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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
STC BROADCASTING, INC.,
WJAC, INCORPORATED
AND
COX BROADCASTING, INC.
FOR
TELEVISION STATION WJAC(TV),
JOHNSTOWN, PENNSYLVANIA
* * *
JULY 6, 2000
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TABLE OF CONTENTS
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SECTION 1 DEFINITIONS .......................................................... 6
SECTION 2 PURCHASE AND SALE OF SHARES/L1 ....................................... 9
2.1 Agreement to Sell and Buy ............................................ 9
2.2 Assets and Liabilities at Closing .................................... 9
2.3 Purchase Price and Escrow ............................................ 11
2.4 Payment of Purchase Price ............................................ 12
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER ............................. 13
3.1 Organization, Standing, and Authority ................................ 13
3.2 Authorization and Binding Obligation ................................. 13
3.3 Capitalization of the Company; Stock Ownership ....................... 13
3.4 Absence of Conflicting Agreements .................................... 14
3.5 Governmental Licenses ................................................ 14
3.6 Title to and Condition of Real Property .............................. 14
3.7 Title to and Condition of Tangible Personal Property ................. 15
3.8 Contracts ............................................................ 15
3.9 Consents ............................................................. 16
3.10 Intangibles .......................................................... 16
3.11 Insurance ............................................................ 16
3.12 Reports .............................................................. 16
3.13 Employee Plans and Matters ........................................... 16
3.14 Tax Matters .......................................................... 19
3.15 Claims and Legal Actions ............................................. 20
3.16 Environmental Matters ................................................ 20
3.17 Compliance with Laws ................................................. 21
3.18 Conduct of Business in Ordinary Course ............................... 21
3.19 Financial Statements ................................................. 22
3.20 Transactions with Affiliates ......................................... 22
3.21 Broker ............................................................... 22
3.22 Labor Relations ...................................................... 23
3.23 Bank Accounts; Powers of Attorney .................................... 23
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER .............................. 23
4.1 Organization, Standing, and Authority ................................ 23
4.2 Authorization and Binding Obligation ................................. 23
4.3 Absence of Conflicting Agreements .................................... 23
4.4 Broker ............................................................... 24
4.5 Buyer's Qualifications ............................................... 24
4.6 Interpretation of Certain Provisions ................................. 24
4.7 No Outside Reliance .................................................. 24
4.8 Availability of Funds ................................................ 24
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING ........................... 24
5.1 Generally ............................................................ 24
5.2 Employees and Compensation ........................................... 24
5.3 Contracts ............................................................ 25
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5.4 Disposition of Assets ............................................... 25
5.5 Encumbrances ........................................................ 25
5.6 Licenses ............................................................ 25
5.7 Rights .............................................................. 26
5.8 No Inconsistent Action .............................................. 26
5.9 Access to Information ............................................... 26
5.10 Maintenance of Assets ............................................... 26
5.11 Insurance ........................................................... 26
5.12 Consents ............................................................ 26
5.13 Books and Records ................................................... 27
5.14 Notification ........................................................ 27
5.15 Financial Information ............................................... 27
5.16 Compliance with Laws ................................................ 27
5.17 Discharge of Indebtedness ........................................... 27
5.18 Programming ......................................................... 27
5.19 Capital Expenditures ................................................ 27
5.20 Mergers ............................................................. 27
5.21 Amendments .......................................................... 27
5.22 Collection of Accounts Receivable ................................... 28
5.23 Securities .......................................................... 28
5.24 Operation During Term of TBA ........................................ 28
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS .................................... 28
6.1 FCC Consent ......................................................... 28
6.2 Control of the Station .............................................. 28
6.3 Risk of Loss ........................................................ 29
6.4 Confidentiality ..................................................... 29
6.5 Environmental Remediation ........................................... 29
6.6 Cooperation ......................................................... 29
6.7 Bulk Sales Law ...................................................... 29
6.8 Sales Tax Filing .................................................... 29
6.9 Access to Books and Records ......................................... 30
6.10 HSR Act Filing ...................................................... 30
6.11 Nonsolicitation Agreement ........................................... 30
6.12 Title Insurance and Survey .......................................... 30
6.13 Employee Matters .................................................... 30
6.14 Tax Matters ......................................................... 33
6.15 No Inconsistent Action by Buyer ..................................... 39
6.16 Distribution of Cash ................................................ 39
6.17 Time Brokerage Agreement ............................................ 39
6.18 Insurance ........................................................... 39
6.19 Collection of Accounts Receivable ................................... 40
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING ............ 40
7.1 Conditions to Obligations of Buyer .................................. 40
7.2 Conditions to Obligations of Seller ................................. 41
SECTION 8 CLOSING AND CLOSING DELIVERIES ...................................... 42
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8.1 TBA Closing .......................................................... 42
8.2 Deliveries by Seller ................................................. 42
8.3 Deliveries by Buyer .................................................. 43
SECTION 9 TERMINATION .......................................................... 44
9.1 Termination by Seller ................................................ 44
9.2 Termination by Buyer ................................................. 44
9.3 Rights on Termination ................................................ 45
SECTION 10 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES................................... 45
10.1 Representations and Warranties ....................................... 45
10.2 Indemnification by Seller ............................................ 45
10.3 Indemnification by Buyer ............................................. 46
10.4 Procedure for Indemnification ........................................ 47
10.5 Specific Performance ................................................. 48
10.6 Attorneys' Fees ...................................................... 48
10.7 Limitations on Indemnification ....................................... 48
10.8 Assignment of Indemnification and Other Rights ....................... 49
SECTION 11 MISCELLANEOUS ........................................................ 49
11.1 Fees and Expenses .................................................... 49
11.2 Notices .............................................................. 49
11.3 Benefit and Binding Effect ........................................... 50
11.4 Further Assurances ................................................... 51
11.5 Governing Law ........................................................ 51
11.6 Headings ............................................................. 51
11.7 Gender and Number .................................................... 51
11.8 Entire Agreement ..................................................... 51
11.9 Waiver of Compliance; Consents ....................................... 51
11.10 Press Release ........................................................ 51
11.11 Counterparts ......................................................... 51
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EXHIBITS
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Exhibit A -- Time Brokerage Agreement
Exhibit B -- Indemnification Escrow Agreement
Exhibit C -- Opinion of Seller's Counsel
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LIST OF SCHEDULES
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Schedule 3.3 -- Capitalization of the Company
Schedule 3.4 -- Consents
Schedule 3.5 -- Licenses
Schedule 3.6 -- Real Property
Schedule 3.7 -- Tangible Personal Property
Schedule 3.8 -- Contracts
Schedule 3.10 -- Intangibles
Schedule 3.11 -- Insurance
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Schedule 3.13 -- Employee Plans and Matters
Schedule 3.14 -- Taxes
Schedule 3.15 -- Claims and Legal Actions
Schedule 3.16 -- Environmental Matters
Schedule 3.18(b) -- Conduct of Business in Ordinary Course
Schedule 3.19 -- Financial Statements
Schedule 3.20 -- Transactions with Affiliates
Schedule 3.22 -- Labor Relations
Schedule 3.23 -- Bank Accounts; Powers of Attorney
Schedule 6.5 -- Environmental Remediation
Schedule 7.1(c) -- Seller's Consents
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is dated as
of the 6th day of July, 2000, by and among STC Broadcasting, Inc., a Delaware
corporation (the "Seller"), WJAC, Incorporated, a Pennsylvania corporation (the
"Company"), and Cox Broadcasting, Inc., a Delaware corporation (the "Buyer").
RECITALS
A STC License Company ("STC License") is the licensee
of television station WJAC(TV), Johnstown, Pennsylvania (the "Station"),
pursuant to licenses issued by the Federal Communications Commission ("FCC") and
the Company owns all of the other assets used or held for use in connection with
the Station.
B On or prior to the Closing, STC License will
distribute to Seller the FCC Licenses and the network affiliation agreement for
the Station and Seller will contribute the FCC Licenses and the network
affiliation agreement for the Station to the Company.
C Seller owns all of the issued and outstanding shares
of the capital stock of the Company.
D Seller desires to sell to Buyer, and Buyer desires to
acquire from Seller, all of the issued and outstanding shares of the capital
stock of the Company, for the price and on the terms and conditions set forth in
this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual
agreements and covenants contained in this Agreement, Buyer, Seller and the
Company, intending to be bound legally, agree as follows:
SECTION 1 DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for (i)
the sale of advertising time run on the Station by Seller prior to the TBA
Date, (ii) the rent of tower space prior to the TBA Date, (iii) compensation
payable by NBC to Seller for the period prior to the TBA Date and (iv)
production work performed by Seller prior to the TBA Date.
"Assets" means all of the tangible and intangible assets of the
Company used or held for use in connection with the conduct of the business or
operations of the Station.
"Closing" means the consummation of the purchase and sale of the
Shares pursuant to this Agreement in accordance with the provisions of SECTION
8.
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"Closing Date" means the date on which the Closing occurs, as
determined pursuant to SECTION 8.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Shares to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property,
employment agreements, talent contracts, collective bargaining agreements,
union contracts, network affiliation agreements and national advertising
representation agreements), written or oral (including any amendments and other
modifications thereto), to which the Company is a party or which are binding
upon the Company, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by the Company between the date of this Agreement
and the TBA Date.
"Effective Time" means 11:59 p.m., Eastern Standard Time, on the day
prior to the Closing Date.
"Encumbrances" has the meaning set forth in Section 2.1.
"Escrow Agreement" has the meaning set forth in Section 2.3(b).
"FCC Consent" means action by the FCC granting its consent to the
transfer of control of the Company to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC in connection with
the business or operations of the Station.
"GAAP" means generally accepted accounting principles consistently
applied.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Income Tax" or "Income Taxes" shall mean any income tax or any
franchise tax based on net income.
"Indemnification Escrow Agreement" has the meaning set forth in
Section 2.4(a).
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by the Company or under which the Company is licensed or franchised and which
are used or held for use in the business and operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
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"Liabilities" means as to any person, all debts, adverse claims,
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured, determined or determinable, known or unknown, including,
without limitation, those arising under any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order, writ, stipulation or
other governmental requirement (including, without limitation, any
environmental law), action, suit, arbitration, proceeding or investigation or
governmental permit, license, authorization, certificate or approval and those
arising under any contract, agreement, arrangement, commitment or undertaking.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Material Adverse Effect" means a material adverse effect on the
business, assets or financial condition of the Station and WTOV taken as a
whole (except for any material adverse effect primarily attributable to (a)
general economic factors affecting the television industry, (b) general,
national, regional or local economic or financial conditions, or (c) new
governmental or legislative laws, rules or regulations).
"Permitted Encumbrances" means (a) liens for taxes not yet due and
payable; (b) landlord's liens and liens for property taxes not delinquent; (c)
statutory liens that were created in the ordinary course of business and which
are not delinquent; (d) liens or security interests securing conditional sale,
rental or purchase money obligations which relate to the Contracts disclosed on
Schedule 3.8 hereto, but only in the property which is the subject of such
obligations; (e) restrictions or rights granted to governmental authorities
under applicable law to the extent not arising pursuant to any defaults
thereunder; (f) zoning, building, or similar restrictions relating to or
affecting property which do not arise in connection with a violation of
applicable law; (g) all matters of record disclosed on Schedule 3.6; and (h)
Encumbrances on the Real Property that do not materially affect the current use
and enjoyment thereof in the operation of the Assets or the value of such Real
Property.
"Person" means any individual, partnership, corporation, limited
liability company, trust or other entity.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or held for use in the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Shares" means all of the issued and outstanding shares of the capital
stock of the Company, consisting of 100 shares of common stock, no par value
per share.
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"TBA" means that certain Time Brokerage Agreement with respect to the
Station, executed by Buyer, Seller and the Company, in substantially the form
attached hereto as Exhibit A.
"TBA Date" means the date on which the transactions contemplated by
the TBA commence.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
held for use in the conduct of the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Taxes" means any federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding or other
tax or governmental assessment, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties.
"Tax Return" means any federal, state, or local tax return, report,
statement and other similar filings required to be filed by the Company with
respect to Taxes.
"To Seller's knowledge" means the actual knowledge of Sandy
DiPasquale, David A. Fitz, Marty Ostrow, the Station's General Manager, Paul R.
Abele, the Station's Chief Engineer, and Dennis Vickroy, the Station's Business
Manager.
"WTOV" means television station WTOV-TV, Steubenville, Ohio.
"WTOV Agreement" shall mean that certain Asset Purchase Agreement by
and between WTOV Seller and Buyer, dated as of the date hereof.
"WTOV Seller" means collectively, Smith Acquisition Company, a
Delaware corporation, and its subsidiary Smith Acquisition License Company, a
Delaware corporation.
SECTION 2. PURCHASE AND SALE OF SHARES
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer, deliver
and assign to Buyer on the Closing Date, and Buyer agrees to purchase, acquire,
pay for and accept from Seller, the Shares, free and clear of any security
interests, mortgages, liens, pledges, or encumbrances of any nature whatsoever
(collectively, "Encumbrances") and any claims or liabilities.
2.2 Assets and Liabilities at Closing.
(a) Assets of the Company at Closing. The Assets to be
owned by the Company at the Closing, all of which shall be free and clear of
any Encumbrances, except for Permitted Encumbrances, shall include the
following:
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(i) The Tangible Personal Property;
(ii) The Real Property;
(iii) The Licenses;
(iv) The Contracts;
(v) The Intangibles and all intangible assets of
the Company relating to the Station that are not specifically included
within the Intangibles, including the goodwill of the Station, if any;
(vi) All of the Company's proprietary
information, technical information and data, machinery and equipment
warranties, maps, computer discs and tapes, plans, diagrams,
blueprints, and schematics, including filings with the FCC relating to
the business and operation of the Station; and
(vii) All books and records relating to the
business or operations of the Station, including executed copies of
the Contracts, and all records required by the FCC to be kept by the
Station.
