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Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made
as of March 24, 2006, among Raycom Media, Inc., a Delaware
corporation ("Parent"), the entities listed on Schedule I
attached hereto (collectively with Parent, "Sellers", and each a
"Seller"), and Barrington Broadcasting Corporation, a Delaware
corporation ("Buyer"). Capitalized terms used and not otherwise
defined herein shall have the meanings set forth on Schedule
II attached hereto.
Recitals
A.
Sellers own and operate the following television
broadcast stations: WNWO-TV, Toledo, Ohio ("WNWO"); WSTM-TV,
Syracuse, New York ("WSTM"); WACH (TV), Columbia, South Carolina
("WACH"); KGBT-TV, Harlingen, Texas ("KGBT"); KXRM-TV, Colorado
Springs, Colorado ("KXRM"); WPBN-TV, Traverse City, Michigan
("WPBN"); WTOM-TV, Cheboygan, Michigan ("WTOM"); WFXL (TV), Albany,
Georgia ("WFXL"); WLUC-TV, Marquette, Michigan ("WLUC"); KTVO (TV),
Kirksville, Missouri ("KTVO"); WSTQ-LP, Syracuse, New York
("WSTQ"); and KXTU-LP, Colorado Springs, Colorado ("KXTU") (each
such station, together with all associated television translator
stations, low-power television stations and broadcast auxiliary
facilities referred to individually as a "Station" or collectively
as the "Stations") pursuant to certain authorizations issued by the
Federal Communications Commission (the "FCC") and engage in
activities incidental and necessary thereto (the
"Business").
B.
Parent and/or its wholly-owned subsidiaries also own
and operate the following television broadcast stations: WTOL
(TV), Toledo, Ohio; WIS (TV), Columbia, South Carolina; and WALB
(TV), Albany, Georgia (each such station referred to individually
as an "Other Raycom Station" or collectively as the "Other Raycom
Stations") pursuant to certain authorizations issued by the
FCC.
C.
As part of the applications to the FCC to permit the
transfer of ownership of FCC licenses for the Other Raycom Stations
in connection with Parent’s acquisition of The Liberty
Corporation (the "Merger"), Parent has requested a temporary waiver
of the FCC’s local television ownership rule (47 C.F.R.
§ 73.3555(b)) (the "Local Television Ownership Rule") to
provide not more than six months from the effective time of the
Merger within which to come into compliance with such
rule.
D.
In connection with the submission and review of
Parent’s premerger notification report to the United States
Department of Justice (the "Justice Department") and the Federal
Trade Commission pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") in connection
with the Merger, Parent has entered into an agreement dated
November 9, 2005 (the "DoJ Agreement") with the Justice Department
regarding Parent’s plans to effect a divestiture of Stations
WNWO-TV, WACH (TV), and WFXL (TV), or the Other Raycom Stations, or
a combination thereof by which Parent shall become compliant with
the Local Television Ownership Rule.
E.
Pursuant to the terms and subject to the conditions
set forth in this Agreement, Sellers desire to sell to Buyer, and
Buyer desires to purchase from Sellers, the Station Assets (as
defined herein).
AGREEMENT
NOW, THEREFORE , taking the foregoing into account, and in
consideration of the mutual covenants and agreements set forth
herein, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
PURCHASE OF ASSETS
1.1
Station Assets . On the terms and
subject to the conditions hereof, at Closing (as defined herein),
except as set forth in Section 1.2 or Section
1.3 , Sellers shall sell, assign, transfer, convey and
deliver to Buyer, and Buyer shall purchase and acquire from
Sellers, all right, title and interest of Sellers in and to all
assets and properties of Sellers, real and personal, tangible and
intangible, that are used or useful in the operation of the
Business, free and clear of any Liens other than Permitted Liens
(the "Station Assets"), including without limitation, the
following:
(a)
all licenses, permits and other authorizations
issued to Sellers by the FCC with respect to the Stations for the
operation of the Stations or the Station Assets or related to the
Shared Contracts, all of which are listed on Schedule 1.1(a)
, including any renewals, extensions or modifications thereof and
additions thereto between the date hereof and the Closing (the "FCC
Licenses");
(b)
all of Sellers’ equipment, computer hardware,
transmitters, antennas, cables, towers, vehicles, furniture,
fixtures, spare parts and other tangible personal property of every
kind and description, including without limitation, those located
at any Station and those listed on Schedule 1.1(b) (the
"Tangible Personal Property");
(c)
all Owned Real Property and all of Sellers’
rights in respect of the Leased Real Property;
(d)
all network affiliation agreements, retransmission
consent agreements, programming agreements, news services
agreements, agreements for the sale of advertising time and all
other contracts, agreements, leases, arrangements or understandings
to which any of Sellers is a party, under which any Seller may have
any rights or by which any Seller, any of the Stations or any of
the Station Assets may be bound, and all bids, quotations and
proposals therefor, including (i) all such contracts, agreements,
leases, arrangements or understandings that in their entirety
relate to the operation or conduct of the Business, any of the
Stations or any of the Station Assets, (ii) that portion of any
other contracts, agreements, leases, arrangements or understandings
to the extent it relates to the Business, any of the Stations or
any of the Station Assets, including without limitation, those
listed on Schedule 1.3 and (iii) the WorldNowAffiliation
Agreement, dated as of December 19,
2005, between Gannaway Web Holdings (dba)
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WorldNow and Raycom Media Inc. and The Tube
Contract, dated as of June 10, 2005, between Tube Music
Network Inc. and Raycom Media Inc. (collectively, the "Station
Contracts"), other than the Station Contracts listed on Schedule
1.2(c) (the "Excluded Station Contracts");
(e)
all of the accounts receivable of the Business and
any other rights to payment of cash consideration (including
without limitation all rights to payments under the network
affiliation agreements and retransmission consent agreements of the
Business, whether or not offset) for goods or services sold or
provided by the Business prior to the Closing (as defined herein)
(the "Accounts Receivable");
(f)
all prepaid expenses and deposits with respect to
the Business held by third parties in Sellers’ name paid by
Sellers;
(g)
all of Sellers’ rights in and to the
Stations’ call letters and Sellers’ intellectual
property rights in and to, arising from or associated with the
following, whether protected, created or arising under the laws of
the United States or any other jurisdiction: (i) trademarks, trade
names, service marks (registered and unregistered), slogans, logos,
internet domain names and other Internet addresses or identifiers,
trade dress and similar rights and applications (including intent
to use applications) to register any of the foregoing
(collectively, "Marks"); (ii) copyrights (registered and
unregistered) and applications for registration (collectively,
"Copyrights"), (iii) programs and programming material, jingles and
other proprietary or intellectual property rights of any kind or
nature that do not comprise or are not protected by Marks or
Copyrights; and (iv) other intangible property owned (in whole or
in part) by, or exclusively licensed by, any of Sellers (the
"Intangible Property");
(h)
all Rights;
(i)
the Station Software, to the extent
assignable;
(j)
all Permits;
(k)
Sellers’ rights in and to all the files,
documents, records, and books of account (or copies thereof)
relating to the operation of the Business, any of the Stations or
any of the Station Assets, including without limitation, the
Stations’ local public files, programming information and
studies, engineering data, advertising studies, marketing and
demographic data, sales correspondence, lists of advertisers,
credit and sales reports, and logs, but excluding records
exclusively relating to Excluded Assets (as defined
herein);
(l)
all assets of Sellers to the extent Sellers receive
a credit therefor under Section 1.7 ; and
(m)
all other assets acquired prior to the Closing that
would be recorded or reflected on a balance sheet of the Business
as of the Closing Date prepared in accordance with GAAP.
