sell,
mortgage, pledge or otherwise dispose of any assets or properties owned, leased
or used in the operation of the Business other than in the ordinary course of
business;
16
(d) Neither Seller nor MMP II or the MMP II Licensee Entities
will merge or consolidate with, agree to merge or consolidate with, or purchase
or agree to purchase all or substantially all of the assets of, or otherwise
acquire, any other business entity;
(e) RESERVED;
(f) Neither MMP II nor the MMP II Licensee Entities will
authorize for issuance, issue or sell any additional shares of its capital
stock, membership units, or partnership interests, as the case may be, or any
securities or obligations convertible or exchangeable into shares of its capital
stock, partnership interests or membership units or issue or grant any option,
warrant or other right to purchase any shares of its capital stock, partnership,
or membership units;
(g) Neither MMP II nor the MMP II Licensee Entities will incur,
or agree to incur, any debt for borrowed money;
(h) Neither MMP II nor the MMP II Licensee Entities will change
its historical practices concerning the payment of accounts payable;
(i) Neither MMP II nor the MMP II Licensee Entities will declare,
issue, or otherwise approve the payment of dividends or distributions of any
kind in respect of its stock or membership units, as the case may be, or redeem,
purchase or otherwise acquire any of its stock or membership units.
(j) Seller and MMP II shall maintain the existing insurance
coverages on the License Assets.
(k) Seller and MMP II will not permit any increases in the
compensation of any of the FCC Employees of Seller or MMP II except (i) as
required by law, or (ii) in the ordinary course of business.
(l) Other than the Time Brokerage Agreement, neither Seller nor
MMP II nor the MMP II Licensee Entities shall enter into or renew any contract
or commitment relating to the FCC Licenses or the MMP II Stations, or incur any
obligation that will be binding on Purchaser after Closing.
(m) Neither MMP II nor the MMP II Licensee Entities shall enter
into any transactions with any Affiliate of Seller binding upon or affecting MMP
II or the MMP II Licensee Entities.
17
(n) Seller and MMP II shall use all commercially reasonable
efforts to maintain the assets of MMP II or the MMP II Licensee Entities or
replacements thereof in good operating condition and adequate repair, normal
wear and tear excepted.
(o) Other than permitted or contemplated by the Time Brokerage
Agreement, MMP II shall not make any expenditures except to maintain the FCC
Licenses and the License Assets.
(p) Neither Seller nor MMP II nor the MMP II Licensee Entities
shall make or change any material Tax election, amend any Tax Return, or take or
omit to take any other action (other than in the ordinary course of business and
consistent with past practice) that would have the effect of increasing any
Taxes of Purchaser or any of its Affiliates, or any Taxes of MMP II or the MMP
II Licensee Entities for any Post-Closing Tax Period.
(q) MMP II and the MMP II Licensee Entities shall not make
distributions to its members or general or limited partners, respectively, other
than of cash.
(r) RESERVED
(s) RESERVED
(t) MMP II shall not acquire or enter into or renew any Local
Marketing Agreement or Time Brokerage Agreement or similar agreement, or Network
Affiliation Agreement, without the prior consent of Purchaser (which consent
shall not be unreasonably withheld) other than as contemplated by this Agreement
or the MMP Acquisition Documents.
(u) MMP II shall not enter into or become subject to any
employment, labor, union or professional service contract not terminable at
will, or any bonus, pension, insurance, profit sharing, incentive, deferred
compensation, severance pay, retirement, hospitalization, employee benefit, or
other similar plans, or increase the compensation payable or to become payable
to any FCC Employee except as required by law.
(v) Neither Seller nor MMP II or the MMP II Licensee Entities
shall take any action which may jeopardize the validity or enforceability of or
rights under the FCC Licenses.
(w) Neither Seller nor MMP II or the MMP II Licensee Entities
shall
18
breach of cause any other person to breach any provision of the Time Brokerage
Agreement required as a condition of closing under the MMP Acquisition Documents
and attached thereto as Exhibit D.
9.4. H-S-R ACT. To the extent required by law, each of Purchaser and
Seller shall, within ten Business Days following the date hereof, file duly
completed and executed Pre-Merger Notification and Report Forms as required
under the H-S-R Act and shall otherwise use their respective best efforts to
comply promptly with any requests made by the Federal Trade Commission ("FTC")
or the Department of Justice ("DOJ") pursuant to the H-S-R Act or the
regulations promulgated thereunder. Seller shall cause MMP II, to the extent
required by law, to join in or provide information in connection with such
filing, including, but not limited to, any response to any request by the FTC or
DOJ. All filing fees and other similar payments in connection with the H-S-R Act
shall be split equally by Purchaser and the Seller.
9.5. FCC APPLICATION.
(a) Each of Purchaser, MMP II and Seller shall, within two (2)
Business Days following the date hereof, file with the FCC the FCC Application;
provided that the parties shall cooperate with each other in the preparation of
the FCC Application and shall in good faith and with due diligence take all
reasonable steps necessary to expedite the processing of the FCC Application and
to secure such consents or approvals as expeditiously as practicable; and
provided further that MMP II shall and shall cause the MMP II Licensee Entities,
to the extent deemed reasonably necessary by counsel to Purchaser to join in and
provide information in connection with the FCC Application and comply with the
immediately preceding provisions and 9.5(b) below. If the Closing shall not have
occurred for any reason within the initial effective periods of the granting of
FCC approval of the FCC Application, and no party shall have terminated this
Agreement under Section 14, the parties shall jointly request and use their
respective best efforts to obtain one or more extensions of the effective
periods of such grants. No party shall knowingly take, or fail to take, any
action the intent or reasonably anticipated consequence of which would be to
cause the FCC not to grant approval of the FCC Application.
(b) Seller and MMP II, as the case may be, shall publish (and
cause the MMP II Licensee Entities to publish) the notices required by the FCC
Rules and Regulations relative to the filing of the FCC Application. Copies of
all applications, documents and papers filed after the date hereof and prior to
the Closing, or filed after the Closing with respect to the transaction under
this Agreement, by Purchaser, Seller, MMP II, or the MMP II Licensee Entities
with the FCC shall be mailed to the other simultaneously with the filing of the
same with the FCC. Each party shall bear its own costs and expenses
19
(including the fees and disbursements of its counsel) in connection with the
preparation of the portion of the application to be prepared by it and in
connection with the processing of that application. All filing and grant fees,
if any, paid to the FCC, shall be split equally by Purchaser and the Seller.
