ASSET PURCHASE AGREEMENT
AGREEMENT dated as of the 15th day of December 1999, by and among ICA
BROADCASTING I, LTD., a Texas limited partnership having its principal place of
business at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxx 00000 ("Purchaser"), BENEDEK
BROADCASTING CORPORATION, a Delaware corporation ("BBC"), and BENEDEK LICENSE
CORPORATION, a Delaware corporation ("BLC"), each having its principal place of
business at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (BBC and BLC are
collectively referred to as "Benedek").
W I T N E S S E T H :
WHEREAS, BBC and its wholly-owned subsidiary, BLC, own and operate
television station KOSA-TV, Channel 7, Odessa, Texas and its auxiliary
facilities (the "Station") pursuant to licenses issued by the Federal
Communications Commission (the "FCC"); and
WHEREAS, Benedek desires to transfer, convey and assign, and Purchaser
desires to purchase and acquire substantially all of the assets, properties and
rights of Benedek in the Station on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise stated in this Agreement, the
following terms shall have the following meanings:
1.1 The term "Affiliate" means, with respect to a Person, any
other Person which, directly or indirectly, is in control of, is controlled by
or is under common control with such Person. For purposes of the foregoing
definition, "control" of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise.
1.2 The term "Agreement" means this agreement, including the
schedules and all exhibits hereto, as the same may be amended or otherwise
modified from time to time, and the terms "herein", "hereof", "hereunder" and
like terms shall be taken as referring to this Agreement in its entirety and
shall not be limited to any particular section or provision hereof.
1.3 The term "Communications Act" means the Communications Act
of 1934, as amended.
1.4 The term "Disclosure Schedule" means the Disclosure
Schedule delivered to Purchaser upon the execution of this Agreement.
1.5 The term "Effective Date" means December 22, 1999.
1.6 The term "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor statute
thereto and all final or temporary regulations promulgated thereunder.
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1.7 The term "FCC Consent" means action by the FCC granting
its consent to the assignment of the Station Licenses (as defined in Section
1.14 hereof) as contemplated by this Agreement.
1.8 The term "Final Order" means a written action or order
issued by the FCC, setting forth the FCC Consent and which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and with respect
to which no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay and the periods provided by statute or FCC
regulations for filing of any such requests for administrative or judicial
review, reconsideration or appeal or for the FCC to set aside the action on its
own motion have expired.
1.9 The term "GAAP" means generally accepted accounting
principals set forth in opinions and pronouncements of the Accounting Principals
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
1.10 The term "Lien" means any charge, lien, mortgage, pledge,
security interest or other encumbrance of any nature whatsoever upon, of or in
property or other assets of a Person, whether absolute or conditional, voluntary
or involuntary, whether created pursuant to agreement, arising by force of
statute, by judicial proceedings or otherwise.
1.11 The term "Material Adverse Effect" means any change or
effect that is materially adverse to the properties, operations, business,
financial condition or results of operations of the Station or to the Assets,
except for any such changes or effects resulting directly or indirectly from (i)
the transactions contemplated by this Agreement, (ii) the announcement or other
disclosure of the transactions contemplated by this Agreement, (iii) regulatory
changes, or (iv) changes in conditions generally applicable to the television
broadcasting industry or in general economic conditions in the geographic region
in which the Station is broadcast.
1.12 The term "Permitted Liens" means (i) Liens for inchoate
mechanics' and materialmen's Liens for construction in progress and workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of the business, (ii) Liens for taxes and other liabilities not yet due and
payable, and for taxes and other liabilities being contested in good faith,
(iii) Liens and imperfections of title the existence of which does not
materially detract from the value of, interfere with, or otherwise affect the
use and enjoyment of the property subject thereto or affected thereby, for the
same use and operations as currently conducted, and (iv) solely with respect to
Owned Real Property, provided that the following are not violated by existing
improvements in any material respect and do not prohibit or materially restrict
the continued use and operation of such Owned Real Property for the same uses
and operations as currently conducted, or grant any third party any option or
right to acquire or lease a material portion thereof, (A) easements, rights of
way or other similar restrictions which would be shown by a current title
report, (B) conditions that may be shown by a current survey, title report or
physical inspection, or (C) zoning, building or other similar restrictions
imposed by applicable law.
1.13 The term "Person" shall include an individual, a
partnership, a joint venture, a corporation, a limited liability company, a
trust, an estate, an unincorporated organization or association or a
governmental agency.
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1.14 The term "Station Licenses" means the licenses, pending
applications, permits and other authorizations issued by the FCC to BLC in
connection with the conduct of the business and operation of the Station,
including the licenses, pending applications, permits and other authorizations
listed on Schedule 7.4 of the Disclosure Schedule.
1.15 The term "Unwind Agreement" means an agreement in form
and substance reasonable satisfactory to Benedek and Purchaser setting forth the
manner in which the parties will comply with a withdrawal of the FCC Consent
prior to the time that it becomes a Final Order. Benedek and Purchaser shall use
their best efforts to agree upon the form of the Unwind Agreement on or prior to
the Effective Date.
1.16 Unless the context otherwise requires: a term has the
meaning assigned to it; an accounting term not otherwise defined has the meaning
assigned to it in accordance GAAP and all accounting calculations will be
determined in accordance with such principles; "or" is not exclusive;
"including" means including without limitation; and words in the singular
include the plural and words in the plural include the singular.
2. PURCHASE AND SALE OF ASSETS.
2.1 PURCHASED ASSETS. On the terms and subject to the
conditions of this Agreement, Benedek shall transfer, convey, assign and deliver
to Purchaser, and Purchaser shall acquire and accept from Benedek, on the
Closing Date, all of the right, title and interest of Benedek in and to all
assets, properties and rights of Benedek used or held for use primarily in
connection with the operation of the Station, of every nature, kind and
description, wherever located, tangible and intangible, real, personal and mixed
(excluding only the Excluded Assets as specified in Section 2.2 below) as the
same shall exist at and as of the Closing Date (the "Assets"), including,
without limitation, the following:
2.1.1 all rights in and to the licenses, pending
applications, permits and other authorizations issued to Benedek by any
governmental authority and held by Benedek and used or intended for use in the
conduct of the business and operation of the Station, including the Station
Licenses listed on Schedule 7.4 of the Disclosure Schedule together with any
renewals, extensions or modification thereof and additions thereto between the
date hereof and the Closing Date, the goodwill and other intangible personal
property owned by Benedek and used or held for use primarily in connection with
the operation of the Station, the business of the Station as a going concern,
and all of Benedek's rights in and to the call letters "KOSA" as the same relate
to the Station;
2.1.2 all land, leaseholds and other interests of
every kind and description in real property, buildings, towers, and antennae,
and fixtures and improvements thereon owned by Benedek as of the date hereof and
used or held for use primarily in connection with the operation of the Station,
including, without limitation, those shown on Schedule 7.9 of the Disclosure
Schedule, and any additions, improvements, replacements and alterations thereto
made between the date of this Agreement and the Closing Date;
2.1.3 all equipment, cameras, transmitters, antennas,
office furniture and fixtures, office materials and supplies, tools, inventory,
spare parts, and other tangible personal property of every kind and description,
owned by it and used or held for use primarily in connection with the operation
of the Station, including the property listed on Schedule 7.10 of the Disclosure
Schedule, together with, to
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the extent permitted by this Agreement, any replacements thereof and additions
thereto made between the date hereof and the Closing Date, and less any
retirements or dispositions thereof made between the date hereof and the Closing
Date which are permitted by this Agreement;
2.1.4 all leases, contracts, licenses, purchase
orders, sales orders, commitments and other agreements primarily relating to the
business and operation of the Station to which Benedek is a party or in which
Benedek has rights, listed on Schedule 7.8 of the Disclosure Schedule, including
the Affiliation Agreement dated as of November 8, 1994, as amended through the
date hereof (the "Affiliation Agreement") with CBS Television Network ("CBS"),
or not required by Section 7.8 hereof to be set forth on Schedule 7.8, and those
leases, contracts, licenses, purchase orders, sales orders, commitments and
other agreements relating to the business and operation of the Station entered
into by Benedek between the date hereof and the Closing Date, except for those
that expire by their terms or are cancelled between the date hereof and the
Closing Date;
2.1.5 all orders and agreements now existing, or
entered into in the ordinary course of business between the date hereof and the
Closing Date, for the sale of advertising time on the Station except those which
on the Closing Date have already been filled or cancelled or have expired;
2.1.6 all programs and programming materials and
elements of whatever form or nature owned by Benedek as of the date of this
Agreement and used or held for use primarily in connection with the operation of
the Station, whether recorded on tape or any other substance or intended for
live performance, and whether completed or in production, and all related
common-law and statutory copyrights owned by or licensed to Benedek and used or
held for use primarily in connection with the operation of the Station, together
with all such programs, materials, elements, and copyrights acquired by Benedek
in connection with the business and operations of the Station between the date
hereof and the Closing Date, except those that expire or are cancelled between
the date hereof and the Closing Date;
2.1.7 all rights of Benedek in and to trade names,
service marks, trademarks, trademark registrations and trademark applications,
copyrights, copyright registrations and copyright applications, patents and
patent applications, inventions, trade secrets, logos, slogans, jingles,
proprietary processes, computer software (including the Station's traffic system
software) and all other information, know-how and intellectual property rights
and all licenses and other agreements relating to any of the foregoing and used
solely in connection with the business and operation of the Station;
2.1.8 all rights of Benedek relating to or arising
out of or under express or implied warranties from suppliers with respect to the
Assets;
2.1.9 except as provided for in Section 4.3 all
prepaid expenses, advances and deposits made by Benedek in connection with the
operation of the Station, including prepaid film and programming expenses (it
being understood that the consideration being transferred to Purchaser includes
consideration for the contracts and commitments of Benedek relating to film and
programming of the Station and that no further consideration shall be due to
Benedek or proration shall be due in respect thereof) and all barter receivables
arising in connection with trade-out agreements now existing or hereafter
entered into in the ordinary course of business;
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2.1.10 all rights of Benedek in and to all post
office boxes, telephone numbers and phone book listings used or held for use in
connection with the operation of the Station, to the extent transferable by
Benedek; and
2.1.11 all books and records relating to the
operation of the Station, including, but not limited to, correspondence,
employment records, production records, accounting records, property records,
filings with the FCC, mailing lists, customer and vendor lists, maps, plans,
diagrams, blue prints, schematics, studies, data, lists and other records and
files of or relating to the Assets, other than the Excluded Records; provided,
however, that such books and records shall be maintained in existence for a
period of three years following the Closing Date and shall be made available for
inspection and duplication by Benedek, at its expense, upon reasonable notice
during normal business hours.
