HSN, Inc.
0 XXX Xxxxx
Xx. Xxxxxxxxxx, XX 00000
November 11, 1997
United Television, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Xx. Xxxx X Xxxxxxxx
President and Chief Executive Officer
Re: Television Station WHSW-TV,
Baltimore, Maryland
Dear Xx. Xxxxxxxx:
This asset purchase agreement (the "Agreement") sets forth our
mutual agreement regarding the terms and conditions of the sale by SKMD
BROADCASTING PARTNERSHIP, a Delaware general partnership ("Seller"), of
certain assets of Television Station WHSW-TV, Channel 24, Baltimore, Maryland
(the "Station") to UNITED TELEVISION, INC., a Delaware corporation ("Buyer").
1. Assets. On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions hereof,
upon the Closing (as defined herein) Seller agrees to sell, and Buyer agrees
to acquire, the following assets used in the business and operations of the
Station and located in the Baltimore, Maryland area (collectively, the
"Assets"):
(a) Tangible Personal Property. All of the tangible personal
property used by the Station and located in the Baltimore, Maryland area,
including, without limitation, the tangible personal property described in
the fixed assets listing dated November 6, 1997 and previously delivered to
the Buyer;
(b) Lease Agreements. That certain Lease dated as of July 1,
1989 (the "Tower Lease"), by and between High Vision, Inc. and a general
partner of Seller (the "General Partner") and that certain Lease dated as of
March 6, 1985, as amended, by and between Xxxxx X. Xxxxxxx t/a Xxxxxxx and
WKJL-TV Channel 24 - Look and Live Ministries, predecessor-in-interest to
Seller (such leases, collectively, the "Lease Agreements");
(c) FCC Licenses. All licenses, permits and other authorizations
which have been issued by the Federal Communications Commission (the "FCC")
to Seller for the operation of the Station (the "FCC Licenses"). Such FCC
Licenses shall include, without limitation, any and all of Seller's rights,
title and interests in and to future authorizations for digital television
service which must
be associated with the Station pursuant to FCC regulations, the Main
Broadcast Authorization for WHSW-TV, broadcast auxiliary station
KPJ-890, and all applications therefor, together with any renewals,
extensions or modifications thereof and additions thereto;
(d) Files and Records. All engineering, business and other books,
papers, logs, files and records pertaining to the Assets, including without
limitation all records required by the FCC to be kept at the Station; and
(e) Permits and Licenses. All permits, approvals, orders,
authorizations, consents, licenses, certificates, franchises, exemptions of,
or filings or registrations with any court or governmental authority (other
than the FCC) in any jurisdiction, which have been issued or granted to or
are owned or used by Seller in connection with the business and operations of
the Station and ownership of the Assets and all pending applications therefor.
(f) No Other Assets. Except for the Assets, no other assets or
properties of Seller or the Station shall be transferred to Buyer.
2. Purchase Price; Allocation of Purchase Price. The consideration
payable by Buyer to Seller for the Assets shall be Eighty Million Dollars
($80,000,000.00) (the "Purchase Price"), payable in cash at the Closing. The
Purchase Price shall be subject to adjustment for customary proration items.
Seller and Buyer shall attempt to agree on an allocation of the Purchase Price
among the Assets during the sixty (60) days after the date hereof and if the
parties fail to agree on an allocation during such period, the allocation of
the Assets shall be as set forth in an appraisal of the Assets to be performed
by Bond & Xxxxxx at Buyer's sole expense.
3. Assumption of Liabilities. At Closing, Buyer will assume, pay,
perform, discharge and indemnify and hold Seller harmless from and against
(a) all liabilities arising out of events occurring on or after the Closing
Date related to the businesses or operations of the Station or Buyer's
ownership of the Assets, (b) all liabilities arising out of events occurring
on or after the Closing Date with respect to the FCC Licenses, and (c) all
liabilities arising on or after the Closing Date, under the Lease Agreements.
Buyer shall not assume or be obligated for any other liabilities or
obligations of Seller or the Station.
4. Seller Representations and Warranties. Seller represents and
warrants to Buyer as follows:
4.1 Organization of Seller. Seller is a partnership duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Seller has the partnership power and authority to own, lease and
operate the Assets, to carry on Seller's business as now conducted, and to
enter into and perform the terms of this Agreement, and the transactions
contemplated hereby.
4.2 Authority of Seller. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary actions of Seller (none
of which actions have been modified or rescinded and all of which actions are
in full force and effect). This Agreement constitutes a valid and binding
agreement and obligation of Seller, enforceable in accordance with its terms.
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4.3 Required Consents.
(a) All of the Assets to be transferred hereunder are
transferable by Seller by Seller's sole act and deed (except the Tower Lease
to which the General Partner is the lessee), and no consent on the part of any
other person is necessary to validate the transfer to Buyer, except for (i)
the consent of the FCC for the assignment of the FCC Licenses described in
Section 1(c) to Buyer, (ii) compliance with the HSR Act (as defined herein),
and (iii) the requirement to obtain third-party consents to the assignment of
the Lease Agreements described in Section 1(b).
(b) No person (other than Buyer pursuant to this
Agreement) has any right, agreement or understanding with Seller with respect
to the acquisition of the Assets.
4.4 Title to Assets.
(a) The Assets to be acquired by Buyer at the Closing
constitute all of the assets that are necessary for the transmission of the
Station's broadcasting signal in accordance with the terms of the FCC Licenses.
(b) Seller is the sole and exclusive legal and equitable
owner of all right, title and interest in and has good and marketable title
to the Assets, free and clear of any encumbrances, except for and subject
only to (i) liens for real estate taxes not yet due and payable, (ii) liens
which do not materially impair the use of such property for the purposes
contemplated hereunder, and (iii) those encumbrances which shall be removed
or released prior to or contemporaneously with the Closing.
