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EXHIBIT 10.3
MEMBERSHIP PURCHASE AGREEMENT
between
▇▇▇▇▇▇▇ BROADCASTING OF SALT LAKE CITY, L.L.C.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
ACME TELEVISION HOLDINGS , L.L.C.
for majority interest in
▇▇▇▇▇▇▇ BROADCASTING OF SALT LAKE CITY, L.L.C.,
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MEMBERSHIP PURCHASE AGREEMENT
This Membership Agreement (this "Agreement") is dated as of July 10,
1998 and is between ▇▇▇▇▇▇▇ Broadcasting of Salt Lake City, L.L.C., a Delaware
limited liability company (collectively, with successors and assigns, "RBSLC"),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Sellers"), and ACME Television Holdings,
L.L.C., a Delaware limited liability company (collectively, with successors and
assigns, "Buyer").
RECITALS:
Sellers together hold fifty one percent (51%), and Buyer holds forty-nine
percent (49%), of the ownership interest in RBSLC. Buyer's ownership interest in
RBSLC was acquired from Sellers. RBSLC previously held a construction permit
(the "CP") from the Federal Communications Commission (the "FCC") to build a new
television station (the "Station") under the call sign of KZAR-TV in Provo,
Utah, and currently holds certain licenses (the "Licenses") issued by the FCC to
cover the CP.
Sellers desire to sell, assign, and transfer, to the fullest extent permitted by
law their remaining ownership interest (the "Majority Interest") in RBSLC to
Buyer, and Buyer desires to acquire the Majority Interest in RBSLC to the
fullest extent permitted by law, all in accordance with the terms and conditions
of this Agreement.
RBSLC will benefit from Buyer's purchase of the Majority Interest contemplated
by this Agreement.
RBSLC and ACME Television of Utah, LLC ("ATU") previously executed a Management
Agreement (the "MA") under which ATU has provided programming and other services
to the Station in exchange for certain consideration specified therein. Buyer is
the parent company and sole owner or ATU.
This Agreement has been executed under terms and upon the exercise of a certain
Option Agreement (the "Option Agreement") previously executed by Sellers and
Buyer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants contained herein, the parties hereby agree as follows:
ARTICLE 1. EXCHANGE OF CONSIDERATION.
1.1 Consideration Conveyed by Sellers. Subject to the terms and
conditions of this Agreement, Sellers shall, to the fullest extent permitted by
law, assign, convey, transfer and deliver to Buyer at Closing, and Buyer shall,
to the fullest extent permitted by law, acquire from Sellers at Closing, free
and clear of all debts, liens, claims, options, warrants, financing leases,
security interests, and encumbrances as well existing and future ownership
interests of any kind whatsoever, except as permitted herein, the Majority
Interest. To that end, each of the Sellers shall assign, convey, transfer and
deliver to Buyer at Closing all of the remaining ownership interest which each
Seller currently holds in RBSLC, such interest being in each case twenty-five
and one-half percent (25.5%) of the total ownership interest in RBSLC.
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1.2 Consideration Conveyed by Buyer.
1.2.1 Purchase Price. Except as otherwise provided herein, at the
Closing Buyer shall pay Sellers by wire transfer of immediately available
federal funds, pursuant to instructions from Sellers, less adjustments made
pursuant to this Agreement, the amount (the "Purchase Price") equal to the
lesser of
(1) the sum of (a) Six Hundred Sixty-seven Dollars ($667)
per day for each day elapsed from the date of the Option
Agreement through the Closing Date (as defined below), and (b)
Five Million Dollars ($5,000,000); and
(2) (ii) the sum of (a) Six Hundred Sixty-Seven Dollars
($667) per day for each day elapsed from the date of the Option
Agreement through the Closing Date, and (b) 51% of the Fair
Market Value of RBSLC as of a date which is thirty days prior to
the date of this Agreement, as determined utilizing the
procedures set forth in subsection 1.2.2.
1.2.2 Appraisal. Fair Market Value of RBSLC shall be determined
by an appraisal in accordance with the following provisions:
(1) The Fair Market Value of RBSLC shall be equal to the
appraised value of the assets of RBSLC on a going concern basis
exclusive of any broker's fee, less the amount of any
outstanding debt of RBSLC following the date hereof.
(2) The appraisal will be conducted in conformity with
standard appraisal techniques in use at the time of the
appraisal, applying the market and economic factors then
relevant.
(3) The appraisal will be conducted by a qualified appraiser
with experience in the television broadcasting industry to be
agreed upon by Sellers and Buyer; provided, that, if the parties
fail to agree on an appraiser, any party may apply to the
American Arbitration Association for the appointment of an
appraiser, who shall be a qualified appraiser with experience in
the television broadcasting industry.
(4) The value of the assets of RBSLC arrived at by the
appraiser shall, absent manifest error, be conclusive and
binding on the relevant parties.
1.2.3 Escrow Fund. On the date of this Agreement, Buyer shall
deposit One Hundred Thousand Dollars ($100,000), hereinafter referred to as the
"Escrow Deposit," with the law firm of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ("Escrow Agent")
pursuant to an Escrow Agreement in the form of EXHIBIT A annexed hereto. At the
Closing, the parties shall issue joint instructions to the Escrow Agent to pay
the Escrow Deposit to Sellers, and the amount of the Escrow Deposit shall be
deducted from the Purchase Price which the Buyer is otherwise is required to pay
Sellers at
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Closing. If this Agreement is terminated due to Buyer's material breach, the
Escrow Deposit shall be paid to Sellers as liquidated damages and as their
exclusive remedy. If this Agreement is terminated for any other reason, the
Escrow Deposit shall be immediately returned to Buyer. Interest on the Escrow
Deposit shall at all times belong to Buyer and shall be paid to Buyer at the
Closing or upon termination upon of this Agreement, as the case may be.
