<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACTS OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1999
COMMISSION FILE NUMBERS:
ACME Intermediate Holdings, LLC 333-40277
ACME Television, LLC 333-40281
----------------
ACME INTERMEDIATE HOLDINGS, LLC
and
ACME TELEVISION, LLC
(Exact name of registrants as specified in their charter)
----------------
<TABLE>
<CAPTION>
Delaware ACME Intermediate Holdings,LLC 52-2050589
Delaware ACME Television, LLC 52-2050588
<S> <C> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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2101 E. Fourth Street, Suite 202
Santa Ana, California, 92705
(714) 245-9499
(Address and Telephone number of Principal Executive Offices)
----------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
92.14% of the membership units of ACME Intermediate Holdings, LLC are owned
directly or indirectly by ACME Television Holdings, LLC. 100% of the membership
units of ACME Television, LLC are owned directly or indirectly by ACME
Intermediate Holdings, LLC. Such membership units are not publicly traded.
As of May 14, 1999, ACME Intermediate Holdings, LLC had outstanding 910,986
membership units, without par value, its only class of equity.
As of May 14, 1999, ACME Television, LLC had outstanding 200 membership units,
without par value, its only class of equity.
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<PAGE> 2
ACME INTERMEDIATE HOLDINGS, LLC
And
ACME TELEVISION, LLC
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER Page
------ ----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Introductory Comments..................................................................... 1
ACME INTERMEDIATE HOLDINGS, LLC and Subsidiaries and
ACME TELEVISION, LLC and Subsidiaries
Consolidated Balance Sheets as of
March 31, 1999 and December 31, 1998........................................ 2
Consolidated Statements of Operations and Members' Capital
for the Three Months Ended March 31, 1999
and March 31, 1998.......................................................... 3
Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1999
and March 31, 1998........................................................... 4
Notes to Consolidated Financial Statements...................................... 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................................................... 7
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK......................................................................... 10
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS......................................................................... 10
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.......................................................... 10
</TABLE>
<PAGE> 3
ACME INTERMEDIATE HOLDINGS, LLC
AND
ACME TELEVISION, LLC
This document contains forward-looking statements. In addition, when used in
this document, the words "intends to", "believes", anticipates", "expects" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to a number of risks and uncertainties. Actual results in
the future could differ materially and adversely from those described in the
forward-looking statements. Differences could come about as a result of various
important factors including but not limited to: the impact of changes in
national and regional economies, successful integration of acquired television
stations, completion of pending acquisitions, pricing fluctuations in local and
national advertising, implementation of Year 2000 compliance measures, and
volatility in programming costs. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking statements
that may be made to reflect any future events or circumstances.
CERTAIN DEFINITIONS
DMA ............. Designated Market Area. There are 211 DMAs in the United
States with each county in the continental United States
assigned uniquely to one DMA. Ranking of DMAs is based upon
Nielsen Media Research estimates of the number of television
households.
LMA ............. Local marketing agreement, time brokerage agreement or
licensee pursuant to which the broadcaster provides similar
arrangement between a broadcaster and a station programming
to, sells advertising time for and funds operating expenses
for the applicable station, manages certain station
activities, and retains the advertising revenues of such
station, in exchange for fees paid to the licensee.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements Important Explanatory Note:
This integrated Form 10-Q is filed pursuant to the Securities Exchange Act of
1934, as amended, for each of ACME Intermediate Holdings, LLC ("ACME
Intermediate") and its subsidiary, ACME Television, LLC ("ACME Television").
Separate financial information has been provided for each entity and, where
appropriate, separate disclosure. Unless the context requires otherwise,
references to the "Company" refer to ACME Intermediate Holdings, LLC and its
consolidated subsidiaries, and references to "ACME Television" refer to ACME
Television, LLC and its consolidated subsidiaries.
ACME Intermediate Holdings, LLC is a holding company with no separate operations
apart from its operating subsidiary, ACME Television, LLC. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. It is suggested that these Consolidated
Financial Statements be read in conjunction with the financial information set
forth in the Annual Report on Form 10 K of ACME Intermediate, LLC and ACME
Television, LLC for the fiscal year ended December 31, 1998.
<PAGE> 4
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF DECEMBER 31,
------------------------------ ----------------------------
1999 1998
------------------------------ ----------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS TELEVISION HOLDINGS TELEVISION
------------ ---------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 938 $ 938 $ 953 $ 953
Accounts receivable, net 9,009 9,009 10,609 10,609
Due from affiliates 9 100 4 131
Current portion of programming rights 6,591 6,591 6,357 6,357
Prepaid expenses and other current assets 663 663 414 414
---------------------------- ----------------------------
Total current assets 17,210 17,301 18,337 18,464
Property and equipment, net 18,420 18,420 16,441 16,441
Programming rights, net of current portion 6,858 6,858 8,046 8,046
Deposits 616 616 36 36
Deferred income taxes 3,811 3,811 3,811 3,811
Intangible assets, net 229,528 229,528 222,987 222,987
Other assets 10,819 9,233 17,187 15,592
---------------------------- ----------------------------
Total assets $ 287,262 $ 285,767 $ 286,845 $ 285,377
============================ ============================
LIABILITIES AND MEMBERS' CAPITAL
Current Liabilities:
Bank borrowings $ 12,900 $ 12,900 $ 8,000 $ 8,000
Accounts payable 3,187 3,187 4,425 4,425
Accrued liabilities 4,892 4,892 4,210 4,210
Current portion of programming rights
payable 6,913 6,913 7,649 7,649
Current portion of obligations under
lease 1,304 1,304 1,273 1,273
Other current liabilities 35 -- -- --
---------------------------- ----------------------------
Total current liabilities 29,231 29,196 25,557 25,557
Programming rights payable, net of
current portion 5,804 5,804 6,512 6,512
Obligations under lease, net of
current portion 4,348 4,348 4,199 4,199
Other liabilities 833 833 1,125 1,125
Deferred income taxes 30,471 30,471 31,241 31,241
Senior discount notes 10 7/8% 149,298 149,298 145,448 145,448
Senior secured notes 12% 43,436 -- 42,051 --
---------------------------- ----------------------------
Total liabilities 263,421 219,950 256,133 214,082
---------------------------- ----------------------------
Members' capital 60,902 95,063 58,402 92,563
Accumulated deficit (37,061) (29,246) (27,690) (21,268)
---------------------------- ----------------------------
Total members' capital 23,841 65,817 30,712 71,295
Total liabilities and members' capital $ 287,262 $ 285,767 $ 286,845 $ 285,377
============================ ============================
</TABLE>
<PAGE> 5
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND MEMBERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
----------------------------------------------------------------------
1999 1998
-------------------------------- ---------------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS, LLC TELEVISION, LLC HOLDINGS, LLC TELEVISION, LLC
------------- --------------- ------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net Revenues $ 11,123 $ 11,123 $ 7,757 $ 7,757
-------- -------- -------- --------
Operating expenses:
Programming and promotion 4,197 4,197 3,002 3,002
Production and engineering 1,182 1,182 868 868
Selling, general and administrative 6,272 6,272 2,670 2,670
Depreciation and amortization 3,766 3,766 848 848
-------- -------- -------- --------
Total operating expenses 15,417 15,417 7,388 7,388
-------- -------- -------- --------
Operating income (loss) (4,294) (4,294) 369 369
Other Income (Expenses)
Interest income 8 8 45 45
Interest expense (5,830) (4,437) (4,864) (3,652)
-------- -------- -------- --------
Net loss before income taxes (10,116) (8,723) (4,450) (3,238)
Income tax benefit (expense) 745 745 (20) (20)
-------- -------- -------- --------
Net Loss $ (9,371) $ (7,978) $ (4,470) $ (3,258)
Parent's contribution 2,500 2,500 6,000 6,000
Members' Capital at the
beginning of the period 30,712 71,295 44,721 80,098
-------- -------- -------- --------
Members' Capital at the
end of the period $ 23,841 $ 65,817 $ 46,251 $ 82,840
======== ======== ======== ========
</TABLE>
<PAGE> 6
ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
----------------------------------------------------------------
MARCH 31, 1999 MARCH 31, 1998
------------------------------ ------------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS, LLC TELEVISION, LLC HOLDINGS, LLC TELEVISION, LLC
------------------------------ ------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(9,371) $(7,978) $(4,470) $(3,258)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 3,766 3,766 848 848
Amortization of program rights 1,582 1,582 1,009 1,009
Amortization of debt issuance cost 128 119 -- --
Amortization of discount on Senior Discount Notes 3,850 3,850 3,463 3,463
Amortization of discount on Senior Secured Notes 1,384 -- 1,212 --
Non-cash compensation expense - Management Carry Units 2,500 2,500 -- --
Deferred taxes (770) (770) -- --
Changes in assets and liabilities:
(Increase) decrease in accounts receivables, net 1,600 1,600 (318) (318)
(Increase) decrease in prepaid expenses (249) (249) 743 743
(Increase) decrease in due from affiliates (5) 31 -- --
Increase in deposits (80) (80) -- --
(Increase) other assets (2,428) (2,428) -- --
Decrease in accounts payable (1,238) (1,238) (42) (42)
Increase in accrued expenses 682 682 442 442
Payments on programming rights payable (2,072) (2,072) (1,151) (1,151)
Decrease in other liabilities (256) (292) -- --
------------------------ ------------------------
Net cash provided by (used in) operating activities (977) (977) 1,736 1,736
------------------------ ------------------------
Cash flows from investing activities:
Purchase of property and equipment (2,171) (2,171) (2,970) (2,970)
Purchase of station interests (1,009) (1,009) (2,225) (2,225)
Cash acquired in acquisition - St. Louis -- -- 779 779
Deposits relating to station acquisitions (500) (500) (2,500) (2,500)
------------------------ ------------------------
Net cash used in investing activities (3,680) (3,680) (6,916) (6,916)
------------------------ ------------------------
Cash flows from financing activities:
Increase in notes payable to bank 4,900 4,900 -- --
Payments on capital leases (258) (258) (70) (70)
------------------------ ------------------------
Net cash provided by (used in) financing activities (4,642) (4,642) (70) (70)
------------------------ ------------------------
Net increase (decrease) in cash (15) (15) (5,250) (5,250)
Cash at beginning of period 953 953 8,820 8,820
------------------------ ------------------------
Cash at end of period $ 938 $ 938 $ 3,570 $ 3,570
======================== ========================
Cash Payments for:
Interest 372 372 24 24
Taxes 25 25 -- --
Non-Cash Transactions:
Purchases of property and equipment in exchange
for capital lease obligations 438 438 -- --
Exchange of note receivable and option deposit as
purchase consideration for station interest 7,000 7,000 -- --
Contribution of Parent for membership units $ -- $ -- $ 6,000 $ 6,000
======================== ========================
</TABLE>
<PAGE> 7
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1999 and March 31, 1998
(Unaudited)
(1) DESCRIPTION OF THE BUSINESS AND FORMATION
Presentation / Interim Financial Statements
Financial statements are presented for each of ACME Intermediate Holdings, LLC
and its subsidiary, ACME Television, LLC. Unless the context requires otherwise,
references to the "Company" refers to ACME Intermediate Holdings, LLC and its
consolidated subsidiaries and references to "ACME Television" refer to ACME
Television, LLC and its consolidated subsidiaries. Segment information is not
presented since all of the Company's revenue is attributed to a single
reportable segment. Certain amounts previously reported for 1998 have been
reclassified to conform to the 1999 financial statement presentation.
The accompanying consolidated financial statements for the three months ended
March 31, 1999 and 1998 are unaudited and have been prepared in accordance with
generally accepted accounting principles, the instructions to this Form 10-Q and
Article 10 of Regulation S-X. In the opinion of management, such financial
statements include all adjustments (consisting of normal recurring accruals)
considered necessary for the fair presentation of the financial position and the
results of operations, and cash flows for these periods. As permitted under the
applicable rules and regulations of the Securities and Exchange Commission.
These financials statements do not include all disclosures and footnotes
normally included with audited consolidated financial statements, and
accordingly, should be read in conjunction with the consolidated financial
statements, and the notes thereto, included in the integrated Annual Report on
Form 10-K for ACME Television and ACME Intermediate for the year ended December
31, 1998. The results of operations presented in the accompanying financial
statements are not necessarily indicative of the results that may be expected
for the year ending December 31, 1999.
Nature of Business
ACME Intermediate Holdings, LLC is a holding company with no assets or
independent operations other than its wholly-owned subsidiary, ACME Television,
LLC. ACME Television, through is subsidiaries, owns and/or operates six
commercially licensed broadcast television stations (the "Stations" or
"Subsidiaries") located throughout the United States: Station KPLR (serving the
St. Louis DMA), Station KWBP (serving the Portland, Oregon DMA), Station KUWB
(serving the Salt Lake City DMA), Station KWBQ (serving the Albuquerque, NM
DMA), Station WBXX (serving the Knoxville DMA) and WTVK (serving the Ft.
Myers/Naples DMA).
(2) ACQUISITIONS
On March 13, 1998, ACME Missouri completed its acquisition of Koplar
Communications, Inc. ("KCI") and acquired all of the outstanding stock of KCI
for a total consideration of approximately $146.3 million. The acquisition was
accounted for using the purchase method. Pursuant to an interim LMA entered into
with KCI in connection with the acquisition, effective October 1, 1997 all
revenues and operating expenses of the station for the period from September 30,
1997 to March 31, 1998 (the effective date of the purchase transaction) are
included in ACME Television's historical operating results. The purchase
transaction was recorded on the consolidated balance sheet of ACME Television
effective March 31, 1998 and beginning on April 1, 1998, ACME Television's
results includes the amortization of all intangible assets related to the
acquisition.
On June 30, 1998, ACME Television acquired substantially all the assets and
assumed certain liabilities of WTVK-Channel 46 serving the Fort Myers/Naples,
Florida marketplace for approximately $14.5 million in cash and 1,047 membership
units in ACME Intermediate's parent, ACME Television Holdings, LLC ("ACME
Parent"), (valued at approximately $1.0 million). The acquisition was accounted
for using the purchase method and the value of the Parent membership units
issued was treated as a contribution from ACME Parent to ACME Intermediate and
then from ACME Intermediate to ACME Television. The excess of the purchase price
over the fair value of the net assets assumed of approximately $15.5 million was
recorded as an intangible asset and is being amortized over a period of 20
years. In connection with the acquisition, ACME Television entered into an LMA
agreement with WTVK wherein ACME Television, effective March 3, 1998, retained
all revenues generated by the station, bore all operating expenses of the
station and had the right to program the station (subject to WTVK's ultimate
authority for programming) and the station's existing programming commitments.
The LMA terminated upon the consummation of the acquisition. Consequently, under
the LMA the revenues and operating expenses of the station are included in the
Company's results of operations from March 3, 1998 to June 30, 1998. The
purchase transaction was recorded on the consolidated balance sheet of the
Company on June 30, 1998 and the Company's results of operations includes
revenues and expenses (including amortization of intangible assets) beginning
July 1, 1998.
<PAGE> 8
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
(2) ACQUISITIONS (CONTINUED)
On February 16, 1999, ACME Television acquired the remaining 51% interest in
Station KUPX in exchange for the payment of $7.0 million (consisting of (i) $3.0
million paid in December 1997 for an option to acquire the remaining 51% of
Station KUPX and (ii) $4.0 million in repayment of a loan from ACME Parent to
the sellers of this station) plus approximately $1.0 million in cash. In March
1999, the FCC approved the swap of station KUPX for station KUWB, which ACME
Television has been operating under an LMA since April 1998. Station KUPX has
been operated by the current owner of Station KUWB since May 1998 under a
reciprocal LMA agreement. The swap is expected to close in May 1999, at which
time the LMAs will terminate. ACME Television intends to account for the swap as
a non-monetary transaction using its historical cost and believes that the fair
value of station KUWB approximates the historical cost of station KUPX.
On February 19, 1999, ACME Television entered into an agreement in principle
with Ramar Communications ("Ramar") to acquire the assets of Ramar's station,
KASY TV-50, serving the Albuquerque, NM, market for approximately $27 million.
In a related transaction, ACME Television will concurrently sell to Ramar the
broadcast license to operate station KWBQ, also serving the Albuquerque market,
for $100,000. An affiliate of ACME Parent will receive an option from Ramar to
repurchase the station's license for $100,000 plus certain reimbursements for
capital equipment purchased by Ramar for KWBQ. This option, which can be
exercised any time within 5 years from the date of the sale of KWBQ, is
expected to be assigned to ACME Television upon completion of the KASY and KWBQ
transactions. Concurrent with these transactions, ACME Television will also
enter into a 10-year LMA agreement with Ramar to operate KWBQ. This transaction
is subject to FCC approval.
(3) RELATED PARTY TRANSACTIONS
On February 15, 1999, ACME Parent acquired a 25% membership interest in Sylvan
Tower, LLC - an entity formed for the sole purpose of building digital
transmission facilities to service the Portland, Oregon marketplace - for
approximately $2.5 million. ACME Parent subsequently entered into an agreement
to enter into a long-term lease with ACME Television of Oregon, LLC (a
subsidiary of ACME Television ("ACME Oregon")) which allows station KWBP to
install and operate a digital television antenna and transmitter at the site. In
connection with the acquisition of this lease, ACME Oregon paid to ACME Parent
approximately $2.5 million, which has been treated as deferred tower rent and is
included in other non-current assets as of March 31, 1999.
(4) CERTAIN COMPENSATION ARRANGEMENTS
ACME Parent has issued Management Carry Units ("MCUs") to certain founding
members of management. These units entitle the holders to certain distribution
rights, payable by ACME Parent, upon achievement of certain returns by
non-management investors and are subject to partial forfeiture or repurchase by
ACME Parent in the event of termination of each individual's employment by ACME
Parent under certain specified circumstances. These MCUs are accounted for as a
variable compensation plan, resulting in an expense when it is probable that any
such distributions will be made. Inasmuch as these MCUs represent a non-cash
expense to the Company, any expense incurred by the Company shall be deemed to
have been funded by a capital contribution from ACME Parent. For the quarter
ended March 31, 1999 the Company has recorded compensation expense and a
corresponding capital contribution of $2.5 million related to the MCUs. For the
three months ended March 31, 1998, no expense or related capital contribution
was recorded.
(5) SUBSEQUENT EVENTS
On April 23, 1999, ACME Television entered into a definitive agreement with
Paxson Communications Corporation ("Paxson") pursuant to which ACME Television,
or its designated subsidiaries, will acquire for $40.0 million, substantially
all of the assets of Paxson relating to Station WDPX, Channel 26, which is
licensed to broadcast in the Dayton, Ohio market, Station WPXG, Channel 14,
which is licensed to broadcast in the Green Bay, Wisconsin market, and Station
WPXU, Channel 23, which is licensed to broadcast in the Champaign-Decatur,
Illinois market.
Of the $40.0 million acquisition cost, $32.0 million was paid on April 23, 1999,
and $8.0 million will be payable upon receipt of FCC approval for the transfer
of the broadcast licenses. Related to this transaction, ACME Television has
entered into an interim LMA agreement for each of these stations whereby ACME
Television will operate the three stations being acquired effective June 2,
1999. These LMAs will terminate upon the approvals from the FCC and the payment
by ACME Television of the remaining $8.0 million purchase consideration. During
the LMA Period, ACME Television will retain all revenues generated from the sale
of all advertising time
<PAGE> 9
within programs supplied by ACME to each station and the sale of all local
advertising time within all network provided programming for each station. ACME
will also reimburse Paxson for certain operating expenses of each station and
have the right to provide programming for each station subject to Paxson's
ultimate authority for each station and each station's existing programming
commitments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The operating revenues of ACME Television are derived primarily from the sale of
advertising time and, to a lesser extent, from production revenues and from
barter transactions for goods and services. Revenues depend on the ability of
the Company to provide popular programming which attracts audiences in the
demographic groups targeted by advertisers, thereby allowing the Company to sell
advertising time at satisfactory rates. Revenue also depends significantly on
factors such as the national and local economy and the level of local
competition.
Net revenues of the Company are generally higher during the fourth quarter of
each year, primarily due to increased expenditures by advertisers in
anticipation of holiday season consumer spending and an increase in viewership
during this period. The Company generally pays commissions to advertising
agencies on local, regional and national advertising and to national sales
representatives on national advertising. Net revenues reflect deductions from
gross revenues for commissions payable to advertising agencies and national
sales representatives.
The Company's primary operating expenses are employee compensation, programming
costs, advertising and promotion expenditures and depreciation and amortization.
Changes in compensation expense result primarily from increases in total
staffing levels, from adjustments to fixed salaries based on employee
performance and inflation and, to a lesser extent, from changes in sales
commissions paid based on levels of advertising revenues.
Programming expense consists primarily of amortization of program broadcast
rights, which is generally matched against the anticipated revenues expected to
be generated by the programs. The Company purchases first run and off-network
syndicated programming to augment its WB Network provided programming on an
ongoing basis. Barter expense generally offsets barter revenue and reflects the
fair market value of goods and services received. Advertising and promotion
expenses primarily consist of media and related production costs in connection
with the Company's promotion of its stations and programs. This amount is net of
any WB Network co-op reimbursement received or due in connection with such
advertisements.
Results of Operations
The following table sets forth certain historical financial data for the periods
indicated:
<TABLE>
<CAPTION>
March 31,
--------------------------
1999 1998
---------- ----------
(In thousands)
<S> <C> <C>
Statement of Operations Data:
Net revenues $11,123 $ 7,757
Operating income (loss) (4,294) 369
Net loss - ACME Television (7,978) (3,258)
Net loss - ACME Intermediate (9,371) (4,470)
Statement of Cash Flow Data:
Net cash provided by (used in)
operating activities (977) 1,736
Net cash used in investing
activities (3,680) (6,916)
Net cash provided by (used in)
financing activities 4,642 (70)
Certain Other Financial Data:
Broadcast cash flow (1) 2,633 1,806
Adjusted EBITDA (2) 1,911 1,446
</TABLE>
- ----------------
(1) "Broadcast cash flow" is defined as operating income, plus depreciation
and amortization, program amortization and corporate overhead, less
program payments - the latter as adjusted to reflect reductions for
impaired or expired rights in connection with acquisitions. The Company
has included broadcast cash flow data because the Company believes such
data is a useful measure for evaluating the operating performance of
the Company's stations. Broadcast cash flow eliminates the effect of
depreciation and amortization which relate to acquisitions under the
purchase method of accounting, the impact of accelerated program
amortization and the impact of corporate expenses, and allows for an
evaluation of the operating performance of the Company's stations
relative to that of the Company's competitors which may not have
similar depreciation, amortization or corporate structures. The
Company's definition of broadcast cash flow may not be comparable to
similarly titled measures presented by other companies. Broadcast cash
flow is not, and should not be used as an indicator or alternative to
operating income, net loss or cash flow as reflected in the
consolidated financial statements, is not a measure of financial
performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
<PAGE> 10
(2) "Adjusted EBITDA" is defined as operating income, plus depreciation and
amortization and program amortization, less program payments - the
latter as adjusted to reflect reductions for impaired or expired rights
in connection with acquisitions. The Company has included broadcast
cash flow data because the Company believes such data is a useful
measure for evaluating the operating performance of the Company's
stations. Adjusted EBITDA is used to pay principle and interest on
long-term debt and to fund capital expenditures. Adjusted EBITDA is
not, and should not be used as an indicator or alternative to operating
income, net loss or cash flow as reflected in the consolidated
financial statements, is not a measure of financial performance under
generally accepted accounting principles and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
Net revenue increased to $11.123 million for the quarter compared to $7.757
million in the same period of 1998, or 43%. The significant increase in net
revenues is attributable to growth at every station, including those that were
in operation during the first quarter of 1998 and those which were signed-on or
acquired after March 31, 1998.
Operating costs for the quarter ended March 31, 1999 were $15.417 million, an
increase of $8.029 million (109%) over the corresponding quarter of 1998.
Programming, promotion, production and engineering costs increased by $1.509
million (39%), in the aggregate, during the quarter due primarily to the
continued development and growth of the Company's stations. Selling, general
and administrative expenses increased $3.602 million on a year-to-year basis
due primarily to a first-time $2.5 million non-cash compensation expense
recorded in 1999 relating to ACME Parent Management Carry Units issued in June
1997 to certain founding executives of the Company and to increased sales costs
and corporate staffing to support the significant growth in the Company's
business. Depreciation and amortization increased by $2.918 million on a
year-to-year basis due primarily to the amortization of intangible assets at
Station KPLR and Station KUWB, which the Company began to amortize subsequent
to March 31, 1998, and to higher depreciation of property, plant and equipment
related to the Company's continued build-out and upgrade of Station studio and
broadcast facilities since the first quarter of 1998.
Interest expense for ACME Television for the three months ended March 31, 1999
was $4.437 million compared to interest expense of $3.652 million for the
corresponding quarter of the prior year. This increase of $785,000 (21%) is
attributable primarily to increases in the balance of ACME Television's Senior
Discount Notes due to the continued amortization of original issuance discount,
interest on notes payable to bank in connection with the June 1998 WTVK
acquisition and other advances during the first quarter of 1999 and interest on
increased capital lease financings.
Interest expense for ACME Intermediate for the three months ended March 31, 1999
was $5.830 million compared to interest expense of $4.864 million for the
corresponding quarter of the prior year. This increase of $966,000 (20%) is
attributable primarily to the increases in ACME Television's interest expense
described above and to increases in the balance of ACME Intermediate's Senior
Secured Notes due to continued amortization of original issuance discount.
The Company recorded a net income tax benefit of $745,000 of which $770,000
related to Station KPLR. This tax benefit relates to a net operating loss
carryforward and a reduction of a deferred tax liability primarily related to
Station KPLR's FCC license.
ACME Intermediate's and ACME Television's net losses for the quarter ended March
31, 1999 were $9,371 million and $7.978, respectively, compared to net losses
for the first quarter of 1998 of $4.470 million and $3.258 million,
respectively. These increased net losses of $4.901 million for ACME Intermediate
and $4.720 million for ACME Television are attributable to increased interest
expense, amortization of intangibles, and the non-cash compensation expense for
the Management Carry Units, as described above, net of improved operating
results (exclusive of depreciation and amortization) at the stations.
Broadcast cash flow for the quarter ended March 31, 1999 increased $827,000, or
46%, to $2.633 million compared to $1.806 million in the corresponding period in
1998. This significant increase was driven primarily by the increased revenue
gains at all stations which outpaced the growth in operating expenses. As a
percentage of net revenues, broadcast cash flow margin increased to 23.7% for
the three months ended March 31, 1999 from 23.3% for the three months ended
March 31, 1998.
Adjusted EBITDA for the quarter ended March 31, 1999 increased $465,000, or 32%,
to $1.911 million compared to $1.446 million in the first quarter of 1998. This
increase was primarily driven by increased broadcast cash flow of $827,000,
offset by an increase in year-to-year corporate overhead expense during the
quarter of $132,000.
Liquidity and Capital Resources
Cash flows used in operating activities for ACME Television and ACME
Intermediate were $986,000 for the quarter-ended March 31, 1999 compared to cash
flows provided by operating activities of $1.737 million for quarter ended March
31, 1998. These decrease were primarily due the payment of certain liabilities
assumed and increases in prepaid expenses and other assets (current and
non-current) in connection with the Station KPLR and Station WTVK acquisitions.
Cash flows used by the Company in investing activities during the first quarter
of 1999 were $3.671 million and related primarily to additions to property and
equipment, including approximately $2.0 million in aggregate purchase price for
the Company's studio facilities for Stations KWBP and KWBQ. Cash flows used by
the Company in investing activities in the first quarter of 1998 of $6.916
million related primarily to purchases to the build-out of Station KUWB's studio
and transmission facilities and to deposits in connection with the acquisition
of WTVK ($2.5 million) and the acquisition of a construction permit serving the
Springfield, Arkansas marketplace for $2.2 million (later sold in the third
quarter of 1998 for $3.3 million).
<PAGE> 11
Cash flows provided by financing activities for the Company of $4,642,000
related primarily to net bank borrowings in 1999, as compared to cash flows used
by financing activities in 1998 of $70,000 for capital lease repayments.
At March 31, 1999, ACME Television's existing credit agreement allows for
revolving credit borrowings of up to a maximum of $40,000,000, dependent upon
its meeting certain financial ratio tests as set forth in the credit agreement.
The revolving credit facility can be used to fund future acquisitions of
broadcast stations and for general corporate purposes. At March 31, 1999, $12.9
million was outstanding and $27.1 million was available under the facility. The
interest rate on this outstanding principal amount was 8.25% per annum at March
31, 1999. In April 1999, the Company borrowed approximately $25 million against
this facility to finance the acquisition of the three Paxson stations discussed
in Note 5 to the financial statements in this document.
ACME Television's 10 7/8% Senior Discount Notes, issued in September 1997, do
not accrue cash interest until October 1, 2000 with the first semi-annual
payment of interest due on March 31, 2001. ACME Intermediate's 12% Senior
Secured Notes, also issued in September 1997, do not accrue cash interest until
October 1, 2002 with the first semi-annual payment of interest due on March 31,
2003.
The Company believes that internally generated funds from operations and
borrowings under its credit agreement, if necessary, will be sufficient to
satisfy the Company's cash requirements for its existing operations for at least
the next twelve months. The Company expects that any future acquisitions of
television stations would be financed through funds generated from operations,
through borrowings under the existing credit agreement and through additional
debt and equity financings. However there is no guarantee that such additional
debt and/or equity financing and/or equity contributions by ACME Parent will be
available or available at rates acceptable to the Company.
Year 2000
The Year 2000 ("Y2K") issue is a result of computer software applications using
a two-digit format, as opposed to a four-digit format, to indicate the year.
These computer software applications will then be unable to uniquely distinguish
dates beyond the year 1999, which could cause a system failure or other computer
errors.
ACME Television is in the process of evaluating potential Year 2000 (Y2K) issues
for both its information technology (IT) and non-IT systems (non-IT systems
include but are not limited to, those systems that are not commonly thought of
as IT systems, such as telephone/PBX systems, fax machines, editing equipment,
cameras, microphones, etc). All internal software and hardware is purchased,
leased or licensed from third party vendors. Most of the Company's station
facilities are new or have been recently upgraded and the Company has polled all
of its significant software vendors and has been advised by them that their
software is Y2K compliant.
The Company has completed its assessment, planning and testing phases, and has
commenced the final phase of its Y2K project-implementation. During this phase,
the Company will fix, retest and implement critical applications that were
discovered to be Y2K deficient during the preceding phases.
At this point in time, the Company is not aware of any additional significant
upgrades or changes that will need to be made to its internal software and
hardware to become Y2K ready, nor is it aware of any material supplier with Y2K
readiness problem, but this is subject to change as the compliance testing
process continues. The Company expects to be able to implement the systems and
programming changes necessary to address Y2K IT and non-IT readiness issues and,
based on preliminary estimates, does not believe that the costs associated with
such actions will have a material effect on the Company's results of operations
or financial condition. There can be no assurance, however, that there will not
be a delay in, or increased costs associated with the implementation of such
changes.
Pending Adoption of Accounting Standard
The FASB (Financial Accounting Standards Board) has issued FASB statement No.
133 "Accounting for Derivative Instruments and Hedging Activities" which the
Company will be required to adopt for its quarter ending June 30, 1999. This
pronouncement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
<PAGE> 12
contracts, (collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This pronouncement is not expected to have a significant impact
on the Company's financial statements since the Company currently has no
derivative instruments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ACME Television's revolving credit facility has a variable interest rate.
Accordingly, the Company's interest expense can be materially affected by future
fluctuations in the applicable interest rate.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation incidental
to the conduct of its business. The Company maintains comprehensive general
liability and other insurance which it believes to be adequate for the purpose.
The Company is not currently a party to any lawsuit or proceeding that
management believes would have a material adverse affect on its financial
condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
3.1 Certificate of Formation of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 3.1 of ACME Intermediate Holdings,
LLC's Registration Statement on Form S-4, File No. 333-40277 filed on
November 14, 1997 (the "Intermediate Registration Statement").
3.2 Limited Liability Company Agreement of ACME Intermediate Holdings,
LLC, incorporated by reference to Exhibit 3.2 of Intermediate
Registration Statement.
3.3 Certificate of Formation of ACME Television, LLC, incorporated by
reference to Exhibit 3.1 of ACME Television, LLC's Registration
Statement on Form S-4, File No. 333-40281, filed on November 14, 1997
(the "Television Registration Statement").