2.2 EXCLUDED ASSETS. Anything contained in Section 2.1 above
to the contrary notwithstanding, Benedek shall not transfer, convey or assign to
Purchaser and the Assets shall not include the following (the "Excluded
Assets"):
2.2.1 the consideration delivered by Purchaser to
Benedek pursuant to this Agreement and all other rights of Benedek under this
Agreement, any agreement, certificate, instrument or other document executed and
delivered by Benedek in connection with the transactions contemplated hereby, or
any side agreement between Benedek and Purchaser entered into on or after the
date of this Agreement;
2.2.2 any cash or cash equivalents or money market
instruments, including unprocessed checks, savings and checking accounts and
other deposits, certificates of deposits, Treasury bills and other marketable
securities of Benedek;
2.2.3 all real and personal property (including,
without limitation, all equipment, furniture, fixtures, files, computers,
computer software and computer software licenses, including the general ledger
accounting software, supplies and other personal property) used by the corporate
and accounting departments of Benedek located at Rockford, Illinois;
2.2.4 all assets, whether real or personal, tangible
or intangible, which are owned, used or held for use by Benedek primarily to
conduct any business operation or activity other than the operation of the
Station;
2.2.5 Benedek's minute books and such other books and
records (other than books and records specifically described in Section 2.1.11
hereof) as pertain to the organization, existence or ownership of Benedek;
provided, however, that such books and records shall be maintained in existence
for a period of three years following the Closing Date and shall be made
available for inspection and duplication by Purchaser, at its expense, upon
reasonable notice during normal business hours and solely for purposes related
to the business and operation of the Station (the "Excluded Records");
2.2.6 Contracts, commitments and agreements of
Benedek to the extent the same relate solely to Excluded Assets and not to the
operation of the Station and actions, claims suits, proceedings, arbitral
actions, deposits, prepayments, refunds, causes of action, choses in action,
rights of recovery, rights of set off, and rights of recoupment of any kind or
nature (including any such item relating to income taxes) relating to the
Excluded Assets or the Excluded Liabilities;
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2.2.7 any refunds of Federal, state, local or other
taxes, including, without limitation, income, property or sales taxes, or other
taxes of any kind or description which relate to periods prior to the Closing
Date;
2.2.8 refunds paid or payable in connection with the
cancellation or discontinuance of any insurance policies applicable to the
Station following the Closing; and
2.2.9 any accounts receivable of Benedek as of the
Closing Date.
2.3 TRANSFER OF ASSETS. The transfer of the Assets as herein
contemplated shall be made by Benedek, free and clear of all Liens other than
(i) Liens set forth on Schedules 7.9 and 7.10 of the Disclosure Schedule and not
required to be discharged on or prior to the Closing Date pursuant to the terms
of this Agreement, (ii) Liens assumed by Purchaser pursuant to Section 3 below,
and (iii) Permitted Liens. The transfer of the Assets shall be effected by
delivery by Benedek of such endorsements, assignments, drafts, checks, deeds,
affidavits of title and other instruments of transfer, conveyance and
assignment, including customary deeds with respect to real property to be
conveyed hereunder, as shall be necessary or appropriate to transfer, convey and
assign the Assets to Purchaser on the Closing Date as contemplated by this
Agreement and as shall be reasonably requested by Purchaser. The conveyancing
documents shall be in form and substance reasonably satisfactory to Purchaser
and Benedek. Benedek shall, at any time and from time to time after the Closing
Date, but at no cost to Benedek, execute and deliver such other instruments of
transfer and conveyance and do all such further acts and things as may be
reasonably requested by Purchaser to transfer, convey, assign and deliver to
Purchaser or to aid and assist Purchaser in collecting and reducing to
possession, any and all of the Assets, or to vest in Purchaser good, valid and
marketable title to the Assets.
3. ASSUMPTION OF CONTRACTS.
3.1 ASSUMED CONTRACTS. Subject to the terms and conditions of
this Agreement and the performance by the parties hereto of their respective
obligations hereunder, on the Closing Date, simultaneously with the transfer,
conveyance and assignment by Benedek to Purchaser of the Assets, Purchaser shall
assume or otherwise be liable for, subject to the limitations contained herein,
the liabilities and obligations of Benedek (the "Assumed Contracts") under:
3.1.1 the contracts, agreements and commitments set
forth on Schedule 7.8 of the Disclosure Schedule to the extent the liabilities
and obligations thereunder arise on or after the Closing Date;
3.1.2 contracts, agreements and commitments
pertaining to the operation of the Station in existence on the date hereof and
not required by Section 7.8 hereof to be set forth on Schedule 7.8, to the
extent the liabilities and obligations thereunder arise on or after the Closing
Date;
3.1.3 contracts, agreements and commitments with
customers and advertising agencies accepted in the ordinary course of business
for the sale of advertising time for cash, to the extent the liabilities and
obligations thereunder arise on or after the Closing Date;
3.1.4 contracts, agreements and commitments of the
type set forth in Sections 3.1.1, 3.1.2 or 3.1.3, to the extent the liabilities
and obligations thereunder arise on or after the Closing Date,
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to which Benedek becomes a party in the ordinary course of business subsequent
to the date of this Agreement and prior to the Closing Date, which (a) are not
fully performed or discharged prior to the Closing Date and (b) are permitted to
be entered into by Benedek under the terms and conditions of this Agreement; and
3.1.5 liabilities for accruals as of the Closing Date
for employee vacation and sick time not to exceed two weeks per employee.
3.2 INSTRUMENTS OF ASSUMPTION FOR THE ASSUMED CONTRACTS. The
assumption by Purchaser of the Assumed Contracts shall be effected by such
instruments of assumption delivered to Benedek on the Closing Date as shall be
reasonably satisfactory to Purchaser and Benedek. Purchaser shall, at any time
and from time to time after the Closing Date, execute and deliver such other
instruments of assumption and do all such further acts and things as may be
reasonably requested by Benedek to implement the assumption of each such
liability and obligation. Assumption by Purchaser of the Assumed Contracts shall
in no way expand the rights or remedies of third parties against Purchaser as
compared to the rights and remedies which such parties would have had against
Benedek had this Agreement not been consummated.
3.3 EXCLUDED LIABILITIES. Purchaser does not and shall not
assume, pay, perform or discharge any liabilities or obligations of Benedek
other than the Assumed Contracts, and, without limiting the foregoing, it is
expressly agreed by the parties hereto that Purchaser shall not assume or be
liable for any of the following liabilities or obligations of Benedek (the
"Excluded Liabilities"):
3.3.1 liabilities or obligations of Benedek for
borrowed money or to any of its stockholders or to any Person affiliated
therewith;
3.3.2 liabilities or obligations of Benedek incurred
with respect to its entry into this Agreement or its consummation of any of the
transactions contemplated hereunder (including, without limitation, Benedek's
legal and accounting fees);
3.3.3 liabilities or obligations for Federal, state,
local or other taxes based on income;
3.3.4 any pension, retirement, profit-sharing plan or
trust or other employee benefit plan of Benedek; and
3.3.5 any litigation, proceeding, or claim by any
Person to the extent relating to the business or operation of or otherwise
relating to the Station prior to the Closing Date, whether or not such
litigation, proceeding, or claim is pending, threatened, or asserted before, on,
or after the Closing Date, including any litigation, proceeding or claim listed
on Schedule 7.11 of the Disclosure Schedule and any litigation, proceeding or
claim pending or threatened as of the Closing Date.
4. PURCHASE PRICE.
4.1 PURCHASE PRICE. The purchase price (the "Purchase Price")
for the Assets shall be (i) Eight Million Dollars ($8,000,000), plus (ii) the
assumption of the Assumed Contracts as herein provided. The Purchase Price, less
any amount transferred by the Escrow Agent to Benedek pursuant to Section 4.2,
shall be made by wire transfer of immediately available funds to an account
designated by Benedek.
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4.2 ESCROW DEPOSIT. On the date hereof, Purchaser has
deposited with Shack & Xxxxxx, P.C. (the "Escrow Agent"), the sum of Two Hundred
Fifty Thousand Dollars ($250,000) (the "Deposit"), which amount shall be held
and disbursed by the Escrow Agent pursuant to the terms of the Escrow Agreement
(the "Escrow Agreement") in the form of Exhibit A annexed hereto. On or before
December 24, 1999, if Purchaser has not theretofore elected to terminate this
Agreement pursuant to Section 13.2 hereof, Purchaser shall deposit with the
Escrow Agent the additional sum of Five Hundred Fifty Thousand Dollars
($550,000)(the "Additional Deposit") and in such event the term "Deposit" as
used in this Agreement shall mean the aggregate sum of Eight Hundred Thousand
Dollars ($800,000) deposited with the Escrow Agent. Purchaser shall be entitled
to receive all interest earned with respect to the Deposit prior to the date of
payment of the Deposit (except as otherwise provided in Section 12 hereof) and,
if Purchaser so instructs, Purchaser and Benedek shall instruct the Escrow Agent
to pay any such interest accumulated on the Closing Date to Benedek in payment
to be credited toward the Purchase Price. At the Closing, contemporaneously with
the performance by Benedek and Purchaser of their respective obligations to be
performed at the Closing, Purchaser and Benedek shall instruct the Escrow Agent
to pay the Deposit to Benedek in immediately available funds. In the event the
transactions contemplated by this Agreement are not consummated in accordance
with the terms hereof, Purchaser and Benedek shall instruct the Escrow Agent to
disburse the Deposit and all interest earned thereon in accordance with Section
12 hereof; provided, however, that if this Agreement is terminated by Purchaser
pursuant to Sections 13.2 or 14, Purchaser and Benedek shall instruct the Escrow
Agent to disburse the Deposit and all interest earned thereon to Purchaser.
4.3 CLOSING ADJUSTMENTS.
4.3.1 All income and expenses arising from the
conduct of the business and operation of the Station shall be prorated between
Purchaser and Benedek in accordance with customary proration practices in
broadcasting acquisitions as of 11:59 p.m. local time, Odessa, Texas, on the
Closing Date. Such prorations shall include, without limitation, all ad valorem,
real estate and other property taxes (but excluding taxes arising by reason of
the transfer of the Assets as contemplated hereby which shall be paid as set
forth in Section 9.6 and taxes based on income of Benedek), business and license
fees (including, without limitations FCC regulatory fees which shall be the sole
responsibility of Benedek for the year-ended December 31, 1999 and which shall
be prorated between Benedek and Purchaser for the year-ended December 31, 2000
as of the Closing Date), lease payments, payments made pursuant to Assumed
Contracts, rents, wages and salaries of employees (excluding accruals for
commissions, vacation and sick pay), utility expenses, water and sewer use
charges, time sales agreements, pre-paid fees and expenses to the extent
Purchaser will receive a benefit thereof, and all other income and expenses
attributable to the ownership and operation of the Station. Benedek
acknowledges, however, that the consideration hereunder for the Assets includes
consideration for the contracts and commitments of Benedek relating to motion
pictures and other programming and for barter receivables arising in connection
with trade-out agreements and that no further payment to Benedek or proration
shall be due in respect thereof. Prorations under this Section 4.3 to the extent
possible shall be determined and paid on the Closing Date with final settlement
thereof to occur, to the extent possible, within 60 calendar days after the
Closing Date in accordance with Sections 4.3.2 and 4.3.3 below.