(c) On the Closing Date (as defined herein), Buyer shall
acquire good and marketable title to, and all right, title and interest of
Seller in, the Assets, free and clear of all encumbrances, except for and
subject only to (i) liens for real estate taxes not yet due and payable, and
(ii) liens which do not materially impair the use of such property for the
purposes contemplated hereunder.
4.5 Condition of Assets and Legality of Use. The Assets are in
good working condition, ordinary wear and tear excepted. The Assets and
their uses by Seller conform in all material respects to all applicable laws,
regulations, rules, ordinances, codes, licenses, franchises and permits, and
no written notice of any violation of any of such matters relating to the
Assets or their use has been received by Seller which remains unresolved.
4.6 FCC Licenses.
(a) Section 1(c) lists the FCC Licenses necessary for
the conduct of the business and operations of the Station as presently
conducted. Seller is the authorized legal holder of the FCC Licenses and
the FCC Licenses are valid and in full force and effect through October 1,
2001. As currently conducted, the operations of the Station are in
accordance with the FCC Licenses.
(b) Except for actions or proceedings affecting
television stations generally, (i) no application, action, complaint,
petition, notice of violation, or proceeding is pending or, to Seller's
knowledge, threatened before the FCC relating to the business or operations
of the Station, and (ii) to Seller's knowledge, no investigation is pending
or threatened before the FCC relating to the business or operations of the
Station. No application, action, complaint, petition, notice of violation,
or proceeding is pending or, to Seller's knowledge, threatened and to
Seller's knowledge, there has been no act or omission of Seller, any partner,
or any of Seller's officers, directors, agents or employees, which may
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result in the revocation, modification, non-renewal or suspension of any of
the FCC Licenses, or the issuance of any administrative order by the FCC with
respect to the FCC Licenses which may materially and adversely affect Buyer's
ability to continue to operate the transmission and STL facilities of the
Station as currently being operated.
(c) The Station is in compliance in all material respects
with the rules, regulations and policies of the FCC. Seller is in compliance
in all material respects with all requirements of the FCC and the Federal
Aviation Administration with respect to the construction and/or any alteration
of Seller's antenna structures.
(d) Seller knows of no facts, conditions or events
relating to Seller or the Station that would be reasonably expected to cause
the FCC to deny or to materially delay consent to the assignment of the FCC
Licenses as provided for in this Agreement.
4.7 Governmental Permits. In addition to the FCC Licenses, Seller
also holds or possesses all other authorizations which are necessary to
entitle it to own or lease, operate and use the Assets and to carry on and
conduct the business of the Station as currently conducted (herein
collectively called the "Governmental Permits"). Seller has fulfilled and
performed in all material respects its obligations under each of the
Governmental Permits. There is no action currently pending or, to the
knowledge of Seller, threatened to revoke, cancel, rescind, modify or refuse
to renew in the ordinary course any of the Governmental Permits.
4.8 Reports and Records. All returns, reports and statements
relating to the Station currently required to be filed by Seller with the FCC
or any other governmental authority have been filed and are true, correct and
complete in all material respects. All documents required by the FCC's rules
to be maintained in the Station's public files as of the date hereof are being
so maintained in such files. All logs and business records of every type and
nature relating to the business and operations of the Station required by the
FCC to be maintained as of the date hereof at the Station are being so
maintained, including but not limited to political and public record files,
program, operating and maintenance logs, equipment performance measurements,
policies or evidence of insurance, licenses, payroll, social security and
withholding tax returns, and other records pertaining to the Assets.
4.9 Lease Agreements. Each of the Lease Agreements described in
Section 1(b) constitutes a valid and binding obligation of Seller (subject to
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally) and is in full force and
effect. Seller (i) has fulfilled and performed in all material respects its
obligations under each of the Lease Agreements, (ii) is not in breach or
default under any of the Lease Agreements in any material respect, and (iii)
has received no notice of default from the landlord party to any of the Lease
Agreements. To the Seller's knowledge, no landlord party to any of the Lease
Agreements is in breach or default under any such Lease Agreement in any
material respect. To Seller's knowledge, the operation of the Station does
not create interference with the operation of Channel 54 in violation of
Section 9 of the Tower Lease.
4.10 No Violation or Litigation. Seller has complied in all
material respects with all laws, regulations, rules, writs, injunctions,
ordinances, franchises, decrees or orders of any court or of any foreign,
federal, state, municipal or other government, governmental department,
commission, board, bureau, agency or instrumentality which are applicable to
the Assets, the Station or the business and operations of the Station. There
are no lawsuits, claims, suits, proceedings or investigations pending or,
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to the knowledge of Seller, threatened against Seller in respect of the
Assets, the Station or the business or operations of the Station.
4.11 Environmental Matters.
(a) Neither Seller nor any of its properties, assets or
operations relating to the Station are subject to any notice, claim or order
from or agreement with any governmental authority, regulatory body or private
party respecting (i) any environmental health or safety requirements of law,
(ii) any Remedial Action or (iii) any Liabilities and Costs arising from the
Release or threatened Release of a Contaminant into the environment (as such
terms are defined herein).
(b) There is not on or in the properties of Seller
relating to the Station (i) any Release of any Contaminant on, in, under or
from such properties; (ii) any underground storage tanks or surface
impoundments; (iii) any asbestos containing material; or (iv) any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical
transformers or other equipment.
(c) Seller has not received any notice or claim relating
to the Station to the effect that it is or may be liable to any person as a
result of the Release or threatened Release of a Contaminant into the
environment.
(d) None of the present or, to Seller's knowledge, past
operations of the Station is the subject of any investigation by any
governmental authority or regulatory body evaluating whether any Remedial
Action is needed to respond to a Release or threatened Release of a
Contaminant into the environment.
