SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
_______________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 26, 1996
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TELEMUNDO GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-16099 13-3348686
- -------- ------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2290 West 8th Avenue, Hialeah, Florida 33010
- -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 884-8200
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Item 2. Acquisition or Disposition of Assets
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Since July 1994, Telemundo Group, Inc. (the "Company"),
through Telemundo News Network, Inc. ("TNNI"), a wholly-owned
subsidiary of the Company, had held a 42% interest in
Telenoticias del Mundo, L.P. ("TeleNoticias"), an
international Spanish-language news service. On June 26,
1996, TNNI acquired the remaining 58% interest in
TeleNoticias from its former partners for approximately $5.1
million (the "Purchase"). Contemporaneous with the Purchase,
the Company sold substantially all of the assets and
certain liabilities of TeleNoticias to CBS Inc. ("CBS") (the
"Sale"). The total consideration for the Sale was $5.0
million in cash and a $1.25 million note from CBS, which
bears no interest and is payable five years after the closing
date, which for financial statement purposes will be recorded
at its present value of approximately $750,000. The
consideration for the Sale is subject to certain post-closing
adjustments, as set forth in the Asset Purchase Agreement
dated as of June 26, 1996, by and among TeleNoticias, the
Company and CBS, a copy of which is attached as an exhibit to
this filing. Of the cash consideration paid by CBS, $1.0
million is being held in escrow as a reserve for such post-
closing adjustments. These transactions, when combined with
the Company's net investment in TeleNoticias, comprising
capital contributions and advances made and losses recognized
in the operations of TeleNoticias through the Sale, are
expected to result in a GAAP loss of approximately $2.4
million which will be reported in the Company's Form 10-Q for
the quarter ended June 30, 1996.
In addition, the Company (and certain of its subsidiaries)
and CBS entered into a number of agreements relating to news
activities, including an agreement under which CBS will
produce the Company's nightly national and international
newscasts for a period of five years at a cost which is less
than the license fee which the Company had paid to
TeleNoticias for such newscasts. The Company also entered
into other agreements including the rental of the
TeleNoticias studio facility to CBS, the provision of certain
technical and other services by the Company to CBS, and the
provision of certain other news services by CBS to the
Company. These agreements will generate net expense savings
and additional sources of income for the Company, some of
which will be reinvested in ongoing operations, including
programming and promotion initiatives. As a result of such
reinvestment, the net impact from the agreements on the
Company's 1996 operating results is not expected to be
material.
In connection with the Purchase, all outstanding disputes
among TNNI and its former partners were resolved, including
the dismissal of the October 16, 1995 legal action commenced
by TNNI in New York State Court relating to certain corporate
governance and other issues.
A copy of the press release announcing such transaction is
attached as Exhibit 99(a).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(b) Pro Forma Financial Information:
-------------------------------
The Company accounted for its investment in
TeleNoticias using the equity method. As a result
of the Sale, the Company will no longer have an
"Investment in and receivable from TeleNoticias" on
its Consolidated Balance Sheets, which was
$1,123,000 at March 31, 1996 and $1,751,000 at
December 31, 1995. The Sale will also eliminate
the Company's "Net loss from investment in
TeleNoticias" on its Consolidated Statements of
Operations, which loss was $1,499,000 for the three
months ended March 31, 1996 and $6,355,000 for the
year ended December 31, 1995.
(c) Exhibits:
--------
Included as part of this Form 8-K are the
exhibits listed on the Exhibit Index
appearing on page 5.
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.
TELEMUNDO GROUP, INC.
(Registrant)
Date: July 11, 1996 By: /s/ Peter J. Housman II
-----------------------
Peter J. Housman II
Chief Financial Officer and Treasurer
EXHIBIT INDEX
Exhibit
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Number Description
- ------ -----------
2(a) Asset Purchase Agreement, dated as of June 26, 1996,
by and among Telenoticias del Mundo, L.P., Telemundo
Group, Inc. and CBS Inc.
99(a) Press release issued June 27, 1996.
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ASSET PURCHASE AGREEMENT
By and Among
TELENOTICIAS DEL MUNDO, L.P.,
TELEMUNDO GROUP, INC.
and
CBS INC.
_____________________
Dated as of June 26, 1996
____________________
_____________________________________________________________________________
TABLE OF CONTENTS
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I. ASSETS ........................................................ 2
1.1. Sale and Transfer of Assets ............................... 2
(a) Prepaids .............................................. 2
(b) Inventory ............................................. 2
(c) Accounts Receivable ................................... 2
(d) Fixed Assets .......................................... 2
(e) Leased Personal Property .............................. 2
(f) Intellectual Property Rights .......................... 2
(g) Business Records....................................... 3
(h) Customers ............................................. 3
(i) Advertising Materials.................................. 3
(j) Contracts ............................................. 4
(k) Licenses .............................................. 4
(l) Insurance ............................................. 4
(m) 401(k) Plan Assets..................................... 4
1.2. Retained Assets ....................................... 4
(a) Cash and Cash Equivalents ............................. 4
(b) Designated Assets ..................................... 5
(c) Excluded Employee Plan Assets ........................ 5
(d) Non-Assigned Contracts ............................... 5
(e) Corporate Records .................................... 5
(f) Partnership Agreement ................................ 5
(g) This Agreement ....................................... 6
(h) Claims ............................................... 6
(i) Taxes ................................................ 6
(j) Certain Obligations and Receivables .................. 6
(k) Certain Documents .................................... 6
(l) Certain Retained Assets .............................. 6
1.3. Assignability and Consents ............................... 6
(a) Required Consents .................................... 6
(b) Nonassignable Items .................................. 6
II. LIABILITIES ................................................ 7
2.1. Assumption of Liabilities ................................ 7
(a) Balance Sheet ........................................ 7
(b) Post-Balance Sheet Liabilities ....................... 7
(c) Contracts ............................................ 7
(d) Employee-Related Liabilities ......................... 7
(e) Post-Closing Date .................................... 8
2.2. Retained Liabilities ..................................... 8
(a) Pre-Closing .......................................... 8
(b) Liabilities Relating to the Sale of Acquired Assets .. 8
(c) Employee-Related Liabilities ......................... 8
(d) Litigation ........................................... 9
(e) Product, Environmental and Safety Liability .......... 9
(f) Taxes ................................................ 9
(g) Liabilities Relating to Partner Purchase ............. 9
(h) Shutdown Costs ....................................... 10
(i) Liabilities Relating to Retained Assets .............. 10
(j) Decoders ............................................. 10
(k) Partnership Agreement ................................ 10
(l) Post-Closing Date .................................... 10
III. PURCHASE PRICE ............................................. 10
3.1. Payment ................................................. 10
3.2. Satisfaction of Certain Indebtedness .................... 11
3.3. Purchase Price Allocation ............................... 11
3.4. Closing Date Balance Sheet .............................. 11
IV. CLOSING .................................................... 13
4.1. General ................................................. 13
4.2. Documents to be Delivered by Seller ..................... 13
4.3. Documents to be Delivered by Buyer ...................... 15
4.4. Documents to be Delivered by Buyer, Seller and Parent ... 15
V. REPRESENTATIONS AND WARRANTIES .............................. 16
5.1. Representations and Warranties of Seller and Parent .... 16
(a) Organization and Standing ......................... 16
(b) Power and Authority ............................... 16
(c) Conflicts ......................................... 17
(d) Defaults .......................................... 17
(e) Distributions ..................................... 18
(f) Partner Purchase Agreement ........................ 18
(g) [intentionally left blank] ........................ 18
(h) Acquired Assets; Title to the Acquired Assets ..... 18
(i) Affiliate Contracts ............................... 19
(j) Leases ............................................ 19
(k) Contracts ......................................... 19
(l) Financial Statements .............................. 20
(m) Liabilities ....................................... 21
(n) Accounts Receivable; Collection ................... 21
(o) Litigation ........................................ 21
(p) Customers and Suppliers ........................... 21
(q) Regulatory Compliance ............................. 22
(r) Reports ........................................... 22
(s) Brokers, Finders and Agents ....................... 22
(t) Intellectual Property ............................. 22
(u) Licenses .......................................... 23
(v) Employee Relations; Collective Bargaining Agreements 24
(w) Employees and Employee Plans ...................... 24
(x) Changes in Circumstances .......................... 25
(y) Taxes ............................................. 27
(z) Warranties ........................................ 27
(aa) Insurance ......................................... 27
(ab) Approvals ......................................... 27
(ac) Complaints ........................................ 27
(ad) Absence of Certain Commercial Practices ........... 28
(ae) Books and Records ................................. 28
(af) Environmental Compliance .......................... 28
(ag) Copies of Documents ............................... 30
(ah) Insider Interests ................................. 30
(ai) Disclosure ........................................ 30
(aj) Loan and Security Credit Agreement ................ 30
(ak) Recitals .......................................... 30
5.2. Representations and Warranties of Buyer ............... 31
(a) Organization and Standing; Corporate Power
and Authority ..................................... 31
(b) Conflicts; Defaults ............................... 31
(c) Brokers, Finders and Agents ....................... 31
5.3. General ............................................... 31
VI. COVENANTS .................................................. 31
6.1. Confidentiality ....................................... 31
6.2. Insurance ............................................. 32
6.3. Maintenance of, and Access to, Records ................ 33
6.4. Accounts Receivable ................................... 34
6.5. Further Assurances; Customer and Supplier
Relationships; Assertion of Claims .................... 34
6.6. Tax Matters ........................................... 35
VII. CERTAIN ADDITIONAL COVENANTS .............................. 37
7.1. Expenses; Transfer Taxes .............................. 37
7.2. Press Releases and Disclosure ......................... 37
7.3. Cooperation in the Defense of Claims .................. 38
7.4. Regulatory Approvals .................................. 38
7.5. Telenoticias Name ..................................... 38
7.6. Employees ............................................. 38
7.7. Non-Competition ....................................... 38
(a) Seller and Parent Period and Conduct ............. 38
(b) Territory ........................................ 39
(c) Definitions ...................................... 39
(d) Remedies ......................................... 40
(e) Severability ..................................... 40
VIII. SURVIVAL AND INDEMNIFICATION ............................. 40
8.1. Survival of Representations, Warranties and Covenants 40
8.2. Limitations on Liability .............................. 41
8.3. Indemnification ....................................... 42
8.4. Defense of Claims ..................................... 43
8.5. Set Off ............................................... 45
8.6. Sole Remedy .......................................... 45
IX. MISCELLANEOUS .............................................. 45
9.1. Amendments, Supplements, Etc .......................... 45
9.2. Entire Agreement; No Third Party Beneficiaries ........ 45
9.3. Severability .......................................... 46
9.4. Governing Law ......................................... 46
9.5. Consent to Jurisdiction; No Jury Trial ................ 46
9.6. Notices ............................................... 47
9.7. Specific Performance .................................. 47
9.8. Counterparts .......................................... 48
9.9. Successors and Assigns ................................ 48
9.10. Waivers ............................................... 48
9.11. Titles and Headings ................................... 48
9.12. Certain Interpretive Matters and Definitions .......... 48
SCHEDULES
A Transition Agreements
1.2(b) Buyer-Designated Retained Assets
1.2(d) Non-Assigned Contracts
1.2(l) Certain Retained Assets
1.3 Consent-Required Contracts
3.2 Indebtedness of Seller
3.3 Purchase Price Allocation
4.2(c) Bill of Sale
4.2(d) Akin Gump Opinion
4.2(e) Consents
4.2(g) Instrument of Assignment for Intellectual Property
4.2(k) Acknowledgement
4.3(c) Buyer Opinion
4.3(d) Instrument of Assumption
4.3(f) Note
4.4(a) Sublease
4.4(b) CBS News Material License Agreement
4.4(c) Telemundo News Material License and Services Agreement
4.4(d) Program Production and License Agreement
4.4(e) Technical Services Agreement
4.4(f) Escrow Agreement
4.4(g) TGI Transition Services and Facilities Agreement
4.4(h) Agreement regarding Promotional Spots and Services
5.1(h)(iii) Fixed Assets
5.1(h)(iv) Inventories
5.1(h)(v) Liens
5.1(h)(vi) Headend Locations
5.1(i) Affiliate Contracts
5.1(j) Lease Agreements
5.1(k) Assigned Contracts
5.1(l) Financial Statements
5.1(n) Accounts Receivable
5.1(o) Litigation
5.1(p) Customers and Suppliers
5.1(t) Intellectual Property
5.1(u) Licenses
5.1(v) Employee Relations
5.1(w) Employees and Employee Plans
5.1(x) Changes in Circumstances
5.1(aa) Insurance Policies
5.1(ab) Approvals
5.1(af) Environmental Matters
7.6(b) Employees Not Being Hired
7.6(c) Retained Severance Liabilities
DEFINED TERMS
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Page
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401(k) Plan ...................................... 4
Accounting Fees ................................. 12
Accounts Receivable .............................. 2
Acquired Assets .................................. 2
Antena 3 ......................................... 1
Apportioned Obligations.......................... 35
Artear ........................................... 1
Assigned Contracts ............................... 4
Assumed Contracts ................................ 7
Assumed Liabilities .............................. 7
Balance Sheet ................................... 20
Balance Sheet Date .............................. 20
Business ......................................... 1
business days ................................... 49
Business Records ................................. 3
Buyer ............................................ 1
Cash ............................................. 5
Cash Payment .................................... 10
CERCLA .......................................... 30
Closing.......................................... 13
Closing Date .................................... 13
Closing Date Balance Sheet ...................... 11
Closing Date Working Capital .................... 11
Code ............................................ 24
Consent-Required Contracts ....................... 6
Consents ......................................... 6
Contracts ........................................ 4
Customer ......................................... 3
Customers ........................................ 3
Deductible ...................................... 32
Defined Benefit Plan ............................ 24
Designated Assets ............................... 5
Direct Claim .................................... 41
Employee Plans ................................... 5
Employment loss ................................. 10
Environmental Laws .............................. 29
Environmental Permits ........................... 29
ERISA ............................................ 5
Escrow Agreement ................................ 10
Excluded Employee Plans .......................... 5
FCC .............................................. 4
Final Balance Sheet ......................... 11, 12
Financial Statements ............................ 20
Fixed Assets ..................................... 2
Formation Date ................................... 1
Former Partners .................................. 1
Governmental Authorities ......................... 4
Hazardous Substances ............................ 30
Indemnifiable Losses ............................ 41
Indemnifying Party .............................. 41
Indemnitee ...................................... 41
Indemnity Payment ............................... 41
Insurance ....................................... 32
Intellectual Property ............................ 3
Inventories ...................................... 2
IP Registrations ................................ 23
Jones Day ....................................... 13
Laws ............................................. 3
Lease Agreements ................................. 2
Leased Property .................................. 2
Licenses ......................................... 4
Liens ........................................... 14
Loan Agreement .................................. 30
Mass layoff ..................................... 10
Material Adverse Effect ......................... 16
Most Recent Financial Statements ................ 20
Multiemployer plan .............................. 24
Non-Assigned Contracts ........................... 5
Non-Prevailing Party ............................ 12
Notice of Claim for Indemnity ................... 41
Order ........................................... 17
Parent ........................................... 1
Parent's Credit Documents ....................... 30
Partner Purchase ................................. 1
Partner Purchase Agreement ....................... 1
Partnership Agreement ............................ 1
Permitted Liens ................................. 19
Person ........................................... 6
Plant closing ................................... 10
Prepaids ......................................... 2
Purchase Price .................................. 10
Records ......................................... 33
Related Party ................................... 26
Release ......................................... 30
Released ........................................ 30
Reserve Amount .................................. 34
Resolution Accountants .......................... 12
Restricted Entities ............................. 31
Retained Assets .................................. 4
Retained Liabilities ............................. 8
Reuters .......................................... 1
Seller ........................................... 1
Shortfall Amount ................................ 12
Tax ............................................. 27
Taxes ........................................... 27
Telemundo ........................................ 1
Telenoticias ..................................... 3
Telenoticias GP .................................. 1
Third Party Claim ............................... 41
Third-Party Recovery ............................ 44
Transaction Documents ........................... 16
Transfer ......................................... 2
Transition Agreements ............................ 1
Uncollectible ................................... 34
Undisputed Payment .............................. 45
WARN ............................................ 10
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated as of June 26, 1996, by and among
Telemundo Group, Inc., a Delaware corporation ("Parent"), Telenoticias del
Mundo, L.P., a Delaware limited partnership ("Seller") and an entity
indirectly wholly owned by Parent, and CBS Inc., a New York corporation
("Buyer").