(b) Liabilities of the Company at Closing. At the
Closing, the Company shall have no liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other than obligations and
liabilities (i) set forth in the Financial Statements (as defined in Section
3.19), (ii) incurred in the ordinary course of business after the date of the
last balance sheet contained in the Financial Statements or (iii) with respect
to the Contracts set forth on Schedule 3.8, Contracts which are not required to
be scheduled on Schedule 3.8 pursuant to Section 3.8, and Contracts which have
been entered into in accordance with the terms of Section 5.3. In no event
shall the Company at Closing have any liability for any amounts owed to Seller
or any affiliate of Seller, including any shareholder, director or officer (who
is not an employee of the Station) of Seller or such affiliate, which shall be
cancelled on or prior to the Closing Date and the Company shall be released
with respect to any obligations for long term debt of Seller prior to or
simultaneously with the Closing, and the Company shall have no long term debt
at the Closing.
(c) Excluded Assets. The following Assets of the Company
shall be assigned and/or distributed to Seller or an affiliate of Seller at or
prior to the Closing:
(i) All rights to Accounts Receivable at the
Station for the period prior to the TBA Date;
(ii) The Company's cash on hand as of the Closing
and all other cash in any of the Company's bank or savings accounts;
any insurance policies, letters of credit, or other similar items and
cash surrender value in regard thereto; and any stocks, bonds,
certificates of deposit and similar investments; and
(iii) All deposits and prepaid expenses of the
Station and the Company as of the TBA Date; provided, however, that
such deposits and prepaid expenses shall be
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included in the Assets of the Company as of the Closing to the extent
that Seller receives a credit therefor in the calculation of the
Purchase Price pursuant to Section 2.3(c).
2.3 Purchase Price and Escrow.
(a) Purchase Price. The Purchase Price for the Shares
shall be Seventy Million Dollars ($70,000,000), adjusted and paid as provided
below.
(b) Escrow Agreement. Concurrently with the execution of
this Agreement the parties and WTOV Seller shall enter into an Escrow Agreement
pursuant to which Buyer shall deposit the amount of Seven Million Dollars
($7,000,000) (the "Escrow Deposit") as earnest money to secure Buyer's
performance of its obligations hereunder and under the WTOV Agreement (the
"Escrow Agreement"). At the Closing, the parties and WTOV Seller shall instruct
the Escrow Agent named in the Escrow Agreement to transfer the Escrow Deposit
(plus any income earned thereon) to Buyer.
(c) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of revenues and expenses. All
revenues and expenses arising from the operation of the Station, including
business and license fees, utility charges, real and personal property taxes
and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except
both Seller and Buyer shall be equally responsible for all state and local
sales or transfer taxes arising from the transfer of the Shares to Buyer under
this Agreement), FCC annual regulatory fees, accrued vacation leave for Hired
Employees and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller receives all
revenues and all refunds to the Company and deposits of the Company held by
third parties, and shall be responsible for all expenses, costs, and
liabilities, allocable to the period prior to the TBA Date, and Buyer shall
receive all revenues and be responsible for all expenses, costs, and
obligations allocable to the period on and after the TBA Date. Accounts
Receivable shall not be prorated hereunder but shall be collected by Buyer and
remitted to Seller as provided for in Section 6.19. Seller does not accrue sick
leave and no adjustment will be made for any accrued sick leave in the
prorations.
(d) Manner of Determining Adjustments. The Purchase
Price, taking into account the Escrow Deposit and the adjustments and
prorations pursuant to Section 2.3(c), will be determined finally in accordance
with the following procedures:
(i) Not later than five (5) days before the TBA
Date, (A) Seller shall prepare and deliver to Buyer a preliminary
statement which shall set forth Seller's good faith estimate of the
prorations for the Station as of the TBA Date (the "Prorations
Statement"). The Prorations Statement (A) shall contain all
information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(c), to the extent such adjustments
can be determined or estimated as of the date of such statement, and
such other information as may be reasonably requested by Buyer, and
(B) shall be certified by Seller as Seller's good faith estimate.
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(ii) Not later than sixty (60) days after the TBA
Date, Buyer will deliver to Seller a statement setting forth Buyer's
determination of the Purchase Price, all information reasonably
necessary to determine the adjustments, and the calculation thereof
pursuant to Section 2.3(c). If Seller disputes the amount of the
Purchase Price determined by Buyer, Seller shall deliver to Buyer
within thirty (30) days after its receipt of Buyer's statement a
statement setting forth Seller's determination of the amount of the
Purchase Price. If Seller notifies Buyer of its acceptance of Buyer's
statement, or if Seller fails to deliver its statement within the
thirty (30) day period specified in the preceding sentence, Buyer's
determination of the Purchase Price shall be conclusive and binding on
the parties as of the last day of the thirty (30) day period. If Buyer
fails to deliver the statement setting forth Buyer's determination of
the Purchase Price within sixty (60) days after the TBA Date, Seller's
Prorations Statement shall be conclusive and binding on the parties.
(iii) Buyer and Seller shall use good faith
efforts to resolve any dispute involving the determination of the
Purchase Price. If the parties are unable to resolve the dispute
within thirty (30) days following the delivery of Seller's statement,
Buyer and Seller shall jointly designate an independent certified
public accountant, who shall be knowledgeable and experienced in the
operation of television broadcasting stations, and who has not
performed services for Buyer or Seller or any of their respective
affiliates, to resolve the dispute. The accountant's resolution of the
dispute shall be final and binding on the parties, and a judgment may
be entered thereon in any court of competent jurisdiction. Any fees of
this accountant shall be split equally between Seller on the one hand
and Buyer on the other hand.
(iv) Amounts payable to the Station from the
United States Copyright Office or such arbitration panels as may be
appointed by the United States Copyright Office that relate to the
period prior to the Closing Date may not be determinable or paid
within the period provided in this Section 2.3 for final determination
of adjustments. In that event, notwithstanding the provisions of this
Section 2.3, Buyer and Seller agree to cooperate fully in future
copyright filings and to allocate any future copyright proceeds in
accordance with Section 2.3 until such time as all such proceeds with
respect to the period prior to the Closing Date are paid.
2.4 Payment of Purchase Price.
(a) At the Closing, Buyer shall deliver an amount equal
to One Million Five Hundred Thousand Dollars ($1,500,000) (the "WJAC Indemnity
Escrow Amount") of the Purchase Price, as adjusted by the prorations adjustment
set forth in Section 2.3 (the "Adjusted Purchase Price") to the Indemnification
Escrow Agent by wire transfer of same-day funds pursuant to wire instructions
which shall be delivered by the Indemnification Escrow Agent to Buyer, at least
two (2) days prior to the Closing Date. The WJAC Indemnity Escrow Amount,
together with the WTOV Indemnity Escrow Amount of One Million Five Hundred
Thousand Dollars ($1,500,000) delivered pursuant to the WTOV Agreement
(collectively, the "Indemnity Escrow Amount") shall be held by the
Indemnification Escrow Agent in
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accordance with the terms and conditions of an Indemnification Escrow Agreement
to be entered into at the Closing in substantially the form attached hereto as
Exhibit B (the "Indemnification Escrow Agreement").
(b) The Adjusted Purchase Price less the WJAC Indemnity Escrow
Amount shall be paid by Buyer to Seller at Closing by wire transfer of same-day
funds pursuant to wire instructions which shall be delivered by Seller to Buyer,
at least two (2) days prior to the Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania. Each of Seller and the Company has all requisite power and
authority (i) to own, lease, and use its assets and property as now owned,
leased, and used, (ii) to conduct their businesses and operations as now
conducted, and (iii) to execute and deliver this Agreement and the documents
contemplated hereby and thereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by it
hereunder and thereunder. The Company is not a participant in any joint venture
or partnership with any other person or entity with respect to any part of the
operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by each of Seller and the Company have been
duly authorized by all necessary actions on the part of each of Seller and the
Company and Seller's shareholders. This Agreement has been duly executed and
delivered by each of Seller and the Company and constitutes the legal, valid,
and binding obligations of each of Seller and the Company, enforceable against
it in accordance with its terms except as the enforceability of this Agreement
may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies.
3.3 Capitalization of the Company; Stock Ownership. The
authorized, issued and outstanding capital stock of the Company is set forth on
Schedule 3.3. All issued and outstanding capital stock of the Company is owned
beneficially and of record by Seller. The Shares are validly issued, fully paid
and nonassessable. Other than this Agreement or as set forth on Schedule 3.3,
there is no subscription, option, warrant, call, right, agreement or commitment
relating to the issuance, sale, delivery or transfer (including any right of
conversion or exchange under any outstanding security or other instrument) of
the Shares or other equity of the Company and there is no voting trust or other
arrangement that relates to the voting of any of the Shares. Seller has, and
upon consummation of the transactions contemplated hereby, Buyer will acquire,
good and valid title to the Shares, free and clear of all claims, liabilities,
security interests, liens, pledges, options, restrictions or encumbrances of
any nature whatsoever. Seller has delivered to Buyer true and correct copies of
the articles of incorporation and bylaws of the Company.
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Schedule 3.3 contains the name and position of each officer and director of the
Company. The Company holds no equity interest in any Person.
3.4 Absence of Conflicting Agreements. Subject to obtaining the
FCC Consent, the Consents listed on Schedule 3.4, and making any filing
required under the HSR Act, the execution, delivery, and performance of this
Agreement and the documents contemplated hereby and thereby (with or without
the giving of notice, the lapse of time, or both): (i) do not require the
consent of any third party; (ii) will not conflict with any provision of the
organizational documents of Seller and the Company; (iii) will not conflict
with, result in a breach of, or constitute a default under, any law, judgment,
order, ordinance, injunction, decree, rule, regulation, or ruling of any court
or governmental instrumentality; (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, any agreement, instrument, license, or permit to which Seller or the
Company is a party or by which Seller or the Company may be bound; and (v) will
not create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets except for
Permitted Encumbrances.
3.5 Governmental Licenses. Schedule 3.5 includes a true and
complete list of all material Licenses including all FCC Licenses. Seller has
made available to Buyer true and complete copies of the Licenses listed on
Schedule 3.5 (including any amendments and other modifications thereto). The
FCC Licenses have been validly issued, and STC License, which is a wholly owned
subsidiary of Seller, is the authorized legal holder thereof on the date of
this Agreement. On the Closing Date, the Company shall be the authorized legal
holder of the Licenses, including all of the Licenses listed on Schedule 3.5.
The Licenses listed on Schedule 3.5 comprise all of the material licenses,
permits, and other authorizations required from any governmental or regulatory
authority for the lawful conduct of the business and operations of the Station
in the manner and to the full extent they are now conducted, and none of the
Licenses is subject to any restriction or condition that would limit the full
operation of the Station as now operated. The Licenses are in full force and
effect, and the conduct of the business and operations of the Station is in
accordance therewith in all material respects. Seller has no reason to believe
that any of the Licenses would not be renewed by the FCC or other granting
authority in the ordinary course. STC License has timely filed with the FCC its
application for authority to operate the Station's digital television
facilities on Channel 34. Except as described in Schedule 3.5, no cable system
has advised STC License, the Company or Seller of any signal quality or
copyright indemnity or other prerequisite to cable carriage of the signal of
the Station, and, except as described in Schedule 3.5, no cable system has
declined or threatened to decline such carriage or failed to respond to a
request for carriage or sought any form of relief from carriage of the
Station's signal from the FCC.
3.6 Title to and Condition of Real Property. Schedule 3.6 contains
a complete and accurate description of all the Real Property and the Company's
interests therein (including street address, legal description, owner, and use
and the location of all improvements thereon). The Real Property listed on
Schedule 3.6 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted. The Company has good
and marketable fee simple title, insurable at standard rates, to all fee
estates (including the improvements thereon) included in the Real Property,
free and clear of all Encumbrances, and
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<PAGE> 15
without reservation or exclusion of any mineral, timber, or other similar
rights or interests, except for (a) Permitted Encumbrances, and (b) such
Encumbrances which shall be released at Closing. With respect to each leasehold
or subleasehold interest included in the Real Property being conveyed under
this Agreement, as of the TBA Date, the lease or sublease creating such
interest is in full force and effect and the Seller knows of no defaults under
such lease or the existence of any event which, after the passage of time and
applicable notice or cure periods, would constitute a default under such lease
or sublease. All towers, guy anchors, and buildings and other improvements
included in the Assets are located entirely on the Real Property listed in
Schedule 3.6. Seller has delivered to Buyer true and complete copies of all
deeds and leases pertaining to the Real Property. As of the TBA Date, all Real
Property (including the improvements thereon) (i) is in good condition and
repair consistent with its present use (reasonable wear and tear excepted),
(ii) is available for immediate use in the conduct of the business and
operations of the Station, and (iii) complies in all material respects with all
applicable building or zoning codes and the regulations of any governmental
authority having jurisdiction. The Company has full legal and practical access
to the Real Property.
3.7 Title to and Condition of Tangible Personal Property.
Schedule 3.7 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.7 comprises all material items
of tangible personal property necessary to conduct the business and operations
of the Station as now conducted. Except as described in Schedule 3.7, the
Company owns and has good title to each item of Tangible Personal Property, and
none of the Tangible Personal Property owned by the Company is subject to any
Encumbrance, except for Permitted Encumbrances and Encumbrances which will be
released at the Closing. As of the TBA Date, each item of Tangible Personal
Property is in good operating condition and repair (normal wear and tear
excepted), and is available for immediate use in the business and operations of
the Station. As of the TBA Date, all items of transmitting and studio equipment
included in the Tangible Personal Property (i) have been maintained in a manner
consistent with good engineering practice, and (ii) will permit the Station to
operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state, and local
statutes, ordinances, rules, and regulations.
