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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 17, 1997 (October 3, 1997)
------------------------
GRANITE BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-19728 13-3458782
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
767 Third Avenue, 34th Floor
New York, New York 10017
(212) 826-2530
(Address, including zip code, and telephone number, including area code
of registrant's principal executive offices)
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Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition of Assets
Not Applicable
Item 3. Bankruptcy or Receivership
Not Applicable
Item 4. Changes in Registrant's Certifying Accountants
Not Applicable
Item 5. Other Events
On October 3, 1997, Granite Broadcasting Corporation ("Granite") entered
into a definitive agreement (the "Agreement") with Pacific FM Incorporated
("Pacific"), a California corporation, James J. Gabbert and Michael P.
Lincoln (the "Sellers"), to acquire 51% of the outstanding stock of Pacific
FM Incorporated ("Pacific"), the owner of KOFY-TV, the WB Network affiliated
station serving the San Francisco-Oakland-San Jose, California television
market. At the closing of this purchase, it is contemplated that Granite will
acquire the remaining 49% of the stock of Pacific. The total purchase price
for all the stock of Pacific will be $143.75 million in cash. In addition,
Granite will pay $30 million to the principal shareholders of Pacific for a
covenant not to compete in the San Francisco-San Jose television market for a
period of five years from the closing of Granite's acquisition.
The proposed acquisition is subject to approval by the Federal
Communications Commission and is expected to be completed during the third
quarter of 1998. Because Granite already owns a television station with an
overlapping service area, KNTV, the ABC affiliate licensed to serve San Jose,
California, the Company will request a waiver from the FCC to permit Granite
to own both KNTV and KOFY-TV.
The terms and conditions of the acquisition were determined based upon
arm's-length negotiations between Granite and the Sellers. No material
relationship exists between Granite and the Sellers.
The Agreement is attached hereto as Exhibit 1 and the press release
issued by Granite on October 6, 1997 is attached hereto as Exhibit 2. The
exhibits are hereby incorporated by reference herein.
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Item 6. Resignation of Registrant's Directors
Not Applicable
Item 7. Financial Statements and Exhibits
C. Exhibits.
1. Stock Purchase Agreement, dated as of October 3, 1997, by and
among Granite Broadcasting Corporation, Pacific FM Incorporated,
James J. Gabbert and Michael P. Lincoln.
2. Press Release, dated October 6, 1997.
Item 8. Change in Financial Year
Not Applicable
Item 9. Sales of Equity Securities Pursuant to Regulation S
Not Applicable
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRANITE BROADCASTING CORPORATION
Dated: October 17, 1997 By: /s/ Lawrence I. Wills
----------------------------------------
Name: Lawrence I. Wills
Its: Vice President - Finance and Controller
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EXHIBIT INDEX
1. Stock Purchase Agreement among Granite Broadcasting Corporation, Pacific
FM Incorporated, James J. Gabbert and Michael P. Lincoln
2. Press Release, dated October 6, 1997.
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Exhibit 99.1
================================================================================
STOCK PURCHASE AGREEMENT
AMONG
GRANITE BROADCASTING CORPORATION
PACIFIC FM INCORPORATED
JAMES J. GABBERT
AND
MICHAEL P. LINCOLN
dated as of
October 3, 1997
================================================================================
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TABLE OF CONTENTS
Page
1. Definitions ...................................................... 2
1.1 Defined Terms ............................................. 2
1.2 Accounting Terms .......................................... 18
1.3 Other Definition Provisions ............................... 18
2. Purchase of Shares, Purchase Price, Method of Payment and Option to
Require Purchase of Additional Shares ............................ 18
2.1 Purchase of Shares ........................................ 18
2.2 Consideration; Proration; Allocation of Purchase Price .... 19
2.2.1 Purchase Price .................................. 19
2.2.2 Prorations ...................................... 19
2.2.3 Manner of Determining Prorations ................ 20
2.2.4 Payment of Purchase Price ....................... 23
2.2.5 Allocation of Purchase Price/Appraisal .......... 24
2.3 Accounts Receivable ....................................... 24
2.4 Assumption of Obligations ................................. 26
2.4.1 Limitation on Obligations of Buyer .............. 26
2.4.2 Retained Obligations Relating to KOFY ........... 26
2.4.3 Substitution Where Not Transferable ............. 27
2.5 Option to Require Purchase of Additional Shares ........... 28
2.5.1 Put Option ...................................... 28
2.5.2 Documentation and Closing ....................... 28
2.5.3 Assignment ...................................... 29
3. FCC Consent ...................................................... 29
3.1 Application and Request ................................... 29
3.2 Final Order ............................................... 30
4. Representations and Warranties Relating to Pacific ............... 31
4.1 Organization and Standing ................................. 32
4.2 Authorization and Binding Obligations ..................... 32
4.3 No Contravention; Consents ................................ 33
4.3.1 No Contravention ................................ 33
4.3.2 Consent ......................................... 34
4.4 Capital Stock ............................................. 34
4.4.1 Outstanding Stock ............................... 34
4.4.2 Securities ...................................... 35
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Page
4.4.3 No Commitments .................................. 36
4.4.4 Equity Holders; Subsidiaries .................... 36
4.5 Title to Assets ........................................... 36
4.5.1 Real Property ................................... 36
4.5.2 Personal Property ............................... 37
4.5.3 Assets Sufficient ............................... 37
4.6 Condition of Assets ....................................... 37
4.7 Licenses and Authorizations ............................... 38
4.7.1 Licenses ........................................ 38
4.7.2 Authorizations .................................. 38
4.8 Contracts ................................................. 39
4.9 Franchises, Trademarks and Trade Names .................... 41
4.10 ERISA ..................................................... 41
4.10.1 Employee Benefit Plans .......................... 41
4.10.2 Terminated Plans ................................ 44
4.11 Financial Statements; Liabilities ......................... 46
4.11.1 Financial Statements ............................ 46
4.11.2 Liabilities ..................................... 47
4.12 Litigation; Violations .................................... 47
4.12.1 Litigation ...................................... 47
4.12.2 Violations ...................................... 48
4.13 Complaints ................................................ 48
4.14 Reports ................................................... 48
4.15 No Misleading Statements .................................. 49
4.16 Affiliated and Recent Transactions ........................ 49
4.16.1 Affiliated Transactions ......................... 49
4.16.2 Recent Transactions ............................. 49
4.17 Taxes ..................................................... 50
4.17.1 Filing of Tax Returns ........................... 50
4.17.2 Payment of Taxes ................................ 51
4.17.3 Audits .......................................... 51
4.17.4 Tax Elections ................................... 52
4.17.5 FIRPTA .......................................... 52
4.17.6 Parachute Payments .............................. 52
4.17.7 Tax-Sharing Agreements .......................... 52
4.17.8 Collapsible Corporation ......................... 53
4.17.9 Disclosure Information .......................... 53
4.18 Environmental Matters ..................................... 53
4.18.1 Compliance ...................................... 53
4.18.2 Hazardous Materials ............................. 53
4.18.3 Claims .......................................... 53
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Page
4.18.4 USTs ............................................ 54
4.18.5 Studies; Investigations ......................... 54
4.18.6 Relevant Property ............................... 54
4.19 Labor ..................................................... 54
4.19.1 Labor Problems .................................. 54
4.19.2 Employees and Compensation ...................... 55
4.20 Cable Carriage ............................................ 56
4.21 Insurance ................................................. 56
4.22 Solvency; Net Worth ....................................... 56
4.23 Bank Accounts and Powers of Attorney ...................... 57
5. Representations and Warranties of Stockholders ................... 57
5.1 Organization and Standing ................................. 57
5.2 Authorization and Binding Obligations ..................... 57
5.3 No Contravention; Consents ................................ 58
5.3.1 No Contravention ................................ 58
5.3.2 Consent ......................................... 59
5.4 Ownership of Shares ....................................... 59
6. Representations and Warranties of Buyer .......................... 59
6.1 Organization and Standing ................................. 59
6.2 Authorization and Binding Obligations ..................... 60
6.3 No Contravention .......................................... 60
6.4 Litigation ................................................ 61
6.5 No Misleading Statements .................................. 61
6.6 Qualifications as Broadcasting Licensee ................... 61
6.7 Financial Capacity ........................................ 62
7. Conduct Pending Closing .......................................... 62
7.1 Pacific's and Stockholders' Covenants ..................... 62
7.1.1 Conduct of Business ............................. 62
7.1.2 Assets .......................................... 62
7.1.3 Inventory ....................................... 62
7.1.4 Employee Compensation and Benefits .............. 62
7.1.5 Organization, Etc. .............................. 63
7.1.6 Insurance ....................................... 63
7.1.7 Transfer of Broadcasting Assets ................. 63
7.1.8 Financial Statements; Pacing Reports ............ 64
7.1.9 Encumbrances .................................... 65
7.1.10 Litigation ...................................... 65
7.1.11 Agreements ...................................... 66
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Page
7.1.12 Consents and Approvals .......................... 66
7.1.13 Licenses ........................................ 67
7.1.14 Offers to Purchase .............................. 67
7.1.15 No Breach of Representations and Warranties ..... 67
7.1.16 Employee Notification Requirements .............. 68
7.1.17 Compliance with Laws ............................ 68
7.1.19 Tax Elections ................................... 70
7.1.20 No Violations ................................... 70
7.1.22 No Changes ...................................... 71
7.1.23 Excluded Pacific Assets and Excluded Pacific
Liabilities ..................................... 72
7.1.24 Delivery of Supplement .......................... 72
7.1.25 Film Contracts .................................. 73
7.1.26 Satisfaction of Funded Debt and Pre-Closing
Liabilities; Removal of Encumbrances ............ 73
7.2 Buyer's Covenants ......................................... 74
7.2.1 Organization, Etc ............................... 74
7.2.2 Litigation ...................................... 74
7.2.3 No Breach of Representations and Warranties ..... 74
7.2.4 No Violations ................................... 75
7.3 Stockholders' Covenants ................................... 75
7.3.1 Organization, Etc. .............................. 75
7.3.2 Litigation ...................................... 75
7.3.3 No Breach of Representations and Warranties ..... 76
7.3.4 No Violations ................................... 76
7.3.5 Encumbrances; Transfers ......................... 76
8. Conditions Precedent to the Obligations of the Parties ........... 76
8.1 Conditions Precedent to the Obligation of Buyer ........... 76
8.1.1 FCC Consent ..................................... 76
8.1.2 Accuracy of Representations and Warranties ...... 77
8.1.3 Compliance with Agreement ....................... 77
8.1.4 No Obstructive Proceeding ....................... 77
8.1.5 Adverse Change .................................. 79
8.1.6 Consents ........................................ 79
8.1.7 Officers' Certificates .......................... 79
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Page
8.1.8 Authorization ................................... 80
8.1.9 Opinions of Counsel ............................. 80
8.1.10 Certifications .................................. 80
8.1.11 HSRA Waiting Period ............................. 80
8.1.12 Copies of Documents ............................. 80
8.1.13 FIRPTA Affidavits ............................... 81
8.1.14 Conditions to Closing ........................... 81
8.1.15 Title Insurance Policies ........................ 81
8.1.16 Proceedings ..................................... 81
8.1.17 Delivery of Instruments of Conveyance and
Transfer ........................................ 82
8.1.18 Stockholders Non-Competition Agreements ......... 82
8.1.19 Assignment and Assumption Agreement ............. 82
8.1.20 WB Agreement .................................... 83
8.2 Conditions to Obligations of Pacific ...................... 83
8.2.1 FCC Consent ..................................... 83
8.2.2 Accuracy of Representations and Warranties ...... 83
8.2.3 Compliance with Agreement ....................... 83
8.2.4 No Obstructive Proceeding ....................... 84
8.2.5 Proceedings ..................................... 85
8.2.6 Opinion of Counsel .............................. 85
8.2.7 HSRA Waiting Period ............................. 85
8.2.8 Authorizations .................................. 85
8.2.9 Payment ......................................... 86
8.2.10 Officer's Certificate ........................... 86
9. Instruments of Conveyance and Transfer; Closing Certificates ..... 86
9.1 Instruments of Conveyance and Transfer of Shares .......... 86
9.2 Closing Certificates ...................................... 86
9.2.1 Certificate of Incorporation .................... 86
9.2.2 Pacific's Subsidiaries Articles of
Incorporation ................................... 87
9.2.3 Good standing Certificates ...................... 87
10. Employees. ....................................................... 87
10.1 Pacific's Termination ..................................... 87
10.2 Continued Employment; Prorations .......................... 87
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Page
10.2.1 Right to Continue Employment .................... 87
10.2.2 Cooperation ..................................... 88
10.2.3 Accrued Compensation ............................ 88
10.3 No Liability for Employee Plans ........................... 88
10.3.1 Amendment to Plans .............................. 88
10.3.2 Assumption of Plan Liability by Stockholder Co. .. 89
10.3.3 No Liability .................................... 89
10.4 Indemnity ................................................. 89
11. Risk of Loss; Casualty or Condemnation ........................... 90
11.1 Risk of Loss .............................................. 90
11.2 Casualty .................................................. 90
11.3 Repair Parameters ......................................... 92
11.4 Condemnation .............................................. 92
11.5 Failure of Broadcast Transmission ......................... 93
12. Books and Records ................................................ 93
13. Possession and Control of KOFY ................................... 95
14. Brokers .......................................................... 95
15. Survival; Indemnification ........................................ 96
15.1 Survival .................................................. 96
15.2 Stockholders' Indemnification - Breaches .................. 97
15.3 Stockholders' Indemnification - Liabilities ............... 97
15.3.1 Generally ....................................... 97
15.3.2 Taxes ........................................... 98
15.4 Stockholders' Satisfaction of Retained Liabilities ........ 99
15.5 Buyer's Indemnification ................................... 99
15.5.1 Breach ............................................ 99
15.5.2 Liabilities .......................................100
15.6 Limitation of Obligation ..................................100
15.7 Indemnification Claim .....................................100
15.8 Notice of Claim ...........................................101
15.9 Indemnitor's Obligations ..................................103
15.10 Date of Notice of Claim ...................................103
15.11 Consent of Indemnitee .....................................103
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Page
16. Hart-Scott-Rodino Filings .......................................103
17. Environmental Assessment ........................................104
17.1 Phase I ..................................................104
17.2 Environmental Hazard .....................................104
17.3 Engineer's Findings ......................................105
18. Termination .....................................................105
18.1 Termination ..............................................105
18.1.1 Buyer ..........................................105
18.1.2 Pacific ........................................105
18.1.3 Mutual Consent .................................106
18.1.4 By Pacific Upon Breach .........................106
18.1.5 By Buyer Upon Breach ...........................106
18.1.6 Pacific or Buyer ...............................106
18.1.7 Other ..........................................106
18.2 Effects of Termination ...................................106
18.2.1 Survival .......................................106
18.2.2 Event of Termination ...........................106
18.2.3 Instructions to Escrow Agent ...................107
19. Security Deposit ................................................107
20. Confidentiality .................................................107
20.1 Stockholders Confidentiality .............................107
20.2 Buyer Confidentiality ....................................108
20.3 Specific Performance .....................................109
21. Miscellaneous ...................................................109
21.1 Grace Period .............................................109
21.1.1 Default Grace Period ...........................109
21.1.2 Final Order Grace Period .......................110
21.2 Costs, Expenses, Etc. ....................................110
21.3 Further Assurances .......................................111
21.4 Notice of Proceedings ....................................111
21.5 Bulk Sales Law ...........................................111
21.6 Notices ..................................................112
21.7 Headings and Entire Agreement; Amendment .................113
21.8 Waiver ...................................................114
21.9 Binding Effect and Assignment ............................114
21.10 Counterparts .............................................114
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Page
21.11 Exhibits, Schedules and Attachments ......................114
21.12 Rights Cumulative ........................................115
21.13 Governing Law ............................................115
21.14 Severability .............................................115
21.15 Third Party Rights .......................................115
21.16 Press Releases ...........................................116
21.17 Specific Performance .....................................116
21.18 Right to Payments ........................................116
21.19 Certain Tax Matters ......................................117
21.19.1 Tax Periods Beginning on or Before the
Closing Date ...................................117
21.19.2 Refunds and Tax Benefits .......................117
21.19.3 Cooperation on Tax Matters .....................118
21.19.4 Tax Audits .....................................119
21.19.5 Tax Sharing Agreements .........................120
21.19.6 Certain Taxes ..................................120
21.20 Agent ....................................................120
21.20.1 Designation ....................................120
21.20.2 Power of Attorney ..............................121
21.20.3 Fees; Liability ................................122
21.20.4 Buyer Reliance .................................122
21.21 Concurrent Closing .............................122
EXHIBITS
Exhibit A - Form of Proration Statement
Exhibit B-1 - Form of Opinion of Counsel to Pacific and Stockholders
Exhibit B-2 - Form of Opinion of Counsel to Pacific and Stockholders
Exhibit C-1 - Form of Non-Competition Agreement for James J. Gabbert
Exhibit C-2 - Form of Non-Competition Agreement for Michael P. Lincoln
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Form of Opinion of Buyer's Counsel
Exhibit F - Deposit Escrow Agreement
Exhibit G - Put Purchase Agreement
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SCHEDULES
Schedule 1-A - Owned and Leased Real Property
Schedule 1-B - Owned and Leased Tangible Personal Property of KOFY
Schedule 1-C - Network Affiliation Agreements and Other Operating
Contracts of KOFY
Schedule 1-D - Licenses, Permits and Authorizations of KOFY
Schedule 1-E - Franchises, Trademarks, Copyrights, etc. of KOFY
Schedule 1-F - Excluded KOFY Assets; Excluded Contracts
Schedule 4.3.2 - Consents
Schedule 4.4 - Equityholders and Subsidiaries of Pacific; Articles of
Incorporation and Bylaws of Pacific
Schedule 4.4.1 - Agreement of Sale - Stock Participation Rights
Schedule 4.5.1 - Real Estate Encumbrances
Schedule 4.5.2 - Personal Property Encumbrances
Schedule 4.8 - Altered Contracts
Schedule 4.10.1 - Station Employee Benefit Plans
Schedule 4.10.2 - Terminated Employee Benefit Plans
Schedule 4.11 - Financial Statements of Pacific
Schedule 4.11.2 - Liabilities
Schedule 4.12 - Schedule of Litigation and Claims of Pacific
Schedule 4.16 - Affiliated and Recent Transactions of Pacific
Schedule 4.17 - Taxes
Schedule 4.18 - Environmental Disclosures
Schedule 4.19 - Employee Matters
Schedule 4.20 - Cable Carriage
Schedule 4.21 - Insurance
Schedule 4.23 - Bank Accounts
Schedule 5.4 - Ownership of Shares
Schedule 10.1 - Terminated Employees
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PURCHASE AND SALE AGREEMENT
THIS AGREEMENT, dated as of September , 1997, among GRANITE
BROADCASTING CORPORATION, a Delaware corporation ("Buyer"), PACIFIC FM
INCORPORATED, ("Pacific" or "Seller"), and JAMES J. GABBERT and MICHAEL P.
LINCOLN (collectively, the "Stockholders").
WITNESSETH:
WHEREAS, Pacific owns and operates, under license from the Federal
Communications Commission (the "FCC"), television station KOFY, Channel 20,
San Francisco, California and its auxiliary facilities ("KOFY"), including
all of the Broadcasting Assets (as hereinafter defined);
WHEREAS, Stockholders own all of the issued and outstanding capital
stock of Pacific, consisting of 1,530 shares of Pacific Common Stock (the
"Stockholders' Shares");
WHEREAS, Buyer desires to purchase all of the outstanding capital
stock of Pacific;
WHEREAS, Stockholders desire to sell and assign fifty-one percent
(51%) of the outstanding capital stock of Pacific owned by Stockholders to
Buyer, and to acquire a contractual right to require Buyer to purchase the
remaining forty-nine percent (49%) thereof at the same price per share, all
in accordance with the terms and conditions herein set forth; and
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WHEREAS, concurrently with the execution of this Agreement, Buyer is
depositing in escrow a cash security deposit in the amount of $5,000,000
(the "Deposit"), which escrow shall be governed by the terms and conditions
of the Escrow Agreement (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises contained herein and
for the other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
1.1 Defined Terms.
"Accounts Receivable" means billed trade accounts receivable of
Pacific as of the Effective Time for services rendered or products
delivered or used on or prior to that time for the benefit of KOFY and
listed on a Schedule to be delivered by Pacific to Buyer within five (5)
business days after the Closing Date.
"Accrued Pacific Taxes" means all Taxes of Pacific accruing
during any tax period ending on or prior to the Closing Date, including but
not limited to Taxes attributable to: (i) the direct or indirect transfer
and assignment of the Excluded Pacific
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Assets from Pacific and its Subsidiaries to Stockholder Co. and the
assumption by Stockholder Co. of the Excluded Pacific Liabilities; and (ii)
the distribution of the stock of Stockholder Co. from Pacific to the
Stockholders.
"Additional Shares" shall have the meaning set forth in Section
2.5 hereof.
"Affiliate" (and, with a correlative meaning, "Affiliated") shall
mean, with respect to any Person, any other Person that directly, or
through one or more intermediaries, controls or is controlled by or is
under common control with such first Person, and, if such a Person is an
individual, any member of the immediate family (including parents, spouse
and children) of such individual and any trust whose principal beneficiary
is such individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with correlative meanings, "controlled
by" and "under common control with," shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise)).
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"Affiliated Transaction" has the meaning set forth in Section
4.16.1 hereof.
"Agent" means James J. Gabbert, the agent for the Stockholders
for purposes of this Agreement and the transactions contemplated hereby and
any successor agent appointed in accordance with the terms of this
Agreement.
"Agreement" means this Stock Purchase Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Appraisal" has the meaning set forth in Section 2.2.5 hereof.
