EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXXXX COMMUNICATIONS, INC.
AND
THE SOLE STOCKHOLDER OF
GRANT TELEVISION INC.
AND GRANT TELEVISION INC.
TABLE OF CONTENTS
1. DEFINITIONS .......................................................................................... 2
2. SALE OF SHARES/EXCLUDED ASSETS ....................................................................... 2
2.1. Sale of Shares .............................................................................. 2
2.2. Redemption of Shares ........................................................................ 2
2.3. Retirement of Phantom Shares ................................................................ 2
2.4. Retirement of the Warrants .................................................................. 2
2.5. Excluded Assets ............................................................................. 3
3. PURCHASE PRICE ....................................................................................... 3
3.1. Payment ..................................................................................... 3
3.2. Manner of Determining Net Financial Assets .................................................. 4
4. CLOSING .............................................................................................. 6
5. REPRESENTATIONS AND WARRANTIES OF SELLERS ............................................................ 6
5.1. Representations as to Shares, Etc ........................................................... 6
5.2. Representations and Warranties as to the Company ............................................ 7
a. Organization and Good Standing ....................................................... 7
b. Capitalization ....................................................................... 8
c. No Conflicts ......................................................................... 8
d. Real Property ........................................................................ 8
e. Tangible Personal Property ........................................................... 9
f. Financial Statements ................................................................. 10
g. FCC .................................................................................. 12
h. Intellectual Property ................................................................ 13
i. Employee Benefit Plans ............................................................... 13
j. Labor ................................................................................ 17
k. Insurance ............................................................................ 18
l. Material Contracts ................................................................... 18
m. Compliance with Laws ................................................................. 19
n. Litigation ........................................................................... 19
i
o. No Brokers ........................................................................... 19
p. Consents ............................................................................. 19
q. Environmental ........................................................................ 20
r. Tax Matters .......................................................................... 21
s. Dividends ............................................................................ 23
t. Accounts Receivable .................................................................. 23
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER .......................................................... 24
6.1. Organization and Good Standing .............................................................. 24
6.2. Execution and Effect of Agreement ........................................................... 24
6.3. No Conflicts ................................................................................ 24
6.4. Consents .................................................................................... 25
6.5. Litigation .................................................................................. 25
6.6. No Brokers .................................................................................. 25
6.7. Acquisition of Stock for Investment ......................................................... 25
6.8. Financial Capability; No Financing Condition ................................................ 25
7. LIMITATION AND SURVIVAL .............................................................................. 25
7.1. Limitation; Survival ........................................................................ 25
8. TAX MATTERS .......................................................................................... 26
8.1. Section 338 Election ........................................................................ 26
8.2. Apportionment ............................................................................... 26
8.3. Cooperation in Tax Matters .................................................................. 26
8.4. Certain Taxes ............................................................................... 26
8.5. Preparation and Filing of Tax Returns ....................................................... 26
9. ADDITIONAL COVENANTS AND UNDERTAKINGS ................................................................ 27
9.1. Further Assurances and Assistance ........................................................... 27
9.2. Access to Information ....................................................................... 27
9.3. Conduct of Business Prior to Closing ........................................................ 28
9.4. H-S-R Act ................................................................................... 30
9.5. FCC Application ............................................................................. 31
9.6. Books and Records ........................................................................... 31
9.7. Control of Station .......................................................................... 31
9.8. Employee Matters ............................................................................ 31
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9.9. Interruption of Broadcast Transmission ...................................................... 32
9.10. Non-Solicitation ............................................................................ 33
9.11. Xxxxx XX Spin-off ........................................................................... 34
10. INDEMNIFICATION ...................................................................................... 34
10.1. Indemnification of Purchaser by Seller ...................................................... 34
10.2. Indemnification of Seller by Purchaser ...................................................... 35
10.3. Limitations and Other Provisions Regarding Indemnification Obligations ...................... 35
10.4. Notice of Claim /Defense of Action .......................................................... 37
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES TO CLOSE .......................................... 38
11.1. Conditions Precedent to the Obligation of Purchaser ......................................... 38
11.2. Conditions Precedent to the Obligation of Seller ............................................ 40
12. DELIVERIES AT THE CLOSING ............................................................................ 41
12.1. Deliveries by Seller ........................................................................ 41
12.2. Deliveries by Purchaser ..................................................................... 42
13. EXPENSES ............................................................................................. 43
13.1. Expenses .................................................................................... 43
14. TERMINATION .......................................................................................... 43
14.1 Termination ................................................................................. 43
14.2 Procedure and Effect of Termination ......................................................... 44
15. NOTICES .............................................................................................. 46
16. MISCELLANEOUS ........................................................................................ 48
16.1. Headings .................................................................................... 48
16.2. Schedules and Exhibits ...................................................................... 48
16.3. Execution in Counterparts ................................................................... 49
16.4. Entire Agreement ............................................................................ 49
iii
16.5. Governing Law ............................................................................... 49
16.6. Modification ................................................................................ 49
16.7. Successors and Assigns ...................................................................... 49
16.8. Waiver ...................................................................................... 49
16.9. Severability ................................................................................ 50
16.10. Announcements ............................................................................... 50
16.11. Specific Performance ........................................................................ 50
16.12 Third Party Beneficiaries ................................................................... 50
16.13 Interpretation .............................................................................. 50
ANNEX 1 -- Definitions
ANNEX 2 -- Seller' s Stock
ANNEX 3 -- Phantom Stockholders
ANNEX 4 -- Warrant Holders
ANNEX 5 -- Payment to Communications Equity Associates
ANNEX 6 -- Company Lenders
EXHIBITS
A - Deposit Escrow Agreement
B - Indemnification Escrow Agreement
C - Time Brokerage Agreement
D - Form of Opinion - Seller's Counsel
E - Form of Sublease
F - Stock Purchase Warrants
G - Warrant Redemption Agreement and Phantom
Stock Payout Agreements
H - Consent and Agreement
I - Form of Opinion - Purchaser's Counsel
J - Redemption and Contribution Agreement
iv
SCHEDULES
v
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of this
_____ day of _______________, 2000, is entered into by and among Xxxxxxxx
Communications, Inc., a Maryland corporation ("Purchaser"), Xxxxxx Xxxxx
("Seller"), the sole shareholder of Grant Television Inc., a Delaware
corporation (the "Company"), and the Company.
WITNESSETH:
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock (the "Stock") of the Company; and
WHEREAS, the Company is the owner of the assets and operator of
WNYO-TV, Channel 49, in the Buffalo, New York market (the "Station"); and
WHEREAS, the Company holds the licenses granted by the Federal
Communications Commission (the "FCC") pursuant to which the Station is permitted
to operate (the "FCC Licenses"); and
WHEREAS, the Company intends to transfer the FCC Licenses to Grant
Television II LLC ("Xxxxx XX") immediately prior to the Closing (as defined
herein) of the transactions contemplated by this Agreement; and
WHEREAS, following the foregoing transfer the Company intends to
distribute all of the membership interests of Xxxxx XX held by the Company to
Seller in redemption of a portion of the issued and outstanding shares of Stock
held by Seller; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all of the remaining issued and outstanding shares of
Stock held by Seller; and
WHEREAS, Xxxxx XX and New York Television, Inc. have entered into an
Asset Purchase Agreement (the "Xxxxx XX APA") of even date herewith, pursuant to
which New York Television, Inc. shall purchase the FCC Licenses and other assets
from Xxxxx XX (collectively, the "License Assets").
NOW, THEREFORE, for the purpose of consummating the above transaction
and in consideration of the promises and mutual covenants herein contained,
Seller and Purchaser hereby agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, capitalized terms shall have the meanings
specified in the text hereof or on Annex 1 hereto (which is incorporated herein
by reference), which meanings shall be applicable to both the singular and
plural forms of the terms defined.
SECTION 2
SALE OF SHARES/EXCLUDED ASSETS
2.1. SALE OF SHARES. At the Closing, Seller shall sell, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase from Seller,
that number and class of shares of Stock as is set forth as shares to be
purchased opposite the name of Seller in Annex 2 hereto.
2.2. REDEMPTION OF SHARES. At the Closing, the Company shall distribute
all of its membership interests of Xxxxx XX to Seller in redemption of that
number and class of shares of Stock as is set forth as shares to be redeemed
opposite the name of Seller in Annex 2 hereto.
2.3. RETIREMENT OF PHANTOM SHARES. As provided in Section 3.1(3),
Purchaser shall pay to the individuals and entities listed on Annex 3 as part of
the Purchase Price the amount set forth next to each individual's or entity's
name on Annex 3 hereto and the rights of the holders of the Phantom Shares shall
be terminated.
2.4. RETIREMENT OF THE WARRANTS. At the Closing, Purchaser shall pay to
the individuals and/or entities listed on Annex 4 the amounts set forth on Annex
4, the Company shall distribute to those individuals and/or entities warrants
issued by Xxxxx XX, and the Warrants shall be cancelled.
2.5. EXCLUDED ASSETS. Notwithstanding anything to the contrary in this
Agreement, the following assets (collectively, the "Excluded Assets") of the
Company shall
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be transferred to Xxxxx XX at or prior to the Closing hereunder:
(a) the FCC Licenses, and
(b) the License Assets as defined in the Xxxxx XX APA.
SECTION 3
PURCHASE PRICE
3.1. PAYMENT. In consideration for the sale of the Stock and the other
transactions described herein, Purchaser shall pay the aggregate amount of Forty
Eight Million Dollars $48,000,000.00 (the "Purchase Price"), payable as follows:
(1) Three Million Six Hundred Thousand Dollars
($3,600,000.00) simultaneously with the execution and delivery of this
Agreement, to be held in escrow by First Union National Bank as Escrow Agent
pursuant to the Escrow Agreement in the form of Exhibit A hereto (the "Deposit
Escrow Agreement"). At the Closing, Purchaser and Seller shall cause such Three
Million Six Hundred Thousand Dollars ($3,600,000.00) to be released to the
Seller and shall cause any interest or other additional amounts in such escrow
to be released to Purchaser;
(2) One Million Dollars ($1,000,000.00) at the
Closing, to be held in Escrow (the "Indemnification Escrow") by First Union
National Bank as Escrow Agent pursuant to the Indemnification Escrow Agreement
in the form of Exhibit B hereto (the "Indemnification Escrow Agreement"); and
(3) On the first Business Day immediately following
the Closing Date to the holders of the Phantom Stock rights as indicated on
Annex 3 in the amounts set forth on Annex 3; and
(4) At the Closing, to Communications Equity
Associates as broker for Seller in the amount set forth on Annex 5;
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(5) At the Closing to the Company's Lenders listed on
Annex 6 in the amounts to be provided to the Company by the Company's Lenders at
the Closing;
(6) At the Closing, to the Warrant Holders listed on
Annex 4 in the amount set forth on Annex 4;
(7) At the Closing, the Purchase Order Amount shall
be paid to Acrodyne Communications, Inc. ("Acrodyne");
(8) the balance of the Purchase Price at the Closing
to Seller as decreased by (i) the Working Capital Shortfall, if any, and (ii)
the amount of any advertising time remaining to be run under the Station's trade
agreements as of the Closing Date exceeds by more than Fifty Thousand Dollars
($50,000.00) the fair market value of such trade agreements to be received by
the Station.
3.1.1. The payments required by Sections 3.1(1) through 3.1(8)
shall be made by wire transfer of federal or other immediately available United
States funds to the accounts specified by the Seller no less than two (2)
Business Days prior to the Closing.
3.2. MANNER OF DETERMINING NET FINANCIAL ASSETS. The Purchase Price
shall be adjusted as provided by this Section 3.2 with the following procedures:
(i) If on the Closing Date the Net Financial Assets
of the Company are less than Seven Hundred Fifty Thousand Dollars ($750,000.00)
(the "Working Capital Shortfall"), the Purchase Price shall be decreased by the
amount of the Working Capital Shortfall.