3.8 Contracts. Schedule 3.8 is a true and complete list of all
Contracts as of the date hereof, except (a) contracts with advertisers for the
sale of advertising time on the Station for cash at rates consistent with past
practices, and (b) Contracts entered into in the ordinary course of business
that do not involve liabilities at Closing in excess of Fifteen Thousand
Dollars ($15,000) individually and One Hundred Thousand Dollars ($100,000) in
the aggregate for all such Contracts. Seller has delivered to Buyer true and
complete copies of all Contracts listed on Schedule 3.8 (including any
amendments and other modifications to such Contracts), and a schedule
summarizing the Company's obligations under trade and barter agreements
relating to the Station as of May 31, 2000. Schedule 3.8 also includes an
amortization schedule as of May 31, 2000 for all of the Station's programming
and film Contracts prepared in accordance with the Company's normal practices
and accounting procedures. Other than the Contracts listed on Schedule 3.8 or
described in clauses (a) or (b) of this Section 3.8 and cash programming
Contracts, the Company requires no contract, lease, or other agreement to
enable it to carry on its business as now conducted. To Seller's knowledge, all
of the Contracts are in full force and effect, and are valid, binding, and
enforceable in accordance with their terms. The Company has and, to Seller's
knowledge, each other party to the Contracts has complied in all material
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<PAGE> 16
respects with all of the terms and conditions of the Contracts and there is not
under any Contract any material default by the Company, or to Seller's
knowledge, by any party thereto or any event that, after notice or lapse of
time or both, could constitute a material default. Other than in the ordinary
course of business, Seller has no knowledge of any intention by any party to
any Contract (i) to terminate such Contract or amend the terms thereof, (ii) to
refuse to renew the Contract upon expiration of its term, or (iii) to renew the
Contract upon expiration only on terms and conditions which are more onerous
than those now existing. Except for the need to obtain the Consents listed in
Schedule 3.4, the Company has full legal power and authority to assign its
rights under the Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability, or continuation of any
of the Contracts.
3.9 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.4, and any filing required
under the HSR Act, to Seller's knowledge, no consent, approval, permit, or
authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, or (ii) to permit
Seller to assign or transfer the Shares to Buyer.
3.10 Intangibles. Schedule 3.10 is a true and complete list of all
material Intangibles (exclusive of those listed in Schedule 3.5), all of which
are valid and in good standing and uncontested. Seller has delivered to Buyer
copies of all documents establishing or evidencing all Intangibles listed on
Schedule 3.10. To Seller's knowledge, the Company is not infringing upon or
otherwise acting adversely to any trademarks, trade names, service marks,
service names, copyrights, patents, patent applications, know-how, methods, or
processes owned by any other person or persons, and there is no claim or action
pending, or to the knowledge of Seller threatened, with respect thereto. To
Seller's knowledge, the Intangibles listed on Schedule 3.10 comprise all
material intangible property interests necessary to conduct the business and
operations of the Station as now conducted.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of the Company or Seller that insure any part of the Assets
or the business of the Station. All policies of insurance listed in Schedule
3.11 (i) are customary in amount with respect to the value of the Assets,
subject to a deductible, (ii) are in full force and effect and (iii) insure the
Assets and the business of the Station against all customary risks.
3.12 Reports. All material returns, reports, and statements that
the Station is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over STC License, the
Company or the Station have been complied with in all material respects. All of
such returns, reports, and statements are complete and correct in all material
respects as filed. STC License and the Company have timely paid to the FCC all
annual regulatory fees payable with respect to the FCC Licenses. All tower
registration applications that STC License or the Company is required to file
with the FCC with respect to the Assets have been filed and the FCC has issued
registrations with respect to such towers.
3.13 Employee Plans and Matters.
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<PAGE> 17
(a) Schedule 3.13 includes a complete and accurate list
of all employees of the Company, their job descriptions, current compensation
levels, dates of hire and amounts and dates of last salary or wage increase as
of the date of this Agreement.
(b) All of the Company's Employee Plans and Compensation
Arrangements are listed in Schedule 3.13, and complete and accurate copies of
(including any amendments to) any such written Employee Plans and Compensation
Arrangements (or related insurance policies) have been furnished to Buyer,
along with copies of any employee handbooks or similar documents describing
such Employee Plans and Compensation Arrangements. Any unwritten Employee Plans
or Compensation Arrangements also are listed in Schedule 3.13, and complete
descriptions have been furnished to Buyer. Except as disclosed in Schedule
3.13, the Company is not a party to and does not have in effect or to become
effective after the date of this Agreement any plan arrangement or other scheme
which will become an Employee Plan or Compensation Arrangement (including, but
not limited to, any bonus, cash or deferred compensation, severance, medical,
pension, profit sharing or thrift, stock option, employee stock ownership, life
or group insurance, death benefit, vacation, sick leave, disability or trust
agreement or arrangement), or any amendment to an Employee Plan or Compensation
Arrangement. The Company does not accrue sick leave for employees of the
Station.
(c) Seller has furnished to Buyer the Forms 5500 filed
for each of the Company's Employee Plans (including all attachments and
schedules), actuarial reports, summaries of material modifications, summary
annual reports, and any other employer notices (including, governmental filings
and descriptions of material changes to Employee Plans and/or Compensation
Arrangements) relating to the Company's Employee Plans for the last two plan
years, and the current summary plan descriptions.
(d) Each Employee Plan and Compensation Arrangement has
been administered in compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, the Age Discrimination in Employment
Act and any other applicable Federal or state laws.
(e) Neither Seller nor any ERISA Affiliate is
contributing to, is required to contribute to, or has contributed within the
last six (6) years to, any Multiemployer Plan, and neither the Company nor any
ERISA Affiliate has incurred within the last six (6) years, or reasonably
expects to incur, any "withdrawal liability," as defined under Section 4201 et
seq. of ERISA.
(f) To Seller's knowledge, there is no governmental
inspection, investigation, audit or examination of any Employee Plan or
Compensation Arrangement listed on Schedule 3.13 and Seller has no knowledge of
any facts which would lead it to believe that any such governmental inspection,
investigation, audit or examination is pending or threatened. There exists no
action, suit or claim (other than routine claims for benefits) with respect to
any Employee Plan or Compensation Arrangement pending or, to the knowledge of
Seller, threatened against any of such Employee Plan or Compensation
Arrangement.
(g) Neither Seller nor any ERISA Affiliate sponsors,
maintains or contributes to any Employee Plan or Compensation Arrangement that
provides retiree medical or retiree life insurance coverage to former employees
of the Company, except to the extent required by
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<PAGE> 18
Section 4980B of the Code or similar state law, and except to the extent any
contributions are made at the expense of the participant or the beneficiary of
a participant. Subsequent to the TBA Date, the Company shall have no liability
to provide retiree medical or retiree life insurance coverage to any current or
former employees of the Company.
(h) Neither Seller nor any ERISA Affiliate maintains, has
maintained or been obligated to maintain any Employee Plan subject to Section
412 of the Code or Title IV of ERISA. Each Employee Plan that is intended to be
tax-qualified, and each amendment thereto, is the subject of a favorable
determination letter, and no plan amendment that is not the subject of a
favorable determination letter likely would affect the validity of an Employee
Plan's letter.
(i) Except as described in Schedule 3.13, with respect to
each Employee Plan and each Compensation Arrangement, no material liabilities
have been incurred, other than the payment of benefits in the ordinary course.
(j) All contributions or premium payments with respect to
Employee Plans and Compensation Arrangements accrued for any period ending on
or before the TBA Date have been or will be timely paid by the Company before
the TBA Date or will be reflected as Adjustment Liabilities for purposes of the
computation of Working Capital. Except as disclosed in Schedule 3.8 neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, stay bonus, or unemployment compensation)
becoming due to any director or employee of Company, (ii) result in the
acceleration of vesting under any Employee Plan or Compensation Arrangement, or
(iii) increase any benefits otherwise payable under any Employee Plan or
Compensation Arrangement; and any such payment or increase in benefits is fully
deductible by Company under the Code, including but not limited to Sections 162
and 280G.
(k) The Company does not sponsor any Employee Plans or
Compensation Arrangements, but the Company is a participating affiliate of the
Sunrise Television Corp. Employee Plans and Compensation Arrangements as
described in Schedule 3.13.
(l) For purposes of this Agreement, the following terms
shall have the meaning indicated: (i) "Employee Plan" shall mean any retirement
or welfare plan or arrangement or any other employee benefit plan as defined in
Section 3(3) of ERISA sponsored, maintained or contributed to by Seller or any
ERISA Affiliate; (ii) "Code" shall mean the Internal Revenue Code of 1986, as
amended, any successor thereto and any regulations promulgated thereunder;
(iii) "Compensation Arrangement" shall mean any plan or compensation
arrangement other than an Employee Plan, whether written or unwritten,
maintained, sponsored or contributed to by Seller or any ERISA Affiliate
providing current employees, former employees, officers, directors and
shareholders of the Company with any compensation or other benefits, whether
deferred or not, in excess of base salary or wages, including, but not limited
to, any bonus or incentive plan, stock rights plan, deferred compensation
arrangement, life insurance, stock purchase plan, severance pay plan and any
other employee fringe benefit plan; (iv) "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended, any successor thereto and
any regulations promulgated thereunder; (v) "Multiemployer Plan" means a plan,
as defined in ERISA Section 3(37), to which the Company or any ERISA Affiliate
has contributed, is
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<PAGE> 19
contributing or is required to contribute; and (vi) "ERISA Affiliate" shall
mean any trade or business related to the Company under the terms of Sections
414(b), (c), (m) or (o) of the Code.
3.14 Tax Matters.
(a) Seller has (or, in the case of returns becoming due
after the date hereof and on or before the Closing Date, will have prior to the
Closing Date) filed or has caused to be filed in a timely manner in accordance
with applicable law all required Tax Returns of the Company with the
appropriate governmental authorities in all jurisdictions in which such Tax
Returns are required to be filed by the Company (except Tax Returns for which
the filing date has not expired or has been extended and such extension period
has not expired), and all Taxes shown on such Tax Returns have been properly
accrued or paid to the extent such Taxes have become due and payable. All such
Tax Returns are correct and complete in all material respects. The Company has
also paid all Taxes required to be paid but for which no Tax Return was
required to be filed, to the extent such Taxes have become payable. The Company
has delivered to Buyer true and complete copies of all income Tax Returns of
the Company for the tax year ended December 31, 1998, and will deliver true and
complete copies of all income Tax Returns of the Company for the tax year ended
December 31, 1999, and any other income Tax Returns filed by or on behalf of
the Company after the date hereof, within 30 days after filing. Except as set
forth in Schedule 3.14, the Financial Statements reflect an adequate reserve in
accordance with GAAP (without regard to any amounts reserved for deferred
taxes) for all unpaid Taxes payable by the Company for all Tax periods and
portions thereof through the date of such Financial Statements. Except as
disclosed in Schedule 3.14, neither Seller nor the Company has, executed any
waiver or extension of any statute of limitations on the assessment or
collection of any Tax or with respect to any liability arising therefrom.
Except as disclosed in Schedule 3.14, none of the federal, state or local
income Tax Returns filed by or on behalf of the Company are currently being
audited by any taxing authority, and no officer or director (or employee
responsible for Tax matters of either Seller or the Company) has any knowledge
of any other examinations, requests for information or other administrative or
judicial proceedings pending with respect to Taxes of the Company. Except as
disclosed in Schedule 3.14, (i) neither the Internal Revenue Service nor any
other taxing authority has asserted any deficiency or claim that has not yet
been resolved for additional Taxes against, or any adjustment of Taxes relating
to the Company, and (ii) there are no proposed reassessments of any property
owned by the Company that would affect the Taxes of the Company. Other than
liability as a member of the Seller Consolidated Group, the Company has no
liability for the Taxes of any Person pursuant to Section 1.1502-6 of the
Treasury Regulations promulgated under the Code or comparable provisions of any
taxing authority in respect of a consolidated, combined or unitary Tax Return.
There are no Tax liens on any assets of the Company, other than liens for
current Taxes not yet due and payable without penalty and liens for Taxes that
are being contested in good faith by appropriate proceedings.
(b) The Company has not been at any time a member of any
partnership, joint venture or other arrangement or contract which is treated as
a partnership for federal, state, local or foreign tax purposes or the holder
of a beneficial interest in any trust for any period for which the statute of
limitations for any Tax has not expired.
(c) The Company files its federal income Tax Returns as a
member of an affiliated group filing a consolidated return of which Sunrise
Television Corporation is the
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common parent. Schedule 3.14 lists each jurisdiction where the Company files a
consolidated or combined income Tax Return with Seller or an affiliate of
Seller. As of the Closing, there will be no tax sharing agreements or similar
arrangements in effect with respect to or involving the Company.
(d) No consent under Section 341(f) of the Code has ever
been filed with respect to the Company.
(e) The Company is not, and for the five years preceding
the Closing Date has not been, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15
and except for any FCC rulemaking proceedings generally affecting the
broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative, or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Seller threatened, against or relating to Seller with respect
to its ownership or operation of the Station, the Company or otherwise relating
to the Assets or the business or operations of the Station.
3.16 Environmental Matters. To Seller's knowledge and except as
set forth in Schedule 3.16:
(a) The Company has complied in all material respects
with all laws, rules, and regulations of all federal, state, and local
governments (and all agencies thereof) concerning the environment, public
health and safety, and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice has
been filed or commenced against the Company in connection with the Company's
ownership or operation of the Station alleging any material failure to comply
with any such law, rule, or regulation.
(b) The Company has no liability relating to the
Company's ownership and operation of the Station (and there is no basis related
to the past or present operations, properties, or facilities of the Company for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Company giving rise to any such
liability) under the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Federal Water
Pollution Control Act, the Clean Air Act, the Safe Drinking Water Act, the
Toxic Substances Control Act, the Refuse Act, or the Emergency Planning and
Community Right-to-Know Act (each as amended) or any other law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
(c) The Company has no material liability relating to the
Company's ownership and operation of the Station (and there is no basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Company giving rise to any such
liability) under the Occupational Safety and Health Act, as amended, or under
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any other law, rule, or regulation of any federal, state, or local government
(or agency thereof) concerning employee health and safety.