R E C I T A L S:
A. Pursuant to an Agreement of Limited Partnership (the
"Partnership Agreement") of Telenoticias del Mundo, L.P. dated July 20, 1994
(the "Formation Date") among Telenoticias del Mundo, Inc., a Delaware
corporation ("Telenoticias GP") and the general partner of Seller, Reuter
Latam News, Inc., a Delaware corporation ("Reuters"), Telemundo News Network,
Inc., a Delaware corporation ("Telemundo"), Antena 3 International, Inc., a
Delaware corporation ("Antena 3"), Artear Argentina Corporation, a Delaware
corporation ("Artear" and collectively with Reuters and Antena 3 being the
"Former Partners") and Parent, Seller conducts the business of providing
international Spanish-language news service with distribution in Latin
America, the United States and Spain (such business, as has been conducted
through the Closing Date, as modified pursuant to the transactions
contemplated by the Purchase Agreement (as hereinafter defined) and the
Transition Agreements (as hereinafter defined), being the "Business").
B. Telemundo has acquired all of the stock of Telenoticias GP
and all of the limited partnership interests of Seller (the "Partner
Purchase") from the Former Partners pursuant to a purchase agreement (the
"Partner Purchase Agreement");
C. Pursuant to the Partner Purchase Agreement, the Former
Partners have agreed to provide certain services or take other actions in
respect of the Business pursuant to the agreements attached as Schedule A
(the "Transition Agreements"); ----------
D. For all purposes of this Agreement, the term "Seller" means
Telenoticias del Mundo, L.P., a Delaware limited partnership, since its
Formation Date through the Closing Date; and
E. Seller desires to sell to Buyer, and Buyer desires to
purchase and acquire from Seller, on the terms and subject to the conditions
hereof, substantially all of the assets, properties, rights and interests of
Seller that relate to the Business, in consideration of certain payments by
Buyer and the assumption by Buyer of certain liabilities and obligations of
Seller all as specifically set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
I. ASSETS
------
1.1 Sale and Transfer of Assets. At the Closing, and effective as
---------------------------
of the Closing Date, Buyer will purchase and acquire from Seller, and Seller
will sell, transfer, convey, assign and deliver (collectively, "Transfer") to
Buyer, all of the assets, properties, rights and interests owned by Seller
relating to the Business, wherever situated, other than the Retained Assets
(as hereinafter defined) (such assets, properties, rights and interests, other
than the Retained Assets, are referred to herein collectively as the "Acquired
Assets") and whether reflected in the Balance Sheet (as hereinafter defined)
or acquired after the Balance Sheet Date (as hereinafter defined) as the same
shall exist on the Closing Date, including without limitation the following:
(a) Prepaids. All prepaid expenses, advance payments, deposits,
--------
surety accounts and other similar items, including without limitation
prepaid deposits with suppliers and utilities (collectively, the
"Prepaids");
(b) Inventory. All items held for sale or lease or to be furnished
---------
under service Contracts, work-in-process, finished items, supplies,
packing and shipping materials set forth in Schedule 5.1(h)(iv)
(collectively "Inventories"); -------------------
(c) Accounts Receivable. All accounts receivable (including
-------------------
royalties receivable, payments for the sale of advertising time and
subscription fees from cable systems), any payments received with
respect thereto after the Closing Date, unpaid interest accrued on any
such accounts receivable, if any, and any security or collateral relating
thereto, if any, including without limitation those set forth on
Schedule 5.1(n) (collectively, "Accounts Receivable");
---------------
(d) Fixed Assets. All production and other machinery, equipment,
------------
router system, leasehold improvements, vehicles, parts, furniture,
furnishings, plant and office equipment and other fixed assets or
personal property owned or leased by Seller, including without limitation
the tangible personal property set forth on Schedule 5.1(h)(iii)
(collectively, the "Fixed Assets"); -------------------
(e) Leased Personal Property. All rights and interests under the
------------------------
lease or sublease agreements for personal property (the "Lease
Agreements") more particularly described on Schedule 5.1(j), which
---------------
descriptions are incorporated herein by reference (the premises subject
to the Lease Agreements being hereinafter collectively referred to as the
"Leased Property");
(f) Intellectual Property Rights. All inventions, discoveries,
----------------------------
trademarks, patents, trade names, copyrights, jingles, know-how,
intellectual property, software, shop rights, licenses, developments,
research data, designs, technology, trade secrets, test procedures,
processes, route lists, computer programs, computer discs, computer
tapes, literature, reports and other confidential information,
intellectual and similar intangible property rights, whether or not
patentable or copyrightable (or otherwise subject to legally enforceable
restrictions or protections against unauthorized third party usage), and
any and all applications for, registrations of and extensions, divisions,
renewals and reissuances of, any of the foregoing, and rights therein,
including without limitation (i) rights under any royalty or licensing
agreements, (ii) the name, mark and logo and all related trade names and
trademarks, using the word "Telenoticias", provided that such word be
--------
used in conjunction with another prominently displayed name or mark that
by such combination of name or mark denotes a source of origin distinct
from the entity owned by the Former Partners and any of the Former
Partners or their Affiliates beginning 90 days after the date of the
Partner Purchase Agreement through and including the date that is two
years from the date of the Partner Purchase Agreement, (iii) programming
and programming rights (including, but not limited to news material and
outtakes), whether on film, tape or any other medium, whether completed,
in production or otherwise, and whether arising by contract common law
or otherwise, and (iv) the intellectual and intangible property rights
described on Schedule 5.1(t) to the extent that such has been used or
---------------
could be used in the Business; (collectively, the "Intellectual
Property");
(g) Business Records. Other than those being retained pursuant to
----------------
Section 1.2(e), all books and records, including without limitation all
files, invoices, forms, accounts, books of account, correspondence,
production records, technical, accounting, manufacturing and procedural
manuals, employment records, studies, reports or summaries relating to
compliance with any statute, rule, regulation or other law, any judicial
or administrative interpretation thereof (collectively, "Laws") or
Contracts, electronically stored or other computerized information,
software, and other books and records relating to the operation of any
of the Acquired Assets, and any other information which has been reduced
to writing or other tangible medium (collectively, the "Business
Records");
(h) Customers. All information and Business Records relating to
---------
the Persons and their cable affiliates to whom or to which Seller has
sold or otherwise furnished production, advertising or other services or
products, directly or indirectly, at any time during the 24-month period
ending on the Closing Date (individually, a "Customer" and collectively,
the "Customers,"), including without limitation related information as
to the unit and dollar volume of such sales, the method of distribution
and other relevant marketing and product information for each Customer;
(i) Advertising Materials. All promotional, marketing and
---------------------
advertising materials, including without limitation all catalogs,
brochures, plans, supplier lists, manuals, handbooks, programming
descriptions and labels;
(j) Contracts. Subject to Section 1.2(d) and 1.3, all rights,
---------
benefits, claims and interests of Seller in, to or under all written
or oral licenses, leases, contracts and commitments between Seller and
all Persons if any ("Contracts"), whether or not listed on
Schedule 5.1(k), including without limitation the Transition
---------------
Agreements, all unfilled purchase and sale Contracts, all advertising
Contracts, any employee confidentiality Contracts, confidentiality or
secrecy Contracts with third parties that relate to the use or
disclosure of information, and express or implied warranties from the
suppliers of goods or services (including any coverage rights under
product liability or other insurance maintained by any of such suppliers
for the benefit of the Seller) (collectively, "Assigned Contracts");
(k) Licenses. To the extent their transfer is permitted by law,
--------
all licenses, permits, approvals, variances, certificates of compliance,
franchises, authorizations, waivers or consents (collectively,
"Licenses") issued by the United States Federal Communications
Commission ("FCC") or any foreign, United States, state or local
governmental entity or municipality or subdivision thereof or any
authority, department, commission, board, bureau, agency, court or
instrumentality (collectively, "Governmental Authorities"), including
without limitation those listed or described on Schedule 5.1(u),
---------------
provided that those requiring consent to transfer are listed on
Schedule 1.3;
------------
(l) Insurance. All refunds upon cancellation as of the Closing
---------
Date of all insurance policies maintained in connection with the
Business, and reflected as prepaid insurance on the Final Closing Date
Balance Sheet, other than those relating to Retained Assets or Retained
Liabilities;
(m) 401(k) Plan Assets. Sponsorship under any defined contribution
------------------
plan sponsored by Seller that is intended to satisfy the requirements
of Section 401(a) and 410(k) of the Code (as hereinafter defined) and
its related trust (collectively, the "401(k) Plan");
(n) Miscellaneous and Post-Balance Sheet Assets. Except for the
-------------------------------------------
Retained Assets, all other assets, properties, rights and interests,
of every kind, nature and description, whether tangible or intangible,
real, personal or mixed, and wherever situated, of Seller, including
without limitation those reflected in the Balance Sheet or acquired
by Seller since the Balance Sheet Date in each case as the same shall
exist on the Closing Date.
1.2 Retained Assets. Anything in Section 1.1 to the contrary
---------------
notwithstanding, the following assets (collectively, the "Retained Assets")
will be retained by Seller, and Buyer will not purchase or acquire (and is
not obligated to purchase or to acquire) any interest therein:
(a) Cash and Cash Equivalents. All cash, cash equivalents, petty
-------------------------
cash and marketable securities, including in lock boxes or on deposit
with or held by any financial institution as of the Closing Date
including without limitation deposits of $93,000 relating to certain
decoders held by Artear Affiliates (collectively, "Cash");
(b) Designated Assets. Except for Assigned Contracts, any of
-----------------
the assets, properties, rights and/or interests, owned, used, occupied
or held by or for the benefit of Seller that Buyer, pursuant to written
notice given to Seller prior to the Closing Date and attached as
Schedule 1.2(b), identifies as not desired by Buyer to be included
---------------
within, or to constitute a part of, the Acquired Assets (collectively,
the "Designated Assets"), provided that the items listed on
Schedule 1.2(b), if any, shall not result in any adjustment to the
---------------
Purchase Price pursuant to Article III hereof;
(c) Excluded Employee Plan Assets. Other than the 401(k) Plan,
-----------------------------
the bonus/commission obligations reflected on Schedule 5.1(w) as accrued
through the Closing Date and accrued vacation obligations for 1996
through the Closing Date, the rights of Seller under, and any funds
and property held in trust or any other funding vehicle pursuant to,
any written and unwritten "employee benefit plan" (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), or any other payroll practices, bonus, stock
option, stock appreciation, stock purchase, severance, termination,
lay-off, leave of absence, disability, workers compensation, pension,
profit sharing, retirement, medical plan, life insurance plan,
hospitalization plan, insurance, deferred compensation, phantom stock,
other executive compensation arrangement or other employee or welfare
benefit plan, agreement or arrangement of Seller that currently exists
which is applicable to Seller's past, present or future employees
(collectively, "Excluded Employee Plans" and, together with the 401(k)
Plan, "Employee Plans");
(d) Non-Assigned Contracts. All of the rights and interests,
----------------------
and all of the liabilities and obligations, of Seller in, under or
pursuant to any Assigned Contract that Buyer, pursuant to written
notice given to Seller prior to the Closing Date and attached as
Schedule 1.2(d), identifies as not desired by Buyer to be included
---------------
within, or to constitute a part of, the Acquired Assets (collectively,
the "Non-Assigned Contracts"); and
(e) Corporate Records. Seller's minute books, tax returns,
-----------------
stock books, stock ledger, any and all copies of financial records
through the Closing Date and corporate seal and any books and records
which Seller is required by Law to retain.
(f) Partnership Agreement. All rights of Seller under or arising
---------------------
from the Partnership Agreement or any other agreements or arrangements
between or among Parent, Seller, the Former Partners or any of their
respective Affiliates (other than and only to the extent such
agreements or arrangements are expressly specified as Assigned
Contracts on Schedule 5.1(k), including without limitation the
---------------
Transition Agreements), and any rights under the $1.5 million Demand
Note executed by Parent in favor of Seller;
(g) This Agreement. Seller's rights under this Agreement;
--------------
(h) Claims. All rights to causes of action, claims or demands
------
of any nature that Seller has or may have on the Closing Date against
any Person to the extent relating to the Retained Assets or Retained
Liabilities;
(i) Taxes. All rights of Parent, Seller or their respective
-----
Affiliates to any claims for any federal, state or local income tax
refunds;
(j) Certain Obligations and Receivables. All obligations of, and
-----------------------------------
amounts receivable from, Parent or its Affiliates;
(k) Certain Documents. All documents, if any, relating to the
-----------------
legal action with the Former Partners disclosed on Schedule 5.1(o); and
---------------
(l) Certain Retained Assets. All rights and interests in and to
-----------------------
the contracts, agreements, assets and commitments identified on
Schedule 1.2(l).
1.3 Assignability and Consents. (a) Required Consents. Set
-------------------------- -----------------
forth on Schedule 1.3 is a list of all Acquired Assets, including without
------------
limitation Assigned Contracts, Licenses and Lease Agreements, which are
non-assignable or may not be subleased to Buyer without the consent of
some other individual, partnership, corporation, association, joint stock
company, trust, joint venture, limited liability company or Governmental
Authority (individually, a "Person") (such Acquired Assets, Contracts,
Licenses, Lease Agreements, the "Consent-Required Contracts"). Subject to
Section 1.3(b) below, Seller has commenced and will continue to take, or
cause to be taken by others, all reasonable actions required to obtain or
satisfy, at the earliest practicable date, all consents, novations,
approvals, authorizations, requirements (including filing and registration
requirements), waivers and agreements ("Consents") from any Persons
necessary to authorize, approve or permit the full and complete assignment
of the Consent-Required Contracts, and to consummate and make effective
the transactions contemplated by this Agreement in respect thereof and to
continue such efforts as may be required after the Closing Date to
facilitate the full and expeditious assignment of the Consent-Required
Contracts as herein contemplated.
(b) Nonassignable Items. Anything in this Agreement to the
-------------------
contrary notwithstanding, this Agreement will not constitute an agreement
to Transfer any Consent-Required Contract if the attempted assignment
thereof, without the Consent of another Person, would constitute a breach
of, or in any way affect the rights of Seller or Buyer with respect to
such Consent-Required Contract. Seller will use its reasonable efforts;
provided, that Seller will not be obligated to pay any consideration
therefor to the Person from whom such Consent is required and Buyer will
fully cooperate in all reasonable respects with Seller, to obtain and
satisfy all Consents and to resolve all impracticalities of assignment so
as to Transfer to Buyer all Consent-Required Contracts. If any such
Consents are not obtained and satisfied or if an attempted Transfer would
be ineffective, Seller and its appropriate Affiliates will at the Closing
enter into such reasonable and lawful arrangements (including related
written agreements) as Buyer may reasonably request in order to provide
to Buyer the benefit of, any such Consent-Required Contract (it being
acknowledged that such arrangement may include obligations imposed on
Seller and such Affiliates promptly to pay to Buyer when received all
monies and other items of value received by Seller and such Affiliates
under any such Consent-Required Contract) so long as Buyer cooperates
fully with Seller in such arrangements and promptly reimburses Seller for
all payments made, and costs incurred, by Seller in conjunction therewith.
II. LIABILITIES
-----------
2.1. Assumption of Liabilities. On the terms and subject to the
-------------------------
conditions set forth in this Agreement, without any further responsibility
or liability of or recourse to Seller or Parent or their respective
partners, shareholders, directors, officers, employees, agents, consultants,
representatives, successors, transferees or assignees (except as provided
in Article VIII), Buyer will absolutely and irrevocably assume, effective
as of the Closing Date, and will thereafter be solely liable and responsible
to pay, perform and discharge as and when due the following, and only the
following, liabilities and obligations of Seller (collectively, the
"Assumed Liabilities"):
(a) Balance Sheet. All liabilities and obligations reflected in
-------------
the Balance Sheet, less payments thereon or discharges thereof prior
to the Closing Date;
(b) Post-Balance Sheet Liabilities. All liabilities and
------------------------------
obligations of Seller that constitute ordinary trade payables and
other liabilities and obligations incurred by Seller in the ordinary
and normal course of business between the Balance Sheet Date (as
hereinafter defined) and the Closing Date and consistent with past
practice;
(c) Contracts. All liabilities and obligations of Seller and
---------
its Affiliates arising under the Assigned Contracts, but only to the
extent such liabilities and obligations arise or accrue after the
Closing Date; provided, however, that Buyer will not assume or be
-------- -------
responsible for any such liabilities or obligations to the extent
arising from breaches thereof or defaults thereunder by Seller prior
to the Closing Date, all of which liabilities and obligations will
constitute Retained Liabilities (as hereinafter defined);
(d) Employee-Related Liabilities. All liabilities and obligations
----------------------------
of Seller arising prior to the Closing Date under the 401(k) Plan,
but only to the extent of the assets of the 401(k) Plan and all
liabilities and obligations arising from and after the Closing Date
under the 401(k) Plan, the bonus/commission obligations reflected on
Schedule 5.1(w) as accrued through the Closing Date and accrued
vacation obligations for 1996 through the Closing Date; and
(e) Post-Closing Date. All liabilities and obligations (A) incurred
-----------------
by Buyer or any of its Affiliates or their respective directors,
officers, shareholders, agents or employees on or after the Closing
Date, (B) related to the Business or the Acquired Assets, (C) expressly
assumed under this Section 2.1 and (D) pursuant to the covenants
contained in this Agreement.