Notwithstanding the foregoing, the assets and properties, real
and personal, tangible and intangible, owned directly by Parent,
RTVB and RHLLC that constitute Station Assets will be only those
used in the operation of the Business.
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1.2
Excluded Assets . Notwithstanding
anything to the contrary contained herein, the Station Assets shall
not include the following assets or any rights, title and interest
therein (the "Excluded Assets"):
(a)
all cash and cash equivalents of Sellers, including
without limitation, certificates of deposit, commercial paper,
treasury bills, marketable securities, money market accounts and
all such similar accounts or investments;
(b)
all tangible and intangible property of Sellers
retired or disposed of between the date of this Agreement and the
Closing in accordance with Article 4 ;
(c)
all Station Contracts set forth on Schedule
1.2(c) , which includes all Station Contracts that Sellers
intend to terminate or that expire by their terms on or before
August 31, 2006, in each case in accordance with Article
4 , as indicated on Schedule 1.2(c) ;
(d)
Sellers’ corporate and trade names unrelated
to the operation of the Stations, including without limitation, the
names "Raycom" and "Liberty", charter documents, and books and
records relating to the organization, existence or ownership of
Sellers, duplicate copies of the records of the Stations and all
records not relating to the operation of the Stations;
(e)
rights, claims or causes of action of Sellers
against third parties to the extent arising in connection with the
discharge by Sellers of the Retained Obligations or relating to the
Excluded Assets;
(f)
all rights arising under any contract other than any
Station Contract;
(g)
all personnel records and other records that Sellers
is required by law to retain in its possession and all records
relating to Retained Obligations or Excluded Assets.
(h)
all claims for refund of Taxes (as defined herein)
and other governmental charges of whatever nature arising from
periods prior to the Closing;
(i)
all intercompany receivables owed by any Seller to
Parent or any direct or indirect subsidiary of Parent;
(j)
all contracts of insurance, all coverages and
proceeds thereunder and all rights in connection therewith,
including without limitation, rights arising from any refunds due
with respect to insurance premium payments to the extent related to
such insurance policies in connection with periods arising prior to
the Closing;
(k)
all pension, profit sharing plans and trusts and the
assets thereof and any other employee benefit plan or arrangement
and the assets thereof, if any, maintained by Sellers;
(l)
any off-the shelf computer software and programs
used in the operation of the Stations that are not
transferable;
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(m)
all rights and claims of Sellers, whether mature,
contingent or otherwise, against third parties with respect to the
Stations and the Station Assets, to the extent arising during or
attributable to any period prior to the Closing;
(n)
computers and other assets located at the
headquarters of any Sellers, and the centralized server facility,
data links, payroll system and other operating systems and related
assets that are used in the operation of the Business and the
stations retained by Sellers;
(o)
the Software License Agreement, dated as of October
5, 1999 (the "ESG Contract"), between Raycom Media, Inc. and
Enterprises Systems Group, Inc. ("ESG"), except as provided in
Section 5.14 ; and
(p)
the slogans "Coverage You Can Count On," "Action
News" and "Storm Team".
1.3
Shared Contracts . All Station
Contracts used in the operation of the Business and other stations
or other business units of Sellers or their Affiliates (the "Shared
Contracts"), and the other stations and other business units of
Sellers or their Affiliates to which each such Shared Contract
applies, are identified on Schedule 1.3 . The obligations
under each Shared Contract shall be equitably allocated among the
Business and such other stations or business units upon terms to be
reasonably agreed upon by Buyer and Sellers as follows: (i)
first, if an allocation is specified in such Shared Contract, as so
specified, and (ii) if an allocation is not so specified, based on
the allocation thereof in effect as of the date hereof, which
allocation is set forth on Schedule 1.3 .
1.4
Assumption of Obligations . On the
Closing Date (as defined herein), Buyer shall assume the following
obligations of Sellers (the "Assumed Obligations"):
(a)
all liabilities arising during, or attributable to,
any period of time on or after the Closing Date under the Station
Contracts (other than the Excluded Station Contracts), the FCC
Licenses and the Permits;
(b)
obligations under any tolling agreement, or joinder
thereto, entered into by any Seller (but only to the extent that
Buyer shall have consented thereto, which consent shall not be
unreasonably withheld, delayed or conditioned) or by Buyer, in each
case pursuant to Section 1.11(b) ;
(c)
all liabilities of Sellers to the extent Buyer
receives a credit therefor under Section 1.7 ;
and
(d)
the liabilities under the Shared Contracts allocated
to Buyer pursuant to Section 1.3 .
1.5
Retained Obligations .
Notwithstanding the provisions of Section 1.4 or any
other provision of this Agreement, any Schedule or Exhibit hereto
or any Ancillary Agreement to the contrary, and regardless of any
disclosure to Buyer, except for the Assumed Obligations,
Buyer shall not assume or be obligated to pay, perform or otherwise
discharge (and Sellers shall retain, pay, perform or otherwise
discharge without recourse to Buyer) any liabilities or obligations
of Sellers of any kind, character or description whatsoever,
whether direct or indirect,
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known or unknown, absolute or contingent, matured or unmatured,
and currently existing or hereinafter arising (the "Retained
Obligations"), including without limitation, the following:
(a)
except as otherwise set forth in Section
1.7(a) , (i) any Seller’s liability for Taxes through
the Closing, (ii) any Seller’s liability for Taxes arising in
connection with the consummation of the transaction contemplated
hereby (including any income Taxes arising because Sellers are
transferring the Station Assets), and (iii) any Seller’s
liability for unpaid Taxes of any person under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or
otherwise;
(b)
any liability pursuant to any Environmental Law
arising from or related to any action, event, circumstance or
condition occurring or existing on or prior the Closing
Date;
(c)
all liabilities relating to Employee Plans (as
defined herein) and employment (or termination of employment) of
any employee, director, consultant, or other person providing
services for any of Sellers or their subsidiaries or
Affiliates;
(d)
any indebtedness for borrowed money or guarantees
thereof outstanding as of the Closing Date and any accrued and
unpaid interest with respect thereto;
(e)
any liability arising from or related to any breach
of , failure to perform under, torts related to the performance of,
violations of Law, infringements or indemnities under, guaranties
pursuant to and overcharges or underpayments under, any Station
Contract, any FCC License or any Permit, in each case prior to the
Closing Date, or the failure to obtain any consents required with
respect thereto;
(f)
any liability arising from or related to any
compliance or noncompliance prior to the Closing Date with any Law
applicable to any of Sellers, the Business or the Station
Assets;
(g)
any liability arising from or related to any action
against any of Sellers, the Business or the Station Assets pending
as of the Closing Date or based upon any action, event,
circumstance or condition arising prior to the Closing
Date;
(h)
any liability under the Fair Labor Standards Act
arising out of the classification of any employees of the Business
as "exempt employees" on or prior to the Closing Date;
(i)
any liability incurred by any Seller or any Person
other than Buyer arising out of or relating to the negotiation and
preparation of this Agreement and the Ancillary Agreements
(including fees and expenses payable to all attorneys and
accountants, other professional fees and expenses and
bankers’, brokers’ or finders’ fees for persons
not engaged by Buyer;
(j)
all intercompany payables owed by any Seller to
Parent or any direct or indirect subsidiary of Parent;
and
(k)
the liabilities under the Shared Contracts allocated
to Sellers pursuant to Section 1.3 .
