PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of this
16th day of March, 1999, by and between XXXXXXXX COMMUNICATIONS, INC., a
Maryland corporation (the "COMPANY"), and STC BROADCASTING, INC., a Delaware
corporation ("PURCHASER").
WHEREAS, the Company and Guy Gannett Communications ("GANNETT") entered
into that certain Purchase Agreement dated September 4, 1998, as amended on
Xxxxx 00, 0000 (xxx "XXXXXXX XXXXXXXX AGREEMENT"), pursuant to which the Company
agreed to purchase substantially all of the assets of the Gannett Television
Stations, including television broadcast stations WICS-TV, Channel 20,
Springfield, Illinois; WICD-TV, Channel 15, Champaign, Illinois; and KGAN-TV,
Channel 2, Cedar Rapids, Iowa (each a "STATION" and collectively, the
"Stations"); and
WHEREAS, the Company desires to sell, assign and transfer to Purchaser
the assets and business of the Stations as described below, and Purchaser
desires to purchase and acquire the assets and business of the Stations as
described below, on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties, intending legally to be bound, agree as follows:
[A LIST OF DEFINED TERMS IS PROVIDED IN ARTICLE 9 HEREOF.]
ARTICLE 1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 ASSETS TO BE ACQUIRED.
Upon the terms and subject to the satisfaction of the conditions set
forth herein, the Company shall sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase, acquire, accept and pay for, all right,
title and interest of the Company and Gannett in and to all of the real,
personal and mixed properties, assets and other rights, both tangible and
intangible (other than the Excluded Assets), owned or leased by, or licensed to
or used or useful by, the Company and Gannett in connection with the Business
and the Stations (collectively, the "ASSETS"), which Assets shall consist of all
of the Assets relating to the Stations that the Company (and its successors and
assigns) have acquired or have the right to acquire, pursuant to the Gannett
Purchase Agreement.
Without limiting the generality of the foregoing, the Assets shall
include the following:
(a) the FCC Licenses;
(b) the Equipment;
(c) all translators, earth stations and other auxiliary facilities, and
all applications therefor;
(d) the Real Property and Leased Property as set forth in Section
1.1(d) of the Disclosure Schedule;
(e) all orders and agreements for the sale of advertising time on the
Stations for cash, and all trade, barter and similar agreements, excluding
Program Contracts (which are provided for below), for the sale of advertising
time on the Stations for any property or services in lieu of or in addition to
cash, and any other orders and agreements relating to the Stations and entered
into (other than in violation of this Agreement or the Gannett Purchase
Agreement) between the date of the Gannett Purchase Agreement and the Transfer
Date;
(f) all film and program licenses and contracts under which the Company
or Gannett has the right to broadcast film product or programs on the Stations
("PROGRAM CONTRACTS"), including all cash and non-cash (barter) program
contracts and including, without limitation, the Program Contracts set forth in
Section 3.10 of the Disclosure Schedule and any other Program Contracts relating
to the Stations and entered into (other than in violation of this Agreement or
the Gannett Purchase Agreement) between the date of the Gannett Purchase
Agreement and the Transfer Date;
(g) all other contracts and agreements related to the Business,
including, without limitation, network affiliation agreements, all employment
contracts entered into with television talent and other Business Employees, all
collective bargaining agreements with respect to any Business Employees, any
time brokerage agreements and all national or local advertising representation
agreements for the Stations, including, without limitation, the contracts and
agreements set forth in Section 3.10 of the Disclosure Schedule, and any other
such contracts and agreements relating to the Stations and entered into (other
than in violation of this Agreement or the Gannett Purchase Agreement) between
the date of the Gannett Purchase Agreement and the Transfer Date;
(h) the Intellectual Property, including, without limitation, the Call
Letters;
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(i) all programs and programming materials used in connection with the
Business, whether recorded on tape or any other media or intended for live
performance, and whether completed or in production, and all related common law
and statutory copyrights owned by or licensed to the Company or Gannett and used
or useful in connection with the Business;
(j) all FCC logs and other records that relate to the operation of the
Stations;
(k) except as set forth in Section 1.2 hereof, all files, books and
other records relating to the Business, including, without limitation, written
technical information, data, specifications, research and development
information, engineering, drawings, manuals, computer programs, tapes and
software relating directly to the Business, other than duplicate copies of
account books of original entry and duplicate copies of such files and records,
if any, that are maintained at the corporate offices of the Company or Gannett
for tax and accounting purposes;
(l) all of the goodwill in, and "going concern" value of, the Business;
(m) all accounts, notes and accounts receivable of the Business and the
Stations relating to or arising out of the business and operations of the
Stations and the Business during the period prior to the Transfer Date;
(n) all deposits, reserves and prepaid expenses of the Business (other
than those relating to Excluded Assets or Liabilities that are not Assumed
Liabilities);
(o) to the extent transferable under applicable law, all franchises,
approvals, permits, licenses, orders, registrations, certificates, exemptions,
variances and similar rights obtained from Governmental Authorities (other than
the FCC Licenses) in any jurisdiction that had issued or granted such items to
the Company or Gannett, or that the Company or Gannett otherwise owns or uses,
in each case relating to the Business, and all pending applications therefor;
and
(p) except as set forth in Section 1.2 hereof, all insurance proceeds
and claims therefor arising out of or related to (i) damage, destruction or loss
of any property or asset used or useful in connection with the Business to the
extent of any damage or destruction that remains unrepaired, or to the extent
any property or asset remains unreplaced, at the Non-License Transfer Date or
the Closing Date, as applicable, and (ii) any other matters related to, or
involving the Business, including, without limitation, employment practices.
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1.2 EXCLUDED ASSETS.
Notwithstanding anything to the contrary herein, all of the assets
listed on Section 1.2 of the Disclosure Schedule or defined in the Gannett
Purchase Agreement as Excluded Assets (collectively, the "Excluded Assets")
shall be excluded from the Assets.
1.3 ASSUMPTION OF LIABILITIES.
(a) On and after the Non-License Transfer Date, Purchaser will assume
and agree to perform and fully discharge when due, except to the extent that
such Liabilities constitute Retained Liabilities, the following Liabilities of
the Company or Gannett: (i) those solely related to or solely arising from or in
connection with the Assets or the Business (other than the License Assets); and
(ii) those partly related to any contract or agreement for the Stations that are
also related to other Gannett Television Stations, but not related to any other
assets or business of Gannett or the Company (any such contract or agreement
being a "GROUP CONTRACT"), but only to the extent the Liabilities under any such
Group Contract relate to or arise from or are in connection with the Assets or
the Business, whether such Liabilities specified in clause (i) or (ii) are
incurred or arise prior to, on or after the Non-License Transfer Date,
including, without limitation, those obligations of the Company relating to the
Business to be assumed by Purchaser pursuant to Section 5.2 hereof.
(b) On and after the Closing Date, to the extent not assumed by
Purchaser at the Non-License Transfer, Purchaser will assume and agree to
perform and fully discharge when due, except to the extent that any Liabilities
constitute Retained Liabilities, the following Liabilities of the Company or
Gannett: (i) those solely related to or solely arising from or in connection
with the Assets or the Business; (ii) those partly related to any Group
Contract, but only to the extent the Liabilities under any such Group Contract
relate to or arise from or are in connection with the Assets or the Business,
and (iii) those solely related to or solely arising from or in connection with
the License Assets listed in Section 1.4 of the Disclosure Schedule, whether
such Liabilities specified in clause (i), (ii) or (iii) are incurred or arise
prior to, on or after the Closing Date, including, without limitation, those
obligations of the Company relating to the Business to be assumed by Purchaser
pursuant to Section 5.2 hereof (the Liabilities assumed by Purchaser pursuant to
Sections 1.3(a) and (b) hereof shall be collectively be referred to herein as
the "ASSUMED LIABILITIES").
(c) Except for the Assumed Liabilities and except as otherwise
expressly provided in this Agreement, Purchaser will assume no other Liabilities
or
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any kind of description (collectively, the "RETAINED LIABILITIES"). The Retained
Liabilities include, without limitation, any of the following Liabilities:
(i) any of the Liabilities defined in the Gannett
Purchase Agreement as "Retained Liabilities";
(ii) any of the Company's obligations hereunder;
(iii) any Liability for federal, state or local income
taxes of Gannett or the Company, their respective
stockholders or any other Person;
(iv) any Liabilities relating to the Corporate Office
except for the Purchaser's reimbursement obligation
pursuant to Section 5.9(b) hereof;
(v) any Liabilities relating to current, former or
inactive Corporate Office Employees;
(vi) any Liabilities under any Employee Benefit Plans of
Gannett or the Company except to the extent assumed
by Purchaser pursuant to Section 5.2 and Section 5.9
hereof;
(vii) any Liability of Gannett or the Company arising from
Indebtedness or any overdrafts on any bank accounts
of Gannett or the Company;
(viii) any Liability for dividends; and
(ix) any Liability with respect to the Gannett Television
Stations (other than the Stations) under any Group
Contract or otherwise.
(d) The Company shall retain, and shall continue to be responsible
after the Transfer Date for, all Retained Liabilities and all other Liabilities
of the Company and Gannett that are not Assumed Liabilities.
1.4 NON-LICENSE TRANSFER; CLOSING.
(a) Unless this Agreement shall have been terminated and the
transactions herein shall have been terminated pursuant to Section 10.1 hereof,
provided that the conditions set forth in Article 6 (except for Section 6.6) and
Article 7 (except for Section 7.6) shall have been satisfied and the Closing
shall not have occurred, there shall be a closing (the "NON-LICENSE TRANSFER")
for the
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purchase and sale of all of the Assets (other than the Assets which are listed
in Section 1.4 of the Disclosure Schedule (the "LICENSE ASSETS"), at 10:00 a.m.
New York City time on a date specified by Purchaser that is within the later of
(i) ten (10) days after the date on which all applicable waiting periods under
the HSR Act shall have expired or terminated, or (ii) the date, time and place
of the closing under the Gannett Purchase Agreement as long as Purchaser shall
have received at least ten (10) days prior written notice from the Company of
the date of the Gannett closing (the date on which the Non-License Transfer
shall occur pursuant to this Section 1.4(a) is referred to herein as the
"NON-LICENSE TRANSFER DATE"); provided, however, that the Company and Purchaser
shall take such reasonable actions as may be necessary to hold the Non-License
Transfer simultaneously with the closing of the Gannett Purchase Agreement. If
the Non-License Transfer shall occur simultaneously with the closing under the
Gannett Purchase Agreement, then the Non-License Transfer shall occur at the
place of the closing under the Gannett Purchase Agreement, or at such other
place as the parties shall agree in writing. Otherwise, the Non-License Transfer
shall occur at the offices of Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx,
Xxxxx 0000, XxXxxx, Xxxxxxxx 00000, or at such other place as the Company and
Purchaser shall agree in writing. At the Non-License Transfer, each of the
parties hereto shall take, or cause to be taken, all such actions and deliver,
or cause to be delivered, all such documents, instruments, certificates and
other items as may be required under this Agreement or otherwise, in order to
perform or fulfill all covenants and agreements on its part to be performed at
or prior to the Non-License Transfer. The Non-License Transfer shall be
effective as of 12:01 a.m., New York City time, on the day of the Non-License
Transfer Date.
(b) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been terminated pursuant to Section
10.1 hereof, the closing (the "CLOSING") of the transactions herein contemplated
shall take place at 10:00 a.m., New York City time, on a date specified by
Purchaser that is within ten (10) days following the satisfaction or waiver of
the conditions set forth in Articles 6 and 7 hereof, or at such other time and
date as the Company and Purchaser shall agree in writing (such time and date of
the Closing being referred to herein as the "CLOSING DATE"), at the offices of
Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, XxXxxx, Xxxxxxxx
00000, or at such other place as the Company and Purchaser shall agree in
writing. At the Closing, each of the parties hereto shall take, or cause to be
taken, all such actions and deliver, or cause to be delivered, all such
documents, instruments, certificates and other items as may be required under
this Agreement or otherwise, in order to perform or fulfill all covenants and
agreements on its part to be performed at or prior to the Closing. The Closing
shall be effective as of 12:01 a.m., New York City time, on the day of the
Closing Date.
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(c) In the event that the closing of the Company's acquisition of the
Stations pursuant to the Gannett Purchase Agreement does not occur
simultaneously with the Transfer Date hereunder, the Company and Purchaser
acknowledge and agree that (i) the representations, warranties, covenants and
agreements made by Gannett under the Gannett Purchase Agreement which relate to
the Stations shall be deemed (A) incorporated by reference into the terms
hereof, and (B) restated by the Company for the benefit of Purchaser as of the
Transfer Date as though the Company was Gannett under the Gannett Purchase
Agreement; provided, that, without limiting the Company's representations,
warranties, covenants and agreements hereunder, such additional representations,
warranties, covenants and agreements from the Gannett Purchase Agreement shall
apply only with respect to the period of ownership of the Stations and the
Assets by the Company and the Company's successors and assigns; (ii) on or prior
to the fifth (5th) Business Day prior to the Transfer Date, the Disclosure
Schedule hereto shall be updated and amended by the Company to reflect the
updates and amendments to the Disclosure Schedule that are necessary in order
for the Company to restate such representations and warranties hereunder as of
the Transfer Date; provided, however, no such updates or amendments shall be
made which would constitute a violation of this Agreement or the Gannett
Purchase Agreement; and (iii) in addition to the Assets described in Section 1.1
hereof, the "Assets" shall include the Assets of the Business and the Stations
with respect to which the Company and the Company's successors and assigns shall
have acquired from and after the closing under the Gannett Purchase Agreement.
(d) If the Closing shall not have occurred on or prior to such date
which is four (4) years after the date of this Agreement, the Company and
Purchaser acknowledge and agree to cooperate and use commercially reasonable
efforts to consummate the sale to a third party of both the License Assets and
the Non-License Assets in an orderly and mutually satisfactory manner (the
"THIRD PARTY SALE"). At the closing of the Third Party Sale pursuant to this
Section 1.4(d), the proceeds therefrom shall be paid as follows: (i) any amounts
of the Purchase Price hereunder not previously paid to the Company shall be paid
directly to the Company, and (2) any other amounts shall be paid directly to the
Purchaser. Any such payments shall be by wire transfer of immediately available
funds to an account identified by the recipient party in writing.
1.5 ADDITIONAL CLOSING DELIVERIES.
(a) At the Non-License Transfer and the Closing, as applicable, the
Company shall deliver to Purchaser:
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(i) a duly executed counterpart of the Xxxx of Sale, Assignment
and Assumption Agreement substantially in the form set forth in Exhibit A hereto
(the "XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT");
(ii) at the Closing only, a duly executed counterpart of the
Assignment of FCC Licenses, substantially in the form set forth in Exhibit B
hereto (the "ASSIGNMENT OF FCC LICENSES");
(iii) instruments of assignment with respect to all of the
Company's rights and interests in the Leased Property and special warranty deeds
(of a type equivalent to that known in New York as a "bargain and sale deed with
covenants against grantor's actions") with respect to all of the Company's
rights and interests in the Real Property, in recordable form sufficient to
convey to Purchaser all of the Company's rights and interests or rights and
interest in the Leased Property and the Real Property acquired by the Company
from Gannett pursuant to the Gannett Purchase Agreement;
(iv) an owner's affidavit, gap indemnity and such other
customary documents and certificates as may be reasonably required by
Purchaser's title insurance company with respect to Purchaser's title insurance
of the Real Property and any Leased Property;
(v) evidence reasonably satisfactory to Purchaser that the
third-party insurance policies listed in Section 3.9 of the Disclosure Schedule
are in full force and effect with respect to the period prior to the Transfer
Date (together with appropriate evidence showing loss payable and/or additional
insured clauses or endorsements, as reasonably requested by Purchaser, in favor
of Purchaser);
(vi) a certificate, dated as of the Transfer Date, executed on
behalf of the Company by the Company's duly authorized officers that, except as
disclosed in Section 3.8 of the Disclosure Schedule (or otherwise disclosed
pursuant to such certificate) (a) there are no Actions against the Company or,
to the Company's knowledge, Gannett relating to the Business or the Assets
pending, or, to the Company's Knowledge, threatened to be brought by or before
any Governmental Authority, and (b) neither the Company nor, to the Company's
Knowledge, Gannett is subject to any Governmental Orders (nor, are there any
such Governmental Orders threatened to be imposed by any Governmental Authority)
relating to the Business or the Assets;
(vii) domain name transfer agreements in form and substance
reasonably satisfactory to Purchaser to perfect the transfer to Purchaser of all
of the domain names of the Stations;
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(viii) all other instruments of conveyance and transfer sufficient
to convey the Assets to Purchaser;
(ix) at the Non-License Transfer only, a duly executed
counterpart of the Time Brokerage Agreement, substantially in the form set forth
in Exhibit C hereto (the "TIME BROKERAGE AGREEMENT"); and
(x) all other documents, instruments and writings required to
be delivered by the Company at or prior to the Closing Date or the Non-License
Transfer Date, as applicable, pursuant to this Agreement.
(b) At the Non-License Transfer and the Closing, as applicable,
Purchaser shall deliver to Company:
(i) the Purchase Price in accordance with Section 2.3 hereof;
(ii) a duly executed counterpart of the Xxxx of Sale, Assignment
and Assumption Agreement;
(iii) at the Closing only, a duly executed counterpart of the
Assignment of FCC Licenses;
(iv) at the Non-License Transfer only, a duly executed
counterpart of the Time Brokerage Agreement; and
(v) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date or the Non-License
Transfer Date, as applicable, pursuant to this Agreement.
(c) Purchaser shall, at any time prior to, at or after the Transfer
Date, take or cause to be taken such further actions, and execute, deliver and
file or cause to be executed, delivered and filed such further documents and
instruments, as may be reasonably requested by the Company in connection with
the consummation of the transactions contemplated by this Agreement. The Company
shall, at any time prior to, at or after the Transfer Date, take or cause to be
taken such further actions, and execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, as may be
reasonably requested by Purchaser in connection with the consummation of the
transactions contemplated by this Agreement.
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1.6 DUE DILIGENCE, DELIVERY OF DISCLOSURE SCHEDULE AND PURCHASER
TERMINATION RIGHT.
The Company hereby acknowledges and agrees that neither the Company nor
Gannett has delivered all due diligence materials or the Disclosure Schedule
with respect to the Stations to Purchaser prior to the date hereof. Subject to
the receipt of any required prior approvals from Gannett, the parties,
therefore, acknowledge and agree that (a) Purchaser shall be permitted to
conduct a due diligence review of the Business and Assets upon, and at all times
after the execution and delivery of this Agreement pursuant to the terms and
conditions of this Agreement, and (b) the Company shall deliver to Purchaser and
to Purchaser's counsel a complete set of the Disclosure Schedule for the
Stations (and copies of all materials identified on the Disclosure Schedule, as
reasonably required to support such Disclosure Schedule or as otherwise
reasonably requested by Purchaser) as soon as possible after the execution and
delivery of this Agreement. Purchaser shall have the right, in its sole and
absolute discretion and for any reason, to terminate this Agreement at any time
prior to 5:00 p.m. (New York City time) on the date which is the tenth (10th)
Business Day after the date hereof (the "Diligence Termination Deadline")
pursuant to Section 10.1(a)(ii) hereof. Such termination right of Purchaser is
in addition to, and shall not limit or diminish, any other termination rights or
other remedies available to Purchaser hereunder or at law or in equity.
ARTICLE 2. PURCHASE PRICE.