(e) With respect to the operation of the Assets, the
Seller is in compliance with all applicable environmental, health and safety
requirements of law.
For purposes of this Agreement, the following terms shall have the
meanings specified below:
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-
derived substance or waste, or any constituent of any such substance or waste.
"Liabilities and Costs" means all liabilities, investigations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including, without limitation, attorney,
expert and consulting fees and expenses, costs of investigation and
feasibility studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present
or future.
"Release" mans any release, spill, emission, leaking, pumping,
injections, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment or into or out of any property,
including the movement of Contaminants through or in the air, soil, surface
water, groundwater or property.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of
6
Release or minimize the further Release of Contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
4.12 Insurance. Seller maintains policies of property, fire,
casualty, liability, life, workmen's compensation, libel and slander, and
other forms of insurance customary for television broadcast stations. All
such policies are in full force and effect.
4.13 Conflicts. Except for the matters described in Section 4.3,
the execution and delivery of this Agreement and the agreements and
instruments called for hereunder, the fulfillment of and the compliance with
the respective terms and provisions of each, and the consummation of the
transactions described in each, do not and will not conflict with or violate
in any material respect any law, ordinance, regulation, order, award,
judgment, injunction or decree applicable to Seller, to the general partners
of Seller, to the Assets or to the Station, or conflict with or result in a
material breach of or constitute a material default under any of the terms,
conditions or provisions of Seller's partnership agreement, or any contract,
agreement, lease, commitment, or understanding to which Seller is a party or
by which Seller is bound or to which any of the Assets or the Station is
subject, or result in the acceleration of any indebtedness or in the creation
of any encumbrance upon the Assets.
4.14 Labor Relations. There are no strikes, work stoppages,
grievance proceedings, union organization efforts, or other controversies
pending or, to Seller's knowledge, threatened between Seller and any of its
employees or agents or any union or collective bargaining unit. Seller is in
compliance in all material respects with all Laws relating to the employment
of labor, including without limitation provisions relating to wages, hours,
collective bargaining, occupational safety and health, equal employment
opportunity, and the withholding of income taxes and social security
contributions. There are no collective bargaining agreements or employment
agreements between Seller and any of its employees. No employee of Seller
has any contractual right to continued employment by Seller following
consummation of the transactions contemplated by this Agreement.
4.15 Cable Television System Carriage. To Seller's knowledge,
Schedule 4.15 lists: (a) each of the cable television systems which carries
the signal of the Station and identifies the cable channel number on which
such system carries the Station, and (b) any retransmission consent notices
given by Seller and any retransmission consent agreements entered into with
respect to the Station. Schedule 4.15 is true and correct in all material
respects.
5. Buyer's Representations and Warranties. Buyer hereby represents and
warrants to Seller as follows:
5.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has the corporate power and authority to enter into and perform the
terms of this Agreement, and the transactions contemplated hereby.
5.2 Authority of Buyer. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary actions of
Buyer (none of which actions has been modified or rescinded, and all of which
actions are in full force and effect). This Agreement constitutes a valid
and binding agreement and obligation of Buyer enforceable in accordance with
its terms. Except as contemplated in Section 4.3
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hereof, the execution, delivery and performance by Buyer of this Agreement
will not (a) require the consent, approval or authorization of any person,
entity or governmental authority or (b) conflict with or result in a breach
of the terms, conditions or provisions of any right, agreement or
understanding of any third party with Buyer with respect to the acquisition
of the Assets or the Station.
5.3 FCC Matters. Buyer is, and pending Closing (except for any
actions taken by unaffiliated investors in Buyer or by unaffiliated investors
in companies controlling or under common control with Buyer) will remain
legally, financially and otherwise qualified under the Communications Act and
all rules, regulations and policies of the FCC to acquire and operate the
Station. There are no proceedings, complaints, notices of forfeiture, claims,
investigations pending or, to the knowledge of Buyer, threatened against any
of the broadcast stations licensed to Buyer or Buyer's affiliates that would
materially impair the qualifications of Buyer to become a licensee of the
Station or materially delay the FCC's processing of the application for the
assignment of the FCC Licenses to Buyer (the "FCC Application"). Except as
set forth in Schedule 5.3, Buyer knows of no facts, conditions, or events
relating to Buyer or any of Buyer's affiliates that would be reasonably
expected to (a) cause the filing of any objection to the assignment of the
FCC Licenses to Buyer, or (b) cause the FCC to deny or to materially delay
consent to the assignment of the FCC Licenses as provided for in this
Agreement. To Buyer's knowledge, no waiver of any FCC rule or policy is
necessary to be obtained for the grant of the FCC Application, nor will
processing pursuant to any exception or rule of general applicability be
requested or required in connection with the consummation of the transactions
herein.
5.4 Conflicts. Except for the matters described in Section 4.3,
the execution and delivery of this Agreement and the agreements and
instruments called for hereunder, the fulfillment of and the compliance with
the respective terms and provisions of each, and the consummation of the
transactions described in each, do not and will not conflict with or violate
in any material respect any law, ordinance, regulation, order, award,
judgment, injunction or decree applicable to Buyer, or conflict with or
result in a material breach of or constitute a material default under any of
the terms, conditions or provisions of Buyer's organization documents, or any
contract, agreement, lease, commitment, or understanding to which Buyer is a
party or by which Buyer is bound.
6. Covenants.
6.1 Operations Prior to the Closing Date; Normal Operation.
Between the date hereof and the Closing Date, Seller shall operate the
Station in the ordinary course and substantially as presently operated.
Consistent with the foregoing, Seller (a) shall keep and maintain the Assets
in good operating condition and repair (ordinary wear and tear excepted), (b)
pay and otherwise satisfy all obligations of the Station in the ordinary
course of business, and (c) maintain its books of account, records, and files
in substantially the same manner as heretofore.