"Broadcasting Assets" means all real, personal and mixed assets,
both tangible and intangible (including the business of KOFY as a "going
concern"), of every kind, nature and description whether or not carried or
reflected on the books of KOFY or Pacific, owned, leased or held and used
by or useful to Pacific in connection with the business and operations of
KOFY, other than the Excluded Pacific Assets (as hereinafter defined),
which are expressly excluded from the definition of Broadcasting Assets and
shall be transferred to Stockholder Co. immediately prior to Closing, and
except as otherwise provided in this Agreement, Broadcasting Assets shall
include all such assets existing on the
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date of this Agreement and all such assets acquired between the date hereof
and the Closing Date, including, without limitation:
(a) all real property, leasehold interests, estates and
improvements of every kind and description, together with all buildings,
structures and improvements of every nature located thereon, owned or held
and used by Pacific in connection with the business and operations of KOFY
as of the date hereof (which assets are expressly identified in Schedule
1-A hereto) and acquired between the date hereof and the Closing Date;
(b) all broadcasting and other equipment, office furniture,
fixtures, tapes, machinery, office materials and supplies, spare parts,
tubes and other tangible personal property of every kind and description
owned, leased or held and used by or useful to Pacific in connection with
the business and operations of KOFY on the date hereof, including without
limitation the assets set forth in Schedule 1-B hereto (which schedule
shall indicate the age of, price paid for and carrying value of any and all
capitalized broadcasting equipment), and any additions, improvements and
replacements thereto between the date hereof and the Closing Date, together
with all warranties, rights and claims relating to the assets listed in
this paragraph (b);
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(c) all Contracts (as herein defined), and commitments
relating to the business and operations of KOFY, other than Excluded
Assets, on the date hereof, including without limitation those contracts,
agreements and commitments set forth on Schedules 1-A (Owned and Leased
Real Property of KOFY), 1-B (Owned and Leased Tangible Personal Property of
KOFY) and 1-C (Network Affiliation, Programming and Other Operating
Contracts of KOFY) hereto (which Schedules shall also specify those
Contracts which require third-party consent in connection with the
transactions contemplated hereby), together with all contracts, agreements
and commitments, that have been entered into between the date hereof and
the Closing Date as expressly permitted by this Agreement;
(d) (i) all KOFY Licenses and (ii) any other permits,
licenses and authorizations issued or granted by any Governmental Authority
or any other Person owned, leased or held and used by Pacific in connection
with the business and operations of KOFY as of the date hereof and any
applications therefor, as set forth in Schedule 1-D hereto, and any
additions, renewals and extensions thereto between the date hereof and the
Closing Date;
(e) the books and records of KOFY or Pacific (other than
those relating to the Excluded Pacific Assets);
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(f) all franchises, trademarks, patents, tradenames,
service marks, promotional materials, slogans, intellectual property rights
and interests, call letters, copyrights in literary property of any kind,
know-how, jingles and privileges, if any, owned or held and used by Pacific
in connection with the business and operations of KOFY as of the date
hereof, including, without limitation, those set forth in Schedule 1-E
hereto, and those acquired between the date hereof and the Closing Date;
(g) all of Pacific's goodwill in and going concern value of
KOFY; and
(h) all of the Pacific's prepaid expenses useful by Buyer
in the operation of KOFY after the Effective Time.
"Buyer" has the meaning set forth in the recitals hereto.
"Buyer's Employees" has the meaning set forth in Section 10.2.1
hereof.
"Buyer's Representatives" has the meaning set forth in Section
20.2 hereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601 - 9675,
and the regulations thereunder, as in effect from time to time.
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"Claims" means any of the following that arise from or relate to
the presence of Hazardous Materials in the Environment and pertain to
Pacific or relate to Relevant Property, including the Broadcasting Assets,
or, to the extent of Pacific's or Stockholders' knowledge, areas adjacent
thereto: pending or threatened demands, suits or causes of action for
damages, including but not limited to, those alleged to result from
exposure to or injury from Environmental Conditions by any Person,
including claims for personal injury or property damage of any kind; actual
or threatened damages to natural resources; pending or threatened recovery
of response costs (as defined in Section 104 of CERCLA and applicable state
law), claims arising under the Toxic Substances Control Act, 15 U.S.C.
Section 2601 - 2671, and applicable state law, or administrative or
judicial orders directing the performance of investigations, or response
actions, as defined by Section 101 of CERCLA or applicable state law;
allegations or notices regarding the Release or threat of Release of
Hazardous Materials at, under, in or about any of the Relevant Property;
allegations or notices regarding the unlawful use, generation, emission,
discharge, transportation, storage, treatment or disposal of any Hazardous
Materials threat or any actual or alleged injury arising therefrom; claims
for restitution, contribution or equitable indemnity from
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third parties or any Governmental Authority; fines, penalties or
Encumbrances against property; injunctive relief; or other notices of
violation from federal, state or local Governmental Authorities.
"Closing" means the consummation of the purchase, assignment and
sale of the shares of Pacific Common Stock as contemplated hereby.
"Closing Date" means a time and business date to be selected by
Buyer, which date shall occur between: (i) two business days after the date
on which the conditions specified in Section 8 hereof shall have been met
or waived by the beneficiary thereof; and (ii) subject to the provisions of
Section 21.1 hereof, July 1, 1998, unless Buyer and Pacific mutually agree
to a different time and date.
"Closing Place" means the offices of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 1333 New Hampshire Avenue, N.W., Suite 400, Washington, D.C.
20036 or such other place as the Buyer and Pacific may agree.
"Code" means the Internal Revenue Code of 1986, as amended, and
the treasury regulations promulgated thereunder, as in effect from time to
time.
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"Communications Act" means the Communications Act of 1934, as
amended, and the rules, regulations and policies promulgated thereunder, as
in effect from time to time.
"Company Voting Debt" has the meaning set forth in Section 4.4.1
hereof.
"Condemnation Shortfall" has the meaning set forth in Section
11.4 hereof.
"Contracts" has the meaning set forth in Section 4.8 hereof.
"Controlled Group" means Pacific and any Person trade or business
(whether or not incorporated) that is under common control (as defined in
section 414(b) or (c) of the Code) with Pacific, any member of an
affiliated service group (as defined in section 414(m) of the Code) that
includes Pacific, and any entity that is treated as being under common
control with Pacific under section 414(o) of the Code.
"Date of Notice of Claim" has the meaning set forth in Section
15.10 hereof.
"Deposit" has the meaning set forth in the Recitals hereto.
"Effective Time" means 12:01 a.m. on the Closing Date.
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"Employee Plan" means any employee benefit plan, as defined in
section 3(3) of ERISA (including, without limitation, defined benefit
pension plans, defined contribution pension plans, and medical and other
welfare plans), and any retirement, deferred compensation, medical, dental,
cafeteria, stock purchase, stock option, savings, severance, bonus,
incentive, vacation, or other benefit plan, agreement, program, or
arrangement, whether or not subject to ERISA, whether written or oral,
whether maintained for current employees, former employees, or retirees,
and whether currently in effect or terminated or frozen.
"Encumbrances" means all mortgages, security interests, pledges,
claims, liens, charges, covenants, easements, rights of way, restrictions,
encroachments, leases, occupancies, tenancies, options, preemptive purchase
or other rights or any other encumbrances whatsoever.
"Engineer" has the meaning set forth in Section 17.1 hereof.
"Environment" means flora, fauna, soil, surface water,
groundwater, drinking water, subsurface strata, or ambient air.
"Environmental Hazard" has the meaning set forth in Section 17.2
hereof.
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"Environmental Law" means any law, regulation, policy, or order
of or relating to the regulation or protection of human health, safety or
the Environment or to Releases of Hazardous Materials into the Environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder, as in effect
from time to time.
"Escrow Agreement" has the meaning set forth in Section 19
hereof.
"Estimated Purchase Price" has the meaning set forth in Section
2.2.4 hereof.
"Excluded Pacific Assets" means: (a) Accounts Receivable; (b)
cash on hand and in bank accounts that relate exclusively to the operation
of Pacific prior to the Closing Date; and (c) any Contract, Employee
Benefit Plan, agreement or asset listed on Schedules 1-F or 4.10 or 4.10.2.
"Excluded Pacific Liabilities" means all Liabilities (including
Accrued Pacific Taxes), commitments or other obligations of KOFY, Pacific,
Stockholders or any of their Affiliates or stockholders of any kind and
nature, whether direct or indirect, absolute, accrued, contingent or
otherwise, or due or to become
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due, asserted or unasserted, matured or unmatured, other than Included
Pacific Obligations.
"EY" means Ernst & Young LLP.
"FCC" has the meaning set forth in the recitals hereto.
"FCC Applications" has the meaning set forth in Section 3.1
hereto.
"FCC Consent" has the meaning set forth in Section 3.2 hereof.
"Final Order" means an order of the FCC granting its consent to
the applications referred to in Section 3.1 below, which order has become
final. For purposes of this Agreement, "final" shall mean action by the
FCC: (a) which has not been vacated, reversed, stayed, set aside, annulled
or suspended; (b) with respect to which no timely appeal, request for stay,
or petition for rehearing, reconsideration or review by any Person or
Governmental Authority or by the FCC on its motion, is pending; and (c) as
to which the time for filing any such appeal, request, petition, or similar
document or for the reconsideration or review by the FCC on its own motion,
has expired.
"Financial Information" has the meaning set forth in Section 4.11
hereof.
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"Financial Statements" has the meaning set forth in Section 4.11
hereof.
"Follow on Study" has the meaning set forth in Section 17.1
hereof.
"GAAP" means generally accepted accounting principles in effect
in the United States of America at the time of determination, and which are
consistently applied.
"Governmental Authority" means any court or federal, state,
municipal or other governmental or quasi-governmental authority,
department, commission, board, agency or instrumentality, foreign or
domestic, or any employee or agent thereof.
"Hazardous Materials" means (a) any petroleum or petroleum
products (including crude oil or any fraction thereof), explosives,
flammable, corrosive, infectious, carcinogenic, metagenic, or radioactive
materials, asbestos in any form, urea, formaldehyde, foam insulation and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCBs); or (b) hazardous or toxic wastes, or
chemicals, substances, constituents, pollutants, contaminants or related
materials, whether solids, liquids, or gases, which are now or hereafter
defined or become regulated under Sections 101(14) or 101(33) of CERCLA;
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RCRA; the Toxic Substances Control Act, 15 U.S.C. Sections 2601 - 2671; the
Safe Drinking Water Act, 42 U.S.C. Sections 300f - 300j-11; the Clean Air
Act, as amended, 42 U.S.C. Sections 7401 - 7642; the Clean Water Act, 33
U.S.C. Sections 1251 - 1387; the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 - 11050; or any other
federal, state or local laws, regulations or policies relating to the
Environment.
"HSRA" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations thereunder, as in effect from time to
time.
"Included Pacific Obligations" has the meaning set forth in
Section 2.4.2.
"Indemnitee" has the meaning set forth in Section 15.7 hereof.
"Indemnitor" has the meaning set forth in Section 15.7 hereof.
"Initial Recipient" has the meaning set forth in Section 21.18
hereof.
"Insurance Deficiency" has the meaning set forth in Section 11.2
hereof.
"KDIA-AM Applications" has the meaning set forth in Section 3.1
hereof.
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"KDIA-AM Licenses" means all licenses, permits and authorizations
issued or granted by the FCC for the ownership and operation of KDIA-AM
Oakland, California and all applications therefor, together with any
renewals, extensions or modifications thereof and additions thereto between
the date hereof and the Closing Date.
"KNTV" means television station KNTV, Channel 11, San Jose,
California.
"KOFY" has the meaning set forth in the recitals hereto.
"KOFY Employees" has the meaning set forth in Section 4.19.2
hereto.
"KOFY Licenses" means all licenses, permits and authorizations
issued or granted by the FCC for the ownership and operation of KOFY and
all applications therefor, all of which are listed in Exhibit 1-D hereto,
together with any renewals, extensions or modifications thereof and
additions thereto between the date hereof and the Closing Date.
"Liabilities" means all obligations, indebtedness, commitments,
and other items constituting "liabilities" under GAAP, whether direct or
indirect, absolute, accrued, contingent, or otherwise, or due or to become
due, asserted or unasserted, matured or unmatured, including without
limitation trade accounts payable,
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accrued liabilities for payroll and related expenses, film contract rights,
obligations for borrowed money or for the deferred purchase price of
property or services and any other known or unknown obligations or
liabilities.
"Material Adverse Effect" means any material and adverse effect
upon the business, assets, prospects, liabilities, financial condition,
rights or results of operations of KOFY, the Broadcasting Assets or
Pacific, or upon the ability of Buyer, Stockholders or Pacific to perform
in any material respect their respective obligations under this Agreement.
"Notice of Claim" has the meaning set forth in Section 15.7
hereof.
"Options" has the meaning set forth in Section 4.4.1 hereof.
"Outside Closing Date" shall mean July 1, 1998.
"Pacific" has the meaning set forth in the recitals hereto.
"Pacific Benefit Plans" has the meaning set forth in Section 4.10
hereto.
"Pacific Common Stock" has the meaning set forth in Section 4.4.1
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Pension Plan" means an employee pension benefit plan as defined
in Section 3(2) of ERISA.
"Permitted Encumbrances" means (a) Encumbrances expressly
identified as Permitted Encumbrances on Schedule 4.5.1 and approved by
Buyer pursuant to Section 7.1.18 hereof and (b) Encumbrances expressly
identified as Permitted Encumbrances on Schedule 4.5.2 hereto.
"Person" shall mean any natural person, corporation, partnership,
limited liability company, firm, joint venture, joint-stock company, trust,
association, unincorporated entity of any kind, trust, governmental or
regulatory body or other entity.
"Pre-Closing Incurred Obligations" has the meaning set forth in
Section 2.2.3(a) hereof.
"Pre-Closing Paid Obligations" has the meaning set forth in
Section 2.2.3(a) hereof.
"Prohibited Business" has the meaning set forth in Section 20.1
hereof.
"Prohibited Transaction" has the meaning specified in Sections
406 through 408 of ERISA and Section 4975 of the Code.
"Proper Recipient" has the meaning set forth in Section 21.18
hereof.
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"Prorated Obligations" has the meaning set forth in Section
2.2.3(a) hereof.
"Proration Statement" has the meaning set forth in Section
2.2.3(a) hereof.
"Purchase Price" has the meaning set forth in Section 2.2.1
hereof.
"Put Option" has the meaning set forth in Section 2.5.1 hereof.
"Put Purchase Agreement" has the meaning set forth in Section
2.5.2 hereof.
"RCRA" means the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Sections 6901 - 6992K, and the regulations thereunder,
as in effect from time to time.
"Release" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without
limitation, any Relevant Property.
"Relevant Property" has the meaning set forth in Section 4.18.6
hereof.
"Remediation Cost" has the meaning set forth in Section 17.2
hereof.
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"Repair Cost" has the meaning set forth in Section 11.2 hereof.
"Shares" means all of the issued and outstanding shares of
Pacific Common Stock.
"Step One AM Application" has the meaning set forth in Section
3.1 hereof.
"Step Two AM Application" has the meaning set forth in Section
3.1 hereof.
"Stockholder Co." means a direct wholly-owned subsidiary of
Pacific, that shall be assigned all the Excluded Pacific Assets and assume
all of the Excluded Pacific Liabilities prior to the Closing.
"Stockholders" has the meaning set forth in the recitals hereto.
"Stockholders' Shares" has the meaning set forth in the recitals
hereto.
"Study" has the meaning set forth in Section 17.1 hereof.
"Subsidiary" means, with respect to any Person, any corporation
or other entity, whether now existing or hereafter organized or acquired,
of which securities or other ownership interests are at the time owned by
such Person and/or one or more Subsidiaries of such Person.
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"Substantial Portion" has the meaning set forth in Section 11.4
hereof.
"Tax" or "Taxes" means all federal, state, local, foreign and
other taxes, including capital gains, income, estimated income, franchise,
gross receipts, employment, license, payroll, excise, stamp, social
security, Medicare, unemployment, real property, personal property, sales,
use, transfer and withholding taxes, including interest, penalties and
additions in connection therewith, whether disputed or not.
"Tax Audit" has the meaning set forth in Section 21.19.4 hereof.
"Title Policies" has the meaning set forth in Section 8.1.15
hereof.
"Title Study Period" has the meaning set forth in Section 7.1.18
hereof.
"Tower" has the meaning set forth in Section 4.6 hereof.
1.2 Accounting Terms. All terms of an accounting nature not
specifically defined herein shall have the respective meanings given to
them under GAAP.
1.3 Other Definition Provisions. The masculine form of words
includes the feminine and the neuter and vice versa, and, unless the
context otherwise requires, the singular form of words
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includes the plural and vice versa. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement
refer to this Agreement as a whole, and not to any particular section or
subsection.
2. Purchase of Shares, Purchase Price, Method of Payment and Option
to Require Purchase of Additional Shares.
2.1 Purchase of Shares. In accordance with the terms and upon
satisfaction of the conditions contained in this Agreement, at the Closing,
Stockholders shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase from Stockholders, fifty-one percent (51%) of the
shares of Pacific Common Stock owned by them, consisting of 780.3 shares of
Pacific Common Stock, in the aggregate.
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2.2 Consideration; Proration; Allocation of Purchase Price.
2.2.1 Purchase Price. The Purchase Price for the shares
of Pacific's Common Stock to be sold and transferred pursuant to this
Agreement shall be Seventy-Three Million Three Hundred Twelve Thousand Five
Hundred Dollars ($73,312,500), subject to adjustment pursuant to Sections
2.2.2 and 2.2.3 below. At the Closing, Buyer will pay to Agent by wire
transfer of immediately available federal funds (pursuant to wire
instructions that Pacific shall deliver to Buyer prior to Closing) the
Purchase Price, as adjusted pursuant to Sections 2.2.2 and 2.2.3 below,
less the amount of the Deposit.
2.2.2 Prorations. The Purchase Price shall be increased
or decreased as required to effectuate the proration of expenses relating
to the operation of KOFY. All expenses arising from the operations of KOFY
and incurred by KOFY, including tower rental, business and license fees,
utility charges, real and personal property taxes and assessments levied
against the Broadcasting Assets, property and equipment rentals, applicable
copyright or other fees, sales and service charges, employee compensation
(including wages and salaries, accrued sick leave, severance pay and personal
days) and similar prepaid and deferred
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items, shall be prorated between Pacific and Stockholders in accordance with
the principle that Stockholders shall be responsible for all expenses, costs
and liabilities allocable to the operations of KOFY for the period on or
prior to and including the Effective Time, and Pacific shall be responsible
for all expenses, costs and obligations allocable to the operations of KOFY
for the period after the Effective Time as determined in accordance with
Section 2.2.3 below, subject to the following:
(a) There shall be no adjustment for, and Stockholders
shall be solely liable with respect to, Liabilities and obligations under
any Contracts listed on Schedule 1-F and under any Employee Benefit Plans
and any other Excluded Pacific Liability.
(b) Payments due under film or programming license
agreements for the month in which the Closing occurs shall be prorated
based on the number of days in such month on or before the Effective Time
and the number of days in such month after and including the Effective
Time.
(c) There shall be no adjustment for any difference
between the value of the goods or services to be received by Pacific as of
the Effective Time under trade or barter agreements relating to KOFY and
the value of any advertising time
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remaining to be run by Pacific as of the Effective Time under trade or
barter agreements relating to KOFY; provided, however, that this provision
shall not apply to barter arrangements that do not arise under programming
contracts, and which pertain to goods or services to be retained by
Shareholders after the Effective Date, which will be prorated.
2.2.3 Manner of Determining Prorations. The Purchase
Price, taking into account the adjustments and prorations outlined in
Section 2.2.2, shall be determined in accordance with the following
procedures:
(a) Prorated Obligations. Pacific shall, no later
than five (5) business days prior to the Closing Date, prepare a document
(the "Proration Statement"), a copy of the form of which is attached as
Exhibit A, listing by item, all of the expenses, costs, obligations and
other Liabilities of KOFY of the type identified in Section 2.2.2 that are
attributable solely to the operations of KOFY, either in whole or in part,
during the period after the Effective Time but either payable in advance
prior to the Effective Time or in arrears after the Effective Time
("Prorated Obligations"). For each Prorated Obligation, there shall be
listed (i) the estimated aggregate amount thereof remaining to be paid
after the Effective Time, (ii) the amount of
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such Prorated Obligation incurred by Pacific or attributable to
operations of KOFY, on or prior to Effective Time ("Pre-Closing Incurred
Obligations") and (iii) the actual amount paid by Pacific with respect to
such Prorated Obligation on or prior to Effective Time ("Pre-Closing Paid
Obligations"). Notwithstanding anything to the contrary contained herein,
Prorated Obligations shall be expressly limited to those items listed on
Exhibit A and amounts listed on the Proration Statement, with any
obligations in excess of such amounts being Excluded Pacific Liabilities.
(b) Closing Adjustment. The Purchase Price paid to
Stockholders shall be adjusted on an estimated basis in accordance with
Section 2.2.3(a) at Closing (with a final adjustment to be completed in
accordance with Section 2.2.3(c) below): (i) upward by the amount, if any,
by which Pre-Closing Paid Obligations exceed Pre-Closing Incurred
Obligations; or (ii) downward by the amount, if any, by which, Pre-Closing
Incurred Obligations exceed Pre-Closing Paid Obligations.
(c) Post-Closing Adjustment.
(i) As promptly as possible after the Closing,
but in any event not later than thirty (30) days after the Closing Date,
Buyer shall deliver to Agent a statement setting forth Buyer's
determination of the Purchase Price and the
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calculation thereof pursuant to Section 2.2.3(b). Buyer's statement shall
contain all information reasonably necessary to determine the adjustments
to the Purchase Price under Section 2.2.3(b), and such other information as
may be reasonably requested by Agent. If Stockholders dispute the amount
of the Purchase Price determined by Buyer, Agent shall deliver to Buyer
within thirty (30) days after their receipt of Buyer's statement a
statement setting forth Stockholders' determination of the amount of the
Purchase Price. If Agent notifies Buyer of Stockholders' acceptance of
Buyer's statement, or if Agent fails to deliver its statement within the
thirty-day period specified in the preceding sentence, Buyer's
determination of the Purchase Price shall be conclusive and binding on the
parties as of the last day of the thirty-day period.
(ii) Buyer and Stockholders shall use good faith
efforts to resolve any dispute involving the determination of the Purchase
Price. If the parties are unable to resolve the dispute within thirty (30)
days following the delivery of Pacific's statement pursuant to Section
2.2.3(c)(i), Buyer and Agent shall jointly designate an independent public
accounting firm of national stature that has not been employed by any party
hereto for the two years preceding the date of such designation, who shall
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be knowledgeable and experienced in the operation of television
broadcasting stations, to resolve the dispute. This accounting firm'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 firm shall be split equally between Buyer and
Stockholders.