3.4 Limited Liability Company Agreement of ACME Television, LLC,
incorporated by reference to Exhibit 3.2 of the Television
Registration Statement.
4.1 Indenture, dated September 30, 1997, by and among ACME Intermediate
Holdings, LLC and ACME Intermediate Finance, Inc., as Issuers, and
Wilmington Trust Company, incorporated by reference to Exhibit 4.2 of
the Intermediate Registration Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC, incorporated by
reference to Exhibit 4.3 of the Intermediate Registration Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME Television, LLC
and ACME Finance Corporation, as Issuers, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Exhibit 4.1 of the Television Registration Statement.
4.5 First Supplemental Indenture, dated February 11, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by reference
to Registrant's Quarterly Report on Form 10-Q for the period ending
March 31, 1998.
4.6 Second Supplemental Indenture, dated March 13, 1998, by and among ACME
Television, LLC and ACME Finance Corporation, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Registrant's Quarterly Report on Form 10-Q for the period ending March
31, 1998.
4.7 Third Supplemental Indenture, dated August 21, 1998, by and among ACME
Television, LLC and ACME Finance Corporation, as issuers, the
Guarantors named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the period
ending September 30, 1998.
10.1* Asset Purchase Agreement, dated February 19, 1999, by and between ACME
Television of New Mexico, LLC and ACME Television Licenses of New
Mexico, LLC and Ramar Communications II, Ltd., with respect to
television station KWBQ-TV, Santa Fe, New Mexico.
10.2* Asset Purchase Agreement, dated February 19, 1999, by and between ACME
Television of New Mexico, LLC and ACME Television Licenses of New
Mexico, LLC and Ramar Communications II, Ltd., with respect to
television station KASY-TV, Albuquerque, New Mexico.
10.3* Membership Purchase Agreement, dated July 10, 1998, by and between
Roberts Broadcasting of Salt Lake City, L.L.C., Michael V. Roberts and
Steven C. Roberts and ACME Television Holdings, LLC for a majority
interest in Roberts Broadcasting of Salt Lake City, L.L.C.
10.4* Asset Exchange Agreement, dated April 20, 1998 by and among Paxson
Salt Lake City License, Inc., Paxson Communications of Salt Lake
City-30, Inc. and Roberts Broadcasting of Salt Lake City, L.L.C.
27.1* Financial Data Schedule for ACME Intermediate Holdings, LLC, available
in electronic format as filed by the Registrant.
27.2* Financial Data Schedule for ACME Television, LLC, available in
electronic format as filed by the Registrant.
- -------------
* Filed herewith
(b) REPORTS ON FORM 8-K.
The Company filed no reports on Form 8-K during the three months ended March 31,
1999.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME TELEVISION, LLC.
Date: May 14, 1999 By: /s/ Doug Gealy
-------------------------------
Doug Gealy, President
Date: May 14, 1999 By: /s/ Thomas D. Allen
-------------------------------
Thomas D. Allen
Executive Vice President / CFO
(principal financial officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME INTERMEDIATE HOLDINGS, LLC.
Date: May 14, 1999 By: /s/ Doug Gealy
-------------------------------
Doug Gealy, President
Date: May 14, 1999 By: /s/ Thomas D. Allen
-------------------------------
Thomas D. Allen
Executive Vice President / CFO
(principal financial officer)
<PAGE> 14
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Certificate of Formation of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 3.1 of ACME Intermediate Holdings,
LLC's Registration Statement on Form S-4, File No. 333-40277 filed on
November 14, 1997 (the "Intermediate Registration Statement").
3.2 Limited Liability Company Agreement of ACME Intermediate Holdings,
LLC, incorporated by reference to Exhibit 3.2 of Intermediate
Registration Statement.
3.3 Certificate of Formation of ACME Television, LLC, incorporated by
reference to Exhibit 3.1 of ACME Television, LLC's Registration
Statement on Form S-4, File No. 333-40281, filed on November 14, 1997
(the "Television Registration Statement").
3.4 Limited Liability Company Agreement of ACME Television, LLC,
incorporated by reference to Exhibit 3.2 of the Television
Registration Statement.
4.1 Indenture, dated September 30, 1997, by and among ACME Intermediate
Holdings, LLC and ACME Intermediate Finance, Inc., as Issuers, and
Wilmington Trust Company, incorporated by reference to Exhibit 4.2 of
the Intermediate Registration Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC, incorporated by
reference to Exhibit 4.3 of the Intermediate Registration Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME Television, LLC
and ACME Finance Corporation, as Issuers, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Exhibit 4.1 of the Television Registration Statement.
4.5 First Supplemental Indenture, dated February 11, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company, incorporated by reference
to Registrant's Quarterly Report on Form 10-Q for the period ending
March 31, 1998.
4.6 Second Supplemental Indenture, dated March 13, 1998, by and among ACME
Television, LLC and ACME Finance Corporation, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Registrant's Quarterly Report on Form 10-Q for the period ending March
31, 1998.
4.7 Third Supplemental Indenture, dated August 21, 1998, by and among ACME
Television, LLC and ACME Finance Corporation, as issuers, the
Guarantors named therein, and Wilmington Trust Company, incorporated by
reference to Registrant's Quarterly Report on Form 10-Q for the period
ending September 30, 1998.
10.1* Asset Purchase Agreement, dated February 19, 1999, by and between ACME
Television of New Mexico, LLC and ACME Television Licenses of New
Mexico, LLC and Ramar Communications II, Ltd., with respect to
television station KWBQ-TV, Santa Fe, New Mexico.
10.2* Asset Purchase Agreement, dated February 19, 1999, by and between ACME
Television of New Mexico, LLC and ACME Television Licenses of New
Mexico, LLC and Ramar Communications II, Ltd., with respect to
television station KASY-TV, Albuquerque, New Mexico.
10.3* Membership Purchase Agreement, dated July 10, 1998, by and between
Roberts Broadcasting of Salt Lake City, L.L.C., Michael V. Roberts and
Steven C. Roberts and ACME Television Holdings, LLC for a majority
interest in Roberts Broadcasting of Salt Lake City, L.L.C.
10.4* Asset Exchange Agreement, dated April 20, 1998 by and among Paxson
Salt Lake City License, Inc., Paxson Communications of Salt Lake
City-30, Inc. and Roberts Broadcasting of Salt Lake City, L.L.C.
27.1* Financial Data Schedule for ACME Intermediate Holdings, LLC, available
in electronic format as filed by the Registrant.
27.2* Financial Data Schedule for ACME Television, LLC, available in
electronic format as filed by the Registrant.
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 19, 1999
BETWEEN
ACME TELEVISION OF NEW MEXICO, LLC
ACME TELEVISION LICENSES OF NEW MEXICO, LLC
AND
RAMAR COMMUNICATIONS II, LTD.
WITH RESPECT TO TELEVISION STATION
KWBQ-TV, SANTA FE, NEW MEXICO
<PAGE> 2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of February 19, 1999,
by and among Ramar Communications II, Ltd., a Texas limited partnership
("Buyer"), ACME Television of New Mexico, LLC, a Delaware limited liability
company ("ATNM"), and ACME Television Licenses of New Mexico, LLC, a Delaware
limited liability company ("ATLNM") (ATNM and ATLNM shall be collectively
referred to herein as "Seller").
R E C I T A L S
ATLNM is the permittee of Television Station KWBQ-TV, Santa Fe, New
Mexico, (the "Station"), pursuant to a construction permit issued by the Federal
Communications Commission (the "FCC"), and ATNM is the owner of other assets
used or useful in connection with the business or operation of the Station.
Seller desires to sell and assign, and Buyer desires to purchase and
acquire, certain assets owned or held by Seller and used or useful in the
conduct of the business or operations of the Station, on the terms and
conditions hereinafter set forth.
A G R E M E N T S
ARTICLE 1
ASSETS TO BE CONVEYED
1.1. CLOSING. Subject to Section 17.1 hereof and except as otherwise
mutually agreed upon by Seller and Buyer, the closing of this transaction (the
"Closing") shall take place on a date designated by Buyer no later than ten (10)
days after the last of the conditions specified in Articles 11 and 12 hereof has
been fulfilled (or waived by the party entitled to waive such condition). The
Closing shall be held at 10:00 a.m. in the offices of Leventhal, Senter & Lerman
P.L.L.C., 2000 K Street, N.W., Suite 600, Washington, D.C., or at such place as
the parties may otherwise agree.
1.2. STATION ASSETS. At the Closing, Seller shall sell, assign, transfer
and convey to Buyer, and Buyer shall purchase from Seller, certain of the
assets, real, personal and mixed, tangible and intangible, owned or held by
Seller and used or useful in the conduct of the business and operation of the
Station (but excluding the assets specified in Section 1.3), including, but not
limited to, the following:
<PAGE> 3
- 2 -
(a) all of Seller's rights in and to (i) the Station Licenses
(as defined in Article 22 hereof), (ii) all licenses, permits and other
authorizations issued to Seller by the Federal Aviation Administration
("FAA") or any governmental authority and used or useful in the
operation of the Station (with all of the foregoing, including the
Station Licenses, collectively referred to hereinafter as the
"Government Authorizations"), copies of which are listed in Schedule
1.2(a), together with any additions thereto (including modifications of
such licenses, permits and authorizations and applications therefor)
between the date hereof and the Closing Date;
(b) the Tower Lease Agreement dated December 30, 1998 by and
between Roberts Broadcasting Company of New Mexico, LLC and ATNM, a true
and correct copy of which has been provided to Buyer (the "Tower
Lease");
(c) all of Seller's rights in and to the trademarks, trade
names, service marks, patents, franchises, copyrights, including
registrations and applications for registration of any of them, jingles,
logos, slogans, licenses, permits and privileges, trade secrets, and
other similar intangible property rights and interests owned by or
licensed to Seller and used or useful exclusively in the operation of
the Station except the call sign KWBQ and the name "ACME Television" and
any variant thereof;
(d) all files, records, studies, data, lists, filings, general
accounting records, books of account, computer programs, software and
logs relating exclusively to the operation of the Station; and
(e) all of Seller's good will in and going concern value of the
Station.
The assets to be assigned and transferred to Buyer hereunder are
hereinafter collectively referred to as the "Station Assets." The Station Assets
shall be assigned and transferred to Buyer free and clear of all security
interests, financing agreements, liens, claims, and encumbrances of any and
every kind (except Permitted Encumbrances).
1.3. EXCLUDED ASSETS. The Station Assets shall not include the following
(the "Excluded Assets"):
<PAGE> 4
-3-
(a) other than the assets encompassed by the Tower Lease and the
Equipment Lease, all broadcast and other equipment, office furniture and
fixtures, office materials and supplies, inventory, spare parts, and
other tangible personal property of every kind and description, owned,
leased or held by Seller and used or useful in the operation of the
Station, together with any replacements thereof and additions thereto,
made between the date hereof and the Closing Date;
(b) other than the Tower Lease and the Equipment Lease, all of
Seller's rights under and interest in the Contracts, together with all
of Seller's rights under and interest in all Contracts entered into or
acquired by Seller between the date hereof and the Closing Date;
(c) Seller's studio property located at 8341 Washington, NE,
Albuquerque, NM;
(d) Seller's books and records as pertain to the organization,
existence or capitalization of Seller, and duplicate copies of such
records as are necessary to enable Seller to file tax returns and
reports;
(e) all cash, cash equivalents or similar type investments of
Seller, such as certificates of deposit, Treasury bills, and other
marketable securities on hand and/or in banks;
(f) all accounts receivable arising out of the operation of the
Station for services performed or provided prior to the Effective Time
(the "Accounts Receivable");
(g) all contracts of insurance, insurance proceeds, and
insurance claims made by Seller relating to Station Assets repaired,
replaced, or restored by Seller prior to Closing, except for any rights
that may be assigned pursuant to Article 20 hereof;
<PAGE> 5
-4-
(h) all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee
benefit plan or arrangement and the assets thereof, if any;
(i) all claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for any period prior to Closing;
(j) the right to the call sign KWBQ-TV; and
(k) the name "ACME Television" and any variant thereof or logo
used in connection therewith.
ARTICLE 2
PURCHASE PRICE
2.1. PURCHASE PRICE. The total consideration to be paid by Buyer for the
Station Assets (the "Purchase Price") shall be One Hundred Thousand Dollars
($100,000), or such lesser amount as may be approved by the FCC.
2.2. PAYMENT OF PURCHASE PRICE. On the Closing Date, Buyer shall pay the
amount of One Hundred Thousand Dollars ($100,000), or such lesser amount as may
be approved by the FCC, by wire transfer of immediately available federal funds
to a bank or other financial institution designated by Seller at least two (2)
days prior to the Closing Date. Buyer may, at its option, pay the Purchase Price
by reducing the amount payable to Buyer under the KASY-TV Agreement by the
amount of the Purchase Price payable hereunder.
2.3. ALLOCATION OF PURCHASE PRICE. Buyer shall prepare an initial draft
of IRS Form 8594 prior to or within one hundred eighty (180) days after the
Closing. Buyer shall forward such form to Seller for its approval, which shall
not be unreasonably withheld or delayed; provided, however, that if Seller does
not approve the draft of IRS Form 8594, it shall bear all expenses of revising
such form, including the costs of any appraisals, and Buyer and Seller shall
each file the IRS Form 8594 finally agreed upon by the parties with their
respective federal income tax return for the tax year in which the Closing
occurs. In no event shall Seller or Buyer take any position in any filing or
other representation with or to the IRS or any governmental authority which is
inconsistent with the allocation agreed to by the parties pursuant to this
Section.
<PAGE> 6
-5-
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
3.1. ASSUMPTION OF OBLIGATIONS. Subject to the provisions of this
Agreement, Buyer shall assume and undertake to pay, satisfy or discharge the
liabilities, obligations and commitments of Seller arising and accruing after
the Closing Date under the Tower Lease.
3.2. LIMITATION. Except as set forth in Section 3.1 hereof, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Seller of any nature whatsoever.
Without limiting the generality of the foregoing, Buyer shall not assume or be
liable for any liability or obligation of Seller (a) arising out of any
litigation, proceeding or claim by any person or entity relating to the business
or operation of the Station prior to the Closing Date, whether or not such
litigation, proceeding or claim is pending, threatened or asserted before, on or
after the Closing Date, (b) under any employment contract, collective bargaining
agreement, insurance, pension, retirement, deferred compensation, incentive
bonus or profit sharing or employee benefit plan or trust, or (c) relating to
any accounts payable.
ARTICLE 4
REQUIRED CONSENTS
4.1. FCC APPLICATION. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent of the FCC. Upon
Seller's three (3) business days' prior written notice to Buyer, but in any
event, no later than thirty (30) days after the date of this Agreement whether
or not such notice is given, Buyer and Seller shall file the FCC Application.
Seller and Buyer shall thereafter prosecute the FCC Application with all
reasonable diligence and otherwise use their commercially reasonable efforts to
obtain the grant of the FCC Application as expeditiously as practicable;
provided, however, that neither Seller nor Buyer shall have any obligation to
satisfy any third party (including but not limited to a petitioner or
complainant) or the FCC by taking any steps which would have a material adverse
effect upon Seller or Buyer or upon any affiliated entity, but neither the
expense nor inconvenience to a party of defending against a petition to deny or
other third party complaint or an inquiry by the FCC shall be considered a
material adverse effect on such
<PAGE> 7
-6-
party. Each party will promptly provide the other party with a copy of any
pleading, order, or other document sent or received by it relating to the FCC
Application. Each party shall make whatever amendments or submissions are
required or requested by the FCC or otherwise necessary to secure FCC Consent;
provided however, that such amendment or response does not have a material
adverse effect on such party or any affiliated entity. If the FCC Consent
imposes any condition on any party hereto, such party shall use commercially
reasonable efforts to comply with such condition; provided, however, that no
party shall be required to comply with any condition that would have a material
adverse effect upon it or any affiliated entity. If reconsideration or judicial
review is sought with respect to the FCC Consent, the party affected shall
vigorously oppose such reconsideration or judicial review; provided, however,
that nothing herein shall be construed to limit either party's right to
terminate this Agreement pursuant to Article 17 hereof.
4.2. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall prepare and file with any other appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
ARTICLE 5
PRORATIONS
5.1. PRORATION OF INCOME AND EXPENSES. All income and expenses arising
from the conduct of the business and operation of the Station shall be prorated
between Buyer and Seller as of the Effective Time in accordance with GAAP. Such
prorations shall be based upon the principle that Seller shall be entitled to
all income earned and shall be responsible for all liabilities and obligations
incurred or accruing in connection with the operation of the Station until the
Effective Time, and, subject to the LMA, Buyer shall be entitled to all income
earned and be responsible for such liabilities and obligations incurred by Buyer
thereafter. Such prorations shall include, without limitation, all ad valorem,
real estate and other property taxes (but excluding taxes arising by reason of
the transfer of the Station Assets as contemplated hereby, which shall be paid
as set forth in Article 14 of this Agreement), business and license fees, music
and other license fees (including any retroactive adjustments thereof), utility
expenses,
<PAGE> 8
-7-
liabilities and obligations under all Contracts to be assumed by Buyer, rents
and similar prepaid and deferred items and all other expenses attributable to
the ownership and operation of the Station. To the extent not known, real estate
taxes shall be apportioned on the basis of taxes assessed for the preceding
year, with a reapportionment as soon as the new tax rate and valuation can be
ascertained.
5.2. PAYMENT OF PRORATION ITEMS. Within sixty (60) days following the
Closing Date, Buyer shall deliver to Seller a schedule of its proposed
prorations (which shall set forth in reasonable detail the basis for those
determinations) (the "Proration Schedule"). The Proration Schedule shall be
conclusive and binding upon Seller unless Seller provides Buyer with written
notice of objection (the "Notice of Disagreement") within thirty (30) days after
Seller's receipt of the Proration Schedule, which notice shall state the
prorations of expenses proposed by Seller (the "Seller's Proration Amount").
Those items which are not in dispute shall be paid by Seller or Buyer, as the
case may be, within forty-five (45) days after Seller's receipt of the Proration
Schedule. Buyer shall have fifteen (15) days from receipt of a Notice of
Disagreement to accept or reject Seller's Proration Amount. If Buyer rejects
Seller's Proration Amount, the items in dispute shall be submitted within ten
(10) days to a mutually acceptable accounting firm that has no relationship with
either Buyer or Seller (the "Referee") for resolution, such resolution to be
made within thirty (30) days after submission to the Referee and to be final,
conclusive and binding on Seller and Buyer. Buyer and Seller agree to share
equally the cost and expenses of the Referee, but each party shall bear its own
legal and other expenses, if any. Payment by Buyer or Seller, as the case may
be, of the proration amounts determined pursuant to this Section 5.2 shall be
due thirty (30) days after the last to occur of (i) Seller's acceptance of the
Proration Schedule or failure to give Buyer a timely Notice of Disagreement;
(ii) Buyer's acceptance of Seller's Proration Amount; and (iii) notice to Seller
and Buyer of the resolution of the disputed amount by the Referee. Any payment
required by Seller to Buyer or by Buyer to Seller, as the case may be, under
this Section 5.2 shall be paid by wire transfer of immediately available federal
funds to the account of the payee with a financial institution in the United
States as designated by Buyer in the Proration Schedule or by Seller in the
Notice of Disagreement (or by separate notice in the event that Seller does not
send a Notice of Disagreement). If either Buyer or Seller fails to pay when due
any amount under this Section 5.2, interest on such amount will accrue from the
date payment was due to the date such payment is made at a per annum rate equal
to the Prime Rate plus three percent (3%), and such interest shall be payable
upon demand.
<PAGE> 9
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
6.1. ORGANIZATION AND STANDING. Buyer is a limited partnership
organized, validly existing and in good standing under the laws of the State of
Texas.
6.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary power
and authority to enter into and perform under this Agreement and the
transactions contemplated hereby, and Buyer's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Buyer and constitutes its valid and binding obligation, enforceable
in accordance with its terms, except as limited by laws affecting creditors'
rights or equitable principles generally.
6.3. FCC QUALIFICATIONS. To Buyer's knowledge, there are no facts which,
under the Communications Act of 1934, as amended, or the published rules and
regulations of the FCC, would disqualify Buyer as assignee of the Station
Licenses.
6.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in Article 4 with respect to FCC and other governmental consents or as
disclosed on Schedule 6.4, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by Buyer:
(a) do not and will not require the consent of any third party; (b) do not and
will not violate any provisions of Buyer's governing instruments; (c) do not and
will not violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority which exist as of the date of
this Agreement and to which Buyer is subject; and (d) do not and will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under any
agreement, instrument, license or permit to which Buyer is now subject as of the
date of this Agreement.
6.5. ABSENCE OF LITIGATION. Except as set forth on Schedule 6.5, there
is no claim, litigation, proceeding or investigation pending or, to the best of
Buyer's knowledge, threatened against Buyer which seeks to enjoin or prohibit,
or which
<PAGE> 10
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otherwise questions the validity of, any action taken or to be taken in
connection with this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
7.1. ORGANIZATION AND STANDING. ATNM and ATLNM are limited liability
companies duly formed, validly existing and in good standing under the laws of
the State of Delaware. ATNM and ATLNM each has all necessary power and authority
to own, lease and operate the Station Assets and to carry on the business of the
Station as now being conducted and as proposed to be conducted by ATNM and ATLNM
between the date hereof and the Closing Date.
7.2. AUTHORIZATION AND BINDING OBLIGATION. ATNM and ATLNM each has all
necessary power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and ATNM's and ATLNM's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by ATNM and ATLNM and constitutes the valid and binding obligation of
each of them, enforceable in accordance with its terms, except as limited by
laws affecting the enforcement of creditors' rights or equitable principles
generally.
7.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in Article 4 with respect to FCC and other governmental consents and
except as set forth on Schedule 7.3, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby by
Seller (a) do not and will not require the consent of any third party; (b) do
not and will not violate any provisions of ATNM's or ATLNM's governing
instruments; (c) do not and will not violate any applicable law, judgment,
order, injunction, decree, rule, regulation or ruling of any governmental
authority which exists as of the date of this Agreement and by which Seller or
the Station Assets are bound; (d) do not and will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination of, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any Real Property Lease or
Contract, agreement, instrument, license or permit to
<PAGE> 11
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which either Seller or the Station Assets are now subject; and (e) do not and
will not result in the creation of any lien, charge or encumbrance on any of the
Station Assets.
7.4. GOVERNMENT AUTHORIZATIONS.
(a) Schedule 1.2(a) lists the Station Licenses and other material
Government Authorizations (including those issued by the FAA), and, except as
set forth on Schedule 1.2(a), and there are no other licenses, permits or other
authorizations from governmental or regulatory authorities required for the
lawful conduct of the business and operation of the Station in the manner and to
the full extent it is now conducted or proposed to be conducted. The Station
Licenses and other licenses, permits and authorizations listed in Schedule
1.2(a) were validly issued and are validly held by Seller, are in full force and
effect, and except as disclosed in Schedule 1.2(a) or on the face of such
Station License, none is subject to any restriction or condition which would
limit in any respect the operation of the Station in accordance with the terms
of such Station Licenses.
(b) Except as disclosed in Schedule 1.2(a), there are no applications,
petitions, complaints, investigations or other proceedings pending or, to the
best of Seller's knowledge, threatened before the FCC relating to the business
or operation of the Station or that may result in the revocation, modification,
non-renewal or suspension of any of the Station Licenses, the denial of any
pending application or the imposition of any fines, forfeitures, or other
administrative actions by the FCC with respect to the Station or its operation
other than proceedings affecting the broadcasting industry generally. Except as
disclosed in Schedule 1.2(a), Seller is not subject to any outstanding judgment
or order of the FCC or any court relating to the Station. The Station is being
constructed and will be operated in accordance with the terms and conditions of
the Station Licenses, the underlying construction permits, the Communications
Act of 1934, as amended, and all rules, regulations and policies of the FCC.
(c) To Seller's knowledge, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify it as the assignor of the Station Licenses.
7.5. TITLE TO AND CONDITION OF REAL PROPERTY.
(a) Seller has not assigned title or any other interest (except a
lender's leasehold mortgage, which shall be eliminated no later than the Closing
Date) to the
<PAGE> 12
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Tower Lease or otherwise taken, or failed to take, any action which would
adversely affect Seller's title therein. The Tower Lease constitutes the valid
and binding obligation of the Seller and, to Seller's knowledge, of all other
parties thereto, and is in full force and effect as of the date hereof. Seller
is not in material default under the Tower Lease and to Seller's knowledge, the
other party to the Tower Lease is not in default thereunder. Seller has not
received or given written notice of any default thereunder from or to the other
party thereto. Seller has all requisite power and authority to assign its rights
under the Tower Lease to Buyer in accordance with this Agreement on terms and
conditions no less favorable than those in effect on the date hereof, and such
assignment will not affect the validity, enforceability or continuity of such
Tower Lease.
7.6. INTELLECTUAL PROPERTY. There is no pending or, to the best of
Seller's knowledge, threatened proceeding or litigation affecting or with
respect to the Intellectual Property. Seller has received no notice and has no
knowledge of any infringement or unlawful use of the Intellectual Property.
7.7. LITIGATION. Seller is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree. Except as disclosed on
Schedule 7.7, there is no claim, litigation, proceeding or investigation pending
or, to the best of Seller's knowledge, threatened against the Seller or relating
to the Station in any federal, state or local court, or before any
administrative agency, arbitrator or other tribunal authorized to resolve
disputes. Except as disclosed on Schedule 7.7, there is no claim, litigation,
proceeding or investigation pending or, to the best of Seller's knowledge,
threatened against Seller or relating to the Station Assets, which might have a
material adverse effect upon the business, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken in connection with
this Agreement, or which might impede Seller's ability to assign the Station
Assets to Buyer in a timely manner under this Agreement and otherwise in
accordance with the terms and conditions of this Agreement.
7.8. COMPLIANCE WITH LAWS. Seller has operated and is operating in
material compliance with all laws, regulations and governmental orders and
published policies applicable to the conduct of the business and operation of
the Station, and, to Seller's knowledge, its present use of the Station Assets
does not violate any such laws, regulations or orders in any material respect.
Seller has not received any notice asserting any noncompliance with any
applicable statute, rule, published policy or regulation, in connection with the
business or operation of the Station.
<PAGE> 13
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7.9. TAXES. Seller has duly, timely and in the required manner filed all
federal, state, local and foreign income, franchise, sales, use, property,
excise, payroll and other tax returns and forms required to be filed, and has
paid in full or discharged all taxes, assessments, excises, interest, penalties,
deficiencies and losses required to be paid. No event has occurred which could
impose on Buyer any liability for any taxes, penalties or interest due or to
become due from Seller from any taxing authority.
7.10. BANKRUPTCY. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller or any of
the Station Assets, are pending or threatened, and Seller has not made any
assignment for the benefit of creditors or taken any action in contemplation of
or which would constitute the basis for the institution of such insolvency
proceedings.
7.11. ENVIRONMENTAL MATTERS. To Seller's knowledge, no Hazardous
Substance (a) is or has been used, treated, stored, disposed of, released,
spilled, generated, manufactured, transported or otherwise handled at the Tower
Lease site, (b) has been spilled, released or disposed of on property adjacent
to the Tower Lease site, or (c) has otherwise come to be located on or under the
Tower Lease site. To Seller's knowledge, the Tower Lease site and all operations
on the Tower Lease site are in material compliance with all Environmental Laws.
Seller has obtained all environmental, health and safety permits necessary for
the operation of the Station, and all such permits are in full force and effect,
and Seller is in material compliance with the terms and conditions of all such
permits. To Seller's knowledge, no outstanding liens have been placed on the
Tower Lease site under any Environmental Laws. Seller has not received any
notice concerning, and is not aware of, any administrative or judicial
investigations, proceedings or actions with respect to, violations, alleged or
proven, of Environmental Laws by Seller, or otherwise involving the Tower Lease
site or the operations conducted on the Tower Lease site.
7.12. UCC FINANCING STATEMENTS. All of the Station Assets are and have
been located in the State of New Mexico since the Station Assets were acquired
by Seller. Copies of all financing statements filed by any party with respect to
the Station Assets are listed in Schedule 7.12.
7.13. INSURANCE. Schedule 7.14 lists all insurance policies maintained
by Seller. All of such policies are in full force and effect, and Seller is not
in default of any material
<PAGE> 14
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provision thereof. Seller has not received notice from any issuer of any such
policies of its intention to cancel, terminate or refuse to renew any policy
issued by it.
7.14. NO MATERIAL OMISSION. Seller 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 8
COVENANTS OF BUYER
8.1. NOTIFICATION. Buyer shall notify Seller of any material litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby,
including any challenges to the FCC Application, and shall use commercially
reasonable efforts to remove any such impediment to the transactions
contemplated by this Agreement.
8.2. NO INCONSISTENT ACTION. Buyer shall not take any action materially
inconsistent with its obligations under this Agreement or that would hinder or
delay the consummation of the transactions contemplated by this Agreement.
8.3. REVERSAL AGREEMENT. In the event that the Closing occurs prior to
the FCC Consent becoming a Final Order, at the Closing, Buyer shall execute and
deliver the Reversal Agreement.
ARTICLE 9
COVENANTS OF SELLER
9.1. COMMENCEMENT OF PROGRAM TESTS. Seller will take the steps necessary
to commence operations on the Station pursuant to 47 C.F.R. Section 73.1620 at
the earliest possible time;
9.2. INTERIM OPERATION. Between the date of this Agreement and the
Closing Date, except as expressly permitted or required by this Agreement, or
with the prior written consent of Buyer:
<PAGE> 15
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(a) Seller shall conduct the business of the Station solely in
the ordinary and normal course of business consistent with past
practice, with the intent of preserving the assets of the Station;
(b) Seller shall not sell, assign, lease or otherwise transfer
or dispose of any of the Station Assets, except for assets consumed or
disposed of in the ordinary course of business, where no longer used or
useful in the business or operation of the Station, in which event the
same shall be replaced with assets of equal or greater value and
utility, and the Station's inventories of spare parts and expendable
supplies shall be maintained at levels consistent with customary
practices in the broadcast industry;
(c) Seller shall not create, assume or permit to exist any
claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Station Assets, except for
those in existence or required by Seller's lender (which shall be
eliminated no later than the Closing Date) on the date of this
Agreement, all of which will be removed on or prior to the Closing Date
unless they are to be assumed by Buyer in accordance with Section 3.1 of
this Agreement;
(d) Seller shall construct and operate the Station in accordance
with the FCC's published rules, policies and regulations, the Station
Licenses, and with all other applicable laws, regulations, rules and
orders, and shall not cause or permit by any act, or failure to act, any
of the Station Licenses to expire, be surrendered, adversely modified,
or otherwise terminated, or fail to prosecute with due diligence any
pending application to the FCC;
(e) Seller shall timely make all payments required to be paid
under the Tower Lease when due and otherwise pay all liabilities and
satisfy all obligations when such liabilities and obligations become
due;
(f) Seller shall maintain insurance on the Station Assets.
9.3. ACCESS TO STATION. Between the date of this Agreement and the
Closing Date, Seller shall give Buyer and Buyer's counsel, accountants,
engineers and other representatives, reasonable access during normal business
hours to all of Seller's properties, records and employees relating to the
Station, and shall furnish Buyer with all
<PAGE> 16
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information related to the Station that Buyer reasonably requests. The rights of
Buyer under this Section 9.3 shall not be exercised in such a manner as to
interfere unreasonably with the business of the Station.
9.4. NO SOLICITATION. Between the date of this Agreement and the
Closing, neither Seller nor any Affiliate of Seller, nor their respective
officers, directors or shareholders shall directly or indirectly (a) solicit,
initiate, entertain or encourage submission of any proposal or offer from any
person relating to any acquisition or purchase of all or any substantial amount
of the Station Assets or Seller, or (b) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or otherwise cooperate in any way, or assist or participate in, facilitate
or encourage, any effort or attempt by any person to do or seek any of the
foregoing.
9.5. NOTIFICATION. Seller shall notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Seller which challenges the transactions contemplated hereby,
including any challenges to the FCC Application, and shall use commercially
reasonable efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement.
9.6. THIRD-PARTY CONSENTS. Seller shall obtain at its own expense the
consent of any third parties, if any, necessary for the assignment to Buyer of
any Station Asset to be assigned hereunder.