6.2 Dispositions. Pending and prior to the Closing, Seller will
not, without the prior written approval of Buyer, sell, assign, lease or
otherwise transfer or dispose of any of the Assets except in the ordinary
course of business (and Seller shall replace any such Assets to the extent
consistent with the ordinary course of business of Seller).
6.3 Access. During the period prior to the Closing Date, Seller
shall make available to Buyer and its representatives all books and records
relating to the Station and the Assets and shall afford Buyer and its
representatives reasonable access to the facilities and equipment used or
held for use
8
in connection with the business or operation of the Station during normal
business hours following reasonable notice.
6.4 Modification of Lease Agreements. Pending and prior to the
Closing, Seller will not materially modify or amend any Lease Agreement.
6.5 Partnership Action. Pending and prior to the Closing Date,
Seller will take all partnership action under the law of any state having
jurisdiction over Seller or the Seller's general partners necessary to
effectuate the transactions contemplated by this Agreement and by the
agreements and instruments called for hereunder.
6.6 Insurance. Pending and prior to the Closing Date, Seller
will maintain in full force and effect all of its casualty, liability, and
other insurance through the day following the Closing Date in amounts not
less than those in effect on the date hereof.
6.7 Violations. Pending and prior to the Closing Date, Seller
will, upon receiving notice or otherwise becoming aware of any material
violations relating to the FCC Licenses, any material violation by the Seller
or the Station of any rules and regulations of the FCC, or any material
violations under any other applicable Laws, promptly notify Buyer and, at
Seller's expense, cure all such violations prior to the Closing Date;
provided, however, that Seller shall not be required to pay any penalties or
fees relating to such violations so long as Seller is contesting any such
penalties or fees in good faith.
6.8 Interruption in Broadcast Operations. Pending and prior to
the Closing Date, Seller will promptly notify Buyer in writing if the Station
ceases to broadcast at its authorized power for more than forty-eight (48)
consecutive hours.
6.9 Consents. Pending and prior to the Closing Date, Seller will
use best efforts to obtain third party consents to assign the Lease Agreements
to Buyer. If, on the Closing Date, Seller has not obtained any required
consent for the assignment of the Lease Agreements to Buyer, (a) Seller will
continue to use best efforts, and the Buyer will cooperate with the Seller,
to obtain any such consent and/or to remove any other impediments to the
assignment of the Lease Agreements, and (b) until the valid assignment of any
such Lease Agreements, Seller will take such actions so as to assure that the
Buyer shall receive the benefits of such Lease Agreements after the Closing
Date to the same extent as if the Buyer were the lessee thereunder (and the
Buyer agrees to cooperate with Seller in connection with any such actions and
to enter into any lawful arrangements in furtherance thereof (but at no
additional cost to Buyer other than such costs as Buyer would incur as the
lessee under the Lease Agreements)).
6.10 Digital Channel. Seller shall use commercially reasonable
efforts to take or cause to be taken such actions and do or cause to be done
all actions that may be necessary under FCC regulations or otherwise
reasonably required in order to preserve any rights to any digital channel
allocated to Seller by the FCC.
6.11 Possession and Control. Between the date hereof and the
Closing Date, Buyer shall not directly or indirectly control, supervise or
direct, or attempt to control, supervise or direct, the business and
operations of the Station, and such operation, including complete control and
supervision of all programs, shall be the sole responsibilities of Seller.
On and after the Closing Date, Seller shall have no control over, or right to
intervene or participate in, the business and operations of the Station.
9
6.12 Regulatory Approvals. Within five (5) days of the date hereof,
Seller and Buyer shall file the FCC Application with the FCC. Within ten (10)
days of the date hereof, Seller and Buyer shall make any filings required
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). Seller and Buyer will diligently take or fully
cooperate in the taking of all necessary and proper steps, and promptly
provide any additional information reasonably requested in order to obtain a
grant of the FCC Application and in order to comply with the requirements of
the HSR Act.
6.13 Environmental Reports.
(a) Within thirty (30) days of the date of this Agreement,
to the extent Seller can make the leasehold interests of Seller available for
inspection without violating the applicable Lease Agreements, Buyer may
obtain (at Buyer's sole expense) a phase one environmental assessment of the
Seller's leasehold interests underlying the Lease Agreements (the "Phase I
Report"). If, within ten (10) days following receipt of the Phase I Report,
the Buyer has reasonable grounds to believe based on the Phase I Report that
Seller's leasehold interests are not in material compliance with applicable
environmental laws, Buyer shall have the right to obtain, to the extent Seller
can make the Seller's leasehold interests available for inspection without
violating the applicable Lease Agreements, within forty-five (45) days
following receipt of the Phase I Report, a phase II environmental assessment
report (the "Phase II Report"), at Buyer's sole expense, with respect to any
or all of the Seller's leasehold interests. The Phase I Report and the Phase
II Report will be prepared by a nationally recognized firm of environmental
engineers as may reasonably be selected by the Buyer. Subject to Seller's
compliance with the Lease Agreement and to the extent not disruptive to the
business or operations of the Station, the Seller agrees to cooperate with
the Buyer and with all third parties in permitting the Buyer to obtain in a
timely manner the Phase I Report and Phase II Report.
(b) If the Phase I Report or the Phase II Report shows
that the Seller's leasehold interests are not in material compliance with
applicable environmental laws, Buyer shall so notify Seller in writing within
ten (10) business days following receipt of such information or in such
shorter time as shall be necessary to ensure timely material compliance with
applicable environmental laws, which notice shall include a copy of the Phase
I Report or Phase II Report. Seller agrees to cure or remediate any such
matters identified in any Phase I Report or Phase II Report on or before the
Closing Date in order for the Seller's leasehold interests to be in material
compliance with applicable environmental laws. If Buyer does not obtain
either the Phase I Report or Phase II Report within the deadlines set forth
in this Section 6, Buyer shall have no further rights, and Seller shall have
no further obligations, under this Section 6.