(d) In connection with its ownership and operation of the
Station, the Company has obtained and been in compliance with all of the terms
and conditions of all material permits, licenses, and other authorizations
which are required under, and has complied with all other material limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all federal, state, and local
laws, rules, and regulations (including all codes, plans, judgments, orders,
decrees, stipulations, injunctions, and charges thereunder) relating to public
health and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(e) All properties and equipment used in the business of
the Company are and have been free of PCB's, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances (as defined in Section 302 of the Emergency
Planning and Community Right-to-Know Act).
(f) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by the Company at any
site including on the Real Property or by any other party on any Real Property.
3.17 Compliance with Laws. The Company has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances. To Seller's knowledge, neither the ownership or
use of the properties of the Station by Company nor the conduct of the business
or operations of the Station conflicts in any material respect with any legally
enforceable property rights of any other person.
3.18 Conduct of Business in Ordinary Course.
(a) Between May 31, 2000, and the TBA Date, the Company
shall have conducted the business and operations of the Station only in the
ordinary course and shall not have suffered any Material Adverse Effect;
(b) Between December 31, 1999 and the TBA Date except as
set forth in the Financial Statements for the five (5) month period ending May
31, 2000, Seller has not:
(i) Except as set forth in Schedule 3.13 or
Schedule 3.18(b), made any material increase in compensation payable
or to become payable to any of the employees of the Company or the
Station, or any bonus payment made or promised to any employee of the
Company or the Station, or any material change in personnel policies,
employee benefits, or other compensation arrangements affecting the
employees of the Station or the Company;
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<PAGE> 22
(ii) Made any sale, assignment, lease, or other
transfer of any of the Station's or the Company's properties other
than in the normal and usual course of business with suitable
replacements being obtained therefor;
(iii) Canceled any debts owed to or claims held by
Seller, except in the normal and usual course of business;
(iv) Suffered any material write-down of the
value of any Assets or any material write-off as uncollectible of any
accounts receivable of the Station; or
(v) Hired or granted any right under, or entered
into any settlement regarding the breach or infringement of, any
license, patent, copyright, trademark, trade name, franchise, or
similar right, or modified any existing right of the Company or
otherwise relating to the Station.
3.19 Financial Statements. Seller has furnished Buyer with true and
complete copies of unaudited financial statements of the Company for the
two-year period ended December 31, 1999 and unaudited financial statements of
the Company for the five (5) month period ended May 31, 2000 ("Financial
Statements") which are attached hereto as Schedule 3.19. The Financial
Statements of the Company have been prepared from the books and records of the
Company, have been prepared in accordance with GAAP throughout the periods
indicated (except that such Financial Statements do not contain all footnotes
required under GAAP and do not include statements of cash flows), accurately
reflect in all material respects the books, records, and accounts of the
Company (which books, records, and accounts are complete and correct in all
material respects), are complete and correct in all material respects, and
present fairly the financial condition of the Company as at their respective
dates and the results of operations for the periods then ended. Except for
obligations and liabilities (i) set forth on Schedule 3.8 with respect to
Contracts, (ii) set forth in the Financial Statements or (iii) incurred in the
ordinary course of business (other than contingent liabilities) since the date
of the most recent balance sheet included in the Financial Statements, the
Company has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise). No dividends have been declared on any
capital stock of the Company which are unpaid. The Seller has not manipulated
the Financial Statements to allocate in a disproportionate manner any operating
costs or operating expenses of the Station as compared to the allocation of
operating costs and operating expenses for other television broadcast stations
of the Seller.
3.20 Transactions with Affiliates. Except as disclosed in Schedule
3.20, the Company has not been involved in any business arrangement or
relationship with any affiliate of Seller or the Company, and no affiliate of
Seller or the Company owns any property or right, tangible or intangible, which
is used in the business of the Company or the Station. As used in this
paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934.
3.21 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
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3.22 Labor Relations. Except as set forth on Schedule 3.22, the
Company is not a party to or subject to any collective bargaining agreements.
The Company has no written or oral contracts of employment other than those
listed in Schedule 3.8. The Company has complied in all material respects with
all laws, rules, and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and the Company has not received any written notice alleging that it has
failed to comply with any such laws, rules, or regulations. No controversies,
disputes, or proceedings are pending or, to Seller's knowledge, threatened,
between the Company and any employee (singly or collectively). No labor union
or other collective bargaining unit represents or claims to represent any of
the employees of the Company. There is no union campaign being conducted to
represent employees of the Company or to solicit cards from employees to
authorize a union to request a National Labor Relations Board certification
election with respect to any employees of the Company.
3.23 Bank Accounts; Powers of Attorney. All of the Company's bank
accounts, and the names of all authorized signatories on all such accounts, are
set forth on Schedule 3.23. All of the Company's powers of attorney are also
set forth on Schedule 3.23.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and at Closing, will be duly qualified to conduct business as
a foreign corporation under the laws of the State of Pennsylvania. Buyer has
all requisite power and authority to execute and deliver this Agreement and the
documents contemplated hereby and thereby, and to perform and comply with all
of the terms, covenants, and conditions to be performed and complied with by
Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Buyer have been duly authorized by all
necessary actions on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
FCC Consent and making any filing required under the HSR Act, the execution,
delivery, and performance by Buyer of this Agreement and the documents
contemplated hereby and thereby (with or without the giving of notice, the
lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with the organizational documents of Buyer; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment, order, injunction, decree, rule, regulation, or ruling of any
court or governmental instrumentality; or (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or
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accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Shares.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Buyer's Qualifications. Buyer is in all material respects
legally, financially and otherwise qualified to acquire the Shares under the
Communications Act of 1934, as amended (the "Act"), and the rules, regulations
and policies of the FCC. Buyer knows of no facts that would under the Act and
the rules, regulations and written policies of the FCC (a) disqualify Buyer as
the owner of the FCC Licenses or as the owner and operator of the Station, or
(b) cause the FCC to fail to grant in a timely fashion without material delay
the FCC Consent. No waiver of any FCC rule or policy is necessary to be
obtained for the grant of the consent of the FCC to the applications for the
transfer of control of the FCC Licenses to Buyer.
4.6 Interpretation of Certain Provisions. Buyer has not relied and
is not relying on the specification of any dollar amount in any representation
or warranty made in this Agreement or any Schedule hereto to indicate that such
amounts, or higher or lower amounts, are or are not material.
4.7 No Outside Reliance. Buyer has not relied and is not relying
on any statement, representation or warranty made by Seller with respect to the
Station, except that Buyer is relying on the statements, representations and
warranties made or to be made by Seller in this Agreement, any schedule hereto
or any certificate to be delivered to Buyer at the Closing.
4.8 Availability of Funds. Buyer will have available on the
Closing Date sufficient funds to enable Buyer to consummate the transactions
contemplated hereby.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Except to the extent contemplated by the TBA,
Seller and the Company agree that, between the date of this Agreement and the
Closing Date, the Company shall operate its business in the ordinary course of
business in accordance with its past practices (except where such conduct would
conflict with the following covenants or with Seller's and the Company's other
obligations under this Agreement), and in accordance with the other covenants
in this SECTION 5. Seller shall cause the Company to comply with all of the
terms of this Section 5 applicable to the Company, and so long as STC License
holds the FCC Licenses, Seller shall cause STC License to comply with Sections
5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.16 and 5.18 with respect to such FCC Licenses.
5.2 Employees and Compensation.
(a) Until the TBA Date, the Company shall use its
reasonable efforts to preserve intact, and for the benefit of Buyer, the
Company's workforce. Except as specifically contemplated by this Agreement, the
TBA or on the schedules hereto (including Schedule 3.8), the Company shall not
take any action (without the prior consent of the Buyer) to (i) institute any
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severance or termination pay practices with respect to any directors, officers
or employees of the Company or to increase the benefits payable under its
severance or termination pay practices in effect on the date hereof and set
forth in Schedule 3.13; (ii) increase the compensation payable, or to become
payable, to employees of the Company, except as required by existing written
agreements disclosed in Schedule 3.13 or increases in the ordinary course of
business consistent with past practice not exceeding 5% for any individual
employee; (iii) adopt any Employee Plan or Compensation Arrangement; (iv) amend
any Employee Plan or Compensation Arrangement, except that the Company may
change healthcare providers as disclosed in Schedule 3.13; (v) pay or award or
agree to pay or award any pension, retirement allowance or other incentive
awards or other employee benefit not required by this Agreement or any of the
Employee Plans or Compensation Arrangements to any current or former director,
officer or employee of the Company; (vi) enter into any collective bargaining
agreement covering any employees, through negotiations or otherwise, or make
any commitments or incur any liability to any labor organization with respect
to any employees of the Company; (vii) renew, terminate, waive or amend, except
as may be required by applicable law, any collective bargaining agreement; or
(viii) voluntarily recognize any union or other entity as the collective
bargaining representative for any of the employees of the Company.
(b) Between the date of this Agreement and the TBA Date,
the Company shall not hire any replacement for any management employee or
talent of the Station whose employment is terminated except with the prior
consent of Buyer. The Company shall provide Buyer with an opportunity to
interview and meet with any such replacement employees.
5.3 Contracts. Without the written consent of Buyer (which consent
shall not be unreasonably withheld, delayed or conditioned), the Company will
not enter into any contract or commitment, or amend or terminate any Contract
(or waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness), except for (a) until the TBA Date, cash time sales agreements
made in the ordinary course of business or (b) until the TBA Date, Contracts
entered into in the ordinary course of business and having a cost or value of
Twenty-Five Thousand Dollars ($25,000) or less individually or One Hundred
Thousand Dollars ($100,000) in the aggregate. Prior to the TBA Date, Seller
shall deliver to Buyer a list of all Contracts entered into between the date of
this Agreement and the TBA Date, together with copies of such Contracts.
5.4 Disposition of Assets. Except for distribution of cash and
cash equivalents to the Seller, the Company shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or held for use in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. The Company shall not create, assume or permit
to exist any Encumbrance upon the Assets, except for (i) Encumbrances, which
shall be removed on or prior to the Closing Date, and (ii) Permitted
Encumbrances.
5.6 Licenses. Neither the Company nor Seller shall cause or
permit, by any act or failure to act, any of the FCC Licenses to expire or to
be revoked, suspended, or modified adversely, or take any action that could
cause the FCC or any other governmental authority to institute proceedings for
the suspension, revocation, or adverse modification of any of the FCC
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Licenses. The Company shall not fail to prosecute with due diligence any
applications to any governmental authority in connection with the operation of
the Station.
5.7 Rights. Neither the Company nor Seller shall waive any
material right relating to the Station or any of the Assets. Seller shall not
cause, by any act or failure to act, any cable system located within the
Station's Designated Market Area to refuse to carry the Station's signal. The
Company shall not make any Tax elections or compromise any Tax liabilities
without Buyer's prior consent.
5.8 No Inconsistent Action. Neither the Company nor Seller shall
take any action that could hinder or delay in any material respect the
consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Each of Seller and the Company shall
give Buyer and its counsel, accountants, engineers, and other authorized
representatives reasonable access to the Assets and to all other properties,
equipment, books, records, Contracts, and documents of the Company or otherwise
relating to the Station for the purpose of audit and inspection, and will
furnish or cause to be furnished to Buyer or its authorized representatives all
information with respect to the affairs and business of the Station and the
Company that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
Station). Without limiting the generality of the foregoing, each of Seller and
the Company shall give Buyer and its counsel, accountants and other authorized
representatives reasonable access to the Company's financial records and the
Company's employees, counsel, accountants and other representatives for the
purpose of preparing and auditing such financial statements (at Buyer's sole
cost and expense) as Buyer determines, in its reasonable judgment, (i) are
required or advisable to comply with federal or state securities laws and the
rules and regulations of securities markets as a result of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or (ii) are required to verify the Financial Statements and any
financial statement provided by Seller to Buyer pursuant to Section 5.15.
5.10 Maintenance of Assets. The Company shall use its commercially
reasonable efforts and take all reasonable actions to maintain all of the
Assets in good condition (ordinary wear and tear excepted), and use, operate,
and maintain all of the Assets in a reasonable manner and in accordance with
the terms of the FCC Licenses, all rules and regulations of the FCC and good
engineering practice. Prior to the TBA Date, the Company shall maintain
inventories of spare parts and expendable supplies at levels consistent with
past practices.
5.11 Insurance. Seller shall continue to maintain the current
insurance policies on the Station and the Assets.
5.12 Consents. Subject to Section 6.7, Seller shall use its
commercially reasonable efforts to obtain the Consents, without any change in
the terms or conditions of any Contract that could be less advantageous to the
Station or the Company than those under such Contract as in effect on the date
of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's written request,
Seller shall cooperate with
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Buyer and use its commercially reasonable efforts to obtain from the lessors
under each Real Property lease such estoppel certificates as Buyer may request;
provided, however, that Seller shall not have the obligation to expend any
funds in connection with obtaining such estoppel certificates except for
customary administrative and legal expenses involved in obtaining such estoppel
certificates. Upon Seller's written request, Buyer shall cooperate with Seller
and use its commercially reasonable efforts to assist Seller in obtaining any
Consent.
5.13 Books and Records. Each of Seller and the Company shall
maintain its books and records relating to the Station and the Company in
accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the business or
operations of the Station or the Company by Seller or the Company, and of any
material change in any of the information contained in Seller's representations
and warranties contained in SECTION 3 of this Agreement.
5.15 Financial Information. Prior to the TBA Date, Seller and the
Company shall furnish to Buyer (i) monthly financial statements, (ii) weekly
pacing reports, (iii) financial estimates of operating income, and (iv) a
monthly closing packet with respect to the Station within thirty (30) days
after the end of each month. All financial information delivered by Seller and
the Company to Buyer pursuant to this Section shall accurately reflect the
books, records, and accounts of the Company, shall be complete and correct in
all material respects, and shall present fairly the financial condition of the
Company as at their respective dates and the results of operations for the
periods then ended.