9.7. CLOSING COVENANT. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets as provided in Article 1
of this Agreement.
9.8. REVERSAL AGREEMENT. In the event that the Closing occurs prior to
the FCC Consent becoming a Final Order, at the Closing, Seller shall execute and
deliver the Reversal Agreement.
9.9. SELLER'S INTERMEDIARY. Notwithstanding anything to the contrary in
this Agreement, Seller may, at any time on or prior to the Closing, in the sole
exercise of its discretion, assign its rights under this Agreement to one or
more qualified intermediaries (as defined under applicable law and regulations)
in order to facilitate a like-kind exchange under Section 1031 of the Internal
Revenue Code of 1986, as amended, in which event Seller shall promptly notify
Buyer of such assignment; provided, that such
<PAGE> 17
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assignment shall not affect Buyer's rights and obligations under this Agreement;
and provided further, that such assignment shall be at Seller's sole cost, with
any such costs incurred by Buyer to be reimbursed by Seller within ten (10) days
of Buyer's submission to Seller of invoices or other documentation of such
costs, and such assignment will not otherwise delay the Closing of the
transactions contemplated by this Agreement. Buyer will cooperate with Seller
and shall execute such other documents as Seller may reasonably request to
effect the assignment contemplated by this section.
9.10. PAYMENT OF INDEBTEDNESS; FINANCING STATEMENTS. Seller shall secure
the release of all liens or encumbrances on the Station Assets that secure the
payment of any indebtedness and shall deliver to Buyer at the Closing releases
or terminations under the Uniform Commercial Code and any other applicable
federal, state or local statutes or regulations of any financing or similar
statements filed against any Station Assets in (a) the jurisdictions in which
the Station Assets are and have been located since such Station Assets were
acquired by Seller, and (b) any other location specified or required by
applicable federal, state or local statutes or regulations.
9.11. NO INCONSISTENT ACTION. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement or that would
hinder or delay the consummation of the transactions contemplated by this
Agreement.
ARTICLE 10
JOINT COVENANTS
10.1. CONDITIONS. If any event should occur between the date hereof and
the Closing, either within or without the control of any party hereto, which
would prevent fulfillment of the conditions upon the obligations of any party to
consummate the transactions contemplated by this Agreement, the parties shall
use their reasonable efforts to cure the event as expeditiously as possible.
10.2. COMMERCIALLY REASONABLE EFFORTS. Between the date of this
Agreement and the Closing, each party shall use commercially reasonable efforts
to cause the fulfillment at the earliest practicable date of all of the
conditions to the obligations of the other party to consummate the sale and
purchase under this Agreement.
10.3. CONTROL OF STATION. Between the date of this Agreement and the
Closing, Buyer shall not, directly or indirectly, control, supervise or direct
the operations of the
<PAGE> 18
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Station. Such operations shall be the sole responsibility of Seller and, subject
to the provisions of Article 9, shall be in its complete discretion.
10.4. CONFIDENTIALITY. Buyer and each Seller shall each keep
confidential all information obtained by it with respect to the other in
connection with this Agreement, and if the transactions contemplated hereby are
not consummated for any reason, each shall return to the other, without
retaining a copy thereof, any schedules, documents or other written information,
including all financial information, obtained from the other in connection with
this Agreement and the transactions contemplated hereby, except where such
information is known or available through other lawful sources or where such
party is advised by counsel that its disclosure is required in accordance with
applicable law.
ARTICLE 11
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Seller made in this Agreement
shall be true, correct and complete in all material respects on and as of the
Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by Seller on or prior to Closing Date shall have been complied with or
performed.
11.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 of
this Agreement shall have been satisfied, and the FCC Consent shall have become
a Final Order, provided however, that either party shall have the right to
require the other to proceed to Closing upon an initial staff grant of the FCC
Consent, in which event the parties will enter into the Reversal Agreement.
11.3. GOVERNMENTAL AUTHORIZATIONS. Seller shall be the lawful holder of
the Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 1.2(a), and there shall not have been any
modification of any of such licenses, permits and other authorizations which
might have a material adverse effect on the
<PAGE> 19
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Station or the conduct of its business and operation. No proceeding shall be
pending which seeks or the effect of which reasonably could be to revoke,
cancel, fail to renew, suspend or modify adversely any of the Station Licenses
or any other licenses, permits or other authorizations relating to the Station.
11.4. THIRD-PARTY CONSENTS. Seller shall have obtained and shall have
delivered to Buyer all third-party consents, if any, that may be required for
assignment of the Station Assets, without any material change or impairment of
such Station Assets.
11.5. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto that Buyer in good faith, based upon a written opinion of
counsel (and provided to Seller), believes would or could (if resolved adversely
to Seller or Buyer) render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms, or
would or could preclude Seller from assigning and conveying the Station Assets
to Buyer in accordance with the terms and conditions of this Agreement.
11.6. DELIVERIES. Seller shall have made or stand ready, willing and
able to make all the deliveries required under Section 13.1.
11.7. ENVIRONMENTAL AUDIT. Buyer shall have received, within sixty (60)
days of the date of this Agreement (and promptly thereafter provided to Seller),
completed Phase I environmental audit reports (the "Phase I Reports") at Buyer's
sole expense regarding the Tower Lease site, which Phase I Reports shall be
reasonably satisfactory to Buyer. In the event Buyer fails to obtain such Phase
I Reports within the aforementioned sixty (60) day period, Buyer shall have
irrevocably waived such condition. If, in Buyer's reasonable judgment, Phase II
environmental audit reports ("Phase II Reports") are necessary in light of the
contents of the Phase I Reports, at Buyer's sole expense, Buyer shall be
required to obtain such Phase II Reports to its reasonable satisfaction within
ninety (90) days of the date of this Agreement (and promptly thereafter provide
them to Seller). In the event Buyer fails to obtain any such Phase II Report
within such 90-day period, Buyer shall have irrevocably waived such condition.
In the event that a Phase I Report and/or a Phase II Report discloses an
environmental condition or matter which is reasonably unsatisfactory to Buyer,
Buyer shall notify Seller in writing of its objection to any environmental
condition or matter addressed in the Phase I Reports or Phase II Reports and
Seller shall have sixty (60) days from Seller's receipt of notice to remediate
<PAGE> 20
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and eliminate such condition or matter, provided, that such matters and
conditions can be remediated and eliminated by Seller's expenditure of One
Hundred Thousand Dollars ($100,000) or less, such expense to be paid by Seller.
If the environmental condition or matter cannot be remediated and eliminated by
Seller's expense of One Hundred Thousand Dollars ($100,000) or less, Seller
shall elect (and provide Buyer with written notice of such election within the
sixty (60) day period following Buyer's initial notice) to either (a) proceed
with the remediation and elimination of such conditions and matters without
regard to the One Hundred Thousand Dollars ($100,000) expense threshold
referenced above, or (b) terminate this Agreement without any further obligation
or liability hereunder; provided however, that if Seller elects to so terminate
this Agreement, Buyer may then elect, by providing Seller with notice thereof
within ten (10) days after Buyer's receipt of Seller's election, to either: (a)
accept such termination by Seller, or (b) notwithstanding anything herein to the
contrary, waive all non-compliant environmental conditions and matters and any
claims it may have against Seller with respect to any such non-remediated or
non-compliant condition or matter, in which case the Closing will proceed as
contemplated by this Agreement (subject to its terms and conditions) and Buyer
shall receive a One Hundred Thousand Dollar ($100,000) credit against the
Purchase Price otherwise payable pursuant to Section 2.1 hereof.
11.8. FCC CONSENT TO ASSIGNMENT OF STATION KASY-TV; CONSUMMATION OF
KASY-TV AGREEMENT. The FCC shall have granted its consent to the assignment of
license of Station KASY-TV, Albuquerque, New Mexico from Buyer to Seller. The
parties' simultaneous closing of the KASY-TV Agreement shall be a condition
precedent to the Closing of this Agreement, provided, that if the parties are
prepared to close the KASY-TV Agreement, the parties shall simultaneously close
this Agreement (assuming that initial FCC Consent has been received and all
other conditions have been or will be satisfied or waived).
11.9. OPTION AGREEMENT AND LOCAL MARKETING AGREEMENT. Simultaneous with
the Closing of this Agreement, (a) Seller and Montecito Broadcasting, LLC shall
enter into an Option Agreement substantially in the form of Exhibit A (the
"Option Agreement"); and (b) Buyer and ATNM shall have entered into a Local
Marketing Agreement substantially in the form of Exhibit B ("LMA"), subject to
ATNM's right to waive this condition relating to the LMA pursuant to Section
11.8 of the KASY-TV Agreement.
<PAGE> 21
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11.10. LIEN SEARCH. Buyer shall have received a written report
concerning the liens and other encumbrances, if any, on any of the Station
Assets and shall have received confirmation from Seller that any liens and other
encumbrances disclosed on such report have been removed or will be removed at
the Closing.
11.11. EQUIPMENT LEASE. Seller and Buyer shall have entered on the
Closing Date a transmitter equipment lease substantially in the form of Exhibit
C hereto (the "Equipment Lease").
11.12 COMMENCEMENT OF PROGRAM TESTS. Seller shall have commenced
operations on the Station pursuant to 47 C.F.R. Section 73.1620.
ARTICLE 12
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties made by Buyer in this Agreement
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date.
(b) All the terms, covenants and conditions to be complied with and
performed by Buyer under this Agreement on or prior to the Closing Date shall
have been complied with or performed in all material respects.
12.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 and
Section 11.2 of this Agreement shall have been satisfied.
12.3. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto that Seller in good faith, based upon a written opinion of
counsel (and provided to Buyer) believes would or could (if resolved adversely
to Seller or Buyer) render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance
<PAGE> 22
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with its terms or would or could preclude Seller from assigning and conveying
the Station Assets to Buyer in accordance with the terms and conditions of this
Agreement..
12.4. DELIVERIES. Buyer shall have made or stand ready, willing and able
to make all the deliveries required under Section 13.2.
12.5. FCC CONSENT TO ASSIGNMENT OF STATION KASY-TV; CONSUMMATION OF
KASY-TV AGREEMENT. The FCC shall have granted its consent to the assignment of
the FCC Authorizations for Station KASY-TV, Albuquerque, New Mexico, from Buyer
to Seller. The parties' simultaneous closing of the KASY-TV Agreement shall be a
condition precedent to the Closing of this Agreement; provided, that, if the
parties are prepared to close the KASY-TV Agreement, the parties shall
simultaneously close this Agreement (assuming that initial FCC Consent has been
received and all other conditions have been or will be satisfied or waived).
12.6. OPTION AGREEMENT AND LOCAL MARKETING AGREEMENT. Simultaneous with
the Closing of this Agreement (a) Seller and Montecito Broadcasting, LLC shall
enter into the Option Agreement; and (b) Buyer and ATNM shall enter into the
LMA, subject to ATNM's right to waive this condition relating to the LMA
pursuant to Section 11.8 of the KASY-TV Agreement.
ARTICLE 13
DOCUMENTS TO BE DELIVERED AT THE CLOSING
13.1. DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller shall
deliver to Buyer the following:
(a) a certificate of an officer of each Seller, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer,
certifying to the fulfillment of the conditions set forth in Sections
11.1 through 11.10 hereof;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Buyer, effecting the sale,
transfer, assignment and conveyance of the Station Assets to Buyer,
including, but not limited to, the following:
<PAGE> 23
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(i) assignment of the Station Licenses and other Government
Authorizations;
(ii) bills of sale for all Personal Property, expressly included
as a Station Asset under Section 1.2 hereof;
(iii) assignments, any necessary consents, and Estoppel
Certificates relative to the Tower Lease;
(iv) assignment of all intangible personal property, expressly
included as a Station Asset under Section 1.2 hereof;
(c) the Reversal Agreement unless at the time of Closing the FCC
Consent shall have become a Final Order;
(d) resolutions of the members of each Seller, authorizing the
execution, delivery and performance of this Agreement, certified by the
secretary of Seller;
(e) the LMA (unless waived by ATNM pursuant to Section 11.8 of
the KASY-TV Agreement;
(f) the Equipment Lease;
(g) such other documents as may reasonably be requested by
Buyer's counsel; and
(h) the opinion of Seller's legal counsel in form and substance
reasonably satisfactory to Buyer.
13.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to Seller the following:
(a) a certificate of an officer of Buyer's general partner, dated the
Closing Date, in form and substance reasonably satisfactory to Seller,
certifying to the fulfillment of the conditions specified in Sections 12.1
through 12.6 hereof;
<PAGE> 24
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(b) immediately available wire-transferred federal funds as provided in
Section 2.2;
(c) instruments, in form and substance reasonably satisfactory to Seller
and its counsel, pursuant to which Buyer assumes obligations, liabilities and
commitments as provided in Article 3 specifically including, without limitation,
with respect to the Tower Lease;
(d) the opinion of Buyer's legal counsel in form and substance
reasonably satisfactory to Seller;
(e) resolutions of the members of Buyer's general partner, countersigned
by the Buyer's limited partners, authorizing the execution, delivery and
performance of this Agreement, certified by the secretary of Seller;
(f) the LMA (unless waived by ATNM pursuant to Section 11.8 of the
KASY-TV Agreement);
(g) the Equipment Lease; and
(h) such other documents as may reasonably be requested by Seller's
counsel.
ARTICLE 14
TRANSFER TAXES; FEES AND EXPENSES
14.1. TRANSFER TAXES AND SIMILAR CHARGES. Except as set forth in
Sections 14.2 and 14.3 hereof, all costs of transferring the Station Assets in
accordance with this Agreement, including recordation, transfer and documentary
taxes and fees, and any excise, sales or use taxes, shall be borne by Seller.
14.2. GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees
imposed by the FCC shall be borne equally by Buyer and Seller.
14.3. EXPENSES. Except as otherwise provided in this Agreement, each
party hereto shall be solely responsible for and shall pay all costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
<PAGE> 25
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ARTICLE 15
BROKER'S COMMISSION OR FINDER'S FEE
15.1. BUYER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Buyer
represents and warrants to Seller that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, nor has it or any person or entity acting on its behalf taken
any action on which a claim for any such payment could be based. Buyer agrees to
indemnify and hold Seller harmless from and against any and all claims, losses,
liabilities and expenses (including reasonable attorneys' fees) arising out of a
claim by any person or entity based on any such arrangement or agreement made or
alleged to have been made by Buyer.
15.2. SELLER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Seller
represents and warrants to Buyer that neither it nor any person or entity acting
on its behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any action
on which a claim for any such payment could be based. Seller agrees to indemnify
and hold Buyer harmless from and against any and all claims, losses, liabilities
and expenses (including reasonable attorneys' fees) arising out of a claim by
any person or entity based on any such arrangement or agreement made or alleged
to have been made by Seller. Seller agrees to be solely responsible for the
payment on the Closing Date of the $250,000 fee due to David Woods in connection
with the KASY-TV Agreement.
ARTICLE 16
INDEMNIFICATION
16.1. INDEMNIFICATION BY SELLER. Notwithstanding the Closing, Seller
hereby agrees to indemnify, defend and hold Buyer harmless against and with
respect to, and shall reimburse Buyer for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or obligation by any Seller contained herein or in any
certificate, document or instrument delivered to Buyer hereunder;
<PAGE> 26
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(b) Any and all obligations of each Seller not assumed by Buyer pursuant
to the terms of this Agreement;
(c) Any and all losses, liabilities or damages resulting from the
construction, operation or ownership of the Station prior to the Effective Time,
including but not limited to (i) any and all liabilities arising under the
Station Licenses or the Tower Lease or any other Station Asset assigned to Buyer
which relate to events occurring prior to the Effective Time; and (ii) any
fines, forfeitures, and other penalties imposed by the FCC related to Seller's
operation of the Station prior to Closing (e.g. commercial overages for
children's programming) (collectively, "FCC Penalties").
(d) Any and all losses, liabilities or damages resulting from any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated by this Agreement;
(e) Any and all losses, liabilities or damages resulting from the
litigation listed on Schedule 7.7;
(f) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(g) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Seller from the date of payment, in the case of a reimbursable
expense, and from the date of incurrence, in the case of any other losses, until
the date of reimbursement by Buyer.
16.2. INDEMNIFICATION BY BUYER. Notwithstanding the Closing, Buyer
hereby agrees to indemnify and hold the Seller harmless against and with respect
to, and shall reimburse the Seller for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or obligation by Buyer contained herein or in any certificate,
document or instrument delivered to Seller hereunder;
<PAGE> 27
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(b) Subject to the provisions of the LMA, any and all losses,
liabilities or damages resulting from the operation or ownership of the Station
by Buyer on and after the Effective Time, including but not limited to any and
all liabilities arising under the Station Licenses, Tower Lease or any other
Station Asset assigned to Buyer relating to events occurring after the Effective
Time;
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(d) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Seller from the date of payment, in the case of a reimbursable
expense, and from the date of incurrence, in the case of any other losses, until
the date of reimbursement by Buyer.
16.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
(a) The party seeking indemnification under this Article 16 (the
"Claimant") shall give notice to the party from whom indemnification is sought
(the "Indemnitor") of any claim, whether solely between the parties or brought
by a third party, specifying (i) the factual basis for the claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, notice shall be given by Claimant within
fifteen (15) business days after written notice of the action, suit or
proceeding was given to Claimant, or sooner if action is required by the
Indemnitor prior to the expiration of the fifteen (15) business days. In all
other circumstances, notice shall be given by Claimant within thirty (30)
business days after Claimant becomes, or should have become, aware of the facts
giving rise to the claim. Notwithstanding the foregoing, Claimant's failure to
give Indemnitor timely notice shall not preclude Claimant from seeking
indemnification from Indemnitor except to the extent that Claimant's failure has
materially prejudiced Indemnitor's ability to defend the claim or litigation.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have thirty (30)
business days to make any investigation of the claim that the Indemnitor deems
necessary or desirable. For the purposes of this investigation, the Claimant
agrees to make available to the Indemnitor
<PAGE> 28
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and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnitor cannot
agree as to the validity and amount of the claim within the 30-day period (or
any mutually agreed upon extension thereof), the Claimant may seek appropriate
legal remedy.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnitor shall have the right at
its own expense to participate in or assume control of the defense of the claim,
and the Claimant shall cooperate fully with the Indemnitor, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnitor. If the Indemnitor elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of the claim at its own expense. If the
Indemnitor does not elect to assume control or otherwise participate in the
defense of any third party claim, Claimant may, but shall have no obligation to,
defend or settle such claim or litigation in such manner as it deems
appropriate, and in any event Indemnitor shall be bound by the results obtained
by the Claimant with respect to the claim (by default or otherwise) and shall
promptly reimburse Claimant for the amount of all expenses (including the amount
of any judgment rendered), legal or otherwise, incurred in connection with such
claim or litigation. The Indemnitor shall be subrogated to all rights of the
Claimant against any third party with respect to any claim for which indemnity
was paid. Notwithstanding anything herein to the contrary, neither Indemnitor
nor Claimant shall settle any third party claim or litigation without providing
the other party reasonable prior notice of the terms of such settlement at least
five (5) business days prior to the execution of any such settlement, unless
emergency circumstances dictate otherwise; provided, that Indemnitor shall not
enter into any such settlement of third party claim without the Claimant's prior
written approval, which approval shall not be unreasonably withheld and shall,
in any event, be provided if the settlement provides a full release of liability
for Claimant and does not otherwise impose any liability on Claimant.
16.4. LIMITATIONS. Neither any Seller nor Buyer shall have any
obligation to the other party for any matter described in Section 16.1 or
Section 16.2, as the case may be, except upon compliance by the other party with
the provisions of this Article 16, particularly Section 16.3. Neither party
shall be required to indemnify the other party under this Article 16 for any
breach of any representation or warranty contained in this Agreement unless
written notice of a claim under this Article 16 was received by the party within
the pertinent survival period specified in Article 18 of this Agreement.
<PAGE> 29
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ARTICLE 17
TERMINATION RIGHTS
17.1. TERMINATION.
(a) This Agreement may be terminated by either Buyer or Seller, if the
party seeking to terminate is not in material breach of this Agreement, upon
written notice to the other upon the occurrence of any of the following:
(i) if, on or prior to the Closing Date, there is a material
breach by the other party with respect to the observance or in the due
and timely performance of any of its covenants or agreements contained
herein and such party fails to cure such breach within ten (10) business
days from receipt of written notice of such breach;
(ii) if, by Final Order, the FCC or its staff denies the FCC
Application or any part thereof or designates the FCC Application for a
trial-type hearing;
(iii) if there shall be in effect any judgment, final decree or
order that would prevent or make unlawful the Closing; or
(iv) if the FCC staff has not issued the FCC Consent within
eighteen (18) months of the date the FCC Application is submitted to the
FCC.
(b) This Agreement may be terminated by Buyer, upon written notice to
Seller if Buyer elects to terminate pursuant to Article 20 hereof.
(c) This Agreement may be terminated by Seller, upon written notice to
Buyer of Seller's election under Section 11.7 hereof (which has not been set
aside by Buyer's waiver).
(d) This Agreement shall automatically terminate upon termination of the
KASY- TV Agreement.
17.2. LIABILITY. Except as otherwise provided in Section 11.7 and
Article 20 hereof, the termination of this Agreement under Section 17.1 hereof
shall not relieve any party of any liability for breach of this Agreement prior
to the date of termination.
<PAGE> 30
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ARTICLE 18
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
The representations, warranties, covenants, indemnities and agreements
contained in this Agreement or in any certificate, document or instrument
delivered pursuant to this Agreement are and will be deemed and construed to be
continuing representations, warranties, covenants, indemnities and agreements
and shall survive the Closing for a period of two (2) years after the Closing
Date, except for (a) agreements under Section 10.4 of this Agreement, which
shall survive the Closing for five (5) years, and (b) indemnification
obligations resulting from or for third party claims, which shall survive the
Closing for a period of one (1) month after the last day of the longest
applicable statutory limitation period. No claim may be brought under this
Agreement or any other certificate, document or instrument delivered pursuant to
this Agreement unless written notice describing in reasonable detail the nature
and basis of such claim is given on or prior to the last day of the applicable
survival period. In the event such a notice is given, the right to
indemnification with respect thereto shall survive the applicable survival
period until such claim is finally resolved and any obligations thereto are
fully satisfied. Any investigation by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, covenant
or agreement contained herein.
ARTICLE 19
REMEDIES
19.1. DEFAULT BY SELLER. Seller recognizes that, in the event Seller
defaults in the performance of its obligations under this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled in such
event, in addition to bringing suit at law or equity for money or other damages
(including costs and expenses incurred by Buyer in the preparation and
negotiation of this Agreement and in contemplation of the Closing hereunder) or
for indemnification under Article 16 hereof, to seek to obtain specific
performance of the terms of this Agreement. In any action to enforce the
provisions of this Agreement, Seller shall waive the defense that there is an
adequate remedy at law or equity and agree that Buyer shall have the right to
seek to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security. In
addition, Buyer shall be entitled to obtain from Seller court costs and
reasonable attorneys' fees incurred by it in successfully enforcing its rights
hereunder, plus interest at the Prime Rate on the amount
<PAGE> 31
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of any judgment obtained against Seller from the date of default until the date
of payment of the judgment. As a condition to seeking specific performance,
Buyer shall not be required to have tendered the Purchase Price specified in
Section 2.1 of this Agreement, but shall be ready, willing and able to do so.
19.2. DEFAULT BY BUYER. In the event Buyer defaults in the performance
of its obligations under this Agreement, Seller shall be entitled to bring suit
at law or equity for money or other damages (including costs and expenses
incurred by Seller in the preparation and negotiation of this Agreement and in
contemplation of the Closing hereunder) or for indemnification under Article 16
hereof. In addition, Seller shall be entitled to obtain from Buyer court costs
and reasonable attorneys' fees incurred by it in enforcing its rights hereunder,
plus interest at the Prime Rate on the amount of any judgment obtained against
Buyer from the date of default until the date of payment of the judgment.
ARTICLE 20
RISK OF LOSS
The risk of loss or damage to the Station Assets prior to the Effective
Time shall be upon Seller. Seller shall repair, replace and restore any damaged
or lost Station Asset to its prior condition as soon as possible and in no event
later than the Effective Time. If Seller is unable or fails to restore or
replace any such lost or damaged Station Asset(s) prior to the Closing and the
aggregate cost of such restoration or replacement would exceed One Hundred
Thousand Dollars ($100,000), Buyer may elect (a) to terminate this Agreement
pursuant to Article 17 hereof, (b) to consummate the transactions contemplated
by this Agreement on the Closing Date, in which event Seller shall assign to
Buyer at Closing Seller's rights under any insurance policy or pay over to Buyer
all proceeds of insurance covering such Station Asset's damage, destruction or
loss (plus an amount equal to any deductible) without further obligation or
liability to Buyer for such loss, or (c) delay the Closing Date until a date
within fifteen (15) days after Seller gives written notice to Buyer of
completion of the restoration or replacement of such Station Asset(s). If Seller
is unable or fails to restore or replace any lost or damaged Station Asset(s)
prior to the Closing Date and the aggregate cost of such restoration or
replacement would be One Hundred Thousand Dollars ($100,000) or less, Seller
shall reimburse Buyer for the cost of restoration or replacement of such
asset(s). If the delay in the Closing Date under this Article 20 would cause the
Closing to fall at any time after the period permitted by the FCC Consent,
Seller and Buyer shall file an appropriate request with the FCC for an extension
of time within which to complete the Closing.
<PAGE> 32
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ARTICLE 21
OTHER PROVISIONS
21.1. PUBLICITY. Except as required by applicable law or with the other
party's express written consent, 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.
21.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Neither Buyer nor Seller may assign this Agreement without the
prior written consent of the other parties hereto except that Buyer may assign
its rights and obligations under this Agreement to an Affiliate of Buyer;
provided, that Buyer will remain liable in the event such assignee fails to
fulfill Buyer's obligations hereunder.
21.3. ENTIRE AGREEMENT. This Agreement, along with the exhibits and
schedules and other documents referenced herein, embodies the entire agreement
and understanding of the parties hereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein. No amendment, waiver of compliance with any provision or condition
hereof, or consent pursuant to this Agreement shall be effective unless
evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
21.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
21.5. COMPUTATION OF TIME. If after making computations of time provided
for in this Agreement, a time for action or notice falls on Saturday, Sunday or
a Federal holiday, then such time shall be extended to the next business day.
21.6. GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of New Mexico without regard to its
principles of conflict of law.
<PAGE> 33
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21.7. NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any party may request in
writing.
To Seller: ACME Television of New Mexico, LLC
ACME Television Licenses of New Mexico, LLC
10829 Olive Boulevard, Suite 202
St. Louis, MO 63141
Attention: Mr. Doug Gealy
Telecopy: 314-989-0566
Telephone: 314-989-0616
With a copy (which shall not constitute notice) to:
Dickstein Shapiro Morin & Oshinsky, L.L.P.
2101 L Street, N.W.
Washington, DC 20037
Attention: Lewis J. Paper, Esq.
Telecopy: 202-887-0689
Telephone: 202-828-2265
To Buyer: Ramar Communications II, Ltd.
9800 University Avenue
Lubbock, TX 79423
Attention: Mr. Brad Moran
Telecopy: 806-748-1949
Telephone: 806-745-3434
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman P.L.L.C.
Suite 600
2000 K Street, N.W.
Washington, DC 20006
Attention: Dennis P. Corbett, Esq.
Telecopy: 202-293-7783
Telephone: 202-429-8970
<PAGE> 34
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Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (iii) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (iv) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
21.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
21.9. FURTHER ASSURANCES. Seller shall at any time and from time to time
after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may reasonably request in
order to vest and confirm in Buyer (or their assignees) the title and rights to
and in all of the Station Assets to be and intended to be transferred, assigned
and conveyed hereunder.
ARTICLE 22
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when used
herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"ATNM" shall have the meaning set forth in the preamble to this
Agreement.
"ATLNM" shall have the meaning set forth in the preamble to this
Agreement.
"Accounts Receivable" shall have the meaning set forth in Section
1.3(f).
"Affiliate" shall mean any person or entity that is controlling,
controlled by or under common control with the named person or entity.
"Agreement" shall mean this Asset Purchase Agreement, including the
exhibits and schedules hereto.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
<PAGE> 35
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"Business Day," whether or not capitalized, shall mean every day of the
week excluding Saturdays, Sundays and Federal holidays.
"Claimant" shall have the meaning set forth in Section 16.3(a).
"Closing" shall have the meaning set forth in Section 1.1 hereof.
"Closing Date" shall mean the date on which the Closing is completed.
"Contracts" shall mean any and all of the contracts, agreements,
including leases (other than those relating to real property), commitments and
understandings, options, rights and interests, written or oral, of any Seller or
to which any Seller is a party, relating to the conduct of the business and
operations of the Station.
"Effective Time" shall mean 12:01 a.m., Mountain Time, on the Closing
Date.
"Environmental Laws" shall mean all applicable local, state and federal
statutes and regulations relating to the protection of human health or the
environment including the FCC's regulations concerning radio frequency
radiation.
"FCC" shall mean the Federal Communications Commission.
"FCC Application" shall mean the application or applications that Seller
and Buyer must file with the FCC requesting its consent to the assignment of the
Station Licenses.
"FCC Consent" shall mean the action by the FCC or its staff granting the
FCC Application.
"Final Order" shall mean action by the FCC (i) which has not been
vacated, reversed, stayed, set aside, annulled or suspended, (ii) with respect
to which no timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion, is
pending, and (iii) as to which the time for filing any such appeal, request,
petition, or similar document or for the reconsideration or review by the FCC on
its own motion under the Communications Act of 1934, as amended, and the rules
and regulations of the FCC, has expired.
<PAGE> 36
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"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Government Licenses" shall have the meaning set forth in Section 1.2(a)
hereof.
"Hazardous Substance" shall mean all hazardous or toxic waste or
material which, because of its quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. "Hazardous
Substance" shall include, but is not limited to, any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such federal
or state statutes. "Hazardous Substance" shall not include ordinary quantities
of consumer or commercial products used in the normal course of broadcast
station operations, including grounds and building operation and maintenance;
provided, that such products have been properly stored, handled and disposed of
in accordance with applicable law and regulation.
"Indemnitor" shall have the meaning set forth in Section 16.3(a).
"Intellectual Property" shall mean all trademarks, trade names, service
marks, patents, franchises, copyrights, including applications for registration
of any of them, jingles, logos, slogans, licenses, permits and privileges, trade
secrets, and other similar intangible property rights and interests owned by or
licensed to Seller and used or useful in the operation of the Station.
"KASY-TV Agreement" shall mean that certain Asset Purchase Agreement
dated as of the date hereof by and between Seller and Buyer relating to the sale
and acquisition of Station KASY-TV, Albuquerque, New Mexico.
"Liens" shall mean mortgages, deeds of trust, liens, pledges, collateral
assignments, security interests, leases, subleases, conditional sales
agreements, easements, covenants, encroachments, encumbrances or other defects
of title.
"LMA" shall have the meaning set forth in Section 11.9.
<PAGE> 37
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"Notice of Disagreement" shall have the meaning set forth in Section
5.2.
"Option Agreement" shall have the meaning set forth in Section 11.10.
"Permitted Encumbrances" shall mean (a) liens for Taxes not yet due and
payable; (b) landlord's liens; and (c) statutory liens that were created in the
ordinary course of business that do not materially affect the current use and
enjoyment of the Station Assets.
"Prime Rate" shall mean a per annum rate equal to the "prime rate" as
published in the Money Rates column of the Eastern Edition of The Wall Street
Journal (or the average of such rates if more than one rate is indicated).
"Proration Schedule" shall have the meaning set forth in Section 5.2.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Referee" shall have the meaning set forth in Section 5.2.
"Reversal Agreement" shall mean a reversal agreement between Seller and
Buyer in a mutually-agreeable form.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller's Proration Amount" shall have the meaning set forth in Section
5.2.
"Station" shall mean television broadcast station KWBQ-TV, Santa Fe, New
Mexico.
"Station Assets" shall have the meaning set forth in Section 1.2.
"Station Licenses" shall mean the licenses, permits and other
authorizations, including any temporary waiver or special temporary
authorization, issued by the FCC to Seller in connection with the conduct of the
business and operation of the Station.
"Tower Lease" shall have the meaning set forth in Section 1.2(b).