2.2.4 Payment of Purchase Price. The Purchase Price
shall be paid by Buyer as follows:
(a) Payment of Estimated Purchase Price at Closing.
The Purchase Price, adjusted by the estimated Closing adjustments pursuant
to Section 2.2.3(b), is referred to as the "Estimated Purchase Price." The
Estimated Purchase Price shall be paid to Agent, at Closing, by wire
transfer, in immediately available funds, less the amount of the Deposit.
(b) Payments to Reflect Post-Closing Adjustments.
(i) If the Purchase Price as finally determined
pursuant to Section 2.2.3(c) exceeds the Estimated Purchase Price, Buyer
shall pay to Agent (for the benefit of the Stockholders), in immediately
available funds within five business days after the date on which the
Purchase Price is
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determined pursuant to Section 2.2.3(c), the difference between the
Purchase Price and the Estimated Purchase Price.
(ii) If the Purchase Price as finally determined
pursuant to Section 2.2.3(c) is less than the Estimated Purchase Price,
Stockholders shall pay to Buyer, in immediately available funds within five
business days after the date on which the Purchase Price is determined
pursuant to Section (c), the difference between the Purchase Price and the
Estimated Purchase Price.
2.2.5 Allocation of Purchase Price/Appraisal. For the
purpose of determining the Accrued Pacific Taxes, Buyer shall, with
expenses therefor to be borne fifty percent (50%) by Buyer and 50% by
Stockholders cause an appraisal (the "Appraisal") to be performed of the
value of the Excluded Pacific Assets, subject to the Excluded Pacific
Liabilities, by a nationally known appraisal firm as Buyer and Pacific
mutually designate, no later than twenty (20) days prior to the Closing
Date. The parties agree that the Accrued Pacific Taxes will be calculated
and paid in accordance with the Appraisal. If any taxing authority makes
or proposes a valuation of the shares of Stockholder Co.'s stock that
materially differs from the Appraisal, Buyer and Agent shall each
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have the right, at its election, to contest such taxing authority's
determination, in accordance with Section 21.19.4.
2.3 Accounts Receivable. As of the Closing Date, Stockholders
appoint Buyer, as Stockholders' agent without compensation but without
Liability except for willful misconduct, to collect the Accounts
Receivable. Buyer shall account to Agent, and remit to Agent, the amounts
collected during the period in respect of Accounts Receivable as follows:
(i) on or before the twentieth (20th) day of the second complete calendar
month after the Closing Date, pay the amounts collected up to the end of
the previous month; and (ii) on or before the twentieth (20th) day of each
succeeding month, remit the amounts collected during the month previous
thereto. With each remittance, Buyer shall furnish a statement of the
amounts collected and the Persons from whom such amounts were collected.
Buyer shall, unless the remittance or an Accounts Receivable debtor
specifies otherwise (and such debtor disputes such account), apply all
amounts it receives from or for the benefit of any Accounts Receivable
debtor first to pay the oldest undisputed Accounts Receivable of such
debtor before applying any of such amounts to pay any obligation of such
debtor to Buyer arising during, or otherwise attributable to, the period
after the Effective Time.
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Buyer's agency to collect the Accounts Receivable shall expire as of
midnight on the 120th day following the Closing Date. Within fifteen (15)
business days thereafter, Buyer shall remit to Agent the amounts collected from
the Closing Date until the date thereof that remain in Buyer's possession. Upon
expiration of the agency, Buyer shall turn over to Agent all documents and
records evidencing the Accounts Receivable which were paid to Agent hereunder
and which remain uncollected and Stockholders shall assume sole responsibility
for collection of any remaining Accounts Receivable. Buyer shall use
commercially reasonable collection efforts to collect the Accounts Receivable,
but shall not be required to institute any legal proceedings to collect the
Accounts Receivable or to otherwise incur any cost or obligations in respect
thereof other than in the ordinary course of business. Stockholders shall have
the right to take reasonably appropriate measures to collect any Accounts
Receivable that are over sixty (60) days past due.
2.4 Assumption of Obligations.
2.4.1 Limitation on Obligations of Buyer. Except for
Included Pacific Obligations, Buyer expressly does not, and shall not, assume or
be deemed to have assumed, and Pacific shall not retain or be deemed to retain
at Closing, under this Agreement or by reason of any transactions contemplated
hereunder,
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any Liabilities or obligations of Stockholders, Pacific, KOFY or any of their
Affiliates or stockholders of any nature whatsoever (including any Excluded
Pacific Liabilities which shall be assumed by Stockholder Co. immediately prior
to Closing).
2.4.2 Retained Obligations Relating to KOFY. Subject to the
provisions of Section 2.4.3 below, the following obligations shall be the only
obligations or other Liabilities of Pacific not assumed by Stockholder Co.
immediately prior to Closing (collectively, the "Included Pacific Obligations"):
(a) the obligations of Pacific arising subsequent to, and relating solely to,
the operations of KOFY after the Effective Time, under, (i) all Contracts,
commitments and leases of Pacific included in the Broadcasting Assets and set
forth on Schedules 1-A, 1-B and 1-C in effect as of the date hereof, and (ii)
all Contracts, commitments, leases and amendments, renewals and other
modifications thereof that are entered into by Pacific in connection with KOFY
between the date hereof and the Closing Date as expressly permitted by and
subject to the terms of this Agreement; (b) any other Prorated Obligations which
accrued prior to the Effective Time to the extent that the Purchase Price has
been reduced therefor in accordance with Section 2.2 hereof; and (c) any other
Prorated Obligations which accrue after the Effective Time. It is understood
and agreed
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that Included Pacific Obligations shall not include trade or other accounts
payable, accrued payroll, employee sales commissions, payroll taxes, or
unemployment taxes, that are not Prorated Obligations, any obligations relating
to any funded or other indebtedness or under Employee Benefit Plans, collective
bargaining agreements, Accrued Pacific Taxes or any other Excluded Pacific
Liabilities.
2.4.3 Substitution Where Not Transferable. If Stockholders
or Pacific shall be unable, on or prior to the Closing, to obtain any consent
required in connection with the transactions contemplated hereby under any
Contract (included in the Broadcasting Assets), then Stockholders, Pacific and
Buyer will cooperate to enter into a reasonable arrangement designed to enable
Pacific to perform its obligations thereunder, and to provide for the retention
of Pacific of the benefits, risks and burdens of, any such Contract, including
enforcement at the cost and for the account of Pacific of any and all rights of
Pacific against the other party thereto arising out of the future cancellation
thereof after the Effective Time by such other party; provided, that, neither
Buyer nor Pacific shall be required to enter into, or to accept as a substitute
for performance by Stockholders hereunder, any arrangement which would impose
any additional cost, expense or
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Liability on Buyer or Pacific, or would deprive Buyer or Pacific of any benefits
or profits contemplated under such Contract.
2.5 Option to Require Purchase of Additional Shares. With respect to
the balance of the Stockholders' Shares, representing forty-nine percent (49%)
thereof and consisting of 749.7 shares (the "Additional Shares"), the parties
agree as follows:
2.5.1 Put Option. Stockholders shall have the right, but not
the obligation, to require that Buyer purchase all, but not less than all, of
the Additional Shares for a purchase price of Seventy Million Four Hundred
Thirty-Seven Thousand Five Hundred Dollars ($70,437,500), not subject to
adjustment as is the price for the fifty-one percent (51%) shareholding being
sold hereunder. Such option (the "Put Option") shall be exercisable by written
notice delivered to Buyer at any time at least ten (10) days prior to the
Closing.
2.5.2 Documentation and Closing. In the event that
Stockholders exercise such Put Option, the sale and purchase of the Additional
Shares shall be documented by a Stock Purchase Agreement, or, if the Additional
Shares shall be owned by more than one seller, by a Stock Purchase Agreement for
each seller, substantially in the form attached hereto as Exhibit G (the "Put
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Purchase Agreement"). Closing of such transaction shall, as provided in Exhibit
G, occur contemporaneously with the Closing hereunder. Buyer's obligation to
purchase the Additional Shares is conditioned upon the simultaneous closing of
the purchase of the fifty-one percent (51%) shareholding being sold hereunder.
2.5.3 Assignment. This option to require purchase of the
Additional Shares may be assigned by Stockholders to any subsequent holders of
the Additional Shares; provided, however, that such option may not be exercised
except as to all of the Additional Shares.
3. FCC Consent.
3.1 Application and Request. Within fifteen (15) business
days after the execution of this Agreement: (a) Buyer, Stockholders and
Pacific shall file with the FCC complete and accurate applications requesting
the consent of the FCC to the transfer of control of Pacific from
Stockholders to Buyer or its permitted assignee as contemplated herein (the
"FCC Applications"); and (b) (i) Pacific and Stockholder Co. shall file with
the FCC complete and accurate applications requesting consent to the
assignment of all the KDIA-AM Licenses from Pacific to Stockholder Co. (the
"Step One AM Application") and (ii) Stockholder Co. and Stockholders shall
file with the FCC complete and accurate
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applications requesting consent to the transfer of control of
Stockholder Co. from Pacific to the Stockholders of Pacific contingent upon
approval and consummation of the Step One AM Application (the "Step Two AM
Application" and collectively with the Step One AM Application, the "KDIA-AM
Applications"). Buyer and Pacific shall each pay one half of all FCC filing
fees in connection with the FCC Applications. Buyer, Stockholders and
Pacific shall, with respect to the FCC Applications, and Pacific,
Stockholders and Stockholder Co. shall, with respect to the KDIA-AM
Applications, diligently take, or cooperate in the taking of, all necessary,
desirable and proper actions, provide any additional information reasonably
required or requested by the FCC, and otherwise use commercially reasonable
efforts to obtain promptly the requested approval of the FCC Applications and
the KDIA-AM Applications by the FCC. Buyer, Stockholders and Pacific shall
oppose any petitions to deny or other objections filed with respect to the
FCC Applications; provided, however, that neither Buyer, Stockholders, nor
Pacific shall have any obligation to participate in an evidentiary hearing on
the FCC Applications. At Buyer's option, Buyer, Stockholders and Pacific
shall appeal or otherwise seek review of any action of the FCC denying the
FCC Applications,
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by filing an appropriate request for appeal or review with the FCC or a court of
competent jurisdiction, as the case may be.
3.2 Final Order. The consummation of the transactions
contemplated by this Agreement is conditioned upon: (a) the issuance by the FCC
(including, for purposes hereof, the FCC staff acting under delegated authority)
of an order or other action approving the (i) FCC Applications and consenting to
the transfer of control of Pacific from Stockholders to Buyer or assignee
approved by Stockholders, with such approval not unreasonably to be withheld
(the "FCC Consent"), (ii) the KDIA-AM Applications, and compliance by the
parties hereto with the conditions imposed in said orders (provided that neither
Buyer nor Pacific shall be required to accept or comply with any condition which
would be unreasonably burdensome or which would have a materially adverse effect
upon it); and (b) the FCC Consent having become a Final Order; provided,
however, that condition (b) may be waived by written notice from Buyer to
Pacific at any time after an FCC Consent is obtained from the FCC. If either
Pacific or Buyer are required by the FCC to participate in an evidentiary
hearing on the FCC Applications, such party, or if the FCC Applications are
denied, either Pacific or Buyer, at its option, by written notice of termination
to the other parties, may terminate this Agreement
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without liability on the part of such party other than liability for
indemnification pursuant to Section 15 hereof; provided, however, that the
terminating party may not so terminate this Agreement if it or any of its
stockholders or Affiliates are in material default under any provision of this
Agreement, or if the conditions described in this Section 3.2 have been met
prior to the delivery of written notice of termination.
4. Representations and Warranties Relating to Pacific.
Stockholders, jointly and severally, represent, warrant and covenant to Buyer
that, as of the date hereof:
4.1 Organization and Standing. Each of Pacific and its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of California; (b) has full corporate power
and authority to own, lease and use its properties and to conduct its business
and operations as now being conducted and proposed to be conducted under
existing agreements and to perform the obligations required to be performed by
it hereunder and to consummate the transactions contemplated hereby; (c) is duly
qualified to do business in every jurisdiction in which the nature of its
business requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect. None of the Broadcasting Assets
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are held by, and none of the business or operations of KOFY are conducted
through, any corporation or Person other than Pacific. Since 1992, Pacific's
and its Subsidiaries' sole business and operations have consisted solely of the
ownership and operation of KOFY, radio stations KDIA-AM and KOFY-AM, and air
charter company New Century Aviation.
4.2 Authorization and Binding Obligations. The execution,
delivery and performance by Pacific of this Agreement and the agreements,
exhibits and other documents to be executed and delivered by Pacific pursuant
hereto or in connection herewith have been duly and validly authorized and, upon
execution thereof, will be duly executed and delivered by Pacific, and
constitute valid and binding agreements of Pacific enforceable in accordance
with their terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws relating to or affecting creditors' rights
generally and the exercise of judicial discretion in accordance with general
equitable principles. The individual signing on behalf of Pacific has the legal
power, authority and capacity to bind Pacific.
4.3 No Contravention; Consents.
4.3.1 No Contravention. The execution, delivery and
performance of this Agreement and the other documents to be
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executed in connection herewith, the consummation of the transactions
contemplated hereby and thereby and the compliance with the provisions hereof
and thereof by Pacific and Stockholders do not and will not, after the giving of
notice, or the lapse of time, or otherwise: (a) conflict with or violate any
provisions of the Articles of Incorporation or bylaws of Pacific or any of its
Subsidiaries; (b) result in the breach of any of the terms of, constitute a
default under, conflict with, result in, or constitute grounds for, the
termination or alteration of, or result in the acceleration of the performance
required by the terms of, any agreement, license, permit or other instrument to
which Pacific or any of its Subsidiaries is a party or by which Pacific, any of
its Subsidiaries or any of their property is bound or affected, or result in the
creation of any Encumbrance upon any of the assets of Pacific or any of its
Subsidiaries, including any of the Broadcasting Assets and the KOFY Licenses;
(c) violate, result in the breach of, or conflict with, any laws, regulations,
orders, writs, ordinances, injunctions, decrees, rules, or judgments applicable
to Pacific, any of its Subsidiaries or any of their assets, including the
Communications Act.
4.3.2 Consent. Except as set forth in Schedule 4.3.2, no
consent, waiver, authorization or approval from, or
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filing of any notice or report with, any Governmental Authority or other Person
is necessary in connection with the execution, delivery or performance by
Pacific or any of its Subsidiaries of this Agreement or any of the documents or
transactions contemplated hereby (with or without the giving of notice, the
lapse of time or both).
4.4 Capital Stock.
4.4.1 Outstanding Stock. The authorized capital stock of
Pacific consists solely of 12,000 shares of common stock, par value $10.00 per
share ("Pacific Common Stock"). As of the date hereof and as of the Closing,
the only issued and outstanding capital stock of Pacific is, and will be, the
Shares, which consist of 1,530 shares of Pacific Common Stock. No shares of
Pacific Common Stock are held in Treasury and no shares of Pacific Common Stock
are reserved for issuance. All of the issued and outstanding shares of Pacific
Common Stock are validly issued, fully paid and nonassessable, have the rights,
powers and preferences set forth in Pacific's Articles of Incorporation and
Bylaws, true and correct copies of which are attached hereto as Schedule 4.4,
and have been offered, issued, sold and delivered by Pacific in compliance with
applicable federal and state securities laws. No bonds, debentures, notes or
other instruments or evidence of indebtedness
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having the right to vote (or convertible into, or exercisable or exchangeable
for, securities having the right to vote) on any matters on which the Pacific's
or its Subsidiaries' stockholders may vote ("Company Voting Debt") are issued or
outstanding. Except as provided in Schedule 4.4.1, there are no outstanding
subscriptions, options, warrants, preemptive or other rights (including
"phantom" stock rights), contracts, commitments, understandings or arrangements
relating to any of the capital stock, interests or other securities of Pacific
or any of its Subsidiaries, including (a) any right of conversion or exchange
under any outstanding security, instrument or agreement (together, "Options")
obligating Pacific or any of its Subsidiaries to issue or sell any Company
Voting Debt, shares of capital stock or other securities of Pacific or its
Subsidiaries or to grant, extend or enter into any Option with respect thereto
or (b) any agreement or commitment regarding any right of first refusal or right
to receive notification of the transactions contemplated hereby or obligating
Pacific or any of its Subsidiaries to make any payments pursuant to any stock
based or stock related plan or award.
4.4.2 Securities. All of the outstanding beneficial
interests of each Subsidiary of Pacific are owned, beneficially and of record,
by Pacific free and clear of any
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Encumbrances. There are no (a) outstanding options, agreements or other
arrangements obligating Pacific or any of its Subsidiaries to issue or sell any
beneficial or other ownership interest of any Subsidiary of Pacific or to grant,
extend or enter into any such option, agreement or arrangement or (b) voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements in favor of any Person other than Pacific with respect to the
voting of or the right to participate in dividends or other earnings on any
beneficial or other ownership interest of Pacific or any Subsidiary of Pacific.
4.4.3 No Commitments. Except as provided in Schedule 4.4.1,
there are no outstanding contractual obligations of Pacific or any Subsidiary of
Pacific to repurchase, redeem or otherwise acquire any shares of Pacific Common
Stock or any beneficial or other ownership interest of any Subsidiary of Pacific
or to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary of Pacific or any other Person.
4.4.4 Equity Holders; Subsidiaries. Set forth on Schedule
4.4 hereto is a list of (a) all of the holders of equity of Pacific and the
amount and type of equity held by each such equityholder and (b) all
Subsidiaries of Pacific. Neither
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Pacific, nor any of its Subsidiaries, has any other investments in the
securities of any other Person.
4.5 Title to Assets.
4.5.1 Real Property.
(a) Pacific has good and marketable fee simple or
leasehold title to all of its real property, free and clear of all Encumbrances,
except for and subject only to: (i) liens for real estate and other taxes not
yet due and payable; and (ii) those matters set forth in Schedule 4.5.1,
including the leases listed thereon, none of which is violated by existing
structures or their use and none of which materially impairs or pursuant to its
terms would materially impair the present operations of KOFY or the present use
of such property.
(b) Schedule 1-A sets forth and accurately describes:
(i) all real estate owned and leased by Pacific; and (ii) the nature of the
right, title or interest Pacific has in such real estate. There are no leases,
tenancies, licenses or other rights of occupancy or use for any portion of such
real property or any assignments or sublets thereunder other than as set forth
on Schedule 1-A.
4.5.2 Personal Property. Pacific has good and marketable
title to all tangible personal property included in the
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Broadcasting Assets, in each case free and clear of all Encumbrances, except for
and subject only to: (a) liens for taxes not yet due or payable; and (b) the
liens set forth in Schedule 4.5.2.
4.5.3 Assets Sufficient. The Broadcasting Assets include all
assets that are used in, and/or necessary to conduct the business and operations
of KOFY as presently conducted and as contemplated to be conducted on the
Closing Date.
4.6 Condition of Assets. The Broadcasting Assets that are currently
used in the operation of KOFY are in Pacific's possession and in good operating
condition and repair, ordinary wear and tear excepted, are suitable for the uses
and purposes for which they are being used or intended, and are in material
compliance with all applicable federal, state and local laws, ordinances and
regulations, including the Communications Act, and Pacific has no knowledge or
has received any notice that its properties and/or assets or the present use
thereof are in violation of applicable statutes, ordinances and regulations.
Without in any way limiting the foregoing, to the best of Pacific's and
Stockholders' knowledge, the Tower is in conformance in all respects with
generally accepted engineering standards of the television broadcasting industry
applicable to transmission
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towers and all FCC requirements. Neither Pacific nor any Stockholder has any
knowledge of any defect or any condition relating to the Tower that would or may
affect the proper anchoring or securing thereof, the structural soundness
thereof, or the conformance thereof in all respects with generally accepted
engineering standards of the television broadcasting industry applicable to
transmission towers and FCC requirements.
4.7 Licenses and Authorizations.
4.7.1 Licenses. Schedule 1-D hereto contains a true and
complete list of all KOFY Licenses, and all other licenses, permits and
authorizations issued under federal (including the Communications Act), state or
local law of Pacific and its Subsidiaries. Pacific is the authorized and legal
holder of all of the foregoing.
4.7.2 Authorizations. The KOFY Licenses and all other
items identified in Section 4.7.1 were validly issued, are valid and in full
force and effect, and have been complied with in all material respects and no
investigation, notice of investigation, violation, order, complaint, action or
other proceeding is pending or, to the knowledge of Pacific or Stockholders,
threatened before the FCC or any other Governmental Authority to revoke, refuse
to renew or modify such FCC licenses or
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other authorizations or which could in any manner threaten or adversely affect
the KOFY Licenses or KOFY's operations as presently conducted. No event has
occurred that permits, or after notice or lapse of time would permit, the
revocation or termination of the KOFY Licenses or such other authorizations or
the imposition of any restriction thereon of such a nature as may materially
limit the business or operations of KOFY as now conducted. Pacific has no
reason to believe that the KOFY Licenses will not be renewed in the ordinary
course.
4.8 Contracts. Schedules 1-A, 1-B, 1-C, 1-F and 4.10 hereto, contain
a true and complete list of all contracts, leases, national and local
advertising representation agreements, employment agreements, programming
contracts and other agreements and commitments of every nature as of the date
hereof, written or otherwise, constituting part of the Broadcasting Assets or
the Included Pacific Liabilities or otherwise relating to KOFY (collectively the
"Contracts"). Neither Pacific, any of its Subsidiaries, nor, to the best of
Pacific's knowledge, any other party to the Contracts, is now, or shall be as of
the Closing, in default under any of the Contracts, and no event, occurrence or
condition exists which with the giving of notice, lapse of time, or both, or the
happening of any further event or condition, would
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become a default thereunder. Neither Pacific nor any of its Subsidiaries has
not released or waived (by action or inaction) any of its rights under any of
the Contracts. All such Contracts are in full force and effect and valid and
binding and enforceable against the parties thereto in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other laws relating to or affecting creditors' rights generally.