1.3 Closing.
1.3.1 Date and Location. The closing of the transactions provided
for in this Agreement (the "Closing") shall be held at the offices of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or at
such other place mutually agreed to by the parties, commencing at 10:00 a.m. on
a date (the "Closing Date") selected by Buyer which shall be within ten (10)
business days after the date on which the FCC order (the "Order") approving the
transaction contemplated hereby becomes a "Final Order" (which, for purposes of
this Agreement, means that the Order has not been stayed, is not subject to
reconsideration or review by the FCC or a court of competent jurisdiction, and
the time to institute such administrative or judicial review has expired):
provided, that the parties shall not be obligated to proceed to Closing if (1)
the Order includes conditions materially adverse to Buyer or Sellers or (2) the
conditions precedent to Closing have not been satisfied or waived; and provided
further, that Buyer shall have the unilateral right to waive the condition that
Closing not occur until after the Order has become a Final Order and, if Buyer
does waive that condition, the Closing shall occur within give (5) business days
after Buyer provides Sellers with notice of such waiver.
1.3.2 Exchange of Documents. At the Closing, each party shall
execute and deliver to the other party or parties the other items specified
herein as well as any additional document(s) and item(s) reasonably necessary
for the consummation of the transactions contemplated herein. Such additional
documents shall be reasonably satisfactory to the other party as to both form
and substance.
1.4 Timing. Time is of the essence to implementation of this Agreement.
It is the intention of the parties that the Closing of the transactions
contemplated herein occur not later than twelve (12) months after the date
hereof.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLERS AND RBSLC.
RBSLC and Sellers represent and warrant to Buyer that the following
matters are true and correct as of the date of this Agreement:
2.1 Company Status. RBSLC is a limited liability company duly organized,
validly existing, and in good standing in the State of Delaware. RBSLC has the
power to hold the Licenses and to operate the Station in accordance with the
Licenses.
2.2 Authorizations. RBSLC is the holder of the Licenses and all related
authorizations, copies of which are included in SCHEDULE 1 to this Agreement.
The Licenses are in full force and effect. The items listed on SCHEDULE 1
constitute all of the authorizations required under the Communications Act of
1934, as amended (the "Act"), and the current rules, regulations, and policies
of the FCC for the operation of the Station. The Sellers have timely filed with
the FCC all material applications, reports and other disclosures required by the
Act and by FCC rules and policies. As of the date of this Agreement, there is
not pending or, to the best
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of Sellers' knowledge, threatened, any petition, complaint, objection (whether
formal or informal), order to show cause, investigation, or other action by or
before the FCC or any court to revoke, cancel, rescind, modify, or refuse to
renew any of the Licenses, or which would otherwise have a material adverse
impact on the operation of the Station, except for proceedings of general
applicability to the broadcasting industry. Other than proceedings of general
applicability to the broadcasting industry, there is not now pending, or to the
best of Sellers' knowledge, threatened, any other petition, complaint,
violation, notice of apparent liability, or notice of forfeiture or other
proceeding by or before the FCC or any court against the Company or Sellers with
respect to any matter affecting the Station. RBSLC and the Sellers are in
material compliance with the terms of the Licenses, the Act, and the rules,
regulations and policies of the FCC. Sellers have no reason to believe that the
Licenses will not be renewed by the FCC in due course for a full term without
modification.
2.3 Title. On the Closing Date, the assets of RBSLC will be free and
clear of all debts, claims, liabilities, security interests, mortgages, pledges,
liens, conditional sales agreements, leases, encumbrances, or charges of any
kind or nature, except as may have been incurred by ATU pursuant to the MA.
2.4 Employees. RBSLC is not a party to any pending or, to Sellers
knowledge, threatened labor dispute affecting the Station. RBSLC (1) has
complied in all material respects with all applicable federal, state, and local
laws, ordinances, rules and regulations and requirements relating to employment
or labor, including but not limited to provisions relative to wages, hours,
collective bargaining, pension, profit-sharing and savings plans and trusts
including, without limitation, 401-K plans ("Trusts") and payment of Social
Security, unemployment and withholding taxes and (2) is not liable for any
arrears of wages or Trusts or benefit payments ("Payments") or any taxes or
penalties for failure to comply with any of the foregoing. RBSLC and Sellers
will hold Buyer harmless from and against (1) any liability for any taxes or
Payments or penalties which have not been paid or made for employment of persons
by RBSLC which relate to a period prior to the date of the Option Agreement, (2)
any claims of discrimination or wrongful termination or hiring, including,
without limitation, violations of federal or state law relating to civil rights,
regulations of the United States Equal Employment Opportunity Commission, or the
Americans With Disabilities Act of 1990 which relate to a period prior to the
date of the Option Agreement, (3) all claims for severance which relate to a
period prior to the date of the Option Agreement, and (4) any other claims by
employees of RBSLC relating to or arising from their employment (or severance
therefrom) by RBSLC. There are no collective bargaining agreements, or
negotiations for the same, in existence which affect any of the Station's
employees.
2.5 Taxes. Except as disclosed in SCHEDULE 2 annexed hereto, RBSLC has
duly and timely filed all required federal, state and local tax returns and paid
all taxes, interest and penalties due, has sought and obtained extensions of
time to file such and pay same within the time provided therefor, or is
challenging such taxes in good faith in accordance with applicable procedures
(and has in place adequate financial reserves to satisfy any adverse decision).