(ii) Seller shall prepare and deliver to Purchaser
not later than five (5) days before the Closing a preliminary settlement
statement for Purchaser's approval (which approval shall not be unreasonably
withheld) which shall set forth Seller's good faith estimate of the Net
Financial Assets. The preliminary settlement statement shall (A) contain all
information reasonably necessary to determine the Net Financial Assets to the
extent such can be determined or estimated as of the date of the preliminary
settlement statement, and such other information as may be reasonably requested
by Purchaser, and (B) be certified by Seller to be true and complete to Seller's
knowledge as of the date thereof.
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(iii) Not later than ninety (90) days after the
Closing Date, Purchaser will deliver to Seller a statement setting forth
Purchaser's determination of the Net Financial Asset calculation. Purchaser's
statement (A) shall contain all information reasonably necessary to determine
the Net Financial Assets and such other information as may be reasonably
requested by Seller, and (B) shall be certified by Purchaser to be true and
complete to Purchaser's Knowledge as of the date thereof. If Seller disputes the
amount of such Net Financial Asset calculation determined by Purchaser, he shall
deliver to Purchaser within thirty (30) days after receipt of Purchaser's
statement, a statement setting forth his determination of the amount of such Net
Financial Asset calculation. If Seller notifies Purchaser of its acceptance of
Purchaser's statement, or if Seller fails to deliver his statement within the
thirty (30) day period specified in the preceding sentence, Purchaser's
determination of the Net Financial Asset calculations shall be conclusive and
binding on the parties as of the last day of the thirty (30) day period.
(iv) Purchaser and Seller shall use good faith
efforts to resolve any dispute involving the determination of the Net Financial
Asset calculation. If the parties are unable to resolve the dispute within forty
five (45) days following the delivery of all of Purchaser's statements to be
provided pursuant to Section 3.2(iii) after the Closing, Purchaser and Seller
shall jointly designate an independent certified public accounting firm of
national standing which has not regularly provided services to the Purchaser,
Seller, or the Company in the last three (3) years, and who shall be
knowledgeable and experienced in the operation of television broadcasting
stations, to resolve the dispute. If the parties are unable to agree on the
designation of an independent certified public accounting firm, the selection of
the accounting firm to resolve the dispute shall be submitted to arbitration to
be held in Buffalo, New York, in accordance with the commercial arbitration
rules of the American Arbitration Association. The accounting firm's resolution
of the dispute shall be final and binding on the parties, and a judgment may be
entered thereon in any court of competent jurisdiction. Any fees of this
accounting firm and, if necessary, for arbitration to select such accountant,
shall be divided equally between the parties.
(v) Once a final resolution as to the Net Financial
Assets calculation has been made, Seller shall cause to be paid to Purchaser any
amount determined by such final resolution to be due and owing to Purchaser. In
the event Seller does not make the payment required by this Section 3.2(v)
within five (5) Business days from the date of such final determination,
Purchaser shall have the right to payment of such amount from the
Indemnification Escrow, and Seller shall execute such documentation as is
necessary to instruct the Escrow Agent to release such payment to the
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Purchaser from the Indemnification Escrow; provided, however, that Seller shall
replenish the Indemnification Escrow in the amount so paid to Purchaser within
five (5) days after any distribution to Purchaser under this Section 3.2(v).
SECTION 4
CLOSING
4.1. The closing of the transaction contemplated by this Agreement (the
"Closing"), subject to fulfillment or waiver of the conditions set forth in
Section 11 hereof, shall be held at the offices of Xxxxxx & Xxxxxxxx, P.A.,
Suite 1100, 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, at 10:00 A.M. local
time (but shall be deemed to have occurred at the close of business on the
immediately preceding day), on the later to occur of (a) five Business Days
after all applicable waiting periods under the H-S-R Act shall have expired or
terminated, (b) five Business Days after the FCC Application has been approved,
or (c) the parties mutually agree upon a different date or location (the actual
date of Closing being the "Closing Date"); provided, however, that, in the event
Closing pursuant to (a) or (b) above would be scheduled for a Business Day after
the fifteenth (15th) day of any month, then Purchaser, at its sole election, may
postpone the Closing to the first (1st) Business Day of the immediately
succeeding month.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF SELLERS
5.1. REPRESENTATIONS AS TO SHARES, ETC.
a. Seller hereby represents and warrants to Purchaser that:
(i) Seller holds of record and owns beneficially all of the shares of the Stock
set forth on Annex 2 hereto free and clear of any lien, security interest,
pledge or encumbrance other than those set forth on Schedule 5.1 hereof, all of
which will be released at or before the Closing; (ii) upon transfer of the Stock
set forth on Annex 2 hereto to Purchaser at the Closing, Purchaser will have
legal and equitable title to such Stock, free and clear of any lien, security
interest, pledge or encumbrance (other than any created by or on behalf of
Purchaser); (iii) Seller has full power and authority to enter into this
Agreement, and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of Seller;
6
(iv) this Agreement has been duly executed and delivered by Seller and
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws affecting the rights of
creditors generally and to the exercise of judicial discretion in accordance
with general principles of equity, whether applied by a court of law or equity;
(v) Seller's shares of Stock are not subject to any option(s), warrant(s),
voting trusts, outstanding proxies, registration rights agreement(s), or other
agreements regarding voting rights (other than those reflected in Schedule 5.1);
and (vi) subject to the approvals contemplated by this Agreement, neither the
execution and delivery of this Agreement by Seller nor the consummation of the
transactions contemplated hereby by Seller will (a) violate any provision of
applicable law, rule or regulation, which violation would prevent or interfere
with Seller's ability to perform its obligations hereunder, or (b) conflict with
or result in a breach of, or give rise to a right of termination of, or
accelerate the performance required by the terms of any judgment, court order or
consent decree, or any agreement, indenture, mortgage or instrument to which
Seller is a party or to which its property is subject, or constitute a default
thereunder, where such conflict, breach, right of termination, acceleration or
default would prevent or materially interfere with Seller's ability to perform
hereunder.
b. Other than for Communications Equity Associates whose fee
is the sole obligation of Seller and shall be paid by Seller at Closing, neither
Seller nor anyone acting on behalf of Seller has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders fees in
connection with the sale of the Stock and the transactions contemplated by this
Agreement.
5.2. REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY.
Seller and the Company, jointly and severally, hereby represent and
warrant to Purchaser as to the Company as follows:
a. ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has full corporate power and authority to carry on its business
as it is now being conducted and to own and use the assets owned and used by it.
The Company is qualified as a foreign corporation in the State of New York and
the State of Florida. The Company does not own any direct or indirect
subsidiaries.
b. CAPITALIZATION. The authorized capital stock of
the Company consists of two classes of common stock, the first consisting of
Five Thousand (5,000) shares
7
of Class A Common Stock, par value of $.01 per share, and the second consisting
of Five Thousand (5,000) shares of Class B Common Stock, par value of $.01 per
share. The issued and outstanding shares thereof are as described on Annex 2.
All the outstanding shares of the Stock have been validly issued and are fully
paid and nonassessable and are held of record by the Seller as set forth on
Annex 2 hereto. Except as described on Annex 2, (i) no shares of capital stock
of the Company are held in treasury, (ii) there are no other issued or
outstanding equity securities of the Company, (iii) there are no outstanding
stock appreciation rights, phantom stock rights, profit participation rights, or
other similar rights with respect to shares; (iv) there are no other issued or
outstanding securities of the Company convertible or exchangeable at any time
into equity securities of the Company; and (v) the Company is not subject to any
commitment or obligation that would require the issuance or sale of additional
shares of capital stock of the Company at any time under options, subscriptions,
warrants, rights or any other obligations. The Company does not have any
subsidiaries and does not have any equity interest in any corporation,
partnership, limited liability company, joint venture or other entity.
c. NO CONFLICTS. Except as described on Schedule
5.2c, neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (i) violate any provision of the
articles of incorporation or by-laws of the Company, (ii) violate any provision
of applicable law, rule and regulation, or (iii) conflict with or result in a
breach of, or give rise to a right of termination of, or accelerate the
performance required by the terms of any judgment, court order or consent
decree, or any material agreement, indenture, mortgage or instrument to which
the Company is a party or to which its property is subject, or constitute a
default thereunder.
d. REAL PROPERTY. Schedule 5.2d contains a complete
description of all Leased Real Property (including street address, owner, and
the Company's use thereof). The Company owns no Owned Real Property. The Real
Property Interests listed on Schedule 5.2d comprise all interests in real
property currently used by the Company and necessary to conduct the Business and
operations of the Station as now conducted. Except as described on Schedule
5.2d, the Company has good title to all Real Property Interests free and clear
of all liens, mortgages, pledges, covenants, easements, restrictions,
encroachments, leases, charges, and other claims and encumbrances, which
restricts the Company's interest in, or use of, the Real Property Interests,
except for Permitted Encumbrances. Each leasehold or subleasehold interest is
included as a Material Contract on Schedule 5.2l and is legal, valid, binding,
enforceable, and in full force and effect. The Company is not in default,
violation, or breach under any lease or sublease, and no event has occurred and
is continuing that constitutes (with notice or passage of time or both) a
default, violation, or breach thereunder.
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To the Company's Knowledge, the Company has not received any notice of a
default, offset, or counterclaim under any lease or sublease with respect to any
of the Real Property Interests. The Company enjoys peaceful and undisturbed
possession of the Real Property Interests; and so long as the Company fulfills
its obligations under the lease therefor, the Company has enforceable rights to
nondisturbance and quiet enjoyment against its lessor or sublessor and, except
as set forth in Schedule 5.2d, no third party holds any interest in the leased
premises with the right to foreclose upon Seller's leasehold or subleasehold
interest. To the Company's Knowledge, the Company has legal and practical access
to all of the Real Property Interests. Except as otherwise disclosed in Schedule
5.2d all towers, guy anchors, ground radials, and buildings and other
improvements included in the Real Property Interests are located entirely on the
Real Property Interests listed in Schedule 5.2d. All Real Property Interests
(including the improvements thereon) (a) are in good condition and repair
consistent with its current use, (b) are available for immediate use in the
conduct of the Business and operations of the Station, and (c) comply in all
material respects with all applicable material building or zoning codes and the
regulations of any governmental authority having jurisdiction, except to the
extent that the current use by the Company, while permitted, constitutes or
would constitute a "nonconforming use" under current zoning or land use
regulations. No eminent domain or condemnation proceedings are pending or, to
the Company's Knowledge, threatened with respect to any of the Real Property
Interests.
e. TANGIBLE PERSONAL PROPERTY. Except for the items
described in Schedule 5.2e, all of which will be released at or before Closing,
the Company owns and has good title to each item of tangible personal property,
and none of the tangible personal property owned by the Company is subject to
any security interest, mortgage, pledge, conditional sales agreement, or other
lien or encumbrance, except for Permitted Encumbrances. With allowance for
normal repairs, maintenance, wear and obso-lescence, each material item of
tangible personal property is in good operating condition and repair, and is
available for immediate use in the Business and operation of the Station. Except
for the License Assets which are contemplated to be transferred to Xxxxx XX in
connection with the Xxxxx XX Spin-Off, the tangible personal property comprises
all the tangible personal property currently used by the Company and necessary
to conduct the Business and operations of the Station as now conducted.