5.16 Compliance with Laws. The Company shall comply in all
material respects with all laws, rules, and regulations applicable or relating
to it or the ownership and operation of the Station.
5.17 Discharge of Indebtedness. Concurrently or prior to the
Closing, Seller shall cause all indebtedness for borrowed money of the Company
to be repaid and discharged in full and Seller shall deliver to Buyer releases
from each lender releasing the Company from such indebtedness; provided,
nothing herein shall require Seller to prepay any capital leases, equipment
leases or similar financing arrangements which are disclosed on Schedule 3.8.
5.18 Programming. Prior to the TBA Date, the Company shall not
make any material changes in the broadcast hours or in the percentages of types
of programming broadcast by the Station, or make any other material change in
the Station's programming policies, except such changes as in the good faith
judgment of the Company are required by the public interest.
5.19 Capital Expenditures. Prior to the TBA Date, Seller will make
any capital expenditures necessary to keep the Station operating in a manner
consistent with past practice.
5.20 Mergers. Seller shall not permit the reorganization,
liquidation, merger or consolidation of the Company with any other entity.
5.21 Amendments. Seller shall not amend, change or modify the
Company's articles of incorporation or bylaws.
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5.22 Collection of Accounts Receivable. Prior to the TBA Date,
Seller shall collect the accounts receivable of the Station only in the
ordinary course of business consistent with the Station's credit policies and
procedures.
5.23 Securities. Seller shall not sell, dispose, encumber, pledge
or transfer any interest in the Shares or grant any options, warrants or other
rights to acquire the Shares. The Company shall not issue any shares of its
capital stock or any options, warrants or other rights to acquire any shares of
its capital stock. Except for the distributions of cash to the Seller, the
Company shall not declare any dividends or acquire or redeem any of its shares.
Other than this Agreement, neither Seller nor the Company shall enter into any
agreement relating to the transfer or voting of the Company's capital stock.
5.24 Operation During Term of TBA. From and after the TBA Date,
Seller and the Company shall only be required to operate the Station in a
manner consistent with the terms and conditions of the TBA.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection
with the purchase and sale of the Assets pursuant to this Agreement shall be
subject to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (i) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (ii) compliance with the condition would have a material adverse effect
upon such party. Buyer and Seller shall oppose any requests for reconsideration
or judicial review of the FCC Consent. If the Closing shall not have occurred
for any reason within the original effective period of the FCC Consent, and
neither party shall have terminated this Agreement under SECTION 9, the parties
shall jointly request an extension of the effective period of the FCC Consent.
No extension of the FCC Consent shall limit the exercise by either party of its
rights under SECTION 9.
(c) Seller shall promptly after the date hereof obtain
all necessary consents from the FCC to assign the Licenses from STC License to
the Company and at the Closing, the Company shall be the holder of the
Licenses.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of the Company until the Closing
subject to the terms of the TBA.
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6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
(the "Risk of Loss") shall be borne by Seller and the Company at all times
prior to the TBA Date. After the TBA Date, the Risk of Loss shall be borne by
Seller and the Company at all times through the Closing, to the extent of, but
solely to the extent of, Seller's or the Company's receipt of insurance
proceeds in respect thereof and in no event shall Seller or the Company have
any liability or obligation to Buyer in respect of any such loss, damage,
impairment, confiscation or condemnation. The Risk of Loss beyond that
specifically borne by Seller or the Company in accordance with the immediately
preceding sentence shall be borne by Buyer. Seller and the Company shall use
commercially reasonable efforts to process any insurance claim to which Seller
or the Company is entitled with respect to any loss, damage, impairment,
confiscation or condemnation of any of the Assets. Seller shall use such
proceeds of insurance to repair or replace any such equipment or other property
of Seller to the extent of such proceeds. At Seller's request and subject to
Seller's supervision and direction, Buyer shall effect in a timely fashion any
repairs to or replacement of any of Seller's damaged equipment or property.
6.4 Confidentiality. Except as necessary for the consummation of
the transactions contemplated by this Agreement, and except as and to the
extent required by law, including, without limitation, disclosure requirements
of federal or state securities laws and the rules and regulations of securities
markets, each party will keep confidential any information obtained from the
other party in connection with the transactions contemplated by this Agreement.
If this Agreement is terminated, each party will return to the other party all
information obtained by such party from the other party in connection with the
transactions contemplated by this Agreement.
6.5 Environmental Remediation. Seller agrees to undertake the
environmental remediation described in Schedule 6.5 prior to Closing.
6.6 Cooperation. Buyer, Seller and the Company shall cooperate
fully with each other and their respective counsel and accountants in
connection with any actions required to be taken as part of their respective
obligations under this Agreement, and Buyer, Seller and the Company shall
execute such other documents as may be necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use their
commercially reasonable efforts to consummate the transactions contemplated
hereby and to fulfill their obligations under this Agreement. Notwithstanding
the foregoing, neither Buyer nor Seller shall have any obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any material adverse
change in any Contract to obtain a Consent required with respect thereto.
6.7 Bulk Sales Law. If applicable, the bulk sales law of the
State of Pennsylvania shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller, Buyer or the Company as the result of
non-compliance with the provisions of any bulk sales law applicable to the
transfer of the Assets as contemplated by this Agreement shall be borne by
Seller.
6.8 Sales Tax Filings. Until the Closing, the Company shall
continue to file Pennsylvania sales tax returns with respect to the Station in
accordance with the Company's past practices and shall concurrently deliver
copies of all such returns to Buyer.
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6.9 Access to Books and Records. Seller shall provide Buyer and
the Company access and the right to copy for a period of seven (7) years from
the Closing Date any books and records relating to the Assets that are in
Seller's possession. The Buyer and the Company shall provide Seller access and
the right to copy for a period of seven (7) years from the TBA Date any books
and records relating to the Assets.
6.10 HSR Act Filing. Seller and Buyer agree to (a) file, or cause
to be filed, with the U.S. Department of Justice ("DOJ") and Federal Trade
Commission ("FTC") all filings, if any, which are required in connection with
the transactions contemplated hereby under the HSR Act within five (5) business
days of the date of this Agreement; (b) submit to the other party, prior to
filing, their respective HSR Act filings to be made hereunder, and to discuss
with the other any comments the reviewing party may have; (c) cooperate with
each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents in such party's
possession that may be reasonably required in connection with such filings; (d)
promptly file, after any request by the FTC or DOJ, any information or
documents requested by the FTC or DOJ; and (e) furnish each other with any
correspondence from or to, and notify each other of any other communications
with, the FTC or DOJ which relates to the transactions contemplated hereunder,
and to the extent practicable, to permit each other to participate in any
conferences with the FTC or DOJ. Buyer and Seller shall share equally all
necessary HSR filing fees.
6.11 Nonsolicitation Agreement. From and after the date hereof to
the first anniversary of the Closing Date, neither Seller nor any affiliates of
Seller shall solicit for employment any employee of the Station; provided,
however, that the foregoing shall not apply to any employee of the Station who
is terminated by Buyer after the TBA Date.
6.12 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to
each parcel of Real Property that the Company owns, Buyer may obtain at its
expense at or prior to Closing an ALTA Owner's Policy of Title Insurance issued
by a title insurer, insuring title to such parcel in the name of the Company as
of the Closing.
(b) Surveys. With respect to each parcel of Real
Property as to which a title policy is obtained, Buyer may obtain at its
expense a current survey of the parcel, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters customarily shown on such surveys,
and showing access affirmatively to public streets and roads.
(c) Seller has delivered to Buyer copies of all of its
title policies and surveys with respect to the Real Property.
6.13 Employee Matters.
(a) On the TBA Date, Buyer shall offer employment to all
employees of the Station; provided, however, that any employee of the Station
who is not actively employed on the TBA Date shall be offered employment by
Buyer following the end of any inactive period
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(whether on account of leave, layoff, injury or disability) but only to the
extent that the Company would have been obligated to offer active employment to
such person upon the end of such inactive period; provided, however that the
two (2) employees designated in the TBA shall become employees of Seller and
shall be offered employment by Buyer on the Closing Date subject to the terms
and conditions set forth in this Section 6.13 (except that any references to
the TBA Date shall be to the Closing Date). All employees of the Station
employed under a Contract and all other employees who accept the Buyer's offer
of employment and become employees of the Buyer (the "Hired Employees") shall
be employed at substantially the same salary as paid to such employee on the
date immediately prior to their employment with Buyer and on such terms and
conditions (including benefits) as those provided by Buyer and Buyer's
affiliates to their similarly situated employees. Effective as of the date of
hire, Buyer shall grant the Hired Employees past service credit for such
employees' service with the Company, Seller or any ERISA Affiliate for all
employee benefit purposes, other than for purposes of benefit accrual under any
defined benefit retirement plan and for purposes of determining eligibility for
post-employment retiree health and life insurance coverage. Except to the
extent otherwise expressly set forth in this Agreement, nothing in this
Agreement shall be deemed or construed to require the Company to continue to
employ any of the Station's employees for any period after they have become
Hired Employees.
(b) As of the TBA Date, Buyer shall offer group health
plan coverage to all Hired Employees (and to the spouse and dependents of such
employees) on terms and conditions generally applicable to all similarly
situated employees of Buyer or Buyer's affiliates. For purposes of providing
such coverage, Buyer shall waive all preexisting condition waiting periods for
all such employees covered by the group health care plan of Seller as of the
TBA Date and shall provide such health care coverage effective as of the
Closing without the application of any eligibility period for coverage. In
addition, Buyer shall credit all payments toward deductible, out-of-pocket and
co-payment obligation limits under Seller's health care plans for the plan year
which includes the TBA Date as if such payments had been made for similar
purposes under Buyer's health care plans during the plan year which includes
the TBA Date, with respect to Hired Employees (and the spouse and any
dependents of such employees).
(c) Seller shall satisfy and discharge any obligations
to provide health care continuation coverage as required by the Consolidated
Omnibus Budget Reconciliation Act of 1985 and as described in Section 4980B of
the Code and Sections 601 through 608 of ERISA and as required by any
applicable state continuation of health coverage provisions (collectively,
"COBRA Obligations") to any employee of the Company whose employment is
terminated prior to or on the TBA Date to whom Seller has on-going COBRA
Obligations (and such employee's covered dependents), including to all
employees who do not become Hired Employees. Buyer shall satisfy and discharge
all other COBRA Obligations with respect to Hired Employees (and such
employee's covered dependents). Seller and Buyer shall reasonably cooperate in
good faith to comply with their respective COBRA Obligations hereunder.
(d) Seller shall furnish to Buyer, as soon as reasonably
practicable after to the TBA Date, but not later than thirty (30) days after
the TBA Date, a list, calculated as of the TBA Date, estimating (i) the amounts
of compensation deferred by each employee of the Station under Seller's 401(k)
Plan during the calendar year in which the consummation of the TBA occurs; and
(ii) those employees who, as of the TBA Date, have outstanding participant
loans from Seller's
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401(k) Plan, including the amount and term of such loans. As soon as reasonably
practicable following the TBA Date, Seller will cause the account balances of
all Hired Employees in the Seller's 401(k) Plan to be distributed to the Hired
Employees in accordance with the terms of Seller's 401(k) Plan.
(e) In furtherance of and not in limitation of the
obligations and liabilities of Buyer set forth in Section 6.13(a) on the TBA
Date, Buyer shall: (i) recognize the unions and labor organizations which are
parties to the collective bargaining agreements set forth in Schedule 3.22;
(ii) offer to employ all employees of the Station represented by any such union
or labor organization (collectively, "Represented Employees"); (iii) adopt
employee benefit and compensation plans, policies and arrangements covering
such Represented Employees, as required by such collective bargaining
agreements; and (iv) negotiate in good faith with the collective bargaining
representatives of the employees of the Company solely with respect to the
substitution of Buyer's employee benefit plans for Seller's employee benefit
plans.
(f) At the request of Buyer, the Company shall, prior to
the TBA Date, take any and all action necessary or appropriate (i) to terminate
no later than the TBA Date any Employee Plan or Compensation Arrangement which
provides non-qualified deferred compensation, non-qualified retirement
benefits, severance benefits, retention benefits, change in control benefits,
or similar benefits (the "Nonqualified Plans"), (ii) to pay all liabilities
accrued for the benefit of the participants under the Nonqualified Benefits
(whether or not actively employed by the Company or currently entitled to a
benefit payment under the Nonqualified Plans) and under any arrangement
directly related to the Nonqualified Plans (including, but not limited to, any
promised adjustment for taxes) (the "Supplemental Tax"), and (iii) to obtain
from each Nonqualified Plan participant a receipt and release of any and all
claims that such participant may have with respect to the Nonqualified Plan and
Supplemental Tax.
(g) On the TBA Date, the Company shall assign to Buyer,
and Buyer shall assume the collective bargaining agreements listed in Schedule
3.22, including, without limitation, all obligations, if any, to provide
severance benefits in connection with the termination after the TBA Date of any
Represented Employee. Without limiting the generality of Section 6.13(e)(iii),
such assignment and assumption shall not obligate Buyer to assume any Employee
Plans or Compensation Arrangements of the Company. Except for liabilities under
Seller's Employee Plans and Compensation Arrangements, Buyer shall be
responsible for any liabilities of the Company under any collective bargaining
agreement listed in Schedule 3.22.
(h) In furtherance of and not in limitation of the
obligations and liabilities of Buyer set forth in Section 6.13(a) and the
Company's obligations under the collective bargaining and employment agreements
that are Contracts, with respect to each Hired Employee, Buyer shall provide
severance benefits no less favorable than those provided by Buyer and Buyer's
affiliates to their similarly situated employees, except for Hired Employees
covered by collective bargaining agreements, which Hired Employees shall
receive severance benefits as provided for in such collective bargaining
agreement. Hired Employees shall be credited under Buyer's severance benefit
plan with their service at the Station for purposes of determining the amount
of severance benefits to which they may be entitled under such plan; provided,
however, that any service at the Station for which severance had previously
been paid shall be disregarded.