2.1 ESCROW DEPOSIT.
For and in partial consideration of the execution and delivery of this
Agreement, provided, that this Agreement shall not have been terminated and the
transactions herein contemplated shall not have been terminated pursuant to
Sections 10.1(a)(ii) or 10.1(a)(iii) hereof, Purchaser shall deposit within
twelve (12) Business Days after the execution and delivery of this Agreement
with the Deposit Escrow Agent an original, irrevocable letter of credit in a
form reasonably acceptable to the Company (the "LETTER OF CREDIT"), issued for
the benefit of the Company and the Deposit Escrow Agent by The Chase Manhattan
Bank for an amount equal to Eight Million One Hundred Thousand Dollars
($8,100,000) (the "ESCROW DEPOSIT"), such Letter of Credit to be dealt with in
accordance with the terms and provisions of the Deposit Escrow Agreement, dated
as of the date of the delivery of the Letter of Credit to the Deposit Escrow
Agent, among the Company, Purchaser and the Deposit Escrow Agent, in the form
attached hereto as Exhibit D (the "DEPOSIT ESCROW AGREEMENT"). Purchaser and the
Company shall cause the Letter of Credit to be returned to Purchaser on the
Transfer Date.
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2.2 PURCHASE PRICE.
(a) In consideration of the sale of the Assets and the Business
hereunder, Purchaser shall (i) pay the Company in cash the aggregate amount of
Eighty One Million Dollars ($81,000,000) (the "BASE PURCHASE PRICE"), plus (if
the Estimated Net Financial Assets are greater than zero) or minus (if the
Estimated Net Financial Assets are less than zero), as the case may be, the
Estimated Net Financial Assets (the Base Purchase Price, as adjusted by the Net
Financial Assets, the "PURCHASE PRICE") and (ii) assume the Assumed Liabilities.
(b) As promptly as possible but no later than three (3) Business Days
prior to the Transfer Date, the Company shall deliver to Purchaser a statement
setting forth the amount estimated in good faith by the Company to be the amount
of the Net Financial Assets as of the Transfer Date (the "ESTIMATED NET
FINANCIAL ASSETS").
2.3 PAYMENT OF PURCHASE PRICE.
(a) At the Non-License Transfer, Purchaser shall pay to the Company the
sum of Seventy-Six Million Dollars ($76,000,000) of the Base Purchase Price plus
(if the Estimated Net Financial Assets are greater than zero) or minus (if the
Estimated Net Financial Assets are less than zero), as the case may be, the
Estimated Net Financial Assets, by wire transfer in immediately available funds
to an account or accounts which shall be designated by the Company not less than
three (3) Business Days prior to the Transfer Date.
(b) One (1) year after the date hereof (the "FIRST YEAR ANNIVERSARY
DATE"), Purchaser shall pay the Company the sum of Two Million Dollars
($2,000,000) of the Purchase Price, by wire transfer in immediately available
funds to an account or accounts which shall be designated by the Company not
less than three (3) Business Days prior to the First Year Anniversary Date.
(c) If the Closing shall not have occured on or prior to the date which
is two (2) years after the date hereof (the "SECOND YEAR ANNIVERSARY DATE"),
Purchaser shall pay the Company the sum of Three Million Dollars ($3,000,000) of
the Purchase Price, by wire transfer in immediately available funds to an
account or accounts which shall be designated by the Company not less than three
(3) Business Days prior to the Second Year Anniversary Date.
(d) The Purchase Price (less any amounts of the Purchase Price paid to
the Company at the Non-License Transfer, on the First Year Anniversary Date and
on the Second Year Anniversary Date) shall be paid by Purchaser to the
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Company at the Closing by wire transfer of immediately available funds to an
account or accounts which shall be designated by the Company not less than three
(3) Business Days prior to the Closing Date.
(e) To the extent that any payments described in Section 2.3(a) or
Section 2.3(b) are not paid when due in accordance with the terms hereof, any
unpaid payments shall accrue interest at a rate per annum of twelve percent
(12%) until paid in full.
2.4 POST-CLOSING ADJUSTMENT.
(a) The parties agree that no later than seventy-five (75) days after
the Transfer Date (or such later date on which such statement reasonably can be
prepared and delivered in light of the compliance of Purchaser and the Company
with their obligations set forth in next two succeeding sentences), the Company
shall deliver to Purchaser, in the form received by the Company from Gannett (i)
a statement of the actual Net Financial Assets as of 11:59 p.m., New York City
time, on the day immediately preceding the Transfer Date (the "CLOSING
STATEMENT") certified by PriceWaterhouseCoopers L.L.P., independent accountants
for Gannett, to be prepared (except as otherwise provided in Section 9 of the
Disclosure Schedule to the Gannett Purchase Agreement) in conformity with GAAP
and on a basis consistent with the basis used in preparing the Unaudited
Financial Statements as of, and for the year ended, December 27, 1997, referred
to in Section 3.5 of the Gannett Purchase Agreement, except to the extent of any
position taken as the result of such statements being prepared on a consolidated
basis, and (ii) a determination of the amount by which the actual Net Financial
Assets are less than or greater than the Estimated Net Financial Assets.
Purchaser shall provide the Company and Gannett, and Gannett's independent
accountants, access at all reasonable times to the relevant personnel,
properties, books and records of the Business for such purposes and to assist
the Company and Gannett, and Gannett's independent accountants, in preparing the
Closing Statement. Purchaser's assistance shall include, without limitation, the
closing of the books of the Business as of the Transfer Date, the preparation of
schedules supporting the amounts set forth in the general ledger and other books
and records of the Business, and such other assistance as the Company, Gannett
or Gannett's independent accountants may reasonably request. During the
twenty-five (25) day period following the delivery by the Company of the Closing
Statement referred to in the first sentence of this Section 2.4(a), Purchaser
and its independent accountants will be permitted to review the working papers
of the Company and of Gannett and its independent accountants relating to the
preparation of the Closing Statement to the same extent as such working papers
have been made available to the Company by Gannett pursuant to the Gannett
Purchase Agreement. If, within twenty-five (25) days after
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delivery by the Company of the Closing Statement, Purchaser notifies the Company
that it disagrees with the Closing Statement, the Company shall attempt to
resolve the disagreement with Gannett. In the event the Company and Purchaser
cannot agree with respect to the Closing Statement within five (5) days of the
notice of disagreement provided by Purchaser to the Company, then the
determination shall be submitted for resolution promptly to an independent
nationally recognized accounting firm (the "ACCOUNTING FIRM"), jointly selected
by the Company and Purchaser, whose determination (the "ACCOUNTING FIRM
DETERMINATION") shall be instructed by the parties to be made within twenty (20)
days and be binding upon all parties hereto, and the fees and expenses of which
shall be borne equally by Purchaser and the Company to the extent that such fees
and expenses are allocable to the transactions contemplated by this Agreement.
The Purchaser agrees that the accounting firm selected by Gannett and the
Company pursuant to Section 2.3(a) of the Gannett Purchase Agreement shall be
the Accounting Firm hereunder as long as such firm has not been engaged by
Gannett or the Company during the three (3) year period prior to the date
hereof. In the event that (whether expressly or by failure of Purchaser to
provide notice of any disagreement within the applicable period) Purchaser
agrees with the determination of the final Net Financial Assets set forth in the
Closing Statement without submitting the matter for an Accounting Firm
Determination, the Net Financial Assets set forth in the Closing Statement shall
be the final determination of the Net Financial Assets. The amount of Net
Financial Assets as of 11:59 p.m., New York City time, on the day immediately
preceding the Closing Date, as definitively determined pursuant to this Section
2.4(a) is referred to herein as the "ACTUAL NET FINANCIAL ASSETS".
(b) If the Actual Net Financial Assets are greater than the Estimated
Net Financial Assets, then Purchaser shall pay the Company in cash, within two
(2) Business Days following the determination of the Actual Net Financial
Assets, an amount equal to such difference, plus interest on the amount of such
difference at the rate of eight percent (8%) per annum from the Transfer Date to
the date of such payment to the Company. If the Actual Net Financial Assets are
less than the Estimated Net Financial Assets, then the Company shall pay the
Purchaser in cash within two (2) Business Days following the determination of
the Actual Net Financial Assets, an amount equal to such difference, plus
interest on the amount of such difference at the rate of eight percent (8%) per
annum from the Transfer Date to the date of such payment to Purchaser. The
amounts paid pursuant to this Section 2.4(b) shall be by wire transfer of
immediately available funds for credit to the recipient at a bank account
identified by such recipient in writing.
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2.5 ALLOCATION OF THE BASE PURCHASE PRICE.
The Company and Purchaser agree to allocate the Base Purchase Price
among the Stations for all purposes (including financial, accounting and tax
purposes) in accordance with Section 2.5 of the Disclosure Schedule. The Company
and Purchaser agree to engage Bond & Xxxxxx, a nationally recognized appraisal
firm, to appraise the classes of Assets of each Station in accordance with the
allocation for the Stations set forth in Section 2.5 of the Disclosure Schedule
and in accordance with Section 1060 of the Code and the Treasury Regulations
promulgated thereunder (the "ALLOCATION"). The Allocation shall be binding upon
Purchaser and the Company, and none of the parties hereto shall file, or cause
to be filed, any Tax Return, Internal Revenue Service Form 8594 or other form,
or take a position with any Tax authority or jurisdiction, that is inconsistent
with the Allocation without obtaining the prior written consent of the Company
or Purchaser, as the case may be. The fees and disbursements of the appraiser
engaged in connection with the Allocation as to the Assets of the Stations shall
be paid one-half (1/2) by Purchaser and one-half (1/2) by the Company.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.
The Company represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND STANDING.
The Company is a corporation duly incorporated, validly existing, and
in good standing under the laws of the State of Maryland. The Company and, to
the Company's Knowledge, Gannett have all requisite corporate power and
authority to own, lease and operate their respective properties and assets and
to conduct their business as it is now being conducted. The Company is and, to
the Company's Knowledge, Gannett is, duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state in which the
operation of its business or ownership of its assets makes such qualification
necessary, except where the failure to so qualify or be in good standing would
not reasonably be expected to have a Material Adverse Effect.
3.2 BINDING AGREEMENT.
The Company has all requisite corporate power and authority to enter
into this Agreement, to execute and deliver this Agreement and the other
Transaction Documents, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
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and delivery of this Agreement and the other Transaction Documents by the
Company and the consummation by the Company of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate and
stockholder action on the part of the Company. This Agreement has been, and on
the Non-License Transfer Date and on the Closing Date the other Transaction
Documents will be, duly executed and delivered on behalf of the Company and,
assuming the due authorization, execution and delivery by Purchaser, constitutes
a legal, valid and binding obligation of the Company enforceable in accordance
with its terms, subject to applicable bankruptcy and similar laws affecting the
rights of creditors generally and to general principles of equity (whether
applied at law or equity).
3.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in Section 3.3 of the Disclosure Schedule, the
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents (and to the extent that the Assets are transferred
directly from Gannett to the Purchaser, to the Company's Knowledge, Gannett) do
not and will not (a) violate, conflict with or result in the breach or default
of any provision of the articles of incorporation or bylaws of the Company, (b)
conflict with or violate in any material respect any material Law or material
Governmental Order applicable to the Company or any of its properties or assets
or to the Assets or the Business, (c) except for (i) the notification
requirements of the HSR Act and (ii) such filings with, and orders of, the FCC
as may be required under the Communications Act and the FCC's rules and
regulations in connection with this Agreement and the transactions contemplated
hereby, require any material consent, approval, authorization or other order of,
action by, registration or filing with or declaration or notification to any
Governmental Authority, or (d) conflict with, result in any violation or breach
of, constitute a default (or event which with the giving of notice, or lapse of
time or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Assets, or result in the imposition or acceleration of any payment,
time of payment, vesting or increase in the amount of compensation or benefit
payable, pursuant to any Material Contract.
3.4 EQUITY INVESTMENTS.
The Assets do not include any capital stock of any corporation or any
equity interest in any Person.
- 15 -
3.5 FINANCIAL STATEMENTS.
(a) The Company has furnished, or prior to the Diligence Termination
Deadline will furnish, to Purchaser the balance sheets for each of the Stations
as of December 31, 1994, December 31, 1995, December 31, 1996, December 31,
1997, and December 31, 1998, and statements of operations for each of the
Stations for the years then ended (such financial statements are collectively
referred to herein as the "UNAUDITED FINANCIAL STATEMENTS"). Except as otherwise
disclosed in Section 3.5 of the Disclosure Schedule, to the Company's Knowledge,
the Unaudited Financial Statements (including any notes thereto) present fairly,
in all material respects, the financial position of the Stations, as of the
dates thereof and the results of operations for the Stations for the periods
then ended and have been prepared in conformity with GAAP.
(b) Except as set forth in Section 3.5 of the Disclosure Schedule, to
the Company's Knowledge, there are no liabilities or obligations, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due), of any Station of a nature required by GAAP to be reflected
in a corporate balance sheet, except such liabilities and obligations (i) that
are adequately accrued or reserved against in the Unaudited Financial Statements
or disclosed in the notes thereto, (ii) that were incurred after December 31,
1998, either in the ordinary course of business consistent with past practice or
in connection with the transactions contemplated by this Agreement, or (iii)
that are immaterial in amount.
3.6 TITLE TO ASSETS; RELATED MATTERS.
To the Company's Knowledge, except for Permitted Exceptions or as
disclosed in Section 3.6 of the Disclosure Schedule (a) Gannett has good, valid
and marketable title (as measured in the context of their current uses) to, or,
in the case of leased or subleased assets, valid and subsisting leasehold
interests (as measured in the context of their current uses) in, or otherwise
has the right to use, all of the Assets, free and clear of all Encumbrances
(except for any assets sold or otherwise disposed of, or with respect to which
the lease, sublease or other right to use such Asset has expired or has been
terminated, in each case after the date hereof solely to the extent permitted
under Section 5.1(a) hereof), (b) each lease or sublease pursuant to which any
Leased Property is leased by Gannett is, to the Company's Knowledge, legal,
valid and binding on Gannett and the Company (as the case may be) and, to the
Company's Knowledge, the other parties thereto and grants the leasehold interest
it purports to grant, including, without limitation, any rights to
nondisturbance and peaceful and quiet enjoyment that may be contained therein
and, to the Company's Knowledge, Gannett and each other party thereto is in
compliance in all material respects with the provisions of such leases and
subleases,
- 16 -
(c) to the Company's Knowledge, the Assets, together with the Excluded Assets,
constitute all the assets and rights of Gannett and its Affiliates used in or
necessary for the operation of the Business as currently conducted, (d) to the
Company's Knowledge, except for Equipment scheduled to be replaced by Gannett's
capital expenditure budget, the Real Property, Leased Property and Equipment is,
in all material respects, in good operating condition and repair (ordinary wear
and tear excepted) taking into account the age thereof, (e) to the Company's
Knowledge, there are no contractual or legal restrictions to which Gannett or
the Company is a party or by which the Real Property is otherwise bound that
preclude or restrict in any material respect Gannett's ability to use the Real
Property for the purposes for which it is currently being used and (f) no
portion of the Real Property or Leased Property is the subject of, or affected
by, any condemnation, eminent domain or inverse condemnation proceeding
currently instituted or, to the Company's Knowledge, threatened. At each of the
Non-License Transfer and the Closing, as applicable, the Company (or Gannett)
shall sell, convey, assign, transfer and deliver to Purchaser all of the
Company's (or Gannett's) right, title and interest in and to all of the Assets,
free and clear of all Encumbrances other than Permitted Exceptions and
Encumbrances arising from Purchaser's acts. Section 1.1(d) of the Disclosure
Schedule contains a true and correct list of all Real Property owned by Gannett
used in the Business (other than the Excluded Assets).
3.7 ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS.
To the Company's Knowledge, since June 30, 1998, except as otherwise
provided in or contemplated by this Agreement or as disclosed in Section 3.7 of
the Disclosure Schedule:
(a) other than in the ordinary course of business consistent with past
practice neither the Company nor Gannett has sold, transferred, leased,
subleased, licensed or otherwise disposed of any material assets used in the
Business, other than the sale of obsolete Equipment;
(b) (i) neither the Company nor Gannett has granted any increase, or
announced any increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable to any of the Business Employees,
including, without limitation, any increase or change pursuant to any Employee
Benefit Plan, or (ii) established, increased or accelerated the payment or
vesting of any benefits under any Employee Benefit Plan with respect to Business
Employees, in either case except (A) as required by Law, (B) that involve only
increases consistent with the past practices of Gannett or (C) as required under
any existing agreement or arrangement;
- 17 -
(c) neither the Company nor Gannett has made any material change in any
method of accounting or accounting practice or policy used by Gannett or the
Company with respect to the Stations, other than changes required by Law or
under GAAP;
(d) neither the Company nor Gannett has suffered any extraordinary
casualty loss or damage with respect to any material assets used in the
Business, whether or not covered by insurance;
(e) there has not been any Material Adverse Effect;
(f) except in connection with the transactions contemplated hereby, the
Business has been conducted in all material respects only in the ordinary and
usual course consistent with past practice;
(g) neither the Company nor Gannett has created, incurred, assumed or
guaranteed any Indebtedness, except for net borrowings under existing lines of
credit;
(h) other than in the ordinary course of business, neither the Company
nor Gannett has compromised, settled, granted any waiver or release relating to,
or otherwise adjusted any Action, material Liabilities or any other material
claims or material rights of the Business; and
(i) neither the Company nor Gannett has entered into any agreement,
contract, commitment or arrangement to do any of the foregoing.
3.8 LITIGATION.
Except as disclosed in Section 3.8 of the Disclosure Schedule, as of
the date hereof, (a) there are no Actions against the Company or, to the
Company's Knowledge, Gannett relating to the Business or the Assets pending, or,
to the Company's Knowledge, threatened to be brought by or before any
Governmental Authority, (b) neither the Company nor, to the Company's Knowledge,
Gannett is subject to any Governmental Orders (nor, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
relating to the Business or the Assets, and (c) there is no Action pending or,
to the Company's Knowledge, threatened to be brought before any Governmental
Authority, that seeks to question, delay or prevent the consummation of the
transactions contemplated hereby.
- 18 -
3.9 INSURANCE.
Section 3.9 of the Disclosure Schedule lists all insurance policies as
of the date hereof relating to the Assets or the Business (the "INSURANCE
POLICIES"). Except as set forth in either Section 3.9 or Section 3.14 of the
Disclosure Schedule, (a) to the Company's Knowledge, all insurance policies
relating to the Assets or Business to which the Company or Gannett is a party or
under which the Assets or the Business is covered (or replacement policies
therefor) are in full force and effect and, to the Company's Knowledge, all
premiums due have been paid and are not in default, (b) to the Company's
Knowledge, no notice of cancellation or non-renewal with respect to, or
disallowance of any claim under, any such policy has been received by either the
Company or Gannett, and (c) to the Company's Knowledge, neither the Company nor
Gannett has been refused insurance with respect to the Business or Assets, nor,
to the Company's Knowledge, has coverage with respect to the Business or Assets
been previously canceled or limited by an insurer to which Gannett or the
Company has applied for such insurance or with which the Company or, to the
Company's Knowledge, Gannett has held insurance within the last three years.
3.10 MATERIAL CONTRACTS.
Section 3.10 of the Disclosure Schedule sets forth all Material
Contracts relating to the Stations, including, without limitation, all
amendments thereof, as of the date hereof. To the extent received by the Company
from Gannett, complete and accurate copies of all written Material Contracts
listed in Section 3.10 of the Disclosure Schedule and accurate summaries of the
material terms of all oral contracts and agreements (which would be Material
Contracts if in writing) have been delivered or made available to Purchaser
(except as otherwise noted therein). Except as set forth in Section 3.10 of the
Disclosure Schedule, to the Company's Knowledge, (a) each Material Contract and
each other contract or agreement that is material to the Business is legal,
valid and binding on Gannett and, to the Company's Knowledge, the other parties
thereto, (b) to the Company's Knowledge, neither the Company nor Gannett is in
default under any Material Contract or other contract or agreement that is
material to the Business and no event has occurred or failed to occur that, with
or without the giving of notice or the lapse of time or both, would result in
such a default and (c) to the Company's Knowledge, no other party to any
Material Contract or other contract or agreement that is material to the
Business has breached or is in default thereunder.