4.3.2 As promptly as practicable, but in any event
within 60 calendar days after the Closing, Benedek shall cause to be prepared
and delivered to Purchaser a schedule of its proposed prorations (which shall
set forth in reasonable detail the basis for those determinations) (the "Final
Prorations Schedule"). The Final Prorations Schedule shall be conclusive and
binding on Purchaser and Benedek shall
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pay to Purchaser, or Purchaser shall pay to Benedek, as the case may be, any
amount due as a result of such adjustment, unless Purchaser provides Benedek
with written notice of objection (the "Notice of Disagreement") within 20
calendar days after Purchaser's receipt of the Final Proration Schedule, which
notice shall state the prorations of expenses proposed by Purchaser
("Purchaser's Proration Amount"). Benedek shall have 15 calendar days from
receipt of a Notice of Disagreement to accept or reject Purchaser's Proration
Amount. Payment pursuant to this Section 4.3.2 shall be due within 15 calendar
days after the last to occur of (i) Purchaser's failure to reject the Final
Prorations Schedule within 20 calendar days after Purchaser's receipt of the
Final Prorations Schedule or, (ii) Benedek's failure to reject Purchaser's
Proration Amount within 15 calendar days of Benedek's receipt of a Notice of
Disagreement.
4.3.3 In the event of any disputes between the
parties as to the prorations and adjustments described in Section 4.3, the
amounts not in dispute shall nonetheless be promptly paid and such disputes
shall be determined by an independent certified public account of national
recognition that does not then have a relationship with Benedek or Purchaser, or
any of their respective Affiliates, mutually acceptable to Benedek and
Purchaser, with the fees and expenses of such accountant being shared equally by
Benedek and Purchaser. Any payment required by Benedek to Purchaser or Purchaser
to Benedek, as the case may be, under this Section shall be paid by wire
transfer of immediately available funds to an account designated by such party.
If either Benedek or Purchaser fails to pay when due any amount under Section
4.3, interest on such amount will accrue from the date payment was due to the
date such payment is made at a rate per annum equal the lesser of (A) the
generally prevailing prime interest rates (as reported by the Wall Street
Journal) plus five percentage points (5%), or (B) the maximum amount permitted
by applicable law, and such interest shall be payable upon demand.
Notwithstanding the provisions of Sections 4.3.1 and 4.3.2, if the amount of any
taxes to be prorated pursuant to Section 4.3 is not known by 60 calendar days
after the Closing, then the amount will be estimated as of such date, and once
the amount of such taxes is known, Benedek shall pay to Purchaser, or Purchaser
shall pay to Benedek, as the case may be, the net amount due as a result of the
actual apportionment of such taxes.
4.4 ALLOCATION. As promptly as practicable following the
execution hereof, Purchaser and Benedek shall enter into good faith negotiations
regarding a mutually agreeable allocation of the sum of (a) the Purchase Price
and (b) the Assumed Contracts assumed by Purchaser among the Assets acquired by
Purchaser. In the event that the parties are unable to agree on an allocation
within 60 days after the Closing, then the parties agree to be bound by an
appraisal of such assets by Xxxxx X. Xxxx & Company or another independent
nationally recognized firm of valuation experts mutually acceptable to Benedek
and Purchaser. The cost of such appraisal shall be borne equally by Purchaser
and Benedek and shall be conclusive and binding on the parties for purposes of
this Section 4.4. Notwithstanding anything to the contrary herein, the
allocation will be consistent with Section 1060 of the Code. Purchaser and
Benedek (i) shall execute and file all tax returns and prepare all financial
statements, returns and other instruments in a manner consistent with the
allocation determined pursuant to this Section 4.4, (ii) shall not take any
position before any governmental authority or in any judicial proceeding that is
inconsistent with such allocation, and (iii) shall cooperate with each other in
a timely filing, consistent with such allocation, of Form 8594 with the Internal
Revenue Service ("IRS").
5. CLOSING. The closing of this Agreement (the "Closing") shall take
place at 10:00 a.m. local time, on a date within five (5) days following the
date of public notice of FCC Consent (or if such date is a Saturday, Sunday, or
Federal holiday, on the next business day thereafter) and all other conditions
to the obligations of Purchaser and Benedek hereunder shall have been satisfied
or waived in writing; provided, however, that in the event any petition or other
objection with respect to the FCC Application has been filed
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with the FCC prior to the Closing Date, the Closing shall take place on a date
within five (5) days following the date on which the FCC Consent shall have
become a Final Order (or if such date is a Saturday, Sunday, or Federal holiday,
on the next business day thereafter), or such other date as may be agreed to by
Purchaser and Benedek. If the Closing takes place prior to the date upon which
the FCC Consent becomes a Final Order, the parties shall, at the Closing, enter
into the Unwind Agreement. The Closing shall take place at the offices of Shack
& Xxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
place as may be agreed to by Purchaser and Benedek. The date of the Closing is
hereinafter referred to as the "Closing Date." For accounting and tax purposes,
the transactions contemplated by this Agreement shall be effective as of 11:59
p.m. on the Closing Date.
6. FCC CONSENTS. The assignment of the Station Licenses to Purchaser as
contemplated by this Agreement is subject to prior FCC Consent. Promptly after
the Effective Date, Purchaser and Benedek shall proceed to prepare for filing
with the FCC appropriate applications for consent to the assignment of the
Station Licenses to Purchaser (the "FCC Application"), which shall be filed with
the FCC as soon as practicable but in no event sooner than the Effective Date
and no later than ten (10) days after the Effective Date. The FCC Application
shall include such information relating to the Station in order to effect the
timely closing of this Agreement. The parties shall thereafter prosecute the FCC
Application with all reasonable diligence and otherwise use commercially
reasonable efforts to obtain the grant of such application as expeditiously as
practicable (but no party shall have any obligation to take any unreasonable
steps to satisfy complainants, if any). If the FCC Consent imposes any condition
on any party hereto, such party shall use commercially reasonable efforts to
comply with such condition unless compliance would have a material adverse
effect upon it, its parent corporation, or any of its or its parent
corporation's subsidiaries or Affiliates, as appropriate. Purchaser and Benedek
shall each pay 50% of all filing fees payable with respect to all filings
required by the FCC in connection with the transactions contemplated by this
Agreement.
7. REPRESENTATIONS AND WARRANTIES OF BENEDEK. In order to induce
Purchaser to enter into this Agreement and to perform its obligations hereunder,
Benedek hereby makes the following representations and warranties to Purchaser:
7.1 ORGANIZATION AND STANDING. Each of BBC and BLC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and each has all requisite power and authority to own,
lease, use and operate its properties and assets at and carry on its business in
the places where such properties and assets are now owned, leased or operated or
where such business is now conducted. Each of BBC and BLC is duly qualified to
do business and is in good standing in the State of Texas.
7.2 POWER AND AUTHORITY. Each of BBC and BLC has all requisite
power and authority to enter into this Agreement and the documents and
instruments contemplated hereby and to assume and perform its obligations
hereunder. The execution and delivery of this Agreement and the documents and
instruments contemplated hereby and the performance by each of BBC and BLC of
its obligations hereunder have been duly and validly authorized by all necessary
action and no further action or approval is required in order to constitute this
Agreement and the documents and instruments contemplated hereby as valid and
binding obligations of each of BBC and BLC, enforceable in accordance with their
terms, except as the enforceability of such agreements, documents and
instruments, may be limited by or subject to, any bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and that the remedies of specific
performance, injunction, and other forms of
10
equitable relief are subject to certain principles of equity jurisdiction,
equitable defenses and the discretion of the court before which any proceeding
therefor may be brought.
7.3 NO CONFLICTS. Except as set forth on Schedule 7.3 of the
Disclosure Schedule and except for any consent required for the assignment to
Purchaser of any contract, lease, agreement or commitment included within the
Assets, the execution and delivery by each of BBC and BLC of this Agreement and
the documents and instruments contemplated hereby, the consummation by each of
BBC and BLC of the transactions contemplated hereby and the performance by each
of BBC and BLC of their obligations hereunder:
7.3.1 do not and will not conflict with or violate
any provision of the Certificate of Incorporation or Bylaws of either BBC or
BLC;
7.3.2 do not and will not conflict with or result in
any breach of any condition or provisions of, or constitute a default under or
give rise to any right of termination, cancellation or acceleration or (whether
after the giving of notice or lapse of time or both) result in the creation or
imposition of any Lien (other than Permitted Liens), upon any of the Assets by
reason of the terms of any contract, mortgage, Lien, lease, agreement,
indenture, instrument, judgment or decree to which either BBC or BLC is a party
or which is or purports to be binding upon BBC or BLC or which affects or
purports to affect any of the Assets; and
7.3.3 subject to the receipt of any governmental
approvals required in connection with the transfer of the Assets to Purchaser,
do not and will not conflict with or result in a violation of or default under
(with or without notice of the lapse of time or both) any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge or other
restriction of any court, administrative agency or commission or other
governmental authority or instrumentality.
7.4 GOVERNMENT APPROVAL. BLC is the holder of the Station
Licenses as set forth on Schedule 7.4 of the Disclosure Schedule, which, except
as set forth on such Schedule 7.4, constitute all necessary authorizations from
the FCC to enable Benedek to broadcast and transmit the present television
programming. Other than FCC rulemaking procedures of general applicability and
except as set forth on Schedule 7.4, there are no fines, forfeitures, notices of
apparent liability, orders to show cause or any other administrative or judicial
orders outstanding nor any proceedings pending or, to Benedek's knowledge,
threatened, the effect of which would be the revocation, cancellation,
non-renewal, suspension or material adverse modification of the Station Licenses
or any material adverse consequence for the Station. Except as contemplated in
Section 6 hereof, no action, approval, consent, authorization or other action by
or filing with any governmental or quasi-governmental agency, commission, board,
bureau or instrumentality, is necessary or required as to each of BBC and BLC
for the due execution, delivery or performance by each of BBC and BLC of this
Agreement or any document or instrument contemplated hereby.
7.5 VALIDITY. This Agreement constitutes and the other
documents and instruments contemplated hereby will, on the due execution and
delivery thereof, constitute the legal, valid and binding obligations of each of
BBC and BLC, enforceable in accordance with their respective terms, except as
the enforceability of such agreements, documents and instruments, may be limited
by or subject to, any bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally.
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7.6 FINANCIAL STATEMENTS. Schedule 7.6 of the Disclosure
Schedule sets forth the following financial statements of Benedek (collectively
the "Financial Statements"): internal unaudited financial statements with
respect to the results of operations of the Station for the fiscal year ended
December 31, 1998 and the nine months ended September 30, 1999. Except as set
forth on Schedule 7.6 of the Disclosure Schedule, the Financial Statements are
true, correct and complete in all material respects, are in accordance with GAAP
and the books and records of Benedek and fairly, completely and accurately
present the financial position of the Station at the dates specified and the
results of operations for the periods covered.
7.7 TAXES. Benedek has duly filed all material foreign,
Federal, state, county and local income, excise, sales, property, withholding,
social security, franchise, license, information returns and other tax returns
and reports required to have been filed by Benedek to the date hereof pertaining
to the operation of the Station and Benedek has paid all amounts shown to be due
thereon.