<PAGE> 38
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
[SIGNATURES BEGIN ON PAGE IMMEDIATELY FOLLOWING]
<PAGE> 39
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RAMAR COMMUNICATIONS II, LTD.
By: GP Ramar, LLC, its General Partner
By: Ramar Communications, Inc., Sole Member
By: /s/ Brad Moran
---------------------------------
Brad Moran, President
ACME TELEVISION LICENSES OF
NEW MEXICO, LLC
By: /s/ Doug Gealy
---------------------------------
Doug Gealy, President
ACME TELEVISION OF NEW MEXICO, LLC
By: /s/ Doug Gealy
---------------------------------
Doug Gealy, President
<PAGE> 40
EXHIBIT 10.1
The Following Schedules and Exhibits have been intentionally omitted by the
Registrants.
LIST OF EXHIBITS
Exhibit A Form of Option
Exhibit B Form of LMA
Exhibit C Form of Equipment Lease
LIST OF SCHEDULES
Schedule 1.2L(a) Station Licenses (pending applications)
Schedule 1.2(b) Tower Lease
Schedule 6.4 Buyer's Required Consents
Schedule 6.5 Buyer's Litigation
Schedule 7.3 Seller's Required consents
Schedule 7.7 Seller's Litigation
Schedule 7.12 UCC Financing Statements
A copy of any omitted Schedule or Exhibit will be provided to the Securities and
Exchange Commission upon request.
<PAGE> 1
EXHIBIT 10.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 19, 1999
BETWEEN
ACME TELEVISION OF NEW MEXICO, LLC
ACME TELEVISION LICENSES OF NEW MEXICO, LLC
AND
RAMAR COMMUNICATIONS II, LTD.
WITH RESPECT TO TELEVISION STATION
KASY-TV, ALBUQUERQUE, NEW MEXICO
<PAGE> 2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of February 19, 1999,
by and among ACME Television of New Mexico, LLC, a Delaware limited liability
company, and ACME Television Licenses of New Mexico, LLC, a Delaware limited
liability company (collectively "Buyer") and Ramar Communications II, Ltd., a
Texas limited partnership ("Seller").
R E C I T A L S
Seller is the licensee of Television Station KASY-TV, Albuquerque, New
Mexico, (the "Station"), pursuant to licenses issued by the Federal
Communications Commission (the "FCC"), and is the owner of the assets used or
useful in connection with the business or operation of the Station.
Seller desires to sell and assign, and Buyer desires to purchase and
acquire, certain assets owned or held by Seller and used or useful in the
conduct of the business or operations of the Station, on the terms and
conditions hereinafter set forth.
Seller and Lee Enterprises, Incorporated ("Lee") are parties to a Time
Brokerage Agreement dated December 12, 1994 (the "Lee TBA") pursuant to which
Lee provides programming on the Station.
A G R E E M E N T S
ARTICLE 1
ASSETS TO BE CONVEYED
1.1. CLOSING. Subject to Section 17.1 hereof and except as otherwise
mutually agreed upon by Seller and Buyer, the closing of this transaction (the
"Closing") shall take place on a date designated by Buyer no later than ten (10)
days after the last of the conditions specified in Articles 11 and 12 hereof has
been fulfilled (or waived by the party entitled to waive such condition). The
Closing shall be held at 10:00 a.m. in the offices of Leventhal, Senter & Lerman
P.L.L.C., 2000 K Street, N.W., Suite 600, Washington, D.C., or at such place as
the parties may otherwise agree.
<PAGE> 3
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1.2. STATION ASSETS. At the Closing, Seller shall sell, assign, transfer
and convey to Buyer, and Buyer shall purchase from Seller, certain of the
assets, real, personal and mixed, tangible and intangible, owned or held by
Seller and used or useful in the conduct of the business and operation of the
Station (but excluding the assets specified in Section 1.3), including, but not
limited to, the following:
(a) all of Seller's rights in and to (i) the Station Licenses (as
defined in Article 22 hereof), (ii) all licenses, permits and other
authorizations issued to Seller by the Federal Aviation Administration
("FAA") or any governmental authority and used or useful in the
operation of the Station (with all of the foregoing, including the
Station Licenses, collectively referred to hereinafter as the
"Government Authorizations"), all of which are listed in Schedule
1.2(a), together with any additions thereto (including renewals or
modifications of such licenses, permits and authorizations and
applications therefor) between the date hereof and the Closing Date,
and, to the extent assignable, all of Seller's rights in and to the call
letters KASY-TV;
(b) all of Seller's right, title and interest in and to all real
estate and other real property interests, including any towers or
fixtures on such real property, owned by Seller and used or useful in
the operation of the Station, including the Real Property Leases as
defined herein and listed in Schedule 1.2(b), together with any
additions thereto between the date hereof and the Closing Date;
(c) all broadcast and other equipment, office furniture and
fixtures, office materials and supplies, inventory, spare parts, and
other tangible personal property of every kind and description, owned,
leased or held by Seller and used or useful in the operation of the
Station, including the items listed in Schedule 1.2(c), together with
any replacements thereof and additions thereto, made between the date
hereof and the Closing Date;
(d) subject to the provisions of Article 3 hereof, all of
Seller's rights under and interest in the Contracts as defined herein
and listed in Schedule 1.2(d) hereto (including assumption of whatever
time remains on the Lee TBA), together with all of Seller's rights under
and interest in all Contracts entered into or acquired by Seller between
the date hereof and the Closing Date in accordance with this Agreement;
provided, that Seller shall provide Buyer a true copy, or, in the case
of an oral agreement, a complete description of any Contract entered
into or acquired
<PAGE> 4
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by Seller between the date hereof and the Closing Date within five (5)
days after entering into such Contract; and, provided further, that
Buyer shall not be obligated to, but may in writing, assume any Contract
entered into or acquired by Seller after the date of this Agreement if
such Contracts, in the aggregate, would create a liability for Buyer in
excess of Five Thousand Dollars ($5,000).
(e) all of Seller's rights in and to the trademarks, trade names,
service marks, patents, franchises, copyrights, including registrations
and applications for registration of any of them, jingles, logos,
slogans, licenses, permits and privileges, trade secrets, and other
similar intangible property rights and interests owned by or licensed to
Seller and used or useful exclusively in the operation of the Station;
(f) all files, records, studies, data, lists, filings, general
accounting records, books of account, computer programs, software and
logs relating to the operation of the Station; and
(g) all of Seller's good will in and going concern value of the
Station.
The assets to be assigned and transferred to Buyer hereunder are
hereinafter collectively referred to as the "Station Assets." The Station Assets
shall be assigned and transferred to Buyer free and clear of all security
interests, financing agreements, liens, claims, and encumbrances of any and
every kind (except Permitted Encumbrances).
1.3. EXCLUDED ASSETS. The Station Assets shall not include the following
(the "Excluded Assets"):
(a) Seller's books and records as pertain to the organization,
existence or capitalization of Seller, and duplicate copies of such
records as are necessary to enable Seller to file tax returns and
reports;
(b) all cash, cash equivalents or similar type investments of
Seller, such as certificates of deposit, Treasury bills, and other
marketable securities on hand and/or in banks;
<PAGE> 5
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(c) all accounts receivable arising out of the operation of the
Station for services performed or provided prior to the Effective Time
(the "Accounts Receivable");
(d) all contracts of insurance, insurance proceeds, and insurance
claims made by Seller relating to Station Assets repaired, replaced, or
restored by Seller prior to Closing, except for any rights that may be
assigned pursuant to Article 20 hereof;
(e) all pension, profit sharing or cash or deferred (Section
401(k)) plans and trusts and the assets thereof and any other employee
benefit plan or arrangement and the assets thereof, if any;
(f) all claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for any period prior to Closing;
(g) all contracts, leases and other executory obligations of
Seller which Buyer does not assume;
(h) Seller's FCC licenses and related assets for Stations K47CF
and KHFT, Hobbs, New Mexico, and Station KUPC, Carlsbad, New Mexico;
provided however, that Buyer will have the right on and after Closing to
co-locate at no cost to Buyer its separate transmission facilities on
the tower for Station KUPC, if such a tower is built and controlled by
Seller; and
(i) Seller's August 14, 1998 Tower Lease with Lee at Hagerman,
New Mexico relating to Seller's Microwave License WPNI-808; provided
however, that, at Buyer's request, Seller will cooperate with Buyer in
using commercially reasonable efforts to facilitate the assignment of
such Tower Lease to Buyer or to otherwise provide Buyer with the
benefits of such Tower Lease.
ARTICLE 2
PURCHASE PRICE
2.1. PURCHASE PRICE. The total consideration to be paid by Buyer for the
Station Assets (the "Purchase Price") shall be Twenty-Five Million Four Hundred
Thousand Dollars ($25,400,000) plus, subject to Section 10.5(b) hereof, any
amount paid by Ramar
<PAGE> 6
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to Lee pursuant to Section 4 ("Lee Purchase Option") of that certain December
12, 1994 Equipment Lease between Lee and Ramar Communications, Inc., Ramar's
predecessor in interest (the portion of the Purchase Price related to the
Purchase Option shall be referred to herein as the "Lee Purchase Option Cost"),
subject to upward adjustment pursuant to Section 11.8 hereof.
2.2. PAYMENT OF PURCHASE PRICE. The Purchase Price will be payable as
follows:
(a)(1) No later than March 1, 1999, Buyer shall deposit the amount of
Five Hundred Thousand Dollars ($500,000) (the "Escrow Deposit") with Escrow
Agent to be held pursuant to the terms and conditions of the Escrow Agreement
(in the form of Exhibit A), together with all interest earned thereon; provided,
however, that this Agreement shall terminate without any further liability or
obligation on the part of any party hereto if the Escrow Agreement is not
executed by the parties thereto by close of business on March 1, 1999 or Buyer
does not deposit the Escrow Deposit with Escrow Agent by close of business,
March 1, 1999. At the Closing, the Escrow Deposit shall be paid by Escrow Agent
to Seller, and all interest earned thereon shall be paid by Escrow Agent to
Buyer.
(2) Except as otherwise provided in Section 11.8 hereof, Four Hundred
Thousand Dollars ($400,000) shall be paid to Seller upon the termination of the
KWBQ-TV LMA, defined in Section 11.8 hereof.
(b) The payment schedule of the remaining Twenty-Four Million Five
Hundred Thousand Dollars ($24,500,000) plus the Lee Purchase Option Cost of the
Purchase Price, subject to upward adjustment pursuant to Section 11.8 hereof,
will depend on whether the Lee TBA is terminated prior to the Closing (the
"Pre-Closing Scenario"); simultaneously with the Closing (the "Simultaneous
Closing Scenario"); or after the Closing (the "Post-Closing Scenario"), as
follows:
(1) Under the Pre-Closing Scenario, Buyer will pay to Lee on behalf
of Seller the One Million Seven Hundred Thousand Dollars
($1,700,000) liquidated damages, or, if the Lee TBA is
terminated during the Renewal Term thereof, as defined therein,
such higher or lower amount of liquidated damages required to be
paid to Lee under the Lee TBA (the "Lee TBA Liquidated Damages")
when such payment is due to be made. Buyer's payment of the Lee
TBA Liquidated Damages will be secured by a
<PAGE> 7
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promissory note substantially in the form of Exhibit B hereto
made by Seller for the benefit of Buyer in the amount of the Lee
TBA Liquidated Damages up to a maximum of $1,700,000 (the
"Note"). On the Closing Date, Buyer shall pay Seller the amount
of Twenty-Four Million Five Hundred Thousand Dollars
($24,500,000) plus the Lee Purchase Option Cost, reduced by the
amount of the amount of the Lee TBA Liquidated Damages up to a
maximum reduction of One Million Seven Hundred Thousand Dollars
($1,700,000), by wire transfer of immediately available federal
funds to a bank or other financial institution designated by
Seller at least two (2) business days prior to the Closing Date,
and will cancel the Note. Under the Pre-Closing Scenario, and to
the extent permissible under the then current rules,
regulations, and policies of the FCC, Buyer and Seller agree to
enter into a time brokerage agreement with each other relating
to the Station, effective upon the termination of the Lee TBA,
with Buyer as Broker and substantially in the form of Exhibit C
hereto (the "Seller/Buyer TBA").
(2) Under the Simultaneous Closing Scenario, on the Closing Date
Buyer will pay (i) the Lee TBA Liquidated Damages and the Lee
Purchase Option Cost to Lee on Seller's behalf; and (ii)
Twenty-Four Million Five Hundred Thousand Dollars ($24,500,000),
reduced by the amount of the Lee TBA Liquidated Damages up to a
maximum reduction of $1,700,000, to Seller by wire transfer of
immediately available federal funds to a bank or other financial
institution designated by Seller at least two (2) business days
prior to the Closing Date.
(3) Under the Post-Closing Scenario, on the Closing Date, Seller
shall assign to Buyer and Buyer shall assume, all of Seller's
rights and obligations under the Lee TBA and Buyer shall (i)
deposit the amount of One Million Seven Hundred Thousand Dollars
($1,700,000) (the "TBA Escrow Deposit") with TBA Escrow Agent to
be held pursuant to the terms and conditions of the TBA Escrow
Agreement (in the form of Exhibit D), together with all interest
earned thereon, and (ii) pay Twenty-Two Million Eight Hundred
Thousand Dollars ($22,800,000) to Seller by wire transfer of
immediately available federal funds to a bank or other financial
institution designated by Seller at least two (2) business days
prior to the Closing Date. The sole purpose of the TBA Escrow
Agreement is to satisfy Buyer's obligation to pay the Lee TBA
Liquidated Damages as assignee of the Lee TBA or pursuant to
Section 10.5 hereof and Buyer and Seller agree to give Escrow
<PAGE> 8
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Agent joint instructions to effectuate this purpose, as well as
to direct Escrow Agent that any funds which are remaining in
such account after the payment of the Lee TBA Liquidated Damages
and the termination of the Lee TBA shall be released to Seller
(with interest thereon paid to Buyer). Any Lee TBA Liquidated
Damages owing to Lee in excess of $1,700,000 shall be paid to
Lee by Buyer when due.
Notwithstanding anything to the contrary in this section, the parties
agree to amend this section as necessary to reflect any subsequent agreement
they may mutually reach with each other and Lee which relates to the Lee TBA
Liquidated Damages.
2.3. ALLOCATION OF PURCHASE PRICE. Buyer shall prepare an initial draft
of IRS Form 8594 prior to or within one hundred eighty (180) days after the
Closing. Buyer shall forward such form to Seller for its approval, which shall
not be unreasonably withheld or delayed; provided, however, that if Seller does
not approve the draft of IRS Form 8594, it shall bear all expenses of revising
such form, including the costs of any appraisals, and Buyer and Seller shall
each file the IRS Form 8594 finally agreed upon by the parties with their
respective federal income tax return for the tax year in which the Closing
occurs. In no event shall Seller or Buyer take any position in any filing or
other representation with or to the IRS or any governmental authority which is
inconsistent with the allocation agreed to by the parties pursuant to this
Section.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
3.1. ASSUMPTION OF OBLIGATIONS. Subject to the provisions of this
Agreement, Buyer shall assume and undertake to pay, satisfy or discharge: (a)
the liabilities, obligations and commitments of Seller arising and accruing
after the Closing Date under the Real Property Leases listed in Schedule 1.2(b),
and the Contracts listed in Schedule 1.2(d), and (b) the liabilities,
obligations and commitments of Seller arising and accruing after the Closing
Date under other contracts entered into between the date of this Agreement and
the Closing Date which Buyer expressly agrees in writing to assume.
<PAGE> 9
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3.2. LIMITATION. Except as set forth in Section 3.1 hereof, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Seller of any nature whatsoever.
Without limiting the generality of the foregoing, Buyer shall not assume or be
liable for any liability or obligation of Seller (a) arising out of any
litigation, proceeding or claim by any person or entity relating to the business
or operation of the Station prior to the Closing Date, whether or not such
litigation, proceeding or claim is pending, threatened or asserted before, on or
after the Closing Date, (b) under any employment contract, collective bargaining
agreement, insurance, pension, retirement, deferred compensation, incentive
bonus or profit sharing or employee benefit plan or trust, except to the extent
such agreement is specifically included in the Contracts listed on Schedule
1.2(d), or (c) relating to any accounts payable.
ARTICLE 4
REQUIRED CONSENTS
4.1. FCC APPLICATION. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent of the FCC. Upon
Buyer's three (3) business days' prior written notice to Seller, but in any
event no later than thirty (30) days after the date of this Agreement, whether
or not such notice is given, Buyer and Seller shall file the FCC Application.
Seller and Buyer shall thereafter prosecute the FCC Application with all
reasonable diligence and otherwise use commercially reasonable efforts to obtain
the grant of the FCC Application as expeditiously as practicable; provided,
however, that neither Seller nor Buyer shall have any obligation to satisfy any
third party (including but not limited to a petitioner or complainant) or the
FCC by taking any steps which would have a material adverse effect upon Seller
or Buyer or upon any affiliated entity, but neither the expense nor
inconvenience to a party of defending against a petition to deny or other third
party complaint or an inquiry by the FCC shall be considered a material adverse
effect on such party. Each party will promptly provide the other party with a
copy of any pleading, order, or other document sent or received by it relating
to the FCC Application. Each party shall make whatever amendments or submissions
are required or requested by the FCC or otherwise necessary to secure FCC
Consent; provided however, that such amendment or response does not have a
material adverse effect on such party or any affiliated entity. If the FCC
Consent imposes any condition on any party hereto, such party shall use
commercially reasonable efforts to
<PAGE> 10
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comply with such condition; provided, however, that no party shall be required
to comply with any condition that would have a material adverse effect upon it
or any affiliated entity. If reconsideration or judicial review is sought with
respect to the FCC Consent, the party affected shall vigorously oppose such
reconsideration or judicial review; provided, however, that nothing herein shall
be construed to limit either party's right to terminate this Agreement pursuant
to Article 17 hereof.
4.2. COMPLIANCE WITH HSRA. Each party shall make or cause to be made in
a timely fashion, and in any event no later than ten (10) business days after
the filing of the FCC Application, any and all filings which are required in
connection with the transactions contemplated hereby under the HSRA, and shall
furnish to the other party all information that the other reasonably requests in
connection with such filings. If the HSRA requires the parties to file
thereunder, the transfer of the Station Assets hereunder is conditioned upon the
expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to the consummation of the
transactions contemplated hereunder. All filing fees in connection with such
notification shall be paid by Buyer.
4.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall prepare and file with any other appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
ARTICLE 5
PRORATIONS
5.1. PRORATION OF INCOME AND EXPENSES. All income and expenses arising
from the conduct of the business and operation of the Station shall be prorated
between Buyer and Seller as of the Effective Time in accordance with GAAP. Such
prorations shall be based upon the principle that Seller shall be entitled to
all income earned and shall be responsible for all liabilities and obligations
incurred or accruing in connection with the operation of the Station until the
Effective Time, and Buyer shall be entitled to all income earned and be
responsible for such liabilities and obligations incurred by
<PAGE> 11
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Buyer thereafter. Such prorations shall include, without limitation, all ad
valorem, real estate and other property taxes (but excluding taxes arising by
reason of the transfer of the Station Assets as contemplated hereby, which shall
be paid as set forth in Article 14 of this Agreement), business and license
fees, music and other license fees (including any retroactive adjustments
thereof), utility expenses, liabilities and obligations under all Contracts to
be assumed by Buyer, rents and similar prepaid and deferred items and all other
expenses attributable to the ownership and operation of the Station. To the
extent not known, real estate taxes shall be apportioned on the basis of taxes
assessed for the preceding year, with a reapportionment as soon as the new tax
rate and valuation can be ascertained.
5.2. PAYMENT OF PRORATION ITEMS. Within sixty (60) days following the
Closing Date, Buyer shall deliver to Seller a schedule of its proposed
prorations (which shall set forth in reasonable detail the basis for those
determinations) (the "Proration Schedule"). The Proration Schedule shall be
conclusive and binding upon Seller unless Seller provides Buyer with written
notice of objection (the "Notice of Disagreement") within thirty (30) days after
Seller's receipt of the Proration Schedule, which notice shall state the
prorations of expenses proposed by Seller (the "Seller's Proration Amount").
Those items which are not in dispute shall be paid by Seller or Buyer, as the
case may be, within forty-five (45) days after Seller's receipt of the Proration
Schedule. Buyer shall have fifteen (15) days from receipt of a Notice of
Disagreement to accept or reject Seller's Proration Amount. If Buyer rejects
Seller's Proration Amount, the dispute shall be submitted within ten (10) days
to a mutually acceptable accounting firm that has no relationship with either
Buyer or Seller (the "Referee") for resolution, such resolution to be made
within thirty (30) days after submission to the Referee and to be final,
conclusive and binding on Seller and Buyer. Buyer and Seller agree to share
equally the cost and expenses of the Referee, but each party shall bear its own
legal and other expenses, if any. Payment by Buyer or Seller, as the case may
be, of the proration amounts determined pursuant to this Section 5.2 shall be
due thirty (30) days after the last to occur of (i) Seller's acceptance of the
Proration Schedule or failure to give Buyer a timely Notice of Disagreement;
(ii) Buyer's acceptance of Seller's Proration Amount; and (iii) notice to Seller
and Buyer of the resolution of the disputed amount by the Referee. Any payment
required by Seller to Buyer or by Buyer to Seller, as the case may be, under
this Section 5.2 shall be paid by wire transfer of immediately available federal
funds to the account of the payee with a financial institution in the United
States as designated by Buyer in the Proration Schedule or by Seller in the
Notice of Disagreement (or by separate notice in
<PAGE> 12
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the event that Seller does not send a Notice of Disagreement). If either Buyer
or Seller fails to pay when due any amount under this Section 5.2, interest on
such amount will accrue from the date payment was due to the date such payment
is made at a per annum rate equal to the Prime Rate plus three percent (3%), and
such interest shall be payable upon demand.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
6.1. ORGANIZATION AND STANDING. Buyer is a limited liability company
organized, validly existing and in good standing under the laws of the State of
Delaware.
6.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary power
and authority to enter into and perform under this Agreement and the
transactions contemplated hereby, and Buyer's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Buyer and constitutes its valid and binding obligation, enforceable
in accordance with its terms, except as limited by laws affecting creditors'
rights or equitable principles generally.
6.3. FCC QUALIFICATIONS. To Buyer's knowledge, there are no facts which,
under the Communications Act of 1934, as amended, or the published rules and
regulations of the FCC, would disqualify Buyer as assignee of the Station
Licenses.
6.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in Article 4 with respect to FCC and other governmental consents or as
disclosed on Schedule 6.4, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by Buyer:
(a) do not and will not require the consent of any third party; (b) do not and
will not violate any provisions of Buyer's governing instruments; (c) do not and
will not violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority which exists as of the date
of this Agreement and to which Buyer is subject; and (d) do not and will not,
either alone or with the giving of notice or the passage of time, or
<PAGE> 13
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both, conflict with, constitute grounds for termination of or result in a breach
of the terms, conditions or provisions of, or constitute a default under any
agreement, instrument, license or permit to which Buyer is subject as of the
date of this Agreement.
6.5. ABSENCE OF LITIGATION. Except as set forth on Schedule 6.5, there
is no claim, litigation, proceeding or investigation pending or, to the best of
Buyer's knowledge, threatened against Buyer which seeks to enjoin or prohibit,
or which otherwise questions the validity of, any action taken or to be taken in
connection with this Agreement.
<PAGE> 14
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
7.1. ORGANIZATION AND STANDING. Seller is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Texas. Seller has all necessary power and authority to own, lease and operate
the Station Assets and to carry on the business of the Station as now being
conducted and as proposed to be conducted by Seller between the date hereof and
the Closing Date.
7.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Seller and constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights or equitable principles generally.
7.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in Article 4 with respect to FCC and other governmental consents and
except as set forth on Schedule 7.3, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby by
Seller (a) do not and will not require the consent of any third party (except
with respect to Real Property Leases disclosed in Schedule 1.2(b) and Contracts
disclosed in Schedule 1.2(d)); (b) do not and will not violate any provisions of
Seller's governing instruments; (c) do not and will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority which exists as of the date of this Agreement by which
Seller or the Station Assets are bound; (d) do not and will not, either alone or
with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Real Property
Lease, Contract, agreement, instrument, license or permit to which either Seller
or the Station Assets are now subject; and (e) do not and will not result in the
creation of any lien, charge or encumbrance on any of the Station Assets.
<PAGE> 15
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7.4. GOVERNMENT AUTHORIZATIONS.
(a) Schedule 1.2(a) includes true and complete copies of the Station
Licenses and other material Government Authorizations (including those issued by
the FAA), and, except as set forth on Schedule 1.2(a), and except for licenses
listed under the Excluded Assets, there are no other licenses, permits or other
authorizations from governmental or regulatory authorities required for the
lawful conduct of the business and operation of the Station in the manner and to
the full extent they are now conducted. The Station Licenses listed in Schedule
1.2(a) were validly issued and are validly held by Seller, are in full force and
effect, and except as disclosed in Schedule 1.2(a) or on the face of such
license, none is subject to any restriction or condition which would limit in
any respect the full operation of the Station as now operated.
(b) Except as disclosed in Schedule 1.2(a), there are no applications,
petitions, complaints, investigations or other proceedings pending or, to the
best of Seller's knowledge, threatened before the FCC relating to the business
or operation of the Station or that may result in the revocation, modification,
non-renewal or suspension of any of the Station Licenses, the denial of any
pending application or the imposition of any fines, forfeitures, or other
administrative actions by the FCC with respect to the Station or its operation
other than proceedings affecting the broadcasting industry generally. Except as
disclosed in Schedule 1.2(a), Seller is not subject to any outstanding judgment
or order of the FCC or any court relating to the Station. The Station has been
and is being operated in accordance with the terms and conditions of the Station
Licenses, the underlying construction permits, the Communications Act of 1934,
as amended, and all rules, regulations and policies of the FCC.
(c) To Seller's knowledge, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify it as the assignor of the Station Licenses.
7.5. TITLE TO AND CONDITION OF REAL PROPERTY.
(a) Schedule 1.2(b) contains descriptions of all of Seller's
real property interests, which consist solely of leasehold interests and
easements, and rights in and agreements with respect to, real property used or
held for use in connection with Seller's operation of the Station (the "Real
Property"). Seller has not assigned title to the non-fee
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estates identified on Schedule 1.2(b) or otherwise taken, or failed to take, any
action which would adversely affect Seller's title therein. Except for leases
listed as Excluded Assets under Section 1.3 hereof, listed in Schedule 1.2(b)
are all leases to which Seller is a party and which relate to real property used
or useful in the operation of the Station (the "Real Property Leases"). The Real
Property Leases constitute valid and binding obligations of the Seller and, to
Seller's knowledge, of all other parties thereto, and are in full force and
effect as of the date hereof. Except as disclosed on Schedule 1.2(b), Seller is
not in material default under any of Real Property Leases, and to Seller's
knowledge, the other parties to such Real Property Leases are not in default
thereunder. Seller has not received or given written notice of any default
thereunder from or to any of the other parties thereto. Schedule 1.2(b) lists
all third party consents necessary to assign such Real Property Leases. Except
as disclosed on Schedule 1.2(b), Seller has all requisite power and authority to
assign its rights under the Real Property Leases listed in Schedule 1.2(b) to
Buyer in accordance with this Agreement on terms and conditions no less
favorable than those in effect on the date hereof, and such assignment will not
affect the validity, enforceability or continuity of any such leases.
7.6. TITLE TO PERSONAL PROPERTY. Schedule 1.2(c) contains a list of the
principal items (and a summary description of the other items) of tangible
personal property owned, leased or held by Seller and used or useful in the
conduct of the business and operation of the Station ("Personal Property").
Except as described in Schedule 1.2(c), Seller has good and marketable title to
all Personal Property (and to all other tangible personal property and assets to
be transferred to Buyer hereunder) owned or leased by it free and clear of all
Liens (except for Liens for current taxes not yet due and payable). The Personal
Property is in good working order and meets any and all applicable governmental
and industry standards.
7.7. CONTRACTS.
(a) Schedule 1.2(d) lists all written Contracts, and includes a
detailed summary of all oral Contracts to be assumed by Buyer, as of the date of
this Agreement.
(b) Seller has delivered to Buyer true and complete copies of
all written Contracts, or true and complete memoranda describing all oral
Contracts. Except as disclosed in Schedule 1.2(d), all Contracts are in full
force and effect and are valid, binding and enforceable by Seller in accordance
with their respective terms, except as
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limited by laws affecting creditors' rights or equitable principles generally.
Seller has complied in all material respects with all Contracts and is not in
default under any of the Contracts. To the best of Seller's knowledge, no other
contracting party is in default under any of the Contracts. Except as set forth
in Schedule 1.2(d), Seller has full legal power and authority to assign its
rights under the Contracts to Buyer in accordance with this Agreement on terms
and conditions no less favorable than those in effect on the date hereof, and
such assignment will not require the consent of any third party or affect the
validity, enforceability or continuity of any of the Contracts.
7.8. INTELLECTUAL PROPERTY. There is no pending or, to the best of
Seller's knowledge, threatened proceeding or litigation affecting or with
respect to the Intellectual Property. Seller has received no notice and has no
knowledge of any infringement or unlawful use of the Intellectual Property.
7.9. LITIGATION. Seller is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree. Except as disclosed on
Schedule 7.9, there is no claim, litigation, proceeding or investigation pending
or, to the best of Seller's knowledge, threatened against the Seller or relating
to the Station in any federal, state or local court, or before any
administrative agency, arbitrator or other tribunal authorized to resolve
disputes. Except as disclosed on Schedule 7.9, there is no claim, litigation,
proceeding or investigation pending or, to the best of Seller's knowledge,
threatened against Seller or relating to the Station Assets, which might have a
material adverse effect upon the business, assets or condition (financial or
otherwise) of the Station, which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken in connection with
this Agreement, or which might impede Seller's ability to assign the Station
Assets to Buyer in a timely manner under this Agreement and otherwise in
accordance with the terms and conditions of this Agreement.
7.10. COMPLIANCE WITH LAWS. Seller has operated and is operating in
material compliance with all laws, regulations and governmental orders and
published policies applicable to the conduct of the business and operation of
the Station, and, to Seller's knowledge, its present use of the Station Assets
does not violate any such laws, regulations or orders in any material respect.
Seller has not received any notice asserting any noncompliance with any
applicable statute, rule, published policy or regulation, in connection with the
business or operation of the Station.
<PAGE> 18
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7.11. TAXES. Seller has duly, timely and in the required manner filed
all federal, state, local and foreign income, franchise, sales, use, property,
excise, payroll and other tax returns and forms required to be filed, and has
paid in full or discharged all taxes, assessments, excises, interest, penalties,
deficiencies and losses required to be paid. No event has occurred which could
impose on Buyer any liability for any taxes, penalties or interest due or to
become due from Seller from any taxing authority.
7.12. BANKRUPTCY. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller or any of
the Station Assets, are pending or threatened, and Seller has not made any
assignment for the benefit of creditors or taken any action in contemplation of
or which would constitute the basis for the institution of such insolvency
proceedings.
7.13. ENVIRONMENTAL MATTERS. To Seller's knowledge, no Hazardous
Substance (a) is or has been used, treated, stored, disposed of, released,
spilled, generated, manufactured, transported or otherwise handled on the Real
Property, (b) has been spilled, released or disposed of on property adjacent to
the Real Property, or (c) has otherwise come to be located on or under the Real
Property. To Seller's knowledge, the Real Property and all operations on the
Real Property are in material compliance with all Environmental Laws. Seller has
obtained all environmental, health and safety permits necessary for the
operation of the Station, and all such permits are in full force and effect, and
Seller is in material compliance with the terms and conditions of all such
permits. To Seller's knowledge, no outstanding liens have been placed on the
Real Property under any Environmental Laws. Seller has not received any notice
concerning, and is not aware of any administrative or judicial investigations,
proceedings or actions with respect to, violations, alleged or proven, of
Environmental Laws by Seller, or otherwise involving the Real Property or the
operations conducted on the Real Property.
7.14. UCC FINANCING STATEMENTS. All of the Station Assets are and have
been located in the State of New Mexico since the Station Assets were acquired
by Seller. Copies of all financing statements filed by any party with respect to
the Station Assets are listed in Schedule 7.14.