3.11 PERMITS AND LICENSES; COMPLIANCE WITH LAW.
(a) Except as disclosed in Section 3.11 of the Disclosure Schedule, (i)
to the Company's Knowledge, Gannett currently holds all the material permits,
- 19 -
licenses, authorizations, certificates, exemptions and approvals of Governmental
Authorities or other Persons including, without limitation, Environmental
Permits, necessary for the current operation and the conduct (as it is being
conducted prior to the Transfer Date) of the Business, other than the FCC
Licenses (which are provided for in Section 3.12 hereof) (collectively,
"PERMITS"), and all material Permits are in full force and effect, (ii) to the
Company's Knowledge, since November 1, 1996, Gannett has not received any
written notice from any Governmental Authority revoking, canceling, rescinding,
modifying or refusing to renew any material Permit and, (iii) to the Company's
Knowledge, Gannett is in material compliance with the requirements of all
material Permits.
(b) Except as disclosed in Section 3.11 of the Disclosure Schedule, to
the Company's Knowledge, (i) Gannett is in compliance in all material respects
with all Laws and Governmental Orders, other than the FCC Licenses, the
Communications Act and the rules and regulations of the FCC (which are provided
for in Section 3.12 hereof), applicable to the conduct of the Business as it is
being conducted prior to the Transfer Date, and (ii) Gannett has not been
charged, since November 1, 1996, by any Governmental Authority with a violation
of any Law or any Governmental Order relating to the Stations, which charge has
not been fully resolved and, to the extent required, accounted for.
3.12 FCC LICENSES.
Except as disclosed in Section 3.12 of the Disclosure Schedule, (a) to
the Company's Knowledge, Gannett holds, and immediately prior to the Closing the
Company will hold, the FCC Licenses listed in Section 3.12 of the Disclosure
Schedule, which FCC Licenses expire on the respective dates set forth in Section
3.12 of the Disclosure Schedule; (b) to the Company's Knowledge, Section 3.12 of
the Disclosure Schedule sets forth a true and complete list of any and all
pending applications filed with the FCC by Gannett, true and complete copies of
which (to the extent received from Gannett by the Company) have been delivered
to Purchaser or made available for inspection by Purchaser; (c) to the Company's
Knowledge, the FCC Licenses listed in Section 3.12 of the Disclosure Schedule
constitute all of the licenses and authorizations required under the
Communications Act and the current rules and regulations of the FCC in
connection with the operation of the Stations as currently operated; (d) to the
Company's Knowledge, the FCC Licenses are in full force and effect through the
dates set forth in Section 3.12 of the Disclosure Schedule, and there is not
pending or, to the Company's Knowledge, threatened any action by or before the
FCC to revoke, suspend, cancel, rescind, modify, or refuse to renew in the
ordinary course any of the FCC Licenses; (e) to the Company's Knowledge, the
Stations are operating in compliance with the FCC Licenses and in compliance in
all material
- 20 -
respects with the Communications Act and the current rules and regulations of
the FCC and have been assigned digital television frequencies; and (f) to the
Company's Knowledge, there exist no facts, conditions or events relating to
Gannett or the Company that would reasonably be expected to cause the revocation
of FCC Licenses or denial by the FCC of the application for consent to the
assignment of the FCC Licenses as provided in this Agreement or the Gannett
Purchase Agreement. To the Company's Knowledge, Gannett has filed all reports,
forms and statements, including, without limitation, construction permit
applications for digital television channels required to be filed by Gannett
with the FCC and maintained in its public files in accordance with the rules and
regulations of the FCC.
3.13 ENVIRONMENTAL MATTERS.
Except as disclosed in Section 3.13 of the Disclosure Schedule, to the
Company's Knowledge, (a) Hazardous Materials have not been Released on any Real
Property except in material compliance with applicable Law; (b) there have been
no events related to the Business or the Real Property that would reasonably be
expected to give rise to any material liability under any Environmental Law; (c)
the Business, the Real Property and the Leased Property is now, and for the past
five (5) years has been, in material compliance with all applicable
Environmental Laws and there are no extant conditions that would reasonably be
expected to constitute an impediment to such compliance in the future; (d) the
Business has disposed of all wastes arising from or otherwise relating to its
business, including those wastes containing Hazardous Materials, in material
compliance with all applicable Environmental Laws (including the filing of any
required reports with respect thereto) and Environmental Permits and (e) there
are no pending or, to the Company's Knowledge, threatened Environmental Claims
against Gannett relating to the Real Property.
3.14 EMPLOYEE BENEFIT MATTERS.
The Company has made available to Purchaser copies of all material
Employee Benefit Plans (including, without limitation, all plans governed by
ERISA, providing pension benefits or providing health, life insurance or
disability benefits) relating to the Stations), which plans are set forth in
Section 3.14 of the Disclosure Schedule. To the Company's Knowledge and except
as set forth in Section 3.14 of the Disclosure Schedule, all such Employee
Benefit Plans are in compliance with the terms of the applicable plan and the
requirements prescribed by applicable law currently in effect with respect
thereto (including Sections 4980B and 5000 of the Code) and, to the Company's
Knowledge, Gannett has performed in all material respects all obligations
required to be performed by it under, and is not in default under or in
violation of, any of the terms of such Employee Benefit Plans
- 21 -
where any such noncompliance, nonperformance, default or violation would,
individually or in the aggregate, be reasonably expected to result in liability
in excess of Twenty-Five Thousand Dollars ($25,000). To the Company's Knowledge,
Gannett has no post-retirement welfare obligations with respect to the Business.
To the Company's Knowledge, Gannett has not incurred, and, to the Company's
Knowledge, no event, transaction or condition has occurred or exists which is
reasonably expected to result in the occurrence of any liability to the Pension
Benefit Guaranty Corporation (other than contributions to the plan and premiums
to the Pension Benefit Guaranty Corporation which, in either event, are not in
default) or any "withdrawal liability" within the meaning of Section 4201 of
ERISA, or any other liability pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating to
employee benefit plans, in any such case relating to any Employee Benefit Plan
or any pension plan maintained by any company that during the last five years
was or currently would be treated as a single employer with the Company or
Gannett, as the case may be, under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA AFFILIATE"), where individually or in the aggregate, in any of
such events, any such liability would be in excess of Twenty-Five Thousand
Dollars ($25,000). To the Company's Knowledge, except as set forth in Section
3.14 of the Disclosure Schedule and except for such matters that would not,
individually or in the aggregate, reasonably be expected to result in liability
in excess of Twenty-Five Thousand Dollars ($25,000), each Employee Benefit Plan
relating to the Stations intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter that
such plan is so qualified and the trusts maintained thereunder are exempt from
taxation under Section 501(a) of the Code and, to the Company's Knowledge, is so
qualified, and no such Employee Benefit Plan holds employer securities. To the
Company's Knowledge and except as set forth in Section 3.14 of the Disclosure
Schedule, neither Gannett nor any ERISA Affiliate has ever made or been
obligated to make, or reimbursed or been obligated to reimburse another employer
for, contributions to any multiemployer plan (as defined in ERISA Section
3(37)). To the Company's Knowledge and except as set forth in Section 3.14 of
the Disclosure Schedule, the Employee Benefit Plans are not presently under
audit or examination (and have not received notice of a potential audit or
examination) by any governmental authority, and no matters are pending with
respect to the Qualified Plan under any governmental compliance programs. To the
Company's Knowledge, with respect to each Employee Benefit Plan of the Stations,
there have been no violations of Code Section 4975 or ERISA Sections 404 or 406
as to which successful claims would, individually or in the aggregate, result in
liability in excess of Twenty-Five Thousand Dollars ($25,000) for Gannett, the
Company or any Person required to be indemnified by either of them. To the
Company's Knowledge, except as set forth in Section 3.14 of the Disclosure
Schedule, and except as expressly provided in this Agreement, the consummation
of
- 22 -
the transactions contemplated by this Agreement will not (i) entitle any current
or former employee or officer of the Business to severance pay, unemployment
compensation or other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer. To the Company's Knowledge, there are no pending or threatened or
anticipated claims by or on behalf of any Employee Benefit Plan relating to the
Stations, by any employee or beneficiary covered under any such plan, or
otherwise involving any such plan (other than routine claims for benefits) where
any such pending, threatened or anticipated claims would, individually or in the
aggregate, reasonably be expected to result in liability in excess of
Twenty-Five Thousand Dollars ($25,000). The Twenty-Five Thousand Dollars
($25,000) liability threshold in this Section 3.14 is intended to apply only to
this Section 3.14, and is in no way intended to be used in defining materiality
anywhere in this Agreement.
3.15 LABOR RELATIONS.
To the Company's Knowledge, Section 3.15 of the Disclosure Schedule
sets forth a list of all labor organizations recognized as representing the
employees of the Business. Complete and accurate copies of all collective
bargaining agreements and other labor union contracts relating to employees of
the Stations and any such labor organizations have been delivered or made
available to Purchaser. Except as disclosed in Section 3.8 or Section 3.15 of
the Disclosure Schedule, (a) to the Company's Knowledge, there are no collective
bargaining agreements or other labor union contracts applicable to employees of
the Business, (b) to the Company's Knowledge, there are no strikes, slowdowns or
work stoppages pending or, to the Company's Knowledge, threatened between
Gannett and any employees of the Business, and Gannett has not experienced any
such strike, slowdown, or work stoppage within the past two (2) years, in each
case, as of the date of the Gannett Purchase Agreement, (c) to the Company's
Knowledge, there are no pending or threatened grievance or arbitration
proceedings arising under any collective bargaining agreements or labor
contracts affecting any employees of the Business, (d) to the Company's
Knowledge, there are no unfair labor practice complaints pending or, to the
Company's Knowledge, threatened against the Business relating to employees of
the Business before the National Labor Relations Board or any other Governmental
Authority or, to the Company's Knowledge, any current union representation
questions involving employees of the Business, (e) to the Company's Knowledge,
Gannett is in compliance in all material respects with its obligations under all
Laws and Governmental Orders governing its employment practices with respect to
employees of the Business, including, without limitation, provisions relating to
wages, hours and equal opportunity, employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform and Control Act,
and occupational safety and health requirements, (f) to the
- 23 -
Company's Knowledge, all Persons classified by Gannett as independent
contractors with respect to the Business do satisfy the requirements of law to
be so classified, and, to the Company's Knowledge, Gannett has fully and
accurately reported their compensation on IRS Forms 1099 when required to do so,
and (g) to the Company's Knowledge, there is no charge or compliance proceeding
actually pending or, to the Company's Knowledge, threatened against the Company
or Gannett with respect to employees of the Business before the Equal Employment
Opportunity Commission or any state, local, or foreign agency responsible for
the prevention of unlawful employment practices.
3.16 INTELLECTUAL PROPERTY.
To the Company's Knowledge, Section 3.16 of the Disclosure Schedule
includes a complete list of all call letters of the Stations (the "CALL
LETTERS"). Except as disclosed in Section 3.16 of the Disclosure Schedule, to
the Company's Knowledge, (a) the rights of Gannett, and immediately prior to the
Transfer Date, the Company, in or to the Call Letters and, to the Company's
Knowledge, the other Intellectual Property do not conflict with or infringe on
the rights of any other Person, (b) the Company has not and, to the Company's
Knowledge, Gannett has not, received any claim from any Person that the rights
of Gannett or the Company in or to the Intellectual Property conflict with or
infringe on the rights of any other Person and, to the Company's Knowledge, no
such claim is threatened, (c) to the Company's Knowledge, Gannett owns (free and
clear of any Encumbrances other than Permitted Exceptions), is licensed or
otherwise has the right to use all Intellectual Property necessary for the
conduct of the Business as currently conducted by Gannett (free and clear of any
Encumbrances other than Permitted Exceptions), except where the failure to have
such rights would not reasonably be expected to impair the operations of the
Business in any material respect and (d) to the Company's Knowledge, no other
Person is infringing or diluting the rights of Gannett with respect to the
Intellectual Property.
3.17 TAXES.
Except as disclosed in Section 3.17 of the Disclosure Schedule and
except relating exclusively to the Gannett Maine Media Business, to the
Company's Knowledge (a) all material Tax Returns required to be filed by Gannett
(or to the extent required to be filed by the Company) relating to the Business
have been timely filed and all such Tax Returns are correct and complete in all
material respects; (b) all Taxes required to be paid by Gannett (or to the
extent required to be paid by the Company) relating to the Business, whether or
not shown as due on such Tax Returns, have been timely paid other than such
Taxes, if any, as are described in Section 3.17 of the Disclosure Schedule and
are being contested in good faith; (c) there is no action, suit, proceeding,
investigation, audit or claim pending
- 24 -
or, to the Company's Knowledge, threatened with respect to Taxes of Gannett or
the Company relating to the Stations or for which Gannett or the Company may be
liable, and no adjustment relating to such Taxes of Gannett or the Company
relating to the Stations has been proposed in writing by any Tax authority and
remains unresolved; (d) there are, and immediately prior to the Transfer Date
there will be, no Tax liens on any of the assets of the Business (other than
liens for Taxes that are not yet due and payable); and (e) all Taxes that the
Business is required to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Tax authority.
3.18 COMMISSIONS.
There is no broker or finder or other Person who has any valid claim
against the Company, Purchaser, or any of their respective Affiliates or any of
their respective assets for a commission, finders' fee, brokerage fee or other
similar fee in connection with this Agreement, or the transactions contemplated
hereby, by virtue of any actions taken by on or behalf of the Company, its
stockholders or the Company's officers, employees or agents.
3.19 AFFILIATE TRANSACTIONS.
Except as set forth in Section 3.19 of the Disclosure Schedule or as
expressly otherwise provided or permitted in this Agreement, to the Company's
Knowledge, since December 27, 1997, Gannett has not engaged in any transaction
with any Affiliate thereof that was material to the Business, and, to the
Company's Knowledge, Gannett is not a party to any material agreements or
arrangements relating to the Stations with any Affiliates that will continue in
effect after the Transfer Date for the Purchaser that are not immediately
terminable by the Purchaser without payment of any penalty or premium.
3.20 GANNETT PURCHASE AGREEMENT.
The Company and its Affiliates have not waived any of their rights or
conditions under the Gannett Purchase Agreement related to the Stations. Neither
the Company nor Gannett is in material breach of, and has not defaulted under,
any of the terms of the Gannett Purchase Agreement. The Gannett Purchase
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy and
similar laws affecting the rights of creditors generally and to general
principles of equity (whether applied at law or equity). The Company is not and,
to Company's Knowledge, Gannett is not, subject to any judgment, award, order,
writ, injunction, arbitration decision or decree which prohibits the performance
of the Gannett Purchase Agreement or the consummation of any transaction
contemplated under
- 25 -
the Gannett Purchase Agreement. There is no Action (a) pending or, to the
Company's Knowledge, threatened against or affecting the Company or (b) to the
Company's Knowledge, pending or threatened against or affecting Gannett in any
federal, state or local court, or before any Governmental Authority or
arbitrator that would adversely affect the ability of the Company or Gannett to
consummate, or that would prohibit, the transactions contemplated under the
Gannett Purchase Agreement related to the Stations.
3.21 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty made by the Company in this Article 3, to
the Company's Knowledge, contains any untrue statement of a material fact or
omits a material fact necessary in order to make the representation or warranty
not misleading.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Company as follows:
4.1 ORGANIZATION AND STANDING.
Purchaser is a corporation duly incorporated, validly existing, and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to conduct its business.
4.2 BINDING AGREEMENT.
Purchaser has all requisite corporate power and authority to enter into
this Agreement, to execute and deliver this Agreement and the other Transaction
Documents, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Transaction Documents by Purchaser and
the consummation by Purchaser of its obligations hereunder and thereunder have
been duly and validly authorized by all necessary corporate and stockholder
action on the part of Purchaser. This Agreement has been and, on the Non-License
Transfer Date and the Closing Date, the other Transaction Documents will be,
duly executed and delivered on behalf of Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding
- 26 -
obligation of Purchaser enforceable in accordance with its terms,
subject to applicable bankruptcy and similar laws affecting the rights of
creditors generally and to general principles of equity (whether applied at law
or equity).
4.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
The execution, delivery and performance by Purchaser of this Agreement
and the other Transaction Documents do not and will not (a) violate, conflict
with or result in the breach or default of any provision of the certificate or
articles of incorporation or by-laws of Purchaser, (b) materially conflict with
or materially violate any material Law or material Governmental Order applicable
to Purchaser or any of its properties or assets, (c) except for (i) the
notification requirements of the HSR Act, (ii) such filings with, and orders of,
the FCC as may be required under the Communications Act and the FCC's rules and
regulations in connection with this Agreement and the transactions contemplated
hereby as provided for in Section 4.7 hereof (including Section 4.7 of the
Disclosure Schedule) or otherwise hereunder, and (iii) such matters that would
not reasonably be expected to materially impair or delay the consummation of the
transactions contemplated hereby, require any consent, approval, authorization
or other order of, action by, registration or filing with or declaration or
notification to any Governmental Authority or any other Person or (d) except for
such matters that would not reasonably be expected to materially impair or delay
the consummation of the transaction contemplated hereby, conflict with, result
in any violation or breach of, constitute a default (or event which with the
giving of notice, or lapse of time or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Purchaser's assets pursuant to,
any note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license or permit, or franchise to which Purchaser is a party or by which its
assets are bound.
4.4 LITIGATION.
Except as described in Section 4.4 of the Disclosure Schedule, there
are no Actions pending or, to Purchaser's knowledge, threatened to be brought by
or before any Governmental Authority, against Purchaser or any of its Affiliates
that (a) seek to question, delay or prevent the consummation of the transactions
contemplated hereby or (b) would reasonably be expected to affect adversely the
ability of Purchaser to fulfill its obligations hereunder, including without
limitation, Purchaser's obligations under Articles 1 and 2 hereof.
- 27 -
4.5 COMMISSIONS.
There is no broker or finder or other Person who has any valid claim
against the Company, Purchaser, any of their respective Affiliates or any of
their respective assets for a commission, finders' fee, brokerage fee or other
similar fee in connection with this Agreement, or the transactions contemplated
hereby, by virtue of any actions taken by on or behalf of Purchaser, or its
officers, employees or agents.
4.6 FINANCING.
Purchaser will at the Non-License Transfer and the Closing have
sufficient funds to pay the amounts of the Purchase Price payable at the
Non-License Transfer and the Closing pursuant to this Agreement and otherwise to
satisfy its obligations hereunder.
4.7 PURCHASER'S QUALIFICATION.
Except as set forth in Section 4.7 of the Disclosure Schedule, (a)
Purchaser does not know of any fact or circumstance that could reasonably be
expected to result in a finding by the FCC that Purchaser is not qualified
legally, financially or otherwise to be the licensee of the Stations as its
operations are now being conducted and (b) except for the FCC's Duopoly Rule, a
waiver of which will be requested by Purchaser (or Purchaser shall be
restructured to comply with), Purchaser does not know of any policy, rule,
regulation or ruling of the FCC that could reasonably be expected to be violated
by the acquisition of the Stations by Purchaser.
4.8 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty made by Purchaser in this Article 4, to
the Purchaser's Knowledge, contains any untrue statement of a material fact or
omits a material fact necessary in order to make the representation or warranty
not misleading.
ARTICLE 5.
COVENANTS AND AGREEMENTS.
5.1 CONDUCT OF THE BUSINESS PRIOR TO CLOSING; ACCESS.
The Company covenants as follows:
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(a) Between the date hereof and the Closing, except as contemplated by
this Agreement or as described in Section 5.1 of the Disclosure Schedule, or
except with the written consent of Purchaser (which consent shall not be
unreasonably withheld), the Company will (or will cause Gannett to the extent
possible under the Gannett Purchase Agreement) operate the Business in the
ordinary course of business consistent with past practice and shall use
commercially reasonable efforts to (i) preserve intact the Business and preserve
the Business's relationships with customers, suppliers, licensees, licensors,
the networks with whom the Stations are affiliated and others having business
dealings with the Stations; (ii) maintain the Business's inventory of supplies,
parts and other materials and keep its books of account, records and files, in
each case in the ordinary course of business consistent with past practice;
(iii) maintain the material items of Real Property, Leased Property and
Equipment substantially in their present condition, ordinary wear and tear
excepted; (iv) pay or discharge all cash and barter obligations in the ordinary
course of business; (v) bring current as of the day immediately preceding the
Transfer Date all payments due and payable under Program Contracts in accordance
with their terms as in effect on the date hereof (with respect to Program
Contracts existing as of the date hereof) or on the date originally entered into
(with respect to Program Contracts entered into after the date hereof); and (vi)
maintain its corporate existence.