None of the information contained in any filing made by Purchaser or Seller with
the FCC with respect to the transaction contemplated by this Agreement shall
contain any untrue statement of a material fact.
(c) RESERVED
9.6. BOOKS AND RECORDS. Following the Closing, Purchaser shall permit
Seller (a) to have reasonable access to the books and records of Purchaser and
those retained or maintained by Seller relating to the operation of the Business
prior to the Closing or after the Closing to the extent related to transactions
or events occurring prior to the Closing, and (b) to have reasonable access to
employees of Purchaser to obtain information relating to such matters. Purchaser
shall maintain such books and records for a period of four (4) years following
the Closing.
9.7. RESERVED
9.8. RESERVED
9.9. INTERPRETATION OF CERTAIN PROVISIONS. Purchaser has not relied and
is not relying on the specification of any dollar amount in any representation
or warranty made in this Agreement or any Schedule hereto to indicate that such
amounts, or higher or lower amounts, are or are not material, and agrees not to
assert in any dispute or controversy between the parties hereto that
specification of such amounts indicates or is evidence as to whether or not any
obligation, item or matter is or is not material for purposes of this Agreement
and the transactions contemplated hereby.
9.10. RESERVED
9.11. RESERVED
9.12. RESERVED
9.13. RESERVED
9.14. RESERVED
20
SECTION 10
INDEMNIFICATION
---------------
10.1. INDEMNIFICATION OF PURCHASER BY SELLER.
(a) Subject to Section 10.3 of this Agreement, after the Closing
Date, Seller shall indemnify and hold Purchaser harmless from and against any
and all Losses, howsoever incurred, which arise out of or result from:
(i) any breach of any representation or warranty of Seller
set forth in Sections 5.2 or 5.3 of this Agreement; provided, however, for
purposes of this Section 10.1(a)(i), the representation set forth in Section
5.2c of the MTC Agreement (as incorporated by reference herein) will be deemed
not to include the requirement of a Material Adverse Effect;
(ii) the material failure by Seller to perform any covenant
of Seller contained herein;
(iii) breaches by Seller, MMP II or the MMP II Licensee
Entities of other agreements and certificates specifically contemplated hereby;
(iv) any and all Taxes of Seller, MMP II and the MMP II
Licensee Entities (including any liability of Seller, MMP II or the MMP II
Licensee Entities for Taxes of any other entity or person) for any Pre-Closing
Tax Period;
(v) RESERVED;
(vi) RESERVED;
(vii) RESERVED.
(b) RESERVED.
10.2. INDEMNIFICATION OF SELLER BY PURCHASER. Subject to Section 10.3
of this Agreement after the Closing, Purchaser shall indemnify and hold Seller
harmless from and against any and all Losses, howsoever incurred, which arise
out of or result from:
(a) any breach by Purchaser of any representation or warranty of
Purchaser set forth in Section 6 of this Agreement;
(b) the material failure by Purchaser to perform any covenant of
Purchaser contained herein; or
21
(c) any and all Taxes of MMP II and the MMP II Licensee Entities
(including any liability of MMP or the MMP II Licensee Entities for Taxes of any
other persons) for any Post-Closing Tax Period except to the extent that such
Taxes arise out of, result from or are attributable to a breach of any
representation, warranty or covenant of Sellers set forth in this Agreement.
10.3. LIMITATIONS AND OTHER PROVISIONS REGARDING INDEMNIFICATION
OBLIGATIONS.
Seller's obligation to indemnify Purchaser pursuant to Section 10.1
shall be subject to all of the following limitations:
(a) Notwithstanding anything contained in this Agreement or
applicable law to the contrary, Purchaser agrees that the payment of any claim
(whether such claim is framed in tort, contract, or otherwise) made by Purchaser
for indemnification hereunder subsequent to the Closing Date, for whatever
reason, shall be limited to, and shall only be made from, the Indemnification
Amount in accordance with the Indemnification Escrow Agreement and, except for
claims against the Indemnification Amount, Purchaser waives and releases, and
shall have no recourse against, Seller as a result of the breach of any
representation, warranty, covenant or agreement of Seller contained herein, or
otherwise arising out of or in connection with the transactions contemplated
hereby, or the operation or the business of MMP II or the MMP II Licensee
Entities prior to the Closing, and such indemnification shall be the sole and
exclusive remedy for Purchaser with respect to any such claim for
indemnification after the Closing Date; provided, however, that nothing herein
shall be deemed to limit any rights or remedies that Purchaser may have for
Sellers' fraud. The Indemnification Escrow shall be disbursed in accordance with
the Indemnification Escrow Agreement.
(b) Anything in this Agreement or any applicable law to the
contrary notwithstanding, it is understood and agreed by Purchaser that, other
than with respect to Seller (but not including any partner, director, officer,
employee, agent or Affiliate Seller (including any shareholder, director,
officer, employee, agent or Affiliate of the Seller)) as expressly provided for
in Section 10.1, no partner, director, officer, employee, agent or Affiliate of
Seller (including any shareholder, director, officer, employee, agent or
Affiliate of Seller) shall have (i) any personal liability to Purchaser as a
result of the breach of any representation, warranty, covenant or agreement of
Seller contained herein or otherwise arising out of or in connection with the
transactions contemplated hereby or thereby, or the operations or the business
of MMP II or the MMP II Licensee Entities prior to the Closing, or (ii) any
personal obligation to indemnify Purchaser for any of Purchaser's claims
pursuant to Section 10.1 and Purchaser waives and releases and shall
22
have no recourse against any of such parties described in this Section 10.3(b)
as a result of the breach of any representation, warranty, covenant or agreement
of Seller contained herein or otherwise arising out of or in connection with the
transactions contemplated hereby or thereby or the operations or the business of
MMP II or the MMP II Licensee Entities prior to the Closing; provided, however,
that nothing herein shall be deemed to limit any rights or remedies that
Purchaser may have for Seller's fraud.