Between the date hereof and the Closing Date, RBSLC shall duly and timely file
all such required returns and pay all such taxes, interest and penalties or
obtain such extensions within the time provided therefor, unless such taxes are
being challenged in good faith in accordance with applicable procedures (and has
in place adequate financial reserves to satisfy any adverse decision).
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2.6 Contracts. SCHEDULE 3 hereto includes true copies of all written
contracts and describes the material terms of all oral contracts (collectively,
the "Contracts") to which RBSLC is a party as of the date of this Agreement.
RBSLC has complied in all material respects with all Contracts and is not in
default beyond any applicable grace periods under any of such Contracts. To
Sellers' knowledge, no other contracting party is in material default under any
of the Contracts. All Contracts are in full force and effect and are valid,
binding and enforceable in accordance with their respective terms, except as
enforceability may be limited by laws affecting creditor rights or equitable
principles generally.
2.7 Environmental. No Hazardous Waste, as defined under the
Environmental Laws has been released, emitted or discharged or, to Sellers'
knowledge, is currently located in or on any asset owned or held by RBSLC or in,
on or under the real property on which any of RBSLC assets are or will be
situated in violation of any Environmental Laws. The construction of the Station
is not in material violation of any Environmental Laws, including but not
limited to FCC rules, policies and guidelines concerning RF radiation. Neither
Sellers nor RBSLC have received any notice, summons, citation, directive, letter
or other communication, written or oral, from the United States, the State of
Utah, or any other party concerning any intentional or unintentional action or
omission on the part of RBSLC, Sellers or any other party which resulted in the
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leeching, dumping or disposing of Hazardous Waste on, above
or under property owned or used by RBSLC.
2.8 Balance Sheet. Sellers have caused RBSLC to provide Buyer with true
copies of a balance sheet for RBSLC dated December 31 of the most recently ended
calendar year (the "Balance Sheet"). A true copy of the Balance Sheet is
included in SCHEDULE 4 annexed hereto. The Balance Sheet (1) has been prepared
in accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. in all
material respects, (2) identifies all of RBSLC's material obligations and
liabilities (contingent or matured), and (3) fairly reflects the financial
position of RBSLC at the date indicated.
2.9 Litigation. Neither Sellers nor RBSLC have been operating under and
is not subject to, or in default with respect to, any order, judgment, writ,
injunction, or decree of any court or any federal, state, municipal, or other
governmental department, commission, board, agency, or instrumentality, foreign
or domestic, which has had or could reasonably be expected to have a material
adverse effect on the Station. Except for proceedings of general applicability
to the broadcasting industry, there is no Litigation pending by or against, or,
to the best of Sellers' knowledge, threatened against the RBSLC or Sellers which
relates to or affects the Station or which materially interferes or could
reasonably be expected materially to interfere with (1) Sellers' right, title
to, or interest in the Majority Interest, (2) the construction or operation of
the Station or (3) Sellers' ability to transfer the Majority Interest to Buyer
free of such Litigation.
2.10 Compliance with Laws. Except as disclosed in SCHEDULE 5 annexed
hereto, RBSLC is in material compliance with all applicable laws, rules,
regulations, policies and orders of the federal, state, and local governments
with respect to the Station. The construction of the Station will not violate
any such laws, regulations, policies or orders in any material respect, and
except for proceedings of general applicability to the broadcasting industry,
there is no investigation or proceeding regarding the foregoing which is
currently pending or, to Sellers' knowledge, threatened.
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2.11 No Defaults. Neither the execution and delivery by RBSLC or Sellers
of this Agreement nor the consummation by Sellers of the transactions
contemplated herein are events that, by themselves or with the giving of notice
or the passage of time or both, constitute a material violation of or will
conflict with or result in any material breach of or any default under (1) the
terms, conditions, or provisions of any arbitration award, judgment, law, order,
decree, writ, or regulation to which RBSLC or Sellers are subject, (2) RBSLC's
certificate, operating agreement or other organizational documents, or (3) any
agreement or instrument to which Sellers or RBSLC is a party or by which Sellers
or RBSLC is bound, or result in the creation of imposition of any lien, charge,
or encumbrance on any asset owned or held by RBSLC or the Majority Interest.
2.12 Brokers. There is no broker or finder or other person who would, as
a result of any agreement of or action taken by Sellers, have any valid claim
against any of the parties to this Agreement for a commission or brokerage fee
in connection with this Agreement or the transactions contemplated herein.
2.13 RBSLC and Sellers Action. This Agreement has been duly and validly
authorized, executed, and delivered by RBSLC and Sellers and constitutes the
valid and binding agreement of RBSLC and Sellers, enforceable in accordance with
and subject to its respective terms, except as enforceability may be limited by
laws affecting the enforcement of creditor rights or equitable principles
generally.
2.14 Leases. Annexed hereto as SCHEDULE 6 are all the leases relating to
real property (the "Real Estate Leases") to which RBSLC is a party. All of the
Real Estate Leases have been complied with in all material respects by RBSLC,
and no material default of RBSLC in respect to any duties or obligations
required to be performed by RBSLC has occurred. All such leases are valid,
binding, and enforceable in accordance with their respective terms. To Sellers'
knowledge, no other party to any of the Real Estate Leases is in default
thereunder, except as enforceability may be limited by laws affecting the
enforcement of creditor rights or equitable principles generally.