(b) Without limiting the generality of Section 5.1(a), between the date
hereof and the Closing, except as contemplated by this Agreement or as described
in Section 5.1 of the Disclosure Schedule, or except with the written consent of
Purchaser (which consent shall not be unreasonably withheld, except in the case
of any consent relating to the entering into of any Program Contract providing
for payments in excess of Thirty Thousand Dollars ($30,000) or having a term
greater than one (1) year (other than any Program Contract that will be fully
satisfied, discharged and performed prior to the Closing), in which case
Purchaser may grant or withhold its consent in Purchaser's absolute discretion
(and the parties hereto further agree that no such consent unreasonably withheld
shall be taken into account in any determination of whether a Material Adverse
Effect has occurred), and any consent shall be deemed given unless withheld in
writing no later than three (3) Business Days after Purchaser's receipt of a
written request for such consent), the Company will not (and, to the extent
provided for in the Gannett Purchase Agreement, will cause Gannett not to, to
the extent possible under the Gannett Purchase Agreement) with respect to the
Business:
(i) create, assume or subject any of the assets of the Business
to any Encumbrance, other than Permitted Exceptions and Encumbrances that will
be released at or prior to the Non-License Transfer and the Closing;
- 29 -
(ii) make any material changes in the operations of the Business;
(iii) other than, in each case, in the ordinary course of business
consistent with past practice, sell, transfer, lease, sublease, license or
otherwise dispose of any material assets of the Business, other than the sale of
obsolete Equipment that has been or is replaced with Equipment of like kind;
(iv) (A) grant any increase, or announce any increase, in the
wages, salaries, compensation, bonuses, incentives, pension or other benefits
payable to any of the officers or key employees of the Business, including,
without limitation, any increase or change pursuant to any Employee Benefit
Plan, or (B) establish or increase or promise to increase or accelerate the
payment or vesting of any benefits under any Employee Benefit Plan with respect
to officers or employees of the Business, in the case of either (A) or (B)
except (I) as required by Law, (II) that involve only increases consistent with
the past practices of the Company or Gannett (or as otherwise required or
allowed under the Gannett Purchase Agreement, as the case may be, but in no
event more than five percent (5%), (III) as required under any existing
agreement or arrangement, (IV) that involve increases related to promotions to
the extent such increases result in the compensation and benefits of the
relevant employee being consistent with the compensation and benefits provided
to the holder of such position in the past or (V) that relate to the
supplemental executive retirement plans identified in Section 3.14 of the
Disclosure Schedule;
(v) make any change in any method of accounting or accounting
practice or policy used by the Company or Gannett in respect of the Business,
other than as required by law or under GAAP;
(vi) fail to maintain in full force and effect all of its
existing casualty, liability or other insurance relating to the Stations through
the Non-License Transfer and the Closing in amounts at least equal to those in
effect on the date hereof;
(vii) (A) amend the payment terms of any Program Contract to
provide that payments that would otherwise be made prior to the Non-License
Transfer or the Closing are made after the Non-License Transfer or the Closing
or (B) acquire, enter into, modify, change or extend the term of (x) any Program
Contract providing for payments in excess of Ten Thousand Dollars ($10,000) or
with a term greater than one year or (y) Program Contracts not subject to clause
(x) that in the aggregate provide for payments in excess of Two Hundred Thousand
Dollars ($200,000);
- 30 -
(viii) acquire, enter into, modify, change or extend the term of any
Material Contract, provided that this clause (viii) will not apply to the
acquisition or entering into of any new Material Contract not otherwise subject
to clauses (i) to (vii) or clauses (ix) to (xv) of this Section 5.1(b) with
respect to which all Liabilities of the Company thereunder relating to the
Stations will be fully satisfied, discharged and performed prior to the Transfer
Date with no adverse effect on Purchaser;
(ix) compromise, settle, grant any waiver or release relating to,
or otherwise adjust, any material Action, material Liabilities or any other
material claims or material rights relating to the Stations;
(x) enter into any new agreement, contract, commitment or
arrangement with any Affiliate of the Company that will be binding upon
Purchaser, the Assets or the Stations after the Non-License Transfer or the
Closing Date;
(xi) apply to the FCC for any construction permit that would
adversely affect the Stations present operations, or make any material change in
the Stations buildings, leasehold improvements, or fixtures;
(xii) except with respect to promotion during ratings sweep periods
(which shall not be subject to this clause (xii)), enter into any trade, barter
or similar agreements (other than Program Contracts) for the sale of advertising
time that would be binding on the Stations or Purchaser after the Non-License
Transfer or the Closing for any property or services in lieu of or in addition
to cash that requires the provision of broadcast time having a value that
exceeds Ten Thousand Dollars ($10,000) in any individual agreement or Two
Hundred Thousand Dollars ($200,000) in the aggregate;
(xiii) take any action, or refrain from taking any action, that
would constitute a material breach of, constitute a default (or event which with
the giving of notice, or lapse of time or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, any Material Contract;
(xiv) enter into or renew any time sales agreement except in the
ordinary course of business for a term not exceeding twelve (12) months; or
(xv) enter into any agreement, contract, commitment or arrangement
to do any of the foregoing.
- 31 -
(c) Pending the Non-License Transfer and the Closing, the Company
shall:
(i) to the extent allowed by Gannett under the Gannett Purchase
Agreement or otherwise, give to Purchaser and its representatives reasonable
access during normal business hours to all of the employees, properties, books
and records of Gannett or the Company that relate to the Stations and, to the
extent available from, or allowed by, Gannett pursuant to the Gannett Purchase
Agreement or otherwise, furnish Purchaser and its representatives with such
information concerning the Stations as Purchaser may reasonably require,
including such access and cooperation as may be necessary to allow Purchaser and
its representatives to interview the employees, to examine the books and records
of the Stations, and to inspect the Real Property and Equipment (which right of
access shall not be exercised in any way which would unreasonably interfere with
the normal operations, business or activities of the Stations);
(ii) to the extent allowed by Gannett under the Gannett Purchase
Agreement or otherwise, cooperate in all reasonable respects with Purchaser's
request to conduct an audit of the financial information of the Stations as
Purchaser may reasonably determine is necessary to satisfy Purchaser's senior
lenders and Purchaser's public company reporting requirements pursuant to the
Securities Act of 1933 or the Securities Exchange Act of 1934 including, without
limitation, (A) using commercially reasonable efforts to obtain the consent of
the auditors of Gannett and/or the Company to permit Purchaser and Purchaser's
auditors to have access to such auditors' work papers, (B) consenting to such
access by Purchaser and (C) using commercially reasonable efforts to cause
Gannett to execute and deliver to Purchaser's independent auditors such
customary management representation letters as the auditors may require as a
condition to such auditors ability to deliver an unqualified report upon the
audited financial statements of the Stations;
(iii) to the extent provided by Gannett pursuant to the Gannett
Purchase Agreement or otherwise, furnish to Purchaser within twenty (20) days
after the end of each month ending between the date of this Agreement and the
Transfer Date an unaudited statement of income and expense and a balance sheet
for the Stations for the month just ended; and
(iv) to the extent provided by Gannett pursuant to the Gannett
Purchase Agreement or otherwise, from time to time, furnish to Purchaser such
additional information (financial or otherwise) concerning the Stations as
Purchaser may reasonably request (which right to request information shall not
be exercised in any way which would unreasonably interfere with the normal
operations, business or activities of the Stations).
- 32 -
(d) The Company will deliver to Purchaser, within ten (10) Business
Days after delivery or receipt, copies of any reports, applications or
communications to or from the FCC or its staff related to the Stations which are
delivered or received between the date of the Gannett Purchase Agreement and the
Transfer Date.
5.2 POST-CLOSING COVENANTS AND AGREEMENTS, AND OTHER EMPLOYEE
BENEFIT MATTERS.
(a) Purchaser shall at all reasonable times after reasonable notice to
Purchaser from and after the Transfer Date, make available without cost, for
inspection and/or copying by the Company and any Person that was a stockholder
of Gannett during any of the tax years (or portions thereof) immediately
preceding the closing under the Gannett Purchase Agreement for which the
relevant statute of limitations (including any waiver thereof) has not expired,
or their respective representatives, the books and records of the Business
transferred to Purchaser from the Company at the Non-License Transfer or the
Closing, as the case may be. Such books and records shall be preserved by
Purchaser until the later of the closing by tax audit of, or the expiration of
the relevant statute of limitations (including any waiver thereof) with respect
to, all open tax periods of Gannett and such stockholders prior to and including
the time immediately prior to the Transfer Date. After the period set forth
above, Purchaser may destroy the books and records in its possession unless,
before expiration of such notice period the Company objects in writing to the
destruction of any or all of such books and records, in which case, such books
and records shall be delivered to the Company. Notwithstanding the foregoing,
Purchaser shall continue to preserve and, at all reasonable times after the
Transfer Date, to make available without cost, for inspection and/or copying by
any Person that was a trustee or other fiduciary under the Employee Benefit
Plans identified in Section 5.2(a) of the Disclosure Schedule, the books and
records of such Employee Benefit Plan transferred to Purchaser from the Company
at the Non-License Transfer or the Closing, as the case may be, and the books
and records of the Business relating thereto.
(b) At least five (5) Business Days prior to the Transfer Date, the
Company shall provide to Purchaser a true and complete list of the names, titles
and annual compensation of each of the employees (including inactive employees)
of the Stations. Effective as of the Transfer Date, except for such employees of
the Stations which are retained by the Company pursuant to the terms of the Time
Brokerage Agreement who shall be offered employment by Purchaser as of the
Closing Date, and the employees identified in Section 5.2(b) of the Disclosure
Schedule (the "EXCLUDED EMPLOYEES"), Purchaser shall offer employment to all
then employees of the Stations, on such terms and conditions as Purchaser shall
- 33 -
establish (except that base cash compensation shall be comparable to their
existing base cash compensation), subject to the terms of any collective
bargaining agreement assumed by Purchaser under Section 5.2(e) and any
employment agreements with specific Business Employees, and shall assume
responsibility for all inactive employees of the Stations, subject to the terms
of this Section 5.2 and the collective bargaining agreements assumed by
Purchaser under Section 5.2(e); provided, however, that any employee of the
Stations who is not actively employed on the Transfer Date shall be offered
employment by Purchaser following the end of any inactive period (whether on
account of leave, layoff, injury or disability) but only to the extent that the
Company would have been obligated to offer active employment to such person upon
the end of such inactive period under the Gannett Purchase Agreement.
Notwithstanding the foregoing, Purchaser shall not have any obligation to offer
employment to any employees of the Corporate Office ("CORPORATE OFFICE
EMPLOYEES"), as described in Section 5.2(b) of the Disclosure Schedule. Nothing
in this Section 5.2(b) is intended to limit the ability of Purchaser to
terminate the employment of any employee after the Transfer Date.
(c) Subject to applicable law and the terms of any collective
bargaining agreement assumed pursuant to this Agreement, if any, Purchaser shall
establish and maintain for a period of one (1) year after the Transfer Date or
the term of their employment by Purchaser, whichever is less, for employees of
the Stations as of the Transfer Date, benefits that, in the aggregate, are no
less favorable than the benefits maintained by the Purchaser for similarly
situated employees of Purchaser, provided that the foregoing will not prohibit
or in any manner restrict Purchaser from terminating or changing the individual
terms of employment of any Business Employee or require Purchaser to maintain
any specific benefits or Employee Benefit Plans. Purchaser shall give employees
of the Stations as of the Transfer Date and former and inactive Business
Employees credit for their service with the Company and Gannett or any of their
Subsidiaries prior to the Transfer Date, to the same extent that such service
would have been credited by Purchaser (if they had been employed by Purchaser
for such period of service), for all purposes under all employee benefit plans
or arrangements maintained by Purchaser for current, former and inactive
Business Employees (including any waiting periods). In addition, Purchaser
shall, if applicable, (i) cause any pre-existing condition limitation to be
waived and (ii) give effect, in determining any deductible and maximum
out-of-pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to current, former and inactive Business Employees with respect to
similar plans maintained by the Company or Gannett prior to the Transfer Date.
(d) Purchaser will assume and indemnify and hold harmless the Company
Indemnified Parties against all Liabilities with respect to severance
- 34 -
benefits arising in connection with or following the Transfer Date pursuant to
the agreements set forth in Sections 3.14.1 and 3.14.2 of the Disclosure
Schedule (subject to the right of recovery set forth in Section 5.9), or
pursuant to any collective bargaining agreement or other agreements with
Business Employees assumed either pursuant to this Agreement or by operation of
law. With respect to all current and inactive Business Employees immediately
prior to the Transfer Date not covered by the agreements referenced in the
immediately preceding sentence, (i) for a period ending not less than one year
after the Transfer Date, Purchaser will provide such Business Employees with the
same severance benefits as Purchaser provides for similarly situated employees
of Purchaser (which benefits, as of the date hereof, are described in Section
5.2(d) of the Disclosure Schedule) and (ii) Purchaser will assume and indemnify
and hold harmless the Company Indemnified Parties against all Liabilities with
respect to severance benefits of Purchaser arising in connection with or
following the Transfer Date.
(e) From and after the Transfer Date, Purchaser shall assume all of the
collective bargaining agreements and labor union contracts described in Section
5.2(e) of the Disclosure Schedule (including, without limitation, pursuant to
the specified provisions of the collective bargaining agreements set forth in
Section 5.2(e) of the Disclosure Schedule) with respect to any Business
Employees existing immediately prior to the Transfer Date.
(f) From and after the Transfer Date, Purchaser shall assume
responsibilities of all Employee Benefits Plans described in Section 5.2(f) of
the Disclosure Schedule that provide post-retirement life insurance or health,
or short-term or long-term disability benefits and be responsible for any
benefits under such Employee Benefit Plans (i) to which any current, former or
inactive Business Employee, or a beneficiary or dependent of any current, former
or inactive Business Employee ("BENEFICIARY"), has already become entitled, or
(ii) to which any current, former or inactive Business Employee has already
become qualified by reason of age and years of service as of the Transfer Date,
to the extent such persons are identified in Section 5.2(f) of the Disclosure
Schedule (which section shall be updated, if necessary, at the Non-License
Transfer or the Closing, as applicable). From and after the Transfer Date,
Purchaser shall also pay to the Business Employees listed in Section 5.2(f) of
the Disclosure Schedule the supplemental retirement benefits provided under the
applicable Gannett supplemental retirement plan.
(g) From and after the Transfer Date, Purchaser shall assume and be
responsible for any workers' compensation benefits payable to a Business
Employee, Beneficiary or dependent of a Business Employee on or after the
Transfer Date, including any such benefits that are attributable to any injury
or
- 35 -
illness that occurred or existed prior to the Transfer Date to the extent not
covered by the Company's workers' compensation insurance policy.
(h) For a period of ninety (90) days after the Transfer Date, Purchaser
shall not implement any employment terminations, layoffs or hours reductions or
take any other action which could result in a "plant closing" or "mass layoff",
as those terms are defined in the Worker Adjustment and Retraining Notification
Act of 1988 ("WARN") or similar events under applicable state law, affecting in
whole or in part any facility, site of employment or operating unit, or any
employee employed by the Stations, or which could require either Purchaser or
the Company to give notice or take any other action required by WARN or
applicable state law.
(i) From and after the Transfer Date, Purchaser shall assume the
Company's and Gannett's obligations and liabilities with respect to COBRA
continuation coverage under Section 4980B of the Code and Section 601 of ERISA
("CONTINUATION COVERAGE") with respect to Business Employees and shall provide
Continuation Coverage to the Business Employees under Purchaser's health and
medical plans (A) with respect to any Business Employees who remain employed
with either the Company or Gannett through the Transfer Date, for a period of
eighteen (18) months after the Transfer Date or, if earlier, until becoming
eligible for comparable coverage from another employer and (B) with respect to
any Business Employees whose employment shall have terminated prior to the
Transfer Date, for remainder of the period with respect to which Continuation
Coverage would otherwise have been available to them had the Company or Gannett,
as the case may be, continued to maintain a group health plan; provided, that
consistent with the Continuation Coverage, Purchaser shall have the right to
charge each Business Employee for such Business Employee's portion of any
Continuation Coverage.
5.3 COOPERATION.
Following the execution of this Agreement, Purchaser and the Company
agree as follows:
(a) The parties and their Affiliates shall each use their reasonable
efforts, and shall cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions with respect to, any filings (other
than filings with the FCC, which are provided for in clause (b) below),
applications, requests, or actions which are or may be necessary to obtain the
consents, approvals, authorizations or other orders of any Governmental
Authority which are or may be necessary in order to accomplish the transactions
contemplated by this Agreement; and, without limiting the generality of the
foregoing, the parties and their Affiliates shall use
- 36 -
their respective reasonable efforts to prepare and file as promptly as
practicable, but in any event no later than five (5) Business Days after the
date hereof (unless the Company designates in writing that the filing shall be
delayed to a date no later than the first (1st) Business Day after the Diligence
Termination Deadline), all of the information called for in the Notification and
Report Form required under the HSR Act and to prepare and file any supplemental
information, also in a timely fashion, which may be required by the United
States Department of Justice or the Federal Trade Commission pursuant to such
Notification and Report Form Filings, and otherwise to use their respective
reasonable efforts to obtain the requisite clearances.
(b) The parties and their Affiliates shall cooperate fully with each
other in preparing, filing, prosecuting, and taking any other actions with
respect to filings with the FCC related to the transactions contemplated by this
Agreement, including, without limitation, preparation of an application for the
assignment of all of the FCC Licenses to Purchaser and any filings by Purchaser
requesting temporary waivers for no more than nine (9) months of the FCC's
applicable ownership rules necessary to permit the parties to consummate the
transactions contemplated by this Agreement. As promptly as practicable, but in
any event not later than ten (10) Business Days after the Diligence Termination
Deadline, the Company and Purchaser shall jointly file the application with the
FCC requesting the FCC Consent, including, without limitation, requesting,
consenting to, and taking and otherwise seeking any action in connection with a
conditional waiver of the FCC's Duopoly Rule. The Company and Purchaser shall
use their respective reasonable best efforts, diligently take all necessary and
proper actions and provide any additional information requested by the FCC in
order to obtain promptly the FCC Consent. Notwithstanding the foregoing or any
other provision of this Agreement, neither Purchaser nor its officers, directors
or Affiliates shall request a permanent waiver of the FCC's applicable ownership
rules or request, consent to, take or otherwise seek or pursue any action that
is inconsistent with the transactions contemplated by this Agreement or that
reasonably could be expected to materially impede or materially delay the FCC
Consent or otherwise materially impede or materially delay the consummation of
the transactions contemplated by this Agreement; and the receipt of any
permanent waiver of the foregoing FCC rules shall not be a condition to the
obligation of Purchaser to consummate the transactions contemplated hereby.