f. FINANCIAL STATEMENTS. The Financial Statements
have been delivered to Purchaser. The Financial Statements have been prepared in
accordance with GAAP, consistently applied with prior periods. The Financial
Statements accurately reflect the books and records of the Company and present
fairly the financial position and the results of operations of the Company as at
and for the periods indicated therein. Except as set forth
9
on Schedule 5.2.f hereto, since December 31, 1999, there has not been any
Material Adverse Effect in the Business, financial condition, operations, or
results of operations of the Company taken as a whole. Without limiting the
generality of the foregoing, except as set forth on Schedule 5.2f, since that
date:
(i) the Company has not sold, leased,
transferred, or assigned any material assets, tangible or intangible, outside
the ordinary course of business;
(ii) the Company has not entered into any
material agreement, contract, lease, or license outside the ordinary course of
business;
(iii) the Company has not accelerated,
terminated, made material modifications to, or canceled any material agreement,
contract, lease, or license to which the Company is a party or by which the
Company is bound outside the ordinary course of business and consistent with
past practice;
(iv) the Company has not imposed any
security interest upon any of its assets, tangible or intangible;
(v) the Company has not made any material
capital expenditures outside the ordinary course of business;
(vi) the Company has not made any material
capital investment in, or any material loan to, any other Person outside the
ordinary course of business;
(vii) the Company has not created, incurred,
assumed, or guaranteed more than Ten Thousand Dollars $10,000.00 in aggregate
indebtedness for borrowed money and capitalized lease obligations;
(viii) the Company has not granted any
license or sublicense of any material rights under or with respect to any
Intellectual Property;
(ix) there has been no change made or
authorized in the articles or bylaws of the Company;
(x) the Company has not issued, sold, or
otherwise
10
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xi) the Company has not declared, set
aside, or paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired
any of its capital stock;
(xii) the Company has not experienced any
material damage, destruction, or loss (whether or not covered by insurance) to
its property;
(xiii) the Company has not made any loan to,
or entered into any other transaction with, any of its directors, officers, and
employees outside the ordinary course of business;
(xiv) the Company has not entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xv) the Company has not granted any
increase in the base compensation of any of its directors, officers, and
employees outside the ordinary course of business;
(xvi) the Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
(xvii) the Company has not made any other
material change in employment terms for any of its directors, officers, and
employees outside the ordinary course of business;
(xviii) the Company has not made or changed
any material Tax election or taken any other action with respect to Taxes not in
the ordinary course of business and consistent with past practices; and
(xix) the Company has not committed to do
any of the foregoing.
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g. FCC. The Company and the Station are operated in
material compliance with the terms of the FCC Licenses, the Communications Act
of 1934, as amended, and applicable rules, regulations and policies of the FCC
("FCC Rules and Regulations"). All FCC Licenses, a true and complete list of
which is set forth on Schedule 5.2g, and true and complete copies of each of
which have been delivered to Purchaser have been validly issued and are valid
and in full force and effect. The FCC Licenses listed on Schedule 5.2g comprise
all of the material licenses, permits, and other authorizations required from
any governmental or regulatory authority for the lawful conduct of the business
and operations of the Station in the manner and to the full extent as it is now
conducted. Except as set forth on Schedule 5.2g, no application, action or
proceeding is pending for the renewal or modification of any of the FCC
Licenses, and there is not now before the FCC any investigation or complaint
against the Company or relating to the Station, the unfavorable resolution of
which would impair the qualifications of the Company or Xxxxx XX to hold any FCC
Licenses. Except as set forth on Schedule 5.2g, there is no proceeding pending
before the FCC, and the Company has received no notice of violation from the FCC
with respect to the Station. Except as set forth on Schedule 5.2g, the Company
has received no order or notice of violation issued by any governmental entity
which permits revocation, adverse modification or termination of any FCC
License. To the Company's Knowledge, there exist no facts or circumstances
relating to the Company, Seller or any Affiliate of the Company or Seller that
would prohibit or delay FCC approval of the FCC Application and the Xxxxx XX
Spin-Off. Except as set forth on Schedule 5.2g, none of the FCC Licenses or
other licenses is subject to any restriction or condition which requires any
material change in the operation of the Station as currently operated. The FCC
Licenses listed in Schedule 5.2g are currently in effect and, except as
disclosed on the Schedules, are not subject to any liens, or other encumbrances.
The Company has filed an application for a construction permit for a digital
television facility, as set forth in Schedule 5.2g, and will prosecute that
application diligently and in compliance with all applicable FCC deadlines. No
license renewal applications are pending with respect to any of the FCC
Licenses, but the Company must file an application for renewal of the FCC
Licenses on or before February 1, 2007. As of the date hereof, the Company has
received no notice or other information to the effect that the FCC would not
renew the FCC Licenses in the ordinary course for a full license term without
any adverse conditions, upon the timely filing of appropriate applications and
payment of the required filing fee. As of the date hereof, the Company has
received no notice or other information to the effect that the FCC would not
grant the FCC Application in the ordinary course without any adverse conditions.
All documents required by 47 C.F.R. Section 73.3526 to be kept in the Station's
public inspection files are in such file, and such file will be maintained in
proper order and complete up to and through the Closing Date, except for any
such immaterial
12
documents. The Company has filed all material reports and filings with the FCC,
has registered its antennas, and has paid all regulatory fees.
h. INTELLECTUAL PROPERTY. Set forth on Schedule 5.2h
is a complete list of all Intellectual Property owned by or licensed to the
Company on the date hereof and, except as otherwise set forth on Schedule 5.2h
hereto, the Company owns such Intellectual Property free and clear of any
royalty, lien, encumbrance or charge and does not interfere with the rights of
others. Except as set forth on Schedule 5.2h, the Company has not received any
written notice or written claim that any such Intellectual Property is not valid
or enforceable, or of any infringement upon or conflict with any patent,
trademark, service xxxx, copyright or trade name of any third party by the
Company. Except as set forth on Schedule 5.2h, the Company has not given any
notice of infringement to any third party with respect to any of the
Intellectual Property, and no such infringement exists.
i. EMPLOYEE BENEFIT PLANS. With respect, as
applicable, to Benefit Plans and Benefit Arrangements:
(i) The Company has delivered true, correct,
and complete copies of the following documents with respect to each Company Plan
and Company Benefit Arrangement, to the extent applicable, to the Purchaser: (A)
all plan or arrangement documents, including but not limited to, trust
agreements, insurance policies, service agreements and formal and informal
amendments to each; (B) the most recent Forms 5500 or 5500C/R and any attached
financial statements and those for the prior three (3) years and any related
actuarial reports; (C) the last Internal Revenue Service ("IRS") determination
or opinion letter, the last IRS determination or opinion letter that covered the
qualification of the entire plan (if different), and the materials submitted to
obtain those letters; (D) summary plan descriptions, summaries of material
modifications, any prospectuses that describe the Company Plans or Company
Benefit Arrangements, and Statement of Financial Accounting Standards Nos. 87,
106, and 112 reports; (E) the most recent written descriptions of all
non-written agreements relating to any such plan or arrangement; (F) all reports
received within the three (3) years preceding the date of this Agreement by
third-party administrators, actuaries, investment managers, consultants, or
other independent contractors (other than individual account records or
participant statements) or prepared by employees of the Company, or its ERISA
Affiliates; (G) all notices the IRS, Department of Labor, or any other
governmental agency or entity issued to the Company within the four (4) years
preceding the date of this Agreement; (H) employee manuals or handbooks
containing personnel or employee relations policies; and (I) any other documents
the Purchaser has requested.
13
(ii) Schedule 5.2i completely and accurately
lists all Company Plans and Company Benefit Arrangements and specifically
identifies any that are Qualified Plans. The Qualified Plans are qualified in
form and operation under Code Section 401(a) and have a currently applicable
determination letter from the Internal Revenue Service, and the trusts are
exempt under Code Section 501, and nothing has occurred with respect to the
Qualified Plan or such trusts that, to the Company's Knowledge, could cause the
loss of such qualification or exemption or the imposition of any material
liability, lien, penalty, or tax under ERISA or the Code, other than the
obligation to make contributions in accordance with the Qualified Plans.
(iii) Each Company Plan and each Company
Benefit Arrangement has been maintained in accordance with its constituent
documents and with all applicable provisions of the Code, ERISA and other
domestic and foreign laws, including federal, state, and foreign securities laws
and all laws respecting reporting and disclosure, in each case in all material
respects. No Company Plan holds employer securities.
(iv) Except as disclosed on Schedule 5.2i,
the Company has no ERISA Affiliates. The Company has never sponsored,
maintained, or had any liability (direct or indirect, actual or contingent) with
respect to any Benefit Plan subject to Title IV of ERISA, and the Company has
never made or been obligated to make or reimbursed or been obligated to
reimburse another employer for, contributions to any multi-employer plan (as
defined in ERISA, Section 3(37)). The Company has no liability (whether actual,
contingent or otherwise) with respect to any Benefit Plan or Benefit Arrangement
that is not a Company Benefit Plan or Arrangement.
(iv) With respect to each Pension Plan, (I)
neither the Company nor any ERISA Affiliate has terminated or withdrawn or
sought a funding waiver, and no facts exist that could reasonably be expected to
cause such actions; (II) no accumulated funding deficiency (under Code Section
412 and without regard to waivers) exists or has existed; (III) no reportable
event (as defined in ERISA Section 4043) has occurred; (IV) all costs have been
provided for on the basis of consistent methods in accordance with sound
actuarial assumptions and practices; (V) the assets, as of its last valuation
date, exceeded its "Benefit Liabilities" (as defined in ERISA Section
4001(a)(16)); and (VI) since the last valuation date, there have been no
amendments or changes to increase the amounts of benefits and, to Company's
Knowledge, nothing has occurred that would reduce the excess of assets over
benefit liabilities in such plans;
14
(v) No claims or lawsuits (other than
routine benefit claims) have been asserted, instituted, or threatened by,
against, or relating to any Company Plan or Company Benefit Arrangement, and to
the Company's Knowledge, there is no fact that could form the basis for any
material liability of either in the event of any such claim or lawsuit. No
Company Plans or Company Benefit Arrangements are or have been under audit or
examination (nor has notice been received of a potential audit or examination by
any domestic or foreign governmental agency or entity (including the Internal
Revenue Service and Department of Labor); and no matters are pending under the
Internal Revenue Service's Employee Plans Compliance Resolution System in any
successor or predecessor program.
(vi) No Company Plan or Company Benefit
Arrangement contains any provision or is subject to any law that would give rise
to any vesting of benefits, severance, termination, or other payments or
liabilities as a result of the transactions this Agreement contemplates, and,
except as disclosed herein or in Schedule 5.2i, the Company has not declared or
paid any bonus or other incentive compensation or established any severance
plan, program, or arrangement in contemplation of the transactions contemplated
by this Agreement.
(vii) With respect to each Company Plan,
there have been no violations of Code Section 4975 or ERISA Sections 404 or 406
as to which successful claims would result in any material liability for the
Company or any Person required to be indemnified by it.
(viii) The Company has made all required
contributions to the Company Plan as of the July 31, 2000 [last day of each
plan's most recent fiscal year], all benefits accrued under any unfunded Company
Plan or Company Benefit Arrangement will have been paid, accrued, or otherwise
adequately reserved in accordance with generally accepted accounting principles
as of June 30, 2000; and all monies withheld from employee paychecks with
respect to Company Plans have been transferred to the appropriate plan within
the timing required by governmental regulations.
(ix) The Company has complied in all
material respects with the health continuation rules of Code Sections 4980B (and
its predecessor) ("COBRA") and with Code Section 5000, the Health Insurance
Portability and Accountability Act, and any other comparable domestic or foreign
laws. The Company has no liability under or with respect to COBRA for its own
actions or omissions or those of any predecessor. No
15
employee or former employee of the Company nor dependent of any such employee or
former employee (or beneficiary of either) is, by reason of such employee's or
former employee's employment, entitled to receive any benefits subject to
reporting under Statement of Financial Accounting Standards No. 106, other than
as required by Code Section 4980B or other applicable law.
(x) Except as disclosed in Schedule 5.2i,
there are no contracts, agreements, plans or arrangements covering any employee
or former employee of the Company that, individually or collectively, could give
rise to the payment of any amount (or portion thereof) that, under Code Sections
280G, 404 or 162(m) would not be deductible when paid.
(xi) The Company does not provide benefits
through a voluntary employee beneficiary association as defined in Code Section
501(c)(9).
(xii) Schedule 5.2i contains the most recent
quarterly listing of workers' compensation claims and a schedule of workers'
compensation claims of the Company for the last three (3) fiscal years.
