UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
_______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
September 16, 1994 1-8309
Date of Report Commission File Number
(Date of earliest event reported)
PRICE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-2991700
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
45 Rockefeller Plaza, Suite 3201, New York, New York 10020
(Address of Principal Executive Offices) (Zip Code)
(212) 757-5600
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)<PAGE>
Item 2. Acquisition or Disposition of Assets.
On September 16, 1994, the Registrant consummated the
purchase of WHTM-TV, Channel 27, serving Harrisburg-York-
Lancaster-Lebanon, Pennsylvania. The Registrant paid at the
closing cash consideration of approximately $47 million plus a
working capital adjustment. The funds utilized to make such
acquisition were provided by a credit facility from Bank of
Montreal and the Registrant's own funds. The sellers included
The Equitable Life Assurance Society of the United States,
Merrill Lynch Life Insurance Company, Smith Broadcasting Group,
Inc., various entities affiliated with Media Venture Partners,
and Prudential Venture Partners.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
(b) Pro forma financial information.
Pursuant to Items 7(a)(4) and 7(b)(2) of Form 8-K, the
financial statements of the business acquired which are
required by Item 7(a) of Form 8-K, and the pro forma
financial information which is required by Item 7(b) of
Form 8-K, have not been provided in this report since
it is impracticable to provide such information at this
time. The Registrant intends to file the required
financial information not later than December 2, 1994.
(c) Exhibits. The following document is furnished as an
Exhibit to this Current Report on Form 8-K pursuant to
Item 601 of Regulation S-K:
(10) Material contracts: Securities Purchase
Agreement, dated as of February 15, 1994, between
the Stockholders and Warrant Holders of Smith
Acquisition Corp. and Price Communications
Corporation
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
PRICE COMMUNICATIONS CORPORATION
Date: September 30, 1994 /s/ Robert Price
Robert Price
Chief Executive Officer, President
and Director
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of this
15th
day of February, 1994 by and among:
Price Communications Corporation, a New York corporation
(the
"Purchaser");
Advent V Capital Company Limited Partnership, in its
capacity
as the Sellers' Representative under the Acquisition Agreement
(as
hereafter described) (in such capacity, the "Sellers'
Representative");
The Equitable Life Assurance Society of the United States,
Merrill Lynch Life Insurance Company, Smith Broadcasting Group,
Inc., Advent V Capital Company Limited Partnership, Advent
Atlantic
Capital Company Limited Partnership, Chestnut Capital
International
II Limited Partnership, Advent Industrial Capital Company Limited
Partnership, TA Investors, Chestnut Street Partners, Inc. and
Prudential Venture Partners (collectively the "Sellers" and each
individually a "Seller"); and
Security Trust Co., N.A., as escrow agent (the "Escrow
Agent").
RECITALS
Concurrently herewith, the Purchaser has entered into a
certain Securities Purchase Agreement (the "Acquisition
Agreement")
with the Sellers pursuant to which the Purchaser has agreed to
purchase from the Sellers all of the issued and outstanding
capital
stock, and all rights to acquire capital stock, of Smith
Acquisition Corp., a Delaware corporation (the "Company").
Capitalized terms used herein without definition shall have the
meanings assigned to such terms in the Acquisition Agreement.
The Acquisition Agreement requires the Purchaser to deposit
the aggregate sum of $2,000,000 into escrow in accordance with
the
terms hereof; this Agreement being the "Escrow Agreement"
referred
to in Section 1.4 of the Acquisition Agreement.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Escrow Deposits.
(a) The Escrow Agent acknowledges receipt of
$1,000,000
(the "Deposit") from the Purchaser.
(b) At Closing, Purchaser shall deliver to the Escrow
Agent $1,000,000 by wire transfer of immediately available funds
(the "Additional Escrow Deposit"). (The Deposit and the
Additional
Escrow Deposit are collectively referred to herein as the "Escrow
Amount".)
(c) The Escrow Agent agrees to hold, administer and
disburse the Escrow Amount, together with all interest and other
amounts earned thereon and on all such interest and other
earnings
(collectively, all such interest and earnings are referred to as
"Escrow Earnings"; and the Escrow Amount and the Escrow Earnings
are collectively referred to as the "Escrowed Funds") pursuant to
the terms of this Agreement.
SECTION 2. Rights, Duties and Immunities.
(a) Acceptance by the Escrow Agent of its duties under
this Agreement is subject to the following terms and conditions,
which all parties to this Agreement hereby agree shall govern and
control the rights, duties and immunities of the Escrow Agent:
(i) The Escrow Agent undertakes to perform such
duties and only such duties as are expressly set forth
herein;
the Escrow Agent shall not be liable except for the
performance of such duties and obligations as are expressly
set forth herein; and the Escrow Agent shall not be deemed
to
have any knowledge of or responsibility for the terms of any
other agreement between or among the Sellers and the
Purchaser, including, without limitation, the Acquisition
Agreement.
(ii) The Escrow Agent shall not be responsible in
any manner whatsoever for any failure or inability of the
Sellers, the Purchaser, or of anyone else, to deliver moneys
to the Escrow Agent or otherwise to honor any of the
provisions of this Agreement, the Acquisition Agreement or
any
other Transaction Document.
(iii) The Sellers' Representative (for and on
behalf of the Sellers) and the Purchaser shall, within ten
(10) days following demand, reimburse and indemnify the
Escrow
Agent for, and hold it harmless from and against, any loss,
liability or expense, including but not limited to
reasonable
counsel fees, arising out of or in connection with its
acceptance of, or the performance of its duties and
obligations under this Agreement, except for losses,
liabilities and expenses caused by the bad faith, willful
misconduct or gross negligence of the Escrow Agent. Such
expenses shall be borne equally by the Sellers'
Representative
(for and on behalf of the Sellers) and the Purchaser.
Without
limiting the foregoing exculpation of the Escrow Agent, the
Escrow Agent shall in no event be liable in connection with
its investment or reinvestment of any cash held by it
hereunder in good faith in accordance with the terms hereof,
including, without limitation, any liability for any delays
not resulting from its bad faith, willful misconduct or
gross
negligence or any loss of interest incident to any such
delays.
(iv) The Escrow Agent shall be fully protected in
acting on and relying upon any written notice, direction,
request, waiver, consent, receipt or other paper or document
which the Escrow Agent believes in good faith to have been
signed or presented by the proper party or parties.
(v) The Escrow Agent shall not be liable for any
error of judgment, or for any act done or step taken or
omitted
by it in good faith or for any mistake of fact or law, or for
anything which it may do or refrain from doing in connection
herewith, except its own bad faith, willful misconduct or
gross
negligence.
(vi) The Escrow Agent may seek the advice of legal
counsel in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or
its
duties hereunder, and it shall incur no liability and shall
be
fully protected in respect of any action taken, omitted or
suffered by it in good faith in accordance with the opinion
of
such counsel.
(vii) The Escrow Agent makes no representation as
to
the validity, value, genuineness or collectibility of any
security, document or instrument held by or delivered to it.
(b) If a controversy or dispute arises between one or
more of the parties hereto, or between any of the parties hereto
and any person not a party hereto, as to whether or not or to
whom
the Escrow Agent shall deliver the Escrowed Funds or any portion
thereof or as to any other matter arising out of or relating to
the
Escrowed Funds or this Agreement, the Escrow Agent shall, in its
sole discretion, have the right to (but shall not be obligated
to),
commence interpleader or similar actions or proceedings for
determination of such controversy or dispute; provided, however,
in
no event shall the Escrow Agent commence any interpleader or
similar action or proceeding if such controversy or dispute shall
have been settled pursuant to a written agreement among the
parties
to such controversy or dispute or a final, non-appealable
judgment
shall have been entered by a court of competent jurisdiction
determining the rights of the parties to such controversy or
dispute.
(c) The Escrow Agent shall be entitled to receive an
annual administration fee of $1,525, payable in advance on each
anniversary of the date hereof. In addition, the Escrow Agent
shall also be entitled to reimbursement of any other reasonable
fees and expenses, including out-of-pocket costs and expenses and
reasonable attorney's fees incurred by the Escrow Agent
hereunder.
The Sellers and the Purchaser shall each be responsible for
one-half of such fees and expenses.
SECTION 3. Investment of Escrowed Funds; Earnings.
Escrowed Funds which are not disbursed by the Escrow Agent shall
be
invested by the Escrow Agent (i) in certificates of deposit with
a
maturity of no longer than one (1) month issued by any bank
organized under the laws of the United States (including the
Escrow
Agent) with capital and surplus of at least $500,000,000 or (ii)
in
an insured money market account, including such account of the
Escrow Agent or an affiliate thereof.
SECTION 4. Release of Escrowed Funds. The Escrow Agent
shall disburse the Escrowed Funds as follows:
(a) The Escrow Agent shall disburse to the Purchaser on
the date designated in a writing signed by both the Purchaser and
the Sellers' Representative as being the "Closing Date" (the
"Closing Date") the Escrow Earnings as of such Closing Date.
(b) If the Escrow Agent at any time prior to the
Closing
Date receives written notice signed by the Sellers'
Representative
stating that the Sellers are entitled to receive the Escrowed
Funds
pursuant to Section 1.4 of the Acquisition Agreement, the Escrow
Agent shall deliver or mail a copy thereof to the Purchaser (in
accordance with Section 8 hereof) and, unless the Escrow Agent
receives a written notice of objection from the Purchaser within
10
business days after the day the copy of such notice from the
Sellers' Representative is deemed given to the Purchaser in
accordance with Section 8 hereof, the Escrow Agent shall disburse
the Escrowed Funds to the Sellers' Representative. If the Escrow
Agent so receives a written notice of objection from the
Purchaser,
the Escrow Agent shall continue to hold the Escrowed Funds until
it
shall have received (i) instructions signed by both the Sellers'
Representative and the Purchaser, (ii) a final, non-appealable
judgment of a court of competent jurisdiction enforcing an
arbitration award rendered in accordance with Section 25 of the
Acquisition Agreement or (iii) a final, non-appealable judgment
of
a court of competent jurisdiction declaring the respective rights
of the Sellers and the Purchaser with respect to the Escrowed
Funds
(any such instructions, award or judgment being referred to as a
"Resolution Notice"), in which case the Escrow Agent shall
disburse
the Escrowed Funds in accordance with such instructions, award or
judgment.
(c) If the Escrow Agent at any time prior to the
Closing
Date receives written notice signed by the Purchaser stating that
the Purchaser is entitled to the Escrowed Funds or a portion
thereof, the Escrow Agent shall deliver or mail a copy thereof
(in
accordance with Section 8 hereof) to the Sellers' Representative
and, unless the Escrow Agent has received a written notice of
objection from the Sellers' Representative within 10 business
days
after the day the copy of such notice from the Purchaser is
deemed
given to the Sellers' Representative in accordance with Section 8
hereof, the Escrow Agent shall disburse the Escrowed Funds or the
requested portion thereof, as the case may be, to the Purchaser.
If the Escrow Agent so receives a written notice of objection
from
the Sellers' Representative, the Escrow Agent shall continue to
hold the Escrowed Funds until it shall have received a Resolution
Notice, in which case the Escrow Agent shall disburse the
Escrowed
Funds in accordance with such Resolution Notice.
(d) (i) If the Escrow Agent at any time after the
Closing Date receives written notice from the Purchaser that the
Purchaser is entitled to receive all or any portion of
theEscrowed
Funds pursuant to Section 10 of the Acquisition Agreement (a
"Notice of Claim"), the Escrow Agent shall give a copy thereof to
the Sellers' Representative in accordance with Section 8 hereof.
If on or prior to the 30th day following the date the copy of
such
Notice of Claim is deemed given to the Sellers' Representative in
accordance with Section 8 hereof the Escrow Agent shall not have
received a notice from the Sellers' Representative disputing all
or
part of such claim (a "Dispute Notice"), the Escrow Agent shall
disburse to the Purchaser a portion of the Escrowed Funds equal
to
the amount set forth in such Notice of Claim on the first
business
day following the end of such 30-day period.
(ii) If the Escrow Agent shall have received a
Dispute Notice within the 30-day period specified in
paragraph
(d)(i) of this Section from the Sellers' Representative with
respect to any amounts which are the subject of a Notice of
Claim (such amounts which are disputed being referred to as
"Disputed Amounts"), the Escrow Agent shall continue to hold
the Disputed Amounts as provided in paragraph (d)(iii) of
this
Section and disburse to the Purchaser the amount, if any, of
the Escrowed Funds which the Purchaser has requested pursuant
to a Notice of Claim and as to the disposition of which the
Sellers' Representative has not disputed pursuant to a
Dispute
Notice.
(iii) The Escrow Agent shall continue to hold any
Disputed Amounts until it shall have received a Resolution
Notice, in which case the Escrow Agent shall disburse the
Disputed Amount in accordance with any such Resolution
Notice.
(e) On the first anniversary of the Closing Date (the
"Final Distribution Date"), the Escrow Agent shall release to the
Sellers' Representative the Escrowed Funds as it shall hold after
making all transfers provided for in Sections 4(c) and 4(d);
provided, however, that the Escrowed Funds remaining after such
release shall not be less than the sum of (i) all then Disputed
Amounts and (ii) all amounts for which Buyer has given a Notice
of
Claim pursuant to Section 4(d) within 30 days prior to the Final
Distribution Date and as to which the Sellers' Representative has
not given a Dispute Notice as of the Final Distribution Date.
Upon
receipt of Resolution Notices concerning amounts withheld on the
Distribution Date pursuant to the preceding sentence, the Escrow
Agent shall disburse to the Purchaser from the withheld amounts
the
amount to which the Purchaser is entitled in accordance with such
Resolution Notices, and any remaining amounts of withheld funds
shall be disbursed to the Sellers' Representative.
(f) The Escrow Agent shall disburse all or any portion
of
the Escrowed Funds (i) to the Purchaser in accordance with
written
instructions at any time received from the Sellers'
Representative,
(ii) to the Sellers' Representative in accordance with written
instructions at any time received from the Purchaser and (iii) in
accordance with any joint written instructions received at any
time
from the Purchaser and the Sellers' Representative.
For purposes of this Agreement the term "business day"
means a day other than a Saturday, Sunday or legal holiday in the
Commonwealth of Massachusetts or the jurisdiction wherein the
Escrow Agent maintains its principal place of business.
SECTION 5. Termination of Escrow Agreement. This
Agreement shall terminate upon the distribution of all amounts
held
by the Escrow Agent in accordance with the provisions hereof.
SECTION 6. Successor Escrow Agent. (a) The Escrow
Agent
(and any successor escrow agent) may at any time resign as such
by
delivering the Escrowed Funds to any successor escrow agent
jointly
designated in writing by the Purchaser and the Sellers'
Representative, or to any court of competent jurisdiction,
whereupon the Escrow Agent shall be discharged of and from any
and
all further obligations arising in connection with this Escrow
Agreement. The resignation of the Escrow Agent shall take effect
on the earlier of the appointment of a successor escrow agent or
the day which is 30 days after the date of delivery of the Escrow
Agent's written notice of resignation to the other parties
hereto.
In the event that a successor escrow agent has not been appointed
at the expiration of such 30-day period, the Escrow Agent's sole
responsibility hereunder shall be the safekeeping of the Escrowed
Funds and to disburse such amount in accordance with the
instructions signed by the Purchaser and the Sellers'
Representative or as any court of competent jurisdiction may
order.
(b) If the Escrow Agent receives a written notice
signed
by the Sellers' Representative and the Purchaser stating that
they
have selected another escrow agent, any portion of the Escrowed
Funds invested by the Escrow Agent shall be promptly liquidated,
and the Escrow Agent shall deliver the Escrowed Funds to the
successor escrow agent named in the aforesaid notice within 10
days
of its receipt of such notice.
SECTION 7. Construction. This Agreement shall take
effect as a sealed instrument and be construed under and governed
by and enforced in accordance with the laws of the jurisdiction
wherein the Escrow Agent maintains its principal place of
business.
SECTION 8. Notices. All notices, requests, consents
and
other communications under this Agreement shall be in writing and
shall be mailed by first class, registered or certified mail,
postage prepaid, or sent via overnight courier service, or
delivered personally or sent by facsimile machine:
Escrow Agent: Security Trust Co., N.A.
730 Fifteenth Street, N.W.
Mail Stop No. DC1-703-01-04
Washington, D.C. 20013
Attention: Sharon Watkins
Facsimile No.: (202) 624-1006
If to the Purchasers: Mr. Robert Price
Price Communications Corporation
45 Rockefeller Plaza
Suite 3201
New York, New York 10020
Facsimile: (212) 397-3755
with a copy to: Peter G. Samuels, Esq.
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Facsimile: (212) 969-2900
If to the Sellers' Advent V Capital Company Limited
Representative: Partnership
c/o Mr. Stephen F. Gormley
Media/Communications Partners
75 State Street, Suite 2500
Boston, Massachusetts 02109
Facsimile: (617) 345-7201
and a copy to: Stephen O. Meredith, Esq.
Edwards & Angell
101 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 439-4170
or to such other address of which the addressee shall have
notified
the sender in writing. Notices mailed in accordance with this
section shall be deemed given the third day after they are
mailed,
notices sent by overnight courier service shall be deemed given
on
the next business day after they are placed in the hands of a
representative of such service and notices sent by facsimile
machine shall be deemed given when sent if sent between 9 a.m.
and
5 p.m. Boston time or the next business day thereafter if sent
after 5 p.m. Boston time.
SECTION 9. Headings. The headings of the paragraphs of
this Agreement are inserted as a matter of convenience and for
reference purposes only, are of no binding effect, and in no
respect define, limit or describe the scope of this Agreement or
the intent of any paragraph.
SECTION 10. Counterparts. This Agreement may be
executed
in any number of counterparts hereof, and by the different
parties
hereto on separate counterparts hereof, each of which shall be
deemed to be an original and all of which together constitute one
and the same agreement.
SECTION 11. Entire Agreement. This Agreement
represents
the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof, supersedes all prior
negotiations between the parties, and can be amended, modified,
supplemented, extended, terminated, discharged or changed only by
an agreement in writing which makes specific reference to this
Agreement and which is signed by the party intended to be bound
thereby.
SECTION 12. Tax Reporting. For tax reporting purposes,
Escrow Earnings accruing on the Deposit prior to the Closing Date
shall be deemed to be earned for the account of the Purchaser and
Escrow Earnings accruing on the Escrow Amount after the Closing
Date shall be deemed to be earned for the account of the Sellers,
as their interests may appear.
SECTION 13. Legal Fees. In the event of any dispute
between the Purchaser and the Sellers or the Sellers'
Representative with respect to their respective rights to the
Escrowed Funds under the Acquisition Agreement, the prevailing
party or parties shall be entitled to recover from the
non-prevailing party or parties all reasonable costs and expenses
(including reasonable attorneys' fees and disbursements) incurred
by the prevailing party or parties in connection with the
enforcement of its rights to the Escrowed Funds under the
Acquisition Agreement.
SECTION 14. Severability. Any provision of this
Agreement which may be determined by a court of competent
jurisdiction to be prohibited or unenforceable in any
jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without validating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render
unenforceable such provisions in any other jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this Escrow
Agreement as of the date first written above.
PRICE COMMUNICATIONS CORPORATION
By:
President
ADVENT V CAPITAL COMPANY
LIMITED PARTNERSHIP
(in its capacity as the Sellers'
Representative under the Acquisition
Agreement, and not personally)
By:
Stephen F. Gormley, Duly
Authorized Agent
ADVENT V CAPITAL COMPANY LIMITED
PARTNERSHIP, ADVENT ATLANTIC CAPITAL
COMPANY LIMITED PARTNERSHIP,
CHESTNUT
CAPITAL INTERNATIONAL II LIMITED
PARTNERSHIP, ADVENT INDUSTRIAL
CAPITAL COMPANY LIMITED PARTNERSHIP,
TA INVESTORS AND CHESTNUT STREET
PARTNERS, INC.
By:
Stephen F. Gormley,
Authorized Signatory
<PAGE>
PRUDENTIAL VENTURE PARTNERS
By:
Title:
SMITH BROADCASTING GROUP, INC.
By:
Robert N. Smith, President
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:
Title:
MERRILL LYNCH LIFE INSURANCE
COMPANY
By:
Title:
SECURITY TRUST CO., N.A.