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(i) In furtherance of and not in limitation of the
obligations and liabilities of Buyer set forth in Section 6.13(a), Buyer shall
assume, without duplication of benefits, the liabilities of Seller to Hired
Employees as of the TBA Date for unused and unpaid vacation subject to Buyer
receiving an adjustment therefor under Section 2.3(b), but only to the extent
reflected in the employee personnel records of Seller, a certified copy of
which shall be delivered to Buyer prior to the TBA Date. Except as otherwise
required by applicable law, Buyer shall provide, without duplication of
benefits, all Hired Employees with vacation time, as the case may be, rather
than cash in lieu thereof, for such unused and unpaid vacation in accordance
with Buyer's policies. Buyer shall be liable for, and shall indemnify, defend
and hold harmless Seller from and against, all liabilities of Seller to Hired
Employees with respect to unused vacation leave.
(j) For a period of ninety (90) days after the TBA Date,
neither the Company nor the Buyer will take any action that could result in a
filing under the Worker Adjustment and Retraining Notification Act of 1988.
(k) Buyer acknowledges and agrees that from and after
the TBA Date until ninety (90) days after the Closing Date, Dennis Vickroy (the
"Business Manager") shall be available to Seller, at the sole cost and expense
of Seller, to coordinate additional financial matters related to the business
and operations of the Station for the period prior to the Closing Date;
provided, that any such services that the Business Manager provides to Seller
shall not interfere with the Business Manager's duties and responsibilities to
Buyer.
(l) Notwithstanding any provisions of Section 6.13 to
the contrary, neither Buyer nor, as of the Closing Date, the Company shall have
or retain any liabilities or payment obligations under the terms of certain
retention agreements set forth or referenced in Schedule 3.8.
(m) Seller shall retain and shall hold the Company and
the Buyer, and any affiliates of them harmless from any liability of whatever
nature with respect to benefits provided or to be provided under the Employee
Plans and Compensation Arrangements.
6.14 Tax Matters.
(a) "Booked Taxes" means Taxes of the Company payable
with respect to a Straddle Period (as defined below) that are reflected as
Adjustment Assets or Adjustment Liabilities and that are taken into account in
computing the adjustment to the Purchase Price under Section 2.3(b) hereof.
(b) Taxes of the Company with respect to the period
ending on (and including) the Closing Date, other than Booked Taxes, shall be
the responsibility of Seller. Taxes of the Company with respect to the period
after the Closing Date shall be the responsibility of Buyer.
(c) (i) Seller agrees to pay and, notwithstanding any
disclosure of potential tax liabilities made by Seller or the Company,
to indemnify, reimburse and hold harmless Buyer and the Company and
their respective successors, and their respective officers, directors,
employees, agents and representatives, from and against any and all
Taxes of the Company payable with respect to, and any and all claims,
liabilities, losses, damages,
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costs and expenses (including, without limitation, court costs and
reasonable professional fees incurred in the investigation, defense or
settlement of any claims covered by this indemnity) (herein referred
to as "Indemnifiable Tax Damages"), arising out of or in any manner
incident, relating or attributable to Taxes of the Company payable
with respect to, or Tax Returns required to be filed by the Company
under this Section 6.14 with respect to, (A) any taxable year (or
other applicable reporting period) (a "Reporting Period") of the
Company ending on or before the Closing Date, and (B) any Reporting
Period of the Company that begins before the Closing Date and that
ends after the Closing Date (a "Straddle Period") but only for that
portion of such period ending on the Closing Date (a "Short Period"),
in each case, whether such Taxes are imposed directly on the Company
or as a result of including the Company in consolidated or combined
returns filed by the affiliated group of which the Company is a member
(the "Seller Consolidated Group"), except that with respect to any
Straddle Period, Seller shall be responsible for the payment of such
Taxes only to the extent that they exceed Booked Taxes. Seller shall
be entitled to any credits or refunds of Taxes of the Company payable
with respect to any Reporting Period of the Company ending on or
before the Closing Date for which the Company is included in a
consolidated, combined or unitary Tax Return with Seller or an
affiliate of Seller, and to any credits or refunds of Taxes of the
Company payable with respect to any other Reporting Period of the
Company ending on or before the Closing Date which are received by the
Company within one year following the Closing Date. Buyer shall cause
the amount of any credits or refunds of Taxes to which Seller is
entitled under this Section 6.14(c), but which are received by or
credited to the Company after the Closing Date, to be paid to Seller
within ten business days following such receipt or crediting; provided
that Seller shall reimburse the Company to the extent of any required
subsequent repayment of, or reduction in, the amount of such credits
or refunds of Taxes so received or credited.
(ii) Seller shall also indemnify and hold
harmless Buyer and the Company from and against any and all Taxes of
Seller and members of the Seller Consolidated Group other than the
Company for any and all periods, whether before or after the Closing
Date, and from and against any and all Indemnifiable Tax Damages
arising out of or in any manner incident, relating or attributable to
such Taxes or to Tax Returns filed by or required to be filed by
Seller and members of the Seller Consolidated Group other than the
Company.
(d) Buyer agrees to pay and to indemnify, reimburse and
hold harmless Seller (and other members of the Seller Consolidated Group) and
their successors, and their officers, directors, employees, agents and
representatives, from and against (i) any and all Booked Taxes and (ii) any and
all Taxes of the Company payable with respect to, and any and all Indemnifiable
Tax Damages, arising out of or in any manner incident, relating or attributable
to Taxes of the Company payable with respect to, or Tax Returns required to be
filed by the Company with respect to, (A) any Reporting Period of the Company
beginning after the Closing Date and (B) any Reporting Period that includes the
Closing Date but only for that portion of such period commencing on the day
after the Closing Date, whether such Taxes are imposed directly on the Company
or as a result of including the Company in consolidated or combined returns
filed by any consolidated group of which the Company or the Buyer is a member.
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(e) Any tax sharing agreement, practice or other similar
arrangement between the Company and other members of the Seller Consolidated
Group shall be terminated as of the Closing Date.
(f) The Tax liabilities for each Straddle Period for the
Company shall be determined by closing the books and records of the Company as
of the Closing Date, by treating the Short Period as if it were a separate
Reporting Period and by employing accounting methods which are consistent with
those employed in preparing the Tax Returns for the Company in prior Reporting
Periods and which do not have the effect of distorting income or expenses
(taking into account the transactions contemplated by this Agreement), except
that Taxes based on items other than income or sales shall be computed for the
Reporting Period beginning on the first day of the applicable Short Period and
prorated on a time basis between the Straddle Period and the period beginning
on the first day after the Closing Date and ending on the last day of the
Reporting Period which includes the Closing Date; provided that with respect to
any Tax which is not in effect during the entire Straddle Period, the proration
of such Tax shall be based on the period during the Straddle Period that such
Tax was in effect.
(g) (i) Seller (x) shall include the Company or
cause the Company to be included in, and shall prepare and file or
cause to be prepared and filed, all Tax Returns of Seller or its
affiliates filed on a consolidated, combined or unitary basis relating
to Income Tax for all taxable periods of the Company ending on or prior
to the Closing Date, and (y) shall prepare and file, or cause to be
prepared and filed, on behalf of the Company all other Tax Returns of
the Company required to be filed for Reporting Periods of the Company
ending on or prior to the Closing Date; provided, however, that such
Tax Returns shall not report any item in a manner that is inconsistent
with the manner in which any corresponding item has been previously
reported in any such Tax Return already filed, unless such
inconsistent treatment is (x) required by law or due to a change in
circumstances, or (y) is permitted by law, Seller elects to make such
change in treatment, and such change would not be prejudicial to Buyer
or to the Company, and provided further, that Seller shall deliver to
Buyer copies of such Tax Returns (in the case of Tax Returns for which
the Company is included in a consolidated or combined Tax Return with
Seller, on a separate company basis) within 30 days after filing.
(ii) Following the Closing, Buyer shall be
responsible for preparing and filing, or causing to be prepared and
filed on behalf of the Company, all Tax Returns of the Company
required to be filed for Reporting Periods of the Company ending after
the Closing Date (including for Straddle Periods); provided, however,
that with respect to Tax Returns for Straddle Periods, such Tax
Returns shall not report any item in a manner that is inconsistent
with the manner in which any corresponding item has been previously
reported in any such Tax Return already filed, unless such
inconsistent treatment is (x) required by law or due to a change in
circumstances, or (y) is permitted by law, Buyer elects to make such
change in treatment, and such change would not be prejudicial to
Seller or to the Company. Buyer shall provide Seller with drafts of
the Tax Returns for Straddle Periods (at Buyer's election, pro forma
returns for a Short Period) at least fifteen (15) days prior to the
due date (including any extensions) of such Tax Return. If Seller
notifies Buyer at least ten (10) days prior to the due date (including
any extensions) that Seller does not approve a Straddle Period Tax
Return provided to it pursuant to the
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foregoing sentence, Buyer and Seller shall consult in good faith to
resolve such dispute. If Buyer and Seller are unable to resolve such
dispute, Buyer and Seller shall attempt to agree upon a suitably
qualified and experienced independent certified public accountant,
which shall not have been retained by either Buyer or Seller within
the two (2) years preceding the date of selection ("CPA"), to resolve
such dispute. If Buyer and Seller are unable to agree upon a CPA, then
the CPAs selected by each of Buyer and Seller shall jointly select a
third CPA to resolve such Tax Return dispute. If the selected CPA
resolves all disputes prior to the due date of the Tax Return, Buyer
shall file such Tax Return consistently with such determination. If
the selected CPA has not resolved all such disputes prior to the due
date of the Tax Return, Buyer shall have the right to file such Tax
Return on the due date in the form proposed by Buyer (and consistent
with the first sentence of this Section 6.14(g)(ii)); provided
however, that to the extent any Indemnifiable Tax Damage is
attributable to an item of dispute between Buyer and Seller, which
item is ultimately decided in favor of Seller by the selected CPA,
Buyer shall not have the right to indemnification from the funds held
by the Indemnity Escrow Agent with respect to such item to the extent
Indemnifiable Tax Damages then payable by Seller would exceed total
Indemnifiable Tax Damages that would have been payable if the Tax
Return had been filed in accordance with the determination of the
selected CPA. The cost of all CPAs provided for herein including the
selected CPA shall be borne equally by Buyer and Seller.
Notwithstanding the foregoing, Buyer shall have no obligation to
consult with Seller regarding matters that would not raise a claim for
indemnification under this Agreement. Buyer shall provide Seller with
copies of Tax Returns for Straddle Periods (at the Buyer's election,
pro forma Tax Returns for the Short Period) within thirty (30) days
following the filing date.
(h) Cooperation on Tax Matters.
(i) Seller and Buyer shall cooperate fully, as
and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section
6.15(i) and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which
are reasonably relevant to any such Tax Return, 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. Seller and Buyer agree (i) to retain
all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the
extent notified by Seller or Buyer, 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, Seller or Buyer, as the case may be, shall allow
the other party to take possession of such books and records to the
extent they would otherwise be destroyed or discarded.
(ii) Seller and Buyer further agree, upon
request, to use commercially reasonable efforts to obtain any
certificate or other document from any governmental
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authority as may be necessary to mitigate, reduce or eliminate any Tax
that could be imposed (including Taxes with respect to the
transactions contemplated hereby).
(iii) Each of Buyer and Seller shall promptly
deliver to the other any notice from any Tax authority received by it
relating to Taxes for which the other is or may be liable pursuant to
this Agreement.
(i) All representations, warranties, agreements,
covenants and obligations with respect to Taxes made or undertaken by Seller in
this Section 6.14 or in any document or instrument executed and delivered
pursuant hereto are material, have been relied upon by Buyer and shall survive
the Closing hereunder, and shall not merge in the performance of any obligation
by any party hereto. Seller agrees, from and after Closing, to indemnify and
hold Buyer or any of Buyer's affiliates, including the Company, and their
respective successors and assigns, harmless from and against all liability,
loss, damages or injury and all reasonable costs and expenses (including
reasonable counsel fees and costs of any suit related thereto) (collectively,
"Tax Damages") suffered or incurred by Buyer or any of Buyer's affiliates,
including the Company, and their respective successors or assigns arising from,
resulting from or relating to any misrepresentation by, or breach of any
covenant, agreement or warranty of, Seller contained in this Section 6.14. It
is understood and agreed by Seller that since the Company will be owned by
Buyer following the Closing, any recovery by Buyer hereunder after Closing will
be against Seller, who will have no right of reimbursement or contribution
against the Company. Any examination, inspection or audit of the assets or
business of the Company conducted pursuant to this Agreement shall in no way
limit, affect or impair the ability of Buyer, its successors or assigns to rely
upon the representations, warranties, covenants and obligations of Seller set
forth in this Section 6.14.
(j) All representations, warranties, agreements,
covenants and obligations with respect to Taxes made or undertaken by Buyer in
this Section 6.14 or in any document or instrument executed and delivered
pursuant hereto are material, have been relied upon by Seller and shall survive
the Closing hereunder and shall not merge in the performance of any obligation
by any party hereto. Buyer agrees from and after Closing to indemnify and hold
Seller harmless from and against all Tax Damages suffered or incurred by Seller
or any of Seller's affiliates, and their respective successors or assigns
arising from any misrepresentation by, or breach of any covenant or warranty
of, Buyer contained in this Section 6.14 or any certificate, document or
instrument furnished by Buyer pursuant thereto.