2.2. Retained Liabilities. Except as expressly provided in
--------------------
Section 2.1, Seller will retain, and Buyer will not assume, or be
responsible or liable for or with respect to, any liabilities or
obligations of Seller, whether or not of, associated with or arising from,
the Business or any of the Acquired Assets, and whether fixed, contingent
or otherwise, known or unknown (collectively referred to hereinafter as
the "Retained Liabilities"), including without limitation the following:
(a) Pre-Closing. All liabilities and obligations to the extent
-----------
relating to, resulting from or arising out of events or conditions
occurring or existing in connection with, or arising out of, the
Business as operated prior to the Closing Date, or the ownership,
possession, use, operation or sale or other disposition prior to
the Closing Date of the Acquired Assets (or any other assets,
properties, rights or interests associated, at any time prior to the
Closing Date, with the Business);
(b) Liabilities Relating to the Sale of Acquired Assets. All
---------------------------------------------------
liabilities and obligations of Seller or any of its Affiliates, or
their respective directors, officers, shareholders or agents, relating
to, resulting from or arising out of this Agreement, the Partner
Purchase Agreement or the transactions contemplated hereby or thereby,
whether incurred prior to, at or subsequent to the Closing Date,
including without limitation all finder's, broker's or investment
banking fees and expenses and any and all fees and expenses of any
attorneys, accountants or other professionals retained by or on behalf
of Seller, or any of its partners or Affiliates;
(c) Employee-Related Liabilities. (i) All liabilities and
----------------------------
obligations to any individuals at any time employed by Seller, or
its Affiliates or their respective predecessors-in-interest or to
any such individual's spouses, children, other dependents or
beneficiaries, with respect to incidents, events, exposures or
circumstances occurring during the period or periods of any such
persons' employment by Seller, or its Affiliates or their respective
predecessors-in-interest and at any time prior to the Closing or in
connection with this Agreement or the Partner Purchase Agreement,
whenever such claims mature or are asserted, including without
limitation all liabilities and obligations arising (A) under any
employment, wage and hour restriction, equal opportunity,
discrimination, plant closing or immigration and naturalization Laws,
(B) under any collective bargaining Laws, agreements or arrangements,
or (C) in connection with any Excluded Employee Plan; and
(ii) all liabilities and obligations set forth in Section 7.6
regarding employee severance.
(d) Litigation. All liabilities and obligations relating to any
----------
litigation, action, suit, claim, investigation or proceeding pending
on the date hereof, or constituted hereafter, to the extent based on
events or conditions occurring or existing in connection with, or
arising out of, or otherwise relating to, the Business as operated by
Seller, prior to the Closing Date or any of its partners or Affiliates
(or any of its predecessors-in-interest), or the ownership, possession,
use, operation, sale or other disposition prior to the Closing Date of
any of the Acquired Assets (or any other assets, properties, rights or
interests associated, at any time prior to the Closing Date, with the
Business);
(e) Product, Environmental and Safety Liability. All liabilitie
-------------------------------------------
and obligations to the extent relating to, resulting from or arising
out of events or conditions occurring or existing prior to the Closing
Date and relating to, resulting from or arising out of, (i) any dispute
for services rendered or goods sold, including without limitation
warranty claims and claims for refunds, returns, personal injury and
property damage, and (ii) compliance with any Laws including without
limitation environmental and employee health and safety Laws;
(f) Taxes. Subject to Section 7.1(a), all liabilities and
-----
obligations of Seller or any of its Affiliates (or any of their
respective predecessors-in-interest) for any Taxes due or becoming due
by reason of (i) the conduct of the Business prior to the Closing Date,
(ii) the ownership, possession, use, operation, purchase, acquisition,
sale or disposition other than pursuant to the terms hereof, of any of
the Acquired Assets, including without limitation (A) Taxes attributable
to the sale of services and employee withholding tax obligations;
(B) Taxes imposed on, or accruing as a result of the Partner Purchase
Agreement or the purchase and sale of the Acquired Assets; and (C) Taxes
relating to, resulting from or arising out of, recapture of depreciation,
other Tax benefit items, or otherwise arising from the transactions
contemplated by this Agreement or the Partner Purchase Agreement, or
(iii) amounts due through the Closing Date in Dade County, Florida;
(g) Liabilities Relating to Partner Purchase. All liabilities and
----------------------------------------
obligations relating to, resulting from, or arising out of, in whole or
in part, the Partner Purchase Agreement or in any of the other documents
or agreements contemplated thereby or otherwise to the Former Partners
or their Affiliates relating to, resulting from or arising out of the
Partner Purchase Agreement, any document or other transaction
contemplated thereby or any event giving rise thereto (whether or not
resulting from a breach thereof) except as otherwise assumed by Buyer
pursuant to the terms hereof and the Transaction Documents;
(h) Shutdown Costs. Any liabilities or obligations relating to,
resulting from or arising out of the shutdown of any of the operations
and facilities utilized by Seller, including without limitation any
action which could be construed as a "plant closing" or "mass layoff,"
as those terms are defined in the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Sections 2101-2109 ("WARN"), or any
"employment loss," as defined in WARN, which any employee of Seller
or any of its Affiliates may suffer or may be deemed to suffer prior
to but not including the Closing Date;
(i) Liabilities Relating to Retained Assets. All liabilities and
obligations relating to, resulting from or arising out of in whole or
in part events or conditions occurring or existing in connection with,
or arising out of, any and all assets, properties, rights and interests
which are not being acquired by Buyer hereunder, including without
limitation the Retained Assets;
(j) Decoders. All liabilities and obligations to refund customer
deposits for certain decoders held by Artear Affiliates, the funds for
which are being retained pursuant to Section 1.2(a);
(k) Partnership Agreement. All obligations of Seller under or
arising from the Partnership Agreement or any other agreements or
arrangements between or among Parent, Seller, the Former Partners or
any of their respective Affiliates (other than and only to the extent
such agreements or arrangements are expressly specified as Assumed
Liabilities); and
(l) Post-Closing Date. All liabilities and obligations incurred
by Seller or any of its Affiliates or their respective directors,
officers, shareholders, agents or employees after the Closing Date
which do not relate to the Business or the Acquired Assets.
III. PURCHASE PRICE
--------------
3.1 Payment. In full consideration of the Transfer of the Acquired
Assets, at the Closing, Buyer will (a) assume the Assumed Liabilities,
(b) pay a total purchase price of $5,000,000, subject to adjustment as
provided in Section 3.4 (as adjusted, the "Purchase Price") and payable in
the following manner: (i) $4,000,000, or the amount adjusted pursuant to
Section 3.4, to Seller (as adjusted, the "Cash Payment") and (ii) $1,000,000
to an escrow account pursuant to the terms of the Escrow Agreement
substantially in the form of Schedule 4.4(f), and (c) deliver to Seller a
Note in an amount at maturity of $1,250,000 in substantially the form of
Schedule 4.3(f). At the Closing, Buyer will pay to Seller the Cash Payment
in New York Clearing House Funds by bank wire transfer to an account
designated in writing for this purpose by Seller to Buyer prior to the
Closing and will deliver to Seller the Note.
3.2 Satisfaction of Certain Indebtedness. At or prior to the Closing,
Seller will take such actions (including without limitation paying, or
directing Buyer to apply any portion of the Purchase Price to pay to, the
appropriate creditors of Seller) as may be required fully to pay, satisfy
and discharge all of the indebtedness of Seller listed or described on
Schedule 3.2 and to secure the release as of the Closing of all Liens on
the Acquired Assets relating thereto.
3.3 Purchase Price Allocation. The consideration payable pursuant to
Section 3.1 represents the amount agreed upon by the parties to be the
aggregate value of the Acquired Assets, and will be allocated among the
Acquired Assets in accordance with the fair market values of the Acquired
Assets, which the parties have agreed are as set forth on Schedule 3.3.
Each of the parties will report the purchase and sale of the Acquired
Assets, including without limitation in all federal, foreign, state, local
and other Tax returns and reports prepared and filed by or for either of
Seller and Buyer, in accordance with the basis of allocation set forth in
Schedule 3.3. Each party agrees to notify the other if the Internal Revenue
Service or any other taxing authority proposes a reallocation of such
amounts.
3.4 Closing Date Balance Sheet. (a) Within 90 calendar days after the
Closing Date, Buyer will prepare and deliver to Seller a balance sheet of
the Business as of the Closing Date (the "Closing Date Balance Sheet"),
calculating the amount of Working Capital as of the Closing Date (the
"Closing Date Working Capital"), which Closing Date Balance Sheet will be
calculated based on a balance sheet of Seller as of the close of business
on the Closing Date. The Closing Date Balance Sheet will (i) include only
Acquired Assets and Assumed Liabilities and (ii) will be prepared by Buyer
in consultation with Seller based on the books and records of Seller and in
accordance with GAAP and on a basis consistent with, and using the same
accounting principles, policies, practices, adjustments and procedures used
in preparing the Balance Sheet. Seller will take such actions as may be
reasonably requested by Buyer to assist Buyer in closing, as of the Closing
Date, the books and accounting records of the Seller and Seller and Buyer
will otherwise reasonably cooperate with one another in the preparation of
the Closing Date Balance Sheet and the dispute resolution, if any,
contemplated below.
(b) If, within 30 calendar days after the date of the Buyer's delivery
to Seller of the Closing Date Balance Sheet, Seller determines in good faith
that the amount of the Closing Date Working Capital as so computed on the
Closing Date Balance Sheet has not been determined in accordance with
Section 3.4(a), Seller will give notice to Buyer within such 30 calendar
day period, (i) setting forth Seller's determination of the Closing Date
Working Capital and (ii) specifying in reasonable detail Seller's basis for
its disagreement with Buyer's computation. The failure by Seller so to
express its disagreement within such 30 calendar day period will constitute
acceptance of the amount of the Closing Date Working Capital so computed on
the Closing Date Balance Sheet and the Closing Date Balance Sheet will
become the "Final Balance Sheet." If Buyer and Seller are unable to resolve
their disagreement within ten calendar days after receipt by Buyer of notice
of such disagreement, the items in dispute will be referred to an
internationally recognized accounting firm mutually agreeable to Buyer and
Seller (the "Resolution Accountants") as promptly as practicable. The
Resolution Accountants will make a determination as to each of the items
in dispute, which determination will be (i) in writing, (ii) furnished to
Buyer and Seller as promptly as practicable after the items in dispute have
been referred to the Resolution Accountants, (iii) made in accordance with
Section 3.4(a), and (iv) conclusive and binding on the parties hereto. In
connection with their determination of the disputed items, the Resolution
Accountants will be entitled to rely on the work papers, trial balances and
similar materials prepared by the Resolution Accountants, Seller or Buyer in
connection with the examination of the Closing Date Balance Sheet. Buyer and
Seller will use reasonable efforts to cause the Resolution Accountants to
render their decision as soon as practicable, including without limitation
by promptly complying with all reasonable requests by the Resolution
Accountants for information, books, records and similar items. The fees and
expenses of the Resolution Accountants (the "Accounting Fees") will be shared
equally by the Buyer and the Seller. Neither party will disclose to the
Resolution Accountants, and the Resolution Accountants will not consider for
any purpose, any settlement offer made by either party. The Closing Date
Balance Sheet as finally determined by the Resolution Accountants will become
the "Final Balance Sheet."
(c) To the extent that the Closing Date Working Capital determined as
provided in this Section 3.4 is less than the Working Capital on the Balance
Sheet in an amount greater than $300,000 (the "Shortfall Amount"), Seller
will, within ten calendar days after the Closing Date Balance Sheet becomes
the Final Balance Sheet, (i) pay to Buyer the Shortfall Amount by agreeing
to the immediate release to Buyer of such amount from the funds held
pursuant to the Escrow Agreement, (ii) if the funds held pursuant to the
Escrow Agreement are not sufficient to reconcile the adjustment, Seller will
pay by wire transfer of immediately available funds to Buyer an amount
sufficient further to adjust the Purchase Price together with interest
thereon from the Closing Date to the date of payment (at a rate equal to the
prime rate in effect from time to time as published in Wall Street Journal
or if the Wall Street Journal is not published on such date on the first
business day thereafter on which the Wall Street Journal is published,
calculated on the basis of the actual number of days elapsed over 365/366),
and (iii) pay its pro rata portion of the Accounting Fees, if applicable.
(d) Funds held pursuant to the Escrow Agreement that remain in the
escrow account after the Final Balance Sheet adjustment described in Section
3.4(c) will be released to Seller to the extent such funds are in excess of
the amount of the difference between (i) the aggregate amount of Accounts
Receivable which have not been collected through the date the Closing Date
Balance Sheet becomes the Final Balance Sheet and (ii) the aggregate Reserve
Amount for Accounts Receivable as reflected in the Final Balance Sheet.
Pursuant to Section 6.4(d), Buyer will be reimbursed from the funds in the
escrow account for the portion of the aggregate Accounts Receivable not
collected through the date which is 180 days from and after the Closing
Date that is in excess of the aggregate Reserve Amount for Accounts
Receivable reflected in the Final Balance Sheet that is deemed uncollectible
and any remaining funds will be released to Seller.
(e) For purposes of this Agreement, the calculation of Working Capital
shall be made in accordance with generally accepted accounting principles,
as adjusted pursuant to Section 3.4(a).
IV. CLOSING
-------
4.1. General. As used in this Agreement, the "Closing" means the time
at which Seller consummates the Transfer of the Acquired Assets to Buyer as
provided herein by the execution and delivery by Seller of the documents and
instruments referred to in Section 4.2 against delivery by Buyer of payments
and documents provided in Sections 3.1 and 4.3, and Seller, Buyer and the
other Persons referred to herein deliver the additional documents referred
to in Section 4.4. The Closing will take place at the offices of Jones, Day,
Reavis & Pogue ("Jones Day"), 599 Lexington Avenue, New York, New York at
10:00 A.M. on the date first set forth above (the "Closing Date"). Legal
title, equitable title and risk of loss with respect to the Acquired Assets
will not pass to Buyer until the Acquired Assets are Transferred at the
Closing, which transfer, once it has occurred, will be deemed effective for
tax, accounting and other computational purposes as of 12:01 A.M. (Eastern
Time) on the Closing Date; provided, that the consummation of the Partner
Purchase, if it shall occur on the same day, shall be deemed to have
occurred prior to the Closing.
4.2 Documents to be Delivered by Seller. At the Closing, Seller will
deliver to Buyer:
(a) Copies of (i) the resolutions of the Board of Directors of Parent
authorizing and approving this Agreement, the Partner Purchase Agreement
and the transactions contemplated hereby and thereby, (ii) long form good
standing certificate for Parent from the Secretary of the State of the
State of Delaware, dated within a reasonable time prior to the Closing
and (iii) the Partner Purchase Agreement, all certified by the Chief
Financial Officer of Parent to be true, correct, complete (with the
exception of certain dollar-value information which has been redacted)
and in full force and effect and unmodified as of the Closing Date;
(b) Copies of (i) resolutions of the Board of Directors of
Telenoticias GP as the general partner of Seller authorizing the
execution of the this Agreement, the Partner Purchase Agreement and
the transactions contemplated hereby and thereby and (ii) long form
good standing certificate for Telenoticias GP from the Secretary of
the State of the State of Delaware, within a reasonable time period
prior to the Closing, all certified by the Secretary of Telenoticias
GP to be true, correct, complete and in full force and effect and
unmodified as of the Closing Date;
(c) A bill of sale, duly executed by Seller, Transferring the
Acquired Assets to Buyer, free and clear of any and all liens, equities,
claims, prior assignments, mortgages, charges, security interests,
pledges, conditional sales contracts, collateral security arrangements
and other title retention arrangements or restrictions, except for
those created by this Agreement, the Acquired Contracts and the Lease
Agreements, imperfections of title, if any, that do not detract from
the value of the property subject thereto and taxes and general and
special assessments which are not delinquent as of the date hereof or
which are being contested in good faith by appropriate proceedings
(collectively, "Liens") in substantially the form of Schedule 4.2(c);
(d) An opinion, dated as of the Closing Date, of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., counsel to Seller and Parent, addressed
to Buyer, substantially in the form of Schedule 4.2(d);
(e) Copies of all Consents required pursuant to the Consent-Required
Contracts designated with an asterisk (*) on Schedule 1.3;
(f) An assignment and assumption of each of the Transition
Agreements;
(g) Instruments of assignment to Buyer of all trademarks, trade
names, service marks, copyrights and patents (and all applications for,
and extensions and reissuances of, any of the foregoing and rights
therein) identified on Schedule 4.2(g);
(h) Long-form good standing certificates for Seller from Delaware
and from the appropriate state and tax authorities in each jurisdiction
in which Seller is qualified to do business as a foreign limited
partnership with respect to the ownership, possession, use or operation
of any of the Acquired Assets, dated not more than ten days prior to the
Closing;
(i) An incumbency certificate of the officers of Seller, Parent and
Telenoticias GP;
(j) Releases, if any, including without limitation termination
statements under the Uniform Commercial Code of any financing statements
filed against any Acquired Assets, evidencing discharge, removal and
termination of all Liens to which any of the Acquired Assets is subject
in connection with the indebtedness described in Schedule 3.2, which
releases shall be effective at or prior to the Closing, together with
evidence satisfactory to Buyer that the indebtedness described on such
Schedule shall have been satisfied and extinguished;
(k) An Acknowledgement executed by each of the Former Partners
substantially in the form of Schedule 4.2(k); and
(l) Such other duly executed deeds, bills of sale, endorsements,
assignments, affidavits and other good and sufficient instruments of
Transfer, in form and substance reasonably satisfactory to Buyer and
its counsel, as are required to effectively vest in Buyer good and valid
title in and to all of the Acquired Assets, free and clear of any and all
Liens.