Neither Pacific nor any of its Subsidiaries has assigned any of its rights under
any of the Contracts or is in any way restricted from enforcing its rights
thereunder. True and complete copies of all Contracts (or accurate descriptions
of any verbal Contracts) and all amendments and modifications thereto have been
delivered or made available to Buyer. Except as set forth on Schedule 4.8
hereto, Pacific has not amended, or otherwise altered the payment terms of or
under, any Contract. Pacific has the right to the quiet enjoyment and
unencumbered use of all of its leased real and personal property relating to
KOFY in accordance with the terms of the lease agreements governing such leased
real or personal property, provided that it fulfills its obligations to be
performed thereunder. Except for the need to obtain the Consents listed on
Schedule 4.3.2, Stockholders and Pacific have full legal power and authority to
consummate the transactions contemplated by
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this Agreement and the consummation thereof will not affect the validity,
enforceability or continuation of any of the Contracts.
4.9 Franchises, Trademarks and Trade Names. All franchises,
trademarks, patents, tradenames, intellectual property rights and interests,
service marks, know-how, call letters, telephone numbers, copyrights in literary
property of any kind, jingles and privileges held by Pacific or any of its
Subsidiaries with respect to KOFY are set forth on Schedule 1-E hereto
(including a description thereof and except as noted on said Schedule 1-E), are
owned by Pacific or licensed for its use and are valid and in full force and
effect. To the knowledge of Pacific, the ownership and operation by Pacific of
KOFY and the other assets utilized in connection with its other businesses and
operations, as presently owned and operated, do not infringe upon or conflict in
any respect with any franchise, patent, trademark, tradename, service mark,
brand name, copyright or other intellectual property rights or interests of any
other Person and no other Person is infringing upon any such rights of Pacific
or its Subsidiaries.
4.10 ERISA.
4.10.1 Employee Benefit Plans. Schedule 4.10.1 hereto lists
all Employee Benefit Plans of Pacific and any member of the Controlled Group
or to which Pacific or any member of the
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Controlled Group is obligated to contribute (collectively, the "Pacific
Benefit Plans"). None of the Pacific Benefit Plans, which is not a qualified
plan exempt from income taxation, provides or promises benefits to
ex-employees (including retirees) of Pacific or any member of the Controlled
Group or their dependents and beneficiaries except as specifically required
under the Code, with respect to continuation of coverage. All of such
Pacific Benefit Plans have been operated in accordance with their terms, and
all of such Pacific Benefit Plans that are nonmultiemployer plans, and that
are subject to the terms of ERISA, the Code, or other statues, laws,
ordinances, codes, rules and regulations comply in all material respects with
ERISA, the Code, and such other statutes, laws, ordinances, codes, rules and
regulations, as applicable, and, in the case of each such Employee Benefit
Plan which is a qualified plan exempt from income Taxes, a determination has
been received from the appropriate District Director of Internal Revenue that
such plan is qualified under Section 401(a) of the Code and the trust created
thereunder, if any, is exempt from federal Taxes under Section 501(a) of the
Code. No such Pacific Benefit Plan has incurred any accumulated funding
deficiency (within the meaning of ERISA or the Code) and neither Pacific nor
any member of the Controlled Group has any Liability or potential Liability
on
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account of an accumulated funding deficiency with respect to any Pacific
Benefit Plan. There has been no transaction involving any Pacific Benefit Plan
which is a "prohibited transaction" under ERISA or the Code in connection with
which Pacific or any member of the Controlled Group would be subject to
Liability under ERISA or any Tax Liability imposed by the Code, or which would
subject any such Pacific Benefit Plan, Pacific or any member of the Controlled
Group to a penalty under ERISA, the Code or any other statute, law, ordinance,
code, rule or regulation. Where applicable, Pacific and each member of the
Controlled Group have paid all premiums due to the PBGC with respect to each
such Pacific Benefit Plan, and no other Liability to the PBGC has been incurred
by Pacific or any member of the Controlled Group. There has been no complete or
partial termination of any Pacific Benefit Plan, nor has there been any
"reportable event" as such term is defined in Section 4043(b) of ERISA and the
regulations promulgated thereunder with respect to any Pacific Benefit Plan.
None of the Pacific Benefit Plans provides for additional or accelerated
payments or other consideration to be made on account of the transactions
contemplated hereby. No suit, action, claim, proceeding, investigation or
arbitration has been made or instituted or, to the best knowledge of Pacific or
any of the
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Stockholders threatened, with respect to any of Pacific Benefit Plan or any
assets thereof.
All contributions or payments required to be made to any Pacific Benefit
Plans by their terms or by law and any relevant collective bargaining
agreement(s), before or after the Closing Date, with respect to all periods or
events occurring on or prior to the Closing Date (including all insurance
premiums) have been properly paid or accrued on the books of account of Pacific
prior to the Closing Date.
Neither Pacific nor any member of the Controlled Group is subject to any
asserted or unasserted withdrawal or other Liability under Title IV of ERISA or
potentially secondarily liable for any withdrawal or other Liability under Title
IV of ERISA.
True, complete and accurate copies of the documents setting forth the terms
of each Pacific Benefit Plan listed on Schedule 4.10.1 hereto, including,
without limitation, plans, agreements, amendments, trusts and all related
contracts and other agreements and, where applicable, copies of the plans': (a)
most recent summary plan descriptions and modifications thereto; (b) notices
distributed to employees, consultants, agents, dependents and other
beneficiaries with regard to any continuation of coverage required under law;
(c) most recent favorable Internal Revenue Service
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determination letters; (d) five (5) most recent annual reports (Forms 5500),
including, without limitation, audited financials statements and all schedules
thereto; and (e) five (5) most recent actuarial reports have heretofore been
delivered to Buyer. There are no oral modifications to any of such Pacific
Benefit Plans. The Liabilities for all benefits provided pursuant to the
Employee Benefit Plans set forth on Schedule 4.10.1 hereto have been truly and
accurately provided for on the books of account of Pacific and each of its
Subsidiaries, as the case may be.
4.10.2 Terminated Plans. Schedule 4.10.2 hereto describes all
Employee Benefit Plans in effect at any time during the three (3) years
preceding the Closing Date with respect to which Pacific or any member of the
Controlled Group has terminated or has taken action during such period which has
or will result in termination. Neither Pacific nor any member of the Controlled
Group has any Liability to any Person, including, without limitation, the PBGC,
any other Governmental Authority or any participant in or beneficiary of any
such Employee Benefit Plan, nor is Pacific or any member of the Controlled Group
liable or potentially liable for any excise, income or other Tax or penalty, as
a result of any Employee Benefit Plan termination. All terminations have been
made in accordance with the Code and ERISA,
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all required filings and participant communications have been made and, where
appropriate, Pacific and each member of the Controlled Group has obtained a
favorable determination letter from the Internal Revenue Service with respect to
the termination of each Employee Benefit Plan which is a qualified retirement
plan and has obtained a notice of sufficiency from the PBGC (with respect to
each of such Employee Benefit Plans, if any, which is a defined benefit plan)
(complete and correct copies of which have heretofore been delivered to Buyer)
and have not received a notice of insufficiency from the PBGC with respect to
any Employee Benefit Plan. The notices of sufficiency and favorable
determination letters were received after full and accurate disclosure of all
relevant facts to the appropriate Governmental Authorities. All steps with
regard to the termination of each terminated Employee Benefit Plan shall have
been completed on or prior to the Closing Date, including, without limitation,
the distribution of accrued benefits to participants and the purchase and
distribution of annuity contracts to participants, and the making of all
required post-termination filings.
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4.11 Financial Statements; Liabilities.
4.11.1 Financial Statements. The: (a) consolidated audited
balance sheets and the related statements of operations and cash flows of
Pacific and its Subsidiaries (collectively, the "Financial Statements") as of
and for the fiscal years ended June 30, 1996 and 1995; and (b) the interim
unaudited Financial Statements (excluding cash flow statements) for the months
ended January 1996 through June 1997 and for the twelve months ended June 30,
1997 and the financial statements to be delivered pursuant to Section 7.1.8
hereof, were (or will be in the case of a future delivery) prepared in
accordance with GAAP. The Financial Statements referred to in the preceding
sentence of this Section 4.11 (hereinafter, collectively referred to as the
"Financial Information") (to the extent prepared) are attached hereto as
Schedule 4.11, are true and correct in all material respects, fairly and
accurately present the financial condition and results of operations of Pacific
and its Subsidiaries as of the dates and for the periods indicated and have been
certified by a responsible financial officer of Pacific and audited by Tong &
Fong, in the case of audited Financial Statements. Since June 30, 1996, there
have been no material adverse changes in the business, operations, prospects or
condition, financial or otherwise, of
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KOFY, Pacific or the Broadcasting Assets, and no fact or condition exists or is
contemplated or threatened which might cause such a material adverse change in
the future.
4.11.2 Liabilities. To the best knowledge of Stockholders and
Pacific after due inquiry, except as set forth on Schedule 4.11.2, there are no
Liabilities or any unrealized or anticipated losses or expenses from commitments
of, or relating to, KOFY, Pacific or any of its Subsidiaries or encumbering any
of their assets, including the Broadcasting Assets.
4.12 Litigation; Violations.
4.12.1 Litigation. Except for administrative rulemaking or
other proceedings of general applicability to the broadcast industry and except
as set forth in Schedule 4.12: (a) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, litigation, action, arbitration,
proceeding or investigation of any nature pending or, to the best of Pacific's
and Stockholders' knowledge, threatened against or relating to Pacific, any of
its Subsidiaries, KOFY, the Broadcasting Assets or the transactions contemplated
hereby or affecting the same; (b) no writ, injunction, judgment, award, order or
decree has been rendered or is pending against or, to the best of Pacific's and
Stockholders' knowledge, threatened against affecting Pacific, any
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of its Subsidiaries, KOFY, the Broadcasting Assets or the transactions
contemplated hereby; and (c) to the best of Pacific's and Stockholders'
knowledge, there is no basis for any of the foregoing set forth in (a) and (b)
above. An adverse determination on any matter set forth on Schedule 4.12 would
not have a Material Adverse Effect.
4.12.2 Violations. Pacific has not violated or in default
under any order, law, rule, regulation, ordinance, policy, judgment, writ or
decree of the FCC or any court or other Governmental Authority in any respect
which might materially adversely affect the business, operations, prospects or
condition, financial or otherwise, of Pacific, any of its Subsidiaries, KOFY,
any of the KOFY Licenses, the Broadcasting Assets or the transactions
contemplated hereby.
4.13 Complaints. There is not any FCC investigation, notice of
violation, notice of apparent liability or order of forfeiture pending or
outstanding against Pacific or any of its Affiliates respecting any violation,
or allegation thereof, of any provision of the Communications Act or, to the
best of Pacific's and Stockholders' knowledge, any complaint before the FCC as a
result of which an investigation, notice of violation, notice of apparent
liability or order of forfeiture may issue from the FCC
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relating to KOFY, Pacific or any of its Affiliates. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any of the KOFY Licenses, or the imposition of any restriction
thereon.
4.14 Reports. All returns, notices, reports, statements or other
filings currently required to be filed by Pacific or any of its Subsidiaries
with the FCC, and all material returns, notices, reports, statements or other
filings currently required to be filed by Pacific or any of its Subsidiaries
with any other federal, state, or local Governmental Authority, have been filed
and complied with and shall continue to be filed and be in compliance on a
current basis until the Closing Date. All such reports, returns and statements
are (or will be, in the case of future reports) complete and correct.
4.15 No Misleading Statements. No representation or warranty made
by Pacific or Stockholders in this Agreement (without reference to any
"materiality," qualifying or limiting language set forth therein), and no
statement made in any schedule, exhibit, certificate or other document
furnished pursuant to this Agreement, contains any untrue statement of a
material fact or omits or fails to state any material fact or information
necessary to make such
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representation or warranty or any such statement not materially misleading.
4.16 Affiliated and Recent Transactions.
4.16.1 Affiliated Transactions. Except as described on
Schedule 4.16, neither Pacific nor any of its Subsidiaries is a party to any
transaction with any of its stockholders, officers, directors, employees (except
in the ordinary course of business) or other Affiliates (each an "Affiliated
Transaction").
4.16.2 Recent Transactions. Except as described on Schedule
4.16, since June 30, 1996, Pacific has not: (a) entered into any transactions,
or conducted business, in any manner inconsistent in any material respect with
its historical practices; (b) changed any accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates); (c) failed to pay any payments on Contracts on a current
basis, except to the extent Pacific has a valid dispute with respect to such
payment; (d) cancelled or compromised any debt or claim or waived or released
any rights of material value; or (e) agreed to take any action referred to in
(a), (b), (c) or (d) above.
4.17 Taxes.
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4.17.1 Filing of Tax Returns. Pacific and its Subsidiaries
have since 1991 timely filed with the appropriate taxing authorities all
federal, state, local and foreign returns (including, without limitation,
information returns and other material information) in respect of all Taxes
required to be filed through the date hereof. Pacific has delivered to Buyer
correct and complete copies of all federal income tax returns filed by Pacific
and its Subsidiaries since June 30, 1992, and will deliver as soon as
practicable after the date hereof, such return for the 2 years prior thereto.
All such income tax returns were correct and complete in all material respects.
Except as specified in Schedule 4.17, no returns are subject to an automatic
extension and, in addition, neither Pacific nor any of its Subsidiaries have
requested any extension of time within which to file returns (including, without
limitation, information returns) in respect of any Taxes. Neither Pacific nor
any of its Subsidiaries (a) has been included or required to be included in a
federal consolidated tax return (or in a comparable return required by any other
Governmental Authority) (other than a group the common parent of which was
Pacific) or (b) has any Liability for the Taxes of any Person (other than
Pacific) under Reg. Section 1.1502-6 (or any similar
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provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.
4.17.2 Payment of Taxes. Pacific and its Subsidiaries have
accurately computed and timely paid all Taxes of any kind that have become due
and payable and that, if unpaid, could result in an Encumbrance upon the assets
of Pacific or any of its Subsidiaries. There are no liens on any of the assets
of Pacific or any of its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any Taxes.
4.17.3 Audits. Except as set forth in Schedule 4.17, no
material deficiencies for Taxes have been claimed, proposed, or assessed by any
taxing or other Governmental Authority against Pacific or any of its
Subsidiaries. Except as set forth in Schedule 4.17, there are no pending or, to
the best knowledge of Pacific and Stockholders, threatened audits,
investigations or claims for or relating to any material Liability in respect of
Taxes, and there are no matters under discussion with any Governmental
Authorities with respect to Taxes that, in the reasonable judgment of Pacific or
Stockholders or their counsel, are likely to result in a material additional
amount of Taxes. Audits of federal, state, and local returns for Pacific or any
of its Subsidiaries for Taxes by the relevant taxing authorities have
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been completed for each period set forth in Schedule 4.17 and, except as set
forth in such Schedule, neither Pacific, its Subsidiaries nor Stockholders have
been notified that any taxing authority intends to audit a return for any other
period. Except as set forth in Schedule 4.17, no extension of a statute of
limitations relating to Taxes is in effect with respect to Pacific or any of its
Subsidiaries. No claim has ever been made by an authority in a jurisdiction
where Pacific or any of its Subsidiaries does not file Tax Returns that any of
them is or may be subject to taxation by that jurisdiction.
4.17.4 Tax Elections. All material elections with respect to
Taxes affecting or relating to Pacific, any of its Subsidiaries, KOFY or the
Broadcasting Assets as of the date hereof are set forth in Schedule 4.17.
4.17.5 FIRPTA. Stockholders are not "foreign persons" as
defined in section 1445(f)(3) of the Code. Neither Pacific nor any of its
Subsidiaries has been a United States real property holding company within the
meaning of Section 897(c)(2) of the Code during the applicable period set forth
in Code Section 897(c)(1)(A)(ii).
4.17.6 Parachute Payments. Neither Pacific nor any of its
Subsidiaries has made any payments, is obligated to make
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any payments, or is a party to any agreements that under certain circumstances
could obligate them to make any payments that would not be deductible under
Section 280G of the Code.
4.17.7 Tax-Sharing Agreements. Neither Pacific or any of its
Subsidiaries is a party to any tax-sharing agreements or similar arrangements.
4.17.8 Collapsible Corporation. None of Pacific and its
Subsidiaries has filed a consent under Code Section 341(f) concerning
collapsible corporations.
4.17.9 Disclosure Information. Schedule 4.17 hereto sets
forth the following information with respect to Pacific and each of its
Subsidiaries as of the most recent practicable date: (a) the basis of Pacific
and each of its Subsidiaries in their assets; and (b) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax credit, or excess charitable contribution allocable to Pacific and
each of its Subsidiaries.
4.18 Environmental Matters.
4.18.1 Compliance. Except as set forth on Schedule 4.18,
Pacific and its Subsidiaries are complying and has complied in all respects with
all Environmental Laws, except for such failures to be in compliance which,
individually or in the
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aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.18.2 Hazardous Materials. Except as described on Schedule
4.18 there are, to the best of the knowledge and belief of Pacific and
Stockholders, no Hazardous Materials on, under, in or about any Relevant
Property in material violation of any Environmental Law.
4.18.3 Claims. Except as set forth on Schedule 4.18, neither
Stockholders nor Pacific is aware of any existing, pending, threatened or past
Claims.
4.18.4 USTs. Except as described on Schedule 4.18, no
underground storage tanks ("USTs"), as defined in RCRA, 42 U.S.C. Section
6991(1), or applicable state law, exist or, to the best of the Pacific's or
Stockholders' knowledge, has ever existed on, under, in or about any of the
Relevant Property.
4.18.5 Studies; Investigations. Schedule 4.18 sets forth
all environmental investigations, studies, audits, tests, reviews or other
analyses conducted by, or which are in the possession of, Pacific, or of which
Pacific is aware, in relation to any Relevant Property, all of which have been
delivered to Buyer prior to the execution of this Agreement.
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4.18.6 Relevant Property. For purposes of this Agreement,
Relevant Property shall mean all real property and equipment owned, leased,
occupied, controlled or used by KOFY, Pacific or Pacific's Subsidiaries and all
real property and equipment formerly owned by KOFY, Pacific or Pacific's
Subsidiaries, if any, at the time such property was owned, leased, occupied,
controlled or used by Pacific or Pacific's Subsidiaries. Relevant Property
shall not include any real property or other assets at the Tower site in San
Francisco that is not leased, occupied and/or used by Pacific or KOFY.
4.19 Labor.
4.19.1 Labor Problems. Except as set forth on Schedule 4.19,
there are no and, during the three year period immediately preceding the date
hereof, there have been no, strikes, work stoppages, grievance proceedings,
labor grievances, labor controversies or union organization efforts or, to the
knowledge of Pacific or Stockholders, have any been threatened between KOFY,
Pacific or any of its Subsidiaries and any of their employees or agents or any
union or collective bargaining unit. KOFY, Pacific and its Subsidiaries have
complied and are in compliance in all material respects with all laws and
regulations relating to the employment of labor. There are no (a) collective
bargaining
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agreements or (b) oral or written employment or other agreements between KOFY,
Pacific or any of Pacific's Subsidiaries, and any of their current or former
employees, agents or consultants. Except as set forth on Schedule 4.19.2,
neither Pacific, any of its Subsidiaries, nor KOFY is a party to any written or
oral agreement, consent decree or court order, and there is no employment
manual, employment handbook or employment practice or policy governing the
employment of any of the employees of Pacific, its Subsidiaries or KOFY under
which such employment is not terminable on 30 days' (or less) notice by Pacific
without penalty or Liability to Pacific or Buyer.
4.19.2 Employees and Compensation. Schedule 4.19 contains a
true, correct and complete list of all employees of Pacific and its
Subsidiaries, including those currently engaged (or at any time during the sixty
(60) days prior to the date hereof engaged) in the business and operations of
the KOFY (the "KOFY Employees"), which employees are separately identified on
such Schedule, and a description of all compensation arrangements affecting all
of the Scheduled employees.
4.20 Cable Carriage. The signal of KOFY is being carried on all cable
television systems set forth in Schedule 4.20, located within the San Francisco
- - San Jose, California DMA
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(Designated Market Area) as designated by the FCC either pursuant to the
mandatory carriage requirements specified in Section 614 of the Communications
Act or pursuant to retransmission consent agreements entered into in accordance
with Section 325(b) of the Communications Act and the terms of such mandatory
carriage rights and retransmission agreements shall by their respective terms
extend until at least the dates set forth in Schedule 4.20 after giving effect
to the transactions contemplated by this Agreement.
4.21 Insurance. Schedule 4.21 is a true and complete list as of the
date of this Agreement of all insurance policies of Pacific and each of its
Subsidiaries that insure any part of the Broadcasting Assets or the business or
operation of Pacific or its Subsidiaries. All policies of insurance listed in
Schedule 4.21 are in full force and effect and no notice of cancellation has
been received with respect to any such policy.
4.22 Solvency; Net Worth. As of the date hereof, and at all times
between the date hereof through the Closing Date, prior to and after giving
effect to the transactions contemplated hereby, Pacific and each of its
Subsidiaries will be capable of meeting their obligations as they become due,
and have assets exceeding Liabilities and neither Pacific, nor any of its
Subsidiaries has insufficient capital.
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4.23 Bank Accounts and Powers of Attorney. Schedule 4.23 sets forth:
(a) the name of each bank in which Pacific has an account or safe deposit box,
the identifying numbers or symbols therefor, and the name of each person
authorized to draw thereon or to have access thereto; and (b) the name of each
person, if any, holding powers of attorney from Pacific, true copies of which
have previously been delivered to Buyer.
5. Representations and Warranties of Stockholders. Each Stockholder
represents and warrants to Buyer that, as of the date hereof:
5.1 Organization and Standing. Such Stockholder: (a) if applicable,
is a corporation or other Person duly organized, validly existing and in good
standing under the laws of the state of its incorporation or formation; (b) has
full power and authority to own, lease and use its properties and to conduct its
business and operations as now being conducted and proposed to be conducted
under existing agreements and to perform the obligations required to be
performed by it hereunder and to consummate the transactions contemplated
hereby; and (c) is duly qualified to do business in every jurisdiction in which
the nature of its business requires such qualification, except where the failure
to do so qualify would not have a Material Adverse Effect.
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5.2 Authorization and Binding Obligations. The execution, delivery
and performance by such Stockholder of this Agreement and the agreements,
exhibits and other documents to be executed and delivered by such Stockholder
pursuant hereto or in connection herewith have been duly and validly authorized
and, upon execution thereof, will be duly executed and delivered by such
Stockholder, and constitute the valid and binding agreement of such Stockholder
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws relating to or
affecting creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles.