Neither Purchaser nor any of its officers, directors or Affiliates will take any
action that would result in any change in the matters set forth in Section 4.7
hereof that would reasonably be expected to materially delay or otherwise
materially impair Purchaser's ability to consummate the transactions
contemplated hereby. After the date hereof, Purchaser or its Affiliates may
enter into transactions that implicate the FCC multiple ownership
- 37 -
rules so long as such transactions would not reasonably be expected to
materially impede or materially delay the Closing
(c) (i) If Purchaser (or its Affiliates) or the Company receives an
administrative or other order or notification relating to any violation or
claimed violation of the rules and regulations of the FCC, or of any
Governmental Authority, that could affect Purchaser's or the Company's ability
to consummate the transactions contemplated hereby, or (ii) should Purchaser (or
its Affiliates) become aware of any fact (including any change in law or
regulations (or any interpretation thereof by the FCC)) relating to the
qualifications of Purchaser (and its controlling persons) that reasonably could
be expected to cause the FCC to withhold the FCC Consent, Purchaser (in the case
of clauses (i) and (ii)) or the Company (in the case of clause (i)) shall
promptly notify the other party or parties thereof and shall use its reasonable
best efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement; and no such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
(d) The parties shall each use their reasonable best efforts to obtain
as promptly as reasonably practical all consents that may be required in
connection with the assignment to the Purchaser at the Non-License Transfer and
the Closing, as applicable, of all the Company's right, title and interest in
and to all Material Contracts as such are acquired by the Company pursuant to
the Gannett Purchase Agreement and all other agreements of the Business to which
the Company or Gannett is a party, provided that (i) neither the Company nor
Purchaser shall be required to make any payment to any party to any such
Material Contract or other agreement in order to obtain any such consent (except
the Company agrees to pay any amounts outstanding as of the Transfer Date under
any such Material Program Contracts as provided for in Section 5.1(a)(v).
(e) To the extent that there are third-party insurance policies
maintained by Gannett covering any Claims or Damages relating to the assets,
business, operations, conduct and employees (including, without limitation,
former employees) of the Business arising out of or relating to occurrences
prior to the Transfer Date, the Company shall use all reasonable efforts to
cause Purchaser to be named as an additional insured with respect to such
policies.
(f) Subject to the terms and conditions of this Agreement, each of the
parties agrees to use its reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the Non-License Transfer and the
Closing and the other transactions contemplated hereby as soon as practicable.
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5.4 CONFIDENTIALITY.
(a) The terms of the Confidentiality Agreement by and between Purchaser
and the Company are herewith incorporated by reference and shall continue in
full force and effect as between Purchaser and the Company at all times prior to
the Transfer Date, and shall remain in effect as between Purchaser and the
Company in accordance with its terms even if this Agreement is terminated.
(b) Before and after the Transfer Date, each of the parties shall
maintain the confidentiality of the financial and tax information of the Persons
other than the Company in the possession of the Company under terms similar to
those set forth in the Confidentiality Agreement by and between Purchaser and
the Company with respect to "Evaluation Material" as though such terms continued
after the Transfer Date.
5.5 PUBLIC ANNOUNCEMENTS.
Except as otherwise required by law or the rules of any stock exchange,
the form and substance of the initial public announcement of this Agreement and
the transactions contemplated hereby, and the time of such announcement, shall
be approved in advance by the parties and the parties shall not issue any other
report, statement or press release or otherwise make any public announcement
with respect to this Agreement and the transactions contemplated hereby without
prior consultation in good faith with the other party hereto.
5.6 NO SOLICITATION.
The Company shall not, and shall cause its officers, directors,
representatives, affiliates and associates not to, (a) initiate contact with,
solicit, encourage or respond to any inquiries or proposals by, or (b) enter
into any discussions or negotiations with, or disclose, directly or indirectly,
any information concerning, the Business, the Assets or the Stations, or afford
any access to the Company's or Gannett's properties, books and records to any
Person in connection with any possible proposal for the acquisition (directly or
indirectly, whether by purchase, merger, consolidation or otherwise) of all or
substantially all of the Business, the Assets or the Stations. The Company
agrees to terminate immediately any such discussions or negotiations.
5.7 EMPLOYEES.
From and after the date hereof to the first anniversary of the Transfer
Date, neither the Company, nor any of its Affiliates shall solicit or offer
employment to or hire or employ or otherwise compensate any employee or former
employee
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(who is an employee of a Station as of the date hereof) of the Stations
(including any individual who may become employed during the one (1) year period
following the Transfer Date) at any other location; provided, however, that the
foregoing shall not apply to the Excluded Employees, or to any employee of a
Station who is terminated by Purchaser without cause after the Transfer Date.
5.8 NO ADDITIONAL REPRESENTATIONS.
Purchaser acknowledges that it and its representatives have been
permitted access to books and records, facilities, equipment, tax returns,
contracts and agreements, insurance policies (or summaries thereof), and other
properties and assets of the Stations and that they and their representatives
have had an opportunity to meet with the officers and employees of the Company
to discuss the Stations and the Business, properties and assets. PURCHASER
ACKNOWLEDGES THAT NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE ANY
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE ACCURACY OR
COMPLETENESS OF ANY INFORMATION REGARDING THE STATION OR THE BUSINESS FURNISHED
OR MADE AVAILABLE TO PURCHASER AND ITS REPRESENTATIVES EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT.
5.9 CERTAIN PAYMENTS.
(a) Pursuant to the terms of the Gannett Purchase Agreement, the
Company has certain rights and obligations with respect to the Severance
Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule of
the Gannett Purchase Agreement, which Severance Agreements include those listed
in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule hereto (the "STC
SCHEDULED SEVERANCE AGREEMENTS"). Promptly, but in no event later than five (5)
Business Days prior to any payment due under the STC Scheduled Severance
Agreements to any employee of the Stations terminated by Purchaser prior to
ninety (90) days after the closing date under the Gannett Purchase Agreement,
Purchaser shall notify the Company of the amount to be paid to such employee,
and the Company shall make the payment to such terminated employee as provided
by the STC Scheduled Severance Agreements (a "STC SEVERANCE PAYMENT"); provided
that the maximum amount that the Company shall be required to pay for all
Business Employees as defined hereunder pursuant to this Section 5.9, after
reimbursement from the Purchaser in the succeeding sentence, shall be the
greater of (i) Two Hundred Twenty Two Thousand Ninety-Seven Dollars
($222,097.00), or (ii) Eight Hundred Fifty Thousand Dollars ($850,000.00) minus
all amounts reimbursed by Gannett to the Company pursuant to Section 5.8(a) of
the Gannett Purchase Agreement for all the Gannett Television Stations other
than the Stations. Within five (5) Business Days after the Company makes an STC
Severance Payment,
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Purchaser shall reimburse the Company for fifty percent (50%) of the amount of
such payment. In addition to any reimbursement by Purchaser under this Section
5.9, to the extent provided by Section 5.8(a) of the Gannett Purchase Agreement,
the Company will be entitled to reimbursement as provided by the Gannett
Purchase Agreement, and nothing in this Agreement or the Gannett Purchase
Agreement shall be construed to give Purchaser any right of recovery to
Purchaser pursuant to Section 5.8(a) of the Gannett Purchase Agreement.
(b) Pursuant to Section 5.8(b) of the Gannett Purchase Agreement,
Gannett will cease operations and vacate the Gannett Corporate Offices, and the
Company has agreed that it will pay, indemnify, and hold harmless Gannett from
and against fifty percent (50%) of all Claims and Damages (including, without
limitation, all rent or other payments made under the Corporate Office Lease
arising out of or relating to the Corporate Office Lease) to the extent such
Claims and Damages arise out of or relate to (x) the termination of the
Corporate Office Lease or (y) the post-closing period after the date in which
the Corporate Office Employees cease using the Corporate Office. Such payments
by the Company thereunder are required under the Gannett Purchase Agreement to
be made by the Company as the related Claims and Damages are incurred. To the
extent the Company is required to make any such payments, Purchaser shall
reimburse and pay over to the Company 26.13% of all such payments made by the
Company (up to the maximum amount of $52,258). Purchaser acknowledges and agrees
that Gannett may terminate the Corporate Office Lease on such terms as Gannett
shall determine and otherwise take such action as Gannett determines in
connection with Gannett vacating the Corporate Office.
5.10 BULK SALES LAWS.
The parties agree to waive compliance with the provisions of the bulk
sales law of any jurisdiction. The Company will indemnify and hold harmless
Purchaser from and against any and all Liabilities which may be asserted by
third parties against Purchaser as a result of such noncompliance.
5.11 CONTROL OF THE STATIONS.
Prior to the Closing Date, control of the Stations (including, without
limitation, control over their finances, personnel and programming) shall remain
with the Company or Gannett, as the case may be. The Company and Purchaser
acknowledge and agree that neither Purchaser nor any of its employees, agents or
representatives, directly or indirectly, shall, or shall have any right to,
control, direct or otherwise supervise the Stations, it being understood that
supervision of all programs, equipment, operations and other activities of the
Stations shall be the sole responsibility of, and at all times prior to the
Closing Date remain under the
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complete control and direction of, the Company or, if prior to the closing under
the Gannett Purchase Agreement, Gannett.
5.12 USE OF CERTAIN NAMES.
After the Transfer Date, neither Purchaser nor any of its Affiliates
shall use "Xxxxxxxx", "Xxxxxxxx Broadcast", "Xxxxxxxx Television", "Xxxxxxxx
Communications", "Guy Gannett", "Gannett", or any name or term confusingly
similar to the "Xxxxxxxx" names in any corporate name or in connection with the
operation of any business.
5.13 NEWS SHARING ARRANGEMENTS.
(a) The Company and Purchaser shall use commercially reasonable and
good faith efforts to enter into a news sharing agreement with Purchaser for
sharing of news operations between television station WEYI-TV, Flint, Michigan,
and WSMH-TV, Flint, Michigan in a form of agreement to be mutually agreed upon
by Purchaser and the Company prior to the Diligence Termination Deadline and
consistent with Section 5.13 of the Disclosure Schedule. If prior to the
Diligence Termination Deadline the parties cannot agree on a form of a mutually
acceptable news share agreement for WSMH-TV, (i) the Company shall be entitled,
in the Company's sole and absolute discretion, to terminate this Agreement
pursuant to Section 10.1(a)(iii), and (ii) the Purchaser shall be entitled, in
the Purchaser's sole and absolute discretion, to terminate, upon written notice
to the Company, the Purchaser's obligations under this Section 5.13 (a) or
otherwise to provide news sharing arrangements for WSMH-TV as provided herein.
(b) The Company and Purchaser shall use commercially reasonable and
good faith efforts to enter into a mutually acceptable news sharing agreement
for sharing of news operations between WUHF-TV, Rochester, New York, and
WROC-TV, Rochester, New York, in a form of agreement to be mutually agreed upon
by Purchaser and the Company prior to the Diligence Termination Deadline and
consistent with Section 5.13 of the Disclosure Schedule. If prior to the
Diligence Termination Deadline the parties cannot agree on a form of a mutually
acceptable news share agreement for WUHF-TV, (i) the Company shall be entitled,
in the Company's sole and absolute discretion, to terminate this Agreement
pursuant to Section 10.1(a)(iii), and (ii) the Purchaser shall be entitled, in
the Purchaser's sole and absolute discretion, to terminate, upon written notice
to the Company, the Purchaser's obligations under this Section 5.13 (b) or
otherwise to provide news sharing arrangements for WUHF-TV as provided herein.
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5.14 RIGHTS UNDER THE GANNETT PURCHASE AGREEMENT.
The Company covenants and agrees with Purchaser as follows with respect
to the Company's rights and obligations under the Gannett Purchase Agreement:
(a) The Company shall enforce all of the Company's rights under the
Gannett Purchase Agreement or any opinions of counsel delivered pursuant thereto
at Purchaser's request as such rights pertain to the Stations and the Assets,
including, without limitation, causing Gannett to act in conformity with the
Gannett Purchase Agreement and requiring Gannett to conduct the business of the
Stations in the ordinary course of business in accordance with the terms of the
Gannett Purchase Agreement (including, without limitation, the provisions of
Section 5.1 of the Gannett Purchase Agreement), and to the extent consistent
with the foregoing, in the same manner in which the same have heretofore been
conducted with the intent of preserving the ongoing operations and business of
the Stations. This covenant shall survive the Non-License Transfer and the
Closing for the period that the Company has any rights under the Gannett
Purchase Agreement or any opinions of counsel delivered pursuant thereto.
(b) The Company shall use the Company's reasonable best efforts to
close the transactions contemplated by the Gannett Purchase Agreement as they
pertain to the Stations in a timely fashion consistent with the terms of such
agreement and shall notify Purchaser in writing of the date, time and place of
the closing under the Gannett Purchase Agreement at least ten (10) days prior to
the date of such closing; provided, however, that the Company shall not waive
any of its rights or conditions under the Gannett Purchase Agreement as they
pertain to any of the Stations (including, without limitation, any conditions to
the obligations of the Company to consummate the transactions under the Gannett
Purchase Agreement), or enter into any amendment or modification to any
provisions of the Gannett Purchase Agreement that affects the Company's rights
or conditions thereunder with respect to any of the Stations. The Company shall
enforce the Company's rights to the fullest extent possible under the Gannett
Purchase Agreement as such rights pertain to the Stations, unless otherwise
directed by Purchaser.
(c) To the extent that the Company receives notifications or
information from Gannett with respect to the Stations under the Gannett Purchase
Agreement or otherwise becomes aware of any breach of any representation,
warranty, covenant or agreement in the Gannett Purchase Agreement, in each case
with respect to the Stations, the Company shall promptly notify Purchaser and
provide such information to Purchaser, and thereafter use reasonable best
efforts to enforce, perform or waive any provision of the Gannett Purchase
Agreement
- 43 -
pertaining to the Stations as may reasonably be requested by Purchaser;
provided, that the Company shall not be obligated to take any action at
Purchaser's request inconsistent with its rights and obligations under the
Gannett Purchase Agreement.
(d) Any proceeds received by the Company from the exercise of the
Company's rights which relate to the Stations against Gannett and its respective
Affiliates shall be paid over to Purchaser within five (5) Business Days of
receipt by the Company, less any reasonable costs and expenses of enforcement
incurred by the Company in such exercise.
(e) Subject to the provisions of the Time Brokerage Agreement, the
Company shall cooperate with Purchaser in connection with the Company's review,
analysis and monitoring of the Assets, the Business and the operations of the
Stations to the end that an efficient transfer of the Assets and the Business
may be made at the Non-License Transfer and the Closing and the operations and
the business of the Stations may continue on an uninterrupted basis. The Company
shall obtain Purchaser's consent prior to the exercise of the Company's rights
under the Gannett Purchase Agreement as such rights pertain to the Stations
(other than the right to consummate the acquisition of the Stations upon
satisfaction of all conditions thereto). In addition to providing information
required hereunder or reasonably requested, the Company agrees to promptly
notify Purchaser of any material problems or developments of which the Company
becomes aware with respect to any Assets or the Business.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement to occur at the Non-License Transfer and the
Closing are, at its option, subject to satisfaction of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained herein
shall be true and correct at and as of the Non-License Transfer Date or the
Closing Date, as applicable, as though each such representation and warranty
were made at and as of such time, other than such representations and warranties
as are made as of a specific date, in each case except for changes that are
expressly contemplated by this Agreement and except for such failures to be true
and correct that would not reasonably be expected to have a Material Adverse
Effect.
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6.2 PERFORMANCE BY THE COMPANY.
All of the covenants and agreements to be complied with and performed
by the Company on or before the Non-License Transfer Date or the Closing Date,
as applicable, shall have been complied with or performed, except for such
failures to comply with or perform that would not reasonably be expected to have
a Material Adverse Effect.
6.3 CERTIFICATES.
The Company shall have delivered to Purchaser (a) a certificate, dated
as of the Non-License Transfer Date or the Closing Date, as applicable, executed
on behalf of the Company by its duly authorized officers to the effect of
Sections 6.1, 6.2 and 6.12; and (b) a certificate, dated as of the Non-License
Transfer Date or the Closing Date, as applicable, executed on behalf of the
Company by its duly authorized officers that (i) the Company has not waived any
of the Company's rights or any conditions under the Gannett Purchase Agreement,
(ii) the Company has not breached the Gannett Purchase Agreement in any material
respect and, to the Company's knowledge, Gannett has not breached the Gannett
Purchase Agreement in any material respect, and (iii) the acquisition of the
Stations by the Company from Gannett has been consummated in accordance with the
terms and conditions of the Gannett Purchase Agreement.
6.4 CONSENTS; NO OBJECTIONS.
(a) The applicable waiting periods under the HSR Act shall have expired
or been terminated;
(b) The parties shall have received all the authorizations, consents,
orders and approvals from Governmental Authorities and consents from third
parties, in each case listed or described in Section 6.4 of the Disclosure
Schedule (which Section includes all of the real estate leases for the towers,
transmitters and television broadcasting studios of the Stations and all of the
network affiliation agreements of the Stations); and
(c) The parties shall have received all authorizations, consents,
orders and approvals from Governmental Authorities necessary to transfer the
material Permits relating to the operation of the towers, transmitters and
television broadcasting studios of the Stations, as such facilities are
operating on the date hereof, except in each case where the failure to receive
such authorizations, consents, orders or approvals would not reasonably be
expected to materially adversely affect the operations of such facilities, or
where such authorizations,
- 45 -
consents, orders or approvals are customarily obtained after the closing of a
transaction of this nature.
6.5 NO PROCEEDINGS OR LITIGATION.
No preliminary or permanent injunction or other order or decree issued
by any United States federal or state Governmental Authority, nor any Law
promulgated or enacted by any United States federal or state Governmental
Authority, that restrains, enjoins or otherwise prohibits the transactions
contemplated hereby or limits the ability in any material respect of the rights
of the Company or Purchaser to hold the Assets (excluding the FCC Licenses) and
conduct the Business as it is being conducted as of the Non-License Transfer
Date or the Closing Date, as applicable, or imposes civil or criminal penalties
on any stockholder, director or officer of Purchaser if such transactions are
consummated, shall be in effect.
6.6 FCC CONSENT.
The FCC Consent shall have been issued with respect to the Stations
without any conditions that are materially adverse to Purchaser and such FCC
Consent shall have become a Final Order; provided, however, that there shall be
no requirement that the FCC Order shall have been issued as of the Non-License
Transfer Date.
6.7 NO MATERIAL ADVERSE CHANGE.
Since the date of the Gannett Purchase Agreement through the
Non-License Transfer Date or the Closing Date, as applicable, there shall not
have occurred any Material Adverse Effect.
6.8 OPINIONS OF COUNSEL.
Purchaser shall have received an opinion of Xxxxxx, Xxxxxxx, Xxxxxx,
Leader & Xxxxxxxx L.L.P., dated the Non-License Transfer Date or the Closing
Date, as applicable, substantially in the form of Exhibit E hereto.
6.9 CERTAIN CERTIFIED MATTERS.
Purchaser shall have received a copy of (i) the resolutions of the
board of directors of the Company, certified as being correct and complete and
then in full force and effect, authorizing the execution, delivery and
performance of this Agreement and the other the documents, instruments and
writings to be delivered by the Company at or prior to Closing Date or the
Non-License Transfer Date, as applicable, and the consummation of the
transactions contemplated hereby
- 46 -
and thereby and (ii) a copy of the Certificate of Incorporation and Bylaws of
the Company, certified by a duly authorized officer of the Company as being
true, correct and complete as of the Closing Date.
6.10 GOOD STANDING CERTIFICATE.
Purchaser shall have received a certificate as to the formation and
good standing of the Company issued by the Secretary of State of Maryland, dated
not more than five (5) days before the Non-License Transfer Date or the Closing
Date, as applicable, and for the states of Illinois and Iowa, a certificate as
to the good standing of the Person transferring the Stations to Purchaser as of
such date, issued by the Secretary of State of such jurisdiction, dated not more
than five (5) days before the Non-License Transfer Date or the Closing Date, as
applicable.
6.11 NO TRANSMISSION DEFECTS.
There shall not exist any loss or damage at any Station which has
resulted in the regular broadcast transmission of such Station (including such
Station's effective radiated power) to be diminished in any material respect;
provided, that if any such loss or damage does exist, then either or both of the
Company and Purchaser shall be entitled, by written notice to the other, to
postpone the Non-License Transfer Date or the Closing Date, as applicable, for a
period of up to sixty (60) days to resume such Station's broadcast transmission.