(xiii) Schedule 5.2i sets forth an accurate
list, as of the date hereof, of all employees of the Company who earned more
than $50,000.00 in 1999 or who may earn more than $50,000.00 in 2000, all
officers and all directors, and all employment agreements with such employees,
officers, and directors and the rate of compensation (and the portions thereof
attributable to salary, bonus, and other compensation respectively) of each such
person as of (i) the Balance Sheet Date and (ii) the date of this Agreement. The
schedule also shows totals accrued for vacation, sick leave, and incentive
bonuses for all employees.
16
j. LABOR. With respect to employees of the Company:
(i) The Company is and has been in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including without limitation any such laws respecting
employment discrimination, workers' compensation, family and medical leave, the
Immigration Reform and Control Act, and occupational safety and health
requirements, and no claims or investigations are pending or, to the Company's
knowledge, threatened with respect to such laws, either by private individuals
or by governmental agencies, and all employees are at-will.
(ii) The employees of the Company are not
and have never been represented by any labor union in connection with employment
by the Company, and no collective bargaining agreement is or has been binding
and in force against, or currently being negotiated by, the Company. No labor
representation organization effort currently exists nor has there been any such
activity within the past three (3) years. No grievance or arbitration proceeding
arising out of or under collective bargaining agreements or employment
relationships is pending, and no claims therefore exist or have, to the
Company's knowledge, been threatened; no labor strike, lock-out, slowdown, or
work stoppage is or has ever been pending or threatened against or directly
affecting the Company.
(iii) The Company is not and has never been
engaged in any unfair labor practice, and here is not now, nor within the past
three (3) years has there been, any unfair labor practice complaint against the
Company pending or, to the Company's knowledge, threatened before the National
Labor Relations Board or any other comparable foreign or domestic authority or
any workers' council.
(iv) All Persons classified by the Company
as independent contractors do satisfy and have satisfied the requirements of law
to be so classified, and the Company has fully and accurately reported the
Company's payments to them on IRS Forms 1099 when required to do so.
(v) The Company is and has been in
compliance with all applicable domestic and foreign laws concerning employer
contributions to any trade union, housing, unemployment, retirement, bonus and
welfare funds and all other funds to which an employer is required by law to
contribute.
17
(vi) Except as disclosed on Schedule
5.2j(vi), since December 31, 1999, no employee of the Company, or group of
employees, the loss of whom would have a Material Adverse Effect on the business
of the Company, has notified the Company of his or their intent to (A) terminate
his or their relationship with the Company, or (B) make any demand for material
payments or modifications of his or their arrangements with the Company.
(vii) The Company has entered into all
employment contracts, individual labor contracts, collective labor contracts,
and similar agreements to the extent required by applicable domestic and foreign
laws, and the Company has delivered to Purchaser prior to the date hereof true
and complete copies of all employment contracts, individual labor contracts,
collective labor contracts, and similar agreements, whether written or oral, to
which the Company is a party.
k. INSURANCE. Schedule 5.2k hereto contains a list of
all insurance policies concerning the Business, other than employee-benefit
related insurance policies. All such policies are in full force and effect,
there are no existing breaches or defaults by the Company with respect to such
policies, and no notice of cancellation or termination has been received by the
Company. During the past three (3) years, no insurance policy of the Company or
the Station has been cancelled by the insurer, and no application of the Company
for insurance has been rejected by any insurer.
l. MATERIAL CONTRACTS. Schedule 5.2l hereto contains
a list of all the Material Contracts and true and complete copies of such
agreements have been furnished to Purchaser or have been made available to
Purchaser, together with a description of any oral Material Contracts. The
Company has used its reasonable efforts to include its other Contracts on
Schedule 5.21, but Seller and the Company make no representation or warranty
that all such Contracts are included therein. All Material Contracts listed on
Schedule 5.2l are legal, valid and binding obligations of each party thereto
enforceable in accordance with their terms and in full force and effect. There
exists no default by the Company or event which, with notice or lapse of time,
or both, would constitute a default by the Company (or, to its Knowledge) any
other party to any such Material Contract or which would permit termination,
modification or acceleration. Except as disclosed in Schedule 5.21, the Company
has not received notice (and has no Knowledge) that any party to any Material
Contract intends to cancel or terminate any such agreement or to exercise or not
to exercise any option to renew thereunder. Other than the Material Contracts
listed on Schedule 5.2l, the Company does not require any other Material
Contracts, lease, or other agreement to enable them to carry on the Business as
now conducted. Except for the need to obtain the Consents listed on
18
Schedule 5.2p, the Closing hereunder will not affect the validity,
enforceability, or continuation of any of the Material Contracts.
m. COMPLIANCE WITH LAWS. Except as set forth on
Schedule 5.2m, the Company is in compliance in all material respects with all
applicable Federal, state and local laws, rules and regulations and, to the
Company's Knowledge, the Company has received no notice of any action threatened
or pending alleging noncompliance therewith.
n. LITIGATION. Except as set forth on Schedule 5.2n
hereto, there is no suit, claim, action, proceeding or arbitration relating to
the Business, or operations of the Station or which seeks to enjoin or obtain
damages in respect of the transactions contemplated hereby pending or, to the
Company's Knowledge, threatened against (i) Seller, or (ii) the Company. The
Company has received no citation, order, judgment, writ, injunction, or decree
of any court, government, or governmental or administrative agency against or
affecting the Business or the Company, except as disclosed on Schedule 5.2n, and
except for such FCC orders and other governmental orders, decrees and other
actions which apply to the broadcasting industry generally.
o. NO BROKERS. Except as disclosed on Schedule 5.2o,
the Company has not employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders fees in connection with the sale of
the Stock and the transactions contemplated by this Agreement.
p. CONSENTS. Except (i) as set forth on Schedule 5.2p
hereto, (ii) for filings pursuant to the H-S-R Act, (iii) the consent of the
Warrant Holders listed on Annex 4, or (iv) for the FCC Application contemplated
by this Agreement, no filing, consent, approval or authorization of any
governmental authority or of any third party on the part of Seller or the
Company is required in connection with the execution and delivery of this
Agreement by Seller or the consummation by Seller of any of the transactions
contemplated hereby (including any consents required under any Company contract
as a result of the change in control contemplated hereby).
19
q. ENVIRONMENTAL. Except as set forth on Schedule
5.2q hereto:
(i) The operations of the Company at or from
any of the Real Property Interests comply in all material respects with
applicable Environmental Laws, and the Company has not engaged in or permitted
any operations or activities upon any of the Real Property Interests for the
purpose of or involving the treatment, storage, use, generation, release,
discharge, emission, or disposal of any Hazardous Substances at the Real
Property Interests, except in compliance with applicable Environmental Laws.
(ii) The Company has not received any notice
or claim alleging that any of the Real Property Interests are listed or, to the
Company's Knowledge, proposed for listing on the National Priorities List
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., or any similar inventory,
register or identification of sites requiring investigation or remediation
maintained by any state or other governmental authority. The Company has not
received any notice from any governmental entity or third party of any actual or
threatened Environmental Liabilities with respect to the Real Property Interests
or the conduct of the Business.
(iii) Other than as disclosed in the Phase I
environmental reports (the "Phase I Reports") delivered by the Company to
Purchaser, to the Company's Knowledge, there are no conditions existing at the
Real Property Interests that require, or which with the giving of notice or the
passage of time or both would likely require remedial or corrective action,
removal or closure pursuant to the Environmental Laws. To the Company's
Knowledge, no event has occurred at the Real Property Interests that would
require the Phase I Reports to be revised, updated, or amended.
(iv) The Company has all the material
permits, authorizations, licenses, consents and approvals necessary for the
current conduct of the Business and for the operations on, in, or at the Real
Property Interests which are required under applicable Environmental Laws, and
is in substantial compliance with the terms and conditions of all such permits,
authorizations, licenses, consents and approvals.
(v) Except as disclosed in the Phase I
Reports, to the Company's Knowledge, there are no Hazardous Substances present
on or in the Real Property Interests or at any geologically or hydrologically
adjoining property, including any Hazardous Substances contained in barrels,
above or underground storage tanks, landfills, land deposits, dumps, equipment
(whether movable or fixed) or other containers,
20
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Real Property Interests or such adjoining property, or
incorporated into any structure therein or thereon. Neither the Company (nor any
other Person for whose conduct it is or may be held responsible) has permitted
or conducted and, to the Company's Knowledge, there are no Hazardous Substances,
or any illegal activity conducted with respect to the Real Property Interests or
any other properties or assets (whether real, personal, or mixed) in which the
Company has or had an interest.
r. TAX MATTERS.
(i) Except as set forth on Schedule 5.2r(i)
hereto:
(A) All Tax Returns required to be
filed by the Company have been filed when due in a timely fashion and all such
Tax Returns are true, correct and complete in all material respects.
(B) The Company has paid in full on
a timely basis all Taxes owed by it that were payable on or prior to the date
hereof, whether or not shown on any Tax Return.
(C) The amount of the Company's
liability for unpaid Taxes did not, as of June 30, 2000 exceed the amount of the
current liability accruals for such Taxes (excluding reserves for deferred
Taxes) reflected on the Financial Statements.
(D) The Company has withheld and
paid over to the proper governmental authorities all Taxes required to have been
withheld and paid over (and complied in all material respects with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto) in connection with amounts paid to any
employee, independent contractor, creditor, or other third party.
(E) The Company has received no
notice of any Tax Proceeding currently pending with respect to the Company and
the Company has not received notice from any Tax Authority that it intends to
commence a Tax Proceeding.
(F) No waiver or extension by the
Company of any statute of limitations is currently in effect with respect to the
assessment, collection, or
21
payment of Taxes of the Company or for which the Company is liable.
(G) The Company has not requested
any extension of the time within which to file any Tax Return of the Company
that is currently in effect.
(H) There are no liens on the
assets of the Company relating or attributable to Taxes (except liens for Taxes
not yet due).
(I) The Company is not and has not
been at any time during the preceding five years a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code.
(J) The Company has not entered
into an agreement or consent made under Section 341(f) of the Code affecting the
Company.
(K) The Company has not agreed to,
nor is it required to, make any adjustments under Section 481(a) of the Code as
a result of a change in accounting methods.
(L) The Company is not and has not
at any time been a party to a tax sharing, tax indemnity or tax allocation
agreement, and the Company has not assumed the Tax liability of any other entity
or person under contract.
(M) The Company is not and has not
at any time been a member of an affiliated group filing a consolidated federal
income tax return and does not have any liability for the Taxes of another
entity or person under Section 1.1502-6 of the Treasury Regulations (or any
similar provision of state, local or foreign law), as a transferee or successor,
or otherwise.
(N) The Company is not a party to
any joint venture, partnership or other arrangement (other than Xxxxx XX) that
is treated as a partnership for U.S. federal income tax purposes.
(O) None of the Company's assets
are treated as "tax exempt use property" within the meaning of Section 168(h) of
the Code.
(P) The Company has not made an
election under Section 1362 of the Code to be treated as an "S" Corporation and
is not currently treated
22
as an "S" Corporation for federal income tax purposes.
(ii) Seller has furnished or otherwise made
available to Purchaser correct and complete copies of (A) all income, franchise
and other material Tax Returns filed by the Company since January 1, 1997; and
(B) all examination reports, statements of deficiencies and closing agreements
received by the Company with respect to the Company relating to Taxes.