7.8 CONTRACTS. Except only those contracts, agreements or
commitments listed and described on Schedule 7.8 of the Disclosure Schedule, and
contracts, agreements or commitments entered into in the ordinary course of
business of the Station and (x) involving less than $10,000 over their term or
(y) involving more than $10,000 over their term but not more than $100,000 in
the aggregate for all such contracts, agreements or commitments or (z) involving
sales of advertising time in accordance with the Station's customary rate
practices, neither BBC nor BLC is a party to or has any contract, agreement or
commitment of any kind or nature whatsoever, written or oral, formal or
informal, with respect to the business and operation of the Station. Except as
set forth on Schedule 7.8, each of the written contracts and commitments
referred to therein is valid and existing, in full force and effect, and
enforceable in accordance with its terms, except as the enforceability of such
agreement, documents and instruments, may be limited by or subject to, any
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and no party
thereto is in default and no claim of default by any party has been made or is
now pending, except for such defaults as would not, in any individual case, be
reasonably be expected, as of the date hereof, to have a Material Adverse
Effect. The Station is currently affiliated with CBS pursuant to the Affiliation
Agreement listed on Schedule 7.8. Said Affiliation Agreement is in full force
and effect and Benedek is not aware of any state of facts which would permit the
termination of the Affiliation Agreement prior to the expiration of the term
thereof.
7.9 REAL PROPERTY.
7.9.1 Schedule 7.9 of the Disclosure Schedule is a
complete and correct list of all real property or premises owned in whole or in
part by Benedek and used in the business and operation of the Station (other
than Excluded Assets) ("Owned Real Property") and all real property or premises
leased in whole or in part by Benedek and used in the business and operation of
the Station ("Leased Real Property", and together with Owned Real Property, the
"Real Property"). Copies of the leases with respect to Leased Real Property or,
with respect to oral leases, written summaries of the terms (the "Leases") and
the other documents referred to on Schedule 7.9 (other than those that will not
survive the Closing) have been delivered to Purchaser.
7.9.2 Benedek has all required legal and valid
occupancy permits and other licenses or government approvals for each of the
Real Properties used or held for use in connection with the operation of the
Station except where the failure to obtain such permit or license would not, in
any individual case, be reasonably be expected, as of the date hereof, to have a
Material Adverse Effect.
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7.9.3 Benedek has the legal right (without the
consent or other approval of any other party) to possess and quietly enjoy the
premises and properties under each of the Leases. Each Lease is in full force
and effect and constitutes a legal, valid and binding obligation of BBC and
there is not under any Lease any claim of default or event which, with or
without notice or the lapse of time or both, could reasonably be expected, in
any individual case, as of the date hereof, to have a Material Adverse Effect.
7.9.4 Except for Permitted Liens and as set forth on
Schedule 7.9 of the Disclosure Schedule, Benedek has good, marketable and
insurable title to the Owned Real Property (other than Excluded Assets), free
and clear of all Liens and no party has the right to acquire or use such Owned
Real Property or any improvements, fixtures or equipment located thereon. Except
as set forth on Schedule 7.9 or Schedule 7.10 of the Disclosure Schedule,
Benedek has good and marketable title and owns outright, free and clear of all
Liens (other than Permitted Liens), each improvement, fixture and item of
equipment located in or on each Real Property.
7.9.5 None of the Real Properties has been condemned
or otherwise taken by any public authority, no condemnation or taking is, to
Benedek's knowledge, threatened or contemplated.
7.10 PERSONAL PROPERTY. Schedule 7.10 of the Disclosure
Schedule is a true and complete list of (i) all tangible personal property owned
by Benedek and used in connection with the business and operation of the Station
having a book value at the date hereof in excess of $10,000 per item and (ii)
all personal property owned by a third party which is leased or otherwise used
by Benedek in connection with the business and operation of the Station,
including, without limitation, leases or other agreements relating to the use or
operation of any machinery, equipment, motor vehicles, office furniture or
fixtures owned by any third party (copies of which leases or other agreements
have been delivered to Purchaser) but excluding leases not required to be set
forth on Schedule 7.8 of the Disclosure Schedule. Each such personal property
lease is in full force and effect and constitutes a legal, valid and binding
obligation of Benedek and there is not under any such lease any default or any
claim of default or of an event which, with or without notice or the lapse of
time or both, could reasonably be expected, in any individual case, as of the
date hereof, to have a Material Adverse Effect. Except for Permitted Liens and
as set forth on Schedule 7.10 of the Disclosure Schedule, all personal property
purported to be owned by Benedek is owned by it, free and clear of all Liens. To
Benedek's knowledge, all tangible personal property is in good working order.
7.11 LITIGATION. Except as set forth on Schedule 7.11 of the
Disclosure Schedule, no action, suit, claim, investigation, proceeding or
controversy, whether legal or administrative or in mediation or arbitration, is
pending or, to Benedek's knowledge, threatened, at law or in equity or
admiralty, before or by any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
which could reasonably be expected, in any individual case, as of the date
hereof, to have a Material Adverse Effect against or seeking to restrain,
prohibit, invalidate, set aside, rescind, prevent or make unlawful this
Agreement or the carrying out of this Agreement or the transactions contemplated
hereby. Benedek is not operating under or subject to, or in default in respect
of, any judgment, order, writ, injunction or decree of any court or any Federal,
state, municipal or other governmental department commission, board, bureau,
agency or instrumentality.
7.12 COMPLIANCE WITH LAW. Except as set forth on Schedule 7.4
of the Disclosure Schedule, each of BBC and BLC has all material permits,
licenses, orders and approvals of all Federal, state or local governmental
regulatory bodies required for it to conduct the business and operation of the
Station
13
as conducted on the date of this Agreement. Except as set forth on Schedule 7.4,
all such permits, licenses, orders and approvals are in full force and effect in
all material respects and no suspension or cancellation of any of them is
pending or threatened. Each of BBC and BLC is in compliance in all material
respects with each law, rule, ordinance, regulation, order and decree applicable
to the business and operation of the Station, except where the failure to so
comply could not reasonably be expected, in any individual case, as of the date
hereof, to have a Material Adverse Effect. Except as set forth on Schedule 7.4
of the Disclosure Schedule, the Station's transmitting and studio equipment is
in all material respects operating in accordance with the terms and conditions
of the Station License, all underlying construction permits, and the rules,
regulations, practices and policies of the FCC, including all requirements
concerning equipment authorization and human exposure to radio frequency
radiation. Except as set forth on Schedule 7.4 of the Disclosure Schedule, all
ownership reports, employment reports, children's television reports, tax
returns and other material documents required to be filed by Benedek with the
FCC or other governmental authority have been timely filed; such reports and
filings are accurate and complete in all material respects; such items as are
required to be placed in the Station's local public records files have been
timely placed in such files; all proofs of performance and measurements that are
required to be made by Benedek with respect to the Station's transmission
facilities have been completed and filed at the Station; and all information
contained in the foregoing documents is true, complete and accurate, except as
to any of the foregoing where the failure to do so would not have a Material
Adverse Effect. The location of the Station's main studio complies with the
FCC's rules. Benedek, or its predecessor-in-interest, has paid to the FCC all
annual regulatory fees due for the Station for the years 1994-1998.
7.13 LABOR. Benedek is not a party to any representation or
labor contract with respect to any employees at the Station. Benedek has not
received any written notice from any labor union or group of employees that such
union or group represents or believes or claims it represents or intends to
represent any of the employees of Benedek; to Benedek's knowledge, no strike or
work interruption by Benedek's employees is planned, under consideration,
threatened or imminent; and Benedek has not made any loan or given anything of
value, directly or indirectly, to any officer, official, agent or representative
of any labor union or group of employees other than salaries and ordinary course
compensation.
7.14 EMPLOYEES. Schedule 7.14 of the Disclosure Schedule is a
complete and correct list as of December 9, 1999 of the names and annual salary,
bonus, commission and perquisite arrangements, written or unwritten, for each
current employee of the Station, including accruals for vacation and sick time.
Benedek does not have any contract for the future employment of any employee
except as may be listed on Schedule 7.14 of the Disclosure Schedule.
7.15 EMPLOYEE BENEFIT PLANS. Schedule 7.15 of the Disclosure
Schedule is a complete and correct list of all employment, bonus, incentive
compensation, deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights, phantom
stock, equity (or equity-based), leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health, medical, accident,
disability, workmen's compensation or other insurance, severance, separation,
termination, change of control or other benefit plan, agreement (including any
collective bargaining agreement), practice, policy or arrangement, whether
written or oral, and whether or not subject to ERISA (including, without
limitation, any "employee benefit plan" within the meaning of Section 3(3) of
ERISA) ("Employee Plans") sponsored, maintained or contributed to by Benedek in
connection with the business and operation of the Station. All Employee Plans,
related trust instruments or annuity contracts (or any other funding
instruments) are legal, valid and binding and are in full force and effect, and
each Employee Plan intended to be qualified under Section 401(a) of the Code is
so qualified and has been so qualified at all
14
times since its inception. All Employee Plans have been maintained, in all
material respects, in accordance with the requirements of the Code and ERISA, or
any other applicable statute, regulation or rule. There are no pending claims
against any Employee Plan (other than routine claims for benefits in accordance
with its terms) nor, to the knowledge of Benedek, has any claim been threatened
in writing by any participant thereof or beneficiary thereunder.
7.16 ENVIRONMENTAL MATTERS.
7.16.1 Except as provided below in this Section
7.16.1, Benedek makes norepresentation or warranty, express or implied, with
respect to: (a) the existence or presence on, at, under or about the real
property used in the business and operation of the Station (the "Premises") of
any environmental hazards, conditions, defects or hazardous materials, including
but not limited to any flammables, explosives, radioactive materials, asbestos,
asbestos containing material, PCBs, hazardous waste, any petroleum, petroleum
product derivative, compound or mixture, and without limitation, those
substances defined as "hazardous substances" or "hazardous wastes" (collectively
referred to as "Hazardous Substances") under any Environmental Laws); (b) the
Premises' compliance with the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 and Superfund Amendments and
Preauthorization Act of 1986, the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act of 1976, the Water Pollution Control Act,
the Clean Air Act, all regulations promulgated under all such Acts, as well as
any other Federal, state or local law, ordinance or regulation pertaining to
health, industrial hygiene or the environment and/or applicable to the
existence, removal, generation, transportation, discharge, process, storage or
treatment of Hazardous Substances (collectively referred to as "Environmental
Law(s)"). Benedek represents that: (i) during the period that Benedek has owned
or leased the Premises, Benedek has not caused or knowingly permitted (nor, at
any time prior to the Closing, will Benedek cause or consent to) any Hazardous
Substances to be deposited in or on the Premises in violation of any
Environmental Laws; and (ii) except as set forth in the environmental reports
referred to in Schedule 7.16 of the Disclosure Schedule, Benedek is not aware of
any environmental contamination at the Premises. Benedek has delivered to
Purchaser a complete copy of the most recent environmental assessment reports
with regard to the Premises (or any portion thereof) in Benedek's possession and
which are listed on Schedule 7.16.
7.16.2 By negotiation and execution of this
Agreement, the parties have expressly allocated certain environmental risks,
liabilities and expenses whether historical, current or prospective from Benedek
to Purchaser. In this regard, Benedek shall have no liability in the future
(except with respect to breach of Benedek's representations in Section 7.16.1)
to Purchaser or to any person claiming by, through or under Purchaser with
respect to (i) any past, present or future claim, cause of action, proceeding or
otherwise, whether known or unknown, relating to or arising out of any past,
present or future environmental condition at, under or about the Premises, (ii)
the presence of Hazardous Substances, (iii) a violation of any Environmental Law
relating to the Premises, and (iv) any losses, damages, penalties, costs
(foreseen or unforeseen, known or unknown), counsel, engineering and other
professional or expert fees with respect to the foregoing (the foregoing clauses
(i), (ii), (iii), and (iv) are collectively referred to as "Environmental
Claims"). Except with respect to breach of Benedek's representations in Section
7.16.1: (i) Purchaser hereby unconditionally releases and discharges Benedek
from any and all Environmental Claims, whether sustained by Purchaser directly
or relating to any claims by Purchaser for indemnification, contribution or
otherwise with respect to Environmental Claims against Purchaser by third
parties; and (ii) Purchaser hereby agrees to indemnify, defend and hold Benedek
harmless from and against all such Environmental Claims,
15
including any and all Environmental Claims made hereafter directly against
Benedek by third parties claiming by, through or under Purchaser.