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1.6
Purchase Price . In consideration
for the sale of the Station Assets to Buyer, at Closing, Buyer
shall pay to Sellers, as designated by Parent, an amount equal to
Two Hundred Sixty Two Million Dollars ($262,000,000) (the "Purchase
Price"), subject to adjustment pursuant to
Section 1.7 . The Purchase Price will be payable by
wire transfer in immediately available funds; provided that
a portion of such payment equal to the PIK Amount, if any, shall be
made through the issuance of PIK Preferred Stock.
1.7
Post Closing Working Capital
Adjustment .
(a)
Within ninety (90) days after the Closing Date,
Sellers shall deliver to Buyer an unaudited statement of Closing
Date Net Working Capital, dated as of the Closing Date (the
"Closing Date Net Working Capital Statement"). The Closing Date Net
Working Capital Statement shall be prepared in accordance with GAAP
applied on a basis consistent with the preparation of the Unaudited
Balance Sheets; provided that no purchase accounting
adjustments in respect of the transactions contemplated by this
Agreement shall be made and; provided , further ,
that in the event of a conflict between GAAP and preparation
consistent with the Unaudited Balance Sheets, GAAP shall prevail.
For purposes of this Agreement, "Closing Date Net Working Capital"
shall mean the net book value of the Current Assets over the
Current Liabilities, as shown on the Closing Date Net Working
Capital Statement. Buyer shall cause its employees to assist
Sellers and their accountants in the preparation of the Closing
Date Net Working Capital Statement and shall provide Sellers and
their accountants reasonable access, during normal business hours
and upon reasonable prior notice, to the personnel, properties,
books and records of Buyer for such purpose.
(b)
During the 20 Business Day period following
Buyer’s receipt of the Closing Date Net Working Capital
Statement, Sellers shall use their commercially reasonable efforts
to provide Buyer and its auditors with access to the working papers
of Sellers and their accountants relating to the Closing Date Net
Working Capital Statement, and Sellers shall cooperate with Buyer
and its auditors to provide them with any other information used in
preparing the Closing Date Net Working Capital Statement reasonably
requested by Buyer and its auditors. The Closing Date Net Working
Capital Statement shall become final and binding on the 20th
Business Day following delivery thereof, unless prior to the end of
such period, Buyer delivers to Sellers written notice of its
disagreement (a "Notice of Disagreement") specifying the nature and
amount of any disputed item. Buyer shall be deemed to have agreed
with all items and amounts in the Closing Date Net Working Capital
Statement not specifically referenced in the Notice of
Disagreement, and such items and amounts shall not be subject to
review in accordance with Section 1.7(c)
.
(c)
During the ten Business Day period following
delivery of a Notice of Disagreement by Buyer to Sellers, the
parties in good faith shall seek to resolve in writing any
differences that they may have with respect to the matters
specified therein. During such ten Business Day period, Buyer shall
use its commercially reasonable efforts to provide Sellers and
their accountants with access to the working papers of Buyer and
its accountants relating to such Notice of Disagreement, and Buyer
and its accountants shall cooperate with Sellers and their
accountants to provide them with any other information used in
preparation of such Notice of Disagreement reasonably requested by
Sellers or their accountants. Any disputed items resolved in
writing between Sellers and Buyer within such ten Business Day
period shall be final and
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binding with respect to such items, and if Sellers and Buyer
agree in writing on the resolution of each disputed item specified
by Buyer in the Notice of Disagreement and the amount of the
Closing Date Net Working Capital, the amount so determined shall be
final and binding on the parties for all purposes hereunder. If
Sellers and Buyer have not resolved all such differences by the end
of such ten Business Day period, Sellers and Buyer shall submit, in
writing, to an independent public accounting firm (the "Independent
Accounting Firm") their briefs detailing their views as to the
correct nature and amount of each item remaining in dispute and the
amount of the Closing Date Net Working Capital, and the Independent
Accounting Firm shall make a written determination as to each such
disputed item and the amount of the Closing Date Net Working
Capital, which determination shall be final and binding on the
parties for all purposes hereunder. The determination of the
Independent Accounting Firm shall be accompanied by a certificate
of the Independent Accounting Firm that it reached such
determination in accordance with the provisions of this
Section 1.7(c) . The Independent Accounting Firm
shall be Deloitte & Touche LLP or, if such firm is unable or
unwilling to act, such other independent public accounting firm as
shall be agreed in writing by Sellers and Buyer. Sellers and Buyer
shall use their commercially reasonable efforts to cause the
Independent Accounting Firm to render a written decision resolving
the matters submitted to it within twenty (20) business days
following the submission thereof. The Independent Accounting Firm
shall be authorized to resolve only those items remaining in
dispute between the parties in accordance with the provisions of
this Section 1.7 within the range of the
difference between Buyer’s position with respect thereto and
Sellers’ position with respect thereto. Sellers and Buyer
agree that judgment may be entered upon the written determination
of the Independent Accounting Firm in any court referred to in
Section 11.9 . The costs of any dispute
resolution pursuant to this Section 1.7(c) ,
including the fees and expenses of the Independent Accounting Firm
and of any enforcement of the determination thereof, shall be borne
equally by the parties. The fees and disbursements of the
accountants and other advisors of each party incurred in connection
with their preparation or review of the Closing Date Net Working
Capital Statement and preparation or review of any Notice of
Disagreement, as applicable, shall be borne by such party.
(d)
The Purchase Price shall be adjusted, upwards or
downwards, as follows:
(i)
if the Closing Date Net Working Capital as finally
determined pursuant to this Section 1.7 is greater
than $8,100,000 (the "Ceiling Reference Amount"), the Purchase
Price shall be adjusted upwards in an amount equal to the
difference between the Closing Date Net Working Capital and the
Ceiling Reference Amount, and Buyer shall pay such amount to
Sellers; and
(ii)
if the Closing Date Net Working Capital as finally
determined pursuant to this Section 1.7 is less than
$7,500,000 (the "Floor Reference Amount"), the Purchase Price shall
be adjusted downwards in an amount equal to the difference between
the Floor Reference Amount and the Closing Date Net Working Capital
and Sellers shall pay such amount to Buyer.