7.15. INSURANCE. Schedule 7.15 lists all insurance policies maintained
by Seller. All of such policies are in full force and effect, and Seller is not
in default of any material
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provision thereof. Seller has not received notice from any issuer of any such
policies of its intention to cancel, terminate or refuse to renew any policy
issued by it.
7.16. CABLE CARRIAGE. To Seller's knowledge, Schedule 7.16 sets forth a
correct and complete list of (a) all cable television systems which carry the
Station's signal on the date hereof under the FCC's "must carry" rules or under
agreements implementing such rules; (b) all cable television systems which carry
the Station's signal pursuant to retransmission consent agreements; and (c) all
other multi-channel video operators which carry the Station's signal.
7.17. NO MATERIAL OMISSION. Seller 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 8
COVENANTS OF BUYER
8.1. NOTIFICATION. Buyer shall notify Seller of any material litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Buyer which challenges the transactions contemplated hereby,
including any challenges to the FCC Application, and shall use commercially
reasonable efforts to remove any such impediment to the transactions
contemplated by this Agreement.
8.2. NO INCONSISTENT ACTION. Buyer shall not take any action materially
inconsistent with its obligations under this Agreement or that would hinder or
delay the consummation of the transactions contemplated by this Agreement.
ARTICLE 9
COVENANTS OF SELLER
9.1. INTERIM OPERATION. Between the date of this Agreement and the
Closing Date, except as expressly permitted or required by this Agreement, or
with the prior written consent of Buyer:
(a) Subject to the Lee TBA, Seller shall conduct the business and
operation of the Station solely in the ordinary and normal course of
business consistent with
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past practice, with the intent of preserving the ongoing operations and
assets of the Station;
(b) Seller shall not sell, assign, lease or otherwise transfer or
dispose of any of the Station Assets, except for assets consumed or
disposed of in the ordinary course of business where no longer used or
useful in the business or operation of the Station, in which event the
same shall be replaced with assets of equal or greater value and
utility, and the Station's inventories of spare parts and expendable
supplies shall be maintained at levels consistent with customary
practices in the broadcast industry;
(c) Seller shall not create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Station Assets, except for those in
existence on the date of this Agreement, all of which will be removed on
or prior to the Closing Date unless they are to be assumed by Buyer in
accordance with Section 3.1 of this Agreement;
(d) Seller shall operate the Station in accordance with the FCC's
published rules, policies and regulations, the Station Licenses, and
with all other applicable laws, regulations, rules and orders, and shall
not cause or permit by any act, or failure to act, any of the Station
Licenses to expire, be surrendered, adversely modified, or otherwise
terminated, or fail to prosecute with due diligence any pending
application to the FCC;
(e) Seller shall not waive any material right under or cancel,
modify or in any way impair any Real Property Lease or Contract relating
to the Station or the Station Assets;
(f) Seller shall timely make all payments required to be paid
under any Real Property Lease and Contract to be assumed by Buyer when
due and otherwise pay all liabilities and satisfy all obligations when
such liabilities and obligations become due;
(g) Seller shall maintain its existing insurance on the Station
Assets, and
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(h) Seller shall not take any action, or as the case may be, fail
to take any commercially reasonable action necessary to preserve the
Station's carriage on cable television systems or multi-channel video
operators identified in Schedule 7.16.
9.2. ACCESS TO STATION. Between the date of this Agreement and the
Closing Date, Seller shall give Buyer and Buyer's counsel, accountants,
engineers and other representatives, reasonable access during normal business
hours to all of Seller's properties, records and employees relating to the
Station, and shall furnish Buyer with all information related to the Station
that Buyer reasonably requests. The rights of Buyer under this Section 9.2 shall
not be exercised in such a manner as to interfere unreasonably with the business
of the Station.
9.3. NO SOLICITATION. Between the date of this Agreement and the
Closing, neither Seller nor any Affiliate of Seller, nor their respective
officers, directors or shareholders shall directly or indirectly (a) solicit,
initiate, entertain or encourage submission of any proposal or offer from any
person relating to: (i) any acquisition or purchase of all or any substantial
amount of the Station Assets or Seller, (ii) or any local marketing agreement
with respect to the Station or (b) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or otherwise cooperate in any way, or assist or participate in, facilitate
or encourage, any effort or attempt by any person to do or seek any of the
foregoing. This Section 9.3 shall not be applicable to Seller's compliance with
its obligations under Section 10.5(a).
9.4. NOTIFICATION. Seller shall notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Seller which challenges the transactions contemplated hereby,
including any challenges to the FCC Application, and shall use commercially
reasonable efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement.
9.5. THIRD-PARTY CONSENTS. Seller shall obtain at its own expense the
consent of any third parties necessary for the assignment to Buyer of any Real
Property Lease or Contract to be assigned hereunder.
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9.6. CLOSING COVENANT. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets as provided in Article 1
of this Agreement.
9.7. REVERSAL AGREEMENT. In the event that the Closing occurs prior to
the FCC Consent becoming a Final Order, at the Closing, Seller shall execute and
deliver the Reversal Agreement.
9.8. PAYMENT OF INDEBTEDNESS; FINANCING STATEMENTS. Seller shall secure
the release of all liens or encumbrances on the Station Assets that secure the
payment of any indebtedness and shall deliver to Buyer at the Closing releases
or terminations under the Uniform Commercial Code and any other applicable
federal, state or local statutes or regulations of any financing or similar
statements filed against any Station Assets in (a) the jurisdictions in which
the Station Assets are and have been located since such Station Assets were
acquired by Seller, and (b) any other location specified or required by
applicable federal, state or local statutes or regulations.
9.9. NO INCONSISTENT ACTION. Seller shall not take any action which is
materially inconsistent with its obligations under this Agreement or that would
hinder or delay the consummation of the transactions contemplated by this
Agreement.
ARTICLE 10
JOINT COVENANTS
10.1. CONDITIONS. If any event should occur between the date hereof and
the Closing, either within or without the control of any party hereto, which
would prevent fulfillment of the conditions upon the obligations of any party to
consummate the transactions contemplated by this Agreement, the parties shall
use their reasonable efforts to cure the event as expeditiously as possible.
10.2. COMMERCIALLY REASONABLE EFFORTS. Between the date of this
Agreement and the Closing, each party shall use commercially reasonable efforts
to cause the fulfillment at the earliest practicable date of all of the
conditions to the obligations of the other party to consummate the sale and
purchase under this Agreement.
10.3. CONTROL OF STATION. Between the date of this Agreement and the
Closing, Buyer shall not, directly or indirectly, control, supervise or direct
the operations of the
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Station. Such operations shall be the sole responsibility of Seller and, subject
to the provisions of Article 9, shall be in its complete discretion.
10.4. CONFIDENTIALITY. Buyer and each Seller shall each keep
confidential all information obtained by it with respect to the other in
connection with this Agreement, and if the transactions contemplated hereby are
not consummated for any reason, each shall return to the other, without
retaining a copy thereof, any schedules, documents or other written information,
including all financial information, obtained from the other in connection with
this Agreement and the transactions contemplated hereby, except where such
information is known or available through other lawful sources or where such
party is advised by counsel that its disclosure is required in accordance with
applicable law.
10.5. COVENANTS WITH RESPECT TO AGREEMENTS WITH LEE.
Seller shall take the following actions in connection with its
obligations to Lee:
(a) Within three (3) business days of the receipt of written notice from
Buyer, but in no event later than thirty (30) days from the date hereof, whether
or not Buyer gives such written notice, Seller shall provide Lee with written
notice of this Agreement (the "ROFR Notice") as required under Section 1(a) of
that certain Agreement between Lee and Seller dated December 12, 1994 (the "ROFR
Agreement"). The ROFR Agreement grants Lee thirty (30) days after receipt of the
ROFR Notice to exercise its right of first refusal (the "ROFR Exercise
Notification"). Seller shall provide Buyer with a copy of any such ROFR Exercise
Notification within five (5) days of Seller's receipt thereof. Notwithstanding
anything herein to the contrary, in the event that Lee properly exercises its
right of first refusal, this Agreement shall be null and void, and the parties
hereto shall have no further obligations or liability to each other hereunder.
(b) Within three (3) business days of the receipt of written notice from
Buyer, and with Seller's consent, not to be unreasonably withheld, Seller shall
provide notice to Lee of its intention to terminate the Lee TBA pursuant to
Section 4.3 thereof; provided however, that notwithstanding anything to the
contrary contained herein, if such notice of termination is given by Seller, and
if this Agreement is terminated for any reason other than Seller's material
uncured breach hereof or Seller's voluntary election to terminate this Agreement
pursuant to Section 17.1(a)(iv) hereof, Buyer shall be responsible for paying
the full amount of the Lee TBA Liquidated Damages. Buyer agrees to fulfill this
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obligation by (i) cancelling the Note; or (ii) in the event the Note has not
been executed, making the TBA Escrow Deposit within five (5) days of such
termination of this Agreement (with no Seller obligation to execute and deliver
the Note), whichever the case may be, and, in addition to (i) or (ii), by paying
directly to Lee when due any Lee TBA Liquidated Damages in excess of $1,700,000.
If this Agreement is terminated solely because of Seller's material uncured
breach hereof or Seller's voluntary election to terminate this Agreement
pursuant to Section 17.1(a)(iv) hereof, Seller shall be responsible for paying
the full amount of the Lee TBA Liquidated Damages. Seller agrees, however, that
in the event (i) this Agreement is terminated solely because of a change in the
law which renders the KWBQ-TV LMA incapable of effectuation, and (ii) Seller,
within two years of such termination, consummates the sale of the Station to a
third party buyer for a purchase price in excess of Twenty-Five Million, Six
Hundred Fifty Thousand Dollars ($25,650,000), then in that event Seller will
reimburse Buyer out of such excess for Lee TBA Liquidated Damages incurred by
Buyer up to a maximum of $1,700,000. Ten (10) business days in advance of
Closing or six (6) months after notice of intent to terminate the Lee TBA has
been given to Lee, whichever is earlier, Buyer shall notify Seller in writing as
to whether or not Buyer wishes Seller to exercise the Lee Purchase Option. If
Buyer notifies Seller hereunder that Buyer does not wish the Lee Purchase Option
to be exercised, Buyer shall not be liable for the Lee Purchase Option Cost.
ARTICLE 11
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Seller made in this Agreement
shall be true, correct and complete in all material respects on and as of the
Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by Seller on or prior to Closing Date shall have been complied with or
performed.
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11.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 of
this Agreement shall have been satisfied, and the FCC Consent shall have become
a Final Order, provided however, that either party shall have the right to
require the other to proceed to Closing upon an initial staff grant of the FCC
Consent; provided, further, that Buyer will not be required to proceed to
Closing hereunder until a Final Order is obtained if Buyer provides Seller
written notice from Buyer's financing sources that, despite Buyer's commercially
reasonable, good faith efforts to obtain its financing sources' consent to close
upon initial FCC Consent, Buyers' financing sources require that FCC Consent
become a Final Order. If the parties proceed to Closing upon an initial staff
grant of the FCC Consent, the parties will enter into the Reversal Agreement.
The applicable waiting period under the HSRA shall have expired.
11.3. GOVERNMENTAL AUTHORIZATIONS. Seller shall be the lawful holder of
the Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 1.2(a), and there shall not have been any
modification of any of such licenses, permits and other authorizations which
might have a material adverse effect on the Station or the conduct of its
business and operation. No proceeding shall be pending which seeks or the effect
of which reasonably could be to revoke, cancel, fail to renew, suspend or modify
adversely any of the Station Licenses or any other licenses, permits or other
authorizations relating to the Station.
11.4. THIRD-PARTY CONSENTS. Seller shall have obtained and shall have
delivered to Buyer all third-party consents that may be required for assignment
of the Real Property Leases and Contracts marked with an asterisk on Schedules
1.2(b) and 1.2(d), without any material change or impairment of such Real
Property Leases or Contracts and without any condition adverse to Buyer.
11.5. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto that Buyer in good faith, based upon a written opinion of
counsel (and provided to Seller), believes would or could (if resolved adversely
to Seller or Buyer) render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms, or
would or could preclude Seller from assigning and conveying the Station Assets
to Buyer in accordance with the terms and conditions of this Agreement.
<PAGE> 26
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11.6. DELIVERIES. Seller shall have made or stand ready, willing and
able to make all the deliveries required under Section 13.1.
11.7. ENVIRONMENTAL AUDIT. Buyer shall have received, within sixty (60)
days of the date of this Agreement (and promptly thereafter provided to Seller),
completed Phase I environmental audit reports (the "Phase I Reports") at Buyer's
sole expense regarding the Real Property, which Phase I Reports shall be
reasonably satisfactory to Buyer. In the event Buyer fails to obtain such Phase
I Reports within the aforementioned sixty (60) day period, Buyer shall have
irrevocably waived such condition. If, in Buyer's reasonable judgment, Phase II
environmental audit reports ("Phase II Reports") are necessary in light of the
contents of the Phase I Reports, at Buyer's sole expense, Buyer shall be
required to obtain such Phase II Reports to its reasonable satisfaction within
ninety (90) days of the date of this Agreement (and promptly thereafter provide
them to Seller). In the event Buyer fails to obtain any such Phase II Report
within such 90-day period, Buyer shall have irrevocably waived such condition.
In the event that a Phase I Report and/or a Phase II Report discloses an
environmental condition or matter which is reasonably unsatisfactory to Buyer,
Buyer shall notify Seller in writing of its objection to any environmental
condition or matter addressed in the Phase I Reports or Phase II Reports and
Seller shall have sixty (60) days from Seller's receipt of notice to remediate
and eliminate such condition or matter; provided, that such matters and
conditions can be remediated and eliminated by Seller's expenditure of One
Hundred Thousand Dollars ($100,000) or less, such expense to be paid by Seller.
If the environmental condition or matter cannot be remediated and eliminated by
Seller's expense of One Hundred Thousand Dollars ($100,000) or less, Seller
shall elect (and provide Buyer with written notice of such election within the
sixty (60) day period following Buyer's initial notice) to either (a) proceed
with the remediation and elimination of such conditions and matters without
regard to the One Hundred Thousand Dollars ($100,000) expense threshold
referenced above, or (b) terminate this Agreement without any further liability
hereunder; provided however, that if Seller elects to so terminate this
Agreement, Buyer may then elect, by providing Seller with notice thereof within
ten (10) days after Buyer's receipt of Seller's election, to either: (a) accept
such termination by Seller, or (b) notwithstanding anything herein to the
contrary, waive all non-compliant environmental conditions and matters and any
claims it may have against Seller with respect to any such non- remediated or
non-compliant condition or matter, in which case the Closing will proceed as
contemplated by this Agreement (subject to its terms and conditions) and Buyer
shall
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receive a One Hundred Thousand Dollar ($100,000) credit against the Purchase
Price otherwise payable pursuant to Section 2.1 hereof.
11.8. FCC CONSENT TO ASSIGNMENT OF STATION KWBQ-TV; CONSUMMATION OF
KWBQ-TV AGREEMENT. The FCC shall have granted its consent to the assignment of
the FCC authorizations for Station KWBQ-TV, Santa Fe, New Mexico, from Buyer to
Seller and such consent shall have become a Final Order. The parties shall
consummate the KWBQ-TV Agreement and Seller and ACME Television of New Mexico,
LLC ("ATNM") shall enter into a Local Marketing Agreement substantially in the
form of Exhibit A to the KWBQ-TV Agreement (the "KWBQ-TV LMA") simultaneous with
the Closing of this Agreement; provided, that, if either party exercises its
right under Section 11.2 of this Agreement to require Closing upon an initial
staff grant of the FCC Consent, then, in that event, the parties shall be
obligated to close the assignment of the FCC authorizations and other assets for
Station KWBQ-TV upon a similar initial staff grant of the FCC Consent for that
transaction; provided further, that, in the event the closing for the assets of
Station KWBQ-TV occurs before any FCC Consent becomes final, then, in that
event, the parties shall enter into a similar Reversal Agreement for that
transaction as well. Notwithstanding anything to the contrary in this Agreement,
ATNM shall have the sole right to waive in writing this condition relating to
the KWBQ-TV LMA; provided that such waiver will increase the Purchase Price for
the Station by One Million Eight Hundred and Fifty Thousand Dollars
($1,850,000), to Twenty Seven Million, Two Hundred and Fifty Thousand Dollars
($27,250,000), plus the Lee Purchase Option Cost, with the Four Hundred Thousand
Dollar ($400,000) portion of the Purchase Price referenced in Section 2.2(a)(2)
hereof to be paid on the Closing Date, and the parties agree in that event to
make any necessary conforming changes to this Agreement and the KWBQ-TV
Agreement and the exhibits and schedules thereto.
11.9. SATISFACTION OF COVENANTS WITH RESPECT TO LEE. Seller shall have
satisfied its obligations under Section 10.5 hereof, and Lee shall not have
properly exercised its right of first refusal under the ROFR Agreement.
11.10. LIEN SEARCH. Buyer shall have received a written report
concerning the liens and other encumbrances, if any, on any of the Station
Assets and shall have received confirmation from Seller that any liens and other
encumbrances disclosed on such report have been removed or will be removed at
the Closing.
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11.11. RENEWAL OF LICENSE. The Station Licenses shall have been renewed
by the FCC for a full term expiring on October 1, 2006 without imposition of any
conditions or modifications except those generally applied to stations of the
same type and class.
ARTICLE 12
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties made by Buyer in this Agreement
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date.
(b) All the terms, covenants and conditions to be complied with and
performed by Buyer under this Agreement on or prior to the Closing Date shall
have been complied with or performed in all material respects.
12.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 and
Section 11.2 of this Agreement shall have been satisfied.
12.3. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto that Seller in good faith, based upon a written opinion of
counsel (and provided to Buyer), believes would or could (if resolved adversely
to Seller or Buyer) render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with its terms or
would or could preclude Seller from assigning and conveying the Station Assets
to Buyer in accordance with the terms and conditions of this Agreement.
12.4. DELIVERIES. Buyer shall have made or stand ready, willing and able
to make all the deliveries required under Section 13.2.
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12.5. FCC CONSENT TO ASSIGNMENT OF STATION KWBQ-TV; CONSUMMATION OF
KWBQ-TV AGREEMENT. The FCC shall have granted its consent to the assignment of
the FCC Authorizations for Station KWBQ-TV, Santa Fe, New Mexico, from Buyer to
Seller and such consent shall have become a Final Order. The parties shall
consummate the KWBQ-TV Agreement and Seller and ATNM shall enter into the
KWBQ-TV LMA simultaneous with the Closing of this Agreement; provided, that, if
the Closing is held under Section 11.2 of this Agreement upon an initial staff
grant of the FCC Consent, then, in that event, the parties shall be obligated to
close the assignment of the FCC authorizations and other assets for Station
KWBQ-TV upon a similar initial staff grant of the FCC Consent for that
transaction; provided further, that, in the event the closing for the assets of
Station KWBQ-TV occurs before any FCC Consent becomes final, then, in that
event, the parties shall enter into a similar Reversal Agreement for that
transaction as well. This condition relating to the KWBQ-TV LMA is subject to
waiver by ATNM pursuant to Section 11.8 hereof.
12.6 SATISFACTION OF COVENANTS WITH RESPECT TO LEE. Buyer shall have
satisfied its obligations under Section 10.5 hereof, and Lee shall not have
properly exercised its right of first refusal under the ROFR Agreement.
ARTICLE 13
DOCUMENTS TO BE DELIVERED AT THE CLOSING
13.1. DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller shall
deliver to Buyer the following:
(a) a certificate of an officer of Seller's general partner,
dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, certifying to the fulfillment of the conditions set forth in
Sections 11.1 through 11.9 hereof;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Buyer, effecting the sale,
transfer, assignment and conveyance of the Station Assets to Buyer,
including, but not limited to, the following:
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(i) assignments of the Station Licenses and other Government
Authorizations;
(ii) bills of sale for all Personal Property, including all
books, records, logs and similar assets;
(iii) assignments of the Real Property Leases and Contracts; and
(iv) assignments of all intangible personal property.
(c) the Reversal Agreement unless at the time of Closing the FCC
Consent shall have become a Final Order;
(d) if the Post-Closing Scenario is applicable, the TBA Escrow
Agreement;
(e) resolutions of the members of Seller's general partner,
countersigned by the Seller's limited partners, authorizing the
execution, delivery and performance of this Agreement, certified by the
secretary of Seller;
(f) the KWBQ-TV LMA;
(g) assignments, consents and Estoppel Certificates relative to
the Real Property Leases;
(h) such other documents as may reasonably be requested by
Buyer's counsel; and
(i) the opinions of Seller's corporate and FCC counsel in the
form and substance reasonably satisfactory to Buyer.
13.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to Seller the following:
(a) a certificate of an officer of Buyer, dated the Closing Date,
in form and substance reasonably satisfactory to Seller, certifying to
the fulfillment of the conditions specified in Sections 12.1 through
12.6 hereof;
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(b) immediately available wire-transferred federal funds as
provided in Section 2.2(b);
(c) instruments, in form and substance reasonably satisfactory to
Seller and its counsel, pursuant to which Buyer assumes obligations,
liabilities and commitments as provided in Article 3;
(d) the opinion of Buyer's counsel in the form and substance
reasonably satisfactory to Seller; and
(e) resolutions of the members of each Buyer, authorizing the
execution, delivery and performance of this Agreement, certified by an
officer of each Buyer;
(f) the KWBQ-TV LMA;
(g) if the Pre-Closing Scenario is applicable, the cancelled
Note;
(h) if the Post-Closing Scenario is applicable, the TBA Escrow
Agreement; and
(i) such other documents as may reasonably be requested by
Seller's counsel.
13.3. ESCROW AGENT. At the Closing the parties shall cause the Escrow
Agent to deliver the Escrow Deposit to Seller by wire transfer of immediately
available funds, and deliver the interest on the Escrow Deposit to Buyer by wire
transfer of immediately available funds.
ARTICLE 14
TRANSFER TAXES; FEES AND EXPENSES
14.1. TRANSFER TAXES AND SIMILAR CHARGES. Except as set forth in
Sections 14.2 and 14.3 hereof, all costs of transferring the Station Assets in
accordance with this Agreement, including recordation, transfer and documentary
taxes and fees, and any excise, sales or use taxes, shall be borne by Seller.
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14.2. GOVERNMENTAL FILING FEES. Any filing or grant fees imposed by the
FCC shall be borne equally by Buyer and Seller. The HSRA fee shall be paid by
Buyer.
14.3. EXPENSES. Except as otherwise provided in this Agreement, each
party hereto shall be solely responsible for and shall pay all costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
ARTICLE 15
BROKER'S COMMISSION OR FINDER'S FEE
15.1. BUYER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Buyer
represents and warrants to Seller that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, other than David Woods, nor has it or any person or entity
acting on its behalf taken any action on which a claim for any such payment
could be based. Buyer agrees to indemnify and hold Seller harmless from and
against any and all claims, losses, liabilities and expenses (including
reasonable attorneys' fees) arising out of a claim by any person or entity based
on any such arrangement or agreement made or alleged to have been made by Buyer.
Buyer agrees to be solely responsible for the payment on the Closing Date of the
$250,000 fee due to David Woods.
15.2. SELLER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Seller
represents and warrants to Buyer that neither it nor any person or entity acting
on its behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any action
on which a claim for any such payment could be based. Seller agrees to indemnify
and hold Buyer harmless from and against any and all claims, losses, liabilities
and expenses (including reasonable attorneys' fees) arising out of a claim by
any person or entity based on any such arrangement or agreement made or alleged
to have been made by Seller.
ARTICLE 16
INDEMNIFICATION
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16.1. INDEMNIFICATION BY SELLER. Notwithstanding the Closing, Seller
hereby agrees to indemnify, defend and hold Buyer harmless against and with
respect to, and shall reimburse Buyer for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or obligation by any Seller contained herein or in any
certificate, document or instrument delivered to Buyer hereunder;
(b) Any and all obligations of Seller not assumed by Buyer pursuant to
the terms of this Agreement;
(c) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station prior to the Effective Time, including but
not limited to (i) any and all liabilities arising under the Station Licenses,
the Real Property Leases, or the Contracts which relate to events occurring
prior to the Effective Time, and; (ii) any fines, forfeitures, and other
penalties imposed by the FCC related to Seller's operation of the Station prior
to Closing (e.g.. commercial overages for children's programming) (collectively,
"FCC Penalties"); provided, however, that in the event the Seller/Buyer LMA
becomes effective, then Seller shall not indemnify Buyer for any FCC Penalties
attributable in whole or in part to Buyer's action or inaction under the
Seller/Buyer LMA.
(d) Any and all losses, liabilities or damages resulting from any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated by this Agreement;
(e) Any and all losses, liabilities or damages resulting from the
litigation listed on Schedule 7.9;
(f) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
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(g) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Seller from the date of payment, in the case of a reimbursable
expense, and from the date of incurrence, in the case of any other losses, until
the date of reimbursement by Buyer.
16.2. INDEMNIFICATION BY BUYER. Notwithstanding the Closing, Buyer
hereby agrees to indemnify and hold the Seller harmless against and with respect
to, and shall reimburse the Seller for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or obligation by Buyer contained herein or in any certificate,
document or instrument delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station by Buyer on and after the Effective Time,
including but not limited to any and all liabilities arising under the Station
Licenses or the Contracts assigned to Buyer which relate to events occurring
after the Effective Time;
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(d) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Seller from the date of payment, in the case of a reimbursable
expense, and from the date of incurrence, in the case of any other losses, until
the date of reimbursement by Buyer.
16.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
(a) The party seeking indemnification under this Article 16 (the
"Claimant") shall give notice to the party from whom indemnification is sought
(the "Indemnitor") of any claim, whether solely between the parties or brought
by a third party, specifying (i) the factual basis for the claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, notice shall be given by
<PAGE> 35
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Claimant within fifteen (15) business days after written notice of the action,
suit or proceeding was given to Claimant, or sooner if action is required by the
Indemnitor prior to the expiration of the fifteen (15) business days. In all
other circumstances, notice shall be given by Claimant within thirty (30)
business days after Claimant becomes, or should have become, aware of the facts
giving rise to the claim. Notwithstanding the foregoing, Claimant's failure to
give Indemnitor timely notice shall not preclude Claimant from seeking
indemnification from Indemnitor except to the extent that Claimant's failure has
materially prejudiced Indemnitor's ability to defend the claim or litigation.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have thirty (30)
business days to make any investigation of the claim that the Indemnitor deems
necessary or desirable. For the purposes of this investigation, the Claimant
agrees to make available to the Indemnitor and/or its authorized representatives
the information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnitor cannot agree as to the validity and amount of the
claim within the 30-day period (or any mutually agreed upon extension thereof),
the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnitor shall have the right at
its own expense to participate in or assume control of the defense of the claim,
and the Claimant shall cooperate fully with the Indemnitor, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnitor. If the Indemnitor elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of the claim at its own expense. If the
Indemnitor does not elect to assume control or otherwise participate in the
defense of any third party claim, Claimant may, but shall have no obligation to,
defend or settle such claim or litigation in such manner as it deems
appropriate, and in any event Indemnitor shall be bound by the results obtained
by the Claimant with respect to the claim (by default or otherwise) and shall
promptly reimburse Claimant for the amount of all expenses (including the amount
of any judgment rendered), legal or otherwise, incurred in connection with such
claim or litigation. The Indemnitor shall be subrogated to all rights of the
Claimant against any third party with respect to any claim for which indemnity
was paid. Notwithstanding anything herein to the contrary, neither Indemnitor
nor Claimant shall settle any third party claim or litigation without providing
the other party reasonable prior notice of the terms of such settlement at least
five (5) business days prior to the
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execution of any such settlement, unless emergency circumstances dictate
otherwise; provided, that Indemnitor shall not enter into any such settlement of
third party claim without the Claimant's prior written approval, which approval
shall not be unreasonably withheld and shall, in any event, be provided if the
settlement provides a full release of liability for Claimant and does not
otherwise impose any liability on Claimant.
16.4. LIMITATIONS. Neither any Seller nor Buyer shall have any
obligation to the other party for any matter described in Section 16.1 or
Section 16.2, as the case may be, except upon compliance by the other party with
the provisions of this Article 16, particularly Section 16.3. Neither party
shall be required to indemnify the other party under this Article 16 for any
breach of any representation or warranty contained in this Agreement unless
written notice of a claim under this Article 16 was received by the party within
the pertinent survival period specified in Article 18 of this Agreement.
ARTICLE 17
TERMINATION RIGHTS
17.1. TERMINATION.
(a) This Agreement may be terminated by either Buyer or Seller, if the
party seeking to terminate is not in material breach of this Agreement, upon
written notice to the other upon the occurrence of any of the following:
(i) if, on or prior to the Closing Date, there is a material
breach by the other party with respect to the observance or in the due
and timely performance of any of its covenants or agreements contained
herein and such party fails to cure such breach within ten (10) business
days from receipt of written notice of such breach, and the terminating
party is not in material breach hereunder;
(ii) if, by Final Order, the FCC denies the FCC Application or
any part thereof or designates the FCC Application for a trial-type
hearing;
(iii) if there shall be in effect any judgment, final decree or
order that would prevent or make unlawful the Closing; or
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(iv) if the FCC or its staff has not issued the FCC Consent and
such FCC Consent has not become a Final Order within eighteen (18)
months of the date the FCC Application is submitted to the FCC.
(b) This Agreement may be terminated by Buyer, upon written notice to
Seller, if Buyer elects to terminate pursuant to Article 20 hereof.
(c) This Agreement may be terminated by Seller, upon written notice to
Buyer of Seller's election under Section 11.7 hereof (which has not been set
aside by Buyer's waiver).
(d) This Agreement shall automatically terminate pursuant to Section
2.2(a) or pursuant to the last sentence of Section 10.5(a) or upon termination
of the KWBQ-TV Agreement.
17.2. LIABILITY. Except as otherwise provided in Sections 2.2(a),
10.5(a), and 11.7 and Article 20 hereof, the termination of this Agreement under
Section 17.1 hereof shall not relieve any party of any liability for breach of
this Agreement prior to the date of termination.
ARTICLE 18
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
The representations, warranties, covenants, indemnities and agreements
contained in this Agreement or in any certificate, document or instrument
delivered pursuant to this Agreement are and will be deemed and construed to be
continuing representations, warranties, covenants, indemnities and agreements
and shall survive the Closing for a period of two (2) years after the Closing
Date, except for (a) agreements under Section 10.4 of this Agreement, which
shall survive the Closing for five (5) years, and (b) indemnification
obligations resulting from or for third party claims, which shall survive the
Closing for a period of one (1) month after the last day of the longest
applicable statutory limitation period. No claim may be brought under this
Agreement or any other certificate, document or instrument delivered pursuant to
this Agreement unless written notice describing in reasonable detail the nature
and basis of such claim is given on or prior to the last day of the applicable
survival period. In the event such a notice is given,
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the right to indemnification with respect thereto shall survive the applicable
survival period until such claim is finally resolved and any obligations thereto
are fully satisfied. Any investigation by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty,
covenant or agreement contained herein.
ARTICLE 19
REMEDIES
19.1. DEFAULT BY SELLER. Seller recognizes that, in the event Seller
defaults in the performance of its obligations under this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled in such
event, in addition to bringing suit at law or equity for money or other damages
(including costs and expenses incurred by Buyer in the preparation and
negotiation of this Agreement and in contemplation of the Closing hereunder) or
for indemnification under Article 16 hereof, to seek to obtain specific
performance of the terms of this Agreement. In any action to enforce the
provisions of this Agreement, Seller shall waive the defense that there is an
adequate remedy at law or equity and agree that Buyer shall have the right to
seek to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security. In
addition, Buyer shall be entitled to obtain from Seller court costs and
reasonable attorneys' fees incurred by it in successfully enforcing its rights
hereunder, plus interest at the Prime Rate on the amount of any judgment
obtained against Seller from the date of default until the date of payment of
the judgment. As a condition to seeking specific performance, Buyer shall not be
required to have tendered the Purchase Price specified in Section 2.1 of this
Agreement, but shall be ready, willing and able to do so.