4.3 Documents to be Delivered by Buyer. At the Closing, Buyer will
deliver to Seller and Parent:
(a) A copy of (i) the resolutions of the Board of Directors of
Buyer authorizing and approving this Agreement and all other
transactions and agreements contemplated hereby if Buyer determines
that such resolutions are so required and (ii) long form good standing
certificate for Buyer from the Secretary of State of the State of New
York, dated not more than ten days prior to the Closing, all certified
by the Secretary of Buyer to be true, correct, complete and in full
force and effect and unmodified as of the Closing Date;
(b) An incumbency certificate of the officers of Buyer;
(c) An opinion, dated the Closing Date, of Ellen Oran Kaden,
general counsel to Buyer, addressed to Seller and Parent, substantially
in the form of Schedule 4.3(c);
(d) An Instrument of Assumption of the Assumed Liabilities
(including without limitation Assigned Contracts) duly executed by
Buyer in substantially the form of Schedule 4.3(d);
(e) Such other duly executed endorsements, assignments, affidavits,
assumptions and other good and sufficient instruments of Transfer, in
form and substance reasonably satisfactory to Seller and its counsel,
as are necessary or reasonably requested by Seller to effectuate the
transactions contemplated hereby; and
(f) The Note, duly executed by Buyer, in substantially the form of
Schedule 4.3(f).
4.4. Documents to be Delivered by Buyer, Seller and Parent. At the
Closing, Buyer, Seller and Parent will duly execute and deliver or cause to
be delivered by its Affiliate:
(a) A Sublease relating to the Leased Property in substantially the
form of Schedule 4.4(a);
(b) The CBS News Material License Agreement in substantially the
form of Schedule 4.4(b);
(c) The Telemundo News Material License and Services Agreement in
substantially the form of Schedule 4.4(c);
(d) The Program Production and License Agreement in substantially
the form of Schedule 4.4(d);
(e) The Technical Services Agreement in substantially the form of
Schedule 4.4(e);
(f) The Escrow Agreement in substantially the form of
Schedule 4.4(f);
(g) The TGI Transition Services and Facilities Agreement in
substantially the form of Schedule 4.4(g); and
(h) The Agreement regarding Promotional Spots and Services in
substantially the form of Schedule 4.4(h).
V. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Seller and Parent. Each of
Seller and Parent, jointly and severally, represents and warrants to Buyer
as of the date of this Agreement that:
(a) Organization and Standing. Seller is a limited partnership
duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has the requisite power and authority
to operate the Business, to own or lease the Acquired Assets, to carry
on the Business as now being conducted and to enter into and to perform
this Agreement and the transactions and other agreements and instruments
contemplated by this Agreement to be entered into and performed on its
part. Each of Parent and Telenoticias GP is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, is duly qualified to do business and is in good
standing under the laws of the State of Delaware, and has the requisite
corporate power and authority to operate its business, and to enter into
and perform this Agreement and the transactions and other agreements and
instruments contemplated by this Agreement to be entered into and
performed on its part. Seller is duly qualified or licensed to do
business as a foreign limited partnership and is in good standing in
each jurisdiction in which the failure to so qualify would have a
material adverse effect upon the condition (financial or otherwise),
business, assets, properties, operations or prospects of the Business
(a "Material Adverse Effect").
(b) Power and Authority. This Agreement and all other agreements and
instruments executed and delivered or to be executed and delivered by
Seller or Parent in connection herewith (collectively, the "Transaction
Documents") have been, or upon execution thereof will be, duly executed
and delivered by Seller or Parent, as the case may be. This Agreement
and the transactions and other agreements and instruments contemplated
hereby have been duly approved by the general partner of Seller, and the
Board of Directors of each of Parent and Telenoticias GP, and constitute
the valid and binding obligations of Seller and Parent, enforceable
against each of them in accordance with their respective terms. The
Transition Agreements and the Partner Releases have been, or upon
execution thereof will be, the valid and binding obligations of each of
the parties thereto, enforceable against each of them in accordance with
their respective terms.
(c) Conflicts. Except for the receipt of third party consents
pursuant to Section 1.3, neither the execution and delivery of this
Agreement or the Partner Purchase Agreement and the other agreements
and instruments executed or to be executed in connection herewith or
therewith by Seller, Parent or Telenoticias GP, nor the performance by
Seller or Parent of the transactions contemplated hereby or thereby, will
(or has) (i) violate, conflict with, constitute a breach or default under
or give rise to any obligation or liability under any of the terms of
Parent's or Telenoticias GP's respective Certificate of Incorporation
or Bylaws or the constituent documentation of Seller or any provisions
of, or result in the acceleration of any obligation under, any Assigned
Contract, Partner Purchase Agreement or any order, judgment or decree
("Order") relating to the Business or the Acquired Assets, or by which
any of Seller, Parent or the Acquired Assets is bound, or Parent's Credit
Documents, (ii) result in the creation or imposition of any Liens or
Claims (as hereinafter defined) upon any of the Acquired Assets, (iii)
violate any Law, (iv) constitute an event which, after notice or lapse
or time or both, would result in such violation, conflict, default,
acceleration or creation or imposition of Liens, Claims or violation
of Law, or (v) constitute an event which, after notice of lapse of
time or otherwise would create, or cause to be exercisable or
enforceable, any option, agreement or right of any kind to purchase
any of the Acquired Assets. Except as set forth on Schedule 1.3,
no Consent, novation, approval, filing or authorization was or will
be required to be obtained or satisfied for the continued performance
by Buyer following the Closing of any acquired Contract.
(d) Defaults. Neither Parent nor Seller is in violation of or in
default under its Certificate of Incorporation, Bylaws or partnership
documentation, as the case may be, any provision of any Assigned
Contract or any Order relating to the Business or the Acquired Assets,
or by which any of Seller or any of the Acquired Assets is or was
bound, or in the payment of any of Seller's monetary obligations or
debts relating to the Business, or Parent's Credit Documents and there
exists no condition or event which, after notice or lapse of time or
both, would result in any such violation or default. Without limiting
the generality or effect of the foregoing, (A) the Partner Purchase
Agreement has been and is being carried out in compliance with the
terms thereof, all applicable Laws and the constituent documentation
pursuant to which Seller was formed and (B) no Person, including
without limitation any Former Partner of Seller or former stockholder
of Telenoticias GP, has any right, cause of action or other claim
against any party hereto or any Affiliate thereof by reason of this
Agreement, the events giving rise to this Agreement or the transactions
contemplated hereby or thereby.
(e) Distributions. Seller has duly acquired all of the interests
to be acquired pursuant to the Partner Purchase Agreement, which
represent all of the interests of Seller so as to permit Seller
and Parent to make the representation and warranties and to perform
the covenants contained herein.
(f) Partner Purchase Agreement. The Partner Purchase Agreement,
the releases contemplated thereby, the Transition Agreements,the
Sublease amendment referred to in the Partner Purchase Agreement,
the agreements and documents effectuating the transactions contemplated
by the Partner Purchase Agreement and the stipulation of discontinuance
with prejudice between Parent and the Former Partners constitute all of
the agreements between Parent and/or Seller on the one hand and any of
the Former Partners on the other hand as part of the Partner Purchase.
(g) [intentionally left blank]
(h) Acquired Assets; Title to the Acquired Assets. (i) Except for
the Retained Assets, items or services provided by Parent or its
Affiliates and items or services previously provided by the Former
Partners and their Affiliates (it being agreed by Buyer that all
items and services previously provided by the Former Partners or
their Affiliates have been terminated, except as provided in the
Transition Agreements), supplies consumed in the ordinary course of
the Business and Account Receivables converted into Cash, the Acquired
Assets and the Transition Agreements are the only assets, properties,
rights and interests used by Seller in connection with the Business
(other than de minimis services that were provided by the Former
Partners from time to time). The Acquired Assets and the Transition
Agreements constitute all of the assets, properties, rights and
interests necessary to conduct the Business in substantially the
same manner as conducted by Seller prior to the date of this Agreement.
All of the Acquired Assets used in connection with the operation of the
Business (including without limitation the assets reflected on the
Balance Sheet) are in good operating condition and repair and are
adequate and sufficient for the uses to which they are put in the
Business. None of the Acquired Assets has any material defects or
is in need of maintenance or repair, except for ordinary, routine
maintenance and repairs which are not in excess of the ordinary costs
therefor.
(ii) Except as set forth on Schedule 1.3, Seller has good and
exclusive title to, and the valid and enforceable power and unqualified
right to use and transfer to Buyer, each of the Acquired Assets,
including without limitation all equipment owned by Seller and used
in the Business, whether located at the Seller's facilities or at the
facilities of its Customers or suppliers, and the Acquired Assets are
free and clear of all Liens and Claims of any kind or nature whatsoever,
except for Permitted Liens.
(iii) Schedule 5.1(h)(iii) contains true, correct and complete lists
of all Fixed Assets (other than Retained Assets) owned or leased by
Seller used in connection with the Business as of the dates specified
therein.
(iv) Schedule 5.1(h)(iv) sets forth a true and complete list of all
Inventories as of the date specified therein.
(v) Except as set forth on Section 1.3, the delivery to Buyer of the
instruments of Transfer contemplated by this Agreement will vest good
and exclusive title (as to all Acquired Assets previously owned by
Seller) or full right to possess and use (as to all Acquired Assets
not previously owned by Seller but used by it in the Business) to the
Acquired Assets in Buyer, free and clear of all Liens and Claims of
any kind or nature whatsoever, except for (A) current governmental
charges or levies which are a Lien but not yet due and payable and
(B) Liens disclosed on Schedule 5.1(h)(v) (the Liens described in
clauses (A) and (B) being collectively referred to herein as "Permitted
Liens").
(vi) To Seller's knowledge, Schedule 5.1(h)(vi) sets forth a true
and complete list of all contact names, telephone numbers and addresses
for headend locations for broadcast and cable affiliates.
(i) Affiliate Contracts. Other than the Partnership Agreement and
the services provided pursuant to agreements contemplated therein (which
services have been terminated except as provided in the Transition
Agreements) and except as set forth on Schedule 5.1(i), there are no
other contracts between Seller on the one hand and Parent or the Former
Partners on the other hand that Seller or Parent reasonably believes are
material to the operation of the Business.
(j) Leases. Schedule 5.1(j) sets forth a complete and accurate list
of all Lease Agreements. None of the Lease Agreements has been modified,
altered, terminated or revoked, and each is in full force and effect.
Seller, as the present lessee under the Lease Agreements, is not in
default thereunder, or in breach thereof, and there are no existing
facts or conditions which could give rise to any such breach or
default, or any claim against Seller under the Lease Agreements.
(k) Contracts. Schedule 5.1(k) contains a complete list and
description (where oral) of (i) each Contract (excluding the
Partnership Agreement and related documents) (A) relating to the
Business or to which Seller is a party which involves aggregate
future payments or receipts in excess of $5,000, or which extends
for a period of more than 12 months and cannot be cancelled without
further payment or penalty, (B) between Seller and any other Person
retained in connection with the Business, or pursuant to which Seller
produces, telecasts or distributes programs, including without
limitation Contracts involving transmitters, uplinks, transponders,
cable affiliates or news reports, in each case described in this
clause (B) regardless of the size or term of such Contracts, (ii)
each loan or credit agreement, security agreement, guaranty,
indenture, mortgage, pledge or other agreement or instrument
evidencing indebtedness of Seller, or to which Seller is a party,
(iii) any conditional sale or other title retention agreement,
equipment obligation, or lease purchase agreement with respect to
the Business involving (in the aggregate) amounts in excess of
$5,000, (iv) any power of attorney given by Seller to any Person,
(v) any non-competition, restrictive covenant or other Contract
that restricts Seller, from conducting the Business anywhere in
the world, (vi) other than Employee Plans, each Contract presently
in effect, whether or not fully performed, between Seller and any
current or former officer, director, consultant or other employee
(or group thereof) retained or employed in connection with the
Business, or any current or former partner or shareholder (or
group of partners or shareholders) of Seller, and (vii) any other
Contract which is material to the condition (financial or otherwise),
results of operations, properties, assets, liabilities, business or
prospects of the Business. Seller as the case may be, has fully
performed all obligations required to be performed by either of
them under each of the foregoing Contracts, and Seller has not nor
to Seller's knowledge any other party to any such Contract has not
breached or improperly terminated any such Contract or is in default
under any such Contract, and there exists no condition or event which
after notice or lapse of time or both, would constitute any such
breach, termination or default. Each of such Contracts is in full
force and effect, and is a legal, binding and enforceable obligation
of or against the parties thereto. Except as set forth on Schedule
5.1(k) and for Employee Plans, Seller does not have any outstanding
Contracts with officers, employees, agents, consultants, advisors,
salespersons, sales representatives, distributors or dealers, that
are not cancelable by it on notice of not longer than 30 days without
liability, penalty or premium. Seller enjoys good working
relationships under all of such Contracts, including without
limitation their distribution and similar contractual arrangements
in connection with the normal operation of the Business, and except
as set forth on Schedule 1.3 the consummation of the transactions
contemplated hereby will not adversely affect any such Contracts,
relationships or arrangements.
(l) Financial Statements. Seller has heretofore delivered to
Buyer the financial statements attached hereto as Schedule 5.1(l)
(collectively, the "Financial Statements"), including without
limitation the balance sheet with notes as to agreed adjustments
(the "Balance Sheet") as of March 31, 1996 (the "Balance Sheet Date"),
and the statements of income and cash flows of the Business for the
12 months ended December 31, 1995 and the three months ended the
Balance Sheet Date (collectively, the "Most Recent Financial
Statements"). Each of the Financial Statements is true, complete
and correct in all material respects, was derived from the books and
records for the Business and fairly presents the financial position
of the Business as of such dates, and the results of operations of
the Business and cash flows for the periods then ended in accordance
with GAAP, except in the case of interim statements for the absence
of notes and normal year-end audit adjustments and except for
adjustments set forth in the most recent financial statements
attached hereto as Schedule 5.1(l) which reflect the transactions
contemplated hereby and the Partner Purchase.
(m) Liabilities. Seller has no liabilities or obligations of
any nature whatsoever, whether absolute, accrued, contingent or
otherwise, related to or connected with the Business or the Acquired
Assets, and whether known or unknown, including without limitation
liabilities for Taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable conditions or
occurrences, or from write-downs or write-offs of assets (including
Inventories and Accounts Receivable), except for those (i) reflected
or reserved against in the Balance Sheet, or (ii) incurred or accrued
since the Balance Sheet Date in the ordinary and normal course of the
Seller's business.
(n) Accounts Receivable; Collection. Schedule 5.1(n) sets forth a
true and complete list of all Accounts Receivable, including an aged
listing by customer of the Accounts Receivable that are outstanding
as May 31, 1996. Seller has not experienced or suffered undue delay
in its payment of its liabilities and obligations to its trade
creditors (including suppliers) or trade debt which would have an
adverse impact on the relationship with such parties and which would
have an adverse effect on the Business.