(e)
Amounts to be paid pursuant to Section
1.7(d) shall bear interest from the Closing Date to the
date of such payment at a rate equal to the rate of interest from
time to time announced publicly by Citibank, N.A. as its prime
rate, calculated on the basis of a year of 365 days and the number
of days elapsed. Payments in respect of Section
1.7(d) shall be made within three (3) business days of
final determination of the Closing Date Net Working
Capital
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pursuant to the provisions of this Section 1.7 by
wire transfer of United States dollars in immediately available
funds to such account or accounts as may be designated in writing
by the party entitled to such payment at least two (2) business
days prior to such payment date.
1.8
Allocation . Buyer and Sellers will
allocate the Purchase Price in accordance with the respective fair
market values of the Station Assets and the goodwill being
purchased and sold in accordance with the requirements of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code").
If parties are unable to agree on such allocation, such allocation
will be based upon an appraisal by a nationally recognized
broadcast appraiser acceptable to Buyer and Sellers (whose fees
shall be paid 50% by Sellers and 50% by Buyer). Buyer and Sellers
shall file their federal income tax returns and other tax returns
reflecting the allocation agreed upon by the parties or made by
such appraiser pursuant to this Section 1.8 . Buyer and
Sellers shall use their commercially reasonable efforts to agree
upon the allocation prior to the Closing Date.
1.9
Closing . The consummation of the
sale and purchase of the Station Assets provided for in this
Agreement (the "Closing") shall take place on the later of (a) July
1, 2006 and (b) the tenth Business Day after the date on which (i)
the FCC Consent shall have become a Final Order and (ii) the
station license renewal applications for all Stations shall have
become Final Orders, or on such other day as Buyer and Sellers may
mutually agree, subject to the satisfaction or waiver of the
conditions set forth in Articles 6 and 7
below. The date on which the Closing is to occur is referred to
herein as the "Closing Date."
1.10
Governmental Consents .
(a)
Within ten (10) business days of the date of this
Agreement, Buyer and Sellers shall file applications with the FCC
(the "FCC Applications") requesting FCC consent to the assignment
of the FCC Licenses to Buyer. FCC consent to the assignment of the
FCC Licenses for all Stations operating on channels that are
allotted in accordance with 47 C.F.R. § 73.606(b) or §
73.622(b), all Class A television Stations, all low-power
television Stations, and all television translator Stations to
Buyer is referred to herein as the "FCC Consent." Each
Station described in the foregoing sentence shall hereinafter be
referred to individually as a "Main Station," and such Stations
shall collectively be referred to as the "Main Stations." Buyer and
Sellers shall diligently prosecute the FCC Applications and
otherwise use their commercially reasonable efforts to obtain the
FCC Consent as soon as possible.
(b)
If applicable, within ten (10) business days after
the date of this Agreement, Buyer and Sellers shall make any
required filings with the Federal Trade Commission and the United
States Department of Justice pursuant to he HSR Act with respect to
the transactions contemplated hereby (including without limitation
a request for early termination of the waiting period thereunder),
and shall thereafter promptly respond to all requests received from
such agencies for additional information or documentation.
Expiration or termination of any applicable waiting period under
the HSR Act is referred to herein as "HSR Clearance."
(c)
Within five (5) business days of the date of this
Agreement and thereafter promptly upon Sellers’ request,
Buyer shall provide to Parent such information as Parent may
reasonably request to be provided to the Justice Department in
connection with the Justice Department’s review and approval,
as contemplated by the DoJ Agreement, of the proposed
sale
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of the Stations to Buyer, and Parent shall use its commercially
reasonable efforts to seek such approval of the Justice Department.
The approval of the Justice Department under the DoJ Agreement of
the proposed sale of the Stations as contemplated by this Agreement
is referred to herein as the "DoJ Approval."
(d)
Buyer and Sellers shall notify each other of all
documents filed with or received from any governmental agency with
respect to this Agreement or the transactions contemplated hereby.
Buyer and Sellers shall furnish each other with such information
and assistance as the other may reasonably request in connection
with their preparation of any governmental filing hereunder. The
FCC Consent, the DoJ Approval and HSR Clearance are referred to
herein collectively as the "Governmental Consents."
1.11
Renewa l .
(a)
The Main Station FCC Licenses expire as set forth on
Schedule 1.11 . If due prior to Closing and if not
previously filed, then Sellers shall timely file an FCC license
renewal application with respect to the Stations and thereafter
prosecute such applications with commercially reasonable diligence.
The parties acknowledge that under current FCC policy, either the
FCC will not grant an assignment application while a renewal
application is pending, or the FCC will grant an assignment
application with a renewal condition. If any of the FCC
Applications are granted subject to a renewal condition, then the
term "FCC Consent" shall mean FCC grant of the FCC Applications and
satisfaction in full of all such renewal conditions. Each renewal
shall be granted and all renewal conditions shall be satisfied as a
condition to Closing.
(b)
In the event that the FCC, as a condition to
granting any FCC Consent for any Station, requires Buyer to enter
into a tolling agreement with respect to a pending renewal
application, or in the event that it becomes necessary or advisable
for Buyer to enter into such a tolling agreement in order to
procure the FCC’s Consent to the assignment to Buyer of the
FCC License for any Station in a timely manner,then,
notwithstanding Section 1.4(b), the Sellers, jointly and severally,
hereby agree to indemnify Buyer for all Damages arising in
connection with such tolling agreement and the renewal application.
Such indemnity shall not be subject to any limitations on
indemnification set forth in Article 9 hereof. In
consideration of the foregoing, Buyer agrees to enter into any such
tolling agreement as required by the FCC in connection with any of
the Stations; provided , however , that Buyer shall
have been afforded the opportunity to negotiate the terms of any
such tolling agreement with the FCC.
ARTICLE 2
SELLERS REPRESENTATIONS AND WARRANTIES
Each Seller, jointly and severally, makes the following
representations and warranties to Buyer:
2.1
Organization . Each Seller is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, and, collectively, Sellers
are qualified to do business in each jurisdiction in which the
Station Assets are located. Each Seller has the requisite power and
authority to execute, deliver and perform this Agreement and all
of
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the Ancillary Agreements to be executed and
delivered by such Seller pursuant hereto (collectively, the "Seller
Ancillary Agreements") and to consummate the transactions
contemplated hereby and thereby.
2.2
Authorization . The execution,
delivery and performance of this Agreement and the Seller Ancillary
Agreements by each Seller have been duly authorized and approved by
all necessary corporate and stockholder action of such Seller and
do not require any further authorization or consent of such Seller.