19.2. DEFAULT BY BUYER. If the transactions contemplated by this
Agreement are not consummated as a result of Buyer's wrongful failure to close
hereunder, and Seller is not also in material breach hereunder, Seller shall be
entitled to, in addition to Buyer's obligation to pay the Lee TBA Liquidated
Damages pursuant to Section 10.5(b) hereof, payment of Five Hundred Thousand
Dollars ($500,000) as liquidated damages in full settlement of any damages of
any nature or kind that Seller may suffer or allege to suffer as the result
thereof. It is understood and agreed that the amount of liquidated damages
represents Buyer's and Seller's reasonable estimate of actual damages and does
not constitute a penalty. Subject to Sections 10.5(b) and 19.3 hereof, which
shall govern responsibility for the Lee TBA Liquidated Damages in the
circumstances specified
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therein, recovery of liquidated damages under this Section 19.2 shall be the
sole and exclusive remedy of Seller against Buyer for failure to consummate this
Agreement and shall be applicable regardless of the actual amount of damages
sustained. In addition, Seller shall be entitled to obtain from Buyer court
costs and reasonable attorneys' fees incurred by Seller in successfully
enforcing its rights hereunder, plus interest at the Prime Rate on the amount of
any judgment obtained against Buyer from the date of default until the date of
payment of the judgment. As a condition to obtaining liquidated damages, Seller
shall not be required to have tendered the Station Assets but shall be required
to demonstrate that it is willing and able to do so and to perform its other
closing obligations in all material respects.
19.3. REMEDIES RELATING TO VOLUNTARY TERMINATION. In the event that
either party has a right to terminate this Agreement pursuant to Section
17.1(a)(iv), the party who first provides written notice of its election to
terminate this Agreement pursuant to Section 17.1(a)(iv) shall be required to
pay the Lee TBA Liquidated Damages or to cancel or pay the Note, as the case may
be.
ARTICLE 20
RISK OF LOSS
The risk of loss or damage to the Station Assets prior to the Effective
Time shall be upon Seller. Seller shall repair, replace and restore any damaged
or lost Station Asset to its prior condition as soon as possible and in no event
later than the Effective Time. If Seller is unable or fails to restore or
replace any such lost or damaged Station Asset(s) prior to the Closing and the
aggregate cost of such restoration or replacement would exceed One Hundred
Thousand Dollars ($100,000), Buyer may elect (a) to terminate this Agreement
pursuant to Article 17 hereof, (b) to consummate the transactions contemplated
by this Agreement on the Closing Date, in which event Seller shall assign to
Buyer at Closing Seller's rights under any insurance policy or pay over to Buyer
all proceeds of insurance covering such Station Asset's damage, destruction or
loss (plus an amount equal to any deductible), without further obligation or
liability to Buyer for such loss, or (c) delay the Closing Date until a date
within fifteen (15) days after Seller gives written notice to Buyer of
completion of the restoration or replacement of such Station Asset(s). If Seller
is unable or fails to restore or replace any lost or damaged Station Asset(s)
prior to the Closing Date and the aggregate cost of such restoration or
replacement would be One Hundred Thousand Dollars ($100,000) or less, Seller
shall
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reimburse Buyer for the cost of restoration or replacement of such asset(s) and
One Hundred Thousand Dollars ($100,000) of the Escrow Deposit shall be retained
in escrow for that purpose until such reimbursement obligation is satisfied. If
the delay in the Closing Date under this Article 20 would cause the Closing to
fall at any time after the period permitted by the FCC Consent, Seller and Buyer
shall file an appropriate request with the FCC for an extension of time within
which to complete the Closing.
ARTICLE 21
OTHER PROVISIONS
21.1. PUBLICITY. Except as required by applicable law or with the other
party's express written consent, 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.
21.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Neither Buyer nor Seller may assign this Agreement without the
prior written consent of the other parties hereto except that Buyer may assign
its rights and obligations under this Agreement to any other party; provided,
that Buyer will remain liable in the event such assignee fails to fulfill any of
Buyer's obligations hereunder.
21.3. ENTIRE AGREEMENT. This Agreement, along with the exhibits,
schedules and any other documents referenced herein, embodies the entire
agreement and understanding of the parties hereto and supersede any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein. No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of any waiver, amendment, change, extension or discharge is sought.
21.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
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21.5. COMPUTATION OF TIME. If after making computations of time provided
for in this Agreement, a time for action or notice falls on Saturday, Sunday or
a Federal holiday, then such time shall be extended to the next business day.
21.6. GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of New Mexico without regard to its
principles of conflict of law.
21.7. NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any party may request in
writing.
To Seller: Ramar Communications II, Ltd.
9800 University Avenue
Lubbock, TX 79423
Attention: Mr. Brad Moran
Telecopy: 806-748-1949
Telephone: 806-745-3434
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman P.L.L.C.
Suite 600
2000 K Street, N.W.
Washington, DC 20006
Attention: Dennis P. Corbett, Esq.
Telecopy: 202-293-7783
Telephone: 202-429-8970
To Buyer: ACME Television of New Mexico, LLC
ACME Television Licenses of New Mexico, LLC
10829 Olive Boulevard, Suite 202
St. Louis, MO 63141
Attention: Mr. Doug Gealy
Telecopy: 314-989-0566
Telephone: 314-989-0616
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With a copy (which shall not constitute notice) to:
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L Street, N.W.
Washington, DC 20037
Attention: Lewis J. Paper, Esq.
Telecopy: 202-887-0689
Telephone: 202-828-2265
Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (iii) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (iv) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
21.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
21.9. FURTHER ASSURANCES. Seller shall at any time and from time to time
after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may reasonably request in
order to vest and confirm in Buyer (or their assignees) the title and rights to
and in all of the Station Assets to be and intended to be transferred, assigned
and conveyed hereunder.
ARTICLE 22
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when used
herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"Accounts Receivable" shall have the meaning set forth in Section
1.3(c).
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"Affiliate" shall mean any person or entity that is controlling,
controlled by or under common control with the named person or entity.
"Affiliate Transactions" shall mean the any transaction between the
Station and an Affiliate of any Seller.
"Agreement" shall mean this Asset Purchase Agreement, including the
exhibits and schedules hereto.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Business Day," whether or not capitalized, shall mean every day of the
week excluding Saturdays, Sundays and Federal holidays.
"Claimant" shall have the meaning set forth in Section 16.3(a).
"Closing" shall have the meaning set forth in Section 1.1 hereof.
"Closing Date" shall mean the date on which the Closing is completed.
"Contracts" shall mean any and all of the contracts, agreements,
including leases (other than those relating to real property), commitments and
understandings, options, rights and interests, written or oral, of any Seller or
to which any Seller is a party, relating to the conduct of the business and
operations of the Station and listed in Schedule 1.2(d).
"Effective Time" shall mean 12:01 a.m., Mountain Time, on the Closing
Date.
"Environmental Laws" shall mean all applicable local, state and federal
statutes and regulations relating to the protection of human health or the
environment including the FCC's regulations concerning radio frequency
radiation.
"Escrow Agent" shall mean such Escrow Agent as the parties hereto
mutually agree upon no later than February 26, 1999.
"Escrow Agreement" shall mean the agreement between Buyer, Seller and
Escrow Agent in the form of Exhibit A hereto.
<PAGE> 44
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"FCC" shall mean the Federal Communications Commission.
"FCC Application" shall mean the application or applications that Seller
and Buyer must file with the FCC requesting its consent to the assignment of the
Station Licenses.
"FCC Consent" shall mean the action by the FCC or its staff granting the
FCC Application.
"Final Order" shall mean action by the FCC (i) which has not been
vacated, reversed, stayed, set aside, annulled or suspended, (ii) with respect
to which no timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion, is
pending, and (iii) as to which the time for filing any such appeal, request,
petition, or similar document or for the reconsideration or review by the FCC on
its own motion under the Communications Act of 1934, as amended, and the rules
and regulations of the FCC, has expired.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Government Licenses" shall have the meaning set forth in Section 1.2(a)
hereof.
"Hazardous Substance" shall mean all hazardous or toxic waste or
material which, because of its quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. "Hazardous
Substance" shall include, but is not limited to, any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such federal
or state statutes. "Hazardous Substance" shall not include ordinary quantities
of consumer or commercial products used in the normal course of broadcast
station operations, including grounds and building operation and maintenance;
provided, that such products have been stored, handled and disposed of in
accordance with applicable law and regulation.
<PAGE> 45
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"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in Section 16.3(a).
"Intellectual Property" shall mean all trademarks, trade names, service
marks, patents, franchises, copyrights, including applications for registration
of any of them, jingles, logos, slogans, licenses, permits and privileges, trade
secrets, and other similar intangible property rights and interests owned by or
licensed to Seller and used or useful in the operation of the Station.
"KWBQ-TV Agreement" shall mean that certain Asset Purchase Agreement
dated as of the date hereof by and between Seller and Buyer relating to the sale
and acquisition of Station KWBQ-TV, Santa Fe, New Mexico.
"Lee TBA Liquidated Damages" shall have the meaning set forth in Section
2.2(b)(1) hereof.
"Liens" shall mean mortgages, deeds of trust, liens, pledges, collateral
assignments, security interests, leases, subleases, conditional sales
agreements, judgments, easements, covenants, encroachments, encumbrances or
other defects of title.
"Lee TBA" shall mean that certain Time Brokerage Agreement by and
between Seller and Lee dated December 12, 1994.
"Notice of Disagreement" shall have the meaning set forth in Section
5.2.
"Permitted Encumbrances" shall mean (a) liens for Taxes not yet due and
payable; (b) landlord's liens; and (c) statutory liens that were created in the
ordinary course of business that do not materially affect the current use and
enjoyment of the Station Assets.
"Personal Property" shall have the meaning set forth in Section 7.6.
"Prime Rate" shall mean a per annum rate equal to the "prime rate" as
published in the Money Rates column of the Eastern Edition of The Wall Street
Journal (or the average of such rates if more than one rate is indicated).
<PAGE> 46
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"Proration Schedule" shall have the meaning set forth in Section 5.2.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Real Property" and "Real Property Leases" shall have the meanings set
forth in Section 7.5(a).
"Referee" shall have the meaning set forth in Section 5.2.
"Reversal Agreement" shall mean a reversal agreement between Seller and
Buyer in a mutually-agreeable form.
"ROFR Notice" shall have the meaning set forth in Section 10.5(a)
hereof.
"ROFR Exercise Notification" shall have the meaning set forth in Section
10.5(a) hereof.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller's Proration Amount" shall have the meaning set forth in Section
5.2.
"Station" shall mean television broadcast station KASY-TV, Albuquerque,
New Mexico.
"Station Assets" shall have the meaning set forth in Section 1.2.
"Station Licenses" shall mean the licenses, permits and other
authorizations, including any temporary waiver or special temporary
authorization, issued by the FCC to Seller in connection with the conduct of the
business and operation of the Station.
"TBA Escrow Agreement" shall mean the agreement between Buyer, Seller
and the TBA Escrow Agent in the form of Exhibit D hereto.
"TBA Escrow Deposit" shall have the meaning set forth in Section 2.2(c).
<PAGE> 47
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
[SIGNATURES BEGIN ON PAGE IMMEDIATELY FOLLOWING]
<PAGE> 48
- 47 -
RAMAR COMMUNICATIONS II, LTD.
By: GP Ramar LLC, its General Partner
By: Ramar Communications, Inc., its Sole
Member
By: /s/ Brad Moran
------------------------------
Brad Moran, President
ACME TELEVISION LICENSES OF NEW
MEXICO, LLC
By: /s/ Doug Gealy
------------------------------
Doug Gealy, President
ACME TELEVISION OF NEW MEXICO, LLC
By: /s/ Doug Gealy
------------------------------
Doug Gealy, President
<PAGE> 49
EXHIBIT 10.2
The Following Schedules and Exhibits have been intentionally omitted by the
Registrants.
LIST OF EXHIBITS
Exhibit A Form of $500,000 Escrow Agreement
Exhibit B Form of Note
Exhibit C Form of Seller/Buyer TBA
Exhibit D Form of TBA Escrow Agreement
LIST OF SCHEDULES
Schedule 1.2(a) Station Licenses
Schedule 1.2(b) Real Property
Schedule 1.2(c) Personal Property
Schedule 1.2(d) Contracts and Leases
Schedule 6.4 Buyer's Required Consents
Schedule 6.5 Buyer's Litigation
Schedule 7.3 Seller's Required Consents
Schedule 7.9 Seller's Litigation
Schedule 7.14 UCC Financing Statements
Schedule 7.16 Cable Carriage
A copy of any omitted Schedule or Exhibit will be provided to the Securities and
Exchange Commission upon request.
<PAGE> 1
EXHIBIT 10.3
MEMBERSHIP PURCHASE AGREEMENT
between
ROBERTS BROADCASTING OF SALT LAKE CITY, L.L.C.
MICHAEL V. ROBERTS and STEVEN C. ROBERTS
and
ACME TELEVISION HOLDINGS , L.L.C.
for majority interest in
ROBERTS BROADCASTING OF SALT LAKE CITY, L.L.C.,
<PAGE> 2
MEMBERSHIP PURCHASE AGREEMENT
This Membership Agreement (this "Agreement") is dated as of July 10,
1998 and is between Roberts Broadcasting of Salt Lake City, L.L.C., a Delaware
limited liability company (collectively, with successors and assigns, "RBSLC"),
Michael Roberts and Steven C. Roberts ("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.
<PAGE> 3
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, Lohnes & Albertson ("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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<PAGE> 4
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 Dickstein
Shapiro Morin & Oshinsky LLP, 2101 L Street, N.W., Washington, D.C. 20037, 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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<PAGE> 5
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).
4
<PAGE> 6
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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<PAGE> 7
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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<PAGE> 8
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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<PAGE> 9
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 --
Michael Roberts, Managing Member
Roberts Broadcasting of Salt Lake City, L.L.C.
Suite 300
1400 N. Kingshighway
St. Louis, MO 63113
with a copy to (but which shall not constitute
notice to Sellers):
Dow, Lohnes & Albertson, P.L.L.C
1200 New Hampshire Avenue, NW
Washington, DC 20036
Attention: John R. Feore, Jr.
and
Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Center, Suite 2600
St. Louis, MO 63102
Attention: Joseph S. vonKaenel, Esq.
If to Buyer--
ACME Television Holdings, L.L.C.
Suite 850650 Town Center Drive
Costa Mesa, CA 92626
Attention: Douglas Gealy, President
with a copy to (but which shall not constitute
notice to Buyer):
Dickstein Shapiro Morin & Oshinsky, L.L.P.
2101 L Street, N.W.
Washington, DC 20037
Attention: Lewis J. 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/ MICHAEL V. ROBERTS
---------------------------
Michael V. Roberts, individually
/s/ STEVEN C. ROBERTS
---------------------------
Steven C. Roberts, individually
ACME TELEVISION HOLDINGS, L.L.C.
By: /s/ DOUGLAS GEALY
---------------------------
Douglas Gealy, President
ROBERTS 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.
<PAGE> 1
EXHIBIT 10.4
================================================================================
ASSET EXCHANGE AGREEMENT
BY AND AMONG
PAXSON SALT LAKE CITY LICENSE, INC.,
PAXSON COMMUNICATIONS OF SALT LAKE CITY-30, INC.
AND
ROBERTS BROADCASTING OF SALT LAKE CITY, L.L.C.
X X X
APRIL 20, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE 1
DEFINITIONS
1.1 Definitions.................................................................1
ARTICLE 2
EXCHANGE AND ASSIGNMENT OF ASSETS
2.1 The Exchange................................................................7
2.2 Assumption of Obligations and Liabilities...................................8
2.3 Prorations and Adjustments.................................................10
ARTICLE 3
THE CLOSING
3.1 Time and Place of Closing..................................................11
3.2 Deliveries by Paxson.......................................................12
3.3 Deliveries by Roberts......................................................12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ROBERTS
4.1 Organization...............................................................13
4.2 Authority Relative to this Agreement.......................................13
4.3 Noncontravention; Consents and Approvals...................................13
4.4 Litigation.................................................................14
4.5 Taxes......................................................................14
4.6 Transmission Equipment.....................................................14
4.7 Compliance with Laws.......................................................15
4.8 FCC Licenses...............................................................15
4.9 Brokers and Finders........................................................16
4.10 Insurance..................................................................16
4.11 Employee Benefit Liabilities...............................................16
4.12 Contracts..................................................................16
4.13 Disclosure.................................................................16
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PAXSON
5.1 Organization...............................................................17
5.2 Authority Relative to this Agreement.......................................17
5.3 Noncontravention; Consents and Approvals...................................17
5.4 Litigation.................................................................18
5.5 Taxes......................................................................18
5.6 Transmitter Equipment......................................................18
</TABLE>
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<TABLE>
<S> <C> <C>
5.7 Compliance with Laws.......................................................18
5.8 FCC Licenses...............................................................19
5.9 Brokers and Finders........................................................19
5.10 Insurance..................................................................19
5.11 Employee Benefit Liabilities...............................................19
5.12 Contracts..................................................................20
5.13 Disclosure.................................................................20
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 Conduct of Business........................................................20
6.2 Access to Information......................................................22
6.3 FCC Consent................................................................22
6.4 Control of the Stations....................................................23
6.5 Consummation of Agreement..................................................23
6.6 Public Announcements.......................................................23
6.7 Access to Books and Records................................................24
6.8 Confidentiality............................................................24
6.9 Insurance..................................................................24
6.10 Risk of Loss...............................................................24
6.11 HSR Act Filing.............................................................25
6.12 Sales Tax Filings..........................................................26
6.14 Roberts Environmental Audits...............................................26
6.15 Paxson Environmental Audits................................................26
6.16 Relocation.................................................................27
6.17 Call Signs.................................................................27
6.18 KUPX Tower Lease...........................................................27
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF ROBERTS
7.1 Representations and Warranties.............................................28
7.2 Covenants..................................................................28
7.3 Certain Proceedings........................................................28
7.4 Opinion of Counsel.........................................................28
7.5 Document Delivery..........................................................28
7.6 No Material Adverse Change.................................................29
7.7 Consents...................................................................29
7.8 KUPX FCC Consent...........................................................29
</TABLE>
<PAGE> 4
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<TABLE>
<S> <C> <C>
7.9 KUWB FCC Consent...........................................................29
7.12 Relocation.................................................................30
7.13 Retention of Digital Frequency.............................................30
7.14 KUPX Sublease .............................................................30
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF PAXSON
8.1 Representations and Warranties.............................................30
8.2 Covenants..................................................................30
8.3 Certain Proceedings........................................................30
8.4 Opinion of Counsel.........................................................31
8.5 Document Delivery..........................................................31
8.6 No Material Adverse Change.................................................31
8.7 Consents...................................................................31
8.8 KUWB FCC Consent...........................................................31
8.9 KUPX FCC Consent...........................................................32
8.12 Relocation.................................................................32
8.13 Retention of Digital Frequency.............................................32
8.14 KUWB Transmitter Lease.....................................................32
8.15 KUPX Sublease..............................................................32
ARTICLE 9
INDEMNIFICATION
9.1 Survival...................................................................32
9.2 Indemnification............................................................33
9.3 Notice of Claims...........................................................34
9.4 Defense of Third Party Claims..............................................34
9.5 Exclusive Remedy...........................................................34
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Termination................................................................35
10.2 Expenses...................................................................36
10.3 Amendment and Modification.................................................37
10.4 Waiver of Compliance; Consents.............................................37
10.5 Notices....................................................................37
10.6 Assignment.................................................................38
10.7 Governing Law..............................................................38
10.8 Counterparts...............................................................38
10.9 Interpretation.............................................................39
</TABLE>
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<TABLE>
<S> <C> <C>
10.10 Entire Agreement...........................................................39
10.11 Severability...............................................................39
10.12 Further Assurance..........................................................39
</TABLE>
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Schedules and Exhibits
<TABLE>
<S> <C>
Schedule 4.3 KUWB Consents
Schedule 4.4 KUWB Litigation
Schedule 4.5 KUWB Taxes
Schedule 4.6 KUWB Transmission Equipment
Schedule 4.8 KUWB Licenses
Schedule 4.10 KUWB Insurance
Schedule 5.3 KUPX Consents
Schedule 5.4 KUPX Litigation
Schedule 5.5 KUPX Taxes
Schedule 5.6 KUPX Transmission Equipment
Schedule 5.8 KUPX Licenses
Schedule 5.10 KUPX Insurance
Schedule 6.1(a) KUWB Liens
Schedule 6.1(b) KUPX Liens
Schedule 7.4 Opinion of Paxson's Counsel
Schedule 8.4 Opinion of Roberts's Counsel
Exhibit A KUPX Time Brokerage Agreement
Exhibit B KUWB Time Brokerage Agreement
</TABLE>
<PAGE> 7
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is entered into as of
this ____ day of April, 1998, by and among PAXSON COMMUNICATIONS OF SALT LAKE
CITY-30, INC., a Florida corporation ("Paxson-30"), PAXSON SALT LAKE CITY
LICENSE, INC., a Florida corporation ("Paxson License" and collectively with
Paxson-30, "Paxson"), and ROBERTS BROADCASTING OF SALT LAKE CITY, L.L.C., a
Delaware limited liability company ("Roberts").
RECITALS
A. Paxson owns and operates and is the licensee of television station
KUPX, Ogden, Utah ("KUPX").
B. Roberts owns and operates and is the licensee of television station
KUWB, Provo, Utah ("KUWB").
C. On the terms, and subject to the conditions set forth herein, Paxson
desires to transfer to Roberts certain assets of KUPX in exchange for certain
assets of KUWB, and Roberts desires to transfer to Paxson certain assets of KUWB
in exchange for certain assets of KUPX.
AGREEMENTS
In consideration of the mutual covenants and agreements set forth
herein, and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions.
"ACME" means ACME Television of Utah, LLC, a Delaware limited liability
company.
"Adjustment Time" means 12:01 a.m., local time, on the Closing Date.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the
<PAGE> 8
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possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by contract or otherwise.
"Agreement" has the meaning specified in the Preamble.
"Assets" means the KUPX Assets in the case of Assets owned or held by
Paxson and the KUWB Assets in the case of Assets owned or held by Roberts.
"Assumed KUPX Liabilities" has the meaning specified in Section 2.2(a).
"Assumed KUWB Liabilities" has the meaning specified in Section 2.2(c).
"Claims" means any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
"Closing" has the meaning specified in Section 3.1.
"Closing Date" has the meaning specified in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"Encumbrance" means any claim, liability, security interest, mortgage,
lien, pledge, condition, charge or encumbrance of any nature whatsoever.
"ERISA" has the meaning specified in Section 4.11.
"Excluded KUPX Assets" has the meaning specified in Section 2.1(b).
"Excluded KUWB Assets" has the meaning specified in Section 2.1(c).
"FCC" means the Federal Communications Commission.
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"FCC Consent" means actions by the FCC granting both the KUWB FCC
Consent and the KUPX FCC Consent.
"Final Order" means an action or order by the FCC (a) that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay and the FCC has not initiated a review
of such action or order on its own motion and the periods provided by statute or
FCC regulations for filing any such requests and for the FCC to set aside the
action on its own motion have expired, or (ii) in the event of review,
reconsideration or appeal, the period provided by statute or FCC regulations for
further review, reconsideration or appeal has expired.
"Final Report" has the meaning specified in Section 2.3(d).
"FTC" means the United States Federal Trade Commission.
"Governmental Authority" means (i) the United States of America, (ii)
any state or commonwealth of the United States of America and any political
subdivision thereof (including counties, municipalities and the like) or (iii)
any agency, authority or instrumentality of any of the foregoing, including any
court, tribunal, department, bureau, commission or board.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" has the meaning specified in Section 9.2.
"Indemnifying Party" has the meaning specified in Section 9.2.
"Indemnity Period" has the meaning specified in Section 9.1.
"KUPX" has the meaning specified in the Recitals.
"KUPX Assets" has the meaning specified in Section 2.1(b).
"KUPX FCC Consent" means action by the FCC granting its consent to the
assignment of the KUPX FCC Licenses to Roberts.
"KUPX FCC Licenses" means all licenses, permits and authorizations
issued by the FCC to Paxson for KUPX, except that any frequency allocations
issued by the FCC with
<PAGE> 10
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respect to the transmission of advanced television, high definition or digital
broadcasts shall be excluded from the definition of KUPX FCC Licenses.
"KUPX Intangibles" means (i) all proprietary information, technical
information and data, machinery and equipment warranties relating to the KUPX
Assets, (ii) all books and records in the possession of Paxson relating to the
KUPX Assets (other than corporate and accounting records), (iii) all choses in
action relating to the KUPX Assets, (iv) all records, logs and other information
in the possession of Paxson that Paxson is required to maintain under the rules
and policies of the FCC with respect to KUPX, and (v) all filings by Paxson with
the FCC with respect to KUPX, together with any additions thereto between the
date of this Agreement and the Closing Date, except that the definition of KUPX
Intangibles shall not include the call letters "KUPX".
"KUPX Licenses" means all licenses, permits and other authorizations
issued by any Governmental Authority, including, without limitation, the FCC and
the Federal Aviation Administration, to Paxson in connection with the conduct of
the business or operations of KUPX, together with any additions thereto between
the date of this Agreement and the Closing Date, except that any frequency
allocations issued by the FCC with respect to the transmission of advanced
television, high definition or digital broadcasts shall be excluded from the
definition of KUPX Licenses.
"KUPX Time Brokerage Agreement" means the Time Brokerage Agreement of
even date herewith between Paxson and ACME attached hereto as Exhibit A.
"KUPX Transmission Equipment" means all equipment, spare parts and other
tangible personal property that are set forth on Schedule 5.6 hereof.
"KUPX Transmitter Lease" means the Transmitter Site Sublease Agreement,
dated June 27, 1997, by and between Skaggs Companies, Inc. and Paxson-30.
"KUWB" has the meaning specified in the Recitals.
"KUWB Assets" has the meaning specified in Section 2.1(c).
"KUWB FCC Consent" means action by the FCC granting its consent to the
assignment of the KUWB FCC Licenses to Paxson.
"KUWB FCC Licenses" means those licenses, permits and authorizations
issued by the FCC to Roberts for KUWB, except that any frequency allocations
issued by the FCC with
<PAGE> 11
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respect to the transmission of advanced television, high definition or digital
broadcasts shall be excluded from the definition of KUWB FCC Licenses.
"KUWB Intangibles" means (i) all proprietary information, technical
information and data, machinery and equipment warranties relating to the KUWB
Assets, (ii) all books and records in the possession of Roberts relating to the
KUWB Assets (other than corporate and accounting records), (iii) all choses in
action relating to the KUWB Assets, (iv) all records, logs and other information
in the possession of Roberts that Roberts is required to maintain under the
rules and policies of the FCC with respect to KUWB, and (v) all filings by
Roberts with the FCC with respect to KUWB, together with any additions thereto
between the date of this Agreement and the Closing Date, except that the
definition of KUWB Intangibles shall not include the call letters "KUWB".
"KUWB Licenses" means all licenses, permits and other authorizations
issued by any Governmental Authority, including, without limitation, the FCC and
the Federal Aviation Administration, to Roberts in connection with the conduct
of the business or operations of KUWB, together with any additions thereto
between the date of this Agreement and the Closing Date, except that any
frequency allocations issued by the FCC with respect to the transmission of
advanced television, high definition or digital broadcasts shall be excluded
from the definition of KUWB Licenses.
"KUWB Time Brokerage Agreement" means the Time Brokerage Agreement of
even date herewith between Roberts and Paxson-30 attached hereto as Exhibit B.
"KUWB Transmission Equipment" means all equipment, spare parts and other
tangible personal property that are set forth on Schedule 4.6 hereof.
"KUWB Transmitter Lease" means the Tower Lease Agreement dated as of
August 22, 1997 and amended as of December 9, 1997 between Roberts Broadcasting
Company of Utah, Inc. and Roberts.
"Legal Action" means, with respect to any Person, any and all litigation
or legal or other actions, at law or in equity, arbitrations, counterclaims,
investigations, proceedings, or requests for material information by or pursuant
to the order of any Governmental Authority.
"Loss and Expense" has the meaning specified in Section 9.2.
"Paxson" has the meaning specified in the Preamble.
<PAGE> 12
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"Paxson-30" has the meaning specified in the Preamble.
"Paxson License" has the meaning specified in the Preamble.
"Paxson Material Consents" means those consents referenced in Schedule
5.3 that are designated with an asterisk.
"Permitted Encumbrances" means liens for taxes not yet due and payable
and landlord's liens which are current and not in default.
"Person" means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
"Preliminary Report" has the meaning specified in Section 2.3(c).
"Records" has the meaning specified in Section 6.7.
"Roberts" has the meaning specified in the Preamble.
"Roberts Material Consents" means those consents referenced in Schedule
4.3 that are designated with an asterisk.
"Tax" means any federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, capital, transfer, employment, withholding or other tax or
governmental assessment, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties,
required to be paid with respect to the ownership or operation of KUWB or KUPX,
respectively.
"Tax Returns" means, with respect to Roberts or Paxson, as the case may
be, all federal, state and local tax returns, reports, statements, declarations
of estimated tax and other similar filings required to be filed by Roberts or
Paxson, as the case may be, with respect to the ownership or operation of KUWB
or KUPX, respectively.
"Time Brokerage Agreements" means the KUPX Time Brokerage Agreement and
the KUWB Time Brokerage Agreement.
"Transfer" has the meaning specified in Section 6.1(a).
<PAGE> 13
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"Transferee" refers equally to Roberts and Paxson insofar as the term
refers to the party receiving assets from the other party.
"Transferor" refers equally to Roberts and Paxson insofar as the term
refers to the party transferring assets to the other party.
ARTICLE 2
EXCHANGE AND ASSIGNMENT OF ASSETS
2.1 The Exchange.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, on the Closing Date, Paxson agrees to transfer, assign, convey
and deliver to Roberts, and Roberts agrees to accept and acquire from Paxson,
free and clear of all Encumbrances, except for Permitted Encumbrances, all of
Paxson's rights, title and interest in and to the KUPX Assets, and Roberts
agrees to transfer, assign, convey and deliver to Paxson, and Paxson agrees to
accept and acquire from Roberts, free and clear of all Encumbrances, except for
Permitted Encumbrances, all of Roberts's rights, title and interest in and to
the KUWB Assets.
(b) "KUPX Assets" means (i) the KUPX Transmission Equipment,
(ii) the KUPX Licenses, and (iii) the KUPX Intangibles. All other assets of
Paxson are specifically excluded from the KUPX Assets, including, without
limitation, the studio facilities and equipment used or useful in connection
with the business and operations of KUPX, any frequency allocations issued by
the FCC with respect to KUPX for the transmission of advanced television, high
definition or digital broadcasts, the KUPX Transmitter Lease, the KUPX antenna
and transmission line and the call letters "KUPX" (the "Excluded KUPX Assets").
(c) "KUWB Assets" means (i) the KUWB Transmission Equipment,
(ii) the KUWB Licenses, (iii) the KUWB Transmitter Lease, and (iv) the KUWB
Intangibles. All other assets of Roberts are specifically excluded from the KUWB
Assets, including, without limitation, the studio facilities and equipment used
or useful in connection with the business and operations of KUWB, any frequency
allocations issued by the FCC with respect to KUWB for the transmission of
advanced television, high definition or digital broadcasts and the call letters
"KUWB" (the "Excluded KUWB Assets").
<PAGE> 14
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2.2 Assumption of Obligations and Liabilities.
(a) As of, and from and after, the Closing Date, Roberts shall
assume, pay, discharge and perform only the following liabilities (the "Assumed
KUPX Liabilities"):
(i) all obligations and liabilities of Paxson under the
KUPX Assets, including but not limited to the KUPX Licenses, arising on or after
the Closing; and
(ii) all obligations and liabilities of Paxson to the
extent that any assignment or transfer is made thereof to Roberts pursuant to
Section 2.3 hereof.
(b) The Assumed KUPX Liabilities shall only include the
obligations and liabilities of Paxson described in subsection (a) of this
Section, and Roberts shall not assume any of the following:
(i) any liabilities or obligations for federal, state or
local income or franchise taxes of Paxson, including, without limitation,
deferred taxes or those arising out of any of the transactions contemplated
hereby;
(ii) any liabilities or obligations for any brokerage or
finder's fees or similar compensation incurred by Paxson or its Affiliates with
respect to any of the transactions contemplated by this Agreement;
(iii) any liabilities or obligations for any
indebtedness for borrowed money of Paxson under any loan agreement, credit
agreement, indenture, evidence of indebtedness or similar document or under any
capital lease, financing agreement or other agreement constituting deferred
purchase price for any of the KUPX Assets;
(iv) any liabilities or obligations attributable to
Excluded KUPX Assets and any intercompany liabilities or payables of any nature
whatsoever of Paxson or any of its Affiliates;
(v) any obligation or liability of Paxson under any
employee pension, retirement, health and welfare or other benefit plan or
collective bargaining agreement, or any obligation of Paxson to any employee for
severance benefits, vacation time or sick leave accrued prior to the Closing
Date; and
(vi) any obligation or liability of Paxson under any
contract or agreement to which Paxson is a party.