(o) Litigation. Except as set forth on Schedule 5.1(o), neither
Seller, Parent nor the Acquired Assets is subject to any Order of, or
Contract or understanding with, any Governmental Authority relating to
the Business, and there exists no litigation, action, suit, claim or
proceeding pending or, to the best of Seller's and Parent's knowledge,
threatened against or affecting Seller or Parent or any of their
respective Affiliates, the Business or the Acquired Assets, or which
would affect the transactions contemplated by this Agreement, at law
or in equity, or which would adversely affect the transactions
contemplated by this Agreement, and to Seller's and Parent's knowledge
no one has grounds to assert any such litigation, action, suit, claim
or proceeding. Set forth on Schedule 5.1(o) is a description of
(i) all litigation, actions, suits, investigations, claims and
proceedings asserted or brought to Seller's knowledge against Seller
or Parent or any of their respective Affiliates or predecessors-in-
interest in respect of the Business since the Formation Date, together
with a description of the outcome or present status thereof and (ii)
all Orders entered into by or against Seller or Parent or any of their
respective Affiliates in respect of the Business.
(p) Customers and Suppliers. Seller is not involved in any
material controversy with any of the Customers or suppliers to the
Business other than the Former Partners and their Affiliates, including,
without limitation, the action captioned Telemundo News Network, Inc.
v. Telenoticias del Mundo, Inc., No. 95/125069 (Supreme Court of the
State of New York, County of New York). Schedule 5.1(p) sets forth a
true, correct and complete list of Seller's Customers and suppliers
which, during the 12 months ended December 31, 1995, individually
accounted for $10,000 or more of sales or orders for the purchase of
supplies or services other than the Former Partners and their
Affiliates. Except for the customers and suppliers identified in
Schedule 5.1(p) and other than the Former Partners and their Affiliates,
Seller has not had any Customer that accounted for more than 5% of sales
during 1995, or any supplier from which it purchased more than 5% of the
goods or services purchased during 1995. Other than those customers
or suppliers noted with an asterisk (*) on Schedule 5.1(p), and other
than the Former Partners and their Affiliates no Customer or supplier
(representing purchases and sales of $10,000 or more) has advised that
such Customer or supplier was or is intending to terminate its
relationship with Seller or would not continue to purchase supplies
or services relating to the Business for future periods on account of
any dissatisfaction with performance or the transactions completed
hereby or by the Partner Purchase Agreement. All business placed by
all employees or representatives of Seller with respect to the Business
has been placed in the name of Seller, and all fees on such Business
have been paid to and are the property of Seller.
(q) Regulatory Compliance. The Business has been conducted, the
Acquired Assets have been maintained and Seller is currently in
compliance with, all applicable Laws and Orders (including without
limitation all laws relating to zoning, building codes, civil rights,
occupational health and safety, antitrust, consumer protection,
currency exchange, equal opportunity, pensions, securities and
environmental matters), and no capital expenditures in excess of
$5,000 in the aggregate are or will be required to comply with any
such Laws and Orders as presently operated. Seller is not and was
not, with respect to the Business, in default under, and no event
has occurred which, with the lapse of time or action by a third
party, could result in default under, the terms of any Order, whether
at law or in equity.
(r) Reports. All returns, reports and statements which Seller or
Parent was or is required to file with respect to the Business with
the FCC and all other returns, reports and statements which Seller or
Parent was or is required to file with any other Governmental Authority
with respect to the Business have been filed. With respect to the
Business, all reporting requirements of the FCC have been complied
with and all reporting requirements of other Governmental Authorities
having jurisdiction thereover have in all material respects been
complied with. All of such reports, returns and statements are
complete and correct as filed.
(s) Brokers, Finders and Agents. Neither Parent nor Seller is
directly or indirectly obligated to anyone acting as a broker, finder,
investment banker or in any other similar capacity in connection with
this Agreement or the transactions contemplated hereby.
(t) Intellectual Property. Schedule 5.1(t) sets forth a complete
and correct list (with an indication of the record owner and
identifying number,if applicable) of (i) all patents, trademarks,
service marks, trade names and copyrights for which registrations
have been obtained (and all applications for, or extensions, renewals
or reissuances of, any of the foregoing) (collectively, "IP
Registrations") and (ii) all unregistered patents, trademarks,
service marks and trade names and copyrights which, in each case,
are or have been used in the conduct of, or which relate to, the
Business or which are owned by Seller. True, correct and complete
copies of all such IP Registrations have been delivered to Buyer.
Seller is the sole owner and has the exclusive right to use, free
and clear of any payment, restriction or encumbrance, all such IP
Registrations. No trademarks covered by any of the IP Registrations
which are or have been used in the conduct of, or which relate to, the
Business are owned otherwise than by Seller. There is no Claim or
demand of any Person pertaining to, or any proceedings which are
pending or, to the best of Seller's and Parent's knowledge,
threatened, which challenge (x) the exclusive rights of Seller
in respect of any IP Registrations or any trademarks which are or
have been used in the conduct of, or which relate to, the Business
or which are owned by Seller, or (y) the rights of Seller in respect
of any processes, confidential information, trade secrets, know-how,
technical data, technology or other intellectual property which are or
have been used in the conduct of, or which relate to, the Business or
which are owned by Seller. No patent, trademark, service mark, trade
name, copyright, process, formulas, confidential information, trade
secret, know-how, technical data, technology or other intellectual
property which is or has been used in the conduct of, or which relates
to, the Business, is subject to any outstanding Order or Contract, or,
to the best of Seller's and Parent's knowledge, infringes or is being
infringed by others or is used by others (whether or not such use
constitutes infringement). To Parent's and Seller's knowledge, the
Business does not involve and has not involved employment of any
Person in a manner which violates any non-competition or non-disclosure
Contract. All IP Registrations or processes, formulas, confidential
information, trade secrets, know-how, technical data, technology or
other intellectual property, or rights thereto, owned or held,
directly or indirectly by any officer, director, shareholder,
employee or any Affiliate of Seller or Parent and relating to the
Business, have been, or prior to the Closing Date will have been,
duly and effectively Transferred to Seller. Seller is not engaged
in any research or development activities based upon designs or
concepts produced, sold or distributed by Persons other than Seller.
(u) Licenses. Schedule 5.1(u) sets forth a true, correct and
complete list of all Licenses which are used in connection with the
Business. Seller has been, and Seller is, in full compliance with,
all such Licenses and all of such Licenses are in full force and
effect. There has been no change in the facts or circumstances
reported or assumed in the application for or granting of each such
License which would render such License invalid. Neither Parent's nor
Seller's operation of the Business during the pendency of its
applications, if any, for Licenses violates any law, regulation or
order of any Governmental Authority. None of the Licenses listed on
Schedule 5.1(u) is subject to any restriction or condition which would
limit the full operation of the Business as presently operated. The
Licenses listed on Schedule 5.1(u) are in full force and effect.
(v) Employee Relations; Collective Bargaining Agreements. Except
as set forth on Schedule 5.1(v), there are no controversies, including
without limitation strikes, disputes, slowdowns or work stoppages,
pending, or to the best of Seller's and Parent's knowledge, threatened
which involve any employees employed in connection with the Business.
Seller has complied, and Seller is complying with all Laws relating to
the employment of labor, including without limitation any provision
thereof relating to wages, hours, collective bargaining, employee
health, safety and welfare, and the payment of social security and
similar taxes. Seller has not experienced any labor difficulties,
including without limitation strikes, slowdowns, work stoppages or
union organizing activities. Seller is not or was not a party to
any collective bargaining or union Contract, and to the best of
Seller's and Parent's knowledge, there exists no current union
organizational effort or proceeding by or before any Governmental
Authority with respect to any of Seller's employees.
(w) Employees and Employee Plans. (i) Schedule 5.1(w) contains
a true and complete list of (A) all employees and other persons
performing services as freelancers or independent contractors (who
shall be considered employees for the purpose of this Agreement) of
the Business, their respective job titles and annual compensation
(including salaries, bonuses, consulting or directors' fees and
incentive or deferred compensation), (B) all employees of the Former
Partners or Parent who are engaged in Seller's Business and who are
marked with two asterisks (**), and (C) all Employee Plans and
employment Contracts. All employees have validly executed a Form I-9
as required by Law. Seller has delivered to Buyer an accurate and
complete copy of the plan document for each Employee Plan as currently
in effect, including any agreements entered into in connection with
such Employee Plan, a copy of each trust or other funding arrangement,
each summary plan description and summary of material modifications,
a copy of the most recent annual report (Form 5500 Series) filed with
the Internal Revenue Service, a copy of the most recent actuarial or
valuation reports and a copy of the most recent determination letter.
Neither Seller nor any officers, directors, shareholders, employees
or agents of Seller, has taken any action directly or indirectly to
obligate Seller to institute any Employee Plan applicable to employees
of the Business other than those Employee Plans set forth in such
Schedule, or to amend any such Employee Plan.
(ii) None of the Employee Plans is a plan that is or has ever
been subject to Title IV of ERISA, Section 302 of ERISA or Section
412 (a "Defined Benefit Plan") of the Internal Revenue Code of 1986,
as amended (the "Code"). None of the Employee Plans is (A) a
"multiemployer plan" as defined in Section 3(37) of ERISA, nor is
Seller or any of its Affiliates required to contribute to a
multiemployer plan, (B) a plan or arrangement described under
Section 4(b)(5) or 401(a) (l) of ERISA, or (C) a plan maintained
in connection with a trust described in Section 501(c)(9) of the
Code. Except as set forth on Schedule 5.1.(w), (A) none of the
Employee Plans provides for the payment of separation, severance,
termination or similar-type benefits to any person, and (B) none of
the Employee Plans provides for or promises retiree medical or life
insurance benefits to any current or former employee, officer or
director of Seller. Each of the Employee Plans is subject only to
the laws of the United States or a political subdivision thereof.
(iii) Each Employee Plan is in compliance with, and has always
been operated in accordance with, its terms and the requirements of
all applicable law other than for such noncompliances as would not
result in a Material Adverse Effect on the Business. No legal action,
suit or claim is pending or, to the knowledge of Seller, threatened
with respect to any Employee Plan (other than claims for benefits in
the ordinary course) and to Seller's and Parent's knowledge, no fact
or event exists that could give rise to any such action, suit or claim.
(iv) The only Employee Plan adopted by Seller which is intended to
be qualified or exempt from taxation under Section 401(a), 401(k) or
501(a) of the Code is the Telenoticias del Mundo, L.P. 401k Plan
effective as of January 1, 1996 (the "401k Plan"). The 401k Plan
is intended to be qualified as exempt from taxation under Section
401(a) of the Code. Seller has not applied for a determination
letter from the IRS with respect to the 401k Plan but the remedial
amendment period with respect to such 401k Plan has not yet expired.
(v) To Seller's knowledge, there has been no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code)
with respect to any Employee Plan. Seller has not incurred any
liability for any excise tax arising under Section 4971, 4972, 4975,
4980 or 4980B of the Code, no fact or event exists which could give
rise to such liability. Seller has not incurred any liability relating
to Title IV of ERISA (other than for the payment of premiums to the
Pension Benefit Guaranty Corporation), and to Seller's and Parent's
knowledge, no fact or event exists which would give rise to such
liability.
(vi) Contributions, premiums or payments required to be made
with respect to any Employee Plan have been made on or before their
due dates. All such contributions have been fully deducted for income
tax purposes and no such deduction has been challenged or disallowed
by any government entity, and to Seller's knowledge no fact or event
exists which could give rise to any such challenge or disallowance.
(x) Changes in Circumstances. Except as set forth on Schedule
5.1(x), and except as contemplated by the Partner Purchase Agreement
and transactions related thereto since the Balance Sheet Date, Seller
has not (i) Transferred or otherwise disposed of any properties or
assets used in connection with the Business (including the Acquired
Assets) outside the ordinary and normal course of business or for less
than fair market value; (ii) mortgaged, pledged or subjected to any
Lien any of the Acquired Assets; (iii) acquired any property or assets
used in connection with the Business (including the Acquired Assets)
outside the ordinary and normal course of business or for more than
fair market value; (iv) sustained any damage, loss or destruction of
or to the Acquired Assets (whether or not covered by insurance) with
a book value in excess of $5,000; (v) other than this Agreement or the
Partner Purchase Agreement and the transactions contemplated hereby,
entered into any transaction or otherwise conducted the Business other
than in the ordinary and normal course; (vi) granted any salary
increase or bonus or permitted any advance to any officer, director
or employee, instituted or granted any general salary increase to the
employees of Seller or entered into any new, or altered or amended any
existing, Employee Plan or any employment or consulting agreement nor
made any agreement to do so or to make any increases or beneficial
changes to any of the foregoing; (vii) made any borrowing, whether or
not in the ordinary and normal course of business, issued any
commercial paper or refinanced any existing borrowings; (viii) paid
any obligation or liability (fixed or contingent), other than in the
ordinary and normal course of business, discharged or satisfied any
Lien, or settled any claim, liability or suit pending or threatened
against the Business or any of the Acquired Assets; (ix) entered into
any licenses or leases in connection with the Business; (x) made any
loans or gifts; (xi) modified, amended, cancelled or terminated any
Contracts under circumstances which would adversely affect the
condition (financial or otherwise), results of operations, business,
properties, assets, liabilities or prospects of Seller or the
Business; (xii) declared or paid, or become obligated to declare
or pay, any dividend or other distribution to equityholders in
connection with the Business; (xiii) made capital expenditures or
commitments outside the ordinary course of the Business for additions
to property, plant or equipment; (xiv) written down the value of any
Inventory or written off as uncollectible any notes or Accounts
Receivable or any portion thereof; (xv) cancelled any other debts
or claims or waived any rights of substantial value; (xvi) made any
change in any method of accounting or accounting practice; (xvii) paid,
accrued or incurred any management or similar fees to any Related Party
or made any other payment or incurred any other liability to a Related
Party or paid any amounts to or in respect of, or sold or transferred
any assets to, any Person, a substantial portion of the equity
ownership interest of which is owned by Seller, the Parent or a
Related Party individually or as a group; (xviii) taken or omitted
to take any action which would cause to be breached, any of the
representations, warranties or covenants of Seller or Parent contained
herein if the same were made anew immediately after such act or
omission; (xix) suffered any occurrence which has had or may be
reasonably expected to have or result in a material adverse change
in the condition (financial or otherwise), business, results of
operations, assets, properties, liabilities or prospects of Seller
or the Business, except for usual and normal changes in the ordinary
course of business which have not, individually or in the aggregate,
been materially adverse; or (xx) other than pursuant to the terms
hereof, agreed to, or obligated itself to, do anything identified
in (i) through (xix) above. For purposes of this Agreement, a
"Related Party" is any Person in which Seller, Parent or any of
their respective Affiliates has a material interest.
(y) Taxes. All returns and reports of all Taxes, including,
without limitation, withholding tax returns and declarations of
estimated tax and tax reports, required to be filed on or prior
to the Closing Date by Seller or Parent with respect to any Tax
that, if not paid, would result in a Lien upon any of the Acquired
Assets, or would result in Purchaser's liability for such Tax, have
been duly and timely filed and are true, correct and complete, and
all Taxes due or claimed to be due pursuant thereto have been paid.
All Taxes required to be paid or deposited on or prior to the Closing
Date by Seller or Parent that if not paid, would result in a Lien upon
any of the Acquired Assets, or would result in Purchaser's liability
for such Tax, have been duly and timely paid or deposited. For the
purposes of this Agreement, "Tax" or "Taxes" means all net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall
profits taxes, customs duties or other taxes, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign).
(z) Warranties. Except for written warranties made by Seller in
the Contracts listed on Schedule 5.1(k), Seller has not given or made
any warranties in connection with the Business. Seller has not
received any written notice of any claim that Seller is under any
liability or obligation with respect to any such warranty.
(aa) Insurance. Schedule 5.1(aa) contains a list of all insurance
policies (specifying the insured, insurer, amount of coverage, type of
insurance and policy number) maintained by Seller for the Business or
the Acquired Assets. Seller has not been refused any insurance with
respect to its assets or operations, and has not had its coverage been
limited, by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last two
years.
(ab) Approvals. Schedule 5.1(ab) sets forth a list of all Consents
which must be obtained or satisfied by Seller for the consummation of
the transactions contemplated by this Agreement or the Partner Purchase
Agreement in addition to the Consents listed on Schedule 1.3. Except
as specifically described in Schedule 5.1(ab), all Consents prescribed
by any Law (including without limitation the Government Contract
Regulations, the Federal Assignment of Claims Act and the Federal
Anti-Assignment Act) which must be obtained or satisfied by Seller
for the consummation of the transactions contemplated by this Agreement
or the Partner Purchase Agreement, or for the continued performance by
Seller of its rights and obligations hereunder or thereunder, have
been, or shall by the Closing have been, made, obtained and satisfied.
(ac) Complaints. There is not any FCC investigation, notice of
violation, notice of apparent liability or order of forfeiture pending
or outstanding against Seller respecting any violation, or allegation
thereof, of any FCC rule, regulation or policy, or of any provision of
the Communications Act of 1934, as amended, and the rules, regulations
and policies promulgated thereunder or, to Seller's knowledge, any
complaint before the FCC as a result of which an investigation, notice
of apparent liability or order of forfeiture may issue from the FCC
relating to Seller.