2.15 Insolvency. No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting RBSLC or
Sellers' is pending or, to the best of Sellers' knowledge, threatened, and
neither RBSLC nor Sellers have made any assignment for the benefit of creditors,
nor taken any actions with a view to, or which would constitute the basis for,
the institution of any such insolvency proceedings.
2.16 Approvals. No approval of any third party, governmental agency or
court is required to be obtained by Sellers with regard to the assignment of the
Majority Interest except the approval by the FCC as provided herein.
2.17 FAA Approval. No approval or other action by the Federal Aviation
Administration ("FAA") is required to complete construction of the Station.
2.18 No Material Omission. Neither RBSLC nor Sellers have failed to
disclose any material fact within their knowledge which would make any statement
or representation in this Agreement inaccurate or misleading.
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2.19 RBSLC Ownership. The Majority Interest and the membership interest
previously acquired by Buyer from Sellers together constitute one hundred
percent (100%) of the equity ownership in RBSLC and, except for such interests,
there are no options, warrants, membership interests or other securities
(certificated or otherwise) issued by RBSLC now outstanding relating to any
existing or future ownership interest in RBSLC.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to RBSLC and Sellers as to the truth of
the following matters as of the date of this Agreement:
3.1 Status. Buyer is a limited liability company duly organized, validly
existing, and in good standing in the State of Delaware, and has the power to
enter into and consummate the transactions contemplated by this Agreement.
3.2 Company Action. All actions and proceedings necessary to be taken by
or on the part of Buyer in connection with the transactions contemplated by this
Agreement and necessary to make the Agreement effective have been duly and
validly taken. This Agreement has been duly and validly authorized, executed,
and delivered by Buyer and constitutes the valid and binding agreement of Buyer,
enforceable in accordance with and subject to its terms, except as
enforceability may be limited by laws affecting the enforcement of creditors'
rights or equitable principles generally.
3.3 Brokers. There is no broker or finder or other person who would, as
a result of any agreement of or action taken by Buyer, have any valid claim
against any of the parties to this Agreement for a commission or brokerage fee
in connection with this Agreement or the transactions contemplated herein.
3.4 Litigation. There is no litigation, proceeding, or investigation of
any nature pending or, to the best of Buyer's knowledge, threatened against or
affecting Buyer that would affect Buyer's ability to carry out the transactions
contemplated herein.
3.5 Qualification as a Broadcast Owner. Buyer knows of no fact, and will
not act in such manner from and after the date hereof, that would, under the Act
and the rules and policies of the FCC, disqualify Buyer as an assignee of the
Majority Interest.
3.6 No Material Omission. Buyer has not failed to disclose any material
fact within its knowledge which would make any statement or representation in
this Agreement inaccurate or misleading.
ARTICLE 4. COVENANTS OF SELLERS PENDING CLOSING.
RBSLC and Sellers covenant and agree that, from the date of this
Agreement to and including the Closing Date, subject to the provisions of this
Agreement, they will take, or refrain from taking, the following actions:
4.1 Maintenance of Station. Subject to the MA, RBSLC and Sellers shall
continue to carry on the Station business and keep its books of account,
records, and files in the ordinary course of business and shall construct the
Station in accordance with the terms of the CP and in
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material compliance with all applicable rules, regulations, policies and laws.
To that end, Sellers will cause RBSLC to (1) timely file with the FCC any and
all reports, applications, and disclosures as may be required by the Act or FCC
rules or policies; and (2) maintain in full force and effect through and
including the Closing Date property damage, liability, and other insurance with
respect to RBSLC's assets to cover contingencies that can reasonably be
anticipated. Prior to the Closing, Sellers will not, without the prior written
consent of Buyer, allow or cause RBSLC to:
4.1.1 sell, lease, transfer, or agree to sell, lease, or transfer
any of RBSLC's assets without replacement thereof with an asset of equivalent
kind, condition, and value;
4.1.2 enter into any collective bargaining agreement or written
contract of employment, unless said contract is subject to cancellation upon
thirty (30) days notice;
4.1.3 enter into any contract or agreement; or
4.1.4 make, allow, or consent to any material change in the Real
Estate Leases or in any buildings, leasehold improvements, or fixtures used or
useful in the construction or operation of the Station.
4.2 Organization, Good Will, Promotion. Subject to the provisions of
this Agreement and the MA, Sellers will cause RBSLC to use its best efforts to
preserve the business organization of the Station intact and shall cooperate
with Buyer to preserve the goodwill of the Station's suppliers, customers, and
others having business relations with the Station.
4.3 Access to Facilities, Files, and Records. At the reasonable request
of Buyer, Sellers shall give Buyer and its representatives (1) reasonable access
during normal business hours to all facilities, property, accounts, title
papers, insurance policies, licenses and other authorizations, agreements,
commitments, records, machinery, fixtures, furniture, and inventories related to
the Station, and (2) all such other information concerning the affairs of RBSLC
or the Station as Buyer may reasonably request.
4.4 Representations and Warranties. Sellers shall give notice to Buyer
promptly upon the occurrence of, or upon becoming aware of the impending or
threatened occurrence of, any event that would cause or constitute a material
breach of any of Sellers' representations or warranties in this Agreement.
4.5 Application for FCC Consent. Within five (5) business days after
execution of this Agreement, Sellers shall prepare and file an appropriate
application (the "Application") with the FCC requesting its written consent to
the transaction contemplated by this Agreement. Sellers shall diligently take,
or cooperate in the taking of, all steps reasonably necessary and appropriate to
expedite the preparation of the Application and its prosecution to a favorable
conclusion. Sellers will promptly provide Buyer with a copy of any pleading,
order, or other document served on it relating to the Application. Sellers will
use commercially reasonable efforts and otherwise cooperate with Buyer in
responding to any information requested by the FCC related to the Application,
in making any amendment to this Agreement requested by the FCC which does not
adversely affect Sellers in a material manner, and in defending against any
petition, complaint, or objection which may be filed against the Application.