6.12 CLOSING ON THE GANNETT PURCHASE AGREEMENT.
The closing, as defined in the Gannett Purchase Agreement, with respect
to all of the Gannett Television Stations shall have occurred or occur
simultaneously with the Non-License Transfer, in accordance with the terms and
conditions of the Gannett Purchase Agreement; and the representations and
warranties of the Company set forth in Section 3.20 hereof shall be true and
correct in all respects at and as of the Non-License Transfer Date or the
Closing Date, as applicable, as though each such representation and warranty
were made at and as of such time (except for representations and warranties that
speak of a specific date or time other than the Non-License Transfer Date or the
Closing Date, as applicable, which need only be true and correct in all material
respects as of such date or time).
6.13 DELIVERIES.
The Company (or Gannett, if applicable) shall have delivered to the
Purchaser all contracts, agreements, instruments and documents required to be
delivered by the Company to Purchaser pursuant to Section 1.5.
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ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to consummate the transactions
contemplated by this Agreement to occur at the Non-License Transfer or the
Closing are, at its option, subject to satisfaction of each of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Purchaser contained herein shall
be true and correct in all material respects at and as of the Non-License
Transfer Date or the Closing Date, as applicable, as though each such
representation and warranty were made at and as of such time, other than such
representations and warranties as are made as of a specific date, in each case
except for changes that are expressly contemplated by this Agreement.
7.2 PERFORMANCE BY PURCHASER.
All of the covenants and agreements to be complied with and performed
by Purchaser on or prior to the Non-License Transfer Date or the Closing Date,
as applicable, shall have been complied with or performed, in all material
respects, except for such failures to comply with or perform that would not,
individually or in the aggregate, reasonably be expected to be materially
adverse to the Company.
7.3 CERTIFICATE.
Purchaser shall have delivered to the Company a certificate, dated as
of the Non-License Transfer Date or the Closing Date, as applicable, executed on
behalf of Purchaser by its duly authorized officers or representatives to the
effect of Sections 7.1 and 7.2.
7.4 CONSENTS; NO OBJECTIONS.
(a) The applicable waiting periods under the HSR Act shall have expired
or been terminated; and
(b) The parties shall have received all the authorizations, consents,
orders and approvals from Governmental Authorities and consents from third
parties, in each case listed or described on Section 7.4 to the Disclosure
Schedule.
7.5 NO PROCEEDINGS OR LITIGATION.
No preliminary or permanent injunction or other order or decree issued
by any United States federal or state Governmental Authority, nor any Law
- 48 -
promulgated or enacted by any United States federal or state Governmental
Authority, that restrains, enjoins or otherwise prohibits the transactions
contemplated hereby, or imposes civil or criminal penalties on any stockholder,
director or officer of the Company if such transactions are consummated, shall
be in effect.
7.6 FCC CONSENT.
The FCC Consent shall have been issued with respect to the Stations,
notwithstanding that it may not have yet become a Final Order; provided,
however, that there shall be no requirement that the FCC Order shall have been
issued as of the Non-License Transfer Date..
7.7 CERTAIN CERTIFIED MATTERS.
The Company shall have received a copy of (i) the resolutions of the
board of directors of Purchaser, certified as being correct and complete and
then in full force and effect, authorizing the execution, delivery and
performance of this Agreement and the other the documents, instruments and
writings to be delivered by Purchaser at or prior to Closing Date or the
Non-License Transfer Date, as applicable, and the consummation of the
transactions contemplated hereby and thereby and (ii) a copy of the Certificate
of Incorporation and Bylaws of Purchaser, certified by a duly authorized officer
of Purchaser as being true, correct and complete as of the Closing Date.
7.8 GOOD STANDING CERTIFICATE.
The Company shall have received a certificate as to the formation and
good standing of Purchaser issued by the Secretary of State of Delaware, dated
not more than five (5) days before the Non-License Transfer Date or the Closing
Date, as applicable, and for the states of Illinois and Iowa as to the good
standing of Purchaser issued by the Secretary of State of such jurisdiction,
dated not more than five (5) days before the Non-License Transfer Date or the
Closing Date, as applicable.
7.9. CLOSING ON GANNETT PURCHASE AGREEMENT.
The closing, as defined in the Gannett Purchase Agreement, shall have
occurred or occur simultaneously with the Non-License Transfer or the Closing,
as applicable, hereunder.
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7.10 DELIVERIES.
The Purchaser shall have delivered to the Company all contracts,
agreements, instruments and documents required to be delivered by the Purchaser
to the Company pursuant to Section 1.5.
ARTICLE 8. INDEMNIFICATION.
8.1 INDEMNIFICATION BY THE COMPANY.
Subject in all respects to the provisions of this Article 8, the
Company hereby agrees to indemnify and hold harmless on and after the Transfer
Date, Purchaser and its stockholders and Affiliates and their respective
officers, directors, employees and agents, and their respective and successors
and permitted assigns (the "PURCHASER INDEMNIFIED PARTIES") from and against any
Claims and Damages asserted against or incurred by them, directly or indirectly,
in connection with, arising out of or relating to (a) any breach on the part of
the Company of any representation or warranty made by the Company in this
Agreement or any Transaction Document or in any certificate delivered pursuant
to this Agreement, (b) any breach on the part of Gannett of any representation
or warranty made by Gannett in the Gannett Purchase Agreement with respect to
the Stations or the Assets, (c) any breach on the part of the Company of any
covenant or agreement made by the Company in this Agreement or any Transaction
Document, (d) any breach on the part of Gannett of any covenant or agreement
made by Gannett in the Gannett Purchase Agreement with respect to the Stations
or the Assets, or (e) any Retained Liabilities.
8.2 INDEMNIFICATION BY PURCHASER.
Subject in all respects to the provisions of this Article 8, Purchaser
hereby agrees to indemnify and hold harmless on and after the Transfer Date, the
Company and its stockholders and Affiliates and their respective officers,
directors, employees and agents, and their respective successors and permitted
assigns (collectively the "COMPANY INDEMNIFIED PARTIES"), from and against any
Claims and Damages asserted against or incurred by them, directly or indirectly,
in connection with, arising out of or relating to (a) any breach on the part of
Purchaser of any representation or warranty made by Purchaser in this Agreement
or any Transaction Document or in any certificate delivered pursuant to this
Agreement, (b) any breach on the part of Purchaser of any covenant or agreement
made by the Purchaser in this Agreement or any Transaction Document, or (c) any
Assumed Liabilities. The parties acknowledge and agree that none of Gannett, any
of its stockholders or Affiliates, or any of their respective officers,
directors, employees,
- 50 -
agents, successors or assigns shall be "Company Indemnified Parties" or
"Beneficiaries" for any purposes of this Agreement or any other Transaction
Document.
8.3 LIMITATIONS ON INDEMNIFICATION CLAIMS AND LIABILITY; TERMINATION
OF INDEMNIFICATION.
(a) The obligations to indemnify and hold harmless a Person pursuant to
Sections 8.1(a), (b), (c) and (d) and Sections 8.2(a) and 8.2(b) shall terminate
when the applicable representation, warranty, covenant or agreement terminates
pursuant to Section 10.12; provided, however, that the obligation to indemnify
and hold harmless under such Sections shall not terminate with respect to any
claim as to which the Person to be indemnified shall have, before the
termination of the applicable representation, warranty, covenant or agreement,
previously made a claim for indemnification by delivering a notice to the
indemnifying party in accordance with Section 8.5. The obligations to indemnify
and hold harmless a Person pursuant to Section 8.1(e) and Section 8.2(c) shall
not terminate.
(b) The Company shall not be obligated to indemnify or hold harmless
any Purchaser Indemnified Party under Section 8.1(a), (b), (c) and (d), unless
and until all Claims and Damages exceed in the aggregate Two Hundred Thousand
Dollars ($200,000) (the "BASKET AMOUNT"), in which case the Company will
(subject to the other provisions of this Article 8) only be obligated to
indemnify and hold harmless the Purchaser Indemnified Parties for all of such
Claims or Damages under Section 8.1(a), (b), (c) or (d) in the aggregate in
excess of One Hundred Thousand Dollars ($100,000); provided that the provisions
of this Section 8.3(b) will not apply to any breach of any Post-Closing
Agreements; provided further that the Basket Amount shall not be applicable to
any amounts owed in connection with the determination of the Actual Net
Financial Assets pursuant to Section 2.4, to the payment and reimbursement
obligations set forth in Section 5.9 or to the indemnities set forth in Section
8.1(e).
(c) The maximum aggregate liability of the Company with respect to all
claims for indemnification under Section 8.1(a), (b), (c) or (d) will be limited
to the amount of Three Million Dollars ($3,000,000).
(d) Notwithstanding anything to the contrary in this Agreement and
except for fraud, the indemnifications in Sections 8.1 and 8.2 hereof will be
the sole and exclusive remedies available to Purchaser and the Company and their
respective stockholders and Affiliates and all of their respective officers,
directors, employees, agents, successors and assigns, after the Transfer Date
for any claims arising out of or relating to any breaches of any representations
or warranties or
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any covenants or agreements contained in this Agreement, or any certificate
delivered pursuant to this Agreement or otherwise in connection with this
Agreement. Any claim for indemnification must be made as provided in Sections
8.5 and 8.6 hereof.
8.4 COMPUTATION OF CLAIMS AND DAMAGES.
Whenever the Indemnitor is required to indemnify and hold harmless the
Indemnitee from and against and hold the Indemnitee harmless from, or to
reimburse the Indemnitee for, any item of Claim or Damage, the Indemnitor will,
subject to the provisions of this Article 8, pay the Indemnitee the amount of
the Claim or Damage (a) reduced by any amounts to which the Indemnitee is
entitled from third parties in connection with such Claim or Damage
("REIMBURSEMENTS"), (b) reduced by the Net Proceeds of any insurance policy
payable to the Indemnitee with respect to such Claim or Damage and (c) reduced
appropriately to take into account any Tax Benefit to the Indemnitee with
respect to such Claim or Damage through and including the tax year in which the
indemnification payment is made, net of all income Taxes resulting or that will
result from the indemnification payment. For purposes of this Section 8.4, (i)
"NET PROCEEDS" shall mean the insurance proceeds payable, less any deductibles,
co-payments, premium increases, retroactive premiums or other payment
obligations (including attorneys' fees and other costs of collection) that
relates to or arises from the making of the claim for indemnification and (ii)
"TAX BENEFIT" shall mean any benefit to be recognized by the Indemnitee in
connection with the Claim or Damage based upon the highest blended (federal,
state, local and foreign) marginal income Tax rate applicable to the Indemnitee
during the taxable year for which a return was most recently filed with the
Internal Revenue Service (based on the date of the claim for indemnification).
The Indemnitor shall use commercially reasonable efforts (the expenses of which
shall be considered Claims and Damages for purposes of the relevant indemnity
claim) to pursue Reimbursements or Net Proceeds that may reduce or eliminate
Claims and Damages. If any Indemnitee receives any Reimbursement, Tax Benefit or
Net Proceeds after an indemnification payment is made which relates thereto or
if any Indemnitee receives a Tax Benefit arising after the tax year in which an
indemnification payment is made which relates thereto, the Indemnitee shall
promptly repay to the Indemnitor such amount of the indemnification payment as
would not have been paid had the Reimbursement, Tax Benefit or Net Proceeds
reduced the original payment (any such repayment shall be a credit against any
applicable indemnification threshold or limitation set forth in Section 8.3(b)
hereof) at such time or times as and to the extent that such Reimbursement, Tax
Benefit or Net Proceeds is actually received.
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8.5 NOTICE OF CLAIMS.
Upon obtaining knowledge of any Claim or Damage which has given rise
to, or could reasonably give rise to, a claim for indemnification hereunder, the
Person seeking indemnification (the "Indemnitee") shall, as promptly as
reasonably practicable (but in no event later than thirty (30) days) following
the date the Indemnitee has obtained such knowledge, give written notice (a
"NOTICE OF CLAIM") of such claim to the other party (the "INDEMNITOR"). The
Indemnitee shall furnish to the Indemnitor in good faith and in reasonable
detail such information as the 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). No failure
or delay by the Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of the Indemnitor to indemnify and hold the
Indemnitee harmless, except to the extent that such failure or delay shall have
adversely affected the Indemnitor's ability to defend against, settle or satisfy
any liability, damage, loss, claim or demand for which such Indemnitee is
entitled to indemnification hereunder. For purposes of this Section 8.5, a
Notice of Claim given in good faith must include a good faith estimate of the
amount of the claim to the extent it is reasonably practicable to determine such
estimate.
8.6 DEFENSE OF THIRD PARTY CLAIMS.
If any claim set forth in the Notice of Claim given by an Indemnitee
pursuant to Section 8.5 hereof is a claim asserted by a third party, the
Indemnitor shall have thirty (30) days after the date that the Notice of Claim
is given by the Indemnitee to notify the Indemnitee in writing of the
Indemnitor's election to defend such third party claim on behalf of the
Indemnitee. If the Indemnitor elects to defend such third party claim, the
Indemnitee shall make available to the Indemnitor and its agents and
representatives all witnesses, pertinent records, materials and information in
the Indemnitee's possession or under the Indemnitee's control as is reasonably
required by the Indemnitor and shall otherwise cooperate with and assist the
Indemnitor in the defense of such third party claim, and so long as the
Indemnitor is defending such third party claim in good faith, the Indemnitee
shall not pay, settle or compromise such third party claim. If the Indemnitor
elects to defend such third party claim, the Indemnitee shall have the right to
participate in the defense of such third party claim, at the Indemnitee's own
expense. In the event, however, that the Indemnitee reasonably determines that
representation by counsel to the Indemnitor of both the Indemnitor and the
Indemnitee may present such counsel with a conflict of interest, then such
Indemnitee may employ separate counsel to represent or defend it in any such
action or proceeding and the
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Indemnitor will, subject to the provisions of this Article 8, pay the reasonable
fees and disbursements of such counsel. If the Indemnitor does not elect to
defend such third party claim or does not defend such third party claim in good
faith, the Indemnitee shall have the right, in addition to any other right or
remedy it may have hereunder, at the Indemnitor's expense, to defend such third
party claim; provided, however, that such Indemnitee's defense of or its
participation in the defense of any such third party claim shall not in any way
diminish or lessen the indemnification obligations of the Indemnitor under this
Article 8. If the Indemnitor shall assume the defense of a third party claim, it
shall not settle such claim without the prior written consent of the Indemnitee
(a) unless such settlement includes as an unconditional term thereof the giving
by the claimant of a release of the Indemnitee from all Liability with respect
to such claim or (b) if such settlement involves the imposition of equitable
remedies or the imposition of any obligations on such Indemnitee other than
financial obligations for which such Indemnitee will be indemnified hereunder.
If the Indemnitee is defending a third party claim it will not settle such claim
without prior written consent of the Indemnitor, which will not be unreasonably
withheld or delayed.
8.7 THIRD PARTY BENEFICIARIES.
Each of the Purchaser Indemnified Parties and the Company Indemnified
Parties shall be third party beneficiaries and entitled to enforce the
provisions of this Article 8; provided, however, that none of the Business
Employees shall be third party beneficiaries of any provision of this Agreement
or any other Transaction Document, including, without limitation, the provisions
of Section 5.2 of this Agreement.
ARTICLE 9. DEFINITIONS.
Unless otherwise stated in this Agreement, the following capitalized
terms have the following meanings:
Accounting Firm has the meaning set forth in Section 2.4(a).
Accounting Firm Determination has the meaning set forth in Section
2.4(a).
Action means any action, suit, claim, arbitration, or proceeding or
investigation (of which the Company has knowledge) commenced by or pending
before any Governmental Authority.
Actual Net Financial Assets has the meaning set forth in Section 2.4(a)
hereof.
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Affiliate means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such specified Person.
Agreement or this Agreement means this Purchase Agreement dated as of
the date first above written (including the Exhibits hereto and the Disclosure
Schedule) and all amendments hereto made in accordance with the provisions of
Section 10.8 hereof.
Allocation has the meaning set forth in Section 2.5 hereof.
Assets has the meaning set forth in Section 1.1 hereof.
Assignment of FCC Licenses has the meaning set forth in Section
1.5(a)(ii) hereof.
Assumed Liabilities means the Liabilities assumed by Purchaser pursuant
to Sections 1.3(a) and (b) hereof.
Base Purchase Price has the meaning set forth in Section 2.2(a).
Basket Amount has the meaning set forth in Section 8.3(b).
Beneficiary has the meaning set forth in Section 5.2(f) hereof.
Xxxx of Sale, Assignment and Assumption Agreement has the meaning set
forth in Section 1.5(a)(i) hereof.
Business means all of the Company's business, operations and activities
of the Stations acquired by the Company from Gannett pursuant to the Gannett
Purchase Agreement or otherwise used by the Company in the business, operations
and activities of the Stations.
Business Day means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in the City of
New York.
Business Employees means all current, former and inactive employees of
the Stations. For the avoidance of doubt, Corporate Office Employees will not be
considered Business Employees.
Call Letters has the meaning set forth in Section 3.16 hereof.
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CERCLA means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended.
Claims and Damages means, after taking into account amounts received by
Purchaser under Section 5.14(d) hereof, any and all losses, claims, demands,
liabilities, obligations, actions, suits, orders, statutory or regulatory
compliance requirements, or proceedings asserted by any Person (including,
without limitation, Governmental Authorities), and all damages, costs, expenses,
assessments, judgments, recoveries and deficiencies, including interest,
penalties, investigatory expenses, consultants' fees, and reasonable attorneys'
fees and costs (including, without limitation, costs incurred in enforcing the
applicable indemnity), of every kind and description, contingent or otherwise,
incurred by or awarded against a party, provided that "Claims and Damages" shall
not include any indirect, consequential, incidental, exemplary or punitive
damages or other special damages or lost profits (except to the extent payable
to a third party as a result of a third party claim).
Closing has the meaning set forth in Section 1.4(b) hereof.
Closing Date has the meaning set forth in Section 1.4(b) hereof.
Closing Statement has the meaning set forth in Section 2.4(a) hereof.
Code means the Internal Revenue Code of 1986, as amended.
Communications Act means the Communications Act of 1934, as amended.
Company has the meaning specified in the introductory paragraph to this
Agreement.
Company Indemnified Parties shall have the meaning set forth in Section
8.2.
Company Permitted Assignee has the meaning set forth in Section 10.5(a)
hereof.
Continuation Coverage has the meaning set forth in Section 5.2(i)
hereof.
Control (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, of the power to direct or to cause
the direction of the affairs or management of a Person, whether through the
ownership of voting securities, by contract or otherwise, including, without
limitation, the
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ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
Corporate Office means the corporate office of Gannett located at Xxx
Xxxx Xxxxxx, Xxxxxxxx, Xxxxx, that provides certain support to the Business and
the Maine Media Business.
Corporate Office Employees has the meaning set forth in Section 5.2(b).
Corporate Office Lease means the Lease dated as of February 16, 1989,
between Gannett and One City Center Associates, and all addenda and amendments
thereto and memoranda relating thereto.
Deposit Escrow Agent means United Bank, 0000 X Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000.
Deposit Escrow Agreement has the meaning set forth in Section 2.1
Diligence Termination Deadline has the meaning set forth in Section
1.6.
Disclosure Schedule means the Disclosure Schedule, dated as of the date
hereof, delivered to Purchaser by the Company in connection with this Agreement.
Employee Benefit Plans means all "employee benefit plans" within the
meaning of Section 3(3) of ERISA, all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
employee benefit plans, programs, policies or arrangements, employment
agreements, severance agreements, severance pay policies, plant closing
benefits, executive compensation arrangements, sick leave, vacation pay, salary
continuation for disability, consulting, or other compensation arrangements,
worker's compensation, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, employee discounts, employee
loans, employee banking privileges, any plans subject to Section 125 of the
Code, and any plans providing benefits or payments in the event of a change of
control, change in ownership, or sale of a substantial portion (including all or
substantially all) of the assets of any business or portion thereof, in each
case with respect to any present or former employees, directors, or agents and
without regard to whether the plan or arrangement was previously terminated (if
potential liabilities remain) or compensation agreements, in each case for the
benefit of, or relating to, any current employee or former employee of the
Business.
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Encumbrance means any security interest, pledge, mortgage, lien
(including, without limitation, tax liens), charge, encumbrance, easement,
adverse claim, preferential arrangement, restriction or defect in title.