(ad) Absence of Certain Commercial Practices. Neither Seller, nor
any officer, director, employee or agent of Seller (or any Person acting
on behalf of Seller) has to the knowledge of Seller given or agreed to
give (i) any gift or similar benefit of more than nominal value to any
Customer, supplier, Governmental Authority (including any governmental
employee or official) or any other Person who is or may be in a position
to help, hinder or assist Seller, the Business or the Person giving
such gift or benefit in connection with any actual or proposed
transaction relating to the Business, which gifts or similar benefits
would individually or in the aggregate subject Seller or any officer,
director, employee or agent of either of them to any fine, penalty,
material cost or expense or to any criminal sanctions, (ii) receipts
from or payments to any governmental officials or employees, (iii)
commercial bribes or kick-backs, (iv) political contributions, or
(v) any receipts or disbursements in connection with any unlawful
boycott. No such gift or benefit is required in connection with the
operation of any portion of the Business to avoid any fine, penalty,
cost, expense or adverse change in the condition (financial or
otherwise), results of operations, properties, assets, liabilities,
business or prospects of Seller or the Business.
(ae) Books and Records. The books and records of Seller maintained
in connection with the Business (including without limitation, computer
software and data in computer readable and human readable form used to
maintain such books and records together with the media on which such
software and data are stored and all documentation relating thereto)
accurately record all material transactions relating to the Business,
and have been maintained consistent with good business practice.
(af) Environmental Compliance. (i) Except as disclosed on Schedule
5.1(af),
(A) Seller has no liability or obligation, fixed or
contingent, under any Environmental Law or Environmental
Permit (including without limitation in respect of the
handling, treatment, storage or disposal of Hazardous Substances
or the Release thereof);
(B) no polychlorinated biphenyls, radioactive material,
urea formaldehyde, lead, asbestos, asbestos-containing material
or underground storage tank (active or abandoned) is present
at any property now owned, leased or operated by Seller or has
been present at any property previously owned, leased or operated
by Seller;
(C) no property now or previously owned, if any, leased or
operated by Seller or any property to which Seller has, directly
or indirectly, transported or arranged for the transportation of
any Hazardous Substances is listed or proposed for listing, on the
National Priorities List promulgated pursuant to CERCLA, on CERCLIS
(as defined in CERCLA) or on any similar federal, state or foreign
list of sites requiring investigation or clean-up;
(D) there are no Liens under Environmental Laws on any assets
owned, leased or operated by Seller, no government actions have
been taken or are in process which could subject any of such
properties or assets to such Liens and Seller is not required to
place any notice or restriction relating to Hazardous Substances
at any property owned by it in any deed to such property; and
(E) there are no Environmental Permits that
are nontransferable or require consent, notification or other
action to remain in full force and effect following the
consummation of the transactions contemplated hereby.
(ii) There has been no environmental investigation, study, audit,
test, review or other analysis conducted by or on behalf of Seller
(or by a third party of which Seller has knowledge) in relation to the
current or prior business of Seller or any property or facility
currently or, to the knowledge of Seller, previously owned or leased by
Seller which has not been delivered to Buyer at least 10 days prior to
the date hereof. No claim is pending, or to the knowledge of Seller,
threatened against Seller, relating to any alleged violation by Seller
of any Environmental Laws.
(iii) For purposes of this section, the following terms have the
following meanings:
"Environmental Laws" means any and all Laws relating to
occupational, health and safety, human health, the environment or
to emissions, discharges or releases of Hazardous Substances into
the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances or the clean-up or
other remediation thereof.
"Environmental Permits" means all permits, licenses,
authorizations, certificates and approvals of governmental
authorities relating to or required by Environmental Laws and
necessary or proper for the Business as currently conducted.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance
having any constituent elements displaying any of the foregoing
characteristics, including without limitation any substance
regulated under Environmental Laws.
"Release" means any discharge, emission or release, including
a Release as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules
and regulations thereunder ("CERCLA"). The term "Released" has a
corresponding meaning.
(ag) Copies of Documents. Seller has delivered to Buyer true,
correct and complete copies of all Contracts and other documents listed
in the Schedules to, or referenced in, this Agreement or the Partner
Purchase Agreement, and all modifications and amendments thereto.
(ah) Insider Interests. Except as provided herein and in the
Transition Agreements, no officer, director or employee of Seller
or Parent or any of their respective Affiliates has any material
interest in any property, real or personal, tangible or intangible,
including without limitation inventions, patents, trademarks, trade
names or copyrights, used in or pertaining to the Business of Seller
or any Affiliate.
(ai) Disclosure. No representation or warranty made by Seller
contained in this Agreement including the Schedules attached hereto or
of Seller or Parent in the Partner Purchase Agreement contains an untrue
statement of a material fact or omits to state a material fact necessary
to make the statements and facts contained herein or therein, in light
of the circumstances in which they were or are made, not false or
misleading. Disclosure of information on any Schedule hereto shall be
deemed disclosure of such information for purposes of all Schedules
hereto.
(aj) Loan and Security Credit Agreement. Seller has disclosed the
terms of this Agreement to the lender under the Loan and Security Credit
Agreement (the "Loan Agreement"), dated as of December 31, 1994, between
Parent and Foothill Capital Corporation and no consent or approval of
the lender under the Loan Agreement or any other loan, indenture or
similar agreement to which Parent or any of its affiliates is a party
(collectively, "Parent's Credit Documents") is required in connection
with the consummation of the transactions contemplated by this
Agreement, the Partner Purchase Agreement or the transactions
contemplated hereby or thereby which has not been received.
(ak) Recitals. Except for Recital E, the Recitals to this Agreement
are true and correct.
5.2. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as of the date of this Agreement that:
(a) Organization and Standing; Corporate Power and Authority. Buyer
is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York, and has the requisite corporate
power and authority to carry on its business as presently conducted and
to enter into, make and perform this Agreement and the transactions and
other agreements and instruments contemplated by this Agreement to be
entered into and performed by it. This Agreement and all other
agreements and instruments executed and delivered or to be executed and
delivered by Buyer in connection herewith have been, or upon execution
thereto will be, duly executed and delivered by Buyer. This Agreement
and the transactions and other agreements and instruments contemplated
by this Agreement to be executed by Buyer have been duly approved by
the Board of Directors and shareholder of Buyer, and constitute the
valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms.
(b) Conflicts; Defaults. Neither the execution and delivery of this
Agreement and the other agreements and instruments executed or to be
executed in connection herewith by Buyer, nor the performance by Buyer
of the transactions contemplated hereby, will (i) violate, conflict
with, constitute a breach or default under or give rise to any
obligation or liability under any of the terms of Buyer's Certificate
of Incorporation or Bylaws, or any provision of or result in the
acceleration of any obligation under, any lease, agreement, commitment,
contract or other instrument to which Buyer is a party or by which it is
bound or any Order by which it is bound, or (ii) violate any Law.
(c) Brokers, Finders and Agents. Buyer is not directly or
indirectly obligated to anyone as a broker, finder or in any other
similar capacity in connection with this Agreement or the transactions
contemplated hereby.
5.3. General. The representations and warranties of the parties
hereto made in this Agreement, subject to the exceptions thereto, will not be
affected by any information furnished to, or any investigation conducted by,
any of them or their representatives in connection with the subject matter of
this Agreement. The representations and warranties made in this Agreement or
in any instrument delivered pursuant to this Agreement will survive the
Closing for the respective periods set forth in Section 8.1.
VI. COVENANTS
6.1. Confidentiality. (a) For a period of two years from the
Closing Date, each of Parent and Seller will, and will cause its respective
Affiliates, officers, directors, financing sources, employees,
representatives, consultants and advisors (the "Restricted Entities") to
hold in confidence all confidential information which remains after Closing
in the possession of Parent, Seller or any of their respective Affiliates
concerning the Business and the Acquired Assets and not release or disclose
any such information to any Person other than a Restricted Entity.
Notwithstanding the foregoing, the confidentiality obligations of this
Section will not apply to information:
(i) which a Restricted Entity is compelled to disclose by
judicial or administrative process, or, by other mandatory requirements
of Law; and
(ii) which a Restricted Entity is required to disclose pursuant
to (A) financial disclosure requirements or (B) as a business necessity
but in no circumstances in the case of this clause (B) may such
information be disclosed to a third party if such a disclosure would
result in a financial or competitive harm to Buyer's interests in the
Business or the Acquired Assets.
(b) For a period of two years from the Closing Date, Buyer will,
and will cause its Restricted Entities to hold in confidence all confidential
information regarding the Former Partners, Parent's relationship with the
Former Partners, the organization of Seller pursuant to the Partnership
Agreement and the services provided by the Former Partners thereunder.
(c) "Confidential information", as used in this Section, means
material information regarding the Business or the Acquired Assets
other than such material information:
(i) which was, is or becomes generally available to the public
other than as a result of a breach of this Section; or
(ii) which was, or is in the future provided to a Restricted
Entity by a third party who obtained such information other than from a
Restricted Entity as a result of a breach of this Section.
6.2. Insurance. (a) With respect to any loss, liability or damage
relating to, resulting from or arising out of the ownership or conduct of
the Business on or prior to the Closing Date for which Seller would be
entitled to assert, or cause any other person or entity to assert, a claim
for recovery under any policy of insurance maintained by Seller in respect
of the Business or the Acquired Assets ("Insurance"), at the request and
expense of Buyer, Seller will use its reasonable efforts to assert one or
more claims under such Insurance covering such loss, liability or damage if
Buyer is not itself entitled to assert such claim but Seller is so entitled
and Seller will promptly pay to Buyer any amounts recovered in respect of any
such claim, but only to the extent Seller would have liability to Buyer with
respect to such liability or damage pursuant to the provisions of this
Agreement (without giving effect to the "deductible" limit set forth in
Section 8.2(b)). Any payment made hereunder shall reduce any claim Buyer
may have for indemnification under Article VIII. Seller will be deemed,
solely for the purpose of asserting claims for insurance pursuant to the
immediately preceding sentence, to have retained liability for such loss,
liability or damage to the extent of the policy limits of the applicable
Insurance; provided, however, that (i) Buyer's obligations under Section
8.3(b) will not be affected by the provisions of this Section 6.2 and (ii)
with respect to any claim made by Seller under any Insurance pursuant to
this Section 6.2, Buyer will indemnify, defend and hold harmless Seller and
its directors, officers, partners, employees, agents and representatives
harmless from and against any Indemnifiable Loss relating to, resulting from
or arising out of any deductible, policy limit, reinsurance due to the
liquidation or insolvency of the reinsurer, self-insurance retention,
retrospective premium resulting from claims made under this Section 6.2
or other like arrangement by which Seller or any captive insurance company
of Seller retains any liability under any such policy of Insurance or
otherwise.
(b) As of the Closing Date, Seller may at its discretion terminate
or otherwise discontinue any current insurance policy and any refund
thereunder to the extent reflected as prepaid insurance on the Final Balance
Sheet will be promptly paid to Buyer.
6.3 Maintenance of, and Access to, Records. (a) On the Closing
Date, or as soon thereafter as practicable, and in no event later than ten
calendar days after the Closing Date, Seller will deliver or cause to be
delivered to Buyer all original agreements, documents, books, records and
files relating to the Business constituting Business Records which are not
Excluded Assets in the possession of Seller or Parent to the extent not in
the possession of Buyer. After the Closing, Buyer will retain all Business
Records (except Business Records constituting Excluded Assets). Except as
provided in the immediately preceding sentence, Buyer will retain all
Business Records for a period of three years after the Closing Date.
After the end of such three-year period, before disposing of any such
Business Records, Buyer will give notice to such effect to Seller and to
give Seller, at Seller's cost and expense, an opportunity to remove and
retain all or any part of such Business Records as Seller may elect.
(b) After the Closing, upon reasonable notice, each of Buyer, Seller
and Parent will give, or cause to be given, to the representatives,
employees, counsel and accountants of the other access, during normal
business hours, to Business Records relating to periods prior to or
including the Closing, and will permit such persons to examine and copy
such Business Records to the extent reasonably requested by the other party
in connection with tax and financial reporting matters (including without
limitation any Tax return relating to state or local real property transfer
or gains taxes), audits, legal proceedings, governmental investigations and
other business purposes; provided, however, that nothing herein will obligate
any party to take actions that would unreasonably disrupt the normal course
of its business, violate the terms of any Contract to which it is a party or
to which it or any of its assets is subject or grant access to any of its
proprietary, confidential or classified information (it being agreed that
information which was in the possession of Seller prior to the Closing Date
will always be made available, if requested, to Seller).
6.4. Accounts Receivable. (a) Subject to clause (d) below, in the
event that Parent, Seller or any of their respective Affiliates receives any
payment relating to any Account Receivable outstanding on or after the
Closing Date, such payment will be the property of, and will be immediately
forwarded and remitted to, Buyer. Parent will or will cause Seller or any
such Affiliate to promptly endorse and deliver to Buyer any cash, checks or
other documents received by Seller or any such Affiliate on account of any
such Accounts Receivable and will advise Buyer of any counterclaims or
set-offs that may arise subsequent to the Closing Date with respect to any
Account Receivable.
(b) After the Closing Date, Buyer will use reasonable best efforts,
onsistent with prior ordinary course business practices of Seller, to
collect all Accounts Receivable included in the Acquired Assets; provided,
however, that Buyer will not be obligated to continue to do business with
any Person if Buyer believes such continuation will not be in its best
interests, and will not be obligated to initiate litigation or to turn any
of such Accounts Receivable over to a collection agency or attorney.
(c) Buyer will deliver a true and correct list of its Accounts
Receivable aging within 15 business days following the expiration of the
period during which such Accounts Receivable are deemed "uncollectible" in
accordance with this Section. Accounts Receivable will be deemed
"uncollectible" if remaining unpaid 180 calendar days after the Closing
Date.
(d) In the event that the aggregate Accounts Receivable (less the
aggregate reserves for Accounts Receivable (the "Reserve Amount")), in each
case as set forth on the Final Balance Sheet, are not paid by the date as of
which they are deemed uncollectible as herein provided, Buyer will be
reimbursed from Seller in the amount such unpaid Accounts Receivable exceed
such Reserve Amount from funds held under the Escrow Agreement pursuant to
Section 3.4(d). Upon such reimbursement, the claim or cause of action
against the debtor not making payment will be assigned by Buyer to Seller
and Seller may take such measures to enforce collection of the unpaid items
as Seller will deem necessary which amount will be retained by Seller. In
connection with the collection of any Accounts Receivable, remittances by a
customer will be first credited to the Accounts Receivable bearing the
earliest date unless the customer has specified the particular invoice to
which a remittance pertains, in which case the credit will be made to the
invoice specified.
(e) The failure of Buyer to collect all outstanding Accounts
Receivable will not give rise to any liability on the part of Seller or
Parent, nor will it be considered a breach of this Agreement, to the extent
Seller makes the reimbursement payment contemplated by clause (d) above.
6.5. Further Assurances; Customer and Supplier Relationships;
Assertion of Claims. (a) Each of Buyer and Seller will use its reasonable
efforts to implement the provisions of this Agreement. In connection
therewith (and subject to Section 1.3), Seller, at the request of Buyer, at
or after the Closing, will, without further consideration, promptly execute
and deliver, or use reasonable efforts (not involving any payment) to cause
to be executed and delivered, to Buyer such deeds, assignments, bills of
sale, Consents and other instruments in addition to those required by this
Agreement, in form and substance reasonably satisfactory to Buyer, and take
all such other actions, as Buyer may reasonably deem necessary or desirable
to implement any provision of this Agreement or to more effectively Transfer
to Buyer good title to, and to put Buyer in actual possession and operating
control of, all of the Acquired Assets, free and clear of all Liens.
(b) From and after the Closing, Seller will use its reasonable best
efforts to assist in the transfer to Buyer of the goodwill and reputation
associated with the Business, and of Seller's personnel, suppliers,
manufacturer's representatives and customer relationships. Seller will use
reasonable efforts, as requested by Buyer from time to time (and not
involving any payments) to assure that Seller's current customers and
suppliers will continue to do business with Buyer in accordance with the
terms and for the periods of time set forth in any Contract, whether
currently in effect or proposed to be entered into by Seller.