5.3 No Contravention; Consents.
5.3.1 No Contravention. The execution, delivery and
performance of this agreement and the other documents to be executed in
connection herewith, the consummation of the transactions contemplated hereby
and thereby and the compliance with the provisions hereof and thereof by such
Stockholder do not and will not, after the giving of notice, or the lapse of
time, or otherwise: (a) conflict with or violate any provisions of the Articles
of Incorporation, bylaws, trust documents or other formation or governance
documents of such Stockholder; (b) result
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in the breach of any of the terms of, constitute a default under, conflict with,
result in, or constitute grounds for, the termination or alteration of, or
result in the acceleration of the performance required by the terms of, any
agreement, license, permit or other instrument to which such Stockholder is a
party or by which such Stockholder or any of its properties is bound or
affected, or result in the creation of any Encumbrance upon any of its assets;
or (c) violate, result in the breach of, or conflict with, any laws,
regulations, orders, writs, ordinances, injunctions, decrees, rules, or
judgments applicable to such Stockholder or any of its assets.
5.3.2 Consent. Except as identified on Schedule 4.3.2, no
consent, waiver, authorization or approval from, or filing of any notice or
report with, any Governmental Authority or other Person is necessary in
connection with the execution, delivery or performance by such Stockholder of
this Agreement or any of the documents or transactions contemplated hereby (with
or without the giving of notice, the lapse of time or both).
5.4 Ownership of Shares. Such Stockholder is the record and
beneficial owner of the number of shares of Pacific's common stock set forth on
Schedule 5.4 after such Stockholder's name free and clear of all Encumbrances.
At the Closing, such
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Stockholder shall deliver to Buyer duly endorsed certificates evidencing such
shares, free and clear of all Encumbrances.
6. Representations and Warranties of Buyer. Buyer represents,
warrants and covenants to Pacific that:
6.1 Organization and Standing. Buyer: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (b) has full corporate power and authority to own its properties and
to transact the business in which it is currently engaged and to perform the
obligations required to be performed by it hereunder and to consummate the
transactions contemplated hereby; and (c) is duly qualified to do business and
in good standing as a foreign corporation in every jurisdiction in which the
nature of the business to be conducted by it requires such qualification, except
where the failure to so qualify would not materially adversely affect the
transactions contemplated hereby.
6.2 Authorization and Binding Obligations. The execution, delivery
and performance of this Agreement and the agreements, exhibits and other
documents to be executed and delivered by Buyer pursuant hereto have been duly
and validly authorized and, upon execution thereof, will be duly executed and
delivered by Buyer and constitute valid and binding agreements of
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Buyer enforceable in accordance with their terms except as such enforceability
may be limited by bankruptcy, insolvency, moratorium or other laws relating to
or affecting creditors' rights generally and the exercise of judicial discretion
in accordance with general equitable principles.
6.3 No Contravention. The execution, delivery and performance of
this Agreement and the other documents to be executed in connection herewith,
the consummation of the transactions contemplated hereby and thereby in
accordance with the terms and conditions hereof and thereof and the compliance
with the provisions hereof and thereof by Buyer do not and will not, after the
giving of notice, or the lapse of time, or otherwise: (a) conflict with or
violate any provisions of the Certificate of Incorporation or Bylaws of Buyer;
(b) result in the breach of, conflict with, or constitute a default under, the
provisions of any agreement or other instrument to which Buyer is a party or by
which the property of Buyer is bound or affected; or (c) violate or conflict
with any laws, regulations, orders, writs, decrees, injunctions or judgments
applicable to Buyer, including the Communications Act.
6.4 Litigation. As of the date hereof, except for administrative
rulemaking or other proceedings of general
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applicability to the broadcast industry, there is no civil, criminal or
administrative action, suit, demand, claim, litigation, action, proceeding or
investigation of any nature pending or, to the best of Buyer's knowledge,
threatened against or affecting Buyer that would adversely affect its or, if
Buyer assigns its rights hereunder to a permitted assignee, its permitted
assignee's ability to consummate the transactions contemplated in this
Agreement.
6.5 No Misleading Statements. No representation or warranty made by
Buyer in this Agreement (without reference to any "materiality," qualifying or
limiting language set forth therein), and no statement made in any schedule,
exhibit, certificate or other document furnished pursuant to this Agreement,
contains any untrue statement of a material fact or omits or fails to state any
material fact or information necessary to make such representation or warranty
or any such statement not materially misleading.
6.6 Qualifications as Broadcasting Licensee. Subject to obtaining
the FCC Consent to the FCC Applications, Buyer is legally qualified under the
Communications Act to own the Shares and consummate the transactions
contemplated hereby.
6.7 Financial Capacity. Buyer has the financial capacity to satisfy
all of Buyer's obligations under this Agreement
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and the documents to be executed and exchanged at the Closing, and to perform
all of Buyer's obligations at the Closing.
7. Conduct Pending Closing.
7.1 Pacific's and Stockholders' Covenants. Pacific and
Stockholders covenant and agree that pending the Closing, except with the
prior written consent of Buyer:
7.1.1 Conduct of Business. Subject to the provisions of
this Agreement, Pacific and its Subsidiaries shall conduct their business and
operations in the normal and ordinary course of business in substantially the
same manner as heretofore conducted and shall use all reasonable efforts
consistent with normal business practices to preserve and promote such
business and to avoid any act which might have a Material Adverse Effect.
7.1.2 Assets. Consistent with normal business practices,
Pacific shall maintain the Broadcasting Assets in the condition specified in
Section 4.6 hereof.
7.1.3 Inventory. Pacific shall maintain its inventory
levels (including office supplies, spare parts, tubes, equipment and the
like) at levels consistent with the normal and ordinary course of operation
of KOFY.
7.1.4 Employee Compensation and Benefits. Pacific shall
not increase the compensation, expense allowance or
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other benefits payable or to become payable to any of its or its
Subsidiaries' employees or pay or arrange to pay any bonus payment to any
such employee; provided, however, that, Pacific shall be permitted to grant
bonuses in the normal and ordinary course of business consistent with past
practices if any such bonus is paid in full prior to Closing and neither
Pacific nor Buyer shall have any obligation with respect thereto after
Closing.
7.1.5 Organization, Etc. Consistent with normal business
practices, Pacific and Stockholders shall use their reasonable best efforts
to: (a) maintain the present quality of the operations of Pacific and its
Subsidiaries; (b) preserve the value of KOFY as a going concern; (c) preserve
intact the business organization of KOFY; (d) keep available to KOFY the
services of all current KOFY Employees and make available for employment by
Buyer all current KOFY Employees; and (e) preserve for KOFY the existing
relationships with employees, suppliers, customers and their agencies and
others having business with KOFY. Neither Pacific nor its Subsidiaries shall
seek any protection under any Federal or state laws affecting creditors'
rights, including bankruptcy and insolvency laws.
7.1.6 Insurance. Pacific and its Subsidiaries shall cause
to be maintained in effect until the Closing adequate
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property damage, Liability and other insurance with respect to their assets,
including the Broadcasting Assets and KOFY, the list of the policies
governing which are set forth on Schedule 4.21.
7.1.7 Transfer of Broadcasting Assets. Neither Pacific nor
any of its Subsidiaries shall sell, assign, lease or otherwise transfer or
dispose of any of the Broadcasting Assets, except where such disposition is
in the ordinary course of business and the assets involved are either: (a) no
longer used or useful; or (b) replaced with a substantially equivalent asset
of substantially equivalent kind, condition and value.
7.1.8 Financial Statements; Pacing Reports.
(a) Pacific shall furnish to Buyer: (i) on or prior
to November 30, 1997, audited Financial Statements of Pacific and its
Subsidiaries prepared in accordance with GAAP as of and for the fiscal years
ended June 30, 1997 which Financial Statements shall include an opinion
thereon from Tong & Fong; and (ii) within twenty (20) days after the end of
each month, commencing with the month ending July 31, 1997, (x) an unaudited
consolidated profit and loss statement of Pacific and its Subsidiaries for
such month and for the period of its fiscal year ended at the end of such
period; and (y) an unaudited consolidated balance sheet of Pacific and its
Subsidiaries as of the end of such
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month. The financial statements to be delivered by Pacific hereunder shall
be certified by a responsible financial officer of Pacific and audited by
Tong & Fong, in the case of audited Financial Statements, shall be prepared
on a comparative basis with the preceding fiscal year or corresponding period
thereof, shall be prepared in accordance with GAAP, shall be true and correct
in all material respects and shall fairly and accurately present the
financial condition and the results of operations of Pacific and its
Subsidiaries as of the dates and for the periods indicated. On or before
delivery of all monthly Financial Statements delivered to Buyer pursuant to
this Section 7.1.8, Pacific shall deliver monthly pacing reports for KOFY
(prepared in a form consistent with past practices), which shall be certified
as to the accuracy thereof by a responsible manager of KOFY;
(b) Pacific acknowledges that Tong & Fong or, if it
shall be unable or unwilling to do so, Buyer's accountants, Ernst & Young LLP
("EY"), will perform an audit of two years (6/30/96 and 6/30/97) of Financial
Statements of Pacific, and in connection therewith, Pacific agrees to provide
to EY (if Tong & Fong does not perform such audit) access to the workpapers
of Tong & Fong used in preparing the audited Financial Statements for those
years with respect to KOFY, its books, accounting records and
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financial statements. Pacific agrees to provide to Tong & Fong or EY such
standard representation letters relating to Pacific, its books, accounting
records and financial statements necessary for Tong & Fong or EY to conduct
such audit in accordance with generally accepted auditing standards.
7.1.9 Encumbrances. Pacific shall not create, assume or
permit to exist any Encumbrance affecting any of the Pacific Common Stock or
the Broadcasting Assets (or their replacements) other than those expressly
permitted by this Agreement.
7.1.10 Litigation. Pacific shall notify Buyer: (a) of any
litigation pending or, to its knowledge, threatened against or affecting
KOFY, Pacific or any of Pacific's Subsidiaries or which challenges or seeks
any damages or other payments in connection with the transactions
contemplated hereby; and (b) of any material damage to or destruction of the
Broadcasting Assets or the business, prospects or other assets of Pacific or
any of its Subsidiaries.
7.1.11 Agreements. Pacific and its Subsidiaries shall
perform all obligations (including, without limitation, all payment
obligations) required to be performed by it under all Contracts, and shall
not amend or terminate any Contract or series
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of related Contracts involving payments of over $250,000 (or waive any
material right thereunder) or enter into any new agreements or arrangements
or series of related Contracts involving payments of over $250,000 which
might be binding on or affect Pacific or Buyer; provided, however, that
Pacific shall be permitted to enter into new programming contracts after
consultation with Buyer with respect thereto. Except as required by law,
Pacific shall not enter into any collective bargaining agreement, employment
agreement (other than an employment agreement terminable at will) or Employee
Benefit Plan or any amendment, extension or other modification of any
existing collective bargaining agreement, employment agreement or Pacific
Benefit Plan.
7.1.12 Consents and Approvals. Pacific will, prior to the
Closing Date, use its best efforts to obtain or cause to be obtained: (a)
consents under the Contracts (without any change in the terms and conditions
of any such Contracts that could have an adverse affect on Buyer or the
operations of KOFY or Pacific) which require the consent of any Person by
reason of the transactions provided for or contemplated in this Agreement;
and (b) any other consents, approvals, waivers, authorizations (without any
conditions attached that could have an adverse affect on Buyer or Pacific, or
the operations of KOFY) and make all necessary
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filings identified on Schedule 4.3.2 hereof. Each party shall cooperate with
the other to obtain any such consents or approvals.
7.1.13 Licenses. Pacific shall not, by any act or omission
to act within its reasonable knowledge and power, surrender, modify,
adversely affect or forfeit any of the KOFY Licenses or cause the FCC to
institute any proceedings for the cancellation, non-renewal or modification
of any of the KOFY Licenses.
7.1.14 Offers to Purchase. Neither Pacific, nor any of its
officers, directors, employees, agents, representatives or Affiliates shall,
either directly or indirectly, entertain or conduct discussions or
negotiations with any Person with respect to any offer or proposal for the
purchase or sale of any portion of the assets or capital stock of Pacific
(other than the assets included in the sale of radio station KOFY-AM, none of
which are Broadcasting Assets), its Subsidiaries or KOFY, or with respect to
any financing, merger, acquisition, combination, consolidation or similar
transaction involving Pacific, any of its Subsidiaries or KOFY or any
significant assets or business of any of them, or enter into any agreement or
transaction relating to any of the foregoing.
7.1.15 No Breach of Representations and Warranties. Neither
Pacific, Stockholders nor any of their
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Affiliates shall take any action or pursue any other course of conduct, or
fail to take any action, that would cause any of the representations and
warranties made by Stockholders or Pacific in this Agreement (or any document
delivered in connection herewith) to be materially untrue, incorrect or
inaccurate.
7.1.16 Employee Notification Requirements.
(a) Notice. Pacific and its Subsidiaries shall
provide timely notice to their employees pursuant to the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. Sections 2102-09, if applicable.
(b) Authority. Pacific shall immediately notify the
Buyer of any activity by any labor organization at KOFY, Pacific or any of
its Subsidiaries or any activity by any labor organization directed at
organizing the employees or any group of employees of Pacific, any of its
Subsidiaries or KOFY.
7.1.17 Compliance with Laws. Stockholders, Pacific and all
of Pacific's Subsidiaries shall comply with all laws, rules and regulations
applicable or relating to Pacific, any
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of Pacific's Subsidiaries, and the business, operations and assets of Pacific
and Pacific's Subsidiaries, including the Broadcasting Assets.
7.1.18 Title Insurance. Within thirty (30) days after the
date hereof, Pacific, with assistance from Buyer, shall obtain, with the
expenses therefor to be borne by Buyer, and deliver to Buyer the following:
(a) Title Commitment. With respect to each real
estate interest relating to the operations of KOFY set forth in Schedule 1-A
(i) a commitment of a title company reasonably satisfactory to Buyer to issue
a 1992 Form ALTA Owner's Leasehold Policy of Title (with the extended
coverage endorsement) insuring the fee simple or leasehold, as applicable,
title of Buyer in such real estate in an amount equal to the amount set forth
in Schedule 1-A and (ii) such affidavits, certificates, tax forms, and
indemnities as are required by the title insurance company.
(b) Survey. Surveys of the real estate covered by
the title insurance commitments deliverable under Section 7.1.18(a) hereof
and made in accordance with the Minimum Standard Details Requirements for
ALTA/ACSM Land Title Surveys and to be prepared subsequent to the date hereof
by a duly licensed surveyor.
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(c) Title and Survey Study Period.
(i) Buyer shall have the right to object, in
its sole and absolute discretion, by giving written notice of such objection
to Pacific within thirty days (the "Title Study Period") after the delivery
by Pacific to Buyer of all of the title commitments and surveys as aforesaid
to any Encumbrance that adversely affects (A) the marketability of title of
the covered real estate interest or (B) the intended use of such real estate
interest, but not to liens for real estate taxes not yet due and payable or
easements for utility services.
(ii) If Pacific fails to cure or remove any
objected to Encumbrances prior to the Closing Date, Buyer shall have the
option either to (A) terminate this Agreement or (B) proceed to Closing with
a mutually agreeable reduction in the Purchase Price.
7.1.19 Tax Elections. No new elections with respect to
Taxes, and no changes in current elections with respect to Taxes, that affect
Pacific or the Broadcasting Assets shall be made after the date of this
Agreement.
7.1.20 No Violations. Pacific and Stockholders shall take
all reasonable actions to prevent, and neither Pacific
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nor Stockholders shall take any action that would cause, a breach of this
Agreement.
7.1.21 Access and Information. Pacific shall give Buyer and
its counsel, accountants, engineers, investment bankers, potential lenders
and other authorized representatives reasonable access upon reasonable
advance notice during normal business hours throughout the period prior to
the Closing Date, to all of KOFY's and Pacific's books, records (including
all employee files), agreements, reports, and other documents and all of the
Broadcasting Assets to be acquired hereunder and shall furnish Buyer, its
counsel, accountants, engineers, investment bankers, potential lenders and
other authorized representatives during such period with all information
concerning the affairs of Pacific, Pacific's Subsidiaries and KOFY as they
may reasonably request in order to enable Buyer to make such examinations and
investigations thereof as it shall deem necessary, and Pacific will make
appropriate officers, employees, attorneys, agents and accountants available
to discuss with Buyer and its representatives such aspects of the business
and operations of KOFY, Pacific and Pacific's Subsidiaries as Buyer may
reasonably require (it being understood that the foregoing shall include such
access: (a) as Buyer and its accountants shall reasonably require in order to
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audit (at Buyer's expense) the books and records of Pacific for the past two
full fiscal years, including access to accountants' work papers and the like;
and (b) as Buyer may reasonably require to the management of Pacific to
enable Buyer to obtain information about the employees of Pacific that Buyer
may elect to retain in connection with the transactions contemplated hereby).
7.1.22 No Changes. Neither Pacific nor any of its
Subsidiaries shall:
(a) amend its articles of incorporation, bylaws or
comparable governing instruments;
(b) issue or sell any shares of its capital stock or
other interests or securities, or issue options, warrants or rights of any
kind to acquire, or any securities convertible into, exchangeable for or
representing a right to purchase or receive, or enter into any contract,
plan, understanding or arrangement with respect to the issuance of, any
equity based or equity related awards, shares of its capital stock or other
securities;
(c) enter into any arrangement or contract with
respect to the purchase, Encumbrance or voting of its shares of capital stock
or other securities or adjust, split,
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combine or reclassify any of its securities, or make any other changes in its
equity capital structure.
7.1.23 Excluded Pacific Assets and Excluded Pacific
Liabilities. Immediately prior to the Closing: (i) Pacific shall no longer
own any of the Excluded Pacific Assets (and shall assign such assets to
Stockholder Co.), and shall have no Liability, responsibility or obligation,
whether direct or indirect, absolute, accrued, contingent or otherwise, or
due or to become due, asserted or unasserted, matured or unmatured, for any
of the Excluded Pacific Liabilities (which shall be assumed by Stockholder
Co.); and (ii) the capital stock of Stockholder Co. shall be transferred to
the Stockholders from Pacific in accordance with the terms of the FCC Order
identified in Section 3.2(a)(ii) hereof.
7.1.24 Delivery of Supplement. Pacific and Stockholders
shall deliver to Buyer a supplement to the Schedules to this Agreement
promptly after any of them becomes aware of any event which changes any
representation or warranty made by Pacific or Stockholders in this Agreement
or any statement made in any of Pacific's and Stockholders' Schedules or in
any supplement; provided, however, nothing contained in any supplement shall
be deemed to modify, amend or supplement said representations or
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warranties for purposes of Sections 4 or 5 of this Agreement unless Buyer
shall have consented specifically thereto in writing.
7.1.25 Film Contracts. Subject to the provision of Section
2.2.2(c), Pacific and Stockholders shall, at or prior to Closing, satisfy in
full any and all payment and other obligations under: (a) all film and other
programming contracts to which it or KOFY is a party or to which it, KOFY or
the Broadcasting Assets is bound, that have become or are due and payable at
or prior to the Closing Date without regard to any extension of time for
payment therefrom; and (b) any Contract that is not included in the
Broadcasting Assets. In the event that the payment provisions of any Contract
have been amended, modified, extended or otherwise altered, Stockholders
shall, at or prior to Closing, make any and all payments that would have been
due thereunder at and/or prior to Closing as if such Contracts were not so
modified or amended.
7.1.26 Satisfaction of Funded Debt and Pre-Closing
Liabilities; Removal of Encumbrances.
(a) Pacific and Stockholders shall, at or prior to
Closing, pay off or otherwise satisfy, fully and completely, any and all of
the Liabilities and other obligations arising out of events occurring on or
prior to the Closing Date of
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Pacific, its Subsidiaries, KOFY or the Broadcasting Assets, other than
Included Pacific Obligations;
(b) Pacific and Stockholders shall, at or prior to
Closing, have removed any and all Encumbrances of any kind and nature from
the Broadcasting Assets and the KOFY Licenses other than Permitted
Encumbrances; and
(c) Pacific and Stockholders shall at or prior to
Closing have terminated any Affiliated Transaction without any further cost
or Liability to Pacific or Buyer and Pacific and Stockholders shall not be
party to any Affiliated Transactions at Closing.
7.2 Buyer's Covenants. Buyer covenants and agrees that prior to
Closing:
7.2.1 Organization, Etc. Consistent with normal business
practices, Buyer shall use every practicable effort to prevent any change in
its business organization or financial capacity that would materially impair
its ability to consummate the transactions contemplated hereby. Buyer shall
not seek any protection under any Federal or state laws affecting creditors'
rights, including bankruptcy and insolvency laws. Buyer shall notify Pacific
of the occurrence of any event identified in this Section 7.2.1.
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7.2.2 Litigation. Buyer shall notify Pacific: (a) of any
litigation pending or, to its knowledge, threatened against or affecting
Buyer or which challenges or seeks any damages or other payments in
connection with the transactions contemplated hereby; and (b) any change that
would adversely affect its ability to control the licensee of KOFY.
7.2.3 No Breach of Representations and Warranties. Neither
the Buyer, nor any of its officers, directors, employees, agents or
representatives, shall take any action or pursue any other course of conduct,
or fail to take any action, that would cause any of the representations and
warranties made by the Buyer in this Agreement (or any document delivered in
connection herewith) to be materially untrue, incorrect or inaccurate.
7.2.4 No Violations. Buyer shall take all reasonable
actions to prevent, and Buyer shall not take any action that would cause, a
breach of this Agreement.
7.3 Stockholders' Covenants. Each Stockholder covenants and agrees
that prior to Closing:
7.3.1 Organization, Etc. Consistent with normal business
practices, such Stockholder shall use its reasonable best efforts to prevent
any change in its business organization or
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financial capacity that would materially impair its ability to consummate the
transactions contemplated hereby. Such Stockholder shall not seek any
protection under any Federal or state laws affecting creditors' rights,
including bankruptcy and insolvency laws. Such Stockholder shall notify
Buyer of the occurrence of any event identified in this Section 7.3.1.