(c) Notwithstanding any other provision of this Agreement to the
contrary, Seller shall not be liable to Purchaser in respect of any
indemnification hereunder until the aggregate amount of Losses of Purchaser
under this Agreement and the MMP Acquisition Documents exceeds Two Hundred Fifty
Thousand Dollars ($250,000.00) (the "Basket Amount"), and then only to the
extent of the excess of Losses over the amount of One Hundred Twenty Five
Thousand Dollars ($125,000.00); provided, that this paragraph shall not apply to
indemnification pursuant to Section 10.1(a)(iv) and indemnification pursuant to
Section 10.1(a)(i) for breaches of the representations and warranties set forth
in Section 5.3r of this Agreement and Section 5.2m of the MTC Agreement as
incorporated by reference herein.
(d) In determining the amount of any Tax or other Loss for which
indemnification is provided under this Agreement, such Loss shall be (i) net of
any insurance recovery made by the indemnified party, (ii) reduced to take into
account any net Tax benefit realized by the indemnified party arising from the
deductibility of such Tax or Loss, and (iii) increased to take account of any
net Tax cost incurred by the indemnified party arising from the receipt of
indemnification payments hereunder. Any indemnification payment hereunder shall
initially be made without regard to this paragraph and shall be reduced to
reflect any net Tax benefit or increased to reflect any net Tax cost only after
the indemnified party has actually realized such benefit or cost. For purposes
of this Agreement, an indemnified party shall be deemed to have "actually
realized" a net Tax benefit or net Tax cost to the extent that, and at such time
as, the amount of Taxes payable by such indemnified party is (x) reduced below
the amount of Taxes that such indemnified party would have been required to pay
but for the deductibility of such Tax or Losses, and (y) increased above the
amount of Taxes that such indemnified party would have been required to pay but
for the receipt of such indemnification payments. The amount of any reduction
hereunder shall be adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect to the
indemnified party's liability for Taxes. Any indemnity payments under this
Agreement shall be treated as an adjustment to the Purchase Price for Tax
purposes, unless a final determination with respect to the indemnified party or
any of its affiliates causes any such payment not to be treated as an adjustment
to the Purchase Price.
23
(e) No claim for indemnification for Losses shall be made after
expiration of the applicable period set forth in Section 7.1 of the MTC
Agreement as incorporated by reference herein; provided that if Closing
hereunder takes place after expiration of all applicable periods referenced in
Section 7.1 of the MTC Agreement as incorporated by reference herein, no party
hereunder shall have any right of indemnification.
(f) Anything to the contrary in this Section 10.3
notwithstanding, the terms, conditions and limitations set forth in this Section
10.3 do not apply to or limit Purchaser's rights under Section 14.2.
10.4. NOTICE OF CLAIM; DEFENSE OF ACTION.
(a) An indemnified party shall promptly give the indemnifying
party notice of any matter which an indemnified party has determined has given
or could give rise to a right of indemnification under this Agreement, stating
the nature and, if known, the amount of the Losses, and method of computation
thereof, all with reasonable particularity and containing a reference to the
provisions of this Agreement in respect of which such right to indemnification
is claimed or arises; provided that the failure of any party to give notice
promptly as required in this Section 10.4 shall not relieve any indemnifying
party of its indemnification obligations except to the extent that such failure
materially prejudices the rights of such indemnifying party. The indemnified
party shall give continuing notice to the indemnifying party promptly thereafter
of all developments coming to such indemnified part(ies)' attention materially
affecting any matter relating to any indemnification claims.
(b) Except as otherwise provided in Section 10.5, the
obligations and liabilities of an indemnifying party under this Section 10 with
respect to Losses arising from claims of any third party that are subject to the
indemnification provided for in this Section 10, shall be governed by and
contingent upon the following additional terms and conditions:
(i) With respect to third party claims, promptly after
receipt by an indemnified party of notice of the commencement of any action or
the presentation or other assertion of any claim which could result in any
indemnification claim pursuant to Section 10.1 or 10.2 hereof, such indemnified
party shall give prompt notice thereof to the indemnifying part(ies) and the
indemnifying part(ies) shall be entitled to participate therein or, to the
extent that it desires, assume the defense thereof with its own counsel.
(ii) If the indemnifying part(ies) elects to assume the
defense of any such action or claim, the indemnifying part(ies) shall not be
liable to the indemnified
24
party for any fees of other counsel or any other expenses, in each case incurred
by such indemnified party in connection with the defense thereof.
(iii) The indemnifying part(ies) shall be authorized,
without consent of the indemnified party being required, to settle or compromise
any such action or claim, provided that such settlement or compromise includes
an unconditional release of the indemnified party from all liability arising out
of such action or claim.
(iv) Whether or not an indemnifying part(ies) elects to
assume the defense of any action or claim, the indemnifying part(ies) shall not
be liable for any compromise or settlement of any such action or claim effected
without its consent, such consent not to be unreasonably withheld.
(v) The parties agree to cooperate to the fullest extent
possible in connection with any claim for which indemnification is or may be
sought under this Agreement, including, without limitation, making available all
witnesses, pertinent records, materials and information in its possession or
under its control relating thereto as is reasonably requested by the other
party.
10.5 TAX CONTESTS.
(a) If any party receives written notice from any Taxing
Authority of any Tax Proceeding with respect to any Tax for which the other
party is obligated to provide indemnification under this Agreement, such party
shall give prompt written notice thereof to the other party; provided, however,
that the failure to give such notice shall not affect the indemnification
provided hereunder except to the extent that the failure to give such notice
materially prejudices the indemnifying party.
(b) Seller shall have the right, at its own expense, to
control and make all decisions with respect to any Tax Proceeding relating
solely to Taxes of MMP II and the MMP II Licensee Entities for Taxable Periods
ending on or before the Closing Date; provided, that Purchaser and counsel of
its own choosing shall have the right, at Purchaser's own expense, to
participate fully in all aspects of the prosecution or defense of such Tax
Proceeding; and provided further that Seller shall not settle any such Tax
Proceeding without the prior written consent of Purchaser if such settlements
could increase the past, present or future Tax liability of Purchaser or any of
its Affiliates, or any Tax Liability of MMP II or the MMP II Licensee Entities
for any Post-Closing Tax Period by an amount greater than $25,000.