The FCC filing fees shall be paid Sellers.
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4.6 Notice of Proceedings. Sellers will promptly (and in any event
within five (5) business days) notify Buyer upon becoming aware of any actual or
threatened claim, dispute, arbitration, litigation, complaint, judgment, order,
decree action or proceeding relating to Sellers, RBSLC, the Station, or the
consummation of this Agreement or any transaction contemplated herein.
4.7 Confidential Information. If the transactions contemplated in this
Agreement are not consummated for any reason, Sellers shall not disclose to
third parties any information designated as confidential and received from Buyer
or its agents in the course of investigating, negotiating, and consummating the
transactions contemplated by this Agreement: provided, that no information shall
be deemed to be confidential that (1) becomes publicly known or available other
than through disclosure by Sellers; (2) is rightfully received by Sellers from a
third party; or (3) is independently developed by Sellers. All originals of all
material provided to Sellers by Buyer or its agents shall be returned to Buyer
and all copies thereof shall be destroyed.
4.8 Consummation of Agreement. RBSLC and Sellers shall fulfill and
perform all conditions and obligations to be fulfilled and performed by RBSLC
and Sellers under this Agreement and make every reasonable effort to cause the
transactions contemplated by this Agreement to be fully carried out.
4.9 Compliance with Law. Sellers will comply and will cause RBSLC to
comply in all material respects with all applicable federal, state and local
laws, ordinances and regulations, including but not limited to the Act and the
rules, regulations and policies of the FCC.
4.10 Performance under Contracts and Leases. Sellers will cause RBSLC to
perform in all material respects its obligations under, and keep in good
standing, all Contracts and Real Estate Leases to which RBSLC is a party.
ARTICLE 5. COVENANTS OF BUYER PENDING THE CLOSING.
Buyer covenants and agrees that, from the date of this Agreement to and
including the Closing, it will take, or refrain from taking, the following
actions:
5.1 Representation and Warranties. Buyer shall give notice to Sellers
promptly (and in any event within five business days) upon the occurrence of, or
upon becoming aware of the impending or threatened occurrence of, any event that
would cause or constitute a material breach of any of the representations and
warranties of Buyer in this Agreement.
5.2 Application for Commission Consent. Buyer will diligently take, or
cooperate in the taking of, all steps necessary and appropriate to expedite the
preparation of the Application and its prosecution to a favorable conclusion.
Buyer will promptly provide Sellers with a copy of any pleading, order, or other
document served on it relating to the Application. Buyer will use commercially
reasonable efforts and otherwise cooperate with Sellers in responding to any
information requested by the FCC related to the Application or this Agreement,
in making any amendment to this Agreement requested by the FCC which does not
adversely affect Buyer in a material manner, and in defending against any
petition, complaint, and other objection which may be filed against the
Application.
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5.3 Confidential Information. If the transactions contemplated in this
Agreement are not consummated for any reason, Buyer shall not disclose to third
parties any information designated as confidential and received from Sellers or
its agents in the course of investigating, negotiating, and performing the
transactions contemplated by this Agreement: provided, however, that no
information shall be deemed to be confidential that (1) becomes publicly known
or available other than through disclosure by Buyer; (2) is rightfully received
by Buyer from a third party; or (3) is independently developed by Buyer. All
originals of material provided by Sellers to Buyer or its agents shall be
returned to Sellers and all copies thereof destroyed.
5.4 Consummation of Agreement. Buyer shall fulfill and perform in all
material respects all conditions and obligations to be fulfilled and performed
by Buyer under this Agreement and make every reasonable effort to cause the
transactions contemplated by this Agreement to be fully carried out.
5.5 Notice of Proceedings. Buyer will promptly (and in any event within
five (5) business days) notify Sellers upon becoming aware of any actual or
threatened claim, dispute, arbitration, litigation, complaint, judgment, order,
decree, action or proceeding relating to Buyer, or the consummation of this
Agreement or any transaction contemplated herein.
ARTICLE 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS TO CLOSE.
The obligation of Sellers to consummate the transactions under this
Agreement is subject to the fulfillment of the following conditions prior to or
at the Closing:
6.1 Representations, Warranties, Covenants.
6.1.1 Buyer's Representations and Warranties. Each of the
representations and warranties of Buyer contained in this Agreement shall have
been true and accurate in all material respects as of the date when made and as
of the Closing Date;
6.1.2 Buyer's Performance Under Agreement. Buyer shall have
performed and complied in all material respects with each and every covenant and
agreement required by this Agreement to be performed or complied with by Buyer
prior to or at the Closing, other than the delivery by Buyer of the
consideration described in Section 1.2.;
6.1.3 Buyer's Deliveries. Buyer shall have delivered to Sellers a
certificate executed by a managing member of Buyer, dated the Closing Date,
certifying to the fulfillment of the conditions set forth in Sections 6.1.1. and
6.1.2.
6.2 Proceedings.
6.2.1 Absence of Litigation. No action or proceeding shall be
pending or have been instituted before any court or governmental body to
restrain or prohibit, or to obtain substantial damages in respect of, the
consummation of this Agreement that, in the reasonable opinion of Seller, may
reasonably be expected to result in the issuance of a preliminary or permanent
injunction against such consummation or otherwise result in a decision
materially adverse to Seller.