7.17 SUFFICIENCY OF ASSETS. The Assets constitute all of the
assets, properties and rights necessary for the conduct of the business of the
Station by Benedek in a manner consistent with past practices.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. In order to induce
Benedek to enter into this Agreement and to perform its obligations hereunder,
Purchaser hereby makes the following representations and warranties to Benedek:
8.1 ORGANIZATION AND STANDING. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Texas and has all requisite power and authority, to
own, lease, use and operate its properties and assets at and carry on its
business in the places where such properties and assets are now owned, leased or
operated or where such business is now being conducted.
8.2 POWER AND AUTHORITY. Purchaser has all requisite power and
authority to enter into this Agreement and the documents and instruments
contemplated hereby and to assume and perform its obligations hereunder. The
execution and delivery of this Agreement and the documents and instruments
contemplated hereby and the performance by Purchaser of its obligations
hereunder have been duly and validly authorized by all necessary action and no
further action or approval, is required in order to constitute this Agreement
and the documents and instruments contemplated hereby as valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except as
the enforceability of such agreements, documents and instruments, may be limited
by or subject to, any bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and that the remedies of specific performance, injunction, and other
forms of equitable relief are subject to certain principles of equity
jurisdiction, equitable defenses and the discretion of the court before which
any proceeding therefor may be brought.
8.3 NO CONFLICTS. The execution and delivery by Purchaser of
this Agreement and the documents and instruments contemplated hereby, the
consummation by Purchaser of the transactions contemplated hereby and the
performance by Purchaser of its obligations hereunder:
8.3.1 do not and will not conflict with or violate
any provision of the Certificate of Formation or Operating Agreement of
Purchaser;
8.3.2 do not and will not conflict with or violate
any agreements, contracts or instruments to which Purchaser is a party; and
8.3.3 subject to the receipt of any governmental
approvals required in connection with the transfer of the Assets to Purchaser,
do not and will not conflict with or result in a violation of or default under
(with or without notice of the lapse of time or both) any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge or other
restriction of any court, administrative agency or commission or other
governmental authority or instrumentality.
16
8.4 GOVERNMENT APPROVAL. Purchaser is legally and financially
qualified under the Communications Act to enter into this Agreement, and to
consummate the transactions contemplated hereby. In connection with the
transactions contemplated by the Agreement, it is not necessary for Purchaser or
any Affiliate of Purchaser (or any Person in which Purchaser or any Affiliate of
Purchaser has an attributable interest under the Communications Act) to seek or
obtain any waiver from the FCC, dispose of any interest in any media or
communications property or interest (including, without limitation, the
Station), terminate any venture or arrangement, or effectuate any changes or
restructuring of its ownership, including, without limitation, the withdrawal or
removal of officers or directors or the conversion or repurchase of equity
securities of Purchaser or any Affiliate of Purchaser or owned by Purchaser or
any Affiliate of Purchaser (or any Person in which Purchaser or any Affiliate of
Purchaser has any attributable interest under the Communications Act). Purchaser
is able to certify on an FCC Form 314 that it is financially qualified.
Additionally, except as contemplated in Section 6 hereof, no action, approval,
consent or authorization or other action, including, but not limited to, any
action, approval, consent or authorization or other action by or filing with any
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary or required as to Purchaser for the due execution,
delivery or performance by Purchaser of this Agreement or any document or
instrument contemplated hereby.
8.5 VALIDITY. This Agreement constitutes and the other
documents and instruments contemplated hereby will, on the due execution and
delivery thereof, constitute the legal, valid and binding obligations of
Purchaser, enforceable in accordance with their respective terms, except as the
enforceability of such agreements, documents and instruments, may be limited by
or subject to, any bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally.
8.6 LITIGATION. No action, suit, claim, investigation,
proceeding or controversy, whether legal or administrative or in mediation or
arbitration, is pending or, to Purchaser's knowledge, threatened, at law or in
equity or admiralty, before or by any court or Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality which, if adversely determined, would effect Purchaser's ability
to carry out this Agreement or the transactions contemplated hereby.
8.7 INDEPENDENT INVESTIGATION. Purchaser has conducted or will
have the opportunity to conduct an independent investigation of the Station and
its business operations, assets, liabilities, results of operations, financial
condition and prospects in making its determination as to the propriety of the
transactions contemplated by this Agreement and in entering into this Agreement
and the documents and instruments required hereby, has relied or will have
relied solely on the results of said investigation and on the representations
and warranties of Benedek expressly contained in this Agreement and the
instruments, certificates or schedules furnished pursuant hereto.
9. COVENANTS OF BENEDEK.
Each of BBC and BLC covenants as follows:
9.1 BOOKS AND RECORDS. Between the date hereof and the Closing
Date, Benedek shall give Purchaser and its authorized representatives reasonable
access, during regular business hours, to any and all of its premises,
properties, contracts, books and records relating to the business and operation
of the Station and will cause its employees to furnish to Purchaser and its
authorized representatives any and all
17
data and information pertaining to the business and operation of the Station as
Purchaser or its authorized representatives shall from time to time reasonably
request.
9.2 INTERIM OPERATIONS. From the date hereof until the Closing
Date, except as otherwise consented to or approved in writing by Purchaser or as
required by this Agreement, Benedek shall not (i) sell, assign, lease, transfer
or otherwise dispose of any of the Assets except in the ordinary course of
business; (ii) mortgage, pledge or grant any Lien (other than Permitted Liens),
charge or other encumbrance on any of the Assets; (iii) other than in the
ordinary course of business, enter into any lease, contract, license or other
agreement, or make any amendment of or terminate any lease, contract, license or
other agreement to which Benedek is a party regarding the business and operation
of the Station; (iv) enter into any contract or commitment relating to sales of
advertising time for the Station except sales of advertising time on the basis
of the Station's customary rate practices and otherwise in the ordinary course
of business or contract or agree to provide any advertising or broadcast time at
substantially less than customary rate practices of the Station; (v) increase
the compensation payable to any of the Station's employees or become obligated
to increase any such compensation other than in the ordinary course of business
(provided, however, Benedek may enter into account executive compensation
guidelines substantially in the form annexed to Schedule 7.14 of the Disclosure
Schedule, which are deemed to be in the ordinary course of business); or (vi)
enter into any transaction other than in the ordinary course of business and
consistent with past practices of the Station.
9.3 DISCHARGE OF LIENS. On or prior to the Closing Date,
Benedek will cause all Liens with respect to the Assets (other than Permitted
Liens and the Liens set forth on Schedule 7.9 and 7.10 of the Disclosure
Schedule hereto which are not required to be discharged on or prior to the
Closing Date pursuant to the terms of this Agreement and except only those
assumed by Purchaser pursuant to Section 3) to be discharged.
9.4 COMPLIANCE. Benedek shall use its commercially reasonable
efforts to take or cause to be taken all action and do or cause to be done all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement. Benedek shall, between the Effective Date and
the Closing Date, take commercially reasonable efforts to obtain the consent of
any party or parties to any such contracts, licenses, leases, commitments, sales
orders, purchase orders or other agreements to the transfer or assignment
thereof by Benedek to Purchaser hereunder in all cases in which such consent is
required for transfer or assignment, including, without limitation, (i) CBS's
consent to the assignment of the Affiliation Agreement, (ii) the consent of the
landlord with respect to Lease Agreement dated November 1, 1993 between Bank One
Texas, N.A., Trustee of the X. X. Xxxxxx Testamentary Trust for the benefit of
Xxxxxx Xxx Xxxxxxxx, Xxxxxxx X. Xxxxxx, individually and as Attorney-in-Fact for
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, as landlord, and
Xxxxxxxxx TV of Odessa, Inc. d/b/a KOSA-TV, as Tenant, as modified by Extension
Option Agreement dated July 27, 1995 (the "Bank One Lease") and (iii) the
consent of the landlord with respect to Lease Agreement dated August 17, 1995
between CAC Consulting, as Landlord, and KOSA-TV, as Tenant (the "CAC Lease"),
provided, that such efforts shall not require the payment of any consideration
by Benedek other than as expressly provided for in this Agreement.
9.5 COMPLIANCE WITH LAWS. Benedek will comply in all material
respects with all rules and regulations of the FCC pertaining to the operation
of the Station, and with all other applicable laws, rules, ordinances and
regulations pertaining to the operation of the Station. As promptly as
practicable after execution of this Agreement, Benedek shall use its reasonable
best effort to obtain authority from the FCC to permit the translator station
K10HH, Big Springs, Texas (the "Translator") to operate in a lawful manner
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in all material respects in the manner in which it currently operates,
including, without limitation, the filing of appropriate applications and/or
requests: (i) to reinstate or replace the construction permit to modify the
license of Translator, permit number BPTTV-960517RC (the "Translator Permit"),
(ii) to issue a license covering the Translator Permit or (iii) to authorize
special temporary authority to operate the Translator.
9.6 PAYMENT OF TAXES. Benedek shall be responsible for all
Federal, state, county, local, income, property, sales, use, intangibles and
other taxes attributable to the operation or ownership of the Station or the
Assets for all periods prior to and including the Closing Date. Thereafter,
Purchaser shall be responsible for all such taxes. Any taxes paid by either
party pertaining to the operation of the Station which relate to periods both
before and after the Closing shall be prorated in accordance with Section 4.3.1
hereof. Benedek shall file all Federal, state, county and local income and other
tax returns and reports required to be filed by it pertaining to the operation
of the Station until and including the Closing Date and shall pay all taxes,
interest and penalties shown on such returns or reports.
9.7 FCC CONSENT. Benedek shall diligently prosecute the FCC
Application and use all commercially reasonable efforts to obtain the FCC
Consent as promptly and expeditiously as possible. Benedek shall not
intentionally take or omit to take any action that will cause the FCC to deny,
delay or fail to approve the FCC Application or cause the FCC Consent not to be
granted.
9.8 ACTION. Benedek shall not knowingly take or cause to be
taken, or fail to take or cause to be taken, any action that would cause the
conditions to the obligations of Benedek or Purchaser to consummate the
transactions contemplated hereby to fail to be satisfied or fulfilled at or
prior to the Closing, including, without limitation, by taking or causing to be
taken, or failing to take or cause to be taken, any action that would cause any
of the representations and warranties made by Benedek in Section 7 hereof to
fail to be true and correct as of the Closing in all material respects. Benedek
shall take, or cause to be taken, all commercially reasonable actions within its
power to cause to be satisfied or fulfilled, at or prior to the Closing, the
conditions precedent to the obligations of Purchaser to consummate the
transactions contemplated hereby as set forth in Section 11.1 hereof.