6.14 Employment Arrangements. Buyer shall have the right, but not
the obligation, to offer employment to the employees of the Station on terms
and conditions determined by Buyer, subject to applicable law. Seller shall
be responsible for all severance payments, if any, and for the payment of all
accrued sick leave and vacation time.
6.15 Consummation of Agreement. Subject to the provisions of
Sections 9.1 and 9.2 of this Agreement, each party shall use all commercially
reasonable efforts to fulfill and perform all conditions and obligations on
its part to be fulfilled and performed under this Agreement, to cause its
representations and warranties to be true and correct in all material
respects on the Closing Date and to cause the transactions contemplated by
this Agreement to be fully carried out.
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7. Closing.
7.1 Closing Date. The closing of the purchase and sale of the
Assets (the "Closing") shall be held within ten (10) business days after the
FCC has consented to the assignment of the FCC Licenses to Buyer and shall be
on a date and at a location designated by Buyer (the date of the Closing
referred to herein as the "Closing Date").
7.2 Conditions Precedent to Buyer's Obligation to Close. Buyer's
obligation to purchase the Assets and to proceed with the Closing shall be
subject to the satisfaction (or waiver by Buyer) at or prior to the Closing of
each of the following conditions:
(a) Representations and Covenants. The representations
and warranties of Seller made herein or in any agreement, instrument or
document called for hereunder shall have been true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties
were made on and as of the Closing Date. In addition, there shall have been
no breach in any material respect by Seller in the performance of any of
Seller's covenants or agreements contained herein;
(b) Condition of the Assets. Since the date of this
Agreement, there shall have been no damage, destruction, loss of property or
claim or condemnation or other taking which has a material adverse effect on
the Assets and which shall not have been remedied in accordance with Section
8;
(c) Delivery of Documents. Seller shall have furnished
to Buyer all of the following documents:
(i) such bills of sale, statements, lease assignments, and
other documents and instruments of sale, assignment, conveyance and transfer,
dated as of the Closing Date, as Buyer may reasonably deem necessary in order
to carry out the purposes of this Agreement;
(ii) copies of all consents received by Seller which are
necessary to effect valid assignments to Buyer of the Lease Agreements; and
(iii) a certificate of Seller signed by the President or
other executive officer of a general partner of Seller certifying that the
representations and warranties of Seller made herein were true and correct
in all material respects as of the date of this Agreement and are true and
correct in all material respects as of the Closing Date, and that Seller has
performed and complied in all material respects with all covenants and
agreements required to be performed or complied with by Seller on or prior
to the Closing Date.
(d) FCC Order. The order or action of the FCC, or the
Chief, Mass Media Bureau, acting under delegated authority, consenting to the
assignment to Buyer of the FCC Licenses for the Station (the "FCC Order") (i)
shall have been issued, (ii) shall not contain any conditions which are
materially adverse to Buyer or which in any way diminish the operating rights
with respect to the Assets; provided, however, that any such condition shall
not be caused by the Buyer as a result of a material default or breach by
Buyer under this Agreement, and (iii) any terms and conditions required as a
result of such order shall have been satisfied.
11
(e) Legal Proceedings. No injunction or order which
restrains, prohibits or invalidates the transactions contemplated by this
Agreement shall be in existence.
(f) Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods
under the HSR Act shall have expired.
7.3 Conditions Precedent to Seller's Obligation to Close.
Seller's obligation to proceed shall be subject to the following conditions:
(a) Representations and Covenants. The representations
and warranties of Buyer made herein or in any agreement, instrument or
document called for hereunder shall have been true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties
were made on and as of the Closing Date. In addition, there shall have been
no breach in any material respect by Buyer in the performance of any of
Buyer's covenants or agreements contained herein;
(b) Assumption Agreements. Buyer shall have furnished
to Seller assumption agreements with regard to the Lease Agreements in a form
reasonably satisfactory to the Seller.
(c) Delivery of Documents. A certificate of Buyer
signed by the President or other executive officer of Buyer certifying that
the representations and warranties of Buyer made herein were true and correct
in all material respects as of the date of this Agreement and are true and
correct in all material respects as of the Closing Date, and that Buyer has
performed and complied in all material respects with all covenants and
agreements required to be performed or complied with by Buyer on or prior to
the Closing Date.
(d) FCC Order. The FCC Order (i) shall have been issued,
and (ii) any terms and conditions required as a result of such order shall
have been satisfied.
(e) Legal Proceedings. No injunction or order which
restrains, prohibits or invalidates the transactions contemplated by this
Agreement shall be in existence.
(f) Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods
under the HSR Act shall have expired.
8. Risk of Loss. The risk of material loss or damage by fire or other
casualty or cause to the Assets until the Closing Date shall be upon Seller.
In the event of such material loss or damage prior to the Closing Date, Seller
shall promptly restore, replace or repair the damaged Assets to their
previous condition at Seller's sole cost and expense. In the event such
material loss or damage shall not be restored, replaced, or repaired as of
the Closing Date, Buyer shall, at its option, either (a) proceed with the
Closing and receive all insurance proceeds to which Seller would be entitled
as a result of such loss or damage (provided, however, if such proceeds do not
equal the loss, Seller shall pay the deficiency to Buyer), or (b) defer the
Closing Date until such restorations, replacements or repairs are made
(provided that no such deferral shall affect the rights of the parties hereto
to terminate this Agreement pursuant to the provisions of Section 9; provided,
however, if any such material loss or damage shall occur during the period
ninety (90) days prior to the Closing Date, Seller shall have the right to
defer the Closing Date for a period of ninety (90) days to make such
restorations, replacements or repairs as are necessary.