This Agreement is, and each Seller Ancillary Agreement when made by
each Seller party thereto and the other parties thereto will be, a
legal, valid and binding agreement of such Seller enforceable in
accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium,
insolvency, reorganization or other similar laws affecting or
limiting the enforcement of creditors’ rights generally and
except as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
2.3
No Conflicts . Except as set forth
on Schedule 2.3 and except for the Governmental Consents,
the execution, delivery and performance by each Seller of this
Agreement and the Seller Ancillary Agreements and the consummation
by such Seller of any of the transactions contemplated hereby and
thereby do not (i) conflict with any organizational documents of
such Seller or any law, judgment, order, or decree to which such
Seller is subject, (ii) conflict with, result in any breach of,
constitute a default (or an event that, with notice or lapse of
time or both, would become a default) under, require any consent of
any Person pursuant to, or give to others any rights of
termination, acceleration or cancellation of, any Station Contract
by which such Seller is bound, (iii) give rise to any increased,
guaranteed, accelerated or additional rights or entitlements of any
Person or otherwise adversely affect any rights of Sellers or the
Business, or result in the creation of any Lien on any of the
Station Assets, or (iv) require the consent or approval of, or a
filing by such Seller with, any governmental or regulatory
authority, or require the consent of any lender or other third
party pursuant to any contract.
2.4
FCC Licenses . Except as set forth
on Schedule 1.1(a) :
(a)
Sellers are the holders of the FCC Licenses
described on Schedule 1.1(a) . Sellers have delivered true
and complete copies of the FCC Licenses to Buyer. The FCC Licenses
are in full force and effect and have not been revoked, suspended,
canceled, rescinded or terminated and have not expired. Each FCC
License has been renewed for a full license term without exceptions
or conditions.
(b)
To Sellers’ knowledge, there is not pending
any action by or before the FCC to revoke, suspend, cancel, rescind
or materially adversely modify any of the FCC Licenses (other than
proceedings and FCC rules of general applicability). There is not
issued or outstanding, by or before the FCC, any order to show
cause, notice of violation, notice of apparent liability, or order
of forfeiture against the Stations or against any Seller with
respect to the Stations that could result in any such action. To
Sellers’ knowledge,the Stations are operating in compliance
in all material respects with the FCC Licenses, the Communications
Act of 1934, as amended (the "Communications Act"), and the rules,
regulations and policies of the FCC.
11
2.5
Taxes . Except as set forth on
Schedule 2.5 , each Seller hereby represents and warrants to
Buyer that:
(a)
all Tax Returns (as defined herein) required to be
filed or furnished to any person on or before the Closing Date
(taking into account applicable extensions) by, on behalf of or
with respect to each Seller or any of the Station Assets or the
Business, (i) have been (or will be) duly and timely filed or
furnished, and (ii) the information reflected on those Tax Returns
was (or, when filed or furnished, will be) accurate and
complete;
(b)
each Seller (i) has (or will have) timely paid all
Taxes (as defined herein) that it is required to pay, whether or
not shown on any Tax Return, or has (or will have) provided for
such Taxes in a reserve which is adequate for the payment of such
Taxes and is identified in the Unaudited Financial Statements (as
defined herein);
(c)
each Seller has paid all employer contributions and
premiums, and filed all Tax Returns and paid all Taxes with respect
to all employee income Tax withholding, and social security
and unemployment Taxes and premiums, all in compliance with the
withholding provisions of the Code and other applicable
laws;
(d)
there are no outstanding assessments, claims or
deficiencies for any Taxes of each Seller that have been proposed,
asserted or assessed in writing;
(e)
no Tax audit or examination is currently being
conducted or proposed in writing by any taxing authority with
respect to each Seller;
(f)
there are no outstanding written claims by a taxing
authority that any Seller may be subject to taxation or required to
file a Tax Return in a jurisdiction where it does not file Tax
Returns, and each Seller is not aware of any jurisdiction that
could properly make such a claim;
(g)
there are no Tax allocation or sharing agreements to
which any Seller is a party;
(h)
there are no Liens (other than Permitted Liens) or
encumbrances for Taxes on any of the assets of each
Seller;
(i)
each Seller has withheld and paid all Taxes which it
is required to withhold from amounts owing to employees, members,
creditors or other third parties and has complied with all
requirements (including record retention) applicable to information
reporting or other reporting requirements;
(j)
no Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the sale of the Station
Assets;
(k)
each Seller has made available to Buyer true and
complete copies of all Tax Returns;
(l)
each Seller is not currently the beneficiary of any
extension of time within which to file any Tax Returns, or the
assessment or collection of any Tax, and has not waived
any
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statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency;
(m)
each Seller has not (i) participated in, or taken
any deduction or received any Tax benefit arising from
participation in, a tax shelter as defined for purposes of Section
6111(c) of the Code, or (ii) participated in a reportable
transaction as defined in Treasury Regulations Section 1.6011-4(b)
and (c)(3) or Section 1.6011-4T(a) and (b); and
(n)
each Seller has paid all employer contributions and
premiums, and filed all Tax Returns and paid all Taxes with respect
to any employee income Tax withholding, and social security and
unemployment Taxes and premiums, all in compliance with the
withholding provisions of the Code and other applicable
laws.
For purposes of this Agreement, "Tax" or "Taxes" means any
federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, whether computed on
a separate or consolidated, unitary or combined basis or in any
other manner, including any interest, penalty, or addition thereto,
whether disputed or not and including any obligation to indemnify
or otherwise assume or succeed to the Tax liability of any other
person; and "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
2.6
Personal Property . Schedule
1.1(b) contains a true and complete list of material items of
Tangible Personal Property included in the Station Assets. Except
as set forth on Schedule 1.1(b) , Sellers have title to the
Tangible Personal Property free and clear of all Liens other than
Permitted Liens (defined herein). As used herein, "Permitted Liens"
means, collectively, the Assumed Obligations, the shared use
arrangements described in Section 1.3 , liens for taxes
not yet due and payable, and liens set forth on Schedule 2.6
that will be released at or prior to Closing. Each item of the
Tangible Personal Property is in all material respects in good
operating condition and repair, ordinary wear and tear excepted,
and is adequate for the uses to which it is being put. All leased
Tangible Personal Property is in all material respects in the
condition required of such property by the terms of the lease
applicable thereto.
2.7
Real Property . Schedule 2.7
sets forth a complete and correct list of all Real Property
included in the Station Assets, subject to Section 1.3 .
Except as disclosed on Schedule 2.6 or Schedule 2.8
:
(a)
Sellers have good, valid, marketable and insurable
fee simple absolute interest in the Real Property. Schedule
2.7(a) lists all policies of title insurance currently existing
in favor of any Seller with respect to the Real Property, a copy of
which policies have previously been provided to Buyer. The Owned
Real Property and the Leased Real Property together constitute all
real property used or useable in the operation of the Station
Assets.
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(b)
There are no Liens, restrictions or encumbrances to
title to any portion of the Real Property. None of Sellers has
subjected the Real Property or the improvements thereon to any
unrecorded contracts, deeds, options, leases, easements, rights,
obligations, covenants, conditions, restrictions, limitations or
agreements not of record, except as set forth in the title policies
listed on Schedule 2.7(a) or in the surveys listed on
Schedule 2.7(b) .