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6.2.2 Absence of Investigation. Neither of the parties to this
Agreement shall have received written notice from any governmental body of (1)
its intention to institute any action or proceeding to restrain or enjoin or
nullify this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including a routine
Civil Investigative Demand) into the consummation of this Agreement or (2) the
actual commencement of such an investigation.
6.3 FCC Approval. The FCC approval contemplated by this Agreement shall
have been granted without any conditions materially adverse to Seller.
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER TO CLOSE.
The obligation of Buyer to consummate the transactions under this
Agreement is subject to the fulfillment of the following conditions prior to or
at the Closing:
7.1 Representations, Warranties, Covenants.
7.1.1 Sellers' Representations and Warranties. Each of the
representations and warranties of RBSLC and Sellers contained in this Agreement
shall have been true and accurate in all material respects as of the date when
made and as of the Closing Date.
7.1.2 Sellers' Performance Under Agreement. RBSLC and Sellers
shall have performed and complied in all material respects with each and every
covenant and agreement required by this Agreement to be performed or complied
with by them prior to or at the Closing; and
7.1.3 Sellers' Deliveries. Sellers shall have delivered to Buyer
(a) certificates executed by Sellers, dated the Closing Date, certifying to the
fulfillment of the conditions set forth in Sections 7.1.1 and 7.1.2, and (b)
documents executed by Sellers sufficient to convey the Majority Interest to
Buyer upon Buyer's provision of the consideration to Sellers under Section 1.2
of this Agreement.
7.2 Proceedings.
7.2.1 Absence of Litigation. No action or proceeding shall be
pending or have been instituted before any court or governmental body to
restrain or prohibit, or to obtain substantial damages in respect of, the
consummation of this Agreement that, in the reasonable opinion of Buyer, may
reasonably be expected to result in the issuance of a preliminary or permanent
injunction against such consummation or otherwise result in a decision
materially adverse to Buyer.
7.2.2 Absence of Investigation. Neither of the parties to this
Agreement shall have received written notice from any governmental body of (1)
its intention to institute any action or proceeding to restrain or enjoin or
nullify this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including a routine
Civil Investigative Demand) into the consummation of this Agreement or (2) the
actual commencement of such an investigation.
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7.3 FCC Approval. The FCC approval contemplated by this Agreement shall
have been granted without any conditions materially adverse to Buyer and shall
have become a Final Order: provided, that the Buyer shall have the unilateral
right to waive the requirement that the Order become a Final Order.
7.4 Legal Opinion. Buyer shall have received an opinion from Sellers'
counsel in the form annexed hereto as EXHIBIT B.
7.5 No Material Adverse Change. Between the date of this Agreement and
the Closing, none of the Station's business, operations, or financial condition
shall have incurred or otherwise be subject to a material adverse change.
7.6 Exchange for KOOG-TV. Sellers shall have cooperated with Buyer and
otherwise used any and all commercially reasonable efforts to arrange a
transaction that would result in an exchange of the CP or the Licenses for the
FCC licenses issued for the operation of KOOG-TV in Salt Lake City, Utah. To
that end, Sellers shall have provided such information and executed such
documents as may have been required to effect such a transaction.
ARTICLE 8. INDEMNIFICATION.
8.1 Survival. The several representations, warranties, covenants, and
agreements of the Sellers and Buyer contained in or made pursuant to this
Agreement shall be deemed to have been made on and as of the Closing, shall
survive the Closing, and shall remain operative and in full force and effect for
a period of twelve (12) months after the Closing.
8.2 Indemnification of Buyer. Sellers shall indemnify, defend, and hold
Buyer harmless from and against any and all damages, claims, losses, expenses,
costs, obligations, and liabilities including, without limiting the generality
of the foregoing, liabilities for reasonable attorneys' fees ("Loss and
Expense"), suffered, directly or indirectly, by Buyer after the Closing Date by
reason of, or arising out of, (1) any material breach of a representation or
warranty made by RBSLC or Sellers pursuant to this Agreement or (2) any material
failure by RBSLC or Sellers to perform or fulfill any of its covenants or
agreements set forth in this Agreement.
8.3 Indemnification of Sellers. Buyer shall indemnify, defend and hold
Sellers harmless from and against any and all Loss and Expense suffered,
directly or indirectly, by Sellers after the Closing Date by reason of, or
arising out of, (1) any material breach of a representation or warranty made by
Buyer pursuant to this Agreement or (2) any material failure by Buyer to perform
or fulfill any of its covenants or agreements set forth in this Agreement.
8.4 Notice of Claim. If Sellers or Buyer believes that any Loss and
Expense has been suffered or incurred, such party shall notify the other
promptly in writing describing such Loss and Expense, the amount thereof, if
known, and the method of computation of such Loss and Expense, all with
reasonable particularity and containing a reference to the provisions of this
Agreement in respect of which such Loss and Expense shall have occurred. If any
action at law or suit in equity is instituted by a third party with respect to
which any of the parties intends to claim any liability or expense as Loss and
Expense under this Article 8, such party shall promptly notify the indemnifying
party of such action or suit. In no event, however, may the indemnifying party
avoid or limit its obligations under this Article 8 by reason of delay unless
such delay has
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materially prejudiced the indemnifying party, and then the indemnifying party's
obligations shall be reduced only to the extent of such prejudice.