9.9 FURTHER ASSURANCES. Benedek shall, at any time, and from
time to time, after the Closing Date, but at no cost to Benedek (other than the
salaries or wages of any Benedek employees), use commercially reasonable efforts
to (i) take, or cause to be taken, all appropriate action, and to do, all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including, without limitation, executing and delivering any
additional instruments, certificates or other documents; and (ii) have the
present and future officers, directors and employees of Benedek cooperate with
Purchaser in furnishing information, evidence, testimony and other assistance in
connection with any tax return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters relating to all
periods prior to the Closing Date.
9.10 NO SOLICITATION. For a period commencing on the date
hereof and ending six (6) months after the Closing Date, neither Benedek nor any
Affiliate of Benedek shall, directly or indirectly, for itself or on behalf of
any other entity, solicit for employment after the Closing Date any person
currently working for the Station in a management position; provided that the
foregoing prohibition shall not apply to the General Manager of the Station if
Purchaser has not made arrangements for the continued employment of the General
Manager in such position after the Closing within a period of 30 days after the
date of this Agreement.
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9.11 NON-COMPETITION. Subject to the performance by Purchaser
of its obligations to be performed prior to the Closing, for a period of five
(5) years after the Closing Date, Benedek will not directly or indirectly (i)
own, manage, operate, control or participate in the ownership, management,
operation or control of a broadcast television station or a radio station in the
currently designated market area ("DMA") of the Station, as designated by X. X.
Xxxxxxx Company, and (ii) be engaged by, or become an Affiliate of, or otherwise
associated with, as a consultant, an independent contractor or otherwise, with
any other Person which is engaged in the business of owning, managing, operating
or controlling a broadcast television station or a radio station in the DMA.
Purchaser and Benedek acknowledge that the length of time and the geographic
restrictions pertaining to the prohibitions in this Section 9.11 are reasonable
and necessary for the protection of Purchaser. Purchaser and Benedek acknowledge
that Purchaser will not have an adequate remedy at law for any breach by Benedek
of this Section 9.11 and that damages flowing from such a breach are not readily
susceptible to being measured in monetary terms. Accordingly, Benedek and
Purchaser acknowledge that Purchaser shall be entitled, among other remedies, to
immediate and injunctive relief and may obtain a restraining order restraining
any threatened or further breach of this Section 9.11. Nothing in this Section
9.11 will be deemed to limit Purchaser's remedies at law or equity for any
breach by Benedek. If any court of competent jurisdiction determines that the
specified time period or geographic area set forth in this Section 9.11 is
unreasonable, arbitrary or against public policy, then a lesser time period or
smaller geographic area that is determined by the court to be reasonable,
non-arbitrary and not against public policy shall be enforced.
10. COVENANTS OF PURCHASER.
Purchaser covenants as follows:
10.1 COMPLIANCE. Purchaser shall use commercially reasonable
efforts to take or cause to be taken all action and do or cause to be done all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including, without limitation, to obtain all
consents, approvals and authorizations of third parties and to make all filings
with and give all notices to third parties which may be necessary or required in
order to effectuate the transactions contemplated hereby.
10.2 CONTROL OF THE STATION. Prior to Closing, Purchaser shall
not, directly or indirectly, control, supervise, direct, or attempt to control,
supervise or direct, the operations of the Station, such operations, including
complete control and supervision of all the Station's programs, employees, and
policies, shall be the sole responsibility of Benedek until the consummation of
the Closing hereunder.
10.3 FCC CONSENT. Purchaser shall diligently prosecute the FCC
Application and use all commercially reasonable efforts to obtain the FCC
Consent as promptly and expeditiously as possible. Purchaser shall not
intentionally take or omit to take any action that will cause the FCC to deny,
delay or fail to approve the FCC Application or cause the FCC Consent not to be
granted.
10.4 FCC COMPLIANCE. Between the date hereof and the Closing
Date, Purchaser agrees that it will not take or fail to take any action within
its control which would result in material noncompliance by Purchaser with the
requirements of the Communications Act and the rules and regulations of the FCC
material to the transactions contemplated by this Agreement. Purchaser will take
no action that Purchaser knows, or has reason to know, would disqualify
Purchaser from being the assignee of the Station Licenses or the owner or
operator of the Station.
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10.5 BOOKS AND RECORDS. If the acquisition contemplated herein
is consummated, Purchaser covenants and agrees that it shall preserve and keep
the records of Benedek delivered to it hereunder for a period of three years
after the Closing Date and shall make such records available to Benedek or its
authorized representatives as reasonably required by Benedek in connection with
any legal proceedings against or governmental investigation of Benedek or in
connection with any tax examination of Benedek.
10.6 ACTION Purchaser shall not knowingly take or cause to be
taken, or fail to take or cause to be taken, any action that would cause the
conditions to the obligations of Benedek or Purchaser to consummate the
transactions contemplated hereby to fail to be satisfied or fulfilled, at or
prior to the Closing, including, without limitation, by taking or causing to be
taken, or failing to take or cause to be taken, any action that would cause the
representations and warranties made by Purchaser in Section 8 hereof to fail to
be true and correct as of the Closing in all material respects. Purchaser shall
take, or cause to be taken, all commercially reasonable actions within its power
to cause to be satisfied or fulfilled, at or prior to the Closing, the
conditions precedent to the obligations of Benedek to consummate the
transactions contemplated hereby as set forth in Section 11.2 hereof.
10.7 EMPLOYEES AND EMPLOYEE BENEFIT MATTERS. Purchaser (i)
shall offer employment as of the Closing Date to each employee set forth in
Schedule 7.14 of the Disclosure Schedule who remains employed by Benedek
immediately prior to the Closing, and each additional employee who is hired to
work at the Station following the date hereof and prior to the Closing who
remains employed by Benedek immediately prior to the Closing, except for the
General Manager of the Station and (ii) may offer employment as of the Closing
Date to the General Manager of the Station (all persons referred to in (i) above
and, if offered employment by the Purchaser, the General Manger referred to in
(ii) above, collectively, the "Transferred Employees") at a salary at least as
favorable as that provided by Benedek immediately before the execution hereof
and with such other benefits as Purchaser makes available to Purchaser's
employees of comparable status. Purchaser shall provide each Transferred
Employee credit for years of service prior to the Closing with Benedek or any
prior owner of the Station for (A) the purpose of eligibility and vesting under
Purchaser's health, vacation and other employee benefit plans and (B) any and
all pre-existing condition limitations and eligibility waiting periods under
group health plans of Purchaser, and shall cause to be credited to any
deductible or out-of-pocket expenses under any health plans of Purchaser any
deductibles or out-of-pocket expenses incurred by Transferred Employees and
their beneficiaries and dependents during the portion of the calendar year prior
to their participation in the health plans of Purchaser. Following the Closing,
Purchaser shall indemnify and hold harmless Benedek with respect to any and all
liability for the termination of employment by Purchaser of any Transferred
Employee.
10.8 FURTHER ASSURANCES. Purchaser shall, at any time, and
from time to time, after the Closing Date, but at no cost to Purchaser (other
than the salaries or wages of any of its employees), use its commercially
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and to do, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including, without limitation,
executing and delivering any additional instruments, certificates or other
documents; and (ii) have the present and future officers, directors, employees
of Purchaser, including the Transferred Employees, cooperate with Benedek in
furnishing information, evidence, testimony and other assistance in connection
with any tax return filing obligations, actions, proceedings, arrangements or
disputes of any nature with respect to matters relating to all periods prior to
the Closing Date.
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11. CONDITIONS OF CLOSING.
11.1 OBLIGATION OF PURCHASER TO CLOSE. The obligation of
Purchaser to close hereunder shall be subject to the fulfillment and
satisfaction, prior to or at the Closing, of the following conditions or the
written waiver thereof by Purchaser:
11.1.1 REPRESENTATIONS. The representations and
warranties of Benedek in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date (other than any representation or
warranty that is expressly made as of a specified date, which shall be true and
correct in all material respects as of such specified date only) except for
changes permitted or contemplated by this Agreement, and Purchaser shall have
received a certificate to that effect dated the Closing Date and executed by an
appropriate officer of each of BBC and BLC.
11.1.2 COVENANTS. Each of the agreements and
covenants of Benedek to be performed under this Agreement at or prior to the
Closing Date shall have been duly performed in all material respects, and
Purchaser shall have received a certificate to that effect dated the Closing
Date and executed by an appropriate officer of each of BBC and BLC.
11.1.3 NO INJUNCTION. No injunction or restraining
order shall be in effect to forbid or enjoin the consummation of the
transactions contemplated by this Agreement and no Federal, state or local
statute, rule or regulation shall have been enacted which prohibits, restricts
or delays the consummation hereof.
11.1.4 STATION LICENSES. Benedek shall be the holder
of the Station Licenses and all other material governmental licenses, permits
and other authorizations listed on Schedule 7.4 of the Disclosure Schedule,
except as otherwise provided in such Schedule, and there shall not have been any
modification of any of such licenses, permits and other authorizations which
could reasonably be expected to have a Material Adverse Effect. Benedek shall
also have obtained special temporary authority or such other appropriate FCC
authorization to operate the Translator in all material respects in the manner
in which it currently operates.
11.1.5 FCC CONSENT. The FCC shall have granted its
consent to the assignment of the Station Licenses to Purchaser and such consent
will have appeared on public notice.
11.1.6 CBS CONSENT. CBS shall have consented, without
material modification to the compensation payable to the Station thereunder, to
the assignment to the Purchaser of the Affiliation Agreement.
11.1.7 LANDLORD CONSENTS. The landlords, with respect
to the Bank One Lease and the CAC Lease, shall have consented to the assignment
to the Purchaser of the Bank One Lease and CAC Lease, respectively.
11.1.8 INSTRUMENTS OF TRANSFER. Purchaser shall have
received the deeds, endorsements, assignments, drafts, checks and other
documents of transfer, conveyance and assignment contemplated by Section 2.3
valid to transfer all of Benedek's right, title and interest in and to the
Assets to Purchaser and to vest in Purchaser good, marketable and insurable
title to the Assets, subject only to
22
Permitted Liens and the Liens set forth on Schedule 7.9 and 7.10 of the
Disclosure Schedule hereto and not required to be discharged (in the manner
herein provided) on or prior to the Closing Date pursuant to the terms of this
Agreement.
11.1.9 BOOKS OF ACCOUNT. Purchaser shall have
received Benedek's books of account, records, leases, indentures, contracts,
agreements, correspondence and other documents pertaining to the Assets and the
Station. Unless otherwise requested by Purchaser, delivery of the foregoing
shall not be effected by physical delivery at the Closing but by surrendering
access to the premises containing the foregoing to Purchaser.
11.1.10 FIXED ASSETS AND EQUIPMENT. The fixed assets
and equipment owned, leased or used by the Station shall be in all material
respects in good working condition and working order, normal wear and tear
excepted.
11.1.11 RESOLUTIONS. Purchaser shall have received a
certified copy of resolutions duly adopted by each of BBC and BLC authorizing
and approving the transfer of the Assets and performance by each of BBC and BLC
of their respective obligations hereunder and the other documents and
instruments to be executed and delivered in connection herewith.