(c)
There is no pending condemnation or similar
proceeding affecting the Real Property or any portion thereof and,
to Sellers’ Knowledge, no such action is presently
contemplated or threatened against the Real Property.
(d)
None of Sellers has received any notice from any
insurance company of any defects or inadequacies in the Real
Property or any part thereof which could adversely affect the
insurability of the Real Property or the premiums for the insurance
thereof. None of Sellers has received any notice from any insurance
company which has issued or refused to issue a policy with respect
to any portion of the Real Property or by any board of fire
underwriters (or other body exercising similar functions)
requesting the performance of any repairs, alterations or other
work with which full compliance has not been made.
(e)
Except as set forth on Schedule 2.8 , there
are no parties in possession of any portion of the Owned Real
Property other than Sellers. There are no options or rights in any
party to purchase or acquire any ownership interest in the Owned
Real Property or the Real Property Leases, including without
limitation pursuant to any executory contracts of sale, rights of
first refusal or options.
(f)
To Sellers’ Knowledge, no zoning, subdivision,
building, health, land-use, fire or other federal, state or
municipal law, ordinance, regulation or restriction is violated by
the continued maintenance, operation, use or occupancy of the Real
Property or any tract or portion thereof or interest therein in its
present manner, except for such violations which would not have a
Material Adverse Effect. To Sellers’ Knowledge, the current
use of the Real Property and all parts thereof as aforesaid does
not violate any restrictive covenants affecting the Real Property.
Except as set forth in the title policies listed on Schedule
2.7(a) , no current use by any Seller of the Real Property or
any improvement located thereon or, to Sellers’ Knowledge,
any current use of the Real Property Leases is dependent on a
nonconforming use or other approval from a governmental authority,
the absence of which would significantly limit the use of any of
the properties or assets in the operation of the Station
Assets.
(g)
The Owned Real Property has adequate access to and
from completed, dedicated and accepted public roads, and there is
no pending, or to Sellers’ Knowledge, threatened,
governmental proceeding which could impair or curtail such access.
No improvement or portion thereof is dependent for its access,
operation, or utility on any land, building, or other improvement
not included in the Owned Real Property.
(h)
There are presently in existence water, sewer, gas
and/or electrical lines or private systems on the Owned Real
Property which have been completed, installed and paid for and
which are sufficient to service adequately the current operations
of each building, facility or tower located on the Real Property,
as the case may be.
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(i)
To Sellers’ Knowledge, there are no
structural, electrical, mechanical, plumbing, air conditioning,
heating or other defects in the buildings located on the Owned Real
Property; the roofs of the buildings located on the Owned Real
Property are free from structural defects, leaks and are in good
condition, and adequate to operate such facilities as currently
used. To Sellers’ Knowledge, all towers, antennae, fixtures
and improvements on the Owned Real Property are suitable for the
current operation of the Station Assets.
(j)
To Sellers’ Knowledge, there are no
assessments, general or special, which have been or are in the
process of being levied against the Real Property, and none of
Sellers has Knowledge of any contemplated assessments.
(k)
All Environmental Permits and other Permits which
are necessary to permit the lawful access, use and operation of the
buildings and improvements located on the Real Property for their
present and intended use have been obtained, are in full force and
effect, and to Sellers’ Knowledge, there is no pending threat
of modification or cancellation of any such Environmental Permits
and other Permits. None of Sellers has received or been informed by
a third party of the receipt by it of any written notice from any
governmental authority having jurisdiction over the Real Property
threatening a suspension, revocation, modification or cancellation
of any Environmental Permit or other Permit.
2.8
Leases . Schedule 2.8 sets
forth a complete and correct list of all Leased Real Property.
Except as set forth on Schedule 2.8 :
(a)
All of the Real Property Leases (i) constitute
legal, valid and binding obligations of Sellers and to
Sellers’ Knowledge, the other parties thereto, (ii) are in
full force and effect. and (iii) none of Sellers nor, to
Sellers’ Knowledge, any other party thereto has violated any
provisions of, or committed or failed to perform any act which,
with notice, lapse of time or both, would constitute a default
under the provisions of any of, the Real Property Leases that would
allow the other party to bring a claim for damages, except as would
not individually or in the aggregate have, or could reasonably be
expected to have, a Material Adverse Effect, or to terminate such
Real Property Lease;
(b)
The Real Property Leases constitute all of the
agreements between Sellers and third parties relating to the Leased
Real Property. Schedule 2.8 lists all of the Real Property
Leases. None of the Real Property Leases has been cancelled,
modified, assigned, extended or amended;
(c)
Sellers have furnished true and complete copies of
all the written Real Property Leases to Buyer, including any and
all amendments thereto. Schedule 2.8(c) contains a true and
complete list of each oral Real Property Lease and a description of
the material terms thereof;
(d)
There are no leasing commissions or similar payments
due, arising out of, resulting from or with respect to any Real
Property Lease which are owned by any Seller; nor does any other
party thereto have a claim, lien, charge or credit against any of
Sellers or offsets against rent due under any Real Property
Lease;
(e)
Except as set forth on Schedule 2.8 ,
Sellers’ right, title and interest in and to each of the Real
Property Leases is fully assignable to Buyer without the consent,
approval or waiver
15
of any other Person and the assignment of such Real Property
Leases will not give any party thereto the right to terminate such
Real Property Lease or accelerate payments under such Real Property
Lease.
2.9
Contracts . Except as set forth on
Schedule 2.9 , each of the Station Contracts (including
without limitation each of the Real Property Leases) is in effect
and is binding upon Sellers and, to Sellers’ knowledge, the
other parties thereto (subject to bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the
enforcement of creditors’ rights generally). Sellers have
performed their obligations under each of the Station Contracts in
all material respects, and are not in material default thereunder,
and to Sellers’ knowledge, no other party to any of the
Station Contracts is in default thereunder in any material respect.
Except as set forth on Schedule 2.9 , upon consummation of
the transactions contemplated by this Agreement, each Station
Contract shall continue in full force and effect without penalty or
other adverse consequence. Schedule 2.9 contains a true
and complete list of the following Station Contracts (such Station
Contracts as described in this Section 2.9 being
"Material Contracts"):
(a)
each network affiliation agreement, retransmission
consent agreement, tower lease, studio lease, antenna lease,
transmitter site lease and news services agreement; and
(b)
each other Station Contract that provides for
payment or receipt by Sellers in connection with the Business of
more than $50,000 (either in cash or through barter) per
year.
There are no Station Contracts that (i) create indebtedness for
borrowed money, including mortgages, other grants of security
interests, guarantees and notes; (ii) limit or purport to limit the
ability of Sellers to compete in any line of business or with any
Person or in any geographic area or during any period of time; or
(iii) create any joint ventures, partnerships or similar
arrangements.
2.10
Environmental . Except as set forth
on Schedule 2.10:
(a)
Sellers have complied and are in compliance with all
Environmental Laws, and Sellers have not received notice of any
pending or threatened action, suit or proceeding against Sellers
involving the presence of Hazardous Materials or violations of
Environmental Law in connection with the Real Property.