(iii) Schedule 5.2r(iii) contains complete
and accurate statements of (A) the Company's basis in its assets, (B) the amount
of any net operating loss, net capital loss and any other Tax carryovers of the
Company (including losses and other carryovers subject to any limitations), and
(C) material Tax elections made by or with respect to the Company. Except as
stated in Schedule 5.2r(iii), the Company has no net operating losses or other
Tax attributes presently subject to limitation under Code Sections 382, 383 or
384, or the federal consolidated return regulations.
s. DIVIDENDS. Since December 31, 1998, no dividends
have been declared, paid, issued or otherwise approved by the Board of Directors
of the Company in respect of the Stock.
t. ACCOUNTS RECEIVABLE. All accounts receivable of
the Company that are reflected on the Financial Statements or on the accounting
records of the Company as of the date hereof (collectively, the "Accounts
Receivable") represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. Except as stated
in Schedule 5.2t, the Accounts Receivable are current and collectable, net of
the reserves shown on the Financial Statements (which reserves are adequate and
calculated consistent with past practice) or on the accounting records of the
Company. There is no contest, claim, or right of setoff, other than returns in
the ordinary course of business, under any contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. The Company's financial records include a complete and accurate list
of all Accounts Receivable.
23
SECTION 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
6.1. ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland. Purchaser has full corporate power and authority to carry on its
business as it is now being conducted. Purchaser is qualified (or Purchaser or
its permitted assignee will be qualified as of the Closing Date) as a foreign
corporation in the State of New York.
6.2. EXECUTION AND EFFECT OF AGREEMENT. Purchaser has full corporate
power and authority to enter into this Agreement. The consummation of the
transactions contemplated hereby has been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and constitutes a legal, valid, and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws affecting the rights of creditors generally and to the exercise
of judicial discretion in accordance with general principles of equity (whether
applied by a court of law or equity).
6.3. NO CONFLICTS.
Except as described on Schedule 6.3 hereof, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) violate any of the provisions of the articles of incorporation
or by-laws of Purchaser, (b) violate any provision of applicable law, rule or
regulation, which violation would prevent or interfere with Purchaser's ability
to perform hereunder, or (c) conflict with or result in a breach of, or give
rise to a right of termination of, or accelerate the performance required by the
terms of any judgment, court order or consent decree, or any agreement,
indenture, mortgage or instrument to which Purchaser is a party or to which its
property is subject, or constitute a default thereunder, except where such
conflict, breach, right of termination, acceleration, or default would not have
a material adverse effect on the business or financial condition of Purchaser or
prevent or materially interfere with Purchaser's ability to perform hereunder.
24
6.4. CONSENTS. Except (i) as set forth on Schedule 6.4 hereto, (ii) for
filings pursuant to the H-S-R Act, or (iii) for the FCC Application, no filing,
consent, approval, or authorization of any governmental authority or of any
third party on the part of Purchaser is required in connection with the
execution and delivery of this Agreement by Purchaser or the consummation of any
of the transactions contemplated hereby.
6.5. LITIGATION. Except as set forth on Schedule 6.5 hereto, there is
no suit, claim, action, proceeding or arbitration pending or, to Purchaser's
Knowledge, threatened against Purchaser which seeks to enjoin or obtain damages
in respect of the transactions contemplated hereby.
6.6. NO BROKERS. Neither Purchaser nor anyone acting on its behalf has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the purchase of the Stock and
the transactions contemplated by this Agreement.
6.7. ACQUISITION OF STOCK FOR INVESTMENT. The Purchaser is acquiring
the Stock for investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling the Stock.
6.8. FINANCIAL CAPABILITY; NO FINANCING CONDITION. The Purchaser will
have available as of the Closing Date funds sufficient to pay the Purchase
Price. The Purchaser understands that its obligations to effect the transactions
contemplated hereby are not subject to the availability to Purchaser of
financing sufficient to pay the Purchase Price.
SECTION 7
LIMITATION AND SURVIVAL
7.1. LIMITATION; SURVIVAL. The representations and warranties,
covenants, and agreements of Seller and Purchaser shall survive the Closing Date
to the following extent: (i) other than representations and warranties set forth
in Sections 5.2i (Employee Benefit Plans), 5.2q (Environmental), and 5.2r (Tax
Matters), for a period of twelve (12) calendar months, and (ii) with respect to
the representations and warranties set forth in Sections 5.2i, 5.2q, 5.2r for a
period of two (2) years, except, in either case, to the extent any claims for
indemnification with respect to a breach of any such representation or warranty
is made on or before such date, in which case, such representation or warranty
shall survive until the resolution of such claim.
25
SECTION 8
TAX MATTERS
8.1. SECTION 338 ELECTION. In the event that Purchaser makes an
election under Section 338 of the Code (or any comparable provision of state,
local or foreign law) with respect to the purchase of the stock in the Company
as provided herein, Purchaser shall be responsible for and shall pay all Taxes
resulting from such election.
8.2. APPORTIONMENT. For purposes of apportioning any Tax to a portion
of any Taxable Period, the determination shall be made assuming that there was a
closing of the books as of the close of business on the last day of such
portion, except that real, personal and intangible property Taxes shall be
apportioned ratably on a daily basis between the portions of the Taxable Period
in question.
8.3. COOPERATION IN TAX MATTERS. Seller, the Company, and Purchaser
shall (a) cooperate fully, as reasonably requested, in connection with the
preparation and filing of all Tax Returns prepared and filed pursuant to Section
8.2; (b) make available to the other, as reasonably requested, all information,
records or documents with respect to Tax matters pertinent to the Company for
all Taxable Periods or portions thereof ending on or before the Closing Date;
and (c) preserve information, records or documents relating to Tax matters
pertinent to the Company that is in their possession or under their control
until the expiration of any applicable statute of limitations.
8.4. CERTAIN TAXES. Seller shall timely pay all transfer, documentary,
sales, use, stamp, registration, and other similar Taxes and fees arising from
or relating to the sale of Stock under this Agreement, and Seller shall at his
own expense file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration, and other
similar Taxes and fees.
8.5. PREPARATION AND FILING OF TAX RETURNS. Purchaser shall prepare or
cause to be prepared and file or cause to be filed, within the time and manner
provided by law (including extensions), all Tax Returns of the Company (i) for
Taxable Periods ending on or before the Closing Date that are due after the
Closing Date, and (ii) for Taxable Periods beginning before and ending after the
Closing Date. Purchaser shall provide Seller a
26
reasonable opportunity to review and consent to the filing of such Tax Returns,
which consent shall not be unreasonably withheld or delayed. If Seller does not
respond to Purchaser's request for consent promptly, Purchaser shall be entitled
to file such Tax Return on the date such Tax Return is due without being in
breach of this Section 8.5, whether or not Seller has consented to such filing.
SECTION 9
ADDITIONAL COVENANTS AND UNDERTAKINGS
9.1. FURTHER ASSURANCES AND ASSISTANCE. Purchaser, the Company, and
Seller agree that each will execute and deliver to the other any and all
documents, in addition to those expressly provided for herein, that may be
necessary or appropriate to implement the provisions of this Agreement, whether
before, at, or after the Closing. The parties agree to cooperate with each other
to any extent reasonably required in order to accomplish fully the transactions
herein contemplated.
9.2. ACCESS TO INFORMATION. Seller, from and after the date of this
Agreement and until the Closing Date, shall cause the Company to (a) give
Purchaser and Purchaser's employees and counsel full and complete access upon
reasonable notice during normal business hours, to all officers, employees,
offices, properties, agreements, records and affairs of the Company or otherwise
relating to the Business, (b) provide Purchaser with all financial statements of
the Company, which shall be prepared and delivered to Purchaser each month
between the date hereof and the Closing Date, and (c) provide copies of such
information concerning the Company and the Business as Purchaser may reasonably
request; provided, however, that the foregoing shall not permit Purchaser or any
agent thereof to (i) disrupt the Business, or (ii) contact any employee of the
Company without providing reasonable prior notice to Seller and allowing a
representative of Seller to be present. The Company and Seller will use their
commercially reasonable efforts to obtain the consent of its auditors to permit
inclusion of the Financial Statements in applicable securities filings of
Xxxxxxxx Broadcast Group, Inc. ("SBGI"). If Purchaser requests, it shall have
the immediate right, without causing unreasonable disruption to the Business, to
have the access provided for in the first sentence hereof to conduct an audit of
the Station's financial information, and, subject to the foregoing, the Company
and Seller shall cooperate with Purchaser's reasonable requests in connection
with such audit, including, without limitation, giving all reasonable consents
thereto as long as any expenses thereof are borne by Purchaser.
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9.3. CONDUCT OF BUSINESS PRIOR TO CLOSING. Except as contemplated by
this Agreement, from and after the date hereof, Seller shall cause the Company
to conduct, and the Company shall conduct, its Business in the ordinary course
consistent with past practice. Except as contemplated by this Agreement or as
consented to by Purchaser (which consent may be withheld in Purchaser's sole and
absolute discretion), from and after the date hereof, Seller shall act, shall
cause the Company to act, and the Company shall act, as follows:
(a) The Company will not adopt any material change in any
method of accounting or accounting practice, except as contemplated or required
by GAAP;
(b) The Company will not amend its charter or by-laws;
(c) Except for the disposition of obsolete equipment in the
ordinary course of business and except as contemplated by Section 2.5 of this
Agreement, the Company will not sell, mortgage, pledge or otherwise dispose of
any material assets or properties owned, leased or used in the operation of the
Business;
(d) The Company will not merge or consolidate with, or agree
to merge or consolidate with, or purchase or agree to purchase all or
substantially all of the assets of, or otherwise acquire, any other business
entity;
(e) The Company will not authorize for issuance, issue, or
sell any additional shares of its capital stock except as required by the
exercise of options outstanding on the date hereof as described in Annex 2 or
issue any securities or obligations convertible or exchangeable into shares of
its capital stock or issue or grant any option, warrant or other right to
purchase any shares of its capital stock;
(f) The Company will not incur, or agree to incur, any debt
for borrowed money;
(g) The Company will not change its historic practices
concerning the payment of accounts payable;
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(h) The Company will not declare, issue, or otherwise approve
the payment of dividends of any kind in respect of the Stock or redeem, purchase
or acquire any of its capital stock;
(i) The Company shall maintain the existing insurance policies
on the assets of the Station or other policies providing substantially similar
coverages;
(j) Except in the ordinary course of its Business and
consistent with past practice or except as otherwise as contemplated by this
Agreement, the Company will not permit any increases in the compensation of any
of the employees of the Station except as required by law or existing contract
or agreement or enter into or amend any Company Plan or Company Benefit
Arrangement; provided, however, that in no event shall any individual employee's
compensation increase exceed five percent (5%) of their compensation as of the
date hereof or as disclosed on any Schedule hereto;
(k) Except in the ordinary course of its Business and
consistent with past practice, the Company shall not enter into or renew, extend
or terminate, or waive any contract or commitment relating to the Station or the
assets of the Station, or incur any obligation that will be binding on Purchaser
after Closing without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld, except for sixty (60) calendar days after
the date hereof in respect of programming contracts, Purchaser may withhold its
consent for any reason and, in any event only to the extent such renewal,
extension, termination, or waiver does not exceed Twenty Thousand Dollars
($20,000.00) for any one contract or One Hundred Fifty Thousand Dollars
($150,000.00) in the aggregate for all Contracts. For purposes of this Section
9.3k, Seller and the Company acknowledge that it shall not be unreasonable for
Purchaser to withhold its consent to approve any programming contract where
Purchaser (i) is acting in good faith and not for any competitive advantage, or
(ii) in good faith has reason to conclude that it can acquire such programming
on better terms. Notwithstanding anything to the contrary contained herein, if
Purchaser shall withhold its consent to the Company entering into any
programming contract, no television station located in the Buffalo designated
market area which is owned and/or programmed by any Affiliate of Purchaser shall
enter into a programming contract with respect to the same program.