11.2 OBLIGATION OF BENEDEK TO CLOSE. The obligation of Benedek
to close hereunder shall be subject to the fulfillment and satisfaction, prior
to or at the Closing, of the following conditions or the written waiver thereof
by Benedek:
11.2.1 REPRESENTATIONS. The representations and
warranties of Purchaser in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date (other than any representation or
warranty that is expressly made as of a specified date, which shall be true and
correct in all material respects as of such specified date only) except for
changes permitted or contemplated by this Agreement, and Benedek shall have
received a certificate to that effect dated the Closing Date and executed by an
appropriate officer of Purchaser.
11.2.2 COVENANTS. Each of the agreements and
covenants of Purchaser to be performed under this Agreement at or prior to the
Closing Date shall have been duly performed in all material respects, and
Benedek shall have received a certificate to that effect dated the Closing Date
and executed by an appropriate officer of Purchaser.
11.2.3 NO INJUNCTION. No injunction or restraining
order shall be in effect to forbid or enjoin the consummation of the
transactions contemplated by this Agreement and no Federal, state, or local
statute, rule or regulation shall have been enacted which prohibits, restricts
or delays the consummation hereof.
11.2.4 FCC CONSENT. The FCC shall have granted its
consent to the assignment of the Station Licenses to Purchaser and such consent
will have appeared on public notice.
11.2.5 ASSUMPTION AGREEMENTS. Purchaser shall have
executed and delivered the instruments of assumption contemplated by Section 3.2
hereof.
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12. REMEDIES FOR BREACH.
12.1 PURCHASER DECLINES TO CLOSE. If Purchaser shall be
entitled to decline to close, and shall decline to close the transactions
contemplated by this Agreement, Purchaser shall have no liability to Benedek
under or in any way by reason hereof, Purchaser shall be entitled to payment of
the Deposit plus interest thereon, and Purchaser shall have all such rights and
remedies against Benedek as may be available to it in law or equity or
otherwise.
12.2 PURCHASER ELECTS TO CLOSE. If Purchaser shall be entitled
to decline to close the transactions contemplated by this Agreement but
Purchaser shall elect nevertheless to close, Purchaser shall be deemed to have
waived any claims of any nature arising from the failure of Benedek to comply
with any of the terms and conditions of this Agreement of which Purchaser had
knowledge at the time of the Closing. If Purchaser elects to close the
transactions contemplated by this Agreement and Benedek wrongfully refuse so to
do, or if Benedek fails, or if a failure by Benedek is threatened, to comply
with any of its covenants and agreements contained in this Agreement, then, in
addition to all other remedies which may be available to it, Purchaser shall be
entitled to injunctive and other equitable relief, including, without
limitation, specific performance.
12.3 BENEDEK DECLINES TO CLOSE. If Benedek shall be entitled
to decline to close, and shall decline to close the transactions contemplated by
this Agreement, Benedek shall have no liability to Purchaser under or in any way
by reason hereof. If this Agreement fails to close or is terminated by reason of
or under circumstances arising from a breach by Purchaser of its
representations, warranties, or covenants hereunder in any material respect, or
if Purchaser refuses or fails to close after the conditions to its Closing have
been satisfied, in either case without Benedek being in breach of any of its
representations, warranties or covenants hereunder in any material respect,
then, in that event, Benedek shall be entitled to payment of the Deposit plus
interest earned thereon as liquidated damages, it being understood that this sum
shall constitute full payment for any and all damages suffered by Benedek by
reason of Purchaser's failure to close this Agreement. The parties acknowledge
that the damages actually suffered by Benedek would be difficult to determine,
but that the amount of the Deposit is a reasonable estimate of the damages
anticipated to be suffered by Benedek in such event.
12.4 PURCHASER FAILS TO MAKE ADDITIONAL DEPOSIT. If Purchaser
does not elect to terminate this Agreement pursuant to Section 13.2 hereof and
does not pay to the Escrow Agent the Additional Deposit contemplated by Section
4.2 hereof in a timely manner, then Benedek may terminate this Agreement and in
such event, Benedek shall be entitled to payment of the Deposit plus interest
earned thereon as liquidated damages, it being understood that this sum shall
constitute full payment for any and all damages suffered by Benedek by reason of
Purchaser's breach of this Agreement. The parties acknowledge that the damages
actually suffered by Benedek would be difficult to determine, but that the
amount of the Deposit is a reasonable estimate of the damages anticipated to be
suffered by Benedek in such event.
12.5 REMEDIES CUMULATIVE. Except as otherwise provided in
Section 12.3 hereof, the specific remedies to which any party may resort under
the terms of this Agreement are cumulative and are not intended to be exclusive
of any other remedies or means of redress to which such party may lawfully be
entitled in case of any breach, threatened breach or failure of observance or
performance of any representation, warranty, covenant, agreement or commitment
made hereunder or relating hereto or by reason of any such representation,
warranty, covenant, agreement or commitment being untrue or incorrect.
24
13. TERMINATION RIGHTS.
13.1 TERMINATION BY EITHER PARTY This Agreement may be
terminated by either Purchaser or Benedek, if not then in default hereunder,
upon written notice to the other upon the occurrence of any of the following:
13.1.1 If the sale of the Assets to Purchaser
pursuant to this Agreement shall not have been effected within nine months after
the date that the FCC accepts the FCC Application for filing; or
13.1.2 If any party defaults in any material respect
in the observance or in the due and timely performance of any of its covenants
herein contained other than the obligation to close on the Closing Date;
provided, however, that termination pursuant to this paragraph shall not be
effective unless the terminating party shall have given to the party in default
at least 30 days advance notice of its claim of default so as to afford the
other party the opportunity to cure.
13.2 TERMINATION BY PURCHASER. This Agreement may be
terminated by Purchaser, if not then in default hereunder upon written notice
delivered to Benedek no later than the Effective Date, if Purchaser so elects,
in its sole and absolute discretion, based on its review of the due diligence
materials with respect to the Station and the Assets.
14. RISK OF LOSS.
14.1 Except to the extent of any loss or damage caused by acts
or omissions of Purchaser, its agents, employees, or other persons while acting
pursuant to a contract with Purchaser, the risk of loss or damage to the Assets
shall be upon Benedek at all times up to and including the Closing Date. In the
event of loss or damage except to the extent caused by acts or omissions of
Purchaser, its agents, employees, or other persons while acting pursuant to a
contract with Purchaser, Benedek shall promptly notify Purchaser thereof and
shall use commercially reasonable efforts to repair, replace and restore the
lost or damaged property to its former condition as soon as possible. If such
repair, replacement and restoration of damage not caused by Purchaser, its
agents, employees, or other persons while acting pursuant to a contract with
Purchaser has not been completed prior to the Closing Date, Purchaser may, at
its option:
14.1.1 elect to terminate this Agreement, but only if
the failure to repair, replace and restore the lost or damaged property relates
to a material portion of the Assets and continues for a period in excess of 30
calendar days;
14.1.2 elect to consummate the transactions
contemplated by this Agreement on the Closing Date in which event Benedek shall
pay to Purchaser the amount necessary to restore the lost or damaged property to
its former condition and against such obligation shall assign to Purchaser all
of Benedek's rights under any applicable insurance policies; or
14.1.3 elect to postpone the Closing Date, with prior
consent of the FCC if necessary, which consent both parties will use
commercially reasonable efforts to obtain, until a date within 15 calendar days
after Benedek gives written notice to Purchaser of completion of the repair,
replacement and restoration of such lost or damaged property. If, after the
expiration of that extension period, the lost
25
or damaged property has not been adequately repaired, replaced or restored,
Purchaser may terminate this Agreement, and the parties shall be released and
discharged from any further obligation hereunder.
14.2 FAILURE OF BROADCAST TRANSMISSION. Benedek shall give
prompt written notice to Purchaser if either of the following (a "Specified
Event") shall occur: (a) the regular broadcast transmission of the Station in
the normal and ususal manner is interrupted or discontinued; or (b) the Station
is operated at less than its licensed antenna height above average terrain or at
less than 90% of its licensed effective radiated power. If any Specified Event
persists for more than 48 consecutive hours or 72 non-consecutive hours (or, in
the event of force majeure or utility failure affecting generally the market
served by the Station, 72 consecutive hours or 168 non-consecutive hours) during
any period of 30 consecutive calendar days, then Purchaser may, at its option:
(x) terminate this Agreement by written notice given to Benedek not more than 10
calendar days after the Specified Event, or (y) proceed in the manner set forth
in Section 14.3. In the event of termination of this Agreement by Purchaser
pursuant to this Section 14.2, the parties shall be released and discharged from
any further obligation hereunder.
14.3 RESOLUTION OF DISAGREEMENTS. If the parties are unable to
agree upon the extent of any loss or damage, the cost to repair, replace or
restore any lost or damaged property, the adequacy of any repair, replacement,
or restoration of any lost or damaged property, or any other matter arising
under Section 14.2, the disagreement shall be referred to a qualified consulting
communications engineer mutually acceptable to Benedek and Purchaser who is a
member of the Association of Federal Communications Consulting Engineers, whose
decision shall be final, binding upon and non-appealable by the parties, and
whose fees and expenses shall be shared equally by Benedek and Purchaser.
15. INDEMNIFICATION.
15.1 INDEMNIFICATION OF BENEDEK. Purchaser shall defend and
promptly indemnify Benedek and save and hold it harmless from, against, for and
in respect of and shall pay any and all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses, including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any action, investigation, claim or proceeding (all hereinafter
collectively referred to as "Losses") suffered, sustained, incurred or required
to be paid by Benedek by reason of (i) the Assumed Contracts, (ii) any
representation or warranty of Purchaser contained herein being untrue or
incorrect in any respect, (iii) the operation of the Station after the Closing
Date or (iv) any breach or failure of observance or performance of any covenant,
agreement or commitment made by Purchaser hereunder or under any document or
instrument relating hereto or executed pursuant hereto. In addition, Purchaser
shall indemnify Benedek with respect to any Environmental Claims as provided in
Section 7.16.2; provided such indemnification shall be governed by the
procedures set forth in Sections 15.3 and 15.4.
15.2 INDEMNIFICATION OF PURCHASER.
15.2.1 Benedek shall defend and promptly indemnify
Purchaser, and save and hold it harmless from, against, for and in respect of
and pay any and all Losses suffered, sustained, incurred or required to be paid
by Purchaser by reason of (i) any and all obligations and liabilities of Benedek
with respect to the Assets and the Excluded Liabilities; (ii) any representation
or warranty contained herein being untrue or incorrect in any material respect;
(iii) the operation of the Station on or prior to the Closing Date (other than
the Assumed Contracts); (iv) any breach or failure of observance or performance
of any covenant, agreement or commitment made by Benedek hereunder or under any
document or instrument relating hereto
26
or executed pursuant hereto; or (v) any liability or obligation of Benedek for
Federal, state, local or other taxes.