(b)
Sellers have not received any notice from any
governmental body indicating that the Real Property or any property
adjacent to the Real Property has been or may be placed on any
federal, state or local list as a result of the presence of
Hazardous Materials or violations of Environmental Law.
(c)
No Hazardous Materials have been used, manufactured,
generated, sold, handled, treated, transported, stored or disposed
of by any of Sellers, and no Hazardous Materials have spilled,
discharged, released, emitted, or leaked from, at, on, or migrated
to or from the Real Property.
(d)
The Real Property is not subject to any
environmental lien.
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(e)
Sellers have provided Buyer with copies of all
reports, audits, studies or analyses in the possession or control
of Sellers relating to Hazardous Materials in connection with the
Real Property.
2.11
Intangible Property . Schedule
2.11(a) lists each registered or pending Mark and each
registered or pending Copyright, owned, used or held for use by
Sellers in the operation of the Business and lists each country in
which each Mark or Copyright is pending or registered. Schedule
2.11(b) lists the software, other than off-the-shelf software
and software embedded in products and machinery or other software
generally available from retail vendors, that Sellers use in, and
that is material to, the operation of the Business. Except as set
forth on Schedule 2.11(c) , to Sellers’ knowledge, (i)
the operation of the Business immediately prior to the Closing Date
does not infringe upon any intellectual property right of any other
person, and (ii) no person is infringing upon any intellectual
property right of Sellers with respect to the Business, except in
each case to the extent such infringements would not be reasonably
likely to have a material adverse effect.
(a)
No registered Mark identified on Schedule
2.11(a) has been or is now involved in any opposition or
cancellation proceeding and, to the knowledge of Sellers, no such
proceeding is or has been threatened with respect to any of such
Marks.
(b)
Sellers exclusively own, free and clear of any and
all Liens, all Intangible Property identified on Schedule
2.11(a) and all other Intangible Property, except for
Intangible Property, as set forth on Schedule 2.11(a) that
is licensed to any of Sellers by a third party licensor pursuant to
a written license agreement that remains in effect. Sellers have
not received any notice or claim challenging their ownership of any
of the Intangible Property owned (in whole or in part) by Sellers,
nor to the knowledge of Sellers is there a reasonable basis for any
claim that they do not so own any of such Intangible
Property.
(c)
Sellers have taken all reasonable steps in
accordance with standard industry practices to protect their rights
in the Intangible Property and at all times have maintained the
confidentiality of all information that constitutes or constituted
a Trade Secret included therein.
(d)
All registered Marks and registered Copyrights
identified on Schedule 2.11(a) ("Seller Registered IP") are
valid and subsisting and, to the knowledge of Sellers, enforceable,
and Sellers have not received any notice or claim challenging the
validity or enforceability of any Seller Registered IP or alleging
any misuse of such Seller Registered IP.
(e)
To the Knowledge of Sellers, the provision of any
services, by or on behalf of the Business or Sellers in connection
with the Business, and all of the other activities or operations of
the Business or Sellers in connection with the Business, have not
infringed upon, misappropriated, violated, diluted or constituted
the unauthorized use of, any Intangible Property of any third
party, and Sellers have not received any notice or claim asserting
or suggesting that any such infringement, misappropriation,
violation, dilution or unauthorized use is or may be occurring or
has or may have occurred, nor to the knowledge of Sellers, is there
a reasonable basis therefor. No Intangible Property of any Seller
is subject to any outstanding order, judgment, decree, stipulation
or agreement restricting the use or licensing thereof by the Seller
or
17
the Business. To the Knowledge of Sellers, no third party is
misappropriating, infringing, diluting or violating any Intangible
Property of Sellers in a material manner.
(f)
Sellers have not transferred ownership of, or
granted any exclusive license with respect to, any material
Intangible Property. Upon the consummation of the Closing,
Buyer shall succeed to all of Seller’s rights and interest in
or under all material Intangible Property of Sellers and all other
Intangible Property used or held for use by Sellers in connection
with the conduct of the Business that is necessary for the conduct
of the Business as currently and proposed to be conducted, and all
of Sellers’ rights under all Intangible Property owned by
Sellers and all such other Intangible Property shall be exercisable
by Buyer to the same extent as by Sellers prior to the Closing. No
loss or expiration of any of the material Intangible Property of
Sellers or any other material Intangible Property used or held for
use by any Seller in connection with the conduct of the Business is
threatened, pending or reasonably foreseeable.
(g)
The Station Software is all off-the-shelf software,
commercially available to Buyer on terms generally available to the
public. None of the Station Software has been customized or altered
in any way for use at any of the Stations, except for elections
with respect to various features and functionalities made during
and contemplated by the standard installation procedures for such
Station Software, and no third party, whether a current or former
employee, consultant or other agent of any Seller, has any rights
in the Station Software.
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2.12
Employees .
Schedule 2.12 sets forth a complete and accurate list
of the names of all current employees of the Business, specifying
their positions with respect to the Business, and their dates of
birth, current salaries, dates of hire, business locations and
identifying which such employees are currently absent or on leave
from active employment. Except as set forth on Schedule 2.12
, (i) each Seller complies in all material respects with all labor
and employment laws, rules and regulations applicable to the
Business, including without limitation those which relate to price,
wage and hour standards, discrimination in employment, equal
employment opportunities, disability rights or benefits, plant
closure issues, affirmative action, workers’ compensation,
employee leave issues, occupational health and safety requirements,
unemployment insurance, collective bargaining, the Immigration
Reform and Control Act, the Worker Adjustment Retraining and
Notification Act of 1988, as amended (the "WARN Act"), and the Fair
Labor Standards Act of 1938, as amended ("FLSA"), (ii) there is no
unfair labor practice charge or complaint against any Seller in
respect of the Business pending or to Sellers’ knowledge
threatened before the National Labor Relations Board, any state
labor relations board or any court or tribunal, and there is no
strike, dispute, request for representation, slowdown or stoppage
pending or, to Sellers’ knowledge, threatened in respect of
the Business, and (iii) none of Sellers is a party to, or subject
to, a collective bargaining agreement involving any of
Sellers’ employees and no collective bargaining agreement is
currently being negotiated, and (iv) none of Sellers is a party to,
or otherwise bound by, any consent decree, settlement agreement, or
conciliation agreement with any Governmental Authority relating to
their employees or employment practices applied to their employees.
Since January 1, 2006 with respect to all Stations other than KGBT,
and with respect to KGBT, since the closing date of the acquisition
by Sellers of KGBT, Sellers have not changed the primary place of
employment of any general manager of other senior employee of any
Station whose primary place of employment as of January 1, 2005 was
located at one or more of the Stations.
2.13
Employee Benefits .