Environmental Claims means any and all actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, investigations,
proceedings, consent orders or consent agreements relating in any way to any
Environmental Law, any Environmental Permit, Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment,
including, without limitation (a) by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages and (b) by any
Person for damages, contributions, indemnification, cost recovery, compensation
or injunctive relief.
Environmental Law means any Law relating to the environment, health,
safety or Hazardous Materials, in force and effect on the date hereof or, in the
case of the Company's certificate to be delivered in accordance with the
provisions of Section 6.3 hereof, on the Closing Date (exclusive of any
amendments or changes to such Law or any regulations promulgated thereunder or
orders, decrees or judgments issued pursuant thereto which are enacted,
promulgated or issued after the date hereof, or in the case of such certificate,
on or after the Closing Date), including but not limited to CERCLA; the Resource
Conservation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. Sections 6901 et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 6901 et seq.; the Clean Water Act, 33 U.S.C. Sections
1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601
et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq.; the Atomic Energy
Act, 42 U.S.C. Sections 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sections 136 et seq.; and the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 1101 et seq.
Environmental Permits means all permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental Law.
Equipment means all of the tangible personal property, machinery,
equipment, vehicles, rolling stock, furniture, and fixtures of every kind and
description in which the Company has an interest or which the Company acquires
from Gannett pursuant to the Gannett Purchase Agreement by ownership or lease,
and used or useful in connection with the Business, together with any
replacements thereof or additions thereto, made in the ordinary course of
business between the date of the Gannett Purchase Agreement and the Transfer
Date.
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ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
ERISA affiliate has the meaning set forth in Section 3.14.
Escrow Deposit has the meaning set forth in Section 2.1.
Estimated Net Financial Assets has the meaning set forth in Section
2.2(b) hereof.
Excluded Assets has the meaning set forth in Section 1.2 hereof.
FCC means the Federal Communications Commission.
FCC Consent means a public notice of the FCC, or of the Chief, Mass
Media Bureau or Video Services Division, acting under delegated authority,
consenting to the assignment of the FCC Licenses to Purchaser.
FCC Licenses means all licenses, permits and other authorizations
issued by the FCC to the Company used for or in connection with the Stations,
and all applications therefor, together with any renewals, extensions or
modifications thereof and additions thereto between the date of the Gannett
Purchase Agreement and the Closing.
Final Order means the FCC Consent as to which the time for filing a
request for administrative or judicial review, or for instituting administrative
review sua sponte, shall have expired without any such filing having been made
or notice of such review having been issued; or, in the event of such filing or
review sua sponte, as to which such filing or review shall have been disposed of
favorably to the grantee and the time for seeking further relief with respect
thereto shall have expired without any request for such further relief having
been filed.
First Year Anniversary Date has the meaning set forth in Section 2.3(b)
GAAP means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved.
Gannett has the meaning set forth in the recitals to this Agreement.
Gannett Corporate Office means the corporate office of Gannett located
at Xxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxx, that provides certain support to Gannett
and its business.
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Gannett FCC Licenses means all licenses, permits and other
authorizations issued by the FCC to Gannett used for or in connection with the
Gannett Television Stations and all applications therefor, together with any
renewals, extensions, or modifications thereof and additions thereto between the
date of the Gannett Purchase Agreement and the Closing.
Gannett Maine Media Business means the newspaper publishing business
which publishes the Portland Press Herald and Maine Sunday Telegram, the
Kennebec Journal and the Central Maine Morning Sentinel, and certain related
businesses in Maine (including, without limitation, the "New Media Development
Group", an Internet-based media business; "Voice Information Services", a
telephone information and marketing service; "Guy Gannett Direct", a direct
marketing operation; a telephone directory business; an integrated marketing
group; and the Coastal Journal, a controlled circulation weekly), and all
assets, liabilities, operations and activities of, and all rights of, Gannett in
the operations of such businesses.
Gannett Purchase Agreement shall have the meaning set forth in the
Recitals.
Gannett Television Stations means the following television broadcasting
station properties: WOKR-TV, Rochester, New York; WICS-TV, Springfield,
Illinois; WICD-TV, Champaign, Illinois; WGGB-TV, Springfield, Massachusetts;
WGME-TV, Portland, Maine; KGAN-TV, Cedar Rapids, Iowa; WTWC-TV, Portland, Maine;
and WTWC-TV, Tallahassee, Florida.
Governmental Authority means any United States federal, state or local
government or any foreign government, any governmental, regulatory, legislative,
executive or administrative authority, agency or commission or any court,
tribunal, or judicial body.
Governmental Order means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority. Governmental Orders shall not include Permits.
Group Contract has the meaning set forth in Section 1.3(a) hereof.
Hazardous Materials means wastes, substances, materials (whether
solids, liquids or gases), petroleum and petroleum products, byproducts or
breakdown products, radioactive materials, and any other chemicals that are
deemed hazardous, toxic, pollutants or contaminants, or substances designated,
classified or regulated as being "hazardous" or "toxic", or words of similar
import, under any Environmental Law.
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HSR Act means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
Indebtedness means obligations with regard to borrowed money and shall
expressly not include either accounts payable or accrued liabilities that are
incurred in the ordinary course of business or obligations under operating
leases regardless of how such leases may be classified or accounted for on
financial statements.
Indemnitee has the meaning set forth in Section 8.5 hereof.
Indemnitor has the meaning set forth in Section 8.5 hereof.
Intellectual Property means all patents, trademarks, trade names,
domain names, service marks, copyrights and other similar intangible assets, and
applications, registrations, extensions and renewals for any of the foregoing,
and other intellectual property owned, leased or used by the Company in the
operation of the Stations or acquired by the Company from Gannett under the
Gannett Purchase Agreement and used in the Business, including, without
limitation, Call Letters, computer software and programs, of the Company used in
the Business or acquired by the Company from Gannett under the Gannett Purchase
Agreement and used in the Business, whether owned or used by, or licensed to,
the Company or acquired by the Company from Gannett under the Gannett Purchase
Agreement.
Knowledge with respect to the Company means the actual knowledge of the
officers and employees of the Company regarding (a) information relating to the
Stations disclosed by Gannett to the Company in the Gannett Purchase Agreement
or any Schedule, Exhibit or documents delivered to the Company in connection
therewith, and (b) information relating to the Stations that the Company has
been made aware of since September 4, 1998.
Law means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or other requirement or rule of law including,
without limitation zoning laws and housing, building, safety or fire ordinances
or codes.
Leased Property means all real property of every kind and description
leased by the Company or rights to such leases or leased property acquired by
the Company from Gannett pursuant to the Gannett Purchase Agreement and used in
connection with the Business, together (to the extent leased by the Company or
obtained from Gannett pursuant to the Gannett Purchase Agreement) with all
buildings and other structures, towers, antennae, facilities or improvements
currently or hereafter located thereon, all fixtures, systems, equipment and
items of personal property of the Company or acquired by the Company from
Gannett pursuant to the Gannett Purchase Agreement attached or appurtenant
thereto and
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all easements, licenses, rights and appurtenances relating to the foregoing,
including, without limitation, the leased property referred to in Section 1.1(d)
of the Disclosure Schedule.
Letter of Credit has the meaning set forth in Section 2.1.
Liabilities means as to any Person all debts, adverse claims,
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured, determined or determinable, known or unknown, including,
without limitation, those arising under any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order, writ, stipulation or
other governmental requirement (including, without limitation, any environmental
law), action, suit, arbitration, proceeding or investigation or governmental
permit, license, authorization, certificate or approval and those arising under
any contract, agreement, arrangement, commitment or undertaking.
License Assets has the meaning set forth in Section 1.4 hereof.
Material Adverse Effect means any circumstance, change in, or effect on
the Company or the Stations that has a material adverse effect on the business,
results of operations or financial condition of the Stations, taken as a whole;
provided, however, that Material Adverse Effect shall not include adverse
effects resulting from (or, in the case of effects that have not yet occurred,
reasonably likely to result from) (i) general economic or industry conditions
that have a similar effect on other participants in the industry, (ii) regional
economic or industry conditions that have a similar effect on other participants
in the industry in such region, (iii) the fact that the Purchaser unreasonably
withheld Purchaser's consent with respect to any Program Contract pursuant to
Section 5.1 of the Agreement, or (iv) any act of Purchaser.
Material Contracts means the written agreements (including, without
limitation, amendments thereto), contracts, policies, plans, mortgages,
understandings, arrangements or commitments relating to the Business, to which
Gannett or the Company is a party or by which its assets are bound as described
below:
(i) any agreement or contract providing for payments to any Person in
excess of Fifty Thousand Dollars ($50,000) per year or Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate over the five (5) year period
commencing on the date hereof;
(ii) all time brokerage agreements and affiliation agreements with
television networks;
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(iii) any license or contract pursuant to which Gannett or the Company
is authorized to broadcast film or taped programming supplied by others in
excess of Ten Thousand Dollars ($10,000) or having a term of more than one (1)
year;
(iv) any employment agreement, consulting agreement or similar contract
providing for payments to any individual in excess of Fifty Thousand Dollars
($50,000) per year or One Hundred Thousand Dollars ($100,000) in the aggregate
over the five (5) year period commencing on the date hereof;
(v) any retention or severance agreement or contract with respect to
any Person who is to be employed by Purchaser following the Closing;
(vi) all collective bargaining agreements or other union contracts;
(vii) (A) any lease of Equipment or license with respect to Intellectual
Property (other than licenses granted in connection with the purchase of
equipment or other assets) by Gannett or the Company from another Person
providing for payments to another Person in excess of Twenty-Five Thousand
Dollars ($25,000) per year or Seventy-Five Thousand Dollars ($75,000) in the
aggregate over the five (5) year period commencing on the date hereof; or (B)
any lease of Real Property by Gannett or the Company from another Person;
(viii) any lease of Equipment or Real Property or license with respect
to Intellectual Property (other than licenses granted in connection with the
purchase of equipment or other assets) by Gannett or the Company to another
Person providing for payments to Gannett or the Company in excess of Twenty
Thousand Dollars ($20,000) per year or Fifty Thousand Dollars ($50,000) in the
aggregate over the five (5) year period commencing on the date hereof;
(ix) any joint venture, partnership or similar agreement or contract;
(x) any agreement or contract under which Gannett or the Company has
loaned any money in excess of One Million Dollars ($1,000,000) or issued or
received any note, bond, indenture or other evidence of indebtedness in excess
of One Million Dollars ($1,000,000);
(xi) any agreement or contract under which Gannett or the Company has
directly or indirectly guaranteed Indebtedness in an amount in excess of One
Million Dollars ($1,000,000);
(xii) any agreement or contract under which Gannett or the Company has
directly or indirectly guaranteed liabilities or obligations of others which do
not constitute Indebtedness;
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(xiii) any covenant not to compete or contract or agreement,
understanding, arrangement or any restriction whatsoever limiting in any respect
the ability of the Company to compete in any line of business or with any Person
or in any area; and
(xiv) any agreement or contract between Gannett or the Company and any
officer, director, stockholder or employee of the Business or any of their
family members providing for payments in excess of Five Thousand Dollars
($5,000) (other than agreements covered in clause iv) (or that would have been
covered in clause (iv) but for the monetary limits thereunder) or agreements or
contracts containing terms substantially similar to terms available to employees
generally).
Material Contracts shall not include any and all (w) contracts,
purchase orders, purchase commitments, leases and agreements entered into in the
ordinary course of business and relating to the Company (other than those
described in clauses (v), (vii), (viii) or (ix) above) that (A) are terminable
at will without payment of premium or penalty by the Company or (B) are
terminable on not more than sixty (60) days' written notice without payment of
premium or penalty and do not involve the obligation of the Company to make
payments in excess of Ten Thousand Dollars ($10,000) during the sixty (60) day
period commencing on the Closing; (x) contracts with respect to time sales (or
other promotion or sponsorship sales) to advertisers or advertising agencies
(including, without limitation, "trade" or "barter" agreements), sales agency or
advertising representation contracts, and barter obligations or commitments to
suppliers of programming; and (y) contracts with respect to the sale of
production time and/or production services relating to advertising or with
respect to other services.
Net Financial Assets means the result of (i) the aggregate amount of
current assets of the Business to be assigned to Purchaser under this Agreement,
excluding for purposes of this calculation, the current portion of rights under
Program Contracts (except as provided otherwise herein), less (ii) the aggregate
amount of current liabilities of the Business to be assumed by Purchaser under
this Agreement, excluding for purposes of this calculation the current portion
of obligations under Program Contracts (except as provided otherwise herein),
less (iii) the aggregate amount of the Company's liability for supplemental
retirement and deferred compensation under the Employee Benefit Plans relating
to the Business Employees set forth in Section 9 of the Disclosure Schedule to
the extent not paid by Gannett prior to the Transfer Date and excluding the
current portion of such liability, if any, to the extent such portion is
included as a current liability in clause (ii), in each case as of the relevant
date of calculation and calculated (except as otherwise provided in Section 9 of
the Disclosure Schedule) in conformity with GAAP. Net Financial Assets expressly
shall not include, as either assets or liabilities, the rights and obligations
under Program Contracts; provided, however,
- 64 -
that notwithstanding any prior practice or lack thereof relating thereto, (x)
any programming downpayments made in advance of customary payment terms, to the
extent not amortized as of the relevant date of calculation as more fully
described in the example set forth in Section 9 of the Disclosure Schedule,
shall be expressly included in the current assets, (y) any regularly scheduled
payments due and unpaid as of the day immediately preceding the Transfer Date
under Program Contracts in accordance with their terms as in effect on the date
hereof (with respect to Program Contracts existing on the date hereof) or on the
date originally entered into (with respect to Program Contracts entered into
after the date hereof) shall be expressly included in the current liabilities
and (z) any prepayments of regularly scheduled amounts due on or after the
Transfer Date, but made prior to the Transfer Date under Program Contracts shall
be expressly included in the current assets. Without limiting the generality of
the foregoing and subject to the immediately preceding sentence, for purposes of
determining the amount of Net Financial Assets, all revenues and all expenses
arising from the operation of the Stations, including, without limitation, tower
rental, business and license fees, utility charges, real and personal property
taxes and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, Taxes (except for
Taxes arising from the transfer of the Assets under this Agreement which shall
be apportioned between Purchaser and the Company pursuant to Section 10.10
hereof), employee compensation, including wages, salaries, commissions, music
license fees and similar prepaid and deferred items, shall be prorated as of the
relevant date of calculation in accordance with GAAP.
Net Proceeds has the meaning set forth in Section 8.4 hereof.
Non-License Assets means the Assets, other than the License Assets.
Non-License Transfer has the meaning set forth in Section 1.4(a).
Non-License Transfer Date has the meaning set forth in Section 1.4(a).
Notice of Claim has the meaning set forth in Section 8.5 hereof.
Permits has the meaning set forth in Section 3.11(a) hereof.
Permitted Exceptions means each of the following:
(i) liens for taxes, assessments and governmental charges or levies not
yet due and payable or the validity of which is being contested in good faith by
appropriate proceedings;
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(ii) Encumbrances imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens, arising in
the ordinary course of business;
(iii) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations;
(iv) survey exceptions, rights of way, easements, reciprocal easement
agreements and other Encumbrances on title to real property set forth in Section
1.1(d) of the Disclosure Schedule or that do not, individually or in the
aggregate, materially adversely affect the use of such property in the conduct
of the Company's business as it is being conducted prior to the Transfer Date;
(v) zoning laws and other land use restrictions that do not in any
material respect (a) detract from or impair the value or the use of the property
subject thereto, or (b) impair the operation of the Stations as it is being
conducted prior to the Closing in accordance with the provisions of the Gannett
Purchase Agreement;
(vi) security interests in favor of suppliers of goods for which payment
has not been made in the ordinary course of business consistent with past
practice;
(vii) Encumbrances on the interests of the lessors of properties used by
the Stations in which the Company or Gannett holds a leasehold interest; and
(viii) any and all other Encumbrances that do not materially detract from
or materially impair the value or the use of the property subject thereto for
the purposes currently utilized in the operation of the Stations.
Person means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
Post-Closing Agreements means those covenants and agreements required
by this Agreement to be performed after the Non-License Transfer or the Closing,
as applicable.
Program Contracts has the meaning set forth in Section 1.1(f) hereof.
Purchase Price has the meaning set forth in Section 2.2(a).
Purchaser has the meaning specified in the introductory paragraph to
this Agreement.
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Purchaser Indemnified Parties has the meaning set forth in Section 8.1
hereof.
Purchaser Permitted Assignee has the meaning set forth in Section
10.5(b) hereof.
Real Property means all real property of every kind and description and
related mineral rights owned by the Company or acquired by the Company from
Gannett pursuant to the Gannett Purchase Agreement and used in connection with
the Business, together with all buildings and other structures, towers,
antennae, facilities or improvements currently or hereafter located thereon, all
fixtures, systems, equipment and items of personal property of the Company or
acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing, including, without limitation, the
owned property set forth in Section 1.1(d) of the Disclosure Schedule.
Reimbursements has the meaning set forth in Section 8.4 hereof.
Release means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
environment.
Second Year Anniversary Date has the meaning set forth in Section
2.3(c).
Stations shall have the meaning set forth in the Recitals.
STC Scheduled Severance Agreements has the meaning set forth in Section
5.9(a).
STC Severance Payment has the meaning set forth in Section 5.9(a).
Subsidiary of any Person means (i) any corporation more than fifty
percent (50%) of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
is owned by such Person directly or indirectly, through Subsidiaries and (ii)
any partnership, limited partnership, limited liability company, associates,
joint venture or other entity in which such Person directly or indirectly
through Subsidiaries has more than a fifty percent (50%) equity interest.
Tax or Taxes means any and all taxes, fees, withholdings, levies,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation,
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taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth, taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added or gains taxes, license, registration and
documentation fees, and customs duties, tariffs and similar charges.
Tax Benefit has the meaning set forth in Section 8.4 hereof.
Tax Return means any report, return, document, declaration or other
information or filing required to be supplied to any Tax authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns, any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
Termination Date has the meaning set forth in Section 10.1(a)(iv)
hereof.
Third Party Sale has the meaning set forth in Section 1.4(d).
Time Brokerage Agreement has the meaning set forth in Section
1.5(a)(ix).
Transaction Documents mean this Agreement; the Xxxx of Sale, Assignment
and Assumption Agreement; the Assignment of FCC Licenses; the Time Brokerage
Agreement; and the Deposit Escrow Agreement.
Transfer Date means the earlier of the Non-License Transfer and the
Closing Date.
Unaudited Financial Statements has the meaning set forth in Section
3.5(a) hereof.
WARN has the meaning set forth in Section 5.2(h).
ARTICLE 10. MISCELLANEOUS PROVISIONS.
10.1 TERMINATION RIGHTS.
(a) This Agreement may be terminated:
(i) by mutual consent of the parties;
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(ii) by Purchaser by written notice of termination delivered to
the Company pursuant to Section 1.6 prior to the Diligence Termination Deadline;
(iii) by the Company by written notice of termination delivered to
Purchaser prior to the Diligence Termination Deadline, if the parties hereto
cannot agree on the forms of news share agreement as provided for in Section
5.13.