(l) Except for the Xxxxx XX Spin-Off, the Company shall not
enter into any transactions with any Affiliate of the Company or Seller that
will be binding upon Purchaser or the Station following the Closing Date;
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(m) The Company shall maintain the assets of the Station or
replacements thereof in good operating condition and adequate repair, normal
wear and tear excepted;
(n) The Company shall, in connection with the operation of the
Station, make expenditures materially consistent with the estimates of expenses
set forth in the Company's operating budget as set forth on Schedule 9.3n and,
including, without limitation, the Company shall make such consistent
expenditures in respect to promotional, programming and engineering activities
for the Station (and any employee expenditures related to such activities) for
any period covered by the current operating budget of the Station and otherwise
in connection with past practice;
(o) The Company shall not make or change any Tax election,
amend any Tax Return, or take or omit to take any other action not in the
ordinary course of business and consistent with past practice that would have
the effect of increasing any Taxes of Purchaser or any of its Affiliates or any
Taxes of the Company.
(p) The Company shall file all Tax Returns when due; provided,
however, that, with the exception of payroll tax filings in the ordinary course
of the Company's business and consistent with past practice, the Company shall
not file any material Tax Return without providing Purchaser with reasonable
opportunity to review and consent to the filing of such Tax Return, which
consent will not be unreasonably withheld.
(q) The Company shall use its reasonable efforts consistent
with past practice to preserve the Business and organization of the Station and
to keep available to the Station its present employees and to preserve the
audience of the Station and the Station's present relationships with suppliers,
advertisers, and others having business relations with it.
9.4. H-S-R ACT. Each of Purchaser and Seller shall, within five (5)
Business Days following the date hereof, file duly completed and executed
Pre-Merger Notification and Report Forms as required under the H-S-R Act and
shall otherwise use their respective best efforts to comply promptly with any
requests made by the Federal Trade Commission or the Department of Justice
pursuant to the H-S-R Act or the regulations promulgated thereunder. All filing
fees and other similar payments in connection with the H-S-R Act shall be split
equally by Purchaser and the Company.
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9.5. FCC APPLICATION.
(a) The Company and Seller shall, on the date this Agreement
is signed by Seller, the Company, and Purchaser, file (or cause to be filed)
with the FCC the FCC Application, and shall in good faith and with due diligence
take all reasonable steps necessary to expedite the processing of the FCC
Application and to secure such consents or approvals as expeditiously as
practicable.
(b) Seller shall cause the Company, and the Company shall,
publish the notices required by the FCC Rules and Regulations relative to the
filing of the FCC Application. Copies of all applications, documents, and papers
filed with the FCC after the date hereof and prior to the Closing, or filed
after the Closing with respect to the transactions contemplated under this
Agreement or the Xxxxx XX APA, by Xxxxx XX, Purchaser, the Company, or Seller
shall be mailed to the other simultaneously with the filing of the same with the
FCC or as soon as practicable thereafter. The Company shall bear its own costs
and expenses (including the fees and disbursements of its counsel) in connection
with the preparation, filing, and prosecution of the FCC Application.
(c) Seller and the Company will use their best efforts to
fulfill and perform all conditions and obligations necessary to cause the FCC
Application to be approved as expeditiously as possible after the date hereof.
9.6. BOOKS AND RECORDS. Following the Closing, Purchaser shall permit
Seller (a) to have reasonable access to the books and records of Purchaser and
those retained or maintained by the Company relating to the operation of the
Business prior to the Closing or after the Closing to the extent related to
transactions or events occurring prior to the Closing, and (b) to have
reasonable access to employees of the Company and Purchaser to obtain
information relating to such matters. Purchaser shall maintain such books and
records for a period of three (3) years following the Closing.
9.7. CONTROL OF STATION. From the date hereof until the Closing Date,
subject to the express provisions of this Agreement, Purchaser shall not
directly or indirectly control, supervise, or direct the operation of the
Station.
9.8. EMPLOYEE MATTERS.
(a) Five (5) Business Days prior to the Closing, Purchaser
shall notify the Company of those employees of the Company that are to be
terminated. Seller shall be responsible and have the obligation for the payment
of any and all obligations and liabilities arising from such termination,
including, but not limited to, payment of any and
31
all severance payments, bonuses, retention payments, payments due to employees
for any compensatory shares or options, or other obligations of the Company to
such terminated employees whether due before, on, or after the Closing Date.
Anything to the contrary in this Agreement notwithstanding, the individuals
listed on Schedule 9.8(a) (the "Retained Employees") shall not remain as
employees of the Company after the Closing Date and may be hired by Seller or
his Affiliates after the Closing Date. Neither Purchaser nor its Affiliates
shall hire any of the Retained Employees for two (2) years after the Closing
Date.
(b) For two (2) years after the Closing Date, neither Seller
nor Seller's or the Company's Affiliates shall hire any of the employees that
have not been terminated by the Company pursuant to the provisions of Section
9.8(a). This provision will not apply to any employee terminated as provided in
Section 9.8(a) above.
9.9. INTERRUPTION OF BROADCAST TRANSMISSION.
(a) In the event of any loss, damage or impairment,
confiscation or condemnation of any of the assets of the Station prior to the
completion of the Closing that materially interferes with the normal operation
of the Station, the Company shall notify Purchaser of same in writing
immediately, specifying with particularity the loss, damage or impairment,
confiscation or condemnation incurred, the cause thereof, if known or reasonably
ascertainable, and the insurance coverage. The Company shall apply the proceeds
of any insurance policy, judgment or award with respect thereto and take such
other commercially reasonable actions, as determined in its sole discretion, as
are necessary to repair, replace or restore such assets of the Station to their
prior condition as soon as possible after such loss, damages or impairment,
confiscation or condemnation.
(b) If before the Closing Date, due to damage or destruction
of the assets of the Station, the regular broadcast transmission of the Station
in the normal and usual manner is interrupted for a period of twelve (12)
continuous hours or more, the Company shall give prompt written notice thereof
to Purchaser. If on the Closing Date, due to damages or destruction of the
assets of the Station the regular broadcast transmission of the Station in the
normal and usual manner is interrupted such that the regular broadcast signal of
such Station (including its effective radiated power) is diminished in any
material respect, then (i) the Company shall immediately give written notice
thereof to Purchaser; and (ii) Purchaser shall have the right, by giving prompt
written notice to Seller, to postpone the Closing Date for a period of up to one
hundred twenty (120) days.
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(c) In the event the Station's normal and usual transmission
has not been resumed by the Closing Date as postponed pursuant to section (b)
above, Purchaser may, pursuant to Section 14.1(e), terminate this Agreement by
written notice to Seller. Notwithstanding the foregoing, however, Purchaser may,
at its option, proceed to close this Agreement and complete the restoration and
replacement of any damaged assets of the Station after the Closing Date, in
which event, Seller shall cause the Company to deliver or assign to Purchaser
all insurance or other proceeds received in connection therewith to the extent
such proceeds are received by or payable to the Company and have not therefore
been used in or committed to the restoration or replacement of the assets, but
Seller shall have no other liability or obligation to Purchaser in connection
therewith.
(d) If before the Closing Date, due to damage or destruction
of the assets the regular broadcast transmission of the Station in the normal
and usual manner is interrupted for a period of twelve (12) continuous days or
more, Seller shall give prompt written notice thereof (the "Interruption
Notice") to Purchaser. Upon receipt of the Interruption Notice, Purchaser shall
have the right, in its sole and absolute discretion, by giving prompt written
notice thereof to Seller within two (2) Business Days of the date of the
Interruption Notice, to terminate this Agreement with the effect specified in
Section 14.2(a) hereof.
(e) The provisions of this Section 9.9 shall not apply to the
matter set forth on Schedule 9.9.
9.10. NON-SOLICITATION. From the date of this Agreement until the
Closing, or the earlier termination of this Agreement in accordance with its
terms, Seller shall not, and shall not cause (and will use reasonable efforts
not to permit) any affiliates, directors, officers, employees, representatives,
or agents of the Company, to, directly or indirectly, solicit or initiate,
entertain, or enter into any discussions or transactions with or encourage or to
provide any information to, any Person concerning any sale of the Stock or the
assets of the Company or the membership interests or the assets of Xxxxx XX.
9.11. XXXXX XX SPIN-OFF. Seller shall use his reasonable efforts to
cause the Xxxxx XX Spin-Off to occur.
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SECTION 10
INDEMNIFICATION
10.1. INDEMNIFICATION OF PURCHASER BY SELLER.
(a) Subject to Section 10.3 hereof, Seller shall indemnify and
hold Purchaser harmless from and against any and all Losses, howsoever incurred,
which arise out of or result from:
(i) any breach of any representation or warranty of
Seller set forth in Sections 5.1 or 5.2 of this Agreement; or
(ii) the material failure by Seller to perform any
covenant of Seller contained herein;
(iii) breaches of the Time Brokerage Agreement or any
agreement or document delivered in connection with the Closing;
(iv) Purchaser's waiver of Seller and the Company's
compliance, to the extent required, with any applicable bulk transfer laws;
provided that the Basket Amount shall not apply to Seller's indemnification
under this Section 10.1(a)(iv);
(v) any and all Taxes of the Company for any period
prior to the Closing Date, except (A) to the extent that such Taxes are
specifically identified on Schedule 10.1(v), or (B) to the extent included as
liabilities in the calculation of Net Financial Assets;
(vi) any obligations or liabilities of the Company
occurring prior to the Closing Date under its charter or bylaws to indemnify its
officers and directors with respect to any actions occurring on or prior to the
Closing Date; or
34
(vii) except for the Company's obligation to disburse
funds as provided by Sections 3.1(3), 3.1(5), and 3.6 hereof, any obligations or
liabilities of the Company after the Closing Date to the Warrant Holders or the
Phantom Stockholders.
10.2. INDEMNIFICATION OF SELLER BY PURCHASER. Subject to Section 10.3
hereof, Purchaser shall indemnify and hold Seller harmless from and against any
and all Losses, howsoever incurred, which arise out of or result from:
(a) any breach by Purchaser of any representation or warranty
of Purchaser set forth in Section 6 of this Agreement;
(b) the material failure by Purchaser to perform any covenant
of Purchaser contained herein; or
(c) breaches of the Time Brokerage Agreement or any agreement
or document delivered in connection with the Closing.
10.3. LIMITATIONS AND OTHER PROVISIONS REGARDING INDEMNIFICATION
OBLIGATIONS. Seller's obligation to indemnify Purchaser pursuant to Section 10.1
shall be subject to the following limitations:
(a) Notwithstanding anything contained in this Agreement or
applicable law to the contrary, Purchaser agrees that the payment of any claim
(whether such claim is framed in tort, contract, or otherwise) made by Purchaser
for indemnification hereunder subsequent to the Closing Date, shall be limited
to, and shall only be made from, the Indemnification Escrow in accordance with
the Indemnification Escrow Agreement, and except for claims against the
Indemnification Escrow, Purchaser waives and releases, and shall have no
recourse against, Seller as a result of the breach of any representation,
warranty, covenant, or agreement of Seller contained herein, and such
indemnification shall be the sole and exclusive remedy for Purchaser with
respect to any such claim for indemnification after the Closing Date; provided,
however, that nothing herein shall be deemed to limit any rights or remedies
that Purchaser may have for Seller's fraud. The Indemnification Escrow shall be
disbursed in accordance with the Indemnification Escrow Agreement.
(b) Notwithstanding the provisions of Section 10.1 hereof,
Purchaser shall not be entitled to indemnification or to receive indemnification
payments with respect to any Losses except if and to the extent that the
aggregate amount of Losses incurred by Purchaser and its Affiliates to which it
or they would otherwise be entitled to
35
indemnification under Section 10.1 hereof, exceeds One Hundred Thousand Dollars
($100,000.00) (the "Basket Amount"), in which case Purchaser shall be entitled
full indemnification for such Losses in the amount of all such claims, including
the Basket Amount.