(c) Seller shall have the right, at its own expense, to
jointly control and participate with Purchaser in all Tax Proceedings relating
to Taxes of MMP II and the
25
MMP II Licensee Entities for a Straddle Period. If Seller exercises such right,
neither party shall settle any such Tax Proceeding without the prior written
consent of the other.
(d) If Seller does not exercise its right to assume control of
or participate in any Tax Proceeding as provided under this Section 10.5,
Purchaser may, without waiving any rights to indemnification hereunder, defend
or settle the same in such manner as it may deem appropriate in its sole and
absolute discretion.
(e) RESERVED.
(f) In the event that the provisions of this Section 10.5 and
the provisions of Section 10.4(b) conflict or otherwise each apply by the terms,
this Section 10.5 shall exclusively govern all matters concerning Taxes.
SECTION 11
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES TO CLOSE
-----------------------------------------------------------
11.1. CONDITIONS PRECEDENT TO THE OBLIGATION OF PURCHASER. The
obligation of Purchaser to consummate the Closing is subject to the fulfillment
or waiver, on or prior to the Closing Date, of each of the following conditions
precedent:
(a) Seller shall have complied in all material respects with its
agreements and covenants contained herein and in the Time Brokerage Agreement to
be performed at or prior to the Closing, and the representations and warranties
of Seller contained herein shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though made on and as of the
Closing Date, except that representations and warranties that were made as of a
specified date shall continue on the Closing Date to have been true as of the
specified date, and Purchaser shall have received a certificate of one of
Sellers' Agents, dated as of the Closing Date and signed by Sellers' Agent,
certifying as to the fulfillment of the condition set forth in this Section
11.1(a) ("Sellers' Bring-Down Certificate").
(b) No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains or prohibits Purchaser
from consummating the transactions contemplated hereby and no action or
proceeding shall be pending wherein an unfavorable ruling would affect any right
to own the Assets.
(c) In the event the parties are required to file a Pre-merger
Notification and Report Form under the H-S-R Act, all applicable waiting periods
under the H-S-R Act shall have expired or been terminated.
26
(d) The Final Order approving the applications for transfer of
control of the FCC Licenses shall have been obtained. All the material
conditions contained in the Final Order required to be satisfied on or prior to
the Closing Date shall have been duly satisfied and performed. Notwithstanding
the foregoing, other than conditions relating the broadcast industry generally,
if the consent of the FCC is conditional or qualified in any manner that has a
material adverse effect on Purchaser or requires Purchaser or any of its
subsidiaries to divest any television or radio station owned, operated or
programmed by Purchaser or any of its subsidiaries (other than those acquired
pursuant to the MMP Acquisition Documents), Purchaser may, nevertheless, in its
sole discretion, require the consummation of the transactions contemplated by
this Agreement, but shall not be required to do so.
(e) Seller shall have delivered to Purchaser at the Closing each
document required by Section 12.1 hereof.
(f) Since the date of this Agreement through the Closing Date,
there shall not have been a material adverse effect with respect to the Assets.
(g) The transfer of the FCC Licenses for Television Stations
WKEF-TV in Dayton, Ohio and WEMT-TV in Greeneville, Tennessee to MMP II and the
distribution of MMP II to Seller shall have occurred pursuant to the Assignment
and Assumption Agreement and the Distribution Agreement substantially in the
form attached to the MTC Agreement as Exhibit C, and MMP and MMP II shall have
entered into one or more Time Brokerage Agreements generally in the form
(subject to such revisions, additional and deletions as determined by counsel to
MMP II and Purchaser prior to the Closing) attached to the MTC Agreement as
Exhibit D.
(h) The closings under the MMP Acquisition Documents shall have
occurred or occur simultaneously with the Closing.
(i) RESERVED
27
11.2. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER. The obligation
of Seller to consummate the Closing is subject to the fulfillment or waiver, on
or prior to the Closing Date, of each of the following conditions precedent:
(a) Purchaser shall have complied in all material respects with
its agreements and covenants contained herein to be performed at or prior to the
Closing, and the representations and warranties of Purchaser contained herein
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though made on and as of the Closing Date, except that
representations and warranties that were made as of a specified date shall
continue on the Closing Date to have been true as of the specified date, and
Seller shall have received a certificate of Purchaser, dated as of the Closing
Date and signed by an officer of Purchaser, certifying as to the fulfillment of
the condition set forth in this Section 11.2(a) ("Purchaser's Bring-Down
Certificate").
(b) No statute, rule or regulation or order of any court or
administrative agency shall be in effect which restrains or prohibits Seller
from consummating the transactions contemplated hereby.
(c) In the event the parties are required to file a Pre-merger
Notification and Report Form under the H-S-R Act, all applicable waiting periods
under the H-S-R Act shall have expired or been terminated.
(d) The issuance by the FCC of a Final Order approving the
applications for transfer of control of the FCC Licenses contemplated by this
Agreement shall have occurred, and there shall have been duly satisfied and
performed on or prior to the Closing Date all the material conditions contained
in the Final Order required to be so satisfied; provided, however, Purchaser, in
its sole discretion, may waive the necessity of a "Final Grant" by the FCC and
close following an "Initial Grant".
(e) Purchaser shall have delivered to Seller at the Closing the
Purchase Price and each document required by Section 12.2 hereof.
(f) The closings under the MMP Acquisition Documents shall have
occurred or occur simultaneously with the Closing.