By:
<PAGE>
SECURITIES PURCHASE AGREEMENT
between
Stockholders and Warrant Holders of
SMITH ACQUISITION CORP.
and
Price Communications Corporation
dated as of February 15, 1994
<PAGE>
SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
INDEX TO CERTAIN DEFINITIONS. . . . . . . . . . . . . . . vi
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Purchase and Sale of Securities . . . . . . . 2
1.1 Purchase and Sale of Securities. . . . . . . . . 2
1.2 Purchase Price . . . . . . . . . . . . . . . . . 2
1.3 Delivery of Securities . . . . . . . . . . . . . 4
1.4 Payment of Purchase Price. . . . . . . . . . . . 4
1.5 Discharge of Company Debt. . . . . . . . . . . . 8
SECTION 2. Closing . . . . . . . . . . . . . . . . . . . 8
2.1 Closing Date; Diligent Efforts . . . . . . . . . 8
2.2 Closing Items. . . . . . . . . . . . . . . . . . 9
SECTION 3. Representations and Warranties of the Sellers 10
3.1 Legal Existence; Organization; Good Standing;
Charter Documents. . . . . . . . . . . . . . . 10
3.2 Capitalization; Equity Ownership of the Company
and the Subsidiary . . . . . . . . . . . . . . 11
3.3 Financial Information. . . . . . . . . . . . . . 12
3.4 Absence of Undisclosed Liabilities . . . . . . . 12
3.5 Absence of Certain Changes or Events . . . . . . 13
3.6 Tax Matters. . . . . . . . . . . . . . . . . . . 14
3.7 Governmental Authorizations and Regulations, Etc. 16
3.8 Litigation, Etc. . . . . . . . . . . . . . . . . 16
3.9 Authority Relative to This Agreement, Etc. . . . 16
3.10 Approvals, Consents, Etc.. . . . . . . . . . . . 17
3.11 Real Properties. . . . . . . . . . . . . . . . . 18
3.12 Tangible Personal Property and Intangibles . . . 19
3.13 Environmental Compliance . . . . . . . . . . . . 20
3.14 Agreements, Contracts, Leases, Etc.. . . . . . . 22
3.15 Insurance. . . . . . . . . . . . . . . . . . . . 23
3.16 Governmental Licenses. . . . . . . . . . . . . . 23
3.17 ERISA. . . . . . . . . . . . . . . . . . . . . . 24
3.18 Employees; Compensation; Labor . . . . . . . . . 26
3.19 Bank Accounts. . . . . . . . . . . . . . . . . . 26
3.20 Finders' and Brokers' Fees . . . . . . . . . . . 27
3.21 Business Conducted by the Company and
Subsidiary Only. . . . . . . . . . . . . . . . 27
3.22 Books and Records. . . . . . . . . . . . . . . . 27
3.23 Accounts and Notes Receivable. . . . . . . . . . 27
SECTION 4. Representations and Warranties of the
Purchaser . . . . . . . . . . . . . . . . . 27
4.1 Legal Existence. . . . . . . . . . . . . . . . . 27
4.2 Authorization, Execution and Delivery
of This Agreement. . . . . . . . . . . . . . . 27
4.3 Consents . . . . . . . . . . . . . . . . . . . . 28
4.4 Finders' and Brokers' Fees . . . . . . . . . . . 28
4.5 Qualifications . . . . . . . . . . . . . . . . . 28
4.6 Funds. . . . . . . . . . . . . . . . . . . . . . 29
4.7 Due Diligence. . . . . . . . . . . . . . . . . . 29
4.8 Investment Intent. . . . . . . . . . . . . . . . 29
SECTION 5. Events Prior to Closing . . . . . . . . . . . 29
5.1 Obligations of the Sellers Prior to
Closing. . . . . . . . . . . . . . . . . . . . 29
5.2 Obligations of the Purchaser Prior
to Closing . . . . . . . . . . . . . . . . . . 31
5.3 Control of the Station . . . . . . . . . . . . . 32
5.4 FCC Approval . . . . . . . . . . . . . . . . . . 32
5.5 Hart-Scott Approval. . . . . . . . . . . . . . . 33
5.6 Release from Securityholders Agreement . . . . . 33
5.7 Obtaining Title Insurance. . . . . . . . . . . . 33
5.8 Additional Environmental Assessment. . . . . . . 34
SECTION 6. Conditions to the Purchaser's Obligations . . 35
6.1 Opinion of Counsel for the Sellers . . . . . . . 35
6.2 Opinion of Federal Regulatory Counsel
for the Sellers and Counsel for the Company
and the Subsidiary . . . . . . . . . . . . . . 35
6.3 Representations and Warranties . . . . . . . . . 35
6.4 Performance of This Agreement. . . . . . . . . . 35
6.5 Compliance Certificate . . . . . . . . . . . . . 35
6.6 FCC Final Order. . . . . . . . . . . . . . . . . 35
6.7 Litigation . . . . . . . . . . . . . . . . . . . 36
6.8 Hart-Scott Act . . . . . . . . . . . . . . . . . 36
6.9 Additional Closing Items . . . . . . . . . . . . 36
6.10 Consents . . . . . . . . . . . . . . . . . . . . 36
6.11 Title Insurance. . . . . . . . . . . . . . . . . 36
6.12 Purchaser's Environmental Report . . . . . . . . 38
SECTION 7. Conditions to the Sellers' Obligation . . . . 39
7.1 Opinion of Counsel for the Purchaser . . . . . . 39
7.2 Representations and Warranties . . . . . . . . . 39
7.3 Performance of This Agreement. . . . . . . . . . 39
7.4 Compliance Certificate . . . . . . . . . . . . . 39
7.5 FCC Final Order. . . . . . . . . . . . . . . . . 39
7.6 Litigation . . . . . . . . . . . . . . . . . . . 39
7.7 Hart-Scott Act . . . . . . . . . . . . . . . . . 40
7.8 Additional Closing Items . . . . . . . . . . . . 40
7.9 Board Resolutions. . . . . . . . . . . . . . . . 40
SECTION 8. Sellers' Representative . . . . . . . . . . . 40
SECTION 9. Survival of Representations and Warranties. . 40
SECTION 10. Indemnification. . . . . . . . . . . . . . . 41
10.1 Indemnification by the Sellers . . . . . . . . . 41
10.2 Limitation as to Amount of Damages . . . . . . . 41
10.3 Set Offs . . . . . . . . . . . . . . . . . . . . 42
10.4 Notice and Settlement of Claims. . . . . . . . . 42
10.5 Third-Party Claims . . . . . . . . . . . . . . . 43
10.6 Tax Indemnification. . . . . . . . . . . . . . . 44
SECTION 11. Confidentiality. . . . . . . . . . . . . . . 45
11.1 Prior to Closing . . . . . . . . . . . . . . . . 45
11.2 Failure to Close . . . . . . . . . . . . . . . . 45
SECTION 12. Employment Matters . . . . . . . . . . . . . 46
SECTION 13. Preparation and Filing of Returns;
Payment of Taxes . . . . . . . . . . . . . 47
13.1 Preparation and Filing of Returns. . . . . . . . 47
13.2 Allocation of Tax Liability. . . . . . . . . . . 48
13.3 Cooperation and Exchange of Information;
Proceedings. . . . . . . . . . . . . . . . . . 48
13.4 Tax Withholding Certificates . . . . . . . . . . 50
13.5 Miscellaneous Tax Matters. . . . . . . . . . . . 50
13.6 Tax Definitions. . . . . . . . . . . . . . . . . 50
SECTION 14. Notices. . . . . . . . . . . . . . . . . . . 51
SECTION 15. Third Party Rights . . . . . . . . . . . . . 52
SECTION 16. Parties in Interest; Assignment. . . . . . . 52
SECTION 17. Construction; Governing Law. . . . . . . . . 52
SECTION 18. Entire Agreement; Amendment and Waiver . . . 52
SECTION 19. Severability . . . . . . . . . . . . . . . . 53
SECTION 20. Counterparts . . . . . . . . . . . . . . . . 53
SECTION 21. Expenses . . . . . . . . . . . . . . . . . . 53
SECTION 22. Schedules and Exhibits . . . . . . . . . . . 53
SECTION 23. Termination. . . . . . . . . . . . . . . . . 53
SECTION 24. Remedies . . . . . . . . . . . . . . . . . . 54
SECTION 25. Nature of Obligations. . . . . . . . . . . . 55
SECTION 26. Dispute Resolution; Judicial Proceedings;
WAIVER OF JURY TRIAL . . . . . . . . . . . 55
SECTION 27. Further Assurances . . . . . . . . . . . . . 56
SECTION 28. Noncompetition . . . . . . . . . . . . . . . 56
SECTION 29. Accounts Receivable. . . . . . . . . . . . . 57
<PAGE>
EXHIBITS and SCHEDULES
Exhibit A
Exhibit 6.5
Schedule 1.2(d)
Schedule 1.2(a)(ii)
Schedule 3.1
Schedule 3.2(a)
Schedule 3.2(b)
Schedule 3.3
Schedule 3.4
Schedule 3.5
Schedule 3.6
Schedule 3.8
Schedule 3.10
Schedule 3.11
Schedule 3.12(a)
Schedule 2.12(b)
Schedule 3.13
Schedule 2.12(c)
Schedule 3.14
Schedule 3.15<PAGE>
Escrow Agreement
Sellers' Compliance Certificate
Calculation of Cash Flow
Company Debt
Charter Documents
Capitalization of the Company
Capitalization of the Subsidiary
Financial Statements
Absence of Undisclosed Liabilities
Subsequent Events
Tax Matters
Litigation
Required Consents
Real Property
Tangible Property
Liens
Environmental Compliance
CERCLA Notice
Contracts
Insurance<PAGE>
Schedule 3.16
Schedule 3.17
Schedule 3.19<PAGE>
FCC Licenses
Company Benefit Plans
Bank Accounts<PAGE>
INDEX TO CERTAIN DEFINITIONS
The following terms are defined in the provisions of this
Agreement indicated below:
Defined Term Defined in
AAA Section 1.4(f)
AAA Rules Section 26(a)
ABC Section 5.2(d)
Additional Escrow Deposit Section 1.4(b)
Arbiter Section 1.4(f)
Barter Agreements Section 5.1(g)
Base Price Section 1.2
Cash Flow Section 1.2(d)
Cash Flow Adjustment Section 1.2(d)
CERCLA Section 3.13(c)
Class A Stock Recitals
Class B Stock Recitals
Class C Stock Recitals
Closing Section 2.1
Closing Date Section 2.1
Closing Date Balance Sheet Section 1.4(g)
Closing Date Cash Flow Adjustment
Estimate Section 1.4(e)
Closing Date Working Capital Section 1.4(g)
Closing Date Working Capital Estimate Section 1.4(d)
Closing Receivables Section 29
Code Section 13.6
Collection Period Section 29
Communications Act Section 3.7
Company Recitals
Company Benefit Plans Section 3.17(j)
Company Debt Section 1.2
Contracts Section 3.14
Damages Section 10.1
Deposit Section 1.4(a)
Deposit Amount Section 1.4(a)
Disposition Bonus Section 1.4(d)
Employees Section 12
Environmental Condition Section 3.13(f)
Environmental Law Section 5.2(f)
Environmental Report Section 3.13(a)
Escrow Agent Section 1.4(a)
Escrow Agreement Section 1.4(a)
FCC Section 3.7
FCC Approvals Section 2.1
FCC Licenses Section 3.16
Final Order Section 6.6
Financial Statements Section 3.3(a)
Hart-Scott Act Section 2.1
Indemnification Obligation Section 10.1
Indemnification Period Section 9
Indemnity Escrow Amount Section 1.4(c)
Intangibles Section 3.12(b)
IRS Section 3.6
Leased Real Property Section 3.11
Leases Section 3.11
Liability Cap Section 10.2(b)
Liens Section 3.11(b)(i)
Overlap Period Section 13.6
Owned Real Property Section 3.11
Permits Section 3.16
Post-Closing Tax Period Section 13.6
Pre-Closing Tax Period Section 13.6
Pro Rata Share Section 10.2
Proceeding Section 13.6
Purchase Price Section 1.2
Purchaser Preamble
Purchaser's Environmental Assessment Section 5.8(a)
Qualified Plan Section 3.17(j)
Receivables Section 3.23
Receivables Collection Shortfall Section 29
Repairs Section 23
Returns Section 13.6
Securities Recitals
Securityholders Agreement Section 3.2(a)
Seller/Sellers Preamble
Sellers' Representative Section 8
Station Recitals
Stock Recitals
Subsidiary Recitals
Subsidiary Stock Section 3.2(a)
Tax or Taxes Section 13.6
Tax Arbitrator 13.3(b)(iii)
Tax Authority Section 13.6
Tax Liabilities Section 13.6
Tax Proceeding Section 13.3(b)(i)
Tax Reserve Section 13.6
Title Company Section 5.7
Trailing Cash Flow Section 1.2(d)
Transaction Documents Section 23
Warrants Recitals
Working Capital Section 1.2
1993 Cash Flow Section 1.2(d)
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is made and entered into
as of this 15th day of February, 1994 by and between:
The Equitable Life Assurance Society of the United States
("Equitable"), Merrill Lynch Life Insurance Company ("Merrill
Lynch"; and together with Equitable, the "Warrant Holders"),
Smith Broadcasting Group, Inc. ("Smith"), Advent V Capital
Company Limited Partnership ("Advent V"), Advent Atlantic
Capital Company Limited Partnership ("Advent Atlantic"),
Chestnut Capital International II Limited Partnership ("Chestnut
Capital"), Advent Industrial Capital Company Limited Partnership
("Advent Industrial"), TA Investors ("TA Investors"), Chestnut
Street Partners, Inc. ("Chestnut Street"; and together with
Advent V, Advent Atlantic, Chestnut Capital, Advent Industrial
and TA Investors, the "TA Group") and Prudential Venture
Partners ("Prudential"; and together with the TA Group, the
"Stockholders") (the Warrant Holders, Smith and the Stockholders
are referred to collectively as the "Sellers" and each
individually as a "Seller"); and
Price Communications Corporation, a New York corporation
(the "Purchaser").
RECITALS:
Smith Acquisition Corp., a Delaware corporation (the
"Company"), is owned by the Sellers as follows:
a. The Warrant Holders own warrants (the "Warrants") to
purchase 5,000 shares of the Company's Class B Non-Voting Stock
("Class B Stock");
b. The Stockholders own 5,000 shares of the Company's
Class A Non-Voting Stock ("Class A Stock"); and
c. Smith owns 100 shares of the Company's Class C Voting
Stock ("Class C Stock"; and together with Class A Stock and
Class B Stock, "Stock").
The Stock and the Warrants held by the Sellers as described
above shall, at the time the transactions contemplated hereby
are consummated, constitute 100% of the issued and outstanding
capital stock, and 100% of all rights to acquire capital stock,
of the Company.
The Company owns 100% of the issued and outstanding capital
stock of WHTM-TV, Inc., a Pennsylvania corporation (the
"Subsidiary") which is licensed by the Federal Communications
Commission to operate television station WHTM-TV in Harrisburg,
Pennsylvania (the "Station").
Subject to the approval of the Federal Communications
Commission, the Sellers desire to sell to Purchaser all of the
issued and outstanding Stock and Warrants and any shares of
capital stock of the Company issued upon the exercise of the
Warrants on or prior to the Closing Date (the Stock, Warrants
and such shares issued upon exercise of the Warrants
collectively referred to as the "Securities"), and the Purchaser
desires to purchase the Securities, on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein set forth, the parties
hereto agree as follows:
SECTION 1. Purchase and Sale of Securities.
1.1 Purchase and Sale of Securities. Subject to the terms
and conditions hereof, on the Closing Date (as defined in
Section 2), each of the Sellers shall sell, transfer, convey,
assign and deliver all of the Securities owned by such Seller to
the Purchaser free and clear of all Liens (as defined in
Section 3.11 hereof), and the Purchaser shall purchase, acquire
and accept such Securities free and clear of all Liens.
1.2 Purchase Price. (a) In consideration of the sale,
transfer, conveyance, assignment and delivery of the Securities
by the Sellers to the Purchaser, the Purchaser shall pay to the
Sellers an amount in the aggregate equal to the following (the
"Purchase Price"):
(i) $41,000,000 (the "Base Price"); minus
(ii) an amount equal to the Company Debt on the Closing
Date; plus or minus (as the case may be)
(iii) the Working Capital of the Company and the
Subsidiary as of the Closing Date; plus or minus (as the case
may be)
(iv) the Cash Flow Adjustment.
(b) For purposes of this Agreement, the term "Company
Debt" means the principal amount of the indebtedness described
on Schedule 1.2(b) hereto plus all accrued and unpaid interest
thereon and all prepayment penalties, fees and expenses relating
thereto, if any, and any other indebtedness for borrowed money
existing on the Closing Date.
(c) For purposes of this Agreement, the term "Working
Capital" means the current assets of the Company and the
Subsidiary (other than intercompany items, assets relating to
programming and film rights and licenses and assets obtained in
barter) minus the current liabilities of the Company and the
Subsidiary (other than intercompany items, current maturities of
long-term indebtedness, accounts payable for programming and
film rights and licenses and barter liabilities). For purposes
of this Agreement, except for those items specifically excluded
above, the "current assets" and "current liabilities" of the
Company and the Subsidiary shall be calculated in accordance
with generally accepted accounting principles consistent with
past practice; provided, however, that the accounts receivable
for purposes of calculating Working Capital shall be valued at
95% of their full value (before any allowance for doubtful
accounts). If the Working Capital as of the Closing Date is a
positive number, then such amount shall be added to the Base
Price, and if the Working Capital as of the Closing Date is a
negative number, then such amount shall be subtracted from the
Base Price.
(d) For purposes of this Agreement, the Cash Flow
Adjustment shall equal the product of 7.25 multiplied by the
difference between (i) $100,000 and (ii) the difference between
(x) 1993 Cash Flow and (y) Trailing Cash Flow; provided,
however, if the difference between the amounts described in
clauses (x) and (y) above is less than or equal to $100,000,
then the Cash Flow Adjustment shall equal $0.00. If Trailing
Cash Flow is greater than 1993 Cash Flow by more than $100,000,
then the Cash Flow Adjustment shall be added to the Base Price,
and if 1993 Cash Flow is greater than Trailing Cash Flow by more
than $100,000, then the Cash Flow Adjustment shall be subtracted
from the Base Price. If the Closing Date Cash Flow Adjustment
Estimate is such that the Purchase Price would be increased by
more than $3,500,000, then the Purchaser shall have no
obligation to consummate the transactions contemplated hereby
unless the Sellers shall agree that the Cash Flow Adjustment for
all purposes of this Agreement shall in no event exceed
$3,500,000. If the Closing Date Cash Flow Adjustment Estimate
is such that the Purchase Price would be decreased by more than
$3,500,000, then the Sellers shall have no obligation to
consummate the transactions contemplated hereby unless the
Purchaser shall agree that the Cash Flow Adjustment for all
purposes of this Agreement shall in no event exceed $3,500,000.
For purposes of this Agreement, the following terms are defined
as follows:
(A) "1993 Cash Flow" means the consolidated Cash Flow
of the Company and the Subsidiary for the twelve months
ended December 31, 1993 as derived from the Company's
Audited Consolidated Statement of Operations for the
year ended December 31, 1993 and computed in accordance
with Schedule 1.2(d) attached hereto; and
(B) "Trailing Cash Flow" means the consolidated Cash
Flow of the Company and the Subsidiary for the twelve
months ended on the last day of the most recent month
prior to the Closing Date as derived from the Company's
(unaudited) Consolidating Income Statements for each of
such months and computed on a basis consistent with
Schedule 1.2(d).
1.3 Delivery of Securities. At the Closing, the
Stockholders shall deliver to the Purchaser certificates
evidencing 100% of the issued and outstanding Stock and the
Warrant Holders shall deliver the Warrants (and any certificates
evidencing stock issued upon the exercise of the Warrants prior
to the Closing Date), in each case, duly endorsed, or
accompanied by transfer powers duly endorsed, in blank for
transfer, together with any required stock transfer stamps,
affixed and cancelled at the expense of Sellers.
1.4 Payment of Purchase Price. (a) Concurrently herewith,
the Purchaser shall deliver to Security Trust Company, N.A. (the
"Escrow Agent") by wire transfer of immediately available funds
the sum of $1,000,000 (the "Deposit") pursuant to the Escrow
Agreement of even date herewith in the form attached as
Exhibit A hereto among the Purchaser, the Sellers'
Representative and the Escrow Agent (the "Escrow Agreement").
If the Closing occurs, then the Sellers' Representative shall
direct the Escrow Agent to disburse to the Purchaser on the
Closing Date in immediately available funds all interest and
other amounts earned on the Deposit. The Deposit shall continue
to be held in escrow pursuant to the terms of the Escrow
Agreement (collectively, the Deposit and such interest and other
amounts are referred to as the "Deposit Amount"). If the
Sellers terminate this Agreement in accordance with Section
23(d) and if the Purchaser does not then have the right to
terminate this Agreement pursuant to the terms hereof, then
Sellers shall have the right to receive the Deposit Amount at
any time following such termination from the Escrow Agent upon
making demand therefor. In any other case, if the Closing does
not occur and this Agreement is terminated, then the Purchaser
shall have the right to receive the Deposit Amount from the
Escrow Agent upon making demand therefor. All disbursements of
the Deposit Amount made by the Escrow Agent shall be made in
accordance with the procedures and other provisions set forth in
the Escrow Agreement.
(b) At Closing, the Purchaser shall deliver by wire
transfer of immediately available funds as directed by the
Sellers' Representative an amount equal to (A) the Base Price
less, (B) the Deposit, less (C) $1,000,000 (the "Additional
Escrow Deposit"), less (D) the amount of the Company Debt on the
Closing Date, plus or minus, as the case may be, (E) the Closing
Date Working Capital Estimate as calculated in accordance with
the provisions of paragraph (d) below, plus or minus, as the
case may be, (F) the Closing Date Cash Flow Adjustment Estimate
as calculated in accordance with the provisions of paragraph (e)
below.
(c) At Closing, the Purchaser shall deliver to the
Escrow Agent by wire transfer of immediately available funds the
Additional Escrow Deposit to be held pursuant to the Escrow
Agreement. All disbursements of the Additional Escrow Deposit
and the interest and earnings thereon shall be made in
accordance with the procedures and other provisions set forth in
the Escrow Agreement. The Deposit, the Additional Escrow
Deposit and all interest and earnings on the Deposit and
Additional Escrow Deposit from and after the Closing Date are
collectively referred to herein as the "Indemnity Escrow
Amount."
(d) For purposes of this Agreement, the "Closing Date
Working Capital Estimate" shall be the amount of the Company's
and the Subsidiary's Working Capital as of the last day of the
month immediately preceding the month in which the Closing
occurs, less any distributions or dividends made or paid to or
on behalf of the Sellers by the Company or the Subsidiary after
such date, including, without limitation, the amounts paid in
satisfaction of the Disposition Bonus pursuant to the
Disposition Bonus Agreement referenced on Schedule 3.14 hereto
(the "Disposition Bonus"). At least five (5) days prior to the
Closing Date, the Sellers' Representative shall deliver to the
Purchaser a schedule setting forth in reasonable detail its
calculation of the Closing Date Working Capital Estimate, which
calculation shall be binding on the parties for purposes of such
Estimate absent manifest error.
(e) For purposes of this Agreement, the "Closing Date
Cash Flow Adjustment Estimate" shall be the Cash Flow Adjustment
derived from the Company's (unaudited) Consolidating Income
Statements for each month ended during the twelve month period
ended on the last day of the month immediately preceding the
month during which the Closing shall occur. At least five (5)
days prior to the Closing Date, the Seller's Representative
shall deliver to the Purchaser a schedule setting forth in
reasonable detail its calculation of the Closing Date Cash Flow
Adjustment Estimate, which calculation shall be binding on the
parties for purposes of such Estimate absent manifest error.
(f) The Purchaser shall deliver to the Sellers'
Representative any objection it may have to the determination of
the Closing Date Cash Flow Adjustment Estimate within 60 days
after the Closing, specifying its objection in reasonable
detail, and its calculation of the Cash Flow Adjustment. If the
Seller's Representative disputes the Purchaser's calculation of
the Cash Flow Adjustment, then the Sellers' Representative and
the Purchaser shall in good faith attempt to resolve such
dispute. If the Sellers' Representative and the Purchaser do
not resolve such dispute within 90 days following the Closing
Date, the Sellers' Representative and the Purchaser shall submit
the matter for resolution to Ernst & Young or such other person
as the Purchaser and Sellers' Representative shall mutually
agree (the "Arbiter"). If Ernst & Young will not serve as
Arbiter and if Purchaser and Sellers' Representative cannot
agree on the selection of an alternative Arbiter, the Arbiter
shall be selected by mutual agreement of the Purchaser's and the
Sellers' Representative's independent certified accountants, or
if they cannot agree, the Sellers' Representative and the
Purchaser shall request the American Arbitration Association
(the "AAA") to appoint the Arbiter, and such appointment by the
Sellers' Representative's and the Purchaser's respective
independent certified public accountants or the AAA, as the case
may be, shall be conclusive and binding on the parties. Such
determination of the Cash Flow Adjustment (and all other
determinations by the Arbiter of figures provided by this
Agreement to be determined by the Arbiter) shall be conclusive
and binding on Sellers and Purchaser for all purposes of this
Agreement absent manifest error. For assistance in making all
such determinations under this Agreement, the Arbiter (if it is
not itself an accountant or accounting firm) may retain such
accountants as it deems appropriate, and all fees and expenses
of such accountants and the Arbiter shall be borne 50% by
Purchaser and 50% by Sellers; provided, however, that the
Arbiter shall have the right (but not the obligation) to
reapportion such fees and expenses between the Purchaser and the
Sellers in accordance with its determination of the relative
merits of their respective arguments with respect to the items
in dispute. Promptly, but no later than 20 days after
submission of the dispute to the Arbiter, the Arbiter shall
determine, based solely on presentations by the Sellers'
Representative and the Purchaser, and not by independent review,
only those issues concerning the Cash Flow Adjustment which are
in dispute and shall render a report as to the dispute and the
resulting computation of the Cash Flow Adjustment, which shall
be conclusive and binding on the Sellers and the Purchaser.
Within five (5) business days of the determination of the Cash
Flow Adjustment, whether by mutual agreement of the parties or
by the Arbiter and provided there is a difference between the
Closing Date Cash Flow Adjustment Estimate and the Cash Flow
Adjustment so determined, (A) if the difference is such that in
accordance with Section 1.2(d) the Base Price would be
decreased, then the Purchaser shall be entitled to receive from
the Escrow Agent a portion of the Indemnity Escrow Amount equal
to such difference (and if the balance of the Indemnity Escrow
Amount is less than such difference, subject to the limitations
set forth in Section 10.2(b)(ii), each of the Sellers shall
deliver to the Purchaser by wire transfer of immediately
available funds a sum equal to its Pro Rata Share (as defined in
Section 10.2) of such shortfall) or (B) if the difference is
such that in accordance with Section 1.2(d) the Base Price would
be increased, then the Purchaser shall deliver to the Sellers'
Representative by wire transfer of immediately available funds
an amount equal to such difference.