8.5 Defense of Third Party Claims. The indemnifying party under this
Article 8 shall have the right to conduct and control, through counsel of that
party's own choosing, any third party claim, action, or suit at the indemnifying
party's sole cost and expense, but the indemnified party may, at that latter
party's election, participate in the defense of any such claim, action, or suit
at that party's sole cost and expense: provided, that if the indemnifying party
shall fail to defend any such claim, action, or suit, then the indemnified party
may defend, through counsel of that party's own choosing, such claim, action, or
suit and settle such claim, action, or suit, and recover from the indemnifying
party the amount of such settlement or of any judgment and the costs and
expenses of such defense; and provided further, that the indemnifying party
shall be given at least (15) days prior notice of the terms of any proposed
settlement thereof so that the indemnifying party may then undertake and/or
resume the defense against the claim. The indemnifying party shall not
compromise or settle any third party claim, action, or suit without the prior
written consent of the indemnified party, which consent will not be unreasonably
withheld or delayed: provided, that any such compromise or settlement shall
include a release for the Indemnified Party of all liability with respect to the
matter being compromised or settled.
8.6 Limitations. No party shall be required to indemnify any other party
under this Article 8 unless written notice of a claim under this Article 8 was
received by the party within the pertinent survival period specified in Section
8.1. No party shall be required to indemnify any other party under this Article
8 until the indemnified party's claims exceed $25,000 in the aggregate:
provided, that in case such amount is exceeded, the indemnified party's rights
hereunder shall include the right to recover the initial $25,000 of claims.
Sellers shall have no obligation to indemnify Buyer for any claim (1) to the
extent such claim is caused by an act or omission of ATU under the MA, or (ii)
based on any fact or circumstance known to ATU at the time of Buyer's exercise
of its rights under the Option Agreement.
ARTICLE 9. MISCELLANEOUS.
9.1 Termination of Agreement. This Agreement may be terminated
immediately on or prior to the Closing under one or more of the following
circumstances:
9.1.1 by the mutual consent of the parties hereto;
9.1.2 by Sellers, so long as such party is not in material
default hereunder, if any of the conditions provided in Article 6 hereof have
not been met by the time required and have not been waived;
9.1.3 by Buyer, so long as such party is not in material default
hereunder, if any of the conditions provided in Article 7 hereof have not been
met by the time required and have not been waived;
9.1.4 by Buyer, so long as such party is not in material default
hereunder, if the FCC has failed to grant the Application in an Order which has
become a Final Order within the time specified in Section 1.4 of this Agreement;
or
9.1.5 by any party hereto, if the FCC denies the Application.
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9.2 Liabilities Upon Termination.
9.2.1 RBSLC and Sellers' Remedies. If the parties hereto shall
fail to consummate this Agreement on the Closing Date due to Buyer's material
breach of any representation, warranty, covenant or condition hereunder, and
RBSLC and Sellers are not at that time in breach of any material representation,
warranty, covenant or condition hereunder, then RBSLC and Sellers would suffer
direct and substantial damages that cannot be determined with reasonable
certainty. In view of the expense and loss which would be incurred by Sellers in
such event, RBSLC and Sellers shall be entitled to retain the Escrow Deposit as
liquidated damages and as their exclusive remedy.
9.2.2 Buyer's Remedies. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due to RBSLC's or Sellers'
material breach of any representation, warranty, covenant or condition
hereunder, and Buyer is not at that time in material breach of any
representation, warranty, covenant or condition hereunder, then Buyer shall be
entitled to specific performance of the terms of this Agreement and of Sellers'
obligation to consummate the transaction contemplated hereby. If any action is
brought by Buyer to enforce this Agreement by specific performance, RBSLC and
Sellers shall waive the defense that Buyer has an adequate remedy at law.
9.2.3 Notice of Breach. In the event that any party to this
Agreement believes that the other party is in material breach of its
representations, warranties or obligations hereunder, such party shall give
prompt written notice thereof, detailing the nature of the breach and the steps
necessary to cure such breach. For purposes of this Agreement, no "breach" shall
be deemed to have occurred hereunder unless the party alleged to be in breach
has been afforded a cure period of at least twenty (20) business days following
such notice within which to cure such breach.
9.2.4 Survival of Confidentiality Obligations. Notwithstanding
any other provision of this Agreement, the provisions of Sections 4.7, and 5.3
shall survive any termination of this Agreement.
9.3 Expenses. Except as otherwise provided herein, each party hereto
shall be solely responsible for all fees and expenses each party incurs in
connection with the transactions contemplated by this Agreement, including,
without limitation, legal fees incurred in connection herewith: provided, that
the FCC filing fees shall be paid by Sellers.
9.4 Assignments. Sellers may not assign their rights or obligations
under this Agreement without the prior written consent of Buyer. Buyer may
assign its rights under this Agreement without the prior written consent of
Sellers to any party which (1) is at least majority owned by Buyer, or (2) is
controlled by the same parties who control Buyer: provided, that no such
assignment shall relieve Buyer of its obligations hereunder.
9.5 Further Assurances. From time to time prior to, at and after the
Closing, each party hereto will execute all such instruments and take all such
actions any other party shall reasonably request in connection with effectuating
the intent and purpose of this Agreement and all transactions contemplated by
this Agreement, including, without limitation, the execution and delivery of any
and all confirmatory and other instruments in addition to those to be delivered
at the Closing.
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9.6 Notices. All notices, demands and other communications authorized or
required by this Agreement shall be in writing, shall be delivered by personal
delivery, by United States certified mail-return receipt requested (postage
prepaid), or by overnight delivery service (charges prepaid), and shall be
deemed to have been given or made when personally delivered, within five (5)
days after being deposited in the mail, postage prepaid, or within one (1) day
after being delivered to an overnight delivery service, charges prepaid. Notices
shall be delivered to each party at the following addresses (or at such other
address as any party may designate in writing to the other parties).