6.6. Tax Matters. The following provisions will govern the
allocation of responsibility as between Buyer and Seller for certain tax
matters following the Closing Date:
(a) The parties hereto agree that all personal property Taxes and
similar ad valorem obligations that are levied with respect to the
Acquired Assets or the Business for assessment period within which
the Closing Date occurs (collectively, the "Apportioned Obligations")
will be apportioned between Seller and Buyer as of the Closing Date
based on the number of days in any such period falling before the
Closing Date, on the one hand, and on and after the Closing Date, on
the other hand (it being understood that Buyer is responsible for the
portion of each such Apportioned Obligation attributable to the number
of days on and after the Closing Date in the relevant assessment
period). Each party hereto will cooperate in assuring that Apportioned
Obligations the payment of which is due prior to the Closing Date are
billed directly to and paid by Seller, and that Apportioned Obligations
whose payment is due on and after the Closing Date will be billed
directly to and paid by Buyer. The parties hereto will cooperate,
including, without limitation, during times of audit by taxing
authorities, to avoid payment of duplicate or inappropriate taxes or
other ad valorem obligations of any kind or description which relate
to the Acquired Assets or the Business, and each party will furnish,
at the request of the other, proof of payment of any such taxes or ad
valorem obligations or other documentation that is a prerequisite to
avoiding payment of a duplicate or inappropriate tax or other ad
valorem obligations.
In the event that any refund, rebate or similar payment is
received by Buyer of Seller for any personal property taxes or similar ad
valorem obligations which are Apportioned Obligations and which payment
pertains to the assessment period in which the Closing Date falls, the
parties hereto agree that such payment will be apportioned between Seller
and Buyer on the basis of each party's respective ownership of the taxed
asset during the assessment period.
In the event that it is determined subsequent to the Closing Date
that additional personal property taxes or similar ad valorem obligations
which are Apportioned Obligations are required to be paid for the assessment
period in which the Closing Date falls, the parties hereto agree that such
additional taxes will be apportioned between Seller and Buyer on the basis
of each party's respective ownership of the taxed asset during the assessment
period.
(b) Except as otherwise provided in this Agreement, as among the
parties hereto, (i) Seller will be responsible for and pay all taxes levied
or imposed upon, or in connection with, the Acquired Assets or the conduct or
operation of the business of the Seller before the Closing Date; (ii) Buyer
will be responsible for and pay all taxes levied or imposed upon, or in
connection with, the Acquired Assets or the conduct or operation of the
Business on and after the Closing Date; and (iii) Seller and Buyer will each
be responsible for its own income and franchise taxes, if any, arising from
the transactions contemplated by this Agreement.
(c) Seller will be responsible for the timely filing (taking into
account any extensions received from the relevant tax authorities) of all
Tax returns required by law to be filed in respect of the Assets or the
business of Seller on or prior to the Closing Date. All Taxes indicated as
due and payable on such returns will be paid or will be paid by Seller as and
when required by law, except for such Taxes as may be contested by Seller in
good faith and in appropriate proceedings. Buyer will be responsible for the
timely filing (taking into account any extensions received from the relevant
tax authorities) of all Tax returns required by law to be filed in respect of
the Acquired Assets or the Business after the Closing Date, it being
understood that all Taxes indicated as due and payable on such returns will
be paid or will be paid by Buyer as and when required by law, except for such
Taxes as may be contested by Buyer in good faith and in appropriate
proceedings.
(d) Except as otherwise provided in this Agreement, any interest
and penalties arising in connection with Taxes due under this Section 6.8
will be the responsibility of the party required to file correct tax returns
concerning such Taxes in a timely manner. Control of any legal or
administrative proceedings concerning any such Taxes, and entitlement to any
refunds or awards with respect to any such taxes, will rest with the party
responsible for payment therefor under this Section 6.8 (without regard to
any other Section of this Agreement); provided however, that, with respect to
Taxes that must be combined or joined with one or more other Tax issues which
one party desires to contest, except in the case of income or franchise
Taxes, control of such proceedings will rest with the party having the larger
amount of Taxes in dispute, and the party in control may not adjust,
compromise or settle Taxes which are contrasted by or on behalf of the other
party without the consent of the other party.
(e) Buyer and Seller will cooperate fully, as and to the extent
reasonably requested by the other party, in connection with any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
will include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Buyer and Seller agree
(i) to retain all books and records with respect to Tax matters pertinent
to Seller relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered
into with any taxing authority, and (ii) to give the other party reasonable
written notice prior to transferring, destroying or discarding any such
books and records and, if the other party so requests, Buyer or Seller, as
the case may be, will allow the other party to take possession of such books
and records.
VII. CERTAIN ADDITIONAL COVENANTS
7.1. Expenses; Transfer Taxes. (a) Except as provided in Article
VIII hereof, each party hereto will bear the legal, accounting and other
expenses incurred by such party in connection with the negotiation,
preparation and execution of this Agreement, the Transaction Documents,
and the transactions contemplated hereby. All sales, transfer, recordation
and documentary Taxes and fees which may be payable in connection with the
transactions contemplated by this Agreement will be shared equally by Buyer
and Seller.
(b) The parties hereto waive compliance with the provisions of
any bulk sales law applicable to the transfer of the Acquired Assets to
Buyer; provided, however, that any loss, liability, obligation or cost
suffered by Buyer as a result of failure to comply therewith shall be borne
by Seller as contemplated by Section 8.3(a).
7.2 Press Releases and Disclosure. For a period of 30 calendar
days from the Closing Date, the parties agree that neither Seller, Buyer nor
their respective Affiliates will issue or cause publication of any press
release or other announcement or public communication with respect to this
Agreement or the transactions contemplated hereby or otherwise disclose this
Agreement or the transactions contemplated hereby to any third party (other
than attorneys, advisors, financing sources and accountants to Seller or
Buyer) without the written consent of the other party hereto, which consent
will not be unreasonably withheld; provided that nothing herein will prohibit
any party from issuing or causing publication of any press release,
announcement or public communication to the extent that such party deems
such action to be required by Law or pursuant to the applicable rules of a
stock exchange; provided further that, except with respect to filings with
the Securities and Exchange Commission, such party will, whenever
practicable consult with the other party concerning the timing and content
of such press release, announcement or communication before the same is
issued or published; provided further that, for informational purposes only,
the parties will use reasonable best efforts to provide to the other party
prior to such filing the first disclosure to be filed with the Securities
and Exchange Commission regarding the transactions contemplated hereby.
7.3. Cooperation in the Defense of Claims. In the event that a
claim is asserted against Buyer or Parent, or any of their respective direct
or indirect subsidiaries or Affiliates, with respect to events or conditions
occurring or existing in connection with, or arising out of, the operation
of the Business prior to or after the Closing, or the ownership, possession,
use or sale of the Acquired Assets prior to or after the Closing, the parties
will cooperate with each other in the defense of any such claim.
7.4. Regulatory Approvals. Seller will, and will cause its
appropriate Affiliates to, and Buyer will and will cause its appropriate
Affiliates to, use, in each case, its reasonable efforts to obtain any
authorizations, consents, orders and approvals of any Governmental Authority
necessary for the performance of its respective obligations pursuant to this
Agreement and any of the other Transaction Documents, and the consummation of
the transactions contemplated hereby and thereby, and will cooperate fully
with each other in all reasonable respects in promptly seeking to obtain
such authorizations, consents, orders and approvals. Neither Seller nor
Buyer will take any action that will have the effect of delaying, impairing
or impeding the receipt of any required regulatory approvals.
7.5. Telenoticias Name. Buyer will comply with the limitations
relating to the use of the Telenoticias name set forth in Section 1.1(f)(ii).
7.6. Employees. (a) Buyer will on the Closing Date offer to employ
all employees of Seller described in Section 5.1(w)(A) in comparable
positions and upon at least comparable (to the employee or independent
contractor) terms and conditions (including benefit plans) as in effect
on the Closing Date.
(b) Buyer will not, and will have no obligation to, employ the
persons set forth on Schedule 7.6(b). Seller and/or Parent will pay one
quarter of any amount required to be paid by law or policy as a severance
payment to such persons.
(c) In the event that the employment of any employee listed on
Schedule 7.6(c) is terminated within 50 calendar days of the date hereof,
Buyer will notify Seller thereof within 2 business days and Seller and/or
Parent will be liable for any amount required to be paid to such persons by
law or by policy as a severance payment based upon law or policy of Seller
as in effect on the day prior to the Closing Date.
(d) Buyer will permit employees to use vacation time accrued
and unused since the commencement of the calendar year.
7.7. Non-Competition. (a) Seller and Parent Period and Conduct.
As further consideration for the purchase and sale of the Acquired Assets
and the transactions contemplated by this Agreement, during the period
commencing on the date hereof and continuing for the longer of three years
or the term of the Program Production and License Agreement, neither Seller,
Parent nor any of their Restricted Affiliates (as hereinafter defined) will:
(i) compete with Buyer or any of its Affiliates in the
production, use, exploitation, cablecast, transmission,
broadcast, telecast or distribution of a Spanish language
news service (as hereinafter defined) or a Spanish language
news or public affairs programming service (as hereinafter
defined);
(ii) solicit or accept orders or business of any kind relating
to the production, use, exploitation, cablecast,
transmission, broadcast, telecast or distribution of a
Spanish language news service or a Spanish language news
or public affairs programming service from any customer or
active prospect of Buyer or any former customer of Seller
or its Affiliates;
(iii) use, or incorporate or otherwise create any business
organization utilizing any name which uses the word
"Telenoticias" or which is confusingly similar to the
word "Telenoticias"; or
(iv) solicit any employee of Buyer who is primarily working
in connection with the Telenoticias broadcast without
Buyer's prior written approval.
(b) Territory. Parent, Seller and its Restricted Affiliates
will refrain from engaging in the activities described in this Section 7.7
during the period specified in Section 7.7(a) hereof in any of the United
States, its territories and possessions (including Puerto Rico), South
America, Central America, Mexico, the Caribbean Islands, the West Indies
and Europe.
(c) Definitions. (i) Parent, Seller and its Restricted Affiliates
will be deemed to be competing with Buyer if Parent, Seller or any of its
Restricted Affiliates is engaged or participates in any activity or
activities described in Section 7.7(a), directly or indirectly, whether
for its own account or for that of any other entity or as principal, agent,
representative, proprietor, or partner, or in any capacity.
(ii) The term "Restricted Affiliate" shall mean any entity
controlled by Seller (within the meaning of Rule 12b-2 of Regulation 12B
under the Securities Exchange Act of 1934, as amended).
(iii) As used in this Section 7.7, "Spanish language news
service" is the gathering, packaging, marketing and licensing of news or
public affairs but shall not include occasional licensing of individual
news stories on a per-news story basis and not as a package.
(iv) As used herein "Spanish language news and public affairs
programming service" shall mean a Spanish language programming service
the substantial majority of whose programs are of a news, public affairs
or informational nature.
(v) Notwithstanding anything to the contrary in this
Section 7.7, upon the termination of the Program Production and License
Agreement, Parent will have the right to obtain news programming from an
alternative news source even if it requires reciprocal sharing of raw
footage produced by Parent or its Affiliates.
(d) Remedies. Inasmuch as a breach, or failure to comply
with, this Section 7.7 will cause serious and substantial damage to Buyer,
if Parent, Seller or any of its Restricted Affiliates should in any way
breach, or fail to comply with, the terms of this Section 7.7, Buyer will
be entitled to an injunction restraining Parent, Seller and such Restricted
Affiliates from any such breach or failure. Resort to the remedy specified
herein will not preclude or bar the concurrent or subsequent seeking of
recovery pursuant to Article VIII.
(e) Severability. Each subdivision of this Section 7.7
constitutes a separate and distinct provision hereof. In the event that
any provision of this Section 7.7 shall finally be judicially determined
to be invalid, ineffective or unenforceable, such determination will apply
only in the jurisdiction in which such adjudication is made and every other
provision of this Section 7.7 will remain in full force and effect. The
invalid, ineffective or unenforceable provision will without further action
by the parties, be automatically amended to effect the original purpose and
intent of the invalid, ineffective or unenforceable provision; provided,
however, that such amendment will apply only with respect to the operation
of such provision in the particular jurisdiction in which such adjudication
is made.
VIII. SURVIVAL AND INDEMNIFICATION
8.1. Survival of Representations, Warranties and Covenants. (a) The
representations and warranties of Parent and Seller under Sections 5.1(y)
will survive the Closing and remain in full force and effect until the
expiration of any applicable statute of limitation with respect thereto.
Except as set forth in the previous sentence with respect to Taxes, the
representations and warranties of Parent and Seller contained in Sections
5.1(h)(v), 5.1(s), 5.1(w) and 5.1(af) will survive the Closing and remain
in full force and effect until six years from the Closing Date. The
representations and warranties of Parent and Seller under the Agreement,
other than those for which a survival period is provided above, will survive
the Closing and remain in full force and effect until two years from the
Closing Date.
(b) The representations and warranties of Buyer under the Agreement
contained in Sections 5.2(c) will survive the Closing and remain in full
force and effect until six years from the Closing Date. The representations
and warranties of Buyer under the Agreement, other than those for which a
survival period is provided above, will survive the Closing and remain in
full force and effect until two years from the Closing Date.
(c) Any claim for indemnification with respect to any breach of a
representation or warranty which is not asserted pursuant to the giving of
a Notice of Claim for Indemnity (as hereafter defined) within such specified
periods of survival may not be pursued and is hereby irrevocably waived.
Any claim for indemnification asserted within such specified periods of
survival pursuant to the giving of a Notice of Claim for Indemnity will
be timely made for purposes hereof.
(d) Unless a specified period is set forth in this Agreement (in
which event sch specified period will control), the covenants and
agreements contained in this Agreement will survive the Closing and remain
in effect indefinitely.
8.2 Limitations on Liability. (a) For purposes of this Agreement,
(i) "Indemnity Payment" means any amount of Indemnifiable Losses required to
be paid pursuant to this Agreement, (ii) "Indemnitee" means any person or
entity entitled to indemnification under this Agreement, (iii) "Indemnifying
Party" means any person or entity required to provide indemnification under
this Agreement, (iv) "Indemnifiable Losses" means any and all loss,
liability, claim, demand, obligation, damage, deficiency, cost or expense
(including without limitation reasonable attorneys' fees and expenses),
including without limitation any of the foregoing relating to, resulting
from or arising out of any action, suit, administrative proceeding,
investigation, audit or other proceeding brought by any person or entity
and any settlement or compromise thereof, reduced by the amount of any
Third-Party Recovery (as hereafter defined) and reduced to take account
of any actual net tax benefit realized from the payment of any Indemnified
Loss ("Tax Benefit"), (v) "Third Party Claim" means any threat, demand,
action, suit, administrative proceeding, investigation or audit or other
proceeding made or brought by any person or entity who or which is not a
party to this Agreement or an Affiliate of a party to this Agreement reduced
by the amount of any Third-Party Recovery and Tax Benefit, and (vi) "Notice
of Claim for Indemnity" means a written notice given in accordance with
Section 8.5 which (A) if based upon a Third Party Claim against any
Indemnitee, must include copies of all material notices and documents
received by the Indemnitee with respect to such Third Party Claim and will
indicate the estimated amount, if reasonably practicable, of the
Indemnifiable Loss that has been or may be sustained by the Indemnitee, or
(B) if based upon an alleged breach of a representation, warranty or covenant
contained in this Agreement, which does not relate to, result from or arise
out of a Third Party Claim (a "Direct Claim"), and which relates to, results
from or arises out of an event or circumstance discovered by the Indemnitee
which the Indemnitee in good faith reasonably believes is reasonably likely
to lead to the incurrence of an Indemnifiable Loss by reason of such alleged
breach, whether or not the Indemnifiable Loss is actually suffered or
sustained within the applicable period of survival specified in Section 8.1,
must include in reasonable detail the basis for the Indemnitee's good faith,
reasonable belief and must indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained
by the Indemnitee reduced by the amount of any Third-Party Recovery and Tax
Benefit; provided, however, that the Indemnifying Party will have no
liability with respect to any estimate referred to in this clause (vi) and
any such estimate will, itself, in no way limit or enlarge the amount of
Indemnifiable Loss recoverable by the Indemnitee indicating such estimate.
Notwithstanding the foregoing, items that would be considered
Indemnifiable Losses (such as investigative costs and expenses) incurred
by an Indemnitee in connection with any Third-Party Claim will not be
considered Indemnifiable Losses unless and until a claim, action, suit
or administrative proceeding is actually commenced or such Third-Party
Claim is settled.
(b) Notwithstanding any other provision of this Agreement or of any
applicable Law, no Indemnitee will be entitled to recovery under Sections
8.3(a) or 8.3(b) (other than a failure by Buyer to pay an Assumed Liability
or Seller to pay a Retained Liability) unless and until the aggregate amount
of Indemnifiable Losses incurred by the Indemnitee in respect of all
individual events or occurrences or any series of related events or
occurrences giving rise to such Indemnifiable Losses exceeds $100,000, in
which event (subject to Section 8.2(c)), such Indemnitee may assert its
right to indemnification hereunder to the extent (but only to the extent)
aggregate Indemnifiable Losses exceed $100,000.