(g) The Purchaser shall deliver to the Sellers'
Representative within 60 days after the Closing a balance sheet
of the Company and the Subsidiary as of the Closing Date (the
"Closing Date Balance Sheet") prepared in accordance with
generally accepted accounting principles on a basis consistent
with prior periods. If the Seller's Representative agrees with
the Closing Date Balance Sheet, then the amount of Working
Capital as of the Closing Date (the "Closing Date Working
Capital") shall be calculated based on the Closing Date Balance
Sheet. If the Sellers' Representative disputes any item on the
Closing Date Balance Sheet that is relevant to the calculation
of the Closing Date Working Capital, then the Sellers'
Representative and the Purchaser shall in good faith attempt to
resolve any such dispute. If the Sellers' Representative and
the Purchaser do not reach agreement concerning the Closing Date
Working Capital within 90 days following the Closing Date, then
the Sellers' Representative and the Purchaser shall submit the
matter for resolution to the Arbiter. Promptly, but no later
than 20 days after submission of the dispute to the Arbiter, the
Arbiter shall determine, based solely on presentations by the
Sellers' Representative and the Purchaser, and not by
independent review, only those issues concerning the Closing
Date Working Capital which are in dispute and shall render a
report as to the dispute and the resulting computation of the
Closing Date Working Capital, which shall be conclusive and
binding upon the Sellers and the Purchaser. Within five (5)
Business Days of the determination of the Closing Date Working
Capital, whether by mutual agreement of the parties or by the
Arbiter and provided there is a difference between the Closing
Date Working Capital Estimate and the Closing Date Working
Capital, (A) if the Closing Date Working Capital Estimate is
greater than the Closing Date Working Capital, the Purchaser
shall be entitled to receive from the Escrow Agent a portion of
the Indemnity Escrow Amount equal to such difference (and if the
balance of the Indemnity Escrow Amount is less than such
difference, subject to the limitations set forth in
Section 10.2(b)(ii), each of the Sellers shall deliver to the
Purchaser by wire transfer of immediately available funds a sum
equal to its Pro Rata Share of such shortfall) or (B) if the
Closing Date Working Capital is greater than the Closing Date
Working Capital Estimate, the Purchaser shall deliver to the
Sellers' Representative by wire transfer of immediately
available funds an amount equal to such difference.
(h) The Purchaser and its representatives shall prior
to the Closing be given reasonable access to the Company's and
Subsidiary's books, records and representatives during regular
business hours upon reasonable notice for all purposes,
including, without limitation, for the purpose of enabling the
Purchaser to review the information underlying the Sellers'
Representative's calculation of the Closing Date Working Capital
Estimate and Closing Date Cash Flow Adjustment Estimate pursuant
to paragraphs (d) and (e) of this Section. The Sellers'
Representatives and its representatives shall following the
Closing be given reasonable access to the Company's and the
Subsidiary's books, records and representatives during regular
business hours upon reasonable notice for the purpose of
enabling the Sellers' Representative to (i) review the
information underlying the Purchaser's calculation of the Cash
Flow Adjustment and the Closing Date Balance Sheet pursuant to
paragraphs (f) and (g) of this Section and (ii) monitor the
Purchaser's compliance with Section 29 and confirm the amount of
the Receivables Collection Shortfall, if any.
1.5 Discharge of Company Debt. On the Closing Date, the
Purchaser shall deliver to the Company immediately available
funds (either by way of capital contributions or loans) in the
amount of the Company Debt, and the Sellers shall cause the
Company to pay and satisfy in full, all of the Company Debt,
release all Liens on any of the Company's or the Subsidiary's
assets or properties or capital stock and release any guarantees
given by the Subsidiary with respect thereto.
SECTION 2. Closing.
2.1 Closing Date; Diligent Efforts. The consummation of
the purchase and sale of the Securities as contemplated hereby
(the "Closing") shall take place at the offices of Edwards &
Angell, 101 Federal Street, Boston, Massachusetts on the later
of (i) July 18, 1994 or (ii) the first business day after the
later to occur of (a) the date on which the FCC approvals for
the transfer of control of the Subsidiary ("FCC Approvals")
shall have been received and shall have become a Final Order, or
(b) the date on which the FCC's grant of the application for
renewal of the Station's license shall have been received and
shall have become a Final Order, or (c) the date upon which all
applicable waiting periods with respect to the sale of the
Securities under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "Hart-Scott Act") shall have expired or been
terminated without objection by the Federal Trade Commission or
the date upon which the approval of the Department of Justice
with respect to the Closing shall have been obtained pursuant to
the Hart-Scott Act, or at such other time, date or place upon
which the Purchaser and the Sellers' Representative shall
mutually agree in writing (the date upon which the Closing
occurs being referred to as the "Closing Date") but in no event
shall the Closing occur during the first fifteen days of any
month. The Sellers and the Purchaser covenant and agree to use
their respective diligent efforts to consummate the transactions
contemplated by this Agreement promptly and consistently with
and subject to the foregoing.
2.2 Closing Items.
(a) At the Closing, concurrently with the discharge of
Purchaser's closing obligations, the Sellers shall deliver, or
cause to be delivered, to the Purchaser in addition to the items
described in Section 1.3:
(i) Evidence of the payment of the Disposition
Bonus and the termination of (A) the Company's and the
Subsidiary's rights and obligations under the
Securityholders Agreement (hereafter described),
(B) the Subsidiary's rights and obligations under the
Management Agreement dated as of September 30, 1992
between the Subsidiary and Robert N. Smith, (C) the
Subsidiary's rights and obligations under the
Management Agreement dated as of September 30, 1992
between the Subsidiary and David A. Fitz and (D) the
Company's and the Subsidiary's rights and obligations
under any other agreement betwen the Company or the
Subsidiary and any affiliate thereof as defined in the
Securityholders Agreement (other than Section 8(b) of
the Employment Agreement dated as of September 30, 1992
between the Company and John Purcell);
(ii) written resignations, or evidence of the
removal from office, of all officers and directors of
the Company and the Subsidiary effective as of the
Closing Date;
(iii) the opinions of counsel and certificates
required by Sections 6.1, 6.2 and 6.5 of this
Agreement;
(iv) the consents required by Section 3.10
(consents of third parties), including, without
limitation, the consent of ABC with respect to the
Affiliation Agreement relating to the Station;
(v) the minute books and stock record books of
the Company and the Subsidiary;
(vi) physical possession of all tangible assets;
(vii) affidavits reasonably requested in connection
with obtaining title insurance for the Owned Real
Property as contemplated hereby;
(viii) estoppel certificates reasonably requested
with respect to Leased Real Property;
(ix) cancelled promissory notes, UCC termination
statements and release of any Guarantees given by the
Subsidiary with respect to Company Debt; and
(x) real estate transfer tax forms, if any.
(b) At the Closing, concurrently with the discharge of
the Sellers' closing obligations, the Purchaser shall, in
addition to fulfilling its obligations under Section 1.4 and
Section 1.5, deliver to the Sellers' Representative the opinion
of counsel and certificates required by Sections 7.1, 7.4 and
7.9 of this Agreement.
SECTION 3. Representations and Warranties of the Sellers. Each
of the Sellers hereby represents and warrants to the Purchaser
as hereafter set forth in this Section 3. For all purposes of
this Agreement, the existence or occurrence of any events or
circumstances which constitute or cause a breach of a
representation or warranty of the Sellers shall be deemed not to
constitute a breach of such representation or warranty if such
event or circumstance is promptly cured without any material
adverse consequence to the Company, the Subsidiary or their
respective assets, and said representation and warranty shall be
true and correct in all material respects on the Closing Date.
Except for the representations and warranties set forth in this
Section 3, the Sellers make no representation or warranty,
whether express or implied, of any kind.
3.1 Legal Existence; Organization; Good Standing; Charter
Documents.
Such Seller has the requisite power and authority to enter
into this Agreement and the other agreements contemplated by
this Agreement and to consummate the transactions contemplated
hereby and thereby. Each of the Company and the Subsidiary is a
corporation duly incorporated, validly existing and in good
standing under the laws of its state of incorporation and is
qualified to do business in each jurisdiction in which the
failure to be so qualified would have a material adverse effect
on the business, operations, assets, properties or financial
condition of the Company or the Subsidiary. The Company and the
Subsidiary each has the corporate power and authority to own,
lease and use its properties and to transact the business in
which it is engaged in the manner and in the places in which
such business is now being conducted. True, correct and
complete copies of the corporate charter and by-laws of each of
the Company and the Subsidiary as the same are in effect on the
date hereof are attached hereto as Schedule 3.1.
3.2 Capitalization; Equity Ownership of the Company and the
Subsidiary.
(a) The issued and outstanding capital stock of the
Company, and the issued and outstanding Warrants and other
rights to purchase capital stock of the Company, are as set
forth on Schedule 3.2(a) hereto. All shares of Stock referenced
on Schedule 3.2(a) are validly issued, fully paid and
non-assessable and are owned both beneficially and of record by
the Stockholders and Smith as set forth on Schedule 3.2(a). All
of the Warrants are owned both beneficially and of record by the
Warrant Holders as set forth on Schedule 3.2(a). Except for the
Stock, the Warrants held by the Warrant Holders as set forth on
Schedule 3.2(a) and the options granted to the TA Group to
acquire 50% of the issued and outstanding Class C Stock pursuant
to the Securityholders Agreement dated as of September 30, 1992
among the Company, the Subsidiary, the Sellers and Robert N.
Smith (the "Securityholders Agreement") (which options shall be
terminated and of no further force or effect upon the occurrence
of the Closing), there are no shares of capital stock or other
securities of the Company issued or outstanding, held in its
treasury or reserved for issuance and there are no outstanding
warrants, options, contracts, puts, calls or other rights of any
kind with regard to the capital stock of the Company. There are
no securities issued or outstanding which are convertible into
or exchangeable for any of the foregoing and there are no
contracts, commitments or understandings to issue or grant any
such convertible or exchangeable security. The Securities are
held free and clear of all liens, pledges and encumbrances other
than those listed on Schedule 3.2(a) hereof, all of which will
be discharged and terminated on or before the Closing, and the
Sellers have full legal right, title and authority to transfer
the Securities to the Purchaser as contemplated hereby. There
are no voting trusts or other contractual commitments or
understandings of any kind with respect to ownership, transfer
and voting of the Securities other than the Securityholders
Agreement. The issued and outstanding capital stock of the
Subsidiary (the "Subsidiary Stock") is as set forth on Schedule
3.2(b) hereto. The Subsidiary Stock is held free and clear of
all liens, pledges and encumbrances other than those listed on
Schedule 3.2(b) hereof, all of which will be discharged and
terminated on or before the Closing. All of such shares are
validly issued, fully paid and non-assessable and are owned
legally and beneficially by the Company. Other than the
Subsidiary Stock, there are no shares of capital stock or other
securities of the Subsidiary issued or outstanding, held in its
treasury, or reserved for issuance and there are no outstanding
warrants, options, contracts, puts, calls or other rights of any
kind with regard to the Subsidiary's capital stock. There are
no securities issued or outstanding which are convertible into
or exchangeable for any of the foregoing and there are no
contracts, commitments or understandings to issue or grant any
such convertible or exchangeable security.
(b) Neither the Company nor the Subsidiary has any
direct or indirect ownership interest in or any obligation to
purchase or acquire any such interest in any corporation,
business trust, firm, partnership, joint venture or other entity
or organization other than the Company's ownership interest in
the Subsidiary.
3.3 Financial Information. (a) The Company has furnished
the Purchaser with the financial statements listed in Schedule
3.3 attached hereto (such financial statements, together with
the financial statements referred to in Section 5.1(h) below,
being herein referred to as the "Financial Statements"). Except
as disclosed on Schedule 3.3, the Financial Statements
(including in all cases the notes thereto) are or will be in
accordance with the books and records of the Company and the
Subsidiary and have been (or will be) prepared in accordance
with generally accepted accounting principles applied on a
consistent basis, and fairly present or will fairly present the
financial position and results of operations of the persons to
which they purport to relate as of the dates and for the periods
indicated.
(b) Neither the Company nor the Subsidiary is in
default in any material respect under any agreement or
instrument relating to the Company Debt. All principal and
interest payments due prior to the date hereof with respect to
the Company Debt have been paid in a timely manner. The Company
Debt may upon the giving of notice be prepaid at any time
without penalty or prepayment fees of any kind.
3.4 Absence of Undisclosed Liabilities. Except as
reflected in the Financial Statements and otherwise disclosed
herein or on the Schedules hereto or contemplated hereby, and
except for those incurred since December 31, 1993 in the
ordinary course of business consistent with past practice (and
of the kind and nature reflected in the Financial Statements
listed on Schedule 3.3), neither the Company nor the Subsidiary
has incurred any indebtedness or material liability (that is not
covered by insurance) required to be disclosed on a balance
sheet prepared in accordance with generally accepted accounting
principles consistently applied or the notes thereto, whether
accrued, absolute, contingent or otherwise, whether due or to
become due. To the Sellers' actual knowledge, there are no
facts or circumstances existing on the date hereof which would
be reasonably likely to result in the incurrence of any such
indebtedness or material liability by the Company or the
Subsidiary.
3.5 Absence of Certain Changes or Events. Except as
reflected on Schedule 3.5 or on the other Schedules hereto and
as contemplated or permitted by this Agreement, since
December 31, 1993, neither the Company nor the Subsidiary has
(i) incurred or suffered any liability (whether accrued,
absolute, contingent or otherwise), or, as to its property, any
physical loss, damage or destruction (whether or not covered by
insurance), materially and adversely affecting the properties,
assets or financial condition of the Company or the Station;
(ii) declared, paid or set aside for payment any dividend or
other distribution in cash, stock, or property with respect to
any class of its capital stock; (iii) purchased, redeemed, sold,
issued or agreed to issue any additional shares of capital stock
or other securities or granted any options, warrants or other
rights to purchase or to convert any obligation into shares of
capital stock or other securities; (iv) except in the ordinary
course of business and consistent with past practices, made or
granted any increase in the compensation or benefits payable or
to become payable to any of its officers, employees whose
current base salary exceeds $50,000 per year, consultants or
directors, or made or granted any increase in or amendments to
or termination of any bonus, pension or other employee benefit
plan, payment or arrangement (including any loan or other credit
accommodation) made to, for or with any such officers,
employees, consultants or directors, (v) entered into, amended
or terminated any material commitment, contractual obligation or
transaction (including borrowings, other than borrowings in the
ordinary course of business from lenders with which a borrowing
relationship existed on the date hereof, all of which are
disclosed on Schedule 3.5) or any other commitment, contractual
obligation or transaction other than in the ordinary course of
business consistent with past practices; (vi) mortgaged, pledged
or subjected to any lien, charge, security interest or any other
encumbrance any of its assets (whether tangible or intangible)
or properties having a replacement cost in excess of $50,000;
(vii) sold, assigned, transferred, conveyed, leased or otherwise
disposed of, or agreed to sell, assign, transfer, convey, lease
or otherwise dispose of, any of its assets, properties or
material rights, except for fair consideration in the ordinary
course of business; (viii) cancelled or compromised any debt or
claim, or waived or released any right, except for adjustments
made in the ordinary course of business which, in the aggregate,
are not material; (ix) effected any change in any method of
accounting or accounting practice; (x) suffered any other event
or condition of any character preventing or materially impairing
regular broadcast transmission by the Station in the normal and
usual manner or otherwise experienced any material adverse
change in the business, operations, properties, assets or
financial condition of the Company or the Subsidiary;
(xi) diverted any of the Company's or the Subsidiary's assets
for any purpose other than operation of the Station; (xii) taken
any other action or entered into any other transaction not in
the ordinary course of business; or (xiii) agreed to or
knowingly permitted any of the foregoing.
3.6 Tax Matters. (a) The Company and the Subsidiary have
prepared and filed in a timely fashion with the appropriate
federal, state and local authorities all Returns (as defined in
Section 13) required to be filed by them with respect to the
Pre-Closing Tax Periods (as defined in Section 13), which
Returns were true, correct and complete in all material
respects, and were prepared on a basis consistent with the
Financial Statements of the Company and the Subsidiary (except
as otherwise disclosed in such Financial Statements or in
schedules filed with such Returns). The Company and the
Subsidiary have paid all Taxes shown on such returns to be
payable, or which have become due pursuant to any assessment,
deficiency notice, 30-day letter or other notice received by it
(except for any amounts being contested in good faith by
appropriate proceedings and as to which adequate reserves have
been established on the Financial Statements).
(b) Neither the Company nor the Subsidiary has
executed or filed with the Internal Revenue Service ("IRS") or
any other Tax Authority (as defined in Section 13) any agreement
now in effect extending the period for assessment or collection
of any income or other Taxes (as defined in Section 13).
Neither the Company nor the Subsidiary is a party to any pending
action or proceeding by any Tax Authority for assessment or
collection of Taxes and neither the Company nor the Subsidiary
has received notification that the IRS or any other applicable
Tax Authority intends to commence a review or examination or has
proposed an adjustment of any such Returns.
(c) True and complete copies of all Federal and
Pennsylvania income and franchise tax Returns filed by the
Company and the Subsidiary for 1990, 1991 and 1992 have been
previously delivered to the Purchaser or its representatives.
No extension of any statute of limitations for the assessment or
collection of any Tax is currently in effect for any Tax year
ending on or before December 31, 1989.
(d) There is no agreement or consent made under
Section 341(f) of the Code affecting the Company or the
Subsidiary. There are no liens for any Tax on the assets of the
Company or the Subsidiary. There are no Tax-sharing agreements
to which the Company or the Subsidiary is a party. Neither the
Company nor the Subsidiary has made any payments, is obligated
to make any payments, or is a party to any agreement that under
certain circumstances would obligate it to make any payments
that will not be deductible under Section 280G of the Code or
that will be subject to withholding under Section 4999 and 3402
of the Code. Except as reflected on the Returns referenced in
subsection (c) of this Section, no Tax elections under the Code
have been made that will materially adversely affect the Company
or the Subsidiary after the Closing Date.
(e) During the Pre-Closing Tax Periods, neither the
Company nor the Subsidiary has been a member of an affiliated
group filing a consolidated federal income Tax Return other than
the group consisting solely of such corporations. The
Subsidiary files a separate tax return in Pennsylvania; the
Company files a separate franchise tax return in Delaware; and
during the Pre-Closing Tax Periods, neither the Company nor the
Subsidiary has filed a state tax return in any other
jurisdiction.
(f) During the Pre-Closing Tax Periods, except as
disclosed on Schedule 3.6, neither the Company nor the
Subsidiary has received any notice from any Tax Authority in a
jurisdiction where either the Company or the Subsidiary does not
file Tax Returns that either of such corporations is or may be
subject to taxation by that jurisdiction.
(g) Neither the Company nor the Subsidiary has
undergone a change in accounting method during the Pre-Closing
Tax Periods that currently requires, or will require in the
future, an adjustment to taxable income under Section 481 of the
Code.
(h) Neither the Company nor the Subsidiary is or
previously during the Pre-Closing Tax Periods has been a partner
in a partnership (or a holder of an interest in an entity that
is treated as a partnership for tax purposes).
(i) There is no deferred gain of the Company or the
Subsidiary attributable to deferred intercompany transactions
within the meaning of Section 1.1502-13 of the Treasury
Regulations which occurred during the Pre-Closing Tax Periods.
The Company does not have an excess loss account with respect to
the stock of the Subsidiary within the meaning of Sections
1.1502-14 and 1.1502-32 of the Treasury Regulations.
(j) Neither the Company nor the Subsidiary has
undergone an ownership change within the meaning of Section 382
of the Code during the Pre-Closing Tax Periods. During the
Pre-Closing Tax Periods, the Subsidiary has been the holder of
the WHTM-TV FCC License, the Company has held all of the
Subsidiary's capital stock and neither the Company nor the
Subsidiary has merged or consolidated with any other person.
3.7 Governmental Authorizations and Regulations, Etc. The
Company, the Station and the Subsidiary are operating in
compliance with all federal, state and local laws, ordinances,
licenses, rules and regulations, orders, writs, decrees or
judgments of any governmental authority in all material respects
applicable to the operation, conduct or ownership of their
business or properties, including, without limitation, the
Communications Act of 1934, as amended, and the rules and
regulations and policies of the Federal Communications
Commission ("FCC") promulgated thereunder (collectively, the
"Communications Act"). None of the Company, the Station or the
Subsidiary is subject to any material adverse consequences
resulting from any previous violation of any such applicable
laws, ordinances, licenses, rules and regulations, orders,
writs, decrees or judgments.
3.8 Litigation, Etc. Except as set forth on Schedule 3.8
hereto, as of the date hereof, no litigation, proceeding,
investigation, review, arbitration or claim, by governmental
representatives or authorities or others is pending or, to the
Sellers' knowledge, threatened against the Company or the
Subsidiary or their respective businesses, assets or properties
or the Securities. Except as disclosed on Schedule 3.8 hereto,
there is no continuing order, injunction or decree of any court,
arbitrator or governmental authority to which the Company or the
Subsidiary is a party or by which either the Company, the
Subsidiary or any of their respective assets or properties or
the Securities are bound.
3.9 Authority Relative to This Agreement, Etc. (a) The
execution, delivery and performance of this Agreement and all
other agreements, instruments and documents executed or
delivered by such Seller or the Sellers' Representative in
connection herewith and the consummation of the transactions
contemplated hereby and thereby, including, without limitation,
the sale and transfer of the Securities and the appointment of
the Sellers' Representative, have been duly authorized by, and
this Agreement has been duly executed and delivered by, such
Seller. The execution, delivery and performance of this
Agreement and all other agreements, instruments and documents
executed or delivered by such Seller or the Sellers'
Representative in connection herewith and the consummation of
the transactions contemplated hereby and thereby will not, with
or without the giving of notice or the passage of time, (i)
subject to obtaining the consents and approvals referred to in
Section 3.10, violate any provision of law, rule or regulation
applicable to the Company or the Subsidiary, (ii) subject to the
obtaining of the consents referred to in Section 3.10, conflict
with, result in the breach of any provision of or the
termination of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the
properties or assets of the Company or the Subsidiary pursuant
to the corporate charter or by-laws of the Company or the
Subsidiary or any other material instrument, license, agreement
or commitment to which the Company or the Subsidiary is a party
or by which they or any of their respective assets or properties
are bound; or (iii) constitute a violation of any order,
judgment or decree to which the Company or the Subsidiary is a
party or by which they or any of their respective assets or
properties are bound.
(b) This Agreement and all other agreements,
instruments and documents executed or delivered by such Seller
or the Sellers' Representative in connection herewith on behalf
of such Seller (to the extent such execution and delivery is
within the scope of the authorization granted to the Sellers'
Representative under Section 8 hereof) constitute the legal,
valid and binding obligation of such Seller, enforceable against
it in accordance with its terms; subject, however, to
bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights
generally or principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or law).
3.10 Approvals, Consents, Etc. No approval, consent or
authorization of, exemption by, or filing with any person not a
party to this Agreement or any court or governmental authority
is required to be obtained or made by such Seller, the Company
or the Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the
transactions contemplated hereby other than (i) filings under
the Hart-Scott Act, (ii) the consent of the FCC to the transfer
of control of the Subsidiary (iii) the grant by the FCC of the
license renewal for the Station and (iv) the consent of other
parties to various agreements, as set forth on Schedule 3.10
hereto.
3.11 Real Properties. (a) Schedule 3.11 hereto describes
(1) all real property owned of record or beneficially by the
Company and the Subsidiary (collectively, the "Owned Real
Property"), and (2) all leases of real property (the "Leased
Real Property") to which the Company or the Subsidiary is a
party (the "Leases").