15.2.2 Notwithstanding anything to the contrary in
this Agreement, Purchaser shall not be entitled to indemnification under Section
15.2.1:
15.2.2.1 in connection with any Loss to the
extent of any net tax benefit realized (by reason of a tax deduction, basis
reductions, shifting of income, credits and/or deductions or otherwise) by
Purchaser in connection with such Loss;
15.2.2.2 with respect to any claim for
indemnification hereunder, unless Purchaser has given Benedek written notice of
such claim prior to the eighteen month anniversary of the Closing Date, except
for any claim for indemnification arising from a claim by the United States of
America, the State of Texas or any other governmental unit, body or agency with
taxing authority relating to taxes or interest or penalties in connection
therewith which claim may be asserted at any time;
15.2.2.3 if the existence of such liability,
breach of representation, warranty or covenant or falsity of the representation
upon which such liability would be based is known by Purchaser prior to Closing
and by reason of the existence thereof Purchaser would have been entitled to
decline to close the transactions contemplated by this Agreement;
15.2.2.4 for any Losses as to which
Purchaser otherwise may be entitled to indemnity hereunder based upon a claim of
breach of a representation or warranty by Benedek contained in Section 7 of this
Agreement (without giving effect to this Section), until such Losses exceed
$50,000, and then only for such Losses in excess of in the aggregate $50,000;
15.2.2.5 for any Losses as a result of
Environmental Claims as provided in Section 7.16.2; and
15.2.2.6 for any Losses in excess of
$8,000,000, all of such Losses in excess of $8,000,000 being the responsibility
of Purchaser.
15.2.3 If with respect to a claim of indemnification
that Purchaser asserts against Benedek hereunder, Purchaser also has an
enforceable right of indemnification against any third party (contractual or
otherwise), Purchaser shall use reasonable efforts to pursue such claims or, in
the event Benedek pays or otherwise discharges such claim of Purchaser,
Purchaser shall assign to Benedek without recourse to Purchaser the claims
against such third party.
15.2.4 Benedek shall also indemnify Purchaser and
save and hold it harmless from, against, for and in respect of any and all fines
or penalties, if any, assessed by the FCC by reason of the matter described in
footnote 2 to Schedule 7.4 of the Disclosure Schedule. After the Closing Date,
in connection with obtaining from the FCC a license modification for the
Translator, if necessary, to operate the Translator in the manner in which it
currently operates, at the Purchaser's option, Benedek shall (i) pay the
reasonable attorneys' fees and expenses incurred by the Purchaser after the
Closing, up to a maximum aggregate amount of $10,000 to obtain such license
modification for the Translator or (ii) retain FCC counsel of Benedek's choice
and at its sole expense, including without limitation, attorneys' fees and
engineering expenses, to undertake to obtain such license modification.
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15.3 PROCEDURES FOR INDEMNIFICATION. If a party (an
"Indemnified Party") shall claim to have suffered a Loss for which
indemnification is available under Section 15.1 or 15.2, as the case may be, the
Indemnified Party shall notify the other party (the "Indemnifying Party") in
writing of such claim within the applicable time periods. The Indemnified Party
shall use reasonable efforts to describe in such notice the nature of such
claim, the facts and circumstances that give rise to such claim and the amount
of such claim if reasonably ascertainable at the time such claim is made.
15.4 PROCEDURES FOR THIRD-PARTY CLAIMS.
15.4.1 Any Indemnified Party seeking indemnification
pursuant to this Section 15 in connection with any legal proceeding, action or
claim, instituted by a third party, including any governmental entity (a
"Third-Party Claim"), shall give the Indemnifying Party from whom
indemnification with respect to such claim is sought (i) prompt written notice
of such Third-Party Claim and (ii) copies of all documents and information
relating to any such Third-Party Claim; provided, however, that the failure by
the Indemnified Party to so notify or provide copies to the Indemnifying Party
shall not relieve the Indemnifying Party from any liability to the Indemnified
Party for any liability hereunder except to the extent that such failure shall
have prejudiced the defense of such Third-Party Claim.
15.4.2 The Indemnifying Party shall have the right
and obligation, at its sole expense, to defend against, negotiate, settle or
otherwise deal with any Third-Party Claim with respect to which it is the
Indemnifying Party and to be represented by counsel of its own choice, and the
Indemnified Party will not admit any liability with respect thereto or settle,
compromise, pay or discharge the same without the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld, so long as the
Indemnifying Party is contesting or defending the same with reasonable diligence
and in good faith; provided, however, that the Indemnified Party may participate
in any proceeding with counsel of its choice and at its expense; provided
further, that the Indemnifying Party may not enter into a settlement of any such
Third-Party Claim without the consent of the Indemnified Party, which consent
shall be not unreasonably withheld, unless such settlement requires no more than
a monetary payment for which the Indemnified Party is fully indemnified by the
Indemnifying Party or involves other matters not binding upon the Indemnified
Party; and provided further that, in the event the Indemnifying Party fails
timely to defend against, negotiate, settle or otherwise deal with such
Third-Party Claim as provided above in this Section 15.4.2, then the Indemnified
Party shall have the right to defend against, negotiate, settle or otherwise
deal with the Third- Party Claim in such manner as the Indemnified Party deems
appropriate, in its sole discretion, and may recover subject to the limitations
set forth in Section 15.2.2, all other amounts paid as a result of such Third
Party Claim or compromise or settlement thereof.
15.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Benedek and Purchaser contained in this
Agreement, or in any certificate, instrument or other document delivered by
Benedek or Purchaser pursuant to this Agreement or in connection with the
transactions contemplated hereby, shall survive the Closing for a period of
eighteen (18) months. No claim shall be made or action brought by any party
hereto after the eighteen month anniversary of the Closing for the breach of, or
inaccuracy in, any representation or warranties contained in this Agreement, or
in any certificate, instrument or other document delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby. None of
the covenants and agreements of Benedek and Purchaser contained in this
Agreement, or in any certificate, instrument or other document delivered by
Benedek or Purchaser pursuant to this Agreement or in connection with the
transactions contemplated hereby, shall survive the Closing, except to the
extent such covenants and agreements by their terms contemplate performance
after the
28
Closing. No claim shall be made or action brought by any party hereto after the
Closing for the breach of any covenant or agreement contained in this Agreement,
or in any certificate, instrument or other document delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby, except
with respect to those covenants and agreements that by their terms contemplate
performance after the Closing.
16. BROKERS. Benedek, on the one hand, and Purchaser, on the other,
covenant and represent to each other that they had no dealings with any broker
or finder in connection with this Agreement or the transactions contemplated
hereby and no broker, finder or other Person is entitled to receive any broker's
commissions or finder's fee or similar compensation in connection with any such
transaction. Each of the parties agrees to defend, indemnify and hold harmless
the other from, against, for and in respect of any and all losses sustained by
the other as a result of any liability or obligation to any broker or finder on
the basis of any arrangement, agreement or acts made by or on behalf of such
party with any Person whatsoever.
17. MISCELLANEOUS.
17.1 ENTIRE AGREEMENT. This Agreement and the Confidentiality
Agreement dated November 16, 1999 constitute the entire agreement of the parties
(and supersedes any prior understanding of the parties) with respect to the
subject matter hereof. The representations, warranties, covenants and agreements
set forth in this Agreement, the Confidentiality Agreement and in any financial
statements, schedules or exhibits delivered pursuant hereto constitute all the
representations, warranties, covenants and agreements of the parties hereto and
upon which the parties have relied and except as may be specifically provided
herein or in the Confidentiality Agreement, no change, modification, amendment,
addition or termination of this Agreement or any part thereof shall be valid
unless in writing and signed by or on behalf of the party to be charged
therewith.
17.2 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be given or made pursuant to any of the
provisions of this Agreement shall be deemed to have been duly given or made for
all purposes if sent by certified or registered mail, return receipt requested
and postage prepaid, hand delivery, overnight delivery service or telephone
facsimile:
If to Purchaser, at:
c/o ICA Broadcasting I, Ltd.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx, President
With a copy to:
Shafer, Davis, Ashley, X'Xxxxx & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxxx Xxxxx
Nations Bank Building
X.X. Xxxxxx 0000 Xxxxx Xx.
Xxxxxx, XX 00000
Telephone: (000) 000-0000
29
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
If to Benedek c/o Benedek Broadcasting Corporation at:
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
With a copy to:
Shack & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
or at such other address as any party may specify by notice given to the other
party in accordance with this Section 17.2. The date of the giving of any notice
sent by mail shall be three business days following the date of the posting of
the mail, if delivered in person, the date delivered in person or the next
business day following delivery to an overnight delivery service or the date
sent by telephone facsimile.
17.3 PUBLIC ANNOUNCEMENT. Except for any disclosures or
announcements which Benedek or Purchaser shall be required to make pursuant to
the Communications Act or the rules and regulations of the FCC, or disclosures
or announcements required to be made pursuant to the rules and regulations of
the Securities and Exchange Commission or any other Federal or state
governmental agency, Purchaser and Benedek will jointly prepare and determine
the timing of any press release or other announcement to the public (including
any announcement to the employees of the Station) concerning the execution of
this Agreement and the transactions contemplated herein. Except as provided for
in the preceding sentence, no party hereto will issue any press release or make
any other public announcement relating to the execution of this Agreement or the
transactions contemplated herein, except that any party may make any disclosure
required to be made by it under applicable law if it determines in good faith
that it is appropriate to do so and gives prior notice and a reasonable time to
comment to the other party hereto. Notwithstanding the foregoing, neither party
will make any public disclosure relating to the execution of this Agreement
until after the Effective Date and then only in accordance with this Section.
17.4 NO WAIVER. No waiver of the provisions hereof shall be
effective unless in writing and signed by the party to be charged with such
waiver. No waiver shall be deemed a continuing waiver in respect of any
subsequent breach or default, either of similar or different nature, unless
expressly so stated in writing.
17.5 GOVERNING LAW. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the State of Texas
applicable to contracts to be performed entirely within that State. Should any
clause, section or part of this Agreement be held or declared to be void or
illegal for any
30
reason, all other clauses, sections or parts of this Agreement which can be
effected without such illegal clause, section or part shall nevertheless
continue in full force and effect.
17.6 EXPENSES. Except as otherwise provided herein, Purchaser
and Benedek shall each bear their own costs and expenses in connection with this
transaction. If attorneys' fees or other costs are incurred to secure
performance of any obligations hereunder, or to establish damages for the breach
thereof or to obtain any other appropriate relief, whether by way of prosecution
or defense, the prevailing party will be entitled to recover reasonable
attorneys' fees and costs incurred in connection therewith.
17.7 COMPUTATION OF TIME. Whenever any time period provided
for in this Agreement is measured in "business days", there shall be excluded
from such period each day that is a Saturday, Sunday, recognized federal legal
holiday, or other day on which the FCC's office are closed and are not reopened
prior to 5:30 p.m. Washington, D.C. time. In all other cases all days shall be
counted.
17.8 BINDING AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that no party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other party hereto. Notwithstanding the foregoing, Purchaser may
assign its rights under this Agreement to an Affiliate of Purchaser, provided
that (i) no such assignment shall be made after (a) the earlier of December 22,
1999 or (b) the filing by Purchaser of the FCC Application and (ii) such
assignment shall not relieve Purchaser of its obligations under this Agreement.
17.9 HEADINGS. The headings or captions under sections of this
Agreement are for convenience and reference only and do not in any way modify,
interpret or construe the intent of the parties or effect any of the provisions
of this Agreement.
17.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts each of which when taken together shall constitute one
agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on the date and year first above written.
ICA BROADCASTING I, LTD.
By: ICA BROADCASTING, LLC, ITS GENERAL PARTNER
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman
BENEDEK BROADCASTING CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President-Finance and Chief
Financial Officer
BENEDEK LICENSE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President-Finance and Chief
Financial Officer