(iv) by either the Company or Purchaser, provided such party is
not then in material default hereunder, upon written notice to the other party,
if the Transfer Date has not occurred on or before the date that is one (1) year
after the date of this Agreement (the "TERMINATION DATE");
(v) by (A) the Company prior to the Transfer Date, or (B)
Purchaser at any time, upon written notice to the other party, if any
Governmental Authority shall have issued a statute, rule, regulation, order,
decree or injunction or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Closing hereunder or the closing under
the Gannett Purchase Agreement and such statute, rule, regulation, order, decree
or injunction or other action shall have become final and nonappealable,
provided that this clause (v) will not be applicable to actions of the FCC
subject to clause (vi) below;
(vi) by (A) the Company prior to the Transfer Date, or (B)
Purchaser at any time, upon written notice to the other party, if (i) the FCC,
or the Chief, Mass Media Bureau of the FCC, acting under delegated authority,
shall have denied the application for assignment of the Gannett FCC Licenses to
the Company, (ii) the FCC, or the Chief, Mass Media Bureau of the FCC, acting
under delegated authority, shall have denied the application for assignment of
the FCC Licenses to Purchaser, (iii) the parties' request for administrative or
judicial review, or the FCC's administrative review sua sponte, shall not have
been disposed of favorably to the parties and (iv) the parties have no further
relief available to them;
(vii) by Purchaser, by written notice to the Company, if there
has been a material breach by the Company of any representation, warranty,
covenant or agreement set forth in this Agreement such that the conditions
precedent set forth in Section 6.1 or 6.2 hereof would not be satisfied, which
breach has not been cured within twenty (20) Business Days following receipt by
the Company of written notice of such breach from Purchaser;
(viii) prior to the Transfer Date, by the Company, by written
notice to Purchaser if there has been a material breach by Purchaser of any
representation, warranty, covenant or agreement set forth in this Agreement such
that the conditions precedent set forth in Section 7.1 or 7.2 hereof would not
be
- 69 -
satisfied, which breach has not been cured within twenty (20) Business Days
following receipt by Purchaser of written notice of such breach from the
Company;
(ix) by Purchaser by written notice to the Company, if the FCC
has revoked the Company's or Gannett's FCC License for the Stations; or
(x) automatically prior to the Transfer Date without further
action by the parties upon the termination of the Gannett Purchase Agreement in
accordance with its terms.
(b) If this Agreement is terminated pursuant to Section 10.1(a)(i),
(iv), (v), (vi), (vii), (ix) or (x) hereof, Purchaser shall receive the
immediate return of the Letter of Credit.
(c) If this Agreement is terminated pursuant to Section 10.1(a)(i),
(ii), (iii), (iv), (v), (vi), (vii), (ix) or (x) hereof this Agreement shall
thereupon become void and of no further effect whatsoever, and the parties shall
be released and discharged of all obligations under this Agreement, except (i)
to the extent of a party's liability for willful material breaches of this
Agreement prior to the time of such termination, and (ii) the obligations of
each party for its own expenses incurred in connection with the transactions
contemplated by this Agreement as provided herein.
(d) If this Agreement is terminated pursuant to Section 10.1(a)(viii)
hereof, the Company's sole and exclusive remedy under this Agreement shall be to
receive the Escrow Deposit by drawing down on the Letter of Credit (without
setoff deduction or counterclaim) as liquidated damages, and upon such payment,
Purchaser shall be discharged from all further liability under this Agreement.
10.2 LITIGATION COSTS.
If any litigation with respect to the obligations of the parties under
this Agreement results in a final nonappealable order of a court of competent
jurisdiction that results in a final disposition of such litigation, the
prevailing party, as determined by the court ordering such disposition, shall be
entitled to reasonable attorneys' fees as shall be determined by such court.
Contingent or other percentage compensation arrangements shall not be considered
reasonable attorneys' fees.
10.3 EXPENSES.
Except as otherwise specifically provided in this Agreement, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
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financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Non-License Transfer or the Closing
shall have occurred, provided that the Company and Purchaser shall each be
responsible and pay fifty percent (50%) of the HSR Act filing fee (unless this
Agreement is terminated by Purchaser prior to the Diligence Termination Deadline
whereupon the Company shall be responsible for the entire HSR Act filing fee)
and the filing fees payable to the FCC in connection with the filing of the
application for assignment of the FCC Licenses.
10.4 NOTICES.
Any notice, demand, claim, notice of claim, request or communication
required or permitted to be given under the provisions of this Agreement shall
be in writing and shall be deemed to have been duly given (i) upon delivery if
delivered in person, (ii) on the next Business Day after the date of mailing if
mailed by registered or certified mail, postage prepaid and return receipt
requested, (iii) on the next Business Day after the date of delivery to a
national overnight courier service, or (iv) upon transmission by facsimile (if
such transmission is confirmed by the answerback of the facsimile machine of the
addressee) if delivered through such services to the following addresses, or to
such other address as any party may request by notifying in writing all of the
other parties to this Agreement in accordance with this Section 10.4.
If to Purchaser:
STC Broadcasting, Inc.
0000 0xx Xxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
with copies to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
- 71 -
and
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx., Esq.
Fax: (000) 000-0000
If to Company:
Xxxxxxxx Communications, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attn: President
Fax: (000) 000-0000
with copy to:
Xxxxxxxx Communications, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attn: General Counsel
Fax: (000) 000-0000
and
Xxxxxx & Xxxxxxxx, P.A.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Any such notice shall be deemed to have been received on the date of
personal delivery, the date set forth on the Postal Service return receipt, or
the date of delivery shown on the records of the overnight courier, as
applicable.
10.5 BENEFIT AND ASSIGNMENT.
(a) The Company shall not assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
- 72 -
Purchaser and any purported assignment contrary to the terms hereof shall be
null, void and of no force and effect; provided, however, the Company shall be
entitled, without the consent of Purchaser, to assign the Company's rights
hereunder to any direct or indirect wholly-owned subsidiaries of the Company to
which the Company shall have assigned the rights of the Company to the Assets of
the Stations under the Gannett Purchase Agreement in accordance with the terms
of the Gannett Purchase Agreement (each a "COMPANY PERMITTED ASSIGNEE");
provided, that the Company gives Purchaser written notice thereof and any such
Company Permitted Assignee shall be responsible for all representations,
covenants and agreements of the Company hereunder as if such Company Permitted
Assignee was a party hereto, and any such assignment shall not relieve the
Company of any of its Liabilities hereunder (including, without limitation, any
obligation pursuant to Article 8 hereof).
(b) Purchaser shall not assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
the Company and any purported assignment contrary to the terms hereof shall be
null, void and of no force and effect; provided, however, Purchaser shall be
entitled, without the consent of the Company, to assign Purchaser's rights and
interests hereunder (in whole or in part as to any Station) (i) prior to the
Transfer Date, to any Affiliate of Purchaser (each a "PURCHASER PERMITTED
ASSIGNEE"); provided, that Purchaser gives the Company written notice thereof
and such Purchaser Permitted Assignee shall be responsible for all
representations, covenants and agreements of Purchaser hereunder as if such
assignee was a party hereto, and any such assignment shall not relieve Purchaser
of any of its Liabilities hereunder (including, without limitation, any
obligation pursuant to Article 8 hereof), and (ii) from and after the Transfer
Date, to any Person.
(c) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns as permitted
hereunder. Except as set forth in Section 8.7, no Person, other than the parties
hereto and their respective successors and assigns as permitted hereunder, is or
shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto. Except as set forth in Section 8.7, the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
10.6 WAIVER.
Any party to this Agreement may (a) extend the time for the performance
of any of the obligations or other acts of any other party, (b) waive any
inaccuracies in the representations and warranties of any other party contained
- 73 -
herein or in any document delivered by any other party pursuant hereto or (c)
waive compliance with any of the agreements or conditions of any other party
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any such rights.
10.7 SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
10.8 AMENDMENT.
This Agreement may not be amended or modified except (a) by an
instrument in writing signed by, or on behalf of, the Company and Purchaser or
(b) by a waiver in accordance with Section 10.6 hereof.
10.9 EFFECT AND CONSTRUCTION OF THIS AGREEMENT.
This Agreement embodies the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior agreements, arrangements and understandings, whether written or oral,
relating to matters provided for herein. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual agreement, and this Agreement shall not be deemed to have been prepared
by any single party hereto. Disclosure of any fact or item in the Disclosure
Schedule referenced by a particular paragraph or section in this Agreement
shall, should the existence of the fact or item or its contents be relevant to
any other paragraph or section, be deemed to be disclosed with respect to that
other paragraph or section whether or not a specific cross reference appears, if
the disclosure in respect of the one paragraph or section is reasonably
sufficient to inform the reader of the information required to be disclosed in
respect such other paragraph or section.
- 74 -
Disclosure of any fact or item in the Disclosure Schedule shall not necessarily
mean that such item or fact, individually or in the aggregate, is material to
the business, results of operations or financial condition of the Stations. Time
shall be of the essence in enforcing and applying the covenants and conditions
set forth in this Agreement. The headings of the sections and subsections of
this Agreement are inserted as a matter of convenience and for reference
purposes only and in no respect define, limit or describe the scope of this
Agreement or the intent of any section or subsection. This Agreement may be
executed in one or more counterparts and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. This Agreement and the rights and duties of the parties hereunder
shall be governed by, and construed in accordance with, the laws of the State of
New York, without giving effect to the conflicts of law principles thereof
(other than Section 5-1401 of the New York General Obligations Law).
10.10 TRANSFER AND CONVEYANCE TAXES.
Purchaser and the Company shall each be liable for and shall pay
one-half of all applicable sales, transfer, recording, deed, stamp and other
similar non-income taxes, imposed in connection with transfers and conveyances
of the Assets, including, without limitation, any real property transfer or
gains taxes (if any), resulting from the consummation of the transactions
contemplated by this Agreement.
10.11 SPECIFIC PERFORMANCE.
Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (a) waive, in any action for specific
performance, the defense of adequacy of a remedy at law and (b) shall be
entitled, in addition to any other remedy to which they may be entitled at law
or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court having jurisdiction thereover.
10.12 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The respective representations, warranties, covenants and agreements of
the Company and Purchaser contained herein or in any certificate and any and all
covenants and agreements herein or therein shall survive the Non-License
Transfer Date or the Closing Date, as applicable, and shall remain in full force
and effect to the following extent: (a) representations and warranties with
respect to
- 75 -
the Non-License Assets shall survive for a period of twelve (12) months after
the Non-License Transfer Date; (b) representations and warranties with respect
to the License Assets shall survive for a period of twelve (12) months after the
Closing Date; (c) the covenants and agreements with respect to the Non-License
Assets which by their terms survive the Non-License Transfer Date shall continue
in full force and effect until fully discharged; (d) the covenants and
agreements with respect to the License Assets which by their terms survive the
Closing Date shall continue in full force and effect until fully discharged; (e)
the Company's obligations with respect to all obligations and liabilities not
assumed by Purchaser shall survive until such obligations and liabilities have
been paid, performed or discharged in full; (f) Purchaser's obligations with
respect to all obligations and liabilities assumed by Purchaser hereunder shall
survive until such obligations and liabilities have been paid, performed or
discharged in full; (g) the covenants and agreements in Article 8 shall continue
in full force and effect until fully discharged; and (h) any representation,
warranty, covenant or agreement that is the subject of a claim which is asserted
prior to the expiration of the survival period set forth in this Section 10.12,
shall survive with respect to such claim or dispute until the final resolution
thereof; provided, however, that unless Purchaser shall notify the Company of
any Claim or Damages at least ten (10) days prior to the expiration of the
survival period set forth in clause (a) or (b) above, the Company shall have no
obligation to indemnify Purchaser under Section 8.1(a) with respect to such
Claim or Damages.
ARTICLE 11. NO PERSONAL LIABILITY FOR REPRESENTATIVES, STOCKHOLDERS, DIRECTORS
OR OFFICERS.
(a) Purchaser understands, acknowledges and agrees that the directors
and officers and consultants of the Company and Gannett and the trustees under
the Employee Benefit Plans have performed, or may perform, certain acts required
or permitted under this Agreement on behalf of the Company or Gannett to
facilitate the transactions among the parties to this Agreement contemplated
herein. Notwithstanding anything to the contrary contained herein, no
stockholder, director or officer of the Company or Gannett, any such consultant,
or any such trustee (or any Affiliate of the foregoing) shall, under any
circumstances, have, and the Purchaser hereby absolves all such Persons from,
any personal liability to the Purchaser (and each of their Affiliates) for such
acts to the extent deemed to be actions by or on behalf of the Company or
Gannett.
(b) The Company understands, acknowledges and agrees that the directors
and officers and consultants of Purchaser have performed, or may perform,
certain acts required or permitted under this Agreement on behalf of Purchaser
to facilitate the transactions among the parties to this Agreement contemplated
- 76 -
herein. Notwithstanding anything to the contrary contained herein, no
stockholder, director or officer of Purchaser or any such consultant (or any
Affiliate of the foregoing) shall, under any circumstances, have, and the
Company hereby absolves all such Persons from, any personal liability to the
Company (and each of their Affiliates) for such acts to the extent deemed to be
actions by or on behalf of Purchaser.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the day and year first above written.
XXXXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxx
---------------------------------
Name: Xxxxx X. Xxx
-------------------------------
Title: Secretary
------------------------------
STC BROADCASTING, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title: Chief Financial Officer
------------------------------
PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXXXX COMMUNICATIONS, INC.
AND
STC BROADCASTING, INC.
DATED AS OF MARCH 16, 1999
TABLE OF CONTENTS
Page
----
ARTICLE 1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES..............................................................1
1.1 Assets to Be Acquired................................................................................1
1.2 Excluded Assets......................................................................................4
1.3 Assumption of Liabilities............................................................................4
1.4 Non-License Transfer; Closing........................................................................5
1.5 Additional Closing Deliveries........................................................................7
1.6 Due Diligence, Delivery of Disclosure Schedule and Purchaser Termination Right......................10
ARTICLE 2. PURCHASE PRICE........................................................................................10
2.1 Escrow Deposit......................................................................................10
2.2 Purchase Price......................................................................................11
2.3 Payment of Purchase Price...........................................................................11
2.4 Post-Closing Adjustment.............................................................................12
2.5 Allocation of the Base Purchase Price...............................................................14
ARTICLE 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY................................................14
3.1 Organization and Standing...........................................................................14
3.2 Binding Agreement...................................................................................14
3.3 Absence of Conflicting Agreements or Required Consents..............................................15
3.4 Equity Investments..................................................................................15
3.5 Financial Statements................................................................................16
3.6 Title to Assets; Related Matters....................................................................16
3.7 Absence of Certain Changes, Events and Conditions...................................................17
3.8 Litigation..........................................................................................18
3.9 Insurance...........................................................................................19
3.10 Material Contracts.................................................................................19
3.11 Permits and Licenses; Compliance with Law..........................................................19
3.12 FCC Licenses.......................................................................................20
3.13 Environmental Matters..............................................................................21
3.14 Employee Benefit Matters...........................................................................21
3.15 Labor Relations....................................................................................23
3.16 Intellectual Property..............................................................................24
3.17 Taxes..............................................................................................24
3.18 Commissions........................................................................................25
3.19 Affiliate Transactions.............................................................................25
3.20 Gannett Purchase Agreement.........................................................................25
3.21 Accuracy and Completeness of Representations and Warranties........................................26
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................26
4.1 Organization and Standing...........................................................................26
4.2 Binding Agreement...................................................................................26
4.3 Absence of Conflicting Agreements or Required Consents..............................................27
4.4 Litigation..........................................................................................27
4.5 Commissions.........................................................................................28
4.6 Financing...........................................................................................28
4.7 Purchaser's Qualification...........................................................................28
4.8 Accuracy and Completeness of Representations and Warranties.........................................28
ARTICLE 5. COVENANTS AND AGREEMENTS..............................................................................28
5.1 Conduct of the Business Prior to Closing; Access....................................................28
5.2 Post-Closing Covenants and Agreements, and Other Employee Benefit Matters...........................33
5.3 Cooperation.........................................................................................36
5.4 Confidentiality.....................................................................................39
5.5 Public Announcements................................................................................39
5.6 No Solicitation.....................................................................................39
5.7 Employees...........................................................................................39
5.8 No Additional Representations.......................................................................40
5.9 Certain Payments....................................................................................40
5.10 Bulk Sales Laws....................................................................................41
5.11 Control of the Stations............................................................................41
5.12 Use of Certain Names...............................................................................42
5.13 News Sharing Arrangements..........................................................................42
5.14 Rights Under the Gannett Purchase Agreement........................................................43
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER................................................................44
6.1 Representations and Warranties......................................................................44
6.2 Performance by the Company..........................................................................45
6.3 Certificates........................................................................................45
6.4 Consents; No Objections.............................................................................45
6.5 No Proceedings or Litigation........................................................................46
6.6 FCC Consent.........................................................................................46
6.7 No Material Adverse Change..........................................................................46
6.8 Opinions of Counsel.................................................................................46
6.9 Certain Certified Matters...........................................................................46
6.10 Good Standing Certificate..........................................................................47
6.11 No Transmission Defects............................................................................47
6.12 Closing on the Gannett Purchase Agreement..........................................................47
6.13 Deliveries.........................................................................................47
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE COMPANY..............................................................48
7.1 Representations and Warranties......................................................................48
7.2 Performance by Purchaser............................................................................48
7.3 Certificate.........................................................................................48
7.4 Consents; No Objections.............................................................................48
7.5 No Proceedings or Litigation........................................................................48
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7.6 FCC Consent.........................................................................................49
7.7 Certain Certified Matters...........................................................................49
7.8 Good Standing Certificate...........................................................................49
7.9. Closing on Gannett Purchase Agreement..............................................................49
7.10 Deliveries.........................................................................................50
ARTICLE 8. INDEMNIFICATION.......................................................................................50
8.1 Indemnification by the Company......................................................................50
8.2 Indemnification by Purchaser........................................................................50
8.3 Limitations on Indemnification Claims and Liability; Termination of Indemnification.................51
8.4 Computation of Claims and Damages...................................................................52
8.5 Notice of Claims....................................................................................53
8.6 Defense of Third Party Claims.......................................................................53
8.7 Third Party Beneficiaries...........................................................................54
ARTICLE 9. DEFINITIONS...........................................................................................54
ARTICLE 10. MISCELLANEOUS PROVISIONS.............................................................................68
10.1 Termination Rights.................................................................................68
10.2 Litigation Costs...................................................................................70
10.3 Expenses...........................................................................................70
10.4 Notices............................................................................................71
10.5 Benefit and Assignment.............................................................................72
10.6 Waiver.............................................................................................73
10.7 Severability.......................................................................................74
10.8 Amendment..........................................................................................74
10.9 Effect and Construction of this Agreement..........................................................74
10.10 Transfer and Conveyance Taxes.....................................................................75
10.11 Specific Performance..............................................................................75
10.12 Survival of Representations, Warranties and Covenants.............................................75
ARTICLE 11. NO PERSONAL LIABILITY FOR REPRESENTATIVES, STOCKHOLDERS, DIRECTORS OR OFFICERS.......................76
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EXHIBITS
Exhibit A Xxxx of Sale, Assignment and Assumption Agreement
Exhibit B Assignment of FCC Licenses
Exhibit C Time Brokerage Agreement
Exhibit D Deposit Escrow Agreement
Exhibit E FCC Opinion
DISCLOSURE SCHEDULE
Section 1.1(d) Real Property
Section 1.2 Excluded Assets
Section 1.4 License Assets
Section 2.5 Allocation of Base Purchase Price
Section 3.3. Absence of Conflicting Agreements or Required Consents
Section 3.5. Financial Statements
Section 3.6. Title to Assets; Related Matters
Section 3.7. Absence of Certain Changes, Events and Conditions
Section 3.8. Litigation
Section 3.9. Insurance
Section 3.10. Material Contracts
Section 3.11 Permits
Section 3.12 FCC Licenses
Section 3.13 Environmental Matters
Section 3.14 Employee Benefits
Section 3.14.1 Non-Corporate Employees (other than division heads)
Section 3.14.2 Severance and Retention Agreements - Division Heads
Section 3.15 Labor Relations
Section 3.16 Intellectual Property
Section 3.17 Taxes
Section 3.19 Affiliate Transactions
Section 4.4 Purchaser Litigation
Section 4.7 Purchaser's Qualification
Section 5.1 Conduct of Business Prior to Closing
Section 5.2 Post-Closing Covenants and Agreements
Section 5.13 News Share Arrangements
Section 6.4 Material Consents Required as a Condition of the
Purchaser's Obligation to Close
Section 7.4 Material Consents Required as a Condition of the
Company's Obligation to Close
Section 9 Closing Statement Differences