<PAGE> 15
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(c) As of, and from and after, the Closing Date, Paxson shall
assume, pay, discharge and perform only the following liabilities (the "Assumed
KUWB Liabilities"):
(i) all obligations and liabilities of Roberts under
KUWB Assets, including but not limited to the KUWB Transmitter Lease and KUWB
Licenses, arising on or after the Closing; and
(ii) all obligations and liabilities of Roberts to the
extent that any assignment or transfer is made thereof to Paxson pursuant to
Section 2.3 hereof.
(d) The Assumed KUWB Liabilities shall only include the
obligations and liabilities of Roberts described in subsection (c) of this
Section, and Paxson shall not assume any of the following:
(i) any liabilities or obligations for federal, state or
local income or franchise taxes of Roberts, including, without limitation,
deferred taxes or those arising out of any of the transactions contemplated
hereby;
(ii) any liabilities or obligations for any brokerage or
finder's fees or similar compensation incurred by Roberts or its Affiliates with
respect to any of the transactions contemplated by this Agreement;
(iii) any liabilities or obligations for any
indebtedness for borrowed money of Roberts under any loan agreement, credit
agreement, indenture, evidence of indebtedness or similar document or under any
capital lease, financing agreement or other agreement constituting deferred
purchase price for any of the KUWB Assets;
(iv) any liabilities or obligations attributable to
Excluded KUWB Assets and any intercompany liabilities or payables of any nature
whatsoever of Roberts or any of its Affiliates;
(v) any obligation or liability of Roberts under any
employee pension, retirement, health and welfare or other benefit plan or
collective bargaining agreement, or any obligation of Roberts to any employee
for severance benefits, vacation time or sick leave accrued prior to the Closing
Date; and
(vi) any obligation or liability of Roberts under any
contract or agreement to which Roberts is a party except for the KUWB
Transmitter Lease.
<PAGE> 16
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2.3 Prorations and Adjustments.
(a) Except to the extent provided by the KUPX Time Brokerage
Agreement, all items of income and expense relating to the ownership or
operation of the KUPX Assets shall be prorated between Paxson and Roberts as of
the Adjustment Time, with Paxson being responsible for all expenses and being
entitled to all income relating to the period prior to the Adjustment Time and
Roberts being responsible for all expenses and being entitled to all income
relating to the period from and after the Adjustment Time. Notwithstanding the
preceding sentence, there shall be no adjustment for, and Paxson shall remain
solely liable with respect to, any obligation or liability not being assumed by
Roberts pursuant to Section 2.2(a).
(b) Except to the extent provided by the KUWB Time Brokerage
Agreement, all items of income and expense relating to the ownership or
operation of the KUWB Assets shall be prorated between Paxson and Roberts as of
the Adjustment Time, with Roberts being responsible for all expenses and being
entitled to all income relating to the period prior to the Adjustment Time and
Paxson being responsible for all expenses and being entitled to all income
relating to the period from and after the Adjustment Time. Notwithstanding the
preceding sentence, there shall be no adjustment for, and Roberts shall remain
solely liable with respect to, any obligation or liability not being assumed by
Paxson pursuant to Section 2.2(c).
(c) At least five business days prior to the Closing, each
Transferor will deliver to the Transferee a preliminary settlement statement
with respect to the KUPX Assets or the KUWB Assets, as the case may be (the
"Preliminary Report"), certified as to completeness and accuracy by an officer
of Transferor (but without personal liability to such officer), showing in
detail the preliminary determination of the prorations referred to in Sections
2.3(a) and (b) that can be determined or estimated on the date of the
Preliminary Report, which are calculated in accordance with such Sections
together with any documents substantiating the prorations proposed in the
Preliminary Report. The net proration shown in the Preliminary Reports will be
paid at the Closing by the responsible party therefor to the other party by wire
transfer of immediately available funds to an account designated in writing by
such other party or by cashiers or certified check.
(d) Within 60 days after the Closing, each Transferee will
deliver to the Transferor a statement with respect to the KUPX Assets or the
KUWB Assets, as the case may be (the "Final Report"), similarly certified by an
officer of Transferee (but without personal liability to such officer), showing
in detail the final determination of any prorations which were not calculated as
of the Closing Date and containing any corrections to the Preliminary Report,
<PAGE> 17
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together with any documents substantiating the final calculation of the
prorations proposed in the Final Report.
(e) Within 30 days after receipt of the Final Report, each
Transferor will give each Transferee written notice of such Transferor's
objections, if any, to the other's Final Report. Each Transferee shall grant to
the Transferor and its authorized representatives access during normal business
hours to the records of KUPX and KUWB, as the case may be, for purposes of
permitting the Transferor to verify the Final Report. If there are objections to
either Final Report, the parties shall use good faith efforts to jointly resolve
the objections within 30 days of a Transferee's receipt of a Transferor's
written notice of objections, which resolution, if achieved, shall be binding
upon both parties to this Agreement and not be subject to dispute or review. If
the parties cannot resolve the discrepancies to their mutual satisfaction within
such 30-day period, the parties shall, within the following 10 days, jointly
designate a national independent public accounting firm to be retained to review
the Final Reports together with the notice(s) of objections and any other
relevant documents. The parties agree that the foregoing independent public
accounting firm shall not be a firm that has been engaged by either party or its
Affiliates in the prior twenty-four (24) months. The cost of retaining such
independent public accounting firm shall be borne equally by the parties. Such
firm shall report its conclusions as to adjustments pursuant to this Section
2.3(e) which shall be conclusive on all parties to this Agreement and not be
subject to dispute or judicial review. If, based on the Final Report as finally
determined pursuant to this Section 2.3(e), it is determined that an amount is
owed by either Paxson or Roberts, as applicable, such party shall pay to the
other party such amount within ten (10) days of the aforesaid report becoming
final.
(f) Nothing contained in this Section 2.3 is intended or shall
be deemed to amend or modify the indemnification provisions of Article 9 or to
reallocate responsibility for the matters set forth therein.
ARTICLE 3
THE CLOSING
3.1 Time and Place of Closing. Subject to satisfaction or, to the extent
permissible by law, waiver (by the party for whose benefit the condition is
imposed), of the conditions described in Articles 7 and 8 and the provisions of
Section 10.1 hereof, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Dow, Lohnes &
Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Washington, D.C. or at such
other place as the parties shall mutually agree, at 10:00 a.m., local time, on a
date (the "Closing Date") to be agreed upon by the parties, but which date shall
not be earlier than the
<PAGE> 18
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fifth business day following the date of the FCC Consent or later than the tenth
business day following the date on which the FCC Consent has become a Final
Order. If the parties are unable to agree on a Closing Date pursuant to the
preceding sentence, the Closing shall take place on the tenth business day after
the date on which the FCC Consent has become a Final Order, subject to
satisfaction or, to the extent permissible by law, waiver (by the party for
whose benefit the condition is imposed), of the conditions described in Articles
7 and 8 and the provisions of Section 10.1 hereof. In the event any material
loss or damage of the Assets exists on the Closing Date, then, notwithstanding
any other provision of this Agreement, the Transferee of the Assets in question
at its option may extend the Closing Date for a period of up to sixty (60) days
from such Closing Date until such time as the Transferor shall have repaired,
replaced and restored any such damaged or lost Assets substantially to their
prior condition. Alternatively, at the request of the Transferee, the Transferor
shall assign to the Transferee the insurance proceeds and pay to the Transferee
the applicable deductible relating to the loss or damage and consummate the
transactions contemplated hereby on the Closing Date.
3.2 Deliveries by Paxson. At the Closing, Paxson shall deliver to
Roberts the following in form and substance reasonably satisfactory to Roberts
and its counsel:
(a) Bills of sale of personal property, assignments and other
instruments of transfer and conveyance duly executed by Paxson, transferring and
assigning to Roberts the KUPX Assets, free and clear of all Encumbrances, other
than Permitted Encumbrances;
(b) Assumption agreements duly executed by Paxson pursuant to
which Paxson will assume the Assumed KUWB Liabilities;
(c) The opinions, certificates, consents and other documents
contemplated by Article 7 hereof; and
(d) The Paxson Material Consents and any other consents received
by Paxson.
3.3 Deliveries by Roberts. At the Closing, Roberts shall deliver to
Paxson the following in form and substance reasonably satisfactory to Paxson and
its counsel:
(a) Bills of sale of personal property, assignments and other
instruments of transfer and conveyance duly executed by Roberts, transferring
and assigning to Paxson the KUWB Assets, free and clear of all Encumbrances,
other than Permitted Encumbrances;
<PAGE> 19
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(b) Assumption agreements duly executed by Roberts pursuant to
which Roberts will assume the Assumed KUPX Liabilities;
(c) The opinions, certificates and other documents contemplated
by Article 8 hereof; and
(d) The Roberts Material Consents and any other consents
received by Roberts.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ROBERTS
Roberts hereby represents and warrants to Paxson as follows:
4.1 Organization. Roberts is a limited liability company duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is duly qualified as a foreign limited liability company and is
in good standing under the laws of the State of Utah. Roberts has the requisite
limited liability company power and authority to carry on its business as it is
now being conducted.
4.2 Authority Relative to this Agreement. Roberts has the necessary
limited liability company power and authority to execute, deliver and perform
this Agreement and the documents contemplated hereby and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the documents contemplated hereby and the consummation of the
transactions contemplated hereby and thereby by Roberts have been duly and
validly authorized and approved by all necessary limited liability company
action by Roberts. This Agreement has been duly and validly executed and
delivered by Roberts and constitutes the legal, valid and binding obligation of
Roberts, enforceable against Roberts in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to general principles of equity.
4.3 Noncontravention; Consents and Approvals.
(a) Except as set forth in Schedule 4.3, the execution and
delivery of this Agreement and the documents contemplated hereby by Roberts and
the consummation by Roberts of the transactions contemplated hereby and thereby
will not (i) conflict with or violate
<PAGE> 20
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any provisions of the organizational documents of Roberts, (ii) violate any
statute, ordinance, rule, regulation, order, judgment or decree applicable to
Roberts or by which Roberts or any of the KUWB Assets may be bound or affected,
or (iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any of the KUWB Assets pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Roberts is a party or by
which it or any of the KUWB Assets are bound or affected.
(b) No consent, waiver, license, approval, authorization, order
or permit or registration or filing with or notification to any Governmental
Authority or other third party is necessary for the execution and delivery of
this Agreement and the documents contemplated hereby by Roberts or the
consummation by Roberts of the transactions contemplated by this Agreement and
the documents contemplated hereby or the compliance by Roberts with any
provision of this Agreement and the documents contemplated hereby, except (i)
the FCC Consent, (ii) filings with respect to sales and other transfer taxes,
(iii) such filings as may be required under the HSR Act, (iv) such filings,
registrations, notifications, permits, authorizations, consents or approvals
that result solely from specific legal or regulatory status of Paxson or as a
result of any other facts that specifically relate to the business or activities
in which Paxson is engaged, and (v) the consent of or notice to each party
identified on Schedule 4.3.
4.4 Litigation. Except as set forth in Schedule 4.4, there are no legal,
administrative, arbitration or other proceedings or governmental investigations
pending or, to the knowledge of Roberts, threatened, against or affecting the
KUWB Assets.
4.5 Taxes. Roberts has duly filed all Tax Returns, including extensions
(including, but not limited to, those filed on a consolidated, combined or
unitary basis), required to have been filed by it prior to the date hereof.
Roberts has paid or, prior to the Adjustment Time will pay, all Taxes shown on
such Tax Returns as being due or (except to the extent the same are contested in
good faith) claimed to be due to any federal, state, local or other taxing
authority, and, except as set forth in Schedule 4.5, Roberts has not received
any notice of the assessment or proposed assessment of any additional Taxes.
4.6 Transmission Equipment. Roberts has good and marketable title to the
KUWB Transmission Equipment free and clear of all Encumbrances, except for
Permitted Encumbrances and for Encumbrances set forth on Schedule 4.6 which
shall be removed prior to or at Closing. The KUWB Transmission Equipment is in
good operating condition and
<PAGE> 21
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repair (subject to normal wear and tear), and is available for immediate use in
the conduct of the business or operations of KUWB. All items of KUWB
Transmission Equipment (i) have been maintained in a manner consistent in all
material respects with generally accepted standards of good engineering practice
and (ii) will permit Paxson to operate KUWB in all material respects in
accordance with the terms of the KUWB FCC Licenses.
4.7 Compliance with Laws. The business and operations of KUWB have been
and are being conducted in all material respects in compliance with all laws,
ordinances and regulations of all Governmental Authorities.
4.8 FCC Licenses. Schedule 4.8 accurately and completely lists all KUWB
FCC Licenses and all material KUWB Licenses issued by Governmental Authorities
other than the FCC. All of the KUWB FCC Licenses and material KUWB Licenses
issued by other Governmental Authorities have been validly issued to Roberts,
and are in full force and effect, and Roberts has fulfilled and performed all of
its obligations with respect thereto in all material respects and has full power
and authority to operate thereunder. Roberts holds all KUWB Licenses necessary
to enable Roberts to conduct the business and operations of KUWB in all material
respects as currently conducted. Except as set forth in Schedule 4.8, none of
the KUWB Licenses is subject to any restriction or condition that would limit
the full operation of KUWB as now conducted, and (ii) Roberts has no reason to
believe that any of the KUWB FCC Licenses would not be renewed by the FCC in the
ordinary course for a full term without material adverse modification. True and
complete copies of the KUWB FCC Licenses are attached to Schedule 4.8. Schedule
4.8 identifies every cable system within KUWB's Area of Dominant Influence for
which Roberts has made a valid election of must carry. Except as set forth on
Schedule 4.8, no cable system has advised Roberts of any signal quality or
copyright indemnity or other obstacle to cable carriage of KUWB's signal, and no
cable system has declined or threatened to decline such carriage or failed to
respond to a request for carriage or sought any form of relief from carriage
from the FCC. All material returns, reports and statements that Roberts is
currently required to file with the FCC or with any other Governmental Authority
with respect to KUWB have been filed, and all reporting requirements of the FCC
and other Governmental Authorities with respect to KUWB have been complied with
in all material respects. All of such returns, reports and statements are
complete and correct as filed in all material respects. Roberts has timely paid
to the FCC all annual regulatory fees payable by Roberts with respect to the
KUWB FCC Licenses. KUWB is currently broadcasting from the site described in the
KUWB Transmitter Site in accordance with the KUWB FCC Licenses, and Roberts has
filed with the FCC all appropriate applications for a covering license with
respect to KUWB.
<PAGE> 22
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4.9 Brokers and Finders. Neither Roberts nor any of its officers,
directors, members or employees has employed any broker or finder in connection
with the transactions contemplated by this Agreement or incurred any liability
for any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
4.10 Insurance. Schedule 4.10 is a true and complete list of all
insurance policies of Roberts related to the KUWB Assets. All policies of
insurance listed in Schedule 4.10 are in full force and effect.
4.11 Employee Benefit Liabilities. Neither Roberts nor any entity
required to be combined with it (as determined under Internal Revenue Code
Sections 414(b), (c), (m), (n) or (o)) has incurred, or expects to incur as a
result of the consummation of the transactions contemplated under this
Agreement, any cost, fee, expense, liability, claim, suit, obligation, or other
damage with respect to any "employee benefit plan" (as defined in section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or
any benefit arrangement not subject to ERISA that could give rise to the
imposition of any liability, cost, fee, expense, or obligation on Paxson or any
of its Affiliates; and, to the knowledge of Roberts, no facts or circumstances
exist that could give rise to any such cost, fee, expense, liability, claim,
suit, obligation, or other damage.
4.12 Contracts. The KUWB Transmitter Lease is valid, binding, in full
force and effect and legally enforceable in accordance with its terms. There is
not under the KUWB Transmitter Lease any default by Roberts or, to the knowledge
of Roberts, any other party thereto or any event which, after notice or lapse of
time, or both, would constitute such a default. All of the KUWB Transmission
Equipment is located entirely on the site leased by Roberts pursuant to the KUWB
Transmitter Lease and Roberts has a legal right of and practical access to such
site. The site leased by Roberts pursuant to the KUWB Transmitter Lease and all
improvements thereon owned by Roberts comply in all material respects with all
environmental, zoning, building and other laws, regulations and rules.
4.13 Disclosure. To the knowledge of Roberts, no statement of a material
fact by Roberts contained in this Agreement, and all exhibits and schedules
related hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements herein or
therein not misleading in light of the circumstances under which they were made.
<PAGE> 23
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PAXSON
Paxson hereby represents and warrants to Roberts as follows:
5.1 Organization. Paxson is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Florida and is duly
qualified as a foreign corporation and is in good standing under the laws of the
State of Utah. Paxson has the requisite corporate power and authority to carry
on its business as it is now being conducted.
5.2 Authority Relative to this Agreement. Paxson has the necessary
corporate power and authority to execute, deliver and perform this Agreement and
the documents contemplated hereby and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby by Paxson have been duly and validly authorized
and approved by all necessary corporate action by Paxson. This Agreement has
been duly and validly executed and delivered by Paxson and constitutes the
legal, valid, and binding obligation of Paxson, enforceable against Paxson in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
5.3 Noncontravention; Consents and Approvals.
(a) Except as set forth in Schedule 5.3, the execution and
delivery of this Agreement and the documents contemplated hereby by Paxson and
the consummation by Paxson of the transactions contemplated hereby and thereby
will not (i) conflict with or violate any provisions of its organizational
documents, (ii) violate any statute, ordinance, rule, regulation, order,
judgment or decree applicable to Paxson or by which Paxson or any of the KUPX
Assets may be bound or affected, or (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of the KUPX
Assets pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Paxson is a party or by which it or any of the KUPX Assets are bound or
affected.
(b) No consent, waiver, license, approval, authorization, order
or permit or registration or filing with or notification to any Governmental
Authority or other third party is
<PAGE> 24
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necessary for the execution and delivery of this Agreement and the documents
contemplated hereby by Paxson or the consummation by Paxson of the transactions
contemplated by this Agreement and the documents contemplated hereby or the
compliance by Paxson with any provision of this Agreement and the documents
contemplated hereby, except (i) the FCC Consent, (ii) filings with respect to
sales and other transfer taxes, (iii) such filings as may be required under the
HSR Act, (iv) such filings, registrations, notifications, permits,
authorizations, consents or approvals that result solely from the specific legal
or regulatory status of Roberts or as a result of any other facts that
specifically relate to the business or activities in which Roberts is engaged,
and (v) the consent of or notice to each party identified on Schedule 5.3.
5.4 Litigation. Except as set forth in Schedule 5.4, there are no legal,
administrative, arbitration or other proceedings or governmental investigations
pending or, to the knowledge of Paxson, threatened, against or affecting the
KUPX Assets.
5.5 Taxes. Paxson has duly filed all Tax Returns including extensions
(including, but not limited to, those filed on a consolidated, combined or
unitary basis), required to have been filed by it prior to the date hereof.
Paxson has paid or, prior to the Adjustment Time will pay, all Taxes shown on
such Tax Returns as being due or (except to the extent the same are contested in
good faith) claimed to be due to any federal, state, local or other taxing
authority, and, except as set forth in Schedule 5.5, Paxson has not received any
notice of the assessment or proposed assessment of any additional Taxes.
5.6 Transmitter Equipment. Paxson has good and marketable title to the
KUPX Transmission Equipment free and clear of all Encumbrances, except for
Permitted Encumbrances and for Encumbrances set forth on Schedule 5.6 which
shall be removed prior to or at Closing. The KUPX Transmission Equipment is in
good operating condition and repair (subject to normal wear and tear), and is
available for immediate use in the conduct of the business or operations of
KUPX. All items of KUPX Transmission Equipment (i) have been maintained in a
manner consistent in all material respects with generally accepted standards of
good engineering practice and (ii) will together with the equipment used by
Roberts pursuant to the Sublease (as defined below) permit Roberts to operate
KUPX in all material respects in accordance with the terms of the KUPX FCC
Licenses.
5.7 Compliance with Laws. The business and operations of KUPX have been
and are being conducted in all material respects in compliance with all laws,
ordinances or regulations of all Governmental Authorities.
<PAGE> 25
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5.8 FCC Licenses. Schedule 5.8 accurately and completely lists all KUPX
FCC Licenses and all material KUPX Licenses issued by Governmental Authorities
other than the FCC. All of the KUPX FCC Licenses and material KUPX Licenses
issued by other Governmental Authorities have been validly issued to Paxson and
are in full force and effect, and Paxson has fulfilled and performed all of its
obligations with respect thereto in all material respects and has full power and
authority to operate thereunder. Paxson holds all KUPX Licenses necessary to
enable Paxson to conduct the business and operations of KUPX in all material
respects as currently conducted. Except as set forth in Schedule 5.8, (i) none
of the KUPX Licenses is subject to any restriction or condition that would limit
the full operation of KUPX as now conducted, and (ii) Paxson has no reason to
believe that any of the KUPX FCC Licenses would not be renewed by the FCC in the
ordinary course for a full term without material adverse modification. True and
complete copies of the KUPX FCC Licenses are attached to Schedule 5.8. Schedule
5.8 identifies every cable system within KUPX's Area of Dominant Influence for
which Paxson has made a valid election of must carry. Except as set forth on
Schedule 5.8, no cable system has advised Paxson of any signal quality or
copyright indemnity or other obstacle to cable carriage of KUPX's signal and no
cable system has declined or threatened to decline such carriage or failed to
respond to a request for carriage or sought any form of relief from carriage
from the FCC. All material returns, reports and statements that Paxson is
currently required to file with the FCC or with any other Governmental Authority
with respect to KUPX have been filed, and all reporting requirements of the FCC
and other Governmental Authorities with respect to KUPX have been complied with
in all material respects. All of such returns, reports and statements are
complete and correct as filed in all material respects. Paxson has timely paid
to the FCC all annual regulatory fees payable by Paxson with respect to the KUPX
FCC Licenses
5.9 Brokers and Finders. Neither Paxson nor any of its officers,
directors, partners or employees has employed any broker or finder in connection
with the transactions contemplated by this Agreement or incurred any liability
for any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
5.10 Insurance. Schedule 5.10 is a true and complete list of all
insurance policies of Paxson related to the KUPX Assets. All policies of
insurance listed in Schedule 5.10 are in full force and effect.
5.11 Employee Benefit Liabilities. Neither Paxson or any entity required
to be combined with it (as determined under Internal Revenue Code Sections
414(b), (c), (m), (n) or (o)) has incurred, or expects to incur as a result of
the consummation of the transactions contemplated under this Agreement, any
cost, fee, expense, liability, claim, suit, obligation, or other damage with
respect to any "employee benefit plan" (as defined in section 3(3) of ERISA
<PAGE> 26
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or any benefit arrangement not subject to ERISA) that could give rise to
the imposition of any liability, cost, fee, expense, or obligation on Roberts or
any of its Affiliates; and, to the knowledge of Paxson, no facts or
circumstances exist that could give rise to any such cost, fee, expense,
liability, claim, suit, obligation, or other damage.
5.12 Contracts. The KUPX Transmitter Lease is valid, binding, in full
force and effect and legally enforceable in accordance with its terms. There is
not under the KUPX Transmitter Lease any default by Paxson or, to the knowledge
of Paxson, any other party thereto or any event which, after notice or lapse of
time or both, would constitute such a default. On the Closing Date, all of the
KUPX Transmission Equipment will be located entirely on the site leased by
Paxson pursuant to the KUPX Transmitter Lease and Paxson has a legal right of
and practical access to such site. The site leased by Paxson pursuant to the
KUPX Transmitter Lease and all improvements thereon owned by Paxson comply in
all material respect with all environmental, zoning, building and other laws
regulations and rules.
5.13 Disclosure. To the knowledge of Paxson, no statement of a material
fact by Paxson contained in this Agreement, and all exhibits and schedules
related hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements herein or
therein not misleading in light of the circumstances under which they were made.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 Conduct of Business.
(a) Except as specifically provided in this Agreement and
subject to the terms of the Time Brokerage Agreements, during the period from
the date of this Agreement to the Closing Date, Roberts will conduct the
business and operations of KUWB in the ordinary course consistent with past
practices, and Paxson will conduct the business and operations of KUPX in the
ordinary course consistent with past practices. Without limiting the generality
of the foregoing, except as otherwise expressly provided in this Agreement,
prior to the Closing Date, (i) without the prior written consent of Paxson,
Roberts, with respect to KUWB, and (ii) without the prior written consent of
Roberts, Paxson, with respect to KUPX, will not (A) sell, transfer, lease,
license, pledge, encumber, mortgage, remove from the premises of KUWB or KUPX,
as the case may be, or otherwise dispose of, or agree to sell, transfer, lease,
license, pledge, encumber, mortgage, remove from the premises of KUWB or KUPX,
as the case may be, or otherwise dispose of (each of the actions described
in clause A above is a "Transfer"),
<PAGE> 27
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any of the KUWB Assets or the KUPX Assets, as the case may be, except (x) that a
"Transfer" shall not include any lien disclosed on Schedule 6.1(a) or 6.1(b),
each of which shall be removed upon or before the Closing and (y) for Permitted
Encumbrances, (B) modify in any respect, waive any material term under or
terminate the KUWB Transmitter Lease or the KUPX Transmitter Lease, as the case
may be, (C) cause or permit, by any act or failure to act, any of the KUWB
Licenses or KUPX Licenses, as the case may be, to expire or be revoked,
suspended or adversely modified, or any Governmental Authority to institute
proceedings for the revocation, suspension or adverse modification of the KUWB
Licenses or KUPX Licenses, as the case may be, or (D) cause, by any act or
failure to act, any cable system located within the Area of Dominant Influence
or Designated Market Area of KUWB or KUPX, as the case may be, to refuse to
carry the signal of KUWB or KUPX, respectively.
(b) Subject to the terms of the Time Brokerage Agreements,
Roberts and Paxson shall each use their commercially reasonable efforts to
maintain (or cause to be maintained) the KUWB Assets and the KUPX Assets,
respectively, in good condition (ordinary wear and tear excepted), and use and
operate (or cause to be used and operated) the KUWB Assets and KUPX Assets,
respectively, in a reasonable manner and in all material respects in accordance
with the terms of the KUWB FCC Licenses and KUPX FCC Licenses, respectively, all
rules and regulations of the FCC and generally accepted standards of good
engineering practice. Subject to the terms of the Time Brokerage Agreements, if
any loss, damage, impairment, confiscation or condemnation of or to any of the
KUWB Assets or KUPX Assets occurs, Roberts or Paxson, as the case may be, shall
repair, replace or restore the KUWB Assets or KUPX Assets, respectively, to
their prior condition as represented in this Agreement as soon thereafter as
possible (and in any event within the time limitations of Section 3.1 of this
Agreement), and Roberts or Paxson as the case may be, shall use the proceeds of
any claim under any insurance policy solely to repair, replace or restore any of
the KUWB Assets or KUPX Assets, respectively, that are lost, damaged, impaired
or destroyed; provided, however, that Paxson shall not have any obligation to
repair, replace or restore any KUPX Assets to the extent any loss, damage or
other impairment was caused directly by the negligence or wilful misconduct of
ACME under the KUPX Time Brokerage Agreement and Roberts shall not have any
obligation to repair, replace or restore any KUWB Assets to the extent any loss,
damage or other impairment was caused directly by the negligence or wilful
misconduct of Paxson under the KUWB Time Brokerage Agreement.
(c) Each of Roberts and Paxson shall comply in all material
respects with the terms of the KUWB Licenses and KUPX Licenses, respectively,
and with all laws, rules and regulations applicable or relating to the ownership
and operation of KUWB and KUPX, respectively. Each of Roberts and Paxson shall
comply in all material respects with the terms of the KUPX Transmitter Lease and
the KUWB Transmitter Lease, as applicable.
<PAGE> 28
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6.2 Access to Information. From the date of this Agreement to the
Closing Date, each of Roberts and Paxson will give the other party and its
authorized representatives reasonable access during normal business hours (and
at such other times as the parties may mutually agree) upon reasonable prior
notice and approval, which shall not be unreasonably withheld, to its
facilities, personnel and operations solely to the extent such facilities,
personnel and operations relate to the KUWB Assets or the KUPX Assets, as the
case may be, and to its books and records relating to the KUWB Assets or the
KUPX Assets; provided, that any inspection of the KUWB Assets or the KUPX
Assets, as the case may be, or discussion with personnel regarding the KUWB
Assets or the KUPX Assets, as the case may be, shall occur only if a
representative of the party granting such access is present. Each party to this
Agreement and its accountants, counsel and other representatives shall, in the
exercise of the rights described in this Section 6.2, not unduly interfere with
the operations or business of the other party hereto.
6.3 FCC Consent.
(a) The exchange of the KUWB Assets for the KUPX Assets as
contemplated by this Agreement is subject to obtaining the FCC Consent.
(b) Within five (5) business days of the execution of this
Agreement, Roberts and Paxson will prepare and file with the FCC appropriate
applications for the KUWB FCC Consent and the KUPX FCC Consent. The parties
shall prosecute such applications with commercially reasonable diligence and
otherwise use their commercially reasonable efforts to obtain the grant of the
applications as expeditiously as practicable. Each party will promptly provide
to the other party a copy of any pleading, order or other document served on it
relating to such applications.
(c) Each party agrees to comply with any condition imposed on it
by any FCC Consent, except that no party shall be required to comply with a
condition if (i) the condition was imposed on it as the result of a circumstance
the existence of which does not constitute a material breach by such party of
any of its representations, warranties or covenants under this Agreement and
(ii) compliance with the condition would have a material adverse effect upon it.
Roberts and Paxson shall oppose any petitions to deny or other objections filed
with respect to the applications for any FCC Consent and any requests for
reconsideration or review of any FCC Consent.
(d) If the Closing shall not have occurred for any reason within
the original effective period of any FCC Consent, and neither party shall have
terminated this Agreement
<PAGE> 29
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under Section 10.1, the parties shall jointly request an extension of the
effective period of such FCC Consent. No extension of the effective period of
any FCC Consent shall limit the exercise by either party of its right to
terminate this Agreement under Section 10.1.
6.4 Control of the Stations. Prior to Closing, Paxson shall not,
directly or indirectly, control, supervise or direct, or attempt to control,
supervise or direct, the operations of KUWB; those operations, including
complete control and supervision of all KUWB's programs, employees and policies,
shall be the sole responsibility of Roberts, provided that Paxson shall have the
rights set forth in the KUWB Time Brokerage Agreement. Prior to Closing, Roberts
shall not, directly or indirectly, control, supervise or direct, or attempt to
control, supervise or direct, the operations of KUPX; those operations,
including complete control and supervision of all KUPX's programs, employees and
policies, shall be the sole responsibility of Paxson, provided that ACME shall
have the rights set forth in the KUPX Time Brokerage Agreement.
6.5 Consummation of Agreement. Each of Roberts and Paxson shall use
commercially reasonable efforts to perform or fulfill all conditions and
obligations to be performed or fulfilled by it under this Agreement so that the
transactions contemplated hereby shall be consummated as expeditiously as
possible. If any event should occur, either within or outside the control of
Roberts or Paxson, that would materially delay or prevent fulfillment of the
conditions to the obligations of any party hereto to consummate the transactions
contemplated by this Agreement, Roberts and Paxson will use their respective
commercially reasonable efforts to cure or minimize the same as expeditiously as
possible. Roberts shall take all commercially reasonable efforts to obtain any
consent necessary to the assignment of the KUWB Assets, including an estoppel
certificate from the lessor under the KUWB Transmitter Lease and Paxson shall
take all commercially reasonable efforts to obtain any consents necessary to the
assignment of the KUPX Assets, in each case without any materially adverse
changes in the terms and conditions of such contracts.
6.6 Public Announcements. Except as may be necessary for the
consummation of the transactions contemplated by this Agreement and except as
and to the extent required by law, including, without limitation, disclosure
requirements of federal or state securities laws and rules and regulations of
securities markets, Roberts and Paxson will consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated by this Agreement, and neither shall issue any
such press release or make any such public statement that is not approved by the
other party hereto, which approval shall not be unreasonably withheld.