28
SECTION 12
DELIVERIES AT THE CLOSING
-------------------------
12.1. DELIVERIES BY SELLERS. At the Closing, Seller will deliver or
cause to be delivered at the Closing to Purchaser:
(a) Sellers' Bring-Down Certificate;
(b) a legal opinion of ▇▇▇▇▇ & Stant, P.C., counsel to Seller
and MMP II substantially in the form attached as Exhibit B to the MTC Agreement;
(c) a legal opinion of FCC counsel to the MMP II Licensee
Entities in the form attached hereto as Exhibit C to the MTC Agreement;
(d) a ▇▇▇▇ of sale, assignment and other transfer documents,
dated as of the Closing Date and executed by Seller transferring the Assets to
Purchaser;
(e) RESERVED;
(f) a certificate as to the existence and good standing of
Seller issued by the Secretary of the State Corporation Commission of the
Commonwealth of Virginia dated not more than five (5) Business Days before the
Closing Date;
(g) a certificate as to the existence of MMP II issued by the
Secretary of the State Corporation Commission of the Commonwealth of Virginia
not more than five (5) Business Days before the Closing Date and certificates
issued by the appropriate governmental authorities in each jurisdiction in which
MMP II is qualified to do business and a certificate as to the existence for
each of the MMP II Licensee Entities of the Secretary of the State Corporation
Commission of the Commonwealth of Virginia dated not more than five (5) Business
Days before the Closing Date;
(h) receipt for Purchase Price;
(i) RESERVED;
(j) RESERVED;
(k) RESERVED;
29
(l) RESERVED;
(m) RESERVED;
(n) RESERVED;
(o) RESERVED
(p) RESERVED;
(q) RESERVED;
(r) such other documents as Purchaser shall reasonably
request.
12.2. DELIVERIES BY PURCHASER. Purchaser will deliver or cause to be
delivered at the Closing to Seller or MMP II, as the case may be:
(a) Purchaser's Bring-Down Certificate;
(b) a legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A., counsel to
Purchaser, substantially in the form attached as Exhibit D to the MTC Agreement
hereto;
(c) the Purchase Price as required pursuant to Section 3.1
hereof;
(d) RESERVED;
(e) a certificate as to the existence and good standing of the
Purchaser issued by the Maryland Department of Assessments and Taxation of the
State of Maryland dated as of the Closing Date;
(f) RESERVED;
(g) such other documents as Seller shall reasonably request.
SECTION 13
EXPENSES
--------
Except as provided in Sections 9.4, 9.5 and 17.12, each party will pay
its own fees, expenses, and disbursements and those of its counsel in connection
with the subject matter of this Agreement (including the negotiations with
respect hereto and the
30
preparation of any documents) and all other costs and expenses incurred by it in
the performance and compliance with all conditions and obligations to be
performed by it pursuant to this Agreement or as contemplated hereby.
SECTION 14
TERMINATION
-----------
14.1 TERMINATION. This Agreement shall terminate upon a termination of
any of the MMP Acquisition Documents. In addition, this Agreement may be
terminated:
(a) At any time by mutual written consent of Purchaser and
Seller;
(b) By either Purchaser or Seller, if the terminating party is
not in default or breach in any material respect of its obligations under this
Agreement, if the Closing hereunder has not taken place on or before December
31, 2000 (the "Termination Date");
(c) by Seller, if Seller's not in default or breach in any
material respect of their obligations under this Agreement, if all of the
conditions in Section 11.2 have not been satisfied or waived by the date
scheduled for the Closing;
(d) by Purchaser, if Purchaser is not in default or breach in
any material respect of its obligations under this Agreement, if all of the
conditions set forth in Section 11.1 have not been satisfied or waived by the
date scheduled for the Closing;
(e) RESERVED
14.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either or
both Purchaser and/or Seller pursuant to Section14.1 hereof, prompt written
notice thereof shall forthwith be given to the other party and this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without further action by any of the parties hereto, but subject to and without
limiting any other rights of the parties specified herein in the event a party
is in default or breach in any material respect of its obligations under this
Agreement. If this Agreement is terminated as provided herein, all filings,
applications and other submissions relating to the transactions contemplated
hereby as to which termination has occurred shall, to the extent practicable, be
withdrawn from the agency or other Person to which such filing is made.
(b) If this Agreement is terminated pursuant to Section
14.1(d),
31
Purchaser shall have the right to pursue all remedies available hereunder at law
or in equity, including, without limitation, the right to seek specific
performance and/or actual monetary damages, but excluding consequential and
incidental damages. In recognition of the unique character of the property to be
sold hereunder, and the damages which Purchaser will suffer in the event of a
termination pursuant to the foregoing Sections of this Agreement, Seller hereby
waives any defense that Purchaser has an adequate remedy at law for the breach
of this Agreement by Seller.
(c) If this Agreement is terminated pursuant to Section
14.1(c) Seller shall have the right to pursue all remedies available hereunder
at law or in equity, including, without limitation, the right to seek specific
performance and/or actual monetary damages, but excluding consequential and
incidental damages. In recognition of the unique character of the property to be
sold hereunder, and the damages which Seller will suffer in the event of a
termination pursuant to the foregoing Sections of this Agreement, Purchaser
hereby waives any defense that Purchaser has an adequate remedy at law for the
breach of this Agreement by Seller.
(d) RESERVED
(e) Prior to the First Closing, a notice of termination made
under any provision of Section 14.1 of this Agreement shall be deemed to be a
notice of termination under the termination provisions of the MMP Acquisition
Documents.
(f) In the event of a default by either party that results in
a lawsuit or other proceeding for any remedy available under this Agreement, the
prevailing party, to the extent it is the prevailing party, shall be entitled to
reimbursement from the other party of its reasonable legal fees and expenses,
whether incurred in arbitration, at trial, or on appeal.
SECTION 15
NOTICES
-------
All notices, requests, consents, payments, demands, and other
communications required or contemplated under this Agreement shall be in writing
and (a) personally delivered or sent via telecopy (receipt confirmed), or (b)
sent by Federal Express or other reputable overnight delivery service (for next
Business Day delivery), shipping prepaid, as follows:
32
To Purchaser: ▇▇▇▇▇▇▇▇ COMMUNICATIONS, INC.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with copies ▇▇▇▇▇▇▇▇ Communications, Inc.
(which shall not ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
constitute notice) to: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
Suite 1100
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
To MMP: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Quad C, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Colonade Capital, L.L.C.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇.
Suite 900
One Columbus Center
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (757) 499-880
If to Seller and Max Television Company
MMP II: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ & Stant, P.C.
Suite 900
One Columbus Center
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Persons or addresses as any Person may request by notice given
as aforesaid. Notices shall be deemed given and received at the time of personal
delivery or completed telecopying, or, if sent by Federal Express or such other
overnight delivery service one Business Day after such sending.