(k) Any Person entitled to indemnification is
hereinafter referred to as the "Tax Indemnified Party," and any Person
obligated to provide such indemnification thereunder is hereinafter referred to
as the "Tax Indemnifying Party." The Tax Indemnified Party shall promptly
notify the Tax Indemnifying Party in writing of any notice, letter,
correspondence, claim, determination, decision or decree (a "Tax Claim")
received by the Tax Indemnified Party that might raise a claim for
indemnification hereunder. The failure of the Tax Indemnified Party to notify
the Tax Indemnifying Party promptly shall not relieve the Tax Indemnifying
Party of any obligations under this Agreement except to the extent such failure
materially prejudices the ability of the Tax Indemnifying Party to defend the
claim. The Tax Indemnified Party promptly shall provide, or shall cause to be
provided, to the Tax Indemnifying Party any relevant information relating to
such Tax Claim which may be particularly within the knowledge of the
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Tax Indemnified Party or its Affiliates and otherwise to cooperate fully with
the Tax Indemnifying Party in good faith with respect to such Tax Claim;
provided that the Tax Indemnifying Party shall be responsible for the payment
of any interest and penalties resulting from any delay by the Tax Indemnifying
Party in payment of the Tax Claim.
(i) Seller shall have the sole right to handle,
answer, defend, compromise or settle (x) any Tax Claim arising from or
otherwise relating to Reporting Periods of the Company ending on or
prior to the Closing Date for which the Company is included (or is
required to be included) in a consolidated, combined or unitary return
with Seller or any affiliate of Seller (a "Seller Consolidated
Return"), and (y) any Tax Claim arising from or otherwise relating to
any other Reporting Period of the Company ending on or prior to the
Closing Date, but in the case of (y), only if the amount of such Tax
Claim does not exceed the then-existing balance held by the Indemnity
Escrow Agent and not subject to other claims. Notwithstanding the
foregoing, Seller shall not agree without the consent of Buyer (which
consent shall not be unreasonably withheld or delayed) to any
adjustment which would legally bind Buyer or that would be legally
binding on the Company for periods after the Closing Date (or, in the
case of a Tax Claim described in clause (y), to any adjustment which
would result in a payment in excess of the then existing balance held
by the Indemnity Escrow Agent and not subject to other claims, except
with the consent of Buyer, which consent shall not be unreasonably
withheld). If Seller fails within a reasonable time after notice to
handle any Tax Claim or any examination, audit, contest or litigation
as provided herein, Seller shall be bound by the results obtained by
Buyer, or its successors or assigns, in connection with such Tax Claim
and such examination, audit, contest or litigation.
(ii) Buyer shall have the sole right to handle,
answer, defend, compromise or settle any Tax Claim arising from or
otherwise relating to Reporting Periods of the Company beginning after
the Closing Date, and any other Reporting Periods (other than
Reporting Periods for which the Company is included in a Seller
Consolidated Return) if the amount of the Tax Claim exceeds the
then-existing balance of the Indemnity Escrow Amount held by the
Indemnity Escrow Agent and not subject to other claims; provided,
however, that in the case of any Tax Claim that might raise a claim
for indemnification by Seller to Buyer hereunder (taking into account
the then existing balance of the Indemnity Escrow Amount held by the
Indemnity Escrow Agent and not subject to other claims), Seller shall
have the right to (and shall promptly notify Buyer as to whether or
not it will) participate at its own cost and expense in any Tax
examination, audit, contest or litigation in connection with such Tax
Claim. If Seller fails within a reasonable time after notice to
participate in any Tax Claim or any examination, audit, contest or
litigation as provided herein, Seller shall be bound by the results
obtained by Buyer, or its successors or assigns, in connection with
such Tax Claim and such examination, audit, contest or litigation.
Notwithstanding the foregoing, Buyer shall not agree without the
consent of Seller (which consent shall not be unreasonably withheld or
delayed) to any adjustment which would legally bind Seller.
(l) Except as otherwise provided in this Section 6.14,
any amounts owed by the Tax Indemnifying Party to the Tax Indemnified Party
under this Section 6.14 shall be paid within ten business days of notice from
the Tax Indemnified Party; provided that if such party has not
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paid such amounts and such amounts are being contested before the appropriate
governmental authorities in good faith, the Tax Indemnifying Party shall not be
required to make payment until it is determined finally by an appropriate
governmental authority that payment is due, provided that the Tax Indemnifying
Party posts appropriate security as necessary to protect such party from (i)
the immediate imposition of a lien that arises or attaches from nonpayment
after assessment and demand of such amounts, or (ii) seizures of assets.
(m) The Seller and Buyer acknowledge and agree that the
provisions set forth in this Section 6.14, including, without limitation, the
indemnification provisions, shall be subject to the limitations and
qualifications on indemnification obligations set forth in Article 10 hereof,
except to the extent of (i) the Tax matters described in Section 6.14(c)(ii),
and (ii) any Tax Claim or claim for Tax Damages arising out of or in any manner
incident, relating, or attributable to Taxes of the Company payable with
respect to Tax Returns of the Company for Reporting Periods of the Company
ending on or prior to the Closing Date for which the Company is included (or is
required to be included) in a consolidated, combined or unitary Tax Return with
Seller or any affiliate of Seller.
6.15 No Inconsistent Action by Buyer.. Buyer shall not take any
action that is inconsistent with its material obligations under this Agreement
or that could hinder or delay in any material respect the consummation of the
transactions contemplated by this Agreement.
6.16 Distribution of Cash. On or prior to the Closing Date, Seller
will cause the Company to distribute all cash and cash equivalents held by the
Company to Seller.
6.17 Time Brokerage Agreement. Notwithstanding anything to the
contrary contained in this Agreement or otherwise, the Seller shall not be
deemed to have breached or failed to comply with any representations,
warranties, covenants, or agreements with respect to the Station or the Assets
if such breach or failure is due to or caused by any act, omission or
instruction of the Buyer under or in connection with the TBA or any activities
or transactions by Buyer in furtherance thereof or in connection therewith or
any actions of Seller in accordance with the terms of the TBA.
6.18 Insurance. To the extent that there are insurance policies
maintained by Seller or any affiliate of Seller covering any claims or damages
relating to the assets, business operations, conduct and employees (including,
without limitation, former employees) of the Station arising out of or relating
to occurrences prior to the Closing, the Seller shall use all best efforts to
cause Buyer to be named as an additional insured or loss payee with respect to
such policies and to maintain such policies in effect until the Closing. Upon
the written request of Buyer, at Buyer's sole cost and expense, Seller will use
best efforts to maintain in place insurance policies maintained by Seller or
any affiliate of Seller covering any claims or damages relating to the assets,
business operations, conduct and employees (including, without limitation,
former employees) of the Station arising out of or relating to occurrences
prior to the Closing after the Closing Date and to the extent permitted by the
terms of such insurance policies, Seller shall use best efforts to cause Buyer
to be named as an additional insured or loss payee with respect to such
policies.
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6.19 Collection of Accounts Receivable. Seller shall deliver to
Buyer not later than five (5) business days after the TBA Date a complete and
detailed statement of all Accounts Receivable as of the TBA Date, showing the
name, amount and age of each account. During the period from the TBA Date
through the end of the sixth successive calendar month (excluding the calendar
month during which the TBA Date occurs) (the "Collection Period"), with respect
to the Accounts Receivable, (i) Buyer will use reasonable best efforts, in
accordance with Buyer's customary business practices, to collect the Accounts
Receivable, but Buyer shall not be obligated to use any efforts to collect any
of the Accounts Receivable that are more extensive than the efforts that Buyer
uses to collect its own accounts receivable, (ii) Buyer shall not make any
referral or compromise of any of the Accounts Receivable to any collection
agency or attorney for collections and shall not settle or adjust the amount of
any of such Accounts Receivable without the prior written authorization of
Seller, (iii) on or before the fifth business day following the end of each
calendar month in the Collection Period Buyer shall furnish Seller with a list
of the amounts collected during such calendar month with respect to the
Accounts Receivable, and (iv) Buyer shall remit to Seller, on or before the
fifth business day after the end of each successive calendar month during the
Collection Period, all amounts collected by Buyer with respect to the Accounts
Receivable that have not previously been remitted to Seller, net of any
commissions paid or payable with respect thereto. Seller shall be entitled to
inspect and/or audit the records maintained by Buyer pursuant to this Section
6.19 from time to time, upon reasonable advance notice. If Buyer receives any
payment from an account debtor that is liable under any of the Accounts
Receivable and with whom Buyer continues to sell advertising time on the
Station, or otherwise maintains a business relationship, Buyer shall first
credit the payment in full to any outstanding Account Receivable balance for
such account unless Seller directs otherwise or unless the account debtor
indicates that there is a dispute in which case the payment shall be applied
first to undisputed items. Following the expiration of the Collection Period,
Buyer shall have no further obligations under this Section 6.19, except that
Buyer shall immediately pay over to Seller any amounts subsequently paid to it
with respect to any Accounts Receivable. Following the Collection Period,
Seller may pursue collection of all Accounts Receivable. Buyer shall have no
right to set-off any amounts collected for Accounts Receivable for any amounts
owed to Buyer by Seller. If Buyer remits to Seller hereunder any Accounts
Receivable paid by NBC which are based on estimates and it is subsequently
determined that Seller was not entitled to the entire amount of such payment,
Seller shall immediately return to Buyer for payment to NBC the excess amount.
The obligation of Seller in the previous sentence shall not be subject to the
Basket.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all respects at and as of the Closing Date (except for representations and
warranties that speak as of a specific date or time (which need only be true
and complete in all respects as of such date or time)), except in all cases (i)
where the failure of such representations and warranties to be true and
complete would not,
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individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect regardless of whether made on a specific date, the TBA Date or
on the Closing Date and (ii) to the extent that the failure of the
representations and warranties to be true and complete is a result of an
occurrence as to which Buyer bears the Risk of Loss pursuant to Section 6.3.
(b) Covenants and Conditions. Seller and the Company
shall have performed and complied in all material respects with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date.
(c) Consents. All Consents set forth on Schedule 7.1(c)
shall have been obtained.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof and Seller shall have complied with any
conditions imposed on it by the FCC Consent.
(e) Governmental Authorizations. The Company shall be
the holder of all FCC Licenses and there shall not have been any modification
of any FCC License that could reasonably likely have a Material Adverse Effect
on the conduct of the Station's business and operations. No proceeding shall be
pending the effect of which could be reasonably expected to revoke, cancel,
fail to renew, suspend, or modify adversely in any material respect any FCC
License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Material Adverse Effect. Between the date of this
Agreement and the TBA Date, there shall have been no Material Adverse Effect
which is continuing.
(h) HSR Act. The waiting period under the HSR Act shall
have expired or terminated without unresolved action by the DOJ or the FTC to
prevent the Closing.
(i) WTOV Purchase Agreement. The closing under the WTOV
Agreement shall be consummated simultaneously with the closing under this
Agreement.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
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(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
(e) HSR Act. The waiting period under the HSR Act shall
have expired or terminated without unresolved action by the DOJ or the FTC to
prevent the Closing.
(f) WTOV Purchase Agreement. The closing under the WTOV
Agreement shall be consummated simultaneously with the closing under this
Agreement.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 TBA Closing.
(a) TBA Date. No later than five (5) business days after
the waiting period under the HSR Act shall have expired or terminated without
unresolved action by the DOJ or the FTC, the parties shall enter into the TBA
and all employees of the Station shall be transferred from the Seller to the
Buyer as contemplated by Section 6.13, except for any such employees who remain
with the Seller pursuant to the terms of the TBA; provided, that, if the
waiting period under the HSR Act shall have expired or terminated without
unresolved action by the DOJ or FTC before July 25, 2000, the parties shall
enter into the TBA effective as of August 1, 2000.
(b) Closing Date. Subject to the satisfaction or waiver
of all of the conditions precedent to the Closing, the Closing shall take place
at 10:00 a.m. on the date which is the last business day of the month during
which the FCC Consent is issued.
(c) TBA and Closing Place. The Closing and the
consummation of the TBA shall be held at the law offices of Dow, Lohnes &
Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Washington, D.C. 20036, or
any other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Shares. Certificates representing all of the Shares,
which shall be either duly endorsed or accompanied by stock powers duly
executed by Seller in favor of Buyer;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property that may have been obtained pursuant to Section 5.12;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
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(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an officer of Seller,
certifying the matters set forth in Section 7.1(a) and Section 7.1(b);
(e) Authorizing Resolutions. Certified copies of the
resolutions of Seller's board of directors and shareholders approving the
transactions contemplated by this Agreement;
(f) UCC, Tax, Lien and Judgment Searches. Results of a
search for UCC, tax, lien and judgment filings in the Secretary of State's
records of the State of Pennsylvania and in the records of the county or
counties in which the Company's assets are located, such searches having been
made no earlier than twenty-five (25) days prior to the Closing Date;
(g) Indemnification Escrow Agreement. The
Indemnification Escrow Agreement executed by Seller;
(h) Secretary's Certificate. A certificate executed by
Seller's Secretary certifying as in effect as of the Closing Date: as attached
to such certificate, the Company's Articles of Incorporation and a Certificate
of Good Standing from the Commonwealth of Pennsylvania, as certified not more
than twenty days earlier by an appropriate state official and the Company's
Bylaws;
(i) Resignations. Written resignations, effective on the
Closing Date, of the Company's officers and directors, in which each such
officer and director waives against the Company all rights and claims to
compensation, bonuses or other obligations or liabilities of whatsoever kind,
nature or description, except with respect to any specific amounts due any such
officer in his capacity as an employee of the Station;
(j) Corporate, Financial and Tax Records. All corporate
records (including minute books and stock books and registers) and financial
and tax records of the Company held by Seller or the Company;
(k) Title Insurance, Transfer Tax and Related Documents.