(a)
Schedule 2.13 lists each "Employee Pension
Benefit Plan" ("Pension Plan") and each "Employee Welfare Benefit
Plan" ("Welfare Plan"), as such terms are defined in Sections 3(2)
and 3(1), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not they are subject
to ERISA, to which each Seller and each company, trade or business
which is treated with such Seller as a member of a controlled group
of corporations or trades or business under common control pursuant
to the Internal Revenue Code of 1986 (the "Code") Section 414(b),
(c), (m) or (o) (an "ERISA Affiliate") maintains, contributes to,
has liability under, or is obligated to contribute to, and all
other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance, "voluntary
employee benefit association" ("VEBA") within the meaning of
Section 501(c)(9) of the Code, perquisites, fringe benefits and
other similar benefit plans, programs, contracts, arrangements or
policies (including a specific identification of those which
contain change of control provisions or pending change of control
provisions), and any employment executive compensation or severance
agreements (including a specific identification of those which
contain change of control provisions or pending change of control
provisions), written or otherwise, as amended, modified or
supplemented, for the benefit of, or relating to, any foreign or
domestic former or current employee, officer, director, independent
contractor or consultant (or any of their beneficiaries), as well
as each plan with respect to which any of Sellers could incur
liability (collectively, the "Employee Plans").
19
(b)
Except as set forth in Schedule 2.13(b), (i)
none of Sellers nor any of its ERISA Affiliates has any direct,
indirect, or contingent liability under Title IV of ERISA (other
than liability for premium payments to the Pension Benefit Guaranty
Corporation) including, without limitation, any material liability
arising out of or resulting from an event described in Section
4041, 4062, 4063 or 4069 of ERISA, (ii) no assets of any of
Sellers, its ERISA Affiliates, or any Employee Plan are subject to
liens, or reasonably expected to be subject o liens, imposed under
Applicable Law including Title IV of ERISA and Section 412 of the
Code, and (ii) none of the transactions or changes relating to
employees and service providers of any of Sellers that are
contemplated by this Agreement will result in any direct, indirect,
or contingent liability of Buyer and its ERISA Affiliates with
respect to the Employee Plans, or the liabilities of any Seller and
its ERISA Affiliates to the employees or other service providers of
such Seller and its ERISA Affiliates.
(c)
None of the Employee Plans is, or within the past
six years has been, a "multiemployer plan" as such term is defined
in Section 3(37) of ERISA, "multiple employer welfare association"
("MEWA") within the meaning of Section 3(40) of ERISA, any plan of
the type described in Sections 4063 and 4064 of ERISA or in Section
413 of the Code (and regulations promulgated
thereunder).
(d)
All Employee Plans have been established and
maintained substantially in accordance with their terms and have
been operated in compliance in all material respects with all
applicable Legal Requirements, and may by their terms be amended
and/or terminated at any time both without increased liability to
any Seller, and without the consent of any other Person, and each
Seller has performed all material obligations required to be
performed by it, and is not in any material respect in default
under or in violation of, any Employee Plan, and such Seller has no
knowledge of any default or violation by any other Person with
respect to, any of the Employee Plans.
(e)
With respect to each Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the 30-day notice requirement has been waived
under the regulations to Section 4043 of ERISA) has occurred for
which there is any material outstanding liability to any Seller nor
would the consummation of the transactions contemplated hereby
(including the execution of this Agreement) constitute a reportable
event for which the 30-day notice requirement has not been
waived.
2.14
Insurance . Sellers maintains
insurance policies or other arrangements with respect to the
Stations and the Station Assets consistent with industry standards,
and will maintain such policies or arrangements until the
Closing.
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2.15
Compliance with Law . Except as set
forth on Schedule 2.15 , (i)Sellers comply in all material
respects with all laws, rules and regulations, and all decrees and
orders of any court or governmental authority which are applicable
to the operation of the Business, (ii) there are no
governmental claims or investigations pending or threatened against
Sellers, in each case in respect of the Business, except those
affecting the industry generally, and (iii) Sellers have all
Permits required to operate the Business and the Station
Assets.
2.16
Litigation . Except as set forth on
Schedule 2.16 , there is no action, suit or proceeding
pending or, to Sellers’ knowledge, threatened against Sellers
in respect of the Business that will subject Buyer to liability or
which will affect Sellers’ ability to perform its obligations
under this Agreement.
2.17
Financial Statements .
(a)
Sellers have provided to Buyer copies of (i) the
unaudited balance sheets of each Station as at December 31, 2003,
2004 and 2005, and the related unaudited statements of results of
operations of each Station for the years ended December 31, 2003,
2004 and 2005 (collectively referred to as the "Unaudited Annual
Financial Statements") and (ii) the unaudited balance sheets of
each Station as at January 31, 2006 and the related unaudited
statements of results of operations of each Station for the month
ended January 31, 2006 (collectively referred to as the "Unaudited
Interim Financial Statements" and, together with the Unaudited
Annual Financial Statements, the "Unaudited Financial Statements").
The Unaudited Financial Statements have been prepared in accordance
with GAAP consistently applied and in the aggregate present fairly
in all material respects the financial position and results of
operations of each Station as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise
noted therein and subject, in the case of the Unaudited Interim
Financial Statements, to normal and recurring year-end adjustments
that will not, individually or in the aggregate, be
material.
(b)
The Audited Financial Statements (as defined
herein), when delivered pursuant to Section 4.8 , will be
prepared in accordance with GAAP consistently applied and in the
aggregate present fairly in all material respects the consolidated
financial position, results of operations and cash flows of the
Business as at the respective dates thereof.
2.18
Undisclosed Liabilities . Except as
and to the extent adequately accrued or reserved against in the
unaudited balance sheets of the Stations as at December 31, 2005
delivered pursuant to Section 2.17(a) (such balance sheets, the
"Unaudited Balance Sheets"), Sellers do not have any liability or
obligation of any nature arising out of, relating to or affecting
the Business, whether accrued, absolute, contingent or otherwise,
whether known or unknown and whether or not required by GAAP to be
reflected in a consolidated balance sheet of the Business or
disclosed in the notes thereto, except for liabilities and
obligations incurred in the ordinary course of business consistent
with past practice since the date of the Unaudited Balance Sheets,
that are not, individually or in the aggregate, material to the
operation of the Business and the Station Assets.
2.19
Absence of Changes . Since the date
of the Unaudited Balance Sheets: (i) Sellers have operated the
Business, the Stations and the Station Assets only in the ordinary
course
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consistent with past practice; (ii) there has not been any
change, event or development, or prospective change, event or
development, that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect; (iii) none of
the Business, any of the Stations or any of the Stations Assets has
suffered any loss, damage, destruction or other casualty affecting
any material properties or assets thereof or included therein,
whether or not covered by insurance; and (iv) Sellers have not
taken any action that, if taken after the date of this Agreement,
would constitute a breach of any of the covenants set forth in
Section 4.1 .
2.20
Station Assets . Except for the ESG
Contract, the Station Assets include all assets that are owned or
leased by Sellers and used or held for use in the operation of the
Business in all material respects as currently operated. Except for
the ESG Contract, the Station Assets constitute all of the assets,
property and rights necessary and sufficient for the conduct and
operation of the Business as currently conducted or proposed to be
conducted.
2.21
Retransmission . Except as set
forth on Schedule 2.21 , Sellers have timely made
retransmission consent elections on behalf of each Stati
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