7.3.2 Litigation. Such Stockholder shall notify Buyer: (a)
of any litigation pending or, to its knowledge, threatened against or
affecting Stockholder or which challenges or seeks any damages or other
payments in connection with the transactions contemplated hereby; and (b) any
change that would adversely affect the Stockholder's ability to consummate
the transactions contemplated hereby.
7.3.3 No Breach of Representations and Warranties. Neither
the Stockholder, nor any of its officers, directors, employees, agents or
representatives, shall take any action or pursue any other course of conduct,
or fail to take any action, that would cause any of the representations and
warranties made by such Stockholder in this Agreement (or any document
delivered in connection herewith) to be materially untrue, incorrect or
inaccurate.
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7.3.4 No Violations. Such Stockholder shall take all
reasonable actions to prevent, and such Stockholder shall not take any action
that would cause, a breach of this Agreement.
7.3.5 Encumbrances; Transfers. Such Stockholder shall not
sell, assign, transfer or dispose of any shares of Pacific Common Stock or
agree to do any of the foregoing. Such Stockholder shall not create, assume
or permit to exist any Encumbrance affecting any shares of Pacific Common
Stock.
8. Conditions Precedent to the Obligations of the Parties.
8.1 Conditions Precedent to the Obligation of Buyer. The
obligations of the Buyer under this Agreement are subject, at the Buyer's
option, to the satisfaction on or prior to the Closing Date of each of the
following express conditions precedent:
8.1.1 FCC Consent. The conditions specified in Section 3.2
hereof shall have been met.
8.1.2 Accuracy of Representations and Warranties. All
representations and warranties of Pacific and Stockholders contained in this
Agreement (and in any document delivered in connection herewith) shall be
true and correct in all respects when made and at and as of the Closing Date
as though made at and as of that time (without regard to any "materiality,"
"knowledge," or "awareness" limiting or qualifying language stated
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therein), except to the extent the failure to be true and correct, in the
aggregate, would not or could not reasonably be expected to have a Material
Adverse Effect, and Buyer shall have received a certificate, executed by
Pacific and each Stockholder, repeating, as of the Closing Date, all such
representations and warranties.
8.1.3 Compliance with Agreement. Stockholders and Pacific
shall have performed and complied in all respects (without regard to any
"materially" limiting or qualifying language stated therein) with all
covenants, agreements and conditions required by this Agreement to be
performed or complied with by them prior to or on the Closing Date, except
where the failure to so perform and comply, in the aggregate, would not or
could not reasonably be expected to have a Material Adverse Effect.
8.1.4 No Obstructive Proceeding.
(a) No Litigation. No action, suit, investigation,
or proceeding shall have been instituted or be pending against or affecting
any of the parties to this Agreement or any of their Affiliates before any
court or any other Governmental Authority to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the consummation
of the transactions contemplated hereby, which may reasonably be expected to
result in a preliminary or permanent
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injunction against consummating the transactions contemplated hereby or, if
the transactions contemplated hereby were consummated, an order to nullify or
render ineffective this Agreement or such transactions, or the recovery
against Buyer or Pacific of substantial damages or otherwise have a material
adverse effect on Buyer, the business or operations of Pacific or KOFY or the
Broadcasting Assets;
(b) No Governmental Intervention. None of the
parties to this Agreement or their Affiliates shall have received written
notice from any Governmental Authority of: (i) its intention to institute any
action or proceeding to restrain or enjoin or nullify or render ineffective
this Agreement or the transactions contemplated hereby if consummated, or
commence any investigation into the consummation of this Agreement or the
transactions contemplated hereby; or (ii) the actual commencement of such an
investigation;
(c) No Order. No order, decree or judgment of any
Governmental Authority shall be subsisting against any of the parties which
would render it unlawful or materially restrain or limit Buyer's ability, as
of the Closing Date, to effect the transactions contemplated hereunder in
accordance with the terms hereof or to operate KOFY as presently being
conducted.
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8.1.5 Adverse Change. No loss, destruction, impairment,
confiscation or condemnation of any of the Broadcasting Assets shall have
occurred by reason of fire, explosion, disaster, flood, accident, riot,
insurrection, war, act of God or other occurrence which individually or in
the aggregate has a Material Adverse Effect. In addition, since June 30,
1996, there shall have been no material adverse change in the business or
operations, prospects or condition, financial or otherwise, of Pacific, KOFY
or the Broadcasting Assets.
8.1.6 Consents. Pacific shall have (a) obtained and
delivered to Buyer all consents, approvals, and permits necessary for the
consummation of transactions contemplated hereby, including but not limited
to, those required under any leases (including, with respect to such leases,
estoppel certificates executed by Pacific's landlord or lessor, whether
direct or indirect, stating the term of the lease, the payment terms thereof,
whether Pacific is in default thereunder, and its respective mortgagees, if
any) and other Contracts, with no adverse condition attached (including any
adverse change in the terms and conditions of any Contract included in the
Included Pacific Obligations) and no material expense imposed upon Buyer or
Pacific and (b) made all necessary filings identified on Schedule 4.3.2
hereto.
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8.1.7 Officers' Certificates. Pacific shall have delivered
to Buyer a certificate signed by its Chairman, President or Vice President
and Secretary, Treasurer or Assistant Treasurer, and each Stockholder shall
have delivered an executed certificate, dated the Closing Date to the effect
that the conditions set forth in Sections 8.1.2, 8.1.3, 8.1.4, 8.1.5, 8.1.6
and 8.1.12 have been satisfied.
8.1.8 Authorization. Buyer shall have received certified
copies of all the respective actions taken by Pacific and Stockholders
authorizing and approving the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereunder.
8.1.9 Opinions of Counsel. Buyer shall have received the
written opinions of Douglas P. Ferguson and Pepper & Corazzini, LLP, counsel
for Pacific and Stockholders, dated the Closing Date, substantially in the
form attached to this Agreement as Exhibit B-1 and B-2.
8.1.10 Certifications. Pacific shall have delivered to
Buyer a schedule and certification showing in all material respects: (a) the
fees payable after the Closing Date under all KOFY program license
agreements; (b) all Contracts or amendments, renewals or other modifications
thereof that have been
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entered into by Pacific or any of its Subsidiaries after the date of this
Agreement.
8.1.11 HSRA Waiting Period. The applicable waiting
period(s) under HSRA with respect to the transactions contemplated by this
Agreement shall have expired.
8.1.12 Copies of Documents. Pacific shall have delivered to
Buyer copies of all documents required to be delivered pursuant to the
Agreement, including but not limited to, all Contracts listed in the schedule
delivered pursuant to Section 8.1.10(b) hereof.
8.1.13 FIRPTA Affidavits. At the Closing, Stockholders
shall execute and deliver to Buyer affidavits pursuant to Section 1445(b)(2)
of the Code in the form set forth in Treas. Reg. Section
1.1445-2(b)(2)(iii)(A), and Buyer agrees that, except as otherwise provided
in Section 1445(b)(7) of the Code and the regulations promulgated thereunder,
upon the execution and delivery of such affidavits to Buyer, no deduction
shall be made or claimed against the Purchase Price by reason of the
requirements of Sections 897 and 1445 of the Code.
8.1.14 Conditions to Closing. All of the conditions to
Closing set forth in Section 8.1 of the Put Purchase Agreement shall have
been satisfied.
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8.1.15 Title Insurance Policies. At the Closing, with the
costs therefor to be borne by Buyer, Pacific shall have delivered to Buyer
owner's or lessee's title insurance policies, dated the Closing Date on 1992
Form ALTA Owner's Policy of Title Insurance covering the real estate covered
by the commitments referred to in Section 7.1.18 hereof, issued by the title
insurance company which issued such commitments insuring the fee simple or
leasehold title, as applicable, of Pacific in the real estate in the amount
set forth in the Schedule 1-A (collectively the "Title Policies").
8.1.16 Proceedings. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Buyer and its counsel, and Buyer and
its counsel shall have received copies of such documents as Buyer or its
counsel, as the case may be, may reasonably request in connection with said
transactions.
8.1.17 Delivery of Instruments of Conveyance and Transfer.
Buyer shall have received the instruments and other documents (in form and
substance reasonably satisfactory to its counsel) required to be delivered to
it pursuant to Section 9 hereof.
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8.1.18 Stockholders Non-Competition Agreements. James J.
Gabbert and Michael P. Lincoln shall each have executed and delivered a
Non-Competition Agreement substantially in the form attached hereto as
Exhibits C-1 and C-2.
8.1.19 Assignment and Assumption Agreement. Stockholders,
Stockholder Co., Pacific and all of Pacific's Subsidiaries shall have
executed and delivered to Buyer an Assignment and Assumption Agreement
substantially in the form attached hereto as Exhibit D (and any other
instruments or documents including bills of sale, deeds, assignments of
licenses as Buyer may reasonably request) pursuant to which Pacific and all
of its Subsidiaries (other than Stockholder Co.) shall assign and transfer
all of the Excluded Pacific Assets to Stockholder Co. and Stockholder Co.
shall assume all of the Excluded Pacific Liabilities.
8.1.20 WB Agreement. The Buyer shall have entered into a
new affiliation agreement with The WB Television Network, expiring January
10, 2007, pursuant to the terms of the Memorandum of Agreement dated as of
September 18, 1997.
8.2 Conditions to Obligations of Pacific. The obligations of
Stockholders and Pacific at Closing are subject, at
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Pacific's option, to the fulfillment prior to or at the Closing Date of each
of the following conditions:
8.2.1 FCC Consent. The conditions specified in Section 3.2
hereof shall have been met.
8.2.2 Accuracy of Representations and Warranties. All
representations and warranties of Buyer or its permitted assignee contained
in this Agreement (and any document delivered in connection herewith) shall
be true and correct in all respects at and as of the Closing Date as though
made at and as of that time (without regard to any "materiality,"
"knowledge," or "awareness" limiting or qualifying language stated therein),
except where the failure to be true and correct, in the aggregate, would not
have a material adverse effect on the ability of Pacific or Stockholders to
consummate the transactions contemplated hereby, and Agent shall have
received a certificate, executed on behalf of Buyer or its permitted assignee
by an officer thereof, to that effect.
8.2.3 Compliance with Agreement. Buyer or its permitted
assignee shall have performed and complied in all respects (without regard to
any "materiality" limiting or qualifying language stated therein) with all
covenants, agreements and conditions required by this Agreement to be
performed or
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complied with by it prior to or on the Closing Date except where the failure
to so perform and comply, in the aggregate, would not have a material adverse
effect on the ability of Pacific or Stockholders to consummate the
transactions contemplated hereby.
8.2.4 No Obstructive Proceeding.
(a) No Litigation. No action, suit, investigation,
or proceeding shall be pending against any of the parties to this Agreement
or any of their Affiliates before any court or any other Governmental
Authority to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the transactions
contemplated hereby, which may reasonably be expected to result in a
preliminary or permanent injunction against consummating the transactions
contemplated hereby or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement or such
transactions, or the recovery against Stockholders of substantial damages or
otherwise have a material adverse effect on Stockholders.
(b) No Governmental Intervention. None of the
parties to this Agreement or their Affiliates shall have received written
notice from any Governmental Authority of: (i) its intention to institute any
action or proceeding to restrain or
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enjoin or nullify or render ineffective this Agreement or the transactions
contemplated hereby if consummated, or commence any investigation into the
consummation of this Agreement and the transactions contemplated hereby; or
(ii) the actual commencement of such an investigation.
(c) No Order. No order, decree or judgment of any
Governmental Authority shall be subsisting against any of the parties which
would render it unlawful or materially restrain or limit any of Stockholders'
ability, as of the Closing Date, to effect the transactions contemplated
hereunder in accordance with the terms hereof.
8.2.5 Proceedings. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Pacific and its counsel, and Pacific
and its counsel shall have received copies of such documents as Pacific or
its counsel, as the case may be, may reasonably request in connection with
said transactions.
8.2.6 Opinion of Counsel. Agent shall have received the
written opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for
Buyer, dated the Closing Date, substantially in the form attached hereto as
Exhibit E.
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8.2.7 HSRA Waiting Period. The applicable waiting
period(s) under HSRA with respect to the transactions contemplated by this
Agreement shall have expired.
8.2.8 Authorizations. Agent shall have received certified
copies of all of the actions taken by Buyer authorizing and approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder.
8.2.9 Payment. Buyer shall pay Agent the Estimated
Purchase Price.
8.2.10 Officer's Certificate. Buyer shall have delivered to
Agent a certificate signed by its Chairman, President or Vice President and
its Secretary or Assistant Secretary dated the Closing Date, to the effect
that the conditions set forth in Sections 8.2.2, 8.2.3 and 8.2.4 have been
satisfied.
9. Instruments of Conveyance and Transfer; Closing Certificates.
9.1 Instruments of Conveyance and Transfer of Shares. At the
Closing, to effect the transfers, conveyances or assignments of the
Stockholders' Shares from Stockholders to Buyer or Buyer's assignee as herein
provided, Stockholders shall deliver to Buyer stock certificates representing
the Stockholders' Shares, duly endorsed in blank or accompanied by stock
powers endorsed in blank,
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all of said transfers or assignments of the Stockholders' Shares being free
and clear of all Encumbrances, all in form and substance reasonably
satisfactory to counsel for Buyer and dated the Closing Date.
9.2 Closing Certificates. At the Closing, Buyer shall have
received the following:
9.2.1 Certificate of Incorporation. A copy of the articles
of incorporation of Pacific certified by the Secretary of State of California
together with a certificate from the Secretary or any Assistant Secretary of
Pacific certifying its bylaws.
9.2.2 Pacific's Subsidiaries Articles of Incorporation. A
copy of the each of Pacific's Subsidiaries' articles of incorporation
certified by the Secretary of State of California or other formation
documents together with a certificate from the Secretary or any Assistant
Secretary of each of Pacific's Subsidiaries certifying such Subsidiary's
bylaws.
9.2.3 Good standing Certificates. Certificates of good
standing or subsistence, dated no earlier than seven days prior to the
Closing and tax certificates dated as of the closest practicable date prior
to the Closing Date as to Pacific and each of its Subsidiaries from the
Secretary of State of its state of
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incorporation and each other jurisdiction where such entity owns any material
assets.
10. Employees.
10.1 Pacific's Termination. Pacific and its Subsidiaries shall
terminate the employment of all of the employees then employed by Pacific and
its Subsidiaries, effective as of the Closing (other than those employees
listed on Schedule 10.1).
10.2 Continued Employment; Prorations.
10.2.1 Right to Continue Employment. On the Closing Date,
Buyer shall have the right but not the obligation to continue the employment
of all employees listed on Schedule 10.1 ("Buyer's Employees"), with such
compensation, benefits and other terms of employment as Buyer shall
determine; provided, that nothing herein shall require Buyer to continue the
employment of any such person for any period of time.
10.2.2 Cooperation. To the extent permitted by law, Pacific
shall cooperate with Buyer's attempts to obtain information relating to
employees of Pacific and its Subsidiaries, including making available to
Buyer the employees personnel files and performance evaluations. Pacific
will make all reasonable efforts to assist Buyer in making a smooth
transition after Closing.
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10.2.3 Accrued Compensation. All personal days, vacation
and bonuses, of the employees of Pacific retained by Buyer on the Closing
Date that are accrued but unpaid at the Closing Date shall be deemed Prorated
Obligations for purpose of Section 2.2 above.
10.3 No Liability for Employee Plans.
10.3.1 Amendment to Plans. Prior to the Closing Date,
Pacific shall, in a manner satisfactory to Buyer (a) amend each of the
Pacific Benefit Plans, as may be necessary to provide for the assumption by
Stockholder Co. of the Liabilities with respect to such plans in accordance
with the provisions set forth below, (b) provide that Buyer Employees shall
cease to participate in any Pacific Benefit Plan as of the Closing Date, and
(c) take such other steps (consistent with applicable law and the terms of
the affected plan) as may be necessary to prevent the consummation of the
transactions contemplated by this Agreement from causing, resulting in or
being treated as Buyer assuming, or Pacific having any continuing obligations
for, any Liability or sponsorship of any Pacific Benefit Plan.
10.3.2 Assumption of Plan Liability by Stockholder Co.
Effective as of the Closing Date, Stockholder Co. shall assume the Pacific
Benefit Plans and honor or cause its
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insurance carriers to honor, in accordance with the terms of such plans, all
claims for benefits incurred by any employees (or their dependents or
beneficiaries) under such plans.
10.3.3 No Liability. Stockholder Co. shall be solely liable
and responsible for providing continuation coverage under Code Section 4980B
and Part 6 of Title I of ERISA with respect to any qualifying event that
occurs on or prior to the Closing Date, including any continuation coverage
requirements that arise as a result of the failure of the Buyer to continue
employment or the Buyer to maintain a Group Health Plan as defined in section
4980B(g) of the Code. Any expenses and benefits with respect to medical
claims incurred by any current or former employees of Pacific or their
covered dependents on or before the Closing Date shall be the responsibility
of Stockholder Co.
10.4 Indemnity. Stockholders shall, jointly and severally,
indemnify, defend and hold Pacific, Buyer and their Affiliates harmless from
and against any and all claims, actions, suits, demands, proceedings, losses,
expenses, damages, obligations and Liabilities (including costs of
collection, attorney's fees and other costs of defense) arising out of or
otherwise in respect of (a) any claim made for severance pay arising in
connection with Pacific's or any of its Affiliates' employment or termination
of
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any current or former employee of Pacific or any of its Affiliates; (b) any
claim made pursuant to the Worker Adjustment and Retraining and Notification
Act arising in connection with Pacific's or any of its Affiliates' employment
or termination of any current of former employee of Pacific or any of its
Affiliates; (c) benefits or claims incurred by any current or former
employees under, or in connection with, any Pacific Benefit Plan; and (d)
claims or Liabilities arising by reason of or relating to any failure of
Pacific or its Affiliates to comply with Code Section 4980B or Part 6 of
Title I of ERISA; provided, however, that, no claim for indemnification under
this section may be based on Pacific's conduct after the Closing Date.
11. Risk of Loss; Casualty or Condemnation.
11.1 Risk of Loss. The risk of any loss, damage or impairment,
confiscation or condemnation of the Broadcasting Assets or any part thereof
from fire or any other casualty or cause shall be borne by Pacific and
Stockholders at all times prior to the Closing.
11.2 Casualty.
(a) If the Broadcasting Assets are damaged or destroyed
by fire or other casualty or cause between the date hereof and the Closing
Date and the repair cost, individually
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or in the aggregate (the "Repair Cost"), will exceed $500,000, Buyer shall
have the option either: (i) to accept the Broadcasting Assets in their
damaged or destroyed condition with (x) Pacific assigning or delivering to
Buyer all of Pacific's rights to any insurance proceeds for such damage or
destruction and (y) the Purchase Price being reduced by the difference
between the amount, if any, that the Repair Cost exceeds such insurance
proceeds received by Buyer (the "Insurance Deficiency") up to an amount not
to exceed $2,000,000; or (ii) unless Pacific agrees to pay the full amount of
such repair cost and such repairs can be so substantially completed prior to
the Closing Date that broadcast activities can be conducted unabated from and
after the Closing, to cancel this Agreement by giving written notice to
Pacific not later than fifteen (15) days after the Repair Cost is determined.
Pacific shall promptly notify Buyer in writing of any fire or other casualty
occurring with respect to the Broadcasting Assets. Pacific shall provide
Buyer and its agents and contractors with access to any damaged Broadcasting
Assets following any fire or other casualty so that Buyer can obtain an
estimate of the Repair Cost within thirty (30) days after Pacific notifies
Buyer of the fire or other casualty.
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(b) If any of the Broadcasting Assets are damaged or
destroyed by fire or other casualty or cause between the date hereof and the
Closing Date and the Repair Cost is equal to or less than $500,000, the Buyer
shall accept the Broadcasting Assets in their damaged or destroyed condition
with Pacific assigning or delivering to Buyer all of Pacific's rights to any
insurance proceeds for such damage or destruction and the Purchase Price
being reduced by the amount of the Insurance Deficiency, if any.
11.3 Repair Parameters. If any of the Broadcasting Assets are
damaged or destroyed by fire or other casualty or cause between the date
hereof and the Closing Date and Buyer elects to have Pacific repair such
damage, all repairs shall be: (a) completed at least fifteen (15) days prior
to the Closing Date; (b) completed in a good and workmanlike manner, using
materials, labors and finishes resulting in the completed repairs being of
the same or better quality than immediately prior to the damage; and (c)
subject to the reasonable approval of Buyer's engineers or contractors.
11.4 Condemnation. If any condemnation proceedings are instituted,
or notice of intent to condemn is given, with respect to the real property
included in the Broadcasting Assets or any portion thereof, Pacific shall
promptly notify Buyer thereof. If
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such condemnation applies to a Substantial Portion (hereinafter defined) of
such real property, then Buyer shall have the option to: (a) terminate this
Agreement; or (b) consummate the purchase of the Shares with Pacific
assigning or delivering to Buyer the condemnation award or Pacific's right to
collect such condemnation award and the Purchase Price being reduced by
fifty-one percent (51%) of the amount, if any, that the lessor of (x) the
diminution in value of such real property or (y) the cost of relocating to a
new property (at which Pacific can perform substantially all of the functions
performed at the condemned property prior to the condemnation) exceeds the
amount of condemnation award (the "Condemnation Shortfall"). If such
condemnation does not apply to a Substantial Portion of the real property
included in the Broadcasting Assets, then Buyer shall consummate the purchase
and Pacific shall assign or deliver to Buyer the condemnation award or
Pacific's right to collect such condemnation award and the Purchase Price
shall be reduced by the amount of the Condemnation Shortfall. Prior to the
Closing, Pacific shall not agree to or accept any compromise or condemnation
award without obtaining Buyer's written approval thereof. A Substantial
Portion of the real property shall mean any portion of the real property the
condemnation of which
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would render the balance of the real property not reasonably suitable for the
operation by Pacific of a television station.
11.5 Failure of Broadcast Transmission. Notwithstanding any
provision of this Agreement to the contrary, in the event KOFY shall cease
transmission of its television broadcast signal (other than to an
insignificant portion of its normal viewing audience): (a) for a period of
five consecutive days, Buyer shall have the right, by written notice to
Pacific, to terminate this Agreement without further obligation to Pacific or
Stockholders hereunder; or (b) on the scheduled Closing Date, the Closing
shall not take place on the scheduled Closing Date and the Buyer shall have
the right to terminate this Agreement, if such failure is not cured within
two (2) days.