<PAGE> 30
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6.7 Access to Books and Records. From and after the Closing, Roberts and
Paxson will allow each other full access to and right to copy documents
(including, but not limited to, records, files, financial information,
accounting records, and books of account, collectively, "Records") with respect
to the KUWB Assets or the KUPX Assets, as the case may be, in each case relating
to the period prior to the Closing.
6.8 Confidentiality. Each of Roberts and Paxson agrees that all
information provided to the other (including employees, attorneys, accountants
and advisors) by such party will be treated as confidential by such other party,
and will not be used for any purpose other than in connection with the
transactions contemplated by this Agreement, except as may be required by law
(including federal or state securities laws and rules and regulations of
securities markets) or by court order. Confidential information shall not
include information which is in the public domain, which is generally known
within the industry, or which can be obtained through lawful methods not
involving a breach of this or any similar obligation of confidentiality. If this
Agreement is terminated, each party shall return to the other all confidential
information in its possession; provided, however, that any confidential
information retained by the recipient thereof, inadvertently or otherwise, shall
continue to be subject to the provisions of this Section 6.10, notwithstanding
the termination of this Agreement.
6.9 Insurance. During the period from the date hereof until the Closing
Date, Roberts shall maintain in effect all policies of insurance currently in
effect with respect to the KUWB Assets, and Paxson shall maintain in effect all
policies of insurance currently in effect with respect to the KUPX Assets.
6.10 Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the KUWB Assets from any cause whatsoever shall be borne
by Roberts at all times prior to the Closing, except for any loss, damage or
other impairment caused directly by the negligence or wilful misconduct of
Paxson under the KUWB Time Brokerage Agreement. If any damage or destruction of
the KUWB Assets or any other event occurs (not caused directly by the negligence
or wilful misconduct of Paxson under the KUWB Time Brokerage Agreement) which
(i) causes KUWB to cease broadcasting operations for a period of five or more
days or (ii) prevents in any material respect signal transmission by KUWB in the
normal and usual manner and Roberts fails to restore or replace the KUWB Assets
so that normal and usual transmission is resumed within fourteen days of the
damage, destruction or other event, Paxson, in its sole discretion, may (x)
terminate this Agreement forthwith without any further obligations hereunder
upon written notice to Roberts, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
<PAGE> 31
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the KUWB Assets after the Closing Date, in which event Roberts shall deliver to
Paxson (or pay to Paxson an amount equal to) all insurance proceeds received by
Roberts in connection with such damage, destruction or other event and pay to
Paxson the deductible relating to the damage, destruction or other event.
(b) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the KUPX Assets from any cause whatsoever shall be borne
by Paxson at all times prior to the Closing, except for any loss, damage or
other impairment caused directly by the negligence or willful misconduct of ACME
under the KUWB Time Brokerage Agreement. If any damage or destruction of the
KUPX Assets or any other event occurs (not caused directly by the negligence or
willful misconduct of ACME under the KUPX Time Brokerage Agreement) which, (i)
causes KUPX to cease broadcasting operations for a period of five or more days
or (ii) prevents in any material respect signal transmission by KUPX in the
normal and usual manner and Paxson fails to restore or replace the KUPX Assets
so that normal and usual transmission is resumed within fourteen days of the
damage, destruction or other event, Roberts, in its sole discretion, may (x)
terminate this Agreement forthwith without any further obligations hereunder
upon written notice to Paxson, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the KUPX Assets after the Closing Date, in which event Paxson shall deliver to
Roberts (or pay to Roberts an amount equal to) all insurance proceeds received
by Paxson in connection with such damage, destruction or other event and pay to
Roberts the deductible relating to the damage, destruction or other event.
6.11 HSR Act Filing. Roberts and Paxson agree to (a) file, or cause to
be filed, with the DOJ and FTC all filings, if any, which are required in
connection with the transactions contemplated hereby under the HSR Act within
ten (10) business days of the date of this Agreement; (b) cooperate with each
other in connection with such HSR Act filings, which cooperation shall include
furnishing the other with any information or documents in such party's
possession that may be reasonably required in connection with such filings; (c)
promptly file such other information or documents as may be requested by the FTC
or DOJ after appropriate negotiation with the DOJ or FTC of the scope of such
request; (d) furnish each other with any correspondence from or to, and notify
each other of any other communications with, the FTC or DOJ which relates to the
transactions contemplated hereunder; and (e) to the extent practicable, permit
each other to participate in any conferences with the FTC or DOJ.
6.12 Sales Tax Filings. Until the Closing, Roberts with respect to KUWB
and Paxson with respect to KUPX shall continue to file all Utah sales tax
returns of and to the extent such returns are required to be filed by applicable
law.
<PAGE> 32
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6.13 Time Brokerage Agreement. On the date hereof, Paxson and Roberts
shall execute and deliver the KUWB Time Brokerage Agreement and Paxson and ACME
shall execute and deliver the KUPX Time Brokerage Agreement. Until the Closing,
Paxson and Roberts shall in all material respects comply with the terms of the
Time Brokerage Agreements and Roberts shall cause ACME to comply with the terms
of the KUPX Time Brokerage Agreement.
6.14 Roberts Environmental Audits. Within thirty (30) days of the
execution of this Agreement, Roberts may complete, at its expense, a Phase I
environmental audit and, if Roberts deems it appropriate or necessary, a Phase 2
environmental audit of the KUPX Assets conducted by an environmental firm
licensed in the State of Utah (the "KUPX Environmental Audits"). If the KUPX
Environmental Audits reveal a condition of material noncompliance with any
environmental law, Roberts shall notify Paxson of such non-compliance within
thirty (30) days of the execution of this Agreement and Paxson shall cure or
remedy the condition of material noncompliance prior to Closing. Notwithstanding
the foregoing, if Paxson notifies Roberts within twenty (20) days of receipt of
the aforesaid notice from Roberts that Paxson is unwilling or unable to cure or
remediate the condition of material noncompliance prior to Closing, then Roberts
may within twenty (20) days of the aforesaid notice from Paxson elect to either
(a) accept the KUPX Assets in their then existing condition and deduct the
estimated amount necessary to cure or remediate the material noncompliance from
any monies to be paid to Paxson under Section 2.3 of this Agreement and/or the
KUPX Time Brokerage Agreement or (b) terminate this Agreement without further
liability.
6.15 Paxson Environmental Audits. Within thirty (30) days of the
execution of this Agreement, Paxson may complete, at its expense, a Phase I
environmental audit and, if Paxson deems it appropriate or necessary, a Phase 2
environmental audit of the KUWB Assets conducted by an environmental firm
licensed in the State of Utah (the "KUWB Environmental Audits"). If the KUWB
Environmental Audits reveal a condition of material noncompliance with any
environmental law, Paxson shall notify Roberts of such noncompliance within
thirty (30) days of the execution of this Agreement and Roberts shall cure or
remedy the condition of material noncompliance prior to Closing. Notwithstanding
the foregoing, if Roberts notifies Paxson within twenty (20) days of receipt of
the aforesaid notice from Paxson that Roberts is unwilling or unable to cure or
remediate the condition of material noncompliance prior to Closing, then Paxson
may within twenty (20) days of the aforesaid notice from Roberts elect to either
(a) accept the KUWB Assets in their then existing condition and deduct the
estimated amount necessary to cure or remediate the material noncompliance from
any monies to be paid to Roberts under Section 2.3 of this Agreement and/or the
KUWB Time Brokerage Agreement or (b) terminate this Agreement without further
liability.
<PAGE> 33
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6.16 Relocation. Paxson shall as soon as reasonably practicable relocate
KUPX's tower site to the site described in the KUPX Transmitter Lease.
6.17 Call Signs. Paxson and Roberts shall use commercially reasonable
efforts to swap the call signs of the Stations immediately upon execution of
this Agreement so that KUPX will have the call signs KUWB and KUWB will have the
call signs KUPX. To the extent such swap is consummated prior to Closing, Paxson
shall assign at Closing to Roberts all of its rights, title and interest in and
to the call signs "KUWB" and Roberts shall assign at Closing to Paxson all of
its rights, title and interest in and to the call signs "KUPX."
6.18 KUPX Tower Lease. At Closing, Roberts and Paxson shall enter into a
sublease in form and condition reasonably satisfactory to Roberts and Paxson
(the "Sublease") pursuant to which Roberts shall have the right to use jointly
with Paxson (i) sufficient space at the site described in the KUPX Transmitter
Lease to broadcast the analog frequencies of KUPX in accordance with the KUPX
FCC Licenses and (ii) the KUPX antenna and transmission line owned by Paxson to
broadcast the analog frequencies of KUPX in accordance with the KUPX FCC
Licenses. Roberts acknowledges that Paxson will be using the site described in
the KUPX Transmitter Lease and the KUPX antenna and transmission line for the
broadcast of the advanced television, high definition or digital signal that
Paxson is retaining pursuant to Section 2.1(b) of this Agreement. The Sublease
shall (i) be on terms and conditions substantially similar to the KUPX
Transmitter Lease, (ii) expire on the date on which Roberts is required to
return to the FCC the analog FCC licenses of KUPX, or such earlier date as
Roberts may elect in its sole discretion, (iii) provide that Roberts shall pay
Paxson rent equal to the rent payable by Paxson under the KUPX Transmitter Lease
for broadcast of the KUPX analog channel, (iv) provide that Roberts and Paxson
shall not improperly cause any cognizable interference or take any other action
that could cause any cognizable interference with their respective broadcasting
operations in violation of the KUPX Transmitter Lease, (v) provide that neither
Roberts nor Paxson shall take any action that could cause a breach or default
under the KUPX Transmitter Lease, and (vi) provide that the Sublease is
assignable to any acquiror of the FCC licenses of KUWB and for security purposes
to a lender of Roberts (or its parent entity) or the lender's designee. Paxson
and Roberts shall use commercially reasonable efforts to obtain the consent of
the landlord under the KUPX Transmitter Lease (the "KUPX Landlord") to the
Sublease, provided that the failure to obtain such consent shall not constitute
a breach by any party hereto of its covenants contained herein. If the KUPX
Landlord refuses to grant its consent to the Sublease, Roberts and Paxson shall
use commercially reasonable efforts to cause the KUPX Landlord to enter into a
new lease (the "New KUPX Lease") with Roberts on terms substantially similar to
the proposed Sublease for sufficient space at the site described in the KUPX
Transmitter Lease to broadcast the analog
<PAGE> 34
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frequencies of KUPX in accordance with the KUPX FCC Licenses and Paxson shall
enter into a separate joint use agreement (the "Joint Use Agreement") with
Roberts authorizing Roberts to jointly use with Paxson for a fee of $1.00
annually the KUPX antenna and transmission line to broadcast the analog
frequencies of KUPX until such time as the FCC requires return of the analog
licenses. Prior to Closing, Roberts and Paxson shall use commercially reasonable
efforts to cause the KUPX Landlord to grant to Paxson and Roberts an additional
250 square feet in the transmitter building described in the KUPX Transmitter
Lease.
6.19 KUWB Programming. Roberts hereby agrees that KUWB shall broadcast a
minimum of 18 hours per day of programming between the date hereof and July 1,
1998.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF ROBERTS
The obligations of Roberts to consummate the exchange of the KUWB Assets
for the KUPX Assets and to perform its other obligations hereunder to be
performed at or subsequent to the Closing shall be subject to the fulfillment at
or prior to the Closing of each of the following conditions, any one or more of
which may be waived by Roberts:
7.1 Representations and Warranties. All representations and warranties
of Paxson contained herein shall be true and correct in all material respects on
the Closing Date as though such representations and warranties were made as of
such date, except for changes permitted or contemplated pursuant to this
Agreement.
7.2 Covenants. Paxson shall have performed and complied in all material
respects with all covenants and agreements contained in this Agreement required
to be performed or complied with by it on or prior to the Closing Date.
7.3 Certain Proceedings. No writ, order, decree or injunction of a court
of competent jurisdiction or Governmental Authority shall have been entered
against Paxson, Roberts or any of their respective affiliates that prohibits or
restricts the exchange of the KUWB Assets and the KUPX Assets contemplated
hereby. No proceeding shall be pending the effect of which could be to revoke,
cancel, fail to renew, respond or modify adversely any material KUPX License.
7.4 Opinion of Counsel. Roberts shall have received the favorable
opinion of Dow, Lohnes & Albertson, PLLC, substantially in the form of Schedule
7.4 attached hereto, which opinion Roberts's lenders may rely on.
<PAGE> 35
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7.5 Document Delivery. Paxson shall have delivered the following
documents, appropriately executed, to Roberts in form and substance reasonably
acceptable to Roberts and its counsel:
(a) All documents required to be delivered to Roberts pursuant
to Section 3.2;
(b) Certified copies of the resolutions of the Board of
Directors and sole shareholder of Paxson authorizing the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby;
(c) A certificate of good standing for Paxson from the State of
Florida and a certificate of good standing for Paxson as a foreign corporation
from the State of Utah; and
(d) A certificate duly executed by an officer of Paxson
certifying compliance by Paxson with the conditions set forth in Sections 7.1
and 7.2.
7.6 No Material Adverse Change. Since the date of this Agreement, there
shall not have occurred any material adverse change in the KUPX Licenses, other
than changes resulting from matters affecting the television broadcasting
industry generally, or the KUPX Transmission Equipment or the KUPX Transmitter
Lease, except for any changes resulting from the negligence or willful
misconduct of ACME under the KUPX Time Brokerage Agreement.
7.7 Consents. All Paxson Material Consents shall have been obtained and
delivered to Roberts, without any materially adverse change in the terms or
conditions of the related license, agreement or other instrument or obligation.
7.8 KUPX FCC Consent. The KUPX FCC Consent shall have been granted
without imposition on Roberts of any material adverse conditions that need not
be complied with by Roberts under Section 6.3 and shall have become a Final
Order.
7.9 KUWB FCC Consent. The KUWB FCC Consent shall have been granted
without imposition on Roberts of any material adverse conditions that need not
be complied with by Roberts under Section 6.3.
7.10 HSR Act. The waiting period under the HSR Act, if any, shall have
expired without unresolved action by the DOJ or FTC to prevent the Closing.
<PAGE> 36
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7.11 Time Brokerage Agreements. Paxson shall have complied in all
material respects with the Time Brokerage Agreements.
7.12 Relocation. Paxson shall have relocated the KUPX tower site to the
site described in the KUPX Transmitter Lease.
7.13 Retention of Digital Frequency. The FCC shall have approved the
retention by Roberts after the Closing of the frequency allocations issued by
the FCC with respect to KUWB for the transmission of advanced television, high
definition or digital broadcasts.
7.14 KUPX Sublease Paxson and Roberts shall have entered into the
Sublease in form and condition reasonably satisfactory to Roberts or if the KUPX
Landlord does not consent to the Sublease, the KUPX Landlord and Roberts shall
have entered into the New KUPX Lease and Paxson and Roberts shall have entered
into the Joint Use Agreement, each in form and condition reasonably satisfactory
to Roberts. The KUPX Landlord shall have granted Paxson and Roberts an
additional 250 square feet in the transmitter building, or shall permit a
buildout of the transmitter building by Paxson and Roberts.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF PAXSON
The obligations of Paxson under this Agreement to consummate the
exchange of the KUPX Assets for the KUWB Assets and to perform its other
obligations hereunder to be performed at or subsequent to the Closing shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions, any one or more of which may be waived by Paxson:
8.1 Representations and Warranties. All representations and warranties
of Roberts contained herein shall be true and correct in all material respects
on the Closing Date as though such representations and warranties were made as
of such date, except for changes permitted or contemplated pursuant to this
Agreement.
8.2 Covenants. Roberts shall have performed and complied in all material
respects with all covenants and agreements contained in this Agreement required
to be performed or complied with by it on or prior to the Closing Date.
8.3 Certain Proceedings. No writ, order, decree or injunction of a court
of competent jurisdiction or Governmental Authority shall have been entered
against Paxson,
<PAGE> 37
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Roberts or any of their respective affiliates which prohibits or
restricts the exchange of the KUWB Assets and the KUPX Assets contemplated
hereby. No proceeding shall be pending the effect of which could be to revoke,
cancel, fail to renew, respond or modify adversely any material KUWB License.
8.4 Opinion of Counsel. Paxson shall have received the favorable opinion
of Dickstein Shapiro Morris & Oshinsky, L.L.P. substantially in the form of
Schedule 8.4 attached hereto, which opinion Paxson's lenders may rely on.
8.5 Document Delivery. Roberts shall have delivered the following
documents appropriately executed to Paxson in form and substance reasonably
acceptable to Paxson and its counsel:
(a) All documents required to be delivered to Paxson pursuant to
Section 3.3;
(b) Certified copies of the resolutions of the members of
Roberts authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(c) A certificate of good standing for Roberts from the State of
Delaware and a certificate of good standing for Roberts as a foreign limited
liability company from the State of Utah;
(d) A certificate duly executed by an officer of Roberts
certifying compliance by Roberts with the conditions set forth in Sections 8.1
and 8.2; and
(e) an estoppel certificate from the landlord under the KUWB
Transmitter Lease.
8.6 No Material Adverse Change. Since the date of this Agreement, there
shall not have occurred any material adverse change in the KUWB Licenses, other
than changes resulting from matters affecting the television broadcasting
industry generally, or the KUWB Transmission Equipment or the KUWB Transmitter
Lease, except for any changes resulting from the negligence or wilful misconduct
of Paxson under the KUWB Time Brokerage Agreement.
8.7 Consents. All Roberts Material Consents shall have been obtained and
delivered to Paxson, without any materially adverse change in the terms or
conditions of the related license, agreement or other instrument or obligation.
<PAGE> 38
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8.8 KUWB FCC Consent. The KUWB FCC Consent shall have been granted
without imposition on Paxson of any material adverse conditions that need not be
complied with by Paxson under Section 6.3 and shall have become a Final Order.
8.9 KUPX FCC Consent. The KUPX FCC Consent shall have been granted
without any imposition on Paxson of any material adverse conditions that need
not be complied with by Paxson under Section 6.3.
8.10 Time Brokerage Agreements. Roberts and ACME shall have complied in
all material respects with the Time Brokerage Agreements.
8.11 HSR Act. The waiting period under the HSR Act, if any, shall have
expired without unresolved action by the DOJ or FTC to prevent the Closing.
8.12 Relocation. Paxson shall have relocated the KUPX tower site to the
site described in the KUPX Transmitter Lease.
8.13 Retention of Digital Frequency. The FCC shall have approved the
retention by Paxson after the Closing of the frequency allocations issued by the
FCC with respect to KUPX for the transmission of advanced television, high
definition or digital broadcasts.
8.14 KUWB Transmitter Lease. The KUWB Transmitter Lease shall have been
amended to provide that it shall automatically terminate on the date on which
the licensee of KUWB is required to return the analog FCC Licenses of KUWB to
the FCC. Such amendment shall be on terms and conditions reasonably satisfactory
to Paxson. The fee described in Section III(c) of the KUWB Transmitter Lease in
the amount of $125,000 shall have been paid in full by Roberts or waived in
writing by the landlord under the KUWB Transmitter Lease.
8.15 KUPX Sublease. Paxson and Roberts shall have entered into the
Sublease in form and condition reasonably satisfactory to Paxson or if the KUPX
Landlord does not consent to the Sublease, the KUPX Landlord and Roberts shall
have entered into the New KUPX Lease and Paxson and Roberts shall have entered
into the Joint Use Agreement, each in form and condition reasonably satisfactory
to Paxson. The KUPX Landlord shall have granted Paxson and Roberts an additional
250 square feet in the transmitter building, or shall permit a buildout of the
transmitter building by Paxson and Roberts.
<PAGE> 39
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ARTICLE 9
INDEMNIFICATION
9.1 Survival. The representations, warranties, covenants and agreements
of the parties contained in this Agreement shall survive the Closing for a
period of one (1) year after the Closing Date, except that (a) all covenants
required to be performed by any party after the Closing shall survive the
Closing until fully performed and (b) Roberts's obligations with respect to the
Assumed KUPX Liabilities shall survive until discharged and Paxson's obligations
with respect to the Assumed KUWB Liabilities shall survive until discharged. The
foregoing survival periods are collectively referred to herein as the "Indemnity
Period." No claim for indemnification, may be asserted after the expiration of
the Indemnity Period. Notwithstanding anything herein to the contrary, any
representation, warranty, covenant and agreement which is the subject of a Claim
which is asserted in writing prior to the expiration of the Indemnity Period
shall survive with respect to such Claim or any dispute with respect thereto
until the final resolution thereof.
9.2 Indemnification. Each of Roberts and Paxson (the "Indemnifying
Party") agrees that on and after the Closing it shall indemnify and hold
harmless the other party (which shall include its Affiliates, officers,
directors, shareholders, employees, agents and other representatives) (the
"Indemnified Party") from and against any and all damages, claims, losses,
expenses, costs, obligations and liabilities, including without limitation
liabilities for all reasonable attorneys', accountants' and experts' fees and
expenses, including those incurred to enforce the terms of this Agreement or any
documents executed pursuant hereto (collectively, "Loss and Expense"), suffered,
directly or indirectly, by the Indemnified Party by reason of, or arising out
of:
(a) any breach of a representation or warranty made by the
Indemnifying Party pursuant to this Agreement or any agreement contemplated
hereby or any failure by the Indemnifying Party to perform or fulfill any of its
covenants or agreements set forth in this Agreement or in any agreement
contemplated hereby;
(b) any Legal Action or other Claim by any third party arising
from the business, ownership or operations of any of the Assets by the
Indemnifying Party prior to the Closing Date, except to the extent arising from
obligations or liabilities that have been assumed by the Indemnified Party
pursuant to this Agreement or except if caused directly by the negligence or
wilful act of the Indemnified Party or ACME under any Time Brokerage Agreement;
<PAGE> 40
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(c) any failure by the Indemnifying Party to pay, perform or
discharge any and all liabilities of the Indemnified Party assumed by the
Indemnifying Party pursuant to the terms hereof or any failure by the
Indemnifying Party to pay, perform or discharge any and all liabilities of the
Indemnifying Party not assumed by the Indemnified Party pursuant to the terms
hereof; or
(d) any failure by the Indemnifying Party to comply with the
provisions of any bulk sales or similar law applicable to the transfer of the
Assets as contemplated by this Agreement.
9.3 Notice of Claims. If an Indemnified Party believes that it has
suffered or incurred any Loss and Expense, it shall notify the Indemnifying
Party promptly in writing, and in any event within the applicable time period
specified in Section 9.1, describing 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 Legal Action
is instituted by a third party with respect to which an Indemnified Party
intends to claim any liability or expense as Loss and Expense under this
Article, such Indemnified Party shall promptly notify the Indemnifying Party of
such Legal Action, but the failure to so notify the Indemnifying Party shall not
relieve such Indemnifying Party of its obligations under this Article, except to
the extent such failure to notify materially prejudices such Indemnifying
Party's ability to defend against such Claim.
9.4 Defense of Third Party Claims. The Indemnifying Party shall have the
right to conduct and control, through counsel of its own choosing, reasonably
acceptable to the Indemnified Party, any third party Legal Action or other
Claim, but the Indemnified Party may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that, if the
Indemnifying Party shall fail to defend any such Legal Action or other Claim
(including the assertion of any reasonable defense conveyed to the Indemnifying
Party by the Indemnified Party or its counsel), then the Indemnified Party may
defend, through counsel of its own choosing, reasonably satisfactory to the
Indemnifying Party, such Legal Action or other Claim, and (so long as it gives
the Indemnifying Party at least fifteen (15) days' notice of the terms of the
proposed settlement thereof and permits the Indemnifying Party to then undertake
the defense thereof) settle such Legal Action or other Claim and recover the
amount of such settlement or of any judgment and the reasonable costs and
expenses of such defense. The Indemnifying Party shall not compromise or settle
any such Legal Action or other Claim without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld, delayed or
conditioned.
<PAGE> 41
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9.5 Exclusive Remedy. The indemnification provided in this Article shall
be the sole and exclusive post-Closing remedy available to either party against
the other party for any Claim under this Agreement.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Termination.
(a) This Agreement may be terminated prior to Closing under one
or more of the following circumstances:
(i) at any time by mutual written consent of Roberts and
Paxson;
(ii) by either party, if the Closing hereunder has not
taken place on or before March 31, 1999, provided that the party seeking such
termination shall not then be in material breach under this Agreement;
(iii) by Roberts if all conditions set forth in Article
7 have not been satisfied or waived on or prior to the date scheduled for
Closing under Section 3.1, and Roberts is not in material breach under this
Agreement;
(iv) by Paxson if all conditions set forth in Article 8
have not been satisfied or waived on or prior to the date scheduled for Closing
under Section 3.1 and Paxson is not in material breach under this Agreement;
(v) by either party if the other party is in material
breach of any of its representations, warranties or covenants set forth in this
Agreement and such breach has not been cured within 10 business days following
notice thereof by the terminating party and the terminating party is not in
material breach under this Agreement;
(vi) by either party if the other party has failed to
repair, replace or restore damaged or lost Assets material to the operation of
KUPX or KUWB, as the case may be, within the time specified in Section 3.1
hereof; or
(vii) by either party under Section 6.10, 6.14 or 6.15.
<PAGE> 42
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(b) (i) If this Agreement is terminated as provided herein:
(A) Neither party hereto nor any of their
directors, officers, shareholders, employees, agents or affiliates shall have
any liability or further obligation to the other party or any of its directors,
officers, shareholders, employers, agents or affiliates pursuant to this
Agreement except as stated in Section 10.1(b)(ii) hereof;
(B) All filings, applications and other
submissions relating to the transactions contemplated hereby shall, to the
extent practicable, be withdrawn from the agency or other person to which made;
and
(C) Roberts shall return any information
received by Roberts from Paxson and will cause all confidential information
obtained by Roberts from Paxson concerning KUPX to be treated as such, and
Paxson shall return any information received by Paxson from Roberts and will
cause all confidential information obtained by Paxson from Roberts concerning
KUWB to be treated as such.
(ii) Notwithstanding anything to the contrary contained
in this Agreement, if Roberts or Paxson is in material breach of its respective
representations, warranties or covenants under this Agreement, then and in that
event, the following provisions shall apply:
(A) In the event the parties hereto shall fail
to close this transaction due to Roberts's material breach of this Agreement,
then Paxson shall have the right to seek all remedies available to it as
provided hereunder or at law or in equity and to enforce its rights by an action
for specific performance.
(B) In the event the parties hereto shall fail
to close this transaction due to Paxson's material breach of this Agreement,
then Roberts shall have the right to seek all remedies available to it as
provided hereunder or at law or in equity and to enforce its rights by an action
for specific performance.
(C) If any action is brought by any party to
enforce this Agreement by specific performance, the party whose enforcement is
sought shall waive the defense that there is an adequate remedy at law because
of the respective unique nature of the KUPX and KUWB Assets. Nothing herein
contained shall be construed as prohibiting either party from pursuing any other
remedies available to it pursuant to the provisions of, and subject to the
limitations contained in, this Agreement for such breach or threatened breach.
<PAGE> 43
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10.2 Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise specifically provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such costs and expenses;
provided, that Roberts and Paxson shall each pay one-half of all filing fees
required in connection with the applications for the FCC Consent and any filings
required under the HSR Act and of all transfer taxes required in connection with
the transfer of the Assets; and, provided further, that if any lawsuit is filed
to enforce a party's rights under this Agreement, the prevailing party shall be
reimbursed by the other party for all reasonable expenses incurred thereby,
including reasonable attorneys' fees.
10.3 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of Roberts and Paxson.
10.4 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.4.
10.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or by facsimile
transmission (receipt confirmed telephonically), mailed by registered or
certified mail (return receipt requested), postage prepaid, or sent by
nationally recognized courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) If to Roberts:
Roberts Broadcasting of Salt Lake City, L.L.C.
c/o Douglas Gealy, President
ACME Television of Utah, LLC 10829 Olive Blvd.
St. Louis, MO 63141
Telecopy: (314) 989-0616
<PAGE> 44
- 38 -
with copies (which shall not constitute notice) to:
Dickstein Shapiro Morris & Oshinsky, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037-1526
Attention: Lewis J. Paper, Esquire
Telecopy: (202) 887-0689
(b) If to Paxson:
Paxson Communications of Salt Lake City-30, Inc.
Paxson Salt Lake City License, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Mr. Lowell W. Paxson
Telecopy: (561) 655-9424
with copies (which shall not constitute notice) to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, DC 20036
Attention: John R. Feore, Jr., Esq.
Telecopy: (202) 776-2222
10.6 Assignment. Neither party may assign or transfer its rights,
interests or obligations under this Agreement without the prior written consent
of the other party, except either party may assign all or part of its rights,
interests and obligations under this Agreement to any Affiliate of such party;
provided, however, that (i) such assigning party shall remain liable to the
other party for the satisfactory performance of such assignee's obligations
under this Agreement and (ii) such assignment or delegation does not delay
receipt of any FCC Consent. Each party hereto may also assign its rights under
this Agreement to its senior lenders for collateral security purposes. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
<PAGE> 45
- 39 -
10.7 Governing Law. This agreement shall be governed by the laws of the
State of Delaware (but not the laws pertaining to choice of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
10.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
10.10 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto and the documents delivered pursuant to or referenced in this
Agreement embody the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement. The Exhibits and
Schedules hereto are an integral part of this Agreement and are incorporated by
reference herein. There are no representations, warranties, covenants or
agreements made with respect to the KUWB Assets and the KUPX Assets, except as
expressly set forth in this Agreement and the Exhibits and Schedules hereto.
10.11 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
10.12 Further Assurance. Subject to the terms and conditions of this
Agreement, each party to this Agreement will use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the exchange of assets contemplated by this
Agreement. From time to time after the Closing Date, without further
consideration, Roberts will, at its own expense, execute and deliver, or cause
to be executed and delivered, such documents to Paxson as Paxson may reasonably
request in order to more effectively vest in Paxson good title to the KUWB
Assets and more effectively consummate the exchange of the KUWB Assets and the
assumption of liabilities and obligations by Roberts pursuant to this Agreement.
From time to time after the Closing Date, without further consideration, Paxson
will, at its own expense, execute and deliver, or cause to be executed and
delivered, such documents to Roberts as Roberts may reasonably request in order
to more effectively vest in Roberts good title to the KUPX Assets and more
effectively consummate the exchange of the KUPX Assets and the assumption of
liabilities and obligations by Paxson pursuant to this Agreement.
<PAGE> 46
- 40 -
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 47
IN WITNESS WHEREOF, Roberts and Paxson have caused this Asset Exchange
Agreement to be signed by their respective duly authorized representatives as of
the date first above written.
PAXSON COMMUNICATIONS OF SALT LAKE
CITY-30, INC.
By: /s/ Lowell W. Paxson
---------------------------------
Name : Lowell W. Paxson
Title:
PAXSON SALT LAKE CITY LICENSE, INC.
By: /s/ Lowell W. Paxson
---------------------------------
Name: Lowell W. Paxson
Title:
ROBERTS BROADCASTING OF SALT LAKE
CITY, L.L.C.
By:
---------------------------------
Name:
Title:
<PAGE> 48
EXHIBIT 10.4
The Following Schedules and Exhibits have been intentionally omitted by the
Registrants.
LIST OF EXHIBITS
Exhibit A KUPX Time Brokerage Agreement
Exhibit B KUWB Time Brokerage Agreement
LIST OF SCHEDULES
Schedule 4.3 KUWB Consents
Schedule 4.4 KUWB Litigation
Schedule 4.5 KUWB Taxes
Schedule 4.6 KUWB Transmission Equipment
Schedule 4.8 KUWB Licenses
Schedule 4.10 KUWB Insurance
Schedule 5.3 KUPX Consents
Schedule 5.4 KUPX Litigation
Schedule 5.5 KUPX Taxes
Schedule 5.6 KUPX Transmission Equipment
Schedule 5.8 KUPX Licenses
Schedule 5.10 KUPX Insurance
Schedule 6.1(a) KUWB Liens
Schedule 6.1(b) KUPX Liens
Schedule 7.4 Opinion of Paxson's Counsel
Schedule 8.4 Opinion of Robert's Counsel
A copy of any omitted Schedule or Exhibit will be provided to the Securities and
Exchange Commission upon request.
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