SECTION 16
SELLERS' AGENTS
---------------
16.1. SELLERS' AGENTS. Seller hereby irrevocably appoints ▇▇▇▇▇ ▇.
▇▇▇▇▇, III, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (herein called the
"Sellers' Agents") as his, her or its agent and attorney-in-fact to take any
action required or permitted to be taken by Seller under the terms of this
Agreement, including, without limiting, the generality of the foregoing, the
payment of expenses relating to the transactions contemplated by the Agreement,
and the right to waive, modify or amend any of the terms of this Agreement in
any respect, whether or not material, and agrees to be bound by any and all
actions taken by the Sellers' Agents on his or its behalf. Any action to be
taken by the Sellers' Agents shall
34
be unanimous. In the event of the death, incapacity or liquidation of any of
Sellers' Agents, such person or entity shall not be replaced, and the remaining
Sellers' Agents shall continue in that capacity. Seller agrees to indemnify the
Sellers' Agents from and against and in respect of any and all liabilities,
damages, claims, costs, and expenses, including, but not limited to attorneys'
fees, arising out of or due to any action by them as the Sellers' Agents and any
and all actions, proceedings, demands, assessments, or judgments, costs, and
expenses incidental thereto, except to the extent that the same result from bad
faith or gross negligence on the part of the Sellers' Agents. Purchaser shall be
entitled to rely exclusively upon any communications given by the Sellers'
Agents on behalf of Seller, and shall not be liable for any action taken or not
taken in reliance upon the Sellers' Agents. Purchaser shall be entitled to
disregard any notices or communications given or made by Seller unless given or
made through the Sellers' Agents.
SECTION 17
MISCELLANEOUS
-------------
17.1. HEADINGS. The headings contained in this Agreement (including,
but not limited to, the titles of the Schedules and Exhibits hereto) have been
inserted for the convenience of reference only, and neither such headings nor
the placement of any term hereof under any particular heading shall in any way
restrict or modify any of the terms or provisions hereof. Terms used in the
singular shall be read in the plural, and vice versa, and terms used in the
masculine gender shall be read in the feminine or neuter gender when the context
so requires.
17.2. SCHEDULES AND EXHIBITS. All Annexes, Schedules and Exhibits
attached to or referenced in this Agreement or incorporated by reference in this
Agreement constitute an integral part of this Agreement as if fully rewritten
herein.
17.3. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
17.4. ENTIRE AGREEMENT. This Agreement, the MMP Acquisition Documents,
and the FCC Licensee Transfer Agreement, the Annexes, Schedules and Exhibits and
the documents to be delivered hereunder and thereunder constitute the entire
understanding and agreement between the parties hereto concerning the subject
matter hereof. All negotiations and writings between the parties hereto are
merged into this Agreement, the MMP Acquisition Documents, the FCC Licensee
Transfer Agreement, and there are no representations, warranties, covenants,
understandings, or agreements, oral or otherwise,
35
in relation thereto between the parties other than those incorporated herein or
to be delivered hereunder.
17.5. GOVERNING LAW. This Agreement is to be delivered in and should be
construed in accordance with and governed by the laws of the Commonwealth of
Virginia without giving effect to conflict of laws principles.
17.6. MODIFICATION. This Agreement cannot be modified or amended except
in writing signed by each of the Seller, MMP, Purchaser and MMP II.
17.7. SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights and obligations hereunder shall be assigned, delegated, sold,
transferred, sublicensed, or otherwise disposed of by operation of law or
otherwise by Seller, MMP or MMP II, without the prior written consent of
Purchaser. Purchaser may assign its rights and obligations hereunder to any
Person without the prior written consent of any other party hereto so long as
Purchaser is not relieved of its obligations hereunder. Purchaser shall promptly
notify Seller of any assignment. In the event of such permitted assignment or
other transfer, all of the rights, obligations, liabilities, and other terms and
provisions of this Agreement shall be binding upon, inure to the benefit of, and
be enforceable by and against, the respective successors and assigns of the
parties hereto, whether so expressed or not.
17.8. WAIVER. Any waiver of any provision hereof (or in any related
document or instrument) shall not be effective unless made expressly and in a
writing executed in the name of the party sought to be charged. The failure of
any party to insist, in any one or more instances, on performance of any of the
terms or conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant, or condition, but the obligations of the parties with
respect hereto shall continue in full force and effect.
17.9. SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding, and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding or unenforceable in its entirety or partially or as to any party, for
any reason, and if such provision cannot be changed consistent with the intent
of the parties hereto to make it fully legal, valid, binding and enforceable,
then such provisions shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall not in any way be affected or impaired, but
shall remain in full force and effect.
36
17.10. ANNOUNCEMENTS. From the date of this Agreement, all further
public announcements relating to this Agreement or the transactions contemplated
hereby will be made only as agreed upon jointly by the parties hereto, except
that nothing herein shall prevent Seller or any Affiliate thereof or Purchaser
from making any disclosure in connection with the transactions contemplated by
this Agreement if required by applicable law or otherwise as a result of its, or
its Affiliate's, being a public company, provided that prior notice of such
disclosure is given to the other party hereto.
17.11. SPECIFIC PERFORMANCE. Sellers acknowledges that Purchaser will
have no adequate remedy at law if Seller fails to perform its obligation to
consummate the sale of Stock contemplated under this Agreement. In such event,
Purchaser shall have the right, in addition to any other rights or remedies it
may have, to specific performance of this Agreement.
17.12 FEES AND EXPENSES. Except as otherwise provided in this
Agreement, each party shall pay their own expenses incurred in connection with
the authorization, preparation, execution, and performance of this Agreement and
the exhibits, Schedules, and other documentation, including all fees and
expenses of counsel, accountants, and each party shall be responsible for all
fees and commissions payable to any finder, broker, adviser, or other similar
Person retained by or on behalf of such party; provided, however, that all
transfer taxes, recordation taxes, sales taxes, and document stamps in
connection with the transactions contemplated by this Agreement shall be paid
one-half (1/2) by Purchaser and one-half (1/2) by Seller and all other filing
fees (including all FCC and H-S-R Act filing fees), and other charges levied by
any governmental entity in connection with the transactions contemplated by this
Agreement shall be paid one-half (1/2) by Purchaser and one-half (1/2) by
Seller. Purchaser hereby waives compliance with the provisions of any applicable
bulk transfer law.