12. Books and Records. Buyer shall be entitled to all records,
including but not limited to, books of account, technical information and
engineering data, programming information, employment records, customer lists
and files, advertising records, FCC logs, asset history files, and other
files, minute books, stock record books, documents and correspondence of
Pacific relating to its and its Subsidiaries operation on or prior to the
Closing Date as shall be reasonably necessary to the maintenance of the
business affairs of Pacific after the Closing Date; provided, however, that
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for a period of six (6) years (or such longer period as may be required under
Section 21.19.3, to the extent that the period for assessment of additional
Taxes has been extended and does not expire until after such six (6) year
period after the Closing Date), Buyer shall retain and make available for
inspection by Stockholders and their representatives for any reasonable
purpose all such records, books of account, files, documents and
correspondence, and Buyer shall not dispose of, alter or destroy any such
materials without giving sixty (60) days' prior written notice to Agent so
that Stockholders may, at their expense, examine, make copies of, or take
possession of such materials. Within five (5) days after the Closing,
Stockholders shall deliver to Buyer in accordance with Buyer's instructions
all documents relating to Pacific that are in the possession of Stockholders
or any of their representatives, agents or Affiliates. For a period of six
(6) years after the Closing Date (or such longer period as may be required
under Section 21.19.3, to the extent that the period for assessment of
additional Taxes has been extended and does not expire until after such six
(6) year period after the Closing Date), Stockholders and their Affiliates
shall give Buyer and its counsel and accountants reasonable access, during
normal business hours and in accordance with mutually satisfactory prior
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arrangements, to such other records, books of account, files, documents and
correspondence relating to Stockholders and their Affiliates prior to the
Closing Date which Buyer may reasonably deem necessary to comply with
applicable federal or state securities laws in connection with any financing
the Buyer may be effecting.
13. Possession and Control of KOFY. Notwithstanding any other provision
of this Agreement, between the date of this Agreement and the Closing Date,
Pacific shall retain ultimate control over the management and operations of
KOFY. Neither title to the Broadcasting Assets, nor right to possession at
KOFY shall, directly or indirectly, pass to Buyer until the Closing Date.
14. Brokers. Stockholders and Pacific represent and warrant to Buyer
that neither Stockholders, Pacific nor any of Pacific's Subsidiaries has
engaged any broker, finder or consultant in connection with this Agreement or
the transactions contemplated herein or any aspect hereof. Buyer represents
and warrants to Stockholders that it has not engaged any broker, finder or
consultant in connection with this Agreement or the transactions contemplated
hereby other than H. Ben LaRue. The brokerage commission of H. Ben LaRue
shall be paid by Buyer at Closing. Subject to the previous sentence, each
party agrees to indemnify
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and hold the other parties harmless from any and all loss, cost, Liability,
damage and expense (including legal and other expenses incident thereto) in
respect of any claim for a broker, finder or consultant's fee or commission
or similar payment by virtue of any alleged agreements, arrangements or
understandings with the indemnifying party or any of its Affiliates.
Notwithstanding any other provision of this Agreement, the representations,
warranties and covenants contained in this Section 14 shall survive the
Closing Date for two (2) years.
15. Survival; Indemnification.
15.1 Survival. The several representations and warranties of the
parties contained in this Agreement (or in any document delivered in
connection herewith) shall be deemed to have been made on the date of this
Agreement and on the Closing Date, shall survive the Closing Date and shall
remain operative and in full force and effect without limitation; provided,
however, that any claim made with respect to the representations and
warranties of: (a) Pacific and/or Stockholders contained in (i) Sections 4.3
(No Contravention; Consents), 4.6 (Condition of Assets), 4.7 (Licenses and
Authorizations), 4.8 (Contracts), 4.9 (Franchises, Trademarks and Trade
Names), 4.11 (Financial Statements; Liabilities), 4.12 (Litigation;
Violations), 4.13 (Complaints),
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4.14 (Reports), 4.15 (Miscellaneous), 4.16 (Affiliated and Recent
Transactions), 4.20 (Cable Carriage), 4.21 (Offers to Purchase), 4.21
(Insurance), 5.3 (No Contravention; Consents) and 14 (Brokers) must be made
within two (2) years from the Closing Date, (ii) Section 4.10 (Employee
Agreements and Plans; ERISA), must be made within seven (7) years from the
Closing Date; and Section 4.19 (Labor), must be made within four (4) years
from the Closing Date; or (b) Buyer contained in Sections 6.3 (No
Contravention), 6.4 (Litigation) and 14 (Brokers) must be made within two (2)
years from the Closing Date. The several covenants and agreements of the
parties contained in this Agreement (or in any document delivered in
connection herewith) shall remain operative and in full force and effect
without any time limitation, except as any such covenant or agreement shall
be limited in duration by the express terms hereof.
15.2 Stockholders' Indemnification - Breaches. Stockholders,
jointly and severally, agree to indemnify, defend and hold Buyer and its
Affiliates harmless from and against any and all loss, cost, Liability, Tax,
damage and expenses (including reasonable legal and other expenses incident
thereto) resulting from breach of Pacific or any Stockholder's
representations, warranties, covenants or agreements (without reference to
any
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"materiality" limiting or qualifying contained therein) contained in this
Agreement or any instruments delivered in connection herewith; provided,
however, that any claim for a breach of a representation or warranty shall
have been made prior to the expiration date thereof, if any, set forth in
Section 15.1 above.
15.3 Stockholders' Indemnification - Liabilities.
15.3.1 Generally. Stockholders, jointly and severally,
agree to indemnify, defend and hold Buyer and its Affiliates harmless from
and against any and all Liabilities (other than the Included Pacific
Obligations), including any and all Excluded Pacific Liabilities, and any
known or unknown, actions, suits, proceedings, demands, assessments,
judgments, costs and expenses (including reasonable legal and other expenses
incident thereto), resulting from causes of action or claims of any kind
asserted prior to or after the Closing by third parties with respect to
Pacific or its Affiliates or their operations at or prior to the Closing
(excluding any and all claims and Liabilities arising or resulting from a
breach of any of Buyer's agreements or warranties or from an inaccuracy in
any of Buyer's representations hereunder).
15.3.2 Taxes.
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(a) Stockholders shall, jointly and severally, be liable
for the payment or satisfaction of, and agree to indemnify and hold harmless
Buyer against, any and all Taxes due and payable by Pacific, Buyer or any of
their Affiliates (i) for any Tax year or portion thereof ending on or before
the Closing Date (or for any Tax year beginning before and ending after the
Closing Date to the extent applicable to the portion of such period beginning
before and ending on the Closing Date), including, without limitation, any
Accrued Pacific Taxes, and (ii) for which Pacific is liable arising from or
by reason of Treas. Reg. Section 1.1502-6 or any similar provision of state,
local or foreign law for any taxable period ending on or prior to the Closing
Date.
(b) For purposes of this Agreement, in the case of any
Taxes that are imposed on a periodic basis and are payable for a period that
begins before the Closing Date and ends after the Closing Date, the portion
of such Tax that shall be deemed to be payable for the portion of the period
ending on or before the Closing Date shall (i) in the case of Taxes, other
than Taxes based upon or related to income or receipts, be treated in
accordance with Section 2.2 hereof, and (ii) in the case of Taxes paid based
upon or related to income and receipts, be deemed equal
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to the amount of which would be payable if the taxable year ended on the
close of the business on the Closing Date.
(c) All payments made by Pacific pursuant to Section
15.3.2 of this Agreement shall be made free and clear of, and without
reduction or withholding of, any Taxes. If any Taxes are payable in respect
of any such payment, the amount of such payment shall be increased to the
extent necessary to yield (after payment of all Taxes) the same amount that
would have been received if no Taxes were payable in respect of the payment.
15.4 Stockholders' Satisfaction of Retained Liabilities. Subject to
Section 8.1.17, Stockholders, jointly and severally, agree to discharge all
contingent Excluded Pacific Liabilities as the same become due and payable
and to satisfy all Liabilities and other obligations of Pacific assumed by
Stockholder Co.
15.5 Buyer's Indemnification. Buyer agrees to indemnify, defend and
hold Stockholders harmless from and against:
15.5.1 Breach. Any and all loss, cost, Liability, damage and
expense (including reasonable legal and other expenses incident thereto)
resulting from Buyer's breach of any of its representations, warranties,
covenants or agreements under this Agreement or any instrument delivered in
connection herewith;
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provided, however, that any such claim, for breach of a representation or
warranty shall have been made prior to the expiration date thereof, if any,
set forth in Section 15.1 above; and
15.5.2 Liabilities. Any Included Pacific Obligations and any
and all actions, suits, proceedings, demands, assessments, judgments, costs,
and expenses (including reasonable legal and other expenses incident
thereto), resulting from causes of action or claims of any kind asserted by
unrelated third parties arising with respect to the operations of Pacific
after the Closing (excluding any and all such Liabilities arising or
resulting from a breach of any agreements or warranties or an inaccuracy of
any of Pacific's representations hereunder).
15.6 Limitation of Obligation. Notwithstanding anything to the
contrary in Section 15.2 above, Stockholders shall not be obligated to make
any payments under Section 15.2 above with respect to a breach of a
representation or warranty unless the aggregate amounts of all claims made
thereunder equals or exceeds $50,000, and in such event payments shall be
made from dollar one. Neither Buyer on the one hand, nor Stockholders and
Pacific on the other hand, shall have aggregate liability in excess of $5
million
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under this Agreement and/or the Put Purchase Agreement, if the Closing does
not occur, for any breach thereof.
15.7 Indemnification Claim. Upon obtaining knowledge of any claim
or demand which has given rise to, or could reasonably give rise to, a claim
for indemnification hereunder, the party seeking indemnification
("Indemnitee") shall promptly give written notice ("Notice of Claim") of such
claim or demand to the party or parties it is seeking indemnification from
("Indemnitor"). Indemnitee shall furnish to the Indemnitor in reasonable
detail such information as Indemnitee may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same).
Subject to the limitations set forth in Section 15.1 hereof, no failure or
delay by Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of Indemnitor to indemnify and hold
Indemnitee harmless, except to the extent that such failure or delay shall
have materially adversely affected Indemnitor's ability to defend against,
settle or satisfy any Liability, damage, loss, claim or demand for which
Indemnitee is entitled to indemnification hereunder.
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15.8 Notice of Claim. If the claim or demand set forth in the
Notice of Claim given by Indemnitee pursuant to Section 15.8 hereof is a
claim or demand asserted by a third party, Indemnitor shall have fifteen (15)
days after the Date of Notice of Claim to notify Indemnitee in writing of its
election to defend such third party claim or demand on behalf of the
Indemnitee. If Indemnitor elects to defend such third party claim or demand,
Indemnitee shall make available to Indemnitor and his agents and
representatives all records and other materials which are reasonably required
in the defense of such third party claim or demand and shall otherwise
cooperate with, and assist Indemnitor in the defense of, such third party
claim or demand, and so long as Indemnitor is defending such third party
claim in good faith, Indemnitee shall not pay, settle or compromise such
third party claim or demand. If Indemnitor elects to defend such third party
claim or demand, Indemnitee shall have the right to participate in the
defense of such third party claim or demand, at Indemnitee's own expense. In
the event, however, that Indemnitee reasonably determines that representation
by counsel to Indemnitor of both Indemnitor and Indemnitee may present such
counsel with a conflict of interest, or where non-monetary relief is being
sought against Indemnitee by a third party, then such Indemnitee may employ
separate counsel to
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represent or defend it in any such action or proceeding and Indemnitor will
pay the fees and disbursements of such counsel; provided, however, that
Indemnitor shall not be required to pay the fees and disbursements of more
than one separate law firm for all Indemnitees in any jurisdiction in any
single action or proceeding. If Indemnitor does not elect to defend such
third party claim or demand or does not defend such third party claim or
demand in good faith, Indemnitee shall have the right, in addition to any
other right or remedy it may have hereunder, at Indemnitor's expense, to
defend such third party claim or demand; provided, however, that (i)
Indemnitee shall not have any obligation to participate in the defense of, or
defend, any such third party claim or demand; and (ii) Indemnitee's defense
of or its participation in the defense of any such third party claim or
demand shall not in any way diminish or lessen the obligations of Indemnitor
under the agreements of indemnification set forth in this Section 15.
15.9 Indemnitor's Obligations. Except for third party claims being
defended in good faith, Indemnitor shall satisfy its obligations hereunder in
cash within thirty (30) days after the Date of Notice of Claim.
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15.10 Date of Notice of Claim. The term "Date of Notice of
Claim" shall mean the date the Notice of Claim is effective pursuant to
Section 21.6 of this Agreement.
15.11 Consent of Indemnitee. No claim giving rise to a Notice
of Claim shall be compromised or settled except with the prior written
consent of the Indemnitee, which consent shall not be unreasonably withheld.
16. Hart-Scott-Rodino Filings. Within 30 days' of the execution of this
Agreement, each party shall make or caused to be made any and all filings
which are required under HSRA with respect to the transactions contemplated
by this Agreement, the filing fees for which shall be borne equally by the
Pacific and the Buyer, and shall cooperate in the taking of all steps that
are necessary, proper or desirable to expedite the preparation and filing of
such notification and the furnishing of all information required in
connection therewith.
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17. Environmental Assessment.
17.1 Phase I. Promptly following the execution of this Agreement,
if requested by Buyer, Pacific agrees to order a "Phase I Environmental Site
Assessment with shallow soil samples" (as defined below), and an assessment
of the buildings for asbestos and lead-based paint (collectively, the
"Study") of any Relevant Property through an environmental consultant
acceptable to Buyer (the "Engineer"). The Study will be addressed to Pacific
and Buyer, the cost of which shall be borne by Buyer. If the Study reveals
information which in the reasonable judgment of Buyer warrants a further
investigation (a "Follow on Study"), Buyer shall have the right to request
Pacific to order a Follow on Study as to such aspects of the Relevant
Property warranting further investigation and/or the estimated cost of
remediation as Buyer may reasonably request, and Pacific shall order such
Follow on Study, the cost of which shall be borne by Buyer.
17.2 Environmental Hazard. If the Study and/or the Follow on Study
reveals (a) a condition that violates any laws relating to the Environment
and that under such laws, is required to be corrected or remediated, (b) the
potential for any Claim(s) ((a) and (b) are each referred to herein as an
"Environmental Hazard"), Pacific shall be obligated to pay the cost of
correction
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or remediation of the Environmental Hazard (the "Remediation Cost") up to an
amount not to exceed $100,000. If the Remediation Cost exceeds $100,000
Pacific may elect not to pay the Remediation Cost, in which event Buyer shall
have the right to terminate this Agreement. To the extent that Pacific is
obligated to bear the cost of the remediation of any Environmental Hazard,
Pacific will pay all such amounts in cash, prior to Closing, failing which
the Purchase Price shall be reduced at Closing, by fifty-one percent (51%) of
the amount not paid by Pacific prior to Closing.
17.3 Engineer's Findings. The term "Phase I Environmental
Assessment with shallow soil samples" shall mean an investigation of the
Relevant Property conducted by the Engineer in accordance with the proposal
therefor attached hereto as a part of Schedule 17. If any shallow soil
samples are taken by the Engineer, such samples shall not be taken through
any paving or asphalt.
18. Termination. This Agreement may be terminated:
18.1 Termination.
18.1.1 Buyer. Subject to Section 21.1, by Buyer if the
Closing shall not have occurred on or prior to July 1, 1998 (other than as a
result of the failure by Buyer to fully comply
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with its obligations under this Agreement or the Put Purchase Agreement);
18.1.2 Pacific. Subject to Section 21.1, by Pacific if the
Closing shall not have occurred on or prior to July 1, 1998 (other than as a
result of the failure by Pacific or any Stockholder or any other owner of
Pacific FM shares to fully comply with its obligations under this Agreement
or the Put Purchase Agreement);
18.1.3 Mutual Consent. By mutual consent of Buyer and
Pacific, which consent may be withheld at the absolute discretion of each
such party;
18.1.4 By Pacific Upon Breach. Subject to Section 21.1, by
Pacific if: (a) Buyer is in material breach of this Agreement; and (b)
neither Pacific nor any of the Stockholders or any other owner of Pacific FM
shares is then in material breach of this Agreement or the Put Purchase
Agreement.
18.1.5 By Buyer Upon Breach. Subject to Section 21.1, by
Buyer: if (a) Pacific or any Stockholder or any other owner of Pacific FM
shares is in material breach of this Agreement or the Put Purchase Agreement;
and (b) Buyer is not then in material breach of this Agreement or the Put
Purchase Agreement;
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18.1.6 Pacific or Buyer. Subject to Section 21.1, by
Pacific or by Buyer if, at or before the Closing, any condition set forth
herein for the benefit of the party seeking termination, shall not have been
timely met and cannot be met by the non-termination parties thereto or their
permitted assigns on or before the Closing Date and has not been waived; or
18.1.7 Other. As otherwise provided herein.
18.2 Effects of Termination.
18.2.1 Survival. The provisions of Sections 15, 20.1, 20.2
and 21.2 shall survive any termination of this Agreement.
18.2.2 Event of Termination. In the event of the
termination of this Agreement either Pacific or Buyer shall be entitled to
receive the Deposit, as provided in the Escrow Agreement.
18.2.3 Instructions to Escrow Agent. The parties agree that
upon termination of this Agreement, they will, within two business days of
any such termination, instruct the Escrow Agent to disburse the Deposit in a
manner consistent with Section 18.2.2 above.
19. Security Deposit. Concurrently with the execution of this
Agreement, Buyer has deposited in escrow a cash security
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deposit of $5,000,000, which deposit shall be governed by the terms and
conditions of the Escrow Agreement, dated the date hereof, among Citibank,
N.A., as Escrow Agent, Buyer, Pacific and Stockholders, a copy of which is
attached hereto as Exhibit F (the "Deposit Escrow Agreement").
Notwithstanding anything to the contrary contained herein, recourse against
Buyer for any breach of this Agreement and/or the Put Purchase Agreement
shall be limited to the Deposit.
20. Confidentiality.
20.1 Stockholders Confidentiality. Pacific, Stockholders and their
respective Affiliates shall at all times from the date hereof until three (3)
years after the Closing Date, maintain confidential and not use for any
purpose other than the operation of KOFY, any information relating to KOFY
(other than information in the public domain not as the result of a breach of
this Agreement), its business and operations except: (a) for disclosure to
authorized representatives of Buyer; (b) as necessary to the performance of
this Agreement; (c) as authorized in writing by the Buyer; or (d) to the
extent that disclosure is required by law or the order of any Governmental
Authority under color of law; provided, that, prior to disclosing any
information pursuant to this clause (d), the disclosing Person shall have
given prior
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written notice thereof to Buyer and provided Buyer with the opportunity to
contest such disclosure at the Buyer's expense.
20.2 Buyer Confidentiality. Prior to the earlier of: (a) three (3)
years from the date hereof; and (b) the Closing, Buyer shall keep and shall
cause its Affiliates and agents (collectively, "Buyer's Representatives") to
keep all information with respect to Pacific and/or KOFY obtained in
connection with the negotiation and performance of this Agreement (other than
information in the public domain not as the result of a breach of this
Agreement), as confidential and shall not disclose, and shall cause Buyer's
Representatives not to disclose, such information to any third party (other
than Buyer's financing sources or potential financing sources or as may be
required in connection with any financing) without Pacific's express prior
written consent, except: (w) for disclosure to authorized representatives of
Pacific; (x) as necessary to the performance of this Agreement; (y) as
authorized in writing by Pacific; or (z) to the extent that disclosure is
required by law or the order of any Governmental Authority under color of
law; provided, that, prior to disclosing any information pursuant to this
clause (z), the disclosing Person shall have given prior written notice
thereof to Pacific and provided Pacific with the opportunity to contest such
disclosure at Pacific's expense.
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If the transactions contemplated by this Agreement are not consummated, Buyer
will return to Pacific all confidential information obtained from Pacific by
Buyer or Buyer's Representatives. Buyer shall advise any third party to whom
disclosure of confidential information is made hereunder of the confidential
nature of such information and shall request that the confidentiality of such
information be preserved.
20.3 Specific Performance. Notwithstanding Section 18.2.2, the
parties hereby acknowledge that the damages the other parties would sustain
in the event of any violation of the provisions of this Section 20 are
difficult or impossible to ascertain. Accordingly, the parties hereby agree
that each party shall be entitled, in addition to any other remedy or damages
available to it in the event of any such violation, to injunctive relief to
restrain such violation by any other party or any Person intended to be
subject to the restriction contained herein which may be acting for or with
such other party or such other Person.
21. Miscellaneous.
21.1 Grace Period.
21.1.1 Default Grace Period. Notwithstanding any other
provision of this Agreement, if a default by any party hereto can be cured or
a condition satisfied within fifteen (15) business
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days after the time initially fixed for Closing as set forth herein, then the
Closing Date shall be extended for the period (not to exceed fifteen (15)
business days) required for such party to make such cure or satisfaction;
provided that such default does not, and would not reasonably be expected to,
have a material adverse effect on KOFY, the Broadcasting Assets or Buyer. If
such cure or satisfaction cannot be, or is not, completed within fifteen (15)
business days after such initial time, then the rights of the parties shall
be governed by the applicable provisions of this Agreement.
21.1.2 Final Order Grace Period. Notwithstanding anything
to the contrary contained herein, in the event that the FCC Consent shall
have been obtained but the FCC Consent shall not have become a Final Order on
or prior to July 1, 1998, then the date of July 1, 1998 shall be extended by
forty-five (45) days.
21.2 Costs, Expenses, Etc. Except as provided elsewhere herein each
of the parties hereto shall bear all costs and expenses incurred by it in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. The payment of all sales, use,
transfer or similar Taxes, documentation stamps, or other charges imposed by
any and all Governmental Authorities (including any income or gain
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Taxes and Accrued Pacific Taxes) with respect to the transfer of title to
Pacific's assets, including the Excluded Pacific Assets, hereunder and the
other transactions anticipated hereby shall be borne by Stockholders. All
recording costs and fees incurred in connection with the clearing and
removing any liens and Encumbrances including costs incurred so as to permit
Stockholders to convey good and marketable title to the Shares free and clear
of all Encumbrances, shall be the responsibility of Stockholders.