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9. Termination.
9.1 This Agreement may be terminated at any time prior to the
Closing by:
(a) the mutual consent of Seller and Buyer;
(b) Buyer, by written notice of termination delivered to
Seller, if (i) the Closing has not occurred within two hundred seventy-five
(275) days after the date of this Agreement, (ii) the FCC designates the FCC
Application for an evidentiary hearing, or (iii) the FCC issues an order in
connection with the FCC Application with conditions which are materially
adverse to Buyer or which in any way diminish the operating rights with
respect to the Assets or the Station; provided that the Buyer shall not be in
default or breach under this Agreement in any material respect;
(c) Buyer, pursuant to, and in accordance with Section 8
hereof;
(d) Seller, by written notice of termination delivered to
Buyer, if (i) the Closing has not occurred within two hundred seventy-five
(275) days after the date of this Agreement, or (ii) the FCC designates the
FCC Application for an evidentiary hearing; provided that Seller shall not be
in default or breach under this Agreement in any material respect; or
(e) Buyer, by written notice of termination delivered to
Seller prior to 5:00 p.m. (New York local time) on Thursday, November 13, 1997,
if Buyer's physical inspection of the Seller's facilities and equipment located
at the Station's transmission site is not satisfactory to Buyer based solely
on the good faith professional opinion of Buyer's engineer.
9.2 If the Closing shall not have occurred by the date which is
two hundred seventy (270) days after the date of this Agreement, and the
Seller shall not have caused such delay in Closing as a result of a material
breach by Seller of the terms hereof, Buyer shall immediately pay to the
Seller the amount of Eight Million Dollars ($8,000,000.00) (the "Deposit")
and the Seller will agree to defer any termination of this Agreement pursuant
to Section 9.1(d) until after fourteen (14) months from the date hereof
(the "14 Month Date") if the Closing shall not have occurred by such date.
If the Closing occurs during the period after Seller's receipt of the Deposit
and prior to the 14 Month Date, Seller agrees that the Purchase Price shall be
reduced by the amount of the Deposit. Any payment of the Deposit by Buyer
pursuant to this Section 9.2 shall be nonrefundable under all circumstances,
except as provided in Section 9.3(a) hereof.
9.3 Effect of Termination.
(a) If this Agreement is terminated in accordance with
Section 9.1, no party to this Agreement shall have any liability to any other
party to this Agreement, and this Agreement in its entirety shall be deemed
null, void and of no further force or effect, and the parties hereto shall be
released from all future obligations hereunder with respect to the Station;
provided, however, that the obligations of Buyer and Seller in Sections 9.3,
12, 13 and 14 shall survive such termination. If this Agreement is terminated
by Buyer in accordance with Section 9.1(c) hereof and, as of the date of such
termination, Buyer shall have paid the Deposit to Seller, then Seller shall
promptly return the Deposit to Buyer in accordance with Buyer's written
instructions.
(b) If this Agreement is terminated in accordance with
Section 9.2 after Seller's receipt of the Deposit, no party to this Agreement
shall have any liability to any other party to
13
this Agreement, and this Agreement in its entirety shall be deemed null, void
and of no further force or effect, and the parties hereto shall be released
from all future obligations hereunder with respect to the Station; provided,
however, that the obligations of Buyer and Seller in Sections 9.3, 12, 13 and
14 shall survive such termination.
10. Indemnification.
10.1 Indemnification by Seller. From and after the Closing Date,
Seller shall indemnify Buyer from and against all losses incurred by Buyer
resulting from: (a) any failure by Seller to pay, perform or discharge any
liabilities related to operation of the Station that are not assumed by Buyer;
(b) the business or operations of the Station during the period prior to the
Closing Date; (c) any misrepresentation or breach of the representations and
warranties of Seller contained herein; (d) any breach by Seller of any
covenants of Seller contained herein; or (e) any failure to comply with any
laws pertaining to bulk sales. Seller shall not be liable to Buyer in
respect of any indemnification except to the extent that the aggregate amount
of losses of Buyer exceeds Fifty Thousand Dollars ($50,000), and then only to
the extent of the excess over such amount. The maximum aggregate liability of
Seller to Buyer and any third parties for any and all losses shall not exceed
an amount equal to the Purchase Price. No claim for indemnification may be
made hereunder by Buyer at any time after such date which is twelve (12)
months after the Closing Date; provided, however, any indemnification claim
by Seller pursuant to Section 10.1(a) or Section 10.11(b) which is related to
any tax liabilities or employee benefit matters may be made hereunder by Buyer
at any time prior to such date which is twenty-four (24) months after the date
hereof; provided, further, any covenants which by their terms are to be
performed after the Closing Date shall survive indefinitely.
10.2 Indemnification by Buyer. From and after the Closing Date,
Buyer shall indemnify Seller from and against all losses incurred by Seller
resulting from: (a) any failure by Buyer to pay, perform or discharge any
liabilities assumed by Buyer; (b) the business or operations of the Station
during the period from and after the Closing Date; (c) any misrepresentation
or breach of the representations and warranties of Buyer contained herein; or
(d) any breach by Buyer of any covenants of Buyer contained herein. No claim
for indemnification may be made hereunder by Seller at any time after such
date which is twelve (12) months after the Closing Date; provided, however,
any covenants which by their terms are to be performed after the Closing Date
shall survive indefinitely, including, without limitation, Section 3 hereof.
11. Assignment. This Agreement shall not, nor shall any interest
hereunder be assigned or transferred by either party, whether voluntarily or
involuntarily by operation of law, without the prior written consent of the
other party hereto; provided, either party may assign this Agreement without
such consent to a wholly-owned subsidiary of such party or to an affiliate
under common control with such party as long as such party shall not be
released from any liabilities or obligations hereunder; provided, however,
that any such assignment shall not delay in any respect the Closing hereunder
or the processing of the FCC Application.