(b) Except as set forth on Schedule 3.11:
(i) the Company or the Subsidiary, as the case
may be, has (A) good and marketable title to the Owned
Real Property, free and clear of all (w) liens,
mortgages, pledges, security interests or encumbrances
(x) leases, (y) options to purchase and (z) easements,
reservations, exceptions, encumbrances, claims under
bailment and storage agreements, equities, conditional
sales contracts, encroachments, conditions,
limitations, charges and restrictions (collectively,
the items listed in clauses (w), (x), (y) and (z) are
referred to as "Liens"), except for Liens, if any, for
real property taxes not yet due and payable and Liens
which, in the aggregate, do not materially adversely
affect title to the Owned Real Property or detract
materially from the value of or interfere with the
present use of any of the Owned Real Property subject
thereto or affected thereby or are not material to the
financial position or results of operations of Company
or the Subsidiary or which will be discharged on or
before the Closing Date, and (B) all easements and
rights, including but not limited to easements for
power lines, water lines, sewers, roadways, and other
means of ingress and egress, necessary to conduct the
business conducted on the Owned Real Property;
(ii) Neither the whole nor any portion of any of
the Owned Real Property, or to the Sellers' knowledge
the Leased Real Property, is subject to any pending
condemnation or similar proceeding by any governmental
authority;
(iii) The Company and the Subsidiary have all
consents, permits, licenses or certificates of
occupancy pertaining to the ownership of any of the
Owned Real Property or the operations conducted on any
Owned Real Property and the Leased Real Property the
not having of which would have a material adverse
effect on business, operations or financial condition
of the Company and the Subsidiary;
(iv) Neither the Company nor the Subsidiary has
received written notification specifying the existence
of any violation (which has not been cured) of any
building, zoning or other law, ordinance or regulation
in respect of the Owned Real Property or Leased Real
Property or structures thereon or the use thereof;
(v) To such Seller's actual knowledge, no defect
or condition exists on the Owned Real Property or the
buildings or improvements which constitute part thereof
which materially adversely impairs the current use of
such Owned Real Property;
(vi) All Leases are in full force and effect and:
(A) the Company or the Subsidiary, as the
case may be, is entitled to enjoy under its
leases for the Leased Real Property (as to
which it is lessee) and will for the term
thereof be entitled to possess the right to
quiet and uninterrupted possession of the
Leased Real Property subject only to a
performance of the lessee's obligations under
the terms of the leases related thereto; and
(B) neither the Company nor the Subsidiary
is in default thereunder in any material
respect nor has the Company or the Subsidiary
received any notices under the Leases which
with the passage of time or giving of notice
or both would constitute a default under the
Leases; and
(vii) True and complete copies of the Leases have
been delivered to the Purchaser or its representative.
Except for the Leases, there are no other agreements to
which either the Company or the Subsidiary is a party
which materially adversely affects the Company's or the
Subsidiary's use of the Leased Real Property.
3.12 Tangible Personal Property and Intangibles.
(a) Schedule 3.12(a) sets forth a list of each item of
machinery, equipment, furniture, fixtures, vehicles and other
tangible assets (other than real property) which are owned by
the Company or the Subsidiary on the date hereof and have a book
value as of December 31, 1993 in excess of $5,000. Except as
set forth on Schedule 3.12(b) hereto, the Company and the
Subsidiary have good title to all material items of tangible
personal property reflected on the Financial Statements (except
as sold or disposed of subsequent to the date thereof in the
ordinary course of business and consistent with past practice),
free and clear of all Liens, except for (i) Liens which are
listed on Schedule 3.12(b) hereto and will be discharged on or
before the Closing Date, and (ii) Liens securing obligations
arising under capital leases described on Schedule 3.14 hereto
which Liens will remain in effect through and following the
Closing Date. All such tangible personal property and all other
personal property used in the operation of the Station is in
good operating condition reasonable wear and tear excepted, is
suitable for the use for which it is now being used by the
Company and the Subsidiary and meets the requirements of all of
the FCC Licenses, the Communications Act and all other
applicable laws, rules, regulations, policies and Permits
relating to such property.
(b) The Company and the Subsidiary own or license all
material trademarks, trade names, service marks, copyrights,
know-how, patents and applications for any of the foregoing and
all computer programs, software and other intangible rights and
property necessary to conduct their business in the ordinary
course consistent with past practices (collectively
"Intangibles").
(c) The Real Property, the tangible personal property
listed on Schedule 3.12(a) and the Intangibles constitute all of
the properties and assets that are used or useful or held for
use in or required for the operation of the business of the
Company and the Subsidiary.
3.13 Environmental Compliance. (a) Attached hereto as
Schedule 3.13 is a true and complete copy of the Phase I
Environmental Site Assessment Report prepared by Environmental
Strategies Corporation and dated November 8, 1993 (the
"Environmental Report") conducted with respect to the Owned Real
Property. The Sellers make no express or implied representation
or warranty with respect to the accuracy or completeness of the
Environmental Report except that the Sellers have not altered
any of its conclusions or withheld any portion thereof. By
commissioning the preparation of the Environmental Report and
delivering it to the Purchaser, the Sellers are not undertaking,
and shall have no obligation to update the Environmental Report
or otherwise notify the Purchaser of any new or amended
Environmental Laws (as defined in Paragraph (f) of this
Section); provided, however, that the Purchaser and Purchaser's
representatives shall be given reasonable access to the Owned
Real Property, Leased Real Property, the Station, and any
available documents or information in the Company's or the
Subsidiary's possession, as requested by Purchaser or
Purchaser's representative, that provide information relevant to
the conduct of the Purchaser's Environmental Assessment in
accordance with Section 5.8.
(b) Neither the Company nor the Subsidiary has
received any notice, directive, order or similar demand from any
federal, state or local regulatory authority with jurisdiction
over Environmental Laws requiring that investigation, cleanup,
remedial or other action be taken at the site of any Owned Real
Property or Leased Real Property, or indicating that the Company
or the Subsidiary might be liable for all or part of the costs
of any investigation, cleanup, remedial or other action at the
site of any Owned Real Property or Leased Real Property. Except
for Environmental Conditions expressly disclosed by the
Environmental Report, the Sellers have no actual knowledge of
any Environmental Condition the existence of which either singly
or in the aggregate would have a material adverse effect on the
business, operations, properties, assets or financial condition
of the Company, the Subsidiary or the Station, or on any
license, concession, or proprietary right of others.
(c) Schedule 3.13(c) contains a complete list of the
name and location of every site which is listed, or proposed for
listing, on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. Sec. 9601 et seq., or inventory of
inactive hazardous waste sites maintained by any state which is
currently or formerly owned, leased or occupied by the Company
or the Subsidiary and with respect to which the Company, the
Subsidiary or the Station has received since June 20, 1986
notice that it is considered to be a potentially responsible
person.
(d) Except for Environmental Conditions expressly
disclosed by the Environmental Report, neither the Company nor
the Subsidiary has caused or knowingly permitted to exist a
disposal, discharge or release on or from any Owned Real
Property or Leased Real Property or any assets located thereon
of solid wastes, pollutants, or hazardous substances as such
terms are defined by applicable Environmental Laws unless said
disposal, discharge or release was pursuant to and in compliance
with the conditions of a permit or authorization issued by an
appropriate federal, state or local governmental agency or
otherwise in compliance with the Environmental Laws.
(e) The Company or the Subsidiary have all the permits
and licenses required by the Environmental Laws to operate at or
from the Owned Real Property and the Leased Real Property, and
any assets located thereon.
(f) For purposes of this Agreement, "Environmental
Condition" means (i) any environmental pollution, including
without limitation any waste, substance, material, product,
contaminant, irritant or pollutant from any spill, discharge,
leak, emission, escape, injection, dumping or release of any
kind whatsoever (whether intentional or not) or any substance or
exposure of any type in any work places or to any medium,
including without limitation air, land, surface waters or ground
waters, or from any generation, transportation, treatment,
discharge, storage or disposal of waste materials, raw
materials, hazardous materials, toxic materials or products of
any kind or from the storage, use or handling of any hazardous
or toxic materials or other substances, or (ii) any
non-compliance with any Environmental Law. For purposes of this
Agreement, the term "Environmental Law" means any federal, state
or local law, rule, regulation, order, permit, authorization or
approval presently in existence pertaining to the protection of
natural resources, the environment or public health and safety.
3.14 Agreements, Contracts, Leases, Etc. Schedule 3.14
hereto sets forth a list of each of the contracts to which the
Company or the Subsidiary is a party or by which the Company or
the Subsidiary or their respective property is bound relating to
the following (the "Contracts"): (i) written or other material
bonus, retirement, deferred compensation, pension, profit
sharing, stock option, life and health insurance,
hospitalization, or employee stock purchase, savings or
retirement agreements, policies, or plans and all other
employee, director, officer or consultant benefit plans;
(ii) written or other material agreements that contain any
severance pay liability or obligation to any employee, former
employee, director, former director or consultant;
(iii) agreements of guarantee or indemnification (except
endorsements of negotiable instruments in the ordinary course of
business); (iv) written or other material employment, consulting
and labor contracts; (v) leases to or for any property, real or
personal, which involve the payment or receipt of rent of more
than $25,000 per year; (vi) national sales representative
contracts; (vii) network affiliation agreements; (xiii) each
trade and barter contract and film and program license agreement
or contract which involves the payment of, or obligation to
provide air time or other services with a value of, more than
$25,000; and (ix) other individual contracts or commitments
under which there is an obligation on the Company or the
Subsidiary to pay consideration in cash or kind having an
aggregate value in excess of $25,000 or which impose any
restrictions or otherwise have any material impact on the
business, operations, assets, properties or financial condition
of the Company or the Subsidiary. True and complete copies of
such Contracts have been delivered to the Purchaser or its
representatives. Each of the Contracts is in full force and
effect and valid and enforceable against the parties thereto in
accordance with its terms in all material respects, and neither
the Company nor, to such Seller's knowledge, any other party
thereto is in any material respect in breach of any term or
condition of any of the Contracts.
The continuation, validity and effectiveness of all such
Contracts will not be materially adversely affected by the
consummation of the transactions contemplated by this Agreement.
3.15 Insurance. Schedule 3.15 hereto sets forth a true and
complete description of all insurance policies maintained by the
Company and the Subsidiary.
3.16 Governmental Licenses. (a) The Subsidiary is the
holder of the licenses, permits and authorizations, (including,
without limitation, licenses and applications relating to
one-way signalling stations and all other facilities subject to
the jurisdiction of the FCC) as listed in Schedule 3.16 hereto
(collectively, such licenses, permits and authorizations are
referred to as the "FCC Licenses"). The FCC Licenses constitute
all of the licenses and authorizations required by the FCC in
connection with the operation of Station as it is now operated.
There is not pending or, to the Sellers' knowledge, threatened,
any action by or before the FCC to revoke, cancel, rescind,
modify or refuse to renew in the ordinary course any of the FCC
Licenses or that may result in the imposition of any fine,
forfeiture, notice of forfeiture, notice of apparent liability
or other sanction. The Subsidiary has duly filed all
applications and reports required to be filed by it with the
FCC. There is not pending, issued or outstanding by, or before
the FCC, or, to the actual knowledge of such Seller, threatened,
any order to show cause, notice of violation, notice of apparent
liability or notice of forfeiture or, to such Seller's actual
knowledge, any investigation or material complaint against the
Station, the Subsidiary or the Company. Neither the Company nor
the Subsidiary has received any notice of the cancellation,
termination or materially adverse modification, or the proposed
cancellation, termination or materially adverse modification, of
any of the Permits or the FCC Licenses. The Company or the
Subsidiary has, on or before June 17, 1993, made a valid
election of must carry or retransmission consent rights,
including election of channel position, with respect to each
cable system located within the Station's Area of Dominant
Influence, no such cable system has advised the Station of any
signal quality or copyright indemnity or other prerequisite to
cable carriage of the Station's signal, no such cable system has
declined or threatened to decline such carriage (provided that
the Subsidiary has only informal arrangements for signal
carriage on three cable systems as described on Schedule 3.14),
and the Station is carried on each such cable system. The
Station has the right to use its prospective call letters
pursuant to FCC rules, regulations and policies. Neither the
Company nor the Subsidiary is in violation in any material
respect of any FCC License.
(b) The Company and the Subsidiary hold all
governmental licenses, permits and authorizations other than FCC
Licenses ("Permits") necessary in connection with the operation
of the Company, the Subsidiary or the Station in the ordinary
course of business. There is not pending or, to such Seller's
actual knowledge, threatened any action by or before any
governmental agency to revoke, cancel, rescind, modify or refuse
to renew in the ordinary course any such Permit or that may
result in the imposition of any fine, forfeiture, notice of
forfeiture, notice of apparent liability or other sanction.
Neither the Company nor the Subsidiary is in violation in any
material respect of any Permit.
3.17 ERISA. (a) Schedule 3.17 hereto lists each Company
Benefit Plan. Except as set forth in Schedule 3.17, each
Qualified Plan is qualified under Section 401(a) of the Code and
is the subject of a favorable determination letter issued by the
Internal Revenue Service after 1985 (which has not revoked or
threatened to revoke such letter) regarding the qualified status
of the plan and no fact or event has occurred since the date of
such determination letter from the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any
such trust. The Purchaser or its representative has received a
complete and accurate copy of each Company Benefit Plan and,
where not available, a description of each Company Benefit Plan.
Except as set forth on Schedule 3.17, none of the Company
Benefit Plans is sponsored or maintained by the Company or the
Subsidiary.
(b) The Company and the Subsidiary have complied with
and performed in all material respects all contractual
obligations and all obligations under law required to be
performed by it or them under or with respect to any of the
Company Benefit Plans or any related trust agreement or
insurance contract. All contributions and other payments
required to be made by the Company and the Subsidiary to any
Company Benefit Plan prior to the date hereof have been made.
Except as set forth in Schedule 3.17, the Company has not
communicated generally to Employees regarding any material
future increases of benefit levels (or creation of material new
benefits) with respect to any Company Benefit Plan beyond those
reflected in the current Company Benefit Plans.
(c) Except as set forth in Schedule 3.17, the Company
has not participated in or incurred an obligation to contribute
to any Multiemployer Plan (as defined in Section 3(37) of ERISA,
or incurred or been notified of any withdrawal liability in
respect of any such Plan.
(d) To the Sellers' knowledge, no event or transaction
(including, without limitation, any "prohibited transaction"
within the meaning of Section 4975 of the Code or Section 406 of
ERISA) has occurred with respect to which the Company or the
Subsidiary is subject to any liability under Section 409 of
ERISA or Section 502 of ERISA.
(e) Except as disclosed on Schedule 3.17,
participation by the Company and the Subsidiary in each Company
Benefit Plan can be terminated or otherwise discontinued after
the Closing in accordance with its terms without liability to
the Company or the Subsidiary.
(f) Neither the Company nor the Subsidiary has any
express commitment to: (i) create, incur any material liability
with respect to or cause to exist any other employee benefit
plan, program or arrangement, (ii) enter into any material
contract or agreement to provide compensation or benefits to any
individual or (iii) modify, change or terminate any Company
Benefit Plan in any material respect, except in accordance with
applicable law.
(g) No legal action, suit or claim (other than claims
for benefits in the ordinary course) is pending or threatened
with respect to any Company Benefit Plan for which the Company
or the Subsidiary could reasonably be expected to incur
liability, and no fact or event exists that could give rise to
any such action, suit or claim.
(h) Except as disclosed by Schedule 3.17, none of the
Company Benefit Plans provides for the payment of separation,
severance, termination or similar-type benefits to any person or
obligates the Company or the Subsidiary to pay separation,
severance, termination or similar-type benefits solely as a
result of any transaction contemplated by this Agreement or as a
result of a "change in control," within the meaning of such term
under Section 280G of the Code. Except to the extent required
by applicable statutory law, none of the Company Benefit Plans
provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or
director of the Company or the Subsidiary.
(i) Neither the Company nor the Subsidiary has
incurred any liability for any excise tax arising under Section
4971, 4972, 4980 or 4980B of the Code which remains unpaid, and
no fact or event exists which, to such Seller's actual
knowledge, would give rise to any such liability. Neither the
Company nor the Subsidiary has incurred any liability under,
arising out of or by operation of Title IV of ERISA, and no fact
or event exists which would give rise to any such liability.
(j) For purposes of this Section 3.17, (i) "Code"
means the Internal Revenue Code of 1986, as amended, (ii)
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, (iii) "Company Benefit Plan" means any
employee benefit plan within the meaning of Section 3(3) of
ERISA to which the Company or the Subsidiary contributes or has
contributed and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or
other benefit plans, programs or arrangements, and all
employment, termination, severance or other contracts or
agreements to which the Company or the Subsidiary is a party,
with respect to which the Company or the Subsidiary has any
obligation or which are maintained, contributed to or sponsored
by the Company or the Subsidiary for the benefit of any current
or former employee, officer or director of the Company or the
Subsidiary; and (iv) "Qualified Plan" means each Company Benefit
Plan intended to qualify under Section 401 of the Code.
3.18 Employees; Compensation; Labor. (a) Schedule 3.18
sets forth a list of all persons who were as of February 8, 1994
employed by the Company or the Subsidiary, together with each
such person's job title and annual salary.
(b) There is no union representing the interests of
any of the Company's or the Subsidiary's employees and, as of
the date hereof, such Seller has no actual knowledge of any
pending or threatened effort to have a union represent the
interests of any of the Company's or the Subsidiary's employees.
The Company and the Subsidiary have complied in all material
respects with all laws relating to the employment of labor,
including any provisions thereof relating to wages, hours,
collective bargaining and the payment of social security and
similar taxes.
3.19 Bank Accounts. Schedule 3.19 hereto sets forth a true
and complete list of bank accounts and safe deposit boxes of the
Company and the Subsidiary and all signatories thereto.
Schedule 3.19 also contains a list of all credit cards under
which the Company or the Subsidiary has current or future
liability and the names of the persons holding such cards.
3.20 Finders' and Brokers' Fees. Neither the Sellers nor
the Company or the Subsidiary, nor anyone on behalf of any of
such persons, has retained any broker, finder or agent other
than Media Venture Partners or agreed to pay any brokerage fee,
finder's fee or commission other than to Media Venture Partners,
whose fee shall be borne by the Sellers, with respect to the
transactions contemplated by this Agreement.
3.21 Business Conducted by the Company and Subsidiary Only.
The Company and the Subsidiary have conducted their businesses
only through the Company and the Subsidiary. All assets
relating to the Station and all rights relating to the operation
of the Station are held by, and all agreements, obligations,
expenses and transactions relating to the Station have been
entered into or assigned to, incurred and conducted by, the
Company and the Subsidiary. The officers and directors of the
Company and the Subsidiary are described on Schedule 3.21
hereto. Since June 20, 1986, the Company has not conducted any
business other than the ownership of the Subsidiary and the
Subsidiary has not conducted any business other than the
operation of the Station.
3.22 Books and Records. The books and records of the
Company and the Subsidiary are complete and correct in all
material respects and have been maintained in accordance with
good business practices.
3.23 Accounts Receivable. All of the accounts receivable
reflected on the Financial Statements and thereafter acquired
through the Closing Date (the "Receivables") constituted and
will constitute only valid claims against third parties not
affiliated with the Company or the Subsidiary arising in the
ordinary course of business. Each payment reflected on the
Company's or the Subsidiary's books as having been made on each
such Receivable was made by the respective account debtor and
not directly or indirectly by any shareholder, director,
officer, employee or agent of the Company or the Subsidiary.
SECTION 4. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Sellers
that:
4.1 Legal Existence. The Purchaser is a corporation, duly
organized, validly existing and in good standing under the laws
of the State of New York, with requisite power and authority to
enter into this Agreement and all other agreements contemplated
by this Agreement and to consummate the transactions
contemplated hereunder and thereunder.
4.2 Authorization, Execution and Delivery of This
Agreement. The execution, delivery and performance of this
Agreement and all other agreements, instruments and documents
executed or delivered by the Purchaser in connection herewith
and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the purchase of the
Securities, have been duly authorized by, and this Agreement has
been duly executed and delivered by, the Purchaser. The
execution, delivery and performance of this Agreement and all
other agreements, instruments and documents executed or
delivered by Purchaser in connection herewith and the
consummation of the transactions contemplated hereby and thereby
will not, with or without the giving of notice or the passage of
time, (i) violate any provision of law, rule or regulation
applicable to the Purchaser, (ii) conflict with, result in the
breach of any provision of or the termination of, or constitute
a default under, or result in the creation of any lien, charge
or encumbrance upon any of the properties or assets of the
Purchaser pursuant to its corporate charter or by-laws or any
other material instrument, license, agreement or commitment to
which the Purchaser is a party or by which it or any of its
assets or properties are bound; or (iii) constitute a violation
of any order, judgment or decree to which the Purchaser is a
party or by which it or any of its assets or properties is
bound.
4.3 Consents. No approval, consent or authorization of,
exemption by, or filing with any person not a party to this
Agreement or any court or governmental authority is required to
be obtained or made by the Purchaser in connection with the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby other than
(i) filings under the Hart-Scott Act and (ii) the consent of the
FCC to the transfer of control of the Subsidiary.
4.4 Finders' and Brokers' Fees. No person or entity is
entitled to any finders' or brokerage fee or commission or other
like payment in connection with the transactions contemplated by
this Agreement based on agreements, arrangements or
understandings with the Purchaser, or any of the Purchaser's
officers, directors, stockholders, representatives, agents or
employees.
4.5 Qualifications. The Purchaser is legally, financially,
technically and otherwise qualified under the rules, regulations
and policies of the FCC and applicable state regulatory
authorities to acquire the Securities, and the Purchaser does
not know of any facts or proceedings which would disqualify it
from acquiring the Securities under the Act, or the rules,
regulations or policies of the FCC or any applicable state
regulatory authority.
4.6 Funds. As of the date of this Agreement, the Purchaser
has access to sufficient funds or has obtained commitments from
responsible financial institutions to enable it to obtain such
funds as are needed to pay the Purchase Price and cause the
Company to pay the Company Debt in full as contemplated by this
Agreement, and the Purchaser covenants to maintain such funds or
commitments in place until the Closing Date.
4.7 Due Diligence. The Purchaser, its accountants, counsel
and other representatives have had reasonable access to the
offices, equipment, records, files, contracts, agreements, books
of account and tax returns of each of the Company and the
Subsidiary, have had the opportunity to discuss the management,
condition and affairs of each of the Company and the Subsidiary
with their respective management and has received all
information which it has requested in connection with making the
decision to purchase the Securities.
4.8 Investment Intent. The Purchaser is acquiring the
Securities solely for its own account, for investment purposes
only, and not with a view to resale or other distribution
thereof in whole or in part. The Purchaser acknowledges that
the Securities cannot be resold unless registered pursuant to
the Securities Act of 1933 and any applicable state securities
laws or unless an exemption therefrom is available. The
Purchaser hereby acknowledges that the Sellers will rely upon
the truth of the representations made herein in determining that
an exemption from the registration requirements of the
securities laws is available in connection with the sale of the
Securities pursuant to this Agreement.
SECTION 5. Events Prior to Closing.
5.1 Obligations of the Sellers Prior to Closing. From the
date of this Agreement until the Closing, the Sellers shall
cause the Company and the Subsidiary to:
(a) Afford the Purchaser, its accountants, counsel,
engineers and other representatives, upon reasonable notice and
so as not to disrupt the operations of the Company or the
Subsidiary, reasonable access during normal business hours to
its properties, offices, equipment, records, files, contracts,
agreements, books of account and tax returns and to make copies
thereof and furnish the Purchaser with all information
concerning the Company and the Subsidiary as the Purchaser shall
reasonably request and to which the Company or the Subsidiary
have reasonable access;
(b) Conduct its business only in the ordinary course
consistent with past practices;
(c) Continue in force all policies of insurance set
forth in any Schedule to this Agreement or comparable
replacement policies;
(d) Other than the renewal of existing employment
contracts in the ordinary course of business and entering into
employment contracts with persons who are replacing employees
who are presently working under an employment contract in the
ordinary course of business (except for contracts with the
Station's general manager, station manager and persons holding
other senior managerial positions), not enter into any
employment contract with any person unless the employer has the
right to terminate such employment contract at any time on or
after the Closing Date without liability;
(e) Not take any action or omit to take any action
reasonably within its power which would have a material adverse
effect on the ability of the Sellers to perform their
obligations under this Agreement or cause any of the
representations and warranties of the Sellers set forth in this
Agreement not to be true and correct in all material respects on
and as of the Closing Date;
(f) Use its diligent efforts to obtain all material
consents of and renewals from third parties required to be
obtained in connection with this Agreement, including without
limitation, the FCC Approvals, renewal of the FCC Licenses for
the Station and the consents of third parties described on
Schedule 3.10;
(g) Not encumber nor sell or dispose of any of the
Company's or the Subsidiary's assets or properties (except for
those referenced as excluded assets on Schedule 3.12(a)) other
than in the ordinary course of business or as otherwise
permitted by this Agreement or incur any obligation or liability
(absolute or contingent), except for current obligations and
liabilities incurred in the ordinary course of business
consistent with past practice; nor enter into, amend, or
terminate any programming contracts, agreements for the sale of
time on the Station for consideration other than cash ("Barter
Agreements"), and other material contracts, leases, options or
commitments relating to the Station without the prior consent of
Purchaser;
(h) As soon as practicable after they are prepared,
furnish to Purchaser all financial reports and statements
relating to the operation of the Company and the Subsidiary that
are prepared in the ordinary course of business, including
without limitation monthly income statements, annual or
quarterly balance sheets (all of the foregoing financial
statements being deemed included within the definition of
Financial Statements for all purposes of this Agreement), and
any other documents prepared in the ordinary course of business
by or on behalf of the Company or Subsidiary relating to the
operation of the Station, a copy of which is requested by
Purchaser;
(i) Not file any applications with the FCC to modify
the existing operating parameters of the Station as set forth in
its current FCC Licenses in any materially adverse respect.
(j) Not amend or alter the Certificate of
Incorporation, by-laws or other charter documents of the Company
or the Subsidiary;
(k) Promptly notify Purchaser in writing of any
material change in any representations or warranties of the
Sellers in this Agreement (it being understood and agreed that
the delivery of such notification to Purchaser shall not in any
manner constitute a waiver by Purchaser of any of its rights
under this Agreement); and
(l) Timely file and use its reasonably diligent
efforts to prosecute all requisite applications, together with
related information, data and exhibits, to request grant of the
renewal of the Station's FCC Licenses; promptly provide
Purchaser with a copy of any pleading, petition, letter of
inquiry, order or other document either from the FCC or filed
with the FCC by the Company, the Subsidiary or any third party
relating to the application to renew the FCC Licenses; and
timely file any responses and provide Purchaser with a copy of
any such responses filed.
5.2 Obligations of the Purchaser Prior to Closing. From
the date of this Agreement until the Closing Date, the Purchaser
shall:
(a) Not take any action or omit to take any action
reasonably within its power which would have a material adverse
effect on the ability of the Purchaser to perform its
obligations under this Agreement or cause any of the
representations and warranties of the Purchaser set forth in
this Agreement not to be true and correct in all material
respects on and as of the Closing Date;
(b) Use its diligent efforts to obtain timely all
consents and renewals by third parties and the FCC which are
necessary for the Purchaser's performance of its obligations
hereunder or for the Purchaser's ownership of the Securities;
(c) Promptly notify the Sellers' Representative in
writing of any material change in any representations or
warranties of the Purchaser in this Agreement (it being
understood and agreed that the delivery of such notification to
the Sellers' Representative shall not in any manner constitute a
waiver by the Sellers of any of their rights under this
Agreement);
(d) Execute an agreement in form satisfactory to
American Broadcasting Companies, Inc. ("ABC") whereby the
Purchaser will assume and perform the Primary Television
Affiliation Agreement dated January 24, 1991 between ABC and the
Subsidiary as contemplated thereby;
(e) Promptly, and in no event more than five days,
after the Closing Date change the name of the Company to a name
other than "Smith Acquisition Corp." and promptly deliver the
Sellers' Representative evidence thereof; and
(f) Promptly, and in no event more than five (5)
business days after its obtaining actual knowledge thereof,
notify the Sellers' Representative of the breach of any
representation or warranty made by the Sellers hereunder or the
failure of any condition which if not satisfied would permit the
Purchasers to refuse to consummate the transactions contemplated
hereby.
5.3 Control of the Station. Notwithstanding any provision
of this Agreement that may be construed to the contrary, prior
to the Closing, Smith shall maintain actual (de facto) and legal
(de jure) control over the Station and the FCC Licenses.
Specifically, and without limitation, the responsibility for the
operation of Station shall, prior to the Closing, reside with
Smith including, but not limited to, responsibility for the
following matters: (a) access to and the use of facilities and
equipment; (b) control of daily operation; (c) creation and
implementation of policy decisions; (d) employment, supervision
and dismissal of employees; (e) payment of financing obligations
and expenses incurred in the operation of the Station; (f)
receipt and distribution of monies and profits derived from the
operation of the Station; and (g) execution and approval of all
contracts and applications prepared and filed before regulatory
agencies.
5.4 FCC Approval. The Sellers' Representative and the
Purchaser shall cooperate and use their respective best efforts
to prepare and file with the FCC within two (2) business days
after the date hereof and, in any event on or before February
15, 1994, all requisite applications, together with related
information, data and exhibits necessary to request issuance of
orders approving the transactions contemplated by this Agreement
by the FCC. Each party shall promptly provide the other with a
copy of any pleading, order or other document served on the
other relating to any such application.
5.5 Hart-Scott Approval. The Sellers' Representative and
the Purchaser shall cooperate and use their respective best
efforts to prepare and file with the Federal Trade Commission as
promptly as possible after the execution of this Agreement and,
in any event, on or before March 4, 1994, all requisite
applications and amendments thereto together with related
information, data and exhibits necessary to satisfy the
requirements of the Hart-Scott Act.
5.6 Release from Securityholders Agreement. The Sellers
shall cause the Company and the Subsidiary to be released as
parties to the Securityholders Agreement as of the Closing Date
such that, following the Closing Date, neither the Company nor
the Subsidiary shall have any further rights, duties or
obligations thereunder or with respect thereto.
5.7 Obtaining Title Insurance. (a) Promptly after the date
hereof, the Purchaser shall arrange at its expense for title to
the Owned Real Property to be examined by a title company (i.e.,
a reputable title insurance company designated by Purchaser and
licensed in the Commonwealth of Pennsylvania hereinafter "Title
Company") for the purpose of obtaining title insurance from such
company or companies, in amounts reasonably required by
Purchaser, for the title to such Owned Real Property. If such
Title Company shall be unwilling to give such insurance by
reason of objectionable conditions of title (other than those
disclosed on Schedule 3.11 hereto), Purchaser shall promptly
notify the Sellers and deliver copies of the applicable title
reports to the Sellers' Representative, and Sellers shall have
the right to eliminate such objectionable conditions of title
prior to the Closing as shall be the basis for the title
Company's unwillingness to give such insurance.
(b) Promptly after the date hereof, Purchaser shall at
its own expense order a new survey for each Owned Real Property
if no existing survey is available, or a survey inspection or
update if there is an existing survey furnished to Purchaser.
The Purchaser and the Purchaser's representatives shall be
provided with reasonable access to the Owned Real Property to
obtain such survey or survey update for each parcel included in
the Owned Real Property in such detail as required by the Title
Company to issue its policy, subject to a survey exception
referring to the matters shown on the surveys to be obtained by
Purchaser for each of the parcels comprising the Owned Real
Property, provided that the matters shown on such surveys do not
(x) render title to the Owned Real Property unmarketable or (y)
prohibit or materially adversely affect the continued existence
and/or continued use (as presently used) or maintenance of the
buildings, structures or improvements presently located on the
Owned Real Property. For the purposes of this Agreement, the
following matters shown on such surveys will not be deemed to
render title unmarketable: (1) variations, if any, between
record lines and tax lot lines; (2) variations, if any, between
record lines and location of fences and hedges; and (3)
encroachments of stoops, awnings, cellar steps, trim and
cornices, if any. In addition, for the purposes of this
Agreement, rights or easements shown on such survey(s) which are
granted to any utility company to maintain and operate lines,
cables, poles and the like in, under, over and upon such Owned
Real Property will not be deemed to render title unmarketable
provided the same do not and will not prohibit or materially
adversely affect the continued existence and/or continued use
(as presently used) or maintenance of buildings, structures and
improvements located upon such Owned Real Property. Purchaser
shall pay the costs of such surveys and of obtaining any title
insurance commitment as well as the costs and premiums of any
insurance that may be issued based on such commitment.
(c) The Purchaser shall complete the title reports and
surveys contemplated by this Section within a reasonable time
after the date hereof but in no event later than April 1, 1994.
5.8 Additional Environmental Assessment. (a) Promptly
after the date hereof, the Purchaser shall undertake to retain a
nationally recognized environmental consultant firm reasonably
acceptable to the Sellers' Representative to prepare an
environmental assessment satisfactory in scope and content to
the Purchaser respecting the Owned Real Property and Leased Real
Property and any environmental liabilities of the Company and
the Subsidiary related to the past and present ownership or
operation of the business or the Station or the past and present
ownership or operation of the Owned Real Property or Leased Real
Property (the "Purchaser's Environmental Assessment").
(b) The Purchaser's Environmental Assessment shall be
completed within a reasonable time after the date hereof, but in
any event no later than the later of (i) June 1, 1994 and (ii)
twenty-one days following the delivery to the Purchaser of the
test results and reports, including any ground water sampling,
relating to the underground storage tank removal being
undertaken by the Subsidiary. Upon completion of the
Purchaser's Environmental Assessment, Purchaser shall promptly
provide a copy or copies to Sellers.
SECTION 6. Conditions to the Purchaser's Obligations. The
obligation of the Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction
of each of the following conditions, unless expressly waived by
the Purchaser:
6.1 Opinion of Counsel for the Sellers. The Purchaser
shall have received the written opinion of the Sellers'
respective counsel, dated as of the Closing Date, in form and
substance that is customary for transactions of the type
contemplated hereby and reasonably satisfactory to the
Purchaser.
6.2 Opinion of Federal Regulatory Counsel for the Sellers
and Counsel for the Company and the Subsidiary. The Purchaser
shall have received the written opinion of Hogan & Hartson, FCC
counsel for the Sellers and counsel for the Company and the
Subsidiary, dated as of the Closing Date, in form and substance
that is customary for transactions of the type contemplated
hereby and reasonably satisfactory to the Purchaser.
6.3 Representations and Warranties. The Sellers'
representations and warranties contained in this Agreement shall
be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date.
6.4 Performance of This Agreement. The Sellers shall have
performed and observed in all material respects their covenants
and obligations as set forth in this Agreement.
6.5 Compliance Certificate. Each of the Sellers shall have
delivered to the Purchaser a compliance certificate, in the form
attached hereto as Exhibit 6.5, certifying as to the matters set
forth in Sections 6.3 and 6.4 of this Agreement.
6.6 FCC Final Order. The FCC shall have consented to the
consummation of the transactions contemplated hereby and the
granting of such consent shall have become a Final Order. The
FCC shall also have granted the renewal of the Licenses for the
Station and the granting of such renewal shall have become a
Final Order. For the purposes of this Agreement, the term
"Final Order" shall mean action by the FCC as to which (i) no
request for stay by the FCC of the action is pending, no such
stay is in effect, and, if any deadline for filing any such
request is designated by statute or regulation, it has passed;
(ii) no petition for rehearing or reconsideration of the action
is pending before the FCC and the time for filing any such
petition has passed; (iii) the FCC does not have the action
under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or
request for stay by a court, of the FCC's actions is pending or
in effect, and, if any deadline for filing any such appeal or
request is designated by statute or rule, it has passed.
Notwithstanding the foregoing, if the FCC grants its approval to
the transactions contemplated hereby but with a condition
materially adverse to Purchaser, the Company or the Subsidiary
and Purchaser does not elect to accept such condition on or
before the date such grant shall have become a Final Order,
provided that the Purchaser is not then otherwise in material
breach of its obligations hereunder, the Purchaser may terminate
this Agreement by giving written notice to Seller's
Representative; provided, however, that the Purchaser shall have
no right to terminate this Agreement in accordance with this
Section if such condition relates to or is imposed by reason of
any matter, condition or circumstance relating to the Purchaser
or its affiliates and not to the Sellers, the Company or the
Subsidiary or the operation or condition of the Station.
6.7 Litigation. There shall be no injunction, decree or
order issued by any court, governmental agency or authority, or
any litigation instituted by any governmental agency or
authority challenging or seeking to prohibit or enjoin any of
the transactions contemplated by this Agreement or which would
subject the Company or the Subsidiary to any material liability
or penalty in connection herewith.
6.8 Hart-Scott Act. All statutory waiting periods required
pursuant to the Hart-Scott Act shall have expired and the
Department of Justice and the Federal Trade Commission shall
have not made a request for additional information which has not
previously been supplied or have taken any action to prevent the
transactions contemplated by this Agreement.
6.9 Additional Closing Items. At the Closing, the Sellers'
Representative shall deliver to the Purchaser the items
specified in Section 1.3 and Section 2.2(a).
6.10 Consents. On or prior to the Closing Date, the
Sellers shall have received all consents, waivers and approvals
required by Section 3.10 hereof.
6.11 Title Insurance. There shall be available to the
Purchaser at the Closing title insurance commitment(s) from the
Title Company for the Owned Real Property for title insurance
policies to be issued at standard rates and including a
"non-imputation" endorsement noting as exception to coverage
only (i) standard exceptions, (ii) such exceptions to title
shown on Schedule 3.11 and (iii) such other exceptions, provided
that such exceptions do not (x) render title to the Owned Real
Property unmarketable or (y) prohibit or materially adversely
affect the continued existence and/or continued use (as
presently used) or maintenance of the buildings, structures or
improvements located on such Owned Real Property, provided that
the following matters of title, if shown on such title insurance
commitments and/or surveys referred to in such title insurance
commitment(s), will not be deemed to render title unmarketable:
covenants and restrictions of record, provided the same do not
prohibit or materially adversely affect the continued existence
and/or continued use (as presently used) or maintenance of the
buildings, structures or improvements located on such Owned Real
Property. For the purposes of this Agreement, the following
matters shown in such title insurance commitments or surveys
will not be deemed to render title unmarketable: (1)
variations, if any, between record lines and tax lot lines; (2)
variations, if any, between record lines and location of fences
and hedges; and (3) encroachments of stoops, awnings, cellar
steps, trim and cornices. In addition, for the purposes of this
Agreement, rights or easements shown on such survey(s) which are
granted to any utility company to maintain and operate lines,
cables, poles and the like in, under, over and upon such Owned
Real Property will not be deemed to render title unmarketable
provided the same do not and will not prohibit or materially
adversely affect the continued existence and/or continued use
(as presently used) or maintenance of the buildings, structures
and improvement located upon such Owned Real Property. The
condition precedent set forth in this Section shall be deemed
satisfied for all purposes of this Agreement if on or before
April 1, 1994 the Purchaser fails to deliver to the Sellers'
Representative the title reports and surveys contemplated by
Section 5.7 and notify the Seller's Representative of any
objections to title disclosed by such reports which, if not
remedied would give the Purchaser the right to terminate this
Agreement by reason of the failure of the condition set forth in
this Section; provided, however, that the Purchaser shall not be
deemed to waiver matters (i) that are not set forth on such
title report at the time the Purchaser notifies the Sellers'
Representative of any objections to title or (ii), provided that
the Purchaser shall have obtained and delivered to the Sellers'
Representative the title reports and surveys contemplated by
Section 5.7 on or before April 1, 1994, that the Purchaser
becomes aware of after April 1, 1994. None of the Sellers shall
have any obligation to execute any affidavit, instrument or
other document or to take any other action, including, without
limitation, causing any director, officer or employee of the
Company or the Subsidiary in their individual capacity to
execute any affidavit, instrument or other document, to enable
or assist the Purchaser in obtaining title insurance policies
containing a "non-imputation" endorsement, and the condition
precedent set forth in this Section shall be deemed to have been
satisfied notwithstanding that the title insurance policies do
not contain a "non-imputation" endorsement due to the Sellers'
or any other person's failure to execute any such affidavit,
document or instrument or take any other such action. For
purposes of this Agreement, the term "standard rates" shall
include, without limitation, the rates charged for any
"non-imputation" endorsement sought by the Purchaser, including,
without limitation, any additional charge imposed as a
consequence of the Sellers' failure to assist in obtaining such
endorsement in accordance with the preceding sentence.
6.12 Purchaser shall have received from an environmental
consultant retained by Purchaser or Purchaser's representative
the Purchaser's Environmental Assessment, described in Section
5.8, which document does not disclose (a) a material inaccuracy
in any of the representations set forth in Section 3.13; (b) any
residual contamination at or from the Owned Real Property
requiring investigation, monitoring or remediation related to
the removal by the Subsidiary, in accordance with applicable
laws and regulations, of those underground storage tanks
identified in the Environmental Report; or (c) the existence of
any Environmental Condition, the existence of any environmental
liability, a substantial risk of any environmental liability or
a substantial risk of any Environmental Condition based on past
operations at or from the Owned Real Property, the Leased Real
Property or the Station that would reasonably be likely to give
rise to any future environmental liability(ies) involving the
aggregate expenditure of more than $100,000 by the Company or
the Subsidiary (i) to investigate, monitor or remediate such
Environmental Condition, (ii) to settle the Company's or
Subsidiary's liability with respect to any such Environmental
Condition or liability and/or (ii) to defend the Company or
Subsidiary against the imposition of such environmental
liability and any costs or damages associated therewith.
Notwithstanding the foregoing, if this condition to Closing
shall fail, the Purchaser's right to terminate this Agreement,
pursuant to Section 23(c), shall not apply if Sellers, at their
sole cost and expense, either (x) cure, remove or remedy the
Environmental Condition or material inaccuracy of representation
prior to Closing, or (y) agree in writing reasonably
satisfactory to Purchaser (with assurance of performance
reasonably satisfactory to Purchaser) to bear the costs and
expense (without reference to the limitation of liability set
forth in Section 10.2(a) or 10.2(b)(i)) of resolving said
environmental liability, including defending the Company or
Subsidiary against the imposition of such environmental
liability or investigating, monitoring and remediating any
residual contamination referred to in clause (b) above, as the
case may be. The condition precedent set forth in this Section
shall be deemed satisfied for all purposes of this Agreement if
the Purchaser shall not have delivered to the Sellers'
Representative on or before the date set forth in Section 5.8(b)
the Purchaser's Environmental Assessment as contemplated by
Section 5.8 and notified the Sellers' Representative of the
existence of a condition which, if not remedied, would give the
Purchaser the right to terminate this Agreement by reason of the
failure of the condition set forth in this Section.
SECTION 7. Conditions to the Sellers' Obligation. The
obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction
of each of the following conditions, unless expressly waived by
the Sellers' Representative:
7.1 Opinion of Counsel for the Purchaser. The Sellers
shall have received the written opinion of Proskauer Rose Goetz
& Mendelsohn, counsel to the Purchaser, dated as of the Closing
Date, in form and substance that is customary for transactions
of the type contemplated hereby and reasonably satisfactory to
the Sellers' Representative.
7.2 Representations and Warranties. The representations
and warranties of the Purchaser contained in Section 4 of this
Agreement shall be true and correct in all material respects on
and as of the Closing Date.
7.3 Performance of This Agreement. The Purchaser shall
have performed and observed in all material respects its
covenants and obligations under this Agreement.
7.4 Compliance Certificate. The Purchaser shall have
delivered to the Sellers a compliance certificate signed by the
chief executive officer of the Purchaser, in his capacity as
such, in form and substance that is customary for transactions
of the type contemplated hereby and reasonably satisfactory to
the Sellers' Representative, certifying as to the matters set
forth in Sections 7.2 and 7.3 of this Agreement.
7.5 FCC Final Order. The FCC shall have consented to the
consummation of the transactions contemplated hereby and the
granting of such consent shall have become a Final Order.
7.6 Litigation. There shall be no injunction, decree or
order issued by any court, governmental agency or authority, or
any litigation instituted by any governmental agency or
authority, challenging or seeking to prohibit or enjoin any of
the transactions contemplated by this Agreement.
7.7 Hart-Scott Act. All statutory waiting periods required
pursuant to the Hart-Scott Act shall have expired and the
Department of Justice and the Federal Trade Commission shall
have not made a request for additional information which has not
previously been supplied or have taken any action to prevent the
transactions contemplated by this Agreement.
7.8 Additional Closing Items. At the Closing, the
Purchaser shall deliver to the Seller the items specified in
Section 2.2(b).
7.9 Board Resolutions. The Purchaser shall deliver to the
Seller a copy of the resolutions of the Board of Directors and,
if required, the stockholders of the Purchaser approving the
transactions contemplated by this Agreement duly certified by
the corporate secretary of the Purchaser.
SECTION 8. Sellers' Representative. The Purchaser and the
Sellers acknowledge that Advent V Capital Company Limited
Partnership has been appointed by the Sellers to act as the
"Sellers' Representative" under this Agreement and the Escrow
Agreement, and that the Purchaser may rely upon any action taken
by Advent V Capital Company Limited Partnership in its capacity
as the Sellers' Representative under this Agreement and the
Escrow Agreement for purposes of taking all such actions,
exercising all such powers, making all such determinations and
receiving and sending all such notices and other information as
are expressly permitted or required to be taken, made, received
or sent by the Sellers' Representative under this Agreement and
the Escrow Agreement. The Purchaser shall not be responsible or
liable in any manner for any actions taken or omitted to be
taken by the Sellers' Representative, including, but not limited
to, the Seller's Representative's obligation to disburse to the
Sellers the portion of the Purchase Price due them pursuant to
this Agreement. The Sellers' Representative may be removed, and
a new Sellers' Representative designated, at any time and from
time to time by written notice to Purchaser from the holders of
more than 50% of the Class A Stock as reflected on
Schedule 3.2(a) hereto. Each Seller ratifies and confirms, and
agrees to ratify and confirm, any action taken by the Sellers'
Representative on behalf of any Seller pursuant to this
Agreement and the Escrow Agreement that is consistent with the
Sellers' Representative's authority as described in this
Section.
SECTION 9. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement and
any certificate or other instrument delivered by or on behalf of
the Sellers or the Purchaser pursuant to this Agreement shall
survive until the first anniversary of the Closing Date;
provided, however, that each of the Sellers' representations set
forth in Section 3.6 (Tax Matters) shall survive until the
expiration of the statute of limitations applicable to any
Return affected by such representation (the "Indemnification
Period"), after which all such representations and warranties
together with any right to indemnification with respect thereto
shall expire (except to the extent a written notice asserting a
claim for breach of any representation and warranty shall have
been given to the party which made such representation or
warranty prior to the termination of the Indemnification
Period).
SECTION 10. Indemnification.
10.1 Indemnification by the Sellers. Subject to
Section 10.2 below, the Sellers shall indemnify and hold
harmless the Purchaser, and shall reimburse the Purchaser for
any loss, cost, liability, damage and expense (including, but
not limited to, reasonable attorneys fees) (collectively
referred to herein as the "Damages") arising from any
misrepresentation or breach of any representation, warranty or
covenant of the Sellers contained in this Agreement, which right
of indemnification shall, other than in the case of fraud and
any written agreement by the parties relating to any
Environmental Condition or environmental liability in accordance
with Section 6.12, be the Purchaser's only remedy against the
Sellers hereunder from and after the Closing Date with respect
to the breach of any representation or warranty made hereunder
or the breach of any covenant to have been performed prior to
the Closing. The obligations of the Sellers under this Section
10.1 are collectively referred to as the "Indemnification
Obligation".
10.2 Limitation as to Amount of Damages.
(a) The Sellers shall have no liability with respect
to the breach of any representation or warranty made hereunder
or the breach of any covenant to have been performed prior to
the Closing except to the extent the total of all Damages with
respect thereto exceeds $175,000; provided, however, that the
provisions of this Section 10.2(a) shall not apply to the
indemnification obligations under Section 10.6(a).
(b) Notwithstanding anything to the contrary in this
Agreement, (i) the Sellers shall bear liability for Damages and
any other claim arising from or in connection with or related to
this Agreement or the subject matter hereof (other than those
arising under subsections (f) and (g) of Section 1.4, Section
13.1 and Section 29) only up to a maximum amount of $4,500,000
(the "Liability Cap"), and (ii) in no event shall the liability
of any Seller, including, without limitation, liability arising
under subsections (f) and (g) of Section 1.4, Section 13.1 and
Section 29 and for any indemnification obligation arising under
this Section 10 or Section 6.12, exceed the amount of proceeds
received by such Seller in connection with the transactions
contemplated hereby (and in no event shall Smith's liablity
hereunder exceed $100.00, which is the amount of proceeds to be
received by Smith hereunder). Recourse for any Damages and
claims shall first be had against the Indemnity Escrow Amount to
the extent of the remainder of such Indemnity Escrow Amount
without any recourse to any Seller. If the amount of Damages or
claims exceeds the remainder of the Indemnity Escrow Amount or
if such Damages or claims are to be paid or satisfied following
the time such remainder of the Indemnity Escrow Amount is
disbursed pursuant to Section 4(e) of the Escrow Agreement, then
each Seller shall deliver to the Purchaser by wire transfer of
funds its Pro Rata Share of the balance of such Damages or
claims (each Seller's "Pro Rata Share" being the percentage of
the proceeds received by such Seller in connection with the
transactions contemplated hereby).
10.3 Set Offs. The Purchaser, Company or Subsidiary, as
appropriate, shall, on a timely and expeditious basis, seek
recovery under applicable insurance policies, if any, for each
underlying item of Damages to the extent the same is covered by
insurance, and such recovery of insurance proceeds shall be
deemed to be a reduction in the amount of Damages incurred. Any
liability for Taxes with respect to which the Purchaser is
entitled to indemnification from the Sellers hereunder (other
than the obligation of the Sellers to make a payment as
described in Section 13.1) shall be offset by the amount of any
Tax savings realized by the Purchaser, the Company or the
Subsidiary with respect to the year in which such liability
arose. The Tax savings attributable to the incurrence of such
liability shall be determined after first taking into account
all of the other Tax benefits available to the Purchaser, the
Company or the Subsidiary.
10.4 Notice and Settlement of Claims. If Purchaser
believes that it has suffered or incurred any Damages (other
than with respect to any matters covered by Section 10.5 hereof)
and if a claim in respect thereof is to be made against the
Seller under Section 10.1, the Purchaser shall give notice
within ten (10) days after Purchaser obtains actual knowledge
that it has suffered or incurred such Damages to the Sellers'
Representative describing the basis for such claim, such Damages
arising therefrom, the amount thereof, if known, and the method
of computation of such Damages, all with reasonable
particularity and containing a reference to the provisions of
this Agreement in respect of which such Damages shall have
occurred, provided that any failure to give such prompt notice
shall not diminish the indemnification obligations hereunder
except if and to the extent the Sellers are directly prejudiced
thereby. Promptly after any such notice has been given, the
Purchaser and the Sellers' Representative shall endeavor to
resolve any disputes with respect to the matters set forth in
such notice to determine whether any Damages which have been
claimed are to be paid by the Sellers and, if so, the amount
which is to be paid. If the Purchaser and the Sellers'
Representative cannot reach agreement within 30 business days
after such notice has been given then the matter shall be
submitted to arbitration as provided in Section 26. The amount
of any Damages which is determined to be payable by agreement of
the Purchaser and the Sellers' Representative shall be promptly
paid (and in any event within 10 days after determination of the
final amount to be paid) out of the remainder of the Indemnity
Escrow Amount if sufficient, or by wire transfer from the
Sellers to the Purchaser of immediately available funds with
respect to any excess Damages over the remainder of the
Indemnity Escrow Amount, subject to Section 10.2(b) hereof.
10.5 Third-Party Claims. Promptly after receipt by the
Purchaser of notice of the assertion of any claim or the
commencement of any action, suit or other proceeding by a third
party for which Purchaser is entitled to indemnification
pursuant to Section 10.1, the Purchaser shall, if a claim in
respect thereof is to be made against the Sellers, give prompt
written notice to the Sellers' Representative, but in no event
later than five days after the service of process in the event
litigation is commenced or ten days after the assertion of such
claim by a third party, provided that any failure to give such
prompt notice shall not diminish the indemnification obligations
hereunder except if and to the extent the Sellers are directly
prejudiced thereby. The Sellers' Representative shall, if the
Sellers' Representative shall have acknowledged in writing
Sellers obligation to indemnify the Purchaser and Purchaser's
Affiliates in respect of such claim and that the claim can be
satisfied by recourse to the remainder of the Indemnity Escrow
Amount or recourse against Sellers (within the Liability Cap),
have the right to assume, conduct and control the defense,
compromise or settlement of any such litigation or claim
involving third parties and, thereupon, to prosecute in the name
and on behalf of the Purchaser, the Company and the Subsidiary
any available crossclaims, counterclaims or third party claims
arising with respect to the claims for which indemnification is
sought, and, in connection therewith, employ legal counsel
reasonably satisfactory to the Purchaser. The Sellers'
Representative shall exercise such right by giving ten (10)
days' prior written notice thereof to the Purchaser. Prior to
the Sellers' Representative exercising its rights under this
paragraph, the Purchaser shall take, or shall cause the Company
and the Subsidiary to take, all necessary steps to protect the
interests of itself and the Sellers, including the filing of
necessary responsive pleadings, the seeking of injunctive relief
or other action necessary to preserve all possible rights,
defenses, counterclaims, crossclaims and third party claims that
may be available with respect to any claim for which
indemnification is sought hereunder. Whichever of the Purchaser
or the Sellers' Representative that is controlling the defense
of any claim involving third parties hereunder shall keep the
other fully apprised at all times as to the status of the
defense and shall notify the other prior to the settlement of
any indemnified matter. Notwithstanding anything to the
contrary contained hereto, (i) the Purchaser may in any event
participate in any such defense with its own counsel and at its
own expense, (ii) Sellers' Representative shall not settle or
compromise any such claim without the written consent of
Purchaser (which consent shall not unreasonably be withheld or
delayed) unless Sellers fully indemnify Purchaser and
Purchaser's Affiliates for all Damages (up to the amount of the
Liability Cap) and (iii) the Sellers' Representative shall not
make any admission for or on behalf of the Company or the
Subsidiary to any violation of law.
10.6 Tax Indemnification.
(a) Indemnification by the Sellers. The Sellers,
shall indemnify and hold harmless the Purchaser, and shall
reimburse the Purchaser, from and against, for, and in respect
of: (i) all Tax Liabilities of the Company and the Subsidiary
for Pre-Closing Tax Periods; (ii) all Tax Liabilities of the
Company and the Subsidiary arising as a result of any breach of
the representations and warranties contained in Section 3.6;
(iii) all Tax Liabilities of the Company and the Subsidiary
arising as a result of any breach of any covenant made by the
Sellers in Section 13; and (iv) all Tax Liabilities for
Pre-Closing Tax Periods imposed on the Company or the Subsidiary
pursuant to Treasury Regulation Section 1.1502-6 (or any
successor thereto) or any comparable provision under state or
local law; provided, however, that the Sellers shall be required
to make an indemnification payment or payments to the Purchaser
solely to the extent that the amount of the Indemnification
sought exceeds the amount of the Tax Reserve (reduced by any
prior offsets or credits pursuant to this Section or Section
13). Any indemnification payment required hereunder shall be
made by the Sellers to the Purchaser within 10 days of the
written notification by the Purchaser to the Sellers that the
Purchaser, the Company or the Subsidiary has incurred Tax
Liabilities.
(b) Indemnification by the Purchaser. Purchaser shall
indemnify and hold harmless the Sellers, and shall reimburse the
Sellers, from and against, for, and in respect of: (i) all Tax
Liabilities of the Company and the Subsidiary for Post-Closing
Tax Periods for which the Purchaser is not entitled to
indemnification under Section 10.6(a) above; (ii) all Tax
Liabilities of the Company and the Subsidiary resulting from an
actual or deemed election under Section 338 of the Code (or any
comparable provision under state or local law); and (iii) all
Tax Liabilities of the Company and the Subsidiary arising as a
result of any breach of any covenant made by the Purchaser in
Section 13 hereof. Any indemnification payment required
hereunder shall be made by the Purchaser to the Sellers within
10 days of the written notification by the Sellers to the
Purchaser that they have incurred Tax Liabilities.
SECTION 11. Confidentiality.
11.1 Prior to Closing. Unless and until the Closing of the
purchase and sale of the Securities shall have occurred, and
except as may be otherwise required by applicable law or
regulation, the Purchaser shall and shall cause its employees,
agents and representatives to, maintain in confidence and not
otherwise use information, documents and data furnished to it,
or to any person or entity on its behalf, by the Sellers, the
Seller's Representative, the Company or the Subsidiary in
connection herewith.
11.2 Failure to Close. Upon termination of this Agreement
pursuant to Section 23 hereof, the Purchaser shall return all
written information, documents and data furnished to the
Purchaser or to any person or entity on its behalf and all
copies thereof with respect to the Company and the Subsidiary.
Notwithstanding anything else in this Agreement to the contrary,
if any of the transactions contemplated by this Agreement are
not consummated, (i) the Purchaser's agreement to maintain in
confidence all information received by it shall continue in
perpetuity with respect to the Company and the Subsidiary and
none of such information shall be used by the Purchaser, its
employees, agents or representatives in the business operations
of any such person, except to the extent that such information
is elsewhere available to the public or otherwise rightfully
obtained without violation of the Purchaser's covenant of
confidentiality contained in this Section and (ii) the Purchaser
shall for a period of two years following the termination of
this Agreement for any reason refrain from making any offers of
employment to employees of the Company or the Subsidiary that
the Purchaser or its agents and representatives shall have been
introduced to in connection with the transactions contemplated
hereby, including, without limitation, in connection with any
due diligence review or investigation.
SECTION 12. Employment Matters. (a) As of the Closing Date,
all individuals who are active employees of the Subsidiary on
the Closing Date ("Employees") shall cease to participate in
Company Benefit Plans; provided, however, that the Company or
Subsidiary shall pay to the Company's 401(k) Plan after the
Closing Date elective deferrals withheld prior to the Closing
but not yet contributed to the Company's 401(k) Plan)and
employer matching contributions in only respect of such
deferrals. As of the Closing Date, all Employees will be fully
vested in all accounts under the Company's 401(k) Plan.
(b) As of the Closing Date, and subject to compliance
with applicable law, the Purchaser shall, or shall cause
Subsidiary to, establish employee benefit plans which provide
benefits which are comparable to those benefits provided under
the Company Benefit Plans, determined in the aggregate without
reference to the ability of the Employees to defer compensation
under the Company's 401(k) Plan but taking into account the
matching contribution feature under such 401(k) Plan. The
Purchaser's obligation under this Section shall continue until
the first anniversary of the Closing Date. With respect to such
employee benefit plans established or caused to be established
by the Purchaser, the Employees shall receive credit for service
with the Subsidiary in satisfying eligibility and vesting
requirements (but not benefit accrual) and shall not be subject
to any service requirement which would prevent Employees from
being immediately eligible for medical and dental benefits. The
Purchaser shall obtain a waiver to any pre-existing condition
exclusion for medical and dental benefits if such waiver can be
obtained on commercially reasonable terms, and if the Purchaser
is unable to obtain such a waiver on commercially reasonable
terms with respect to all employees and dependents, then the
Purchaser shall be responsible for paying the premiums imposed
under the group health plans maintained by Smith for COBRA
continuation coverage under Section 4980B of the Code with
respect to all employees and dependents until the first
anniversary of the Closing Date, and Smith shall be obligated to
accept such payments from the Purchaser through such date.
Employees shall be credited with their experience under the
Company Benefit Plans for purposes of meeting any deductible,
co-insurance and maximum out-of-pocket requirements under such
employee benefit plans. Except as reflected on the Closing Date
Balance Sheet, neither the Company nor the Subsidiary has or
will incur any special or extraordinary fees or costs in
connection with their cessation of participation in any of the
Company Benefit Plans.
(c) Except as provided by applicable law, at no time,
either prior to or after the Closing, shall the Sellers (or any
of them) have any obligation whatsoever to provide to the
Employees any benefits of any kind, whether pursuant to Section
12(b) or otherwise.
(d) The Purchaser shall indemnify and hold the Sellers
harmless from and against any and all damages that arise from or
in connection with the Purchaser's breach of its obligations
under this Section.
SECTION 13. Preparation and Filing of Returns; Payment of
Taxes.
13.1 Preparation and Filing of Returns.
(a) The Sellers agree to cause to be prepared and
filed on a timely basis all federal income Tax Returns and state
and local income or franchise Tax Returns of the Company and the
Subsidiary for Pre-Closing Tax Periods that are not yet due but
will be due on or before the Closing Date, to pay all Taxes
shown to be due on such Returns, and to give copies thereof to
the Purchaser promptly after the same has been filed. Such
Returns shall be prepared and filed on a basis that is
consistent with prior Returns and past practices. The Sellers
shall undertake reasonable efforts to request the Company and
the Subsidiary to deliver copies of such Tax Returns to the
Purchaser prior to their being filed, however, in no event shall
the Sellers suffer any liability or shall the Purchaser have any
right of recourse in the event the Sellers fail to comply with
their obligations under this sentence.
(b) The Purchaser shall cause to be prepared and filed
on a timely basis all Returns of the Company and the Subsidiary
that include Pre-Closing Tax Periods and are due after the
Closing Date; provided, however, that the Sellers'
Representative shall have the right to review each such Returns
at least ten (10) business days prior to the due date of such
Return. Such Returns shall be prepared and filed on a basis
that is consistent with prior Returns and past practices;
provided, however, if the Purchaser is notified in writing by
its regular outside accounting firm that preparing and filing
such returns on a consistent basis would be a violation of law,
then the Purchaser shall so notify the Sellers' Representative
and if the Sellers shall dispute such position by the
Purchaser's regular outside accounting firm, then the matter
shall be submitted to the Tax Arbitrator for resolution as
contemplated by Section 13.3(b)(iii). At least three (3)
Business Days prior to the due date of any Return, Sellers shall
direct the Escrow Agent to disburse to the Purchaser a portion
of the Indemnity Escrow Amount equal to the Taxes attributable
to the Pre-Closing Tax Period included in such Return (and if
the balance of the Indemnity Escrow Amount is less than such
amount of Taxes, then each of the Sellers shall deliver to the
Purchaser by wire transfer of immediately available funds a sum
equal to its Pro Rata Share of such shortfall), but only to the
extent that the amount due from Sellers exceeds the amount of
the Tax Reserve (reduced by any prior offsets or credits
pursuant to this section or Section 10.6).
13.2 Allocation of Tax Liability.
(a) To the extent permitted by applicable law, the
parties hereto agree to cause state and local Tax periods of
each of the Company and the Subsidiary to be closed at the close
of business on the Closing Date. In the event applicable law
does not permit the closing of any such period, the allocation
of Tax liability shall be made in accordance with Section
13.2(b).
(b) In the case of a Return for an Overlap Period
based upon income or gross receipts, the amount of Taxes
attributable to any Pre-Closing Tax Period or Post-Closing Tax
Period included in the Overlap Period shall be determined by
closing the books of each of the Company and the Subsidiary as
of the close of business on the Closing Date and by treating
each of such Pre-Closing Tax Period and Post-Closing Tax Period
as a separate taxable year, except that exemptions, allowances
or deductions that are calculated on an annual basis shall be
apportioned on a per diem basis. If the liability for Taxes for
an Overlap Period is determined on a basis other than income or
gross receipts, the amount of Taxes attributable to any
Pre-Closing Tax Period included in the Overlap Period shall be
equal to the amount of Taxes for the Overlap Period multiplied
by a fraction, the numerator of which is the number of days in
the Pre-Closing Tax Period included in the Overlap Period and
the denominator of which is the total number of days in the
Overlap Period, and the amount of such Taxes attributable to any
Post-Closing Tax Period included in an Overlap Period shall be
the excess of the amount of Taxes for the Overlap Period over
the amount of Taxes attributable to the Pre-Closing Tax Period.
13.3 Cooperation and Exchange of Information; Proceedings.
(a) As soon as practicable after the Closing Date, but
not later than thirty (30) days thereafter, each Seller will
cause to be delivered to Purchaser all of the original books and
records of the Company and the Subsidiary relating to Taxes
which are in its possession, if any. The Purchaser agrees to
furnish or cause to be furnished to the Sellers' Representative
upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating
to the Company and the Subsidiary as is reasonably necessary to
complete and file any Return, respond to audits, obtain refunds,
make any determination under this Agreement (including, but not
limited to, the determination of the responsibility for the
payment of Taxes under this Agreement), verify issues and
negotiate settlements with Tax Authorities, or defend or
prosecute any claims.
(b) (i) If, subsequent to the Closing, Purchaser, the
Company or the Subsidiary receives notice of a proceeding with
respect to the Company or the Subsidiary for which the Sellers
could have an indemnification obligation under Section 10.6(a)
(a "Tax Proceeding"), Purchaser shall promptly notify the
Sellers of such Tax Proceeding. The Sellers may elect, through
written notification by Sellers receiving more than 50% of the
purchase price and acting through Sellers' Representative, to
control the conduct and resolution of such Tax Proceeding,
unless such resolution could materially increase the Tax
Liability of the Purchaser, Company or the Subsidiary for a
Post-Closing Tax Period and the Sellers would not be required to
fully indemnify any of such corporations for such increase, in
which event the Sellers' Representative and Purchaser shall
jointly control and resolve such Tax Proceeding. Each of the
Sellers and Purchaser shall be responsible for its own legal
fees and related expenses incurred in connection with such Tax
Proceeding.
(ii) If the Sellers shall elect not to control or
participate in the control of the conduct of a Tax Proceeding
referred to in Section 13.3(b)(i) above, Purchaser shall have
the right to control the conduct of such Tax Proceeding, but
shall not resolve such Tax Proceeding without the Sellers
Representative's written consent, which shall not be
unreasonably withheld.
(iii) In the event of a dispute regarding the
conduct or resolution of any Tax Proceeding in which the
Sellers' Representative and the Purchaser jointly control the
conduct and resolution of such Tax Proceeding, such dispute
shall be referred to a nationally recognized accounting firm
(the "Tax Arbitrator") agreed to by the parties. Each of the
Sellers' Representative and Purchaser shall present its position
to the Tax Arbitrator which shall decide which position shall be
adopted. The Tax Arbitrator shall not be entitled to adopt any
other position, unless the Sellers Representative and Purchaser
so agree. The decision of the Tax Arbitrator shall be final and
binding, and its fees and costs shall be paid one-half by the
Sellers and one-half by Purchaser.
13.4 Tax Withholding Certificates. The Purchaser has no
obligation under the Code to withhold or pay over to the
Internal Revenue Service any portion of the consideration
payable to the Sellers. The Sellers shall have delivered to the
Purchaser any and all certificates required by applicable Tax
law in order to avoid the withholding of any portion of the
purchase price.
13.5 Miscellaneous Tax Matters. The Sellers and the
Purchaser agree to cause the Company and the Subsidiary not to
engage in any transaction on the Closing Date outside of the
ordinary course of their businesses, other than the transactions
contemplated by this Agreement.
13.6 Tax Definitions. For purposes of this Agreement, the
following terms shall have the meaning set forth below:
"Code" means the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Overlap Period" means any taxable period beginning
before and ending after the Closing Date.
"Post-Closing Tax Period" means (i) any taxable period
beginning after the Closing Date and (ii) the period beginning
immediately after the Closing Date and ending on the last day of
an Overlap Period.
"Pre-Closing Tax Period" means (i) any taxable period
commencing on or after June 20, 1986 and ending at or before the
close of business on the Closing Date and (ii) the period
beginning on the first day of an Overlap Period and ending at
the close of business on the Closing Date.
"Proceeding" means any audit, other administrative
proceeding or judicial proceeding involving Taxes.
"Returns" means all returns, reports, estimates,
information returns and statements (including any related or
supporting information) filed or to be filed with any Tax
Authority in connection with the determination, assessment,
collection or administration of any Taxes.
"Tax" or "Taxes" means all taxes, charges, fees,
interest, penalties, additions to tax or other assessments,
including, but not limited to, income (whether net or gross),
excise, property, sales, transfer, gains, gross receipts,
occupation, privilege, payroll, wage, unemployment, workers'
compensation, social security, occupation, use, value added,
capital, gross receipts, franchise, license, severance, stamp,
premium, windfall profits, environmental (including taxes under
Code Sec. 59A), capital stock, profits, withholding, disability,
real property, personal property, registration, customs duties,
alternative or add-on minimum, estimated or other tax of any
kind whatsoever (whether disputed or not) imposed by an Tax
Authority.
"Tax Authority" means any federal, national, foreign,
state, municipal or other local government, any subdivision,
agency, commission or authority thereof, or any
quasi-governmental body or other authority exercising any taxing
or tax regulatory authority.
"Tax Liabilities" means all liabilities for Taxes and
all reasonable costs and expenses related thereto (including,
without limitation, reasonable attorneys' and accountants'
fees).
"Tax Reserve" means the amount of Taxes reflected as a
liability in the calculation of the Working Capital of the
Company and the Subsidiary as of the Closing Date.
SECTION 14. Notices. All notices, requests, consents and other
communications under this Agreement shall be in writing and
shall be mailed by first class, registered or certified mail,
postage prepaid, or sent via overnight courier service, or
delivered personally or sent by facsimile machine:
If to the Purchaser: Mr. Robert Price
Price Communications Corporation
45 Rockefeller Plaza, Suite 3201
New York, New York 10020
Facsimile: (212) 397-3755
with a copy to: Peter G. Samuels, Esq.
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Facsimile: (212) 969-2900
If to the Sellers: c/o Advent V Capital Company
Limited Partnership
75 State Street, Suite 2500
Boston, Massachusetts 02109
Attention: Mr. Stephen F. Gormley
Facsimile: (617) 345-7201
and a copy to: Stephen O. Meredith, Esq.
Edwards & Angell
101 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 439-4170
or to such other address of which the addressee shall have
notified the sender in writing. Notices mailed in accordance
with this section shall be deemed given the third day after they
are mailed, notices sent by overnight courier service shall be
deemed given on the next business day after they are placed in
the hands of a representative of such service and notices sent
by facsimile machine shall be deemed given when sent if sent
between 9 a.m. and 5 p.m. Boston time or the next business day
thereafter if sent after 5 p.m. Boston time.
SECTION 15. Third Party Rights. It is the intention of the
parties that nothing in this Agreement shall be deemed to create
any right with respect to any person not a party to this
Agreement and no person other than the parties to this Agreement
is, or is intended to be, a third party beneficiary of this
Agreement.
SECTION 16. Parties in Interest; Assignment. All covenants and
agreements contained in this Agreement by or on behalf of any of
the parties to this Agreement shall bind and inure to the
benefit of their respective successors and assigns, whether so
expressed or not. No party to this Agreement may, however,
assign its rights or delegate its obligations under this
Agreement (whether by operation of law or otherwise) to any
other person or entity without the express prior written consent
of the Purchaser or the Sellers' Representative, as the case may
be, provided that the Purchaser may assign its rights, and
delegate its duties, under this Agreement to any person that is
wholly-owned and controlled by the Purchaser without the prior
written consent of the Sellers' Representative so long as the
Purchaser continues to remain liable to the Sellers for the
performance of the obligations of the Purchaser hereunder.
SECTION 17. Construction; Governing Law. The section headings
contained in this Agreement are inserted as a matter of
convenience and shall not affect in any way the construction of
the terms of this Agreement. This Agreement shall be governed
by and interpreted in accordance with the laws of the District
of Columbia, without giving effect to the provisions thereof
regarding conflict of law.
SECTION 18. Entire Agreement; Amendment and Waiver. This
Agreement, including the Schedules and Exhibits hereto,
constitutes and contains the entire agreement between the
Sellers and the Purchaser with respect to the transactions
contemplated hereby and supersedes any prior oral or written
understanding or agreement of the Sellers and the Purchaser with
respect to the transactions contemplated hereby. This Agreement
may be amended as to any party only with the written consent of
such party, except that the Sellers' Representative (for and on
behalf of the Sellers) is authorized to amend this Agreement to
(i) extend the time for the performance of any obligations of
the Purchaser hereunder to a date not later than one year after
the date otherwise required; (ii) waive any inaccuracies of
representations and warranties made by the Purchaser; (iii)
waive performance of any obligations by the Purchaser (other
than any such waiver constituting a reduction of the Purchase
Price by more than $2,000,000); and (iv) waive the fulfillment
of any condition precedent to the performance by the Sellers of
their obligations hereunder (other than any such waiver
constituting a reduction of the Purchase Price by more than
$2,000,000). Any such amendment or waiver must be in writing
and signed by an officer of the party or parties to such
amendment or waiver, except that the consummation of the
transactions contemplated hereby shall be deemed to constitute a
waiver by each party of all misrepresentations, breaches of
warranties and covenants and unfulfilled conditions made by or
to be performed or satisfied by any other party or parties to
the extent the other party or parties have actual knowledge
thereof at or prior to the Closing. No such waiver shall be
deemed to constitute the waiver of any other breach of the same
or of any other term or condition of this Agreement.
SECTION 19. Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity
or enforceability of the remaining provisions.
SECTION 20. Counterparts. This Agreement may be executed in
one or more counterparts, any one of which need not contain the
signatures of more than one party but all of which taken
together shall constitute one and the same agreement.
SECTION 21. Expenses. Each party to this Agreement shall pay
any and all fees and expenses that such party may incur in
connection with the negotiation, execution and consummation of
the transactions contemplated by this Agreement, including,
without limitation, the preparation, filing and prosecution of
its portion of the applications and other materials required
under Section 5.5.
SECTION 22. Schedules and Exhibits. The Schedules and Exhibits
attached to this Agreement constitute a part of this Agreement
and are incorporated herein by reference in their entirety as if
fully set forth in this Agreement.
SECTION 23. Termination. Anything contained in this Agreement
to the contrary notwithstanding, this Agreement (a) may be
terminated at any time by the mutual consent of the Sellers and
the Purchaser, (b) shall automatically terminate if the Closing
shall not have occurred on the first anniversary of the date
hereof by reason of the failure of any of the conditions set
forth in Sections 6.6, 6.8, 7.5 or 7.7 to be satisfied by such
date, (c) may be terminated by Purchaser as provided in the last
sentence of Section 6.6 or of any of the conditions set forth in
Sections 6.7, 6.10, 6.11 or 6.12 hereof; or (d) may be
terminated by either Purchaser or Sellers if there has been a
material breach of any representation, warranty, covenant or
agreement contained herein or in the Escrow Agreement
(collectively, the "Transaction Documents") on the part of the
other party which, if not cured, would permit the Purchaser or
the Sellers, as the case may be, not to consummate the
transactions contemplated hereby under Sections 6 and 7,
respectively, and such breach has not been cured in all material
respects in the case of defaults under Section 5.4 (FCC
Approvals), on the date hereof, in the case of defaults under
Section 5.5 (Hart-Scott Approval), within 10 days of the date
such party receives notice of the existence of such default, and
in all other cases, at the time the Closing would have taken
place in accordance with Section 2.1 but for the existence of
such default; (e) may be terminated by the Sellers or the
Purchaser upon the earlier of (i) the designation of the FCC
License renewal application for hearing, or (ii) 90 days after
the timely filing of a comparative application with the FCC by
parties unrelated to and unaffiliated with the Sellers or
Purchasers which seeks authority to construct and operate a
television station on Channel 27 in Harrisburg, Pennsylvania,
which application is still pending as of the date of such
termination; or (f) may be terminated by Purchaser if any loss,
damage or other occurrence prevents broadcast transmissions by
the Station for more than ten (10) continuous days, provided
that if Purchaser does not terminate this Agreement pursuant to
this paragraph (f) within ten days of notice by Sellers (which
notice Sellers shall give as soon as practicable after it
becomes aware of any loss, damage or other occurrence which is
reasonably likely to prevent broadcast transmissions by the
Station for more than five continuous days), Sellers shall cause
the Company and the Subsidiary promptly to restore transmissions
and replace the damaged property in a manner substantially
similar to that previously conducted or existing (the "Repairs")
and Purchaser shall not be entitled to terminate this Agreement
by reason of such failure to broadcast. If the Repairs have not
been completed at the time the Closing would otherwise be held,
then the Closing shall be deferred until a date within fifteen
days after Sellers have notified Purchaser of the completion of
the Repairs. If the Repairs have not been completed and the
Purchaser is so notified by the Sellers, the Purchaser may
terminate this Agreement. If in any event the Closing Date
would be after the period permitted by the FCC's Final Order for
the transfer of control of the Subsidiary, the Sellers and the
Purchaser shall file an appropriate request with the FCC for an
extension of time within which to complete the Closing.
SECTION 24. Remedies. The Sellers and the Purchaser
acknowledge and agree that, because of the unique nature of the
Station and the business operations conducted by the Company and
the Subsidiary, the failure of any of the Sellers to perform
their obligations under this Agreement, or of Purchaser to
perform its obligation under the provisions of Section 11 hereof
when and as contemplated hereby would cause the other party
hereto to incur damages for which there is no adequate remedy at
law; the Sellers and the Purchaser accordingly agree that, in
addition to any other remedies available to the Sellers or the
Purchaser with respect thereto, any such failure by either party
shall be subject to the remedy of specific performance.
SECTION 25. Nature of Obligations. The Sellers' obligations
and liability arising under or in connection with this Agreement
and the other Transaction Documents and the transactions
contemplated hereby and thereby are several and not joint, and
are nonrecourse to the Sellers' respective general and limited
partners and stockholders, as the case may be except to the
extent any such partner or Stockholder is a Seller hereunder.
SECTION 26. Dispute Resolution; Judicial Proceedings; WAIVER OF
JURY TRIAL.
(a) Any controversy, dispute or claim, including, but not
limited to, a claim for specific performance, between the
Sellers and the Purchaser arising out of or in connection with,
or relating to, this Agreement or any of the other Transaction
Documents or the breach, termination or validity hereof or
thereof, shall be finally settled by arbitration conducted
expeditiously in accordance with the Commercial Arbitration
Rules (the "AAA Rules") of the American Arbitration Association
(the "AAA") in effect at the time of the commencement of the
arbitration proceeding by a sole arbitrator appointed by the
AAA. The arbitrator shall be an attorney with no less than 15
years experience in the practice of corporate law (preferably,
experience in the acquisition and financing of broadcasting
stations). Judgment upon the award rendered by the arbitrator
may be entered and specifically enforced in any court having
jurisdiction thereof. The situs for any such arbitration shall
be the District of Columbia. A final award shall be rendered as
soon as reasonably possible and in any event within 120 days of
the filing with AAA of any Demand for Arbitration. The parties
agree that the AAA arbitrator shall have the right to shorten
the length of any notice periods or other time periods provided
in the AAA Rules and to implement Expedited Procedures under the
AAA Rules in order to ensure that the arbitration process is
completed within the time frames provided herein. The
arbitration award shall be in writing.
(b) EACH OF THE PARTIES HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT
ON, WITH RESPECT TO OR IN CONNECTION WITH THIS AGREEMENT, ANY OF
THE OTHER TRANSACTION DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY.
(c) The provisions of this Section 26 shall survive
any termination of this Agreement for any reason.
SECTION 27. Further Assurances. Sellers and the Purchaser
shall cooperate and take such actions, execute such other
documents, at the Closing or subsequently, as may be reasonably
requested by the other in order to carry out the provisions and
purposes of this Agreement.
SECTION 28. Noncompetition. (a) In order to induce Purchaser
to enter into this Agreement, the Stockholders agree that they
shall not:
(i) for a period of six months from the Closing
Date (but in no event extending for a period after
December 31, 1994), operate or be interested in
(whether as an owner, partner, manager, employer or
otherwise), any television station located within a
radius of thirty (30) miles from the city limits of
Harrisburg, Pennsylvania; provided, however, that
ownership of securities of public company not in excess
of 5% of any class of such securities by any Seller
shall not be considered a breach or violation of this
provision; or
(ii) for a period of twelve months from the date
hereof, without Purchaser's prior written consent,
employ or otherwise engage, or offer employment or
engagement to, any individual who was an employee of
the Station on the date of this Agreement and who is
not discharged by the Purchaser; or
(iii) at any time disclose to any person or entity
other than Purchaser or its representatives and such
Stockholder's affiliates and investors, any financial
information or other confidential information
concerning the Station (except to governmental
authorities if and as required by law).
(b) The parties acknowledge that any breach of this
Section will result in immediate and irreparable injury to the
Purchaser for which the Purchaser will not have an adequate
remedy at law. Therefore, the Purchaser shall be entitled, if
any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent
injunction enjoining such breach, and to seek any and all other
remedies to which the Purchaser may be entitled without posting
bond or other security.
SECTION 29. Accounts Receivable.
(a) The Purchaser shall be entitled to receive from
the Sellers on the 185th day following the Closing Date an
amount equal to the difference between (i) 95% of the accounts
receivable appearing on the Closing Date Balance Sheet (such
account receivables being referred to as the "Closing
Receivables") less (ii) the amount of the Closing Receivables
collected on or before the 180th day following the Closing Date
(such 180-day period being referred to as the "Collection
Period" and such difference being referred to as the
"Receivables Collection Shortfall"). The amount, if any,
payable to the Purchaser under this Section shall be disbursed
by the Escrow Agent out of the Indemnity Escrow Amount (and if
the balance of the Indemnity Escrow Amount is less than the
Receivables Collection Shortfall, then, subject to the
limitations set forth in Section 10.2(b)(ii), each of the
Sellers shall deliver to the Purchaser by wire transfer of
immediately available funds a sum equal to its Pro Rata Share of
the Receivables Collection Shortfall).
(b) The Purchaser shall cause the Company and the
Subsidiary to use diligent collection efforts consistent with
past practices in order to collect the Closing Receivables on or
before the 180th day following the Closing Date; provided,
however, that in no event shall the Purchaser, the Company or
the Subsidiary be required to engage the services of a
collection agency or to commence litigation to collect any of
the Closing Receivables. All payments of Closing Receivables
shall be applied against the oldest outstanding receivable from
the payor unless such oldest receivable due from such payor is
the subject of a bona fide dispute between it and the Company or
the Subsidiary. The Purchaser shall promptly after its
discovery thereof, notify the Sellers' Representative of the
existence of any such dispute and provide an explanation of such
dispute in reasonable detail and any other information which the
Sellers' Representative might reasonably request in connection
therewith. During the Collection Period, the Purchaser shall
not, and shall not permit the Company or the Subsidiary to,
compromise, discount or settle any Closing Receivable for an
amount less than the full amount thereof as reflected on the
Closing Date Balance Sheet without the Sellers' Representative's
prior written consent.
(c) Concurrently with the delivery of the amount, if
any, of the Receivables Collection Shortfall to the Purchaser,
the Purchaser shall transfer and assign to the Sellers all
Closing Receivables not collected prior to the termination of
the Collection Period. Following the Collection Period, the
Purchaser shall disburse to the Sellers' Representative the
proceeds, if any, received by the Purchaser, the Company or the
Subsidiary in respect of any Closing Receivables after the
Collection Period.
<PAGE>
IN WITNESS WHEREOF, the Sellers and the Purchaser have
caused this Securities Purchase Agreement to be executed by
their duly authorized representatives as of the day and year
first written above.
PRICE COMMUNICATIONS CORPORATION
By
Robert Price, President
ADVENT V CAPITAL COMPANY LIMITED
PARTNERSHIP, ADVENT ATLANTIC CAPITAL
COMPANY LIMITED PARTNERSHIP,
CHESTNUT CAPITAL INTERNATIONAL II
LIMITED PARTNERSHIP, ADVENT
INDUSTRIAL CAPITAL COMPANY LIMITED
PARTNERSHIP, TA INVESTORS AND
CHESTNUT STREET PARTNERS, INC.
By:
Stephen F. Gormley,
Authorized Signatory
Securities Purchase Agreement
<PAGE>
PRUDENTIAL VENTURE PARTNERS
By:
Title:
SMITH BROADCASTING GROUP, INC.
By:
Robert N. Smith, President
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:
Title:
MERRILL LYNCH LIFE INSURANCE
COMPANY
By:
Title:
Securities Purchase Agreement
<PAGE>
3/1//94
16126-99431
Schedules to
Securities Purchase Agreement
between
Stockholders and Warrant Holders of
SMITH ACQUISITION CORP.
and
PRICE COMMUNICATIONS CORPORATION
dated as of February 15, 1994
The following Schedules are incorporated in, and are an
integral part of, the Securities Purchase Agreement dated as of
February 15, 1994 between the Stockholders and Warrant Holders of
Smith Acquisition Corp. and Price Communications Corporation (the
"Agreement"). Capitalized terms used herein shall have the
meanings ascribed to such terms in the Agreement unless otherwise
defined herein. All Schedule headings are inserted for
convenience
of reference only and shall not be used in the construction or
interpretation of the information contained in the Schedules.
The
inclusion of, or reference to, any item on any Schedule herein
does
not constitute an admission that such item or information is
material or satisfies all of the criteria set forth in the
Agreement for inclusion in any Schedule. Information disclosed
on
any Schedule is deemed to be disclosed for all purposes of the
Agreement and all other Schedules.
<PAGE>
SCHEDULE 1.2(b)
COMPANY DEBT
1. The Company's indebtedness to The First National Bank of
Boston ("FNB") and the Federal Deposit Insurance Corporation
("FDIC"; and together with FNB, the "Banks") under that
certain Amended and Restated Loan Agreement dated as of
September 30, 1992 among the Company, FNB and RECOLL
Management Corporation as attorney-in-fact for the FDIC as
the
receiver of New Bank of New England, N.A., as the assignee
of
the FDIC, as the receiver of Bank of New England, N.A. (such
indebtedness being referred to as the "Bank Debt"). As of
December 31, 1993 the outstanding principal amount of the
Bank
Debt was $16,651,576.
2. The Company's indebtedness to Equitable, Cudd & Co. (as an
assignee of Equitable) and Merrill Lynch under that certain
Amended and Restated Loan Agreement dated as of September
30,
1992 (such indebtedness being referred to as "Senior Secured
Debt"). As of December 31, 1993, the outstanding principal
amount of the Senior Secured Debt was $3,915,913.
3. The Company's indebtedness to Equitable, Cudd & Co. (as an
assignee of Equitable) and Merrill Lynch under that certain
Amended and Restated Loan Agreement dated as of September
30,
1992 among the Company, Equitable and Merrill Lynch (such
indebtedness being referred to as "Senior Subordinated
Debt").
As of December 31, 1993, the outstanding principal amount
(including capitalized interest) of the Senior Subordinated
Debt was $1,474,208.
4. The Company's indebtedness to Equitable, Cudd & Co. (as an
assignee of Equitable) and Merrill Lynch under that certain
Amended and Restated Subordinated Loan Agreement dated as of
September 30, 1992 among the Company, Equitable and Merrill
Lynch (such indebtedness being referred to as "Junior
Subordinated Debt"). As of December 31, 1993, the
outstanding
principal amount (including capitalized interest) of the
Junior Subordinated Debt was $5,572,625.
<PAGE>
SCHEDULE 1.2(d)
Smith Acquisition Corp. and WHTM-TV, Inc.
Year Ended
12/31/93
Net Income 2,228,167
Add:
Interest Expense 2,518,879
Depreciation & Amortization 459,888
Amortization of Goodwill 743,460
Management Fee 175,000
Other Non-Operating Expense 0
Income Taxes 1,147,837
File & Program Amortization 1,704,662
Costs of Selling Company (A) 0
Environmental Clean-up 25,000
Purcell Compensation in excess of $200,000 72,400
Employee Retention Bonuses 0
Trade & Barter Expense 395,062
Less:
Scheduled Film & Program Payments 1,583,386
Trade & Barter Revenues 431,678
Reversal of ASCAP/BMI Accrual 391,001
Other Non-Operating Expense 57
Cumulative Effect of FAS 109 Accounting Change 1,438,066
__________
1993 Cash Flow 5,626,167
(A) 12/31/93 balance sheet includes $53,863 in deferred expenses
relating to the sale of the Company. These costs and all
others incurred in connection with the sale, including,
without limitation, those incurred in connection with the
withdrawal of employees from the Employee Benefit Trust
described on Schedule 3.17 and the termination of employees
from the 401(k) Plan described on Schedule 3.17, will be
recognized on the Closing Date.
<PAGE>
SCHEDULE 3.1
CHARTER DOCUMENTS
Copies of the corporate charter and by-laws for each of the
Company and the Subsidiary are attached as follows:
Restated Certificate of Incorporation of Annex
3.1(a)
Smith Acquisition Corp.
By-Laws of Smith Acquisition Corp. Annex
3.1(b)
Articles of Incorporation of WHTM-TV, Inc. Annex
3.1(c)
By-Laws of WHTM-TV, Inc. Annex
3.1(d)
<PAGE>
SCHEDULE 3.2(a)
CAPITALIZATION OF THE COMPANY
I. CAPITAL STOCK OF THE COMPANY OUTSTANDING
No. of
Holder Class Shares
Smith Broadcasting C 100
Group, Inc.
Advent V Capital A 2,875.0
Company Limited
Partnership
Advent Atlantic A 146.5
Capital Company
Limited Partnership
Chestnut Capital A 340.0
International II
Limited Partnership
Advent Industrial A 176.0
Capital Company
Limited Partnership
TA Investors A 97.0
Chestnut Street A 294.0
Partners, Inc.
Prudential Venture A 1,071.5
Partners
II. WARRANTS AND OPTIONS TO PURCHASE CAPITAL STOCK OF THE COMPANY
A. Warrants
No. of
Warrant Holder Class Shares
Equitable B 4,550
Merrill Lynch B 450
B. Options
The TA Group has the option, pursuant to the
Securityholders Agreement, to acquire from the Company such
number of shares of authorized but unissued Class C Stock
which, after giving effect to the issuance of such shares,
shall represent 50% of all of the issued and outstanding
Class
C Stock then issued and outstanding. Such option shall be
terminated and of no further force or effect upon the
occurrence of the Closing.
III. LIENS
1. The Banks, Equitable and Merrill Lynch hold security
interests in the issued and outstanding capital stock of the
Company pursuant to the Investor Pledge Agreement dated as of
September 30, 1992 among the Stockholders, the Banks, Equitable
and
Merrill Lynch. A copy of such Investor Pledge Agreement has
previously been delivered to the Purchaser's representatives.
<PAGE>
SCHEDULE 3.2(b)
CAPITALIZATION OF THE SUBSIDIARY
There are 10 shares of the Subsidiary's common stock, no par
value, issued and outstanding, which shares represent 100% of
the Subsidiary's issued and outstanding capital stock. All
of
such shares are held legally and beneficially by the Company.
The Banks, Equitable and Merrill Lynch hold security
interests
in the issued and outstanding common stock of the Subsidiary
pursuant to a certain Subsidiary Pledge Agreement dated as of
June 19, 1986.
<PAGE>
SCHEDULE 3.3
FINANCIAL STATEMENTS
The Purchaser has been furnished with copies of the
following financial statements:
1. Audited Consolidated Financial Statements
Years ended December 31, 1992 and 1991
2. Audited Consolidated Financial Statements
Years ended December 31, 1991 and 1990
3. Monthly Financial Statements - May 31, 1993
4. Monthly Financial Statements - August 31, 1993
5. Monthly Financial Statements
December 31, 1993
6. Monthly Financial Statements
December 31, 1992
7. Monthly Financial Statements
December 31, 1991
The monthly Financial Statements prepared by the Company or
the
Subsidiary referenced above and hereafter provided in
accordance with the Agreement were and will be prepared in
accordance with generally accepted accounting principles
except
that they do not and will not include notes to financial
statements or statements of cash flows and do not provide for
normal year-end audit adjustments.
<PAGE>
SCHEDULE 3.5
SUBSEQUENT EVENTS
1. The employees listed on Annex 3.5(iv) hereto currently
have base salaries in excess of $50,000 per year and received
salary increases after December 31, 1993.
2. Robert N. Smith is paid as a consultant a salary of
$91,000 per year. The rights and obligations of the Company
and the Subsidiary are to be terminated as of the Closing.
3. David A. Fitz is paid as a consultant a salary of
$84,000
per year. The rights and obligations of the Company and the
Subsidiary are to be terminated as of the Closing.
4. The Subsidiary has agreed to sell to John Purcell his
Subsidiary-provided automobile and to David A. Fitz his
Subsidiary-provided personal computer equipment, in each case
subject to all outstanding obligations, if any, relating
thereto as of the Closing Date, including, without
limitation,
obligations arising under any lease, purchase, maintenance,
repair or insurance agreement relating to such automobile or
computer equipment.
<PAGE>
SCHEDULE 3.6
TAX MATTERS
A. Adverse Tax Elections
None.
B. Notice of Possible Taxation
By letter dated October 23, 1992, the Pennsylvania Department
of Revenue notified the Company that it may be doing business in
Pennsylvania such that would require it to meet additional state
tax obligations. The Company provided the Department of Revenue
with documentation evidencing its withdrawal from Pennsylvania
and
payment of all taxes and charges owed to Pennsylvania. No
further
communication has been made to or received by the Department of
Revenue. Copies of the above-described correspondence and
related
correspondence is attached as Annex 3.6 hereto.
<PAGE>
SCHEDULE 3.8
LITIGATION
1. Robert B. Grover v. WHTM-TV, Inc.
Civil Action No. 3437 S 1992
In the Court of Common Pleas
Dauphin County, Pennsylvania
This claim, filed on August 24, 1992, involves the
termination
of employee Robert Grover on June 29, 1992. The plaintiff
alleges that he was terminated without cause and is entitled
to
severance pay of $7,793.50. The claim was submitted to
arbitration and on May 6, 1993 Mr. Grover received an
arbitration award of $7,5240, together with costs and
interest
from June 29, 1992. WHTM continues to consider Mr. Grover's
claim to be without merit and has appealed the arbitration
award.
<PAGE>
SCHEDULE 3.10
REQUIRED CONSENTS
Consents Required
* 1. Primary Television Affiliation Agreement dated January
24,
1991 with Capital Cities/ABC, Inc.
2. Agreement dated July 12, 1993 with Twentieth Television
(Bertice Berry)
3. Agreement dated December 30, 1992 with Turner Program
Services, Inc. (CNN Headline News, CNN Newssource)
4. Agreement dated May 12, 1993 with Group W Productions,
Inc. (Martha Stewart Living)
5. Agreement dated March 23, 1993 with Viacom Enterprises
(Nick News)
* 6. Agreement dated June 4, 1991 with Viacom Enterprises
(Roseanne)
7. Agreement dated May 5, 1993 with WUPI (What's Up
Network)
* 8. Syndication License Agreement dated October 29, 1990
with
Warner Bros. Television Distribution, Inc. (Murphy
Brown)
9. Program License Agreement with Cannell Distribution
Company, dated April 23, 1993 ("Renegade").
10. Station Agreement with Horizon Media Inc., dated March
28,
1990, regarding sale of broadcast advertising time.
11. License Agreement for Television Motion Picture
Exhibition
with KingWorld, dated January 7, 1994 ("American
Journal,
Vol. I").
12. Turner Program Services Inc. : CNN Television
Syndication
Agreement, dated November 4, 1993.
See also Schedule 3.14 - Contracts. Notwithstanding anything
in the Securities Purchase Agreement to the contrary, the
obtaining
of consents of third parties to agreements (excluding those
agreements designated above with an asterisk (*)) shall not be a
condition precedent to either the Purchaser's or Sellers'
obligations to close. However, the Sellers shall use all
commercially reaonsable efforts (without the expenditure of undue
time or effort, significant costs or making payments to such
third
parties) to obtain the consents specified in items 1-12 above.
<PAGE>
SCHEDULE 3.11
REAL PROPERTY
1. Real Property Owned by the Company:
None.
2. Real Property Owned by the Subsidiary:
See Annex 3.11. The Property in Dauphin County,
Pennsylvania described on Annex 3.11 is also known as
3235
Hoffman Street, Harrisburg, Pennsylvania.
3. Real Property Leased by the Company:
None.
4. Real Property Leased by the Subsidiary:
Lessor Description
a. Certon Corporation land for satellite
dishes
b. Commonwealth of PA transmitter site
c. Commonwealth of PA space and desk at
capital (oral lease)
Lessee
d. Eastern Microwave Inc. transmitter site
e. Metrocall of Delaware transmitter site
Inc.
f. Quaker Broadcasting - transmitter tower
KOOL and building space
5. Other Interests in Real Property:
a. Deed and Agreement of Easement for
Easement between location of guys
Brian Danzis and the and anchors
Subsidiary
b. Easement and Use Agreement Easement for
between June Broadcasting, location of guys and
Inc. and the Subsidiary and anchors
6. Liens, Encumbrances and Restrictions
a. See Schedule 3.12(b) - Liens
b. See Annex 3.11
<PAGE>
Annex 3.11
The Subsidiary owns the real property described in the
following Indentures:
a. Indenture dated as of October 31, 1980 between The Times
Mirror Company (as grantor) and WHTM-TV, Inc. (as
grantee)
filed with the Dauphin County, Pennsylvania Recorders
Office on November 25, 1980 in Book 174 beginning at
Page
119, a copy of which, together with a copy of a title
insurance policy relating thereto, is attached as Annex
3.11(a) hereto.
b. Indenture dated as of October 31, 1980 between The Times
Mirror Company (as grantor) and WHTM-TV, Inc. (as
grantee)
filed with the Cumberland County, Pennsylvania Recorders
Office on November 25, 1980 in Book F 29 beginning at
Page
373, a copy of which, together with a copy of a title
policy and survey relating thereto, is attached as Annex
3.11(b) hereto.
<PAGE>
SCHEDULE 3.12(b)
LIENS
1. The Banks and the holders of Senior Subordinated Indebtedness
have been granted a security interest in and lien upon
substantially all of the Subsidiary's assets and on the
issued
and outstanding capital stock of the Subsidiary, as
collateral
security for the payment and satisfaction of the Bank Debt
and
the Senior Subordinated Debt. The holders of the Junior
Subordinated Debt have been granted a security interest in
and
lien upon the issued and outstanding capital stock of the
Subsidiary as collateral security for the payment and
satisfaction of the Junior Subordinated Debt, which security
interest and lien is second in right to the security interest
and lien held by the Banks and the holders of the Senior
Subordinated Debt.
2. The Subsidiary's assets are subject to liens arising in the
ordinary course of business by operation of law, such as
warehousemen's liens, mechanics liens and the like.
3. Annex 3.12(b) sets forth the financing statements (including
notice filings) on record against the Company and the
Subsidiary.
4. The Banks, Equitable and Merrill Lynch hold a security
interest
in the issued and outstanding capital stock of the Company
pursuant to an Investor Pledge Agreement dated as of
September
30, 1992 among the Banks, Equitable, Merrill Lynch and the
Stockholders.
<PAGE>
ANNEX 3.12(b)
LIENS
DEBTOR: WHTM-TV, Inc.
3235 Hoffman Street
Harrisburg, PA 17110
SECURED PARTY FILING OFFICE FILING DATE FILE
NUMBER
The First National Secretary of State, 06/19/86
14361639
Bank of Boston Pennsylvania
Continuation Filed: 5/13/91
19681545
Merridian Leasing Secretary of State, 8/8/90
18800361
Inc. Pennsylvania
Keystone Financial Secretary of State, 8/8/90
18800361
Leasing Corp. Pennsylvania
Susquebanc Lease Co. Dauphin County, 2/22/90 386
PA Prothonotary
Merridian Leasing Dauphin County, 8/8/90 1801
Inc. PA Prothonotary
Keystone Financial Dauphin County, 11/2/90 2402
Leasing Corp. PA Prothonotary
The First National Dauphin County, 06/19/86 1253
Bank of Boston PA Prothonotary
Continuation Filed: 5/14/91 1001
DEBTOR: Smith Acquisition Corp.
c/o Smith Broadcasting Group, Inc.
3839 Fourth Street, N. - Suite 420
St. Petersburg, FL 33703
The First National Secretary of State, 6/18/86 74541A
Bank of Boston Michigan
Continuation Filed: 5/13/91 C478531
Amendment Filed: 10/2/92 24103B
The First National Secretary of State 6/19/86
14361636
Bank of Boston Pennsylvania
Continuation Filed: 5/13/91
19681546
Amendment Filed: 10/2/92
21241470
The First National Dauphin County, 6/19/86 1254
Bank of Boston PA Prothonotary
Continuation Filed: 5/14/91 1000
Amendment Filed: 10/2/92 1000
<PAGE>
SCHEDULE 3.13
ENVIRONMENTAL COMPLIANCE
The Phase I Environmental Site Assessment Final Report dated
November 8, 1993 prepared by Environmental Strategies Corporation
was delivered to the Purchaser on January 28, 1994.
<PAGE>
SCHEDULE 3.13(c)
None.
<PAGE>
SCHEDULE 3.14
CONTRACTS
1. Leases -- Annex 3.14(a)
2. Operating Contracts -- Annex 3.14(b)
3. Syndicated Film and Programming Contracts -- Annex 3.14(c)
4. Employment Contracts -- Annex 3.14(d)
5. Capitalization Agreements -- Annex 3.14(e)
6. See Schedule 3.17 - Employee Benefits
7. See Schedule 3.15 - Insurance
8. See Schedule 3.19 - Bank Accounts
In certain instances complete and legible copies of each
contract may not have been provided to the Purchaser by reason of
the fact that the Company is unable to locate such a copy. The
Sellers represent and warrant that, to the extent any such
contract
is incomplete or illegible, such missing or illegible provisions
are consistent with provisions generally found in contracts of
similar type and do not and will not have a material adverse
effect
upon the Company or the Subsidiary.
Except as provided in Section 5.1(d) of the Securities
Purchase
Agreement, any of the contracts disclosed herein which expires
prior to the Closing Date may be renewed or extended by the
Company
or the Subsidiary in the ordinary course of business consistent
with past practices upon terms substantially similar in all
material respects to those applicable under the existing
contract.
<PAGE>
ANNEX 3.14(a)
A. Leases Where Subsidiary Is Lessor
1. Amendment to Microwave Lease Agreement, dated October
12,
1990 with Eastern Microwave, Inc.
2. Lease Agreement dated April 1, 1987 with Metrocall of
Delaware, Inc.
3. Lessor's Consent, Waiver of Lien and Agreement dated
August 23, 1987 with Quaker Broadcasting, Inc.
B. Leases Where Subsidiary Is Lessee
1. Lease Agreement dated March 5, 1986 with Certon Corp.
2. License for Right-of-Way (State Forests) dated June 20,
1983 with the Commonwealth of Pennsylvania
3. Oral lease agreement for desk and space at capitol with
Commonwealth of Pennsylvania.
<PAGE>
ANNEX 3.14(b)
OPERATING CONTRACTS
1. Primary Television Affiliation Agreement dated January
24,
1991 with Capital Cities/ABC, Inc.
2. Nielsen Station Index Service Agreement dated November
12,
1991 with A.C. Nielsen Company
3. License to Receive and Use Broadcast Advertisers Reports
(BAR) Commercial Activity Data dated December 10, 1991
with Arbitron Ratings Company
4. Customer Service Protection Plan Addendum dated April
27,
1992 with AT&T
5. AP Membership Agreement for Television dated July 30,
1993
with The Associated Press
6. Letter Agreement dated April 26, 1993 with John Blair &
Company, Inc.
7. Local Television Blanket License dated September 10,
1986
with Broadcast Music, Inc., together with extension
dated
August 20, 1993.
8. The Subsidiary is a party to ASCAP's standard form of
license agreement generally applicable to television
stations but is unable to locate a copy thereof.
9. SESAC Broadcasting Performance License for TV Stations
dated October 10, 1985 with SESAC Inc.
10. Commercial Property Service Agreement dated September 8,
1992 with Chemlawn Commercial Services
11. Software-Hardware Maintenance Agreement dated June 16,
1993 with Dynatech Color Graphics
12. License Agreement dated as of December 16, 1991 with
Columbine Systems, Inc.
13. Agreement for Stenographic/Closed-Captioning Service
dated
June 29, 1992 with Ann Marie Sweeney
14. Agreement for Stenographic/Closed-Captioning Service
dated
June 30, 1992 with Deborah Turnbaugh
15. Agreement for Stenographic/Closed Captioning Service
dated
June 29, 1992 with Emily Clark
16. Agreement dated April 28, 1993 with Frank N. Magid
Associates, Inc.
17. Storage and Service Agreement dated January 23, 1992
with
Keystone Records Management Company
18. Pole Attachment Permit dated February 24, 1981 with
Pennsylvania Power & Light Company
19. Consultation Agreement dated December 16, 1992 with Noll
& Associates
20. Subscription Agreement with SportsTicker
21. Service Agreement dated February 28, 1991 with Waste
Management of PA - Elizabethtown
22. Agreement of Ownership dated April 24, 1990 with WSI
Corporation
23. TMS Postage Meter Rental Agreement dated July 13, 1990
with IMS Inc.
24. Equipment Lease Agreement and Release Letter dated May
5,
1992 with Citicorp Industrial Credit
25. [intentionally omitted]
26. [intentionally omitted]
27. Equipment Lease dated November 3, 1993 with Keystone
Financial Leasing regarding copier equipment
28. Lease Agreement dated July 23, 1990 with Meridian
Leasing
Inc.
29. Xerox Order Agreement dated January 23, 1992 with Xerox
Corporation
30. Agreement dated January 27, 1987 regarding the
Subsidiary's assumption of the Company's liability with
respect to Company Debt
31. Agreement For Environmental Services dated December 16,
1993 with Environmental Strategies Corporation
32. Oral Agreement (temporary) with Century Communications
for
cable carriage of Station's signal
33. Oral Agreement with Nittany Media for cable carriage of
Station's signal
34. Oral Agreement with Millersburg Cable for cable carriage
of Station's signal
35. End User Information Notice and related Columbine
Maintenance Agreement Authorization Form and Supplement
with IBM executed by the Subsidiary on November 3, 1992
36. Data Products Maintenance Agreement dated September 25,
1989, together with related assignment to Memorex Telex
Corporation
37. Term Lease Master Agreement with IBM Credit Corporation
dated December 13, 1991
38. Dauphin Deposit Bank and Trust Company Closed-End Motor
Vehicle Lease Agreement and Disclosure Statement dated
December 21, 1993
39. Electronic Fund Transfer Agreement with Dauphin Deposit
Bank and Trust Company dated December 22, 1992
40. Snow removal contract with Dave Shewmon
41. Lease Agreement with Royer Buick, Inc. dated August 1,
1991
42. Letter Agreement with American Broadcasting Companies,
Inc. dated April 2, 1992 regarding "ABC NewsOne"
<PAGE>
Annex 3.14(c)
Syndicated and Film Program Contracts
1. Bertice Berry -- Agreement dated July 12, 1993 with
Twentieth Television
2. CNN Headline News, CNN Newssource -- Agreement dated
December 2, 1993 with Turner Program Services, Inc.
3. Columbia Features 10 -- Agreement dated March 3, 1986
with
Columbia Pictures Television
4. Donahue -- Agreement dated August 10, 1992 with
Multimedia
Entertainment, Inc.
5. Evening Shade -- Agreement dated February 2, 1993 with
MTM
Television Distribution Group, Ltd.
6. Family Feud -- Agreement dated April 5, 1993 with The
New
Family Company
7. Friends of the Family -- Agreement dated June 19, 1993
with Gillett Teleproductions, Inc.
8. George Michael Sports III -- Agreement dated July 14,
1993
with ITC Distribution, Inc.
9. Hanna-Barbera Specials -- Agreement dated July 30, 1993
with Turner Program Services, Inc.
10. Jerry Springer -- Agreement dated August 9, 1993 with
Multimedia Entertainment, Inc.
11. Leadership -- Agreement dated June 19, 1992 with Cecil
Productions
12. Married With Children -- Agreement dated August 23, 1990
with Columbia Pictures Television, Inc.
13. Martha Stewart Living -- Agreement dated May 12, 1993
with
Group W Productions, Inc.
14. The Maury Povich Show -- Agreement dated March 11, 1993
with Paramount Pictures Corporation
15. Motorweek -- Agreement dated August 6, 1993 with ITC
Distribution, Inc.
16. Mr. Food -- Agreement dated May 19, 1993 with King World
17. Murphy Brown -- Agreement dated October 29, 1990 with
Warner Bros. Television Distribution, Inc.
18. National Geographic -- Agreement dated September 16,
1987
with Genesis
19. News 101 -- Agreement dated August 18, 1992 with MCM
Communications, Inc.
20. Nick News -- Agreement dated March 23, 1993 with Viacom
Enterprises
21. Portfolio Special Ed II -- Agreement dated May 11, 1987
with Paramount Television Domestic Distribution, Inc.
22. Paramount Portfolio XI -- Agreement dated January 1,
1987
with Paramount Television Domestic Distribution, Inc.
23. Prime Suspect -- Agreement dated April 12, 1993 with
Rysher TPE. Terms and conditions are not in the
possession of the Company.
24. Real News for Kids -- Agreement dated August 27, 1993
with
Turner Program Services
25. Roseanne -- Agreement dated June 4, 1991 with Viacom
Enterprises
26. Rush Limbaugh -- Agreement dated February 9, 1993 with
Multimedia Entertainment, Inc.
27. Sally Jessy Raphael -- Agreement dated August 10, 1992
with Multimedia Entertainment, Inc.
28. Today's Breakthroughs -- Agreement dated March 29, 1993
with Ivanhoe Communications, Inc.
29. Warner vol. 21 -- Agreement dated April 13, 1993 with
Warner Bros. Domestic Television Distribution
30. What's Up Network -- Agreement dated May 5, 1993 with
WUPI
31. Renegade -- Agreement dated April 23, 1993 with Cannell
Distribution Company.
32. American Journal, Volume I -- License Agreement for
Television Motion Picture Exhibition dated January 7,
1994
with King World Productions, Inc.
33. Judge & Jury -- Agreement with Buena Vista Television,
Inc. dated January 13, 1994
34. Live -- Agreement with Buena Vista Television, Inc.
dated
January 13, 1994 with respect to 1994-1995 season
35. Live -- Agreement with Buena Vista Television, Inc.
dated
January 13, 1994 with respect to 1995-1996 season
36. The Maury Povich Show -- Interim Agreement dated
February
3, 1994, with Attached addendum, with Paramount Pictures
37. Entertainment News Television -- Domestic field order
dated August 16, 1993, with attached Addendum, with
Warner
Brothers domestic television distribution
38. Tristar Showcase IV -- Movies Offer dated November 1,
1993
with Columbia Pictures Television Distribution
39. Embassy II -- Movies Offer dated November 1, 1993 with
Columbia Pictures Television Distribution
40. Embassy III -- Movies Offer dated November 1, 1993 with
Columbia Pictures Television Distribution
<PAGE>
ANNEX 3.14(e)
CAPITALIZATION AGREEMENTS*
1. Amended and Restated Loan Agreement dated as of September 30,
1992 among the Company, The First National Bank of Boston and
the Federal Deposit Insurance Corporation ("FDIC"), receiver
of
New Bank of New England N.A., assignee of the FDIC, receiver
of
Bank of New England, N.A., by its attorney-in-fact, RECOLL
Management Corporation, together with the various security
and
other documents contemplated thereby.
2. Amended and Restated Loan Agreement dated as of September 30,
1992 among the Company, Equitable and Merrill Lynch, together
with the security and other documents contemplated thereby.
3. Amended and Restated Subordinated Loan Agreement, dated as of
September 30, 1992 among the Company, Equitable and Merrill
Lynch, together with the security and other documents
contemplated thereby.
4. Securityholder's Agreement dated as of September 30, 1992
among
the Company, the Subsidiary and each of the Sellers.
5. Disposition Bonus Agreement dated September 30, 1992 among
the
Company, the Subsidiary, John Purcell, Robert N. Smith, David
A. Fitz and William S. Reyner, Jr.
6. Management Agreement dated as of September 30, 1992 between
the
Subsidiary and Robert N. Smith.
7. Management Agreement dated September 30, 1992 between the
Subsidiary and David A. Fitz.
8. Employment Agreement dated as of September 30, 1992 among the
Company, the Subsidiary and John Purcell.
9. Agreements and instruments contained in a two-volume set of
bound documents entitled "Smith Acquisition Corp. and WSTM,
L.P. Restructuring September 30, 1992" and containing 50
tabbed
documents. Copies of such documents have been provided to
the
Purchaser.
10. Subsidiary Pledge Agreement dated as of June 19, 1986 with
the
Banks, Equitable, and Merrill Lynch
* The Obligations arising under the contracts referenced
on
this Annex 3.14(e) shall be satisfied on or prior to the Closing
and such contracts shall be of no further force or effect from
and
after the Closing.<PAGE>
SCHEDULE 3.15
INSURANCE
See Annex 3.15 attached hereto for a description of insurance
policies maintained by the Company and the Subsidiary. Coverage
of
the Company and the Subsidiary under such policies will terminate
as of the Closing.
<PAGE>
SCHEDULE 3.16
FCC LICENSES
WHTM-TV Main Broadcast License
(BLCT-457; BRCT-890321KE) Harrisburg, PA
Auxiliaries:
KGL-26 TV STL
WGV-762 Intercity Relay
KS-2054 TV Pickup
KA-52358 TV Pickup
KB-55672 TV Pickup
BLP-00724 LP (Wireless microphone)
BLP-00725 LP (Wireless microphone)
BLP-00833 LP
Earth Station:
E-865001 Expires: 12/19/96
Receive-Only Harrisburg, PA
Business Radio:
WYM-352 Expires: 7/22/96
Harrisburg, PA
N.B. The main broadcast license and all auxiliary licenses
expire on August 1, 1994; a renewal application for all
such
licenses must be filed on or before April 1, 1994.
<PAGE>
SCHEDULE 3.17
COMPANY BENEFIT PLANS
A. The Company and Subsidiary participate in the following Plans
maintained and/or sponsored by Smith Broadcasting Group, Inc.:
1. Smith Broadcasting Group & Affiliates
Employee Benefit Trust
Covering the following:
. Life Insurance
. Accidental Death, Dismemberment & Loss
of Sight Insurance
. Hospital Benefits
. Medical Benefits
. Dental Care Benefits
. Prescription Drug Benefits
. Flexible Benefits Account
Determination letter sought, received and valid on tax
exempt
status of Trust.
2. Smith Broadcasting Group & Affiliates
401(k) Plan *,***, ****
3. Smith Broadcasting Group & Affiliates
Long and Short-term Disability Plan *,**
4. Smith Broadcasting Group & Affiliates
Travel-Accident Insurance Plan *,**
* No determination letter sought on any of these plans.
** Completely funded by purchase of insurance contracts.
*** Protype plan of Dun & Bradstreet. Dun & Bradstreet
has received favorable determination letter on
protype plan, therefore Smith Broadcasting Group
has
not requested separate determination letter.
**** The matching contribution component of the 401(k)
Plan is presently 25% of the first 4% of salary.
An
additional discretionary matching contribution is
also possible. The Company made such a
discretionary contribution of approximately $25,000
in 1993.
The Subsidiary will owe the following for each employee and
separate dependent unit withdrawn from the Health Plan, which
will
be satisfied on or before the Closing:
Employee $352.39
Dep. Coverage
Additional Amt $616.71
B. The Subsidiary will owe certain transaction fees on the
termination of employees from the 401K Plan, which will be
satisfied on or before the Closing.
C. WHTM-TV Employee Handbook attached hereto as Annex 3.17 is
incorporated by reference into this Schedule.
<PAGE>
SCHEDULE 3.19
BANK ACCOUNTS
Account Name Bank Account Number
A. WHTM-TV, Inc.(1) Dauphin Deposit 88007529
Bank & Trust Co.
B. WHTM-TV, Inc.(2) Dauphin Deposit 00-10-07-7103
Lock Box Bank & Trust Co.
C. WHTM-TV, Inc.(1) First National 531-69228
Bank of Boston
D. WHTM-TV, Inc.(1) Dauphin Deposit 28824555
Payroll Bank & Trust
________________________
(1) The authorized signatories for such account are Robert
Smith, John Purcell, David Fitz, William S. Reyner, Jr., Joseph
M.
Fry and Paul O'Dell. Two signatures are required on all checks
and
all checks drawn in an amount of more than $25,000 must be signed
by any two of Messrs. Smith, Purcell, Fitz and Reyner.
(2) Agreement with Dauphin Deposit and First National Bank of
Boston for automatic transfer of deposit to First National Bank
of
Boston; to be terminated on or before the Closing.
SAFE DEPOSIT BOXES
None.
CREDIT CARDS
See Annex 3.19 attached hereto.
All credit cards listed in Annex 3.19
will be surrendered or terminated on
or prior to the Closing.
<PAGE>
SCHEDULE 3.21
DIRECTORS AND OFFICERS
Smith Acquisition Corp.:
Robert N. Smith President, Treasurer, Director
David A. Fitz Vice President, Assistant
Secretary, Director
John Purcell Vice President
WHTM-TV, Inc.:
Robert N. Smith President, Treasurer, Director
David A. Fitz Vice President, Assistant
Secretary, Director
John Purcell Vice President, Director
<PAGE>
Exhibit 6.5
to
Securities Purchase Agreement
dated as of February 15, 1994
between the Stockholders and Warrant Holders
of
Smith Acquisition Corp.
and
Price Communications Corporation
Closing Certificate
Pursuant to the Securities Purchase Agreement dated as of
February 15, 1994 (the "Agreement") by and among The Equitable
Life
Assurance Society of the United States, Merrill Lynch Life
Insurance Company, Smith Broadcasting Group, Inc., Advent V
Capital
Company Limited Partnership, Advent Atlantic Capital Company
Limited Partnership, Chestnut Capital International II Limited
Partnership, Advent Industrial Capital Company Limited
Partnership,
TA Investors, Chestnut Street Partners, Inc. and Prudential
Venture
Partners (collectively, the "Sellers" and each individually a
"Seller") and Price Communications Corporation, a New York
corporation, the undersigned hereby certifies as follows:
1. The Sellers' representations and warranties
contained in the Agreement are true and correct in all material
respects on and as of the date hereof as if made on and as of the
date hereof; and
2. The Sellers have performed and observed in all
material respects their covenants and obligations set forth in
the
Agreement to be performed and observed on or before the date
hereof.