9.6.1 If to Sellers --
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Managing Member
▇▇▇▇▇▇▇ Broadcasting of Salt Lake City, L.L.C.
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to (but which shall not constitute
notice to Sellers):
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.L.L.C
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
and
Armstrong, Teasdale, Schlafly & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to Buyer--
ACME Television Holdings, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
with a copy to (but which shall not constitute
notice to Buyer):
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Paper, Esq.
9.7 Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Delaware without regard to
conflict of laws provisions.
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9.8 Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall not affect the exercise of a party's rights at a later date. No waiver by
any party of any condition or the breach of any provision, term, covenant,
representation, or warranty contained in this Agreement in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or of the breach of any other provision, term, covenant,
representation, or warranty of this Agreement.
9.9 Counterparts. This Agreement may be executed in counterparts, and
all counterparts so executed shall collectively constitute one agreement,
binding on all of the parties hereto, notwithstanding that all the parties are
not signatory to the original or the same counterpart.
9.10 Reimbursement of Legal Expenses. If a formal legal proceeding is
instituted by a party to enforce that party's rights under this Agreement, the
party prevailing in the proceeding shall be reimbursed by the other party for
all reasonable costs incurred thereby, including but not limited to reasonable
attorneys' fees.
9.11 Publicity. Except as required by applicable law or with the other
party's express written consent, which shall not be unreasonably withheld, no
party to this Agreement nor any affiliate of any party shall issue any press
release or make any public statement (oral or written) regarding the
transactions contemplated by this Agreement.
9.12 Entire Agreement. This Agreement constitutes the entire agreement
among the parties, supersedes and cancels any and all prior or contemporaneous
agreements and understandings between them, and may not be amended except in a
writing signed by the parties.
ARTICLE 10. RULES OF CONSTRUCTION.
10.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
10.1.1 "Closing" and "Closing Date" shall have the meanings set
out in Section 1.3.1 hereof.
10.1.2 "Contracts" shall have the meaning set out in Section 2.6
hereof.
10.1.3 "CP" shall have the meaning set out in Recital 1 hereof..
10.1.4 "Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., the Substances Control Act, as amended, 15 U.S.C. 2601 et seq.,
the Resource Conservation and Recovery Act of 1976, as amended, U.S.C. Section
6901 et seq., the Clean Water Act, as amended, 42 U.S.C. Section 1251 et seq.,
the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq., any other
federal, state or local law relating to the environment, and any regulations or
policies adopted pursuant to such laws.
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10.1.5 "Escrow Deposit" shall have the meaning set out in Section
1.2.3 of this Agreement.
10.1.6 "FCC" means the Federal Communications Commission.
10.1.7 "Financial Statements" shall have the meaning set out in
Section 2.8 hereof.
10.1.8 "Hazardous Waste" means any hazardous or toxic waste,
substance, material or pollutant.
10.1.9 "IRS" means the Internal Revenue Service.
10.1.10 "License" shall have the meaning set out in Recital 1
hereof.
10.1.11 "Litigation" means any litigation, arbitration, dispute,
proceeding or investigation.
10.1.12 "Majority Interest" shall have the meaning set out in
Recital 2 hereof.
10.1.13 "Payments" shall have the meaning set out in Section 2.4
hereof.
10.1.14 "Purchase Price" shall have the meaning set out in
Section 1.2 hereof.
10.1.15 "Real Estate Leases" shall have the meaning set out in
Section 2.14 hereof.
10.1.16 "Station" shall have the meaning set out in Recital 1
hereof.
10.1.17 "Trusts" shall have the meaning set out in Section 2.4
hereof.
10.1.18 Other Definitions. Other capitalized terms used in this
Agreement shall have the meanings ascribed to them herein.
10.2 Number and Gender. Whenever the context so requires, words used in
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be construed to mean or include any other
gender or genders.
10.3 Headings and Cross-references. Headings of the sections have been
included for convenience of reference only and shall in no way limit or affect
the meaning or interpretation of the specific provisions of this Agreement. All
cross-references to sections herein shall mean the section of this Agreement
unless otherwise stated or clearly required by the context. Words such as
"herein" and "hereof" shall be deemed to refer to this Agreement as a whole and
not to any particular provision of this Agreement unless otherwise stated or
clearly required by the context. The term "including" means "including without
limitation."
10.4 Computation of Time. Whenever any time period provided for in this
Agreement is measured in "business days," there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the FCC's offices are
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closed and are not reopened prior to 5:30 p.m. Washington, D.C. time. In all
other cases all days shall be counted.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year written above.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually
ACME TELEVISION HOLDINGS, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, President
▇▇▇▇▇▇▇ BROADCASTING OF SALT
LAKE CITY, L.L.C.
By:
---------------------------
Name:
Title:
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EXHIBIT 10.3
The Following Schedules and Exhibits have been intentionally omitted by the
Registrants.
LIST OF EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Opinion of Seller's Counsel
LIST OF SCHEDULES
Schedule 1 Licenses and Permits of RBSLC
Schedule 2 Unpaid Taxes, etc.
Schedule 3 Material Contracts of RBSLC
Schedule 4 Balance Sheet of RBSLC
Schedule 5 Material Breaches and Violations by RBSLC
Schedule 6 Real Estate Leases of RBSLC
A copy of any omitted Schedule or Exhibit will be provided to the Securities and
Exchange Commission upon request.