21.3 Further Assurances. Each party shall, from time to time, upon
the request of another party, execute, acknowledge and deliver to the other
party such other documents or instruments, and take any and all actions as
are reasonably necessary for the implementation and consummation of the
transactions contemplated by this Agreement.
21.4 Notice of Proceedings. Each party will promptly and in any
case within five (5) business days notify the other parties in writing upon
becoming aware of any labor organization drive or any order or decree or any
complaint praying for an order or decree restraining or enjoining the
consummation of this Agreement or the transactions contemplated hereunder, or
upon receiving any notice from any Governmental Authority of its intention to
institute an investigation into, or institute a suit
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or proceeding to restrain or enjoin the consummation of this Agreement or
such transactions, or to nullify or render ineffective this Agreement or such
transactions if consummated.
21.5 Bulk Sales Law. Buyer waives compliance by Pacific with the
provisions of bulk sales and similar laws applicable to this transaction, if
any; provided, however, that any loss, liability, obligation or cost suffered
by Buyer or Pacific as a result of the failure by Pacific or its Subsidiaries
to comply therewith shall be borne by Stockholders and that Stockholders
shall indemnify Buyer and hold Buyer harmless therefrom.
21.6 Notices. Any notice, request, demand or consent required or
permitted to be given under this Agreement shall be in writing (including
telexes, telecopies, facsimile transmissions and similar writings) and shall
be effective when transmitted and confirmation of receipt is obtained for
telexes, telecopies, facsimile transmissions and similar writings; when
delivered personally; one day after sent by recognized overnight courier; and
five days after sent by mail, first class, postage prepaid, registered mail,
return receipt requested; in each case to the following address or telephone
number, as applicable:
If to Pacific to: Pacific FM Incorporated
2500 Marin Street
San Francisco, California 94124
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Attn: Mr. James J. Gabbert,
President
Telephone: (415) 821-2020
Telecopier: (415) 641-1165
with copies to: Douglas P. Ferguson, Esq.
591 Redwood Highway Suite 3250
Mill Valley, California 94941
Telephone: (415) 381-5260
Telecopier: (415) 381-5263
Gregg P. Skall, Esq.
Pepper & Corazzini
1776 K Street, N.W.
Washington, D.C. 20006
Telephone: (202) 296-0600
Telecopier: (202) 296-5572
If to
Stockholders: James J. Gabbert
2500 Marin Street
San Francisco, California 94124
Telephone: (415) 821-2020
Telecopier: (415) 641-1163
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With copies to: Michael P. Lincoln
2500 Marin Street
San Francisco, California 94124
Telephone: (415) 821-2020
Telecopier: (415) 641-1163
If to Agent: James J. Gabbert
2500 Marin Street
San Francisco, California 94124
Telephone: (415) 821-2020
Telecopier: (415) 641-1163
If to Buyer: Granite Broadcasting Corporation
767 Third Avenue
34th Floor
New York, New York 10017
Attn: Mr. W. Don Cornwell, Chairman
and Chief Executive Officer
Telephone: (212) 826-2530
Telecopier: (212) 826-2858
with copies to: Akin, Gump, Strauss, Hauer
& Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Attn: Russell W. Parks, Jr., P.C.
Telephone: (202) 887-4092
Telecopier: (202) 887-4288
or at such other address as either party shall specify by notice to the other.
21.7 Headings and Entire Agreement; Amendment. The section and
subsection headings do not constitute any part of this Agreement and are
inserted herein for convenience of reference only. This Agreement embodies
the entire agreement between the
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parties with respect to the subject matter hereof. This Agreement may not be
amended, modified or changed orally, and no provision hereof may be waived,
except only in writing signed by the party against whom enforcement of any
amendment, modification, change, waiver, extension or discharge is sought.
21.8 Waiver. No waiver of a breach of, or default under, any
provision of this Agreement shall be deemed a waiver of such provision or of
any subsequent breach or default of the same or similar nature or of any
other provision or condition of this Agreement.
21.9 Binding Effect and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
successors and permitted assigns. Neither this Agreement nor any obligation
hereunder shall be assignable except with the prior written consent of the
other party which may be withheld for any reason; provided, however, that
Buyer may assign this Agreement, in whole or in part, to any direct or
indirect wholly owned subsidiary of Buyer provided such assignment shall not
relieve Buyer of its obligations under this Agreement and such assignment
application does not cause a material delay in obtaining the FCC Consent.
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21.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one agreement.
21.11 Exhibits, Schedules and Attachments. The Exhibits,
Schedules and attachments attached to this Agreement are incorporated herein
and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the
provisions of such exhibits and the provisions of this Agreement, the
provisions in this Agreement shall control.
21.12 Rights Cumulative. Except as set forth herein, all
rights, powers and remedies herein given to the parties hereto are cumulative
and not alternative, and are in addition to all statutes or rules of law.
21.13 Governing Law. This Agreement, and the rights and
obligations of the parties hereunder, shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
made and to be performed therein. The parties irrevocably consent to the
exclusive jurisdiction of the courts of California to resolve any dispute
related to this Agreement, and also to the convenience of the United States
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District Court for the Northern District of, California, to resolve any such
dispute.
21.14 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance, is held invalid, such
invalidity shall not affect any other provision which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable.
21.15 Third Party Rights. Nothing in this Agreement (including
the Schedules, Exhibits and other attachments hereto, or any ancillary
agreement, instrument or document contemplated hereby or relating hereto)
shall be deemed to create any right with respect to any Person or property
not a party to this Agreement.
21.16 Press Releases. Except as otherwise required by law,
Buyer and Pacific shall: (a) prior to its issuance of any press release
relating to the transactions contemplated by this Agreement, submit to and
consult with the other party with respect to such press release; and (b) use
its best efforts to characterize the other party, in any other public
statements made by the party making such statement about the other party, on
substantially the same basis as in any press release made by the party making
such statement. No other party or Affiliate of any party shall be
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permitted to issue a press release relating to the transactions contemplated
hereby.
21.17 Specific Performance. Pacific and Stockholders hereby
agree that Buyer shall be entitled, in addition to any other remedies or
damages available to Buyer in the event of any breach of this Agreement by
Pacific or any Stockholder, to specific performance of the obligations of
Pacific and such Stockholder under this Agreement.
21.18 Right to Payments. If any party (the "Initial Recipient")
hereto receives any payments, another party (the "Proper Recipient") is
entitled to hereunder, the Initial Recipient shall promptly notify the Proper
Recipient of receipt of, and within ten (10) business days transfer to the
Proper Recipient, such payments.
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21.19 Certain Tax Matters.
21.19.1 Tax Periods Beginning on or Before the Closing Date.
Buyer shall prepare or cause to be prepared and timely file or cause to be
timely filed all Tax Returns for Pacific and its Subsidiaries for all periods
beginning on or prior to the Closing Date which are filed after the Closing
Date, other than income Tax Returns with respect to periods for which a
consolidated, unitary or combined income Tax Return of Stockholders will
include the operations of Pacific and its Subsidiaries. Buyer shall permit
Agent to review and comment on each such Tax Return described in the
preceding sentence prior to filing and shall make such revisions to such Tax
Returns as are reasonably requested by Agent, provided such adjustments do
not have a material adverse effect on Pacific or Buyer in periods after the
Closing Date. Stockholders shall reimburse Buyer for Taxes of Pacific and its
Subsidiaries with respect to such periods within fifteen (15) days after
payment by Buyer or Pacific and its Subsidiaries of such Taxes to the extent
such Taxes were not paid by Pacific on or before the Closing Date or by
Stockholders
21.19.2 Refunds and Tax Benefits. Any refunds of Taxes that
are received by Buyer or Pacific, and the amounts credited against Taxes to
which Buyer or Pacific become entitled,
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that relate to periods or portions thereof ending on or before the Closing
Date shall be for the account of Stockholders, and Buyer shall pay over to
Agent such refund or the amount of any such credit within fifteen (15) days
after receipt or entitlement thereto, net of any expenses incurred by Buyer
or Pacific after the Closing Date attributable to obtaining such refund or
credit.
21.19.3 Cooperation on Tax Matters.
(a) Buyer, Pacific and its Subsidiaries and Stockholders
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns pursuant to this section
21.19 and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Pacific and
its Subsidiaries and Stockholders agree (i) to retain all books and records
with respect to Tax matters pertinent to Pacific and its Subsidiaries
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent
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notified by Buyer or Agent, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with
any taxing authority, and (ii) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, Pacific and its Subsidiaries or
Stockholders, as the case may be, shall allow the other party to take
possession of such books and records. The party requesting such information
shall pay the reasonable external costs of the party providing the requested
information.
(b) Buyer and Stockholders further agree, upon request,
to use their best efforts to obtain any certificate or other document from
any Governmental Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Taxes that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).
(c) Buyer and Stockholders further agree, upon request,
to provide the other party with all information that either party may be
required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
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21.19.4 Tax Audits. Except as otherwise provided herein,
Buyer shall after the Closing be responsible for and shall have the right to
control any audit concerning any matters relating to Taxes of Pacific for all
periods ("Tax Audit"). Buyer shall promptly notify Agent in writing of the
commencement of any audit or proposed adjustment to the Taxes of Pacific for
any pre-Closing period, which shall be deemed to be a Notice of Claim under
Section 15.7 hereof. Sections 15.7 - 15.11 shall apply with respect to
Stockholders' indemnification of such Taxes, provided that an increase in
Pacific's Taxes in a post-Closing period attributable to a pre-Closing
adjustment in any Tax Audit or adjustment shall be considered reasonable
grounds for Buyer or Pacific to withhold its consent to the proposed
adjustment if it is not indemnified for the present value of such increase in
Taxes.
21.19.5 Tax Sharing Agreements. All tax sharing agreements
or similar agreements with respect to or involving Pacific and its
Subsidiaries shall be terminated as of the Closing Date and, after the
Closing Date, Pacific and its Subsidiaries shall not be bound thereby or have
any Liability thereunder.
21.19.6 Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with
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this Agreement shall be paid by Stockholders when due, and Stockholders will,
at their own expense, file all necessary Tax Returns and other documentation
with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable law,
Buyer will, and will cause its affiliates to, join in the execution of any
such Tax Returns and other documentation.
21.20 Agent.
21.20.1 Designation. For purposes of this Agreement,
the "Agent" shall be James J. Gabbert and, if he shall be unable to act as
Agent, the Agent shall be Michael P. Lincoln, and, if he shall be unable to
act as Agent, Michael P. Lincoln shall appoint a successor Agent to act
thereafter as the Agent. James J. Gabbert agrees to act as the Agent and
Michael P. Lincoln agrees, if necessary, to act as the successor Agent, in
accordance with the terms of this Agreement and the Escrow Agreement. In
order to become the Agent, any designated successor Agent must sign this
Agreement and the Escrow Agreement, as Agent. If Michael P. Lincoln shall
fail to appoint a successor Agent or does not notify Buyer of the name of
such successor within ten days after being requested to do so by Buyer, then
Buyer shall select a successor Agent and such choice shall be binding upon
each of the
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Stockholders; provided, that any Agent selected by Buyer may be replaced by
Stockholders.
21.20.2 Power of Attorney. The Stockholders hereby
irrevocably constitute and appoint the Agent, acting alone, as their true and
lawful attorney to perform on their behalf all acts which by the provisions
of this Agreement and the documents to be executed in connection herewith
that are to be performed by them; to execute and give and receive on their
behalf all notices, requests, consents, releases, indemnities, amendments,
demands and other communications to them hereunder; to receive the Purchase
Price on behalf of each such Stockholder; to delegate to any Persons in
writing all or any of such Agent's power and authority hereunder in the event
of absence or incapacity to act; and generally to act for each Stockholder
and on each such Stockholder's behalf in all matters connected with this
Agreement as fully and with the same force and effect as each such
Stockholder might act in person. This power of attorney is deemed to be
coupled with an interest, shall be irrevocable and shall not be affected by
the subsequent death, disability or incompetence of any of the Stockholders.
21.20.3 Fees; Liability. The Agent shall act, without
compensation, on behalf of the Stockholders, and the Agent
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shall not be liable to any Stockholder for any action taken in good faith on
behalf of such Stockholder.
21.20.4 Buyer Reliance. By execution hereof by the
Stockholders, they as Agent, agree to accept disbursements under this
Agreement or documents executed in connection herewith on behalf of the
Stockholders and to promptly disburse to the Stockholders who have executed
this Agreement their pro rata portion thereof. Buyer shall be entitled to
rely on the full power and authority of the Agent to act hereunder and under
any Exhibit or Schedule hereto on behalf of the Stockholders, and shall not
be liable in any way whatsoever for any action it takes or omits to take in
reliance upon such power and authority. The Stockholders shall look solely to
the Agent for payment to them of their pro rata share of any amounts payable
to the Stockholders pursuant to this Agreement and they shall have no
recourse against Buyer or any of its Affiliates or agents for payment
thereof; provided, however, that this sentence shall in no way limit the
Agent's power to enforce the Stockholders' rights hereunder.
21.21 Concurrent Closing. Notwithstanding anything to the
contrary contained herein, Buyer's obligation to close the Transactions
contemplated by this Agreement, is conditioned on the
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simultaneous closing of the transactions contemplated by the Put Option and
the Put Purchase Agreement.
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IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed and delivered in its name and on its behalf, all as of the date and
year first above written.
GRANITE BROADCASTING CORPORATION
By: /s/ W. Don Cornwell
_______________________________________
W. Don Cornwell, Chairman and
Chief Executive Officer
PACIFIC FM INCORPORATED
By: /s/
_______________________________________
Name:
Title:
/s/ James J. Gabbert
_______________________________________
James J. Gabbert
/s/ Michael P. Lincoln
_______________________________________
Michael P. Lincoln
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Exhibit 99.2
FROM: GRANITE BROADCASTING CORPORATION
Press Contact: W. Don Cornwell
Analyst Contact: Ellen McClain
Tel: 212/826-2530
FOR IMMEDIATE RELEASE
Monday, October 6, 1997
GRANITE BROADCASTING TO ACQUIRE
KOFY-TV IN SAN FRANCISCO FOR $173.75 MILLION
Transaction Creates Unique Operating Opportunity in 5th Largest U.S.
Television Market, Increases Affiliation Mix Toward Fast Growing WB Network
and Increases Granite's Growth Potential
NEW YORK, October 6, 1997 -- Granite Broadcasting Corporation
(GBTVK/GBTVP: NASDAQ) announced today that it has entered into a definitive
agreement to acquire 51% of the outstanding stock of Pacific FM, Inc., owner
of KOFY-TV, the WB Network affiliated television station serving San
Francisco-Oakland-San Jose, California, the nation's fifth largest television
market. At the closing of this purchase, it is contemplated that Granite will
acquire the remaining 49% of Pacific FM. The total price for all the stock of
Pacific FM is $143.75 million in cash. In addition, Granite will pay $30
million to the principal shareholders of Pacific FM, Inc. for a covenant not
to compete in the San Francisco television market for a period of five years
from the closing. The principal shareholders of Pacific FM have owned and
operated KOFY-TV for over 17 years.
The proposed acquisition is subject to approval by the Federal
Communications Commission and is expected to be completed during the third
quarter of 1998. Granite expects to fund the acquisition with bank debt.
Because Granite already owns a television station with an overlapping service
area, KNTV, the ABC affiliate licensed to serve San Jose, California, the
Company will request a waiver from the FCC to permit Granite to own both KNTV
and KOFY-TV.
<PAGE>
PAGE TWO--GRANITE BROADCASTING TO ACQUIRE KOFY-TV IN SAN FRANCISCO
Commenting on the announcement, W. Don Cornwell, Granite's Chairman and
Chief Executive Officer, said, "The acquisition of KOFY-TV significantly
changes the face of Granite and immediately increases the value and growth
potential of our station group. Fueled by the momentum of the WB Network, we
have now entered a market with approximately $600 million of television
advertising--ranked fourth in the nation by that measure--with excellent
growth potential and highly desirable demographics. In fact, our entry into
San Francisco, combined with our acquisition of a station in Detroit earlier
this year, has increased the size of the advertising revenue pool available
to our stations to more than $1.5 billion annually. While this transaction
will be slightly dilutive to Granite's after-tax cash flow initially, it will
become accretive by our second full year of ownership and will greatly
enhance our long term rate of growth."
Mr. Cornwell noted, "The acquisition of our second top-ten market WB
affiliate increases the revenue contribution from that fast growing new
network to approximately 21% of our annual revenue from 12% and makes Granite
one of the most significant station groups in the WB Network. In that regard,
we are pleased to note that KOFY-TV has extended its affiliation with the WB
Network for ten years."
"Supported by our proven techniques for improving stations through
quality local news, strong community service programs and innovative
marketing, we have an excellent opportunity to develop stronger ratings and
increased revenue at KOFY-TV," Mr. Cornwell explained. "By acquiring KOFY-TV
in combination with our continued ownership of KNTV, we will be able to
provide a new source of local and regional news to KOFY-TV viewers. KNTV is
the only television station in the Bay Area concentrated exclusively on San
Jose, and its local news programming is the market standard. It has been
recognized as having among the best newscasts in Northern California as
reflected in numerous awards by the Associated Press and the Radio and
Television News Directors Association. We plan to utilize KNTV's capabilities
to launch a unique news franchise for KOFY-TV. With news programming, KOFY-TV
will gain access to the estimated $150 million market for news-targeted
television advertising in San Francisco. In addition to expanded news, we are
also committed to providing KOFY-TV's viewers with unparalleled community
service programming and continuing the long tradition of its previous
shareholders, Jim Gabbert and Mike Lincoln, of serving the San Francisco
public with innovation and distinction."
<PAGE>
PAGE THREE--GRANITE BROADCASTING TO ACQUIRE KOFY-TV IN SAN FRANCISCO
In requesting a waiver of the FCC's ownership rules, "Granite",
according to Mr. Cornwell, "will emphasize the compelling public interest
benefits which will flow directly from our continued ownership of KNTV." More
specifically, Granite's request to the FCC will point out that, if granted a
waiver, the company will be able to call upon the award winning resources of
KNTV to inaugurate the newscast on KOFY-TV. The company's request will also
emphasize that a waiver would promote a paramount policy goal of the FCC--
advancement of minority ownership. As Mr. Cornwell noted, "In a time of
dwindling minority ownership of broadcast stations, Granite is prepared to
make a major step forward in television ownership in the largest markets. The
combined ownership of KNTV and KOFY-TV will greatly facilitate our ability to
respond to the consolidation trend sweeping through the broadcasting industry
in the wake of the passage of the Telecommunications Act of 1996."
The exclusive broker in this transaction was Ben La Rue of H.B. La Rue, Media
Brokers, Beverly Hills, California.
* * * * *
Granite Broadcasting Corporation operates eleven television stations in
geographically diverse markets, reaching nearly 8.0% of the nation's
television households. Three stations are affiliated with the NBC Television
Network (NBC), four with the ABC Television Network (ABC), three with the CBS
Television Network (CBS) and one station with the WB Network. The NBC
stations are: KSEE-TV, Fresno-Visalia, California; WEEK-TV,
Peoria-Bloomington, Illinois; and KBJR-TV, Duluth, Minnesota and Superior,
Wisconsin. The ABC affiliates are WKBW-TV, Buffalo, New York; KNTV, San Jose
and Monterey-Salinas, California; WPTA-TV, Fort Wayne, Indiana; and WLAJ-TV,
Lansing, Michigan, which Granite operates pursuant to a time brokerage
agreement. The CBS affiliates are WWMT-TV, Grand Rapids-Kalamazoo-Battle
Creek, Michigan; WTVH-TV, Syracuse, New York; and KEYE-TV, Austin, Texas. The
WB affiliate is WXON-TV, Detroit, Michigan. Granite also owns WEEK-FM in
Eureka, Illinois and operates the radio station in combination with WEEK-TV.
Granite was the 1995 Black Enterprise Company of the Year and is Number 7 on
Black Enterprise Magazine's 1997 Industrial/Service 100 List.
<PAGE>
PAGE FOUR-GRANITE BROADCASTING TO ACQUIRE KOFY-TV IN SAN FRANCISCO
GRANITE BROADCASTING CORPORATION
Total Station Group Reach in the U.S.
_______________________________________________________________________________
Market US Household
Market Rank Station Affiliation Coverage
_______________________________________________________________________________
Television
- ----------
San Francisco 5 KOFY WB 2.35%
Detroit 9 WXON WB 1.83%
Grand Rapids 37 WWMT CBS 0.67%
Buffalo 39 WKBW ABC 0.65%
Fresno-Visalia 55 KSEE NBC 0.51%
Austin 63 K-EYE CBS 0.45%
Syracuse 68 WTVH CBS 0.40%
Fort Wayne 103 WPTA ABC 0.25%
Lansing (a) 106 WLAJ ABC 0.24%
Peoria-Bloomington 110 WEEK NBC 0.23%
Monterey-Salinas 122 KNTV ABC 0.21%
Duluth-Superior 134 KBJR NBC 0.17%
Total 7.96%
Coverage:
RADIO
- -----
Eureka/Peoria (b) 134 WEEK FM N.A.
_______________________________________________________________________________
(a) WLAJ-TV is operated by Granite pursuant to a Time Brokerage Agreement.
<PAGE>
PAGE FIVE-GRANITE BROADCASTING TO ACQUIRE KOFY-TV IN SAN FRANCISCO
DIVERSE IN NETWORK AFFILIATIONS
_______________________________________________________________________________
[PIE CHART]
Duluth Detroit Buffalo Austin
Fresno San Francisco Fort Wayne Grand Rapids
Peoria Lansing Syracuse
San Jose
17% 21% 35% 28%
<PAGE>
PAGE SIX-GRANITE BROADCASTING TO ACQUIRE KOFY-TV IN SAN FRANCISCO
GRANITE BROADCASTING CORPORATION STATION GROUP
_______________________________________________________________________________
[UNITED STATES MAP]
KOFY-TV
San Francisco
KNTV-TV
San Jose,
Monterey-Salinas, CA
KSEE-TV
Fresno, CA
WEEK-TV & RADIO
Peoria, IL
KBJR-TV
Duluth, MN
WWMT-TV
Grand Rapids, MI
WLAJ-TV
Lansing, MI
WXON-TV
Detroit, MI
WTVH-TV
Syracuse, NY
WKBW-TV
Buffalo, NY
WPTA-TV
Fort Wayne, IN
K-EYE-TV
Austin, TX