12. Brokers. Buyer and Seller each represent to the other that it has
not engaged, or incurred any unusual liability (or any brokerage fees,
finders' fees, commissions or otherwise) to, any broker, finder or agent in
connection with the transactions contemplated by this Agreement. Seller
agrees to indemnify buyer and Buyer agrees to indemnify Seller against any
claims asserted against the other party for any such fees or commissions by
any person purporting to act or to have acted for or on behalf of the
indemnifying party.
14
13. Transaction Expenses. Each party will be solely responsible for the
payment of all costs and expenses of its attorneys, accountants and other
professional advisers incurred in connection with the negotiations of this
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, Buyer and Seller shall each pay one-half (1/2) of all of the
following (a) all sales, use, transfer, conveyance, excise, recording,
license and other similar taxes and fees ("Transfer Taxes") applicable to,
imposed upon or arising out of the sale by Seller and the purchase by Buyer
of the Station and/or the Assets whether now in effect or hereinafter adopted
and regardless of which party such Transfer Tax is imposed upon, (b) any FCC
filing fees incurred in connection with the assignment of the FCC Licenses to
Buyer, and (c) any fees and expenses incurred in connection with any filings
required to be made pursuant to the HSR Act.
14. Confidentiality. Subject to required disclosure to governmental
agencies, Seller and Buyer agree to maintain the confidentiality of this
Agreement. Buyer further agrees to use its best efforts to maintain the
confidentiality of all information and data provided to it by Seller, and
Seller further agrees to use its best efforts to maintain the confidentiality
of all information and data provided to it by Buyer.
15. Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed under and in accordance with the laws of the State
of New York, excluding the choice of law rules thereof.
16. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto and, in the case of the Seller, its
partners, agrees to use its commercially reasonable efforts to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments and obtain such further consents (including
governmental approvals), as may be necessary or reasonably requested in
connection with the consummation of the transactions contemplated hereby.
In case at any time after the Closing Date any further action is necessary to
carry out the purposes of this Agreement, including, without limitation, the
securing of consents of third parties, each party hereto shall use its best
efforts to take all such necessary action.
17. Notices. All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered (including delivery by overnight courier), mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by telegram, telex or facsimile transmission addressed as follows:
(i) If to Buyer:
United Television, Inc.
000 X. Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx
Attn: Xx. Xxxx X Xxxxxxxx
Chief Executive Officer/President
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
15
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(ii) If to Seller:
HSN, Inc.
00000 00xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx, L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxx, Xx.
Fax: (000) 000-0000
or such other address as the addressee may indicate by written notice.
Each notice, demand, request, or communication which shall be given
or made in the manner described above shall be deemed sufficiently given or
made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answer back being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
18. Section 1031 Exchange. If requested by Seller, Buyer agrees to
cooperate with Seller in completing an exchange qualifying the disposition of
the Assets for nonrecognition of gain under Section 1031 of the Internal
Revenue Code. The parties agree to execute such agreements and other
documents as may be necessary to complete and otherwise effectuate a
tax-deferred exchange by Seller.
19. Unwind Arrangements. In the event that a Closing occurs hereunder
prior to the receipt of a Final Order, and upon the receipt of an FCC order
requiring Buyer to return the Assets (including the FCC Licenses) to Seller
as a result of Seller's failure to comply with the Communications Act or the
rules and regulations of the FCC, Seller agrees that upon Seller's receipt of
the Assets (including the FCC Licenses), Seller shall return the Purchase
Price to Buyer. In such event, Seller and Buyer agree to cooperate to return
the Assets to Seller, the Purchase Price to Buyer and to otherwise place the
parties in the same positions as they were in immediately prior to the Closing
and to ensure that neither party has been otherwise economically damaged. The
term "Final Order" as used herein shall mean an FCC order or action as to
which the time for filing a request for administrative or judicial review, or
for instituting administrative review sua sponte, shall have expired without
any such filing having been made or notice of such review having been issued;
or, in the event of such filing or review sua sponte, as to which such
16
filing or review shall have been disposed of favorably to the grant and the
time for seeking further relief with respect thereto shall have expired
without any request for such further relief having been filed.
20. Miscellaneous. This Agreement may be executed in separate
counterparts, none of which need contain the signatures of all parties, each
of which shall be deemed to be an original and all of which taken together
constitute one and the same instrument. The Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior oral or written agreements, commitments or understandings
with respect to such matters. No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification
or discharge is sought.
* * * * *
17
If the foregoing is in accordance with our mutual understanding and
agreement, please so indicate by signing a copy of this Agreement in the
place indicated and returning it to me.
Sincerely yours,
SKMD BROADCASTING PARTNERSHIP
By: SILVER KING BROADCASTING OF
MARYLAND, INC., general partner
By:
Name:
Title:
Accepted and agreed to this ___
day of November __, 1997.
UNITED TELEVISION, INC.
By: ___________________________
Name:
Title:
JOINDER AGREEMENT
As a material inducement for the Buyer to enter into the foregoing
Asset Purchase Agreement of even date herewith, SKTV, Inc., ("Parent") and
the parent of the general partner of SKMD Broadcasting Partnership, hereby
joins in and agrees to be bound by the provisions of the Asset Purchase
Agreement as they relate to the Seller for the purposes of making the
representations and warranties set forth in Sections 4 and 13, the covenants
set forth in Sections 6, 14 and 16 and guaranteeing the obligations of the
Seller under Section 10.1. In addition, Parent acknowledges and agrees that
(i) any claim of Buyer arising under the Asset Purchase Agreement or under
any other documents called for thereunder (the "Other Documents") may be
asserted against Parent and (ii) Parent shall be jointly and severally liable
under the Asset Purchase Agreement and the Other Documents for any default in
the performance of the obligations of Seller under such documents or for any
breach by Seller of a representation, warranty, covenant or agreement
contained in such documents.