An owner's affidavit in form and substance reasonably acceptable to Seller and
Buyer's title insurance company executed by Seller, transfer tax forms executed
by Seller (where required) and a FIRPTA affidavit executed by Seller; and
(l) Opinion of Counsel. An opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Exhibit C hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Adjusted Purchase Price. The Adjusted Purchase Price
as provided in Section 2.4;
(b) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by an officer of Buyer,
certifying (i) that the representations and warranties of Buyer contained in
this Agreement are true and complete in all material respects as of the
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Closing Date as though made on and as of that date, and (ii) that Buyer has in
all material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(c) Authorizing Resolutions. Certified copies of the
resolutions of the board of directors of Buyer approving the transactions
contemplated by this Agreement; and
(d) Indemnification Escrow Agreement. The
Indemnification Escrow Agreement executed by Buyer.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Shares abandoned, if Seller is not then
in material default of the terms hereof, upon written notice to Buyer, upon the
occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
prior to the date which is twelve months after the date hereof.
(d) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer shall have breached any of its
representations, warranties or covenants under this Agreement, which breach (i)
would give rise to the failure of a condition set forth in Section 7.2(a) or
Section 7.2(b), and (ii) has not been cured by Buyer within thirty (30) days
after Buyer receives written notice of such breach from Seller; provided,
however, Buyer shall not have such thirty (30) day cure period with respect to
the failure of Buyer to consummate the transactions hereunder if all of the
conditions set forth in Section 7.1 have been fulfilled.
(e) Cross-Default. The termination of the WTOV
Agreement.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Shares abandoned, if Buyer is not then
in material default of the terms hereof, upon written notice to Seller, upon
the occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
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(c) Upset Date. If the Closing shall not have occurred
prior to the date which is twelve months after the date hereof.
(d) Interruption of Service. If any event shall have
occurred prior to the TBA Date that prevented signal transmission of the
Station at less than fifty percent (50%) of authorized power for a continuous
period of seven (7) days (provided that Buyer shall have no right to terminate
if another television station in the Designated Market Area of the Station has
also suffered a similar loss of signal transmission).
(e) Breach. Without limiting Buyer's rights under the
other provisions of this Section 9.2, if Seller or the Company shall have
breached any of its representations, warranties or covenants under this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 7.1(a) or Section 7.1(b), and (ii) has not been cured by
Seller or the Company within thirty (30) days after Seller receives written
notice of such breach from Buyer; provided, however, Seller shall not have such
thirty (30) day cure period with respect to the failure of the Seller to
consummate the transactions hereunder if all of the conditions set forth in
Section 7.2 have been fulfilled.
(f) Cross-Default. The termination of the WTOV
Agreement.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1(a), 9.1(b), 9.1(c) or 9.1(e) or Section 9.2 and neither
party is in material breach of this Agreement, the parties hereto shall not
have any further liability to each other with respect to the purchase and sale
of the Shares and Buyer shall be entitled to the return of the Escrow Deposit.
If this Agreement is terminated by Buyer pursuant to Section 9.2(e), Buyer
shall have all rights and remedies available at law or equity. If Seller
terminates this Agreement pursuant to Section 9.1(d), Seller shall receive from
the Escrow Agent the Escrow Deposit as liquidated damages and the sole and
exclusive remedy to Seller for Buyer's breach. Seller and Buyer agree that
actual damages would be difficult to ascertain and that the Escrow Deposit is a
fair and equitable amount to pay to Seller for damages sustained due to Buyer's
material breach of this Agreement. If this Agreement is terminated for any
reason other than as a result of a breach by Buyer, Buyer shall be entitled to
the return of the Escrow Deposit.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall continue until the Closing and
thereafter shall survive the Closing solely for purposes of indemnification for
a period of twelve (12) months after the Closing Date. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement
of any representation, warranty, or covenant contained in this Agreement. No
notice or information delivered by Seller, the Company, or Buyer shall affect
the other party's right to rely on any representation or warranty made by such
party or relieve such party of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
10.2 Indemnification by Seller. Subject to Section 6.17, after the
Closing and subject to the terms and conditions in Sections 10.4 and 10.7,
notwithstanding the Closing, and
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regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Seller or the Company contained in this Agreement or in any
certificate, document, or instrument delivered to Buyer under this Agreement at
Closing.
(b) Any and all losses, liabilities or damages resulting
from any liability or obligation of the Company in existence as of the Closing
Date and not permitted by Section 2.2(b).
(c) Any and all losses, liabilities or damages of the
Company relating to the period prior to the TBA Date which are not taken into
account in connection with the calculation of the prorations adjustment as a
credit in favor of Buyer.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
It is understood and agreed by Seller that since the Company will be
owned by Buyer following the Closing, any recovery by Buyer hereunder after
Closing will be against Seller, who will have no right of reimbursement or
contribution against the Company.
10.3 Indemnification by Buyer. After the Closing and subject to
the terms and conditions in Sections 10.4 and 10.7, notwithstanding the
Closing, and regardless of any investigation made at any time by or on behalf
of Seller or any information Seller may have, Buyer hereby agrees to indemnify
and hold Seller harmless against and with respect to, and shall reimburse
Seller for:
(a) Any and all losses, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Buyer contained in this Agreement or in any certificate,
document, or instrument delivered to Seller under this Agreement.
(b) Any and all losses, liabilities, or damages
resulting from the operation or ownership of the Station on and after the TBA
Date except for actions taken by Seller during the period between the TBA Date
and Closing not in accordance with the terms of the TBA or this Agreement.
(c) Any and all losses, liabilities or damages of the
Company which relate to the period prior to the TBA Date which are taken into
account in connection with the calculation of the prorations adjustment as a
credit in favor of Buyer.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of
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the foregoing or incurred in investigating or attempting to avoid the same or
to oppose the imposition thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five (5)
days after written notice of such action, suit, or proceeding was given to
Claimant. Notice of claims by Buyer for indemnification also shall be given to
the Indemnification Escrow Agent as described in the Indemnification Escrow
Agreement.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty (30) days to make such investigation of the claim as
the Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty (30) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within the thirty (30) day period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate remedy at law or equity subject to
the limitations and qualifications set forth in this Section 10.4 and Section
10.7.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
in good faith by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a
third party, requires immediate action, the parties will make commercially
reasonable efforts to reach a decision with respect thereto as expeditiously as
possible.
(e) The indemnification rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
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(f) No party shall be entitled to indemnification
hereunder unless and until the amount for which indemnification under this
Agreement and the WTOV Agreement is owing exceeds One Hundred Fifty Thousand
Dollars ($150,000) (the "Basket") in the aggregate for all such matters;
provided, however, that if such amount exceeds One Hundred Fifty Thousand
Dollars ($150,000), the Indemnifying Party shall be liable to the Claimant for
the entirety of the amount and not just the portion in excess of One Hundred
Fifty Thousand Dollars ($150,000); provided, further, that the Basket shall not
apply to the proration set forth in Section 2.3; provided, further, that the
Basket shall not apply to material breaches of the representations and
warranties set forth in Section 3.16 solely to the extent that Buyer has made a
written claim hereunder with respect to such material breach prior to the date
which is seventy-five (75) days after the TBA Date.
10.5 Specific Performance. The parties recognize that if
Seller breaches this Agreement prior to Closing and refuses to perform under
the provisions of this Agreement, monetary damages alone would not be adequate
to compensate Buyer for its injury. Buyer shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Agreement. If any action is
brought by Buyer to enforce this Agreement, Seller shall waive the defense that
there is an adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either
party which results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the other party of its reasonable legal fees and expenses.
10.7 Limitations on Indemnification.
(a) Notwithstanding any other provision of this
Agreement to the contrary, Buyer acknowledges and agrees as follows: (i) the
maximum aggregate liability of Seller and WTOV Seller pursuant to this
Agreement and the WTOV Agreement (taken as a whole) to Buyer for any and all
losses, liabilities or damages incurred or suffered by Buyer (including losses,
liabilities or damages with respect to claims of third parties) shall not
exceed the Indemnity Escrow Amount, regardless of whether the Buyer seeks
indemnification pursuant to this Section 10 or Section 10 of the WTOV
Agreement, regardless of the form of action, whether in contract or tort,
including negligence, and regardless of whether or not Seller and WTOV Seller
are notified of the possibility of damages to Buyer or any other third party,
and (ii) the sole and exclusive recourse, remedy and source of funds available
to satisfy any indemnification obligations of Seller pursuant to this Section
10 shall be solely payable from the funds held by the Indemnification Escrow
Agent pursuant to the Indemnification Escrow Agreement; provided, however, that
nothing herein shall limit the remedies Buyer may have for losses, liabilities
or damages based on fraud by the Seller.
(b) Notwithstanding any other provision of this
Agreement to the contrary, (i) in no event shall Buyer or Seller be liable for
any punitive damages and (ii) in no event shall Seller be liable for any
losses, liabilities or damages related to asbestos located at the Real Property
(except to the extent set forth in Section 6.5). Each party hereto agrees to
use reasonable efforts to mitigate any losses, liabilities or damages which
form the basis for any claim for indemnification hereunder.
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(c) Whenever an Indemnifying Party is required to
indemnify and hold harmless a Claimant from and against and hold a Claimant
harmless from, or to reimburse a Claimant for losses, liabilities or damages,
such Indemnifying Party will, subject to the provisions of this Section 10, pay
the Claimant the amount of such losses, liabilities or damages reduced by the
net proceeds of any insurance policy paid to the Claimant with respect to such
losses, liabilities or damages, including, without limitation, insurance
payments made to Buyer under Seller's insurance policies as provided for in
Section 6.18.
10.8 Assignment of Indemnification and Other Rights. The parties
hereto acknowledge that Seller may at any time after the Closing (a) assign (by
contract, dividend, distribution or otherwise) to Seller's stockholders, or to
any other affiliate of Seller or Seller's stockholders, any or all of Seller's
rights in and to the Indemnity Escrow Amount and/or any or all of Seller's
contractual rights to indemnification by Buyer under this Agreement and (b)
assign (by contract, dividend, distribution or otherwise) to Seller's
stockholders, or to any other affiliate of Seller or Seller's stockholders, any
or all of Seller's obligations and liabilities with respect to indemnification
obligations for Taxes as set forth in Section 6.14 as long as such Person has
the financial capacity to satisfy such indemnification obligations for Taxes
and upon such assignment, Seller shall have no further obligations and
liabilities hereunder with respect to indemnification obligations for Taxes.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax or recordation costs and expenses arising in connection with the
conveyance of the Shares by Seller to Buyer pursuant to this Agreement shall be
paid equally by Buyer and Seller. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection with
the authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives, except that Buyer and Seller shall each pay one-half of all
filing fees required by the FCC.
11.2 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested or sent by
facsimile transmission, (c) deemed to have been given on the date of personal
delivery or the date set forth in the records of the delivery service or on the
return receipt or on the date of the confirmation if sent by facsimile, and (d)
addressed as follows:
<TABLE>
<S> <C>
If to Seller: STC Broadcasting, Inc.
720 2nd Avenue South
St. Petersburg, Florida 33701
Attention: David A. Fitz
Fax: (727)821-8092
With a copy to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
</TABLE>
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<TABLE>
<S> <C>
Attention: Lawrence D. Stuart, Jr., Esq.
Fax: (214)740-7355
and Hogan & Hartson, L.L.P.
8300 Greensboro Drive
McLean, VA 22102
Attention: Richard T. Horan, Jr., Esq.
Fax: (703)610-6200
If to Buyer: Andrew S. Fisher
Executive Vice President - TV Affiliates
Cox Broadcasting, Inc.
1400 Lake Hearn Drive, N.E.
Atlanta, GA 30319
Fax: (404) 843-5398
With a copy to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Attention: Kevin F. Reed, Esq.
Fax: (202)776-2222
</TABLE>
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2.
11.3 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that (a) Buyer may assign its rights and obligations under
this Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Seller's prior
approval; provided, (i) Buyer provides Seller with written notice prior to the
time of such assignment and Buyer guarantees the performance of Buyer's
obligations hereunder by the assignee, and (ii) such assignment shall not delay
the FCC's grant of the FCC Consent, and (b) from and after the Closing, Seller
may assign certain of its rights as set forth in Section 10.8. Upon any
permitted assignment by Buyer or Seller in accordance with this Section 11.3,
all references to "Buyer" herein shall be deemed to be references to Buyer's
assignee and all references to "Seller" herein shall be deemed to be references
to Seller's assignee, as the case may be. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Except to the extent provided in Section 10.4(e), no
person or entity, other than the parties hereto, is or shall be entitled to
bring any action to enforce any provision of this Agreement against any of the
parties hereto, and the covenants and agreements set forth in this Agreement
shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto or their respective successors and assigns as permitted
hereunder. Without limiting the foregoing, no employee of Seller and no other
person or entity shall be a third-party beneficiary under this Agreement or any
other transaction document.
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11.4 Further Assurances. The parties shall take any actions and
execute any other documents that may be reasonably necessary or desirable to
the implementation and consummation of this Agreement, including, in the case
of Seller, any additional stock powers or other transfer documents that, in the
reasonable opinion of Buyer, may be necessary to ensure, complete, and evidence
the full and effective transfer of the Shares to Buyer pursuant to this
Agreement.
11.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.6 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.7 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.8 Entire Agreement. This Agreement, the schedules hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
among Buyer, Seller and the Company with respect to the subject matter hereof.
This Agreement supersedes all prior negotiations between the parties and cannot
be amended, supplemented, or changed except by an agreement in writing that
makes specific reference to this Agreement and which is signed by the party
against which enforcement of any such amendment, supplement, or modification is
sought.
11.9 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.9.
11.10 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all
disclosures and/or filings with governmental authorities as may, in its
judgment be required or advisable in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
11.11 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement as of the day and year first above written.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------------------------
Name: David A. Fitz
Title: Chief Financial Officer
WJAC, INCORPORATED
By: /s/ David A. Fitz
-----------------------------------
Name: David A. Fitz
Title: Chief Financial Officer
COX BROADCASTING, INC.
By: /s/ Andrew S. Fisher
-----------------------------------
Name: Andrew S. Fisher
Title: Executive Vice President
-i-