(c) In determining the amount of any Losses for which
indemnification is provided under this Agreement, such Losses shall be (i) net
of any insurance recovery made by the indemnified party, (ii) reduced to take
into account any net Tax benefit realized by the indemnified party arising from
the deductibility of such Losses, and (iii) increased to take account of any net
Tax cost incurred by the indemnified party arising from the receipt of
indemnification payments hereunder. Any indemnification payment hereunder shall
initially be made without regard to this paragraph and shall be reduced to
reflect any net Tax benefit or increased to reflect any net Tax cost only after
the indemnified party has actually realized such benefit or cost. For purposes
of this Agreement, an indemnified party shall be deemed to have "actually
realized" a net Tax benefit or net Tax cost to the extent that, and at such time
as, the amount of Taxes payable by such indemnified party is (x) reduced below
the amount of Taxes that such indemnified party would have been required to pay
but for the deductibility of such Tax or Loss, and (y) increased above the
amount of Taxes that such indemnified party would have been required to pay but
for the receipt of such indemnification payments. The amount of any reduction
hereunder shall be adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect to the
indemnified party's liability for Taxes. Any indemnity payments under this
Agreement shall be treated as an adjustment to the Purchase Price for Tax
purposes, unless a final determination with respect to the indemnified party or
any of its affiliates causes any such payment not to be treated as an adjustment
to the Purchase Price.
(d) No claim for indemnification for Losses shall be made
after expiration of the applicable time period set forth in Section 7.1 hereof.
(e) Indemnification pursuant to this Section 10 shall be the
sole and exclusive remedy of each party hereto after the Closing Date with
respect to any Losses relating to or arising out of any breaches of any
representations and warranties, or any covenant or agreement set forth in this
Agreement or any certificate delivered pursuant to or in connection with this
Agreement, notwithstanding that indemnification may not be available and shall
be in lieu of any and all other rights and remedies after the Closing Date,
whether asserted as claims for breach of contract, tort claims, actions in
equity or otherwise.
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(f) The terms and conditions of Sections 10.3(a) through (e)
shall not be deemed to limit any rights or remedies of Purchaser under the Time
Brokerage Agreement or the Xxxxx XX APA; provided that no claims may be made
under this Agreement relating to the Xxxxx XX APA.
10.4. NOTICE OF CLAIM /DEFENSE OF ACTION.
(a) An indemnified party shall promptly give the indemnifying
part(ies) notice of any matter which an indemnified party has determined has
given or could give rise to a right of indemnification under this Agreement,
stating the nature and, if known, the amount of the Losses, and method of
computation thereof, all with reasonable particularity and containing a
reference to the provisions of this Agreement in respect of which such right to
indemnification is claimed or arises; provided that the failure of any party to
give notice promptly as required in this Section 10.4 shall not relieve any
indemnifying party of its indemnification obligations except to the extent that
such failure materially prejudices the rights of such indemnifying party. The
indemnified party shall give continuing notice promptly thereafter of all
developments coming to the indemnified party's attention materially affecting
any matter relating to any indemnification claims.
(b) Except as otherwise provided in Section 10.5, the
obligations and liabilities of an indemnifying party under this Section 10 with
respect to Losses arising from claims of any third party that are subject to the
indemnification provided for in this Section 10, shall be governed by and
contingent upon the following additional terms and conditions:
(i) With respect to third party claims, promptly
after receipt by an indemnified party of notice of the commencement of any
action or the presentation or other assertion of any claim which could result in
any indemnification claim pursuant to Section 10.1 or 10.2 hereof, such
indemnified party shall give prompt notice thereof to the indemnifying
party(ies) and the indemnifying party(ies) shall be entitled to participate
therein or, to the extent that it shall wish, assume the defense thereof with
its own counsel.
(ii) If the indemnifying party(ies) elects to assume
the defense of any such action or claim, the indemnifying party(ies) shall not
be liable to the indemnified party for any fees of other counsel or any other
expenses, in each case incurred by such indemnified party in connection with the
defense thereof.
(iii) The indemnifying party(ies) shall be
authorized, without consent of the indemnified party being required, to settle
or compromise any such action or claim,
37
provided that such settlement or compromise includes an unconditional release of
the indemnified party from all liability arising out of such action or claim.
(iv) Whether or not an indemnifying party(ies) elects
to assume the defense of any action or claim, the indemnifying party(ies) shall
not be liable for any compromise or settlement of any such action or claim
effected without its consent, such consent not to be unreasonably withheld.
(v) The parties agree to cooperate to the fullest
extent possible in connection with any claim for which indemnification is or may
be sought under this Agreement, including, without limitation, making available
all witnesses, pertinent records, materials and information in its possession or
under its control relating thereto as is reasonably requested by the other
party.
SECTION 11
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES TO CLOSE
11.1. CONDITIONS PRECEDENT TO THE OBLIGATION OF PURCHASER. The
obligation of Purchaser to consummate the Closing is subject to the fulfillment
or waiver, on, or prior to the Closing Date, of each of the following conditions
precedent:
(a) Seller shall have complied in all material respects with
his agreements and covenants contained herein to be performed at or prior to the
Closing, and the representations and warranties of Seller contained herein shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though made on and as of the Closing Date, except that
representations and warranties that were made as of a specified date shall
continue on the Closing Date to have been true as of the specified date, and
Purchaser shall have received a certificate from Seller, dated as of the Closing
Date and signed by Seller, certifying as to the fulfillment of the conditions
set forth in this Section 11.1(a) ("Seller's Bring-Down Certificate").
(b) No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains or prohibits Purchaser
from consummating the transactions contemplated hereby, and no action or
proceeding shall be pending wherein an unfavorable ruling would affect any right
to own the Stock.
38
(c) All applicable waiting periods under the H-S-R Act shall
have expired or been terminated.
(d) The consents of the Warrant Holders and all consents
and/or agreements identified on Schedule 5.2p and marked with an asterisk shall
have been received.
(e) The FCC Application shall have been approved and the Xxxxx
XX Spin-Off shall have occurred.
(f) Seller shall have delivered to Purchaser at the Closing
each document required by Section 12.1 hereof.
(g) Since the date of this Agreement through the Closing Date,
there shall not have been any Material Adverse Effect to the Business,
operations, properties, assets, or condition of the Company or the Station, and
no event shall have occurred or circumstance exist that would reasonably be
expected to result in such a Material Adverse Effect.
(h) Purchaser shall have received from the Company a properly
executed statement in the form set forth in Schedule 11.1(h), together with
evidence that the Company has complied with the notice requirements of Section
1.897-2(h)2 of the Treasury regulations.
(i) Xxxxx XX shall be in compliance (and not in default or
breach) with the material terms and conditions of the Xxxxx XX APA.
(j) Xxxxx XX shall have entered into the Time Brokerage
Agreement substantially in the form attached hereto as Exhibit C.
(k) Seller shall have caused the Company to enter into an
agreement (the "Purchase Order") with Acrodyne for the purchase of a digital
television transmitter specified by Purchaser, and the Company or Purchaser (on
Company's behalf) shall pay to Acrodyne a deposit on said transmitter of Seven
Hundred Fifty Thousand Dollars ($750,000.00) (the "Purchase Order Amount")
pursuant to Section 3.1(7).
39
11.2. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER. The obligation
of Seller to consummate the Closing is subject to the fulfillment or waiver, on
or prior to the Closing Date, of each of the following conditions precedent:
(a) Purchaser shall have complied in all material respects
with its agreements and covenants contained herein to be performed at or prior
to the Closing, and the representations and warranties of Purchaser contained
herein shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except that representations and warranties that were made as of a specified date
shall continue on the Closing Date to have been true as of the specified date,
and Seller shall have received a certificate of Purchaser, dated as of the
Closing Date and signed by an officer of Purchaser, certifying as to the
fulfillment of the condition set forth in this Section 11.2(a) ("Purchaser's
Bring-Down Certificate").
(b) No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains or prohibits Seller
from consummating the transactions contemplated hereby.
(c) All applicable waiting periods under the H-S-R Act shall
have expired or been terminated.
(d) The FCC Application shall have been approved without any
condition or qualification that materially adversely effects the Seller or the
transaction contemplated hereby and the Xxxxx XX Spin-Off shall have occurred.
(e) Purchaser shall have delivered the Purchase Price as
provided in Sections 3.1(1) through 3.1(8) and each document required by Section
12.2 hereof.
(f) Purchaser, or an Affiliate thereof, shall have entered
into the Time Brokerage Agreement substantially in the form attached as Exhibit
C.
(g) Purchaser, or an Affiliate thereof, shall be in compliance
(and not in default or breach) with the material terms and conditions of the
Xxxxx XX APA.
40
SECTION 12
DELIVERIES AT THE CLOSING
12.1. DELIVERIES BY SELLER. At the Closing, Seller will deliver or
cause to be delivered to Purchaser:
(a) Seller's Bring-Down Certificate;
(b) the legal opinion of Xxxxxxxxx Xxxxxx Xxxxxx, LLP, counsel
to Seller, in the form attached hereto as Exhibit D;
(c) stock certificates evidencing the Stock, together with
stock powers, dated as of the Closing Date and executed by the respective
Seller, transferring the Stock to Purchaser;
(d) the original corporate minute books, stock registry and
seal of the Company (to the extent available);
(e) a certificate as to the existence and good standing of the
Company issued by the Secretary of State of the State of Delaware dated shortly
before the Closing Date;
(f) receipt for Purchase Price;
(g) resignations of each of the officers and directors of the
Company, effective as of the Closing Date;
(h) the statement required by Section 11.1(h);
(i) a copy of any instrument evidencing any consents received,
including, but not limited to, estoppel certificates (to the extent available)
from the Company's landlord with respect to the Leased Real Property;
(j) the Indemnification Escrow Agreement, duly executed by
Seller;
41
(k) the Time Brokerage Agreement substantially in the form
attached hereto as Exhibit C duly executed by the managing member of Xxxxx XX
and an officer of the Company;
(l) the Purchase Order, duly executed by the appropriate
officers;
(m) the sublease substantially in the form attached as Exhibit
E signed by the managing member of Xxxxx XX;
(n) the Stock Purchase Warrants attached hereto as Exhibit F
marked cancelled;
(o) Warrant Redemption Agreement and the Phantom Stock Payout
Agreements signed by the respective Warrant Holders and Phantom Stockholders
substantially in the form attached hereto as Exhibit G;
(p) such other documents as Purchaser shall reasonably
request; and
(q) the Consent and Agreement attached hereto as Exhibit H
executed by the managing member of Xxxxx XX.
12.2. DELIVERIES BY PURCHASER. Purchaser will deliver or cause to be
delivered at the Closing to Seller or the Indemnification Escrow Agent, as the
case may be:
(a) Purchaser's Bring-Down Certificate;
(b) a legal opinion of Xxxxxx & Xxxxxxxx, P.A., counsel to
Purchaser, substantially in the form attached as Exhibit I hereto;
(c) the Purchase Price as required pursuant to Sections 3.1(1)
through 3.1(5) hereof;
(d) the Indemnification Escrow Agreement, duly executed by
Purchaser;
(e) certificates as to the existence and good standing of the
Purchaser issued by the Maryland Department of Assessments and Taxation of the
State of Maryland and the Secretary of State of New York as to the Purchaser's
qualification as a foreign corporation dated shortly before the Closing Date;
42
(f) the Time Brokerage Agreement substantially in the form
attached hereto as Exhibit C duly executed by the Company;
(g) the sublease substantially in the form attached hereto as
Exhibit E signed by the appropriate officers of the Company; and
(h) such other documents Seller shall reasonably request.
SECTION 13
EXPENSES
13.1. EXPENSES. Seller shall pay his and the Company's fees, expenses,
disbursements, and those of his counsel and the Company's counsel in connection
with the subject matter of this Agreement, including the negotiations with
respect hereto, and the preparation of any documents, and all other costs and
expenses incurred by either Seller or the Company in the performance and
compliance with all conditions and obligations to be performed by or pursuant to
this Agreement or as contemplated hereby. Purchaser shall pay its own fees and
expenses and disbursements and those of its counsel in connection with the
subject matter of this Agreement (including the negotiations with respect hereto
and the preparation of any documents), and all other costs and expenses incurred
by it in the performance and compliance with all conditions and obligations to
be performed by it pursuant to this Agreement or as contemplated hereby. The
filing fees paid in connection with the H-S-R filing shall be split evenly
between Seller and Purchaser.