17.13 THIRD PARTY BENEFICIARIES. Nothing expressed or referred to in
this Agreement shall be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
17.14 INTERPRETATION. The parties hereto acknowledge and agree that the
preparation and drafting of this Agreement and the Exhibits hereto are the
result of the efforts of all parties to this Agreement and every covenant, term,
and provision of this Agreement shall be construed according to its fair meaning
and shall not be construed against any particular party as the drafter of such
covenant, term, and/or provision. The
37
parties agree that this Agreement is to be construed in a manner consistent with
the terms of the MMP Acquisition Documents; provided, however, that in the event
the terms and conditions of this Agreement vary or are inconsistent with the
terms and conditions of the Time Brokerage Agreement as executed by the parties
thereto and in effect, the terms and conditions of the Time Brokerage Agreement
shall prevail over the terms and conditions of this Agreement.
[SIGNATURE PAGES TO FOLLOW
--REST OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first written above.
MAX TELEVISION COMPANY,
a Virginia corporation
By
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its
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MAX MEDIA PROPERTIES LLC
By
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its
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MAX MEDIA PROPERTIES II LLC,
a Virginia limited liability company
By
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its
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▇▇▇▇▇▇▇▇ COMMUNICATIONS, INC.,
a Maryland corporation
By
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its
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ANNEX 1
DEFINITIONS
As used in the attached Asset Purchase Agreement, the following terms
shall have the corresponding meaning set forth below:
"Affiliate" of, or a Person "Affiliated" with, a specified Person,
means a Person who directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Person
specified.
"Agreement" has the meaning set forth in the preamble.
"Assets" has the meaning set forth in the Recitals.
"Basket Amount" shall have the meaning set forth in Section 10.3(c).
"Benefit Arrangement" shall mean any benefit arrangement, obligations,
custom, or practice, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, agents, or independent contractors, other than any
obligation, arrangement, custom or practice that is a Benefit Plan, including
without limitation, employment agreements, severance agreements, executive
compensation arrangements, including but not limited to stock options,
restricted stock rights and performance unit awards, incentive programs or
arrangements, sick leave, vacation pay, severance pay policies, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock purchase, hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs, employee discounts, employee loans,
employee banking privileges, any plans subject to Section 125 of the code, and
any plans providing benefits or payments in the event of a change of control,
change in ownership, or sale of a substantial portion (including all or
substantially all) of the assets of any business or portion thereof, in each
case with respect to any present or former employees, directors, agents.
"Benefit Plan" shall have the meaning given in Section 3(3) of ERISA.
"Business" means the business of owning the FCC Licenses.
"Business Day" means any day on which banks in New York City are open
for business.
"Closing" has the meaning set forth in Section 4 of the Agreement.
"Closing Date Tax Liabilities" shall have the meaning set forth in
Section 2.2(b)(iv) of this Agreement.
"Closing Date" has the meaning set forth in Section 4 of the Agreement.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Company" refers to Seller in this Agreement.
"Company Interests" shall have the meaning set forth in Section 5.3t.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to lawfully and validly transfer
the Assets to Purchaser to maintain the validity and effectiveness (any default
or violation of the terms thereof) of any Material Contract and any licenses
(including, without limitation, the FCC Licenses) to be transferred to
Purchaser, or otherwise to consummate the transactions contemplated by this
Agreement.
"Environment" means any surface or subsurface physical medium or
natural resource, including air, land, soil (surface or subsurface), surface
waters, ground waters, wetlands, stream and river sediments, rock and biota.
"Environmental Laws" means any federal, state, or local law,
legislation, rule, regulation, ordinance or code of the United States or any
subdivision thereof relating to the injury to, or the pollution or protection
of, human health and safety or the Environment.
"Environmental Liability" means any loss, liability, damage, cost or
expense arising under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any Person that together with MMP II, as
applicable, would be or was at any time treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA and any general partnership of
which the Company or MMP, as applicable, is or has been a general partner.
2
"FCC" has the meaning set forth in the recitals to the Agreement.
"FCC Application" means the applications requesting approval and
consent of the FCC to (i) the transfer of the FCC Licenses pursuant to the MMP
II Transfers, and (ii) the transfer of control or the FCC Licenses to Purchaser
or its assignee for those Television Stations and Radio Stations not included in
the MMP II Transfers.
"FCC Employees" means those employees employed by Seller, MMP II and
the MMP II Licensee Entities necessary for each of those entities to discharge
its obligations under the Time Brokerage Agreement.
"FCC Licenses" means those licenses, permits and authorizations issued
by the FCC to the FCC Licensee Entities in connection with the business and
operations of the Stations (together with any renewals, extensions,
modifications or additions thereto between the date of this Agreement and the
Closing Date.
"FCC Rules and Regulations" has the meaning set forth in Section 5.3f
of the Agreement.
"Final Order" means action by the FCC as to which no further steps
(including those of appeal or certiorari) can be taken in any action or
proceeding to review, modify or set the determination aside, whether under
Section 402 or 405 of the Communications Act, or otherwise.
"First Closing" means the closing under the MMP Acquisition Documents.
"GAAP" means generally accepted accounting principles.
"Hazardous Substances" means petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, urea formaldehyde, asbestos or any
materials containing asbestos, and any materials or substances regulated or
defined as or included in the definition of "hazardous substances, "hazardous
materials," "hazardous constituents," "toxic substances," "pollutants,
"pollutants," "contaminants" or any similar denomination intended to classify
substances by reason of toxicity, carcinogenicity, ignitability, corrosivity or
reactivity under any Environmental Laws.
"H-S-R Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
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"Initial Grant" means the date of the publication of the FCC "Public
Notice" announcing the grant of the "Assignment Applications" for the FCC
License to be transferred hereunder which contain no conditions materially
adverse to Purchaser. The term "Public Notice" and "Assignment Applications"
have the same meaning herein as are generally given the same under existing FCC
rules, regulation and procedures.
"Intellectual Property" means the patents, patent applications,
trademark registrations and applications therefor, service ▇▇▇▇ registrations
and applications therefor, copyright registrations and applications therefor and
trade names that are (i) owned by the Company and (ii) material to the continued
operation of the Business.
"IRS" means the Internal Revenue Service.
"Investors Agreement" has the meaning set forth in the Recitals.