Dated as of the 11th day of November, 1997.
SKTV, Inc.
By:
Name:
Title:
HSN, INC.
Xxx XXX Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
November 18, 1997
United Television, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxx X Xxxxxxxx
President and Chief Executive Officer
Re: Television Station WHSW-TV, Baltimore, Maryland
Dear Xx. Xxxxxxxx:
This Amendment No. 1 to Asset Purchase Agreement (this "Amendment")
sets forth our mutual agreement regarding certain amendments to that certain
Asset Purchase Agreement dated November 11, 1997 (the "Purchase Agreement"),
between SKMD Broadcasting Partnership, a Delaware general partnership (the
"Partnership"), and United Television, Inc., a Delaware corporation ("Buyer").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings given such terms in the Purchase Agreement.
The Purchase Agreement is hereby amended as follows:
1. The introductory paragraph of the Purchase Agreement is hereby
deleted in its entirety and replaced with the following:
"This asset purchase agreement (the "Agreement") sets forth
our mutual agreement regarding the terms and conditions of the sale by SKMD
BROADCASTING PARTNERSHIP, a Delaware general partnership (the "Partnership"),
and SILVER KING BROADCASTING OF MARYLAND, INC., a Delaware corporation and a
general partner of the Partnership (the "General Partner"; together with the
Partnership, the "Seller"), of certain assets of Television Station WHSW-TV,
Channel 24, Baltimore, Maryland (the "Station") to UNITED TELEVISION, INC., a
Delaware corporation ("Buyer")."
2
2. By execution and delivery of this Amendment, the General
Partner hereby makes the representations and warranties contained in Section
4 of the Purchase Agreement, as amended hereby, as of the date hereof, and
agrees to be bound by the covenants and agreements of the Seller contained
in the Purchase Agreement.
3. Section 1(b) of the Purchase Agreement is hereby deleted in
its entirety and replaced with the following:
"(b) Lease Agreements. The following leases and agreement:
(i) that certain Lease dated as of July 1, 1989 (the "Tower Lease"), by and
between High Vision, Inc. and the General Partner; (ii) that certain Lease
dated as of March 6, 1985, as amended, by and between Xxxxx X. Xxxxxxx t/a
Xxxxxxx and WKJL-TV Channel 24 - Look and Live Ministries, a predecessor-in-
interest to Seller; and (iii) that certain Application for Service - Regulated
Services dated September 13, 1995, between Channel 24 and Xxxx Atlantic-
Maryland, Inc. (the leases and agreement described in clauses (i), (ii) and
(iii), collectively, the "Lease Agreements")."
4. Section 4.5 of the Purchase Agreement is hereby amended by
deleting the first sentence in its entirety and replacing it with the
following:
"The Assets are in good working condition, ordinary wear and
tear excepted; provided, however, the equipment for the former studio-
transmitter-link is no longer installed and operating, and the FCC
authorization therefor has been surrendered."
5. Section 4.1 of the Purchase Agreement is hereby deleted in its
entirety and replaced with the following:
"4.1 Organization of Seller. The Partnership is a
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Partnership has the partnership power and
authority to own, lease and operate the Assets, to carry on the Partnership's
business as now conducted, and to enter into and perform the terms of this
Agreement, and the transactions contemplated hereby. The General Partner is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The General Partner has the corporate power
and authority to own, lease and operate the Assets, to carry on the General
Partner's business as now conducted, and to enter into and perform the terms
of this Agreement, and the transactions contemplated hereby."
6. Section 4.3(a) is hereby amended by deleting the parenthetical
"(except the Tower Lease to which the General Partner is the lessee)"
therefrom.
7. Except as expressly amended by this Amendment, all of the
terms, covenants and conditions of the Purchase Agreement shall continue in
full force and effect.
8. This Amendment may be executed in separate counterparts, none
of
3
which need contain the signatures of all parties, each of which shall be
deemed to be an original and all of which taken together constitute one and
the same instrument.
* * * * * * * *
4
If the foregoing is in accordance with our mutual
understanding and agreement, please so indicate by signing a copy of this
Amendment in the place indicated and return it to me.
Sincerely yours,
SKMD BROADCASTING PARTNERSHIP
By: SILVER KING BROADCASTING
OF MARYLAND, INC., a general
partner
By:
Name:
Title:
SILVER KING BROADCASTING OF MARYLAND, INC.
By:
Name:
Title:
Accepted and Agreed to this 18th
day of November, 1997
UNITED TELEVISION, INC.
By:
Name:
Title:
JOINDER AGREEMENT
As a material inducement for the Buyer to enter into the foregoing
Amendment No. 1 to Asset Purchase Agreement of even date herewith (the
"Amendment"), SKTV, Inc. ("Parent"), the parent of Silver King Broadcasting
of Maryland, Inc. (the "General Partner"), hereby joins in and agrees to be
bound by the provisions of the Amendment as they relate to the Seller,
including the amendments to the representations and warranties set forth in
Section 4 of the Purchase Agreement. In addition, Parent acknowledges and
agrees that (i) any claim of Buyer against the General Partner arising under
the Purchase Agreement or under any other documents called for thereunder
(the "Other Documents") may be asserted against Parent and (ii) Parent shall
be jointly and severally liable under the Purchase Agreement and the Other
Documents for any default in the performance of the obligations of the
General Partner under such documents or for any breach by the General Partner
of a representation, warranty, covenant or agreement contained in such
documents.
Dated as of the 18th day of November, 1997.
SKTV, Inc.
By:
Name:
Title:
