UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________ .
Commission File Number 1-13796
Gray Communications Systems, Inc.
(Exact name of registrant as specified in its charter)
Georgia 58-0285030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
126 N. Washington St., Albany, Georgia 31701
(Address of principal executive offices) (Zip code)
(912) 888-9390
(Registrant's telephone number, including area
code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class A Common Stock, (No Par Value) Class B Common Stock, (No Par Value)
- ------------------------------------- -----------------------------------
4,538,145 shares as of August 13, 1998 3,411,277 shares as of August 13, 1998
<PAGE>
INDEX
GRAY COMMUNICATIONS SYSTEMS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets (unaudited) - June 30, 1998
and December 31, 1997
Condensed consolidated statements of operations (unaudited) Three
months ended June 30, 1998 and 1997; Six months ended June 30, 1998
and 1997
Condensed consolidated statement of stockholders' equity
(unaudited) - Six months ended June 30, 1998
Condensed consolidated statements of cash flows (unaudited) Six
months ended June 30, 1998 and 1997
Notes to condensed consolidated financial statements (unaudited) -
June 30, 1998
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GRAY COMMUNICATIONS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,739,188 $ 2,367,300
Trade accounts receivable, less allowance for doubtful accounts
of $1,293,000 and $1,253,000, respectively 20,025,376 19,527,316
Recoverable income taxes 1,897,469 2,132,284
Inventories 1,320,444 846,891
Current portion of program broadcast rights 1,324,251 2,850,023
Other current assets 1,185,291 968,180
------------- -------------
Total current assets 28,492,019 28,691,994
PROPERTY AND EQUIPMENT:
Land 864,695 889,696
Buildings and improvements 12,025,272 11,951,700
Equipment 56,624,691 52,899,547
------------- -------------
69,514,658 65,740,943
Allowance for depreciation (26,340,052) (23,635,256)
------------- -------------
43,174,606 42,105,687
OTHER ASSETS:
Deferred loan costs 7,987,427 8,521,356
Goodwill and other intangibles 261,159,342 263,425,447
Other 2,869,399 2,306,143
------------- -------------
272,016,168 274,252,946
------------- -------------
$ 343,682,793 $ 345,050,627
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (continued)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Trade accounts payable (includes $1,130,000 and $850,000 payable
to Bull Run Corporation, respectively) $ 3,391,969 $ 3,321,903
Employee compensation and benefits 3,839,784 3,239,694
Accrued expenses 2,646,703 2,265,725
Accrued interest 4,713,304 4,533,366
Current portion of program broadcast obligations 1,189,093 2,876,060
Deferred revenue 2,183,695 1,966,166
Current portion of long-term debt 578,881 400,000
------------- -------------
Total current liabilities 18,543,429 18,602,914
LONG-TERM DEBT 226,322,573 226,676,377
OTHER LONG-TERM LIABILITIES:
Program broadcast obligations, less current portion 424,190 617,107
Supplemental employee benefits 1,226,158 1,161,218
Deferred income taxes 1,272,533 1,203,847
Other acquisition related liabilities 4,224,998 4,494,016
------------- -------------
7,147,879 7,476,188
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Serial Preferred Stock, no par value; authorized 20,000,000 shares;
issued 2,060 shares ($20,600,000 aggregate liquidation value) 20,600,000 20,600,000
Class A Common Stock, no par value; authorized 15,000,000
shares; issued 5,307,716 shares 10,385,595 10,358,031
Class B Common Stock, no par value; authorized 15,000,000
shares; issued 3,515,364 shares 66,527,502 66,397,804
Retained earnings 4,697,154 6,603,191
------------- -------------
102,210,251 103,959,026
Treasury Stock at cost, Class A Common, 769,571 and 781,921 shares, respectively (8,862,142) (9,011,369)
Treasury Stock at cost, Class B Common, 105,588 and 166,790 shares, respectively (1,679,197) (2,652,509)
------------- -------------
91,668,912 92,295,148
------------- -------------
$ 343,682,793 $ 345,050,627
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Broadcasting (net of agency commissions) $ 22,689,990 $ 17,782,557 $ 42,201,054 $ 33,767,854
Publishing 7,379,114 6,081,748 13,916,449 11,306,602
Paging 1,991,407 1,634,609 3,924,873 3,184,985
------------ ------------ ------------ ------------
32,060,511 25,498,914 60,042,376 48,259,441
EXPENSES
Broadcasting 12,661,021 9,604,608 24,779,408 19,299,392
Publishing 5,983,435 4,594,834 11,440,940 8,528,255
Paging 1,327,495 946,629 2,583,100 1,836,923
Corporate and administrative 656,449 740,991 1,316,929 1,374,319
Depreciation and amortization 4,221,723 3,488,301 7,843,307 6,760,244
------------ ------------ ------------ ------------
24,850,123 19,375,363 47,963,684 37,799,133
------------ ------------ ------------ ------------
7,210,388 6,123,551 12,078,692 10,460,308
Miscellaneous income (expense), net (73,209) 5,930 (314,276) (39,833)
------------ ------------ ------------ ------------
7,137,179 6,129,481 11,764,416 10,420,475
Interest expense 6,039,258 5,081,505 11,966,739 10,057,198
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 1,097,921 1,047,976 (202,323) 363,277
Income tax expense 260,814 426,100 443,377 202,500
------------ ------------ ------------ ------------
NET INCOME (LOSS) 837,107 621,876 (645,700) 160,777
Preferred Dividends 358,998 350,000 717,996 700,000
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS $ 478,109 $ 271,876 $ (1,363,696) $ (539,223)
============ ============ ============ ============
AVERAGE OUTSTANDING COMMON SHARES:
Basic 7,944,503 7,943,309 7,932,532 7,953,460
Stock compensation awards 399,608 117,932 -0- -0-
------------ ------------ ------------ ------------
Diluted 8,344,111 8,061,241 7,932,532 7,953,460
============ ============ ============ ============
BASIC EARNINGS (LOSS) PER COMMON SHARE:
Net income (loss) available to common
stockholders $ 0.06 $ 0.03 $ (0.17) $ (0.07)
============ ============ ============ ============
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Net income (loss) available to common
stockholders $ 0.06 $ 0.03 $ (0.17) $ (0.07)
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited)
<TABLE>
<CAPTION>
CLASS A CLASS B
PREFERRED STOCK COMMON STOCK COMMON STOCK
----------------------- -------------------------- --------------------------
SHARES AMOUNTS SHARES AMOUNTS SHARES AMOUNTS
-------- -------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 2,060 $20,600,000 5,307,716 $10,358,031 3,515,364 $66,397,804
Net loss for the six months ended June
30, 1998
Common Stock dividends ($.04 per
share)
Preferred stock dividends
Income tax expense relating to stock
plans 27,564 26,326
Issuance of treasury stock:
401(k) plan 103,372
Non-qualified stock plan
Purchase of Class A Common Stock
----- ----------- --------- ----------- --------- -----------
Balance at June 30, 1998 2,600 $20,600,000 5,307,716 $10,385,595 3,515,364 $66,527,502
===== =========== ========= =========== ========= ===========
CLASS A CLASS B
TREASURY STOCK TREASURY STOCK
----------------------------- ------------------------------
RETAINED
EARNINGS SHARES AMOUNTS SHARES AMOUNTS
------------- ------------ ---------------- ------------- ----------------
Balance at December 31, 1997 $6,603,191 (781,921) $(9,011,369) (166,790) $(2,652,509)
Net loss for the six months ended June
30, 1998 (645,700)
Common Stock dividends ($.04 per
share) (317,400)
Preferred stock dividends (717,996)
Income tax expense relating to stock
plans
Issuance of treasury stock:
401(k) plan 8,702 138,389
Non-qualified stock plan (224,941) 22,850 460,290 52,500 834,923
Purchase of Class A Common Stock (10,500) (311,063)
---------- -------- ----------- -------- -----------
Balance at June 30, 1998 $4,697,154 (769,571) $(8,862,142) (105,588) $(1,679,197)
========== ======== =========== ======= ===========
TOTAL
--------------
Balance at December 31, 1997 $92,295,148
Net loss for the six months ended June
30, 1998 (645,700)
Common Stock dividends ($.04 per
share) (317,400)
Preferred stock dividends (717,996)
Income tax expense relating to stock
plans 53,890
Issuance of treasury stock:
401(k) plan 241,761
Non-qualified stock plan 1,070,272
Purchase of Class A Common Stock (311,063)
------------
Balance at June 30, 1998 $91,668,912
============
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended June 30,
----------------------------
1998 1997
------------ ------------
OPERATING ACTIVITIES
Net income (loss) $ (645,700) $ 160,777
Items which did not use (provide) cash:
Depreciation 4,175,981 3,646,840
Amortization of intangible assets 3,667,326 3,113,404
Amortization of deferred loan costs 541,723 542,139
Amortization of program broadcast rights 1,899,189 1,619,198
Payments for program broadcast rights (1,954,588) (1,830,304)
Supplemental employee benefits (154,657) (117,749)
Common stock contributed to 401(k) Plan 241,761 216,819
Deferred income taxes 68,686 2,200,000
(Gain) loss on disposal of assets 348,310 (5,314)
Changes in operating assets and
liabilities:
Receivables, inventories and other
current assets (1,012,774) (1,203,550)
Accounts payable and other current
liabilities 1,260,198 (2,691,321)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,435,455 5,650,939
INVESTING ACTIVITIES
Purchase of FCC License (829,600) -0-
Acquisition of satellite uplink business -0- (4,074,031)
Purchases of property and equipment (5,766,160) (6,757,526)
Deferred acquisition costs (200,745) (485,303)
Payments on purchase liabilities (269,018) (138,599)
Deferred costs associated with exchange of
television station (859,534) -0-
Proceeds from asset sales 182,421 5,314
Other (241,707) (524,815)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (7,984,343) (11,974,960)
7
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)(continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------
1998 1997
------------ ------------
<S> <C> <C>
FINANCING ACTIVITIES
Dividends paid (717,400) (712,807)
Common Stock transactions 53,890 241,545
Purchase of treasury stock (311,063) (1,119,775)
Sale of treasury stock 1,070,272 -0-
Proceeds from borrowings of long-term debt 10,200,000 13,500,000
Payments on long-term debt (10,374,923) (6,113,020)
------------ ------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (79,224) 5,795,943
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 371,888 (528,078)
Cash and cash equivalents at beginning of period 2,367,300 1,051,044
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,739,188 $ 522,966
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
8
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Gray Communications Systems, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1997.
Certain amounts in the accompanying unaudited condensed consolidated
financial statements have been reclassified to conform to the 1998 format.
NOTE B--BUSINESS ACQUISITIONS AND DISPOSITION
SUBSEQUENT TRANSACTIONS
On July 31, 1998, the Company completed the purchase of all of the
outstanding capital stock of Busse Broadcasting Corporation ("Busse"). The net
purchase price was $112 million plus associated transaction costs. The purchase
price includes the assumption of Busse's indebtedness, including its 11 5/8%
Senior Secured Notes due 2000. Immediately prior to the Company's acquisition of
Busse, Cosmos Broadcasting Corporation acquired WEAU-TV from Busse and exchanged
it for WALB-TV, the Company's NBC affiliate in Albany, Georgia. In exchange for
WALB-TV, the Company received WEAU-TV, which was valued at $66 million, and
approximately $12 million in cash for a total value of $78 million. As a result
of these transactions, the Company adds the following television stations to its
existing broadcast group: KOLN-TV, the CBS affiliate serving the
Lincoln-Hastings-Kearney, Nebraska market; its satellite station KGIN-TV, the
CBS affiliate serving Grand Island, Nebraska; and WEAU-TV, an NBC affiliate
serving the Eau Claire-La Crosse, Wisconsin market. These transactions also
satisfy the Federal Communication Commission's requirement for the Company to
divest itself of WALB-TV. The Company will pay Bull Run Corporation, a principal
stockholder of the Company, a fee equal to 1% of the transaction values
for services performed, of which $780,000 was included in accounts payable at
June 30, 1998.
Condensed unaudited balance sheets of WALB-TV as of June 30, 1998 and
December 31, 1997 are as follows:
JUNE 30, DECEMBER 31,
1998 1997
------ ------
(IN THOUSANDS)
Current assets $2,662 $2,379
Property and equipment, net 2,760 1,473
Other assets 95 471
------ ------
Total assets $5,517 $4,323
====== ======
Current liabilities $2,027 $ 994
Other liabilities 177 215
Stockholder's equity 3,313 3,114
------ ------
Total liabilities and stockholder's equity $5,517 $4,323
====== ======
9
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
NOTE B--BUSINESS ACQUISITIONS AND DISPOSITION (continued)
SUBSEQUENT TRANSACTIONS (CONTINUED)
Condensed unaudited income statement data for the three months and six
months ended June 30, 1998 and 1997 for WALB-TV is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
1998 1997 1998 1997
------ ------ ------ ------
(in thousands)
Broadcasting revenues $3,235 $2,584 $5,658 $4,931
Expenses 1,418 1,162 2,556 2,255
------ ------ ------ ------
Income before income taxes $1,817 $1,422 $3,102 $2,676
====== ====== ====== ======
Net income $1,126 $ 883 $1,923 $1,660
====== ====== ====== ======
Condensed unaudited balance sheets of Busse Broadcasting Corporation
(including WEAU-TV) as of June 28, 1998 and December 28, 1997 are as follows:
JUNE 28, DECEMBER 28,
1998 1997
------- -------
(IN THOUSANDS)
Current assets $13,473 $14,123
Property and equipment, net 12,555 13,226
Deferred charges and other assets 1,503 1,812
Intangible assets and excess reorganization value 46,827 48,775
------- -------
Total assets $74,358 $77,936
======= =======
Current liabilities $ 2,360 $ 4,161
Long term debt 61,168 60,919
Stockholder's equity 10,830 12,856
------- -------
Total liabilities and stockholder's equity $74,358 $77,936
======= =======
Condensed unaudited income statement data for the three months and six
months ended June 28, 1998 and June 29, 1997 for Busse Broadcasting Corporation
(including WEAU-TV) is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- --------------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1998 1997 1998 1997
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Broadcasting revenues $ 5,489 $ 5,285 $ 10,216 $ 9,550
Expenses 5,939 6,074 12,242 12,048
-------- -------- -------- --------
Loss before income taxes $ (450) $ (789) $ (2,026) $ (2,498)
======== ======== ======== ========
Net loss available to common stockholders $ (1,656) $ (1,995) $ (4,437) $ (4,909)
======== ======== ======== ========
</TABLE>
10
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
NOTE B--BUSINESS ACQUISITIONS AND DISPOSITION (continued)
PRO FORMA FINANCIAL DATA (UNAUDITED)
On April 24, 1997, the Company purchased GulfLink Communications, Inc. and
on August 1, 1997, the Company purchased the assets of WITN-TV(collectively
referred to as the "1997 Acquisitions"). Unaudited pro forma operating data for
the three months and six months ended June 30, 1998 and 1997 is presented below
and assumes that the acquisition of Busse Broadcasting Corporation ("Busse
Acquisition"), the exchange of WALB-TV ("WALB Exchange") and the 1997
Acquisitions were completed on January 1, 1997.
This unaudited pro forma operating data does not purport to represent the
Company's actual results of operations had the Busse Acquisition, WALB Exchange
and the 1997 Acquisitions been completed on January 1, 1997, and should not
serve as a forecast of the Company's operating results for any future periods.
The pro forma adjustments are based solely upon certain assumptions that
management believes are reasonable under the circumstances at this time.
Unaudited pro forma operating data for the three months and six months ended
June 30, 1998 and 1997, is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1998 1997 1998 1997
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues, net $ 34,315 $ 30,692 $ 64,600 $ 57,899
Expenses 34,355 30,944 67,466 60,976
-------- -------- -------- --------
Loss before income taxes $ (40) $ (252) $ (2,866) $ (3,077)
======== ======== ======== ========
Net loss available to common stockholders $ (660) $ (517) $ (4,027) $ (2,731)
======== ======== ======== ========
Diluted loss per share available to common stockholders $ (0.08) $ (0.07) $ (0.51) $ (0.34)
======== ======== ======== ========
</TABLE>
The pro forma results presented above include adjustments to reflect (i)
the incurrence of interest expense to fund the respective acquisitions, (ii)
depreciation and amortization of assets acquired, (iii) the elimination of the
corporate expense allocation net of additional accounting and administrative
expenses and (iv) the income tax effect of such pro forma adjustments.
NOTE D--LONG-TERM DEBT
In September 1996, the Company entered into the $125.0 million senior
credit facility (the "Senior Credit Facility") with KeyBank National
Association, NationsBank, N.A. (South), CIBC, Inc., CoreStates Bank, N.A., and
the Bank of New York. The Senior Credit Facility included scheduled reductions
in the $125.0 million credit limit which commenced on March 31, 1997, interest
rates based upon a spread over LIBOR and/or Prime, an unused commitment fee of
0.50% applied to available funds and a maturity date of June 30, 2003. Effective
September 17, 1997, the Senior Credit Facility was modified to reinstate the
original credit limit of $125.0 million which had been reduced by the scheduled
reductions. The modification also reduced the interest rate spread over LIBOR
and/or Prime. The modification also extended the maturity date from June 30,
2003 to June 30, 2004. The modification required a one-time fee of $250,000. At
June 30, 1998, the Company had approximately $65.6 million outstanding under the
Senior Credit Facility, which did not include a letter of credit in the amount
of $5.9 million which had been established but not yet drawn upon. On June 30,
1998, the balance available under the Senior Credit Facility was $49.8 million
and the interest rate on the balance outstanding was based on a spread over
LIBOR and Prime of 2.00% and 0.25%, respectively. As of June 30, 1998, the
credit limit of $125.0 million as amended on September 17, 1997 had been reduced
by $3.7 million due to scheduled reductions as specified in the Senior Credit
Facility.
11
<PAGE>
GRAY COMMUNICATIONS SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
NOTE D--LONG-TERM DEBT (continued)
On July 31, 1998, the Company amended and restated the Senior Credit
Facility to increase its committed availability from $125 million to $200
million. The amendment also provides for an additional $100 million of
uncommitted borrowing capacity. The modification also extended the maturity date
from June 30, 2004 to June 30, 2005. The modification required a one-time fee of
approximately $750,000.
Immediately following the acquisition of Busse, the Company exercised its
right to satisfy and discharge the Busse 11 5/8% Senior Secured Notes,
effectively prefunding the notes at the October 15, 1998 call price of 106 plus
accrued interest. The amount necessary to satisfy and discharge the notes was
approximately $69.9 million.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations of Gray Communications Systems, Inc.
INTRODUCTION
The following analysis of the financial condition and results of
operations of Gray Communications Systems, Inc. (the "Company") should be read
in conjunction with the Company's unaudited Condensed Consolidated Financial
Statements and notes thereto included elsewhere herein.
The Company derives its revenues from its television broadcasting,
publishing and paging operations. On August 1, 1997 the Company purchased
substantially all of the assets of WITN-TV ("WITN"), the NBC affiliate serving
the Greenville-Washington-New Bern, North Carolina market (the "WITN
Acquisition"). On April 24, 1997, the Company purchased GulfLink Communications,
Inc. (the "GulfLink Acquisition"), which is in the transportable satellite
uplink business, a business in which the Company was already engaged. As a
result of the higher operating margins associated with the Company's television
broadcasting operations, the profit contribution of these operations as a
percentage of revenues, has exceeded, and is expected to continue to exceed, the
profit contributions of the Company's publishing and paging operations. Set
forth below, for the periods indicated, is certain information concerning the
relative contributions of the Company's television broadcasting, publishing and
paging operations.
Three Months Ended June 30,
-----------------------------------------------
1998 1997
--------------------- ----------------------
Percent of Percent of
Amount Total Amount Total
------- ------- ------- ---------
(dollars in thousands)
Television Broadcasting
Revenues $22,690 70.8% $17,783 69.7%
Operating income (1) 6,801 86.2 5,520 80.2
Publishing
Revenues $ 7,379 23.0% $ 6,082 23.9%
Operating income (1) 856 10.9 1,035 15.0
Paging
Revenues $ 1,991 6.2% $ 1,634 6.4%
Operating income (1) 231 2.9 324 4.8
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations of Gray Communications Systems, Inc. (continued)
INTRODUCTION (CONTINUED)
Six Months Ended June 30,
-----------------------------------------------
1998 1997
--------------------- ----------------------
Percent of Percent of
Amount Total Amount Total
------- ------- ------- ---------
(dollars in thousands)
Television Broadcasting
Revenues $42,201 70.3% $33,768 70.0%
Operating income (1) 11,137 82.9 9,281 78.3
Publishing
Revenues $13,916 23.2% $11,306 23.4%
Operating income (1) 1,800 13.4 1,922 16.2
Paging
Revenues $ 3,925 6.5% $ 3,185 6.6%
Operating income (1) 499 3.7 657 5.5
(1) Represents income before miscellaneous income (expense), allocation of
corporate overhead, interest expense and income taxes.
The operating revenues of the Company's television stations are derived
primarily from broadcast advertising revenues and, to a much lesser extent, from
compensation paid by the networks to the stations for broadcasting network
programming. The operating revenues of the Company's publishing operations are
derived from retail advertising, circulation and classified revenue. Paging
revenue is derived primarily from the leasing and sale of pagers.
In the Company's broadcasting operations, broadcast advertising is sold
for placement either preceding or following a television station's network
programming and within local and syndicated programming. Broadcast advertising
is sold in time increments and is priced primarily on the basis of a program's
popularity among the specific audience an advertiser desires to reach, as
measured by Nielsen Media Research ("Nielsen"). In addition, broadcast
advertising rates are affected by the number of advertisers competing for the
available time, the size and demographic makeup of the market served by the
station and the availability of alternative advertising media in the market
area. Broadcast advertising rates are the highest during the most desirable
viewing hours, with corresponding reductions during other hours. The ratings of
a local station affiliated with a major network can be affected by ratings of
network programming.
Most broadcast advertising contracts are short-term, and generally run
only for a few weeks. Approximately 52.0% of the gross revenues of the Company's
television stations for the six months ended June 30, 1998 were generated from
local advertising, which is sold primarily by a station's sales staff directly
to local accounts, and the remainder represented primarily national advertising,
which is sold by a station's national advertising sales representative. The
stations generally pay commissions to advertising agencies on local, regional
and national advertising. The stations also pay commissions to the national
sales representative on national advertising.
Broadcast advertising revenues are generally highest in the second and
fourth quarters each year, due in part to increases in consumer advertising in
the spring and retail advertising in the period leading up to and including the
holiday season. In addition, broadcast advertising revenues are generally higher
during even numbered election
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations of Gray Communications Systems, Inc. (continued)
INTRODUCTION (CONTINUED)
years due to spending by political candidates, which spending typically is
heaviest during the fourth quarter.
The Company's publishing operations' advertising contracts are generally
entered into annually and provide for a commitment as to the volume of
advertising to be purchased by an advertiser during the year. The publishing
operations' advertising revenues are primarily generated from local advertising.
As with the broadcasting operations, the publishing operations' revenues are
generally highest in the second and fourth quarters of each year.
The Company's paging subscribers either own pagers, thereby paying solely
for the use of the Company's paging services, or lease pagers, thereby paying a
periodic charge for both the pagers and the paging services. Of the Company's
pagers currently in service, approximately 75% are owned and maintained by
subscribers with the remainder being leased. The terms of the lease contracts
are month-to-month, three months, nine months or twelve months in duration.
Paging revenues are generally equally distributed throughout the year.
The broadcasting operations' primary operating expenses are employee
compensation, related benefits and programming costs. The publishing operations'
primary operating expenses are employee compensation, related benefits and
newsprint costs. The paging operations' primary operating expenses are employee
compensation and telephone and other communications costs. In addition, the
broadcasting, publishing and paging operations incur overhead expenses, such as
maintenance, supplies, insurance, rent and utilities. A large portion of the
operating expenses of the broadcasting, publishing and paging operations is
fixed, although the Company has experienced significant variability in its
newsprint costs in recent years.
MEDIA CASH FLOW
The following table sets forth certain operating data for the broadcast,
publishing and paging operations for the three months and six months ended June
30, 1998 and 1997:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Operating income $ 7,210 $ 6,124 $ 12,079 $ 10,460
Add:
Amortization of program
license rights 959 822 1,899 1,619
Depreciation and
amortization 4,221 3,488 7,843 6,760
Corporate overhead 658 741 1,317 1,374
Non-cash compensation and
contributions to the
Company's 401(k) plan,
paid in common stock 115 95 233 210
Less:
Payments for program
license liabilities (959) (892) (1,955) (1,830)
-------- -------- -------- --------
Media Cash Flow (1) $ 12,204 $ 10,378 $ 21,416 $ 18,593
======== ======== ======== ========
15
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations of Gray Communications Systems, Inc. (continued)
MEDIA CASH FLOW (CONTINUED)
(1) Of Media Cash Flow for the three months ended June 30, 1998 and 1997,
$10.1 million and $8.2 million, respectively, was attributable to the
Company's broadcasting operations; $1.4 million and $1.5 million,
respectively, was attributable to the Company's publishing operations; and
$670,000 and $694,000, respectively, was attributable to the Company's
paging operations. Of Media Cash Flow for the six months ended June 30,
1998 and 1997, $17.5 million and $14.4 million, respectively, was
attributable to the Company's broadcasting operations; $2.5 million and
$2.8 million, respectively, was attributable to the Company's publishing
operations; and $1.4 million, respectively was attributable to the
Company's paging operations.
"Media Cash Flow" is defined as operating income, plus depreciation and
amortization (including amortization of program license rights), non-cash
compensation and corporate overhead, less payments for program license
liabilities. The Company has included Media Cash Flow data because such data are
commonly used as a measure of performance for media companies and are also used
by investors to measure a company's ability to service debt. Media Cash Flow is
not, and should not be used as, an indicator or alternative to operating income,
net income or cash flow as reflected in the Company's unaudited Condensed
Consolidated Financial Statements, and is not a measure of financial performance
under generally accepted accounting principles and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles.
As discussed in the INTRODUCTION, the Company completed two broadcasting
acquisitions during 1997. The financial results of the Company reflect increases
between the three month and six month periods ended June 30, 1998 and 1997 in
substantially all broadcast line items.
CASH FLOW PROVIDED BY (USED IN) OPERATING, INVESTING AND FINANCING ACTIVITIES
The following table sets forth certain cash flow data for the Company for
the six months ended June 30, 1998 and 1997.
Six Months Ended June 30,
----------------------------
1998 1997
-------- -------
(in thousands)
Cash flows provided by (used in)
Operating activities $ 8,435 $ 5,650
Investing activities (7,984) (11,975)
Financing activities (79) 5,796
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations of Gray Communications Systems, Inc. (continued)
BROADCASTING, PUBLISHING AND PAGING REVENUES
Set forth below are the principal types of operating revenues earned by
the Company's broadcasting, publishing and paging operations for the periods
indicated and the percentage contribution of each to the Company's total
revenues:
<TABLE>
<CAPTION>
Three Months Ended June 30,
------------------------------------------------------------------------------
1998 1997
------------------------------------- -----------------------------------
Amount Percent of Total Amount Percent of Total
----------- ---------------- --------- ----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Broadcasting
Net revenues:
Local $11,167 34.8% $ 9,804 38.5%
National 6,530 20.4 5,466 21.4
Network compensation 1,358 4.2 1,148 4.5
Political 1,993 6.2 106 0.4
Production and other 1,643 5.2 1,259 4.9
------- ----- ------- --------
$22,691 70.8% $17,783 69.7%
======= ===== ======= ========
Publishing
Net revenues:
Retail advertising $ 3,447 10.8% $ 2,895 11.4%
Classified 2,413 7.5 1,850 7.3
Circulation 1,340 4.2 1,227 4.8
Other 179 0.5 110 0.4
------- ------ ------- --------
$ 7,379 23.0% $ 6,082 23.9%
======= ====== ======= ========
Paging
Net revenues:
Paging lease and service $ 1,991 6.2% $ 1,634 6.4%
======= ====== ======= ========
$32,061 100.0% $25,499 100.0%
======= ====== ======= ========
</TABLE>
17
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations of Gray Communications Systems, Inc. (continued)
BROADCASTING, PUBLISHING AND PAGING REVENUES (CONTINUED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------------------------------------------------
1998 1997
------------------------------------- -----------------------------------
Amount Percent of Total Amount Percent of Total
----------- ---------------- --------- ----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Broadcasting
Net revenues:
Local $22,065 36.7% $18,916 39.2%
National 12,100 20.2 10,231 21.2
Network compensation 2,573 4.3 2,281 4.7
Political 2,186 3.6 153 0.3
Production and other 3,278 5.5 2,187 4.6
------- ------- ------- -------
$42,202 70.3% $33,768 70.0%
======= ======= ======= =======
Publishing
Net revenues:
Retail advertising $ 6,424 10.7% $ 5,384 11.1%
Classified 4,498 7.5 3,467 7.2
Circulation 2,619 4.4 2,217 4.6
Other 375 0.6 238 0.5
------- ------- ------- -------
$13,916 23.2% $11,306 23.4%
======= ======= ======= =======
Paging
Net revenues:
Paging lease and service $ 3,925 6.5% $ 3,185 6.6%
======= ======= ======= =======
$60,043 100.0% $48,259 100.0%
======= ======= ======= =======
</TABLE>
Three Months Ended June 30, 1998 compared to Three Months Ended June 30, 1997
REVENUES. Total revenues for the three months ended June 30, 1998
increased $6.6 million, or 25.7%, over the same period of the prior year, from
$25.5 million to $32.0 million. This increase was primarily attributable to the
net effect of (i) increased revenues resulting from the WITN Acquisition, (ii)
increased political revenue, (iii) increased publishing revenues and (iv)
increased paging revenues. The WITN Acquisition accounted for $2.3 million of
the revenue increase.
Broadcast net revenues increased $4.9 million, or 27.6%, over the same
period of the prior year, to $22.7 million from $17.8 million. The WITN
Acquisition accounted for $2.3 million of the broadcast net revenue increase. On
a pro forma basis, assuming the acquisition of WITN had been effective on
January 1, 1997, broadcast net revenues for WITN for the three months ended June
30, 1998 remained constant at $2.3 million when compared to the same period of
the prior year. Broadcast net revenues, excluding the WITN Acquisition,
increased $2.6 million, or 14.8%, over the same period of the prior year, to
$20.4 million from $17.8 million. This increase was due primarily to an increase
in political advertising revenue of $1.8 million.
Publishing revenues increased $1.3 million, or 21.3%, over the same period
of the prior year, to $7.4 million from $6.1 million. The increase in revenues
was due primarily to an increase in retail advertising, classified advertising,
circulation and other revenue of $553,000, $563,000 $113,000 and $69,000,
respectively. The increase in retail advertising and circulation revenue was due
primarily to an increase in circulation at the Gwinnett Daily Post
18
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Three Months Ended June 30, 1998 compared to Three Months Ended June 30, 1997
(continued)
to 64,000 at June 30, 1998 from 49,000 at June 30, 1997. The increase in retail
advertising and classified advertising revenue was due primarily to linage
increases.
Paging revenue increased $357,000 or 21.8%, over the same period of the
prior year, to $2.0 million from $1.6 million. The increase was attributable
primarily to an increase in the number of pagers in service. The Company had
approximately 78,500 pagers and 58,000 pagers in service at June 30, 1998 and
1997, respectively.
OPERATING EXPENSES. Operating expenses for the three months ended June 30,
1998 increased $5.5 million, or 28.3%, over the same period of the prior year,
to $24.9 million from $19.4 million, due primarily to the WITN Acquisition,
increased expenses at the Company's existing television stations exclusive of
WITN and the expense associated with the increase in circulation at the Gwinnett
Daily Post. The WITN Acquisition, increased expenses at existing television
stations and the cost associated with the increase in circulation at the
Gwinnett Daily Post accounted for $1.3 million, $1.8 million and $1.2 million
(exclusive of depreciation and amortization), respectively, of the operating
expense increase.
Broadcast expenses increased $3.1 million, or 31.8%, over the three months
ended June 30, 1998, to $12.7 million from $9.6 million. The increase was
attributable primarily to the WITN Acquisition and increased expenses at the
Company's existing television stations exclusive of WITN. On a pro forma basis,
assuming the acquisition of WITN had been effective on January 1, 1997,
broadcast expenses for WITN for the three months ended June 30, 1998 as compared
to the three months ended June 30, 1997 remained constant at $1.3 million.
Broadcast expenses, excluding the results of the WITN Acquisition increased $1.8
million, or 18.5%, to $11.4 million from $9.6 million. This increase was due
primarily to an increase in payroll expense, other expense and the GulfLink
Acquisition of $800,000, $650,000 and $250,000, respectively.
Publishing expenses for the three months ended June 30, 1998 increased
$1.4 million, or 30.2%, from the same period of the prior year, to $6.0 million
from $4.6 million. This increase resulted primarily from an increase in the
expense associated with the increase in circulation at the Gwinnett Daily Post
and higher newsprint pricing. Average newsprint costs increased approximately
9.6% while newsprint consumption increased approximately 26.8%.
Paging expenses increased $380,000 or 40.1%, over the same period of the
prior year, to $1.4 million from $947,000. The increase was attributable
primarily to an increase in payroll and other costs associated with an increase
in the number of pagers in service.
Corporate and administrative expenses decreased $84,000 or 11.3%, over the
same period of the prior year, to $656,000 from $741,000.
Depreciation of property and equipment and amortization of intangible
assets was $4.2 million for the three months ended June 30, 1998, as compared to
$3.5 million for the same period of the prior year, an increase of $732,000, or
21.0%. This increase was primarily the result of higher depreciation and
amortization costs related to the WITN Acquisition and the GulfLink Acquisition.
INTEREST EXPENSE. Interest expense increased $959,000, or 18.9%, to $6.0
million for the three months ended June 30, 1998 from $5.1 million for the three
months ended June 30, 1997. This increase was attributable primarily to
increased levels of debt resulting from the financing of the WITN Acquisition
and the GulfLink Acquisition.
INCOME TAX EXPENSE (BENEFIT). Income tax expense decreased $165,000, or
38.8%, to $261,000 for the three months ended June 30, 1998 from $426,000 for
the three months ended June 30, 1997.
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS. Net income available to
common stockholders of the Company was $479,000 for the three months ended June
30, 1998, as compared with net income available to common stockholders of
$272,000 for the same period of the prior year, an increase of $207,000.
19
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Six Months Ended June 30, 1998 compared to Six Months Ended June 30, 1997
REVENUES. Total revenues for the six months ended June 30, 1998 increased
$11.8 million, or 24.4%, over the same period of the prior year, to $60.0
million from $48.3 million. This increase was primarily attributable to the net
effect of (i) increased revenues resulting from the WITN Acquisition and the
GulfLink Acquisition, (ii) increased publishing revenues (iii) increased
political broadcast revenue and (iv) increased paging revenues. The WITN
Acquisition and the GulfLink Acquisition accounted for $4.1 million and $1.0
million, respectively, of the revenue increase.
Broadcast net revenues increased $8.4 million, or 25.0%, over the same
period of the prior year, to $42.2 million from $33.8 million. The WITN
Acquisition and the GulfLink Acquisition accounted for $4.1 million and $1.0
million, respectively, of the broadcast net revenue increase. On a pro forma
basis, assuming the acquisition of WITN had been effective on January 1, 1997,
broadcast net revenues for WITN for the six months ended June 30, 1998 increased
$124,000, or 3.1%, when compared to the same period of the prior year to $4.1
million from 4.0 million. Broadcast net revenues, excluding the WITN Acquisition
and the GulfLink Acquisition, increased $3.3 million, or 9.8%, over the same
period of the prior year, to $36.7 million from $33.4 million. This increase was
due primarily to an increase in political advertising revenue of $2.0 million.
Publishing revenues increased $2.6 million, or 23.1%, over the same period
of the prior year, to $13.9 million from $11.3 million. The increase in revenues
was due primarily to an increase in retail advertising, classified advertising
and circulation revenue of $1.0 million, $1.0 million, and $401,000,
respectively. The increase in retail advertising and circulation revenue was due
primarily to an increase in circulation at the GWINNETT DAILY POST. The increase
in classified advertising revenue was due primarily to linage increases.
Paging revenue increased $741,000 or 23.3%, over the same period of the
prior year, to $3.9 million from $3.2 million. The increase was attributable
primarily to an increase in the number of pagers in service. The Company had
approximately 78,500 and 58,000 pagers in service at June 30, 1998 and 1997,
respectively.
OPERATING EXPENSES. Operating expenses for the six months ended June 30,
1998 increased $10.2 million, or 26.9%, over the same period of the prior year,
from $37.8 million to $48.0 million, due primarily to the WITN Acquisition, the
GulfLink Acquisition, and the expense associated with the increase in
circulation at the GWINNETT DAILY POST. The WITN Acquisition, the GulfLink
Acquisition and the cost associated with the increase in circulation at the
GWINNETT DAILY POST accounted for $2.5 million, $842,000 and $2.7 million
(exclusive of depreciation and amortization), respectively, of the operating
expense increase.
Broadcast expenses increased $5.5 million, or 28.4%, over the six months
ended June 30, 1998, to $24.8 million from $19.3 million. The increase was
attributable primarily to the WITN Acquisition and GulfLink Acquisition. On a
pro forma basis, assuming the acquisition of WITN had been effective on January
1, 1997, broadcast expenses for WITN for the six months ended June 30, 1998
increased $46,000, or 2.0%, over the six months ended June 30, 1997 to $2.5
million from $2.4 million. Broadcast expenses, excluding the results of the WITN
Acquisition and the GulfLink Acquisition, increased $2.2 million, or 11.3%, to
$21.2 million from $19.0 million. This increase resulted from an increase in
payroll expense and other expense of $1.3 million and $780,000, respectively.
Publishing expenses for the six months ended June 30, 1998 increased $2.9
million, or 34.2%, from the same period of the prior year, to $11.4 million from
$8.5 million. This increase resulted primarily from an increase in the expense
associated with the increase in circulation at the GWINNETT DAILY POST and
higher newsprint pricing. Average newsprint costs increased approximately 10.2%
while newsprint consumption increased approximately 30.0%.
Paging expenses increased $746,000 or 40.6%, over the same period of the
prior year, to $2.6 million from $1.8 million. The increase was attributable
primarily an increase in payroll and other costs associated with an increase in
the number of pagers in service.
20
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Six Months Ended June 30, 1998 compared to Six Months Ended June 30, 1997
(continued)
Corporate and administrative expenses for the six months ended June 30,
1998 decreased $57,000, or 4.1%, over the same period of the prior year, to
$1,317,000 from $1,374,000.
Depreciation of property and equipment and amortization of intangible
assets for the six months ended June 30, 1998, increased $1.1 million, or 16.0%,
over the same period of the prior year, to $7.8 million from $6.7 million. This
increase was primarily the result of higher depreciation and amortization costs
related to the WITN Acquisition and the GulfLink Acquisition.
INTEREST EXPENSE. Interest expense increased $1.9 million, or 19.0%, from
$10.1 million for the six months ended June 30, 1997 to $12.0 million for the
six months ended June 30, 1998. This increase was attributable primarily to
increased levels of debt resulting from the financing of the WITN Acquisition
and the GulfLink Acquisition.
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS. Net loss available to
common stockholders of the Company was $1.4 million for the six months ended
June 30, 1998, as compared with a net loss available to common stockholders of
$539,000 for the same period of the prior year, an increase of $824,000.
Liquidity and Capital Resources
In September 1996, the Company entered into the $125.0 million senior
credit facility (the "Senior Credit Facility") with KeyBank National
Association, NationsBank, N.A. (South), CIBC, Inc., CoreStates Bank, N.A., and
the Bank of New York. The Senior Credit Facility included scheduled reductions
in the $125.0 million credit limit which commenced on March 31, 1997, interest
rates based upon a spread over LIBOR and/or Prime, an unused commitment fee of
0.50% applied to available funds and a maturity date of June 30, 2003. Effective
September 17, 1997, the Senior Credit Facility was modified to reinstate the
original credit limit of $125.0 million which had been reduced by the scheduled
reductions. The modification also reduced the interest rate spread over LIBOR
and/or Prime. The modification also extended the maturity date from June 30,
2003 to June 30, 2004. The modification required a one-time fee of $250,000. At
June 30, 1998, the Company had approximately $65.6 million outstanding under the
Senior Credit Facility, which did not include a letter of credit in the amount
of $5.9 million which had been established but not yet drawn upon. On June 30,
1998, the balance available under the Senior Credit Facility was $49.8 million
and the interest rate on the balance outstanding was based on a spread over
LIBOR and Prime of 2.00% and 0.25%, respectively. As of June 30, 1998, the
credit limit of $125.0 million as amended on September 17, 1997 had been reduced
by $3.7 million due to scheduled reductions as specified in the Senior Credit
Facility.
On July 31, 1998, the Company amended and restated the Senior Credit
Facility to increase its committed availability from $125 million to $200
million. The amendment also provides for an additional $100 million of
uncommitted borrowing capacity. The modification also extended the maturity date
from June 30, 2004 to June 30, 2005. The modification required a one-time fee of
approximately $750,000.
The Company's working capital was $9.9 million and $10.1 million at June
30, 1998 and December 31, 1997, respectively. The Company's cash provided from
operations was $8.4 million and $5.7 million for the six months ended June 30,
1998 and 1997, respectively. Management believes that current cash balances,
cash flows from operations and the available funds under its Senior Credit
Facility will be adequate to provide for the Company's capital expenditures,
debt service, cash dividends and working capital requirements for the forseeable
future. The Senior Credit Facility contains certain restrictive provisions,
which, among other things, limit additional indebtedness and require minimum
levels of cash flows. Additionally, the effective interest rate of the Senior
Credit Facility can be changed based upon the Company's maintenance of certain
operating ratios as defined in the Senior Credit Facility, not to exceed the
lender's prime rate plus 0.5% or LIBOR plus 2.25%. The Senior Credit Facility
contains restrictive provisions similar to the provisions of the Company's 10
5/8% Senior Subordinated Notes due 2006.
21
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
The Company's cash used in investing activities was $8.0 million and $12.0
million for the six months ended June 30, 1998 and 1997, respectively. The
decreased usage of $4.0 million from 1997 to 1998 was primarily due to the
GulfLink Acquisition which was completed on April 24, 1997. The Company will
require liquidity for capital expenditures and working capital needs. For the
three months ended June 30, 1998 capital expenditures totaled $5.8 million.
It is anticipated that significant capital expenditures may be required in
the future to implement advanced television ("ATV"), at the Company's television
stations. The Federal Communication Commission ("FCC") has determined the
technical standards, the channel assignments and a time table for implementation
of ATV.
Generally, under the FCC's implementation schedule, the Company must apply
for ATV construction permits for each of its present television stations by
November 1, 1999 and then commence ATV operations by May 1, 2002. Under the
current FCC implementation schedule the Company would generally be required to
surrender to the government either the current channel or the ATV channel by
December 31, 2006 and continue its digital operations thereafter on the retained
channel. Recent legislation requires the FCC to extend the December 31, 2006
surrender date with respect to certain stations within a given television market
if (i) at least one network affiliate is not broadcasting a digital service in
the given market and has exercised "due diligence" in meeting the ATV buildout
requirements for that market or (ii) digital to analog converter technology is
not generally available in the given market or (iii) 15 percent or more of the
television households in a given market do not subscribe to a multichannel video
programming distributor that carries the digital service of each local station
and those television households do not have at least one advanced television set
or at least one digital to analog converter. The foregoing implementation
schedule is subject to review by the FCC every two years and may also be subject
to future legislation or judicial review, the effect of which cannot be
predicted by the Company.
The Company is currently studying the ATV channel assignments for its
television stations as well as the technical and capital expenditure
requirements to implement ATV at these television stations. The Company
currently intends to implement ATV at its television stations within the FCC
mandated implementation period. The Company cannot presently predict the cost of
such implementation but, based upon general industry estimates, currently
believes that such costs will be material and will require several million
dollars to commence initial ATV operations.
The Company's cash used in financing activities was $79,000 for the six
months ended June 30, 1998 as compared to cash provided by financing activities
of $5.8 million for the six months ended June 30, 1997. The decrease in cash
provided by financing activities resulted primarily from decreased net
borrowings of long-term debt, decreased cash provided by common stock
transactions partially offset by increased funds provided by the sale of commons
stock. During the six months ended June 30, 1998, the Company issued 22,850
shares of Class A Common Stock and 61,202 shares of Class B Common Stock from
treasury to fulfill obligations under its employee benefit plan, non-employee
director stock purchase plan and long-term incentive plan. During the six months
ended June 30, 1998, the Company purchased 10,500 shares of Class A Common stock
at a cost of $311,063.
The Company regularly enters into program contracts for the right to
broadcast television programs produced by others and program commitments for the
right to broadcast programs in the future. Such programming commitments are
generally made to replace expiring or canceled program rights. Payments under
such contracts are made in cash or the concession of advertising spots for the
program provider to resell, or a combination of both. During the six months
ended June 30, 1998, the Company paid $2.0 million for such program broadcast
rights.
On July 31, 1998, the Company completed the purchase of all of the
outstanding capital stock of Busse Broadcasting Corporation ("Busse"). The net
purchase price was $112 million plus associated transaction costs. The purchase
price includes the assumption of Busse's indebtedness, including its 11 5/8%
Senior Secured Notes due 2000. Immediately prior to the Company's acquisition of
Busse, Cosmos Broadcasting Corporation acquired WEAU-TV from Busse and exchanged
it for WALB-TV, the Company's NBC affiliate in Albany, Georgia. In exchange for
WALB-TV, the Company received WEAU-TV, which was valued at $66 million, and
approximately
22
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
$12 million in cash for a total value of $78 million. As a result of these
transactions, the Company adds the following television stations to its existing
broadcast group: KOLN-TV, the CBS affiliate serving the
Lincoln-Hastings-Kearney, Nebraska market; its satellite station KGIN-TV, the
CBS affiliate serving Grand Island, Nebraska; and WEAU-TV, an NBC affiliate
serving the Eau Claire-La Crosse, Wisconsin market. These transactions also
satisfy the Federal Communication Commission's requirement for the Company to
divest itself of WALB-TV. The Company will pay Bull Run Corporation, a principal
stockholder of the Company, a fee equal to 1% of the transaction values
for services performed, of which $780,000 was included in accounts payable at
June 30, 1998.
Immediately following the acquisition of Busse, the Company exercised its
right to satisfy and discharge the Busse 11 5/8% Senior Secured Notes,
effectively prefunding the notes at the October 15, 1998 call price of 106 plus
accrued interest. The amount necessary to satisfy and discharge the notes was
approximately $69.9 million which was funded through the Senior Credit Facility.
The Company and its subsidiaries file a consolidated federal income tax
return and such state or local tax returns as are required. As of June 30, 1998,
the Company anticipates that it will generate taxable operating losses for the
foreseeable future.
Management does not believe that inflation in past years has had a
significant impact on the Company's results of operations nor is inflation
expected to have a significant effect upon the Company's business in the near
future.
Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act
This quarterly report on Form 10-Q contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. When
used in this report, the words "believes," "expects," "anticipates," "estimates"
and similar words and expressions are generally intended to identify
forward-looking statements. Statements that describe the Company's future
strategic plans, goals, or objectives are also forward-looking statements.
Readers of this Report are cautioned that any forward-looking statements,
including those regarding the intent, belief or current expectations of the
Company or management, are not guarantees of future performance, results or
events and involve risks and uncertainties, and that actual results and events
may differ materially from those in the forward-looking statements as a result
of various factors including, but not limited to, (i) general economic
conditions in the markets in which the Company operates, (ii) competitive
pressures in the markets in which the Company operates, (iii) the effect of
future legislation or regulatory changes on the Company's operations and (iv)
other factors described from time to time in the Company's filings with the
Securities and Exchange Commission. The forward-looking statements included in
this report are made only as of the date hereof. The Company undertakes no
obligation to update such forward-looking statements to reflect subsequent
events or circumstances.
Impact of Year 2000
Some of the Company's older computer programs were written using two
digits rather than four to define the applicable year. As a result, those
computer programs have time-sensitive software that recognize a date using "00"
as the year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
The Company has completed an assessment and will have to modify or replace
portions of its software so that its computer systems will function properly
with respect to dates in the year 2000 and thereafter. The Company does not
believe that the estimated total Year 2000 project cost will have a material
impact upon its financial
23
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Impact of Year 2000 (continued)
position. Most of this cost will be realized over the estimated useful lives of
the new hardware and software. To date, the Company has not incurred significant
expenses associated with the Year 2000 issue.
The project is estimated to be completed no later than June 30, 1999,
which is prior to any anticipated impact on its operating systems. The Company
believes that with modifications to existing software and conversions to new
software, the Year 2000 issue will not pose significant operational problems for
its computer systems. However, if such modifications and conversions are not
made, or are not completed timely, the Year 2000 issue could have a material
impact on the operations of the Company.
The costs of the project and the date on which the Company believes it
will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
24
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Amended and Restated Stock Purchase Agreement by and among Busse
Broadcasting Corporation, South Street Corporate Recovery Fund I,
L.P., Greycliff Leveraged Fund 1993, L.P., South Street Leveraged
Corporate Recovery Fund, L.P., South Street Corporate Recovery Fund
I (International), L.P. and Gray Communications Systems, Inc. dated
as of June 22, 1998
10.2 - Asset Purchase Agreement by and among Busse Broadcasting
Corporation, WEAU License, Inc. and Cosmos Broadcasting Corporation
dated as of June 22, 1998
10.3 - Exchange Agreement by and among Gray Communications Systems, Inc.,
WALB-TV, Inc., WALB Licensee Corporation., Cosmos Broadcasting
Corporation, Busse Broadcasting Corporation, and WEAU License, Inc.
dated as of June 22, 1998
10.4 - Escrow Agreement by and among WALB-TV, Inc. WALB Licensee
Corporation, Cosmos Broadcasting Corporation and NationsBank, N. A.
dated as of June 22, 1998
10.5 - Amended and Restated Loan Agreement by and among Gray Communications
Systems, Inc. as Borrower, NationsBank, NA as Syndication Agent and
Administrative Agent, Key Corporate Capital Inc., as Documentation
Agent and The Financial Institutions Listed Herein as of July 31,
1998 with NationsBanc Montgomery Securities LLC, as Lead Arranger.
10.6 Asset Purchase Agreement by and among WALB-TV, Inc., WALB-TV
Licensee Corp. and Cosmos Broadcasting Corporation dated as of
June 22, 1998
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
25
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GRAY COMMUNICATIONS SYSTEMS, INC.
(Registrant)
Date: August 13, 1998 By: /s/ Frederick J. Erickson
-------------------------
Frederick J. Erickson
Chief Financial Officer
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
BY AND AMONG
BUSSE BROADCASTING CORPORATION,
SOUTH STREET CORPORATE RECOVERY FUND I, L.P.,
GREYCLIFF LEVERAGED FUND 1993, L.P.,
SOUTH STREET LEVERAGED CORPORATE RECOVERY FUND, L.P.,
SOUTH STREET CORPORATE RECOVERY FUND I (INTERNATIONAL), L.P.
AND
GRAY COMMUNICATIONS SYSTEMS, INC.
DATED AS OF JUNE 22, 1998
<PAGE>
CONTENTS
Background ................................................................ 1
Agreement ................................................................. 1
ARTICLE I
SALE OF NEW STOCK
1.01 Purchase of Shares by Purchaser ...................................... 1
1.02 Purchase Price for the Stock ......................................... 2
1.03 Letter of Credit ..................................................... 2
1.04 Effectiveness of Closing; Deliveries ................................. 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES BY THE STOCKHOLDERS AND THE COMPANY
2.01 Title to Stock; Other Rights ........................................ 3
2.02 Capacity and Validity ............................................... 3
2.03 Organization ........................................................ 3
2.04 Capitalization ...................................................... 4
2.05 No Conflict ......................................................... 4
2.06 Subsidiaries ........................................................ 5
2.07 Financial Statements ................................................ 5
2.08 Absence of Undisclosed Liability .................................... 5
2.09 Absence of Changes .................................................. 5
2.10 Tax Matters ......................................................... 6
2.11 Title to Assets; Encumbrances; Condition ............................ 7
2.12 Real Property ....................................................... 8
2.13 Personal Property ................................................... 9
2.14 Intellectual Property ............................................... 9
2.15 Computer Software and Databases ..................................... 10
2.16 Accounts Receivable ................................................. 10
2.17 Insurance ........................................................... 10
2.18 Bonds, Letters of Credit and Guarantees ............................. 11
2.19 Compliance with Law ................................................. 11
2.20 Environmental ....................................................... 12
2.21 Litigation and Claims ............................................... 14
2.22 Benefit Plans ....................................................... 15
2.23 Contracts ........................................................... 17
2.24 Suppliers and Customers ............................................. 19
2.25 Labor Matters ....................................................... 19
2.26 Brokers and Finders ................................................. 20
2.27 Interested Transactions ............................................. 20
2.28 Officers, Directors and Bank Accounts ............................... 21
2.29 Reports and Financial Statements .................................... 21
2.30 Statements True and Correct ......................................... 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Organization ........................................................ 21
3.02 Capacity and Validity ............................................... 21
3.03 No Conflict ......................................................... 22
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3.04 Brokers and Finders ................................................. 22
3.05 Investment Representation ........................................... 22
3.06 Qualification of Purchaser .......................................... 22
3.07 Financing ........................................................... 22
3.08 Statements True and Correct ......................................... 22
ARTICLE IV
COVENANTS AND ADDITIONAL AGREEMENTS OF THE COMPANY, THE STOCKHOLDERS AND
PURCHASER
4.01 Conduct of Business ................................................. 22
4.02 Right of Inspection; Access ......................................... 23
4.03 Other Offers and Exclusive Dealing .................................. 24
4.04 Confidentiality ..................................................... 24
4.05 Consents and Approvals .............................................. 25
4.06 Supplying of Financial Statements ................................... 25
4.07 Qualification and Corporate Existence ............................... 25
4.08 Public Announcements ................................................ 25
4.09 Closing Conditions .................................................. 25
4.10 Supplements to Schedules ............................................ 26
4.11 Certain Tax Matters ................................................. 26
4.12 Expenses ............................................................ 27
4.13 Further Assurances .................................................. 27
4.14 Delivery of Books and Records ....................................... 27
4.15 FCC Matters ......................................................... 28
4.16 Cooperation To Effect Station Exchange .............................. 28
4.17 Name Change ......................................................... 28
4.18 Severance and Incentive Payments .................................... 28
4.19 HSR Filings ......................................................... 28
4.20 Further Actions ..................................................... 29
ARTICLE V NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES ......... 29
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
6.01 Representations True and Covenants Performed at Closing ............. 29
6.02 Incumbency Certificate .............................................. 29
6.03 Certified Copies of Resolutions ..................................... 30
6.04 Opinions of Counsel ................................................. 30
6.05 No Material Adverse Change .......................................... 30
6.06 No Injunction, Etc .................................................. 30
6.07 Resignations ........................................................ 30
6.08 Approval of Legal Matters ........................................... 30
6.09 FCC Approvals ....................................................... 30
6.10 Hart-Scott Approval ................................................. 31
6.11 Environmental Report ................................................ 31
6.12 Sales and Use Taxes ................................................. 31
6.13 Title Documents ..................................................... 31
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
AND STOCKHOLDERS
7.01 Representations True and Covenants Performed at Closing ............. 32
7.02 Incumbency Certificate .............................................. 32
7.03 Certified Copies of Resolutions ..................................... 32
7.04 No Injunction, Etc .................................................. 32
7.05 Hart-Scott Act Approval ............................................. 33
7.06 Approval of Legal Matters ........................................... 33
7.07 FCC Approvals ....................................................... 33
7.08 Opinions of Counsel ................................................. 33
ARTICLE VIII
TERMINATION
8.01 Cause for Termination ............................................... 33
8.02 Notice of Termination ............................................... 33
8.03 Effect of Termination ............................................... 33
8.04 Risk of Loss ........................................................ 34
ARTICLE IX
DEFINITIONS
Accounts Receivable ....................................................... 34
Affiliate ................................................................. 35
Agreement ................................................................. 35
Balance Sheet ............................................................. 35
Balance Sheet Date ........................................................ 35
Board of Directors ........................................................ 35
Business .................................................................. 35
Business Day .............................................................. 35
Certificate of Incorporation .............................................. 35
Closing ................................................................... 35
Closing Date .............................................................. 35
Code ...................................................................... 35
Commitments ............................................................... 35
Common Stock .............................................................. 35
Computer Software ......................................................... 36
Contract .................................................................. 36
Databases ................................................................. 36
Default ................................................................... 36
Employee Benefit Plan ..................................................... 36
Environmental Laws ........................................................ 37
Environmental Litigation .................................................. 37
Environmental Matter ...................................................... 37
Environmental Report ...................................................... 37
ERISA ..................................................................... 37
ERISA Plan ................................................................ 37
FCC ....................................................................... 37
Financial Statements ...................................................... 37
GAAP ...................................................................... 37
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Governmental Authority .................................................... 38
Hart-Scott Act ............................................................ 38
Hazardous Substance ....................................................... 38
Improvements .............................................................. 38
Intellectual Property ..................................................... 38
Inventory ................................................................. 38
IRS ....................................................................... 38
Knowledge ................................................................. 38
Law ....................................................................... 38
Leased Personal Property .................................................. 38
Leased Real Property ...................................................... 38
Liability ................................................................. 38
License ................................................................... 39
Lien ...................................................................... 39
Litigation ................................................................ 39
Loss ...................................................................... 39
Material or Materially .................................................... 39
Material Adverse Change or Material Adverse Effect ........................ 39
Option Property ........................................................... 40
Order ..................................................................... 40
Other Agreements .......................................................... 40
Owned Real Property ....................................................... 40
Permitted Liens ........................................................... 40
Person .................................................................... 40
Personal Property ......................................................... 40
Preferred Stock ........................................................... 40
PUC Laws .................................................................. 40
Purchase Price ............................................................ 40
Real Property ............................................................. 40
Registration Rights Agreement ............................................. 41
Related Person ............................................................ 41
Stock ..................................................................... 41
Subsidiary ................................................................ 41
Tax or Taxes .............................................................. 41
Tax Returns ............................................................... 41
Third Party or Third Parties .............................................. 41
Undisclosed Liabilities ................................................... 41
ARTICLE X
MISCELLANEOUS
10.01 Notices ............................................................ 41
10.02 Entire Agreement ................................................... 43
10.03 Modifications, Amendments and Waivers .............................. 43
10.04 Successors and Assigns ............................................. 43
10.05 Table of Contents; Captions; References ............................ 44
10.06 Governing Law ...................................................... 44
10.07 Pronouns ........................................................... 44
10.08 Severability ....................................................... 44
10.09 Remedies Not Exclusive ............................................. 44
10.10 Counterparts ....................................................... 44
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10.11 Interpretations .................................................... 44
10.12 Exclusive Remedy ................................................... 45
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EXHIBITS AND SCHEDULES
Exhibit 1.02 -- Purchase Price Allocation Among Stockholders
Exhibit 2.01 -- Stockholders' Ownership
Exhibit 6.04(i) -- Form of Opinion of Cadwalader, Wickersham & Taft
Exhibit 6.04(ii) -- Form of Opinion of Pepper & Corazzini L.L.P.
Exhibit IX -- Key Employees of the Company and the Subsidiaries
Exhibit X -- Option Property
Schedule 2.03 -- Organization, Standing & Foreign Qualification
Schedule 2.05 -- Conflicts
Schedule 2.06 -- Subsidiaries
Schedule 2.07 -- Financial Statements
Schedule 2.08 -- Absence of Undisclosed Liability
Schedule 2.09 -- Absence of Changes
Schedule 2.10 -- Tax Matters
Schedule 2.11 -- Title to Assets; Encumbrances
Schedule 2.12 -- Real Property
Schedule 2.13 -- Personal Property
Schedule 2.14 -- Intellectual Property
Schedule 2.15 -- Computer Software and Databases
Schedule 2.17 -- Insurance
Schedule 2.18 -- Bonds, Letters of Credit and Guarantees
Schedule 2.19 -- Compliance With Law
Schedule 2.20 -- Environmental
Schedule 2.21 -- Litigation and Claims
Schedule 2.22 -- Benefit Plans
Schedule 2.23(a)(i) -- Real Property Contracts
Schedule 2.23(a)(ii) -- Personal Property Contracts
Schedule 2.23(a)(iii) -- Purchase Orders--Non-Capital Assets
Schedule 2.23(a)(iv) -- Purchase Orders--Capital Assets
Schedule 2.23(a)(v) -- Sales Contracts
Schedule 2.23(a)(vi) -- Employment; Other Affiliate Contracts
Schedule 2.23(a)(vii) -- Sales Representatives Contracts
Schedule 2.23(a)(viii) -- Powers of Attorney
Schedule 2.23(a)(ix) -- Programming and Network Affiliation Agreements
Schedule 2.23(a)(x) -- Barter & Trade Agreements
Schedule 2.23(a)(xi) -- Any Other Contracts
Schedule 2.24 -- Suppliers and Customers
Schedule 2.25 -- Labor Matters
Schedule 2.26 -- Brokers and Finders
Schedule 2.27 -- Interested Transactions
Schedule 2.28 -- Officers, Directors and Bank Accounts
Schedule 3.03 -- Purchaser -- Conflicts
Schedule 3.04 -- Purchaser -- Brokers and Finders
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this "Agreement") dated
as of the 22nd day of June, 1998, is made and entered into by and among BUSSE
BROADCASTING CORPORATION, a Delaware corporation (the "Company"), SOUTH STREET
CORPORATE RECOVERY FUND I, L.P., GREYCLIFF LEVERAGED FUND 1993, L.P., and SOUTH
STREET LEVERAGED CORPORATE RECOVERY FUND, L.P., all of which are Delaware
limited partnerships, and SOUTH STREET CORPORATE RECOVERY FUND I
(INTERNATIONAL), L.P., a Cayman Islands exempted limited partnership
(individually, a "Stockholder" and collectively, the "Stockholders"), and GRAY
COMMUNICATIONS SYSTEMS, INC., a Georgia corporation ("Purchaser").
BACKGROUND:
The Stockholders collectively own, beneficially and of record, 107,700
shares of the Common Stock of the Company, representing 100% of the outstanding
shares of the Common Stock and 65,524.41 shares of the Preferred Stock of the
Company, representing 100% of the outstanding shares of the Preferred Stock.
The Company is the parent corporation of WEAU License, Inc. ("WEAU")
and of KOLN/KGIN, Inc. ("KOLN/KGIN"). KOLN/KGIN is the parent corporation of
KOLN/KGIN License, Inc. ("KOLN/KGIN License" and together with KOLN/KGIN and
WEAU, sometimes collectively referred to herein as the "Subsidiaries" or
individually as a "Subsidiary"). The Company, directly or indirectly, owns and
operates three network-affiliated very high frequency television stations,
KOLN-TV, serving Lincoln, Nebraska, KGIN-TV, serving Grand Island, Nebraska and
WEAU-TV, serving Eau Claire and LaCrosse, Wisconsin (collectively, the
"Stations" and individually, a "Station").
Certain terms used in this Agreement are defined in Article IX hereof.
AGREEMENT:
In consideration of the foregoing, the mutual agreements, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, the parties hereto
agree as follows:
ARTICLE I
SALE OF STOCK
1.01 PURCHASE OF STOCK BY PURCHASER. At the Closing, and subject to the terms
and conditions of this Agreement, the Stockholders shall sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase and accept from
the Stockholders, all of the issued and outstanding Common Stock and all of the
issued and outstanding Preferred Stock, in each case free and clear of any and
all Liens other than those created hereunder or by Purchaser.
<PAGE>
1.02 PURCHASE PRICE FOR THE STOCK. The total purchase price for the Stock
shall be equal to (i) One Hundred Twelve Million Dollars ($112,000,000) LESS
(ii) an amount equal to the balance, as of the Closing Date, of (x) the
aggregate accreted value of the Company's 11-5/8% Senior Secured Notes due 2000
(issued under that certain Indenture, dated as of October 26, 1995, by and among
the Company, certain guarantors and Shawmut Bank Connecticut, National
Association) and (y) the outstanding aggregate principal balance of indebtedness
for borrowed money (excluding any intercompany indebtedness) that is evidenced
by a note, bond, debenture or similar instrument of the Company or its
Subsidiaries, taken as whole, LESS (iii) accrued interest on the indebtedness
referred to in the foregoing clause (ii), PLUS (iv) an amount equal to the sum,
as of the Closing Date, of all cash, cash equivalents, marketable securities,
bank accounts, certificates of deposit and short term investments (other than
Accounts Receivable) of the Company and the Subsidiaries OTHER THAN the amount,
if any, received by the Company pursuant to that certain Asset Purchase
Agreement of even date herewith by and among the Company, WEAU License, Inc. and
Cosmos Broadcasting Corp. (the "WEAU Agreement"), LESS (v) an amount equal to
the net book value (calculated in accordance with GAAP) of the Option Property
at the end of the month prior to the transfer of such Option Property by the
Company, LESS (vi) an amount equal to the aggregate unpaid obligations, if any,
of the Company to any Person (including without limitation any current or former
employee, officer, director, consultant, agent, advisor or representative of the
Company) with respect to or on account of any severance agreement, severance
plan, severance policy, incentive compensation, bonus arrangement, employment
agreement, severance benefit agreement, compensation plan, consulting agreement
or personal service contract (including without limitation the Company's Long
Term Incentive Plan, the Company's Incentive Fee Plan, the Amended and Restated
Employment Agreement with Lawrence A. Busse and the Amended and Restated
Employment Agreement with James C. Ryan) other than any such obligation that
relates solely to a termination of employment by the Company after the Closing
(or any such termination done at the request of Purchaser prior to the Closing)
of any employee of, or any consultant or independent contractor to, the Company
other than Lawrence A. Busse or James C. Ryan. Each of the foregoing components
of the Purchase Price shall be calculated by the Company in a manner reasonably
satisfactory to Purchaser and (a) according to GAAP, (b) in a manner consistent
with the Company's publicly available financial statements and (c) as of the
close of business on the Business Day immediately preceding the Closing Date. At
the Closing, Purchaser shall pay the Purchase Price to the Stockholders, against
delivery to Purchaser of a certificate or certificates, registered in its name
or the name of its designees, representing the Stock. At the Closing, the
Purchase Price shall be paid in cash by wire transfers of immediately available
funds, or in such other form and manner as may be mutually satisfactory, to an
account designated in writing by each of the Stockholders at least three (3)
days prior to the Closing. The amount of the Purchase Price due to each
Stockholder shall be in the respective percentages set forth on Exhibit 1.02 and
all payments shall be in such percentages.
1.03 LETTER OF CREDIT. Simultaneously with the execution of the Stock
Purchase Agreement dated as of February 13, 1998, Purchaser deposited with SSP,
Inc., on behalf of and for the benefit of the Stockholders, a standby letter of
credit in the amount of Five Million Eight Hundred Fifty Thousand Dollars
($5,850,000) (the "LC") to be applied as provided herein. In the event of a
termination of this Agreement, the LC will be paid to the Stockholders or
Purchaser as provided in Section 8.03 below. At the Closing, the LC shall be
returned to Purchaser.
1.04 CLOSING; EFFECTIVENESS OF CLOSING; DELIVERIES. The Closing shall occur
at 10:00 a.m. local time on the Closing Date at the offices of Cadwalader,
Wickersham & Taft in New York, New York or at such other time and place as the
parties may agree. The Closing shall be effective as of the close of business on
the Closing Date. All deliveries, payments and other transactions and documents
relating to the Closing (i) shall be interdependent and none shall be effective
unless and until all are effective (except to the extent that the party entitled
to the benefit thereof has waived satisfaction or
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performance thereof as a condition precedent to Closing), and (ii) shall be
deemed to be consummated in the order set forth in this Agreement and, to the
extent the order is not specified, shall be deemed to be consummated
simultaneously.
ARTICLE II
REPRESENTATIONS AND WARRANTIES BY THE STOCKHOLDERS AND THE COMPANY
Each of the Stockholders and the Company, jointly and severally, hereby
represent and warrant to Purchaser as follows:
2.01 TITLE TO STOCK; OTHER RIGHTS. Each of the Stockholders is the owner of
all right, title and interest (legal and beneficial) in and to that number of
shares of Common Stock and shares of Preferred Stock set forth next to its name
on Exhibit 2.01, free and clear of all Liens. Collectively, the Stockholders own
all right, title and interest (legal and beneficial) in and to all of the issued
and outstanding shares of the Stock. Except as specifically contemplated by this
Agreement, no Person has any Contract or option or any right or privilege
(whether pre-emptive or contractual) capable of becoming a Contract or option
for the purchase from the Stockholders of any shares of Common Stock or
Preferred Stock or for the purchase, subscription or issuance of any securities
of the Company.
2.02 CAPACITY AND VALIDITY. Each of the Stockholders has the full power and
authority necessary to enter into and perform its obligations under this
Agreement and the Other Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The Company has the full corporate
power, capacity and authority necessary to enter into and perform its
obligations under this Agreement and the Other Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the Other Agreements
have been approved by all necessary action of (i) the Board of Directors and
stockholders of the Company and (ii) the partners of each of the Stockholders,
including the Board of Directors of each corporate partner. This Agreement has
been, and the Other Agreements to which the Company or any of the Stockholders
are parties will be when executed and delivered, duly executed and delivered by
duly authorized officers of the Company and duly authorized partners or agents
of each Stockholder, including duly authorized officers of corporate partners,
and the Agreement and each of the Other Agreements constitutes, or will
constitute when executed and delivered, the legal, valid and binding obligation
of the Company and each of the Stockholders, as the case may be, enforceable
against the Company and each of the Stockholders, as the case may be, in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or
general equitable principles (regardless of whether considered in a proceeding
in equity or at law) or by an implied covenant of good faith and fair dealing.
2.03 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its assets
and to carry on its Business as presently conducted. Each of the Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its respective assets and to carry on its
respective business as presently conducted. Each of the Stockholders is a
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and has all requisite power and
authority to own, operate and lease its respective assets and to conduct its
respective business as presently conducted. The Company and each of
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the Subsidiaries are duly qualified or licensed to transact business as a
foreign corporation in good standing in the jurisdictions listed in Schedule
2.03, and the character of their respective assets or the nature of their
respective businesses do not require such qualification or licensing in any
other jurisdiction except where the failure to so qualify or be so licensed
would not have a Material Adverse Effect on the Company or any such Subsidiary,
as the case may be. Complete and correct copies of the Certificate of
Incorporation of the Company and each of the Subsidiaries, and all amendments
thereto (certified by the Secretary of State of the State of Delaware) and
complete and correct copies of the By-Laws of the Company and each of the
Subsidiaries, and all amendments thereto, previously have been delivered to
Purchaser. Except as may be set forth in Schedule 2.03, copies of all records of
the proceedings of incorporators, stockholders and directors of each of the
Company and each of the Subsidiaries, which are set forth in the Company's and
each of the Subsidiaries' respective minute books (collectively, the "Minute
Books"), are correct and complete in all Material respects and accurately
reflect in all Material respects all proceedings of each of the Company's and
each of the Subsidiaries' respective incorporators, stockholders and Board of
Directors and all committees thereof. Except as may be set forth in Schedule
2.03, the stock record books of each of the Company and each of the Subsidiaries
(collectively, the "Stock Record Books") are correct and complete and accurately
reflect the stock ownership of their respective stockholders. The Minute Books
and the Stock Record Books have been made available to Purchaser for review.
2.04 CAPITALIZATION. The authorized capital stock of the Company consists of
2,154,000 shares of Common Stock, of which 107,700 are issued and outstanding,
and 65,524.41 shares of Preferred Stock, all of which are issued and
outstanding. All of such Stock is duly and validly issued and outstanding, is
fully paid and nonassessable and was issued pursuant to a valid exemption from
registration under the Securities Act of 1933, as amended, and all applicable
state securities laws. Except for shares of Common Stock issuable upon
conversion of the Preferred Stock, no Stock is reserved for issuance. Except as
contemplated by the conversion rights applicable to the Preferred Stock, the
Company has no obligation to issue any additional Stock or securities
convertible or exchangeable for Stock, or options or warrants for the purchase
of (a) any Stock or (b) any securities convertible into or exchangeable for any
Stock. Excepted as contemplated by the Registration Rights Agreement, there are
no outstanding rights to either demand registration of any Stock under the
Securities Act of 1933, as amended, or to sell any Stock in connection with such
a registration of Stock.
2.05 NO CONFLICT. Except as disclosed on Schedule 2.05 or as contemplated in
the WEAU Agreement and assuming compliance with the Hart-Scott Act and the
receipt of all necessary FCC approvals, neither the execution, delivery and
performance of this Agreement or the Other Agreements to which it is a party by
either the Company or any of the Stockholders nor the consummation by the
Company or any of the Stockholders of the transactions contemplated hereby or
thereby will (i) conflict with or result in a violation, contravention or breach
of any of the terms, conditions or provisions of the Certificate of
Incorporation, as amended, or the By-Laws, as amended, of the Company or any of
the Subsidiaries, (ii) conflict with or result in a violation, contravention or
breach of any of the terms, conditions or provisions of the partnership
agreement, certificate of limited partnership or other governing document or
agreement of any of the Stockholders, (iii) result in a Default under, or
require the consent or approval of any party to, any Contract or License of the
Company or any of the Subsidiaries required to be set forth on one or more of
the Schedules contemplated by Section 2.23 hereof or any Contract or License of
any of the Stockholders (which, in the case of the Stockholders, would (a)
affect the ability of the Stockholders to consummate the transactions
contemplated hereby or (b) result in any Liability to Purchaser), (iv) result in
the violation of any Law or Order applicable to the Company, any of the
Subsidiaries or any of the Stockholders (which, in the case of the Stockholders,
would (a) affect the ability of the Stockholders to consummate the transactions
contemplated hereby or (b) result in any Liability to
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Purchaser) or (v) result in the creation or imposition of any Lien applicable to
the Stock, the Company or any of the Subsidiaries, except in each case as would
not have a Material Adverse Effect.
2.06 SUBSIDIARIES. Except as set forth on Schedule 2.06 and except for the
Subsidiaries, neither the Company nor any of the Subsidiaries has in the past
three (3) years had, and none of them currently has, a direct or indirect
majority or controlling interest in any entity. Except as disclosed on Schedule
2.06, neither the Company nor any of the Subsidiaries has in the past three (3)
years owned and none of them owns, directly or indirectly, more than 1% of any
capital stock or other equity, ownership, proprietary or voting interest in any
Person. The Company owns, directly or indirectly, 100% of the issued and
outstanding capital stock of each of the Subsidiaries. None of the Subsidiaries
has any obligation to issue any additional capital stock or other securities or
securities convertible or exchangeable for capital stock or other securities, or
options or warrants for the purchase of (a) any capital stock or other
securities or (b) any securities convertible into or exchangeable for any
capital stock or other securities.
2.07 FINANCIAL STATEMENTS. The Financial Statements (of the type provided for
in clauses (i) and (ii) of the definition thereof), correct and complete copies
of which are included in Schedule 2.07, (i) are in accordance with the books and
records of the Company and each of the Subsidiaries, which are correct and
complete in all Material respects and which have been maintained in accordance
with good business practices; (ii) present fairly in all Material respects the
financial position of the Company and each of the Subsidiaries as of the dates
indicated and the results of each of their operations and their respective cash
flows for the periods then ended; and (iii) have been prepared in accordance
with GAAP, subject, in the case of interim financial statements, to the
condensing of the Financial Statements or the absence of footnotes. The
Financial Statements contain all adjustments, which are solely of a normal
recurring nature, necessary to present fairly in all Material respects the
consolidated financial condition and the consolidated results of operations,
changes in stockholders' equity and changes in financial position or cash flows
of the Company and each of the Subsidiaries as of the dates and for the periods
indicated.
2.08 ABSENCE OF UNDISCLOSED LIABILITY. Except as set forth in Schedule 2.08,
neither the Company nor any of the Subsidiaries has any Undisclosed Liabilities
nor does there exist any Known basis for or threat of an assertion against the
Company or any of the Subsidiaries, their respective businesses or their
respective assets of any Undisclosed Liability, except for Liabilities incurred
since the Balance Sheet Date in the ordinary course of business consistent with
past practice, none of which are Material.
2.09 ABSENCE OF CHANGES. Except as disclosed in Schedule 2.09 and other than
as may be contemplated in the WEAU Agreement, since the Balance Sheet Date, (i)
the Business has been carried on only in the ordinary course consistent with
past practice, (ii) there has been no Material Adverse Change, and there has
been no event or circumstance that reasonably is anticipated to result in a
Material Adverse Change with respect to the Company or any of the Subsidiaries,
their respective assets or businesses or the Business, (iii) the Company has not
directly or indirectly declared, paid or authorized any dividends or other
distributions or payments in respect of its Stock or other equity securities, if
any, (iv) neither the Company nor any of the Subsidiaries has made any change in
any method of accounting or accounting practice, and (v) except in the ordinary
course of business consistent with past practice, neither the Company nor any of
the Subsidiaries has canceled, modified or waived, without receiving payment or
performance in full, any (a) Liability owed to the Company or any of the
Subsidiaries, as the case may be, including without limitation, any receivable
of the Company from any Affiliate (other than a Subsidiary) or any Related
Person to an Affiliate, (b) Litigation the Company or any of the Subsidiaries
may have against other Persons, or (c) other rights of the Company or any of the
Subsidiaries, as the case may be
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2.10 TAX MATTERS. Except as set forth on Schedule 2.10:
(a) The Company and each of the Subsidiaries have timely filed with the
appropriate Governmental Authorities all required Tax Returns in all
jurisdictions in which Tax Returns are required to be filed. Neither the Company
nor any of the Subsidiaries is presently the beneficiary of any extension of
time within which to file any Tax Return. All Taxes (whether or not shown on any
Tax Return) for all periods ending on or before the Balance Sheet Date, have
been fully paid or appropriate deposits or adequate accruals have been made
therefor on the Balance Sheet.
(b) Since the Balance Sheet Date, neither the Company nor any of the
Subsidiaries has incurred any Liability for Taxes other than in the ordinary
course of business and no such Tax Liability so incurred (other than any
Liability incurred by the Company or the Subsidiaries in connection with their
cooperation under Section 4.16 hereof) is Material. Neither the Company nor any
of the Subsidiaries is currently delinquent in the payment of any Tax,
assessment, deposit or other charge by any Governmental Authority for which any
Liability is pending or has been assessed, asserted or threatened (in writing,
or otherwise to the Knowledge of the Company, any of the Subsidiaries or any of
the Stockholders) against the Company, any of the Subsidiaries or any of their
respective assets in connection with any Tax and there is no basis for any such
Liability. Neither the Company nor any of the Subsidiaries has received any
notice of assessment or proposed assessment in connection with any Tax Returns
and there are no pending Tax examinations of or Tax claims asserted (in writing,
or otherwise to the Knowledge of the Company, any of the Subsidiaries or any of
the Stockholders) against the Company, any of the Subsidiaries or any of their
respective assets, including without limitation, any claim by any Governmental
Authority in any jurisdiction where the Company or any of the Subsidiaries did
not file Tax Returns that the Company or any of the Subsidiaries, respectively,
is or may be subject to or liable for Taxes imposed by that Governmental
Authority or jurisdiction. There are no Liens for any Taxes (other than any Lien
for current real property or ad valorem Taxes not yet due and payable) on any of
the Company's or any of the Subsidiaries' assets.
(c) None of the Company's or any of the Subsidiaries' Tax Returns have
ever been audited by the IRS or any other Governmental Authority and the neither
the Company nor any of the Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to a Tax assessment or deficiency. Neither the
Company nor any of the Subsidiaries has filed any consent under Section 341(f)
of the Code relating to collapsible corporations. No Tax is required to be
withheld pursuant to Section l445 of the Code as a result of any of the
transfers contemplated by this Agreement and the Company, each of the
Subsidiaries and each of the Stockholders will provide any certificate
reasonably requested by Purchaser at Closing with respect thereto.
(d) The Company and each of the Subsidiaries have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
Third Party.
(e) Neither the Company nor any of the Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code or any similar
provision of foreign, state or local Law.
(f) Neither the Company nor any of the Subsidiaries has agreed, nor is it
required to make, any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise.
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(g) Neither the Company nor any of the Subsidiaries is a party to or bound
by (nor will the Company or the Subsidiaries, prior to the Closing, become a
party to or be bound by) any Tax indemnity, Tax sharing or Tax allocation
agreement or arrangement.
(h) Except for the group of which the Company and the Subsidiaries are
presently members, none of the Company or any of the Subsidiaries has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company) or has any
Liability for Taxes of any Person (other than the Company or any of the
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of the state, local, or foreign Law), as a transferee or successor, by
contract, or otherwise.
(i) Neither the Company nor any of the Subsidiaries is a party to any
joint venture, partnership, or other arrangement or Contract which is treated as
a partnership for federal income Tax purposes.
(j) Neither the Company nor any of the Subsidiaries has issued or assumed
any corporate acquisition indebtedness, within the meaning of Section 279(b) of
the Code, or any obligation described in Section 279(a)(2) of the Code.
(k) Neither the Company nor any Subsidiary has any excess loss account (as
defined in Treasury Regulation Section 1.1502-19) with respect to the stock of
any Subsidiary.
(l) Schedule 2.10 contains Materially complete and accurate descriptions
of the following information with respect to the Company and its Subsidiaries
(or, in the case of clause (B) below, with respect to each of the Subsidiaries)
as of the most recent practicable date: (A) the basis of the Company or the
Subsidiary in its assets; (B) the basis of each shareholder in each Subsidiary's
stock; and (C) the amount of any deferred gain or loss allocable to the Company
or Subsidiary arising out of any deferred intercompany transaction.
(m) The net operating loss and other carryovers reported by the Company
and each of the Subsidiaries as of the Balance Sheet Date are as set forth in
Schedule 2.10; as of the Closing Date and immediately prior to the consummation
of any of the transactions contemplated hereby the ability of the Company and
each of the Subsidiaries to use such reported carryovers will not have been
affected by Sections 382, 383 or 384 of the Code or by the SRLY or CRCO
limitations of Treasury Regulation Sections 1.1502-21 or 1.1502-22. Except as
set forth in this clause (m) and notwithstanding anything in this Agreement to
the contrary, the Stockholders and the Company make no representation or
warranty as to the extent, availability or use of the net operating loss and
other carryover items reported by the Company and its Subsidiaries.
2.11 TITLE TO ASSETS; ENCUMBRANCES; CONDITION.
(a) Each of the Company and each of the Subsidiaries has good, valid and
marketable (and, in the case of the Owned Real Property, insurable) title to all
of its respective assets free and clear of any and all Liens, except Permitted
Liens and as contemplated in the WEAU Agreement. Schedule 2.11 contains true and
complete copies (in all Material respects) of (i) Commitments to issue owner's
title insurance policies for all of the Owned Real Property in the amounts
indicated in each such Commitment, except for the Owned Real Property located in
York County, Nebraska, a copy of which will
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be delivered to Purchaser prior to Closing, and (ii) all existing owner's title
insurance policies. A survey of each parcel of the Owned Real Property has been
delivered to Purchaser prior to the date hereof, except for the Owned Real
Property located in York County, Nebraska, a copy of which will be delivered to
Purchaser prior to Closing. Copies of all documents evidencing the Liens upon
the Company's and each of the Subsidiaries' respective assets are either
contained in Schedule 2.11 or previously have been delivered to Purchaser.
(b) Except as set forth in Schedule 2.11, each of the Material
Improvements and each item of Material Personal Property is in good condition
and repair, reasonable wear and tear excepted, and is usable in the ordinary
course of business consistent with past practices. Each Material Improvement and
each item of Material Personal Property is adequate for its present and intended
uses and operation and neither the Company nor any of the Subsidiaries has any
intention to use or operate any Material Improvement or any item of Material
Personal Property other than as presently used or operated. The Company's and
each of the Subsidiaries' respective assets (including the Company's and each of
the Subsidiaries' respective interest in all leased assets) include all Material
assets required to operate the Business as presently conducted.
2.12 REAL PROPERTY.
(a) Schedule 2.12 contains a correct and complete list of all of the Real
Property, including, without limitation, a legal description for all of the
Owned Real Property. To the Knowledge of the Company, any of the Subsidiaries or
any of the Stockholders, no facts or circumstances exist which do, or
potentially may, adversely affect any of the access to and from the Real
Property, from and to the existing public highways and roads, and, to the
Knowledge of the Company, any of the Subsidiaries or any of the Stockholders,
there is no pending or threatened denial, revocation, modification or
restriction of such access. The primary tower, transmitter and Real Property on
which such tower and transmitter are located are all owned by the Company or one
of the Subsidiaries in fee simple title, except for the 2000 foot television
tower located on a permanent easement which is located in Eau Claire County
(Fairchild Township), Wisconsin.
(b) The Real Property is served by utilities as required for its current
operation.
(c) No zoning or similar land use restrictions are presently in effect or
proposed by any Governmental Authority that would impair in any Material respect
the operation of the Business as presently conducted by the Company and each of
the Subsidiaries or which would prevent the use of any of the Real Property as
currently operated. All of the Real Property is in compliance in all Material
aspects with all applicable zoning laws and recorded covenants. Neither the
Company nor any of the Subsidiaries has received any notice from any
Governmental Authority or other Third Party with regard to encroachments on or
off the Real Property, violations of building codes, zoning, subdivision or
other similar Laws or other material defects in the Improvements or in the good,
valid, marketable and insurable title of said Real Property.
(d) As of the Closing Date, there will be no Persons in possession of the
Real Property or any part thereof other than the Company or one or more of the
Subsidiaries or their lessees pursuant to Contracts that are Permitted Liens.
(e) No condemnation proceedings are pending or to the Knowledge of the
Company, any of the Subsidiaries or any of the Stockholders, threatened with
regard to the Owned Real Property.
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(f) With respect to each parcel of Leased Real Property, (i) the lessor
was the owner of the premises leased to the lessee at the time of the execution
and delivery of the lease, (ii) the Company is the owner and holder of the
interest of the lessee in the lease, (iii) all buildings and towers constructed
by the lessee of each lease are located within the boundaries of the leased
premises, (iv) each lease contains an adequate description of the leased
premises, (v) each lease is enforceable by the lessee, (vi) all payments of rent
are current under each lease and no default exists under any lease and (vii)
except as set forth on Schedule 2.21, there are no disputes with or adverse
claims asserted by any lessor of a lease. Each of the Contracts of the Company
or any of the Subsidiaries relating to such Leased Real Property (other than the
WEAU Agreement) is fully and accurately identified, and the expiration date and
current rent are described, in Schedule 2.23(a)(i) and each such Contract is in
full force and effect. Except as disclosed on Schedule 2.12, neither the Leased
Real Property nor any of the Company's or any of the Subsidiaries' right, title
or interest therein is affected by any Lien (other than as contemplated in the
WEAU Agreement), prior interests or superior interests of any nature whatsoever
that will, or could reasonably be expected to, terminate or otherwise adversely
affect such Leased Real Property or any of the Company's or any of the
Subsidiaries' right, title and interest therein.
2.13 PERSONAL PROPERTY.
(a) Schedule 2.13 contains a correct and complete list of each item of
Personal Property, other than Inventory and the Option Property (excluding
office furniture, equipment, supplies and miscellaneous items of personal
property with an individual cost of less than $2,500).
(b) Schedule 2.13 contains a correct and complete description of all
Material Leased Personal Property. Each of the Contracts of the Company or any
of the Subsidiaries relating to such Leased Personal Property is identified on
Schedule 2.13 and each such Contract is in full force and effect.
2.14 INTELLECTUAL PROPERTY.
(a) Schedule 2.14 contains a correct and complete list of all of the
Company's and each of the Subsidiaries' respective Material Intellectual
Property, including all Material license agreements relating thereto. Neither
the Company nor any of the Subsidiaries (or any goods or services sold by any of
them) has violated, infringed upon or unlawfully or wrongfully used the
Intellectual Property of others and none of the Company's or any of the
Subsidiaries' Intellectual Property or any related rights or any customer lists,
supplier lists or mailing lists, as used in the Business or in the other
businesses now or heretofore conducted by the Company or any of the
Subsidiaries, Materially infringes upon or otherwise Materially violates the
rights of others, nor has any Person asserted a claim of such infringement or
misuse, which infringement or violation is likely to result in a cost to the
Company in excess of $20,000. Each of the Company and the Subsidiaries has taken
all reasonable measures to enforce, maintain and protect its interests and, to
the extent applicable, the rights of Third Parties, in and to the Company's and
each of the Subsidiaries' Material Intellectual Property. The Company and each
of the Subsidiaries have all right, title and interest in the Intellectual
Property identified on Schedule 2.14 (other than as contemplated in the WEAU
Agreement). The consummation of the transactions contemplated by this Agreement
will not alter or impair any Material Intellectual Property rights of the
Company or any of the Subsidiaries. Except as set forth in Schedule 2.14,
neither the Company nor any of the Subsidiaries is obligated nor has the Company
or any of the Subsidiaries incurred any Liability to make any Material payments
for royalties, fees or otherwise to any Person in connection with any of the
Company's or any of the Subsidiaries' Intellectual Property. All patents,
trademarks, trade names, service marks, assumed names, and copyrights
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and all registrations thereof included in or related to the Company's or any of
the Subsidiaries' Intellectual Property are valid, subsisting and in full force
and effect. The Company is unaware of any Material infringement of the Company's
or any of the Subsidiaries' Material Intellectual Property, and there are no
pending infringement actions against another for infringement of the Company's
or any of the Subsidiaries' Intellectual Property or theft of the Company's
trade secrets.
(b) No present or former officer, director, partner or employee of the
Company or any of the Subsidiaries owns or has any proprietary, financial or
other interest, direct or indirect, in any of the Company's or any of the
Subsidiaries' Material Intellectual Property, except as described on Schedule
2.14. Except as set forth on Schedule 2.14, no officer, director, partner or
employee of the Company or any of the Subsidiaries has entered into any Contract
(i) that requires such officer, director, partner or employee to (A) assign any
interest to inventions or other Material Intellectual Property, or (B) keep
confidential any Material trade secrets, proprietary data, customer lists or
other business information or (ii) that restricts or prohibits such officer,
director, partner or employee from engaging in competitive activities with or
soliciting customers to or from any competitor of the Company or any of the
Subsidiaries.
2.15 COMPUTER SOFTWARE AND DATABASES. Schedule 2.15 identifies all Material
Computer Software and Databases owned, licensed, leased, internally developed or
otherwise used in connection with the Business. The Company and each of the
Subsidiaries have use of or the ability to freely acquire, without substantial
costs to the Company or any of the Subsidiaries for such acquisition, all
Computer Software and Databases that are necessary to conduct the Business as
presently conducted by the Company and each of the Subsidiaries and all
documentation relating to all such Material Computer Software and Databases.
Such Computer Software and Databases perform in all Material respects in
accordance with the documentation related thereto or used in connection
therewith and are free of Material defects in programming and operation. The
Company has previously delivered to Purchaser complete and accurate copies of
all documents (other than the WEAU Agreement) relating to the sale, license,
lease or other transfer or grant of Material Computer Software and Databases by
the Company or any of its Subsidiaries since January 1, 1996.
2.16 ACCOUNTS RECEIVABLE. The Accounts Receivable are (i) validly existing,
(ii) enforceable by the Company or the Subsidiaries in accordance with the terms
of the instruments or documents creating them, and (iii) collectible in the
ordinary course of business consistent with past practice at the full recorded
amount thereof less an allowance for collection losses disclosed in the Balance
Sheet, or in the case of Accounts Receivable arising after the Balance Sheet
Date, an allowance for collection losses accrued on the books of the Company or
any of the Subsidiaries in the ordinary course of business consistent with past
practices and in accordance with GAAP. The allowance for collection losses on
the Balance Sheet was established in the ordinary course of business consistent
with past practices and in accordance with GAAP. The Accounts Receivable
represent monies due for, and have arisen solely out of, bona fide sales and
deliveries of goods, performance of services and other business transactions in
the ordinary course of business consistent with past practices. None of the
Accounts Receivable represent monies due for goods either sold on consignment or
sold on approval. There are no refunds, discounts or other adjustments payable
with respect to any such Accounts Receivable, and there are no defenses, rights
of set-off, counterclaims, assignments, restrictions, encumbrances, or
conditions enforceable by Third Parties on or affecting any Account Receivable,
except, in each case, for terms arising in the ordinary course of business
consistent with past practice.
2.17 INSURANCE. All of the assets and the operations of the Company, each of
the Subsidiaries and the Business of an insurable nature and of a character
usually insured by companies of
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similar size and in similar businesses are insured by the Company or any of the
Subsidiaries in such amounts and against such losses, casualties or risks as is
(i) usual in such companies and for such assets, operations and businesses, (ii)
required by any Law applicable to the Company, any of the Subsidiaries or the
Business, or (iii) required by any Contract of the Company or any of the
Subsidiaries. Schedule 2.17 contains a complete and accurate list of all
Material insurance policies now in force and held or owned by the Company or any
of the Subsidiaries and such Schedule indicates the name of the insurer, the
type of policy, the risks covered thereby, the amount of the premiums, the term
of each policy, the policy number and the amounts of coverage and deductible in
each case and all outstanding claims thereunder. Correct and complete copies or
summaries of all such policies have been delivered to Purchaser by the Company
or will be delivered to Purchaser by the Company as soon as such policies are
available to the Company after the date hereof. All such policies are in full
force and effect and enforceable in accordance with their terms. Neither the
Company nor any of the Subsidiaries is now in Material Default regarding the
provisions of any such policy, including, without limitation, failure to make
timely payment of any premiums due thereon, and neither the Company nor any of
the Subsidiaries has failed to give any Material notice or present any Material
claim thereunder in due and timely fashion. Neither the Company nor any of the
Subsidiaries has been refused or denied renewal of, any Material insurance
coverage in connection with the Company, any of the Subsidiaries, the ownership
or use of the Company's or any of the Subsidiaries' respective assets or the
operation of the Business. In addition to the deductibles set forth on Schedule
2.17, such Schedule discloses all Material risks that are self-insured by the
Company and each of the Subsidiaries that in the ordinary course of business
could be insured.
2.18 BONDS, LETTERS OF CREDIT AND GUARANTEES. Schedule 2.18 contains a
complete and accurate list of all bonds (whether denominated bid, litigation,
performance, fidelity, or otherwise), letters of credit, and guarantees (other
than instruments that are guaranteed in the ordinary course) issued by the
Company, any of the Subsidiaries, the Stockholders or others for the benefit of
the Company or any of the Subsidiaries and now in force or outstanding. Correct
and complete copies of each such Material bond, letter of credit and guarantee
have been delivered to Purchaser by the Company on or before the date of this
Agreement. The bonds, letters of credit and guarantees listed in Schedule 2.18
satisfy all Material requirements for bonds, letters of credit or guarantees set
forth in (i) any Law applicable to the Company, any of the Subsidiaries or the
Business and (ii) any Contracts of the Company or any of the Subsidiaries. All
such bonds, letters of credit and guarantees are in full force and effect and
enforceable in accordance with their terms. Neither the Company nor any of the
Subsidiaries is in Material Default regarding the provisions of any such bond,
letter of credit or guarantee, including, without limitation, the failure to
make timely payment of all premiums and fees due thereon, and neither the
Company nor any of the Subsidiaries has failed to give any notice or present any
claim thereunder in due and timely fashion.
2.19 COMPLIANCE WITH LAW.
(a) The Company and each of the Subsidiaries have complied with and are in
compliance with all Laws, Licenses and Orders applicable to, required of or
binding on the Company or any of the Subsidiaries, respectively, their
respective assets or the Business, including without limitation, the FCC
Licenses, the Communications Act of 1934, and PUC Laws, and none of the Company,
any of the Subsidiaries, or any of the Stockholders has Knowledge of any basis
for any claim of current or past non-compliance with any such Law, License or
Order, in each case where such non-compliance would be Material to the business,
operations, assets, Liabilities, financial condition, or results of operations
of the Company and the Subsidiaries, taken as a whole, including, without
limitation, the value of the Company and the Subsidiaries, taken as a whole. No
notices from any Governmental Authority with respect to any failure or alleged
failure of the Company, any of the Subsidiaries, their respective assets or the
Business to comply with any such Law, License or Order have been received by the
Company, any of the Subsidiaries
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or any of the Stockholders, nor, to the Knowledge of the Company, any of the
Subsidiaries or any of the Stockholders, are any such notices proposed or
threatened. Schedule 2.19 contains a complete and correct list of all Material
Licenses and Orders applicable to, required of or binding on the Company, any of
the Subsidiaries, their respective assets or the Business, true and complete
copies of which (other than the FCC Licenses) previously have been delivered to
the Purchaser.
(b) The Company and each of the Subsidiaries hold the FCC Licenses and all
other Material Licenses necessary for or used in the operations of the Business,
and each of the FCC Licenses is, and all such other Material Licenses are, in
full force and effect. Schedule 2.19 contains a true and complete list of the
FCC Licenses currently in effect and all such other Material Licenses (showing,
in each case, the expiration date). Except as set forth in Schedule 2.19, no
application, action or proceeding is pending for the renewal or modification of
any of the FCC Licenses or any of such other Material Licenses, and no
application, action or proceeding is pending or, to the Company's, any of the
Subsidiaries' or any of the Stockholder's Knowledge, threatened that may result
in the denial of the application for renewal, the revocation, modification,
nonrenewal or suspension of any of the FCC Licenses or any of such other
Material Licenses, the issuance of a cease-and-desist order, or the imposition
of any administrative or judicial sanction with respect to the Business that may
Materially and adversely affect the rights of Purchaser, the Company or any of
the Subsidiaries under any such FCC Licenses or other Material Licenses. All
Material returns, reports and statements required to be filed by the Company or
any of the Subsidiaries with the FCC relating to the Business have been filed
and complied with and are complete and correct in all Material respects as
filed.
(c) Except as described in Schedule 2.19, there are no Material capital
expenditures that the Company, any of the Subsidiaries or any of the
Stockholders anticipates will be required to be made in connection with the
Company's or any of the Subsidiaries' respective assets or the Business as now
conducted in order to comply with any Law applicable to the Company, any of the
Subsidiaries, their respective assets or the Business as now conducted.
2.20 ENVIRONMENTAL. Except as set forth in Schedule 2.20 or the Environmental
Report:
(a) There is no Environmental Litigation (or any Litigation against any
Person whose Liability, or any portion thereof, for Environmental Matters or
under any Environmental Laws the Company or any of the Subsidiaries has or, to
the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, may have retained or assumed contractually or by operation of Law)
pending or, to the Knowledge of the Company, any of the Subsidiaries or any of
the Stockholders, threatened with respect to (i) the ownership, use, condition
or operation of the Business, the Real Property or any other asset of the
Company or any of the Subsidiaries or any asset formerly held for use or sale by
the Company or any of the Subsidiaries or any of their respective predecessors
or any of their respective current or former subsidiaries, or (ii) any violation
or alleged violation of or Liability or alleged Liability under any
Environmental Law or any Order related to Environmental Matters. To the
Knowledge of the Company, any of the Subsidiaries or any of the Stockholders,
there have been and there are no existing violations of (i) any Environmental
Law, or (ii) any Order related to Environmental Matters, with respect to the
ownership, use, condition or operation of the Business, the Real Property or any
other asset of the Company or any of the Subsidiaries or any asset formerly held
for use or sale by the Company or any of the Subsidiaries or any of their
respective predecessors or any of their respective current or former
subsidiaries. To the Knowledge of the Company, any of the Subsidiaries or any of
the Stockholders, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
any Environmental Matter, that could reasonably be expected to form the basis of
(i) any Environmental Litigation against the Company or any of the Subsidiaries,
or (ii) any Litigation against any
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Person whose Liability (or any portion thereof) for Environmental Matters or
under any Environmental Laws the Company or any of the Subsidiaries has or may
have retained or assumed contractually or by operation of Law. To the Knowledge
of the Company, any of the Subsidiaries or any of the Stockholders, none of the
Company, any of the Subsidiaries or any of their respective predecessors or any
of their respective current or former subsidiaries nor anyone Known to the
Company, any of the Subsidiaries or any of the Stockholders has used any assets
or premises of the Company or any of the Subsidiaries or any of their respective
predecessors or any of their respective current or former subsidiaries or any
part thereof for the handling, treatment, storage, or disposal of any Hazardous
Substances except in Material compliance with applicable Environmental Laws. The
disclosure of facts set forth in Schedule 2.20 shall not relieve the Company,
any of the Subsidiaries or any of the Stockholders of any of their respective
obligations under this Agreement.
(b) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, no release, discharge, spillage or disposal of any Hazardous
Substances has occurred or is occurring at any assets owned, leased, operated or
managed by the Company or any of the Subsidiaries or any of their respective
predecessors or any of their respective current or former subsidiaries or any
part thereof while or before such assets were owned, leased, operated or managed
by the Company or any of the Subsidiaries.
(c) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, no soil or water in, under or adjacent to any assets owned,
leased, operated or managed, directly or indirectly, by the Company or any of
the Subsidiaries or assets formerly held for use or sale by the Company or any
of the Subsidiaries or, in either case, any of their respective predecessors or
any of their respective current or former subsidiaries has been contaminated by
any Hazardous Substance while or before such assets were owned, leased, operated
or managed by the Company or any of the Subsidiaries or any of their respective
predecessors or any of their respective current or former subsidiaries.
(d) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, all waste containing any Hazardous Substances generated, used,
handled, stored, treated or disposed of (directly or indirectly) by the Company
or any of the Subsidiaries or any of their respective predecessors or any of
their respective current or former subsidiaries has been released or disposed of
in compliance with all applicable reporting requirements under any Environmental
Laws and there is no Environmental Litigation with respect to any such release
or disposal.
(e) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, all underground tanks and other underground storage facilities
presently or previously located at any Real Property owned, leased, operated or
managed by the Company or any of the Subsidiaries or any of their respective
predecessors or any of their respective current or former subsidiaries or any
such tanks or facilities located at any Real Property while such Real Property
was owned, leased, operated, or managed by the Company or any of the
Subsidiaries or any of their respective predecessors or any of their respective
current or former subsidiaries are listed together with the capacity and
contents (former and current) of each such tank or facility in Schedule 2.20. To
the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, none of such underground tanks or facilities is leaking or has
ever leaked, and none of the Company, any of the Subsidiaries or any of their
respective current or former subsidiaries holds any responsibility or Liability
for any underground tanks or underground facilities at any other location.
(f) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, all hazardous waste has been removed from all Real Property of the
Company and each of
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the Subsidiaries and each of their respective predecessors and each of their
respective current and former subsidiaries in Material compliance with
applicable Environmental Laws.
(g) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, the Company, each of the Subsidiaries and each of their respective
predecessors or any of their respective current or former subsidiaries has
complied with all applicable reporting requirements under all Environmental Laws
concerning the disposal or release of Hazardous Substances and none of the
Company, any of the Subsidiaries or any of their respective predecessors or any
of their respective current or former subsidiaries has made any such reports
concerning any Real Property of the Company or any of the Subsidiaries or
concerning the operations or activities of the Company, any of the Subsidiaries
or any of their respective predecessors or any of their respective current or
former subsidiaries.
(h) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, no building or other Improvement or any Real Property owned,
leased, operated or managed by the Company or any of the Subsidiaries contains
any asbestos-containing materials.
(i) To the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, without limiting the generality of any of the foregoing, (i) all
on-site and off-site locations where the Company, any of the Subsidiaries or any
of their respective predecessors or any of their respective current or former
subsidiaries has disposed or arranged for the disposal of Hazardous Substances
are identified in Schedule 2.20, (ii) none of the on-site or off-site locations
identified in Schedule 2.20 is listed on any federal, state or local government
lists of abandoned disposal sites or sites where Hazardous Substances have or
may have occurred, and (iii) no polychlorinated biphenyls ("PCB's") are used or
stored on or in any real property owned, leased, operated or managed by the
Company, any of the subsidiaries or any of their respective predecessors or any
of their respective current or former Subsidiaries, except in Material
compliance with applicable Environmental Laws.
(j) Schedule 2.20 contains a correct and complete list of all
environmental site assessments and other studies relating to the investigation
of the possibility of the presence or existence of any Environmental Matter with
respect to the Company, any of the Subsidiaries, the Business, any assets owned,
leased, operated or managed by the Company, any of the Subsidiaries or any of
their respective predecessors or any of their respective current or former
subsidiaries, and the Company has previously delivered to Purchaser a correct
and complete copy of each such assessment and study.
2.21 LITIGATION AND CLAIMS. Except as disclosed on Schedule 2.21:
(a) There is no Litigation pending or, to the Knowledge of the Company,
any of the Subsidiaries or any of the Stockholders, threatened and none of the
Company, any of the Subsidiaries or any of the Stockholders has any Knowledge of
any basis for any such Litigation or any facts or the occurrence of any event
which might give rise to any Litigation;
(b) No Litigation has been pending during the three (3) years prior to the
date hereof that, individually or in the aggregate resulted in an uninsured Loss
in excess of $150,000 or granted any injunctive relief against the Company or
any of the Subsidiaries; and
(c) Neither the Company nor any of the Subsidiaries has been advised by
any attorney representing it that there are any "loss contingencies" (as defined
in Statement of Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975 ("FASB
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5"), which would be required by FASB 5 to be disclosed or accrued in financial
statements of the Company or any of the Subsidiaries, were such financial
statements prepared as of the date hereof.
2.22 BENEFIT PLANS.
(a) Schedule 2.22 lists every Employee Benefit Plan of the Company and
each of the Subsidiaries. On or after September 26, 1980, none of the Company,
any of the Subsidiaries or any entity aggregated with the Company or any of the
Subsidiaries under Code Section 414 (for purposes of this Section, an "ERISA
Affiliate") has had an "obligation to contribute" (as defined in ERISA Section
4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and
(3)(37)(A)). No Employee Benefit Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(b) The Employee Benefit Plans listed in Schedule 2.22 have been or will
be made available to Purchaser for review, including correct and complete copies
of: (i) all trust agreements or other funding arrangements for such Employee
Benefit Plans (including insurance contracts), and all amendments thereto, (ii)
with respect to any such Employee Benefit Plans or amendments, all determination
letters, rulings, opinion letters, information letters, or advisory opinions
issued by the United States Internal Revenue Service, the United States
Department of Labor, or the Pension Benefit Guaranty Corporation after December
31, 1974, (iii) annual reports or returns, audited or unaudited Financial
Statements, actuarial valuations and reports, and summary annual reports
prepared for any Employee Benefit Plan with respect to the most recent three
plan years, and (iv) the most recent summary plan descriptions and any material
modifications thereto.
(c) Except as disclosed in Schedule 2.22, all the Employee Benefit Plans
and the related trusts subject to ERISA comply in all Material respects with and
have been administered in compliance in all Materials respects with, (i) the
applicable provisions of ERISA, (ii) all applicable provisions of the Code
relating to qualification and Tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended Tax consequences, (iii) all
applicable state or federal securities Laws, and (iv) all other applicable Laws
and collective bargaining agreements, and neither the Company nor any of the
Subsidiaries has received any notice from any Governmental Authority questioning
or challenging such compliance. All available determination letters and required
registrations under federal and state securities Laws ("Permits") for the
Employee Benefit Plans have been obtained, including, but not limited to, timely
determination letters on the qualification of the ERISA Plans and Tax exemption
of related trusts, as applicable under the Code, and all such Permits continue
in full force and effect. No event has occurred which will or could reasonably
be expected to give rise to disqualification of any such plan or loss of
intended Tax consequences under the Code or to any Tax under Section 511 of the
Code.
(d) Except as disclosed in Schedule 2.22, no oral or written
representation or communication with respect to any aspect of the Employee
Benefit Plans has been made to employees of the Company or any of the
Subsidiaries prior to the date hereof that is not in accordance with the written
or otherwise preexisting terms and provisions of such plans. None of the
Company, any of the Subsidiaries or any administrator or fiduciary of any
Employee Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner that could subject the
Company, any of the Subsidiaries or Purchaser to any direct or indirect Material
Liability (by indemnity or otherwise) for breach of any fiduciary, co-fiduciary
or other duty under ERISA. There are no unresolved claims or disputes under the
terms of, or in connection with, the Employee Benefit Plans other than claims
for benefits which are payable in the ordinary course and no Litigation has been
commenced with respect to any Employee Benefit Plan.
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(e) Except as disclosed in Schedule 2.22, all Employee Benefit Plan
documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary plan
descriptions issued with respect to the Employee Benefit Plans are correct and
complete in all Material respects, have been timely filed with the IRS and the
United States Department of Labor, have been timely distributed to participants
in the Employee Benefit Plans, and there have been no changes in the information
set forth therein.
(f) No "party in interest" (as defined in Section 3(14) of ERISA) or
"disqualified person" (as defined in Code Section 4975) of any Employee Benefit
Plan has engaged in any Material nonexempt "prohibited transaction" (described
in Code Section 4975 or ERISA Section 406). Except as disclosed in Schedule
2.22, there has been no (i) "reportable event" (as defined in Section 4043 of
ERISA), or event described in Sections 4041, 4042, 4062 (including ERISA Section
4062(e)), 4064, 4069 or 4063 of ERISA, or (ii) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which the Company or any of the Subsidiaries maintains or contributes to
or has maintained or contributed to. Except as disclosed in Schedule 2.22,
neither the Company nor any of the Subsidiaries has incurred any liability under
Title IV of ERISA, including any Liability that could arise under Title IV of
ERISA as a result of the Company's or any of the Subsidiaries' membership in a
"controlled group" as defined in ERISA ss.ss. 4001(a)(14) and 4001(b)(1).
(g) Except as disclosed in Schedule 2.22, for any ERISA Plan that is an
employee pension benefit plan as defined in ERISA ss. 3(2) ("ERISA Pension
Plan"), the fair market value of such Plan's assets equals or exceeds the
present value of all benefits (whether vested or not) accrued to date by all
present or former participants in such ERISA Pension Plan. For this purpose the
assumptions prescribed by the Pension Benefit Guaranty Corporation for valuing
plan assets or liabilities upon plan termination shall be applied and the term
"benefits" shall include the value of all benefits, rights and features
protected under Code ss. 411(d)(6) or its successors and any ancillary benefits
(including disability, shutdown, early retirement and welfare benefits) provided
under any such employee pension benefit plan and all "benefit liabilities" as
defined in ERISA Section 4001(a)(16). Since the date of the most recent
actuarial valuation, there has been (i) no Material change in the financial
position of an ERISA Pension Plan, (ii) no change in the actuarial assumptions
with respect to any ERISA Pension Plan, and (iii) no increase in benefits under
any ERISA Pension Plan as a result of ERISA Pension Plan amendments or changes
in any applicable regulation which is reasonably likely to have, individually or
in the aggregate, a Material effect on the funding status of such ERISA Pension
Plan. All contributions with respect to an Employee Benefit Plan of the Company
or of an ERISA Affiliate that is subject to Code Section 412 or ERISA Section
302 have been, or will be, timely made and there is no Lien or expected to be a
Lien under Code Section 412(n) or ERISA Section 302(f) or Tax under Code Section
4971. No ERISA Pension Plan of the Company or any of the Subsidiaries or of an
ERISA Affiliate has a "liquidity shortfall" as defined in Code Section
412(m)(5). No event described in Code Section 401(a)(29) has occurred or can
reasonably be expected to occur with respect to the Company or its ERISA
Affiliates. All premiums required to be paid under ERISA Section 4006 have been
paid by the Company and each of the Subsidiaries and by any Person aggregated
with the Company or any of the Subsidiaries under ERISA Sections 4001(a)(14) and
4001(b)(1).
(h) Neither the Company nor any of the Subsidiaries has, or maintains, an
Employee Benefit Plan providing welfare benefits (as defined in ERISA Section
3(1)) to employees after retirement or other separation of service except to the
extent required under Part 6 of Title I of ERISA or Code Section 4980B or their
successors. No Material Tax under Code Sections 4980B or 5000 has been incurred
with respect to any Employee Benefit Plan and no circumstances exist which could
reasonably be expected to give rise to such Taxes.
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(i) Except as disclosed on Schedule 2.22, neither the execution or
delivery of this Agreement or the Other Agreements nor the consummation of the
transactions contemplated by this Agreement will (1) entitle any current or
former employee of the Company or any of the Subsidiaries to severance pay,
unemployment compensation or any payment contingent upon a change in control or
ownership of the Company or any of the Subsidiaries, or (2) accelerate the time
of payment or vesting, or increase the amount, of any compensation due to any
such employee or former employee.
(j) Except as disclosed on Schedule 2.22, all individuals participating in
(or eligible to participate in) any Employee Benefit Plan maintained (or
contributed to) by the Company or any of the Subsidiaries are common-law
employees.
2.23 CONTRACTS.
(a) Description.
(i) Real Property. Schedule 2.23(a)(i) is a list or brief description
of all Material Contracts affecting or relating to the Real Property, including,
without limitation, Contracts evidencing Material Liens (including those
referred to in Schedule 2.11).
(ii) Personal Property. Schedule 2.23(a)(ii) is a list of all Contracts
affecting or relating to the Personal Property, including, without limitation,
Contracts evidencing Liens (including those referred to in Schedule 2.11) (other
than Contracts affecting rights in the Personal Property each of which does not
involve the payment by the Company or any of the Subsidiaries of more than
$25,000 per year).
(iii) Purchase Orders -- Non-Capital Assets. Schedule 2.23(a)(iii) is a
list of all outstanding Contracts of the Company or any of the Subsidiaries or
that relate to the Business, for the acquisition or sale of goods, assets or
services (other than purchase orders or other commitments for the acquisition of
capital assets), all of which were executed in the ordinary course of business
consistent with past practice of the Company or any of the Subsidiaries (other
than purchase orders and other commitments which do not exceed $25,000 each).
(iv) Purchase Orders -- Capital Assets. Schedule 2.23(a)(iv) is a list
of all outstanding Contracts of the Company or any of the Subsidiaries or that
relate to the Business, for the acquisition of capital assets and that were
executed in the ordinary course of business consistent with past practice of the
Company or any of the Subsidiaries (other than purchase orders and other
commitments which do not exceed $25,000 each).
(v) Sales. Schedule 2.23(a)(v) is a list or brief description of all
Contracts of the Company or any of the Subsidiaries or that relate to the
Business, for the sale of products or the performance of services by the Company
or any of the Subsidiaries and which exceed $5,000 each.
(vi) Employment; Other Affiliate Contracts. Schedule 2.23(a)(vi)
contains a list of all Material Contracts of the Company or any of the
Subsidiaries or that relate to the Business, with any employee, officer, agent,
consultant, distributor, dealer or Affiliate of the Company or any of the
Subsidiaries (other than those entered into in the ordinary course of business
consistent with past practice that are immediately terminable at will by the
Company or any of the Subsidiaries, as the case may be, without any Liability).
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(vii) Sales Representatives. Schedule 2.23(a)(vii) is a list of all
Material Contracts of the Company or any of the Subsidiaries or that relate to
the Business, with any agent, broker, sales representative of, or any Person in
a similar representative capacity for, the Company or any of the Subsidiaries
(other than those entered into in the ordinary course of business consistent
with past practice that are terminable within sixty (60) days by the Company or
any of the Subsidiaries, as the case may be, without Liability).
(viii) Powers of Attorney. Schedule 2.23(a)(viii) is a list of all
powers of attorney given by the Company or any of the Subsidiaries, whether
limited or general, to any Person continuing in effect.
(ix) Programming, Network Affiliation, Operating and Cable
Retransmission Agreements. Schedule 2.23(a)(ix) is a list of all network
affiliation agreements, operating agreements, cable retransmission agreements
and all programming agreements of the Company or that relate to the Business
(correct and complete copies of which previously have been delivered to
Purchaser), including for each of those agreements the amounts and availability
dates of programming and the dollar amount and schedule of payments thereunder.
(x) Barter and Trade Agreements. Schedule 2.23(a)(x) is a list of all
"barter" and "trade" agreements of the Company or any of the Subsidiaries or
that relate to the Business (correct and complete copies of which previously
have been delivered to Purchaser) and includes an estimate of the positive or
negative trade balances associated with each such agreement.
(xi) Any Other Contracts. Schedule 2.23(a)(xi) is a list or brief
description of any other Contracts of the Company or any of the Subsidiaries or
that relate to the Business and that: (A) payments provided for or actually made
thereunder by or to the Company or any of the Subsidiaries in any calendar year
exceed $25,000, (B) require performance by the Company or any of the
Subsidiaries of any obligation for a period of time extending beyond six (6)
months from the Closing Date or which is not terminable by the Company or any of
the Subsidiaries without penalty upon sixty (60) days or less notice, (C)
evidence, create, guarantee or service indebtedness of the Company or any of the
Subsidiaries, (D) establish or provide for any joint venture, partnership or
similar arrangement involving any of the Stockholders, the Company or any of the
Subsidiaries, or (E) guarantee or endorse the Liabilities of any other Person.
The lists in all Schedules referred to above are correct and complete as of
the date hereof unless otherwise noted thereon.
(b) Copies. Correct and complete copies of all the written Contracts, and
correct and complete descriptions of all oral Contracts, referred to in Section
2.23(a) have been delivered to Purchaser on or before the date hereof.
(c) No Default. None of the Company, any of the Subsidiaries or, to the
Knowledge of the Company, any of the Subsidiaries or any of the Stockholders,
any other party is in Default under any of the Contracts or any Liens referred
to in Section 2.23(a) and, to the Knowledge of the Company, any of the
Subsidiaries or any of the Stockholders, there is no basis for any claim of
Material Default under any of the foregoing.
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(d) Assurances. Each of the Contracts referred to in this Section 2.23 is
in full force and effect and constitutes a valid, legal and binding agreement of
the Company or the Subsidiaries party thereto and, to the Knowledge of the
Company, any of the Subsidiaries or any of the Stockholders, the other parties
thereto, enforceable in accordance with its terms except for bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other Laws
affecting creditors' rights generally, or general equitable principles
(regardless of whether considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing, and as otherwise set forth in
Schedule 2.23 . Neither the Company nor any of the Subsidiaries is a party to or
bound by any Contract or Contracts that, either separately or in the aggregate
has or will have a Material Adverse Effect with respect to the Company, any of
the Subsidiaries, their respective assets, or the Business. The continuation,
validity and effectiveness of each of the Contracts referred to in this Section
2.23 will not be affected in any way by the consummation of the transactions
contemplated by this Agreement.
2.24 SUPPLIERS AND CUSTOMERS. Schedule 2.24 sets forth each supplier to whom
payments were made that equaled or exceeded five percent (5%) of the Company's
and each of the Subsidiaries' aggregate operating expenses for the fiscal year
ended December 28, 1997 (the "Large Suppliers"). Schedule 2.24 sets forth each
customer or group of related customers from whom payments were received that
equaled or exceeded five percent (5%) of the Company's and each of the
Subsidiaries' aggregate gross sales for the fiscal year ended December 28, 1997
(the "Large Customers"). Except as reflected in Schedule 2.24, no Large Supplier
is a sole source of supply of any good or service to the Company or any of the
Subsidiaries. To the Knowledge of the Company, any of the Subsidiaries or any of
the Stockholders, the relationships of the Company and each of the Subsidiaries
with its Large Suppliers and Large Customers are good commercial working
relationships and, except as set forth on Schedule 2.24, neither (i) any of the
Large Suppliers or any of the Large Customers, nor (ii) any Large Supplier who
at any time during 1997 was or now is the sole source of supply of any good or
service, has terminated, or, to the Knowledge of the Company, any of the
Subsidiaries or any of the Stockholders, made any threat reasonably likely to be
acted upon to terminate, its relationship with the Company or any of the
Subsidiaries or has during the last twelve (12) months Materially decreased or
Materially limited, or, to the Knowledge of the Company, any of the Subsidiaries
or any of the Stockholders, made any threat reasonably likely to be acted upon
to Materially decrease or Materially limit, its services, supplies or materials
to the Company or any of the Subsidiaries or its usage or purchase of the goods
or services of the Company or any of the Subsidiaries, as the case may be. None
of the Company, any of the Subsidiaries or any of the Stockholders has any
Knowledge and belief that any of the Large Suppliers or any of the Large
Customers intends to terminate or otherwise modify adversely to the Company or
any of the Subsidiaries its relationship with the Company or any of the
Subsidiaries or to decrease or limit its services, supplies or materials to the
Company or any of the Subsidiaries or its usage or purchase of the goods or
services of the Company or any of the Subsidiaries, as the case may be, and the
acquisition of the Stock by Purchaser will not, to the Knowledge of the Company,
any of the Subsidiaries or any of the Stockholders adversely affect the
relationship of the Business or of the Company or any of the Subsidiaries with
any of the Large Suppliers or any of the Large Customers.
2.25 LABOR MATTERS. Schedule 2.25 contains a correct and complete list of all
employees of the Company and each of the Subsidiaries whose direct annual
compensation exceeds $50,000. Except as disclosed on Schedule 2.25, the
employment of all employees of the Company and each of the Subsidiaries is
terminable at will by the Company and each of the Subsidiaries, respectively,
without any penalty or severance obligation incurred by the Company or any of
the Subsidiaries. Except as set forth on Schedule 2.25 and other than in the
ordinary course of business consistent with past practices, neither the Company
nor any of the Subsidiaries will owe any amounts to any of its employees as of
the Closing Date, including, without limitation, any amounts incurred for wages,
bonuses, vacation pay, sick
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leave or any severance obligations other than amounts owed with respect to the
then current pay period. Except as and to the extent set forth in Schedule 2.25,
(i) neither the Company nor any of the Subsidiaries is a party to any union
agreement or collective bargaining agreement or work rules or practices agreed
to with any labor organization or employee association applicable to any
employees of the Company or any of the Subsidiaries and, to the Knowledge of the
Company, any of the Subsidiaries or any of the Stockholders, no attempt to
organize any of the employees of the Business has been made, proposed or
threatened in the past three years, (ii) neither the Company nor any of the
Subsidiaries is, or within the past three years has been, subject to any Equal
Employment Opportunity Commission charges or other claims of employment
discrimination made against it, (iii) no Wage and Hour Department investigations
have been made in the past 3 years of the Company or any of the Subsidiaries,
(iv) no labor strike, dispute, slowdown, stoppage or lockout is pending or, to
the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, threatened against or affecting the Company, any of the
Subsidiaries, their respective assets or the Business and during the past five
(5) years there has not been any such action, (v) no unfair labor practice
charge or complaint against the Company or any of the Subsidiaries is pending
or, to the Knowledge of the Company, any of the Subsidiaries or any of the
Stockholders, threatened before the National Labor Relations Board or any
similar Governmental Authority, and (vi) neither the Company nor any of the
Subsidiaries has received any formal notice (other than as set forth in Section
6.07 hereof) that any of the employees listed on Schedule 2.25 will terminate or
contemplates terminating his or her employment currently or at any time within
sixty (60) days after the Closing Date or will otherwise not be available to the
Company or any of the Subsidiaries. Since the enactment of the Worker Adjustment
and Retraining Notification Act (the "WARN Act"), neither the Company nor any of
the Subsidiaries has effectuated (a) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company or any of the
Subsidiaries; or (b) a "mass layoff" (as defined in the WARN Act) affecting any
site of employment or facility of the Company or any of the Subsidiaries; nor
has either the Company or any of the Subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law. Except as set
forth in Schedule 2.25, none of the Company's or any of the Subsidiaries'
employees has suffered an "employment loss" (as defined in the WARN Act) since
six (6) months prior to the date hereof.
2.26 BROKERS AND FINDERS. Except as set forth on Schedule 2.26, no finder or
any agent, broker or other Person acting pursuant to authority of the Company,
any of the Subsidiaries or any of the Stockholders is entitled to any commission
or finder's fee in connection with the transactions contemplated by this
Agreement.
2.27 INTERESTED TRANSACTIONS. Except as set forth in Schedule 2.27, neither
the Company nor any of the Subsidiaries is a party to any Contract or other
transaction with any Affiliate of the Company or any of the Subsidiaries, any
Related Party of any Affiliate of the Company or any of the Subsidiaries (other
than as a stockholder or employee of the Company or any of the Subsidiaries), or
any Person in which any of the foregoing (individually or in the aggregate)
beneficially or legally owns, directly or indirectly, five percent (5%) or more
of the equity or voting interests (other than, in each case, Contracts or
transactions between or among the Company and its Subsidiaries). Each of such
Contracts and other transactions described in the preceding sentence was
negotiated on an arm's length basis, contains pricing terms that reflected fair
market value at the time entered into and otherwise contains terms and
conditions comparable to those customarily contained in similar transactions
between unrelated parties. Except as described in Schedule 2.27 and other than
the Stockholders and their Affiliates, none of the Persons described in the
first sentence of this Section 2.27 owns, or during the last three (3) years has
owned, directly or indirectly, beneficially or legally, (individually or in the
aggregate) five percent (5%) or more of
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the equity or voting interests of any Person that competes with the Company, any
of the Subsidiaries or the Business.
2.28 OFFICERS, DIRECTORS AND BANK ACCOUNTS. Schedule 2.28 lists (i) the names
of all officers and directors of the Company and each of the Subsidiaries and
(ii) the name and location of each bank or other institution in which the
Company or any of the Subsidiaries has any deposit account or safe deposit box
in which the Company or any of the Subsidiaries has any interest or access, all
account numbers and names of all Persons authorized to draw thereon or to have
access thereto.
2.29 REPORTS AND FINANCIAL STATEMENTS. The Company has filed all reports
required to be filed with the Securities and Exchange Commission since January
1, 1997 (collectively, the "SEC Reports"). None of such SEC Reports, as of their
respective dates or as of the date of any amendment or supplement thereto,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading . Each
of the financial statements (including the related notes) included in the SEC
Reports presents fairly, in all Material respects, the consolidated financial
position and consolidated results of operations and cash flows of the Company
and its subsidiaries as of the respective dates or for the respective periods
set forth therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise noted therein, and subject, in the case of
the unaudited interim financial statements, to normal year-end adjustments and
any other adjustments described therein. All of such SEC Reports, as of their
respective dates, complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
2.30 STATEMENTS TRUE AND CORRECT. No representation or warranty made by the
Company or the Stockholders, nor any statement, certificate or instrument
furnished or to be furnished to Purchaser pursuant to this Agreement, the Other
Agreements or any other document, agreement or instrument referred to herein or
therein, including, without limitation, the Financial Statements, contains or
will contain any untrue statement of fact or omits or will omit to state a
Material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and the Stockholders
that:
3.01 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia, with the
corporate power and authority to carry on its business and to own, lease and
operate its assets.
3.02 CAPACITY AND VALIDITY. Purchaser has the full corporate power and
authority necessary to enter into and perform its obligations under this
Agreement and the Other Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements will have been approved
by all necessary action of the Board of Directors and stockholders of Purchaser
on or before Closing. This Agreement has been, and the Other Agreements will be
when executed and delivered, duly executed and delivered by duly authorized
officers of Purchaser, and the Agreement and each of the Other Agreements
constitutes, or will constitute when executed and delivered, the legal, valid
and binding obligation of
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Purchaser, enforceable against Purchaser in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or general equitable principles (regardless of
whether considered in a proceeding in equity or at law) or by an implied
covenant of good faith and fair dealing.
3.03 NO CONFLICT. Except as disclosed on Schedule 3.03, neither the
execution, delivery and performance of this Agreement and the Other Agreements
to which it is a party by Purchaser nor the consummation of the transactions
contemplated hereby or thereby, will (i) conflict with or result in a violation,
contravention or breach of any of the terms, conditions or provisions of the
Articles of Incorporation, as amended, or By-laws, as amended, of Purchaser,
(ii) result in a Default under, or require the consent or approval of any party
to, Contract or License of Purchaser, (iii) result in the violation of any Law
or Order, or (iv) result in the creation or imposition of any Lien.
3.04 BROKERS AND FINDERS. Except as set forth in Schedule 3.04, no finder or
any agent, broker or other Person acting pursuant to authority of Purchaser is
entitled to any commission or finder's fee in connection with the transactions
contemplated by this Agreement.
3.05 INVESTMENT REPRESENTATION. Purchaser is purchasing the Stock for
investment and is not acquiring the Stock with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act of 1933, as amended.
3.06 QUALIFICATION OF PURCHASER. Purchaser is fully qualified to assume
control and operation of the Stations and, to the best of Purchaser's knowledge
and belief, there exists no reason for the FCC to refuse to consent to the
assignment of the broadcast Licenses to Purchaser.
3.07 FINANCING. Purchaser has all necessary financial resources or has
secured a binding commitment for all financing necessary for Purchaser to
consummate the transactions contemplated by this Agreement.
3.08 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
Purchaser, nor any statement, certificate or instrument furnished or to be
furnished to the Company or the Stockholders pursuant to this Agreement, the
Other Agreements or any other document, agreement or instrument referred to
herein or therein, contains or will contain any untrue statement of fact or
omits or will omit to state a fact necessary to make the statements contained
therein not misleading.
ARTICLE IV
COVENANTS AND ADDITIONAL AGREEMENTS OF THE COMPANY, THE STOCKHOLDERS AND
PURCHASER
4.01 CONDUCT OF BUSINESS. Prior to the Closing Date, except with the prior
written consent of Purchaser and except as necessary to effect the transactions
contemplated in this Agreement, the Company shall, and the Stockholders shall
cause the Company and each of the Subsidiaries to:
(a) other than in connection with the WEAU Agreement, conduct the Business
in substantially the same manner as presently being conducted, and refrain from
entering into any transaction or Contract other than in the ordinary course of
business consistent with past practice, except as otherwise contemplated by this
Agreement;
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(b) confer on a regular and frequent basis with Purchaser to report
Material operational matters and to report the general status of ongoing
operations;
(c) notify Purchaser of any unexpected emergency or other change in the
normal course of the Business or the operation of the assets of the Company or
any of the Subsidiaries, and of any Litigation (or communications indicating
that the same may be contemplated), affecting the Company, any of the
Subsidiaries, the Business or any Material assets, and keep Purchaser fully
informed of such events and permit its representatives prompt access to all
materials prepared in connection therewith in each case where such emergency,
change, Litigation or other event could cause a Material Adverse Effect;
(d) except in the ordinary course of business consistent with past
practice, not make any Material capital expenditure;
(e) other than in connection with the WEAU Agreement, not take any action,
or omit to take any action, that would cause the representations and warranties
contained in Article II hereof to be incorrect or incomplete in any Material
respect;
(f) promptly notify Purchaser in writing of any Material Adverse Change
with respect to the Company, the Business or any of the Subsidiaries, or any
condition or event which threatens to result in a Material Adverse Change with
respect to the Company, the Business or any of the Subsidiaries;
(g) notwithstanding the $1,000,000 threshold contained in the definition
of Material Adverse Change in Article IX, use all reasonable efforts to promptly
remedy any adverse change, condition or event that causes or is reasonably
likely to cause any of the Stations to be or go off the air; and
(h) not make any agreement or commitment which will result in or cause to
occur a Default of any of the items contained in paragraphs (a) through (g)
above.
Notwithstanding any of the foregoing provisions of this Section 4.01, prior to
the Closing, control of the operation of the Stations shall remain exclusively
with the Company, any of the Subsidiaries and the Stockholders.
4.02 RIGHT OF INSPECTION; ACCESS. In order to allow Purchaser to conduct its
due diligence investigation, including, without limitation, environmental due
diligence, the Company shall give to Purchaser and its designees, during normal
working hours, full and free access to all of its and each of the Subsidiaries'
respective assets, Contracts, reports and other records and shall furnish to
Purchaser and its designees all additional financial, legal and other
information with respect to the Company, any of the Subsidiaries, their
respective assets and the Business that Purchaser may reasonably request. The
Company shall also allow and arrange for Purchaser and its designees free and
full access and opportunity, during normal business hours, to consult and meet
with the officers, directors, employees, attorneys, accountants and other agents
of the Company and each of the Subsidiaries. The Company shall instruct such
individuals to cooperate fully with Purchaser and its designees. Purchaser and
its designees shall have the right to make copies of any of the records referred
to above. In addition to the foregoing, the Company and the Stockholders shall
provide to Purchaser such evidence as Purchaser reasonably requires to verify
the accuracy of the representation and warranty contained in paragraph (m) of
Section 2.10. Within thirty (30) days after the date of this Agreement, the
Stockholders shall provide to Purchaser a letter from Arthur Andersen in form
and substance reasonably satisfactory to Purchaser and its counsel that verifies
that since
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April 20, 1995 there has not been an ownership change (within the meaning of
Section 382 of the Code) with respect to the Company. Further, at Closing, the
Stockholders shall provide to Purchaser an updated letter from Arthur Andersen
bringing current to the Closing Date the letter provided pursuant to the
foregoing sentence. Purchaser agrees to indemnify against and hold the Company,
the Subsidiaries and the Stockholders harmless from any claim for Liability,
costs, expenses (including reasonable attorneys' fees actually incurred),
damages or injuries arising out of or resulting from the inspection of the
Company by Purchaser or its agents.
4.03 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and until this Agreement is
terminated prior to Closing pursuant to Section 8.01 and other than in
connecetion with the WEAU Agreement, the Company and each of the Stockholders
shall, and shall cause each of the Subsidiaries to, deal exclusively with
Purchaser with respect to the sale of the Stock or any assets or properties of
the Company or any of the Subsidiaries. In addition, unless and until this
Agreement is terminated prior to Closing pursuant to Section 8.01 and other than
in connection with the WEAU Agreement, neither the Company nor any of the
Stockholders, acting in any capacity, shall, and the Company and the
Stockholders shall direct each of the Subsidiaries and the officers, directors,
limited partners, general partners (as applicable), financial advisors,
accountants and counsel of the Company, any of the Subsidiaries and the
Stockholders not to, either directly or indirectly, through the Company, any of
the Subsidiaries, any officer, director, employee, agent or otherwise, (a)
solicit, initiate or encourage submission of proposals or offers from any Person
relating to any purchase of the Stock, or any merger, sale of substantial
assets, or purchase of securities or similar transaction involving the Company
or any of the Subsidiaries, (b) participate in any discussions or negotiations
regarding, or, except as required by a legal or judicial process, furnish to any
other Person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to purchase the assets of the Company or any of the
Subsidiaries, or engage in a merger, purchase of substantial assets or purchase
of stock or similar transaction involving the Company or any of the
Subsidiaries, or (c) approve or undertake any such transaction. If,
notwithstanding the foregoing, the Company, the Stockholders or any of their
respective shareholders, directors, partners, officers, employees or agents
shall receive any written proposal or inquiry regarding any such transaction,
the Company and the Stockholders shall, and shall cause any of the Subsidiaries
to, promptly communicate to Purchaser the terms of any such proposal or offer
upon Knowledge or receipt of such written proposal or offer.
4.04 CONFIDENTIALITY. For a period of one (1) year from and after the date
hereof and other than in connection with the WEAU Agreement, each of Purchaser,
the Company and the Stockholders agrees that it will not, and will use
reasonable efforts to ensure that none of its representatives or Affiliates
will, use in the conduct of its business (except as contemplated by this
Agreement), or disclose to or file with any other Person (other than financing
sources, financial advisors, accountants and attorneys for the foregoing who
will be informed of the confidential nature of such information and who have a
need to know such information), (a) any confidential or non-public information
relating to the other parties to this Agreement or (b) the existence of this
Agreement or the fact of the transactions contemplated hereby, except (i) for a
disclosure that is required by Law or by a Governmental Authority or is
reasonably believed to be so required, including, without limitation,
disclosures to the FCC and the Department of Justice for purposes of obtaining
consents to the transactions contemplated hereby and disclosures to the
Securities and Exchange Commission and related public disclosures (in connection
with public offerings or otherwise); (ii) information that is ascertainable or
obtained from public or published information; (iii) information received from a
Third Party not known to the disclosing party to be under an obligation to keep
such information confidential; (iv) information independently developed by the
disclosing party; or (v) information disclosed to or filed with any Persons
necessary to obtaining the consents or the equity and debt financing relating to
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
(i)
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neither Purchaser nor its assignees, in the course of any investigation it shall
deem necessary and desirable in connection with the transactions contemplated by
this Agreement, shall be prohibited from discussing the Company, any of the
Subsidiaries, their respective assets and the Business with others having
business dealings with the Company or any of the Subsidiaries, and (ii) the
foregoing provisions of this Section 4.04 shall not apply to Purchaser or any of
its representatives or Affiliates after consummation of the transactions
contemplated hereby at the Closing with respect to information relating to the
Company or its Subsidiaries. If the transaction contemplated by this Agreement
is not consummated, each party will return or destroy as much of such written
information as the party furnishing such information may reasonably request.
4.05 CONSENTS AND APPROVALS. The Company and the Stockholders shall obtain
the waiver, consent and approval of all Persons whose waiver, consent or
approval (i) is required in order to consummate the transactions contemplated by
this Agreement, or (ii) is required by any Material Contract, Order, Law or
License to which the Company, any of the Subsidiaries or any of the Stockholders
is a party or subject on the Closing Date, and Purchaser shall cooperate with
the Company and the Stockholders in connection therewith. All written waivers,
consents and approvals obtained by the Company and the Stockholders shall be
produced at Closing in form and content reasonably satisfactory to Purchaser.
4.06 SUPPLYING OF FINANCIAL STATEMENTS. The Stockholders shall cause the
Company and each of the Subsidiaries to deliver to Purchaser within twenty (20)
days following the end of each month true and complete copies of all unaudited
monthly financial statements of the Company and each of the Subsidiaries for
each calendar month ending subsequent to the date hereof and prior to the
Closing Date in the format historically utilized internally by the Company and
each of the Subsidiaries. In addition, the Stockholders shall cause the Company
and each of the Subsidiaries to deliver to Purchaser as soon as practicable
consolidated audited financial statements as of December 28, 1997 and for the
year then ended.
4.07 QUALIFICATION AND CORPORATE EXISTENCE. The Company shall deliver to
Purchaser (i) certificates of the Secretary of State of the State of Delaware,
dated within ten (10) days prior to the Closing Date, stating that the Company
and each of the Subsidiaries are corporations in good standing under the laws of
the State of Delaware, and have paid all applicable franchise and other fees and
Taxes due to such state and (ii) certificates of the appropriate officials of
the states and foreign jurisdictions listed on Schedule 2.03, each dated not
more than ten (10) days prior to the Closing Date, stating that each of the
Company and each of the Subsidiaries is duly qualified and in good standing to
transact business as a foreign corporation as stated in Section 2.03 in each
such state and foreign jurisdiction and has paid all applicable franchise and
other fees and Taxes due to each such state and foreign jurisdiction.
4.08 PUBLIC ANNOUNCEMENTS. Upon execution of this Agreement, Purchaser and
the Company shall each issue a press release and public announcement regarding
this Agreement and the transactions contemplated hereby, each of which press
releases shall be reasonably satisfactory to the other party. Except as
permitted by the foregoing sentence or Section 4.04, none of Purchaser, the
Company, or the Stockholders, nor any of their representatives or Affiliates,
shall make any public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other parties
hereto unless required by Law or judicial process, in which case notification
shall be given to the other parties hereto prior to such disclosure.
4.09 CLOSING CONDITIONS. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to take, or cause to be taken, all
commercially reasonable actions to consummate the transactions contemplated by
this Agreement and to satisfy the conditions precedent to Closing set forth in
Article VI and Article VII of this Agreement.
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4.10 SUPPLEMENTS TO SCHEDULES. The Company and the Stockholders shall from
time to time after the date hereof, supplement or amend the Schedules referred
to in Article II with respect to any matter arising after the date hereof which,
if existing or occurring at the date hereof, would have been required to be set
forth or described in such Schedules. Purchaser may unilaterally extend the
Closing Date if necessary to allow Purchaser five (5) business days to review
such supplements to the Schedules prior to the Closing Date. If, in Purchaser's
reasonable determination, any such supplements to the Schedules reveal any
Material Adverse Change with respect to the Company, any of the Subsidiaries or
the Business, or any condition or event which threatens to result in a Material
Adverse Change with respect to the Company, any of the Subsidiaries or the
Business, Purchaser may, subject to the Stockholder's right to cure any such
Material Adverse Change or reduce the Purchase Price in the manner contemplated
herein, terminate this Agreement pursuant to Section 8.01.
4.11 CERTAIN TAX MATTERS.
(a) Purchaser, on the one hand, and the Company and the Stockholders, on
the other hand, shall provide the other parties to this Agreement, at the
expense of the requesting party, with such assistance as may reasonably be
requested by any of them in connection with the preparation of any Tax Return,
any audit or other examination by any Governmental Authority, or any judicial or
administrative proceedings relating to any Liability for Taxes, and each will
retain and provide the requesting party with any records or information that may
be relevant to any of the foregoing.
(b) The Stockholders shall cause the Company to prepare and file on or
before the due date therefor (including any extensions thereof) all Tax Returns
and amendments thereto required to be filed by the Company on or before the
Closing Date, and shall cause the Company to pay, or cause to be paid, all Taxes
(including estimated taxes) due on such Tax Return or which are otherwise
required to be paid at any time prior to or during such period. Such Tax Returns
shall be prepared in accordance with the most recent Tax practices as to
elections and accounting method. Purchaser shall have a reasonable opportunity
to review all Material Tax Returns and amendments thereto prior to their filing.
(c) The Stockholders shall not, without the prior written consent of
Purchaser, file or cause to be filed, any amended Tax Return or claim for Tax
Refund with respect to the Company or any Subsidiary for any period ending on or
before the Closing Date, to the extent that any such filing may affect the Tax
Liability of Purchaser, any of its Affiliates, the Company or any Subsidiary for
any period ending after the Closing Date (including, but not limited to, the
imposition of Tax deficiencies, the reduction of asset basis or cost
adjustments, the lengthening of any amortization or depreciation periods, the
denial of amortization or depreciation deductions, or the reduction of loss or
credit carryforwards).
(d) To the extent the Company, any of the Subsidiaries or any of the
Stockholders have Knowledge of the commencement or scheduling of any Tax audit,
the assessment of any Tax, the issuance of any notice of Tax due or any bill for
collection of any Tax, or the commencement or scheduling of any other
administrative or judicial proceeding with respect to the determination,
assessment or collection of any Tax of the Company or any of the Subsidiaries,
the Company, the Subsidiaries or the Stockholders shall provide prompt notice to
Purchaser of such matter, setting forth information (to the extent Known)
describing any asserted Tax Liability in reasonable detail and including copies
of any notice or other documentation received from the applicable Tax authority
with respect to such matter.
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(e) The Stockholders shall furnish Purchaser on or before the Closing Date
an affidavit, stating, under penalty of perjury, the transferor's United States
taxpayer identification number and that the transferor is not a foreign person,
pursuant to Section 1445(b)(2) of the Code.
(f) The Stockholders shall not agree to settle any Tax Liability or
compromise any claim with respect to Taxes which settlement or compromise may
affect the Liability for Taxes hereunder (or right to Tax benefit hereunder) of
the Company or Purchaser without Purchaser's prior written consent.
4.12 EXPENSES.
(a) Except as provided below, regardless of whether the transactions
contemplated by this Agreement are consummated, the Company shall be responsible
for all expenses and fees incurred by it and by the Stockholders in connection
with the transactions contemplated hereby and Purchaser shall be responsible for
all expenses and costs incurred by it in connection with the transactions
contemplated hereby.
(b) At the Closing the Stockholders shall pay out of the Purchase Price
all Taxes, if any, relating to the transfer of the Stock to Purchaser. The
Stockholders shall file all necessary documentation and Tax Returns required to
be filed by them with respect to such Taxes.
(c) The Company and Purchaser each shall pay one-half of the costs and
fees relating to the environmental report or reports required by Section 6.11.
(d) The Company and Purchaser shall each pay one-half of the initial
$45,000 filing fee associated with the pre-merger notifications and reports
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
(e) The Company shall bear the costs and expenses associated with delivery
of the title documents described in Section 6.13.
(f) The Company and Purchaser shall each pay one-half of the processing
fees incident to the filing of the transfer of control applications with the
FCC; provided that none of the Company or any Stockholder shall have any
obligation to pay any such processing fees arising out of the transactions
contemplated by Section 4.16.
4.13 FURTHER ASSURANCES. At any time and from time to time after the Closing,
the Company and the Stockholders shall, at the request of Purchaser, take any
and all actions necessary to fulfill their respective obligations hereunder, to
put Purchaser in actual possession and control of the Stock and execute and
deliver such further instruments of conveyance, sale, transfer and assignment,
and take such other actions necessary or desirable to effectuate, record or
perfect the transfer of the Stock to Purchaser free and clear of all Liens, to
confirm the title of the Stock to Purchaser, to assist Purchaser in exercising
rights relating thereto, or to otherwise effectuate or consummate any of the
transactions contemplated hereby.
4.14 DELIVERY OF BOOKS AND RECORDS. The Company and the Stockholders shall
deliver to Purchaser at the Closing all original documents, books and records
pertaining to the Company, the Business and the Stock, including without
limitation, the original minute books and stock record books. The Company and
the Stockholders may retain copies of any of the foregoing for their own use.
Without
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limiting the generality of the foregoing, the Company and the Stockholders shall
deliver to Purchaser at the Closing all documents and records relating to the
Intellectual Property, including without limitation, Certificates of
Registration for all letters patent, trademarks and service marks listed on
Schedule 2.14 and all such documents relating thereto.
4.15 FCC MATTERS.
(a) If not previously filed, then as promptly as practical following the
date of this Agreement, the Company and Purchaser or its assignees shall prepare
and file, and the Company shall cause each of the Subsidiaries as may be
required or necessary to prepare and file, with the FCC all necessary
applications for approval of the transactions contemplated in this Agreement. In
connection therewith, Purchaser or its assignees shall provide the information
requested by the FCC and take actions reasonably necessary to enable the FCC to
grant the applications including, but not limited to, authority for KGIN-TV to
operate as a satellite of KOLN-TV within the time periods contemplated by this
Agreement.
(b) The Company, each of the Stockholders and Purchaser further covenant
that from the date hereof until the Closing Date, without the prior written
consent of the Company or Purchaser, as the case may be, neither the Company nor
Purchaser shall take any action, and neither the Company nor any of the
Stockholders shall permit any of the Subsidiaries to take any action, that is
reasonably likely to adversely affect, or delay or interfere with, obtaining the
FCC Order or complying with or satisfying the terms thereof, including without
limitation, acquiring any new or increased attributable interest, as defined in
the FCC rules, in any media property, which property could not be held (without
the need for a waiver) in common control by the Company, any of the Subsidiaries
and Purchaser following the Closing Date.
4.16 COOPERATION TO EFFECT STATION EXCHANGE. Each of the Stockholders and the
Company shall use reasonable efforts to cooperate with Purchaser to effect a
tax-free, like-kind exchange of Purchaser's Albany station with a designated
purchaser of one or more of the Stations, provided that such exchange shall not
be likely to cause the Closing to occur subsequent to September 1, 1998.
Purchaser will bear all costs and expenses resulting from or arising out of any
such like-kind exchange. In addition, the identification of such purchaser, the
closing of such transaction or the execution of documents relating thereto shall
not be a condition to the Closing.
4.17 NAME CHANGE. Immediately following the Closing, Purchaser shall cause
the Company to take all action necessary to change its name to delete any
references to "Busse" therein.
4.18 SEVERANCE AND INCENTIVE PAYMENTS. The parties intend that either (i)
prior to the Closing, the Company will make payments to certain of its employees
or former employees pursuant to the Company's obligations to make severance or
incentive payments as a result of the transactions contemplated by this
Agreement and the WEAU Agreement, which payments include payments required under
the Company's Long Term Incentive Plan, the Company's Incentive Fee Plan, the
Amended and Restated Employment Agreement with Lawrence A. Busse and the Amended
and Restated Employment Agreement with James C. Ryan or (ii) the amount of such
obligations will be a reduction in the Purchase Price pursuant to Section 1.02.
Further, the Company and the Stockholders shall provide Purchaser with such
evidence as it shall reasonably require to verify that such payments were made
prior to the Closing or to verify the amount of such obligations for purposes of
calculating the Purchase Price.
4.19 HSR FILINGS. Purchaser, the Company and the Stockholders shall, as
promptly as practicable following the execution of this Agreement, and in
cooperation with each other, file with the
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Department of Justice and the Federal Trade Commission the premerger
notification forms and any other documents required under the HSR Act, and each
shall use its best efforts to obtain earliest termination of all waiting periods
under the HSR Act.
4.20 FURTHER ACTIONS. Subject to the terms and conditions of this Agreement,
the Stockholders, the Company and Purchaser each agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated in this Agreement and to satisfy the conditions
hereto, in each case in as prompt a manner as is reasonably possible.
ARTICLE V
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
None of the representations or warranties made by the parties in this
Agreement and the Other Agreements shall survive the Closing hereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Purchaser
may have hereunder as a result of any misrepresentation by, or breach of any
agreement, covenant or warranty of the Company or the Stockholders contained in
this Agreement or any Other Agreement, provided that the entering into and
consummation of the transactions contemplated by the WEAU Agreement shall not be
deemed to affect the following:
6.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by the Company and each of the Stockholders
shall be correct and complete in all Material respects at the close of business
on the day before the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the close of business
on the day before the Closing Date. The Company and each of the Stockholders
shall have each duly performed and complied in all Material respects with all of
the agreements, covenants, acts and undertakings to be performed or complied
with by it in all Material respects on or prior to the Closing Date. The Company
and each of the Stockholders shall have delivered to Purchaser a certificate or
certificates dated as of the Closing Date certifying as to the fulfillment of
the conditions of this Section 6.01. Notwithstanding any other provision of this
Agreement to the contrary, for purposes of this Section 6.01, all Materiality
qualifications contained in the representations and warranties made by the
Company and each of the Stockholders shall be disregarded and given no effect.
6.02 INCUMBENCY CERTIFICATE. Purchaser shall have received an appropriate
incumbency certificate or certificates, dated the Closing Date, certifying the
incumbency of all officers of the Company and the partners and agents of each
Stockholder who have executed this Agreement and the Other Agreements. The
certificate or certificates shall contain specimens of the signatures of each of
the officers, agents and partners whose incumbency is certified and shall be
executed by officers of the Company and partners of each Stockholder other than
officers and partners, respectively, whose incumbency is certified.
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6.03 CERTIFIED COPIES OF RESOLUTIONS. Purchaser shall have received copies,
certified by the duly qualified and acting Secretary or Assistant Secretary of
the Company and each corporate general partner of any Stockholder, of
resolutions adopted by the Board of Directors of the Company and each such
corporate partner of any Stockholder approving this Agreement and the Other
Agreements and the consummation of the transactions contemplated hereby and
thereby.
6.04 OPINIONS OF COUNSEL. Purchaser shall have received (i) a written opinion
of Cadwalader, Wickersham & Taft, counsel to the Stockholders, dated the Closing
Date and substantially in the form of Exhibit 6.04(i) attached hereto and made a
part hereof by this reference, (ii) a written opinion of Winston & Strawn,
counsel to the Company and the Subsidiaries, dated the Closing Date and
substantially in form and substance reasonably satisfactory to Purchaser and its
counsel, and (iii) a written opinion of Pepper & Corazzini L.L.P., FCC counsel
to the Company and each of the Subsidiaries, dated the Closing Date and
substantially in the form of Exhibit 6.04(ii) attached hereto and made a part
hereof by this reference.
6.05 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any Material
Adverse Change, or any condition or event that is reasonably likely to cause a
Material Adverse Change, with respect to the Business, the Company, or any of
the Subsidiaries, taken as a whole, or any of their respective assets from the
Balance Sheet Date. The Company and each of the Stockholders shall have
delivered to Purchaser a certificate or certificates dated as of the Closing
Date executed by the Company and each of the Stockholders certifying the
foregoing statement.
6.06 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall have
been instituted, threatened or proposed by a Third Party before any court or
Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
6.07 RESIGNATIONS. Purchaser shall have received a written instrument signed
by each of the directors and officers of the Company and each of the
Subsidiaries resigning from the Board of Directors and as corporate officers of
the Company and each of the Subsidiaries, as the case may be, effective the
Closing Date.
6.08 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments and
documents reasonably deemed necessary or appropriate by Purchaser or its
attorneys to effectuate this Agreement and to consummate the transactions
contemplated hereby shall have been approved by such attorneys in the exercise
of their reasonable discretion.
6.09 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to Purchaser
or its assignee, the Company or any of the Subsidiaries or Materially adverse to
the operations of the Business, to the acquisition of control of the Company or
any of the Subsidiaries by Purchaser as provided in this Agreement (whether or
not any appeal or request for reconsideration or review is pending or the time
for filing any appeal or request for reconsideration or review, or for any sua
sponte action by the FCC with similar effect has expired), including without
limitation, any Materially Adverse Condition on Purchaser's acquisition or
operation of any of the Stations. In addition, the FCC shall have granted the
renewal of the FCC Licenses of each Station for a full eight (8) year term from
the date of the expiration of the most recent License term.
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6.10 HART-SCOTT APPROVAL. All waiting periods applicable to this Agreement
and the transactions contemplated hereby under the Hart-Scott Act shall have
expired or been terminated.
6.11 ENVIRONMENTAL REPORT. Prior to the Closing, the Company shall (i)
provide to Purchaser a letter from the Nebraska Department of Environmental
Quality ("DEQ") stating that no further investigation or remediation will be
required by DEQ related to the two fuel oil underground storage tanks formerly
located at KOLN-TV, Lincoln, Nebraska and noted in Section 4.7 of the
Environmental Report related to KOLN-TV (the "Former USTs"), or (ii) cause, at
its sole cost and expense, Montgomery Watson or such other environmental
consultant as shall be reasonably acceptable to Purchaser (the "Environmental
Consultant") to perform an investigation, consistent with applicable state
regulations (the "Investigation"), of the area surrounding the Former USTs to
determine if contamination from the Former USTs is present. In the event
actionable levels of contamination related to the Former USTs are detected by
such Investigation, the Stockholders may, at their sole discretion, elect to
cause the Company to remediate the identified contamination in compliance with
applicable state regulations (the "Remedial Action"). In the event the
Stockholders do not make such election or the Remedial Action is not completed
on or prior to the Closing Date, then the Purchase Price shall be reduced by the
amount determined by the Environmental Consultant to be reasonably necessary to
complete the Remedial Action. The Company shall keep the Purchaser reasonably
apprised of the status of any Investigation or Remedial Action by providing the
Purchaser with Material documents and information relating to the performance of
the Investigation and Remedial Action.
Prior to the Closing, the Company shall further cause Montgomery Watson or
the Environmental Consultant to visually observe the towers located in Beaver
Crossing and Heartwell, Nebraska and provide a letter report summarizing such
observations to Purchaser and the Company. The Environmental Consultant's costs
to conduct such visual observations shall be paid equally by the Stockholders
and Purchaser. Such letter report shall state that no condition exists with
respect to the assets currently owned, leased, operated, or controlled by the
Company or any of the Subsidiaries that has resulted in, or would reasonably be
expected to result in, any violation of an Environmental Law, any Environmental
Claim, or in any Liability relating to an Environmental Matter. Such report
shall include an estimate of the total cost of remedying any such condition
reported therein. In the event such letter report indicates that such a
condition exists, the Stockholders shall remedy such condition to Purchaser's
reasonable satisfaction within ninety (90) days after the date of the
Stockholders' receipt of the final draft of the letter report. If such condition
cannot be remedied to Purchaser's reasonable satisfaction within ninety (90)
days, the Purchase Price shall be reduced by the amount determined by Montgomery
Watson or the Environmental Consultant to be reasonably necessary to remedy such
condition.
6.12 SALES AND USE TAXES. The Company shall have used its reasonable best
efforts to obtain and deliver to Purchaser an updated certificate or
certificates from the Michigan, Nebraska and Wisconsin Departments of Revenue
(or similar Taxing authorities) and from any other state and foreign Tax
authority listed on Schedule 2.03 stating that no sales or use Taxes are due
relating to the Business or the assets or operations of the Company or any of
the Subsidiaries prior to Closing.
6.13 TITLE DOCUMENTS. Purchaser shall have received an owner's title
insurance policy (or an endorsement to an existing owner's title insurance
policy) for each parcel of the Owned Real Property bringing forward the
effective date of the policy to the Closing Date subject to no additional Liens
other than Permitted Liens and reflecting no change in ownership of the Owned
Real Property. With respect to each parcel of Leased Real Property in which the
Company or its Subsidiaries is the lessee, except for the Kalamazoo, Michigan
leased property, Purchaser shall have received a leasehold insurance policy
insuring the Company or its Subsidiary, as the case may be, subject to no Liens
other than Permitted
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Liens and a current updated and revised ALTA survey. Each of the title insurance
policies described in this Section 6.13 shall contain zoning endorsements in
form and substance reasonably satisfactory to Purchaser and shall be paid
equally by the Stockholders and Purchaser. The title insurance commitment for
the owner's title insurance policy for the Owned Real Property in Eau Claire
County, Wisconsin will be endorsed to remove exception No. 21 relating to a
mortgage held by Chemical Bank so that the policy when issued will contain no
special exception for the mortgage held by Chemical Bank, but will reference the
estate, right, title and interest of Americus (successor to Sage Broadcasting)
and all parties claiming by, through or under Americus.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND STOCKHOLDERS
The obligations of the Company and the Stockholders to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
the Company and the Stockholders for purposes of consummating such transactions,
but without prejudice to any other right or remedy which the Company and the
Stockholders may have hereunder as a result of any misrepresentation by, or
breach of any agreement, covenant or warranty of Purchaser contained in this
Agreement or any Other Agreement:
7.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by Purchaser shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Purchaser shall have duly performed and complied with all of the
agreements, covenants, acts and undertakings to be performed or complied with by
it on or prior to the Closing Date. Purchaser shall have delivered to the
Company and the Stockholders a certificate dated as of the Closing Date
certifying as to the fulfillment of the conditions of this Section 7.01.
Notwithstanding any other provision of this Agreement to the contrary, for
purposes of this Section 7.01, all Materiality qualifications contained in the
representations and warranties made by Purchaser shall be disregarded and given
no effect.
7.02 INCUMBENCY CERTIFICATE. The Company and the Stockholders shall have
received an incumbency certificate or certificates dated the Closing Date
certifying the incumbency of all officers of Purchaser who have executed this
Agreement or documents in connection with this Agreement. The certificate or
certificates shall contain specimens of the signatures of each of the officers
whose incumbency is certified and shall be executed by an officer of Purchaser
other than an officer whose incumbency is certified.
7.03 CERTIFIED COPIES OF RESOLUTIONS. The Company and the Stockholders shall
have received copies, duly certified by the duly qualified and acting Secretary
or Assistant Secretary of Purchaser of resolutions adopted by the Board of
Directors of Purchaser approving this Agreement and the consummation of the
transactions contemplated herein.
7.04 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall have
been instituted, threatened or proposed by a Third Party before any court or
Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
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7.05 HART-SCOTT ACT APPROVAL. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott Act
shall have expired or been terminated.
7.06 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments and
documents reasonably deemed necessary or appropriate by the Stockholders or
their attorneys to effectuate this Agreement and to consummate the transactions
contemplated hereby shall have been approved by such attorneys in the exercise
of their reasonable discretion.
7.07 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to Purchaser
or its assignee, the Company or any of the Subsidiaries or Materially adverse to
the operations of the Business, to the acquisition of control of the Company or
any of the Subsidiaries by Purchaser as provided in this Agreement (whether or
not any appeal or request for reconsideration or review is pending or the time
for filing any appeal or request for reconsideration or review, or for any sua
sponte action by the FCC with similar effect has expired), including without
limitation, any Materially Adverse Condition on Purchaser's acquisition or
operation of any of the Stations. In addition, the FCC shall have granted the
renewal of the FCC Licenses of each Station for a full eight (8) year term from
the date of the expiration of the most recent License term.
7.08 OPINIONS OF COUNSEL. The Stockholders shall have received a written opinion
of either Heyman & Sizemore or Alston & Bird, LLP, counsel to Purchaser, dated
the Closing Date and in form and substance reasonably satisfactory to the
Stockholders and their counsel.
ARTICLE VIII
TERMINATION
8.01 CAUSES FOR TERMINATION. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date: (i)
by the mutual consent of the Stockholders and Purchaser; (ii) by Purchaser in
the event the conditions set forth in Article VI of this Agreement shall not
have been satisfied or waived by September 1, 1998; (iii) by the Stockholders in
the event that the conditions set forth in Article VII of this Agreement shall
not have been satisfied or waived by September 1, 1998; (iv) by Purchaser
pursuant to Sections 4.10 or 6.11; or (v) by Purchaser or the Stockholders at
any time if Purchaser determines in good faith that any Material Adverse Change,
or any condition or event that is reasonably likely to cause a Material Adverse
Change, with respect to the Company, any of the Subsidiaries, their respective
assets or the Business shall have occurred or been discovered since the Balance
Sheet Date.
8.02 NOTICE OF TERMINATION. Notice of termination of this Agreement as
provided for in this Article VIII shall be given by the party so terminating to
the other parties hereto in accordance with the provisions of Section 10.01.
8.03 EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement pursuant to Section
8.01 hereof, except for the confidentiality provisions of Section 4.04, which
shall remain in full force and effect, this Agreement shall become void and of
no further force and effect, and each party shall pay the costs and expenses
incurred by it in connection with this Agreement, and no party (or any of its
agents, counsel, representatives, Affiliates or assigns) shall be liable to any
other party for any Loss hereunder. Notwithstanding the foregoing sentence, if
the non-occurrence of Closing is the direct or indirect result of
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the Material Default by any of the Stockholders or the Company of any of their
or its respective obligations hereunder, including without limitation, any
Material inaccuracy in any representation or warranty made by such party, and
Purchaser has not Materially Defaulted on any of its obligations hereunder, such
Defaulting parties shall be fully liable to Purchaser for any such Default; and
if the non-occurrence of Closing is the direct or indirect result of the
Material Default by Purchaser of any of its obligations hereunder, and neither
the Company nor any of the Stockholders has Materially Defaulted on any of its
respective obligations hereunder, the LC shall be paid to the Stockholders as
liquidated damages to compensate the Stockholders and the Company for the
damages resulting to such parties from such Default. The parties agree that
actual damages pursuant to a breach of this Agreement prior to the Closing would
be impossible to measure. Receipt of the LC shall be the sole and exclusive
remedy that the Stockholders and the Company shall have in the event of such
Default and shall constitute a waiver of any and all other legal or equitable
rights or remedies that any of the Stockholders or the Company may otherwise
have as a result of Purchaser's Default, and that in consideration for the
receipt of the LC as liquidated damages, neither the Company nor any of the
Stockholders may obtain any further legal or equitable relief, including
specific performance, to which it may otherwise have been entitled and Purchaser
shall have no further Liability to the Company or any of the Stockholders as a
result of such Default or the non-occurrence of Closing.
(b) If the Closing does not occur due to the nonfulfillment of any of the
conditions in Article VI or for any other reason except Purchaser's Material
Default in the performance of any of its obligations under this Agreement,
neither the Company nor any of the Stockholders shall be entitled to the LC and,
promptly after the termination of this Agreement, the LC shall be returned to
Purchaser. In addition, the Company and each of the Stockholders acknowledge
that Purchaser, at its option (to be exercised in its sole and absolute
discretion), may elect to have the Agreement specifically performed by the
Company and the Stockholders in addition to receipt of the LC. The Company and
the Stockholders further acknowledge that any breach of this Agreement by either
the Company or any of the Stockholders will cause irreparable damage and injury
to Purchaser and that Purchaser will be entitled to injunctive relief in any
court of competent jurisdiction without the necessity of posting any bond.
(c) It is agreed that time is of the essence in the performance and
satisfaction of this Agreement and each of the conditions specified in Articles
VI and VII of this Agreement are Material for purposes of this Agreement.
8.04 RISK OF LOSS. The Stockholders assume all risk of condemnation,
destruction or Loss to the Company or any of the Subsidiaries due to fire or
other casualty from the date of this Agreement until the Closing.
ARTICLE IX
DEFINITIONS
The following terms (in their singular and plural forms as appropriate) as
used in this Agreement shall have the meanings set forth below unless the
context requires otherwise:
"ACCOUNTS RECEIVABLE" means, as of any applicable date, all accounts
receivable, notes receivable, and other monies due to the Company or any of the
Subsidiaries for sales and deliveries of goods, performance of services and
other business transactions (whether or not on the books of the Company or any
of the Subsidiaries).
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"AFFILIATE" of a Person means: (i) any Person directly, or indirectly through
one or more intermediaries, controlling, controlled by or under common control
with such Person; (ii) any officer, director, partner, employee, agent, or
representative or direct or indirect beneficial or legal owner of any 10% or
greater equity or voting interest of such Person (other than the limited
partners of the Stockholders); (iii) any entity for which a Person described in
(ii) above acts in any such capacity.
"AGREEMENT" means this Amended and Restated Stock Purchase Agreement,
including the Exhibits and Schedules delivered pursuant hereto or referred to
herein, each of which is incorporated herein by reference.
"BALANCE SHEET" means initially, the consolidated balance sheet of the
Company and each of the Subsidiaries as of September 28, 1997 and included in
the Financial Statements and, subsequently, when delivered to Purchaser pursuant
to Section 4.06, the consolidated audited balance sheet of the Company and each
of the Subsidiaries as of December 28, 1997 and included in the Financial
Statements.
"BALANCE SHEET DATE" means the date of the most recent Balance Sheet.
"BOARD OF DIRECTORS" means the Board of Directors of a Person that is a
corporation.
"BUSINESS" means the Company's business conducted through the Subsidiaries,
of owning and operating (i) the television station KOLN/TV, serving Lincoln,
Nebraska, (ii) the television station KGIN-TV, serving Grand Island, Nebraska
and (iii) the television station WEAU-TV serving Eau Claire and LaCrosse,
Wisconsin.
"BUSINESS DAY" means a day other than a Saturday, a Sunday, a day on which
banking institutions in the State of Georgia are authorized or obligated by law
or required by executive order to be closed, or a day on which the New York
Stock Exchange is closed.
"CERTIFICATE OF INCORPORATION" means the certificate of incorporation of a
Person that is a corporation.
"CLOSING" means the consummation of the transactions contemplated by this
Agreement.
"CLOSING DATE" means the fifth business day after issuance of the FCC Order
as set forth in Section 4.15 and the satisfaction (or waiver) of all of the
conditions set forth in Articles VI and VII, or such other date as the parties
may agree in writing; provided that the Closing Date may be extended to
September 1, 1998 by Purchaser as necessary to effectuate the tax-free like-kind
exchange described in Section 4.16; provided, further, that the provisions of
Section 4.16 shall continue to be in effect on the date of issuance of such FCC
Order.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"COMMITMENTS" means the owner's title insurance policy commitments contained
in Schedule 2.11.
"COMMON STOCK" means the $.01 par value per share common stock of the
Company.
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"COMPUTER SOFTWARE" means all computer programs, materials, tapes, source and
object codes, and all prior and proposed versions, releases, modifications,
updates, upgrades and enhancements thereto, as well as all documentation and
listings related thereto used in the Business.
"CONTRACT" means any written or oral contract, agreement, understanding,
lease, usufruct, license, plan, instrument, commitment, restriction,
arrangement, obligation, undertaking, practice or authorization of any kind or
character or other document to which any Person is a party or that is binding on
any Person or its securities, assets or business.
"DATABASES" means databases in all forms, versions and media, together with
prior and proposed updates, modifications and enhancements thereto, as well as
all documentation and listings therefor used in the Business, other than
Licenses.
"DEFAULT" means (1) a breach of, default under, or misrepresentation in or
with respect to any Contract or License, (2) the occurrence of an event that
with the passage of time or the giving of notice or both would constitute a
breach of, default under, or misrepresentation in any Contract or License, or
(3) the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right to terminate, change the
terms of or renegotiate any Contract or License or to accelerate, increase, or
impose any Liability under any Contract or License.
"EMPLOYEE BENEFIT PLAN" means collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan, or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by the Company, any of the Subsidiaries or any other ERISA
Affiliate thereof or under which the Company, any of the Subsidiaries, any other
ERISA Affiliate thereof has any Liability for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate. "Employee Benefit Plans" also means any plans, programs,
agreements, arrangements or understandings previously maintained by, sponsored
in whole or in part by, or contributed to by the Company, any of the
Subsidiaries, or any other ERISA Affiliate thereof that could result in a
Material Liability to the Company or any of the Subsidiaries, including but not
limited to, any plan covered by or subject to Title IV of ERISA. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee or director or independent
contractor of the Company, any of the Subsidiaries or any dependent or
beneficiary thereof, maintained by the Company or any of the Subsidiaries or
under which the Company or any of the Subsidiaries has any obligation or
Liability, whether or not they are or are intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii) written or
oral, (iii) funding or unfunded, (iv) actual or contingent, or (v) generally
available to any or all employees (or former employees) of the Company or any of
the Subsidiaries (or their beneficiaries or dependents), including, without
limitation, all incentive, bonus, deferred compensation, flexible spending
accounts, cafeteria plans, vacation, holiday, medical, disability, share
purchase or other similar plans, policies, programs, practices or arrangements.
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"ENVIRONMENTAL LAWS" means all Laws relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Substance, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substance.
"ENVIRONMENTAL LITIGATION" means any Litigation against the Company, any of
the Subsidiaries, or the Business or the assets of the Company, or any of the
Subsidiaries (including, without limitation, written notice or other written
communication by any Person alleging potential Liability for investigatory
costs, cleanup costs, private or governmental response or remedial costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based upon, or resulting from (i) any Environmental Matter or
(ii) any circumstances or state of facts forming the basis of any Liability or
alleged Liability under, or violation or alleged violation of, any Environmental
Law.
"ENVIRONMENTAL MATTER" means any matter or circumstances related in any
manner whatsoever to (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, or (ii) the
transportation, treatment, storage, recycling or other handling of any Hazardous
Substance or (iii) the placement of structures or materials into waters of the
United States, by, in each case, the Company, any of the Subsidiaries or any of
their respective predecessors or (iv) the presence of any Hazardous Substance,
including, but not limited to, asbestos, in any building, structure or workplace
or on any of the Real Property.
"ENVIRONMENTAL REPORT" means collectively, the three independent Phase I
environmental site assessment reports of the Company's and its Subsidiaries'
properties and operations prepared for the Company and Purchaser by Montgomery
Watson, each dated February, 1998.
"ERISA" means Employee Retirement Income Security Act of 1974, as amended.
"ERISA PLAN" means any Employee Benefit Plan which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or an "employee
welfare benefit plan" as that term is defined in Section 3(1) of ERISA.
"FCC" means the Federal Communications Commission.
"FINANCIAL STATEMENTS" means (i) the consolidated audited balance sheets of
the Company and each of the Subsidiaries as of December 29, 1996 and December
31, 1995 and, when delivered to Purchaser pursuant to Section 4.06, December 28,
1997 and the related statements of income and cash flows for the periods then
ended and (ii) the consolidated unaudited balance sheets of the Company and each
of the Subsidiaries as of the end of each fiscal quarter from December 30, 1996
through December 28, 1997 and the related statements of income for the months
then ended, and (iii) the monthly financial statements provided to Purchaser
pursuant to Section 4.06.
"GAAP" means generally accepted accounting principles as in effect in the
United States consistently applied.
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"GOVERNMENTAL AUTHORITY" means any federal, state, county, local, foreign or
other governmental or public agency, instrumentality, commission, authority,
board or body.
"HART-SCOTT ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, 15 U.S.C.A. ss. 18(a), as amended, and all Laws promulgated thereunder.
"HAZARDOUS SUBSTANCE" means (i) any hazardous substance, hazardous material,
hazardous waste pollutants, contaminants, or toxic substance (as those terms are
defined by any applicable Environmental Laws) and (ii) any petroleum, petroleum
products, or oil.
"IMPROVEMENTS" means all buildings, structures, fixtures and other
improvements included in the Real Property.
"INTELLECTUAL PROPERTY" means, with the exception of the Option Property, (i)
patents and pending patent applications together with any and all continuations,
divisions, reissues, extensions and renewals thereof, (ii) trade secrets,
know-how, inventions, formulae and processes, whether trade secrets or not,
(iii) trade names, trademarks, service marks, logos, assumed names, brand names
and all registrations and applications therefor together with the goodwill of
the business symbolized thereby, (iv) copyrights and any registrations and
applications therefor, (v) technology rights and licenses, and (vi) Computer
Software and all other intellectual property owned by, registered in the name
of, or used in the business of a Person or in which a Person or its business has
any interest.
"INVENTORY" means all inventories of raw materials, supplies, products,
advertising materials, and other inventories.
"IRS" means the Internal Revenue Service of the United States of America.
"KNOWLEDGE" or "KNOWN" with respect to the Company, any of the Subsidiaries
or any of the Stockholders, means collectively those facts that any of the
Company, any of the Subsidiaries, any of its officers and employees listed on
Exhibit IX hereto or Alfred C. Eckert, III, after due inquiry, knew or
reasonably should have known.
"LAW" means any code, law, order, ordinance, regulation, rule, or statute of
any Governmental Authority.
"LEASED PERSONAL PROPERTY" means all Personal Property that is not owned by
the Company or any of the Subsidiaries that the Company or any of the
Subsidiaries either uses or has the right to use.
"LEASED REAL PROPERTY" means all Real Property that is not owned in fee
simple by the Company or any of the Subsidiaries that the Company or any of the
Subsidiaries either occupies or uses or has the right to occupy or use.
"LIABILITY" means any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, expense (including, without limitation, costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills and
checks presented to banks for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
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"LICENSE" means any license, franchise, notice, permit, easement, right,
certificate, authorization, approval or filing with any Governmental Authority
or court to which any Person is a party or that is or may be binding on any
Person or its securities, property or business.
"LIEN" means any mortgage, lien, security interest, pledge, hypothecation,
encumbrance, restriction, reservation, encroachment, infringement, easement,
conditional sale agreement, title retention, lease, right of occupancy or other
security arrangement, defect of title, adverse right or interest, charge or
claim of any nature whatsoever of, on, or with respect to any property or
property interest.
"LITIGATION" means any action, administrative or other proceeding,
arbitration, cause of action, claim, complaint, criminal prosecution, inquiry,
hearing, investigation (governmental or otherwise), litigation, notice (written
or oral) before any Governmental Authority or arbitration, mediation or similar
tribunal by any Person alleging potential Liability or requesting information
relating to or affecting the Company or any of the Subsidiaries, their
respective assets (including, without limitation, Contracts relating to the
Company or any of the Subsidiaries), the Business or the transactions
contemplated by this Agreement.
"LOSS" means any and all direct or indirect demands, claims, payments,
obligations, recoveries, deficiencies, fines, penalties, interest, assessments,
actions, causes of action, suits, losses, diminution in the value of assets,
damages, punitive, exemplary or consequential damages (including, but not
limited to, lost income and profits and interruptions of business), liabilities,
costs, expenses (including without limitation, (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce rights to indemnification hereunder, and (iii) consultants'
fees and other costs of defense or investigation), and interest on any amount
payable to a Third Party as a result of the foregoing, whether accrued,
absolute, contingent, known, unknown, or otherwise as of the Closing Date or
thereafter.
"MATERIAL" or "MATERIALLY" shall be determined in light of the facts and
circumstances of the matter in question; provided, however, that any specific
monetary amount cited in this Agreement shall be deemed to determine materiality
in that instance.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any Material
adverse change in or effect on (i) the business, operations, assets,
Liabilities, financial condition or results of operations of such Person,
including, without limitation, any Material adverse change in the value of the
Company or its Subsidiaries, taken as a whole, (ii) the ability of such party to
consummate the transactions contemplated by this Agreement or any of the Other
Agreements to which it is or will be a party, or (iii) the ability of such party
to perform any of its obligations under this Agreement or any of the Other
Agreements to which it is or will be a party, if such change or effect
Materially impairs the ability of such party to perform its obligations
hereunder or thereunder, taken as a whole. If any change, condition or event
shall have an adverse effect or a reasonably likely adverse effect of less than
$1,000,000, no Material Adverse Change or Material Adverse Effect will be deemed
to have occurred. If any change, condition or event shall have an adverse effect
or a reasonably likely adverse effect of $1,000,000 or more but less than
$7,500,000, no Material Adverse Effect will be deemed to have occurred and the
Stockholders shall have the option to either (i) cure such change, condition or
event or (ii) reduce the Purchase Price by the amount of the adverse effect
caused by such change, condition or event. If any change, condition or event
shall have an adverse effect or a reasonably likely adverse effect of $7,500,000
or more, either Purchaser or the Stockholders may terminate this Agreement at
their discretion. Neither a Material Adverse Change nor a
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Material Adverse Effect shall be deemed to result from an adverse change in
general economic conditions, industry conditions or general conditions in the
markets in which the Company operates. Further, notwithstanding the $1,000,000
threshold contained in the third sentence of this definition, the Stockholders
shall cause the Company to use all reasonable efforts to promptly remedy any
adverse change, condition or event that causes or is reasonably likely to cause
any of the Company's stations to be or go off the air.
"OPTION PROPERTY" means all of the Personal Property subject to Lawrence A.
Busse's option to purchase under that certain letter agreement dated the date
hereof, 1998 between Mr. Busse and the Company, a correct and complete list of
each item of Option Property is contained on Exhibit X.
"ORDER" means any decree, injunction, judgment, order, ruling, writ, quasi-
judicial decision or award or administrative decision or award of any federal,
state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority to which any Person is a party
or that is or may be binding on any Person or its securities, assets or business
(including, in the case of the FCC, a public notice or other written
authorization).
"OTHER AGREEMENTS" means the agreements, documents, assignments and
instruments to be executed and delivered by the Company or the Stockholders
pursuant to this Agreement.
"OWNED REAL PROPERTY" means all Real Property other than Leased Real
Property.
"PERMITTED LIENS" means (i) Liens for current real property Taxes not yet due
and payable, (ii) non-monetary Liens that do not affect the value or use of any
parcel of Real Property, (iii) Liens related to the Company's 11-5/8% Senior
Secured Notes due 2000 referred to in Section 1.02 and (iv) all Special
Exceptions (but not General Exceptions) to title contained in the Commitments.
"PERSON" means a natural person or any legal, commercial or governmental
entity, such as, but not limited to, a business association, corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, or any person acting in a representative capacity.
"PERSONAL PROPERTY" means collectively and with the exception of the Option
Property all of the personal property or interests therein owned, leased, used
or controlled by the Company or any of the Subsidiaries including, without
limitation, machinery, tools, equipment (including office equipment and
supplies), furniture, furnishings, fixtures (including trade fixtures),
vehicles, leasehold improvements, all other tangible personal property other
than Inventory (which is specifically excluded from the Personal Property).
"PREFERRED STOCK" means the $.01 par value per share Series A preferred stock
of the Company.
"PUC LAWS" means public utility commission laws, rules and regulations.
"PURCHASE PRICE" means the total consideration to be paid to the Stockholders
by Purchaser for the purchase of the Stock pursuant to this Agreement and which
shall be paid in accordance with Section 1.02 of this Agreement.
"REAL PROPERTY" means collectively all the real property or interests therein
owned, leased, occupied, or used by the Company or any of the Subsidiaries as of
the date of this Agreement, together
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with (i) all rights, easements, tenements, hereditaments, appurtenances,
privileges, immunities, mineral rights and other benefits belonging or
appertaining thereto which run with said real property and (ii) all right, title
and interest, if any, of the Company or any of the Subsidiaries in and to (A)
any land lying in the bed of any street, road, avenue, open or proposed,
adjoining said real property, (B) any award made or to be made in lieu of the
land described in the preceding clause (A), (C) any unpaid award for damage to
said real property, and (D) all strips and rights-of-way abutting or adjoining
said real property, if any. The Real Property includes, without limitation, all
buildings, structures, fixtures and other improvements located on the land
described in the preceding sentence.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement dated May 3, 1995 entered into by the Company and KOLN/KGIN, Inc., as
amended.
"RELATED PERSON" means, with regard to any natural Person, its spouse,
parent, sibling, child, aunt, uncle, niece, nephew, in-law, grandparent and
grandchild (including by adoption) and any trustees or other fiduciaries for the
benefit of such relatives.
"STOCK" means the Common Stock and the Preferred Stock.
"SUBSIDIARY" means any of WEAU License, Inc., a Delaware corporation, or its
successor; KOLN/KGIN, Inc., a Delaware corporation, and KOLN/KGIN License, Inc.,
a Delaware corporation.
"TAX" or "TAXES" means any federal, state, county, local, foreign and other
taxes, assessments, charges, fees, and impositions, including interest and
penalties thereon or with respect thereto, whether disputed or not, and
including Liabilities relating to unclaimed property.
"TAX RETURNS" means all returns, reports, filings, declarations and
statements relating to Taxes that are required to be filed, recorded, or
deposited with any Governmental Authority, including any attachment thereto or
amendment thereof.
"THIRD PARTY" or "THIRD PARTIES" means any Person that is not Purchaser, the
Company, the Stockholders, the Subsidiaries or an Affiliate of any of the
foregoing.
"UNDISCLOSED LIABILITIES" means any Liability that is not fully reflected or
reserved against in the Financial Statements or fully disclosed in a Schedule to
this Agreement.
ARTICLE X
MISCELLANEOUS
10.01 NOTICES.
(a) All notices, requests, demands and other communications hereunder
shall be (i) delivered by hand, (ii) mailed by registered or certified mail,
return receipt requested, first class postage prepaid and properly addressed,
(iii) sent by national overnight courier service, or (iv) sent by facsimile,
graphic scanning or other telegraphic communications equipment to the parties or
their assignees, addressed as follows:
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To the Company: Busse Broadcasting Corporation
141 East Michigan Avenue
Suite 300
Kalamazoo, Michigan 49007
Attention: Mr. Lawrence A. Busse
Telephone: (616) 388-8019
Facsimile: (616) 388-6089
with copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601-9703
Attention: Steven J. Gavin, Esquire
Telephone: (312) 558-5600
Facsimile: (312) 558-5700
To the Stockholders: SSP, Inc.
c/o Greenwich Street Capital Partners, Inc.
388 Greenwich Street -- 36th Floor
New York, New York 10013
Attention: Mr. Alfred C. Eckert, III
Telephone: (212) 816-9506
Facsimile: (212) 816-0166
with copies to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Jonathan M. Wainwright, Esquire
Telephone: (212) 504-6122
Facsimile: (212) 504-6666
and to: Morgan, Stanley & Co. Incorporated
1585 Broadway -- 35th Floor
New York, New York 10036
Attention: Mr. Michael F. Wyatt
Telephone: (212) 761-4000
Facsimile: (212) 761-0501
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To Purchaser: Gray Communications Systems, Inc.
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3099
Attention: Mr. Robert S. Prather, Jr.
Telephone: (404) 266-8333
Facsimile: (404) 261-9607
with copies to: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Stephen A. Opler, Esquire
Telephone: (404) 881-7693
Facsimile: (404) 881-4777
(b) All notices, requests, instructions or documents given to any party in
accordance with this Section 10.01 shall be deemed to have been given (i) on the
date of receipt if delivered by hand, overnight courier service or if sent by
facsimile, graphic scanning or other telegraphic communications equipment or
(ii) on the date three (3) business days after depositing with the United States
Postal Service if mailed by United States registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed.
(c) Any party hereto may change its address specified for notices herein
by designating a new address by notice in accordance with this Section 10.01.
10.02 ENTIRE AGREEMENT. This Agreement, the Schedules, the Exhibits and the
Other Agreements constitute the entire agreement between the parties relating to
the subject matter hereof and thereof and supersede all prior oral and written,
and all contemporaneous oral, negotiations, discussions, writings and agreements
relating to the subject matter of this Agreement, including without limitation
that certain Stock Purchase Agreement dated February 13, 1998 by and among Busse
Broadcasting Corporation, South Street Corporate Recovery Fund I, L.P.,
Greycliff Leveraged Fund 1993, L.P., South Street Leveraged Corporate Recovery
Fund, L.P., South Street Corporate Recovery Fund I (International), L.P. and
Gray Communications Systems, Inc.
10.03 MODIFICATIONS, AMENDMENTS AND WAIVERS. The failure or delay of any
party at any time or times to require performance of any provision of this
Agreement shall in no manner affect its right to enforce that provision. No
single or partial waiver by any party of any condition of this Agreement, or the
breach of any term, agreement or covenant or the inaccuracy of any
representation or warranty of this Agreement, whether by conduct or otherwise,
in any one or more instances shall be construed or deemed to be a further or
continuing waiver of any such condition, breach or inaccuracy or a waiver of any
other condition, breach or inaccuracy.
10.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties hereto, and their
respective estates, successors, legal or personal representatives, heirs,
distributees, designees and assigns, but no assignment shall relieve any party
of the obligations hereunder. This Agreement or any portion thereof cannot be
assigned by any party without the prior written consent of the other parties
hereto; provided, however, that Purchaser may assign this Agreement with the
prior written consent of the Company and the Stockholders, to an Affiliate of
Purchaser; provided, further, such assignment shall not relieve Purchaser of its
obligations hereunder.
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With respect to such assignments, all representations, warranties, covenants and
indemnification rights shall be binding upon, and inure to the benefit of, the
assignee or assignees as if such representations, warranties, covenants and
indemnification rights were made directly between the original parties to this
Agreement.
10.05 TABLE OF CONTENTS; CAPTIONS; REFERENCES. The table of contents and the
captions and other headings contained in this Agreement as to the contents of
particular articles, sections, paragraphs or other subdivisions contained herein
are inserted for convenience of reference only and are in no way to be construed
as part of this Agreement or as limitations on the scope of the particular
articles, sections, paragraphs or other subdivisions to which they refer and
shall not affect the interpretation or meaning of this Agreement. All references
in this Agreement to "Section" or "Article" shall be deemed to be references to
a Section or Article of this Agreement.
10.06 GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the substantive Laws of the State of New York,
without respect to the Laws related to choice or conflicts of Laws.
10.07 PRONOUNS. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
10.08 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good faith to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as practicable to
that of the invalid, illegal or unenforceable provisions.
10.09 REMEDIES NOT EXCLUSIVE. Except for the liquidated damages provided for
in Section 8.03(a), no remedy conferred by any of the specific provisions of
this Agreement is intended to be, nor shall be, exclusive of any other remedy
available at law, in equity or otherwise.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but all of such counterparts
shall together constitute one and the same instrument.
10.11 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Purchaser, the Company,
or the Stockholders whether under any rule of construction or otherwise. No
party to this Agreement shall be considered the draftsman. On the contrary, this
Agreement has been reviewed, negotiated and accepted by all parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and intentions
of all parties hereto.
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10.12 EXCLUSIVE REMEDY.. The parties acknowledge and agree that this
Agreement shall provide the exclusive remedies of Purchaser, the Stockholders,
the Company and the Subsidiaries with respect to the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, on and
after the Closing, Purchaser, the Stockholders, the Company and the Subsidiaries
hereby waive any statutory, equitable or common law rights or remedies relating
to any environmental health and safety matters, including without limitation,
any such matters arising under any Environmental , Health and Safety
Requirements, the Comprehensive Environmental Response, Compensation and
Liability Act or any analogous state law.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the Company, each of the Stockholders and Purchaser have
duly executed this Agreement under seal as of the date first above written.
THE COMPANY
BUSSE BROADCASTING CORPORATION
By: /s/ James C. Ryan
-------------------
Name: James C. Ryan
Title: Treasurer
THE STOCKHOLDERS
SOUTH STREET CORPORATE RECOVERY FUND I, L.P.
By: SSP Advisors, L.P., its general partner
By: SSP, Inc., its general partner
By: /s/ Alfred C. Eckert III
------------------------
Name: Alfred C. Eckert III
Title: President
GREYCLIFF LEVERAGED FUND 1993, L.P.
By: SSP Partners, L.P., its general partner
By: SSP, Inc., its general partner
By: /s/ Alfred C. Eckert III
------------------------
Name: Alfred C. Eckert III
Title: President
SOUTH STREET LEVERAGED CORPORATE RECOVERY
FUND, L.P.
By: SSP Partners, L.P., its general partner
By: SSP, Inc., its general partner
By: /s/ Alfred C. Eckert III
------------------------
Name: Alfred C. Eckert III
Title: President
<PAGE>
SOUTH STREET CORPORATE RECOVERY FUND I
(INTERNATIONAL) L.P.
By: /s/ Alfred C. Eckert III
--------------------------
Alfred C. Eckert III, as Director of SSP (International),
Inc., as General Partner of SSP (International) Partners,
L.P., as General Partner of South Street Corporate
Recovery Fund I (International), L.P.
PURCHASER
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /s/ Robert A. Beizer
--------------------
Name: Robert A. Beizer
Title: Secretary
ASSET PURCHASE AGREEMENT
BY AND AMONG
BUSSE BROADCASTING CORPORATION,
WEAU LICENSE, INC.
AND
COSMOS BROADCASTING CORPORATION
DATED AS OF JUNE 22, 1998
<PAGE>
CONTENTS
Background ................................................................ 1
Agreement ................................................................. 1
ARTICLE I
SALE OF ASSETS
1.01 Purchase of Assets by Purchaser ..................................... 1
1.02 Purchase Price for the Assets ....................................... 2
1.03 Closing; Effectiveness of Closing; Deliveries ....................... 2
ARTICLE II
ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS
2.01 General ............................................................. 2
2.02 Assumption of the Liabilities of the Business ....................... 3
2.03 No Intention to Benefit Third Parties ............................... 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY THE SELLERS
3.01 Capacity and Validity ............................................... 3
3.02 Organization ........................................................ 3
3.03 No Conflict ......................................................... 4
3.04 Financial Statements ................................................ 4
3.05 Absence of Undisclosed Liability .................................... 4
3.06 Absence of Changes .................................................. 4
3.07 Tax Matters ......................................................... 5
3.08 Title to Assets; Encumbrances; Condition ............................ 6
3.09 Real Property ....................................................... 7
3.10 Personal Property ................................................... 8
3.11 Intellectual Property ............................................... 8
3.12 Computer Software and Databases ..................................... 8
3.13 Insurance ........................................................... 9
3.14 Bonds, Letters of Credit and Guarantees ............................. 9
3.15 Compliance with Law ................................................. 9
3.16 Environmental ....................................................... 10
3.17 Litigation and Claims ............................................... 12
3.18 Benefit Plans ....................................................... 12
3.19 Contracts ........................................................... 14
3.20 Suppliers and Customers ............................................. 16
3.21 Labor Matters ....................................................... 17
3.22 Brokers and Finders ................................................. 17
3.23 Interested Transactions ............................................. 17
3.24 Officers, Directors and Bank Accounts ............................... 18
3.25 Statements True and Correct ......................................... 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.01 Organization ........................................................ 18
4.02 Capacity and Validity ............................................... 18
4.03 No Conflict ......................................................... 18
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4.04 Brokers and Finders ................................................. 19
4.05 Qualification of Purchaser .......................................... 19
4.06 Financing ........................................................... 19
4.07 Statements True and Correct ......................................... 19
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS OF THE SELLERS AND PURCHASER
5.01 Conduct of Business ................................................. 19
5.02 Right of Inspection; Access ......................................... 20
5.03 Other Offers and Exclusive Dealing .................................. 20
5.04 Confidentiality ..................................................... 20
5.05 Consents and Approvals .............................................. 21
5.06 Supplying of Financial Statements ................................... 21
5.07 Qualification and Corporate Existence ............................... 21
5.08 Public Announcements ................................................ 21
5.09 Closing Conditions .................................................. 22
5.10 Supplements to Schedules ............................................ 22
5.11 Certain Tax Matters ................................................. 22
5.12 Expenses ............................................................ 22
5.13 Further Assurances .................................................. 23
5.14 Delivery of Books and Records ....................................... 23
5.15 FCC Matters ......................................................... 23
5.16 Third Party Designation ............................................. 23
5.17 HSR Filings ......................................................... 23
5.18 Further Actions ..................................................... 23
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
6.01 Survival of Representations and Warranties; Acknowledgment of
Purchaser Reliance .................................................. 24
6.02 Indemnification by Sellers .......................................... 24
6.03 Indemnification by Purchaser ........................................ 24
6.04 Indemnification Payments ............................................ 25
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
7.01 Representations True and Covenants Performed at Closing ............. 25
7.02 Incumbency Certificate .............................................. 25
7.03 Certified Copies of Resolutions ..................................... 26
7.04 Opinions of Counsel ................................................. 26
7.05 No Material Adverse Change .......................................... 26
7.06 No Injunction, Etc .................................................. 26
7.07 Approval of Legal Matters ........................................... 26
7.08 FCC Approvals ....................................................... 26
7.09 Hart-Scott Approval ................................................. 26
7.10 Sales and Use Taxes ................................................. 26
7.11 Title Documents ..................................................... 27
7.12 Title Documents ..................................................... 27
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
8.01 Representations True and Covenants Performed at Closing ............. 27
8.02 Incumbency Certificate .............................................. 27
8.03 Certified Copies of Resolutions ..................................... 27
8.04 No Injunction, Etc .................................................. 28
8.05 Hart-Scott Act Approval ............................................. 28
8.06 Approval of Legal Matters ........................................... 28
8.07 FCC Approvals ....................................................... 28
ARTICLE IX
TERMINATION
9.01 Cause for Termination ............................................... 28
9.02 Notice of Termination ............................................... 28
9.03 Effect of Termination ............................................... 29
9.04 Risk of Loss ........................................................ 29
ARTICLE X
DEFINITIONS
Affiliate ................................................................. 29
Agreement ................................................................. 29
Assets .................................................................... 29
Assumed Liabilities ....................................................... 30
Balance Sheet ............................................................. 30
Balance Sheet Date ........................................................ 30
Board of Directors ........................................................ 30
Business .................................................................. 30
Business Day .............................................................. 30
Certificate of Incorporation .............................................. 30
Closing ................................................................... 30
Closing Date .............................................................. 30
Code ...................................................................... 30
Commitments ............................................................... 30
Computer Software ......................................................... 31
Contract .................................................................. 31
Databases ................................................................. 31
Default ................................................................... 31
Employee Benefit Plan ..................................................... 31
Environmental Laws ........................................................ 31
Environmental Litigation .................................................. 32
Environmental Matter ...................................................... 32
Environmental Report ...................................................... 32
ERISA ..................................................................... 32
ERISA Plan ................................................................ 32
Exchange Agreement ........................................................ 32
FCC ....................................................................... 32
Financial Statements ...................................................... 32
GAAP ...................................................................... 32
Governmental Authority .................................................... 33
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Hart-Scott Act ............................................................ 33
Hazardous Substance ....................................................... 33
Improvements .............................................................. 33
Intellectual Property ..................................................... 33
IRS ....................................................................... 33
Knowledge ................................................................. 33
Law ....................................................................... 33
Leased Personal Property .................................................. 33
Leased Real Property ...................................................... 33
Liability ................................................................. 33
License ................................................................... 33
Lien ...................................................................... 33
Litigation ................................................................ 34
Loss ...................................................................... 34
Material or Materially .................................................... 34
Material Adverse Change or Material Adverse Effect ........................ 34
Order ..................................................................... 34
Other Agreements .......................................................... 35
Owned Real Property ....................................................... 35
Permitted Liens ........................................................... 35
Person .................................................................... 35
Personal Property ......................................................... 35
PUC Laws .................................................................. 35
Purchase Price ............................................................ 35
Purchaser ................................................................. 35
Real Property ............................................................. 35
Related Person ............................................................ 36
Retained Assets ........................................................... 36
Retained Liabilities ...................................................... 36
Subsidiary ................................................................ 37
Tax or Taxes .............................................................. 37
Tax Returns ............................................................... 37
Third Party or Third Parties .............................................. 37
Undisclosed Liabilities ................................................... 37
ARTICLE XI
MISCELLANEOUS
11.01 Notices ............................................................. 37
11.02 Entire Agreement .................................................... 38
11.03 Modifications, Amendments and Waivers ............................... 38
11.04 Successors and Assigns .............................................. 39
11.05 Table of Contents; Captions; References ............................. 39
11.06 Governing Law ....................................................... 39
11.07 Pronouns ............................................................ 39
11.08 Severability ........................................................ 39
11.09 Remedies Not Exclusive .............................................. 39
11.10 Counterparts ........................................................ 39
11.11 Interpretations ..................................................... 39
11.12 Exclusive Remedy .................................................... 40
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EXHIBITS AND SCHEDULES
Exhibit 1.02(b) -- Allocation of Purchase Price
Exhibit 7.04(ii) -- Form of Opinion of Pepper & Corazzini L.L.P.
Exhibit X -- Key Employees of the Sellers
Schedule 3.02 -- Organization, Standing & Foreign Qualification
Schedule 3.03 -- Conflicts
Schedule 3.04 -- Financial Statements
Schedule 3.05 -- Absence of Undisclosed Liability
Schedule 3.06 -- Absence of Changes
Schedule 3.07 -- Tax Matters
Schedule 3.08 -- Title to Assets; Encumbrances
Schedule 3.09 -- Real Property
Schedule 3.10 -- Personal Property
Schedule 3.11 -- Intellectual Property
Schedule 3.12 -- Computer Software and Databases
Schedule 3.13 -- Insurance
Schedule 3.14 -- Bonds, Letters of Credit and Guarantees
Schedule 3.15 -- Compliance With Law
Schedule 3.16 -- Environmental
Schedule 3.17 -- Litigation and Claims
Schedule 3.18 -- Benefit Plans
Schedule 3.19(a)(i) -- Real Property Contracts
Schedule 3.19(a)(ii) -- Personal Property Contracts
Schedule 3.19(a)(iii) -- Purchase Orders--Non-Capital Assets
Schedule 3.19(a)(iv) -- Purchase Orders--Capital Assets
Schedule 3.19(a)(v) -- Sales Contracts
Schedule 3.19(a)(vi) -- Employment; Other Affiliate Contracts
Schedule 3.19(a)(vii) -- Sales Representatives Contracts
Schedule 3.19(a)(viii)-- Powers of Attorney
Schedule 3.19(a)(ix) -- Programming and Network Affiliation Agreements
Schedule 3.19(a)(x) -- Barter & Trade Agreements
Schedule 3.19(a)(xi) -- Any Other Contracts
Schedule 3.20 -- Suppliers and Customers
Schedule 3.21 -- Labor Matters
Schedule 3.22 -- Brokers and Finders
Schedule 3.23 -- Interested Transactions
Schedule 3.24 -- Officers, Directors and Bank Accounts
Schedule 4.03 -- Purchaser -- Conflicts
Schedule 4.04 -- Purchaser -- Brokers and Finders
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated as of the 22nd day of
June, 1998, is made and entered into by and among BUSSE BROADCASTING
CORPORATION, a Delaware corporation (the "Company"), WEAU LICENSE, INC., a
Delaware corporation and a wholly-owned subsidiary of the Company (the
"Subsidiary" and together with the Company, the "Sellers"), and COSMOS
BROADCASTING CORPORATION, a South Carolina corporation ("the Purchaser").
BACKGROUND:
The Company owns and operates the network-affiliated very high
frequency television station, WEAU-TV, serving Eau Claire and LaCrosse,
Wisconsin (the "Station"). The Subsidiary holds the FCC license to operate the
Station.
This Agreement sets forth the terms and conditions upon which Sellers shall
sell to Purchaser, and upon which Purchaser shall purchase, certain of Sellers'
Assets associated with the business of the Station.
Certain terms used in this Agreement are defined in Article X hereof.
AGREEMENT:
In consideration of the foregoing, the mutual agreements, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, the parties hereto
agree as follows:
ARTICLE I
SALE OF ASSETS
1.01 PURCHASE OF ASSETS BY PURCHASER.
(a) At the Closing, and subject to the terms and conditions of this
Agreement, Purchaser shall purchase and accept from Sellers and Sellers shall
sell, convey, transfer, assign and deliver to Purchaser for the purchase price
set forth in Section 1.02 below, all of the Assets, free and clear of any and
all Liens other than the Permitted Liens.
(b) None of the Retained Assets are being purchased by Purchaser pursuant
to this Agreement.
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1.02 PURCHASE PRICE FOR THE ASSETS.
(a) The total purchase price for the Assets shall be equal to Sixty-Six
Million Dollars ($66,000,000).
(b) The Purchase Price has been allocated among the Assets in accordance
with an exhibit mutually prepared by Sellers and Purchaser and attached hereto
as Exhibit 1.02(b). If Purchaser or Sellers undertake to change such exhibit,
such party must obtain the approval of Sellers or Purchaser, as the case may be,
which will not be unreasonably withheld. The allocation and undertaking pursuant
to this Section 1.02(b), and the following undertaking with respect to Tax
reporting, have been specifically negotiated by Purchaser, on the one hand, and
Sellers, on the other, at arms' length and are a part of the basis of this
Agreement. Each of Purchaser and Sellers shall prepare its Tax Returns after the
Closing employing the allocation made pursuant to this Section 1.02(b) and shall
not take a position in any Tax proceeding, Tax audit or otherwise that is
inconsistent with such allocation; provided, however, that nothing contained
herein shall require Purchaser or Sellers to contest beyond or otherwise than by
the exhaustion of administrative remedies before any Taxing authority or agency
or to litigate before any court, including, without limitation, the United
States Tax Court, any proposed deficiency or adjustment by any Taxing authority
or agency which challenges such allocation. Each of Purchaser and Sellers shall
give prompt notice to each other of the commencement of any Tax audit or the
assertion of any proposed deficiency or adjustment by any Taxing authority or
agency which challenges such allocation.
1.03 CLOSING; EFFECTIVENESS OF CLOSING; DELIVERIES. The Closing shall occur
at 10:00 a.m. local time on the Closing Date at the offices of Cadwalader,
Wickersham & Taft in New York, New York or at such other time and place as the
parties may agree. The Closing shall be effective as of such time as agreed to
by the parties hereto. All deliveries, payments and other transactions and
documents relating to the Closing (i) shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing), and (ii) shall be deemed to be
consummated in the order set forth in this Agreement and, to the extent the
order is not specified, shall be deemed to be consummated simultaneously.
ARTICLE II
ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS
2.01 GENERAL.
(a) Purchaser is not assuming and shall not be liable for or with respect
to any Retained Liability.
(b) Notwithstanding anything in this Agreement to the contrary, in no event
shall any Liability due to any Affiliate of the Sellers be assumed by Purchaser.
(c) Nothing contained in this Section 2.01 or in any instrument of
assumption executed by Purchaser at the Closing shall be deemed to release or
relieve the Sellers from their respective representations, warranties, covenants
and agreements contained in this Agreement or any of the Other Agreements.
Further, Sellers shall pay, satisfy and perform all of the Retained Liabilities
and no disclosures made or exceptions noted with respect to the representations,
warranties, covenants and
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agreements of the Sellers contained in this Agreement or any of the Other
Agreements shall affect Sellers' obligation to pay, satisfy and perform all of
the Retained Liabilities.
2.02 ASSUMPTION OF THE LIABILITIES OF THE BUSINESS.
(a) Purchaser shall assume the Assumed Liabilities on the terms provided in
subsection 2.02(b).
(b) Purchaser expressly agrees, effective on the Closing Date, to assume
the Assumed Liabilities and thereafter to pay, perform and discharge in full, in
accordance with their terms where applicable, the Assumed Liabilities. Nothing
contained in this Agreement shall require Purchaser to pay, perform or discharge
any of the Assumed Liabilities so long as Purchaser shall in good faith contest
or cause to be contested the amount or validity thereof or shall in good faith
assert any defense or offset thereto, and the Sellers shall provide reasonable
assistance to Purchaser in so contesting and defending such claims.
Notwithstanding anything contained in this Agreement to the contrary, Purchaser
shall not assume, pay, satisfy or discharge any of the Assumed Liabilities to
the extent that such Liabilities are insured against (or but for the transfer of
the Assets and assignment and assumption of the Assumed Liabilities pursuant to
this Agreement, would have been insured against) by a Third Party under policies
of insurance which the Sellers are unable to assign to Purchaser and which are
maintained by the Sellers.
2.03 NO INTENTION TO BENEFIT THIRD PARTIES. This Agreement is not intended
to, and shall not, benefit any person or entity other than the Sellers and
Purchaser or create any Third Party beneficiary right in any person.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY THE SELLERS
Each of the Sellers, jointly and severally, hereby represent and warrant to
Purchaser as follows:
3.01 CAPACITY AND VALIDITY. Each of the Sellers has the full corporate
power, capacity and authority necessary to enter into and perform its
obligations under this Agreement and the Other Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the Other Agreements
have been approved by all necessary action of the Board of Directors of the
Sellers. This Agreement has been, and the Other Agreements to which each of the
Sellers is a party will be when executed and delivered, duly executed and
delivered by duly authorized officers of each of the Sellers, and this Agreement
and each of the Other Agreements constitutes, or will constitute when executed
and delivered, the legal, valid and binding obligation of each of the Sellers,
enforceable against each of the Sellers, as the case may be, in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or general equitable principles
(regardless of whether considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
3.02 ORGANIZATION. Each of the Sellers is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its assets and to carry on its Business as presently conducted. Each of
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the Sellers is duly qualified or licensed to transact business as a foreign
corporation in good standing in the jurisdictions listed in Schedule 3.02, and
the character of their respective assets or the nature of their respective
businesses do not require such qualification or licensing in any other
jurisdiction except where the failure to so qualify or be so licensed would not
have a Material Adverse Effect on the Sellers. Complete and correct copies of
the Certificate of Incorporation of each of the Sellers, and all amendments
thereto (certified by the Secretary of State of the State of Delaware) and
complete and correct copies of the By-Laws of each of the Sellers, and all
amendments thereto, previously have been made available to Purchaser. Except as
may be set forth in Schedule 3.02, copies of all records of the proceedings of
incorporators, stockholders and directors of each of the Sellers, which are set
forth in the Sellers' respective minute books (collectively, the "Minute
Books"), are correct and complete in all Material respects and accurately
reflect in all Material respects all proceedings of each of the Sellers'
respective incorporators, stockholders and Board of Directors and all committees
thereof. Except as may be set forth in Schedule 3.02, the stock record books of
each of the Sellers (collectively, the "Stock Record Books") are correct and
complete and accurately reflect the stock ownership of their respective
stockholders. The Minute Books and the Stock Record Books have been made
available to Purchaser for review.
3.03 NO CONFLICT. Except as disclosed on Schedule 3.03 and assuming
compliance with the Hart-Scott Act and the receipt of all necessary FCC
approvals, neither the execution, delivery and performance of this Agreement or
the Other Agreements to which it is a party by each of the Sellers nor the
consummation by each of the Sellers of the transactions contemplated hereby or
thereby will (i) conflict with or result in a violation, contravention or breach
of any of the terms, conditions or provisions of the Certificate of
Incorporation, as amended, or the By-Laws, as amended, of each of the Sellers;
(ii) result in a Default under, or require the consent or approval of any party
to, any Contract or License of the Sellers required to be set forth on one or
more of the Schedules contemplated by Section 3.19 hereof; (iii) result in the
violation of any Law or Order applicable to either of the Sellers or (iv) result
in the creation or imposition of any Lien applicable to either of the Sellers,
except in each case as would not have a Material Adverse Effect.
3.04 FINANCIAL STATEMENTS. The Financial Statements (of the type provided
for in clauses (i) and (ii) of the definition thereof), correct and complete
copies of which are included in Schedule 3.04, (i) are in accordance with the
books and records of each of the Sellers, which are correct and complete in all
Material respects and which have been maintained in accordance with good
business practices; (ii) present fairly in all Material respects the financial
position of each of the Sellers as of the dates indicated and the results of
each of their operations and their respective cash flows for the periods then
ended; and (iii) have been prepared in accordance with GAAP, subject, in the
case of interim financial statements, to the condensing of the Financial
Statements or the absence of footnotes. The Financial Statements contain all
adjustments, which are solely of a normal recurring nature, necessary to present
fairly in all Material respects the consolidated financial condition and the
consolidated results of operations, changes in stockholders' equity and changes
in financial position or cash flows of each of the Sellers as of the dates and
for the periods indicated.
3.05 ABSENCE OF UNDISCLOSED LIABILITY. Except as set forth in Schedule
3.05, neither of the Sellers has any Undisclosed Liabilities nor does there
exist any Known basis for or threat of an assertion against either of the
Sellers, their respective businesses or their respective Assets of any
Undisclosed Liability, except for Liabilities incurred since the Balance Sheet
Date in the ordinary course of business consistent with past practice, none of
which are Material.
3.06 ABSENCE OF CHANGES. Except as disclosed in Schedule 3.06 and with
respect to the Business, since the Balance Sheet Date, (i) the Business has been
carried on only in the ordinary
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course consistent with past practice, (ii) there has been no Material Adverse
Change, and there has been no event or circumstance that reasonably is
anticipated to result in a Material Adverse Change with respect to either of the
Sellers, their respective Assets or businesses, or the Business, (iii) neither
of the Sellers has made any change in any method of accounting or accounting
practice, and (iv) except in the ordinary course of business consistent with
past practice, neither of the Sellers has canceled, modified or waived, without
receiving payment or performance in full, any (a) Liability owed to either of
the Sellers, including without limitation, any receivable of the Sellers from
any Affiliate (other than the Subsidiary) or any Related Person to an Affiliate,
(b) Litigation either of the Sellers may have against other Persons, or (c)
other rights of the Sellers.
3.07 TAX MATTERS. Except as set forth in Schedule 3.07 and with respect to
the Business:
(a) Each of the Sellers has timely filed with the appropriate Governmental
Authorities all required Tax Returns in all jurisdictions in which Tax Returns
are required to be filed. Neither of the Sellers is presently the beneficiary of
any extension of time within which to file any Tax Return. All Taxes (whether or
not shown on any Tax Return) for all periods ending on or before the Balance
Sheet Date, have been fully paid or appropriate deposits or adequate accruals
have been made therefor on the Balance Sheet.
(b) Since the Balance Sheet Date, neither of the Sellers has incurred any
Liability for Taxes other than in the ordinary course of business and no such
Tax Liability so incurred (other than any Liability incurred by the Sellers in
connection with their cooperation under Section 5.16 hereof) is Material.
Neither of the Sellers is currently delinquent in the payment of any Tax,
assessment, deposit or other charge by any Governmental Authority for which any
Liability is pending or has been assessed, asserted or threatened (in writing,
or otherwise to the Knowledge of either of the Sellers) against the Sellers or
any of their respective Assets in connection with any Tax and there is no basis
for any such Liability. Neither of the Sellers has received any notice of
assessment or proposed assessment in connection with any Tax Returns and there
are no pending Tax examinations of or Tax claims asserted (in writing, or
otherwise to the Knowledge of either of the Sellers) against either of the
Sellers or any of their respective Assets, including without limitation, any
claim by any Governmental Authority in any jurisdiction where either of the
Sellers did not file Tax Returns that either of the Sellers is or may be subject
to or liable for Taxes imposed by that Governmental Authority or jurisdiction.
There are no Liens for any Taxes (other than any Lien for current real property
or ad valorem Taxes not yet due and payable) on any of the Sellers' Assets.
(c) None of the Sellers' Tax Returns have ever been audited by the IRS or
any other Governmental Authority and neither of the Sellers has waived any
statute of limitations in respect of Taxes or agreed to a Tax assessment or
deficiency. Neither of the Sellers has filed any consent under Section 341(f) of
the Code relating to collapsible corporations. No Tax is required to be withheld
pursuant to Section l445 of the Code as a result of any of the transfers
contemplated by this Agreement and the Sellers or their stockholders will
provide any certificate reasonably requested by Purchaser at Closing with
respect thereto.
(d) Each of the Sellers has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Third Party.
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(e) Neither of the Sellers is a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code or any similar provision of foreign, state or local
Law.
(f) Neither of the Sellers has agreed, nor is it required to make, any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
(g) Neither of the Sellers is a party to or bound by (nor will the Sellers,
prior to the Closing, become a party to or be bound by) any Tax indemnity, Tax
sharing or Tax allocation agreement or arrangement.
(h) Except for the group of which the Sellers are presently members,
neither of the Sellers has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Company) or has any Liability for Taxes of any Person (other than
the Sellers) under Treasury Regulation Section 1.1502-6 (or any similar
provision of the state, local, or foreign Law), as a transferee or successor, by
contract, or otherwise.
(i) Neither of the Sellers is a party to any joint venture, partnership, or
other arrangement or Contract which is treated as a partnership for federal
income Tax purposes.
(j) Neither of the Sellers has issued or assumed any corporate acquisition
indebtedness, within the meaning of Section 279(b) of the Code, or any
obligation described in Section 279(a)(2) of the Code.
(k) The Company does not have any excess loss account (as defined in
Treasury Regulation Section 1.1502-19) with respect to the stock of the
Subsidiary.
3.08 TITLE TO ASSETS; ENCUMBRANCES; CONDITION.
(a) Each of the Sellers has good, valid and marketable (and, in the case of
the Owned Real Property, insurable) title to all of its respective Assets free
and clear of any and all Liens, except Permitted Liens. Schedule 3.08 contains
true and complete copies (in all Material respects) of (i) Commitments to issue
owner's title insurance policies for all of the Owned Real Property in the
amounts indicated in each such Commitment, and (ii) all existing owner's title
insurance policies. A survey of each parcel of the Owned Real Property has been
delivered to Purchaser prior to the date hereof. Copies of all documents
evidencing the Liens upon each of the Sellers' respective Assets are either
contained in Schedule 3.08 or previously have been delivered to Purchaser.
(b) Except as set forth in Schedule 3.08, each of the Material Improvements
and each item of Material Personal Property is in good condition and repair,
reasonable wear and tear excepted, and is usable in the ordinary course of
business consistent with past practices. Each Material Improvement and each item
of Material Personal Property is adequate for its present and intended uses and
operation and neither of the Sellers has any intention to use or operate any
Material Improvement or any item of Material Personal Property other than as
presently used or operated. Each of the Sellers' respective Assets (including
each of the Sellers' respective interest in all leased Assets) include all
Material Assets required to operate the Business as presently conducted.
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3.09 REAL PROPERTY.
(a) Schedule 3.09 contains a correct and complete list of all of the Real
Property, including, without limitation, a legal description for all of the
Owned Real Property. To the Knowledge of either of the Sellers, no facts or
circumstances exist which do, or potentially may, adversely affect any of the
access to and from the Real Property, from and to the existing public highways
and roads, and, to the Knowledge of either of the Sellers, there is no pending
or threatened denial, revocation, modification or restriction of such access.
The primary tower, transmitter and Real Property on which such tower and
transmitter are located are all owned by either of the Sellers in fee simple
title, except for the 2000 foot television tower located on a permanent easement
which is located in Eau Claire County (Fairchild Township), Wisconsin.
(b) The Real Property is served by utilities as required for its current
operation.
(c) No zoning or similar land use restrictions are presently in effect or
proposed by any Governmental Authority that would impair in any Material respect
the operation of the Business as presently conducted by the Sellers or which
would prevent the use of any of the Real Property as currently operated. All of
the Real Property is in compliance in all Material aspects with all applicable
zoning laws and recorded covenants. Neither of the Sellers has received any
notice from any Governmental Authority or other Third Party with regard to
encroachments on or off the Real Property, violations of building codes, zoning,
subdivision or other similar Laws or other material defects in the Improvements
or in the good, valid, marketable and insurable title of said Real Property.
(d) As of the Closing Date, there will be no Persons in possession of the
Real Property or any part thereof other than the Sellers or their lessees
pursuant to Contracts that are Permitted Liens.
(e) No condemnation proceedings are pending or to the Knowledge of either
of the Sellers, threatened with regard to the Owned Real Property.
(f) With respect to each parcel of Leased Real Property, (i) the lessor was
the owner of the premises leased to the lessee at the time of the execution and
delivery of the lease, (ii) either of the Sellers is the owner and holder of the
interest of the lessee in the lease, (iii) all buildings and towers constructed
by the lessee of each lease are located within the boundaries of the leased
premises, (iv) each lease contains an adequate description of the leased
premises, (v) each lease is enforceable by the lessee, (vi) all payments of rent
are current under each lease and no default exists under any lease and (vii)
except as set forth on Schedule 3.17, there are no disputes with or adverse
claims asserted by any lessor of a lease. Each of the Contracts of the Sellers
relating to such Leased Real Property is fully and accurately identified, and
the expiration date and current rent are described, in Schedule 3.19(a)(i) and
each such Contract is in full force and effect. Except as disclosed on Schedule
3.08, neither the Leased Real Property nor any of the Sellers' right, title or
interest therein is affected by any Lien, prior interests or superior interests
of any nature whatsoever that will, or could reasonably be expected to,
terminate or otherwise adversely affect such Leased Real Property or any of the
Sellers' right, title and interest therein.
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3.10 PERSONAL PROPERTY.
(a) Schedule 3.10 contains a correct and complete list of each item of
Personal Property, other than inventory (excluding office furniture, equipment,
supplies and miscellaneous items of personal property with an individual cost of
less than $2,500).
(b) Schedule 3.10 contains a correct and complete description of all
Material Leased Personal Property. Each of the Contracts of the Sellers relating
to such Leased Personal Property is identified on Schedule 3.10 and each such
Contract is in full force and effect.
3.11 INTELLECTUAL PROPERTY.
(a) Schedule 3.11 contains a correct and complete list of all of the
Sellers' respective Material Intellectual Property, including all Material
license agreements relating thereto. Neither of the Sellers (or any goods or
services sold by either of them) has violated, infringed upon or unlawfully or
wrongfully used the Intellectual Property of others, and none of the Sellers'
Intellectual Property or any related rights or any customer lists, supplier
lists or mailing lists, as used in the Business or in the other businesses now
or heretofore conducted by either of the Sellers, Materially infringes upon or
otherwise Materially violates the rights of others, nor has any Person asserted
a claim of such infringement or misuse, which infringement or violation is
likely to result in a cost to the Sellers in excess of $20,000. Each of the
Sellers has taken all reasonable measures to enforce, maintain and protect its
interests and, to the extent applicable, the rights of Third Parties, in and to
the Sellers' Material Intellectual Property. Each of the Sellers have all right,
title and interest in the Intellectual Property identified on Schedule 3.11. The
consummation of the transactions contemplated by this Agreement will not alter
or impair any Material Intellectual Property rights of either of the Sellers.
Except as set forth in Schedule 3.11, neither of the Sellers is obligated nor
has either of the Sellers incurred any Liability to make any Material payments
for royalties, fees or otherwise to any Person in connection with any of the
Sellers' Intellectual Property. All patents, trademarks, trade names, service
marks, assumed names, and copyrights and all registrations thereof included in
or related to the Sellers' Intellectual Property are valid, subsisting and in
full force and effect. Each of the Sellers is unaware of any Material
infringement of the Sellers' Material Intellectual Property, and there are no
pending infringement actions against another for infringement of the Sellers'
Intellectual Property or theft of the Sellers' trade secrets.
(b) No present or former officer, director, partner or employee of either
of the Sellers owns or has any proprietary, financial or other interest, direct
or indirect, in any of the Sellers' Material Intellectual Property, except as
described on Schedule 3.11. Except as set forth on Schedule 3.11, no officer,
director, partner or employee of either of the Sellers has entered into any
Contract (i) that requires such officer, director, partner or employee to (A)
assign any interest to inventions or other Material Intellectual Property, or
(B) keep confidential any Material trade secrets, proprietary data, customer
lists or other business information, or (ii) that restricts or prohibits such
officer, director, partner or employee from engaging in competitive activities
with or soliciting customers to or from any competitor of the Sellers.
3.12 COMPUTER SOFTWARE AND DATABASES. Schedule 3.12 identifies all Material
Computer Software and Databases owned, licensed, leased, internally developed or
otherwise used in connection with the Business. Each of the Sellers has use of
or the ability to freely acquire, without substantial costs to the Sellers for
such acquisition, all Computer Software and Databases that are necessary to
conduct the Business as presently conducted by the Sellers and all documentation
relating to all such Material Computer Software and Databases. Such Computer
Software and Databases perform in
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all Material respects in accordance with the documentation related thereto or
used in connection therewith and are free of Material defects in programming
and operation. Each of the Sellers has previously delivered to Purchaser
complete and accurate copies of all documents relating to the sale, license,
lease or other transfer or grant of Material Computer Software and Databases by
the Sellers since January 1, 1996.
3.13 INSURANCE. All of the Assets and the operations of each of the Sellers
and the Business of an insurable nature and of a character usually insured by
companies of similar size and in similar businesses are insured by the Sellers
in such amounts and against such losses, casualties or risks as is (i) usual in
such companies and for such assets, operations and businesses, (ii) required by
any Law applicable to the Sellers or the Business, or (iii) required by any
Contract of the Sellers. Schedule 3.13 contains a complete and accurate list of
all Material insurance policies now in force and held or owned by the Sellers
and such Schedule indicates the name of the insurer, the type of policy, the
risks covered thereby, the amount of the premiums, the term of each policy, the
policy number and the amounts of coverage and deductible in each case and all
outstanding claims thereunder. All such policies are in full force and effect
and enforceable in accordance with their terms. Neither of the Sellers is now in
Material Default regarding the provisions of any such policy, including, without
limitation, failure to make timely payment of any premiums due thereon, and
neither of the Sellers has failed to give any Material notice or present any
Material claim thereunder in due and timely fashion. Neither of the Sellers has
been refused or denied renewal of any Material insurance coverage in connection
with the Sellers, the ownership or use of their respective Assets or the
operation of the Business. In addition to the deductibles set forth on Schedule
3.13, such Schedule discloses all Material risks that are self-insured by the
Sellers that in the ordinary course of business could be insured.
3.14 BONDS, LETTERS OF CREDIT AND GUARANTEES. Schedule 3.14 contains a
complete and accurate list of all bonds (whether denominated bid, litigation,
performance, fidelity, or otherwise), letters of credit, and guarantees (other
than instruments that are guaranteed in the ordinary course) issued by the
Sellers or others for the benefit of the Sellers and now in force or
outstanding. Correct and complete copies of each such Material bond, letter of
credit and guarantee have been made available to Purchaser by the Sellers on or
before the date of this Agreement. The bonds, letters of credit and guarantees
listed in Schedule 3.14 satisfy all Material requirements for bonds, letters of
credit or guarantees set forth in (i) any Law applicable to the Sellers or the
Business and (ii) any Contracts of the Sellers. All such bonds, letters of
credit and guarantees are in full force and effect and enforceable in accordance
with their terms. Neither of the Sellers is in Material Default regarding the
provisions of any such bond, letter of credit or guarantee, including, without
limitation, the failure to make timely payment of all premiums and fees due
thereon, and neither of the Sellers has failed to give any notice or present any
claim thereunder in due and timely fashion.
3.15 COMPLIANCE WITH LAW.
(a) Each of the Sellers has complied with and is in compliance with all
Laws, Licenses and Orders applicable to, required of or binding on the Business,
or on the Sellers or their respective Assets with respect to the Business,
including without limitation, the FCC License, the Communications Act of 1934,
and PUC Laws, and neither of the Sellers has Knowledge of any basis for any
claim of current or past non-compliance with any such Law, License or Order, in
each case where such non-compliance would be Material to the Business,
operations, Assets, Liabilities, financial condition, or results of operations
of the Sellers, taken as a whole, including, without limitation, the value of
the Sellers, taken as a whole. No notices from any Governmental Authority with
respect to any failure or alleged failure of either of the Sellers, their
respective Assets or the Business to comply with any such Law, License or Order
have been received by either of the Sellers, nor, to the Knowledge either of the
Sellers, are
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any such notices proposed or threatened. Schedule 3.15 contains a
complete and correct list of all Material Licenses and Orders applicable to,
required of or binding on the Sellers, their respective Assets or the Business,
true and complete copies of which (other than the FCC License) previously have
been made available to the Purchaser.
(b) The Subsidiary holds the FCC License and all other Material Licenses
necessary for or used in the operations of the Business, and the FCC License is,
and all such other Material Licenses are, in full force and effect. Schedule
3.15 contains a true and complete list of the FCC License currently in effect
and all such other Material Licenses (showing, in each case, the expiration
date). Except as set forth on Schedule 3.15, no application, action or
proceeding is pending for the renewal or modification of the FCC License or any
of such other Material Licenses, and no application, action or proceeding is
pending or, to either of the Sellers' Knowledge, threatened that may result in
the denial of the application for renewal, the revocation, modification,
nonrenewal or suspension of the FCC License or any of such other Material
Licenses, the issuance of a cease-and-desist order, or the imposition of any
administrative or judicial sanction with respect to the Business that may
Materially and adversely affect the rights of Purchaser or the Sellers under any
such FCC License or other Material Licenses. All Material returns, reports and
statements required to be filed by the Sellers with the FCC relating to the
Business have been filed and complied with and are complete and correct in all
Material respects as filed.
(c) Except as described in Schedule 3.15, there are no Material capital
expenditures that the Sellers anticipate will be required to be made in
connection with the Sellers' respective Assets or the Business as now conducted
in order to comply with any Law applicable to either of the Sellers, their
respective Assets or the Business as now conducted.
3.16 ENVIRONMENTAL. Except as set forth in Schedule 3.16 or the
Environmental Report and with respect to the Business:
(a) There is no Environmental Litigation (or any Litigation against any
Person whose Liability, or any portion thereof, for Environmental Matters or
under any Environmental Laws either of the Sellers has or, to the Knowledge of
either of the Sellers, may have retained or assumed contractually or by
operation of Law) pending or, to the Knowledge of either of the Sellers,
threatened with respect to (i) the ownership, use, condition or operation of the
Business, the Real Property or any other Asset of either of the Sellers or any
Asset formerly held for use or sale by either of the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries, or (ii) any violation or alleged violation of or Liability or
alleged Liability under any Environmental Law or any Order related to
Environmental Matters. To the Knowledge of either of the Sellers, there have not
been any, and there are no, existing violations of (i) any Environmental Law, or
(ii) any Order related to Environmental Matters, with respect to the ownership,
use, condition or operation of the Business, the Real Property or any other
Asset of the Sellers or any Asset formerly held for use or sale by the Sellers
or any of their respective predecessors or any of their respective current or
former subsidiaries. To the Knowledge of either of the Sellers, there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, any Environmental Matter, that could
reasonably be expected to form the basis of (i) any Environmental Litigation
against the Sellers, or (ii) any Litigation against any Person whose Liability
(or any portion thereof) for Environmental Matters or under any Environmental
Laws the Sellers have or may have retained or assumed contractually or by
operation of Law. To the Knowledge of either of the Sellers, neither of the
Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries nor anyone Known to either of the Sellers has
used any Assets or premises of the Sellers or any of their respective
predecessors or any of their respective current or former subsidiaries or any
part thereof for the handling, treatment, storage, or disposal of any Hazardous
Substances except in
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Material compliance with applicable Environmental Laws. The
disclosure of facts set forth in Schedule 3.16 shall not relieve either of the
Sellers of any of their respective obligations under this Agreement.
(b) To the Knowledge of either of the Sellers, no release, discharge,
spillage or disposal of any Hazardous Substances has occurred or is occurring at
any Assets owned, leased, operated or managed by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries or any part thereof while or before such Assets were owned, leased,
operated or managed by the Sellers.
(c) To the Knowledge of either of the Sellers, no soil or water in, under
or adjacent to any Assets owned, leased, operated or managed, directly or
indirectly, by the Sellers or Assets formerly held for use or sale by the
Sellers or, in either case, any of their respective predecessors or any of their
respective current or former subsidiaries has been contaminated by any Hazardous
Substance while or before such Assets were owned, leased, operated or managed by
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries.
(d) To the Knowledge of either of the Sellers, all waste containing any
Hazardous Substances generated, used, handled, stored, treated or disposed of
(directly or indirectly) by the Sellers or any of their respective predecessors
or any of their respective current or former subsidiaries has been released or
disposed of in compliance with all applicable reporting requirements under any
Environmental Laws and there is no Environmental Litigation with respect to any
such release or disposal.
(e) To the Knowledge of either of the Sellers, all underground tanks and
other underground storage facilities presently or previously located at any Real
Property owned, leased, operated or managed by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries or any such tanks or facilities located at any Real Property while
such Real Property was owned, leased, operated, or managed by the Sellers or any
of their respective predecessors or any of their respective current or former
subsidiaries are listed together with the capacity and contents (former and
current) of each such tank or facility in Schedule 3.16. To the Knowledge of
either of the Sellers, none of such underground tanks or facilities is leaking
or has ever leaked, and neither of the Sellers or any of their respective
current or former subsidiaries holds any responsibility or Liability for any
underground tanks or underground facilities at any other location.
(f) To the Knowledge of either of the Sellers, all hazardous waste has been
removed from all Real Property of the Sellers and each of their respective
predecessors and each of their respective current and former subsidiaries in
Material compliance with applicable Environmental Laws.
(g) To the Knowledge of either of the Sellers, the Sellers and each of
their respective predecessors or any of their respective current or former
subsidiaries have complied with all applicable reporting requirements under all
Environmental Laws concerning the disposal or release of Hazardous Substances
and neither of the Sellers or any of their respective predecessors or any of
their respective current or former subsidiaries has made any such reports
concerning any Real Property of the Sellers or concerning the operations or
activities of the Sellers or any of their respective predecessors or any of
their respective current or former subsidiaries.
(h) To the Knowledge of either of the Sellers, no building or other
Improvement or any Real Property owned, leased, operated or managed by the
Sellers contains any asbestos-containing materials.
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(i) To the Knowledge of either of the Sellers, without limiting the
generality of any of the foregoing, (i) all on-site and off-site locations where
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries has disposed or arranged for the disposal of
Hazardous Substances are identified in Schedule 3.16, (ii) none of the on-site
or off-site locations identified in Schedule 3.16 is listed on any federal,
state or local government lists of abandoned disposal sites or sites where
Hazardous Substances have or may have occurred, and (iii) no polychlorinated
biphenyls ("PCB's") are used or stored on or in any real property owned, leased,
operated or managed by the Sellers or any of their respective predecessors or
any of their respective current or former subsidiaries, except in Material
compliance with applicable Environmental Laws.
(j) Schedule 3.16 contains a correct and complete list of all environmental
site assessments and other studies relating to the investigation of the
possibility of the presence or existence of any Environmental Matter with
respect to the Sellers, the Business, any Assets owned, leased, operated or
managed by either of the Sellers or any of their respective predecessors or any
of their respective current or former subsidiaries, and the Sellers have
previously delivered to Purchaser a correct and complete copy of each such
assessment and study.
3.17 LITIGATION AND CLAIMS. Except as disclosed on Schedule 3.17:
(a) There is no Litigation pending or, to the Knowledge of either of the
Sellers, threatened and neither of the Sellers has any Knowledge of any basis
for any such Litigation or any facts or the occurrence of any event which might
give rise to any Litigation;
(b) No Litigation has been pending during the three (3) years prior to the
date hereof that, individually or in the aggregate resulted in an uninsured Loss
in excess of $150,000 or granted any injunctive relief against the Sellers; and
(c) Neither of the Sellers has been advised by any attorney representing it
that there are any "loss contingencies" (as defined in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board in
March 1975 ("FASB 5")), which would be required by FASB 5 to be disclosed or
accrued in financial statements of the Sellers, were such financial statements
prepared as of the date hereof.
3.18 BENEFIT PLANS.
(a) Schedule 3.18 lists every Employee Benefit Plan of the Sellers. On or
after September 26, 1980, neither of the Sellers or any entity aggregated with
the Sellers under Code Section 414 (for purposes of this Section, an "ERISA
Affiliate") has had an "obligation to contribute" (as defined in ERISA Section
4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and
(3)(37)(A)). No Employee Benefit Plan is or has been a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(b) The Employee Benefit Plans listed in Schedule 3.18 have been or will be
made available to Purchaser for review, including correct and complete copies
of: (i) all trust agreements or other funding arrangements for such Employee
Benefit Plans (including insurance contracts), and all amendments thereto, (ii)
with respect to any such Employee Benefit Plans or amendments, all determination
letters, rulings, opinion letters, information letters, or advisory opinions
issued by the United States Internal Revenue Service, the United States
Department of Labor, or the Pension Benefit Guaranty Corporation after December
31, 1974, (iii) annual reports or returns, audited or unaudited Financial
Statements,
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actuarial valuations and reports, and summary annual reports
prepared for any Employee Benefit Plan with respect to the most recent three
plan years, and (iv) the most recent summary plan descriptions and any material
modifications thereto.
(c) Except as disclosed in Schedule 3.18, all the Employee Benefit Plans
and the related trusts subject to ERISA comply in all Material respects with and
have been administered in compliance in all Materials respects with, (i) the
applicable provisions of ERISA, (ii) all applicable provisions of the Code
relating to qualification and Tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended Tax consequences, (iii) all
applicable state or federal securities Laws, and (iv) all other applicable Laws
and collective bargaining agreements, and neither of the Sellers has received
any notice from any Governmental Authority questioning or challenging such
compliance. All available determination letters and required registrations under
federal and state securities Laws ("Permits") for the Employee Benefit Plans
have been obtained, including, but not limited to, timely determination letters
on the qualification of the ERISA Plans and Tax exemption of related trusts, as
applicable under the Code, and all such Permits continue in full force and
effect. No event has occurred which will or could reasonably be expected to give
rise to disqualification of any such plan or loss of intended Tax consequences
under the Code or to any Tax under Section 511 of the Code.
(d) Except as disclosed in Schedule 3.18, no oral or written representation
or communication with respect to any aspect of the Employee Benefit Plans has
been made to employees of the Sellers prior to the date hereof that is not in
accordance with the written or otherwise preexisting terms and provisions of
such plans. Neither of the Sellers or any administrator or fiduciary of any
Employee Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner that could subject the
Sellers or Purchaser to any direct or indirect Material Liability (by indemnity
or otherwise) for breach of any fiduciary, co-fiduciary or other duty under
ERISA. There are no unresolved claims or disputes under the terms of, or in
connection with, the Employee Benefit Plans other than claims for benefits which
are payable in the ordinary course and no Litigation has been commenced with
respect to any Employee Benefit Plan.
(e) Except as disclosed in Schedule 3.18, all Employee Benefit Plan
documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary plan
descriptions issued with respect to the Employee Benefit Plans are correct and
complete in all Material respects, have been timely filed with the IRS and the
United States Department of Labor, have been timely distributed to participants
in the Employee Benefit Plans, and there have been no changes in the information
set forth therein.
(f) No "party in interest" (as defined in Section 3(14) of ERISA) or
"disqualified person" (as defined in Code Section 4975) of any Employee Benefit
Plan has engaged in any Material nonexempt "prohibited transaction" (described
in Code Section 4975 or ERISA Section 406). Except as disclosed in Schedule
3.18, there has been no (i) "reportable event" (as defined in Section 4043 of
ERISA), or event described in Sections 4041, 4042, 4062 (including ERISA Section
4062(e)), 4064, 4069 or 4063 of ERISA, or (ii) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which the Sellers maintain or contribute to or have maintained or
contributed to. Except as disclosed in Schedule 3.18, neither of the Sellers has
incurred any liability under Title IV of ERISA, including any Liability that
could arise under Title IV of ERISA as a result of the Sellers' membership in a
"controlled group" as defined in ERISA ss.ss. 4001(a)(14) and 4001(b)(1).
(g) Except as disclosed in Schedule 3.18, for any ERISA Plan that is an
employee pension benefit plan as defined in ERISA ss. 3(2) ("ERISA Pension
Plan"), the fair market value
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of such Plan's assets equals or exceeds the present value of all benefits
(whether vested or not) accrued to date by all present or former participants in
such ERISA Pension Plan. For this purpose the assumptions prescribed by the
Pension Benefit Guaranty Corporation for valuing plan assets or liabilities upon
plan termination shall be applied and the term "benefits" shall include the
value of all benefits, rights and features protected under Code ss. 411(d)(6) or
its successors and any ancillary benefits (including disability, shutdown, early
retirement and welfare benefits) provided under any such employee pension
benefit plan and all "benefit liabilities" as defined in ERISA Section
4001(a)(16). Since the date of the most recent actuarial valuation, there has
been (i) no Material change in the financial position of an ERISA Pension Plan,
(ii) no change in the actuarial assumptions with respect to any ERISA Pension
Plan, and (iii) no increase in benefits under any ERISA Pension Plan as a result
of ERISA Pension Plan amendments or changes in any applicable regulation which
is reasonably likely to have, individually or in the aggregate, a Material
effect on the funding status of such ERISA Pension Plan. All contributions with
respect to an Employee Benefit Plan of the Sellers or of an ERISA Affiliate that
is subject to Code Section 412 or ERISA Section 302 have been, or will be,
timely made and there is no Lien or expected to be a Lien under Code Section
412(n) or ERISA Section 302(f) or Tax under Code Section 4971. No ERISA Pension
Plan of either of the Sellers or of an ERISA Affiliate has a "liquidity
shortfall" as defined in Code Section 412(m)(5). No event described in Code
Section 401(a)(29) has occurred or can reasonably be expected to occur with
respect to either of the Sellers ERISA Affiliates. All premiums required to be
paid under ERISA Section 4006 have been paid by the Sellers and by any Person
aggregated with the Sellers under ERISA Sections 4001(a)(14) and 4001(b)(1).
(h) Neither of the Sellers has, or maintains, an Employee Benefit Plan
providing welfare benefits (as defined in ERISA Section 3(1)) to employees after
retirement or other separation of service except to the extent required under
Part 6 of Title I of ERISA or Code Section 4980B or their successors. No
Material Tax under Code Sections 4980B or 5000 has been incurred with respect to
any Employee Benefit Plan and no circumstances exist which could reasonably be
expected to give rise to such Taxes.
(i) Except as disclosed in Schedule 3.18, neither the execution or delivery
of this Agreement or the Other Agreements nor the consummation of the
transactions contemplated by this Agreement will (1) entitle any current or
former employee of the Sellers to severance pay, unemployment compensation or
any payment contingent upon a change in control or ownership of the Station, or
(2) accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such employee or former employee.
(j) Except as disclosed in Schedule 3.18, all individuals participating in
(or eligible to participate in) any Employee Benefit Plan maintained (or
contributed to) by the Sellers are common-law employees.
3.19 CONTRACTS.
(a) Description.
(i) Real Property. Schedule 3.19(a)(i) is a list or brief description
of all Material Contracts affecting or relating to the Real Property, including,
without limitation, Contracts evidencing Material Liens (including those
referred to in Schedule 3.08).
(ii) Personal Property. Schedule 3.19(a)(ii) is a list of all Contracts
affecting or relating to the Personal Property, including, without limitation,
Contracts evidencing Liens
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(including those referred to in Schedule 3.08) (other than Contracts
affecting rights in the Personal Property each of which does not involve the
payment by the Sellers of more than $25,000 per year).
(iii) Purchase Orders -- Non-Capital Assets. Schedule 3.19(a)(iii) is a
list of all outstanding Contracts of the Sellers relating to the Business, for
the acquisition or sale of goods, assets or services (other than purchase orders
or other commitments for the acquisition of capital assets), all of which were
executed in the ordinary course of business consistent with past practice of the
Sellers (other than purchase orders and other commitments which do not exceed
$25,000 each).
(iv) Purchase Orders -- Capital Assets. Schedule 3.19(a)(iv) is a list
of all outstanding Contracts of the Sellers relating to the Business, for the
acquisition of capital assets and that were executed in the ordinary course of
business consistent with past practice of the Sellers (other than purchase
orders and other commitments which do not exceed $25,000 each).
(v) Sales. Schedule 3.19(a)(v) is a list or brief description of all
Contracts of the Sellers relating to the Business, for the sale of products or
the performance of services by the Sellers and which exceed $5,000 each.
(vi) Employment; Other Affiliate Contracts. Schedule 3.19(a)(vi)
contains a list of all Material Contracts of the Sellers relating to the
Business, with any employee, officer, agent, consultant, distributor, dealer or
Affiliate of the Sellers (other than those entered into in the ordinary course
of business consistent with past practice that are immediately terminable at
will by the Sellers, as the case may be, without any Liability).
(vii) Sales Representatives. Schedule 3.19(a)(vii) is a list of all
Material Contracts of the Sellers relating to the Business, with any agent,
broker, sales representative of, or any Person in a similar representative
capacity for, the Sellers (other than those entered into in the ordinary course
of business consistent with past practice that are terminable within sixty (60)
days by the Sellers, without Liability).
(viii) Powers of Attorney. Schedule 3.19(a)(viii) is a list of all
powers of attorney given by the Sellers with respect to the Business, whether
limited or general, to any Person continuing in effect.
(ix) Programming, Network Affiliation, Operating and Cable
Retransmission Agreements. Schedule 3.19(a)(ix) is a list of all network
affiliation agreements, operating agreements, cable retransmission agreements
and all programming agreements of the Sellers relating to the Business (correct
and complete copies of which previously have been delivered to Purchaser),
including for each of those agreements the amounts and availability dates of
programming and the dollar amount and schedule of payments thereunder.
(x) Barter and Trade Agreements. Schedule 3.19(a)(x) is a list of all
"barter" and "trade" agreements of the Sellers relating to the Business (correct
and complete copies of which previously have been delivered to Purchaser) and
includes an estimate of the positive or negative trade balances associated with
each such agreement.
(xi) Any Other Contracts. Schedule 3.19(a)(xi) is a list or brief
description of any other Contracts of the Sellers relating to the Business and
that: (A) payments provided for or actually made thereunder by or to the Sellers
in any calendar year exceed $25,000, (B) require performance
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by the Sellers of any obligation for a period of time extending beyond six
(6) months from the Closing Date or which is not terminable by the Sellers
without penalty upon sixty (60) days or less notice, (C) evidence, create,
guarantee or service indebtedness of the Sellers, (D) establish or provide for
any joint venture, partnership or similar arrangement involving either of the
Sellers, or (E) guarantee or endorse the Liabilities of any other Person.
The lists in all Schedules referred to above are correct and complete as of
the date hereof unless otherwise noted thereon.
(b) Copies. Correct and complete copies of all the written Contracts, and
correct and complete descriptions of all oral Contracts, referred to in Section
3.19(a) have been made available to Purchaser or its designee on or before the
date hereof.
(c) No Default. Neither of the Sellers or, to the Knowledge of either of
the Sellers, any other party is in Default under any of the Contracts or any
Liens referred to in Section 3.19(a) and, to the Knowledge of either of the
Sellers, there is no basis for any claim of Material Default under any of the
foregoing.
(d) Assurances. Each of the Contracts referred to in this Section 3.19 is
in full force and effect and constitutes a valid, legal and binding agreement of
the Seller party thereto and, to the Knowledge of either of the Sellers, the
other parties thereto, enforceable in accordance with its terms except for
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other Laws affecting creditors' rights generally, or general equitable
principles (regardless of whether considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing, and as otherwise
set forth in Schedule 3.19. Neither of the Sellers is a party to or bound by any
Contract or Contracts that, either separately or in the aggregate has or will
have a Material Adverse Effect with respect to either of the Sellers, their
respective Assets, or the Business. The continuation, validity and effectiveness
of each of the Contracts referred to in this Section 3.19 will not be affected
in any way by the consummation of the transactions contemplated by this
Agreement.
3.20 SUPPLIERS AND CUSTOMERS. Schedule 3.20 sets forth each supplier to
whom payments were made that equaled or exceeded five percent (5%) of either of
the Sellers' aggregate operating expenses with respect to the Business for the
fiscal year ended December 28, 1997 (the "Large Suppliers"). Schedule 3.20 sets
forth each customer or group of related customers from whom payments were
received that equaled or exceeded five percent (5%) of either of the Sellers'
aggregate gross sales with respect to the Business for the fiscal year ended
December 28, 1997 (the "Large Customers"). Except as reflected in Schedule 3.20,
no Large Supplier is a sole source of supply of any good or service to the
Sellers with respect to the Business. To the Knowledge of either of the Sellers,
the relationships of each of the Sellers with its Large Suppliers and Large
Customers are good commercial working relationships and, except as set forth on
Schedule 3.20, neither (i) any of the Large Suppliers or any of the Large
Customers, nor (ii) any Large Supplier who at any time during 1997 was or now is
the sole source of supply of any good or service, has terminated, or, to the
Knowledge of either of the Sellers, made any threat reasonably likely to be
acted upon to terminate, its relationship with the Sellers or has during the
last twelve (12) months Materially decreased or Materially limited, or, to the
Knowledge of either of the Sellers, made any threat reasonably likely to be
acted upon to Materially decrease or Materially limit, its services, supplies or
materials to either of the Sellers or its usage or purchase of the goods or
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services of the Sellers. Neither of the Sellers has any Knowledge or belief that
any of the Large Suppliers or any of the Large Customers intends to terminate or
otherwise modify adversely to the Sellers its relationship with the Sellers or
to decrease or limit its services, supplies or materials to the Sellers or its
usage or purchase of the goods or services of the Sellers, and the acquisition
of the Assets by Purchaser will not, to the Knowledge of either of the Sellers,
adversely affect the relationship of the Business or of the Sellers with any of
the Large Suppliers or any of the Large Customers.
3.21 LABOR MATTERS. Schedule 3.21 contains a correct and complete list of
all employees of the Sellers with respect to the Business whose direct annual
compensation exceeds $50,000. Except as disclosed on Schedule 3.21, the
employment of all employees of the Sellers is terminable at will by the Sellers,
without any penalty or severance obligation incurred by the Sellers. Except as
set forth on Schedule 3.21 and other than in the ordinary course of business
consistent with past practices, neither of the Sellers will owe any amounts to
any of its employees as of the Closing Date, including, without limitation, any
amounts incurred for wages, bonuses, vacation pay, sick leave or any severance
obligations other than amounts owed with respect to the then current pay period.
Except as and to the extent set forth in Schedule 3.21, (i) neither of the
Sellers is a party to any union agreement or collective bargaining agreement or
work rules or practices agreed to with any labor organization or employee
association applicable to any employees of the Sellers and, to the Knowledge of
either of the Sellers, no attempt to organize any of the employees of the
Business has been made, proposed or threatened in the past three years, (ii)
neither of the Sellers is, or within the past three years has been, subject to
any Equal Employment Opportunity Commission charges or other claims of
employment discrimination made against it, (iii) no Wage and Hour Department
investigations have been made in the past 3 years of the Sellers, (iv) no labor
strike, dispute, slowdown, stoppage or lockout is pending or, to the Knowledge
of either of the Sellers, threatened against or affecting the Sellers, their
respective Assets or the Business and during the past five (5) years there has
not been any such action, (v) no unfair labor practice charge or complaint
against either of the Sellers is pending or, to the Knowledge of either of the
Sellers, threatened before the National Labor Relations Board or any similar
Governmental Authority, and (vi) neither of the Sellers has received any formal
notice that any of the employees listed on Schedule 2.21 will terminate or
contemplates terminating his or her employment currently or at any time within
sixty (60) days after the Closing Date or will otherwise not be available to the
Sellers. Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), neither of the Sellers has effectuated (a) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Sellers; or (b) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Sellers; nor has either of
the Sellers been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state or
local Law. Except as set forth in Schedule 3.21, none of the Sellers' employees
has suffered an "employment loss" (as defined in the WARN Act) since six (6)
months prior to the date hereof.
3.22 BROKERS AND FINDERS. Except as set forth on Schedule 3.22, no finder
or any agent, broker or other Person acting pursuant to authority of either of
the Sellers is entitled to any commission or finder's fee in connection with the
transactions contemplated by this Agreement.
3.23 INTERESTED TRANSACTIONS. Except as set forth in Schedule 3.23, neither
of the Sellers is a party to any Contract or other transaction with any
Affiliate of the Sellers, any Related Party of any Affiliate of the Sellers
(other than as a stockholder or employee of either of the Sellers), or any
Person in which any of the foregoing (individually or in the aggregate)
beneficially or legally owns, directly or indirectly, five percent (5%) or more
of the equity or voting interests (other than, in each case, Contracts or
transactions between the Sellers). Each of such Contracts and other transactions
described in the preceding sentence was negotiated on an arm's length basis,
contains pricing terms that reflected fair market value at the time entered into
and otherwise contains terms and conditions comparable to those customarily
contained in similar transactions between unrelated parties. Except as described
in Schedule 3.23, none of
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the Persons described in the first sentence of this Section 3.23 owns, or
during the last three (3) years has owned, directly or indirectly, beneficially
or legally, (individually or in the aggregate) five percent (5%) or more of the
equity or voting interests of any Person that competes with either of the
Sellers or the Business.
3.24 OFFICERS, DIRECTORS AND BANK ACCOUNTS. Schedule 3.24 lists (i) the
names of all officers and directors of each of the Sellers and (ii) the name and
location of each bank or other institution in which either of the Sellers has
any deposit account or safe deposit box in which either of the Sellers has any
interest or access, all account numbers and names of all Persons authorized to
draw thereon or to have access thereto.
3.25 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
either of the Sellers, nor any statement, certificate or instrument furnished or
to be furnished to Purchaser pursuant to this Agreement, the Other Agreements or
any other document, agreement or instrument referred to herein or therein,
including, without limitation, the Financial Statements, contains or will
contain any untrue statement of fact or omits or will omit to state a Material
fact necessary to make the statements contained therein not misleading in light
of the circumstances under which they were made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers that:
4.01 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of South Carolina,
with the corporate power and authority to enter into the transactions
contemplated hereunder and under the Other Agreements.
4.02 CAPACITY AND VALIDITY. Purchaser has the full corporate power and
authority necessary to enter into and perform its obligations under this
Agreement and the Other Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements will have been approved
by all necessary action of the Board of Directors of Purchaser on or before
Closing. This Agreement has been, and the Other Agreements will be when executed
and delivered, duly executed and delivered by duly authorized officers of
Purchaser, and the Agreement and each of the Other Agreements constitutes, or
will constitute when executed and delivered, the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or general equitable principles
(regardless of whether considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
4.03 NO CONFLICT. Except as disclosed on Schedule 4.03 and assuming
compliance with the Hart-Scott Act and the receipt of all necessary FCC
approvals, neither the execution, delivery and performance of this Agreement and
the Other Agreements to which it is a party by Purchaser nor the consummation of
the transactions contemplated hereby or thereby, will (i) conflict with or
result in a violation, contravention or breach of any of the terms, conditions
or provisions of the Articles of Incorporation, as amended, or By-laws, as
amended, of Purchaser, (ii) result in a Default under, or require the consent or
approval of any party to, Contract or License of Purchaser, (iii) result in the
violation of any Law or Order applicable to Purchaser, or (iv) result in the
creation or imposition of any Lien applicable to Purchaser, except in each case
as would not have a Material Adverse Effect.
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4.04 BROKERS AND FINDERS. Except as set forth in Schedule 4.04, no finder
or any agent, broker or other Person acting pursuant to authority of Purchaser
is entitled to any commission or finder's fee in connection with the
transactions contemplated by this Agreement.
4.05 QUALIFICATION OF PURCHASER. Purchaser is fully qualified under the
Communications Act of 1934, as amended, and the rules, regulations and written
policies of the FCC to assume control and operation of the Station and, to
Purchaser's commercially reasonable knowledge and belief, there exists no reason
for the FCC to refuse to consent to the assignment of the broadcast License to
Purchaser.
4.06 FINANCING. Purchaser has all necessary financial resources or has
secured a binding commitment for all financing necessary for Purchaser to
consummate the transactions contemplated by this Agreement.
4.07 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
Purchaser, nor any statement, certificate or instrument furnished or to be
furnished to the Sellers pursuant to this Agreement, the Other Agreements or any
other document, agreement or instrument referred to herein or therein, contains
or will contain any untrue statement of fact or omits or will omit to state a
Material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made.
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS OF THE SELLERS AND PURCHASER
5.01 CONDUCT OF BUSINESS. Prior to the Closing Date, except with the prior
written consent of Purchaser and except as necessary to effect the transactions
contemplated in this Agreement, each of the Sellers shall, with respect to the
Business:
(a) conduct the Business in substantially the same manner as presently
being conducted, and refrain from entering into any transaction or Contract
other than in the ordinary course of business consistent with past practice,
except as otherwise contemplated by this Agreement;
(b) confer on a regular and frequent basis with Purchaser to report
Material operational matters and to report the general status of ongoing
operations;
(c) notify Purchaser of any unexpected emergency or other change in
the normal course of the Business or the operation of the Assets, and of any
Litigation (or communications indicating that the same may be contemplated),
affecting the Business or any Material Assets, and keep Purchaser fully informed
of such events and permit its representatives prompt access to all materials
prepared in connection therewith in each case where such emergency, change,
Litigation or other event could cause a Material Adverse Effect;
(d) except in the ordinary course of business consistent with past
practice, not make any Material capital expenditure;
(e) not take any action, or omit to take any action, that would cause
the representations and warranties contained in Article III hereof to be
incorrect or incomplete in any Material respect;
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(f) promptly notify Purchaser in writing of any Material Adverse
Change with respect to the Sellers or the Business, or any condition or event
which threatens to result in a Material Adverse Change with respect to the
Sellers or the Business;
(g) notwithstanding the $1,000,000 threshold contained in the
definition of Material Adverse Change in Article X, use all reasonable efforts
to promptly remedy any adverse change, condition or event that causes or is
reasonably likely to cause the Station to be or go off the air; and
(h) not make any agreement or commitment which will result in or cause
to occur a Default of any of the items contained in paragraphs (a) through (g)
above.
Notwithstanding any of the foregoing provisions of this Section 5.01, prior to
the Closing, control of the operation of the Station shall remain exclusively
with the Sellers, and the Subsidiary shall be permitted to merge with and into a
limited liability company, the sole member of which shall be the Company.
5.02 RIGHT OF INSPECTION; ACCESS. In order to allow Purchaser to conduct
its due diligence investigation, including, without limitation, environmental
due diligence, the Sellers shall give to Purchaser and its designee, during
normal working hours, full and free access to all of their respective Assets,
Contracts, reports and other records and shall furnish to Purchaser and its
designee all additional financial, legal and other information with respect to
the Assets and the Business that Purchaser may reasonably request. Each of the
Sellers shall also allow and arrange for Purchaser and its designee free and
full access and opportunity, during normal business hours, to consult and meet
with the officers, directors, employees, attorneys, accountants and other agents
of the Sellers. Each of the Sellers shall instruct such individuals to cooperate
fully with Purchaser and its designee. Purchaser and its designee shall have the
right to make copies of any of the records referred to above. Purchaser agrees
to indemnify against and hold the Sellers harmless from any claim for Liability,
costs, expenses (including reasonable attorneys' fees actually incurred),
damages or injuries arising out of or resulting from the inspection of the
Sellers by Purchaser or its agents.
5.03 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and until this Agreement is
terminated prior to Closing pursuant to Section 9.01 and except for the
transactions contemplated in that certain Amended and Restated Stock Purchase
Agreement dated as of June 22, 1998 by and among Busse Broadcasting Corporation,
South Street Corporate Recovery Fund I, L.P., Greycliff Leveraged Fund 1993,
L.P., South Street Leveraged Corporate Recovery Fund, L.P., South Street
Corporate Recovery Fund I (International), L.P. and Gray Communications Systems,
Inc., (the "Amended and Restated Stock Purchase Agreement") and all agreements
related thereto, the Sellers shall deal exclusively with Purchaser with respect
to the sale of the Assets or properties of the Sellers relating to the Business.
In addition, unless and until this Agreement is terminated prior to Closing
pursuant to Section 9.01, neither of the Sellers, acting in any capacity, shall,
and the Sellers shall direct their officers, directors, limited partners,
general partners (as applicable), financial advisors, accountants and counsel
not to, either directly or indirectly, through the Sellers, any officer,
director, employee, agent or otherwise, (a) solicit, initiate or encourage
submission of proposals or offers from any Person relating to any purchase of
the Assets relating to the Business, or (b) approve or undertake any such
transaction. If, notwithstanding the foregoing, the Sellers or any of their
respective stockholders, directors, partners, officers, employees or agents
shall receive any written proposal or inquiry regarding any such transaction,
the Sellers shall promptly communicate to Purchaser the terms of any such
proposal or offer upon Knowledge or receipt of such written proposal or offer.
5.04 CONFIDENTIALITY. For a period of one (1) year from and after the date
hereof and except for the transactions contemplated in the Amended and Restated
Stock Purchase Agreement and all
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agreements relating thereto, each of Purchaser and Sellers agree that it will
not, and will use reasonable efforts to ensure that none of its
representatives or Affiliates will, use in the conduct of its business (except
as contemplated by this Agreement), or disclose to or file with any other Person
(other than financing sources, financial advisors, accountants and attorneys for
the foregoing who will be informed of the confidential nature of such
information and who have a need to know such information), (a) any confidential
or non-public information relating to the other parties to this Agreement or (b)
the existence of this Agreement or the fact of the transactions contemplated
hereby, except (i) for a disclosure that is required by Law or by a Governmental
Authority or is reasonably believed to be so required, including, without
limitation, disclosures to the FCC and the Department of Justice for purposes of
obtaining consents to the transactions contemplated hereby and disclosures to
the Securities and Exchange Commission and related public disclosures (in
connection with public offerings or otherwise); (ii) information that is
ascertainable or obtained from public or published information; (iii)
information received from a Third Party not known to the disclosing party to be
under an obligation to keep such information confidential; (iv) information
independently developed by the disclosing party; or (v) information disclosed to
or filed with any Persons necessary to obtaining the consents or the equity and
debt financing relating to the transactions contemplated by this Agreement.
Notwithstanding the foregoing, (i) neither Purchaser nor its designee, in the
course of any investigation it shall deem necessary and desirable in connection
with the transactions contemplated by this Agreement, shall be prohibited from
discussing the Sellers, their respective Assets and the Business with others
having business dealings with the Sellers, and (ii) the foregoing provisions of
this Section 5.04 shall not apply to Purchaser or any of its representatives or
Affiliates after consummation of the transactions contemplated hereby at the
Closing with respect to information relating to the Sellers. If the transaction
contemplated by this Agreement is not consummated, each party will return or
destroy as much of such written information as the party furnishing such
information may reasonably request.
5.05 CONSENTS AND APPROVALS. Each of the Sellers shall obtain the waiver,
consent and approval of all Persons whose waiver, consent or approval (i) is
required in order to consummate the transactions contemplated by this Agreement,
or (ii) is required by any Material Contract, Order, Law or License to which
either of the Sellers is a party or subject on the Closing Date and that relates
to the Business, and Purchaser shall cooperate with the Sellers in connection
therewith. All written waivers, consents and approvals obtained by the Sellers
shall be produced at Closing in form and content reasonably satisfactory to
Purchaser.
5.06 SUPPLYING OF FINANCIAL STATEMENTS. The Sellers shall make available to
Purchaser within twenty (20) days following the end of each month true and
complete copies of all unaudited monthly financial statements of each of the
Sellers for each calendar month ending subsequent to the date hereof and prior
to the Closing Date in the format historically utilized internally by the
Sellers.
5.07 QUALIFICATION AND CORPORATE EXISTENCE. Each of the Sellers shall
deliver to Purchaser (i) certificates of the Secretary of State of the State of
Delaware, dated within ten (10) days prior to the Closing Date, stating that
each of the Sellers is a corporation in good standing under the laws of the
State of Delaware, and has paid all applicable franchise and other fees and
Taxes due to such state and (ii) certificates of the appropriate officials of
the states and foreign jurisdictions listed on Schedule 3.02, each dated not
more than ten (10) days prior to the Closing Date, stating that each of the
Sellers is duly qualified and in good standing to transact business as a foreign
corporation as stated in Section 3.02 in each such state and foreign
jurisdiction and has paid all applicable franchise and other fees and Taxes due
to each such state and foreign jurisdiction.
5.08 PUBLIC ANNOUNCEMENTS. Upon execution of this Agreement, the Sellers
shall issue a press release and public announcement regarding this Agreement and
the transactions contemplated
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hereby, such press release to be reasonably satisfactory to Purchaser. Except as
permitted by the foregoing sentence or Section 5.04, neither Purchaser or
Sellers, nor any of their representatives or Affiliates, shall make any public
announcement with respect to this Agreement or the transactions contemplated
hereby without the prior consent of the other parties hereto unless required by
Law or judicial process, in which case notification shall be given to the other
parties hereto prior to such disclosure.
5.09 CLOSING CONDITIONS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to take, or cause to be taken, all
commercially reasonable actions to consummate the transactions contemplated by
this Agreement and to satisfy the conditions precedent to Closing set forth in
Article VII and Article VIII of this Agreement.
5.10 SUPPLEMENTS TO SCHEDULES. The Sellers shall from time to time after
the date hereof, supplement or amend the Schedules referred to in Article III
with respect to any matter arising after the date hereof which, if existing or
occurring at the date hereof, would have been required to be set forth or
described in such Schedules. Purchaser may unilaterally extend the Closing Date
if necessary to allow Purchaser five (5) business days to review such
supplements to the Schedules prior to the Closing Date. If, in Purchaser's
reasonable determination, any such supplements to the Schedules reveal any
Material Adverse Change with respect to the Sellers or the Business, or any
condition or event which threatens to result in a Material Adverse Change with
respect to the Sellers or the Business, Purchaser may, subject to the Sellers'
right to cure any such Material Adverse Change, terminate this Agreement
pursuant to Section 9.01.
5.11 CERTAIN TAX MATTERS.
(a) Purchaser, on the one hand, and the Sellers, on the other hand,
shall provide the other parties to this Agreement, at the expense of the
requesting party, with such assistance as may reasonably be requested by any of
them in connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority, or any judicial or administrative
proceedings relating to any Liability for Taxes, and each will retain and
provide the requesting party with any records or information that may be
relevant to any of the foregoing.
(b) The Sellers shall prepare and file on or before the due date
therefor (including any extensions thereof) all Tax Returns and amendments
thereto required to be filed by the Sellers on or before the Closing Date, and
each of the Sellers shall pay, or cause to be paid, all Taxes (including
estimated taxes) due on such Tax Return or which are otherwise required to be
paid at any time prior to or during such period. Such Tax Returns shall be
prepared in accordance with the most recent Tax practices as to elections and
accounting method.
5.12 EXPENSES.
(a) Except as provided below, regardless of whether the transactions
contemplated by this Agreement are consummated, the Sellers shall be responsible
for all expenses and fees incurred by them in connection with the transactions
contemplated hereby and Purchaser shall be responsible for all expenses and
costs incurred by it in connection with the transactions contemplated hereby. In
no event shall any of the Assets be utilized for or reduced by the payment of
any such fees or expenses.
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(b) At the Closing the Sellers shall pay out of the Purchase Price all
Taxes, if any, relating to the transfer of the Assets to Purchaser. The Sellers
shall file all necessary documentation and Tax Returns required to be filed by
them with respect to such Taxes.
(c) The Sellers shall bear the costs and expenses associated with
delivery of the title documents described in Section 7.11.
5.13 FURTHER ASSURANCES. At any time and from time to time after the
Closing, the Sellers shall, at the request of Purchaser, take any and all
actions necessary to fulfill their respective obligations hereunder, to put
Purchaser in actual possession and control of the Assets and execute and deliver
such further instruments of conveyance, sale, transfer and assignment, and take
such other actions necessary or desirable to effectuate, record or perfect the
transfer of the Assets to Purchaser free and clear of all Liens, to confirm the
title of the Assets to Purchaser, to assist Purchaser in exercising rights
relating thereto, or to otherwise effectuate or consummate any of the
transactions contemplated hereby.
5.14 DELIVERY OF BOOKS AND RECORDS. The Sellers shall deliver to Purchaser
at the Closing all original documents, books and records pertaining to the
Assets. The Sellers may retain copies of any of the foregoing for their own use.
Without limiting the generality of the foregoing, the Sellers shall deliver to
Purchaser at the Closing all documents and records relating to the Intellectual
Property, including without limitation, Certificates of Registration for all
letters patent, trademarks and service marks listed on Schedule 3.11 and all
such documents relating thereto.
5.15 FCC MATTERS. Prior to the execution hereof, the Sellers and
Purchaser's designee have filed with the FCC applications requesting the FCC's
written consent to the transactions contemplated by this Agreement. Purchaser
shall reasonably cooperate with the Sellers and Purchaser or Purchaser's
designee in prosecuting such FCC applications and shall not take any action that
is reasonably likely to adversely affect, delay or interfere with obtaining FCC
approval.
5.16 THIRD PARTY DESIGNATION. At the request of Purchaser, the Sellers
agree to convey the Assets and any documents relating thereto to any third party
designated in writing by Purchaser and approved by Sellers; it being recognized,
acknowledged and agreed that Gray Communications Systems, Inc. or its subsidiary
is an acceptable designee.
5.17 HSR FILINGS. Purchaser or Purchaser's designee and Sellers shall, as
promptly as practicable following the execution of this Agreement, and in
cooperation with each other, file with the Department of Justice and the Federal
Trade Commission the premerger notification forms and any other documents
required under the HSR Act, and each shall use its best efforts to obtain
earliest termination of all waiting periods under the HSR Act.
5.18 FURTHER ACTIONS. Subject to the terms and conditions of this
Agreement, the Sellers and Purchaser each agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated in this Agreement and to satisfy the conditions
hereto, in each case in as prompt a manner as is reasonably possible.
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ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENT OF
PURCHASER RELIANCE. All of Sellers' and Purchaser's representations, warranties,
covenants, and agreements as set forth in this Agreement shall survive the date
hereof for a period of one (1) year. Sellers and Purchaser acknowledge and agree
that Purchaser has had an opportunity to perform an investigation of the
Business and the Assets; however, no investigation by Purchaser will diminish or
obviate any of the representations, warranties, covenants, indemnities or
agreements made or to be performed by either Seller pursuant to this Agreement
or Purchaser's right to fully rely upon such representations, warranties,
covenants, indemnities and agreements.
6.02 INDEMNIFICATION BY SELLERS. Each Seller, jointly and severally, agrees
to indemnify, defend, and hold harmless Purchaser (and each of its directors,
officers, shareholders, employees, affiliates and assigns) from and against any
and all Losses asserted against, imposed upon or incurred by any of the
foregoing by reason of, resulting from, arising out of, based upon or otherwise
in respect of the following notwithstanding any actual or alleged negligence of
any of the Persons indemnified hereunder:
(a) any inaccuracy in any representation or warranty made by either
Seller pursuant to this Agreement;
(b) any breach of any covenant or agreement made or to be performed
by either Seller pursuant to this Agreement;
(c) any Undisclosed Liability;
(d) any Liability for any Taxes of either Seller that either accrued
on or before the date hereof or arose out of or relate to either Seller or the
operations of the Business on or before the date hereof; and
(e) any Retained Liability.
Sellers, acting collectively, shall have the right at their own cost and expense
to undertake to defend against any claim or cause of action under the hold
harmless and indemnity provisions of this Section 6.02. Purchaser agrees to
provide written notice of any Third Party claims which may arise under this
Section 6.02 promptly after Purchaser's receipt of notice of any such claim from
any Third Party. Failure to provide such written notice within the time
specified shall not constitute a waiver of the provisions of this Section by
Purchaser, except to the extent that such failure shall have prejudiced either
Seller's rights and abilities to defend a lawsuit that is the basis of such a
claim.
6.03. INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify, defend
and hold harmless each Seller (and its respective directors, officers,
employees, affiliates and assigns) from and against all Losses asserted against,
imposed upon or incurred by any of the foregoing by reason of, resulting from,
arising out of, based upon or otherwise in respect of the following
notwithstanding any actual or alleged negligence of any of the Persons
indemnified hereunder:
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(a) any inaccuracy in any representation or warranty made by
Purchaser pursuant to this Agreement;
(b) any breach of any covenant or agreement made or to be performed
by Purchaser pursuant to this Agreement; and
(c) any Assumed Liability.
Purchaser shall have the right at its own cost and expense to undertake to
defend against any claim or cause of action under the hold harmless and
indemnity provisions of this Section 6.03. Each Seller agrees to provide written
notice of any Third Party claims that may arise under this Section 6.03 promptly
after Sellers' receipt of notice of any such claim from any Third Party. Failure
to provide such written notice within the time specified shall not constitute a
waiver of the provisions of this Section by Sellers, except to the extent that
such failure shall have prejudiced Purchaser's rights and abilities to defend a
lawsuit that is the basis of such a claim.
6.04 INDEMNIFICATION PAYMENTS. Subject to the terms hereof, a party
obligated to make indemnification payments pursuant to this Agreement shall pay
to the indemnified party the full amount of any and all Losses (other than
Losses resulting from a Third Party claim) within ten (10) days of receipt of
the notice thereof and the full amount of any Loss resulting from a Third Party
claim within ten (10) days of the date such Litigation is terminated or the date
a final judgment or award is rendered and no appeal is taken, and thereafter the
amount of such Loss shall bear interest at a rate equal to the lesser of two
percent (2%) per month or the maximum amount permitted by Law.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Purchaser
may have hereunder as a result of any misrepresentation by, or breach of any
agreement, covenant or warranty of the Sellers contained in this Agreement or
any Other Agreement:
7.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by the Sellers shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Each of the Sellers shall have duly performed and complied in all Material
respects with all of the agreements, covenants, acts and undertakings to be
performed or complied with by it in all Material respects on or prior to the
Closing Date. Each of the Sellers shall have delivered to Purchaser a
certificate or certificates dated as of the Closing Date certifying as to the
fulfillment of the conditions of this Section 7.01. Notwithstanding any other
provision of this Agreement to the contrary, for purposes of this Section 7.01,
all Materiality qualifications contained in the representations and warranties
made by the Sellers shall be disregarded and given no effect.
7.02 INCUMBENCY CERTIFICATE. Purchaser shall have received an appropriate
incumbency certificate or certificates, dated the Closing Date, certifying the
incumbency of all officers of the Sellers.
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The certificate or certificates shall contain specimens of the signatures of the
officers whose incumbency is certified and shall be executed by officers of the
Sellers other than officers whose incumbency is certified.
7.03 CERTIFIED COPIES OF RESOLUTIONS. Purchaser shall have received copies,
certified by the duly qualified and acting Secretary or Assistant Secretary of
the Sellers, of resolutions adopted by the Board of Directors of the Sellers.
7.04 OPINIONS OF COUNSEL. Purchaser shall have received (i) a written
opinion of Winston & Strawn, counsel to the Sellers, dated the Closing Date and
substantially in form and substance reasonably satisfactory to Purchaser and its
counsel, and (ii) a written opinion of Pepper & Corazzini L.L.P., FCC counsel to
the Sellers, dated the Closing Date and substantially in the form of Exhibit
7.04(ii) attached hereto and made a part hereof by this reference.
7.05 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any Material
Adverse Change, or any condition or event that is reasonably likely to cause a
Material Adverse Change, with respect to the Assets or the Business, or either
of the Sellers with respect to the Business, from the Balance Sheet Date. Each
of the Sellers shall have delivered to Purchaser a certificate or certificates
dated as of the Closing Date executed by the Sellers certifying the foregoing
statement.
7.06 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall
have been instituted, threatened or proposed by a Third Party before any court
or Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
7.07 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments and
documents reasonably deemed necessary or appropriate by Purchaser or its
attorneys to effectuate this Agreement and to consummate the transactions
contemplated hereby shall have been approved by such attorneys in the exercise
of their reasonable discretion.
7.08 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to
Purchaser, Purchaser's designee, or the Sellers or Materially adverse to the
operations of the Business, to the assignment of the FCC License to Purchaser or
Purchaser's designee as provided in this Agreement (whether or not any appeal or
request for reconsideration or review is pending or the time for filing any
appeal or request for reconsideration or review, or for any sua sponte action by
the FCC with similar effect has expired), including without limitation, any
Materially Adverse Condition on the acquisition or operation of the Station by
Purchaser or Purchaser's designee.
7.09 HART-SCOTT APPROVAL. All waiting periods applicable to this Agreement
and the transactions contemplated hereby under the Hart-Scott Act shall have
expired or been terminated.
7.10 SALES AND USE TAXES. The Sellers shall have used their reasonable best
efforts to obtain and deliver to Purchaser an updated certificate or
certificates or letter of good standing from the Michigan and Wisconsin
Departments of Revenue (or similar Taxing authorities) and from any other state
and foreign Tax authority listed on Schedule 3.02 stating that no sales or use
Taxes are due relating to the Business or the Assets or operations of the
Station prior to Closing.
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7.11 TITLE DOCUMENTS. Purchaser shall have received an owner's title
insurance policy (or an endorsement to an existing owner's title insurance
policy) for each parcel of the Owned Real Property bringing forward the
effective date of the policy to the Closing Date subject to no additional Liens
other than Permitted Liens and reflecting no change in ownership of the Owned
Real Property. With respect to each parcel of Leased Real Property in which
either of the Sellers is the lessee, Purchaser shall have received a leasehold
insurance policy insuring either of the Sellers, as the case may be, subject to
no Liens other than Permitted Liens and a current updated and revised ALTA
survey. Each of the title insurance policies described in this Section 7.11
shall contain zoning endorsements in form and substance reasonably satisfactory
to Purchaser and shall be paid equally by the Sellers and Purchaser. The title
insurance commitment for the owner's title insurance policy for the Owned Real
Property in Eau Claire County, Wisconsin will be endorsed to remove exception
No. 21 relating to a mortgage held by Chemical Bank so that the policy when
issued will contain no special exception for the mortgage held by Chemical Bank,
but will reference the estate, right, title and interest of Americus (successor
to Sage Broadcasting) and all parties claiming by, through or under Americus.
7.12 CLOSING OF WALB AGREEMENT. At the time of Closing, all parties to that
certain Asset Purchase Agreement by and among Cosmos Broadcasting Corporation,
WALB-TV, Inc. and WALB Licensee Corp. dated as of June 22, 1998 (the "WALB
Agreement") shall be ready, willing and able to consummate the transactions
contemplated by the WALB Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by the Sellers for purposes of consummating such
transactions, but without prejudice to any other right or remedy which the
Sellers may have hereunder as a result of any misrepresentation by, or breach of
any agreement, covenant or warranty of Purchaser contained in this Agreement or
any Other Agreement:
8.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by Purchaser shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Purchaser shall have duly performed and complied with all of the
agreements, covenants, acts and undertakings to be performed or complied with by
it on or prior to the Closing Date. Purchaser shall have delivered to the
Sellers a certificate dated as of the Closing Date certifying as to the
fulfillment of the conditions of this Section 8.01. Notwithstanding any other
provision of this Agreement to the contrary, for purposes of this Section 8.01,
all Materiality qualifications contained in the representations and warranties
made by Purchaser shall be disregarded and given no effect.
8.02 INCUMBENCY CERTIFICATE. The Sellers shall have received an incumbency
certificate or certificates dated the Closing Date certifying the incumbency of
all officers of Purchaser who have executed this Agreement or documents in
connection with this Agreement. The certificate or certificates shall contain
specimens of the signatures of each of the officers whose incumbency is
certified and shall be executed by an officer of Purchaser other than an officer
whose incumbency is certified.
8.03 CERTIFIED COPIES OF RESOLUTIONS. The Sellers shall have received copies,
duly certified by the duly qualified and acting Secretary or Assistant Secretary
of Purchaser, of resolutions
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adopted by the Board of Directors of Purchaser approving this Agreement and the
consummation of the transactions contemplated herein.
8.04 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall
have been instituted, threatened or proposed by a Third Party before any court
or Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
8.05 HART-SCOTT ACT APPROVAL. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott Act
shall have expired or been terminated.
8.06 APPROVAL OF LEGAL MATTERS. All actions, proceedings, instruments and
documents reasonably deemed necessary or appropriate by the Sellers or their
attorneys to effectuate this Agreement and to consummate the transactions
contemplated hereby shall have been approved by such attorneys in the exercise
of their reasonable discretion.
8.07 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to
Purchaser, Purchaser's designee, or the Sellers or Materially adverse to the
operations of the Business or to the assignment of the FCC License to Purchaser
or Purchaser's designee as provided in this Agreement (whether or not any appeal
or request for reconsideration or review is pending or the time for filing any
appeal or request for reconsideration or review, or for any sua sponte action by
the FCC with similar effect has expired), including without limitation, any
Materially Adverse Condition on the acquisition or operation of the Station by
Purchaser or Purchaser's designee.
ARTICLE IX
TERMINATION
9.01 CAUSES FOR TERMINATION. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date: (i)
by the mutual consent of the Sellers and Purchaser; (ii) by Purchaser in the
event the conditions set forth in Article VII of this Agreement shall not have
been satisfied or waived by September 1, 1998; (iii) by the Sellers in the event
that the conditions set forth in Article VIII of this Agreement shall not have
been satisfied or waived by September 1, 1998; (iv) by Purchaser pursuant to
Sections 5.10; (v) by Purchaser or the Sellers at any time if Purchaser
determines in good faith that any Material Adverse Change, or any condition or
event that is reasonably likely to cause a Material Adverse Change, with respect
to the Business or the Assets, or the Sellers with respect to the Business,
shall have occurred or been discovered since the Balance Sheet Date; (vi) by
Purchaser or the Sellers if the transactions contemplated under the WALB
Agreement are not consummated or all parties to the WALB Agreement are not
ready, willing and able to consummate the transactions contemplated by the WALB
Agreement on the Closing Date; or (vii) by Purchaser or Sellers upon the
termination of the Exchange Agreement.
9.02 NOTICE OF TERMINATION. Notice of termination of this Agreement as
provided for in this Article IX shall be given by the party so terminating to
the other parties hereto in accordance with the provisions of Section 11.01.
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9.03 EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement pursuant to
Section 9.01 hereof, except for the confidentiality provisions of Section 5.04,
which shall remain in full force and effect, this Agreement shall become void
and of no further force and effect, and each party shall pay the costs and
expenses incurred by it in connection with this Agreement, and no party (or any
of its agents, counsel, representatives, Affiliates or assigns) shall be liable
to any other party for any Loss hereunder; provided, however, if non-occurrence
of Closing is the direct or indirect result of the Default of any party of its
obligations hereunder, including, without limitation, any Material inaccuracy in
any representation or warranty made by such party, such defaulting party shall
be fully liable to the other parties hereto for any such Default.
(b) It is agreed that time is of the essence in the performance and
satisfaction of this Agreement and each of the conditions specified in Articles
VII and VIII of this Agreement are Material for purposes of this Agreement.
9.04 RISK OF LOSS. The Sellers assume all risk of condemnation, destruction
or Loss due to fire or other casualty from the date of this Agreement until the
Closing.
ARTICLE X
DEFINITIONS
The following terms (in their singular and plural forms as appropriate) as
used in this Agreement shall have the meanings set forth below unless the
context requires otherwise:
"AFFILIATE" of a Person means: (i) any Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under common
control with such Person; (ii) any officer, director, partner, employee, agent,
or representative or direct or indirect beneficial or legal owner of any 10% or
greater equity or voting interest of such Person; or (iii) any entity for which
a Person described in (ii) above acts in any such capacity.
"AGREEMENT" means this Asset Purchase Agreement, including the Exhibits and
Schedules delivered pursuant hereto or referred to herein, each of which is
incorporated herein by reference.
"ASSETS" means all of the following assets, properties and rights of the
Sellers of every kind, nature, character and description, whether real, personal
or mixed, whether tangible or intangible, whether accrued, contingent or
otherwise (other than the Retained Assets) relating to or utilized in the
Business, directly or indirectly, in whole or in part, in existence on the date
hereof whether or not carried on the books and records of the Sellers, and
whether or not owned in the name of Sellers or any Affiliate of Sellers and
wherever located, including but not limited to the following:
(i) FCC License held by the Subsidiary;
(ii) the Real Property;
(iii)the Personal Property;
(iv) all rights, choses in action and claims, known or unknown,
matured or unmatured, accrued or contingent, against Third Parties; and
(v) any other tangible assets used in the Business and owned by
either of the Sellers (other than the Retained Assets, which includes accounts
receivables).
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"ASSUMED LIABILITIES" means the following specific Liabilities of the
Sellers:
(i) Liabilities first to be paid or performed after the Closing
Date under or pursuant to Contracts of Sellers assigned to Purchaser pursuant to
this Agreement (including, without limitation, outstanding purchase orders and
sales commitments of Sellers); provided, however, such Liabilities shall not
include any Liabilities resulting from or arising out of any Default by Sellers
prior to the Closing Date under or with respect to any of such Contracts; and
(ii) the License Agreement between the Company and the Subsidiary
dated as of October 20, 1995 pursuant to which the Company was granted a license
to use the FCC license of the Subsidiary.
"BALANCE SHEET" means the unaudited balance sheets of the
Sellers' Business as of December 28, 1997 and included in the Financial
Statements.
"BALANCE SHEET DATE" means the date of the most recent Balance
Sheet.
"BOARD OF DIRECTORS" means the Board of Directors of a Person
that is a corporation.
"BUSINESS" means the Sellers' business conducted by the Company
and through the Subsidiary, of owning and operating the television station
WEAU-TV serving Eau Claire and LaCrosse, Wisconsin.
"BUSINESS DAY" means a day other than a Saturday, a Sunday, a day
on which banking institutions in the State of Georgia are authorized or
obligated by law or required by executive order to be closed, or a day on which
the New York Stock Exchange is closed.
"CERTIFICATE OF INCORPORATION" means the certificate of
incorporation of a Person that is a corporation.
"CLOSING" means the consummation of the transactions contemplated
by this Agreement.
"CLOSING DATE" means the fifth business day after issuance of the
FCC approval as set forth in Section 5.15 and the satisfaction (or waiver) of
all of the conditions set forth in Articles VII and VIII, or such other date as
the parties may agree in writing; provided that the Closing Date may be extended
to September 1, 1998 by Purchaser as necessary to effectuate the tax-free
like-kind exchange described in the Exchange Agreement; provided, further, that
the provisions of the Exchange Agreement shall continue to be in effect on the
date of issuance of such FCC approval.
"CODE" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COMMITMENTS" means the owner's title insurance policy
commitments contained in Schedule 3.09.
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"COMPUTER SOFTWARE" means, with respect to the Business, all
computer programs, materials, tapes, source and object codes, and all prior and
proposed versions, releases, modifications, updates, upgrades and enhancements
thereto, as well as all documentation and listings related thereto.
"CONTRACT" means, with respect to the Business, any written or
oral contract, agreement, understanding, lease, usufruct, license, plan,
instrument, commitment, restriction, arrangement, obligation, undertaking,
practice or authorization of any kind or character or other document to which
any Person is a party or that is binding on any Person or its securities, assets
or business.
"DATABASES" means databases in all forms, versions and media,
together with prior and proposed updates, modifications and enhancements
thereto, as well as all documentation and listings therefor used in the
Business, other than Licenses.
"DEFAULT" means (1) a breach of, default under, or
misrepresentation in or with respect to any Contract or License, (2) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of, default under, or misrepresentation in any
Contract or License, or (3) the occurrence of an event that with or without the
passage of time or the giving of notice or both would give rise to a right to
terminate, change the terms of or renegotiate any Contract or License or to
accelerate, increase, or impose any Liability under any Contract or License.
"EMPLOYEE BENEFIT PLAN" means, collectively, each pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other incentive plan, any other
written or unwritten employee program, arrangement, agreement or understanding,
whether arrived at through collective bargaining or otherwise, any medical,
vision, dental or other health plan, any life insurance plan, or any other
employee benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by either of the Sellers or any other ERISA Affiliate
thereof or under which either of the Sellers or any other ERISA Affiliate
thereof has any Liability for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. "Employee
Benefit Plans" also means any plans, programs, agreements, arrangements or
understandings previously maintained by, sponsored in whole or in part by, or
contributed to by either of the Sellers, or any other ERISA Affiliate thereof
that could result in a Material Liability to the Sellers, including but not
limited to, any plan covered by or subject to Title IV of ERISA. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee or director or independent
contractor of either of the Sellers or any dependent or beneficiary thereof,
maintained by the Sellers or under which the Sellers have any obligation or
Liability, whether or not they are or are intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii) written or
oral, (iii) funding or unfunded, (iv) actual or contingent, or (v) generally
available to any or all employees (or former employees) of the Sellers (or their
beneficiaries or dependents), including, without limitation, all incentive,
bonus, deferred compensation, flexible spending accounts, cafeteria plans,
vacation, holiday, medical, disability, share purchase or other similar plans,
policies, programs, practices or arrangements.
"ENVIRONMENTAL LAWS" means all Laws relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or
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subsurface strata), including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42 U.S.C.
9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases or threatened releases of any Hazardous Substance, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Substance.
"ENVIRONMENTAL LITIGATION" means any Litigation against the
Sellers with respect to the Business or the Assets of either of the Sellers
(including, without limitation, written notice or other written communication by
any Person alleging potential Liability for investigatory costs, cleanup costs,
private or governmental response or remedial costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based upon,
or resulting from (i) any Environmental Matter or (ii) any circumstances or
state of facts forming the basis of any Liability or alleged Liability under, or
violation or alleged violation of, any Environmental Law.
"ENVIRONMENTAL MATTER" means any matter or circumstances related
in any manner whatsoever to (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, or (ii) the
transportation, treatment, storage, recycling or other handling of any Hazardous
Substance or (iii) the placement of structures or materials into waters of the
United States, by, in each case, either of the Sellers or any of their
respective predecessors or (iv) the presence of any Hazardous Substance,
including, but not limited to, asbestos, in any building, structure or workplace
or on any of the Real Property.
"ENVIRONMENTAL REPORT" means, with respect to the Business, the
independent Phase I environmental site assessment report of the Sellers'
properties and operations prepared for the Sellers and Purchaser by Montgomery
Watson, dated February, 1998.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
"ERISA PLAN" means any Employee Benefit Plan which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, or an "employee welfare benefit plan" as that term is defined in Section
3(1) of ERISA.
"EXCHANGE AGREEMENT" means that certain agreement dated of even
date herewith by and among Gray Communications Systems, Inc., WALB-TV, Inc.,
WALB Licensee Corp., Purchaser and Sellers.
"FCC" means the Federal Communications Commission.
"FINANCIAL STATEMENTS" means (i) the unaudited balance sheets of the Sellers
as of December 28, 1997 and the related statements of income for the periods
then ended and (ii) the unaudited balance sheets of the Sellers as of the end of
each fiscal quarter from December 30, 1996 through December 28, 1997 and the
related statements of income for the months then ended, and (iii) the monthly
financial statements related to the Business provided to Purchaser pursuant to
Section 5.06.
"GAAP" means generally accepted accounting principles as in effect in the
United States consistently applied.
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"GOVERNMENTAL AUTHORITY" means any federal, state, county, local, foreign or
other governmental or public agency, instrumentality, commission, authority,
board or body.
"HART-SCOTT ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, 15 U.S.C.A. ss. 18(a), as amended, and all Laws promulgated thereunder.
"HAZARDOUS SUBSTANCE" means (i) any hazardous substance, hazardous material,
hazardous waste pollutants, contaminants, or toxic substance (as those terms are
defined by any applicable Environmental Laws) and (ii) any petroleum, petroleum
products, or oil.
"IMPROVEMENTS" means all buildings, structures, fixtures and other
improvements included in the Real Property.
"INTELLECTUAL PROPERTY" means, with respect to the Business, (i) patents and
pending patent applications together with any and all continuations, divisions,
reissues, extensions and renewals thereof, (ii) trade secrets, know-how,
inventions, formulae and processes, whether trade secrets or not, (iii) trade
names, trademarks, service marks, logos, assumed names, brand names and all
registrations and applications therefor, (iv) copyrights and any registrations
and applications therefor, (v) technology rights and licenses, and (vi) Computer
Software and all other intellectual property owned by, registered in the name
of, or used in the business of a Person or in which a Person or its business has
any interest.
"IRS" means the Internal Revenue Service of the United States of America.
"KNOWLEDGE" or "KNOWN" with respect to the Sellers, means collectively those
facts that either of the Sellers, any of its officers and employees listed on
EXHIBIT X hereto or Alfred C. Eckert, III, after due inquiry, knew or reasonably
should have known.
"LAW" means any code, law, order, ordinance, regulation, rule, or statute of
any Governmental Authority.
"LEASED PERSONAL PROPERTY" means all Personal Property that is not owned by
the Sellers that the Sellers either use or have the right to use.
"LEASED REAL PROPERTY" means all Real Property that is not owned in fee
simple by the Sellers that the Sellers either occupy or use or have the right to
occupy or use.
"LIABILITY" means any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, expense (including, without limitation, costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills and
checks presented to banks for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
"LICENSE" means any license, franchise, notice, permit, easement, right,
certificate, authorization, approval or filing with any Governmental Authority
or court to which any Person is a party or that is or may be binding on any
Person or its securities, property or business.
"LIEN" means any mortgage, lien, security interest, pledge, hypothecation,
encumbrance, restriction, reservation, encroachment, infringement, easement,
conditional sale agreement, title retention,
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lease, right of occupancy or other security arrangement, defect of title,
adverse right or interest, charge or claim of any nature whatsoever of, on, or
with respect to any property or property interest.
"LITIGATION" means any action, administrative or other proceeding,
arbitration, cause of action, claim, complaint, criminal prosecution, inquiry,
hearing, investigation (governmental or otherwise), litigation, notice (written
or oral) before any Governmental Authority or arbitration, mediation or similar
tribunal by any Person alleging potential Liability or requesting information
relating to or affecting the Sellers with respect to the Business or the Assets,
the Business or the transactions contemplated by this Agreement.
"LOSS" means any and all direct or indirect demands, claims, payments,
obligations, recoveries, deficiencies, fines, penalties, interest, assessments,
actions, causes of action, suits, losses, diminution in the value of assets,
damages, punitive, exemplary or consequential damages (including, but not
limited to, lost income and profits and interruptions of business), liabilities,
costs, expenses (including without limitation, (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce rights to indemnification hereunder, and (iii) consultants'
fees and other costs of defense or investigation), and interest on any amount
payable to a Third Party as a result of the foregoing, whether accrued,
absolute, contingent, known, unknown, or otherwise as of the Closing Date or
thereafter.
"MATERIAL" or "MATERIALLY" shall be determined in light of the facts and
circumstances of the matter in question; provided, however, that any specific
monetary amount cited in this Agreement shall be deemed to determine materiality
in that instance.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any Material
adverse change in or effect on (i) the Business, operations, Assets,
Liabilities, financial condition or results of operations of such Person,
including, without limitation, any Material adverse change in the value of the
Sellers, taken as a whole, (ii) the ability of such party to consummate the
transactions contemplated by this Agreement or any of the Other Agreements to
which it is or will be a party, or (iii) the ability of such party to perform
any of its obligations under this Agreement or any of the Other Agreements to
which it is or will be a party, if such change or effect Materially impairs the
ability of such party to perform its obligations hereunder or thereunder, taken
as a whole. If any change, condition or event shall have an adverse effect or a
reasonably likely adverse effect of less than $1,000,000, no Material Adverse
Change or Material Adverse Effect will be deemed to have occurred. If any
change, condition or event shall have an adverse effect or a reasonably likely
adverse effect of $1,000,000 or more but less than $7,500,000, no Material
Adverse Effect will be deemed to have occurred and the Sellers shall have the
option to either (i) cure such change, condition or event or (ii) reduce the
Purchase Price by the amount of the adverse effect caused by such change,
condition or event. If any change, condition or event shall have an adverse
effect or a reasonably likely adverse effect of $7,500,000 or more, either
Purchaser or the Sellers may terminate this Agreement at their discretion.
Neither a Material Adverse Change nor a Material Adverse Effect shall be deemed
to result from an adverse change in general economic conditions, industry
conditions or general conditions in the markets in which the Sellers operate.
Further, notwithstanding the $1,000,000 threshold contained in the third
sentence of this definition, the Sellers shall use all reasonable efforts to
promptly remedy any adverse change, condition or event that causes or is
reasonably likely to cause the Station to be or go off the air.
"ORDER" means any decree, injunction, judgment, order, ruling, writ, quasi-
judicial decision or award or administrative decision or award of any federal,
state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority to which any Person is a party
or that
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is or may be binding on any Person or its securities, assets or business
(including, in the case of the FCC, a public notice or other written
authorization).
"OTHER AGREEMENTS" means the agreements, documents, assignments and
instruments to be executed and delivered by the Sellers pursuant to this
Agreement, including but not limited to that certain Exchange Agreement dated of
even date herewith by and among Gray Communications Systems, Inc., WALB-TV,
Inc., WALB Licensee Corp., the Purchaser and the Sellers.
"OWNED REAL PROPERTY" means all Real Property other than Leased Real
Property.
"PERMITTED LIENS" means (i) Liens for current real property Taxes not yet due
and payable, (ii) non-monetary Liens that do not affect the value or use of any
parcel of Real Property and (iii) all Special Exceptions (but not General
Exceptions) to title contained in the Commitments.
"PERSON" means a natural person or any legal, commercial or governmental
entity, such as, but not limited to, a business association, corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, or any person acting in a representative capacity.
"PERSONAL PROPERTY" means collectively all of the personal property or
interests therein owned, leased, used or controlled by the Sellers with respect
to the Business including, without limitation, inventory; the Intellectual
Property of each Seller; the Contracts of each Seller; the Licenses of each
Seller; the Computer Software; the Databases; the customer lists, mailing lists,
customer files, supplier files, sales agent and manufacturers' representative
files, credit files, and credit data relating to the Assets and the Assumed
Liabilities, all other files, records, drawings, catalogues, stationary,
advertising materials and other documents (or copies thereof) related to the
Assets or Business, and the use of any telephone numbers used in the operation
of the Business; the deposits, prepaid sums, fees and expenses (including
without limitation, Taxes, insurance premiums, rental fees, utility charges and
service charges), trust funds, retainages, escrows, monies and assets held by
Third Parties, and deferred charges, as the same shall exist as of the Closing
Date; machinery, tools, equipment (including office equipment and supplies),
furniture, furnishings, fixtures (including trade fixtures), vehicles, leasehold
improvements and all other tangible personal property.
"PUC LAWS" means public utility commission laws, rules and regulations.
"PURCHASE PRICE" means the total consideration to be paid to the Sellers by
Purchaser for the purchase of the Assets pursuant to this Agreement and which
shall be paid in accordance with Section 1.02 of this Agreement.
"PURCHASER" means Cosmos Broadcasting Corporation or its designee.
"REAL PROPERTY" means collectively all the real property or interests therein
owned, leased, occupied, or used by the Sellers in the Business as of the date
of this Agreement, together with (i) all rights, easements, tenements,
hereditaments, appurtenances, privileges, immunities, mineral rights and other
benefits belonging or appertaining thereto which run with said real property and
(ii) all right, title and interest, if any, of the Sellers in and to (A) any
land lying in the bed of any street, road, avenue, open or proposed, adjoining
said real property, (B) any award made or to be made in lieu of the land
described in the preceding clause (A), (C) any unpaid award for damage to said
real property, and (D) all strips and rights-of-way abutting or adjoining said
real property, if any. The Real Property includes, without
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limitation, all buildings, structures, fixtures and other improvements located
on the land described in the preceding sentence.
"RELATED PERSON" means, with regard to any natural Person, its spouse,
parent, sibling, child, aunt, uncle, niece, nephew, in-law, grandparent and
grandchild (including by adoption) and any trustees or other fiduciaries for the
benefit of such relatives.
"RETAINED ASSETS" means the following assets, none of which are being
purchased by Purchaser pursuant to this Agreement:
(i) all Sellers' cash or cash equivalents, Tax refunds, and Sellers'
goodwill;
(ii) records and reports maintained by Seller pertaining exclusively
to other Retained Assets or Retained Liabilities;
(iii) any asset of Sellers relating to any Employee Benefit Plan;
and
(iv) all accounts receivable.
"RETAINED LIABILITIES" means any Liability of Sellers that is not an Assumed
Liability, including, without limitation, the following:
(i) any Liabilities for any Taxes of Sellers that arise prior to the
Closing Date;
(ii) all accounts payable;
(iii) any Liabilities relating to current or former assets of
Sellers not being acquired by Purchaser pursuant to this Agreement;
(iv) any Contract of Sellers not validly assigned to Purchaser;
(v) any Liability incurred by Sellers as a result of any Default by
Sellers under any provision of this Agreement or the Other Agreements;
(vi) any Liability of Sellers for severance payments or other
severance obligations relating to any Person employed by Sellers on or before
the Closing Date;
(vii) any Liability of Sellers for continuation of coverage under
any group health plan maintained by Sellers required under the provisions of
Code ss.4980B or Sections 601-608 of ERISA with respect to any Person
employed by Sellers who experiences a "qualifying event" (as defined in the
Code and ERISA) on or before the Closing Date;
(viii) any Liability of Sellers to pay bonuses or other compensation
to Affiliates of Sellers on account of the transactions contemplated by this
Agreement;
(ix) any Undisclosed Liability;
(x) any Liability of Sellers, of any nature whatsoever, to any
current or former shareholder or Affiliate of Sellers;
(xi) any Liability (including without limitation, any Liability
relating to any Litigation) relating to, based upon, or arising out of (A)
the conduct of the Business or the ownership of the Assets prior to the
Closing Date or (B) any act, omission, transaction, circumstance, sale of
goods or services, state of facts or other condition which occurred or
existed prior to the Closing Date, whether or not then known, due or payable
and whether or not disclosed in this Agreement or the Other Agreements;
(xii) any Liability that Purchaser may incur in connection with any
Litigation brought against Purchaser under the Worker Adjustment and
Retraining Notification Act or any similar Law that relates to actions taken
by Seller with regard to any employees or any site employment;
(xiii) any of the events, circumstances, or conditions described in
Schedule 3.16, or any Environmental Claim, or Liability arising from any
Environmental Matter;
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(xiv) any Liability of Seller under or relating to any Employee
Benefit Plan;
(xv) any Liability to or Lien of any Third Party pursuant to the
bulk sales of any jurisdiction that may be asserted against any of the Assets
(whether asserted against Sellers, the Assets or Purchaser); or
(xvi) any claim by any broker, finder or other Person employed or
allegedly employed by Sellers in connection with the transactions
contemplated by this Agreement.
"SUBSIDIARY" means WEAU License, Inc. or its successor.
"TAX" or "TAXES" means any federal, state, county, local, foreign and other
taxes, assessments, charges, fees, and impositions, including interest and
penalties thereon or with respect thereto, whether disputed or not, and
including Liabilities relating to unclaimed property.
"TAX RETURNS" means all returns, reports, filings, declarations and
statements relating to Taxes that are required to be filed, recorded, or
deposited with any Governmental Authority, including any attachment thereto or
amendment thereof.
"THIRD PARTY" or "THIRD PARTIES" means any Person that is not Purchaser, the
Sellers or an Affiliate of any of the foregoing.
"UNDISCLOSED LIABILITIES" means any Liability that is not fully reflected or
reserved against in the Financial Statements or fully disclosed in a Schedule to
this Agreement.
ARTICLE XI
MISCELLANEOUS
11.01 NOTICES.
(a) All notices, requests, demands and other communications hereunder
shall be (i) delivered by hand, (ii) mailed by registered or certified mail,
return receipt requested, first class postage prepaid and properly addressed,
(iii) sent by national overnight courier service, or (iv) sent by facsimile,
graphic scanning or other telegraphic communications equipment to the parties or
their designee, addressed as follows:
To the Sellers: Busse Broadcasting Corporation
141 East Michigan Avenue
Suite 300
Kalamazoo, Michigan 49007
Attention: Mr. Lawrence A. Busse
Telephone: (616) 388-8019
Facsimile: (616) 388-6089
with copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601-9703
Attention: Steven J. Gavin, Esquire
Telephone: (312) 558-5600
Facsimile: (312) 558-5700
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Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Jonathan M. Wainwright, Esquire
Telephone: (212) 504-6122
Facsimile: (212) 504-6666
To Purchaser: Cosmos Broadcasting Corporation
The Liberty Corporation
2000 Wade Hampton Boulevard
Greenville, South Carolina 29615
Attention: Martha G. Williams, Esquire
Telephone: (864) 609-4264
Facsimile: (864) 609-3176
with copies to: Dow, Lohnes & Albertson
1200 New Hampshire Avenue, NW
Suite 800
Washington, D.C. 20036
Attention: Michael Hines, Esquire
Telephone: (202) 776-2519
Facsimile: (202) 776-2222
(b) All notices, requests, instructions or documents given to any party in
accordance with this Section 11.01 shall be deemed to have been given (i) on the
date of receipt if delivered by hand, overnight courier service or if sent by
facsimile, graphic scanning or other telegraphic communications equipment or
(ii) on the date three (3) business days after depositing with the United States
Postal Service if mailed by United States registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed.
(c) Any party hereto may change its address specified for notices herein
by designating a new address by notice in accordance with this Section 11.01.
11.02 ENTIRE AGREEMENT. This Agreement, the Schedules, the Exhibits and the
Other Agreements constitute the entire agreement between the parties relating to
the subject matter hereof and thereof and supersede all prior oral and written,
and all contemporaneous oral negotiations, discussions, writings and agreements
relating to the subject matter of this Agreement.
11.03 MODIFICATIONS, AMENDMENTS AND WAIVERS. The failure or delay of any
party at any time or times to require performance of any provision of this
Agreement shall in no manner affect its right to enforce that provision. No
single or partial waiver by any party of any condition of this Agreement, or the
breach of any term, agreement or covenant or the inaccuracy of any
representation or warranty of this Agreement, whether by conduct or otherwise,
in any one or more instances shall be construed or deemed to be a further or
continuing waiver of any such condition, breach or inaccuracy or a waiver of any
other condition, breach or inaccuracy.
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<PAGE>
11.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties hereto, and their
respective estates, successors, legal or personal representatives, heirs,
distributees, designees and assigns, but no assignment shall relieve any party
of the obligations hereunder. Except as permitted by Section 5.16 and under the
Exchange Agreement, this Agreement or any portion thereof cannot be assigned by
any party without the prior written consent of the other parties hereto. With
respect to such assignments, all representations, warranties, covenants and
indemnification rights shall be binding upon, and inure to the benefit of, the
assignee or assignees as if such representations, warranties, covenants and
indemnification rights were made directly between the original parties to this
Agreement. If the Subsidiary should be merged with and into a limited liability
company owned by the Company, all references to stockholders, directors,
Certificate of Incorporation and By-laws of the Subsidiary shall refer to
members, managers, articles of organization and the operating agreement,
respectively.
11.05 TABLE OF CONTENTS; CAPTIONS; REFERENCES. The table of contents and the
captions and other headings contained in this Agreement as to the contents of
particular articles, sections, paragraphs or other subdivisions contained herein
are inserted for convenience of reference only and are in no way to be construed
as part of this Agreement or as limitations on the scope of the particular
articles, sections, paragraphs or other subdivisions to which they refer and
shall not affect the interpretation or meaning of this Agreement. All references
in this Agreement to "Section" or "Article" shall be deemed to be references to
a Section or Article of this Agreement.
11.06 GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the substantive Laws of the State of New York,
without respect to the Laws related to choice or conflicts of Laws.
11.07 PRONOUNS. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
11.08 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good faith to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as practicable to
that of the invalid, illegal or unenforceable provisions.
11.09 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the specific
provisions of this Agreement is intended to be, nor shall be, exclusive of any
other remedy available at law, in equity or otherwise.
11.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but all of such counterparts
shall together constitute one and the same instrument.
11.11 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Purchaser or Sellers,
whether under any rule of construction or otherwise. No party to this Agreement
shall be considered the draftsman. On the contrary, this Agreement has been
reviewed, negotiated and accepted by all parties and their attorneys and shall
be construed and
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<PAGE>
interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.
11.12 EXCLUSIVE REMEDY.. The parties acknowledge and agree that this
Agreement and the Exchange Agreement shall provide the exclusive remedies of
Purchaser and Sellers with respect to the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, on and after the
Closing, Purchaser and Sellers hereby waive any statutory, equitable or common
law rights or remedies relating to any environmental health and safety matters,
including without limitation, any such matters arising under any Environmental,
Health and Safety Requirements, the Comprehensive Environmental Response,
Compensation and Liability Act or any analogous state law.
[SIGNATURES ON FOLLOWING PAGES]
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<PAGE>
IN WITNESS WHEREOF, the Company, the Subsidiary and Purchaser have duly
executed this Agreement under seal as of the date first above written.
THE COMPANY
BUSSE BROADCASTING CORPORATION
By: /s/ James C. Ryan
-------------------
Name: James C. Ryan
Title: Treasurer
THE SUBSIDIARY
WEAU LICENSE, INC.
By: /s/ James C. Ryan
-------------------
Name: James C. Ryan
Title: Vice President
PURCHASER
COSMOS BROADCASTING CORPORATION
By: /s/ James M. Keelor
-------------------
Name James M. Keelor
Title: President
EXHIBIT 10.3
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (the "Agreement") is made as of this 22nd
day of June, 1998, by and among Gray Communications Systems, Inc. ("Gray"),
WALB-TV, Inc. ("WALB"), WALB Licensee Corp. ("WALB Licensee"), Cosmos
Broadcasting Corporation ("Cosmos"), Busse Broadcasting Corporation ("Busse")
and WEAU License, Inc., or its successor ("WEAU").
WITNESSETH:
WHEREAS, WALB and WALB Licensee each respectively desires to
exchange for other property of like-kind and qualifying use within the meaning
of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code")
and the Regulations promulgated thereunder, ownership in and title to (a) the
non-license assets as described in the WALB Asset Purchase Agreement (as defined
below), referred to herein as the "WALB Assets" (with respect to WALB) and (b)
the license assets as described in the WALB Asset Purchase Agreement referred to
herein as the "WALB License" (with respect to WALB Licensee);
WHEREAS, WALB and WALB Licensee have entered into an asset purchase
agreement, dated as of June 22, 1998, with Cosmos whereby WALB and WALB Licensee
agree to sell and Cosmos agrees to purchase the WALB Assets and the WALB License
(the "WALB Asset Purchase Agreement");
WHEREAS, Cosmos has agreed to acquire the WALB Assets and the WALB
License in exchange for ownership in and title to (a) the non-license assets of
like-kind and qualifying use within the meaning of Section 1031 of the Code and
the Regulations promulgated thereunder, as identified by WALB and WALB Licensee
and as described in the WEAU Asset Purchase Agreement (as defined below),
referred to herein as the "WEAU Assets" (with respect to Busse) and (b) the
license assets as described in the WEAU Asset Purchase Agreement, referred to
herein as the "WEAU License" (with respect to WEAU), plus cash as herein
provided;
WHEREAS, in connection with the acquisition of the WEAU Assets,
Cosmos has entered into an asset purchase agreement, dated as of June 22, 1998,
with Busse and WEAU whereby Busse and WEAU agree to sell and Cosmos agrees to
purchase the WEAU Assets and the WEAU License (the "WEAU Asset Purchase
Agreement");
WHEREAS, Gray, WALB and WALB Licensee have requested that Cosmos
enter into the WEAU Asset Purchase Agreement in order to effect the exchange
contemplated herein;
WHEREAS, Cosmos is not willing to enter into the WEAU Asset Purchase
Agreement, this Agreement or the documents relating thereto or hereto unless,
Gray, WALB
<PAGE>
and WALB Licensee provide Cosmos with a full and complete indemnity against any
and all claims arising from, or relating to, the execution, delivery and
performance by Cosmos (other than Cosmos' obligation to pay the cash purchase
price to Busse and WEAU) of the WEAU Asset Purchase Agreement; and
WHEREAS, it is the intention of the parties hereto that Cosmos shall
direct Busse and WEAU to directly transfer and convey all right, title and
interest in the WEAU Assets and the WEAU License to WALB and WALB Licensee,
respectively, as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
ARTICLE I
1.1 WEAU Asset Purchase Agreement. Cosmos hereby agrees, pursuant to
the WEAU Asset Purchase Agreement, to direct Busse and WEAU to transfer and
convey all right, title and interest in the WEAU Assets and the WEAU License to
WALB and WALB Licensee, respectively, in exchange for the aggregate cash
payments of $66 million made by Cosmos to Busse and WEAU, as provided for in the
WEAU Asset Purchase Agreement. In addition to the cash payments to Busse and
WEAU, which payments will be equal to the value of the transferred WEAU Assets
and the WEAU License, respectively, and total $66 million, (a) Cosmos agrees to
pay to WALB a cash payment equal to the amount of the excess of the value of the
WALB Assets over the value of the WEAU Assets, each as determined pursuant to
Section 2.3 below, and (b) Cosmos agrees to pay to WALB Licensee a cash payment
equal to the amount of the excess of the value of the WALB License over the
value of the WEAU License, each as determined pursuant to Section 2.3 below;
provided that the net aggregate cash payments made by Cosmos to WALB and WALB
Licensee shall be equal to $12 million and the net aggregate cash payments made
by Cosmos to all parties hereto shall be equal to $78 million, each as adjusted
pursuant to Section 1.04 of the WALB Asset Purchase Agreement. Each of WALB and
WALB Licensee hereby agrees to exchange the WALB Assets and the WALB License,
respectively, for the WEAU Assets and the WEAU License, respectively, and to
receive the cash payments pursuant to the terms and conditions of this
Agreement.
ARTICLE II
2.1 Exchange Consideration. The consideration for the transfer of
the WALB Assets and the WALB License to Cosmos shall be the exchange by Cosmos
of the WEAU Assets to WALB and the WEAU License to WALB Licensee, plus the net
aggregate cash payments of $12 million referred to in Section 1.1.
2.2 Closing. (a) Cosmos' obligation to close under the WEAU Asset
Purchase Agreement is subject to the simultaneous consummation of the closing
under the WALB Asset Purchase Agreement, and the parties acknowledge and agree
that Cosmos shall
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<PAGE>
not be deemed to be in violation of the WEAU Asset Purchase Agreement to the
extent that any of Gray, WALB or WALB Licensee fails to perform any of its
obligations contemplated pursuant to the terms of this Agreement. At the closing
under the WEAU Asset Purchase Agreement, Cosmos shall assign, and Gray, WALB and
WALB Licensee shall accept, all of Cosmos' remaining rights, liabilities and
obligations under the WEAU Asset Purchase Agreement. Upon the earlier of (i) the
consummation of the closing under the WEAU Asset Purchase Agreement, (ii) the
termination of the WEAU Asset Purchase Agreement pursuant to Article IX thereof,
or (iii) the termination of the WALB Asset Purchase Agreement pursuant to
Article IX thereof, all of the parties hereto acknowledge and agree that Cosmos
shall be fully released from any and all liabilities and obligations under the
WEAU Asset Purchase Agreement and the documents relating thereto.
(b) The closing shall occur and shall be effective at such time as
agreed to by the parties (the "Closing Date") and shall take place at the
offices of Cadwalader, Wickersham & Taft in New York or at such other time and
place as the parties may agree. On the Closing Date, Cosmos will pay (a) a cash
amount equal to the fair market value of the WEAU Assets, as determined pursuant
to Section 2.3 below, to Busse, or to the Indenture Trustee for and at the
written request of Busse and (b) a cash amount equal to the fair market value of
the WEAU License, as determined pursuant to Section 2.3 below, to WEAU, or the
Indenture Trustee for and at the written request of Busse, by wiring federal or
other immediately available funds to the appropriate bank accounts as instructed
by Busse or the Indenture Trustee. Upon consummation of the exchanges
contemplated herein, Cosmos shall make the cash payments that are part of the
exchange consideration, as set forth in Section 2.1 above, by wiring federal or
other immediately available funds to the appropriate bank accounts as instructed
by the party, or parties to receive the cash payments; provided, however, that
the aggregate net cash payments made by Cosmos to all parties hereto shall be
equal to $78 million, as adjusted pursuant to Section 1.04 of the WALB Asset
Purchase Agreement; and provided further that such cash payments made by Cosmos
shall be reduced by any cash payments deposited into an escrow account as set
forth in the WALB Asset Purchase Agreement to the extent paid to WALB or WALB
Licensee. Prior to the consummation of the exchanges contemplated hereby and
receipt of the WEAU Assets and WEAU License by WALB and WALB Licensee, no cash
consideration shall be received, pledged, borrowed by, or otherwise made
available to or for the benefit of WALB, WALB Licensee or Gray unless this
Exchange Agreement shall have been terminated in accordance with Article V
hereof.
2.3 Asset Valuation and Exchange Groups. The values of the various
WEAU Assets, the WEAU License, the WALB Assets and the WALB License have been
allocated among the assets in accordance with a schedule mutually prepared by
the parties and attached hereto as Schedule 2.3. If any party undertakes to
change such schedule, such party must obtain the consent of the other parties,
which will not be unreasonably withheld.
2.4 Direct Deeding. For purposes of this Agreement, Busse agrees to
deliver and convey the WEAU Assets directly to WALB and WEAU agrees to deliver
the WEAU License directly to WALB Licensee, at the direction of Cosmos.
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<PAGE>
ARTICLE III
3.1 Indemnification. (a) Gray, WALB and WALB Licensee hereby jointly
and severally indemnify, defend and hold harmless Cosmos and its respective
officers, directors, shareholders, employees, agents and affiliates from,
against and with respect to any and all losses, damages, claims, judgments,
obligations, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs and expenses incurred in investigating,
preparing, defending against or prosecuting any litigation, claim, proceeding or
demand), of any kind or character, including environmental or tax liabilities or
claims, arising out of or in connection with the entering into and performance
of the WEAU Asset Purchase Agreement and this Agreement and any documents made
pursuant thereto or hereto and the transactions contemplated thereunder and
hereunder. This indemnity will survive the closing of the exchanges contemplated
herein and any termination of this Agreement pursuant to Section 5.1; provided,
however, that this indemnification shall not apply to Cosmos' obligation to
deliver the cash payment purchase price to Busse and WEAU and to perform its
obligations under this Agreement. Notwithstanding anything to the contrary in
the foregoing, Gray, WALB, WALB Licensee and Cosmos hereby agree that this
Article III has no application to the entering into or the performance of the
WALB Asset Purchase Agreement or the documents made pursuant thereto and that
the indemnification obligations (and limitations thereto) under the WALB Asset
Purchase Agreement have no application to this Agreement.
(b) Gray hereby indemnifies, defends and holds harmless Busse, WEAU
and their respective officers, directors, shareholders, employees, agents and
affiliates from, against and with respect to any and all losses, damages,
claims, judgments, obligations, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and costs and expenses incurred
in investigating, preparing, defending against or prosecuting any litigation,
claim, proceeding or demand), of any kind or character, including environmental
or tax liabilities or claims, arising out of or in connection with the entering
into and performance of the WEAU Asset Purchase Agreement and this Agreement and
any documents made pursuant thereto or hereto and the transactions contemplated
thereunder and hereunder. This indemnity will survive the closing of the
exchanges contemplated herein and any termination of this Agreement pursuant to
Section 5.1; provided, however, that this indemnification shall not apply to (i)
Busse's failure to perform its obligation under the Amended and Restated Stock
Purchase Agreement, dated as of June 22, 1998, among Busse, Gray and the Busse
stockholders and (ii) Busse's and WEAU's failure to perform their respective
obligations under the WEAU Asset Purchase Agreement and under this Agreement.
ARTICLE IV
4.1. Expenses. (a) Except as provided below, regardless of whether
the transactions contemplated by this Agreement are consummated, Gray shall be
responsible for all of the expenses and fees incurred by each of Gray and Busse,
or their affiliates, in connection with the transactions contemplated hereby.
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<PAGE>
(b) Gray and Busse shall each pay one-half of the costs and filing
fees associated with the pre-merger notification and reports required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR"),
pursuant to the Amended and Restated Stock Purchase Agreement.
(c) On the Closing Date under the WALB Asset Purchase Agreement,
Gray shall pay $20,000 to Cosmos as reimbursement for certain expenses and fees
incurred by Cosmos. Upon such payment, the indemnification obligations under
Article III hereof exclude any indemnification by Gray, WALB or WALB Licensee
for any expenses incurred by Cosmos in connection with the review, preparation
and negotiation of the WEAU Asset Purchase Agreement, this Agreement and the
documents made pursuant thereto and hereto and in connection with participating
in and facilitating the closing contemplated by the WEAU Asset Purchase
Agreement and this Agreement.
ARTICLE V
5.1 Causes for Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing Date: (i) by the mutual written consent of the parties hereto, or (ii)
by either Gray or Cosmos in the event that either the WEAU Asset Purchase
Agreement or the WALB Asset Purchase Agreement shall have been terminated;
provided, however, that it is understood and agreed that the WALB Asset Purchase
Agreement may not be terminated except as specifically provided therein.
Furthermore, notwithstanding anything herein to the contrary, upon the
termination of this Agreement either Busse or Cosmos may terminate the WEAU
Asset Purchase Agreement whereupon such WEAU Asset Purchase Agreement shall be
void and of no further force and effect.
5.2 Notice of Termination. Notice of termination of this Agreement
as provided for in this Article V shall be given by the party so terminating to
the other parties hereto in accordance with the provisions of Section 6.1.
5.3 Effect of Termination. (a) In the event of a termination of this
Agreement pursuant to Section 5.1 hereof, this Agreement shall become void and
of no further force and effect, and Gray shall pay the costs and expenses
incurred by the parties, as set forth in Article IV above, unless such
termination was caused by a default by Cosmos of its obligations under the WALB
Asset Purchase Agreement or the WEAU Asset Purchase Agreement, in which case
Cosmos shall be responsible for its own expenses and costs relating to the
transactions contemplated herein. In addition, Gray shall remain responsible to
pay any costs arising under Article III above.
(b) It is agreed that time is of the essence and the performance and
satisfaction of the WEAU Asset Purchase Agreement and the WALB Asset Purchase
Agreement and each of the conditions set forth therein are material for purposes
of this Agreement.
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ARTICLE VI
6.1 Notices. Any and all notices, consents, approvals or other
communications required or permitted to be given pursuant to the provisions of
this Agreement shall be given in writing and shall be sent certified or
registered mail (return receipt requested), overnight courier, or telecopier to
the parties hereto as follows:
If to Gray, WALB or WALB Licensee:
Gray Communications Systems, Inc.
1201 New York Avenue, NW
Suite 1000
Washington, DC 20005-3917
Telecopier: (202) 962-8300
Attention: Robert A. Beizer, Esq.
With a copy to:
The Ward Quaal Company
401 N. Michigan Avenue
Suite 3140
Chicago, IL 60611
Telecopier: (312) 644-3733
Attention: Mr. Ward L. Quaal
and a copy to:
Alston & Bird
1201 West Peachtree Street
Atlanta, GA 30309-3424
Telecopier: (404) 881-4777
Attention: Stephen A. Opler, Esq.
If to Cosmos:
Cosmos Broadcasting Corporation
The Liberty Corporation
2000 Wade Hampton Boulevard
Greenville, SC 29615
Telecopier: (864) 609-3176
Attention: Martha G. Williams, Esq.
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With a copy to:
Dow, Lohnes & Alberston
1200 New Hampshire Avenue, NW
Suite 800
Washington, DC 20036
Telecopier: (202) 776-2222
Attention: Michael Hines, Esq.
If to Busse or WEAU:
Busse Broadcasting Corporation
141 East Michigan Avenue
Suite 300
Kalamazoo, MI 49007
Telecopier: (616) 388-6089
Attention: Mr. James. C. Ryan
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
Telecopier: (312) 558-5700
Attention: Steven J. Gavin, Esq.
and a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Telecopier: (212) 504-6666
Attention: Jonathan M. Wainwright, Esq.
6.2 Governing Law. This Agreement shall be governed by and construed
under the laws of New York, without regard to conflict of law principles
thereof.
6.3 Further Assurances. Each of the parties hereto shall hereafter
execute and deliver such further instruments and do such further acts as may be
required or necessary to carry out the intent and purposes of this Agreement and
which are not otherwise inconsistent with the terms of this Agreement.
6.4 Third Party Beneficiary. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any creditor of the
parties hereto or for the benefit of or enforceable by any third party.
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6.5 Superseding Effect. In the event of a conflict between the terms
of this Agreement, the WEAU Asset Purchase Agreement and/or the WALB Asset
Purchase Agreement, unless otherwise specifically addressed, the terms of this
Agreement shall govern.
6.6 Gray Guaranty. Gray hereby unconditionally guarantees the
performance of WALB and WALB Licensee of their obligations hereunder and under
documents relating hereto.
6.7 Counterparts. This Agreement may be executed in two or more
identical counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
date first above written.
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /s/ Robert A. Beizer
Robert A. Beizer
Vice President
WALB-TV, INC.
By:/s/ Ward Quaal
Ward Quaal
President
WALB LICENSEE CORP.
By:/s/ Ward Quaal
Ward Quaal
President
COSMOS BROADCASTING CORPORATION
By:/s/ James M. Keelor
Name: James M. Keelor
Title: President
BUSSE BROADCASTING CORPORATION
By:/s/ James C. Ryan
James C. Ryan
Treasurer
WEAU LICENSE, INC.
By:/s/ James C. Ryan
James C. Ryan
Vice President
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SCHEDULE 2.3
[ALLOCATION OF VALUATION OF WEAU AND WALB ASSETS]
EXHIBIT 10.4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is entered into as of this 22nd
day of June, 1998, by and among WALB-TV, Inc., a Georgia corporation (the
"Company"), WALB Licensee Corp., a Delaware corporation (the "Subsidiary") (the
Company and the Subsidiary, collectively, "Sellers"), Cosmos Broadcasting
Corporation, a South Carolina corporation ("Buyer"), and NationsBank, N.A., a
national banking association (the "Escrow Agent").
WITNESSETH:
WHEREAS, Sellers and Buyer are parties to an Asset Purchase Agreement of
even date herewith pursuant to which Buyer is to deposit Three Million Nine
Hundred Thousand Dollars ($3,900,000) with the Escrow Agent related to the
purchase and sale of television station WALB-TV, Albany, Georgia.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, Sellers, Buyer and
Escrow Agent hereby agree as follows:
1. Escrow Account and Deposit. The Escrow Agent has established, or
simultaneously with the execution hereof will establish, an account (the "Escrow
Account") into which Buyer has deposited, or simultaneously with the execution
hereof will deposit, Three Million Nine Hundred Thousand Dollars ($3,900,000).
Upon receipt thereof, the Escrow Agent shall provide Buyer and Sellers
confirmation thereof, and shall hold and disburse such deposit as set forth in
this Agreement. Such deposit shall be invested in the NationsBank Money Market
Account or one of the Nations Money Market Funds listed on Schedule A attached
hereto, as directed by Buyer. Such deposit, as increased or decreased based upon
such investment results, is referred to herein as the "Deposit."
2. Release of Deposit by Escrow Agent. The Escrow Agent shall promptly
release all or a portion of the Deposit to Buyer or Sellers, as the case may be,
upon the first to occur of the following circumstances:
(i) The Escrow Agent receives joint written instructions from
Sellers and Buyer directing the Escrow Agent to make such release; or
(ii) The Escrow Agent receives a final order of a court of competent
jurisdiction authorizing the Escrow Agent to make such release.
3. Reliance by Escrow Agent. The Escrow Agent shall be entitled to rely
upon and act in accordance with any of: (a) the joint written instructions of
Sellers and Buyer, and (b) a final order of a court of competent jurisdiction
authorizing the Escrow Agent to release the Deposit, or any portion thereof, to
Buyer or Sellers.
<PAGE>
4. Conflicting Demands. If conflicting demands are made upon the Escrow
Agent, the Escrow Agent shall not be required to resolve such controversy or
take any action, but may await resolution of the controversy by joint
instructions from Sellers and Buyer or by appropriate legal proceedings.
5. Indemnification; Fees of Escrow Agent. Buyer and Sellers shall jointly
and severally pay, and hold the Escrow Agent harmless against, all costs,
charges, damages and attorneys' fees which the Escrow Agent in good faith may
incur or suffer in connection with or arising out of this Agreement. The Escrow
Agent shall be entitled to a fee for services it renders hereunder in the amount
set forth on Schedule A attached hereto, which shall be paid one-half by the
Sellers and one-half by the Buyer.
6. Rights and Duties of Escrow Agent.
(a) No assignment of the interest of any of the parties hereto shall
be binding upon the Escrow Agent unless and until written evidence of such
assignment in a form satisfactory to the Escrow Agent shall be filed with and
accepted by the Escrow Agent.
(b) The Escrow Agent may rely or act upon orders or directions
signed by the proper parties, or bearing a signature or signatures reasonably
believed by the Escrow Agent to be genuine.
(c) The Escrow Agent shall have no duties other than those expressly
imposed on it herein and shall not be liable for any act or omission except for
its own gross negligence or willful misconduct.
(d) In the event that the Deposit or any proceeds thereof shall be
attached, garnished, or levied upon by an order of any court, or the delivery
thereof shall be stayed or enjoined by an order of court, or any order, judgment
or decree shall be made or entered by any court affecting the property deposited
under this Agreement, or any part thereof, the Escrow Agent is hereby expressly
authorized in its sole discretion to obey and comply with all writs, orders or
decrees so entered or issued, which it is advised by legal counsel of its own
choosing is binding upon it, whether with or without jurisdiction, and in case
the Escrow Agent obeys or complies with any such writ, order or decree it shall
not be liable to any of the parties hereto or to any other person, firm or
corporation, by reason of such compliance notwithstanding that such writ, order
or decree be subsequently reversed, modified, annulled, set aside or vacated.
(e) The Escrow Agent may resign by giving sixty (60) days written
notice of resignation, specifying the effective date thereof. Within thirty (30)
days after receiving the aforesaid notice, the Sellers and Buyer agree to
appoint a successor escrow agent to which the Escrow Agent shall transfer the
Deposit or any proceeds thereof then held in escrow under this Agreement. If a
successor escrow agent has not been appointed and/or has not accepted such
appointment by the end of the 30-day period, the Escrow Agent may at its sole
option: (i) apply to a court of competent jurisdiction for the appointment of a
successor escrow agent, and the costs, expenses and reasonable attorneys' fees
which are incurred in connection with such a
-2-
<PAGE>
proceeding shall be paid one-half by the Sellers and one-half by the Buyer, or
(ii) continue to hold the Deposit until it receives an order from a court of
competent jurisdiction or joint written instructions of Sellers and Buyer
directing the Escrow Agent to release the Deposit.
7. Disputes. In the event of any disagreement between any of the parties
resulting in conflicting or adverse claims or demands being made to the Deposit,
the Escrow Agent shall be entitled, at its sole option, to refuse to comply with
or recognize any such claims or demands as long as the disagreement shall
continue, and in doing so, Escrow Agent shall not become liable in any way to
any person for failure or refusal comply with such conflicting or adverse claims
or demands, and its duties hereunder with regard to such disputed Deposit, shall
be suspended until the rights of the claimants have been fully adjudicated or
the differences adjusted between the parties and the Escrow Agent shall have
been notified thereof in writing signed by all parties interested. In the event
the differences between the parties with regard to the disputed Deposit have not
been adjusted, and the Escrow Agent has been so notified, within ten (10) days
following receipt of notice by Escrow Agent of conflicting or adverse claims or
demands, Escrow Agent may, but shall not be obligated to, interplead the
disputed Deposit in court, and thereupon Escrow Agent shall be fully and
completely discharged of its duties as Escrow Agent with regard to the Deposit.
The parties shall be jointly and severally liable to Escrow Agent for all fees
and expenses, including legal fees, incurred by Escrow Agent in exercising its
rights.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed to have been sufficiently given when delivered
personally, by facsimile or by such other method (including recognized air
courier or registered or certified mail, return receipt requested), addressed as
follows:
(a) if to Sellers: c/o The Ward L. Quaal Company
401 N. Michigan Avenue, Suite 3140
Chicago, Illinois 60611
Attention: Ward L. Quaal
Facsimile No.: (312) 644-3733
with copies to: Gray Communications Systems, Inc.
1201 New York Avenue, N.W., Suite 1000
Washington, D.C. 20005
Attention: Robert A. Beizer
Facsimile No.: (202) 962-8300
(b) if to Buyer: Cosmos Broadcasting Corporation
2000 Wade Hampton
Greenville, South Carolina 29615
Attention: Martha G. Williams
Facsimile No.: (864) 609-3176
-3-
<PAGE>
with copies to: Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036
Attention: Patricia A. Francis
Facsimile No.: (202) 776-2222
(c) if to Escrow Agent:NationsBank, N.A.
Private Client Group
DC1-701-03-08
1501 Pennsylvania Avenue, N.W.
Washington, D.C. 20005-1066
Attention: Susan B. Poliquin, Vice President
Facsimile No.: (202) 624-1086
or to such other address as may be specified by any party in a written notice
to the other parties.
9. Governing Law. This Agreement shall be construed under the laws of the
District of Columbia.
10. Waiver. This Agreement may be amended or modified, and any term may be
waived, only if such amendment, modification or waiver is in writing and signed
by all parties.
11. No Third Party Beneficiaries. This Agreement is a personal one, the
duty of the Escrow Agent being only to the parties hereto, their successors or
assigns, and to no other person whatsoever.
12. Counterparts. This Agreement may be executed in separate counterparts.
[SIGNATURE PAGE FOLLOWS]
-4-
<PAGE>
SIGNATURE PAGE TO WALB-TV ESCROW AGREEMENT
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective duly authorized officers all as of the day and year
first above written.
BUYER:
COSMOS BROADCASTING CORPORATION
By:/s/ James M. Keelor
___________________________
James M. Keelor, President
SELLERS:
WALB-TV, INC.
By:/s/ Ward L. Quaal
_____________________________
Ward L. Quaal, President
WALB LICENSEE CORP.
By:/s/ Ward L. Quaal
_____________________________
Ward L. Quaal, President
ESCROW AGENT:
NATIONSBANK, N.A.
By:/s/ Susan B. Poliquin
__________________________________
Susan B. Poliquin, Vice President
<PAGE>
SCHEDULE A TO ESCROW AGREEMENT
NATIONS MONEY MARKET FUNDS
1. Nations Prime Fund
2. Nations Government Money Market Fund
3. Nations Treasury Fund
4. Nations Tax Exempt Fund
ESCROW AGENT FEE
$1,500
EXECUTION COPY
AMENDED AND RESTATED LOAN AGREEMENT
by and among
GRAY COMMUNICATIONS SYSTEMS, INC.,
as Borrower,
NATIONSBANK, N.A.,
as Syndication Agent and Administrative Agent,
KEY CORPORATE CAPITAL INC.,
as Documentation Agent,
and
THE FINANCIAL INSTITUTIONS LISTED HEREIN
as of July 31, 1998
with
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Lead Arranger.
Powell, Goldstein, Frazer & Murphy LLP,
Atlanta, Georgia
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS.......................................................2
1.1 DEFINITIONS............................................................2
1.2 OTHER TERMS...........................................................18
1.3 ACCOUNTING PROVISIONS.................................................19
SECTION 2. THE LOANS AND THE LETTERS OF CREDIT..............................19
2.1 THE REVOLVING COMMITMENT AND THE REVOLVING LOANS......................19
2.2 THE TERM COMMITMENT AND THE TERM LOANS................................21
2.3 LETTER OF CREDIT......................................................21
2.4 MAKING AND CONTINUATION/CONVERSION OF THE LOANS.......................25
2.5 THE NOTES.............................................................26
2.6 FEES..................................................................27
2.7 PREPAYMENT............................................................27
2.8 RESERVES OR DEPOSIT REQUIREMENTS, ETC.................................29
2.9 TAX LAW, INCREASED COSTS, ETC.........................................29
2.10 EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE....30
2.11 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL.......................30
2.12 FUNDING.............................................................30
2.13 INDEMNITY...........................................................30
2.14 CAPITAL ADEQUACY....................................................31
2.15 TAXES...............................................................31
2.16 INCREMENTAL COMMITMENT..............................................32
SECTION 3. INTEREST; PAYMENTS...............................................32
3.1 INTEREST..............................................................32
3.2 MANNER OF PAYMENTS....................................................33
SECTION 4. CLOSING..........................................................34
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER...................34
5.1 ORGANIZATION AND POWERS TAXES.........................................34
5.2 AUTHORIZATION.........................................................35
5.3 FINANCIAL STATEMENTS..................................................35
5.4 PROJECTIONS...........................................................36
5.5 CAPITALIZATION OF THE BORROWER AND ITS SUBSIDIARIES...................36
5.6 TITLE TO PROPERTIES; PATENTS, TRADEMARKS, ETC.........................36
5.7 LITIGATION; PROCEEDINGS...............................................37
5.8 TAXES.................................................................37
5.9 ABSENCE OF CONFLICTS..................................................38
5.10 INDEBTEDNESS........................................................38
5.11 COMPLIANCE..........................................................38
5.12 STATEMENTS NOT MISLEADING...........................................39
5.13 CONSENTS OR APPROVALS...............................................39
5.14 MATERIAL CONTRACTS AND COMMITMENTS..................................39
5.15 EMPLOYEE BENEFIT PLANS..............................................40
5.16 LICENSES AND OPERATING AGREEMENTS...................................40
5.17 MATERIAL RESTRICTIONS...............................................41
5.18 INVESTMENT COMPANY ACT..............................................41
i
<PAGE>
5.19 ABSENCE OF MATERIAL ADVERSE EFFECT..................................41
5.20 DEFAULTS............................................................41
5.21 REAL ESTATE.........................................................41
5.22 SECURITIES LAWS.....................................................41
5.23 INSURANCE...........................................................42
5.24 LABOR MATTERS.......................................................42
5.25 ENVIRONMENTAL COMPLIANCE............................................42
5.26 SOLVENCY............................................................44
5.27 BUSSE PURCHASE AGREEMENT, SUBORDINATED NOTE INDENTURE AND
REGISTRATION STATEMENTS.............................................45
5.28 LICENSE SUBSIDIARIES................................................46
5.29 YEAR 2000 COMPLIANCE................................................46
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BANKS.................46
6.1 COMPLIANCE............................................................46
6.2 SECURITY AGREEMENTS...................................................48
6.3 PLEDGE AGREEMENTS.....................................................48
6.4 REAL ESTATE MATTERS...................................................48
6.5 FINANCING STATEMENTS..................................................50
6.6 SUBSIDIARY GUARANTY...................................................50
6.7 OPINION OF BORROWER'S COUNSEL.........................................50
6.8 CONSUMMATION OF BUSSE PURCHASE AGREEMENT..............................51
6.9 SUBORDINATED NOTES....................................................51
6.10 PAYMENT OF EXISTING INDEBTEDNESS....................................51
6.11 FINANCIAL INFORMATION...............................................51
6.12 ENGINEER'S REPORT...................................................52
6.13 DUE DILIGENCE.......................................................52
6.14 BORROWING REQUEST...................................................52
6.15 INSURANCE CERTIFICATES..............................................52
6.16 CORPORATE DOCUMENTS.................................................53
6.17 LIEN SEARCHES, CONSENTS AND RELEASES OF LIENS.......................53
6.18 NO ORDER, JUDGMENT OR DECREE........................................53
6.19 NO MATERIAL ADVERSE EFFECT..........................................53
6.20 FEE LETTER; FEES AND EXPENSES.......................................54
6.21 LEGAL APPROVAL......................................................54
6.22 OTHER DOCUMENTS.....................................................54
SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWER............................54
7.1 USE OF PROCEEDS.......................................................54
7.2 CONTINUED EXISTENCE; MAINTENANCE OF RIGHTS AND LICENSES; COMPLIANCE
WITH LAW..............................................................54
7.3 INSURANCE.............................................................55
7.4 OBLIGATIONS AND TAXES.................................................55
7.5 FINANCIAL STATEMENTS AND REPORTS......................................56
7.6 NOTICES...............................................................58
7.7 MAINTENANCE OF PROPERTY...............................................59
7.8 INFORMATION AND INSPECTION............................................59
7.9 MAINTENANCE OF LIENS..................................................59
7.10 TITLE TO PROPERTY...................................................60
7.11 ENVIRONMENTAL COMPLIANCE AND INDEMNITY..............................60
7.12 RATE HEDGING OBLIGATIONS............................................61
7.13 FCC CONSENTS........................................................61
7.14 APPRAISALS..........................................................62
7.15 REAL ESTATE.........................................................62
7.16 YEAR 2000 COMPLIANCE................................................62
7.17 COVENANTS REGARDING FORMATION OF SUBSIDIARIES AND ACQUISITIONS......62
ii
<PAGE>
SECTION 8. NEGATIVE COVENANTS OF THE BORROWER...............................63
8.1 INDEBTEDNESS..........................................................63
8.2 LIENS.................................................................63
8.3 GUARANTIES............................................................64
8.4 RENTAL AND CONDITIONAL SALE OBLIGATIONS...............................64
8.5 REAL PROPERTY INTERESTS...............................................64
8.6 CAPITALIZED LEASE OBLIGATIONS.........................................64
8.7 NOTES, ACCOUNTS RECEIVABLE AND CLAIMS.................................65
8.8 CAPITAL DISTRIBUTIONS; RESTRICTIONS ON PAYMENTS TO STOCKHOLDERS.......65
8.9 DISPOSAL OF PROPERTY; MERGERS; ACQUISITIONS; REORGANIZATIONS..........65
8.10 INVESTMENTS.........................................................68
8.11 AMENDMENT OF GOVERNING DOCUMENTS....................................69
8.12 FINANCIAL COVENANTS.................................................69
8.13 MANAGEMENT AGREEMENTS AND FEES......................................70
8.14 FISCAL YEAR.........................................................70
8.15 ERISA...............................................................70
8.16 AFFILIATES..........................................................71
8.17 CHANGE OF NAME, IDENTITY OR CORPORATE STRUCTURE.....................71
8.18 AMENDMENTS OR WAIVERS...............................................71
8.19 ISSUANCE OR TRANSFER OF CAPITAL STOCK AND OTHER EQUITY INTERESTS....71
8.20 CHANGE IN BUSINESS..................................................72
8.21 REGULATION U........................................................72
8.22 LICENSE SUBSIDIARIES................................................72
8.23 SUBORDINATED DEBT...................................................72
SECTION 9. EVENTS OF DEFAULT................................................73
9.1 NON-PAYMENT...........................................................73
9.2 FAILURE OF PERFORMANCE IN RESPECT OF OTHER OBLIGATIONS................73
9.3 BREACH OF WARRANTY....................................................73
9.4 CROSS-DEFAULTS........................................................73
9.5 ASSIGNMENT FOR BENEFIT OF CREDITORS...................................74
9.6 BANKRUPTCY............................................................74
9.7 APPOINTMENT OF RECEIVER; LIQUIDATION..................................74
9.8 JUDGMENTS.............................................................74
9.9 IMPAIRMENT OF COLLATERAL; INVALIDATION OF ANY LOAN DOCUMENT...........74
9.10 TERMINATION OF LICENSE OR OPERATING AGREEMENT.......................75
9.11 CHANGE OF CONTROL...................................................75
9.12 CONDEMNATION........................................................76
9.13 CESSATION OF OPERATIONS.............................................76
9.14 SUBORDINATION.......................................................76
9.15 MATERIAL ADVERSE EFFECT.............................................76
SECTION 10. REMEDIES........................................................76
10.1 OPTIONAL DEFAULTS...................................................76
10.2 AUTOMATIC DEFAULTS..................................................77
10.3 PERFORMANCE BY THE BANKS............................................77
10.4 OTHER REMEDIES......................................................77
10.5 ENFORCEMENT AND WAIVER BY THE BANKS.................................77
SECTION 11. THE ADMINISTRATIVE AGENT........................................78
11.1 APPOINTMENT.........................................................78
11.2 POWERS..............................................................78
11.3 GENERAL IMMUNITY....................................................78
iii
<PAGE>
11.4 ACTION ON INSTRUCTIONS OF THE BANKS.................................79
11.5 EMPLOYMENT OF ADMINISTRATIVE AGENTS AND COUNSEL.....................79
11.6 RELIANCE ON DOCUMENTS; COUNSEL......................................79
11.7 ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION............79
11.8 RIGHTS AS A BANK....................................................80
11.9 BANK CREDIT DECISION................................................80
11.10 SUCCESSOR ADMINISTRATIVE AGENT......................................80
11.11 RATABLE SHARING.....................................................81
11.12 ACTIONS BY THE ADMINISTRATIVE AGENT AND THE BANKS...................81
SECTION 12. MISCELLANEOUS...................................................81
12.1 CONSTRUCTION........................................................81
12.2 FURTHER ASSURANCE...................................................82
12.3 EXPENSES OF THE ADMINISTRATIVE AGENT AND THE BANKS; INDEMNIFICATION.82
12.4 NOTICES.............................................................83
12.5 WAIVER AND RELEASE BY THE BORROWER..................................85
12.6 RIGHT OF SET OFF....................................................85
12.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS..............................85
12.8 APPLICABLE LAW......................................................87
12.9 ENFORCEMENT.........................................................88
12.10 JURY TRIAL WAIVER...................................................88
12.11 BINDING EFFECT AND ENTIRE AGREEMENT.................................89
12.12 COUNTERPARTS........................................................89
12.13 SURVIVAL OF AGREEMENTS..............................................89
12.14 MODIFICATION........................................................89
12.15 SEPARABILITY........................................................90
12.16 SECTION HEADINGS....................................................90
12.17 TERMINATION.........................................................90
12.18 FCC COMPLIANCE......................................................91
12.19 MARSHALING; PAYMENTS SET ASIDE......................................91
iv
<PAGE>
EXHIBITS
Exhibit A - Form of Borrower Security Agreement
Exhibit B - Form of Borrower Pledge Agreement
Exhibit C - Form of Subsidiary Guaranty
Exhibit D - Form of Subsidiary Pledge Agreement
Exhibit E - Form of Subsidiary Security Agreement
Exhibit F - Form of Revolving Note
Exhibit G - Form of Term Note
Exhibit H - Form of Compliance Certificate
SCHEDULES
Schedule 1 - Permitted Liens
Schedule 2 - Ratable Share and Notice Addresses
Schedule 3 - Subsidiaries
Schedule 4 - Capitalization
Schedule 5 - Litigation
Schedule 6 - Permitted Indebtedness
Schedule 7 - Compliance Issues
Schedule 8 - Material Contracts
Schedule 9 - Employee Benefit Plans
Schedule 10 - Licenses
Schedule 11 - Real Estate
Schedule 12 - Environmental Problems
v
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and entered into as of
July 31, 1998, by and among GRAY COMMUNICATIONS SYSTEMS, INC., a Georgia
corporation (the "Borrower"), the FINANCIAL INSTITUTIONS listed on the signature
pages hereof (the "Banks"), NATIONSBANK, N.A., as syndication agent (the
"Syndication Agent"), KEY CORPORATE CAPITAL INC., as documentation agent (the
"Documentation Agent") and NATIONSBANK, N.A., as administrative agent (the
"Administrative Agent") for the Banks, the Syndication Agent, and the
Documentation Agent.
WITNESSETH:
----------
WHEREAS, the Borrower, Key Corporate Capital Inc., as Agent (as defined in
the Prior Loan Agreement defined below), and NationsBank, N.A., as Co-Agent (as
defined in the Prior Loan Agreement defined below), and the Banks are all
parties to the Prior Loan Agreement (as hereinafter defined); and
WHEREAS, the Borrower has requested that the Administrative Agent, the
Documentation Agent and the Banks consent to certain amendments to the Prior
Loan Agreement, as more fully set forth in this Amended and Restated Loan
Agreement; and
WHEREAS, the Administrative Agent and the Banks have agreed to amend and
restate the Prior Loan Agreement in its entirety as set forth herein; and
WHEREAS, the Borrower acknowledges and agrees that the security interest
granted to the Agent (as defined in the Prior Loan Agreement), for itself and on
behalf of the Banks pursuant to the Prior Loan Agreement and the Collateral
Documents (as defined in the Prior Loan Agreement) executed in connection
therewith shall remain outstanding and in full force and effect in accordance
with the Prior Loan Agreement and shall continue to secure the Obligations (as
defined herein); and
WHEREAS, the Borrower acknowledges and agrees that (i) the Obligations (as
hereinafter defined) represent, among other things, the amendment, restatement,
renewal, extension, consolidation and modification of the Obligations (as
defined in the Prior Loan Agreement) arising in connection with the Prior Loan
Agreement and the other Collateral Documents executed in connection therewith;
(ii) the parties hereto intend that the Prior Loan Agreement and the other
Collateral Documents executed in connection therewith and the collateral pledged
thereunder shall secure, without interruption or impairment of any kind, all
existing Indebtedness under the Prior Loan Agreement and the other Collateral
Documents executed in connection therewith as so amended, restated,
restructured, renewed, extended, consolidated and modified hereunder, together
with all other Obligations hereunder, (iii) all Liens evidenced by the Prior
Loan Agreement and the other Collateral Documents executed in connection
therewith are hereby ratified, confirmed and continued; and (iv) the Loan
Documents (as hereinafter defined) are intended to restructure, restate, renew,
extend, consolidate, amend
<PAGE>
and modify the Prior Loan Agreement and the other Collateral Documents executed
in connection therewith; and
WHEREAS, the parties hereto intend that (i) the provisions of the Prior
Loan Agreement and the other Collateral Documents executed in connection
therewith, to the extent restructured, restated, renewed, extended,
consolidated, amended and modified hereby, are hereby superseded and replaced by
the provisions hereof and of the Loan Documents; and (ii) the Notes (as
hereinafter defined) amend, renew, extend, modify, replace, are substituted for
and supersede in their entirety, but do not extinguish the indebtedness arising
under, the promissory notes issued pursuant to the Prior Loan Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby amend and restate the Prior Loan Agreement as follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. All terms typed with leading capitals are terms defined
in this Agreement. For the purposes of this Agreement, the terms defined in this
Section 1 shall have the meanings set out below.
"Adjusted Leverage Ratio" shall mean, as of any date, the ratio of (a) the
difference between (i) Total Debt as of such date, minus (ii) the aggregate
amount of the Borrower's cash and marketable securities on hand, not to exceed
$5,000,000 to (b) Operating Cash Flow for the four (4) quarter period then ended
or most recently ended.
"Administrative Agent" shall mean NationsBank, N.A., in its capacity as
Administrative Agent for the Banks or any successor Administrative Agent
appointed pursuant to Section 11.10.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at NationsBank, N.A., Agency Services,
NC1-001-15-04, Independence Center, 101 North Tryon Street, Charlotte, North
Carolina 28255, or such other office as may be designated pursuant to Section
12.4.
"Affiliate" means, with respect to any Person (a) any other Person which
is directly or indirectly controlled by, under common control with or
controlling the first specified Person; (b) a Person owning beneficially or
controlling ten percent (10%) or more of the equity interest in such other
Person; (c) any officer, director or partner of such other Person; or (d) any
spouse or relative (by blood, adoption or marriage) of any such individual
Person. The term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person whether through the ownership of voting securities, partnership
interests, by contract or otherwise.
2
<PAGE>
"Applicable Margin" means, as of any date of determination, the percentage
determined from the following table based upon the Leverage Ratio:
Applicable Margin Applicable Margin
Leverage Ratio: for Base Rate Loans: for LIBOR Loans:
--------------- -------------------- ----------------
Greater than 6.5:1.0. 0.500% 2.250%
Greater than 6.00:1.0,
but less than or equal to
6.50:1.0. 0.250% 2.00%
Greater than 5.50:1.0,
but less than or equal to
6.00:1.0. 0.000% 1.750%
Greater than 5.00:1.0,
but less than or equal to
5.50:1.0. 0.000% 1.500%
Greater than 4.50:1.0 but
less than or equal to
5.00:1.0 0.00% 1.250%
Greater than 4.00:1.0,
but less than or equal to
4.50:1.0. 0.000% 1.000%
Less than or equal to
4.0:1.0. 0.000% 0.750%
"Asset Sale" means the sale by the Borrower or any of its Subsidiaries to
any Person of any of the stock, partnership interests or other equity interests
of any Subsidiary or any other assets of the Borrower or any Subsidiary, other
than (a) the sale of assets in one transaction or a series of transactions with
an aggregate value which does not exceed $300,000 in any fiscal year and (b) the
sale in the ordinary course of business of assets held for resale in the
ordinary course of business or the trade in or replacement of assets in the
ordinary course of business.
"Banking Day" means a day on which the office of the Administrative Agent
in Charlotte, North Carolina is open to the public for the transaction of
business, and on which, with respect to any LIBOR Loan, banks are open for
business in London, England, and quoting deposit rates for dollar deposits.
"Banks" means the financial institutions listed on the signature pages of
this Agreement and their respective successors and assigns; the term "Banks"
shall include the Issuing Bank.
"Base Rate" means the rate of interest determined and publicly announced
by the Administrative Agent from time to time as its "prime rate" at the
Administrative Agent's Office. The prime rate functions as a reference rate
index, and the Administrative Agent may charge
3
<PAGE>
borrowers more or less than the prime rate. The Base Rate will automatically
change as and when such prime rate changes.
"Base Rate Loans" means those Loans described in Sections 2.1 and 2.2 on
which the Borrower shall pay interest at a rate based on the Base Rate.
"Benefit Arrangement" means any pension, profit-sharing, thrift or other
retirement plan, medical, hospitalization, vision, dental, life, disability or
other insurance or benefit plan, deferred compensation, stock ownership, stock
purchase, stock option, performance share, bonus, fringe benefit, savings or
other incentive plan, severance plan or other similar plan, agreement,
arrangement or understanding, to which the Borrower or any member of the
Controlled Group is, or in the preceding six (6) years was, required to
contribute on behalf of its employees or directors, whether or not such plan,
agreement, arrangement or understanding is subject to ERISA.
"Borrower" means Gray Communications Systems, Inc., a Georgia
corporation.
"Borrower Pledge Agreement" means, collectively, that certain Amended and
Restated Borrowers Pledge Agreement dated as of July 31, 1998, between the
Borrower and the Administrative Agent, or any supplement, in form and substance
satisfactory to the Administrative Agent, thereto, or any other similar
agreement substantially in the form of Exhibit A attached hereto, pursuant to
which the Borrower has pledged to the Administrative Agent, for itself and on
behalf of the Banks, all of the Borrower's Capital Stock in any Subsidiaries
existing on the Agreement Date or formed or acquired by the Borrower after the
Agreement Date.
"Borrower Security Agreement" means, collectively, that certain Amended
and Restated Borrower Security Agreement dated as of July 31, 1998 between the
Borrower and the Administrative Agent, or any supplement in form and substance
satisfactory to the Administrative Agent, thereto, or any other similar
agreement substantially in the form of Exhibit B attached hereto.
"Busse Bonds" means those certain 11 5/8% Senior Secured Notes due 2000
issued by Busse Broadcasting on October 26, 1995.
"Busse Broadcasting" means Busse Broadcasting Corporation, a Delaware
corporation.
"Busse Purchase Agreement" means that certain Amended and Restated Stock
Purchase Agreement by and among Busse Broadcasting, South Street (Corporate),
Greycliff, South Street (Leveraged), South Street (International), and the
Borrower, dated as of June 22, 1998.
"Busse Sellers" means, collectively, Busse Broadcasting, South Street
(Corporate), Greycliff, South Street (Leveraged) and South Street
(International).
4
<PAGE>
"Capital Distribution" means any dividend, payment or distribution made,
liability incurred or other consideration given for the purchase, acquisition,
redemption or retirement of any stock, partnership interest or other equity
interest of the Borrower or any of its Subsidiaries or as a dividend, return of
capital or other payment or distribution of any kind to a shareholder or partner
of the Borrower or any of its Subsidiaries in respect of the Borrower's or such
Subsidiary's stock or partnership interests; provided, however, that any
dividend or other distribution with respect to any class of Capital Stock paid
or made in such class of Capital Stock shall not constitute a "Capital
Distribution" for purposes of this Agreement.
"Capital Expenditures" means any payments by the Borrower or any of its
Subsidiaries for or in connection with the rental, lease, purchase, construction
or use of any real or personal property the value or cost of which, under GAAP,
should be capitalized and appear on the Borrower's or such Subsidiary's balance
sheet in the category of property, plant or equipment, without regard to the
manner in which such payments or the instrument pursuant to which they are made
are characterized by the Borrower or such Subsidiary or any other Person;
provided, however, that neither (a) the capitalized portion of the purchase
price payable in connection with the Busse Purchase Agreement or a Permitted
Acquisition, nor (b) expenditures of proceeds of casualty insurance policies
reasonably and promptly applied to replace insured assets, shall constitute a
Capital Expenditure for purposes of this Agreement.
"Capital Stock" means, as applied to any Person, any capital stock of such
Person, regardless of class or designation, and all warrants, options, purchase
rights, conversion or exchange rights, voting rights, calls or claims of any
character with respect thereto.
"Capitalized Lease Obligations" means the obligations of the Borrower or
any of its Subsidiaries to pay rent or other amounts under leases of, or other
agreements conveying the right to use real or personal property, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of the Borrower or such Subsidiary, prepared in accordance with
GAAP.
"Closing" and "Closing Date" have the meanings assigned to them in
Section 4.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commitments" means, collectively, the Term Commitment and the Revolving
Commitment; and "Commitment" shall mean either one of the foregoing Commitments.
"Controlled Group" means a controlled group of entities which are treated
as a single employer under Sections 414(b), 414(c) or 414(m) of the Code of
which the Borrower or any of its Subsidiaries is a part.
"Cosmos Broadcasting" means Cosmos Broadcasting Corporation, a South
Carolina corporation.
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"Default Interest Rate" means a simple rate of interest equal to the sum
of (a) the Base Rate, plus (b) two percent (2.0%) per annum.
"Discount Rate" means, with respect to a prepayment or conversion of a
LIBOR Loan on a date other than the last day of its Interest Period, a rate
equal to the interest rate (as of the date of prepayment or conversion) on
United States Treasury obligations in a like amount as such Loan and with a
maturity approximately equal to the period between the prepayment or conversion
date and the last day of the Interest Period of such Loan, as determined by the
Administrative Agent.
"Environmental Claim" means, with respect to any Person, any written or
oral notice, claim, demand, request for information, citation, summons, order or
other communication (each, a "claim") by any other Person alleging or asserting
the liability of the recipient of such claim for investigatory costs, cleanup
costs, governmental response costs, damages to natural resources or other
property or health, personal injuries, fines or penalties arising out of, based
on or resulting from (a) the presence, or Release, of any Hazardous Material at
or from any location, whether or not owned by such Person, or (b) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law. The term "Environmental Claim" shall include, without limitation, any claim
by any governmental authority for enforcement, cleanup, removal, response,
remedial or other damages pursuant to any applicable Environmental Law, and any
claim by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
Release of Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment.
"Environmental Laws" means all provisions of law, statutes, ordinances,
rules, regulations, permits, licenses, judgments, writs, injunctions, decrees,
order, awards and standards promulgated by the government of the United States
of America or by any state or municipality thereof or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning health, safety and protection of, or regulation of the emission,
release or discharge of substances into, the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"Event of Default" means any of the events specified in Section 9.
"Exchange Parties" means, collectively, the Borrower, WALB Inc., WALB
(License), Cosmos Broadcasting, Busse Broadcasting, and WEAU (License).
"FCC" means the Federal Communications Commission or any governmental
authority at any time substituted therefor.
"Fee Letter" means any letter agreement between the Administrative Agent,
the Syndication Agent, the Lead Arranger, the Documentation Agent or any Lender
on the one hand,
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and the Borrower relating to certain fees payable by the Borrower in connection
with this Agreement.
"Final Order" means an action or order issued by the FCC (a) which has not
been reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests or petitions have been filed for administrative
or judicial review, reconsideration, rehearing, appeal or stay, and the time for
filing any such requests or petitions and for the FCC to set aside the action on
its own motion has expired, (ii) in the event of review, reconsideration or
appeal, the time for further review, reconsideration or appeal has expired, and
(iii) no appeal to a court or request for stay by a court of such action 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.
"Fixed Charge Coverage Ratio" means, as of the end of any fiscal quarter,
the ratio of (a) Operating Cash Flow for the four (4) quarter period then ended
to (b) the sum of (i) all Interest Expense for such four (4) quarter period,
plus, (ii) all required principal payments of Revolving Loans made pursuant to
scheduled Revolving Commitment reductions pursuant to Section 2.1 during such
four (4) quarter period, plus (iii) all required principal payments due on the
Term Loans during such four (4) quarter period, plus (iv) all principal payments
required to be made by the Borrower and its Subsidiaries on Total Debt (other
than the Loans) during such four (4) quarter period, plus (v) Capital
Expenditures made by the Borrower and its Subsidiaries during such four (4)
quarter period, plus (vi) any federal, state or local income taxes accrued by
the Borrower or any of its Subsidiaries during such four (4) quarter period.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States, consistently applied.
"Greycliff" means Greycliff Leveraged Fund 1993, L.P., a Delaware limited
partnership.
"Guarantor" means any Person who pledges its credit or property in any
manner, or otherwise becomes responsible for the payment or other performance of
the indebtedness, contract or other obligation of another Person and includes,
without limitation, any guarantor (whether of payment or of collection), surety,
co-maker, endorser or one who agrees conditionally or otherwise to make any
purchase, loan or investment in order thereby to enable another to prevent or
correct a default of any kind and one who has endorsed (otherwise than for
collection or deposit in the ordinary course of business), or has discounted
with recourse or agreed (continuously or otherwise) to purchase or otherwise
acquire or become liable for, any Indebtedness.
"Hazardous Material" means, collectively, (a) any petroleum or petroleum
products, flammable materials, explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, and transformers or other equipment that contain
polychlorinated biphenyls ("PCBs"), (b) any chemicals or other materials or
substances that are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental
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<PAGE>
Law and (c) any other chemical or other material or substance, exposure to which
is not or hereafter prohibited, limited or regulated under any Environmental
Law.
"Indebtedness" means, with respect to any Person, all liabilities,
obligations and reserves, contingent or otherwise, which, in accordance with
GAAP, would be reflected as a liability on a balance sheet (excluding trade
accounts payable and accrued expenses arising in the ordinary course of
business), and (without duplication) (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to assets purchase by such Person, (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services, (f) all obligations of others secured by (or for which
the holder of such obligations has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed by such Person, (g) all
obligations or liabilities in respect of which such Person is a Guarantor, (h)
all Capitalized Lease Obligations of such Person, (i) all Rate Hedging
Obligations, and (j) all obligations of such Person as an account party to
reimburse any Person in respect of letters of credit (including, without
limitation, the Letters of Credit) or bankers' acceptances. The Indebtedness of
any Person shall include any recourse Indebtedness of any partnership in which
such Person is a general partner.
"Interest Expense" shall mean, for any period, the gross interest expense
accrued by the Borrower and its Subsidiaries in respect of their Indebtedness
for such period, determined on a consolidated basis, all fees payable under
Section 2.6 or any Fee Letter and any other fees, charges, commissions and
discounts in respect of Indebtedness, including any fees payable in connection
with the Letters of Credit. For purposes of the foregoing, gross interest
expense shall be determined after giving effect to any net payments made or
received by the Borrower with respect to Rate Hedging Obligations.
"Interest Period" means, with respect to any LIBOR Loan, the period
selected by the Borrower, commencing on the date such Loan is made, continued or
converted and ending on the last day of such period as selected by the Borrower.
The Interest Period for each LIBOR Loan shall be one (1), two (2), three (3) or
six (6) months or, if available from all of the Banks, nine (9) or twelve (12)
months; provided, however, that whenever the last day of such Interest Period
would otherwise occur on a day other than a Banking Day, the last day of such
Interest Period shall occur on the next succeeding Banking Day; and provided,
further, however, that if such extension of time would cause the last day of
such Interest Period to occur in the next calendar month, the last day of such
Interest Period shall occur on the next preceding Banking Day; and provided,
further, however, that if the first day of an Interest Period is the last
Banking Day of a month or a day for which there is no numerically corresponding
day in the appropriate subsequent calendar month, then such Interest Period
shall end on the last Banking Day of the appropriate subsequent calendar month.
The Borrower shall not select any Interest Period which extends beyond any date
on which a scheduled payment is or may be required to be made pursuant to
Section 2.1(b), 2.2 or 2.7(b)(i) unless the sum of the amount available to be
drawn
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<PAGE>
under the Commitments, plus the aggregate principal balance of all Base Rate
Loans and all LIBOR Loans with Interest Periods ending prior to such date is at
least equal to the maximum amount that is, or may be, required to be paid on
such date.
"Issuing Bank" means NationsBank, N.A., in its capacity as the issuer of
the Letters of Credit, or any successor issuer of the Letters of Credit.
"KGIN-TV" means the television station KGIN-TV serving Grand Island,
Nebraska.
"KOLN-TV" means the television station KOLN-TV serving Lincoln,
Nebraska.
"Lead Arranger" means NationsBanc Montgomery Securities LLC.
"Letters of Credit" has the meaning ascribed to it in Section 2.3(a).
"Leverage Ratio", as of any date, means the ratio of (a) Total Debt as of
such date to (b) Operating Cash Flow for the four (4) quarter period then ended
or most recently ended.
"LIBOR" means the average (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent (1/16%)) of the per annum rates at which deposits
in immediately available funds in United States dollars for the relevant
Interest Period and in an amount approximately equal to the Loan to be disbursed
or to remain outstanding during such Interest Period, as the case may be, are
offered to the Administrative Agent by prime banks in the London Eurodollar
market, determined as of 11:00 a.m. London, England time (or as soon thereafter
as practicable), two (2) Banking Days prior to the beginning of the relevant
Interest Period.
"LIBOR Loans" means those Loans described in Sections 2.1 and 2.2 on which
the Borrower shall pay interest at a rate based on the applicable LIBOR Rate.
"LIBOR Rate" means a rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the nearest one one-hundredth of one percent
(1/100%)) by dividing (a) the applicable LIBOR by (b) the difference between (1)
1.0, minus (2) the LIBOR Reserve Percentage.
"LIBOR Reserve Percentage" means for any day that percentage (expressed as
a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank of the Federal Reserve System in respect of Eurocurrency
Liabilities (as that term is defined in Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time). The LIBOR Rate
shall be adjusted automatically on and as of the effective date of any change in
the LIBOR Reserve Percentage.
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<PAGE>
"License" means any license, authorization, permit, consent, franchise,
ordinance, registration, certificate, agreement or other right filed with,
granted by, or entered into by a federal, state or local governmental authority
which permits or authorizes the acquisition, construction or operation of a
television broadcasting station, or any part of a television broadcasting
station or which is required for the acquisition, ownership or operation of any
Station, any Newspaper, the Porta Phone Business or the Satellite Broadcasting
Business.
"License Subsidiary" means each Subsidiary which has no assets other than
Licenses issued by the FCC.
"Licensing Authority" means a governmental authority which has granted
or issued a License.
"Lien" as applied to the property of any Person means: (a) any mortgage,
lien, pledge, charge, lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind in respect of any property of such Person, or upon
the income or profits therefrom; (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of Indebtedness
in priority to the payment of the general, unsecured creditors of such Person;
(c) the filing of, or any agreement to give, any financing statement under the
Uniform Commercial Code or its equivalent of any jurisdiction in respect of
Indebtedness; and (d) in the case of securities or other equity interests, any
purchase option, call or similar right of a third party with respect to such
securities or other equity interests.
"Like-Kind Exchange Agreement" means, collectively, the following: (a)
that certain Exchange Agreement by and among the Borrower, WALB Inc., WALB
(License), Cosmos Broadcasting, Busse Broadcasting, and WEAU (License), dated as
of June 22, 1998; (b) that certain Asset Purchase Agreement by and among Busse
Broadcasting, WEAU (License), and Cosmos Broadcasting, dated as of June 22,
1998; (c) that certain Asset Purchase Agreement by and among WALB Inc., WALB
(License), and Cosmos Broadcasting, dated as of June 22, 1998; and (d) that
certain Escrow Agreement by and among WALB Inc., WALB (License), and Cosmos
Broadcasting, dated as of June 22, 1998.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Agreements, the Pledge Agreements, the Subsidiary Guarantees, all subordination
agreements entered into by creditors of the Borrower or any of its Subsidiaries
with respect to Indebtedness for Money Borrowed of the Borrower or any of its
Subsidiaries, all legal opinions or reliance letters issued by counsel to the
Borrower or any of its Subsidiaries, all Fee Letters, all agreements relating to
any Rate Hedging Obligations of the Borrower or any of its Subsidiaries, on the
one hand, and the Administrative Agent and the Banks, or any of them, on the
other hand, all compliance certificates issued by the Borrower or any of its
Subsidiaries and all other documents, agreements, supplements and certificates
executed or delivered in connection with or contemplated by this Agreement or
any of the foregoing documents, agreements and instruments.
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<PAGE>
"Loans" means, collectively, the Revolving Loans and the Term Loans; and
"Loan" shall mean any one of the foregoing Loans.
"Material Adverse Effect" means a material adverse effect upon or change
in (a) the properties, assets, business, operations, financial condition or
prospects of the Borrower or any of its Subsidiaries or on the ability of the
Borrower or any such Subsidiary to conduct its business, (b) the ability of the
Borrower, any of its Subsidiaries or any other party to a Loan Document (other
than the Administrative Agent or any Bank) to perform its obligations hereunder
or under any other Loan Document to which it is a party, (c) the validity or
enforceability of this Agreement, the Notes or any other Loan Document, or (d)
the rights or remedies of the Administrative Agent or the Banks under this
Agreement, the Notes or any other Loan Document or at law or in equity.
"Maturity Date" shall mean June 30, 2005.
"Mortgages" has the meaning assigned to it in Section 6.4(a).
"Net Earnings" means, with respect to the Borrower, the consolidated net
income (or deficit) of the Borrower and its Subsidiaries for the period
involved, after taxes paid or accrued and after all proper charges and reserves
(excluding, however, non-recurring special charges and credits), all as
determined in accordance with GAAP.
"Newspapers" means, as of any date, the newspapers owned or operated by
the Borrower or any of its Subsidiaries as of such date.
"Notes" means, collectively, the Revolving Notes and the Term Notes; and
"Note" shall mean any one of the foregoing Notes.
"Obligations" means any obligation of the Borrower or any of its
Subsidiaries (a) to pay to the Banks the principal of and interest on the Loans
in accordance with the terms hereof and of the Notes and the contingent
liability of the Borrower under all outstanding Letters of Credit, including,
without limitation, any interest accruing after the date of any filing by the
Borrower or any Subsidiary of any petition in bankruptcy or the commencing of
bankruptcy, insolvency or similar proceedings with respect to the Borrower or
any of its Subsidiaries, regardless of whether such interest is allowable as a
claim in any such proceeding; (b) in respect of any Rate Hedging Obligations
owing to any Bank or any Affiliate of any Bank; (c) to pay, satisfy or perform
any other liability or obligation to the Administrative Agent or any Bank,
arising under this Agreement or any Loan Document, whether now existing or
hereafter incurred by reason of future advances or otherwise, matured or
unmatured, direct or contingent, joint or several, including any extensions,
modifications or renewals thereof and substitutions therefor, and including,
without limitation, all fees, indemnification amounts, costs and expenses,
including interest thereon and reasonable attorneys' fees, incurred by the
Administrative Agent or any Bank for the protection, preservation or enforcement
of its rights and remedies arising hereunder or under the Loan Documents; (d) to
repay to the Administrative Agent or the Banks all amounts advanced at any time
by the Administrative Agent or the Banks hereunder or under any Loan
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<PAGE>
Document, including, without limitation, advances for principal or interest
payments to prior secured parties, mortgagees, lienors or other Persons, or for
taxes, levies, insurance, rent or repairs to, or maintenance or storage of, any
of the property of the Borrower or any of its Subsidiaries; (e) to perform any
covenant or agreement made with the Banks pursuant to this Agreement or any Loan
Document; or (f) to take any other action in respect of any other liability of
any nature of the Borrower or any of its Subsidiaries to the Banks under this
Agreement or any Loan Document.
"Operating Agreement" means any programming agreement, time brokerage,
local marketing or similar agreement, network affiliation agreement, franchise
agreement, lease or other agreement of the Borrower or any of its Subsidiaries
relating to the operation of a Station, a Newspaper, the Porta Phone Business or
the Satellite Broadcasting Business, the termination or adverse modification of
which could reasonably be expected to have a Material Adverse Effect.
"Operating Cash Flow" means, during any period, the consolidated Net
Earnings of the Borrower for such period (excluding, to the extent included in
Net Earnings, (i) the effect of any exchange of advertising time for non-cash
consideration, such as merchandise or services, (ii) any other non-cash income
or expense (including the cumulative effect of a change in accounting principles
and extraordinary items) and (iii) any gains or losses from sales, exchanges and
other dispositions of property not in the ordinary course of business), minus
any interest income, investment income and other non-operating income, minus any
cash payments made in respect of Programming Obligations, plus the sum of (a)
depreciation on or obsolescence of fixed or capital assets and amortization of
intangibles and leasehold improvements (including, without limitation,
amortization in respect of Programming Obligations) for such period, plus (b)
Interest Expense accrued in such period, plus (c) federal, state and local
income taxes accrued in such period to the extent deducted in calculating Net
Earnings in such period (other than any such taxes resulting from any gains from
sales and exchanges and other distributions not in the ordinary course of
business), all on a consolidated basis and computed on the accrual method. For
purposes of calculating Operating Cash Flow in any period , any acquisition of
any Station or Newspaper, and any sale or other disposition of any assets, which
occurs during such period shall be deemed to have occurred on the first day of
such period.
"PBGC" means the Pension Benefit Guaranty Corporation or any governmental
authority at any time substituted therefor.
"PCBs" has the meaning assigned to it in the definition of "Hazardous
Materials" herein.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA which is subject to the provisions of Section 302 or Title
IV of ERISA or Section 412 of the Code.
"Permitted Acquisition" has the meaning assigned to it in
Section 8.9(b).
"Permitted Investment" has the meaning assigned to it in Section 8.10.
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"Permitted Lien" means any of the following Liens:
(a) Liens for taxes or assessments and similar charges, which
are either not delinquent or being contested diligently and in good faith by
appropriate proceedings, and (i) as to which the Borrower or its affected
Subsidiary has set aside adequate reserves in accordance with GAAP on its books
and (ii) which do not entail any significant risk of loss, forfeiture,
foreclosure or sale of the property subject thereto;
(b) statutory Liens, such as mechanic's, materialman's,
warehouseman's, landlord's, artisan's, workman's, contractor's, carrier's or
other like Liens, (i) incurred in good faith in the ordinary course of business,
(ii) which are either not delinquent or are being contested diligently and in
good faith by appropriate proceedings, (iii) as to which the Borrower or its
affected Subsidiary has set aside adequate reserves in accordance with GAAP on
its books or bonded satisfactorily to the Administrative Agent and (iv) which do
not entail any significant risk of loss, forfeiture, foreclosure or sale of the
property subject thereto;
(c) encumbrances consisting of zoning restrictions, easements,
licenses, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of real property or minor irregularities of title,
provided that none of such encumbrances materially impairs the use or value of
any property in the operation of the Borrower's or any of its Subsidiaries'
business;
(d) Liens securing conditional sale, rental or purchase
money obligations permitted under Section 8.4 and Capitalized Lease Obligations
permitted under Section 8.6 (and protective UCC-1 financing statements filed by
lessors in connection therewith under leases not intended as security), but only
in the property which is the subject of such obligations;
(e) Liens arising under or pursuant to this Agreement or
any Loan Document or otherwise securing any Obligation;
(f) Liens in respect of judgments or awards with respect to
which the Borrower or any of its Subsidiaries is, in good faith, prosecuting an
appeal or proceeding for review and with respect to which a stay of execution
upon such appeal or proceeding for review has been secured, and as to which
judgments or awards the Borrower or such Subsidiary has established adequate
reserves in accordance with GAAP on its books or has bonded in a manner
satisfactory to the Administrative Agent;
(g) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation, or to participate in any
fund in connection with worker's compensation, unemployment insurance, old-age
pensions or other social security programs;
(h) Liens granted to secure the performance of bids,
tenders, contracts, leases, public or statutory obligations, surety, customs,
appeal and performance bonds and other
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<PAGE>
similar obligations and not incurred in connection with the borrowing of money,
the obtaining of advances or the payment of the deferred purchase price of any
property; and
(i) any other Liens listed on Schedule 1 attached hereto or
to which the Required Banks have consented in writing.
"Person" shall include natural persons, corporations, business trusts,
associations, companies, limited liability companies, joint ventures and
partnerships.
"Plan" means any employee benefit plan, as defined under Section 3(3) of
ERISA, established or maintained by the Borrower or any member of the Controlled
Group or any such Plan to which the Borrower or any member of the Controlled
Group is, or in the last six (6) years was, required to contribute on behalf of
its employees.
"Pledge Agreements" means, collectively, the Borrower Pledge Agreement
and the Subsidiary Pledge Agreements.
"Porta Phone Business" means, as of any date, the porta phone paging
business owned or operated by the Borrower or any of its Subsidiaries as of such
date.
"Possible Default" means an event, condition, situation or thing which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice of both would constitute, an Event of Default.
"Preferred Stock" means, collectively, the Series A Preferred Stock of the
Borrower and Series B Preferred Stock of the Borrower.
"Prepayment Premium" means, with respect to the prepayment or conversion
of any LIBOR Loan or any other receipt or recovery of any LIBOR Loan prior to
the end of the applicable Interest Period, whether by voluntary prepayment,
acceleration, conversion to a Base Rate Loan or otherwise, an amount equal to
the sum of (a) the present value (discounted at the Discount Rate) of the
product of (i) the excess, if any, of the rate of interest applicable to such
Loan pursuant to Section 3.1 at the time of such prepayment or conversation on
the principal amount so prepaid, converted or accelerated, as the case may be,
over the Discount Rate, as determined by the Administrative Agent, times (ii)
the principal amount so prepaid, converted or accelerated, as the case may be,
times (iii) a fraction, the numerator of which is the number of days remaining
in the related Interest Period and the denominator of which is three hundred and
sixty (360) (taking into installment payments of the Loans being prepaid), plus
(b) reasonable out-of-pocket costs and expenses incurred by the Banks and the
Administrative Agent with respect to such prepayment.
"Prior Loan Agreement" means that certain Loan Agreement by and among the
Borrower, Key Corporate Capital Inc., as Agent (as defined therein),
NationsBank, N.A. (South), as Co-Agent (as defined therein), and the financial
institutions parties thereto dated as of September 23,
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<PAGE>
1996, as amended by that certain First Amendment to Loan Agreement dated as of
September 8, 1997.
"Pro Forma Debt Service" means, as of the end of any fiscal quarter, the
sum of, (a) all required principal payments of Revolving Loans made pursuant to
scheduled Revolving Commitment reductions pursuant to Section 2.1 during the
four (4) quarter period following such date, plus (b) all principal payments
required to be made on the Term Loans pursuant to Section 2.2 during such
subsequent four (4) quarter period, plus (c) all principal payments required to
be made by the Borrower and its Subsidiaries on Total Debt (other than the
Loans) during such subsequent four (4) quarter period, plus (d) all Interest
Expense during such subsequent four (4) quarter period. In calculating Pro Forma
Debt Service, (i) the interest rate in effect in such subsequent period on any
Indebtedness which does not bear interest at a rate which is fixed for the
entire subsequent period shall be deemed to be the interest rate in effect on
such Indebtedness as of the date of determination, and (ii) for the purpose of
determining the amount of principal payments required on the Term Loans pursuant
to Section 2.2 in future periods, it shall be assumed that the principal amount
of Term Loans outstanding as of the date of determination will be outstanding
for the subsequent four (4) quarter period, subject to any required principal
payments.
"Programming Obligations" means all direct or indirect monetary
liabilities, contingent or otherwise, with respect to contracts for television
broadcast rights relating to television series or other programs produced or
distributed for television release.
"Quarterly Date" means the last day of each of the Borrower's fiscal
quarters, which dates shall be March 31st, June 30th, September 30th and
December 31st of each year.
"Ratable Share" means, with respect to any Bank, its pro rata share of the
Revolving Commitment, the Term Commitment, the Letters of Credit and the Loans.
The Ratable Share of each Bank as of the date of this Agreement is as set forth
on Schedule 2 attached hereto.
"Rate Hedging Obligations" means any and all obligations of the Borrower,
whether absolute or contingent and howsoever and whensoever created, arising,
evidence or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all agreements, devices
or arrangements designed to protect the Borrower from the fluctuations of
interest rates, including, without limitation, interest rate exchange or swap
agreements, reverse swap agreements, interest rate cap or collar protection
agreements, and interest rate options, puts and warrants, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Regulatory Change" means the adoption of or any change in federal, state
or local treaties, laws, rules or regulations or the adoption of or change in
any interpretations, guidelines, directives or requests of or under any federal,
state or local treaties, laws, rules or regulations (whether or not having the
force of law) by any court, governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof.
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<PAGE>
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"Reportable Event" means a reportable event as that term is defined in
Title IV of ERISA, excluding, however, such events as to which the PBGC by
regulation has waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waivers in accordance with Section 412(d) of the Code).
"Required Banks" means, at any time, the Banks holding at least sixty-six
and two-thirds percent (66 2/3%) of the then aggregate unpaid principal amount
of the Loans, or, if no principal amount of the Loans is then outstanding, the
Banks having at least sixty-six and two thirds percent (66 2/3%) of the
Commitments.
"Revolving Commitment" has the meaning assigned to it in Section 2.1(a).
"Revolving Loans" has the meaning assigned to it in Section 2.1(a).
"Revolving Notes" has the meaning assigned to it in Section 2.5.
"Satellite Broadcasting Business" means, as of any date, the satellite
broadcasting business owned or operated by the Borrower or any of its
Subsidiaries on such date.
"Security Agreements" means, collectively, the Borrower Security
Agreement and the Subsidiary Security Agreements.
"Senior Debt" means (a) Total Debt, minus (b) Subordinated Debt.
"South Street (Corporate)" means South Street Corporate Recovery Fund I,
L.P., a Delaware limited partnership.
"South Street (Leveraged)" means South Street Leveraged Corporate
Recovery Fund, L.P., a Delaware limited partnership.
"South Street (International)" means South Street Corporate Recovery Fund
I (International), L.P., a Delaware limited partnership.
"Stations" means, as of any date, the television broadcasting stations and
all television translators, auxiliary stations and low power television stations
owned in connection with the foregoing, or any other communications station
owned or operated by the Borrower or any of its Subsidiaries on such date.
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"Subordinated Debt" means all Indebtedness of the Borrower and its
Subsidiaries under the Subordinated Note Indenture or any agreements, notes,
instruments or documents executed or delivered in connection therewith and all
other Indebtedness of the Borrower the repayment of which is subordinated in
right of payment to the Obligations pursuant to a subordination agreement in
form and substance satisfactory to all of the Banks.
"Subordinated Note Indenture" means that certain Indenture dated as of
September 25, 1996, among the Borrower, all of its Subsidiaries, and Bankers
Trust Company in respect of the Borrower's 10-5/8% Senior Subordinated Notes due
2006, as the same may be amended to the extent permitted in Section 8.19.
"Subsidiary" means each partnership or corporation, the majority of the
outstanding partnership interests, capital stock or voting power of which is (or
upon the exercise of all outstanding warrants, options and other rights would
be) owned, directly or indirectly, at the time in question by the Borrower.
"Subsidiary Guaranties" means, collectively, those certain Guaranties
dated as of September 23, 1996, in favor of the Agent (as defined in the Prior
Loan Agreement) and the Banks given by each Subsidiary of the Borrower, or any
supplement, in form and substance satisfactory to the Administrative Agent,
thereto, and shall include any similar agreements substantially in the form of
Exhibit C attached hereto.
"Subsidiary Pledge Agreements" means, collectively, those certain
Subsidiary Pledge Agreements between each Subsidiary of the Borrower having one
or more of its own Subsidiaries, on the one hand, and the Agent (as defined in
the Prior Loan Agreement), on the other hand, or any supplement, in form and
substance satisfactory to the Administrative Agent, thereto, and any similar
agreements substantially in the form of Exhibit D attached hereto.
"Subsidiary Security Agreements" means, collectively, those certain
Subsidiary Security Agreements dated as of September 23, 1996, among each of the
Subsidiaries and the Agent (as defined in the Prior Loan Agreement), or any
supplement, in form and substance satisfactory to the Administrative Agent,
thereto, and shall include any similar agreements substantially in the form of
Exhibit E attached hereto.
"Term Commitment" has the meaning assigned to it in Section 2.2(a).
"Term Loan" has the meaning assigned to it in Section 2.2(a).
"Term Notes" has the meaning assigned to it in Section 2.5.
"Total Debt" means (a) all Indebtedness of the Borrower and its
Subsidiaries for borrowed money, including, without limitation, the Loans, (b)
all Capitalized Lease Obligations of the Borrower and its Subsidiaries, (c) all
other Indebtedness of the Borrower or any of its Subsidiaries represented by
notes or drafts representing extensions of credit or on which interest is
typically charged, (d) all obligation of the Borrower or any of its Subsidiaries
evidenced by
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bonds, debentures, notes or other similar instruments (including, without
limitation, all such obligations to which any property or asset owned by the
Borrower or any of its Subsidiaries is subject, whether or not the obligation
secured thereby shall have been assumed), (e) all obligations of the Borrower or
any of its Subsidiaries under conditional sale or other title retention
agreements relating to purchased assets, (f) all obligations of the Borrower or
any of its Subsidiaries which are incurred, issued or assumed as the deferred
purchase price of property or services and which are payable over a period in
excess of one (1) year, (g) all obligations or liabilities in respect of which
the Borrower or any of its Subsidiaries is a Guarantor, (h) at any time after
the occurrence and during the continuance of an event of default under any
agreement of the Borrower or any of its Subsidiaries' governing Rate Hedging
Obligations, the aggregate amount payable by the Borrower or such Subsidiary
under such agreement, and (i) all obligations of the Borrower or any of its
Subsidiaries as an account party to reimburse any Person in respect of letters
of credit (including the stated amount of all Letters of Credit) or bankers'
acceptances.
"WALB Inc." means WALB-TV, Inc., a Georgia corporation.
"WALB (License)" means WALB Licensee Corp., a Delaware corporation.
"WALB-TV" means television station WALB-TV serving Albany Georgia.
"WEAU (License)" means WEAU License, Inc., a Delaware corporation.
"WEAU-TV" means television station WEAU-TV serving Eau Claire, Wisconsin
and LaCrosse, Wisconsin.
"Working Capital" means, as of any date, the excess of the consolidated
current assets, other than cash, of the Borrower and its Subsidiaries over their
consolidated current liabilities, other than the current portion of long term
debt, as of such date.
"Year 2000 Compliant" has the meaning assigned to it in Section 5.29.
"Year 2000 Problem" has the meaning assigned to it in Section 5.29.
1.2 Other Terms. Except as otherwise specifically provided in this
Agreement, each term not otherwise expressly defined herein which is defined in
the Uniform Commercial Code, as amended (the "UCC"), as adopted in any
applicable jurisdiction shall have the meaning assigned to it in the UCC in
effect in such jurisdiction. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. All references
herein to Sections, Schedules or Exhibits shall be deemed to be references to
Sections of, and Schedules and Exhibits to, this Agreement unless the context
shall otherwise require. Whenever any agreement, promissory note or other
instrument or document is defined in this Agreement, such definition shall be
deemed to mean and include, from and after the date of any amendment,
restatement or modification thereof, such agreement, promissory note or other
instrument or document as so amended, restated or modified. All terms defined in
this Agreement in the singular shall have comparable meanings when used in the
plural and vice
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versa. The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
1.3 Accounting Provisions. All accounting terms used in this
Agreement which are not expressly defined herein shall have the respective
meanings given to them in accordance with GAAP, all computations shall be made
in accordance with GAAP, and all balance sheets and other financial statements
shall be prepared in accordance with GAAP. All financial or accounting
calculations or determinations required pursuant to this Agreement unless
otherwise expressly provided shall be made on a consolidated basis for the
Borrower and is Subsidiaries.
SECTION 2. THE LOANS AND THE LETTERS OF CREDIT.
2.1 The Revolving Commitment and the Revolving Loans.
(a) Subject to the terms and conditions hereof, during the
period from the Closing Date up to but not including the Maturity Date, the
Banks severally, but not jointly, shall make loans to the Borrower in such
amounts as the Borrower may from time to time request but not exceeding in
aggregate principal amount at any one time outstanding $100,000,000 (as such
amount may be reduced from time to time, the "Revolving Commitment"); provided,
however, that in no event shall (1) the aggregate principal amount of such
loans, plus the aggregate stated amount of the Letters of Credit exceed the
Revolving Commitment, and (2) the aggregate stated amount of all outstanding
Letters of Credit exceed $15,000,000. All amounts borrowed by the Borrower
pursuant to this Section 2.1(a) and all amounts drawn under any Letter of Credit
and not repaid may be referred to hereinafter collectively as the "Revolving
Loans." Each Revolving Loan requested by the Borrower shall be funded by the
Banks in accordance with their Ratable Shares of the requested Revolving Loan. A
Bank shall not be obligated hereunder to make any additional Revolving Loan if
immediately after making such Revolving Loan, the aggregate principal balance of
all Revolving Loans made by such Bank, plus such Bank's Ratable Share of any
outstanding Letters of Credit would exceed such Bank's Ratable Share of the
Revolving Commitment. The Revolving Loans may be comprised of Base Rate Loans or
LIBOR Loans, as provided in Section 2.4.
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(b) On each date set forth in the table below, the Revolving
Commitment as of September 29, 2000 shall be automatically reduced by the
percentage amount set forth for such date in such table:
======================================================================
Calendar
Year March 31 June 30 September 30 December 31
---------------------------------------------------------------------
Not Not
2000 applicable. applicable. 5.00% 5.00%
---------------------------------------------------------------------
2001 3.75% 3.75% 3.75% 3.75%
---------------------------------------------------------------------
2002 3.75% 3.75% 3.75% 3.75%
---------------------------------------------------------------------
2003 5.00% 5.00% 5.00% 5.00
---------------------------------------------------------------------
2004 6.25% 6.25% 6.25% 6.25%
---------------------------------------------------------------------
All
remaining Not Not
2005 7.50% principal. applicable. applicable.
======================================================================
(c) Prior to the Maturity Date, the Borrower may, at its
option, subject to the provisions of Section 2.7, from time to time prepay all
or any portion of the Revolving Loans. The Borrower may from time to time
reborrow amounts so prepaid up to the amount of the Revolving Commitment in
effect at the time of reborrowing.
(d) Prior to the Maturity Date, by written notice to the
Administrative Agent no later than 11:00 a.m., Charlotte, North Carolina time,
five (5) Banking Days prior to such termination or reduction, the Borrower may
permanently terminate or, from time to time, permanently reduce the Revolving
Commitment. Such notice shall be in writing or by telephonic communication
confirmed by telecopy or other facsimile transmission on the same day as such
telephone notice. Any such partial reduction hereunder shall be in an amount
which is not less than $5,000,000 or an integral multiple of $1,000,000 in
excess thereof. The Administrative Agent shall notify the Banks of any such
reduction or termination of the Revolving Commitment.
(e) All Revolving Loans, together with all interest accrued
thereon, shall be paid in full no later than the Maturity Date.
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2.2 The Term Commitment and the Term Loan.
(a) Subject to the terms and conditions hereof, the Banks
severally, but not jointly, shall make a loan to the Borrower on the Closing
Date not exceeding an aggregate principal amount of $100,000,000 (the "Term
Commitment"). All amounts borrowed by the Borrower pursuant to this Section
2.2(a) and not repaid may be referred to hereinafter collectively as the "Term
Loan". The Term Loan requested by the Borrower shall be funded on the Closing
Date by the Banks in accordance with their Ratable Shares. The Term Loan may be
a Base Rate Loan or LIBOR Loan, as provided in Section 2.4.
(b) Prior to the Maturity Date, the Borrower may, at its
option, subject to the provisions of Section 2.7, from time to time prepay all
or any portion of the Term Loan. No amount so repaid may be reborrowed.
(c) On each date set forth in the table below, the principal
amount of the Term Loan outstanding as of December 30, 1999, shall be repaid by
the percentage amount set forth for such date in such table:
=========================================================================
Calendar Year March 31 June 30 September 30 December 31
- --------------------------------------------------------------------------
1999 Not Applicable Not Applicable Not Applicable 2.50%
- --------------------------------------------------------------------------
2000 2.50% 2.50% 2.50% 2.50%
- --------------------------------------------------------------------------
2001 2.50% 2.50% 2.50% 2.50%
- --------------------------------------------------------------------------
2002 4.375% 4.375% 4.375% 4.375%
- --------------------------------------------------------------------------
2003 4.375% 4.375% 4.375% 4.375%
- --------------------------------------------------------------------------
2004 5.312% 5.312% 5.312% 5.312%
- --------------------------------------------------------------------------
All remaining Not Not
2005 10.625% principal. applicable. applicable.
==========================================================================
2.3 Letter of Credit.
(a) Issuance. Subject to the terms and conditions hereof,
including the provisions of Section 6, the Borrower may request that the Issuing
Bank issue, from time to time on and after the Closing Date, and the Issuing
Bank agrees to issue, from time to time on and after the Closing Date, standby
letters of credit (collectively, the "Letters of Credit") in an aggregate stated
amount not exceeding $15,000,000. Each Letter of Credit shall be issued under
the Revolving Commitment. No Letter of Credit shall (i) have an expiration date
which is later than the Maturity Date, (ii) be issued for a term of more than
three hundred sixty-four (364) days and (iii) be issued if after giving effect
to such issuance, the sum of the outstanding principal balance of the Revolving
Loans (including amounts drawn on Letters of Credit and not repaid), plus the
aggregate stated amount of outstanding Letters of Credit, would exceed the
Revolving Commitment. Each Letter of Credit shall be (y) issued in the manner
and on the conditions set
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<PAGE>
forth in this Section 2.3 and Section 6 and (z) in the Issuing Bank's standard
form for letters of credit or in such other form as is acceptable to the Issuing
Bank inform and substance.
(b) Application. Each request for a Letter of Credit shall
be made to the Issuing Bank by an application on the Issuing Bank's standard
form or in such other manner as the Issuing Bank may approve. Promptly following
the issuance of any Letter of Credit, the Issuing Bank shall notify the
Administrative Agent and the Banks of such issuance.
(c) Participation by the Banks.
(i) By the issuance of a Letter of Credit and
without any further action on the part of the Issuing Bank or the other Banks
in respect thereof, the Issuing Bank hereby grants to each other Bank, and each
other Bank hereby agrees to acquire from the Issuing Bank, a participation in
such Letter of Credit equal to such Bank's Ratable Share of the stated amount
of such Letter of Credit, effective upon the issuance of such Letter of Credit;
provided, however, that no Bank shall be required to acquire participations in
any Letter of Credit that would result in its Ratable Share of the sum of
outstanding Revolving Loans, plus the stated amount of all outstanding Letters
of Credit to be greater than its Ratable Share of the Revolving Commitment. In
consideration and in furtherance of the foregoing, each Bank hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account
of the Issuing Bank, in accordance with Section 2.3(d), such Bank's Ratable
Share of each amount disbursed pursuant to a Letter of Credit; provided,
however, that payment by the Issuing Bank under such Letter of Credit against
presentation of such draft or document shall not have constituted gross
negligence or willful misconduct of the Issuing Bank.
(ii) Each Bank acknowledges and agrees that its
obligation to acquire participations pursuant to paragraph (i) above in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstances whatsoever, including, without limitation, the occurrence and
continuance of an Event of Default or Possible Default, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(d) Letter of Credit Disbursements.
(i) If the Administrative Agent has not received
from the Borrower the payment permitted pursuant to paragraph (ii) of this
Section 2.3(d) by 11:00 a.m., Charlotte, North Carolina time, on the date on
which the Issuing Bank has notified the Borrower that payment of a draft
presented under any Letter of Credit will be made, as provided in such paragraph
(ii), the Administrative Agent shall promptly notify the Issuing Bank and each
other Bank of the disbursement to be made under such Letter of Credit and, in
the case of each Bank, its Ratable Share of such disbursement. Each Bank shall
pay to the Administrative Agent, not later than 1:00 p.m., Charlotte, North
Carolina time, on such date (or, if the Issuing Bank shall elect to defer
reimbursement from the Banks hereunder, such later date as the Issuing Bank
shall specify by notice to the Administrative Agent and the Banks), such Bank's
Ratable Share of such disbursement, which the Administrative Agent shall
promptly pay to the Issuing Bank. The
22
<PAGE>
Administrative Agent will promptly remit to each Bank its share of any amount
subsequently received by the Administrative Agent from the Borrower in respect
of such disbursement; provided, however, that amounts so received for the
account of any Bank prior to payment by such Bank of amounts required to be paid
by it hereunder in respect of any disbursement shall be remitted to the Issuing
Bank.
(ii) If the Issuing Bank shall receive any draft
presented under any Letter of Credit, the Issuing Bank shall give notice thereof
as provided in paragraph (iii) below. If the Issuing Bank shall pay and draft
presented under a Letter of Credit, the Borrower may (but shall not be required
to) pay to the Administrative Agent, for the account of the Issuing Bank, an
amount equal to the amount of such draft before 11:00 a.m., Charlotte, North
Carolina time, on the Banking Day on which the Issuing Bank shall have notified
the Borrower that payment of such draft will be made. The Administrative Agent
will promptly pay any such amounts received by it to the Issuing Bank.
(iii) The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit to ascertain that the same appear on their face
to be in substantial conformity with the terms and conditions of such Letter of
Credit. The Issuing Bank shall as promptly as reasonably practicable give oral
notification, confirmed in writing, to the Administrative Agent and the Borrower
of such demand for payment and the determination by the Issuing Bank as to
whether such demand for payment was in accordance with the terms and conditions
of such Letter of Credit and whether the Issuing Bank has made or will make a
disbursement thereunder, provided that the failure to give such notice shall not
relieve the Borrower of its obligation to reimburse such disbursement, and the
Administrative Agent shall promptly give each Bank notice thereof.
(e) Obligation to Repay Letter of Credit Disbursements, etc.
The Borrower assumes all risks in connection with the Letters of Credit and the
Borrower's obligation to repay each disbursement under a Letter of Credit shall
be absolute, unconditional and irrevocable under any and all circumstances and
irrespective of:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower or any other person may at any time have against
the beneficiary under any Letter of Credit, the Administrative Agent, the
Issuing Bank or any other Bank (other than the defense of payment in accordance
with the terms of this Agreement or a defense based on the gross negligence or
willful misconduct of the Issuing Bank) or any other Person in connection with
this Agreement or any other agreement or transaction;
(iii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect,
provided that payment by the Issuing Bank
23
<PAGE>
under such Letter of Credit against presentation of such draft or document shall
not have constituted gross negligence or willful misconduct of the Issuing Bank;
and
(iv) any other circumstance or event whatsoever,
whether or not similar to any of the foregoing; been the result of gross
negligence or willful misconduct of the Issuing Bank.
It is understood that in making any payment under a Letter of Credit: (A) the
Issuing Bank's exclusive reliance as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any documents presented pursuant to such Letter of
Credit prove to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any such Letter of Credit proves to
be forged or invalid or any statement therein proves to be inaccurate or untrue
in any respect whatsoever; and (B) any noncompliance in any immaterial respect
of the documents presented under a Letter of Credit with the terms thereof,
shall, in each case, not be deemed willful misconduct or gross negligence of the
Issuing Bank.
(f) Indemnification. The Borrower shall: (i) indemnify and
hold each Bank (including, without limitation, the Issuing Bank) harmless from
any loss resulting from any claim, demand or liability which may be asserted
against such Bank in connection with actions taken under any Letter of Credit;
and (ii) reimburse such Bank for any fees or other reasonable expenses paid or
incurred by such Bank in connection with any Letter of Credit, other than any
loss or expense resulting from such Bank's willful misconduct or gross
negligence. Any amounts paid by the Issuing Bank on any Letter of Credit shall
be deemed to be a Revolving Loan for all purposes of this Agreement and shall
bear interest from the date of payment by the Issuing Bank at the rates provided
in Section 3.1 until paid in full.
(g) Security. Upon the occurrence of any Event of Default,
the Borrower shall, upon demand, pay to the Issuing Bank the stated amount of
all outstanding Letters of Credit, which amount the Issuing Bank shall hold as
security for the obligations incurred under such Letter of Credit, this
Agreement or the Notes. The payment by the Borrower of such security shall not
terminate the obligations of the Borrower under this Section 2.3.
(h) Additional Costs. If any Regulatory Change shall either
(i) impose upon, modify, require, make or deem applicable to any Bank (or its
holding company) any reserve requirement, special deposit requirement, insurance
assessment or similar requirement against or affecting any Letter of Credit
issued or to be issued hereunder, or (ii) subject any Bank to any tax, charge,
fee, deduction or withholding of any kind whatsoever, or (iii) impose any
condition upon or cause in any manner the addition of any supplement to or
increase of any kind to any Bank's (or its holding company's) capital or cost
base for issuing such Letter of Credit which results in an increase in the
capital requirement supporting such Letter of Credit, or (iv) impose upon,
modify, require, make or deem applicable to any Bank (or its holding company)
any capital requirement, increased capital requirement or similar requirement
such as the deeming of such Letters of Credit to be assets held by such bank (or
its holding company) for
24
<PAGE>
capital calculation or other purposes and the result of any events referred to
in clause (i), (ii), (iii) or (iv) of this Section 2.3(h) shall be to increase
the costs or decrease the benefit in any way to a Bank (or its holding company)
of issuing, maintaining or participating in such Letters of Credit, then and in
such event the Borrower shall, within ten (10) days after the mailing of written
notice of such increased costs and/or decreased benefits to the Administrative
Agent and the Borrower by any Bank, pay to such Bank all such additional amounts
which in such Bank's sole good faith calculation as allocated to such Letters of
Credit, shall be sufficient to compensate it (or its holding company) for all
such increased costs and/or decreased benefits. Such Bank's calculation shall be
conclusive absent manifest error.
(i) Fees. The Letters of Credit shall be issued for a fee of
one and one-eighth percent (1.125%) per annum of the stated amount thereof,
payable upon issuance. The fee shall be payable to the Administrative Agent for
the benefit of the Banks in accordance with their Ratable Shares. If any Letter
of Credit is drawn upon prior to its expiration date, the Banks shall reimburse
to the Borrower that portion of the fee allocable to the period from the date of
the draw to the expiration date, calculated in accordance with the Issuing
Bank's standard letter of credit procedures. In addition, the Borrower shall pay
to the Issuing Bank for its own account its standard charges for the issuance of
letters of credit and for draws upon letters of credit, which charges, as of the
date hereof, are as follows: (i) $200 per Letter of Credit, payable upon
issuance; and (ii) $100 per Letter of Credit, payable upon a draw under such
Letter of Credit.
2.4 Making and Continuation/Conversion of the Loans.
(a) Making of the Loans.
(i) Each Revolving Loan or Term Loan, as the case
may be, shall be made by the Banks in such amount as the Borrower shall request;
provided, however, that each borrowing shall be in an amount which is a minimum
of, (A) with respect to any LIBOR Loan, $1,000,000, and integral multiples of
$500,000 in excess thereof, and (B) with respect to any Base Rate Loan,
$500,000, and integral multiples of $200,000 in excess thereof, or in each case
such lesser amount as may be equal to the then unused portion of the Revolving
Commitment. The obligation of the Banks to make any Loan is conditioned upon the
fact that: (x) no Possible Default or Event of Default shall then exist or
immediately after the Loan would exist; (y) all of the Loan Documents shall
still be in full force and effect; and (z) the representations and warranties
contained herein and in the Loan Documents shall be true and correct in all
material respects as if made on and as of the date of such borrowing, except to
the extent that any thereof expressly relate to an earlier date.
(ii) Loans shall be effected at the Administrative
Agent's Office, and shall be made at such times as the Borrower may request by
notice to the Administrative Agent no later than 11:00 a.m., Charlotte, North
Carolina time, (A) three (3) Banking Days prior to the date of a requested LIBOR
Loan and (B) on the date of a requested Base Rate Loan. Such notices shall be in
writing, or by telephonic communication confirmed by telecopy or other facsimile
transmission on the same day as the telephone request, and shall
25
<PAGE>
specify the proposed date and the amount of the requested Loan, whether it is to
bear interest initially based upon the Base Rate or the LIBOR Rate, and the
Interest Period thereof, if applicable.
(iii) Upon receipt of each borrowing notice for a
Loan, the Administrative Agent shall promptly notify each Bank of the type,
Interest Period, if applicable, amount and date of the proposed borrowing. Not
later than 1:00 p.m., Charlotte, North Carolina time, on the date of a proposed
borrowing, each Bank shall provide the Administrative Agent at its address
specified in Section 12.4 with immediately available funds covering such Bank's
Ratable Share of the borrowing, and the Administrative Agent shall pay over such
immediately available funds to the Borrower.
(b) Conversion/Continuation of the Loans. At the Borrower's
election pursuant to notice given to the Administrative Agent not later than
11:00 a.m., Charlotte, North Carolina time, three (3) Banking Days prior to such
conversion or continuation, any Base Rate Loan may be converted to, or any LIBOR
Loan may be continued as, a LIBOR Loan as requested by the Borrower; provided,
however, that each conversion shall be in an amount which is a minimum of
$1,000,000, and integral multiples of $500,000 in excess thereof; and provided,
further, however, that no Loan may be continued as or converted to a LIBOR Loan
at any time that an Event of Default or Possible Default exists. If the Borrower
has not delivered to the Administrative Agent such notice with respect to any
terminating Interest Period at least three (3) Banking Days prior to the end of
such Interest Period, the affected LIBOR Loan shall convert to a Base Rate Loan
at the end of such Interest Period.
(c) Number of Interest Rate Options. In no event shall
the Borrower have more than seven (7) LIBOR Loans outstanding at any time.
2.5. The Notes. All Revolving Loans shall be evidenced by separate
promissory notes payable to the Banks substantially in the form attached hereto
as Exhibit F to be duly executed and delivered by the Borrower at or prior to
the Closing in the aggregate principal amount of the Revolving Commitment (the
"Revolving Notes"). The Term Loan shall be evidenced by separate promissory
notes payable to the Banks substantially in the form attached hereto as Exhibit
G to be duly executed and delivered by the Borrower at or prior to the Closing
in the aggregate principal amount of the Term Commitment (the "Term Notes"). The
Banks may, and are hereby authorized by the Borrower to, set forth on the grids
attached to the Notes, or in other comparable records maintained by them, the
amount of each Loan, all payments and prepayments of principal and interest
received, the current outstanding principal balance, and other appropriate
information. The aggregate unpaid amount of any Loan set forth in any records
maintained by a Bank with respect to a Note shall be presumptive evidence of the
principal amount owing and unpaid on such Note. Failure of a Bank to record the
principal amount of any Loan on the grid(s) attached to a Note shall not limit
or otherwise affect the obligation of the Borrower hereunder or under such Note
to repay the principal amount of such Loan and all interest accruing thereon.
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2.6 Fees.
(a) Commitment Fees. The Borrower shall pay to the
Administrative Agent for the benefit of the Banks a non-refundable commitment
fee of one-half of one percent (1/2%) per annum (based on a year having three
hundred sixty (360) days and actual days elapsed) on the difference between (i)
the Revolving Commitment, minus (ii) the sum of (A) the average daily amount of
Revolving Loans outstanding plus (B) the aggregate stated amount of the Letters
of Credit then outstanding issued under the Revolving Commitment; provided,
however, that the commitment fee shall be one-quarter of one percent (1/4%) per
annum for any day on which the Leverage Ratio is less than or equal to 5.75 to
1.0. Such commitment fee shall (1) commence to accrue as of the date hereof and
continue for each day from the Closing Date to and including the Maturity Date,
and, with respect to each fiscal quarter period, until the last Business Day of
such fiscal quarter, (2) be in addition to any other fee required by the terms
and conditions of this Agreement, (3) be payable in arrears on the fifteenth
(15th) day following each Quarterly Date and on the date the Revolving
Commitment is terminated, and (4) be shared by the Banks in accordance with
their Ratable Shares.
(b) Other Fees. The Borrower shall pay to the
Administrative Agent, the Documentation Agent, the Syndication Agent, the
Lead Arranger, and/or the Lenders such other fees as are set forth in any Fee
Letter.
2.7 Prepayment.
(a) Voluntary Prepayments. By notice to the Administrative
Agent (which shall be in writing or by telephonic communication confirmed by
telecopy or other facsimile transmission on the same day as such telephone
notice) no later than 11:00 a.m., Charlotte, North Carolina time, on the Banking
Day of such prepayment (with respect to any Base Rate Loan) or on the third
(3rd) Banking Day prior to such prepayment (with respect to any LIBOR Loan), the
Borrower may, at its option, prepay the Loans in whole at any time or in part
from time to time without penalty or premium; provided, however, that any such
prepayment of any LIBOR Loan shall be made together with the applicable
Prepayment Premium; and provided, further, however, that each partial prepayment
shall be in the aggregate principal amount of not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof. Each voluntary prepayment of
the Term Loan shall be applied to the principal installments due pursuant to
Section 2.2 in the inverse order of maturity, and no amount so prepaid may be
reborrowed.
(b) Mandatory Prepayments.
(i) Reduction of Revolving Commitment. If at any time
the outstanding principal amount of the Revolving Loans, plus the aggregate
stated amount of all Letters of Credit exceeds the Revolving Commitment, as the
Revolving Commitment may be reduced pursuant to the terms hereof, the Borrower
shall immediately prepay the Revolving Notes without penalty or premium (except
that any such prepayment of any LIBOR Loan shall be made together with the
applicable Prepayment Premium), in an amount necessary to cause the
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outstanding principal amount of the Revolving Loans, plus the aggregated stated
amount of all Letters of Credit not to exceed the Revolving Commitment, as so
reduced.
(ii) Proceeds of Asset Sales. The Borrower shall make a
mandatory prepayment of the Loans in an amount equal to the cash proceeds of any
Asset Sale (including, without limitation, any sale permitted pursuant to
Section 8.10(c)), net of any reasonable costs directly incurred in connection
with any such Asset Sale and any taxes payable by the Borrower or the selling
Subsidiary in connection with such Asset Sale; provided, however, that the
Borrower shall not be required to make such a mandatory prepayment of the Loans
in respect of any such Asset Sale, so long as (A) no Event of Default or
Possible Default exists as of the date of such Asset Sale or at the date of the
reinvestment of such proceeds and (B) the Borrower reinvests such proceeds by
making a Permitted Acquisition within twelve (12) months of the date of the
consummation of such Asset Sale. If any such Event of Default or Possible
Default exists or if such proceeds are not so reinvested within such twelve (12)
month period, or used to pay such purchase price, then the Borrower shall make a
mandatory prepayment of the Loans in an amount equal to the cash proceeds of
such Asset Sale, net of any reasonable costs directly incurred in connection
with such Asset Sale and any taxes payable by the Borrower or the selling
Subsidiary in connection with such Asset Sale. Together with any prepayment
required by this Section 2.7(b)(ii), the Borrower shall deliver to the
Administrative Agent a certificate executed by the Borrower's chief financial
officer setting forth the calculation of the net cash proceeds of such Asset
Sale, including a calculation of the taxes payable by the Borrower or the
selling Subsidiary in respect of such sale. Such prepayment shall be made
simultaneously with the consummation of such Asset Sale.
(iii) Insurance Proceeds. Within ninety (90) days after
the date of receipt of any cash payments under any insurance policy maintained
by the Borrower or any of its Subsidiaries which have not been reinvested in
assets of a kind then used or usable in the business of the Borrower or such
Subsidiary or used to maintain the business of the Borrower and its Subsidiaries
as going concerns as a consequence of any business interruption, the Borrower
shall make a mandatory prepayment of the Loans in the amount of such
unreinvested or unused proceeds; provided, however, that notwithstanding any of
the foregoing to the contrary, upon and during the continuance of any Event of
Default or Possible Default, all such insurance proceeds, regardless of
reinvestment or other use, received by the Borrower or any Subsidiary shall be
applied as a prepayment of the Loans.
(c) Application of Prepayments; Reduction of Commitments.
(i) Application to Prepayment Premium, Accrued
Interest and Principal. All prepayments made pursuant to this Section 2.7 shall
be applied first to any Prepayment Premium and second due, then to accrued
interest in accordance with the Administrative Agent's standard operating
procedures and then to the principal outstanding under the Loans. For purposes
of the calculation of interest and the determination of whether any Prepayment
Premium is due in connection with any such prepayment, such principal
prepayments shall be applied first to the Base Rate Loans and second to the
LIBOR Loans with the shortest remaining Interest Periods
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(ii) Application to Loans. All mandatory prepayments of
principal required to be made pursuant to Section 2.7(b) shall be applied to the
Loans on a weighted pro rata basis.
(iii) Application to Revolving Loans and Revolving
Commitments. Any mandatory prepayment which, pursuant to Section 2.7(c)(ii), is
to be applied to the Revolving Loans shall cause the Revolving Commitment to be
immediately, automatically and permanently reduced by the amount of such
prepayment. Each such mandatory prepayment of the Revolving Loans shall be
applied to the subsequent Revolving Commitment reductions set forth in Section
2.1(b) in inverse order of maturity. No amount so prepaid may be reborrowed.
(iv) Application to Term Loan and Term Commitment. Any
mandatory prepayment which, pursuant to Section 2.7(c)(ii), is to be applied to
the Term Loan shall be applied to the principal installments due pursuant to
Section 2.2(c) in the inverse order of maturity. No amount so prepaid may be
reborrowed.
(d) Prepayment Premium. The Borrower shall pay to the
Administrative Agent, for the benefit of the Banks, the applicable Prepayment
Premium upon any prepayment or conversion (whether voluntary or involuntary) of
any LIBOR Loan not made on the last day of the applicable Interest Period.
2.8 Reserves or Deposit Requirements, etc. If at any time any
Regulatory Change (including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) shall impose any reserve and/or special
deposit requirement (other than reserves included in the LIBOR Reserve
Percentage, the effect of which is reflected in the interest rate of any LIBOR
Loan) against assets held by, or deposits in or for the amount of any loans by,
any Bank, and the result of the foregoing is to increase the cost (whether by
incurring a cost or adding to a cost) to such Bank of taking or maintaining
hereunder any LIBOR Loan or to reduce the amount of principal, interest or fees
received by such Bank with respect to any such Loan, then such Bank shall notify
the Administrative Agent and the Borrower of such occurrence. Thereafter, upon
demand by such Bank the Borrower shall pay to such Bank additional amounts
sufficient to compensate and indemnify such Bank for such increased cost or
reduced amount. A statement as to the increased cost or reduced amount as a
result of any event mentioned in this Section 2.8 shall be submitted by such
Bank to the Administrative Agent and the Borrower and shall, in the absence of
manifest error, be conclusive and binding as to the amount thereof.
2.9 Tax Law, Increased Costs, etc. In the event that by reason of
any Regulatory Change, any Bank shall, with respect to this Agreement or any
transaction under this Agreement, be subjected to any tax, levy, impost, charge,
fee, duty, deduction or withholding of any kind whatsoever (other than any tax
imposed upon the net income of such Bank and other than changes in franchise
taxes), and if any such measure or any other similar measure shall result in an
increase in the costs to such Bank of making or maintaining any LIBOR Loan or in
a reduction in the amount of principal or interest ultimately receivable by such
Bank in respect of such Loan, then such Bank shall notify the Administrative
Agent and the Borrower stating the
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reasons therefor. The Borrower shall thereafter pay to such Bank within ten (10)
days after written demand such additional amounts as will compensate such Bank
for such increased cost or reduced amount. A statement as to any such increased
cost or reduced amount shall be submitted by such Bank to the Administrative
Agent and the Borrower and shall, in the absence of manifest error, be
conclusive and binding as to the amount thereof.
2.10 Eurodollar Deposits Unavailable or Interest Rate
Unascertainable. If any Bank determines that dollar deposits of the relevant
amount for the relevant Interest Period are not available to it in the
applicable Eurodollar market or that, by reason of circumstances affecting such
market, adequate and reasonable means do not exist for ascertaining the LIBOR
Rate applicable to such Interest Period, or that the LIBOR Rate does not
adequately reflect the cost to such Bank of making such Loan, as the case may
be, such Bank shall promptly give notice of such determination to the
Administrative Agent and the Borrower, and any request for a new LIBOR Loan or
notice of conversion of an existing Loan to a LIBOR Loan given thereafter or
previously given by the Borrower and not yet made or converted shall be deemed a
notice to make a Base Rate Loan.
2.11 Changes in Law Rendering LIBOR Loans Unlawful. If at any time
any Regulatory Change shall make it unlawful for any Bank to fund any LIBOR Loan
which it has committed to make hereunder with moneys obtained in the applicable
Eurodollar market, such Bank shall notify the Administrative Agent and the
Borrower, and the obligation of the Banks to fund such Loan shall, upon the
happening of such event, forthwith be suspended for the duration of such
illegality. If any such change makes it unlawful for any Bank to continue in
effect the funding in the applicable Eurodollar market of any LIBOR Loan
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify the Administrative Agent and the Borrower thereof in writing
stating the reasons therefor, and the Borrower shall, on the earlier of (a) the
last day of the then current Interest Period or (b) if required by such
Regulatory Change on such date as shall be specified in such notice, either
convert all such Loans to Base Rate Loans or prepay all such Loans in full.
2.12 Funding. Any Bank may, but shall not be required to, make LIBOR
Loans hereunder with funds obtained outside the United States.
2.13 Indemnity. Without prejudice to any other provisions of
Sections 2.8 through Section 2.12 or to the obligation of the Borrower to pay
the Prepayment Premium pursuant to Section 2.7(d), but without duplication, the
Borrower hereby agrees to indemnify each Bank against any loss or expense which
it may sustain or incur as a consequence of the Borrower's failure to borrow any
LIBOR Loan requested pursuant to this Agreement, or the Borrower's failure to
continue any LIBOR Loan or convert any Base Rate Loan to a LIBOR Loan, in either
case after notice of such continuation or conversion shall have been given to
the Administrative Agent pursuant to Section 2.4(b), or any default by the
Borrower in payment when due of any amount due hereunder in respect of any LIBOR
Loan, including, without limitation, any premium or penalty actually incurred by
such Bank in respect of funds borrowed by it for the purpose of making or
maintaining such Loan, as determined by such Bank. A statement as to any such
loss or expense shall be submitted by such Bank to the Borrower for
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payment under the aforesaid indemnification, with a copy to the Administrative
Agent, which statement shall, in the absence of manifest error, be conclusive
and binding as to the amount thereof.
2.14 Capital Adequacy. If any Bank shall determine that any
Regulatory Change regarding capital adequacy or compliance by such Bank (or its
lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) or any governmental authority, central
bank or comparable agency has the effect of reducing the rate of return on such
Bank's capital (or on the capital of such bank's holding company) as a
consequence of its obligations hereunder to a level below that which such Bank
(or its holding company) could have achieved but for such Regulatory Change or
compliance (taking into consideration such Bank's policies or the policies of
its holding company with respect to capital adequacy) by an amount which such
Bank deems to be material, then from time to time, within ten (10) days after
demand by such Bank, the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its holding company) for such
reduction. Such Bank will designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole judgment of such Bank, be otherwise disadvantageous to
such Bank. A certificate of such Bank claiming compensation under this Section
2.14 and setting forth the additional amount to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods. Failure on the
part of any Bank to demand compensation for any reduction in return on capital
with respect to any period shall not constitute a waiver of such Bank's rights
to demand compensation for any reduction in return on capital in such period or
in any other period. The protection of this Section 2.14 shall be available to
each Bank regardless of any possible contention of the invalidity or
inapplicability of the law, regulation or other condition which shall have been
imposed.
2.15 Taxes. Without duplication of any other Section of this
Agreement, including, without limitation, Section 2.9, all sums payable by the
Borrower hereunder or under the Notes or in respect of the Letters of Credit,
whether of principal, interest, fees, expenses or otherwise, shall be paid in
full, free of any deductions or withholdings for any and all present and future
taxes, levies, imposts, stamps, duties, fees, assessments, deductions,
withholdings, and other governmental charges and all liabilities with respect
thereto (collectively referred to as "Taxes"). If Borrower shall pay directly to
all appropriate taxing authorities any and all present and future Taxes, and all
liabilities with respect thereto imposed by law or by any taxing authority on or
with regard to any aspect of the transactions contemplated by this Agreement or
the execution and delivery of this Agreement or the Notes or the issuance of the
Letters of Credit, except for any taxes or other liabilities that the Borrower
is contesting in good faith by appropriate proceedings, provided that the
Borrower hereby indemnifies the Administrative Agent and the Banks and holds
them harmless from and against any and all liabilities, fees or additional
expense with respect to or resulting from any delay in paying, or omission to
pay, Taxes. Within thirty (30) days after the payment by the Borrower of any
Taxes, upon request of the Administrative Agent the Borrower shall furnish the
Administrative Agent with the original or a certified copy of the receipt
evidencing payment thereof, together with any other information the
Administrative Agent may require to establish to its satisfaction that full and
timely payment
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of such Taxes has been made. Each Bank shall notify the Borrower and the
Administrative Agent of any payment of Taxes required or requested of it and
shall give due consideration to any advice or recommendation given in response
thereto by the Borrower, and upon notice from such Bank that Taxes or any
liability relating thereto (including, without limitation, penalties and
interest) have been paid, the Borrower shall pay or reimburse such Bank therefor
within ten (10) days of such notice. The foregoing to the contrary
notwithstanding, in no event shall any Bank receive any amount pursuant to this
Section 2.15 in excess of the amount required to be paid by it in respect of any
Taxes. Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 2.15 shall survive the payment in full of principal and interest
hereunder and under the Notes.
2.16 Incremental Commitment. At any time prior to September 30,
2000, the Borrower may solicit from the Banks an incremental commitment of up to
$100,000,000 (in $25,000,000 increments) in the form of (a) a senior secured
reducing revolving credit or, (b) with the consent of the Required Banks, a term
credit facility pursuant to which no more than $75,000,000 of the incremental
commitment (in $25,000,000 increments) may be term loans which will be secured
pari passu with the Obligations, in each case, in form and substance similar to
the existing credit facilities hereunder; provided, however, that any such
incremental commitment shall be discretionary on the part of the Banks, and no
Bank shall be obligated to increase its Commitments beyond the amount it has
agreed to as of the Closing Date. Any such increase shall be on terms and
conditions, such as the applicable interest rate and amortization, as may be
negotiated between the Borrower and the consenting Banks; provided, however,
that (i) the terms and conditions of such increase shall be no more favorable
than those set forth herein, (ii) any loan made under the increased commitment
shall have a longer average term to maturity than the Loans, and (iii) any term
loan made under the increased commitment shall mature no earlier than six (6)
months after the Maturity Date. Upon any such increase, the Borrower shall enter
into any amendments and modifications to this Agreement and the Loan Documents
as the Administrative Agent may request to reflect such increase and such
additional terms and conditions.
SECTION 3. INTEREST; PAYMENTS.
3.1 Interest.
(a) Subject to Section 3.1(c), prior to maturity, LIBOR
Loans shall bear interest at the LIBOR Rate, plus the Applicable Margin, and
Base Rate Loans shall bear interest at the Base Rate, plus the Applicable
Margin.
(b) The Applicable Margin shall be determined by the
Administrative Agent quarterly, and upon the making of each Loan and the
issuance of each Letter of Credit, as applicable, based on the financial
statements and the Compliance Certificate delivered to the Banks pursuant to
Sections 7.5(b) and (d) (in the case of a quarterly determination) and the
Compliance Certificate delivered pursuant to Section 6.13(c) (in the case of the
determination of the Applicable Margin upon the making of a Loan or the issuance
of a Letter of Credit). Any change in the interest rate on the Loans due to a
change in the Applicable Margin shall be
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effective on the fifth (5th) Banking Day after delivery of such financial
statements or compliance certificate; provided, however, that if any such
quarterly financial statements and Compliance Certificate indicate an increase
in the Applicable Margin and such financial statements and certificate are not
provided within the time period required in Section 7.5(b), the increase in the
interest rate due to such increase in the Applicable Margin shall be effective
as of the fifth (5th) Banking Day after the date on which such financial
statements and certificate were due. Until delivery of financial statements for
the first (1st) fiscal quarter of the Borrower ending after the Closing, for
purposes of calculating the Applicable Margin, the Leverage Ratio shall be
determined, after giving effect to the Loans made on and after the Closing Date,
from the certificate delivered to the Administrative Agent pursuant to Section
6.13(b). The Borrower shall deliver to the Banks with each set of quarterly
financial statements which indicate a change in the Applicable Margin a notice
with respect to such change, which notice shall set forth the calculation of,
and the supporting evidence for, such change.
(c) Upon the occurrence of any Event of Default, the entire
outstanding principal amount of each Loan and (to the extent permitted by law)
unpaid interest thereon and all other amounts due hereunder shall bear interest,
from the date of occurrence of such Event of Default until the earlier of the
date such Loan is paid in full and the date on which such Event of Default is
cured or waived in writing, at the Default Interest Rate which shall be payable
upon demand.
(d) Interest shall be computed on a three hundred sixty
(360) day year basis calculated for the actual number of days elapsed. Interest
accred on each Base Rate Loan shall be paid quarterly in arrears on each
Quarterly Date after the date hereof until such Loan is paid in full, and
interest accrued on each LIBOR Loan shall be paid on the last day of the
Interest Period thereof and on the date such Loan is paid in full and, in
addition, if such Interest Period has a duration of more than three (3) months,
on each day that occurs during such Interest Period that is three (3), six (6)
or nine (9) months from the first day of such Interest Period.
(e) The rate of interest payable on any Note from time to time
shall in no event exceed the maximum rate, if any, permissible under applicable
law. If the rate of interest payable on any Note is ever reduced as a result of
the preceding sentence and any time thereafter the maximum rate permitted by
applicable law shall exceed the rate of interest provided for on such Note,
then the rate provided for on such Note shall be increased to the maximum rate
permitted by applicable law for such period as is required so that the total
amount of interest received by the holder of such Note is that which would have
been received by such holder but for the operation of the preceding sentence.
3.2 Manner of Payments.
(a)...Prior to each Quarterly Date and the end of each
Interest Period, the Administrative Agent shall render a statement to the
Borrower of all amounts due to the Banks for principal, interest and fees
hereunder. All amounts listed on each such statement shall be due and payable on
the Quarterly Date or, for LIBOR Loans, the last day of such Interest Period, in
respect of which such statement was sent. As to all other Obligations which
become
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due and payable other than on a fixed date by their terms, the Administrative
Agent shall advise the Borrower by a written statement that they are due and
payable, and the Borrower shall pay the same within five (5) days of receipt of
such statement. Any failure by the Administrative Agent to render any such
statement or give any such advice shall in no way relieve the Borrower of any
liability for or obligation to pay any amount due and payable hereunder.
(b) Whenever any payment to be made hereunder, including,
without limitation, any payment to be made on a Note, shall be stated to be due
on a day which is not a Banking Day, such payment may be made on the next
succeeding Banking Day, and such extension of time shall in each case be
included in the computation of the interest payable on such Note; provided,
however, that if such extension of time would cause payment of interest on or
principal of a LIBOR Loan to be made in the next calendar month, such payment
shall be made on the next preceding Banking Day.
(c) Unless otherwise provided in this Agreement, all
payments or prepayments made or due hereunder or under the Notes shall be made
in immediately available funds by federal funds wire transfer, and without
setoff, deduction or counterclaim, to the Administrative Agent prior to 11:00
a.m., Charlotte, North Carolina time, on the date when due, at the
Administrative Agent's Office. Funds received after 1:00 p.m., Charlotte, North
Carolina time, shall be deemed to have been received on the next Banking Day. To
the extent any such payment is made for the ratable benefit of the Banks, the
Administrative Agent shall promptly distribute such payment to the Banks in
accordance with their respective Ratable Shares.
SECTION 4. CLOSING.
The closing of the first Loan to be made hereunder and the other
transactions contemplated hereby shall take place at the offices of Heyman &
Sizemore, 2300 International Tower, 229 Peachtree Street, N.E., Atlanta, Georgia
30303 on July 31, 1998, or at such other place or on such other date as to which
the parties hereto may agree (the "Closing" and the "Closing Date"). Subject to
the terms and conditions hereof, upon the fulfillment or waiver in writing of
all the conditions precedent set out in Section 6, and the delivery to the
Administrative Agent of the Notes, the Banks shall make such Revolving Loans and
the Term Loan and issue such Letters of Credit as the Borrower may request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
To induce the Banks to enter into this Agreement and to make the Loans and
issue the Letters of Credit, the Borrower represents and warrants as follows:
5.1 Organization and Powers.
(a) The Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Georgia. The
Borrower is duly qualified or registered to conduct business and in good
standing under the laws of each other jurisdiction in which the character of its
business or the ownership of its assets makes such qualification
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or registration necessary, except where failure to so qualify or register could
not reasonably be expected to have a Material Adverse Effect. The Borrower has
all requisite power and authority to own and operate its properties, to carry on
its business as now conducted and proposed to be conducted, to enter into and
perform the Busse Purchase Agreement, the Like-Kind Exchange Agreement, this
Agreement, the Loan Documents to which it is a party and all other documents to
be executed by it in connection with the transactions contemplated hereby and
thereby, to acquire the additional Stations pursuant to the Busse Purchase
Agreement and the Like-Kind Exchange Agreement and to carry out the terms hereof
and thereof.
(b) As of the date hereof, the Borrower has no Subsidiaries
other than the Subsidiaries listed on Schedule 3 attached hereto. Each
Subsidiary is a corporation, duly organized, validly existing and in good
standing under the laws of its State of incorporation and is duly qualified and
in good standing under the laws of each other jurisdiction in which the
character of its business or the ownership of its assets makes such
qualification or registration necessary, except where failure to so qualify or
register could not reasonably be expected to have a Material Adverse Effect.
Each Subsidiary is a direct or indirect, wholly-owned Subsidiary of the
Borrower. Each Subsidiary has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and proposed
to be conducted, to enter into and perform the Loan Documents to which it is a
party and all other documents to be executed by it in connection with the
transactions contemplated hereby and thereby and to carry out the terms hereof
and thereof.
5.2 Authorization. All necessary corporate, shareholder or other
actions on the part of the Borrower and its Subsidiaries to authorize the
execution and delivery of the Busse Purchase Agreement, the Like-Kind Exchange
Agreement, this Agreement and the Loan Documents and the performance of the
respective obligations of the Borrower and its Subsidiaries herein and therein
have been taken. The Busse Purchase Agreement, the Like-Kind Exchange Agreement,
this Agreement and each Loan Document have been duly authorized, executed and
delivered by each of the Borrower and its Subsidiaries and are valid and legally
binding upon each of the Borrower and its Subsidiaries, to the extent it is a
party thereto, and enforceable in accordance with their respective terms, except
to the extent that the enforceability hereof and thereof may be limited by
bankruptcy, insolvency or like laws affecting creditors rights generally and by
the application of general equitable principles.
5.3 Financial Statements. The Borrower has delivered to the
Administrative Agent and the Banks the following (collectively, the "Financial
Statements"): (a) the audited consolidated financial statements of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 1997, (b) the
audited financial statements of Busse Broadcasting for the fiscal year ended
December 31, 1997, (c) the unaudited consolidated financial statements of the
Borrower and its Subsidiaries as of March 31, 1998, and for the three (3) month
period then ended, and (d) the unaudited financial statements of Busse
Broadcasting as of March 31, 1998, and for the three (3) month period then
ended. The Financial Statements are true and complete in all material respects
(including, without limitation, a disclosure of all material contingent
liabilities) and present fairly the financial condition and results of
operations of the Borrower and its Subsidiaries, or Busse Broadcasting, as the
case may be, as of the dates and for the periods
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indicated and have been prepared in accordance with GAAP, subject in the case of
statements for interim periods to normal year-end adjustments and the absence of
footnotes.
5.4 Projections. The Borrower has delivered to the Administrative
Agent and the Banks the Borrower's projections for the fiscal years 1997 through
2005. Such projections assume the consummation of the transactions contemplated
in the Registration Statements referenced in Section 5.27(c), the Busse Purchase
Agreement, and the Like-Kind Exchange Agreement were prepared by the Borrower in
good faith on the basis of assumptions the Borrower believes were reasonable in
light of the conditions existing at the time of preparation thereof and remain
reasonable as of the date hereof, and as of the date hereof there are no facts
which are known to the Borrower which the Borrower believes would cause a
material adverse change in such projections.
5.5 Capitalization of the Borrower and its Subsidiaries. The
Borrower has delivered to the Administrative Agent and the Lenders statements
setting forth the capitalization of the Borrower and the Subsidiaries as of the
Closing Date and all of the issued and outstanding shares of Capital Stock of
the Subsidiaries are owned as set forth on Schedule 4 attached hereto. Schedule
4 attached hereto identifies each License Subsidiary and, with respect to each
other Subsidiary, the Stations, Newspapers or other businesses owned and
operated by such Subsidiary. All of the issued and outstanding Capital Stock of
the Borrower and of each Subsidiary has been duly and validly issued and is
fully paid and nonassessable. All of the issued and outstanding Capital Stock of
each Subsidiary is free and clear of any Lien, charge, encumbrance or right or
option to purchase except for the Liens granted pursuant to the Subsidiary
Pledge Agreement and except for Liens that will be released on the Closing Date.
None of the Capital Stock of the Borrower or of any Subsidiary has been issued
in violation of the Securities Act of 1933, as amended, or the securities or
"Blue Sky" or any other applicable laws, rules or regulations of any applicable
jurisdiction. Except as set forth on Schedule 4 attached hereto, as of the
Closing Date, neither the Borrower nor any of its Subsidiaries has any
commitment or obligation, either firm or conditional, to issue, deliver,
purchase or sell, under any offer, option agreement, bonus agreement, purchase
plan, incentive plan, compensation plan, warrant, conversion rights, contingent
share agreement, shareholders agreement, partnership agreement or otherwise, any
shares of its Capital Stock, partnership interests or other equity securities or
securities convertible into shares of Capital Stock, partnership interests or
other equity securities.
5.6 Title to Properties; Patents, Trademarks, etc. The Borrower and
each of its Subsidiaries have, and will have after giving effect to the closings
under the Busse Purchase Agreement and the Like-Kind Exchange Agreement, good
and marketable title to all of their assets, whether real or personal, tangible
or intangible, free and clear of any Liens or adverse claims, except Permitted
Liens. The Borrower and each of its Subsidiaries own or possess, and will own or
possess after giving effect to the closing under the Busse Purchase Agreement
and the Like-Kind Exchange Agreement, the valid right to use all the patents,
patent applications, patent and know-how licenses, inventions, technology,
permits, trademark registrations and applications, trademarks, service marks,
trade names, copyrights, product designs, applications, formulae, processes,
circulation, and other subscriber lists, industrial property rights and licenses
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and rights in respect of the foregoing used or necessary for the conduct of its
business (collectively, "proprietary rights"). The Borrower is not aware of any
existing or threatened infringement or misappropriation of (a) any such
proprietary rights of others by the Borrower or any of its Subsidiaries or (b)
any proprietary rights of the Borrower or any of its Subsidiaries by others.
5.7 Litigation; Proceedings. Except as disclosed on Schedule 5
attached hereto, there is no action, suit, complaint, proceeding, inquiry or
investigation at law or in equity, or by or before any court or governmental
instrumentality or agency, nor any order (including, without limitation, any
order to show cause or order of forfeiture), decree or judgment in effect,
pending or, to the best of the Borrower's knowledge, threatened against or
affecting the Borrower, any of its Subsidiaries, any Station (including, without
limitation, the Stations being acquired pursuant to the Busse Purchase Agreement
and Like-Kind Exchange Agreement), any Newspaper, the Porta Phone Business or
the Satellite Broadcasting Business, or any of the properties or rights relating
to any Station (including, without limitation, the Stations being acquired
pursuant to the Busse Purchase Agreement and Like-Kind Exchange Agreement), any
Newspaper, the Porta Phone Business or the Satellite Broadcasting Business. None
of such actions, suits, complaints, proceedings, inquiries or investigations,
orders, decrees or judgments could reasonably be expected to have a Material
Adverse Effect. No Person has filed, or to the best of the Borrower's knowledge,
threatened to file, any material competing application, petition to deny or
other opposition against any application, including any renewal application,
filed or to be filed by the Borrower or any of its Subsidiaries.
5.8 Taxes. All Federal, state and local tax returns, reports and
statements (including, without limitation, those relating to income taxes,
withholding, social security and unemployment taxes, sales and use taxes, and
franchise taxes) required to be filed by the Borrower or any of its Subsidiaries
have been properly filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are required to be
filed, which returns, reports and statements are complete and accurate, and all
taxes and other impositions due and payable have been timely paid prior to the
date on which any fine, penalty, interest, late charge or loss may be added
thereto for non-payment thereof, except where contested in good faith and by
appropriate proceedings. As of the Closing Date, neither the Borrower nor any of
its Subsidiaries has filed with the Internal Revenue Service or any other
governmental authority any agreement or other document extending or having the
effect of extending the period for assessment or collection of any Federal,
state, local or foreign taxes or other impositions. All tax deficiencies
asserted or assessments made as a result of any examinations conducted by the
Internal Revenue Service or any other governmental authority relating to the
Borrower or any of its Subsidiaries have been fully paid or are being contested
in accordance with the provisions of Section 7.4. Proper and accurate amounts
have been withheld by the Borrower and its Subsidiaries from its employees for
all periods to fully comply with the tax, social security and unemployment
withholding provisions of the applicable Federal, state, local and foreign law.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of any taxes or other governmental charges are adequate.
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5.9 Absence of Conflicts. The execution, delivery and performance of
the Busse Purchase Agreement, the Like-Kind Exchange Agreement, this Agreement
and the Loan Documents and all actions and transactions contemplated hereby and
thereby will not (a) violate, be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under (i) any
provision of the Articles or Certificate of Incorporation or Bylaws or any
shareholders agreement or other organizational document of the Borrower or any
of its Subsidiaries, (ii) any arbitration award or any order of any court or of
any other governmental agency or authority binding on the Borrower or any of its
Subsidiaries, (iii) any License of the Borrower or any of its Subsidiaries or
under which the Borrower or any of its Subsidiaries operates or will operate
after giving effect to the closing under the Busse Purchase Agreement or the
Like-Kind Exchange Agreement, (iv) any applicable law, rule, order or regulation
(including without limitation, (A) the Communications Act of 1934, as amended,
(B) any law, rule, regulation or policy of the FCC or any other Licensing
Authority or (C) Regulations T, U or X of the Board of Governors of the Federal
Reserve System or (v) any Operating Agreement, the Subordinated Note Indenture
or other material agreement, instrument or document relating to a Station
(including, without limitation, the Stations being acquired pursuant to the
Busse Purchase Agreement and Like-Kind Exchange Agreement), a Newspaper, the
Porta Phone Business or the Satellite Broadcasting Business or to which the
Borrower or any of its Subsidiaries is a party, or by which the Borrower or any
of its Subsidiaries or any of their properties is bound, or (b) result in the
creation or imposition of any Lien of any nature whatsoever, other than those
Liens arising hereunder or under the Loan Documents, upon any of the properties
of the Borrower or any of its Subsidiaries.
5.10 Indebtedness. As of the Closing Date, the Borrower has no
Indebtedness of any nature, whether due or to become due, absolute, contingent
or otherwise, including, without limitation, Indebtedness for taxes and any
interest or penalties relating thereto, which exceeds in the aggregate,
$150,000, except (a) the liability to pay legal and accounting fees and
reasonable closing expenses in connection with this Agreement, the Busse
Purchase Agreement and the Like-Kind Exchange Agreement, (b) the Obligations,
(c) Indebtedness under the Subordinated Note Indenture and the notes issued
pursuant thereto, (d) Indebtedness incurred in the ordinary course of business
since June 30, 1997, (e) as disclosed in the Financial Statements, and (f) as
disclosed on Schedule 6 attached hereto.
5.11 Compliance. Except as disclosed in Schedule 7 attached hereto,
neither the Borrower nor any of its Subsidiaries, nor the ownership,
construction or operation of any Station (including, without limitation, the
Stations being acquired pursuant to the Busse Purchase Agreement and Like-Kind
Exchange Agreement), Newspaper, the Porta Phone Business or the Satellite
Broadcasting Business is in material violation of its Articles or Certificate of
Incorporation, its Bylaws, any License or any statute, ordinance, law, rule,
regulation or order of the United States of America or the FCC (including,
without limitation, applicable federal laws and the rules, regulation, policies
and orders of the FCC relating to foreign ownership restrictions or to
limitations on the nature and number of media outlets that may be held under
common ownership or control), the Federal Aviation Administration or any other
federal, state, county, municipal or other governmental agency or authority
applicable to the Borrower or any of its Subsidiaries, their properties, the
ownership, construction or operation of any Station (including,
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without limitation, the Stations being acquired pursuant to the Busse Purchase
Agreement and Like-Kind Exchange Agreement), Newspaper, the Porta Phone Business
or the Satellite Broadcasting Business or the conduct of their business. Neither
the Borrower nor any of its Subsidiaries nor the ownership, construction or
operation of any Station (including, without limitation, the Stations being
acquired pursuant to the Busse Purchase Agreement and Like-Kind Exchange
Agreement), any Newspaper, the Porta Phone Business or the Satellite
Broadcasting Business is in violation or has breached in any material respect
the provisions of the Subordinated Note Indenture or any indenture, License,
Operating Agreement, note, lease or other agreement, instrument or document to
which it is a party or by which it is bound, nor does there exist any material
default, or any event or condition which, upon notice or lapse of time, or both,
would become a material default, under the Subordinated Note Indenture or any
indenture, License, Operating Agreement, note, lease, or other agreement,
instrument or document. The Borrower and each of its Subsidiaries have the legal
right and authority to conduct their respective businesses as now conducted or
proposed to be conducted.
5.12 Statements Not Misleading. No statement, representation or
warranty made by the Borrower or any of its Subsidiaries in or pursuant to this
Agreement or the Schedules or Exhibits attached hereto or any of the Loan
Documents contains any untrue statement of a material fact, nor omits to state a
material fact necessary to make such statement not misleading in light of the
circumstances under which such statement was made, or otherwise violates any
federal or state securities laws, rules or regulations. There is no fact known
to the Borrower (other than matters of a general economic nature or relating to
the broadcasting and newspaper industries generally) that has had or could
reasonably be expected to have a Material Adverse Effect.
5.13 Consents or Approvals. No consent, approval or authorization
of, or filing, registration or qualification with, any governmental authority or
any other Person (including, without limitation, the FCC and any other Licensing
Authority) is required to be obtained by the Borrower or any of its Subsidiaries
in connection with the execution, delivery or performance of the Subordinated
Note Indenture, the Busse Purchase Agreement, the Like-Kind Exchange Agreement,
this Agreement or any of the Loan Documents, including, without limitation, in
connection with the granting of Liens in the assets of the Borrower or in the
Capital Stock and the assets of its Subsidiaries, which has not already been
obtained or completed, except for (a) the filing with the FCC of this Agreement
and certain of the Loan Documents pursuant to FCC rules, which shall be
accomplished within the required time period after the Closing, (b) the filing
of financing statements, the Mortgages and other actions expressly required to
be taken pursuant to the Loan Documents, and (c) the consent of the FCC to the
extent required in connection with the exercise by the Administrative Agent or
the Banks of their rights and remedies hereunder or under the Loan Documents.
5.14 Material Contracts and Commitments. Schedule 8 attached hereto
contains a true and complete description of all material contracts and
commitments of the Borrower or any of its Subsidiaries or which relate to a
Station (including, without limitation, the Stations being acquired pursuant to
the Busse Purchase Agreement and Like-Kind Exchange Agreement), a Newspaper, the
Porta Phone Business or the Satellite Broadcasting Business as of
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the Closing Date, after giving effect to the closing under the Busse Purchase
Agreement and the Like-Kind Exchange Agreement, whether oral or written,
including, without limitation, (a) any security agreement, pledge agreement,
mortgage or guaranty; (b) any material management, construction supervision,
service or employment agreements, conditional sale contract or lease of personal
property; (c) any collective bargaining agreement; (d) any material contract or
commitment for the future purchase or sale of goods in excess of $200,000 in any
single case; (e) any contract or commitment which involves a material Capital
Expenditures in excess of $200,000 in any single case; (f) all Licenses; and (g)
all Operating Agreements. To the best of the Borrower's knowledge, except as
disclosed on Schedule 8 attached hereto, as of the Closing Date, all of the
items listed on Schedule 8 attached hereto are in full force and effect without
material default. Schedule 8 attached hereto further identifies each such
contract which requires consent to the granting of a Lien in favor of the
Administrative Agent for the benefit of the Banks on the rights of the Borrower
or its Subsidiaries under such contract. The Borrower has made available to the
Administrative Agent true and complete copies of each of the above.
5.15 Employee Benefit Plans. Schedule 9 attached hereto contains a
true and complete list of all Plans maintained by the Borrower or any member of
the Controlled Group. Neither the Borrower nor any member of the Controlled
Group has or will have, after giving effect to the closing under the Busse
Purchase Agreement and the Like-Kind Exchange Agreement, any liability, or
reasonably anticipates any liability, of any kind (including any withdrawal
liability under Section 4201 of ERISA) which is in excess, in the aggregate, of
$250,000 and which is more than one hundred twenty (120) days past due, to or in
respect of any Plan or Benefit Arrangement. With respect to the Plans and
Benefit Arrangements maintained by the Borrower or any member of the Controlled
Group: (a) each Plan that is intended to be qualified under Section 401(a) of
the Code is so qualified and has been so qualified since its adoption, and each
trust forming a part thereof is exempt from tax under Section 501(a) of the
Code; (b) each Plan complies in all material respects with all applicable
requirements of law, has been administered in accordance with its terms and all
required contributions have been made; (c) neither the Borrower nor any member
of the Controlled Group knows or has reason to know that the Borrower or any
member of the Controlled Group has engaged in a transaction which would subject
it to any material tax, penalty or liability under ERISA or the Code for any
prohibited transaction; (d) no Plan is subject to the minimum funding
requirements under Section 302 of ERISA or Section 412 of the Code, is a
multiemployer plan (as defined in Section 4001(a)(3) of ERISA), is a defined
benefit plan (as defined under Section 3(35) of ERISA or Code 414(j) of the
Code), or is a multiple employer plan (as defined in Section 4063 of ERISA). No
Plan or Benefit Arrangement maintained by the Borrower or any member of the
Controlled Group is a multiple employer welfare arrangement (as defined in
Section 3(40) of ERISA).
5.16 Licenses and Operating Agreements. The Licenses and Operating
Agreements shown on Schedule 10 attached hereto constitute all of the Licenses
and Operating Agreements which, as of the Closing Date, are necessary for the
lawful ownership, construction or operation of the Stations (including, without
limitation, the Stations being acquired pursuant to the Busse Purchase Agreement
and the Like-Kind Exchange Agreement), the Newspapers, the Porta Phone Business
and the Satellite Broadcasting Business and of the other businesses of the
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Borrower and its Subsidiaries in the manner and to the full extent they are
currently owned, constructed or operated. Schedule 10 attached hereto sets forth
a correct and complete list, as of the Closing Date, of the expiration date of
each License and of each pending application for a License. Except as specified
on Schedule 10 attached hereto all of the Licenses relating to the Stations
(including, without limitation, the Stations being acquired pursuant to the
Busse Purchase Agreement and Like-Kind Exchange Agreement), Newspapers, the
Porta Phone Business or the Satellite Broadcasting Business and all other
Licenses of the Borrower and its Subsidiaries have been duly and validly issued
or assigned to and are legally held by the Borrower or one of its Subsidiaries
and are in full force and effect without condition except those of general
application. All such Licenses have been issued in compliance with all
applicable laws and regulations, are legally binding and enforceable in
accordance with their terms and are in good standing. The Borrower knows of no
facts or conditions which would constitute grounds for any Licensing Authority
to deny any pending application for a License, to suspend, revoke, materially
adversely modify, designate for a hearing, annul, fail to renew on or before its
renewal date, or renew for less than a full license period any License or to
impose a material financial penalty on the Borrower or any of its Subsidiaries.
5.17 Material Restrictions. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or other instrument or subject to any
other restriction which has had or could reasonably be expected to have a
Material Adverse Effect.
5.18 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries (a) is an investment company as that term is defined in the
Investment Company Act of 1940, as amended, (b) directly or indirectly controls,
or is directly or indirectly controlled by, a company which is an investment
company as that term is defined in such act or (c) is otherwise subject to
regulation under such act.
5.19 Absence of Material Adverse Effect. No Material Adverse Effect
has occurred since December 31, 1997.
5.20 Defaults. No Possible Default or Event of Default now exists or
will exist upon the making of any Loan.
5.21 Real Estate. Schedule 11 attached hereto lists all real estate
owned as of the Closing Date by the Borrower or any of its Subsidiaries and all
real estate which the Borrower or any Subsidiary will acquire pursuant to the
Busse Purchase Agreement and the Like-Kind Exchange Agreement and all leases
pursuant to which the Borrower or any of its Subsidiaries has acquired, as of
the Closing Date, or will acquire pursuant to the Busse Purchase Agreement and
the Like-Kind Exchange Agreement, a leasehold interest in real estate. Schedule
11 lists the use of such owned and leased property in the Borrower's or its
Subsidiary's operations and the Borrower's good faith estimate of the fair
market value of each such parcel of owned real estate.
5.22 Securities Laws. No proceeds of any Loan will be used by the
Borrower or any of it Subsidiaries to acquire any security in any transaction
which is subject to Section 13
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or 14 of the Securities Exchange Act of 1934, as amended. Neither the
registration of any security under the Securities Act of 1933, as amended, or
the securities laws of any state, nor the qualification of any indenture in
respect thereof under the Trust Indenture Act of 1939, as amended, is required
in connection with the consummation of this Agreement or the Busse Purchase
Agreement and the Like-Kind Exchange Agreement or the execution and delivery of
the Notes.
5.23 Insurance. All policies of insurance of any kind or nature
owned by or issued to the Borrower or any of its Subsidiaries are in compliance
with the requirements of Section 7.3 and are in full force and effect. In the
past three (3) years neither the Borrower nor any of it is Subsidiaries has been
refused insurance for which it applied or had any policy of insurance terminated
(except at its own request).
5.24 Labor Matters. There are no material strikes, unfair labor
practice charges or other material labor disputes or grievances pending or, to
the best of the Borrower's knowledge, threatened against the Borrower, any of
its Subsidiaries or any Station (including, without limitation, the Stations
being acquired pursuant to the Busse Purchase Agreement and Like-Kind Exchange
Agreement), any Newspaper, the Porta Phone Business or the Satellite
Broadcasting Business. The Borrower has not received any written complaints or
knowledge or any threatened complaints, nor to the best of the Borrower's
knowledge, any such complaints on file with any Federal, state or local
governmental agency, alleging employment discrimination by the Borrower or any
of its Subsidiaries or in connection with any Station (including, without
limitation, the Stations being acquired pursuant to the Busse Purchase Agreement
and Like-Kind Exchange Agreement), any Newspaper, the Porta Phone Business or
the Satellite Broadcasting Business. All payments due under any collective
bargaining agreement to which the Borrower or any of its Subsidiaries is a party
have been paid or accrued as a liability on the books of the Borrower or such
Subsidiary.
5.25 Environmental Compliance.
Except as set forth in Schedule 12 attached hereto and after giving effect
to the consummation of the Busse Purchase Agreement and the Like-Kind Exchange
Agreement:
(a) the Borrower and each of its Subsidiaries have obtained
all material permits, licenses and other authorizations which are required under
all Environmental Laws. The Borrower and each of its Subsidiaries are in
material compliance with all terms and conditions of all such permits, licenses
and authorizations and are also in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
including, without limitation, all Environmental Laws in all jurisdictions in
which the Borrower or such Subsidiary owns or operates a Station, a Newspaper, a
facility or site, arranges or has arranged for disposal or treatment of
Hazardous Materials, solid waste or other wastes, accepts or has accepted for
transport any Hazardous
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Materials, solid waste or other wastes or holds or has held any interest in real
property or otherwise;
(b) no Environmental Claim has been issued, no complaint has
been filed, no penalty has been assessed and no litigation, proceeding,
investigation or review is pending or, to the best of the Borrower's knowledge,
threatened by any Person with respect to any alleged failure by the Borrower,
any of its Subsidiaries or any property owned by the Borrower or any Subsidiary
to comply with any Environmental Law or to have any permit, license or
authorization required in connection with the conduct of the business of the
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, use disposal or Release of any
Hazardous Materials generated by the Borrower or any of its Subsidiaries or with
respect to any real property in which the Borrower or any of its Subsidiaries
hold or has held an interest or any past or present operation of the Borrower or
any of its Subsidiaries;
(c) there are no Environmental Laws requiring any material
work, repairs, construction, Capital Expenditures or other remedial work of any
nature whatsoever, with respect to any real property in which the Borrower or
any of its Subsidiaries holds or has held an interest or any past or present
operation of the Borrower or any Subsidiary;
(d) neither the Borrower nor any of its Subsidiaries has
handled any Hazardous Material, on any property now or previously owned or
leased by the Borrower or any of its Subsidiaries to an extent that it has, or
could reasonably be expected to have, a Material Adverse Effect;
(e) to the best of the Borrower's knowledge:
(i) no PCBs or asbestos is present at any property
now or previously owned or any premises now or previously leased by the
Borrower or any of its Subsidiaries;
(ii) no underground storage tanks for Hazardous
Materials, active or abandoned, are now or were previously operated at any
property now or previously owned by the Borrower or any of its Subsidiaries,
and, with respect to premises now or previously leased by the Borrower or any of
its Subsidiaries, no underground storage tanks for Hazardous Materials, active
or abandoned, are now or were previously operated by the Borrower or any of its
Subsidiaries;
(iii) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any property now or
previously owned by the Borrower or any of its Subsidiaries; and
(iv) no Hazardous Materials have been otherwise Released
at, on or under any property now or previously owned or any premises now or
previously leased by
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the Borrower or any of its Subsidiaries to an extent that it has, or could
reasonably be expected to have, a Material Adverse Effect;
(f) neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location that is listed on the National Priorities List ("NPL") under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), listed for possible inclusion of the NPL by the
Environmental Protection Agency in the Comprehensive Environmental Response and
Liability Information System, as provided for by 40 C.F.R. ss.300.5 ("CERCLIS"),
or on any similar state or local list or that is the subject of Federal, state
or local enforcement actions or other investigations that may lead to
Environmental Claims against the Borrower or any of its Subsidiaries;
(g) no Hazardous Material generated by the Borrower or any
of its Subsidiaries has been recycled, treated, stored, disposed of or Released
by the Borrower or any of its Subsidiaries at any location;
(h) no oral or written notification of a Release of a
Hazardous Material has been given or filed by or on behalf of the Borrower or
any of its Subsidiaries and no property now or previously owned or premises
leased by the Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities list promulgated pursuant to CERCLA, on
CERCLIS or on any similar state list of sites requiring investigation or
cleanup;
(i) there are no Liens arising under or pursuant to any
Environmental Laws or any of the property owned or premises leased by the
Borrower or any of its Subsidiaries, and no government actions have been taken
or are in process which could subject any of such property to such Liens, and
neither the Borrower nor any of its Subsidiaries would be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property;
(j) neither the Borrower nor any of its Subsidiaries has
retained or assumed any liabilities (contingent or otherwise) in respect to any
Environmental Claims under the terms of any contract or agreement or by
operation of law as a result of the sale of assets or stock; and
(k) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are in
the possession of the Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by the Borrower or such
Subsidiary which has not been made available to the Banks.
5.26 Solvency. The Borrower has received, or has the right hereunder
to receive, consideration which is the reasonably equivalent value of the
obligations and liabilities that the Borrower has incurred to the Banks. The
Borrower is not insolvent as defined in Section 101 of Title 11 of the United
States Code or any applicable state insolvency statute, nor, after giving effect
to the consummation of the transactions contemplated herein, in the Busse
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Purchase Agreement, the Like-Kind Exchange Agreement, and in the Subordinated
Note Indenture, will the Borrower be rendered insolvent by the execution and
delivery of this Agreement, the Notes or the Loan Documents to the Banks. The
Borrower is not engaged or about to engage in any business or transaction for
which the assets retained by it shall be an unreasonably small capital, taking
into consideration the obligations to the Banks incurred hereunder. The Borrower
does not intend to, nor does it believe that it will, incur debts beyond its
ability to pay them as they mature.
5.27 Busse Purchase Agreement, Like-Kind Exchange Agreement,
Subordinated Note Indenture and Registration Statements.
(a) The Borrower has provided to the Administrative Agent a
complete and correct copy of each of the Busse Purchase Agreement and the
Like-Kind Exchange Agreement. All of the representations and warranties of the
Borrower and, to the best of the Borrower's knowledge, each other party thereto
in the Busse Purchase Agreement and the Like-Kind Exchange Agreement are true
and correct in all material respects as of the date hereof as if given as of the
date hereof and will be true and correct in all material respects as of the
Closing Date as if given as of such date. No party to the Busse Purchase
Agreement or the Like-Kind Exchange Agreement has given notice of any breach of
its representations, warranties or covenants therein. All of the representations
and warranties of the Borrower in this Section 5 shall be deemed to be given
after giving effect to the consummation of the closing under the Busse Purchase
Agreement, and the television stations being acquired pursuant to the Busse
Purchase Agreement and the Like-Kind Exchange Agreement shall be deemed to be
Stations for all purposes of these representations and warranties.
(b) The Borrower has provided to the Administrative Agent a
complete and correct copy of the Subordinated Note Indenture and the notes and
other agreements and documents executed and delivered pursuant thereto. All of
the representations and warranties of the Borrower in the Subordinated Note
Indenture are true and correct in all material respects as of the date hereof as
if given as of the date hereof, and will be true and correct in all material
respects as of the Closing Date as if given as of such date, and no default or
event of default exists thereunder or will exist after giving effect to the
making of any Loan or the issuance of any Letter of Credit hereunder. The
Subordinated Note Indenture has not been amended or modified, and no provisions
thereof have been waived.
(c) The Borrower has provided to the Administrative Agent
complete and correct copies of (i) the Registration Statement on Form S-1
(Registration No. 333-4338) relating to the notes issued pursuant to the
Subordinated Note Indenture and (ii) the Registration Statement on Form S-1
(Registration No. 333-4340) relating to the Borrower's issuance of 3,500,000
shares of its Class B Common Stock. No statement, representation or warranty
made in either such Registration Statement (including the prospectus contained
therein) contains any untrue statement of a material fact, nor omits to state a
material fact necessary to make such statement not misleading in light of the
circumstances under which such statement was made, or otherwise violates any
federal or state securities laws, rules or regulations.
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5.28 License Subsidiaries. Neither the Borrower nor any of its
Subsidiaries (other than License Subsidiaries) holds any License issued by the
FCC. No License Subsidiary (a) has any Indebtedness (other than pursuant to the
Subsidiary Guaranty and the Subsidiary Security Agreement executed by such
License Subsidiary and the subordinated guaranty executed by such License
Subsidiary pursuant to the Subordinated Note Indenture), (b) has any assets
other than FCC Licenses, (c) is a party to or bound by any contract or
agreement, (d) conducts any business or (e) has any employees, and there are no
Liens of any nature whatsoever on any of the property or assets of any License
Subsidiary except in favor of the Administrative Agent, for the benefit of the
Banks. All of the Licenses issued by the FCC in connection with the ownership
and operation of the Stations (including, without limitation, the Stations
being acquired pursuant to the Busse Purchase Agreement and the Like-Kind
Exchange Agreement), the Porta Phone Business and the Satellite Broadcasting
Business, have been, or at the closing under the Busse Purchase Agreement and
the Like-Kind Exchange Agreement will be, duly assigned to a Licensed
Subsidiary.
5.29 Year 2000 Compliance. The Borrower has (i) initiated a review
and assessment of substantially all areas within its and each of its
Subsidiaries' business and operations, or will initiate a review and assessment
in all remaining areas by December 31, 1998 (including those affected by
suppliers, vendors and customers) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by the Borrower
or any of its Subsidiaries (or suppliers, vendors and customers) may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Borrower believes that all computer applications (including those
of its suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' businesses and operations are reasonably expected by June 30, 1999
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Complaint", except to the extent
that a failure to do so could not reasonably be expected to have a Materially
Adverse Effect.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BANKS.
The obligations of the Banks to make any Loan or to issue or renew any
Letter of Credit and the performance by the Banks of the other actions to be
taken by them on or after the Closing Date are subject to the fulfillment or
waiver in writing of each of the following conditions precedent. The Borrower
shall deliver to the Administrative Agent copies for each Bank of each document,
instrument or other item to be delivered pursuant to this Section 6.
6.1 Compliance. All of the representations and warranties of the
Borrower and its Subsidiaries herein and in the Loan Documents shall be true and
correct on and as of the Closing Date and the date of any subsequent Loan (other
than a Loan resulting from the funding of a Letter of Credit) or the issuance or
renewal of a Letter of Credit, as if made on and as of such date and time before
and after giving effect to the making of the proposed loan or the issuance of
the proposed Letter of Credit, except to the extent that such representations
and warranties
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expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date. The Borrower and
its Subsidiaries shall have performed and shall be in compliance with all the
applicable terms and provisions of this Agreement and the Loan Documents and no
Possible Default or Event of Default shall have occurred and be continuing, on
and as of the Closing Date and the date of any subsequent Loan (other than a
Loan resulting from the funding of a Letter of Credit) or the issuance or
renewal of a Letter of Credit, before and after giving effect to the making of
the proposed Loan or the issuance of the proposed Letter of Credit. On the
Closing Date, the Borrower shall deliver to the Banks a certificate, dated as of
the Closing Date and signed by an executive officer of the Borrower certifying
compliance with the conditions of this Section 6.1. Each request by the Borrower
for a Loan or the issuance of a Letter of Credit shall, in and of itself,
constitute a representation and warranty that the Borrower, as of the date of
such Loan, is in compliance with this Section 6.1.
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6.2 Security Agreements.
(a) The Borrower shall have executed and delivered to the
Administrative Agent a Borrower Security Agreement granting to the
Administrative Agent, for the benefit of the Banks, a first priority security
interest in substantially all of the Borrower's personal property, including,
without limitation, the property acquired pursuant to the Busse Purchase
Agreement and the Like-Kind Exchange Agreement; and the Borrower Security
Agreement, or supplement thereto and the security interests granted pursuant
thereto, shall be in full force and effect.
(b) Each Subsidiary shall have executed and delivered to the
Administrative Agent a Subsidiary Security Agreement granting to the
Administrative Agent, for the benefit of the Banks, a first priority security
interest in substantially all of each Subsidiary's personal property, including,
without limitation, the property acquired pursuant to the Busse Purchase
Agreement and the Like-Kind Exchange Agreement; and each Subsidiary Security
Agreement, or supplement thereto and the security interests granted pursuant
thereto, shall be in full force and effect.
6.3 Pledge Agreements.
(a) The Borrower shall have executed and delivered to the
Administrative Agent a Borrower Pledge Agreement granting to the Administrative
Agent, for the benefit of the Banks, a first priority security interest in all
of the issued and outstanding Capital Stock of each of the Borrower's direct
Subsidiaries; the Borrower shall have delivered to the Administrative Agent
stock certificates evidencing all of such Capital Stock and stock powers, duly
endorsed in blank, with respect thereto; the Borrower shall have taken all
actions as may be required to effect the grant and perfection of the
Administrative Agent's security interest in such Capital Stock; and the Borrower
Pledge Agreement, or supplement thereto, and the security interests granted
pursuant thereto, shall be in full force and effect.
(b) Each Subsidiary of the Borrower which has a Subsidiary
shall have executed and delivered to the Administrative Agent a Subsidiary
Pledge Agreement granting to the Administrative Agent, for the benefit of the
Banks, a first priority security interest in all of the issued and outstanding
Capital Stock of each Subsidiary owned by such Subsidiary; each such Subsidiary
shall have delivered to the Administrative Agent stock certificates evidencing
all of such Capital Stock and stock powers, duly endorsed in blank, with respect
thereto; each such Subsidiary shall have taken all actions as may be required to
effect the grant and perfection of the Administrative Agent's security interest
in such Capital Stock; and each Subsidiary Pledge Agreement or supplement
thereto, and the security interests granted pursuant thereto, shall be in full
force and effect.
6.4 Real Estate Matters.
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(a) With respect to each parcel of real property owned by
the Borrower or any of its Subsidiaries, to the extent requested by the
Administrative Agent, the Borrower or such Subsidiary shall, with respect to
real property owned or to be acquired as of the Closing Date on or prior to the
Closing Date, and, with respect to real property thereafter acquired, promptly
after acquisition thereof, have executed and delivered a first priority mortgage
or deed of trust, in form and substance satisfactory to the Administrative
Agent, covering such parcel of real property. With respect to each parcel of
real property leased by the Borrower or any of its Subsidiaries, to the extent
requested by the Administrative Agent, the Borrower or such Subsidiary shall (on
or prior to the Closing Date with respect to leases held or to be acquired as of
the Closing Date and, with respect to leases thereafter acquired, promptly after
acquisition thereof) have executed and delivered a first priority leasehold
mortgage or collateral assignment of lease, in form and substance satisfactory
to the Administrative Agent, covering such leasehold interest. Such mortgages,
deeds of trust, leasehold mortgages and collateral assignments of leases may be
referred to hereinafter collectively as the "Mortgages". Each Mortgage shall
have been duly recorded, and the Borrower shall have paid all taxes, fees or
charges incurred in connection with the execution or recording thereof.
(b) The Borrower shall have procured and delivered to the
Administrative Agent a commitment from a title insurance company satisfactory to
the Administrative Agent for an ALTA mortgagee's policy of title insurance (Form
1970 if available, or 1984 or 1990 with 1970 Endorsement) covering each parcel
of real estate owned by the Borrower or any of its Subsidiaries which is subject
to a Mortgage, which policy shall be for the benefit of the Administrative Agent
on behalf of the Banks and satisfactory to the Administrative Agent and shall
insure that such Mortgage is a valid first mortgage lien on the property covered
thereby. Such policy shall, to the extent available and appropriate: (i) insure
title to the real property and all recorded easements benefiting such real
property, (ii) contain an "Extended Coverage Endorsement" insuring over the
general exceptions contained customarily in such policy, (iii) contain an
endorsement insuring that the real property described in the title insurance
policy is the same real estate as shown on the survey delivered with respect to
such property, (iv) contain an endorsement insuring that each street adjacent to
the real property is a public street and that there is direct and unencumbered
pedestrian and vehicular access to such street from the real property, (v) if
the real property consists of more than one record parcel, contain a
"contiguity" endorsement, if applicable, insuring that all of the record parcels
are contiguous to one another, (vi) contain appropriate endorsements insuring
against encroachments, and (vii) contain a commercial revolving line of credit
endorsement insuring that advances made subsequent to the date of the title
insurance policy are included in the title coverage, not to exceed the face
amount of the title policy. No title indemnities shall be established in
connection with the issuance of the aforesaid lender's title insurance policy.
(c) With respect to each parcel of real property owned by
the Borrower or any of its Subsidiaries which is subject to a Mortgage, the
Borrower shall have procured and delivered to the Administrative Agent evidence
as to whether such parcel of property is located within a flood hazard area for
purpose of the National Flood Insurance Act of 1968, as amended.
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(d) The Borrower shall obtain from each lessor under a
lease, in respect of which the Borrower or any of its Subsidiaries has granted
to the Administrative Agent a Mortgage or collateral assignment, written consent
to such grant in form and substance satisfactory to the Administrative Agent.
(e) The Borrower shall have provided to the Administrative
Agent copies of (i) phase I environmental surveys, acceptable to the
Administrative Agent, conducted by a company acceptable to the Administrative
Agent, with respect to each parcel of real estate acquired pursuant to the Busse
Purchase Agreement which is subject to a Mortgage, (ii) to the extent available,
all environmental surveys or audits performed during the past five (5) years in
connection with each of the parcels of real estate which is subject to a
Mortgage, and the results of any existing search of the public records of the
authorities in the relevant jurisdictions responsible for environmental matters
with respect to any proceeding or action affecting any parcel of real estate
which is subject to a Mortgage and (iii) such other evidence concerning
compliance (both past and present) with Environmental Laws by the Borrower and
its Subsidiaries as the Administrative Agent may request. The results of each
phase I environmental survey shall be satisfactory to the Administrative Agent.
(f) The Administrative Agent shall have received a survey
(collectively, the "Surveys") of each parcel of real estate acquired pursuant to
the Busse Purchase Agreement or the Like-Kind Exchange Agreement which is the
subject of a Mortgage, which survey shall be made in accordance with the
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys"
established and adopted by the American Land Title Associated and American
Congress on Surveying and Mapping in 1992, and meeting the accuracy requirement
of an "Urban" survey as defined therein, showing all buildings and other
improvements, if any, all encroachments, if any, all set-back lines, if any, and
all areas affected by any easements or other instruments of record, if any (the
recording data in respect of which shall be marked on the survey), containing
metes and bounds description of such parcel, setting forth the flood zone
designations, if any, in which such parcel is located.
6.5 Financing Statements. Any financing statements or fixture
filings required by the Security Agreements, the Pledge Agreements and the
Mortgages shall have been filed for record with the appropriate governmental
authorities.
6.6 Subsidiary Guaranty. Each Subsidiary shall have executed and
delivered to the Administrative Agent, for the benefit of the Banks, a
Subsidiary Guaranty pursuant to which such Subsidiary shall guarantee the
Obligations of the Borrower to the Banks.
6.7 Opinion of Borrower's Counsel. On the Closing Date, the
Administrative Agent shall have received the favorable written opinions of
special counsel to the Borrower and the Subsidiaries, of FCC counsel to the
Borrower and the Subsidiaries, and of local counsel in the States of Florida,
Georgia, Kentucky, Nebraska and Wisconsin, in each case dated the Closing Date,
addressed to the Banks and in form and substance satisfactory to the
Administrative Agent.
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6.8 Consummation of Busse Purchase Agreement and the Like-Kind
Exchange Agreement.
(a) The transactions contemplated by the Busse Purchase
Agreement and the Like-Kind Exchange Agreement shall have been consummated, or
shall be consummated simultaneously with the making of the initial Loans
hereunder, without the waiver of any material term or condition by and party
thereto, and the FCC shall have issued its consent to the assignment of the FCC
Licenses relating to WALB-TV, WEAU-TV, KOLN-TV, and KGIN-TV, respectively.
Without limiting the foregoing sentence, the Borrower and such License
Subsidiaries shall have purchased or otherwise acquired pursuant to the Busse
Purchase Agreement and the Like-Kind Exchange Agreement substantially all of
the operating assets of WEAU-TV, KOLN-TV and KGIN-TV free and clear of all
Liens, except Permitted Liens. The consummation of the transactions
contemplated by the Busse Purchase Agreement and the Like-Kind Exchange
Agreement shall be completed in a manner satisfactory to the Administrative
Agent, and the Administrative Agent shall have received conformed copies of
photocopies of all conveyance and other material documents relating thereto.
The Borrower shall use its best efforts to cause all opinions and certificates
delivered to the Borrower in connection with such closing to be addressed to
the Banks.
(b) The Borrower shall have delivered to the Administrative
Agent certified copies of the Busse Purchase Agreement and the Like-Kind
Exchange Agreement and of all agreements, documents and instruments entered into
in connection therewith.
6.9 Subordinated Notes. The Borrower shall have delivered to the
Administrative Agent certified copies of the Subordinated Note Indenture and the
notes issued pursuant thereto. The Borrower shall have delivered evidence
satisfactory to the Administrative Agent that the requested Loan, or the stated
amount of the requested Letter of Credit, constitutes "Senior Debt" for all
purposes of the Subordinated Note Indenture.
6.10 Payment of Existing Indebtedness. The existing senior secured
indebtedness of the Borrower shall have been paid in full, the agreements and
instruments governing and evidencing such indebtedness shall have been
terminated and cancelled, all Liens in connection therewith shall have been
released and the instruments and documents related thereto shall be satisfactory
to the Administrative Agent and the Banks in their sole discretion.
6.11 Financial Information.
(a) Audits. The Borrower shall have delivered to the
Administrative Agent on or prior to the Closing Date (i) unaudited consolidated
financial statements for the three (3) month period ended March 31, 1998,
including consolidated balance sheets and income and expense statements, of the
Borrower and its Subsidiaries as of, and for the three (3) month period ended,
March 31, 1998, and the results of their operations during such period.
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(b) Pro Forma Financial Statements. On the Closing Date, the
Borrower shall have delivered to the Administrative Agent (i) a consolidated pro
forma balance sheet and income statement, for the four (4) quarter period ended
June 30, 1998, after giving effect to closing under this Agreement, the Busse
Purchase Agreement, and the Like-Kind Exchange Agreement and (ii) a certificate
in form and substance satisfactory to the Administrative Agent showing in detail
the calculation of the Applicable Margin (using pro forma four (4) quarter
trailing cash flow as of June 30, 1998) after giving effect to the closings
under this Agreement, the Busse Purchase Agreement and the Like-Kind Exchange
Agreement.
(c) Compliance Certificate. The Borrower shall have
delivered to the Administrative Agent a pro forma compliance certificate in form
and substance satisfactory to the Administrative Agent showing the Leverage
Ratio as the date of such borrowing or issuance of a Letter of Credit and the
Borrower's compliance with the financial covenants set forth in Section 8.
(d) Solvency Certificate. On the Closing Date, the Borrower
shall have delivered to the Administrative Agent a solvency certificate in form
and substance satisfactory to the Administrative Agent executed by the chief
financial officer of the Borrower.
6.12 Engineer's Report. On the Closing Date, the Borrower shall have
delivered to the Administrative Agent a detailed engineering report from the
Borrower's engineer, acceptable in form and substance to the Administrative
Agent, as to the construction, engineering, installation and operation of each
of the Stations, including, without limitation, the Stations being acquired
pursuant to the Busse Purchase Agreement and the Like-Kind Exchange Agreement,
and its facilities and equipment. Such certificate shall also list any material
equipment problems at such Station and any material upgrades of equipment which
are currently, or which will within six (6) months be, required at such Station.
6.13 Due Diligence. The Administrative Agent and its counsel shall
have conducted a due diligence investigation of the Borrower, its Subsidiaries
and the businesses being acquired pursuant to the Busse Purchase Agreement and
the Like-Kind Exchange Agreement, and the results of such investigation shall
have been satisfactory to the Administrative Agent in all respects.
6.14 Borrowing Request. On the date of each Loan, the Borrower shall
have delivered to the Administrative Agent a borrowing request for such Loan in
form and substance satisfactory to the Administrative Agent, setting forth the
application of the proceeds of such Loan, evidence that such application is
permitted pursuant to Section 7.1, and showing the recipient, the amount of the
payment and the wire transfer instructions.
6.15 Insurance Certificates. On the Closing Date, the Borrower shall
have furnished to the Administrative Agent certificates of insurance together
with copies, if requested by the Administrative Agent, of all policies or other
satisfactory evidence that the insurance required by Section 7.3 is in full
force and effect.
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6.16 Corporate Documents. On the Closing Date, the Borrower
shall delivered to the Administrative Agent the following:
(a) certificates of good standing for each of the Borrower
and its Subsidiaries from the Secretary of State of the state of its
incorporation and from the Secretary of State of each other state in which the
Borrower or such Subsidiary is qualified or registered to do business, in each
case dated as of a date as near to the Closing Date as practicable;
(b) a certificate signed by the Secretary or Assistant
Secretary of the Borrower, dated as of the Closing Date, certifying that
attached thereto are true and complete copies of (i) the Articles of Certificate
of Incorporation and Bylaws of the Borrower and each Subsidiary, (ii)
resolutions adopted by the respective Boards of Directors of the borrower and
each of its Subsidiaries authorizing the execution, delivery and performance of
the Busse Purchase Agreement, the Like-Kind Exchange Agreement, the Subordinated
Note Indenture, this Agreement, the Loan Documents and the Obligations;
(c) incumbency certificates for the Borrower and each
Subsidiary; and
(d) such other documents as any Bank may reasonably request
in connection with the proceedings taken by the Borrower or any of its
Subsidiaries authorizing this Agreement and the Loan Documents.
6.17 Lien Searches, Consents and Releases of Liens. The
Administrative Agent shall have received: (a) certified copies of UCC, judgment
and tax lien search reports for each jurisdiction in which the Borrower or any
Subsidiary owns any property or conducts any business listing all effective
financing statements and other Liens on any of the property of the Borrower or
such Subsidiary, (b) consents to the granting of Liens in all Operating
Agreements and other material contracts and leases of the Borrower and each of
its Subsidiaries (including, without limitation, any acquired pursuant to the
Busse Purchase Agreement and the Like-Kind Exchange Agreement), which by their
terms require such consent, and (c) releases of any existing Liens encumbering
any assets of the Borrower or any of its Subsidiaries (including assets being
acquired pursuant to the Busse Purchase Agreement and the Like-Kind Exchange
Agreement), except for Permitted Liens.
6.18 No Order, Judgment or Decree. No order, judgment or decree of
any court, arbitrator or governmental authority shall purport to enjoin or
restrain the Banks from making the Loans.
6.19 No Material Adverse Effect. There shall have occurred no
Material Adverse Effect since December 31, 1997. No material disruption of or
material adverse change in financial, banking or capital markets shall have
occurred since March 31, 1998, and be continuing as of the Closing Date that, in
the Administrative Agent's reasonable judgment, would have a material adverse
effect on any Bank's ability to fund the initial Loans hereunder. No material
disruption of or material adverse change in the primary or secondary loan
syndication markets, shall have occurred since March 31, 1998, and be continuing
as of the
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Closing Date that, in the Administrative Agent's reasonable judgment, would have
a material adverse effect on the syndication of the Loans.
6.20 Fee Letter; Fees and Expenses. The Borrower shall have paid all
fees, expenses and other amounts due pursuant hereto and pursuant to any Fee
Letter.
6.21 Legal Approval. All legal matters incident to this Agreement
and the consummation of the transactions contemplated hereby shall be
satisfactory to Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia,
special counsel to the Administrative Agent.
6.22 Other Documents. The Administrative Agent shall have received
all Loan Documents duly executed, and each Bank shall have received such other
certificates, opinions, agreements and documents, in form and substance
satisfactory to it, as it may reasonably request.
SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower agrees with the Banks that so long as this Agreement shall
remain in effect or any of the Obligations shall remain unpaid or to be
performed or any Letter of Credit shall remain outstanding, it shall perform and
comply with the affirmative covenants contained in this Section.
7.1 Use of Proceeds. The Borrower shall use the proceeds of the
Loans only for the following purposes: (i) to finance the Busse Purchase
Agreement, (ii) to fund Permitted Acquisitions and Permitted Investments, (iii)
to refinance Indebtedness outstanding under the Prior Loan Agreement, (iv) to
fund Capital Expenditures to the extent permitted by Section 8.7, (v) for
working capital and general corporate purposes (including the payment of closing
costs and expenses in connection with the Busse Purchase Agreement, the
Like-Kind Exchange Agreement, and this Agreement), (vi) to redeem Preferred
Stock as permitted hereunder and (vii) to defease the Busse Bonds and to finance
any fees associated with such defeasance.
7.2 Continued Existence; Maintenance of Rights and Licenses;
Compliance with Law. The Borrower shall, and shall cause each of its
Subsidiaries to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its corporate existence and its material
rights and Licenses. Without limiting the generality of the foregoing, the
Borrower shall, and shall cause each of its Subsidiaries to, maintain in full
force and effect, until termination in accordance with their respective terms,
any and all Licenses, Operating Agreements and other material contracts and
other rights necessary to operate the Stations (including, without limitation,
the Stations being acquired under the Busse Purchase Agreement and the Like-Kind
Exchange Agreement), the Newspapers, the Porta Phone Business and the Satellite
Broadcasting Business, not breach or violate the same in any material respect,
and take all actions which may be required to comply in all material respects
with all applicable laws, statutes, rules, regulations, orders and decrees now
in effect or hereafter promulgated by any governmental authority, including
without limitation, the FCC. The Borrower shall, and shall cause each of its
Subsidiaries to, obtain, renew and extend all of the foregoing rights, Licenses
and the like which may be necessary for the continuance of the operation of the
Stations
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(including, without limitation, the Stations being acquired under the Busse
Purchase Agreement and the Like-Kind Exchange Agreement), the Newspapers, the
Porta Phone Business and the Satellite Broadcasting Business.
7.3 Insurance. The Borrower shall, and shall cause each of its
Subsidiaries to, keep its insurable properties insured to the full replacement
cost thereof at all times by financially sound and reputable insurers reasonably
acceptable to the Administrative Agent, and maintain such other insurance, to
such extent and against such risks, including, without limitation, fire,
lightning, vandalism, malicious mischief, flood (to the extent required by the
Administrative Agent, if any of the Borrower's or any of its Subsidiaries'
property is located in an identified flood hazard area, in which insurance has
been made available pursuant to the National Flood Insurance Act of 1968) and
other risks insured against by extended coverage, as is customary with companies
in the broadcasting and media businesses. All such insurance shall be in amounts
sufficient to prevent the Borrower or any of its Subsidiaries from becoming a
coinsurer, shall name the Administrative Agent, for the benefit of the Banks, as
loss payee and may contain loss deductible provisions which shall not exceed
$250,000. The Borrower shall maintain, for itself and its Subsidiaries, in full
force and effect liability insurance, business interruption insurance, errors
and omissions insurance, general accident and public liability insurance and all
other insurance as is usually carried by companies engaged in the same or
similar businesses similarly situated against claims for personal or bodily
injury, death or property damage occurring upon, in, about or in connection with
the use or operation of any property or motor vehicles owned, occupied,
controlled or used by the Borrower, its Subsidiaries and their employees or
Administrative Agents, or arising in any other manner out of the business
conducted by the Borrower and its Subsidiaries. All of such insurance shall be
in amounts reasonably satisfactory to the Administrative Agent and shall be
obtained and maintained by means of policies with generally recognized,
responsible insurance companies authorized to do business in such states as may
be necessary depending upon the locations of the Borrower's and its
Subsidiaries' assets and shall name the Administrative Agent, for the benefit of
the Banks, as an additional insured or loss payee, as the case may be. The
insurance to be provided may be blanket policies. Each policy of insurance shall
be written so as not to be subject to cancellation or substantial modification
without not less than thirty (30) days advance written notice to the
Administrative Agent. The Borrower shall furnish the Administrative Agent
annually with certificates or other evidence satisfactory to the Administrative
Agent that the insurance required hereby has been obtained and is in full force
and effect and, prior to the expiration of any such insurance, the Borrower
shall furnish the Administrative Agent with evidence satisfactory to the
Administrative Agent that such insurance has been renewed or replaced. The
Borrower shall, upon request of the Administrative Agent, furnish the
Administrative Agent such information about such insurance as the Administrative
Agent may from time to time reasonably request.
7.4 Obligations and Taxes. The Borrower shall, and shall cause each
of its Subsidiaries to, pay and perform all of its material Indebtedness and
other material liabilities and obligations in a timely manner in accordance with
normal business practices and with the terms governing the same. The Borrower
shall, and shall cause each of its Subsidiaries to, comply with the terms and
covenants of all material agreements and all material leases of real or personal
property and shall keep them all in full force and effect until termination
thereof in accordance
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with their respective terms. The Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or in respect of its property
before the imposition of any penalty, as well as all lawful claims for labor,
materials, supplies or other matters which, if unpaid, might become a Lien or
charge upon such properties or any part thereof; provided, however, that neither
the Borrower nor any of its Subsidiaries shall be required to pay and discharge
any such tax, assessment, charge, levy or claim so long as (a) the validity
thereof is being contested diligently and in good faith by appropriate
proceedings and the enforcement thereof is stayed, pending the outcome of such
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves in accordance with GAAP with respect thereto, and (c) such
contest will not endanger the Lien of the Administrative Agent in any of the
Borrower's or such Subsidiary's assets.
7.5 Financial Statements and Reports. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain true and complete books and records
of account in accordance with GAAP. The Borrower shall furnish to the
Administrative Agent, for delivery to the Banks, the following financial
statements and projections at the following times:
(a) as soon as available, but in no event later than ninety
(90) days after the end of each fiscal year of the Borrower, the Borrower shall
furnish (i) audited consolidated financial statements, including audited
consolidated balance sheets and income and expense statements, of the Borrower
and its Subsidiaries as of the close of such fiscal year and the results of
their operations during such fiscal year, and a consolidated statement of cash
flows for such fiscal year, together with such additional statements, schedules
and footnotes as are customary in a complete accountant's report; such financial
statements shall be certified by independent certified public accountants
selected by the Borrower and acceptable to the Administrative Agent, and the
opinion of such accountants shall be unqualified; and (ii) a statement signed by
such accountants to the effect that in connection with their examination of such
financial statements they have reviewed the provisions of this Agreement and
have no knowledge of any event or condition which constitutes an Event of
Default or Possible Default or, if they have such knowledge, specifying the
nature and period of existence thereof; provided, however, that in issuing such
statement, such independent accountants shall not be required to go beyond
normal auditing procedures conducted in connection with their opinion referred
to above;
(b) as soon as available, but in no event later than
forty-five (45) days after the end of each fiscal quarter of the Borrower, the
Borrower shall furnish unaudited consolidated and consolidating financial
statements, including consolidated and consolidating balance sheets and income
and expense statements, of the Borrower and its Subsidiaries as of the end of
such period and the results of their operations during such period and for the
then elapsed portion of the fiscal year, and a consolidated statement of cash
flows for the portion of the fiscal year ended with the last day of such
quarter; all such financial statements shall set forth, in comparative form,
corresponding figures for the equivalent period of the prior year and a
comparison to budget for the applicable quarter shall be in form and detail
satisfactory to the Administrative Agent, and shall be certified as to accuracy
and completeness by the chief financial officer of the Borrower;
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(c) as soon as available, but in no event later than
forty-five days after the end of each month for the first eleven (11) month of
fiscal year, and within sixty (60) days after the end of the last month of each
fiscal year, the Borrower shall furnish unaudited statements of income and
expense for each Station, each Newspaper, the Porta Phone Business and the
Satellite Broadcasting Business, which shall contain a comparison with budget or
projections for such period and a comparison to the comparable period for the
prior year, and which shall be certified by the chief financial officer of the
Borrower;
(d) the financial statements required under (a) and (b) above
shall be accompanied by a compliance certificate in the form attached hereto as
Exhibit H of the chief financial officer of the Borrower (i) setting forth the
computations showing compliance with the financial covenants set forth in
Section 8 below, and (ii) certifying that no Possible Default or Event of
Default has occurred, or if any Possible Default or Event of Default has
occurred, stating the nature thereof and the actions the Borrower intends to
take in connection therewith;
(e) the Borrower shall furnish (i) no later than sixty (60)
days after the commencement of each fiscal year, an annual operating budget or
fiscal projections for such fiscal year, and (ii) promptly upon preparation
thereof, any material revisions of such annual budget or fiscal projections;
(f) promptly upon their becoming available, the Borrower
shall furnish (i) copies of any periodic or special reports filed by the
Borrower or any of its Subsidiaries with the FCC or any other federal, state or
local governmental agency or authority if such reports indicate any material
change in the ownership of the Borrower or such Subsidiary, or any materially
adverse change in business, operations, affairs or condition of the Borrower or
such Subsidiary, (ii) copies of any material notices and other material
communications from the FCC or any other federal, state or local governmental
agency or authority which specifically relate to the Borrower, any of its
Subsidiaries, any Station, the Porta Phone Business or the Satellite
Broadcasting Business or any material License, and the substance of which
relates to a matter that could reasonably be expected to have a Material Adverse
Effect, and (iii) copies of the results of each survey conducted by the Borrower
or any of its Subsidiaries for the purpose of certifying to the FCC compliance
with federal laws and the rules, regulations, policies and orders of the FCC
relating to foreign ownership restrictions and to limitations on the nature and
number of media outlets that may be held under common ownership or control;
(g) promptly upon their becoming available, the Borrower
shall furnish (i) copies of any registration statements and regular periodic
reports, if any, which any Borrower or any Subsidiary shall have filed with the
Securities and Exchange Commission (or any governmental agency substituted
therefor) or any national securities exchange, and (ii) copies of all financial
statements, reports and proxy statements mailed to its stockholders;
(h) the Borrower shall furnish (i) upon request, promptly
after the filing thereof with the Internal Revenue Service, copies of each
annual report with respect to each Plan established or maintained by the
Borrower or any member of the Controlled Group for each plan year, including (A)
where required by law, a statement of assets and liabilities of such
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Plan as of the end of such plan year and statements of changes in fund balance
and in financial position, or a statement in changes in net assets available for
plan benefits, for such plan year, certified by an independent public accountant
satisfactory to the Administrative Agent, and (B) if prepared by or available to
the Borrower, an actuarial statement of such Plan applicable to such plan year,
certified by an enrolled actuary of recognized standing acceptable to the
Administrative Agent; and (ii) promptly after receipt thereof, a copy of any
notice the Borrower or a member of the Controlled Group may receive from the
Department of Labor or the Internal Revenue Service with respect to any Plan
(other than notices of general application) which could result in a material
liability to the Borrower; the Borrower will promptly notify the Administrative
Agent of any material taxes assessed, proposed to be assessed or which the
Borrower has reason to believe may be assessed against the Borrower or any
member of the Controlled Group by the Internal Revenue Service with respect to
any Plan or Benefit Arrangement within thirty days (30) after the Borrower knows
or has reason to know that any Reportable Event with respect to any Plan has
occurred, a statement of the chief financial officer of the Borrower setting
forth details as to such Reportable Event and the action which the Borrower
proposes to take with respect thereto, together with a copy of the notice of
such reportable event given to the PBGC if a copy of such notice is available to
the Borrower; notice within thirty (30) days after the Borrower or any other
member of the Controlled Group knows or has reason to know that any
multiemployer plan (as defined in Section 414(f) of the Code) under which the
Borrower or member of the Controlled Group is an employer, is in reorganization
(as defined in Section 418 of the Code or Title IV of ERISA) or is insolvent;
the Borrower will promptly notify the Administrative Agent of any withdrawal
liability asserted against the Borrower or any member of the Controlled Group
under Section 4201(a) of ERISA with respect to any Plan;
(i) without duplication of any delivery requirements
otherwise set forth herein, copies of any reports, notices or other
communications that the Borrower is required to deliver to the trustee under the
Subordinated Note Indenture; and
(j) upon the Administrative Agent's written request, such
other information about the financial condition, properties and operations of
the Borrower or any of its Subsidiaries as any Bank may from time to time
reasonably request.
7.6 Notices. The Borrower shall give the Administrative Agent, for
distribution to the Banks, notice within five (5) days after its receipt of
notice or knowledge thereof, (a) of any action, suit, investigation or
proceeding by or against the Borrower or any of its Subsidiaries, which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect, including, without limitation, any material admonition, censure or
adverse citation or order by the FCC or any other governmental authority or
regulatory agency, (b) (i) of any action or event constituting an event of
default or violation of the Subordinated Note Indenture, or any License,
Operating Agreement, or other material contract to which the Borrower or any of
its Subsidiaries is a party or by which the Borrower or any Subsidiary is bound,
and (ii) of any competing application, petition to deny or other opposition to
any license renewal application filed by the Borrower or any of its Subsidiaries
with the FCC, if such event of default, violation or other matter could
reasonably be expected to have a Material Adverse
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Effect, (c) of the occurrence of any Possible Default or Event of Default and
the actions the Borrower intends to take in connection therewith, (d) of any
cancellation of or any material amendment to any of the insurance policies
maintained in accordance with the requirements of this Agreement, except for
cancellations and amendments that occur in the ordinary course of business, (e)
of any material, adverse change in the business or financial condition of the
Borrower or any of its Subsidiaries, and (f) of any material strike, labor
dispute, slow down or work stoppage due to a labor disagreement (or any material
development regarding any thereof) affecting the Borrower or any of its
Subsidiaries.
7.7 Maintenance of Property. The Borrower shall, and shall cause
each of its Subsidiaries to, at all times maintain and preserve its towers,
printing presses, machinery, equipment, motor vehicles, fixtures and other
property in good working order, condition and repair, normal wear and tear
excepted, and in compliance with all material applicable standards, rules or
regulations imposed by any governmental authority or agency (including, without
limitation, the FCC, the Federal Aviation Administration or any other License
Authority) or policy of insurance , except for such property which, in the
judgment of the Borrower, is no longer necessary to the business of the Borrower
or any of its Subsidiaries.
7.8 Information and Inspection. The Borrower shall furnish to the
Administrative Agent and the Banks form time to time, promptly upon request,
information reasonably requested by the Administrative Agent or any Bank
pertaining to any covenant, provision or condition hereof or of any Loan
Document, or to any matter connected with the books, records, operations,
financial condition, properties, activities or business of the Borrower or of
any of its Subsidiaries. At all reasonable times, the Borrower shall permit any
authorized representative designated by any Bank to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, and their books and
records, and to take extracts therefrom and make copies thereof, and to discuss
the Borrower's and its Subsidiaries' affairs, finances and accounts with the
management of the Borrower and its Subsidiaries and with the Borrower's
independent accountants.
7.9 Maintenance of Liens. The Borrower shall do all things necessary
or requested by the Administrative Agent to preserve and perfect the Liens of
the Administrative Agent, for the benefit of the Banks, arising pursuant hereto
and pursuant to the Loan Documents as first Liens, except for Permitted Liens,
and to insure that the Administrative Agent, for the benefit of the Banks, has a
Lien on substantially all of the assets of the Borrower and in all of the
Capital Stock and substantially all of the assets of each of its Subsidiaries.
If the Borrower or any of its Subsidiaries purchases any real property, the
Borrower or such Subsidiary shall notify the Administrative Agent and execute,
deliver and cause to be recorded any Mortgage requested by the Administrative
Agent in connection therewith, which shall be first lien, except for Permitted
Liens and take such other actions as would have been required pursuant to
Section 6.4 has such property been owned on the Closing Date. If the Borrower or
any of its Subsidiaries enters into a new Operating Agreement or other material
contract or lease which prohibits the assignment thereof or the granting of a
security interest therein without the consent of the other party, the Borrower
shall use its best efforts to obtain the written consent of such other party to
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the grant to the Administrative Agent, for the benefit of the Banks, of a
security interest therein pursuant to the Security Agreements.
7.10 Title to Property. The Borrower shall, and shall cause each of
its Subsidiaries to, own and hold title to all of its assets in its own name and
not in the name of any nominee.
7.11 Environmental Compliance and Indemnity.
(a). The Borrower shall, and shall cause each of its
Subsidiaries to, comply in all material respects with all Environmental Laws,
including, without limitation, all Environmental Laws in jurisdictions in which
the Borrower or any of its Subsidiaries owns or operates a facility or site,
arranges for disposal or treatment of Hazardous Materials, solid waste or other
wastes, accepts for transport any Hazardous Materials, solid wastes or other
wastes or hold any interest in real property or otherwise. Neither the Borrower
nor any of its Subsidiaries shall cause or allow the Release of Hazardous
Materials, solid waste or other wastes on, under or to any real property in
which the Borrower or such Subsidiary holds any interest or performs any of its
operations, in material violation of any Environmental Law. The Borrower shall
notify the Banks promptly after its receipt of notice thereof, of any
Environmental Claim which the Borrower receives involving any potential or
actual material liability of the Borrower or any of its Subsidiaries arising in
connection with any noncompliance with or violation of the requirements of any
Environmental Law or a material Release or threatened Release of any Hazardous
Materials, solid waste or other waste into the environment. The Borrower shall
promptly notify the Banks (i) of any material Release of Hazardous Material on,
under or from the real property in which the Borrower or any of its Subsidiaries
holds or has held an interest, upon the Borrower's learning thereof by receipt
of notice that the Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of such Release or that the Borrower or such Subsidiary
has been identified as potentially responsible for, or is subject to
investigation by any governmental authority relating to, such Release, and (ii)
of the commencement or threat of any judicial or administrative proceeding
alleging a violation of any Environmental Laws.
(b) If the Administrative Agent at any time has a reasonable
basis to believe that there may be a violation of any Environmental Law by, or
any liability arising thereunder of, the Borrower or any of its Subsidiaries or
related to any real property owned, leased or operated by the Borrower or any of
its Subsidiaries or real property adjacent to such real property, which
violation or liability could reasonably be expected to have a Material Adverse
Effect, then the Borrower shall, upon request from the Administrative Agent,
provide the Administrative Agent with such reports, certificates, engineering
studies or other written material or data as the Administrative Agent may
require so as to satisfy the Administrative Agent that the Borrower or such
Subsidiary is in material compliance with all applicable Environmental Laws.
(c) The Borrower shall defend, indemnify and hold the
Administrative Agent and the Banks, and their respective officers, directors,
shareholders, employees, agents, affiliates, successors and assigns harmless
from and against all costs, expenses, claims, demands,
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damages, penalties and liabilities of every kind or nature whatsoever incurred
by them (including, without limitation, reasonable attorney fees) arising out
of, resulting from or relating to (i) the noncompliance of the Borrower, any of
its Subsidiaries of any property owned or leased by the Borrower or any of its
Subsidiaries with any Environmental Law, or (ii) any investigatory or remedial
action involving the Borrower, any of its Subsidiaries or any property owned or
leased by the Borrower or any of its Subsidiaries and required by Environmental
Laws or by order of any governmental authority having jurisdiction under any
Environmental Laws, or (iii) any injury to any person whatsoever or damage to
any property arising out of, in connection with or in any way relating to the
breach of any of the environmental warranties or covenants contained in this
Agreement or any facts or circumstances that cause any of the environmental
representations or warranties contained in this Agreement to cease to be true,
or (iv) the existence, treatment, storage, Release, generation, transportation,
removal, manufacture or other handling of any Hazardous Material on or affecting
any property owned or leased by the Borrower of any of its Subsidiaries, or (v)
the presence of any asbestos-containing material or underground storage tanks,
whether in use or closed, under or on any property owned or leased by the
Borrower or any of its Subsidiaries; provided, however, that the foregoing
indemnity shall not apply to any such costs, expenses, claims, demands, damages,
penalties or liabilities that are determined in a final non-appealable order of
a court of competent jurisdiction to have arisen solely out of the gross
negligence or willful misconduct of the indemnified person.
7.12 Rate Hedging Obligations. The Borrower shall within sixty (60)
days after the Closing enter into, and shall at all times thereafter maintain in
full force and effect, agreements in form and substance reasonably satisfactory
to the Administrative Agent regarding Rate Hedging Obligations so that the sum
of the notional amount subject to such agreements, plus the aggregate principal
amount of all Total Debt which bears interest at a fixed interest rate equals,
at all times, at least fifty percent (50%) of the principal amount of Total Debt
then outstanding.
7.13 FCC Consents. The Borrower acknowledges that certain
transactions contemplated by this Agreement or the Loan Documents, and certain
actions which may be taken by the Administrative Agent or the Banks in the
exercise of their rights under this Agreement or the Loan Documents, may require
the consent of the FCC. If the counsel to the Administrative Agent determines
that the consent of the FCC is required in connection with the execution,
delivery and performance of any of the aforesaid documents or any documents
delivered to the Administrative Agent or the Banks in connection therewith or as
a result of any action which may be taken pursuant thereto, then the Borrower,
at its sole cost and expense, shall use its best efforts, and shall cause its
Subsidiaries to use their best efforts, to secure such consent and to cooperate
with the Administrative Agent and the Banks in any action commenced by the
Administrative Agent or the Banks to secure such consent. The Borrower shall
not, and shall not permit any Subsidiary to, take any action which interferes
with the exercise or completion of any such action taken by the Administrative
Agent or the Banks. The Borrower further consents to the transfer of control or
assignment of Licenses to a receiver or trustee or similar official or to any
purchaser of the collateral securing the Loans pursuant to any public or private
sale, judicial sale, foreclosure or exercise of other remedies available to the
Administrative Agent or the Banks as permitted by applicable law upon the
occurrence of an Event of Default
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7.14 Appraisals. If at any time any Bank determines that it must
have current appraisals of any of the real property subject to a Mortgage to
comply with any law, rule or regulation applicable to it, then, upon request by
such Bank, the Borrower shall, at its expense, order appraisals of all of such
real property. Such appraisals shall be in form and substance acceptable to the
Banks, shall be prepared by appraisers acceptable to the Banks and shall be
delivered to the Administrative Agent within forty-five (45) days of the request
therefor.
7.15 Real Estate. Within forty-five (45) days after any reasonable
request by the Administrative Agent, the Borrower shall deliver to the
Administrative Agent copies of documentation evidencing the security interest of
the Administrative Agent in the assets acquired pursuant to the Busse Purchase
Agreement and the Like-Kind Exchange Agreement, all of which shall be in form
and substance reasonably satisfactory to the Administrative Agent, in respect of
any parcel of real estate owned by the Borrower or any of its Subsidiaries and
in respect of which such items were not delivered to the Administrative Agent on
the Closing Date.
7.16 Year 2000 Compliance. The Borrower will promptly notify the
Administrative Agent in the event the Borrower discovers or determines that any
computer application (including, without limitation, those of its suppliers and
vendors) that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a Materially
Adverse Effect.
7.17 Covenants Regarding Formation of Subsidiaries and Acquisitions.
At the time of (i) any Permitted Acquisition or (ii) the formation of any new
Subsidiary of the Borrower or any of its Subsidiaries which is permitted under
this Agreement, including, without limitation, the formation of any License
Subsidiary, the Borrower will, and will cause its Subsidiaries, as appropriate,
to (a) provide to the Administrative Agent (1) an executed Subsidiary Security
Agreement for such new Subsidiary, in substantially the form of Exhibit E
attached hereto, together with appropriate UCC-1 financing statements, and (2)
an executed Subsidiary Guaranty for such new Subsidiary, in substantially the
form of Exhibit C attached hereto; (b) pledge to the Administrative Agent all of
the Capital Stock of such Subsidiary or Person which is acquired or formed,
beneficially owned by the Borrower or any of its Subsidiaries, as the case may
be, as additional collateral for the Obligations to be held by the
Administrative Agent in accordance with the terms of the Borrower Pledge
Agreement, an existing Subsidiary Pledge Agreement, or a new Subsidiary Pledge
Agreement in substantially the form of Exhibit D attached hereto, and execute
and deliver to the Administrative Agent all such other documentation for such
pledge as, in the opinion of the Administrative Agent, is appropriate; and (c)
provide revised financial projections for the remainder of the fiscal year and
for each subsequent year until the Maturity Date which reflect such Permitted
Acquisition or formation, certified by the chief financial officer of the
Borrower, together with a statement by such Person that no Event of Default
exists or would be caused by such Permitted Acquisition or formation, and all
other documentation, including one or more opinions of counsel, which are
satisfactory to the Administrative Agent and which in its opinion is appropriate
with respect to such Acquisition or the formation of such
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Subsidiary. Any document, agreement or instrument executed or issued pursuant to
this Section 7.17 shall be a "Loan Document" for purposes of this Agreement.
SECTION 8. NEGATIVE COVENANTS OF THE BORROWER.
The Borrower agrees with the Banks that so long as this Agreement shall
remain in effect or any of the Obligations shall remain unpaid or to be
performed or any Letter of Credit shall remain outstanding, the Borrower shall
not, directly or indirectly, take any of the actions set out in this Section 8
nor permit any of the conditions set out herein to occur.
8.1 Indebtedness. The Borrower shall not, and shall not permit any
of its Subsidiaries to, incur, create, assume or permit to exist any
Indebtedness, except:
(a) the Obligations;
(b) Indebtedness permitted under Sections 8.3, 8.4, 8.5 or
8.6 hereof and any other Indebtedness secured by a Permitted Lien which, in the
aggregate, shall not exceed $5,000,000;
(c) unsecured trade accounts payable and other unsecured
current Indebtedness incurred in the ordinary course of business (but excluding
any Indebtedness for borrowed money);
(d) Indebtedness for taxes, assessments, governmental
charges, liens or similar claims to the extent that payment thereof shall not be
required to be made by the provisions of Section 7.4;
(e) Indebtedness incurred in respect of Rate Hedging
Obligations required pursuant to Section 7.12;
(f) Subordinated Debt incurred pursuant to the terms of the
Subordinated Note Indenture, or Indebtedness incurred in refinancing such
Subordinated Debt, provided such Indebtedness is on terms and conditions
satisfactory to the Required Banks, as in effect on the date hereof in a
principal amount not to exceed $150,000,000; and
(g) existing Indebtedness listed on Schedule 6 attached
----------
hereto.
8.2 Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, incur, create, assume or permit to exist any Lien of any nature
whatsoever on any property or assets now owned or hereafter acquired by the
Borrower or any of its Subsidiaries, other than Permitted Liens. The Borrower
shall not, and shall not permit any of its Subsidiaries to enter into or permit
to exist any arrangement or agreement, other than pursuant to this Agreement or
any Loan Document, which directly or indirectly prohibits the Borrower or any of
its Subsidiaries from creating or incurring any Lien on any of its assets, other
than (a) leases and agreements regarding purchase money Indebtedness permitted
pursuant to Section 8.4 (so long as
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such prohibition only relates to the asset which is subject to such lease or
which secure such Indebtedness, (b) provisions in agreements which prohibit the
assignment of such agreements and (c) restrictions on the creation of Liens
contained in the Subordinated Note Indenture as in effect as of the date hereof.
8.3 Guaranties. The Borrower shall not, and shall not permit any of
its Subsidiaries to, become a Guarantor for any Person, except with respect to
(a) endorsements of negotiable instruments for collection in the ordinary course
of business, (b) the Subsidiary Guaranties, (c) guaranties by the Borrower's
Subsidiaries of the Borrower's obligations under the Subordinated Debt, so long
as such guaranties are subordinate to the obligations of the Borrower's
Subsidiaries under the Subsidiary Guaranties to the same extent as the
Subordinated Debt under the Subordinated Note Indenture is subordinate to the
Obligations, (d) contingent obligations under indemnity agreements to title
insurers to cause such title insurers to issue to the Administrative Agent
mortgagee title insurance policies, as provided in Section 6.4, and (e)
contingent obligations incurred in the ordinary course of business with respect
to surety and appeal bonds, performance and return-of-money bonds and other
similar obligations not exceeding, together with Indebtedness permitted under
Sections 8.1(b), 8.4, 8.5 or 8.6, at any time outstanding $5,000,000 in the
aggregate.
8.4 Rental and Conditional Sale Obligations. The Borrower shall not,
and shall not permit any of its Subsidiaries to, incur, create, assume or permit
to exist, with respect to any personal property, any conditional sale
obligation, any purchase money obligation, any rental obligation, any purchase
money security interest or any other arrangement for the use of personal
property of any other Person, which in any such case has an unexpired term of
not less than one (1) year, other than an arrangement constituting a Capitalized
Lease Obligation, if the aggregate amount payable by the Borrower and its
Subsidiaries pursuant to all such arrangements in any fiscal year would exceed,
together with Indebtedness permitted under Section 8.1(b), 8.3, 8.5, or 8.6, at
any time outstanding $5,000,000 in the aggregate, plus the amount of any such
obligations incurred pursuant to a Permitted Acquisition.
8.5 Real Property Interests. The Borrower shall not, and shall not
permit any of its Subsidiaries to, be obligated under, enter into, assume or
permit to exist any lease or rental obligation for real property which has an
unexpired term of not less than one (1) year, if the aggregate amount payable in
respect of all such arrangements by the Borrower and its Subsidiaries in any
fiscal year would exceed, together with Indebtedness permitted under Section
8.1(b), 8.3, 8.4, or 8.6, at any time outstanding $5,000,000 in the aggregate,
plus the amount of any such obligations incurred pursuant to a Permitted
Acquisition.
8.6 Capitalized Lease Obligations. The Borrower shall not, and shall
not permit any of its Subsidiaries to, incur, create, assume or permit to exist
Capitalized Lease Obligations if the aggregate amount payable by the Borrower
and its Subsidiaries in respect of all such Capitalized Lease Obligations in any
fiscal year would exceed, together with Indebtedness permitted under Section
8.1(b), 8.3, 8.4, or 8.5, at any time outstanding $5,000,000 in the aggregate,
plus the amount of any such obligations incurred pursuant to a Permitted
Acquisition.
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8.7 Notes, Accounts Receivable and Claims. The Borrower shall not,
and shall not permit any of its Subsidiaries to, sell, discount or otherwise
dispose of any note, account receivable or other right to receive payment, with
or without recourse, except for collection in the ordinary course of business,
or fail to timely assert any claim, cause of action or contract right which it
possesses against any third party or agree to settle or compromise any such
claim, cause of action or contract right except in any case in the exercise of
good business judgment and except for settlements or compromise made in the
reasonable exercise of business judgment in the ordinary course of business.
8.8 Capital Distributions; Restrictions on Payments to
Stockholders.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, make, or declare or incur any liability to make, any Capital
Distribution; provided, however, that:
(i) any Subsidiary of the Borrower may make Capital
Distributions to the Borrower or to a wholly-owned Subsidiary of the
Borrower; and
(ii) the Borrower may make Capital Distributions so long
as: (A) prior to making any such distribution, the Borrower shall have
demonstrated to the satisfaction of the Administrative Agent that the Borrower
will be in compliance with all of the covenants contained herein after giving
effect to such distribution; (B) no Possible Default or Event of Default exists
at the time of making such distribution or would exist after giving effect
thereto; and (C) prior to making any such distribution, the Borrower shall have
delivered to the Administrative Agent a certificate of its chief financial
officer in form and substance satisfactory to the Administrative Agent which
shall contain calculations demonstrating on a pro forma basis the Borrower's
compliance with the financial covenants set forth in this Section 8 after giving
effect to such distribution.
(b) The Borrower shall not permit any of its Subsidiaries to
enter into or agree, or otherwise become subject to any agreement, contract or
other arrangement with any Person pursuant to the terms of which (a) such
Subsidiary is or would be prohibited from or limited in declaring or paying any
cash dividends or distributions on any class of its Capital Stock or any other
ownership interests owned directly or indirectly by the Borrower or from making
any other distribution on account of any class of any such Capital Stock or
ownership interests (herein referred to as "Upstream Dividends") or (b) the
declaration or payment of Upstream Dividends by a Subsidiary of the Borrower to
the Borrower or to another Subsidiary of the Borrower, on an annual or
cumulative or other basis, is or would be otherwise limited or restricted.
8.9 Disposal of Property; Mergers; Acquisitions;
Reorganizations.
(a) Except as provided in paragraphs (b) and (c) below, the
Borrower shall not, and shall not permit any of its Subsidiaries to, (i)
dissolve or liquidate; (ii) make any Asset Sale, except for (A) Asset Sales in
the ordinary course of business in an aggregate amount
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not to exceed $1,000,000 in any transaction or related series of transactions,
and (B) the disposition of substantially all of the assets of the Porta Phone
Business, so long as in each such case the Borrower has complied with the
provisions of Section 2.7(b)(ii); (iii) be a party to any consolidation, merger,
recapitalization or other form of reorganization; (iv) make any acquisition of
all or substantially all the assets of any Person, or of a business division or
line of business of any Person, or of any other assets constituting a going
business; (v) create, acquire or hold any Subsidiary (other than Subsidiaries
existing on the date hereof and Subsidiaries created pursuant to Permitted
Acquisitions); or (vi) be or become a party to any joint venture or other
partnership.
(b) The Borrower may make the acquisitions contemplated in
the Busse Purchase Agreement and the Like-Kind Exchange Agreement. In addition,
the Borrower or any of its wholly owned Subsidiaries may make acquisitions of
substantially all of the assets of any television station or newspaper operation
or of all of the Capital Stock or other equity interests of a Person which owns
a television station or newspaper operation, subject to the satisfaction of the
following conditions (any acquisition which satisfies all of the following
conditions, together with any acquisition under Section 8.10(c), being referred
to hereinafter as a "Permitted Acquisition").
(i) any television station to be acquired (A) shall be
located in any of the top one hundred twenty-five (125) United States markets,
as ranked by Designated Market Area as determined by Nielsen Media Research, (B)
shall be a CBS, NBC or ABC network affiliate and located in a market ranked one
hundred twenty-six (126) through and including one hundred seventy-five (175),
as ranked by Designated Market Area as determined by Nielsen Media Research, or
(C) if permitted by law and the rules and regulations of the FCC, shall be an
affiliate of the Fox network and located in a market in which the Borrower or
any of its Subsidiaries owns a television station;
(ii) any newspaper to be acquired shall be a daily
newspaper with a minimum paid circulation of 25,000;
(iii) the Borrower shall have given to the
Administrative Agent written notice of such acquisition at least fifteen (15)
days prior to executing any binding commitment with respect thereto, which
notice shall state the additional amounts, if any, by which the Borrower
proposes to increase the dollar limitations set forth in Sections 8.4 and 8.5;
and the structure of the transaction shall be acceptable to the Administrative
Agent in form and substance;
(iv) the Borrower shall have demonstrated to the
satisfaction of the Administrative Agent that the Borrower will be in compliance
with all of the covenants contained herein after giving effect to such
acquisition and that no Event of Default or Possible Default then exists or
would exist after giving effect to such acquisition, and the Borrower shall have
delivered to the Administrative Agent within ten (10) days prior to the
consummation of such acquisition an acquisition report signed by an executive
officer of the Borrower in form and substance satisfactory to the Administrative
Agent which shall contain (A) calculations demonstrating on a pro forma basis
the Borrower's compliance with the financial covenants set
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forth in this Section 8 after giving effect to such acquisition, (B) projections
for the Borrower for a five (5) year period after the closing of such
acquisition giving effect to the acquisition and including a statement of
sources and uses of funds for such acquisitions showing, among other things, the
source of financing for the acquisition and (C) if such acquisition is of a
television station, a detailed engineering report from the Borrower's engineer,
acceptable in form and substance to the Administrative Agent, as to the
construction, engineering, installation and operation of the station being
acquired and its facilities and equipment, which certificate shall also list any
material equipment problems at such station and any material upgrades of
equipment which will, within six (6) months of such acquisition, be required at
such Station;
(v) if such acquisition is of a television stations that
does not have an affiliation agreement with ABC, CBS or NBC, the Borrower shall
negotiate in good faith with the Banks regarding a limitation, to be added as a
negative covenant to this Agreement, on the annual amount of its Programming
Obligations;
(vi) the agreement governing such acquisition and all
related documents and instruments shall be in form and substance satisfactory to
the Administrative Agent;
(vii) any FCC Licenses acquired in connection with such
acquisition shall be transferred immediately upon consummation of such
acquisition to a License Subsidiary or to a direct wholly-owned Subsidiary of
the Borrower which shall have no other assets or liabilities;
(viii) the Borrower shall have delivered to the
Administrative Agent UCC, judgment and tax lien searches for each relevant
jurisdiction with respect to the assets being acquired and shall have taken any
actions as may be necessary or requested by the Administrative Agent to grant to
the Administrative Agent, for the benefit of the Banks, perfected Liens in all
assets, real and personal, tangible and intangible, acquired by the Borrower or
any of its Subsidiaries in such acquisition pursuant to the Loan Documents,
subject to no prior Liens except Permitted Liens;
(ix) if the Borrower acquires a Subsidiary or creates a
Subsidiary (including, without limitation, a License Subsidiary) pursuant to or
in connection with such acquisition,
(A) the Borrower shall, or shall cause its Subsidiary
which is the stockholder of such newly acquired or created Subsidiary to, pledge
to the Administrative Agent, for the benefit of the Banks, all of the stock or
other securities or equity interests of such acquired or created Subsidiary
pursuant to documentation in form and substance satisfactory to the
Administrative Agent; and
(B) such acquired or created Subsidiary shall execute
and deliver to the Administrative Agent, for the benefit of the Banks, a
guaranty of all of the Obligations of the Borrower, in form and substance
satisfactory to the Administrative Agent, and
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shall grant to the Administrative Agent, for the benefit of the Banks, a first
priority, perfected lien or security interest in substantially all of its
assets, real and personal, tangible and intangible, subject to no prior Liens,
except for Permitted Liens, pursuant to documentation in form and substance
satisfactory to the Administrative Agent; and
(x) the Borrower shall have delivered to the
Administrative Agent evidence reasonably satisfactory to the Administrative
Agent to the effect that all approvals, consents or authorizations required in
connection with such acquisition (including, without limitation, the formation
of any License Subsidiary and the transfer of any FCC Licenses to such
Subsidiary) from any Licensing Authority or other governmental authority shall
have been obtained and that any consent of the FCC shall have become a Final
Order, and such opinions as the Administrative Agent may reasonably request as
to the Liens granted to the Administrative Agent, for the benefit of the Banks,
as required pursuant to this Section 8.9, as to any required regulatory
approvals for such acquisition and as to such other matters as the
Administrative Agent may reasonably request.
(c) The Borrower may make such other acquisitions as may be
approved from time to time by the Required Banks in their sole discretion.
8.10 Investments. The Borrower shall not, and shall not permit any
of its Subsidiaries to, purchase or otherwise acquire, hold or invest in any
Capital Stock or other securities or evidences of indebtedness of, or any
interest or investment in, or make or permit to exist any loans or advances to,
any other Person, except the following (each a "Permitted Investment"):
(a) direct obligations of the United States Government
maturing within one (1) year;
(b) certificates of deposit of a member bank of the Federal
Reserve System having capital, surplus and undivided profits in excess of
$2,000,000,000;
(c) any investment in commercial paper which at the time
of such investment is assigned the highest quality rating in accordance with
the rating systems employed by either Moody's Investors Service, Inc. or
Standard & Poor's Corporation;
(d) money market funds;
(e) securities received pursuant to a plan of reorganization
adopted in an insolvency proceeding or otherwise in immaterial amounts in
exchange for accounts receivable of the entity which is the subject of such
insolvency proceeding generated in the ordinary course of the Borrower's or any
of its Subsidiaries' business; and
(f) investments in its existing Subsidiaries and in
Subsidiaries created pursuant to Section 8.10(b) or (c).
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8.11 Amendment of Governing Documents. The Borrower shall not, and
shall not permit any of its Subsidiaries to, amend, modify or supplement its
Certificate or Articles of Incorporation, Bylaws or other organizational or
governing documents or any shareholders or security holders agreement, unless
required by law, in any manner that is adverse to the interests of the Banks (as
may be determined by the Administrative Agent).
8.12 Financial Covenants.
(a)...Leverage Ratio. As of any calculation date, the Borrower
shall not permit the Leverage Ratio at any time during any period listed in
Column A below to be greater than the ratio set forth in Column B below opposite
such period:
Column A Column B
- -------- --------
Period: Permitted Ratio:
- ------ ----------------
Closing Date through September 30, 1998 6.90:1.0
October 1, 1998, and thereafter 6.40:1.0
(b) Adjusted Leverage Ratio. As of any calculation date, the
Borrower shall not permit the Adjusted Leverage Ratio at any time during any
period listed in Column A below to be greater than the ratio set forth in Column
B below opposite such period:
Column A Column B
- -------- --------
Period: Permitted Ratio:
- ------ ----------------
Closing Date through September 30, 1998 6.75:1.0
October 1, 1998, through December 31, 1999 6.25:1.0
January 1, 2000, through December 31, 2000 5.75:1.0
January 1, 2001, through December 31, 2001 5.25:1.0
January 1, 2002, and thereafter 4.75:1.0
(c) Senior Debt to Operating Cash Flow Ratio. As of any
calculation date, the Borrower shall not permit the ratio of (i) Senior Debt on
such date to (ii) Operating Cash Flow for the four (4) fiscal quarter period
then ended, or most recently ended, (1) for any date from the Closing Date
through and including December 31, 1999, to be greater than 4.25 to 1.00, and
(2) at all other times, to be greater than 3.50 to 1.00.
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(d) Operating Cash Flow to Interest Expense. As of any
calculation date, the Borrower shall not permit the ratio of (i) Operating Cash
Flow for the four (4) fiscal quarter period then ended or most recently ended,
to (ii) the sum of (A) Interest Expense, plus (B) Capital Distributions for the
same such four (4) quarter period to be less than 1.50 to 1.00.
(e) Pro Forma Debt Service Coverage Ratio. As of any
calculation date, the Borrower shall not permit the ratio of (i) Operating Cash
Flow for the four (4) fiscal quarter period then ended or most recently ended,
to (ii) Pro Forma Debt Service as of the end of the same such four (4) quarter
period to be less than 1.10 to 1.00.
(f) Fixed Charge Coverage Ratio. The Borrower shall not
permit the Fixed Charge Coverage Ratio as of the end of any fiscal quarter to
be less than 1.00 to 1.00.
8.13 Management Agreements and Fees.
(a)...Except for agreements permitted pursuant to Section
8.14(b), the Borrower shall not, and shall not permit any of its Subsidiaries
to, make or enter into, or pay any management fees pursuant to, any management
or service agreement or joint operating agreement whereby management,
supervision or control of its business, or any significant aspect thereof, shall
be delegated to or placed in any Person other than the Borrower, an employee of
the Borrower or such Subsidiary. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make or enter into, or receive any management fees
pursuant to, any management or service agreement or joint operating agreement
whereby management, supervision or control of the business of any other Person
(other than a Subsidiary of the Borrower), or any significant aspect thereof,
shall be delegated to or placed in the Borrower or any of its Subsidiaries.
(b) Without the prior written consent of the Administrative
Agent, the Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into, or otherwise be obligated under any local marketing agreement, time
brokerage agreement, program service agreement, joint sales agreement,
facilities leasing agreement or similar arrangement.
8.14 Fiscal Year. The Borrower shall not, and shall not permit any
Subsidiary to, change its fiscal year.
8.15 ERISA. Neither the Borrower nor any member of the Controlled
Group shall fail to make any contributions which are required pursuant to the
terms of any Plan or any Benefit Arrangement. Neither the Borrower nor any
member of the Controlled Group shall contribute to or agree to contribute to any
Plan which is (a) subject to the minimum funding requirements under Section 302
of ERISA or Section 412 of the Code; (b) a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA); (c) a defined benefit plan (as defined under
Section 3(35) of ERISA or Section 414(j) of the Code); (d) a multiple employer
plan (as defined in Section 4063 or ERISA); or (e) a multiple employer welfare
arrangement (as defined in Section 3(40) of ERISA).
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8.16 Affiliates. The Borrower shall not, and shall not permit any of
its Subsidiaries to, enter into any transaction or agreement with any Affiliate
of the Borrower or pay any compensation or salary to any such Person unless such
transaction or agreement is in the ordinary course of and pursuant to the
reasonable requirements of the business of the Borrower or any of its
Subsidiaries and the terms of such transaction or agreement are not less
favorable to the Borrower or such Subsidiary than could be obtained in an
arms-length transaction with an unaffiliated third party or unless the amount
paid to such person is not in excess of the fair value of the services rendered
by such person.
8.17 Change of Name, Identity or Corporate Structure. The Borrower
shall not, and shall not permit any of its Subsidiaries to, change its name,
identity or corporate structure without thirty days prior written notice to the
Administrative Agent.
8.18 Amendments or Waivers. The Borrower shall not, and shall not
permit any of its Subsidiaries to, amend, alter or modify, or consent to or
suffer any amendment, alteration or modification of, (a) the Subordinated Note
Indenture or any notes or other documents or agreements issued or entered into
pursuant to the Subordinated Note Indenture without the prior written consent of
all of the Banks if such amendment, alteration or modification affects the
subordination provisions thereof or imposes any more onerous term or condition
on the Borrower or any of its Subsidiaries than is contained in such agreement,
note or document as of the date hereof or is otherwise materially adverse to the
Borrower, any of its Subsidiaries or the Banks, or without the prior written
consent of the Required Banks if such amendment, alteration or modification does
not affect the subordination provisions thereof or impose any more onerous term
or condition on the Borrower or any of its Subsidiaries than is contained in
such agreement, note or document as of the date hereof and is not otherwise
materially adverse to the Borrower, any of its Subsidiaries or the Banks, in
either case as reasonably determined by the Administrative Agent, or (b) the
Like-Kind Exchange Agreement without the prior written consent of the
Administrative Agent, the Busse Purchase Agreement, the Like-Kind Exchange
Agreement, any License, or any Operating Agreement or other material contract to
which the Borrower or such Subsidiary is a party, except for any amendments,
alterations or modifications to any License or Operating Agreement which could
not reasonably be expected to have a Material Adverse Effect. The Administrative
Agent shall deliver to the Banks promptly after its receipt thereof a copy of
each amendment or modification to the Busse Purchase Agreement and the Like-Kind
Exchange Agreement.
8.19 Issuance or Transfer of Capital Stock and other Equity
Interests. The Borrower shall not issue any stock that by its terms (or the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part or that by its terms is
entitled to a mandatory distribution or dividend. The Borrower shall not permit
any of its Subsidiaries to sell or issue any Capital Stock, partnership
interests or other equity interests or any warrants, options or other securities
convertible into or exercisable for any Capital Stock, partnership interests or
other equity interests, and the Borrower shall not permit any of its
Subsidiaries to permit the transfer of any Capital Stock, partnership interests
or other such equity interests.
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8.20 Change in Business. The Borrower shall not, and shall not
permit any of its Subsidiaries to, change the nature of its business in any
material respect. Neither the Borrower nor any of its Subsidiaries shall engage
in any business other than the ownership and operation of the Stations
(including, without limitation, the Stations being acquired pursuant to the
Busse Purchase Agreement and the Like-Kind Exchange Agreement), the Newspapers,
the Porta Phone Business and the Satellite Broadcasting Business and other
activities incidental or related thereto.
8.21 Regulations T, U or X. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, (a) apply any part of
the proceeds of the Loans to the purchasing or carrying of any "margin stock"
within the meaning of Regulations T, U or X of the Federal Reserve Board, or any
regulations, interpretations or rulings thereunder, (b) extend credit to others
for the purpose of purchasing or carrying any such margin stock, or (c) retire
Indebtedness which was incurred to purchase or carry any such margin stock.
8.22 License Subsidiaries. The Borrower shall not, and shall not
permit any Subsidiary (other than a License Subsidiary) to, hold any FCC
Licenses, but rather shall cause all FCC Licenses to be issued to and held by
License Subsidiaries. The Borrower shall not permit any License Subsidiary to
(a) incur, create, assume or permit to exist any Indebtedness (other than
pursuant to a Subsidiary Guaranty and Subsidiary Security Agreement executed by
such License Subsidiary, and the subordinated guaranty executed by such License
Subsidiary pursuant to the Subordinated Note Indenture), (b) incur, create,
assume or permit to exist any Lien of any nature whatsoever on any property or
assets now owned or hereafter acquired by it except in favor of the
Administrative Agent, for the benefit of the Banks, (c) make any Capital
Expenditures, (d) acquire any assets other than the Licenses, (e) conduct any
business, or (f) hire or engage any employees.
8.23 Subordinated Debt. The Borrower shall not redeem, purchase,
discharge, pay, prepay or defease all or any portion of the principal or
interest of any Subordinated Debt, prior to the indefeasible payment in full in
cash of all Obligations, except that (a) the Borrower may pay interest on the
Subordinated Debt in accordance with the provisions of the Subordinated Note
Indenture as in effect on the date hereof or as amended in accordance with the
provisions of Section 8.18 so long as no Event of Default or Possible Default
then exists, and (b) the Borrower may make open market purchases of notes issued
pursuant to the Subordinated Note Indenture (to the extent permitted in, and in
accordance with the provisions of, the Subordinated Note Indenture as in effect
on the date hereof) so long as: (i) prior to making any such purchase, the
Borrower shall have demonstrated to the satisfaction of the Administrative Agent
that the Borrower will be in compliance with all of the covenants contained
herein after giving effect to such purchase; (ii) no Possible Default or Event
of Default exists at the time of making such distribution or would exist after
giving effect thereto; and (iii) prior to making any such purchase, the Borrower
shall have delivered to the Administrative Agent a certificate of its chief
financial officer in form and substance satisfactory to the Administrative Agent
which shall contain calculations demonstrating on a pro forma basis the
Borrower's compliance with the financial covenants set forth in this Section 8
after giving effect to such purchase. The Borrower shall not
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take any action in violation of any of the provisions of Article X of the
Subordinated Note Indenture and shall not permit any Subsidiary to take any
action in violation of any of the provisions of Article XI of the Subordinated
Note Indenture.
SECTION 9. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events, whether
voluntarily or involuntarily or by operation of law, shall constitute an Event
of Default hereunder:
9.1 Non-Payment. The Borrower shall fail to pay when due, whether by
acceleration of maturity or otherwise, any installment of principal due
hereunder or under any Note or shall fail to pay within three (3) days of the
date when due, whether by acceleration of maturity or otherwise, any installment
of interest due hereunder or under any Note or any fee or other payment
obligation in respect of the Obligations or payable pursuant to any Fee Letter.
9.2 Failure of Performance in Respect of Other Obligations.
(a) The Borrower shall fail to observe, perform or be in
compliance with any of the provisions of Section 7.1, 7.3, 7.8, or 8, or the
first sentence of Section 7.2; or
(b) the Borrower, any of its Subsidiaries or any other party
to a Loan Document (other than the Administrative Agent or a Bank) shall fail to
observe, perform or be in compliance with the terms of any Obligation, covenant
or agreement (other than those referred to in Section 7.1, 7.3, 7.8, 8 or 9.1,
or the first sentence of Section 7.2) to be observed, performed or complied with
by the Borrower, any of its Subsidiaries or such other party hereunder or under
any Loan Document and, provided that such failure is of a type which can be
cured, such failure shall continue and not be cured for thirty (30) days after:
(i) written notice thereof from the Administrative Agent or a Bank; or (ii) the
Administrative Agent or the Banks are notified thereof or should have been
notified thereof pursuant to the provisions of Section 7.6 hereof, whichever is
earlier.
9.3 Breach of Warranty. Any financial statement, representation,
warranty, statement or certificate made or furnished by the Borrower, any of its
Subsidiaries or any other party to a Loan Document (other than the
Administrative Agent or a Bank) in or in connection with this Agreement or any
Loan Document, or as an inducement to the Administrative Agent or the Banks to
enter into this Agreement and the Loan Documents, including, without limitation,
those in Section 5 above, shall have been false, incorrect or incomplete when
made or deemed made in any material respect.
9.4 Cross-Defaults. Any Change in Control or Event of Default, as
those terms are defined in the Subordinated Note Indenture as in effect as of
the date hereof, shall occur; or the Borrower or any of its Subsidiaries shall
default in any payment due on any Total Debt in excess of $250,000 and such
default shall continue for more than the period of grace, if any, applicable
thereto; or the Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term of any evidence of such Total Debt or
of any
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mortgage, indenture or other agreement relating thereto, and any such default
shall continue for more than the period of grace, if any, specified therein if
such default causes, or permits the holder thereof to cause, the acceleration of
such Total Debt.
9.5 Assignment for Benefit of Creditors. The Borrower or any of its
Subsidiaries shall make any assignment for the benefit of its creditors, or
shall admit its insolvency or shall fail to pay its debts generally as such
debts become due.
9.6 Bankruptcy. Any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, shall be filed by
or against the Borrower or any of its Subsidiaries or any proceeding shall be
commenced by or against the Borrower or any of its Subsidiaries with respect to
relief under the provisions of any other applicable bankruptcy, insolvency or
other similar law of the United States or any State providing for the
reorganization, winding-up or liquidation of Persons or an arrangement,
composition, extension or adjustment with creditors; provided, however, that no
Event of Default shall be deemed to have occurred if any such involuntary
petition or proceeding shall be discharged within sixty days of its filing or
commencement.
9.7 Appointment of Receiver; Liquidation. Other than in connection
with a proceeding described in Section 9.6, a receiver or trustee shall be
appointed for the Borrower or any of its Subsidiaries or for any substantial
part of its assets, and such receiver or trustee shall not be discharged within
sixty (60) days of his appointment; any proceedings shall be instituted for the
dissolution or the full or partial liquidation of the Borrower or any of its
Subsidiaries and such proceedings shall not be dismissed or discharged within
sixty (60) days of their commencement; or the Borrower or any of its
Subsidiaries shall discontinue its business.
9.8 Judgments. The Borrower or any of its Subsidiaries shall incur
final judgments for the payment of money aggregating at any one time in excess
of $250,000 (to the extent not covered by insurance) and shall not discharge (or
make adequate provision for the discharge of) the same within a period of thirty
(30) days unless, pending further proceedings, execution thereon has been
effectively stayed; or a non-monetary judgment or order shall be rendered
against the Borrower or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect, and there shall be any period in
excess of thirty (30) consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect.
9.9 Impairment of Collateral; Invalidation of any Loan Document. (i)
A creditor of the Borrower or of any of its Subsidiaries shall obtain possession
of any significant portion of the collateral for the Obligations by any means,
including, without limitation, levy, distraint, replevin or self-help, or any
creditor shall establish or obtain any right in such collateral which is equal
or senior to a Lien of the Administrative Agent, for the benefit of the Banks,
in such collateral; or (ii) any material damage to, or loss, theft or
destruction of, any material collateral for the Loans shall occur, except to the
extent such loss, damage or injury is covered by insurance; or (iii) the
Administrative Agent, for the benefit of the Banks, shall cease to have a first
priority perfected lien (except for Permitted Liens) in all of the issued and
outstanding
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Capital Stock of each Subsidiary of the Borrower and in substantially all of the
properties and assets of the Borrower and each Subsidiary; or (iv) any Lien
granted or created or purported to be granted or created by this Agreement or
any Loan Document shall cease or fail to be perfected with respect to any
significant portion of the collateral purported to be covered thereby; or (v)
this Agreement, any Note or any Loan Document ceases to be a legal, valid and
binding agreement or obligation enforceable against any party thereto
(including, without limitation, the Banks or the Administrative Agent) in
accordance with its terms, or shall be terminated, invalidated, set aside or
declared ineffective or inoperative and such cessation, termination, invalidity,
set aside or declaration could reasonably be expected to have a Material Adverse
Effect; or (vi) any party to any Loan Document shall contest or deny the
validity or enforceability of such Loan Document or any lien, security interest
or obligation purported to be created thereby.
9.10 Termination of License or Operating Agreement. The FCC or any
other Licensing Authority shall (a) revoke, terminate, substantially and
adversely modify or fail to renew any material License, or (b) designate any
material License for hearing or commence proceedings to suspend, revoke,
terminate or substantially and adversely modify any such License and such
proceedings shall not be dismissed or discharged within sixty (60) days; or any
Operating Agreement or any other agreement which is necessary to the operation
of a Station (including, without limitation, the Stations being acquired
pursuant to the Busse Purchase Agreement and the Like-Kind Exchange Agreement),
a Newspaper, the Porta Phone Business or the Satellite Broadcasting Business
shall be revoked or terminated or materially, adversely modified and not
replaced by a substitute acceptable to the Required Banks within thirty (30)
days of such revocation, termination or modification.
9.11 Change of Control. (i) any Person (or group of Persons) is or
becomes the "beneficial owner" (within the meaning of Rules 13d-3 and 13d-5
under the federal Securities Exchange Act of 1934, as amended), directly or
indirectly, of a percentage of the voting Capital Stock of the Borrower greater
than thirty-five percent (35%), other than J. Mack Robinson or Robert S.
Prather, Jr., the spouse and lineal descendants or either such individual, the
estate, executor, administrator, or other personal representative of either such
individual, or any trust created for either such individual or for the spouse or
lineal descendants of either such individual; or (ii) during any period of
twenty-four (24) consecutive months, individuals who at the beginning of such
period constituted the Board of Directors of the Borrower (together with any new
directors whose election by such Board or whose nomination for election by the
stockholders of the Borrower was approved by a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in office; or
(iii) except as permitted pursuant to this Agreement, the Borrower shall cease
or fail to own, directly or indirectly, beneficial and legal title to all of the
issued and outstanding Capital Stock of each of its Subsidiaries or any
Subsidiary of the Borrower shall cease to be a wholly owned Subsidiary of the
Borrower.
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9.12 Condemnation. Any court, government or governmental agency
shall condemn, seize or otherwise appropriate, or take custody or control of any
substantial portion of the assets of the Borrower or any of its Subsidiaries
pursuant to a final, non-appealable order.
9.13 Cessation of Operations. The Borrower's on-the-air broadcast
operations at any Station shall be interrupted at any time for more than
forty-eight (48) hours, whether or not consecutive, during any period of five
(5) consecutive days, unless (a) the broadcasting operations of all or
substantially all of the television stations in the relevant market also are
interrupted for a like period of time, or (b) the Borrower shall be receiving
during such period of interruption insurance sufficient to assure that its per
diem Operating Cash Flow during such period is at least equal to that which
could reasonably have been expected during such period but for the interruption.
9.14 Subordination. The Borrower or any holder of Subordinated Debt
shall fail to comply with the agreement or instrument governing or evidencing
such Subordinated Debt or any separate subordination agreement, and the
Administrative Agent shall have determined that such failure to comply could
reasonably be expected to have a material adverse effect on the Borrower or any
of its Subsidiaries or on its ability to perform its obligations hereunder or
under any of the Loan Documents or on the rights and remedies of the
Administrative Agent and the Banks hereunder or under the Loan Documents.
9.15 Material Adverse Effect. Any Material Adverse Effect shall
occur.
SECTION 10. REMEDIES.
Notwithstanding any contrary provision or inference herein or elsewhere,
10.1 Optional Defaults. If any Event of Default referred to in
Section 9.1 through and including Section 9.4 or Section 9.8 through and
including Section 9.15 shall occur, the Issuing Bank shall not be required to
issue any additional Letters of Credit, and the Administrative Agent, with the
consent of the Required Banks, upon written notice to the Borrower, may:
(a) terminate the Commitments and the credit hereby
established and forthwith upon such election the obligations of the Banks to
make any further Loans hereunder (other than Loans resulting from the funding of
Letters of Credit) immediately shall be terminated;
(b) accelerate the maturity of the Loans and all other
Obligations, whereupon all Obligations shall become and thereafter be
immediately due and payable in full without any presentment of demand and
without any further or other notice of any kind, all of which are hereby waived
by the Borrower; and/or
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(c) demand the payment to the Issuing Bank of the aggregate
stated amount of the outstanding Letters of Credit, which amount the Issuing
Bank shall hold as security for the obligations incurred under the Letters of
Credit.
10.2 Automatic Defaults. If any Event of Default referred to in
Sections 9.5 through and including 9.7 shall occur:
(a) the Commitments and the credit hereby established shall
automatically and forthwith terminate, and the Banks thereafter shall be under
no obligation to grant any further Loans hereunder (other than Loans resulting
from the funding of Letters of Credit);
(b) the principal of and interest on the Notes, then
outstanding, and all of the other Obligations shall thereupon become and
thereafter be immediately due and payable in full, all without any presentment,
demand or notice of any kind, which are hereby waived by the Borrower; and
(c) the Issuing Bank shall not be required to issue any
additional Letters of Credit, and the aggregate stated amount of the outstanding
Letters of Credit shall be immediately payable by the Borrower to the Issuing
Bank, which amount the Issuing Bank shall hold as security for the obligations
incurred under the Letters of Credit.
10.3 Performance by the Banks. If at any time after the occurrence
and during the continuance of an Event of Default the Borrower or any of its
Subsidiaries fails or refuses to pay or perform any material obligation or duty
to any third Person, except for payments which are the subject of bona fide
disputes in the ordinary course of business, the Administrative Agent or the
Banks may, in their sole discretion, but shall not be obligated to, pay or
perform the same on behalf of the Borrower or such Subsidiary, and the Borrower
shall promptly repay all amounts so paid, and all costs and expenses so
incurred. This repayment obligation shall become one of the Obligations of the
Borrower hereunder and shall bear interest at the Default Interest Rate.
10.4 Other Remedies. Upon the occurrence of an Event of Default, the
Administrative Agent and the Banks may exercise any other right, power or remedy
as may be provided herein, in the Notes or in any other Loan Document, or as may
be provided at law or in equity, including, without limitation, the right to
recover judgment against the Borrower for any amount due either before, during
or after any proceedings for the enforcement of any security or any realization
upon any security.
10.5 Enforcement and Waiver by the Banks. The Administrative Agent
and the Banks shall have the right at all times to enforce the provisions of
this Agreement and all Loan Documents in strict accordance with the terms hereof
and thereof, notwithstanding any conduct or custom on the part of the
Administrative Agent or the Banks in refraining from so doing at any time,
unless the Administrative Agent or the Banks shall have waived such enforcement
in writing in respect of a particular instance. The failure of the
Administrative Agent or the Banks at any time to enforce their rights under such
provisions shall not be construed as having created
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a custom or course of dealing in any way contrary to the specific provisions of
this Agreement or the Loan Documents, or as having in any way modified or waived
the same. All rights, powers and remedies of the Administrative Agent and the
Banks are cumulative and concurrent and the exercise of one right, power or
remedy shall not be deemed a waiver or release of any other right, power or
remedy.
SECTION 11. THE ADMINISTRATIVE AGENT.
11.1 Appointment. NationsBank, N.A. is hereby appointed
Administrative Agent hereunder, and each of the Banks irrevocably authorizes the
Administrative Agent to act as the Administrative Agent of such Bank. The
Administrative Agent agrees to act as such upon the express conditions contained
in this Section 11. NationsBank, N.A. is hereby appointed Syndication Agent, Key
Corporate Capital Inc. is hereby appointed Documentation Agent, and NationsBanc
Montgomery Securities LLC is hereby appointed Lead Arranger. NationsBank, N.A.,
as Syndication Agent, Key Corporate Capital Inc., as Documentation Agent, and
NationsBanc Montgomery Securities LLC, as Lead Arranger, shall have no rights or
obligations hereunder or under any of the Loan Documents in its capacity as
Syndication Agent, Documentation Agent and Lead Arranger, respectively. None of
the Administrative Agent, the Syndication Agent, the Documentation Agent or the
Lead Arranger shall have a fiduciary relationship in respect of any Bank by
reason of this Agreement.
11.2 Powers. The Administrative Agent shall have any may exercise
such powers hereunder as are specifically delegated to it by the terms hereof,
together with such powers as are reasonably incidental thereto. The
Administrative Agent shall not have any implied duties or any obligation to the
Banks to take any action hereunder except any action specifically provided by
this Agreement to be taken by the Administrative Agent.
11.3 General Immunity. Neither the Administrative Agent nor any of
its directors, officers, affiliates, agents or employees shall be liable to the
Banks or any Bank for any action taken or omitted to be taken by it or them
hereunder or in connection herewith except for its or their own gross negligence
or willful misconduct. Without limiting the foregoing, none of the
Administrative Agent, the Syndication Agent, the Documentation Agent, the Lead
Arranger, or any of their respective directors, officers, affiliates, agents or
employees shall be responsible for, or have any duty to examine (a) the
genuineness, execution, validity, effectiveness, enforceability, value or
sufficiency of this Agreement, any Loan Document, or any other document or
instrument furnished pursuant to or in connection with this Agreement or any
Loan Document, (b) the collectibility of any amounts owed by the Borrower, (c)
any recitals, statements, reports, representations or warranties made in
connection with this Agreement or any Loan Document, (d) the performance or
satisfaction by the Borrower or any Subsidiary of any covenant or agreement
contained herein or in any Loan Document, (e) any failure of any party to this
Agreement to receive any communication sent, including any telegram, teletype,
bank wire, cable, radiogram or telephone message sent or any writing,
application, notice, report, statement, certificate, resolution, request, order,
consent letter or other instrument or paper or communication entrusted to the
mails or to a delivery service, or (f) the assets or liabilities or financial
condition or results of operations or business or credit-worthiness of the
Borrower or
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any of its Subsidiaries. The Administrative Agent shall not be bound to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement or any Loan Document.
11.4 Action on Instructions of the Banks. The Administrative Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Banks
(subject to Section 11.12 hereof), and such instructions shall be binding upon
all the Banks and all holders of the Notes; provided, however, that the
Administrative Agent shall not be required to take any action which exposes it
to personal liability or which is contrary to this Agreement or applicable law.
The foregoing provisions of this Section 11.4 shall not limit in any way the
exercise by any Bank of any right or remedy granted to such Bank pursuant to the
terms of this Agreement or any Loan Document. Except as otherwise expressly
provided herein, any reference in this Agreement to action by the Banks shall be
deemed to be a reference to the Required Banks. The Banks hereby direct the
Administrative Agent and the Documentation Agent to execute and deliver to the
Borrower documentation necessary to effect the release of collateral required to
consummate the Like-Kind Exchange Agreement.
11.5 Employment of Administrative Agents and Counsel. The
Administrative Agent may execute any of its duties as Administrative Agent
hereunder by or through employees, Administrative Agents and attorneys-in-fact
and shall not be answerable to the Banks, except as to money or securities
received by it or its authorized Administrative Agents, for the default or
misconduct of any such Administrative Agents or attorneys-in-fact selected by it
with reasonable care.
11.6 Reliance on Documents; Counsel. The Administrative Agent shall
be entitled to rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper, document or other communication believed by
it to be genuine and correct and to have been signed or sent by the proper
person or persons, and, with respect to legal matters, upon the opinion of
counsel selected by the Administrative Agent, which counsel may be employees of
the Administrative Agent, concerning all matters pertaining to the agency hereby
created and its duties hereunder.
11.7 Administrative Agent's Reimbursement and Indemnification. The
Banks agree to reimburse and indemnify the Administrative Agent (which
indemnification shall be shared by the Banks ratably in proportion to their
respective Ratable Shares of the Loans) (a) for any amounts not reimbursed by
the Borrower for which the Administrative Agent is entitled to reimbursement by
the Borrower hereunder or under any Loan Document, (b) for any other expenses
reasonably incurred by the Administrative Agent on behalf of the Banks, in
connection with the preparation, execution, delivery, administration, amendment
or enforcement hereof or of any of the Loan Documents and (c) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement, any Loan Document or any other
document related hereto or thereto or the transactions contemplated hereby or
the enforcement of any of the terms
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hereof or thereof or of any such other document; provided, however, that no Bank
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Administrative Agent.
11.8 Rights as a Bank. With respect to its Ratable Share of the
Commitments, the Loans made by it, the Notes issued to it, and the Letters of
Credit issued by it, the Administrative Agent shall have the same rights and
powers hereunder as any Bank and may exercise the same as though it were not the
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include the Administrative Agent, in its individual
capacity. Each of the Administrative Agent, may accept deposits from, lend money
to, and generally engage in any kind of banking or trust business with the
Borrower or any of its Subsidiaries as if it were not the Administrative Agent,
hereunder.
11.9 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Bank also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents. The Administrative Agent shall not be
required to keep the Banks informed as to the performance or observance by the
Borrower and its Subsidiaries of this Agreement or any other document referred
to or provided for herein or to inspect the properties or books of the Borrower
or any of its Subsidiaries. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
of its Subsidiaries which may come into its possession.
11.10 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Banks. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Banks and shall have accepted such appointment within
thirty (30) days after the notice of resignation, then the retiring
Administrative Agent may appoint a successor Administrative Agent. Such
successor Administrative Agent shall be a commercial bank having capital and
retained earnings of at least $500,000,000. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as the Administrative Agent, the provisions of
this Section 11 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder.
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11.11 Ratable Sharing. All principal and interest payments on Loans
and commitment fees received by the Administrative Agent shall be remitted to
the Banks in accordance with their Ratable Shares. Any amounts received by the
Administrative Agent or any other Bank upon the sale of any collateral for the
Loans or upon the exercise of any remedies hereunder or under any of the Loan
Documents or upon the exercise of any rights of setoff shall be remitted to the
Banks in accordance with their Ratable Shares of the Loans; provided, however,
that, solely for purposes of the sharing of any amounts received by the
Administrative Agent or any other Bank, if at the time of any such receipt the
Borrower has defaulted under any agreements regarding Rate Hedging Obligations
entered into pursuant to Section 7.12 with any Bank or any Affiliate of any
Bank, then the Ratable Share of the affected Bank shall be proportionately
increased and the Ratable Shares of the other Banks shall be proportionately
decreased based upon the amount due to the affected Bank (or such Bank's
Affiliate) pursuant to such agreements. If any Bank shall obtain any payment
hereunder (whether voluntary, involuntary, through exercise of any right of
set-off or otherwise) in excess of its Ratable Share, then such Bank shall
immediately remit such excess to the other Banks pro rata.
11.12 Actions by the Administrative Agent and the Banks. The
Administrative Agent shall take formal action following the occurrence of a
Possible Default or an Event of Default only upon the agreement of the Required
Banks; provided, however, that if the Administrative Agent gives notice to the
Banks of a Possible Default or an Event of Default, and the Required Banks
cannot agree (which agreement shall not be unreasonably withheld) on a mutual
course of action within thirty (30) days following such notice, the
Administrative Agent may (but shall not be required to) pursue such legal rights
and remedies against the Borrower as it deems necessary and appropriate to
protect the Banks and any collateral under the circumstances.
SECTION 12. MISCELLANEOUS.
12.1 Construction. The provisions of this Agreement shall be in
addition to those of the Loan Documents and to those of any other guaranty,
security agreement, note or other evidence of the liability relating to the
Borrower held by the Banks, all of which shall be construed as complementary to
each other. Nothing contained herein shall prevent the Administrative Agent or
the Banks from enforcing any or all of such instruments in accordance with their
respective terms. Each right, power or privilege specified or referred to in
this Agreement or in any Loan Document is in addition to any other rights,
powers or privileges that the Administrative Agent or the Banks may otherwise
have or acquire by operation of law, by other contract or otherwise. No course
of dealing in respect of, nor any omission or delay in the exercise of, any
right, power or privilege by the Administrative Agent or the Banks shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any further or other exercise thereof or of any other, as each right, power or
privilege may be exercised independently or concurrently with others and as
often and in such order as the Administrative Agent or the Banks may deem
expedient. Notwithstanding any other provision of this Agreement, the Borrower
shall not be required to pay any amount of interest pursuant hereto which is in
excess of the maximum amount permitted by law.
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12.2 Further Assurance. From time to time, the Borrower shall
execute and deliver to the Banks, and shall cause its Subsidiaries to execute
and deliver to the Banks, such additional documents and take such actions as the
Administrative Agent may reasonably require to carry out the purposes of this
Agreement or any of the Loan Documents, or to preserve and protect the rights of
the Administrative Agent and the Banks hereunder or thereunder.
12.3 Expenses of the Administrative Agent and the Banks;
Indemnification.
(a) Whether or not the transactions contemplated by this
Agreement are consummated, the Borrower shall pay the costs and expenses,
including, without limitation, the reasonable fees and disbursements of the
Administrative Agent's special counsel, incurred by the Administrative Agent and
the Banks in connection with: (i) the negotiation, preparation, amendment or
enforcement of this Agreement and the Loan Documents and any amendment or
modification thereof and the closing of the transactions contemplated hereby and
thereby; (ii) the perfection of the Liens granted pursuant hereto and pursuant
to the Loan Documents; (iii) the making of the Loans and the issuance of the
Letters of Credit hereunder; (iv) the negotiation, preparation or enforcement of
any other document in connection with this Agreement, the Loan Documents or the
Loans made hereunder; (v) any proceeding brought or formal action taken by the
Administrative Agent or the Banks to enforce any provision of this Agreement or
any Loan Document, or to enforce or exercise any right, power or remedy
hereunder or thereunder; or (vi) any action which may be taken or instituted by
any Person against the Administrative Agent or any Bank as a result of any of
the foregoing; provided, however, that the Borrower shall not be responsible for
the legal fees of any Bank other than the Administrative Agent in respect of any
period prior to the occurrence of a Possible Default. The estimated fees and
expenses of the Administrative Agent's special counsel, Powell, Goldstein,
Frazer & Murphy LLP, Atlanta, Georgia, through the Closing shall be paid on the
Closing Date.
(b) The Borrower hereby indemnifies and holds harmless the
Administrative Agent and each Bank and their respective directors, officers,
employees, Administrative Agents, counsel, subsidiaries and affiliates (the
"Indemnified Persons") from and against any and all claims, losses, liabilities,
obligations, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable attorneys fees) which may be imposed on, incurred by, or asserted
against any Indemnified Person in any way relating to or arising out of this
Agreement, the Loan Documents, or any of them, or the Loans made pursuant hereto
or the Letters of Credit issued pursuant hereto, or the use of the proceeds
thereof or any of the transactions contemplated hereby or thereby or the
ownership or operation of the Stations (including, without limitation, the
Stations being acquired pursuant to the Busse Purchase Agreement and the
Like-Kind Exchange Agreement), the Newspapers, the Porta Phone Business or the
Satellite Broadcasting Business or any of the other assets or businesses of the
Borrower or its Subsidiaries or the breach by the Borrower or any of its
Subsidiaries of any of the representations, warranties, covenants and agreements
contained herein or in any Loan Document; provided, however, that the Borrower
shall not be liable to any Indemnified Person, if there is a final
non-appealable judicial determination that such claims, losses, liabilities,
obligations, damages, penalties, actions,
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judgments, suits, costs, expenses or disbursements resulted solely from the
gross negligence or willful misconduct of such Indemnified Person.
12.4 Notices. Except as otherwise expressly provided herein, all
notices, demands and requests required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly delivered and received (a) on the date of personal delivery, (b) on
the date of receipt (as shown on the return receipt) if mailed by registered or
certified mail, postage prepaid and return receipt requested, (c) on the next
business day after delivery to a courier service that guarantees delivery on the
next business day if the conditions to the courier's guarantee are complied
with, or (d) on the date of receipt by telecopy, in each case addressed as
follows:
TO THE ADMINISTRATIVE AGENT:
NationsBank, N.A.
Agency Services
NC1-001-15-04
Independence Center
101 North Tryon Street
Charlotte, Norh Carolina
Attention: Angela Berry
Telecopy: (704) 388-9436
With a copy to:
NationsBank, N.A.
Financial Strategies Group
600 Peachtree Street, N.E.
19th Floor
Atlanta, Georgia 30308
Attention: Melinda Bergbom
Telecopy: (404) 607-6343
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Attention: Cindy A. Brazell, Esq.
Telecopy: (404) 572-6999
TO THE BANKS, THE SYNDICATION AGENT OR THE DOCUMENTATION AGENT, AT THE
ADDRESSES LISTED ON THE SCHEDULE 2 ATTACHED HERETO OR IN THE ASSIGNMENT
INSTRUMENT DELIVERED PURSUANT TO SECTION 12.7(b)
TO THE BORROWER OR ANY OF ITS SUBSIDIARIES:
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Gray Communications Systems, Inc.
126 North Washington Street
Albany, Georgia 31701
Attention: Chief Financial Officer
Telecopy: (912) 888-9374
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With a copy to:
Neal H. Ray, Esq.
Heyman & Sizemore
2300 Cain Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy: (404) 521-2838
or to such other address or addresses as the party to which such notice is
directed may have designated in writing to the other parties hereto.
12.5 Waiver and Release by the Borrower. Neither the Administrative
Agent, nor any Bank, nor any Affiliate, officer, director, employee, attorney or
Administrative Agent of the Administrative Agent or any Bank shall have any
liability with respect to, and the Borrower hereby waives, releases and agrees
not to sue any of them upon, any claim for any special, indirect, incidental or
consequential damages suffered or incurred by the Borrower or any of its
Subsidiaries in connection with, arising out of, or in any way related to, this
Agreement or any of the Loan Documents, or any of the transactions contemplated
by this Agreement or any of the Loan Documents, unless arising from the gross
negligence or willful misconduct of such Person as determined by a final
non-appealable judgment of a court of competent jurisdiction.
12.6 Right of Set Off. Upon the occurrence and during the
continuance of any Event of Default, each Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank or
an Affiliate of such Bank to or for the credit or the account of the Borrower or
any of its Subsidiaries against any and all of the obligations of the Borrower
or any of its Subsidiaries now or hereafter existing hereunder or under any Loan
Document, irrespective of whether or not such Bank shall have made any demand
hereunder or under any Loan Document and although such obligations may be
unmatured. Such Bank agrees promptly to notify the Administrative Agent and the
Borrower after any such set-off and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Banks under this Section 12.6
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Banks may have. The Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any holder of
a participation in the Notes may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower or any of its Subsidiaries
in the amount of such participation.
12.7 Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; provided, however, that the Borrower may not assign or
transfer any of its rights or obligations hereunder
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or under the Notes without the prior written consent of all of the Banks and the
Administrative Agent.
(b) Each Bank may assign all or any part of any of its
Loans, its Notes, and its share of the Commitments and the Letters of Credit
with the consent of the Borrower and the Administrative Agent, which consent
shall not be unreasonably withheld; provided, however, that (i) no such consent
by the Borrower shall be required (A) for any such assignment by any Bank to an
Affiliate of such Bank, (B) if, at the time of such assignment, an Event of
Default or Possible Default has occurred and is continuing, (C) in the case of
any assignment to another branch or a principal office of a Bank, or (D) for any
such assignment to another Bank or an Affiliate of another Bank; (ii) any such
partial assignment shall be in an amount at least equal to $5,000,000; and (iii)
each such assignment shall be made by a Bank in such manner that the same
portion of its Loans, its Notes, its share of the Commitments and its
participation in the Letters of Credit is assigned to the assignee. Upon
execution and delivery by the assignor and the assignee to the Borrower and the
Administrative Agent of an instrument in writing pursuant to which such assignee
agrees to become a "Bank" hereunder (if not already a Bank) having the share of
the Commitments, Loans and Letters of Credit specified in such instrument, and
upon consent thereto by the Administrative Agent and the Borrower (to the extent
required), the assignee shall have, to the extent of such assignment (unless
otherwise provided in such assignment with the consent of the Administrative
Agent), the obligations, rights and benefits of a Bank hereunder holding the
share of the Commitments, Loans and Letters of Credit (or portions thereof)
assigned to it (in addition to the share of the Commitments, Loans and Letters
of Credit, if any, theretofore held by such assignee) and the assigning Bank
shall, to the extent of such assignment, be released from the share of the
Commitments, the Letters of Credit and the obligations hereunder so assigned.
(c) Upon its receipt of an assignment pursuant to Section
12.7(b) above duly executed by an assigning Bank and the assignee, together with
any Notes subject to such assignment and the Administrative Agent's standard
processing and recordation fee of $3,500, the Administrative Agent shall, if
such assignment has been completed, accept such assignment. Within five (5)
business days after receipt of such notice, the Borrower, at the Borrower's own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Notes new Notes to the order of the assignee in an amount equal
to the share of the Commitments, of the Loans and of the Letters of Credit
assumed by the assignee and, if the assigning Bank has retained a portion of the
Commitments, the Loans and the Letters of Credit hereunder, new Notes to the
order of the assigning Bank in an amount equal to the share of the Commitments
and the Loans retained by it hereunder. Such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the effective date of such assignment and shall otherwise
be in substantially the form of Exhibit G attached hereto in the case of
Revolving Notes, or Exhibit F attached hereto in the case of Term Notes.
Cancelled Notes shall be returned to the Borrower.
(d) A Bank may sell or agree to sell to one or more other
Persons (each, a "Participant") a participation in all or any part of any Loans
held by it, or in its share of the Commitments and the Letters of Credit. Except
as otherwise provided in the last sentence of
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this Section 12.7(d), no Participant shall have any rights or benefits under
this Agreement or any Note or any other Loan Documents (the Participant's rights
against such Bank in respect of such participation to be those set forth in the
agreements executed by such Bank in favor of the Participant). All amounts
payable by the Borrower to any Bank under Section 2 hereof in respect of Loans
held by it, and its share of the Commitments, shall be determined as if such
Bank had not sold or agreed to sell any participations in such Loans and share
of the Commitments, and as if such Bank were funding each of such Loans and its
share of the Commitments in the same way that it is funding the portion of such
Loans and its share of the Commitments in which no participations have been
sold. In no event shall a Bank that sells a participation agree with the
Participant to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Bank may agree with the Participant that
it will not, without the consent of the Participant, agree to any modification,
supplement or waiver hereof or of any of the other Loan Documents to the extent
that the same, under Section 12.12, requires the consent of each Bank. The
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.8 through and including 2.15 and Section 12.6 with respect to its
participating interest.
(e) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 12.7, any Bank may
assign and pledge all or any portion of its Loans and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the assigning Bank
from its obligations hereunder.
(f) A Bank may furnish any information concerning the
Borrower and its Subsidiaries in the possession of such Bank from time to time
to assignees and participants (including prospective assignees and
participants).
(g) Anything in this Section 12.7 to the contrary
notwithstanding, no Bank may assign or participate any interest in any Loan held
by it hereunder to the Borrower or any of its Affiliates without the prior
written consent of all of the Banks.
12.8 APPLICABLE LAW. THIS AGREEMENT AND THE LOAN DOCUMENTS, AND THE
DUTIES, RIGHTS, POWERS AND REMEDIES OF THE PARTIES HERETO AND THERETO, SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF GEORGIA,
WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF, EXCEPT TO THE EXTENT
THAT ANY LOAN DOCUMENT PROVIDES THAT THE LOCAL LAW OF ANOTHER JURISDICTION
GOVERNS THE GRANT, PERFECTION OR ENFORCEMENT OF THE LIENS GRANTED PURSUANT TO
SUCH LOAN DOCUMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY
THE BORROWER AND THE ADMINISTRATIVE AGENT ON BEHALF OF THE BANKS AND SHALL BE
SUBJECT TO NO EXCEPTIONS. THE BORROWER HAS MADE THIS CHOICE OF GOVERNING LAW
KNOWINGLY AND WILLINGLY AND AFTER CONSULTING WITH ITS COUNSEL. NONE OF THE
ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE DOCUMENTATION AGENT, THE LEAD
ARRANGER, ANY BANK, NOR THE
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BORROWER HAVE AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF
THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
12.9 ENFORCEMENT. THE BORROWER (A) HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF GEORGIA AND TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, FOR
THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF
BROUGHT BY THE ADMINISTRATIVE AGENT OR THE BANKS OR THEIR SUCCESSORS OR ASSIGNS
AND (B) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE,
OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS
PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION
OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR ANY LOAN DOCUMENT OR
THE SUBJECT MATTER HEREOF OR THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,
AND (C) HEREBY WAIVES AND AGREES NOT TO SEEK ANY REVIEW BY ANY COURT OF ANY
OTHER JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF THE
JUDGMENT OF ANY SUCH GEORGIA STATE OR FEDERAL COURT. THE BORROWER HEREBY
CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH
NOTICES ARE TO BE GIVEN. THE BORROWER AGREES THAT ITS SUBMISSION TO JURISDICTION
AND ITS CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF
THE ADMINISTRATIVE AGENT AND THE BANKS. FINAL JUDGMENT AGAINST THE BORROWER IN
ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, OR IN ANY OTHER MANNER PROVIDED BY
OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE
ADMINISTRATIVE AGENT OR THE BANKS MAY AT THEIR OPTION BRING SUIT, OR INSTITUTE
OTHER JUDICIAL PROCEEDINGS, AGAINST THE BORROWER OR ANY OF ITS ASSETS IN ANY
STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE
BORROWER, OR SUCH ASSETS, MAY BE FOUND.
12.10 JURY TRIAL WAIVER. THE BORROWER, THE ADMINISTRATIVE AGENT AND
THE BANKS EACH WAIVE IRREVOCABLY, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE, BETWEEN THE BANKS AND THE BORROWER ARISING OUT OF, IN
CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE NOTES OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
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CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO AND THERETO. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (UNLESS EXPRESSLY MODIFIED IN
WRITING BY ALL PARTIES HERETO), AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOANS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.11 Binding Effect and Entire Agreement. This Agreement shall
inure to the benefit of, and shall be binding upon, the respective successors
and permitted assigns of the parties hereto. This Agreement, the Schedules and
Exhibits hereto, which are hereby incorporated in this Agreement, and the Loan
Documents constitute the entire agreement among the parties on the subject
matter hereof.
12.12 Counterparts. This Agreement may be executed in any number of
counterparts or duplicate originals, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
12.13 Survival of Agreements. All covenants, agreements,
representations and warranties made herein or in any Loan Document shall survive
any investigation and the Closing and shall continue in full force and effect so
long as any of the Obligations remain to be performed or paid or the Banks have
any obligation to advance sums hereunder or any Letters of Credit remain
outstanding.
12.14 Modification. Any term of this Agreement or of the Notes may
be amended and the observance of any term of this Agreement or of the Notes may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only with the written consent of the Borrower and the Required
Banks or, if there are only two (2) Banks each of which holds a Ratable Share of
eighty percent (80%) or less of the Loans, with the written consent of the
Borrower and both Banks; provided, however, that no such amendment or
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waiver or other action shall, without the prior written consent of all of the
Banks or the holders of all of the Notes at the time outstanding, (a) extend the
maturity or reduce the principal amount of, or reduce the rate or extend the
time of payment of interest on, or reduce the amount or extend the time of
payment of any principal installment of, any Note, (b) reduce the amount or
extend the time of payment of the commitment fees, (c) change the Commitments or
the Ratable Share of any Bank (other than any change in Commitments or Ratable
Share resulting from the sale of a participation in or assignment of any Bank's
interest in the Commitments and Loans in accordance with subsection 12.7 or
resulting from an increase in Commitments under Section 2.16), (d) change the
percentage referred to in the definition of "Required Banks" contained in
Section 1.1 or reduce the number of Banks required to approve any waiver,
amendment or modification, (e) amend this Section 12.14, (f) amend or waive
compliance with Section 2.7(b), (g) release any collateral or any guaranty for
the Loans except in connection with a sale permitted pursuant to Section 8.10,
(h) amend or waive any of the conditions precedent set forth in Section 6 for
the making of the initial Loans on the Closing Date, or (i) extend the
expiration date of any outstanding Letter of Credit or postpone the
reimbursement obligations of the Borrower in respect of any Letter of Credit or
reduce the fees payable by the Borrower in respect of any Letter of Credit; and
provided, further, however, that notwithstanding the foregoing provisions of
this Section 12.14, this Agreement and the Notes may be amended or modified in
the manner contemplated by Section 12.7 for the purpose of permitting any Bank
to assign its interest, rights and obligations hereunder to another Person if
the appropriate assignment agreement or counterparts thereof are executed by the
Borrower (to the extent required), the Administrative Agent and the appropriate
Bank assignor and assignee. Any amendment or waiver effected in accordance with
this Section 12.14 shall be binding upon each holder of any Note at the time
outstanding, each future holder of any Note and the Borrower.
12.15 Separability. If any one or more of the provisions contained
in this Agreement or any Loan Document should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of all
remaining provisions shall not in any way be affected or impaired. Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
12.16 Section Headings. The Section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12.17 Termination. This Agreement shall terminate when all amounts
due hereunder, under the Notes and under each Loan Document shall have been
indefeasibly paid in full in cash and all other Obligations hereunder or
thereunder shall have been fully performed, so long as no Letters of Credit are
then outstanding and the Banks have no further obligation to advance sums
hereunder. Upon such termination, at the request of the Borrower, the
Administrative Agent and the Banks shall release all Liens granted herein or in
any Loan Document at the Borrower's expense and return all collateral held
pursuant hereto or to any Loan Document without recourse or representation.
Notwithstanding anything to the contrary
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contained herein, each expense reimbursement and indemnification provision in
this Agreement or in any Loan Document shall survive the repayment in full of
the Loans and the termination of this Agreement.
12.18 FCC Compliance.
(a) Notwithstanding anything herein or in any of the Loan
Documents to the contrary, but without limiting or waiving the Borrower's or any
of its Subsidiaries' obligations hereunder or under any of the Loan Documents,
the Administrative Agent's and the Banks' remedies hereunder and under the Loan
Documents are subject to compliance with the Communications Act of 1934, as
amended, and to all applicable rules, regulations and policies of the FCC, and
neither the Administrative Agent nor the Banks will take any action pursuant to
this Agreement or any of the Loan Documents that will constitute or result in
any assignment of a License issued by the FCC or any change of control of the
Borrower or any of its Subsidiaries which owns any FCC License if such
assignment of License or change of control would require under then existing law
(including, without limitation, the written rules and regulations promulgated by
the FCC), the prior approval of the FCC, without first obtaining such approval
of the FCC. This Agreement, the Loan Documents and the transactions contemplated
hereby and thereby do not and will not constitute, create, or have the effect of
constituting or creating, directly or indirectly, actual or practical ownership
of the Borrower or any of its Subsidiaries by the Administrative Agent or the
Banks or control, affirmative or negative, direct or indirect, of the Borrower
or any of its Subsidiaries by the Administrative Agent or the Banks, over the
management or any other aspect of the operation of the Borrower or any of its
Subsidiaries, which ownership and control remain exclusively and at all times in
the stockholders and directors of the Borrower and its Subsidiaries until such
time as the Administrative Agent and the Banks have complied with such law,
rules, regulations and policies.
(b) Furthermore, the parties acknowledge their intent that,
upon the occurrence of an Event of Default, the Administrative Agent and the
Banks shall receive, to the fullest extent permitted by applicable law and
governmental policy (including, without limitation, the rules, regulations and
policies of the FCC), all rights necessary or desirable to obtain, use or sell
the Licenses and the collateral securing the Loans, and to exercise all remedies
available to them under this Agreement, the Loan Documents, the Uniform
Commercial Code or other applicable law. Therefore, the parties agree that, in
the event of changes in law or governmental policy occurring after the date
hereof that affect in any manner the Administrative Agent's or the Banks' rights
of access to, or ability to obtain a Lien in, or use or sale of, the Licenses or
such collateral, or the procedures necessary to enable the Administrative Agent
or the Banks to obtain such rights of access, Liens, use or sale, the
Administrative Agent, the Banks and the Borrower shall amend this Agreement and
the Loan Documents in such manner as the Administrative Agent shall reasonably
request, in order to provide the Administrative Agent and the Banks such rights
to the greatest extent possible consistent with then applicable law and
governmental policy.
12.19 Marshaling; Payments Set Aside. The Administrative Agent and
the Banks shall not be under any obligation to marshal any assets in favor of
the Borrower or any
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other Person or against or in payment of any or all of the Obligations. To the
extent that the Borrower or any of its Subsidiaries makes a payment or payments
to the Administrative Agent or the Banks or the Administrative Agent or any Bank
enforces its security interest or exercises its rights of setoff, and such
payment or payments or the process of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy or insolvency law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the Obligations or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement had not occurred.
[Remainder of This Page Intentionally Left Blank]
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TO WITNESS THE ABOVE, the Borrower, the Banks and the Administrative Agent
have caused this Loan Agreement to be executed by their respective
representatives thereunto duly authorized as of the date first above written.
BORROWER: . GRAY COMMUNICATIONS SYSTEMS, INC.
By: /s/ Frederick J. Erickson
__________________________
Frederick J. Erickson
Chief Financial Officer
<PAGE>
NATIONSBANK, N.A., as Administrative
Agent, Syndication Agent, and a Bank
By: /s/ Melinda M. Bergbom
__________________________________
Name: Melinda M. Bergbom
________________________________
Title: Senior V. President
________________________________
<PAGE>
KEY CORPORATE CAPITAL INC. (f/k/a KeyBank
National Association), as Documentation
Agent, and a Bank
By: /s/ Kenneth J. Keeler
_____________________________________
Name: Kenneth J. Keeler
_____________________________________
Title: Senior Portfolio Manager
____________________________________
<PAGE>
CIBC INC., as a Bank
By:/s/ Michele E. Roller
___________________________________
Name: Michele E. Roller
_________________________________
Title: Executive Director
________________________________
<PAGE>
THE BANK OF NEW YORK, as a Bank
By:/s/ John R. Ciulla
________________________________
Name: John R. Ciulla
______________________________
Title: Vice President
_____________________________
<PAGE>
FIRST UNION NATIONAL BANK
(f/k/a CoreStates Bank, N.A.), as a Bank
By:/s/ Jim Redman
_____________________________________
Name: Jim Redman
___________________________________
Title: Senior Vice President
__________________________________
EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated as of the 22nd day of
June, 1998, is made and entered into by and among WALB-TV, INC., a Georgia
corporation (the "Company"), WALB LICENSEE CORP., a Delaware corporation and a
wholly-owned subsidiary of the Company (the "Subsidiary" and together with the
Company, the "Sellers"), and COSMOS BROADCASTING CORPORATION, a South Carolina
corporation (the "Purchaser").
BACKGROUND:
The Company owns and operates the television station WALB-TV, serving
Albany, Georgia (the "Station"). The Sellers, respectively, hold the FCC
Licenses.
This Agreement sets forth the terms and conditions upon which Sellers shall
sell to Purchaser, and upon which Purchaser shall purchase, certain of Sellers'
Assets associated with the business of the Station.
Certain terms used in this Agreement are defined in Article X hereof.
AGREEMENT:
In consideration of the foregoing, the mutual agreements, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, the parties hereto
agree as follows:
ARTICLE I
SALE OF ASSETS
1.01 PURCHASE OF ASSETS BY PURCHASER. At the Closing, and subject to the
terms and conditions of this Agreement, Purchaser shall purchase and accept from
Sellers and Sellers shall sell, convey, transfer, assign and deliver to
Purchaser for the purchase price set forth in Section 1.02 below, all of the
Assets, free and clear of any and all Liens other than the Permitted Liens. None
of the Retained Assets are being purchased by Purchaser pursuant to this
Agreement.
1.02 PURCHASE PRICE FOR THE ASSETS.
(a) The total purchase price for the Assets shall be equal to Seventy-Eight
Million Dollars ($78,000,000), as adjusted as provided by Section 1.04.
(b) The Purchase Price has been allocated among the Assets in accordance with
a schedule mutually prepared by Sellers and Purchaser and attached hereto as
Exhibit 1.02(b). If Purchaser or Sellers undertake to change such schedule, such
party must obtain the approval of Sellers or Purchaser, as the case may be,
which will not be unreasonably withheld.
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The allocation and undertaking pursuant to this Section 1.02(b), and the
following undertaking with respect to Tax reporting, have been specifically
negotiated by Purchaser, on the one hand, and Sellers on the other, at arms'
length and are a part of the basis of this Agreement. Each of Purchaser and
Sellers shall prepare its Tax Returns after the Closing employing the allocation
made pursuant to this Section 1.02(b) and shall not take a position in any Tax
proceeding, Tax audit or otherwise that is inconsistent with such allocation;
provided, however, that nothing contained herein shall require Purchaser or
Sellers to contest beyond or otherwise than by the exhaustion of administrative
remedies before any Taxing authority or agency or to litigate before any court,
including, without limitation, the United States Tax Court, any proposed
deficiency or adjustment by any Taxing authority or agency which challenges such
allocation. Each of Purchaser and Sellers shall give prompt notice to each other
of the commencement of any Tax audit or the assertion of any proposed deficiency
or adjustment by any Taxing authority or agency which challenges such
allocation.
(c) Capitalized terms used in this Section 1.02(c) and not defined in this
Agreement have the respective meanings set forth in the Exchange Agreement (the
"Exchange Agreement") of even date herewith among Sellers, Purchaser and certain
other parties. Pursuant to the Exchange Agreement and the WEAU Asset Purchase
Agreement, at Closing thereunder and hereunder, Purchaser will pay to Busse and
WEAU $66,000,000 as set forth in the Exchange Agreement and the WEAU Asset
Purchase Agreement (the "WEAU Purchase Price") for the WEAU Assets and WEAU
License, which Purchaser will direct Busse and WEAU to transfer and assign to
the Company and the Subsidiary, respectively. At Closing hereunder, Purchaser
shall receive a credit against the Purchase Price in an amount equal to the WEAU
Purchase Price paid by Purchaser pursuant to the WEAU Asset Purchase Agreement.
The pre-merger notification and report required by the Hart-Scott Act in
connection with Sellers' acquisition of the WEAU Assets and the WEAU License is
to be filed by Sellers and Busse, and Purchaser will not be a party to, and has
no obligation to pay the filing fee associated with, such notification and
report. The FCC assignment application for the WEAU License has been filed by
the Subsidiary and WEAU, and Purchaser is not a party to, and has no obligation
to pay the filing fee associated with, such application. Whether or not the
closing under the WEAU Asset Purchase Agreement is consummated, Sellers shall
have the obligation to sell, and purchaser shall have the obligation to
purchase, the Assets, pursuant to the terms, and subject to the conditions, set
forth in this Agreement. The foregoing shall not be deemed to limit Sellers'
right to extend the Closing Date as set forth in the definition of such term or
the other rights and obligations set forth in this Section and Section 5.16.
1.03 CLOSING; EFFECTIVENESS OF CLOSING; DELIVERIES. The Closing shall occur
at 10:00 a.m. local time on the Closing Date at the offices of Cadwalader,
Wickersham & Taft in New York, New York or at such other time and place as the
parties may agree. The Closing shall be effective as of such time as agreed to
by the parties hereto. All deliveries, payments and other transactions and
documents relating to the Closing (i) shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing), and (ii) shall be deemed to be
consummated in the order set
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forth in this Agreement and, to the extent the order is not specified, shall be
deemed to be consummated simultaneously.
1.04 PRORATIONS AND ADJUSTMENTS.
(a) Prorations and Adjustments. The Purchase Price shall be increased or
decreased as required to effectuate the proration of revenues and expenses as
provided for herein. All revenues and all expenses arising from the operation of
the Station, including tower rental, business and license fees (including FCC
regulatory fees), utility charges, real and personal property taxes and
assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, including program license payments, sales
and service charges, taxes (except for taxes arising from the transfer of the
Assets under this Agreement), employee compensation, including wages, salaries,
commissions, accrued vacation pay and personal days, music license fees and
similar prepaid and deferred items, shall be prorated between Purchaser and
Sellers in accordance with generally accepted accounting principles and to
effect the principle that Sellers shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the operations
of the Station for the period prior to 12:01 a.m. on the Closing Date, and
Purchaser shall receive all revenues and shall be responsible for all expenses,
costs and obligations allocable to the operations of the Station for the period
after 12:01 a.m. on the Closing Date, subject to the following:
(1) There shall be no adjustment for, and Sellers shall remain solely
liable with respect to, any Contract that is included in the Retained Assets and
any other obligation or liability not being assumed by Purchaser in accordance
with Section 2.02.
(2) No adjustment or proration to the Purchase Price shall be made in
favor of Sellers or Purchaser for the amount, if any, by which the value of the
goods or services to be received by the Station under its trade or barter
agreements as of Closing for the Station exceeds, or is less than, the value of
any advertising time remaining to be run by the Station as of Closing.
(3) There shall be no adjustment or proration to the Purchase Price for
program barter. Sellers shall be responsible for payment of all film or
programming license fees for periods prior to Closing, and Purchaser shall be
responsible for payment of all such fees for periods after Closing.
(4) There shall be no adjustment or proration for sick days accrued on
or prior to Closing by any employee of Sellers, all of which shall be assumed by
Purchaser.
(b) Manner of Determining Prorations and Adjustments. The Purchase Price,
taking into account the adjustments and prorations pursuant to Section 1.04(a),
will be determined in accordance with the following procedures:
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(1) Sellers shall prepare and deliver to Purchaser not later than five
(5) days before Closing a preliminary settlement statement signed by Sellers
which shall set forth Sellers' good faith estimate of the adjustments or
prorations to the Purchase Price under Section 1.04(a). Such preliminary
settlement statement shall contain all information reasonably necessary to
determine the adjustments or prorations to the Purchase Price under Section
1.04(a), including appropriate supporting documentation. The adjustments and
prorations to the Purchase Price to be made at Closing shall be based upon such
preliminary settlement statement.
(2) Not later than ninety days after the Closing Date, Purchaser will
deliver to Sellers a statement signed by Purchasers setting forth Purchaser's
good faith determination of any changes to the adjustments and prorations made
at Closing. Such statement shall contain all information reasonably necessary to
determine the adjustments and prorations to the Purchase Price under Section
1.04(a), including appropriate supporting documentation. If Sellers dispute the
adjustments and prorations determined by Purchaser, they shall deliver to
Purchaser within sixty days after its receipt of Purchaser's statement a
statement setting forth its determination of the adjustments and prorations. If
Sellers notify Purchaser of their acceptance of Purchaser's statement, or if
Sellers fail to deliver their statement within the sixty-day period specified in
the preceding sentence, Purchaser's determination of the adjustments and
prorations shall be conclusive and binding on the parties as of the last day of
the sixty-day period.
(3) Purchaser and Sellers shall use good faith efforts to resolve any
dispute involving the determination of the adjustments and prorations. If the
parties are unable to resolve the dispute within fifteen days following the
delivery of Sellers' statement pursuant to Section 1.04(b)(2), Purchaser and
Sellers shall jointly designate an independent certified public accountant, who
shall be knowledgeable and experienced in the operation of television
broadcasting stations, to resolve the dispute. If the parties are unable to
agree on the designation of an independent certified public accountant, the
selection of the accountant to resolve the dispute shall be submitted to
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association. The accountant's resolution of the dispute shall be
final and binding on the parties, and a judgment may be entered thereon in any
court of competent jurisdiction. Any fees of this accountant, and, if necessary,
for arbitration to pick such accountant, shall be split equally between the
parties.
(4) Amounts payable to the Station from the United States Copyright
Office or such arbitration panels as may be appointed by the United States
Copyright Office that relate to the period prior to Closing may not be
determinable or paid within the period provided in this Section 1.04 for final
determination of adjustments. In that event, notwithstanding the provisions of
this Section 1.04, Purchaser and Sellers agree to cooperate fully in future
copyright filings and to allocate any future copyright proceeds in accordance
with Section 1.04 until such time as all such proceeds with respect to the
period prior to Closing are paid.
(c) If required by Section 1.07, the Purchase Price shall be adjusted as
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provided in Section 1.07.
1.05 PAYMENT OF PURCHASE PRICE AND PRORATIONS AND ADJUSTMENTS. The Purchase
Price shall be paid by Purchaser to Sellers as follows:
(a) Payment of Estimated Purchase Price At Closing. At Closing, Purchaser
shall pay or cause to be paid to Sellers the Purchase Price as adjusted as
provided by Section 1.04 by federal wire transfer of same-day funds pursuant to
wire instructions which shall be delivered to Purchaser by Sellers prior to
Closing. Any payment of the Deposit to Sellers as provided by Section 1.06 and
any payment of the WEAU Purchase Price provided by Section 1.02(c) shall be
credited as a partial payment of the Purchase Price.
(b) Payments to Reflect Prorations and Adjustments.
(1) If the Purchase Price as finally determined pursuant to Section
1.04(b) exceeds the estimated Purchase Price paid at Closing, Purchaser shall
pay to Sellers, in immediately available funds within five business days after
the date on which the Purchase Price is finally determined pursuant to Section
1.04(b), the difference between the final Purchase Price and the estimated
Purchase Price paid at Closing.
(2) If the Purchase Price as finally determined pursuant to Section
1.04(b) is less than the estimated Purchase Price paid at Closing, Sellers shall
pay to Purchaser, in immediately available funds within five business days after
the date on which the Purchase Price is finally determined pursuant to Section
1.04(b), the difference between the final Purchase Price and the estimated
Purchase Price paid at Closing.
(3) If any dispute arises over the amount to be refunded or paid, such
refund or payment shall nevertheless be made to the extent any amount is not in
dispute.
1.06 DEPOSIT. On the date of this Agreement, Purchaser shall deposit into
escrow with NationsBank (the "Escrow Agent") the sum of $3,900,000 pursuant to
the Escrow Agreement (the "Escrow Agreement") of even date herewith among
Sellers, Purchaser and the Escrow Agent. At Closing, such deposit, as increased
or decreased based upon investment as provided in the Escrow Agreement (the
"Deposit") shall be paid to (or at the direction of) Sellers as a partial
payment of the Purchase Price. If this Agreement is terminated without a
Closing, the Deposit shall be disbursed as set forth in Section 9.03. Purchaser
and Sellers shall instruct the Escrow Agent to disburse the Deposit to the party
entitled thereto and shall not, by any act or omission, delay or prevent any
such disbursement.
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1.07 CAPITAL IMPROVEMENTS. Purchaser acknowledges that Sellers are in the
process of making certain 1998 capital improvements to the Station's facilities
and equipment for a total cost of $930,000, as set forth on Attachment A hereto
(the "Capital Fund"). Sellers shall endeavor to complete such capital
improvements prior to Closing, to the extent feasible. If the Capital Fund has
not been exhausted in accordance with Attachment A prior to Closing, the
Purchase Price shall be adjusted in favor of Purchaser in an amount equal to the
Capital Fund minus the amount expended by Sellers in accordance with Attachment
A, and to the extent of such adjustment Purchaser shall assume Sellers'
obligations to complete such capital improvements in accordance with Attachment
A. If Purchaser makes any change to such specifications, Purchaser shall bear
any additional costs associated with such change.
ARTICLE II
ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS
2.01 GENERAL.
(a) Purchaser is not assuming and shall not be liable for or with respect to
any Retained Liability.
(b) Notwithstanding anything in this Agreement to the contrary, in no event
shall any Liability due to any Affiliate of the Sellers be assumed by Purchaser.
(c) Nothing contained in this Section 2.01 or in any instrument of assumption
executed by Purchaser at the Closing shall be deemed to release or relieve the
Sellers from their respective representations, warranties, covenants and
agreements contained in this Agreement or any of the Other Agreements. Further,
Sellers shall retain all of the Retained Liabilities and no disclosures made or
exceptions noted with respect to the representations, warranties, covenants and
agreements of the Sellers contained in this Agreement or any of the Other
Agreements shall require Purchaser to assume any of the Retained Liabilities.
2.02 ASSUMPTION OF THE LIABILITIES OF THE BUSINESS.
(a) Purchaser shall assume the Assumed Liabilities on the terms provided in
subsection 2.02(b).
(b) Purchaser expressly agrees, effective on the Closing Date, to assume the
Assumed Liabilities and thereafter to pay, perform and discharge in full, in
accordance with their terms where applicable, the Assumed Liabilities. Nothing
contained in this Agreement shall require Purchaser to pay, perform or discharge
any of the Assumed Liabilities so long as Purchaser shall in good faith contest
or cause to be contested the amount or validity thereof or shall in good faith
assert any defense or offset thereto, and the Sellers shall provide reasonable
assistance to Purchaser in so contesting and defending such claims.
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2.03 NO INTENTION TO BENEFIT THIRD PARTIES. This Agreement is not intended
to, and shall not, benefit any person or entity other than the Sellers and
Purchaser or create any Third Party beneficiary right in any person.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY THE SELLERS
Each of the Sellers, jointly and severally, hereby represent and warrant to
Purchaser as follows:
3.01 CAPACITY AND VALIDITY. Each of the Sellers has the full corporate power,
capacity and authority necessary to enter into and perform its obligations under
this Agreement and the Other Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements have been approved by all
necessary action of the Board of Directors and stockholders of the Sellers. This
Agreement has been, and the Other Agreements to which each of the Sellers is a
party will be when executed and delivered, duly executed and delivered by duly
authorized officers of each of the Sellers, and this Agreement and each of the
Other Agreements constitutes, or will constitute when executed and delivered,
the legal, valid and binding obligation of each of the Sellers, enforceable
against each of the Sellers, as the case may be, in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or general equitable principles
(regardless of whether considered in a proceeding in equity or at law).
3.02 ORGANIZATION. Each of the Sellers is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate power and authority to own, lease
and operate its Assets and to carry on its Business as presently conducted.
3.03 NO CONFLICT. Except as disclosed on Schedule 3.03 and assuming
compliance with the Hart-Scott Act and the receipt of all necessary FCC
approvals, neither the execution, delivery and performance of this Agreement or
the Other Agreements to which it is a party by each of the Sellers nor the
consummation by each of the Sellers of the transactions contemplated hereby or
thereby (i) conflicts with or results in a violation, contravention or breach of
any of the terms, conditions or provisions of the Certificate of Incorporation,
as amended, or the By-Laws, as amended, of each of the Sellers, (ii) results in
a Default under, or requires the consent or approval of any party to, any
Assumed Contract or License of the Sellers or requires the consent of any Third
Party or Governmental Authority, (iii) results in the violation of any Law or
Order applicable to either of the Sellers, or (iv) results in the creation or
imposition of any Lien on the Assets, except in each case (other than clause
(ii)) as would not have a Material Adverse Effect.
3.04 RESERVED.
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3.05 FINANCIAL STATEMENTS. The Financial Statements, correct and complete
copies of which are included in Schedule 3.05, (i) are in accordance with the
books and records of the Company, which are correct and complete in all Material
respects and which have been maintained in accordance with good business
practices; (ii) present fairly in all Material respects the financial position
of the Company as of the dates indicated and the results of each of its
operations for the periods then ended; and (iii) have been included in the
consolidated financial statements of Gray Communications Systems, Inc., which
are prepared in accordance with GAAP, as of the dates indicated and for the
periods then ended. The Financial Statements contain all adjustments, which are
solely of a normal recurring nature, necessary to present fairly in all Material
respects the financial condition and the results of operations, and changes in
financial position of the Company as of the dates and for the periods indicated.
3.06 RESERVED.
3.07 ABSENCE OF CHANGES. Except as disclosed on Schedule 3.07, since the
Balance Sheet Date, (i) the Business has been carried on only in the ordinary
course consistent with past practice, (ii) there has been no Material Adverse
Change, and there has been no event or circumstance that reasonably is
anticipated to result in a Material Adverse Change, with respect to the Assets
or the Business, (iii) Sellers have not made any material increase in
compensation payable or benefits provided to any of Sellers' Station employees
other than in the ordinary course of business and not exceeding 5% per year, and
(iv) Sellers have not given any promise, assurance or guaranty of the payment,
discharge or fulfillment of any obligation of any other person or entity with
respect to the Business.
3.08 TAX MATTERS. Except as set forth on Schedule 3.08, with respect to the
Business:
(a) Each of the Sellers has timely filed with the appropriate Governmental
Authorities all required Tax Returns in all jurisdictions in which Tax Returns
are required to be filed. Neither of the Sellers is presently the beneficiary of
any extension of time within which to file any Tax Return. All Taxes (whether or
not shown on any Tax Return) for all periods ending on or before the Balance
Sheet Date, have been fully paid or appropriate deposits or adequate accruals
have been made therefor on the Financial Statements.
(b) Since the Balance Sheet Date, neither of the Sellers has incurred any
Liability for Taxes other than in the ordinary course of business and no such
Tax Liability so incurred is Material. Neither of the Sellers is currently
delinquent in the payment of any Tax, assessment, deposit or other charge by any
Governmental Authority for which any Liability is pending or has been assessed,
asserted or threatened (in writing, or otherwise to the Knowledge of either of
the Sellers) against the Sellers or any of their respective Assets in connection
with any Tax and there is no basis for any such Liability. Neither of the
Sellers has received any notice of assessment or proposed assessment in
connection with any Tax Returns and there are no pending Tax examinations of or
Tax claims asserted (in writing, or otherwise to the Knowledge of either of the
Sellers) against either of the Sellers or any of their respective
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Assets, including without limitation, any claim by any Governmental Authority in
any jurisdiction where either of the Sellers did not file Tax Returns that
either of the Sellers, are or may be subject to or liable for Taxes imposed by
that Governmental Authority or jurisdiction. There are no Liens for any Taxes
(other than any Lien for current real property or ad valorem Taxes not yet due
and payable) on any of the Sellers' Assets.
(c) Each of the Sellers has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Third Party.
3.09 TITLE TO ASSETS; ENCUMBRANCES; CONDITION.
(a) Except as set forth on Schedule 3.09, each of the Sellers has good, valid
and marketable (and, in the case of the Owned Real Property, insurable) title to
all of its respective Assets free and clear of any and all Liens, except
Permitted Liens.
(b) Except as set forth in Schedule 3.09, each of the Material Improvements
and each item of Material Personal Property is in good condition and repair,
reasonable wear and tear excepted, and is usable in the ordinary course of
business consistent with past practices. Each Material Improvement and each item
of Material Personal Property is adequate for its present and intended uses and
operation and neither of the Sellers has any intention to use or operate any
Material Improvement or any item of Material Personal Property other than as
presently used or operated. Each of the Sellers' respective Assets (including
the each of the Sellers' respective interest in all leased assets) include all
Material Assets required to operate the Business as presently conducted.
3.10 REAL PROPERTY.
(a) Schedule 3.10 contains a correct and complete list of all of the Real
Property, including, without limitation, a legal description for all of the
Owned Real Property. To the Knowledge of either of the Sellers, no facts or
circumstances exist which do, or potentially may, adversely affect any of the
access to and from the Real Property, from and to the existing public highways
and roads, and, to the Knowledge of either of the Sellers, there is no pending
or threatened denial, revocation, modification or restriction of such access.
(b) The Real Property is served by utilities as required for its current
operation.
(c) No zoning or similar land use restrictions are presently in effect or
proposed by any Governmental Authority that would impair in any Material respect
the operation of the Business as presently conducted by the Sellers or which
would prevent the use of any of the Real Property as currently operated. All of
the Real Property is in compliance in all Material aspects with all applicable
zoning laws and recorded covenants. Neither of the Sellers has received any
notice from any Governmental Authority or other Third Party with regard to, and
Sellers have no Knowledge of, encroachments on or off the Real Property,
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violations of building codes, zoning, subdivision or other similar Laws or other
material defects in the Improvements or in the good, valid, marketable and
insurable title of said Real Property.
(d) As of the Closing Date, there will be no Persons in possession of the
Real Property or any part thereof other than the Sellers or their lessees
pursuant to Contracts that are Permitted Liens.
(e) No condemnation proceedings are pending or to the Knowledge of either of
the Sellers, threatened with regard to the Owned Real Property.
(f) With respect to each parcel of Leased Real Property, (i) the lessor was
the owner of the premises leased to the lessee at the time of the execution and
delivery of the lease, (ii) the Company or the Subsidiary is the owner and
holder of the interest of the lessee in the lease, (iii) all buildings and
towers constructed by the lessee of each lease are located within the boundaries
of the leased premises, (iv) each lease contains an adequate description of the
leased premises, (v) each lease is enforceable by the lessee, (vi) all payments
of rent are current under each lease and no default exists under any lease and
(vii) except as set forth on Schedule 3.19, there are no disputes with or
adverse claims asserted by any lessor of a lease. Each of the Assumed Contracts
relating to such Leased Real Property is fully and accurately identified, and
the expiration date and current rent are described, in Schedule 3.10 and each
such Assumed Contract is in full force and effect. Except as disclosed on
Schedule 3.09, and except for Permitted Liens, neither the Leased Real Property
nor any of the Sellers' right, title or interest therein is affected by any
Lien, prior interests or superior interests of any nature whatsoever that will,
or could reasonably be expected to, terminate such leasehold or otherwise
Materially adversely affect such Leased Real Property or any of the Sellers'
right, title and interest therein.
3.11 PERSONAL PROPERTY.
(a) Schedule 3.11 contains a correct and complete list of each item of
Personal Property, other than Inventory (excluding office furniture, equipment,
supplies and miscellaneous items of personal property with an individual fair
market value of less than $2,500).
(b) Schedule 3.11 contains a correct and complete description of all Material
Leased Personal Property. Each of the Assumed Contracts relating to such Leased
Personal Property is identified on Schedule 3.11 and each such Assumed Contract
is in full force and effect.
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3.12 INTELLECTUAL PROPERTY.
(a) Schedule 3.12 contains a correct and complete list of all of the Sellers'
respective Material Intellectual Property, including all Material license
agreements relating thereto. Neither of the Sellers (or any goods or services
sold by either of them) has violated, infringed upon or unlawfully or wrongfully
used the Intellectual Property of others and none of the Sellers' Intellectual
Property or any related rights or any customer lists, supplier lists or mailing
lists, as used in the Business or in the other businesses now or heretofore
conducted by either of the Sellers, Materially infringes upon or otherwise
Materially violates the rights of others, nor has any Person asserted a claim of
such infringement or misuse, which infringement or violation is likely to result
in a cost to the Sellers in excess of $20,000. Each of the Sellers has taken all
reasonable measures to enforce, maintain and protect its interests and, to the
extent applicable, the rights of Third Parties, in and to the Sellers' Material
Intellectual Property. Each of the Sellers have all right, title and interest in
the Intellectual Property identified on Schedule 3.12. The consummation of the
transactions contemplated by this Agreement will not alter or impair any
Material Intellectual Property rights of either of the Sellers. Except as set
forth in Schedule 3.12, neither of the Sellers is obligated nor has either of
the Sellers incurred any Liability to make any Material payments for royalties,
fees or otherwise to any Person in connection with any of the Sellers'
Intellectual Property. All patents, trademarks, trade names, service marks,
assumed names, and copyrights and all registrations thereof included in or
related to the Sellers' Intellectual Property are valid, subsisting and in full
force and effect. Each of the Sellers is unaware of any Material infringement of
the Sellers' Material Intellectual Property, and there are no pending
infringement actions against another for infringement of the Sellers'
Intellectual Property or theft of the Sellers' trade secrets.
(b) No present or former officer, director, partner or employee of either of
the Sellers owns or has any proprietary, financial or other interest, direct or
indirect, in any of the Sellers' Material Intellectual Property, except as
described on Schedule 3.12. Except as set forth on Schedule 3.12, no officer,
director, partner or employee of either of the Sellers has entered into any
Contract (i) that requires such officer, director, partner or employee to (A)
assign any interest to inventions or other Material Intellectual Property, or
(B) keep confidential any Material trade secrets, proprietary data, customer
lists or other business information or (ii) that restricts or prohibits such
officer, director, partner or employee from engaging in competitive activities
with or soliciting customers to or from any competitor of the Sellers.
3.13 COMPUTER SOFTWARE AND DATABASES. Schedule 3.13 identifies all Material
Computer Software and Databases owned, licensed, leased, internally developed or
otherwise used in connection with the Business. Each of the Sellers has use of
or the ability to freely acquire, without substantial costs to the Sellers for
such acquisition, all Computer Software and Databases that are necessary to
conduct the Business as presently conducted by the Sellers and all documentation
relating to all such Material Computer Software and Databases. Such Computer
Software and Databases perform in all Material respects in accordance with the
documentation related thereto or used in connection therewith and are free
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of Material defects in programming and operation. Each of the Sellers has
previously made available to Purchaser complete and accurate copies of all
documents relating to the sale, license, lease or other transfer or grant of
Material Computer Software and Databases by the Sellers since January 1, 1996.
3.14 RESERVED.
3.15 INSURANCE. All of the Assets and the operations of each of the Sellers
and the Business of an insurable nature and of a character usually insured by
them are insured by the Sellers in such amounts and against such losses,
casualties or risks as is (i) consistent with Sellers' past practices, and (ii)
required by any Law applicable to the Sellers or the Business. Schedule 3.15
contains a complete and accurate list of all Material insurance policies now in
force and held or owned by the Sellers and such Schedule indicates the name of
the insurer, the type of policy, the policy number and the amounts of coverage
and deductible in each case.
3.16 RESERVED.
3.17 COMPLIANCE WITH LAW.
(a) Each of the Sellers has complied with and is in compliance with all Laws,
Licenses and Orders applicable to, required of or binding on the Business, or on
the Sellers or their respective Assets with respect to the Business, including
without limitation, the FCC Licenses, the Communications Act, and PUC Laws, and
neither of the Sellers has Knowledge of any basis for any claim of current or
past non-compliance with any such Law, License or Order, in each case where such
non-compliance would be Material to the Business or the Assets, taken as a
whole, including, without limitation, the value of the Station, taken as a
whole. No notices from any Governmental Authority with respect to any failure or
alleged failure of either of the Sellers, their respective Assets or the
Business to comply with any such Law, License or Order have been received by
either of the Sellers, nor, to the Knowledge of either of the Sellers, are any
such notices proposed or threatened. Schedule 3.17 contains a complete and
correct list of all Material Licenses and Orders applicable to, required of or
binding on the Sellers, their respective Assets or the Business, true and
complete copies of which (other than the FCC Licenses) previously have been made
available to the Purchaser.
(b) Sellers, respectively, hold the FCC Licenses and all other Material
Licenses necessary for or used in the operations of the Business, and the FCC
Licenses and all such other Material Licenses are in full force and effect.
Schedule 3.17 contains a true and complete list of the FCC Licenses currently in
effect and all such other Material Licenses (showing, in each case, the
expiration date). Except as set forth on Schedule 3.17, no application, action
or proceeding is pending for the renewal or modification of any of the FCC
Licenses or any of such other Material Licenses, and no application, action or
proceeding is pending or, to the either of the Sellers' Knowledge, threatened
that may result in the denial of the application for renewal, the revocation,
modification, nonrenewal or suspension of the FCC Licenses or any of such other
Material Licenses, the issuance of a cease-and-desist order,
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or the imposition of any administrative or judicial sanction with respect to the
Business that may Materially and adversely affect the rights of Purchaser or the
Sellers under any such FCC Licenses or other Material Licenses. All Material
returns, reports and statements required to be filed by the Sellers with the FCC
relating to the Business have been filed and complied with and are complete and
correct in all Material respects as filed. The FCC Licenses are not subject to
any FCC conditions that would limit the full operation of Station as now
operated, other than those set forth on the forms evidencing or orders granting
the FCC Licenses or any renewal thereof and those set forth in the
Communications Act imposed on licensees generally or television broadcasting
licenses specifically.
(c) Except as described in Section 1.07 or in Schedule 3.17, there are no
Material capital expenditures that the Sellers anticipate will be required to be
made in connection with the Sellers' respective Assets or the Business as now
conducted in order to comply with any Law applicable to either of the Sellers,
their respective Assets or the Business as now conducted.
3.18 ENVIRONMENTAL. Except as set forth in Schedule 3.18, with respect to the
Business:
(a) There is no Environmental Litigation (or any Litigation against any
Person whose Liability, or any portion thereof, for Environmental Matters or
under any Environmental Laws that either of the Sellers has or, to the Knowledge
of either of the Sellers, may have retained or assumed contractually or by
operation of Law) pending or, to the Knowledge of either of the Sellers,
threatened with respect to (i) the ownership, use, condition or operation of the
Business, the Real Property or any other Asset of either of the Sellers or any
Asset formerly held for use or sale by the Sellers or any of their respective
predecessors or any of their respective current or former subsidiaries, or (ii)
any violation or alleged violation of or Liability or alleged Liability under
any Environmental Law or any Order related to Environmental Matters. To the
Knowledge of either of the Sellers, there have not been any, and there are no,
existing violations of (i) any Environmental Law, or (ii) any Order related to
Environmental Matters, with respect to the ownership, use, condition or
operation of the Business, the Real Property or any other Asset of the Sellers
or any Asset formerly held for use or sale by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries. To the Knowledge of either of the Sellers, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, any Environmental Matter, that could reasonably
be expected to form the basis of (i) any Environmental Litigation against the
Sellers, or (ii) any Litigation against any Person whose Liability (or any
portion thereof) for Environmental Matters or under any Environmental Laws the
Sellers have or may have retained or assumed contractually or by operation of
Law. To the Knowledge of either of the Sellers, neither of the Sellers or any of
their respective predecessors or any of their respective current or former
subsidiaries nor anyone Known to either of the Sellers has used any Assets of
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries or any part thereof for the handling, treatment,
storage, or disposal of any Hazardous Substances except in Material compliance
with applicable Environmental Laws. The disclosure of facts set forth in
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Schedule 3.18 shall not relieve either of the Sellers of any of their respective
obligations under this Agreement.
(b) To the Knowledge of either of the Sellers, no release, discharge,
spillage or disposal of any Hazardous Substances has occurred or is occurring at
any assets owned, leased, operated or managed by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries or any part thereof while or before such Assets were owned, leased,
operated or managed by the Sellers.
(c) To the Knowledge of either of the Sellers, no soil or water in, under or
adjacent to any Assets owned, leased, operated or managed, directly or
indirectly, by the Sellers or Assets formerly held for use or sale by the
Sellers or, in either case, any of their respective predecessors or any of their
respective current or former subsidiaries has been contaminated by any Hazardous
Substance while or before such Assets were owned, leased, operated or managed by
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries.
(d) To the Knowledge of either of the Sellers, all waste containing any
Hazardous Substances generated, used, handled, stored, treated or disposed of
(directly or indirectly) by the Sellers or any of their respective predecessors
or any of their respective current or former subsidiaries has been released or
disposed of in compliance with all applicable reporting requirements under any
Environmental Laws and there is no Environmental Litigation with respect to any
such release or disposal.
(e) To the Knowledge of either of the Sellers, all underground tanks and
other underground storage facilities presently or previously located at any Real
Property owned, leased, operated or managed by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries or any such tanks or facilities located at any Real Property while
such Real Property was owned, leased, operated, or managed by the Sellers or any
of their respective predecessors or any of their respective current or former
subsidiaries are listed together with the capacity and contents (former and
current) of each such tank or facility in Schedule 3.18. To the Knowledge of
either of the Sellers, none of such underground tanks or facilities is leaking
or has ever leaked, and neither of the Sellers or any of their respective
current or former subsidiaries holds any responsibility or Liability for any
underground tanks or underground facilities at any other location.
(f) To the Knowledge of either of the Sellers, all hazardous waste has been
removed from all Real Property of the Sellers and each of their respective
predecessors and each of their respective current and former subsidiaries in
Material compliance with applicable Environmental Laws.
(g) To the Knowledge of either of the Sellers, the Sellers and each of their
respective predecessors or any of their respective current or former
subsidiaries have complied with all applicable reporting requirements under all
Environmental Laws concerning the disposal or release of Hazardous Substances
and neither of the Sellers or any of their respective
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predecessors or any of their respective current or former subsidiaries has made
any such reports concerning any Real Property of the Sellers or concerning the
operations or activities of the Sellers or any of their respective predecessors
or any of their respective current or former subsidiaries.
(h) To the Knowledge of either of the Sellers, no building or other
Improvement or any Real Property owned, leased, operated or managed by the
Sellers contains any asbestos-containing materials.
(i) To the Knowledge of either of the Sellers, without limiting the
generality of any of the foregoing, (i) all on-site and off-site locations where
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries has disposed or arranged for the disposal of
Hazardous Substances are identified in Schedule 3.18, (ii) none of the on-site
or off-site locations identified in Schedule 3.18 is listed on any federal,
state or local government lists of abandoned disposal sites or sites where
Hazardous Substances have or may have occurred, and (iii) no polychlorinated
biphenyls ("PCB's") are used or stored on or in any real property owned, leased,
operated or managed by the Sellers or any of their respective predecessors or
any of their respective current or former subsidiaries, except in Material
compliance with applicable Environmental Laws.
(j) Sellers have made available to Purchaser copies of all environmental site
assessments and other studies relating to the investigation of the possibility
of the presence or existence of any Environmental Matter with respect to the
Assets that are in Sellers' possession.
3.19 LITIGATION AND CLAIMS. Except as disclosed on Schedule 3.19, there is no
Litigation against Sellers or the Station that prevents Sellers from performing
their obligations hereunder or Materially adversely effects the Assets and that
is pending or, to the Knowledge of either of the Sellers, threatened, and
neither of the Sellers has any Knowledge of any basis for any such Litigation or
any facts or the occurrence of any event which might give rise to any
Litigation.
3.20 BENEFIT PLANS.
(a) Schedule 3.20 lists every Employee Benefit Plan of the Sellers. On or
after September 26, 1980, neither of the Sellers or any entity aggregated with
the Sellers under Code Section 414 (for purposes of this Section and Article X,
an "ERISA Affiliate") has had an "obligation to contribute" (as defined in ERISA
Section 4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3)
and (3)(37)(A)). No Employee Benefit Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(b) The Employee Benefit Plans listed on Schedule 3.20 have been or will be
made available to Purchaser for review, including correct and complete copies
of: (i) all trust agreements or other funding arrangements for such Employee
Benefit Plans (including insurance contracts), and all amendments thereto, (ii)
with respect to any such Employee
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Benefit Plans or amendments, all determination letters, rulings, opinion
letters, information letters, or advisory opinions issued by the United States
Internal Revenue Service, the United States Department of Labor, or the Pension
Benefit Guaranty Corporation after December 31, 1974, (iii) annual reports or
returns, audited or unaudited Financial Statements, actuarial valuations and
reports, and summary annual reports prepared for any Employee Benefit Plan with
respect to the most recent three plan years, and (iv) the most recent summary
plan descriptions and any material modifications thereto.
(c) Except as disclosed in Schedule 3.20, all the Employee Benefit Plans and
the related trusts subject to ERISA comply in all Material respects with and
have been administered in compliance in all Materials respects with, (i) the
applicable provisions of ERISA, (ii) all applicable provisions of the Code
relating to qualification and Tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended Tax consequences, (iii) all
applicable state or federal securities Laws, and (iv) all other applicable Laws
and collective bargaining agreements, and neither of the Sellers has received
any notice from any Governmental Authority questioning or challenging such
compliance. All available determination letters and required registrations under
federal and state securities Laws ("Permits") for the Employee Benefit Plans
have been obtained, including, but not limited to, timely determination letters
on the qualification of the ERISA Plans and Tax exemption of related trusts, as
applicable under the Code, and all such Permits continue in full force and
effect. No event has occurred which will or could reasonably be expected to give
rise to disqualification of any such plan or loss of intended Tax consequences
under the Code or to any Tax under Section 511 of the Code.
(d) Except as disclosed in Schedule 3.20, no oral or written representation
or communication with respect to any aspect of the Employee Benefit Plans has
been made to employees of the Sellers prior to the date hereof that is not in
accordance with the written or otherwise preexisting terms and provisions of
such plans. Neither of the Sellers or any administrator or fiduciary of any
Employee Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner that could subject the
Sellers or Purchaser to any direct or indirect Material Liability (by indemnity
or otherwise) for breach of any fiduciary, co-fiduciary or other duty under
ERISA. There are no unresolved claims or disputes under the terms of, or in
connection with, the Employee Benefit Plans other than claims for benefits which
are payable in the ordinary course and no Litigation has been commenced with
respect to any Employee Benefit Plan.
(e) Except as disclosed in Schedule 3.20, all Employee Benefit Plan documents
and annual reports or returns, audited or unaudited financial statements,
actuarial valuations, summary annual reports, and summary plan descriptions
issued with respect to the Employee Benefit Plans are correct and complete in
all Material respects, have been timely filed with the IRS and the United States
Department of Labor, have been timely distributed to participants in the
Employee Benefit Plans, and there have been no changes in the information set
forth therein.
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(f) No "party in interest" (as defined in Section 3(14) of ERISA) or
"disqualified person" (as defined in Code Section 4975) of any Employee Benefit
Plan has engaged in any Material nonexempt "prohibited transaction" (described
in Code Section 4975 or ERISA Section 406). Except as disclosed in Schedule
3.20, there has been no (i) "reportable event" (as defined in Section 4043 of
ERISA), or event described in Sections 4041, 4042, 4062 (including ERISA Section
4062(e)), 4064, 4069 or 4063 of ERISA, or (ii) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which the Sellers maintain or contribute to or have maintained or
contributed to. Except as disclosed in Schedule 3.20, neither of the Sellers has
incurred any liability under Title IV of ERISA, including any Liability that
could arise under Title IV of ERISA as a result of the Sellers' membership in a
"controlled group" as defined in ERISA ss.ss. 4001(a)(14) and 4001(b)(1).
(g) Except as disclosed in Schedule 3.20, for any ERISA Plan that is an
employee pension benefit plan as defined in ERISA ss. 3(2) ("ERISA Pension
Plan"), the fair market value of such Plan's assets equals or exceeds the
present value of all benefits (whether vested or not) accrued to date by all
present or former participants in such ERISA Pension Plan. For this purpose the
assumptions prescribed by the Pension Benefit Guaranty Corporation for valuing
plan assets or liabilities upon plan termination shall be applied and the term
"benefits" shall include the value of all benefits, rights and features
protected under Code ss. 411(d)(6) or its successors and any ancillary benefits
(including disability, shutdown, early retirement and welfare benefits) provided
under any such employee pension benefit plan and all "benefit liabilities" as
defined in ERISA Section 4001(a)(16). Since the date of the most recent
actuarial valuation, there has been (i) no Material change in the financial
position of an ERISA Pension Plan, (ii) no change in the actuarial assumptions
with respect to any ERISA Pension Plan, and (iii) no increase in benefits under
any ERISA Pension Plan as a result of ERISA Pension Plan amendments or changes
in any applicable regulation which is reasonably likely to have, individually or
in the aggregate, a Material effect on the funding status of such ERISA Pension
Plan. All contributions with respect to an Employee Benefit Plan of the Sellers
or of an ERISA Affiliate that is subject to Code Section 412 or ERISA Section
302 have been, or will be, timely made and there is no Lien or expected to be a
Lien under Code Section 412(n) or ERISA Section 302(f) or Tax under Code Section
4971. No ERISA Pension Plan of either of the Sellers or of an ERISA Affiliate
has a "liquidity shortfall" as defined in Code Section 412(m)(5). No event
described in Code Section 401(a)(29) has occurred or can reasonably be expected
to occur with respect to either of the Sellers ERISA Affiliates. All premiums
required to be paid under ERISA Section 4006 have been paid by the Sellers and
by any Person aggregated with the Sellers under ERISA Sections 4001(a)(14) and
4001(b)(1).
(h) Neither of the Sellers has, or maintains, an Employee Benefit Plan
providing welfare benefits (as defined in ERISA Section 3(1)) to employees after
retirement or other separation of service except to the extent required under
Part 6 of Title I of ERISA or Code Section 4980B or their successors. No
Material Tax under Code Sections 4980B or 5000 has been incurred with respect to
any Employee Benefit Plan and no circumstances exist which could reasonably be
expected to give rise to such Taxes.
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3.21 ASSUMED CONTRACTS. Schedules 3.10 and 3.21 include a complete list as
of the date of this Agreement of all Assumed Contracts except (i) contracts with
advertisers for production or the sale of advertising time on the Station for
cash with a term of not more than ninety days or that may be canceled by Sellers
on not more than ninety days' notice, (ii) oral employment contracts terminable
at will, (iii) miscellaneous service contracts terminable on not more than
thirty (30) days' notice, and (iv) other Contracts entered into in the ordinary
course of business, not involving liabilities exceeding $15,000 per Contract per
year and $80,000 in the aggregate for all such other Contracts per year and
$300,000 in the aggregate for all such other Contracts. Sellers have delivered
or made available to Purchaser true and complete copies of all written Assumed
Contracts and accurate descriptions of all oral Assumed Contracts listed on
Schedules 3.10 and 3.21. Sellers are not in Default under any Assumed Contract
in any Material respect and to the Knowledge of Sellers, no other party to any
such Assumed Contract is in Default thereunder in any Material respect. To the
Knowledge of Sellers, the Assumed Contracts are in full force and effect and are
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other Laws affecting creditors' rights generally, or general
equitable principles (regardless of whether considered in a proceeding in equity
or at law) or by an implied covenant of good faith and fair dealing. Subject to
obtaining any consents required by the terms of the Assumed Contracts, the
continuation, validity and effectiveness of the Assumed Contracts will not be
affected in any Material adverse respect by the consummation of the transactions
contemplated by this Agreement.
3.22 RESERVED.
3.23 LABOR MATTERS. Sellers have delivered to Purchaser a correct and
complete list of Sellers' Station employees and position and compensation as of
the date of this Agreement. Except for employees under Assumed Contracts and
except as disclosed on Schedule 3.23, the employment of all employees of the
Sellers is terminable at will by the Sellers, without any penalty or severance
obligation incurred by the Sellers. Except as set forth on Schedule 3.23 and
other than in the ordinary course of business consistent with past practices,
neither of the Sellers will owe any amounts to any of its employees as of the
Closing Date, including, without limitation, any amounts incurred for wages,
bonuses, vacation pay, sick leave or any severance obligations other than
amounts owed with respect to the then current pay period. Except as and to the
extent set forth in Schedule 3.23, (i) neither of the Sellers is a party to any
union agreement or collective bargaining agreement or work rules or practices
agreed to with any labor organization or employee association applicable to any
employees of the Sellers and, to the Knowledge of either of the Sellers, no
attempt to organize any of the employees of the Business has been made, proposed
or threatened in the past three years, (ii) neither of the Sellers is, or within
the past three years has been, subject to any Equal Employment Opportunity
Commission charges or other claims of employment discrimination made against it,
(iii) no Wage and Hour Department investigations have been made in the past 3
years of the Sellers, (iv) no labor strike, dispute, slowdown, stoppage or
lockout is pending or, to the Knowledge of either of the Sellers, threatened
against or affecting the Sellers, their respective Assets or the Business and
during the past five (5) years there has not been any such action, (v) no unfair
labor practice charge or complaint against either of the Sellers is pending
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or, to the Knowledge of either of the Sellers, threatened before the National
Labor Relations Board or any similar Governmental Authority, and (vi) neither of
the Sellers has received any formal notice (other than as set forth in Schedule
3.23) that any of the employees listed on Schedule 3.23 will terminate or
contemplates terminating his or her employment currently or at any time within
sixty (60) days after the Closing Date or will otherwise not be available to the
Sellers. Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), neither of the Sellers has effectuated (a) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Sellers; or (b) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Sellers; nor has either of
the Sellers been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state or
local Law. Except as set forth in Schedule 3.23, neither of the Sellers'
employees has suffered an "employment loss" (as defined in the WARN Act) since
six (6) months prior to the date hereof.
3.24 BROKERS AND FINDERS. Except as set forth on Schedule 3.24, no finder or
any agent, broker or other Person acting pursuant to authority of either of the
Sellers is entitled to any commission or finder's fee in connection with the
transactions contemplated by this Agreement.
3.25 INTERESTED TRANSACTIONS. Except as set forth in Schedule 3.25, neither
of the Sellers is a party to any Assumed Contract with any Affiliate of the
Sellers, any Related Party of any Affiliate of the Sellers (other than as a
stockholder or employee of either of the Sellers), or any Person in which any of
the foregoing (individually or in the aggregate) beneficially or legally owns,
directly or indirectly, five percent (5%) or more of the equity or voting
interests. Each of such Assumed Contracts and other transactions described in
the preceding sentence was negotiated on an arm's length basis, contains pricing
terms that reflected fair market value at the time entered into and otherwise
contains terms and conditions comparable to those customarily contained in
similar transactions between unrelated parties. Except as described in Schedule
3.25, none of the Persons described in the first sentence of this Section 3.25
owns, or during the last three (3) years has owned, directly or indirectly,
beneficially or legally, (individually or in the aggregate) five percent (5%) or
more of the equity or voting interests of any Person that competes with either
of the Sellers or the Business.
3.26 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
either of the Sellers, nor any statement, certificate or instrument furnished or
to be furnished to Purchaser pursuant to this Agreement, the Other Agreements or
any other document, agreement or instrument referred to herein or therein,
including, without limitation, the Financial Statements, contains or will
contain any untrue statement of Material fact or omits or will omit to state a
Material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers that:
4.01 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization, with the corporate power and authority to perform its obligations
under this Agreement and carry on the Business and to own, lease and operate the
Assets.
4.02 CAPACITY AND VALIDITY. Purchaser has the full corporate power and
authority necessary to enter into and perform its obligations under this
Agreement and the Other Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements will have been approved
by all necessary action of the Board of Directors of Purchaser on or before
Closing. This Agreement has been, and the Other Agreements will be when executed
and delivered, duly executed and delivered by duly authorized officers of
Purchaser, and the Agreement and each of the Other Agreements constitutes, or
will constitute when executed and delivered, the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or general equitable principles
(regardless of whether considered in a proceeding in equity or at law).
4.03 NO CONFLICT. Assuming compliance with the Hart-Scott Act and receipt of
all necessary FCC approvals, neither the execution, delivery and performance of
this Agreement and the Other Agreements to which it is a party by Purchaser nor
the consummation of the transactions contemplated hereby or thereby (i)
conflicts with or results in a violation, contravention or breach of any of the
terms, conditions or provisions of the Articles of Incorporation, as amended, or
By-laws, as amended, of Purchaser, (ii) results in a Default under, or requires
the consent or approval of any party to, and contract or license of Purchaser,
or requires the consent of any Third Party or Governmental Authority, (iii)
results in the violation of any Law or Order applicable to Purchaser, or (iv)
results in the creation or imposition of any Lien, except in each case (other
than clause (ii)) as would not have a Material Adverse Effect.
4.04 BROKERS AND FINDERS. No finder or any agent, broker or other Person
acting pursuant to authority of Purchaser is entitled to any commission or
finder's fee in connection with the transactions contemplated by this Agreement.
4.05 QUALIFICATION OF PURCHASER. Purchaser is fully qualified under the
Communications Act to assume control and operation of the Station and, to the
best of Purchaser's knowledge and belief, there exists no reason for the FCC to
refuse to consent to the assignment of the FCC Licenses to Purchaser.
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4.06 FINANCING. Purchaser has all necessary financial resources or has
secured a binding commitment for all financing necessary for Purchaser to
consummate the transactions contemplated by this Agreement.
4.07 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
Purchaser, nor any statement, certificate or instrument furnished or to be
furnished to the Sellers pursuant to this Agreement, the Other Agreements or any
other document, agreement or instrument referred to herein or therein, contains
or will contain any untrue statement of Material fact or omits or will omit to
state a Material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were made.
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS OF THE SELLERS AND PURCHASER
5.01 CONDUCT OF BUSINESS. Prior to the Closing Date, except with the prior
written consent of Purchaser and except as necessary to effect the transactions
contemplated in this Agreement, each of the Sellers shall, with respect to the
Business:
(a) conduct the Business in substantially the same manner as presently
being conducted, except as otherwise contemplated by this Agreement; and,
without Purchaser's prior written consent, which shall not be unreasonably
withheld, (i) not enter into any transaction with respect to the Station or
Contract other than in the ordinary course of business consistent with past
practice, and (ii) not enter into any Contracts (other than Contracts designated
by Sellers as Retained Assets) involving liabilities exceeding $10,000 per
Assumed Contract per year and $50,000 in the aggregate for all such Assumed
Contracts per year;
(b) confer on a regular and frequent basis with Purchaser to report
Material operational matters and to report the general status of ongoing
operations;
(c) notify Purchaser of any unexpected emergency or other change in the
normal course of the Business or the operation of the Assets, and of any
Litigation (or communications indicating that the same may be contemplated),
affecting the Business or any Material Assets, and keep Purchaser fully informed
of such events and permit its representatives prompt access to all materials
prepared in connection therewith in each case where such emergency, change,
Litigation or other event could cause a Material Adverse Effect;
(d) except as set forth in Section 1.07, and except in the ordinary course
of business consistent with past practice, not make any Material capital
expenditure;
(e) not take any action, or omit to take any action, that would cause the
representations and warranties contained in Article III hereof to be incorrect
or incomplete in any Material respect;
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(f) promptly notify Purchaser in writing of any Material Adverse Change
with respect to the Sellers or the Business, or any condition or event which
threatens to result in a Material Adverse Change with respect to the Sellers or
the Business;
(g) notwithstanding the dollar amount threshold contained in the
definition of Material Adverse Change in Article IX, use all reasonable efforts
to promptly remedy any adverse change, condition or event that causes or is
reasonably likely to cause the Station to be or go off the air; and
(h) not make any agreement or commitment which will result in or cause to
occur a Default of any of the items contained in paragraphs (a) through (g)
above.
Notwithstanding any of the foregoing provisions of this Section 5.01, prior to
the Closing, control of the operation of the Station shall remain exclusively
with the Sellers.
5.02 RIGHT OF INSPECTION; ACCESS. In order to allow Purchaser to conduct its
due diligence investigation, including, without limitation, environmental due
diligence, the Sellers shall give to Purchaser and its designees, during normal
working hours, full and free access to all of their respective Assets, Assumed
Contracts, reports and other records and shall furnish to Purchaser and its
designees all additional financial, legal and other information with respect to
the Assets and the Business that Purchaser may reasonably request. Each of the
Sellers shall also allow and arrange for Purchaser and its designees free and
full access and opportunity, during normal business hours, to consult and meet
with the officers, directors, employees, attorneys, accountants and other agents
of the Sellers. Each of the Sellers shall instruct such individuals to cooperate
fully with Purchaser and its designees. Purchaser and its designees shall have
the right to make copies of any of the records referred to above. Purchaser
agrees to indemnify against and hold the Sellers harmless from any claim for
Liability, damages or injuries arising out of or resulting from the inspection
of the Sellers by Purchaser or its agents, including without limitation any
costs and expenses (including reasonable attorneys' fees actually incurred) in
connection with such Liability, damages or injuries.
5.03 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and until this Agreement is
terminated prior to Closing pursuant to Section 9.01, the Sellers shall deal
exclusively with Purchaser with respect to the sale of the Assets or properties
of the Sellers relating to the Station. In addition, unless and until this
Agreement is terminated prior to Closing pursuant to Section 9.01, neither of
the Sellers, acting in any capacity, shall, and the Sellers shall direct their
officers, directors, limited partners, general partners (as applicable),
financial advisors, accountants and counsel not to, either directly or
indirectly, through the Sellers, any officer, director, employee, agent or
otherwise, (a) solicit, initiate or encourage submission of proposals or offers
from any Person relating to any purchase of the Assets, or (b) approve or
undertake any such transaction. If, notwithstanding the foregoing, the Sellers
or any of their respective shareholders, directors, partners, officers,
employees or agents shall receive any written proposal or inquiry regarding any
such transaction, the Sellers shall promptly
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communicate to Purchaser the terms of any such proposal or offer upon Knowledge
or receipt of such written proposal or offer.
5.04 CONFIDENTIALITY. For a period of one (1) year from and after the date
hereof, each of Purchaser and Sellers agree that it will not, and will use
reasonable efforts to ensure that none of its representatives or Affiliates
will, use in the conduct of its business (except as contemplated by this
Agreement), or disclose to or file with any other Person (other than financing
sources, financial advisors, accountants and attorneys for the foregoing who
will be informed of the confidential nature of such information and who have a
need to know such information), (a) any confidential or non-public information
relating to the other parties to this Agreement or (b) the existence of this
Agreement or the fact of the transactions contemplated hereby, except (i) for a
disclosure that is required by Law or by a Governmental Authority or is
reasonably believed to be so required, including, without limitation,
disclosures to the FCC and the Department of Justice for purposes of obtaining
consents to the transactions contemplated hereby and disclosures to the
Securities and Exchange Commission and related public disclosures (in connection
with public offerings or otherwise); (ii) information that is ascertainable or
obtained from public or published information; (iii) information received from a
Third Party not known to the disclosing party to be under an obligation to keep
such information confidential; (iv) information independently developed by the
disclosing party; or (v) information disclosed to or filed with any Persons
necessary to obtaining the consents or the equity and debt financing relating to
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
(i) neither Purchaser nor its assignees, in the course of any investigation it
shall deem necessary and desirable in connection with the transactions
contemplated by this Agreement, shall be prohibited from discussing the Sellers,
their respective Assets and the Business with others having business dealings
with the Sellers, and (ii) the foregoing provisions of this Section 5.04 shall
not apply to Purchaser or any of its representatives or Affiliates after
consummation of the transactions contemplated hereby at the Closing with respect
to information relating to the Sellers. If the transaction contemplated by this
Agreement is not consummated, each party will return or destroy as much of such
written information as the party furnishing such information may reasonably
request.
5.05 CONSENTS AND APPROVALS. Each of the Sellers and Purchaser shall use
commercially reasonable efforts to obtain the waiver, consent and approval of
all Persons whose waiver, consent or approval is required in order to consummate
the transactions contemplated by this Agreement under any Material Assumed
Contract and the parties shall cooperate in connection therewith. All written
waivers, consents and approvals obtained by any party shall be produced at
Closing in customary form and content.
5.06 SUPPLYING OF FINANCIAL STATEMENTS. The Sellers shall make available to
Purchaser within twenty (20) days following the end of each month true and
complete copies of all unaudited monthly financial statements of each of the
Sellers for each calendar month ending subsequent to the date hereof and prior
to the Closing Date in the format historically utilized internally by the
Sellers.
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5.07 QUALIFICATION AND CORPORATE EXISTENCE. Each of the Sellers shall deliver
to Purchaser certificates of the Secretary of State of the jurisdiction of its
organization, dated within ten (10) days prior to the Closing Date, stating that
each of the Sellers is a corporation in good standing.
5.08 EMPLOYEE MATTERS.
(a) On the Closing Date, Sellers shall terminate the employment of each of
their Station employees, other than Station employees covered by a Contract (as
disclosed in the Schedules to this Agreement).
(b) Sellers' maintain a "defined contribution plan" (as defined in Code
Section 414(i)) that is intended to satisfy the requirements of Code Section
401(k) ("Sellers' 401(k) Plan") and a "defined benefit plan" (as defined in Code
Section 414(j)) that is intended to satisfy the requirements of Code Section
401(a) ("Sellers' Defined Benefit Plan"). For purposes of this Section 5.08, the
term "Hired Employee" means any employee who is employed by either of the
Sellers on the Closing Date and is hired by Purchaser immediately following the
Closing Date.
(c) Hired Employees who are participants in Sellers' 401(k) Plan will be able
to make their normal salary deferral contributions pursuant to the terms of the
401(k) Plan and applicable salary reduction agreements out of compensation paid
to the Hired Employee prior to the Closing Date. Sellers shall contribute the
normal matching contribution (based on the terms of the 401(k) Plan) applicable
to these salary reduction contributions. Sellers agree to fully vest each Hired
Employee who is a participant in Sellers' 401(k) Plan and Sellers' Defined
Benefit Plan in their accrued benefit under such plans.
(d) Certain Hired Employees will have account balances in the Sellers' 401(k)
Plan. At the time of the 401(k) asset transfer contemplated herein, Sellers will
provide Purchaser with a current favorable determination letter from the
Internal Revenue Service issued with respect to Sellers' 401(k) Plan. Sellers
will enclose with the IRS determination letter a written acknowledgment stating
that no event has occurred and no condition exists that could reasonably be
expected to result in the revocation of any such determination letter. The
vested account balances under Sellers' 401(k) Plan for the Hired Employees will
be transferred to a "defined contribution plan" sponsored by Purchaser that is
intended to satisfy the requirements of Code Section 401(k) ("Purchaser's 401(k)
Plan") as soon as administratively practicable based on normal administrative
practices after the Closing Date. The amount transferred will be in cash,
participant loans, or other assets acceptable to Sellers and Purchaser equal to
the aggregate account balances of the Hired Employees determined as of the
valuation date preceding the actual transfer. At the time of the 401(k) asset
transfer contemplated herein, Purchaser will provide Sellers with a current
favorable determination letter from the Internal Revenue Service issued with
respect to Purchaser's 401(k) Plan. Purchaser will enclose with the IRS
determination letter a written acknowledgment stating that no event has occurred
and no condition exists that could reasonably be expected to result in the
revocation of any such determination letter. Purchaser represents Purchaser's
401(k) Plan will
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be amended to address the transfer of accounts from the Sellers' 401(k) Plan
including the preservation of all Section 411(d)(6) optional forms of benefits
available to the Hired Employees under Sellers' 401(k) Plan, distribution rules
under Code Section 401(k), and past service credit and participation in Sellers'
401(k) Plan required by Code Section 414(a). Following the transfer, Purchaser
shall assume all liabilities for the payment of account balances that are
transferred to Purchaser's 401(k) Plan.
(e) Purchaser shall employ the Hired Employees at their current location with
base remuneration not less than current levels (subject to normal salary
increases). Except as provided in the following sentence, as of the Closing
Date, the Hired Employees and their dependents, if any, previously covered under
Sellers' health and dental insurance plan shall be offered coverage under
Purchaser's group health and dental insurance plan without being subject to any
pre-existing condition limitations or exclusions and without any waiting period.
However the preceding sentence shall not apply to any pre-existing condition
limitation, exclusion or waiting period applicable to a Hired Employee or his or
her dependent at the Closing Date under Sellers' group health and dental
insurance plan (i) to the extent such pre-existing condition limitation,
exclusion or waiting period also applies under Purchaser's group health and
dental insurance plan and (ii) only until the earlier of the date such
pre-existing limitation, exclusion or waiting period would otherwise have
expired under Sellers' group health and dental insurance plan or under
Purchaser's group health and dental insurance plan or under applicable law.
Hired Employees shall receive full credit for their prior service with Sellers
for purposes of determining their eligibility and vesting rights under,
Purchaser's tax qualified "pension plans" (as defined in ERISA Section 3(2)) and
for the accrual of vacation benefits beginning on January 1, 1999. Benefit
accrual under Purchaser's tax qualified pension plans shall accrue from the
Employees' first day of service with Purchaser and shall be based solely on
service with Purchaser.
(f) Sellers make no representations or warranties about whether any of the
Hired Employees will remain employed at their current location after the Closing
Date.
5.09 CLOSING CONDITIONS. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to take, or cause to be taken, all
commercially reasonable actions to consummate the transactions contemplated by
this Agreement and to satisfy those conditions precedent to Closing set forth in
Article VII and Article VIII of this Agreement that are to be satisfied by it.
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5.10 WALB TOWER.
(a) Sellers', at their expense and at Purchaser's behest, have engaged
Anderson-Foreman Engineers, Inc. ("Anderson-Foreman") to perform an analysis of
the structure and electric circuitry of the Station's broadcast tower. Sellers
will provide Purchaser with a copy of the results of such analysis upon receipt.
Upon such receipt, Sellers, at their option and expense, may engage their
engineering consultant ("Sellers' Engineer") to perform an analysis of the
structure and electric circuitry of the Station's tower. If Sellers elect to
request such an analysis, Sellers will provide Purchaser with a copy of the
results thereof upon receipt. If the reports of Anderson-Foreman and Sellers'
Engineer disagree, then the matter shall be resolved by an independent,
qualified engineering consultant (the "Independent Engineer") selected jointly
by Sellers and Purchaser. The analysis of the structure and electric circuitry
of the Station's tower as established pursuant to this Section 5.10(a), is
referred to herein as the "Tower Report."
(b) If the Tower Report concludes that the tower is not in compliance in any
material respect with applicable law or engineering standards customary for the
television industry, Sellers will cause to be made any repairs necessary to
achieve such compliance. Receipt of the Tower Report and completion of any such
necessary repairs are not conditions to Closing. If any such necessary repairs
are not completed prior to Closing, then after Closing Sellers shall have no
further obligation to make any such repairs, but Sellers shall reimburse
Purchaser for the reasonable cost of completing such repairs, which cost shall
be determined in advance either by mutual agreement of Sellers and Purchaser or,
if they are unable to agree, by the Independent Engineer (who shall not be
eligible to perform any such repair work).
(c) Sellers shall use commercially reasonable efforts to assign to Purchaser
at Closing any manufacturer's warranty or agreements governing the
manufacturer's duties to repair and improve the Station's broadcast tower.
5.11 CERTAIN TAX MATTERS.
(a) Purchaser, on the one hand, and the Sellers, on the other hand, shall
provide the other parties to this Agreement, at the expense of the requesting
party, with such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority, or any judicial or administrative
proceedings relating to any Liability for Taxes, and for a period of five years
after Closing each will retain and provide the requesting party with any records
or information that may be relevant to any of the foregoing.
(b) The Sellers shall prepare and file on or before the due date therefor
(including any extensions thereof) all Tax Returns and amendments thereto
required to be filed by the Sellers on or before the Closing Date, and each of
the Sellers shall pay, or cause to be paid, all Taxes (including estimated
taxes) due on such Tax Return or which are otherwise required to be paid at any
time prior to or during such period. Such Tax Returns shall be
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prepared in accordance with the most recent Tax practices as to elections and
accounting method.
5.12 EXPENSES.
(a) Except as provided below, regardless of whether the transactions
contemplated by this Agreement are consummated, the Sellers shall be responsible
for all expenses and fees incurred by them in connection with the transactions
contemplated hereby and Purchaser shall be responsible for all expenses and
costs incurred by it in connection with the transactions contemplated hereby. In
no event shall any of the Assets be utilized for or reduced by the payment of
any such fees or expenses.
(b) At the Closing Purchaser and Sellers shall each pay one-half of all
Taxes, if any, relating to the transfer of the Assets to Purchaser. Purchaser
and Sellers shall file all necessary documentation and Tax Returns required to
be filed by them with respect to such Taxes.
(c) Purchaser and Sellers shall each pay one-half of the initial $45,000
filing fee associated with the pre-merger notifications and reports required by
the Hart-Scott Act in connection with Purchaser's acquisition of the Assets
hereunder.
(d) Purchaser shall bear the costs and expenses associated with delivery of
the title documents described in Section 7.11.
(e) The Sellers and Purchaser shall each pay one-half of the processing fees
incident to the filing of the assignment application with the FCC.
5.13 FURTHER ASSURANCES. At any time and from time to time after the Closing,
the Sellers shall, at the request of Purchaser, take any and all actions
necessary to fulfill their respective obligations hereunder, to put Purchaser in
actual possession and control of the Assets and execute and deliver such further
instruments of conveyance, sale, transfer and assignment, and take such other
actions necessary or desirable to effectuate, record or perfect the transfer of
the Assets to Purchaser free and clear of all Liens, to confirm the title of the
Assets to Purchaser, to assist Purchaser in exercising rights relating thereto,
or to otherwise effectuate or consummate any of the transactions contemplated
hereby.
5.14 DELIVERY OF BOOKS AND RECORDS. At Closing, Sellers shall deliver to
Purchaser at the Closing all original documents, books and records pertaining to
the Assets. The Sellers may retain copies of any of the foregoing for their own
use. Without limiting the generality of the foregoing, the Sellers shall deliver
to Purchaser at the Closing all documents and records relating to the
Intellectual Property, including without limitation, Certificates of
Registration for all letters patent, trademarks and service marks listed on
Schedule 3.12 and all such documents relating thereto.
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5.15 FCC MATTERS.
(a) The Sellers and Purchaser have filed with the FCC all necessary
applications for assignment of the FCC Licenses to Purchaser. In connection
therewith, each party shall provide the information requested by the FCC, take
actions reasonably necessary to enable the FCC to grant the applications, and
oppose requests for reconsideration or judicial review of the FCC's consent to
assignment of the FCC Licenses to Purchaser.
(b) The Sellers and Purchaser further covenant that from the date hereof
until the Closing Date, without the prior written consent of the Sellers or
Purchaser, as the case may be, neither the Sellers nor Purchaser shall take any
action that is reasonably likely to adversely affect, or delay or interfere
with, obtaining the FCC's consent to assignment of the FCC Licenses to
Purchaser, or complying with or satisfying the terms thereof, including without
limitation, acquiring any new or increased attributable interest, as defined in
the FCC rules, in any media property, which property could not be held (without
the need for a waiver) in common control by Purchaser following the Closing
Date.
5.16 COOPERATION TO EFFECT STATION EXCHANGE. Sellers intend that their sale
of the Station qualify as a like-kind exchange under Section 1031 of the Code.
In connection therewith, Sellers and Purchaser are concurrently entering into
the Exchange Agreement. Sellers and Purchaser shall comply with the terms of the
Exchange Agreement. If either the Exchange Agreement or the purchase agreement
for the replacement property described therein terminates, or if the
transactions contemplated by the Exchange Agreement or such other purchase
agreement are not consummated simultaneously with Closing, then notwithstanding
anything herein to the contrary, Sellers may transfer the Assets and assign this
Agreement to a third party qualified intermediary and cause title to the Assets
to be transferred by such third party to Purchaser, and Purchaser shall
cooperate with such transfer and assignment. Alternatively, in such event, at
Sellers election, Purchaser will enter into an exchange agreement substantially
the same as the Exchange Agreement with respect to other replacement property
identified by Sellers. The Closing Date may not be extended beyond the time
provided by the definition thereof to effectuate the exchange described in this
Section.
5.17 WFXL TOWER. Sellers, at their expense and at Purchaser's behest, have
engaged Anderson-Foreman to perform a structural analysis of the antenna tower
(the "WFXL Tower") used by television station WFXL-TV. Sellers will provide
Purchaser with a copy of the results of such analysis upon receipt. Sellers make
no representation, warranty or covenant regarding the WFXL Tower, and Purchaser
shall not be entitled to terminate this Agreement based upon the WFXL Tower or
such report.
5.18 HSR FILINGS. Purchaser and Sellers shall, as promptly as practicable
following the execution of this Agreement, and in cooperation with each other,
file with the Department of Justice and the Federal Trade Commission the
premerger notification forms and any other documents required under the HSR Act,
and each shall use its best efforts to obtain earliest termination of all
waiting periods under the HSR Act.
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5.19 FURTHER ACTIONS. Subject to the terms and conditions of this Agreement,
the Sellers and Purchaser each agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated in this Agreement and to satisfy the conditions hereto, in each
case in as prompt a manner as is reasonably possible.
5.20 ACCOUNTS RECEIVABLE.
(a) Upon Closing, Purchaser shall collect the Accounts Receivable on behalf
of the Sellers for a period of 120 days following the Closing Date (the
"Collection Period"). Purchaser shall collect the Accounts Receivable with the
same care and diligence as Purchaser uses with respect to its own accounts
receivable, except that Purchaser shall not be obligated to use any
extraordinary efforts for collection, including without limitation, institution
of litigation and shall not refer any of the Accounts Receivable to a collection
agency or to an attorney for collection, or compromise, settle or adjust the
amount of any Account Receivable, except with the prior written approval of
Sellers. Any payment received by Purchaser from any account debtor of Purchaser
that is also an account debtor of Sellers shall be applied to the oldest account
due from such account debtor, unless there is a good faith dispute with respect
to either account and the account debtor specifically identifies the invoice
being paid, in which case any payment by such account debtor shall be applied
first in accordance with the remittance advice or instructions from the account
debtor, with any excess payment applied to the oldest account due. Purchaser
shall have no right to offset any amounts collected in respect of the Accounts
Receivable against any amounts owed by Sellers to Purchaser. Any Accounts
Receivable remaining uncollected at the end of the Collection Period shall be
transferred to Sellers, a list thereof and all files concerning the collection
or attempt to collect such Accounts Receivable hereunder, and Purchaser shall
thereafter have no further responsibility with respect thereto except to remit
to Sellers any payments in respect of the Accounts Receivable that Purchaser
receives.
(b) Certain capitalized terms used in this Section are defined below.
Purchaser shall pay the A/R Commissions out of the A/R Proceeds when due on
behalf of Sellers. On the first and fifteenth day of each month, Purchaser shall
remit to Sellers all A/R Proceeds not previously remitted to Sellers less all
A/R Commissions paid by Purchaser. On the fifteenth day of each month, Purchaser
shall deliver to Sellers a list of all A/R Proceeds received by Purchaser and
all A/R Commissions paid by Purchaser (and, upon Sellers' request, evidence of
such payments) during the prior month.
(c) For purposes of this Section, (i) the proceeds of collection of the
Accounts Receivable are referred to as the "A/R Proceeds," (ii) those sales
employees of Sellers with respect the Station who are employed by Purchaser
during the Collection Period are referred to as "Transferred Sales Employees,"
and (iii) those commissions, if any, that are payable by Sellers to Transferred
Sales Employees as a result of receipt of the A/R Proceeds, pursuant to Sellers'
sales commission policy in effect at Closing (which Sellers will deliver to
Purchaser at Closing), and that have not been paid by Sellers, are referred to
as the "A/R Commissions."
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5.21 SATELLITE TRUCK. Notwithstanding anything in this Agreement to the
contrary, the Company's existing satellite truck (the "Existing Truck") and the
related FCC authorization described below are Retained Assets and the Frontline
DSNG satellite truck (the "New Truck") ordered by the Company (at the Company's
expense) is included in the Assets, and if the New Truck is not delivered to the
Company prior to Closing then:
(a) the New Truck will not be conveyed to Purchaser at Closing, and Sellers
and Purchaser shall use commercially reasonable efforts to arrange for Purchaser
to acquire the New Truck directly from the manufacturer and pay when due the
balance of the purchase price for the New Truck (being $150,000) and any unpaid
sales taxes applicable thereto, which payments shall be reimbursed by Sellers
immediately; and, if such arrangements cannot be made despite such efforts, then
the New Truck will be conveyed to Purchaser upon receipt by the Company (and any
applicable transfer taxes will be paid as set forth in Section 5.12); and,
(b) during the period after Closing and until delivery of the New Truck, the
Company will lease to Purchaser the Existing Truck pursuant to a customary net
lease agreement to be entered into by the Company and Purchaser at Closing
providing among other things that Purchaser will:
(i) pay all costs and expenses of operating and maintaining the Existing
Truck during the lease term, including without limitation the cost of insurance
(which Purchaser will maintain in effect during the lease term with the Company
included as an additional insured) and any applicable property and other taxes,
but Purchaser will not be obligated to pay rent to the Company for the use of
the Existing Truck;
(ii) use the Existing Truck only to operate the Station and only in
compliance with all applicable laws and the terms of the FCC authorization to
operate the temporary fixed satellite transmit earth station included in the
Existing Truck, it being understood such FCC authorization will not be assigned
to Purchaser and that the holder of such FCC authorization shall have ultimate
control over the operation of such earth station in accordance with FCC rules
and policies;
(iii) indemnify the Company against any and all loss, liability, cost and
expense arising from use of the Existing Truck during the lease term; and
(iv) return the Existing Truck to the Company at the end of the lease term
in the same condition as it existed at the beginning of such term, ordinary wear
and tear from reasonable use excepted.
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ARTICLE VI
SURVIVAL; INDEMNIFICATION; REMEDIES
6.01 SURVIVAL. The representations and warranties of Purchaser and Sellers
contained herein shall survive the Closing for a period of twelve months after
the Closing Date and shall terminate on such date, except to the extent that any
claims for indemnification in respect of a breach of any such representation or
warranty is made on or before such date, in which case such representation or
warranty (but not any others) shall survive until the resolution of such claim.
Purchaser's obligation to pay, perform or discharge the Assumed Liabilities
shall survive until such Assumed Liabilities have been paid, performed or
discharged in full. Any claim for indemnification in respect of a covenant or
agreement of Purchaser or Sellers hereunder to be performed before the Closing
shall be made before the expiration of the twelve month anniversary of the
Closing Date. The covenants and agreements of Sellers contained herein and to be
performed to any extent after the Closing Date shall survive the Closing for a
period of twelve months after the Closing Date (except for those set forth in
Section 5.11 (Certain Tax Matters), which shall survive for five years, and
those set forth in Sections 5.10 (WALB Tower) and 5.21 (Satellite Truck), which
shall survive until fully performed) and shall terminate on such date and any
claims for indemnification in respect of a breach of such covenants to be
performed in any respect after the Closing Date must be made on or before such
date. The covenants and agreements of Purchaser contained herein to be performed
in any respect after the Closing Date shall survive the Closing Date until fully
discharged and performed.
6.02 INDEMNIFICATION BY SELLERS.
(a) After the Closing, Sellers hereby agree to indemnify, defend and hold
Purchaser harmless against and with respect to, and shall reimburse Purchaser
for:
(1) any and all losses, liabilities or damages (whether such claim arises
from a third party action or is made by Purchaser against Sellers) resulting
from any breach of any representation or warranty made pursuant to this
Agreement, or any failure by Sellers to perform any covenant of Sellers set
forth herein or in any certificate, document or instrument prepared by Sellers
and delivered to Purchaser hereunder;
(2) any failure by Sellers to pay, perform or discharge any and all
liabilities of Sellers not assumed by Purchaser pursuant to the terms hereof;
(3) any litigation, proceeding or claim by any third party arising from
the business or operations of the Assets by Sellers prior to the Closing Date;
and
(4) any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
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Subject to the limitations set forth herein, such indemnity shall apply after
Closing regardless of whether Purchaser has knowledge of any breach or default
of Sellers under this Agreement at Closing. Notwithstanding the foregoing or any
other provision of this Agreement to the contrary, in the event of a failure of
the condition set forth in Section 7.05 (Material Adverse Change) to be
satisfied or a failure of the representation set forth in clause (ii) of Section
3.07 (Material Adverse Change) to be true at Closing for any reason other than a
failure by Sellers to comply with terms of this Agreement, Purchaser's sole
remedy shall be the right to terminate this Agreement prior to Closing pursuant
to Section 9.01 and obtain the Deposit pursuant to Section 9.03(b).
(b) Sellers' obligation to indemnify Purchaser pursuant to Section 6.02 shall
be subject to all of the following limitations:
(1) No indemnification shall be required to be made by Sellers as the
Indemnifying Party under Section 6.02 until the aggregate amount of damages of
Purchaser as Claimant exceeds Three Hundred Thousand Dollars ($300,000) and then
only with respect to the amount of such damages in excess of such amount;
provided, however, that such limitation shall not apply to claims made by
Purchaser with respect to adjustments to the Purchase Price under Section 1.04
or expenses to be paid by Sellers under Section 5.12.
(2) Purchaser shall be entitled to indemnification only for those damages
arising with respect to any claim as to which Purchaser has given the Sellers
written notice within the appropriate time period set forth in Section 6.01
hereof for such claim.
(3) Notwithstanding anything contained in this Agreement or applicable law
to the contrary, except as set forth in this Section 6.02(b) in no event shall
Sellers' obligation for indemnification under this Agreement and the Other
Agreements in the aggregate exceed Two Million Dollars ($2,000,000) and
Purchaser waives and releases, and shall have no recourse against, Sellers as a
result of the breach of any representation, warranty, covenant or agreement of
Sellers contained in this Agreement or the Other Agreements or otherwise arising
out of or in connection with the transactions contemplated hereby or the
operation of the Station.
(4) Following the Closing, the sole and exclusive remedy for Purchaser for
any claim (whether such claim is framed in tort, contract or otherwise) arising
out of a breach of any representation, warranty, covenant or other agreement in
this Agreement or the Other Agreements or otherwise arising out of or in
connection with the transactions contemplated by this Agreement or the operation
of the Station shall be a claim for indemnification pursuant to this Section
6.02.
(5) Anything in this Agreement or any applicable law to the contrary
notwithstanding, it is understood and agreed by Purchaser that no director,
officer, employee, agent or Affiliate of Sellers shall have (i) any personal
liability to Purchaser as a result of the breach of any representation,
warranty, covenant or agreement of Sellers contained in this
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Agreement or the Other Agreements or otherwise arising out of or in connection
with the transactions contemplated hereby or the operation of the Station or
(ii) any personal obligation to indemnify Purchaser for any of Purchaser's
claims pursuant to Section 6.02(a), and Purchaser waives and releases and shall
have no recourse against any of such parties as a result of the breach of any
representation, warranty, covenant or agreement of Sellers contained in this
Agreement or the Other Agreement or otherwise arising out of or in connection
with the transactions contemplated hereby or the operation of the Station.
The limitations set forth in Section 6.02(b)(1), (2), (3) and (4) shall not
apply to any Third Party claims for Retained Liabilities or Sellers' obligations
under Sections 5.10 and 5.21 or any indemnification obligations of Sellers with
respect to the foregoing, or to claims, if any, under the Exchange Agreement,
and no such claims shall be taken into account for purposes of the dollar amount
thresholds set forth in such Sections.
6.03 INDEMNIFICATION BY PURCHASER.
(a) After the Closing, Purchaser hereby agrees to indemnify, defend and hold
Sellers harmless against and with respect to, and shall reimburse Sellers for:
(1) any and all losses, liabilities or damages (whether such claim arises
from a third party action or is made by Sellers against Purchaser) resulting
from any breach of any representation or warranty made pursuant to this
Agreement, or any failure by Purchaser to perform any covenant of Purchaser set
forth herein or in any certificate, document or instrument delivered to Sellers
under this Agreement;
(2) any failure by Purchaser to pay, perform or discharge any and all
Assumed Liabilities or any other liabilities of, or assumed by, Purchaser
pursuant to this Agreement;
(3) any litigation, proceeding or claim arising from the business or
operations of the Assets on or after the Closing Date; and
(4) any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
Subject to the limitations set forth herein, such indemnity shall apply after
Closing regardless of whether Sellers have knowledge of any breach or default of
Purchaser under this Agreement at Closing.
(b) Purchaser's obligation to indemnify Sellers pursuant to Section 6.03
shall be subject to all of the following limitations:
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(1) No indemnification shall be required to be made by Purchaser as the
Indemnifying Party under Section 6.03 until the aggregate amount of damages of
Sellers as Claimant exceeds Three Hundred Thousand Dollars ($300,000) and then
only with respect to the amount of such damages in excess of such amount;
provided, however, that such limitation shall not apply to claims made by
Sellers with respect to adjustments to the Purchase Price under Section 1.04 or
expenses to be paid by Purchaser under Section 5.12.
(2) Sellers shall be entitled to indemnification only for those damages
arising with respect to any claim as to which Sellers have given Purchaser
written notice within the appropriate time period set forth in Section 6.01
hereof for such claim.
(3) Notwithstanding anything contained in this Agreement or applicable law to
the contrary, except as set forth in this Section 6.03(b), in no event shall
Purchaser's obligation for indemnification under this Agreement and the Other
Agreements in the aggregate exceed Two Million Dollars ($2,000,000), and Sellers
waive and release, and shall have no recourse against, Purchaser as a result of
the breach of any representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or the Other Agreements or otherwise arising out of
or in connection with the transactions contemplated hereby or the operation of
the Station.
(4) Following the Closing, the sole and exclusive remedy for Sellers for any
claim (whether such claim is framed in tort, contract or otherwise) arising out
of a breach of any representation, warranty, covenant or other agreement in this
Agreement or the Other Agreements or otherwise arising out of or in connection
with the transactions contemplated by this Agreement or the operation of the
Station shall be a claim for indemnification pursuant to this Section 6.03.
(5) Anything in this Agreement or any applicable law to the contrary
notwithstanding, it is understood and agreed by Sellers that no director,
officer, employee, agent or Affiliate of Purchaser shall have (i) any personal
liability to Sellers as a result of the breach of any representation, warranty,
covenant or agreement of Purchaser contained in this Agreement or the Other
Agreements or otherwise arising out of or in connection with the transactions
contemplated hereby or the operation of the Station or (ii) personal obligation
to indemnify Sellers for any of Sellers' claims pursuant to Section 6.03(a), and
Sellers waives and releases and shall have no recourse against any of such
parties as the result of the breach of any representation, warranty, covenant or
agreement of Purchaser contained in this Agreement or the Other Agreements or
otherwise arising out of or in connection with the transactions contemplated
hereby or the operation of the Station.
The limitations set forth in Section 6.03(b)(1), (2), (3) and (4) shall not
apply to Purchaser's obligations under Sections 5.08, 5.10, 5.20 and 5.21,
Purchaser's obligation to pay, perform or discharge the Assumed Liabilities, or
any indemnification obligations of Purchaser with respect to the foregoing.
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6.04 PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall
be as follows:
(a) The party claiming indemnification (the "Claimant") shall promptly give
notice to the party from which indemnification is claimed (the "Indemnifying
Party") of any claim, whether between the parties or brought by a third party,
specifying in reasonable detail the factual basis for the claim, the amount
thereof, estimated in good faith, and the method of computation of such claim,
all with reasonable particularity and containing a reference to the provisions
of this Agreement in respect of which such indemnification claim shall have
occurred. If the claim relates to an action, suit, or proceeding filed by a
third party against Claimant, such notice shall be given by Claimant within ten
business days after written notice of such action, suit, or proceeding was given
to Claimant.
(b) With respect to claims solely between the parties, following receipt of
notice from the Claimant of a claim, the Indemnifying Party shall have thirty
days to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation, the Claimant
agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim, subject to the
terms hereof (including Sections 6.02(b) and 6.03(b)). If the Claimant and the
Indemnifying Party do not agree within the thirty-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate remedy at law
or equity, as applicable, subject to the limitations of Sections 6.02(b) and
6.03b).
(c) With respect to any claim by a third party as to which the Claimant is
entitled to indemnification under this Agreement, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party.
If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any
third-party claim, then the Claimant may defend through counsel of its own
choosing and (so long as it gives the Indemnifying Party at least fifteen (15)
days' notice of the terms of the proposed settlement thereof and permits the
Indemnifying Party to then undertake the defense thereof) settle such claim,
action or suit, and to recover from the Indemnifying Party the amount of such
settlement or of any judgment and the costs and expenses of such defense. The
Indemnifying Party shall not compromise or settle any third party claim, action
or suit without the prior written consent of the Claimant, which consent will
not be unreasonably withheld or delayed.
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(d) If a claim, whether between the parties or by a third party, requires
immediate action, the parties will make every effort to reach a decision with
respect thereto as expeditiously as possible.
(e) Subject to the limitations set forth herein and without expanding the
total liability of Purchaser or Sellers hereunder, the indemnification rights
provided in Section 6.02 and Section 6.03 shall extend to the officers,
directors, employees, agents and Affiliates of any Claimant although for the
purpose of the procedures set forth in this Section 6.04, any indemnification
claims by such parties shall be made by and through the Claimant.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Purchaser
may have hereunder as a result of any misrepresentation by, or breach of any
agreement, covenant or warranty of the Sellers contained in this Agreement or
any Other Agreement:
7.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by the Sellers shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Sellers shall have each duly performed and complied in all Material
respects with all of the agreements, covenants, acts and undertakings to be
performed or complied with by it in all Material respects on or prior to the
Closing Date. Sellers shall have delivered to Purchaser a certificate signed by
Sellers dated as of the Closing Date certifying as to the fulfillment of the
conditions of this Section 7.01. Notwithstanding any other provision of this
Agreement to the contrary, for purposes of this Section 7.01, all Materiality
qualifications contained in the representations and warranties made by the
Sellers shall be disregarded and given no effect.
7.02 INCUMBENCY CERTIFICATE. Purchaser shall have received an appropriate
incumbency certificate or certificates, dated the Closing Date, certifying the
incumbency of all officers of the Sellers. The certificate or certificates shall
contain specimens of the signatures of the officers, whose incumbency is
certified and shall be executed by officers of the Sellers other than officers
whose incumbency is certified.
7.03 CERTIFIED COPIES. Purchaser shall have received copies, certified by the
duly qualified and acting Secretary or Assistant Secretary of the Sellers, of
Sellers' articles and bylaws and resolutions adopted by the Board of Directors
of the Sellers approving this Agreement and the consummation of the transactions
contemplated hereby.
7.04 REQUIRED CONSENTS. The Required Consents shall have been obtained.
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7.05 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any Material
Adverse Change, or any condition or event that is reasonably likely to cause a
Material Adverse Change, with respect to the Assets or the Business, or either
of Sellers with respect to the Business, taken as a whole, from the Balance
Sheet Date. Each of the Sellers shall have delivered to Purchaser a certificate
or certificates dated as of the Closing Date executed by the Sellers certifying
the foregoing statement.
7.06 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall have
been instituted, threatened or proposed by a Third Party before any court or
Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
7.07 CONVEYANCING DOCUMENTS. Purchaser shall have received from Sellers duly
executed documents conveying the Assets to Purchaser free and clear of Liens
other than Permitted Liens and otherwise subject to the terms of this Agreement,
including an assignment of the FCC Licenses duly executed by the Sellers,
respectively, and a bill of sale, deeds in recordable form, and an assignment
and assumption agreement duly executed by the Company, all subject to the terms
of this Agreement.
7.08 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to Purchaser
(whether or not any appeal or request for reconsideration or review is pending
or the time for filing any appeal or request for reconsideration or review, or
for any sua sponte action by the FCC with similar effect has expired).
7.09 HART-SCOTT APPROVAL. All waiting periods applicable to this Agreement
and the transactions contemplated hereby under the Hart-Scott Act shall have
expired or been terminated.
7.10 RESERVED.
7.11 TITLE DOCUMENTS. Purchaser shall have received an owner's title
insurance policy (or an endorsement to an existing owner's title insurance
policy) for each parcel of the Owned Real Property subject to no Liens other
than Permitted Liens. Purchaser confirms that it has ordered such policy.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by the Sellers for purposes of consummating such
transactions, but without prejudice to any other right or remedy which the
Sellers may have hereunder as a result of any
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misrepresentation by, or breach of any agreement, covenant or warranty of
Purchaser contained in this Agreement or any Other Agreement:
8.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by Purchaser shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Purchaser shall have duly performed and complied with all of the
agreements, covenants, acts and undertakings to be performed or complied with by
it on or prior to the Closing Date. Purchaser shall have delivered to the
Sellers a certificate signed by Purchaser dated as of the Closing Date
certifying as to the fulfillment of the conditions of this Section 8.01.
Notwithstanding any other provision of this Agreement to the contrary, for
purposes of this Section 8.01, all Materiality qualifications contained in the
representations and warranties made by Purchaser shall be disregarded and given
no effect.
8.02 INCUMBENCY CERTIFICATE. The Sellers shall have received an incumbency
certificate or certificates dated the Closing Date certifying the incumbency of
all officers of Purchaser who have executed this Agreement or documents in
connection with this Agreement. The certificate or certificates shall contain
specimens of the signatures of each of the officers whose incumbency is
certified and shall be executed by an officer of Purchaser other than an officer
whose incumbency is certified.
8.03 CERTIFIED COPIES. The Sellers shall have received copies, duly certified
by the duly qualified and acting Secretary or Assistant Secretary of Purchaser,
of Purchaser's articles and bylaws and resolutions adopted by the Board of
Directors of Purchaser approving this Agreement and the consummation of the
transactions contemplated herein.
8.04 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall have
been instituted, threatened or proposed by a Third Party before any court or
Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
8.05 HART-SCOTT ACT APPROVAL. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott Act
shall have expired or been terminated.
8.06 ASSUMPTION AGREEMENT. Sellers shall have received from Purchaser a duly
executed assignment and assumption agreement pursuant to which Purchaser assumes
the Assumed Liabilities.
8.07 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to the
Sellers (whether or not any appeal or request for reconsideration or review is
pending or the time for filing any
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appeal or request for reconsideration or review, or for any sua sponte action by
the FCC with similar effect has expired).
8.08 REQUIRED CONSENTS. The Required Consents shall have been obtained.
ARTICLE IX
TERMINATION
9.01 CAUSES FOR TERMINATION. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date: (i)
by the mutual consent of the Sellers and Purchaser; (ii) by Purchaser in the
event the conditions set forth in Article VII of this Agreement shall not have
been satisfied or waived by the date nine months after the date of this
Agreement for any reason other than Purchaser's breach or default hereunder or
failure to act in good faith; (iii) by the Sellers in the event that the
conditions set forth in Article VIII of this Agreement shall not have been
satisfied or waived by the date nine months after the date of this Agreement for
any reason other than Sellers' breach or default hereunder or failure to act in
good faith; or (iv) by Purchaser or the Sellers at any time if Purchaser
determines in good faith that any Material Adverse Change, or any condition or
event that is reasonably likely to cause a Material Adverse Change, with respect
to Business or the Assets, or the Sellers with respect to the Business shall
have occurred or been discovered since the Balance Sheet Date.
9.02 NOTICE OF TERMINATION. Notice of termination of this Agreement as
provided for in this Article IX shall be given by the party so terminating to
the other parties hereto in accordance with the provisions of Section 11.01.
9.03 EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement pursuant to Section 9.01
hereof, except for Sections 3.24, 404, 5.04, 5.12 and 9.03, which shall remain
in full force and effect, this Agreement shall become void and of no further
force and effect, and each party shall pay the costs and expenses incurred by it
in connection with this Agreement, and no party (or any of its agents, counsel,
representatives, Affiliates or assigns) shall be liable to any other party for
any Loss hereunder. Notwithstanding the foregoing sentence, if the
non-occurrence of Closing is the direct or indirect result of the Material
breach or default by the Sellers of any of their respective obligations
hereunder, including without limitation, any Material inaccuracy in any
representation or warranty made by such party, and Purchaser has not Materially
breached or defaulted on any of its obligations hereunder, Sellers shall be
liable to Purchaser for any such breach or default; and if the non-occurrence of
Closing is the direct or indirect result of the Material breach or default by
Purchaser of any of its obligations hereunder, and neither of the Sellers has
Materially breached or defaulted on any of its respective obligations hereunder,
the Deposit shall be paid to the Sellers as liquidated damages to compensate the
Sellers for the damages resulting to such parties from such breach or default.
The parties agree that actual damages pursuant to a breach of this Agreement
prior to the Closing would be impossible to measure. Receipt of the Deposit
shall be the sole and exclusive remedy that the
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Sellers shall have in the event of such breach or default and shall constitute a
waiver of any and all other legal or equitable rights or remedies that any of
the Sellers may otherwise have as a result of Purchaser's breach or default, and
that in consideration for the receipt of the Deposit as liquidated damages,
neither of the Sellers may obtain any further legal or equitable relief,
including specific performance, to which it may otherwise have been entitled and
Purchaser shall have no further Liability to the Sellers as a result of such
breach or default or the non-occurrence of Closing.
(b) If the Closing does not occur due to the nonfulfillment of any of the
conditions in Article VII or for any other reason except Purchaser's Material
breach or default in the performance of any of its obligations under this
Agreement, then promptly after termination of this Agreement the Deposit shall
be returned to Purchaser. The Sellers acknowledge that Purchaser, at its option
(to be exercised in its sole and absolute discretion), may elect to have the
Agreement specifically performed by the Sellers. The Sellers further acknowledge
that any breach of this Agreement by either of the Sellers will cause
irreparable damage and injury to Purchaser and that Purchaser will be entitled
to injunctive relief in any court of competent jurisdiction without the
necessity of posting any bond.
(c) It is agreed that time is of the essence in the performance and
satisfaction of this Agreement and each of the conditions specified in Articles
VII and VIII of this Agreement are Material for purposes of this Agreement.
9.04 RISK OF LOSS. The Sellers assume all risk of condemnation, destruction
or Loss due to fire or other casualty from the date of this Agreement until the
Closing.
ARTICLE X
DEFINITIONS
The following terms (in their singular and plural forms as appropriate) as
used in this Agreement shall have the meanings set forth below unless the
context requires otherwise:
"Accounts Receivable" means all accounts receivable, notes receivable, and
other monies due to the Sellers for sales and deliveries of goods, performance
of services and other business transactions (whether or not on the books of the
Sellers) that exist as of 12:01 a.m. on the Closing Date.
"Affiliate" of a Person means: (i) any Person directly, or indirectly through
one or more intermediaries, controlling, controlled by or under common control
with such Person; (ii) any officer, director, partner, employee, agent, or
representative or direct or indirect beneficial or legal owner of any 10% or
greater equity or voting interest of such Person; or (iii) any entity for which
a Person described in (ii) above acts in any such capacity.
"Agreement" means this Asset Purchase Agreement, including the Exhibits and
Schedules delivered pursuant hereto or referred to herein, each of which is
incorporated herein by reference.
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"Assets" means all of the Seller's right, title and interest in and to the
assets and properties, of every kind, nature, character and description, whether
real, personal or mixed, whether tangible or intangible, whether accrued,
contingent or otherwise (other than the Retained Assets) used or held for use in
the Business, together with any additions thereto between the date hereof and
the Closing Date, but excluding those disposed of between the date of this
Agreement and the Closing Date in accordance with the terms of this Agreement,
including but not limited to the following:
(i) the FCC Licenses;
(ii) the Real Property;
(iii) the Personal Property;
(iv) the Inventory;
(v) the Intellectual Property;
(vi) the Assumed Contracts;
(vii) the Licenses;
(viii) the Computer Software;
(ix) the Databases;
(x) Sellers' other intangible assets of the Business, including, but not
limited to, the trademarks, service marks, and tradenames and assumed names of
the Business;
(xi) all intangible personal property and assets other than the foregoing
that are used or held for use in the Business, including all books and records
of Sellers relating solely to the Business (including copies of the Assumed
Contracts and the records required by the FCC to be kept at the Station) and any
assignable warranties with respect to the Personal Property;
(xii) the customer lists, mailing lists, customer files, supplier files,
sales agent and manufacturers' representative files, credit files, and credit
data relating to the Assets and the Assumed Liabilities, all other files,
records, drawings, catalogues, stationery, advertising materials and other
documents (or copies thereof) related to the Assets or the Business, and the use
of any telephone numbers that are used in the operation of the Business;
(xiii) to the extent used or held for use in the operation of the Business
and adjusted in favor of Sellers under Section 1.04, the deposits, prepaid sums,
fees and expenses (including, without limitation, Taxes, insurance premiums,
rental fees, utility charges and
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service charges), trust funds, retainages, escrows, monies and assets held by
Third Parties, and deferred charges, as the same shall exist as of the Closing
Date; and
(xiv) any other assets used in the Business and owned by either of the
Sellers (other than the Retained Assets).
"Assumed Contracts" means (i) all Contracts listed on Schedules 3.10 and 3.21
and all Contracts of the type described in Sections 3.10 and 3.21 that are not
required to be listed thereon pursuant to the exceptions set forth in such
Sections, (ii) Contracts with advertisers for the sale of advertising time for
cash or production services in the ordinary course of business, (iii) Contracts
entered into between the date of this Agreement and the Closing Date that
Purchaser agrees in writing to assume, and (iv) Contracts entered into between
the date of this Agreement and the Closing Date in compliance with Section 5.01;
provided that Assumed Contracts shall in no event include Contracts that are
included in the Retained Assets. The Assumed Contracts shall include without
limitation the contracts listed on Schedules 3.10 and 3.21, whether entered into
solely by the Company, solely by the Company's parent or jointly by the Company
and its parent. With respect to those Assumed Contracts to which the Company's
parent is a party, at Closing Sellers shall cause such Assumed Contracts to be
assigned to Purchaser, and Purchaser shall assume such Assumed Contracts, and
such Assumed Contracts shall otherwise be considered Assumed Contracts for all
purposes of this Agreement, including without limitation for purposes of the
representations and warranties hereunder, except that Sellers shall not be
deemed to be in breach or default hereunder by reason of the fact that the
Company's parent is the only party thereto or a joint party thereto.
"Assumed Liabilities" means the following specific Liabilities of the
Sellers:
(i) Liabilities first to be paid or performed after 12:01 a.m. on the Closing
Date under or pursuant to the Assumed Contracts (including, without limitation,
outstanding purchase orders and sales commitments of Sellers); provided,
however, such Liabilities shall not include any Liabilities resulting from or
arising out of any Default by Sellers prior to the Closing Date under or with
respect to any of such Assumed Contracts;
(ii) To the extent arising after 12:01 a.m. on the Closing Date or for which
there is an adjustment to the Purchase Price, all trade accounts payable and
accrued operating expenses of Sellers which (A) were incurred in the ordinary
course of business consistent with past practices, (B) arose only from
expenditures related directly to the Business or the Assets, (C) are not payable
to or with respect to or for the benefit of an Affiliate of Seller; and
(iii) All sick, personal and vacation time accrued prior to Closing by
Sellers' Station employees.
"Balance Sheet Date" means the date of the most recent balance sheet included
in the Financial Statements, being March 31, 1998.
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"Board of Directors" means the Board of Directors of a Person that is a
corporation.
"Business" means the Sellers' business of owning and operating the Station.
"Business Day" means a day other than a Saturday, a Sunday, a day on which
banking institutions in the State of Georgia are authorized or obligated by law
or required by executive order to be closed, or a day on which the New York
Stock Exchange is closed.
"Certificate of Incorporation" means the certificate of incorporation of a
Person that is a corporation.
"Closing" means the consummation of the transactions contemplated by this
Agreement.
"Closing Date" means the date on which the Closing occurs, which shall be the
fifth business day after issuance of the FCC approval as set forth in Section
5.15 and the satisfaction (or waiver) of all of the conditions set forth in
Articles VII and VIII, or such other date as the parties may agree in writing;
provided that the Closing Date may be extended by Sellers to a date no later
than nine (9) months after the date of this Agreement as necessary to effectuate
the tax-free like-kind exchange described in Section 5.16.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Communications Act" means the Communications Act of 1934, as amended, and
the rules, regulations and written policies of the FCC.
"Computer Software" means all Sellers' computer programs, materials, tapes,
source and object codes, and all prior and proposed versions, releases,
modifications, updates, upgrades and enhancements thereto that are used or held
for use in the Business, as well as all documentation and listings related
thereto used in the Business.
"Contract" means any written or oral contract, agreement, understanding,
lease, usufruct, license, plan, instrument, commitment, restriction,
arrangement, obligation, undertaking, practice or authorization of any kind or
character or other document to which either of Sellers is a party or that is
binding on either of Sellers and that is used or held for use in the Business.
"Databases" means Sellers' databases in all forms, versions and media,
together with prior and proposed updates, modifications and enhancements
thereto, as well as all documentation and listings therefor used in the
Business, other than Licenses, that are used or held for use in the Business.
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"Default" means (1) a breach of, default under, or misrepresentation in or
with respect to any contract or license, (2) the occurrence of an event that
with the passage of time or the giving of notice or both would constitute a
breach of, default under, or misrepresentation in any contract or license, or
(3) the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right to terminate, change the
terms of or renegotiate any contract or license or to accelerate, increase, or
impose any Liability under any contract or license.
"Employee Benefit Plan" means, collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan, or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by either of the Sellers or any other ERISA Affiliate
thereof or under which either of the Sellers or any other ERISA Affiliate
thereof has any Liability for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. "Employee
Benefit Plans" also means any plans, programs, agreements, arrangements or
understandings previously maintained by, sponsored in whole or in part by, or
contributed to by either of the Sellers or any other ERISA Affiliate thereof
that could result in a Material Liability to the Sellers, including but not
limited to, any plan covered by or subject to Title IV of ERISA. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee or director or independent
contractor of either of the Sellers or any dependent or beneficiary thereof,
maintained by the Sellers or under which the Sellers have any obligation or
Liability, whether or not they are or are intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii) written or
oral, (iii) funding or unfunded, (iv) actual or contingent, or (v) generally
available to any or all employees (or former employees) of the Sellers (or their
beneficiaries or dependents), including, without limitation, all incentive,
bonus, deferred compensation, flexible spending accounts, cafeteria plans,
vacation, holiday, medical, disability, share purchase or other similar plans,
policies, programs, practices or arrangements.
"Environmental Laws" means all Laws relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
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Hazardous Substance, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substance.
"Environmental Litigation" means any Litigation against the Sellers with
respect to the Business or the Assets of either of the Sellers (including,
without limitation, written notice or other written communication by any Person
alleging potential Liability for investigatory costs, cleanup costs, private or
governmental response or remedial costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based upon, or
resulting from (i) any Environmental Matter or (ii) any circumstances or state
of facts forming the basis of any Liability or alleged Liability under, or
violation or alleged violation of, any Environmental Law.
"Environmental Matter" means any matter or circumstances related in any
manner whatsoever to (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, or (ii) the
transportation, treatment, storage, recycling or other handling of any Hazardous
Substance or (iii) the placement of structures or materials into waters of the
United States, by, in each case, either of the Sellers or any of their
respective predecessors or (iv) the presence of any Hazardous Substance,
including, but not limited to, asbestos, in any building, structure or workplace
or on any of the Real Property.
"ERISA" means Employee Retirement Income Security Act of 1974, as amended.
"ERISA Plan" means any Employee Benefit Plan which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or an "employee
welfare benefit plan" as that term is defined in Section 3(1) of ERISA.
"FCC" means the Federal Communications Commission.
"FCC Licenses" means the licenses and authorizations issued by the FCC to
either of the Sellers with respect to the Business.
"Financial Statements" means the unaudited balance sheets of the Sellers as
of December 31, 1997 and March 31, 1998 and the related statements of income for
the periods then ended.
"GAAP" means generally accepted accounting principles as in effect in the
United States consistently applied.
"Governmental Authority" means any federal, state, county, local, foreign or
other governmental or public agency, instrumentality, commission, authority,
board or body.
"Hart-Scott Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, 15 U.S.C.A. ss. 18(a), as amended, and all Laws promulgated thereunder.
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"Hazardous Substance" means (i) any hazardous substance, hazardous material,
hazardous waste pollutants, contaminants, or toxic substance (as those terms are
defined by any applicable Environmental Laws) and (ii) any petroleum, petroleum
products, or oil.
"Improvements" means all buildings, structures, fixtures and other
improvements included in the Real Property.
"Intellectual Property" means the following of Sellers to the extent used or
held for use in the Business (i) patents and pending patent applications
together with any and all continuations, divisions, reissues, extensions and
renewals thereof, (ii) trade secrets, know-how, inventions, formulae and
processes, whether trade secrets or not, (iii) trade names, trademarks, service
marks, logos, assumed names, brand names and all registrations and applications
therefor, (iv) copyrights and any registrations and applications therefor, (v)
technology rights and licenses, and (vi) Computer Software and all other
intellectual property owned by, registered in the name of, or used in the
business of a Person or in which a Person or its business has any interest.
"Inventory" means all Sellers' inventories of raw materials, supplies,
products, advertising materials, and other inventories used or held for use in
the Business.
"IRS" means the Internal Revenue Service of the United States of America.
"Knowledge" or "Known" with respect to the Sellers, means collectively those
facts that either of the Sellers or any of their officers and employees listed
on Exhibit X hereto, after due inquiry, knew or reasonably should have known.
"Law" means any code, law, order, ordinance, regulation, rule, or statute of
any Governmental Authority.
"Leased Personal Property" means all Personal Property that is not owned by
the Sellers that the Sellers either use or have the right to use.
"Leased Real Property" means all Real Property that is not owned in fee
simple by the Sellers that the Sellers either occupy or use or has the right to
occupy or use.
"Liability" means any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, expense (including, without limitation, costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills and
checks presented to banks for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
"License" means any license, franchise, notice, permit, easement, right,
certificate, authorization, approval or filing with any Governmental Authority
or court to
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which either Seller is a party or that is or may be binding on either Seller and
that is used or held for use in the Business.
"Lien" means any mortgage, lien, security interest, pledge, hypothecation,
encumbrance, restriction, reservation, encroachment, infringement, easement,
conditional sale agreement, title retention, lease, right of occupancy or other
security arrangement, defect of title, adverse right or interest, charge or
claim of any nature whatsoever of, on, or with respect to any property or
property interest.
"Litigation" means any action, administrative or other proceeding,
arbitration, cause of action, claim, complaint, criminal prosecution, inquiry,
hearing, investigation (governmental or otherwise), litigation, notice (written
or oral) before any Governmental Authority or arbitration, mediation or similar
tribunal by any Person alleging potential Liability against the Sellers or any
Affiliate of Sellers with respect to the Business or the Assets, the Business or
the transactions contemplated by this Agreement.
"LOI" means the letter of intent dated April 10, 1998 between Sellers and
Purchaser with respect to the Station.
"Loss" means any and all direct or indirect demands, claims, payments,
obligations, recoveries, deficiencies, fines, penalties, interest, assessments,
actions, causes of action, suits, losses, diminution in the value of assets,
damages, punitive, exemplary or consequential damages (including, but not
limited to, lost income and profits and interruptions of business), liabilities,
costs, expenses (including without limitation, (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce rights to indemnification hereunder, and (iii) consultants'
fees and other costs of defense or investigation), and interest on any amount
payable to a Third Party as a result of the foregoing, whether accrued,
absolute, contingent, known, unknown, or otherwise as of the Closing Date or
thereafter.
"Material" or "Materially" shall be determined in light of the facts and
circumstances of the matter in question; provided, however, that any specific
monetary amount cited in this Agreement shall be deemed to determine materiality
in that instance.
"Material Adverse Change" or "Material Adverse Effect" means any Material
adverse change in or effect on (i) the business, operations, assets,
Liabilities, financial condition or results of operations of such Person,
including, without limitation, any Material adverse change in the value of the
Station, the Assets or the Business, taken as a whole, (ii) the ability of such
party to consummate the transactions contemplated by this Agreement or any of
the Other Agreements to which it is or will be a party, or (iii) the ability of
such party to perform any of its obligations under this Agreement or any of the
Other Agreements to which it is or will be a party, if such change or effect
Materially impairs the ability of such party to perform its obligations
hereunder or thereunder, taken as a whole. If any change, condition or event
shall have an adverse effect or a reasonably likely adverse effect of less than
$700,000, no Material Adverse Change or Material Adverse Effect will be deemed
to have occurred. If
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any change, condition or event shall have an adverse effect or a reasonably
likely adverse effect of $700,000 or more but less than $5,200,000, no Material
Adverse Change or Material Adverse Effect will be deemed to have occurred and
the Sellers shall have the option to either (i) cure such change, condition or
event by the Closing Date or (ii) reduce the Purchase Price by the amount of the
adverse effect caused by such change, condition or event. If any change,
condition or event shall have an adverse effect or a reasonably likely adverse
effect of $5,200,000 or more, either Purchaser or the Sellers may terminate this
Agreement at their discretion. Neither a Material Adverse Change nor a Material
Adverse Effect shall be deemed to result from an adverse change in general
economic conditions, industry conditions or general conditions in the markets in
which the Sellers operate. Further, notwithstanding the $700,000 threshold
contained in the third sentence of this definition, the Sellers shall use all
reasonable efforts to promptly remedy any adverse change, condition or event
that causes or is reasonably likely to cause the Station to be or go off the
air.
"Order" means any decree, injunction, judgment, order, ruling, writ, quasi-
judicial decision or award or administrative decision or award of any federal,
state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority to which any Person is a party
or that is or may be binding on any Person or its securities, assets or business
(including, in the case of the FCC, a public notice or other written
authorization).
"Other Agreements" means the agreements, documents, assignments and
instruments to be executed and delivered by the Sellers pursuant to this
Agreement.
"Owned Real Property" means all Real Property other than Leased Real
Property.
"Permitted Liens" means (i) Liens for current real property Taxes not yet due
and payable, (ii) non-monetary Liens on Real Property that do not affect the
value or use or future use of any parcel of Real Property, and (iii) those
exceptions to title contained in the existing lender title policies with respect
to the Owned Real Property that are listed on Schedule X-1 attached hereto.
"Person" means a natural person or any legal, commercial or governmental
entity, such as, but not limited to, a business association, corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, or any person acting in a representative capacity.
"Personal Property" means collectively all Sellers' of the personal property
or interests therein owned, leased, used or controlled by the Sellers and used
or held for use in the Business, including, without limitation, machinery,
tools, equipment (including office equipment and supplies), furniture,
furnishings, fixtures (including trade fixtures), vehicles, leasehold
improvements, all other tangible personal property other than Inventory (which
is specifically excluded from the Personal Property).
"PUC Laws" means public utility commission laws, rules and regulations.
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"Purchase Price" means the total consideration to be paid to the Sellers by
Purchaser for the purchase of the Assets pursuant to this Agreement and which
shall be paid in accordance with Section 1.05 of this Agreement.
"Real Property" means collectively all Sellers' real property or interests
therein owned, leased, occupied, or used by the Sellers as of the date of this
Agreement and used or held for use in the Business, together with (i) all
rights, easements, tenements, hereditaments, appurtenances, privileges,
immunities, mineral rights and other benefits belonging or appertaining thereto
which run with said real property and (ii) all right, title and interest, if
any, of the Sellers in and to (A) any land lying in the bed of any street, road,
avenue, open or proposed, adjoining said real property, (B) any award made or to
be made in lieu of the land described in the preceding clause (A), (C) any
unpaid award for damage to said real property, and (D) all strips and
rights-of-way abutting or adjoining said real property, if any. The Real
Property includes, without limitation, all buildings, structures, fixtures and
other improvements located on the land described in the preceding sentence.
"Required Consents" means the consents to assign to Purchaser those Contracts
designated on Schedule 3.03 as Required Consent Contracts, to the extent
required under such Assumed Contracts.
"Retained Assets" means the following:
(a) cash, cash equivalents and cash items of any kind whatsoever,
certificates of deposit, money market instruments, bank balances, and rights in
and to bank accounts, Treasury bills and marketable securities and other
securities of Sellers, and the Accounts Receivable;
(b) contracts of insurance and insurance plans and the assets thereof,
promissory notes, amounts due from employees, bonds, letters of credit,
certificates of deposit, or other similar items, and any cash surrender value in
regard thereto;
(c) any pension, profit-sharing, retirement, bonus, stock purchase,
savings plans and trusts, 401(k) plans, health insurance plans (including any
insurance contracts or policies related thereto), and the assets thereof and any
rights thereto, and all other plans, agreements or understandings to provide
employee benefits of any kind for employees of Sellers, including any contracts
listed on Schedule X to this Agreement;
(d) tangible personal property disposed of or consumed in the ordinary
course of the business of Sellers and in compliance with this Agreement between
the date of this Agreement and the Closing Date;
(e) claims of Sellers with respect to transactions arising prior to the
Closing Date, including, without limitation, rights and interests of Sellers in
and to any claims for tax refunds (including, but not limited to, federal, state
or local franchise, income or other
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taxes) and causes of action and claims of Sellers under contracts and with
respect to other transactions with respect to events occurring prior to the
Closing Date and all claims for other refunds of monies paid to any governmental
agency and all claims for copyright royalties for broadcast prior to the Closing
Date;
(f) Contracts that are not Assumed Contracts;
(g) Sellers' corporate records and other books and records that pertain to
internal corporate matters of Sellers and Sellers' account books of original
entry with respect to the Business and the Assets, and all original accounts,
checks, payment records, tax records (including payroll, unemployment, real
estate and other tax records) and other similar books, records and information
of Sellers relating to Sellers' operation of the Business and the Assets prior
to Closing;
(h) the deposits and prepaid expenses of Sellers with respect to the items
that are not adjusted in favor of Sellers under Section 1.04; and
(i) all interests in the assets described on Schedule X to this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, no
representations, warranties or covenants are made with respect to the Retained
Assets.
"Retained Liabilities" means any Liability of Sellers that is not an Assumed
Liability, including, without limitation, the following:
(i) any Liabilities for any Taxes of Sellers that arise prior to the
Closing Date;
(ii) any Liabilities relating to current or former assets of Sellers not
being acquired by Purchaser pursuant to this Agreement;
(iii) any Contracts that are not Assumed Contracts;
(iv) any Liability incurred by Sellers as a result of any Default by Sellers
under any provision of this Agreement or the Other Agreements;
(v) any Liability of Sellers for severance payments or other severance
obligations relating to any Person employed by Sellers on or before the Closing
Date;
(vi) any Liability of Sellers for continuation of coverage under any group
health plan maintained by Sellers required under the provisions of Code ss.4980B
or Sections 601-608 of ERISA with respect to any Person employed by Sellers who
experiences a "qualifying event" (as defined in the Code and ERISA) on or before
the Closing Date;
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<PAGE>
(vii) any Liability of Sellers to pay bonuses or other compensation to
Affiliates of Sellers on account of the transactions contemplated by this
Agreement;
(viii) any Liability of Sellers, of any nature whatsoever, to any current or
former shareholder or Affiliate of Sellers;
(ix) any Liability (including without limitation, any Liability relating to
any Litigation described on Schedule 3.19 and any other Litigation) relating to,
based upon, or arising out of (A) the conduct of the Business or the ownership
of the Assets prior to the Closing Date or (B) any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition which
occurred or existed prior to the Closing Date, whether or not then known, due or
payable and whether or not disclosed in this Agreement or the Other Agreements;
(x) any Liability that Purchaser may incur in connection with any Litigation
brought against Purchaser under the Worker Adjustment and Retraining
Notification Act or any similar Law that relates to actions taken by Sellers
with regard to any employees or any site employment;
(xi) any Environmental Litigation;
(xii) any Liability of Sellers under or relating to any Employee Benefit
Plan;
(xiii) any Liability to or Lien of any Third Party pursuant to the bulk sales
of any jurisdiction that may be asserted against the sale of any of the Assets
pursuant to this Agreement (whether asserted against Sellers, the Assets or
Purchaser);
(xiv) any claim by any broker, finder or other Person employed or allegedly
employed by Sellers in connection with the transactions contemplated by this
Agreement; or
(xv) any credit agreements, note purchase agreements, indentures, or other
financing arrangements, other than the Assumed Contracts, of either of Sellers.
"Subsidiary" means WALB Licensee Corp.
"Tax" or "Taxes" means any federal, state, county, local, foreign and other
taxes, assessments, charges, fees, and impositions, including interest and
penalties thereon or with respect thereto, whether disputed or not, and
including Liabilities relating to unclaimed property.
"Tax Returns" means all returns, reports, filings, declarations and
statements relating to Taxes that are required to be filed, recorded, or
deposited with any Governmental Authority, including any attachment thereto or
amendment thereof.
"Third Party" or "Third Parties" means any Person that is not Purchaser, the
Sellers or an Affiliate of any of the foregoing.
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ARTICLE XI
MISCELLANEOUS
11.01 NOTICES.
(a) All notices, requests, demands and other communications hereunder shall
be (i) delivered by hand, (ii) mailed by registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed, (iii)
sent by national overnight courier service, or (iv) sent by facsimile, graphic
scanning or other telegraphic communications equipment to the parties or their
assignees, addressed as follows:
To the Sellers: c/o The Ward L. Quaal Company
401 N. Michigan Avenue, Suite 3140
Chicago, Illinois 60611
Attention: Ward L. Quaal
Telephone: (312) 644-6066
Facsimile: (312) 644-3733
with copies to: Gray Communications Systems, Inc.
1201 New York Avenue, N.W., Suite 1000
Washington, D.C. 20005
Attention: Robert A. Beizer
Telephone: (202) 962-4820
Facsimile: (202) 962-8300
To Purchaser: Cosmos Broadcasting Corporation
2000 Wade Hampton
Greenville, South Carolina 29615
Attention: Martha G. Williams
Telephone: (864) 609-4264
Facsimile: (864) 609-3176
with copies to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036
Attention: Patricia A. Francis
Telephone: (202) 776-2509
Facsimile: (202) 776-2222
(b) All notices, requests, instructions or documents given to any party in
accordance with this Section 11.01 shall be deemed to have been given (i) on the
date of receipt if delivered by hand, overnight courier service or if sent by
facsimile, graphic scanning or other telegraphic communications equipment or
(ii) on the date three (3) business days after depositing with the United States
Postal Service if mailed by United States registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed.
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<PAGE>
(c) Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 11.01.
11.02 ENTIRE AGREEMENT. This Agreement, the Schedules, the Exhibits, the
Exchange Agreement, and the Other Agreements constitute the entire agreement
between the parties relating to the subject matter hereof and thereof and
supersede all prior oral and written, and all contemporaneous oral negotiations,
discussions, writings and agreements relating to the subject matter of this
Agreement, including without limitation the LOI.
11.03 MODIFICATIONS, AMENDMENTS AND WAIVERS. The failure or delay of any
party at any time or times to require performance of any provision of this
Agreement shall in no manner affect its right to enforce that provision. No
single or partial waiver by any party of any condition of this Agreement, or the
breach of any term, agreement or covenant or the inaccuracy of any
representation or warranty of this Agreement, whether by conduct or otherwise,
in any one or more instances shall be construed or deemed to be a further or
continuing waiver of any such condition, breach or inaccuracy or a waiver of any
other condition, breach or inaccuracy.
11.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties hereto, and their
respective estates, successors, legal or personal representatives, heirs,
distributees, designees and assigns, but no assignment shall relieve any party
of the obligations hereunder. This Agreement or any portion thereof cannot be
assigned by any party without the prior written consent of the other parties
hereto; provided, however, that Purchaser may assign this Agreement with the
prior written consent of the Sellers, to an Affiliate of Purchaser, which
consent shall not be unreasonably withheld if it does not delay the FCC consent
and if it does not have an adverse tax impact on Sellers or their Affiliates and
if Purchaser obtains all necessary Third Party consents in connection therewith
without delaying Closing; provided, further, such assignment shall not relieve
Purchaser of its obligations hereunder. With respect to such assignments, all
representations, warranties, covenants and indemnification rights shall be
binding upon, and inure to the benefit of, the assignee or assignees as if such
representations, warranties, covenants and indemnification rights were made
directly between the original parties to this Agreement.
11.05 TABLE OF CONTENTS; CAPTIONS; REFERENCES. The table of contents and the
captions and other headings contained in this Agreement as to the contents of
particular articles, sections, paragraphs or other subdivisions contained herein
are inserted for convenience of reference only and are in no way to be construed
as part of this Agreement or as limitations on the scope of the particular
articles, sections, paragraphs or other subdivisions to which they refer and
shall not affect the interpretation or meaning of this Agreement. All references
in this Agreement to "Section" or "Article" shall be deemed to be references to
a Section or Article of this Agreement.
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<PAGE>
11.06 GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the substantive Laws of the State of New York,
without respect to the Laws related to choice or conflicts of Laws.
11.07 PRONOUNS. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
11.08 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good faith to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as practicable to
that of the invalid, illegal or unenforceable provisions.
11.09 REMEDIES NOT EXCLUSIVE. Except for the liquidated damages provided for
in Section 9.03, prior to Closing no remedy conferred by any of the specific
provisions of this Agreement is intended to be, nor shall be, exclusive of any
other remedy available at law, in equity or otherwise.
11.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but all of such counterparts
shall together constitute one and the same instrument.
11.11 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Purchaser or Sellers
whether under any rule of construction or otherwise. No party to this Agreement
shall be considered the draftsman. On the contrary, this Agreement has been
reviewed, negotiated and accepted by all parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all parties hereto.
11.12 EXCLUSIVE REMEDY. The parties acknowledge and agree that after Closing
this Agreement shall provide the exclusive remedies of Purchaser and Sellers
with respect to the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, on and after the Closing, Purchaser
and Sellers hereby waive any statutory, equitable or common law rights or
remedies relating to any environmental health and safety matters, including
without limitation, any such matters arising under any Environmental, Health and
Safety Requirements, the Comprehensive Environmental Response, Compensation and
Liability Act or any analogous state law.
11.13 GUARANTEE. Subject to the limitations set forth herein, including
without limitation those set forth in Sections 6.01 and 6.02(b), Gray
Communications Systems, Inc. hereby unconditionally guarantees to Purchaser the
due and punctual payment and performance in full, when due, of all obligations
and liabilities of Sellers' under this Agreement and the Other Agreements and
waives any circumstances that might constitute a defense available to, or a
discharge of, a guarantor or surety (but not any circumstances that might
constitute a defense available to,
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<PAGE>
or discharge of, either of the Sellers).
[SIGNATURES ON FOLLOWING PAGES]
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<PAGE>
SIGNATURE PAGE TO WALB-TV ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the Sellers and Purchaser have duly executed this
Agreement as of the date first above written.
THE COMPANY
WALB-TV, INC.
By: /s/ Ward L. Quaal
_________________________
Ward L. Quaal, President
THE SUBSIDIARY
WALB LICENSEE CORP.
By: /s/ Ward L. Quaal
_________________________
Ward L. Quaal, President
PURCHASER
COSMOS BROADCASTING CORPORATION
By: /s/ James M. Keelor
____________________________
James M. Keelor, President
FOR PURPOSES OF SECTION 11.13:
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /s/ Robert A. Beizer
__________________________________
Robert A. Beizer, Vice President
-56-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1998 unaudited condensed consolidated financial statements of Gray
Communications Systems, Inc. and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,739,188
<SECURITIES> 0
<RECEIVABLES> 21,318,376
<ALLOWANCES> 1,293,000
<INVENTORY> 1,320,444
<CURRENT-ASSETS> 28,492,019
<PP&E> 69,514,658
<DEPRECIATION> 26,340,052
<TOTAL-ASSETS> 343,682,793
<CURRENT-LIABILITIES> 18,543,429
<BONDS> 226,322,573
0
20,600,000
<COMMON> 66,371,758
<OTHER-SE> 4,697,154
<TOTAL-LIABILITY-AND-EQUITY> 343,682,793
<SALES> 60,042,376
<TOTAL-REVENUES> 60,042,376
<CGS> 0
<TOTAL-COSTS> 47,963,684
<OTHER-EXPENSES> 314,276
<LOSS-PROVISION> 289,477
<INTEREST-EXPENSE> 11,966,739
<INCOME-PRETAX> (202,323)
<INCOME-TAX> 443,377
<INCOME-CONTINUING> (645,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,363,696)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