"Investors" has the meaning set forth in the Recitals.
"Knowledge or knowledge" shall mean with respect to Seller, MMP, MMP II
and the MMP II FCC Licensee Entities the actual knowledge (without any
requirement of inquiry except as otherwise provided in the Agreement) of ▇. ▇.
▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the managers and officers of MMP II,
and the officers and directors of Seller.
"LMA Stations" shall have the meaning set forth in the Recitals.
"License Assets" means those assets maintained by MTC, MMP II and the
MMP II Licensee Entities in order for those entities to comply with their
obligations under the Time Brokerage Agreement.
"Losses" means any loss, liability, damage, cost or expense (including,
without limitation, reasonable attorneys' fees and expenses) but exclusive of
incidental or consequential damages.
"MMP Acquisition Documents" shall mean collectively the MRI Agreement,
the MTC Agreement, the Investors Agreement, and the Management Agreement.
"MMP II Licensee Entities" shall have the meaning set forth in the
Recitals.
"MMP II FCC Applications" means the application requesting the approval
and
4
consent of the FCC to the transfer of control of Television Stations WKEF-TV and
WEMT-TV from MMP to MTC.
"MMP II Stations" means television broadcast stations WKEF-TV and
WEMT-TV.
"MMP Real Property" means all real property owned or leased by MMP.
"MRI" shall have the meaning set forth in the Recitals.
"MRI Agreement" shall have the meaning set forth in the Recitals.
"MTC Agreement" shall have the meaning set forth in the Recitals.
"MTR" has the meaning set forth in the Recitals.
"Management Agreement" shall have the meaning set forth in the
Recitals.
"Material Adverse Effect" shall mean a material adverse effect on the
business, or financial condition of MMP II or either of the MMP II Licensee
Entities.
"Material Contract" means all agreements to which MMP II is a party or
by or to which it or its assets or properties are bound, except: (i) agreements
for the cash sale of advertising time with a term of less than six months, (ii)
agreements cancelable on no more than 90 days' notice without material penalty,
or (iii) agreements which are otherwise immaterial to the Business and the MMP
II Stations.
"Permitted Encumbrances" shall mean liens for taxes not yet due and
payable; landlord's liens; liens for property taxes not delinquent; statutory
liens that were created in the ordinary course of business; restrictions or
rights required to be granted to governmental authorities or otherwise imposed
by governmental authorities under applicable law; zoning, building or similar
restrictions relating to or effecting property, including leasehold interests;
all liens of record as of the date of this Agreement, but only if such liens do
not materially effect the ownership or use of the MMP Real Property or leasehold
interests and real property owned by others and operating leases for personal
property and leased interests in property leased to others; liens and
encumbrances on the MMP Real Property, currently of record as of the date
hereof, and other liens or encumbrances on the MMP Real Property, in any case
that individually or in the aggregate do not materially effect the current use
and enjoyment thereof in the operation of any Station.
"Person" means a natural person, a governmental entity, agency or
representative
5
(at any level of government), a corporation, partnership, joint venture or other
entity or association, as the context requires.
"Pre-Closing Tax Period" means any Taxable Period or portion thereof
that ends on or before the Closing Date.
"Post-Closing Tax Period" means any Taxable Period or portion thereof
beginning after the Closing Date.
"Purchase Price" has the meaning set forth in Section 3.1 of the
Agreement.
"Purchaser" has the meaning set forth in the preamble to the Agreement.
"Purchaser's Bring-Down Certificate" has the meaning set forth in
Section 11.2(a) of the Agreement.
"Purchaser's Knowledge" means the actual knowledge of the officers of
Purchaser.
"Qualified Plan" shall mean any MMP II Benefit Plan that meets,
purports to meet, or is intended to meet the requirements of Section 401(a) of
the Code.
"RLLP" shall have the meaning set forth in the Recitals.
"Radio Stations" shall have the meaning set forth in the Recitals.
"Real Property" means any real property owned or leased by Seller.
"Related Agreement" means any document delivered at the Closing and any
contract which is to be entered into at the Closing or otherwise pursuant to
this Agreement, including the Escrow Agreement.
"Seller" has the meaning set forth in the preamble to the Agreement.
"Sellers' Bring-Down Certificate" has the meaning set forth in Section
11.1(a) of this Agreement.
"Stations" has the meaning set forth in the recitals to the Agreement.
"Stock" has the meaning set forth in the recitals to the Agreement.
"Straddle Period" shall have the meaning set forth in Section 8.2 of
this
6
Agreement.
"Tax" or "Taxes" means all taxes, including, but not limited to, income
(whether net or gross), excise, property, sales, transfer, gains, gross
receipts, occupation, privilege, payroll, wage, unemployment, workers'
compensation, social security, occupation, use, value added, franchise, license,
severance, stamp, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), capital stock, withholding, disability, registration,
alternative or add-on minimum, estimated or other tax of any kind whatsoever
(whether disputed or not) imposed by any Tax Authority, including any related
charges, fees, interest, penalties, additions to tax or other assessments.
"Tax Authority" means any federal, national, foreign, state, municipal
or other local government, any subdivision, agency, commission or authority
thereof, or any quasi-governmental body or other authority exercising any taxing
or tax regulatory authority.
"Tax Liability" means any liability for a Tax.
"Taxable Period" means any taxable year or any other period that is
treated as a taxable year with respect to which any Tax may be imposed under any
applicable statute, rule or regulation.
"Tax Proceeding" means any audit, examination, claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Returns" means all returns, reports, forms, estimates, information
returns and statements (including any related or supporting information) filed
or to be filed with any Tax Authority in connection with the determination,
assessment, collection or administration of any Taxes.
"Television Licensee" shall have the meaning set forth in the Recitals.
"Television Stations" shall have the meaning set forth in the Recitals.
"Termination Date" shall have the meaning set forth in Section 14.1(b).
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"Time Brokerage Agreement" means that agreement entered into by
Purchaser, MMP II and the MMP II Licensee Entities at the First Closing.
"Trade-out Agreements" shall mean all contracts and agreements
(excluding program contracts) pursuant to which MMP has sold, traded or bartered
commercial air time on the Stations in consideration for any property or
services in lieu of or in addition to cash.
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