(c) Notwithstanding any other provision of this Agreement or of
applicable Law, the aggregate indemnification obligations of Seller and
Parent under Section 8.3(a)(i) will not exceed $6,250,000.
8.3. Indemnification. (a) Subject to the other provisions of this
Article VIII, Seller and Parent will jointly and severally indemnify, defend
and hold harmless Buyer and its Affiliates and their respective directors,
officers, partners, employees, agents and representatives from and against
any and all Indemnifiable Losses relating to, resulting from or arising out
of:
(i) Any breach by Seller or Parent of any of the representations
or warranties of Seller contained in this Agreement;
(ii) Any breach by Seller or Parent of any covenant, obligation or
agreement of Seller or Parent contained in this Agreement;
(iii) Any of the following: (A) Third Party Claims (including
without limitation arising out of any personal injury, property damage
claims or clean-up, remediation or investigation obligation) in
connection with or arising from any environmental condition related
to (1) any real property previously owned, operated, leased, or
controlled by Seller or (2) any other real property on which any
materials that were used at, originated from or were generated at
or resulted from activities conducted at any real property identified
in clause (1) above have come to be located, (B) the failure of Seller
to pay, perform and discharge the Retained Liabilities, (C) the failure
of Seller to report the sale of the Acquired Assets in accordance with
the allocations required by Section 3.3, and (D) any failure to comply
with the laws of any jurisdiction relating to bulk transfers which may
be applicable in connection with the transfer of the Acquired Assets to
Buyer; and
(iv) Any claim by any Former Partner, any stockholder of
Telenoticias GP or any Affiliate (which does not include Buyer) or
successor-in-interest to any of the foregoing, whether based upon the
Business, any actual or alleged breach of any constituent document of
Seller, the Partner Purchase Agreement, this Agreement or any
transaction contemplated by any of the foregoing or event giving rise
to or resulting from any of the foregoing.
(b) Subject to the other provisions of this Article VIII, Buyer
will indemnify, defend and hold harmless Seller and its Affiliates and
their respective directors, officers, partners, employees, agents and
representatives from and against any and all Indemnifiable Losses
relating to, resulting from or arising out of:
(i) Any breach by Buyer of any of the representations or warranties
of Buyer contained in this Agreement;
(ii) Any breach by Buyer of any covenant, obligation or agreement
of Buyer contained in this Agreement; and
(iii) Any of the following: (A) the failure of Buyer to assume,
pay, perform and discharge the Assumed Liabilities and (B) the failure
of Buyer to report the purchase of the Acquired Assets in accordance
with the allocation required by Section 3.3.
(c) The rights of Buyer under clauses (i) through (iv) of Section
8.3(a) and of Seller and Parent under clauses (i) through (iii) of Section
8.3(b) are cumulative (but no Indemnitee may recover more than the amount
of any Indemnified Loss).
8.4. Defense of Claims. (a) If any Indemnitee receives notice of
the assertion of any claim, or the commencement of any Third Party Claim, or
the Indemnitee intends to seek indemnity hereunder, then the Indemnitee will
promptly provide the Indemnifying Party with a Notice of Claim for
Indemnity, but in any event not later than 20 calendar days after receipt
of such Notice of Claim for Indemnity. The failure by an Indemnitee to
provide a Notice of Claim for Indemnity to an Indemnifying Party of a Third
Party Claim will not relieve the Indemnifying Party of any indemnification
responsibility under this Article VIII, except to the extent, if any, that
such failure materially prejudices the ability of the Indemnifying Party to
defend such Third Party Claim.
(b) Without prejudice to the rights of the Indemnitee prior
thereto, the Indemnifying Party will have the right to control the defense,
compromise or settlement of the Third Party Claim with its own counsel
(reasonably satisfactory to the Indemnitee) if the Indemnifying Party
delivers written notice to the Indemnitee within 30 calendar days following
the Indemnifying Party's receipt of notice of the Third Party Claim from the
Indemnitee setting forth its undertaking to defend such Third Party Claim in
accordance with this Article VIII; provided, however, that the Indemnifying
Party will not enter into any settlement of any Third Party Claim which would
impose or create any obligation or any financial or other liability on the
part of the Indemnitee if such liability or obligation (i) requires more than
the payment of a liquidated sum or (ii) is not covered by the indemnification
provided to the Indemnitee hereunder. In its defense, compromise or
settlement of any Third Party Claim, the Indemnifying Party will timely
provide the Indemnitee with such information with respect to such defense,
compromise or settlement as the Indemnitee may reasonably request. The
Indemnitee will be entitled (at the Indemnitee's expense) to participate in
the defense by the Indemnifying Party of any Third Party Claim with its own
counsel.
(c) In the event that the Indemnifying Party does not undertake the
defense, compromise or settlement of a Third Party Claim in accordance with
subsection (b) of this Section 8.4, the Indemnitee will have the right to
control the defense or settlement of such Third Party Claim with counsel of
its choosing; provided, however, that the Indemnitee will not settle or
compromise any Third Party Claim without the Indemnifying Party's prior
written consent, unless (i) the terms of such settlement or compromise
release the Indemnitee and the Indemnifying Party from any and all liability
with respect to the Third Party Claim or (ii) the Indemnifying Party shall
not have acknowledged its obligations to indemnify the Indemnitee with
respect to such Third Party Claim in accordance with this Article VIII.
The Indemnifying Party will be entitled (at the Indemnifying Party's
expense) to participate in the defense of any Third Party Claim with its
own counsel.
(d) Any Direct Claim will be asserted by giving the Indemnifying
Party a Notice of Claim for Indemnity as promptly as reasonably possible
after discovery thereof. If the Indemnifying Party does not respond to
such notice within 60 days after its receipt, it will have no further right
to contest the validity of such claim.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, Tax
Benefit or pursuant to any claim, recovery, settlement against or with any
person or entity which is not an Affiliate of the Indemnitee (a "Third-Party
Recovery"), the amount of such reduction, in each case less any costs,
expenses, premiums or taxes incurred by the Indemnitee in connection
therewith, together with interest thereon from the date of payment thereof
at the prime rate of interest as announced from time to time by Citibank N.A.
plus 1%, will promptly be repaid by the Indemnitee to the Indemnifying Party.
(f) Upon making any Indemnity Payment the Indemnifying Party will,
to the extent of such Indemnity Payment, be subrogated to all rights of the
Indemnitee against any third person or entity that is not an Affiliate of
the Indemnitee in respect of the Indemnifiable Loss to which the Indemnity
Payment relates; provided, however, that (A) the Indemnifying Party shall
then be in compliance with its obligations under this Agreement in respect
of such Indemnifiable Loss and (B) until the Indemnitee recovers full
payment of its Indemnifiable Loss, any and all claims of the Indemnifying
Party against any such third person or entity on account of said Indemnity
Payment will be subrogated and subordinated in right of payment to the
Indemnitee's rights against such third person or entity. Without limiting
the generality or effect of any other provision hereof, each such Indemnitee
and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described subrogation
and subordination rights.
8.5. Set Off. In addition to any and all other remedies under
this Agreement, Buyer will be entitled to recover any Indemnification
Payment due from Seller or Parent hereunder to the extent, but only to
the extent, such Indemnification Payment is a sum certain which (a) is
past due and owing without dispute or (b) is past due and a judgment is
entered by a court having proper jurisdiction that such Indemnification
Payment hereunder is due and owing by Parent or Seller to Buyer (in either
case, an "Undisputed Payment") by retaining and setting off the amounts of
such Undisputed Payment against any amounts due or to become due from
Buyer to Seller or its Affiliates under the Telemundo News Material
License and Services Agreement, the Technical Services Agreement, the
Sublease and the Note, each as referred to in Section 4.4; provided that
if a judgment with respect to an Undisputed Payment pursuant to clause
(b) above is reversed or stayed, Buyer will immediately pay such amount
to Parent or Seller as the case may be.
8.6. Sole Remedy. Subject to Buyer's right to seek specific
performance of the provisions of this Agreement pursuant to Section 7.7(d)
and Section 9.7, the indemnification afforded by this Article VIII will be
the sole and exclusive remedy against Seller or Parent or any of their
Affiliates for any and all loss, liability, claim, demand, obligation
damage, deficiency, cost or expense (collectively, "Liabilities") of
Buyer or any other Indemnitee in respect of matters arising out of this
Agreement.
IX. MISCELLANEOUS
9.1. Amendments, Supplements, Etc. This Agreement may be amended
or supplemented at any time by additional written agreements signed by
Buyer, Parent and Seller as may mutually be determined by Buyer, Parent
and Seller to be necessary, desirable or expedient to further the purposes
of this Agreement, or to clarify the intention of the parties hereto or for
any other purpose.
9.2. Entire Agreement; No Third Party Beneficiaries. This
Agreement (together with the Schedules hereto) and the Nondisclosure
Agreement dated as of January 11, 1996 between Westinghouse Electric
Corporation and Parent (a) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties hereto with respect to the subject matter hereof and (b) except as
provided in Article VIII, is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder. Any right of a
Person other than the parties hereto to any rights or remedies under
Article VIII is expressly conditioned upon such Persons complying with
the provisions of Article VIII applicable to it as a Person seeking
indemnification thereunder and compliance with the last paragraph of
Section 9.5.
9.3. Severability. If any term or other provision of this
Agreement, or the application thereof to any Person, place or
circumstances, shall be held by a court of competent jurisdiction to be
invalid, unenforceable, or void, the remainder of this Agreement and such
provisions as applied to other Persons, places and circumstances shall
remain in full force and effect; provided, however, that in the event that
the terms and conditions of this Agreement are materially altered as a
result of this paragraph, the parties will use reasonable efforts to
renegotiate the terms and conditions of this Agreement to resolve any
inequities.
9.4. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law.
9.5. Consent to Jurisdiction; No Jury Trial. Each of Buyer, Seller
and Parent irrevocably submits to the non-exclusive jurisdiction of (a) the
Supreme Court of the State of New York, New York County and (b) the United
States District Court for the Southern District of New York for the
purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of Buyer, Seller
and Parent further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set
forth in Section 9.6 will be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of Buyer, Seller and Parent irrevocable and unconditionally
waives any objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transaction contemplated
hereby in (i) the Supreme Court of the State of New York, New York County
or (ii) the United States District Court for the Southern District of New
York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY RELATED
AGREEMENT OR THE SUBJECT MATTER HEREOF IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING OR WHETHER IN CONTRACT, IN TORT OR OTHERWISE.
9.6. Notices. Any notice, request or other communication required
or permitted hereunder will be in writing and will be deemed to have been
duly given (a) when received if personally delivered, (b) on the fifth day
after being sent by registered or certified mail, return receipt requested,
postage prepaid, (c) on the next business day after being sent by telecopy,
with confirmed answer back, or (d) on the next business day after being sent
by priority delivery by an established overnight courier, to the parties at
their respective addresses set forth below:
To Seller: Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, FL 33010
Telecopier: (305) 889-7980
Attention: Chief Financial Officer
With a copy to: Akin Gump, Strauss, Hauer & Feld, L.L.P.
(which by itself 399 Park Avenue
shall not constitute New York, NY 10022
notice) Telecopier: (212) 872-1002
Attention: Patrick J. Dooley, Esq.
To Buyer: CBS Inc.
51 West 52nd Street
New York, NY 10019-6188
Telecopier: (212) 975-7292
Attention: Ellen Oran Kaden, Esq.
General Counsel
With a copy to: Jones, Day, Reavis & Pogue
(which by itself 599 Lexington Avenue
shall not constitute New York, NY 10022
notice) Telecopier: (212) 755-7306
Attention: Robert A. Profusek, Esq.
Any party by written notice to the others given in accordance with this
Section 9.6 may change the address or the Persons to whom notices or copies
thereof will be directed.
9.7. Specific Performance. Each party hereto acknowledges and
agrees that the other party hereto could be irreparably damaged in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms. Accordingly, each party agrees that the other party
will be entitled to an injunction or injunctions to enforce specifically
this Agreement and the terms and conditions hereof in any action instituted
in any court of the United States, or any state thereof having personal and
subject matter jurisdiction, in addition to any other remedy to which such
party may be entitled at law or in equity.
9.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement
and will become effective when one or more such counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
9.9. Successors and Assigns. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns but no rights, obligations or liabilities
hereunder will be assignable by any party without the prior written consent
of the other parties.
9.10. Waivers. Either Buyer, Parent or Seller (acting on behalf
of itself and its appropriate Affiliates) by written notice to the other
may (a) extend the time for performance of any of the obligations or other
actions of the other under this Agreement, (b) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement,
(c) waive compliance with any of the conditions or covenants of the other
contained in this Agreement, or (d) waive or modify performance of any of
the obligations of the other under this Agreement; provided, however, that
neither Buyer, Parent nor Seller may, without the prior written consent of
the other, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its (or
any of its Affiliates') representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no
action taken pursuant to this Agreement will be deemed to constitute a
waiver of compliance with any representations, warranties or covenants
contained in this Agreement and will not operate or be construed as a
waiver of any subsequent breach, whether of a similar or dissimilar nature.
9.11 Titles and Headings. The titles and headings in this Agreement
are solely for convenience of reference and will not be given any effect in
the construction or interpretation of this Agreement.
9.12. Certain Interpretive Matters and Definitions. (a) When a
reference is made in this Agreement to an Article, Section or Schedule,
such reference shall be to an Article, Section or Schedule of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"included", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." All accounting
terms not defined in this Agreement shall have the meanings determined by
generally accepted accounting principles as in effect from time to time.
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The definitions
contained in this Agreement are applicable to the singular as well as
the plural forms of such terms and to the masculine as well as the feminine
and neuter genders of such term, and references to a Person are also to
its permitted successors and assigns. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from
time to time amended, modified or supplemented, including (in the case
of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references
to all attachments thereto and instruments incorporated therein. The
term "Affiliate" has the meaning given to that term in Rule 12b-2 of
Regulation 12B under the Securities Exchange Act of 1934, as amended.
All references to "business days" will be to any day other than a weekend
day or a day which is a Federal holiday in the United States, and all
references to "$" or dollar amounts will be to lawful currency of the
United States of America.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent
to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first written above.
TELENOTICIAS DEL MUNDO, L.P.
By: Telenoticias del Mundo, Inc.,
its General Partner
By: /s/ Peter J. Housman II
-----------------------
Name: Peter J. Housman II
Title: Chief Financial Officer & Treasurer
TELEMUNDO GROUP, INC.
By: /s/ Peter J. Housman II
-----------------------
Name: Peter J. Housman II
Title: Chief Financial Officer & Treasurer
CBS INC.
By: /s/ Claudia E. Morf
-------------------
Name: Claudia E. Morf
Title: Vice President and Treasurer
FOR IMMEDIATE RELEASE Contact: Donald J. Tringali
- --------------------- Telemundo Group, Inc.
(305) 889-7994
TELEMUNDO ANNOUNCES
-------------------
AGREEMENTS WITH CBS FOR TELENOTICIAS
------------------------------------
MIAMI, FLORIDA, JUNE 27, 1996 -- Telemundo Group, Inc., a
principal partner in TeleNoticias del Mundo, L.P., the
international Spanish-language news service, announced today
that it had entered into a series of agreements with the
other partners in TeleNoticias, as well as with
Westinghouse/CBS, which resulted in Westinghouse/CBS
acquiring from Telemundo all of the operating assets of
TeleNoticias.
Telemundo had acquired all of the interests in
TeleNoticias from its former partners, which included Reuters
Latam News, Inc., Artear Argentina Corporation, and Antena 3
International, Inc. The transaction resolves all outstanding
legal disputes among the former partners.
Telemundo and Westinghouse/CBS also entered into a
variety of agreements relating to news activities, including
an agreement under which CBS TeleNoticias will produce
Telemundo's nightly national and international newscasts, as
well as a number of news specials throughout the year.
"We are very pleased to be embarking on this new
relationship with one of the preeminent news organizations
in the world," stated Roland A. Hernandez, President and CEO
of Telemundo. "This new arrangement is positive not only for
our viewers, who will benefit from an association with CBS News,
but also for our shareholders, who will realize the financial
benefits from this improved structure."
Westinghouse/CBS will continue to operate TeleNoticias
from the TeleNoticias studio facility in Hialeah, Florida,
which it will sublease from Telemundo. Telemundo has also
been contracted to provide certain technical and other
services to CBS TeleNoticias.
Telemundo Group, Inc. (NASDAQ:TLMD), based in Miami, Florida,
is a Spanish-language television network that, through its
owned and operated stations and affiliates in 56 markets,
reaches 85% of all U.S. Hispanic households. Telemundo also
owns and operates a television station and related production
facilities in Puerto Rico.