SECTION 14
TERMINATION
14.1 TERMINATION. This Agreement may be terminated:
(a) at any time by mutual written consent of Purchaser and
Seller;
43
(b) by either Purchaser or Seller, if the terminating party is
not in default or breach in any material respect of its or their obligations
under this Agreement, if the Closing hereunder has not taken place on or before
six (6) calendar months from the date hereof, except where Closing has been
postponed pursuant to the provisions of 9.9, in which case the applicable date
shall be upon the expiration of the one hundred twenty (120) day period referred
to in Section 9.9;
(c) by Seller, if Seller is not in default or breach in any
material respect of his obligations under this Agreement, if all of the
conditions in Section 11.2 have not been satisfied or waived by the date
scheduled for the Closing (as such date may be postponed pursuant to Section
9.9);
(d) by Purchaser, if Purchaser is not in default or breach in
any material respect of its obligations under this Agreement, if all of the
conditions in Section 11.1 have not been satisfied or waived by the date
scheduled for the Closing (as such date may be postponed pursuant to Section
9.9);
(e) by Purchaser or Seller, pursuant to Section 9.9;
(f) by Purchaser if the FCC makes a determination under 47 CFR
73.3555 promulgated under the Communications Act of 1934, as amended, that
precludes a grant of the FCC Xxxxxxxx Application; provided, however, that
Purchaser gives Seller notice of such termination by Purchaser within ten (10)
days after public notice of such determination.
14.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either or
both Purchaser and/or Seller pursuant to Sections 9.9 or 14.1 hereof, prompt
written notice thereof shall forthwith be given to the other party, and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned without further action by any of the parties hereto, but subject to
and without limiting any other rights of the parties specified herein in the
event a party is in default or breach in any material respect of its obligations
under this Agreement. If this Agreement is terminated as provided herein, all
filings, applications and other submissions relating to the transactions
contemplated hereby as to which termination has occurred shall, to the extent
practicable, be withdrawn from the agency or other Person to which such filing
is made.
44
(b) If this Agreement is terminated pursuant to Sections
14.1(b), 14.1(d), 14.1(e), or 14(f), the payment made by Purchaser pursuant to
Section 3.1(1) shall be returned to Purchaser. If this Agreement is terminated
pursuant to Section 14.1(d) and Seller shall be in breach in any material
respect of its representations, warranties, covenants, agreements, or
obligations set forth in this Agreement, which breach has not been cured by
Seller within thirty (30) days after notice to Seller by Purchaser, then and in
that event, in recognition of the unique character of the property to be sold
hereunder, and the damages which Purchaser will suffer in the event of a
termination of this Agreement caused by a breach by Seller, Purchaser shall have
the right to pursue all remedies available hereunder at law or in equity,
including, without limitation, the right to seek specific performance and/or
monetary damages. Seller hereby waives any defense that Purchaser has an
adequate remedy at law for such breach of this Agreement by Seller.
(c) If this Agreement is terminated pursuant to Section
14.1(c) and Purchaser shall be in breach in any material respect of its
representations, warranties, covenants, agreements, or obligations set forth in
this Agreement, which breach has not been cured by Purchaser thirty (30) days
after notice to Purchaser by Seller then and in that event, Seller shall have
the right to retain the amount delivered by Purchaser pursuant to Section
3.1(1), plus interest earned thereon, as liquidated damages, and as the sole and
exclusive remedy of Seller as a consequence of Purchaser's default (which
aggregate amount the parties agree is a reasonable estimate of the damages that
will be suffered by Seller as a result of the default by Purchaser and does not
constitute a penalty), the parties hereby acknowledging the inconvenience and
nonfeasability of otherwise obtaining an adequate remedy.
(d) If this Agreement is terminated pursuant to Section
14.1(a), the payment made by Purchaser pursuant to Section 3.1(1) shall be
returned to Purchaser.
(e) In the event of a default by either party that results in
a lawsuit or other proceeding for any remedy available under this Agreement, the
prevailing party shall be entitled to reimbursement from the other party of its
reasonable legal fees and expenses, whether incurred in arbitration, at trial,
or on appeal.
45
SECTION 15
NOTICES
All notices, requests, consents, payments, demands, and other
communications required or contemplated under this Agreement shall be in writing
and (a) personally delivered or sent via telecopy (receipt confirmed and
followed promptly by delivery of the original), or (b) sent by Federal Express
or other nationally recognized overnight delivery service (for next Business Day
delivery), shipping prepaid, as follows:
If to Purchaser to:
Mr. Xxxxx Xxxxx
President
Xxxxxxxx Communications, Inc.
00000 Xxxxxx Xxx Xxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx Communications, Inc.
00000 Xxxxxx Xxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxx & Xxxxxxxx, P.A.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esquire
Telephone: (000) 000-0000
Fax: (000) 000-0000
46
with a copy to (which shall not constitute notice):
Xxxx Xxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxx X. Leader, Esquire
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Seller to:
Xxxxxx Xxxxx
c/o Grant Television Inc.
000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Company to:
Grant Television Inc.
000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy in the case of Seller or the Company to (which
shall not constitute notice):
Xxxxxxxxx Xxxxxx Xxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 000000-0000
Attn: Xxxxxxx Xxxxxx, Esquire
Telephone: (000) 000-0000
Fax: (000) 000-0000
47
with a copy in the case of Seller or the Company to (which
shall not constitute notice):
Ober, Kaler, Xxxxxx & Xxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx Xxxxxx, Esquire
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other Persons or addresses as any Person may request by notice given
as aforesaid. Notices shall be deemed given and received at the time of personal
delivery or completed telecopying, or, if sent by Federal Express or such other
overnight delivery service one Business Day after such sending.
SECTION 16
MISCELLANEOUS
16.1. HEADINGS. The headings contained in this Agreement (including,
but not limited to, the titles of the Schedules and Exhibits hereto) have been
inserted for the convenience of reference only, and neither such headings nor
the placement of any term hereof under any particular heading shall in any way
restrict or modify any of the terms or provisions hereof. Terms used in the
singular shall be read in the plural, and vice versa, and terms used in the
masculine gender shall be read in the feminine or neuter gender when the context
so requires.
16.2. SCHEDULES AND EXHIBITS. All Schedules, Annexes and Exhibits
attached to this Agreement constitute an integral part of this Agreement as if
fully rewritten herein. The inclusion of any fact or item on a Schedule
referenced by a particular section of this Agreement shall, should the existence
of the fact or item or its contents be relevant to any other Section, be deemed
to be disclosed with respect to such other Section whether or not an explicit
cross-reference appears in the Schedules, if such relevance is readily apparent
from examination of such Schedules.
48
16.3. EXECUTION IN COUNTERPARTS. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
16.4. ENTIRE AGREEMENT. This Agreement, the Annexes, Schedules,
Exhibits, and other documents to be delivered hereunder and thereunder
constitute the entire understanding and agreement between the parties hereto
concerning the subject matter hereof. All negotiations and writings between the
parties hereto are merged into this Agreement, and there are no representations,
warranties, covenants, understandings, or agreements, oral or otherwise, in
relation thereto between the parties other than those incorporated herein or to
be delivered hereunder.
16.5. GOVERNING LAW. This Agreement is to be delivered in and shall be
construed in accordance with and governed by the laws of the State of New York
without giving effect to conflict of laws principles.
16.6. MODIFICATION. This Agreement cannot be modified or amended except
in writing signed by each of the Purchaser and Seller.
16.7. SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights and obligations hereunder shall be assigned, delegated, sold,
transferred, sublicensed, or otherwise disposed of by operation of law or
otherwise, without the prior written consent of each of the other parties
hereto; provided, however, that Purchaser may assign its rights and obligations
hereunder to one or more subsidiaries so long as Purchaser is not relieved of
its obligations hereunder. In the event of such permitted assignment or other
transfer, all of the rights, obligations, liabilities, and other terms and
provisions of this Agreement shall be binding upon, inure to the benefit of, and
be enforceable by and against, the respective successors and assigns of the
parties hereto, whether so expressed or not.
16.8. WAIVER. Any waiver of any provision hereof (or in any related
document or instrument) shall not be effective unless made expressly and in a
writing executed in the name of the party sought to be charged. The failure of
any party to insist, in any one or more instances, on performance of any of the
terms or conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant, or condition, but the obligations of the parties with
respect hereto shall continue in full force and effect.
49
16.9. SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding, and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding or unenforceable in its entirety or partially or as to any party, for
any reason, and if such provision cannot be changed consistent with the intent
of the parties hereto to make it fully legal, valid, binding and enforceable,
then such provisions shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall not in any way be affected or impaired, but
shall remain in full force and effect.
16.10. ANNOUNCEMENTS. From the date of this Agreement, all public
announcements relating to this Agreement or the transactions contemplated hereby
will be made only as agreed upon jointly by the parties hereto, except that
nothing herein shall prevent Seller or Purchaser or any Affiliate thereof from
making any disclosure in connection with the transactions contemplated by this
Agreement if (and to the extent) required by applicable law as a result of its,
or its Affiliate's, being a public company, provided that prior notice of such
disclosure is given to the other party hereto.
16.11. SPECIFIC PERFORMANCE. Seller acknowledges that Purchaser will
have no adequate remedy at law if Seller fails to perform his obligations to
consummate the sale of Stock contemplated under this Agreement. In such event,
Purchaser shall have the right, in addition to any other rights or remedies it
may have, to specific performance of this Agreement.
16.12 THIRD PARTY BENEFICIARIES. Nothing expressed or referred to in
this Agreement shall be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
16.13 INTERPRETATION. The Purchaser and Seller acknowledge and agree
that the preparation and drafting of this Agreement and the Exhibits, Annexes,
and Schedules hereto are the result of the efforts of all parties to this
Agreement, and every covenant, term, and provision of this Agreement shall be
construed according to its fair meaning and shall not be construed against any
particular party as the drafter of such covenant, term, and/or provision.
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[SIGNATURE PAGE TO FOLLOW -
PAGE LEFT INTENTIONALLY BLANK]
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first written above.
PURCHASER: SELLER:
XXXXXXXX COMMUNICATIONS,
INC.
By: _____________________________ _________________________________
Title: _____________________________ Xxxxxx Xxxxx,
Sole Stockholder of Grant
Television, Inc.
THE COMPANY:
GRANT TELEVISION INC.
By: _____________________________
Title: _____________________________
52
ANNEX 1
DEFINITIONS
As used in the attached Stock Purchase Agreement, the following terms
shall have the corresponding meaning set forth below:
"Accounts Receivable" has the meaning set forth in Section 5.2t.
"Acrodyne" has the meaning set forth in Section 3.1(7).
Affiliate" of, or a Person "Affiliated" with, a specified Person, means
a Person who directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Person
specified.
"Agreement" has the meaning set forth in the preamble.
"Balance Sheet Date" has the meaning set forth in Section 5.2i(viii).
"Benefit Arrangement" means any benefit arrangement, obligation, or
practice, whether or not legally enforceable, to provide benefits (other than
merely as salary or under a Benefit Plan), as compensation for services
rendered, to present or former directors, employees, agents, or independent
contractors, including, but not limited to, employment or consulting agreements,
severance agreements or pay policies, stay or retention bonuses or compensation,
executive or incentive compensation programs or arrangements, sick leave,
vacation pay, plant closing benefits, salary continuation for disability,
workers' compensation, retirement, deferred compensation, bonus, stock option or
purchase plans or programs, tuition reimbursement or scholarship programs,
employee discount programs, meals, travel, or vehicle allowances, any plans
subject to Code Section 125, and any plans providing benefits or payments in the
event of a change of control, change in ownership or effective control 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.
"Benefit Plan" has the meaning given in ERISA Section 3(3), together
with plans or arrangements that would be so defined if they were not (i)
otherwise exempt from ERISA by that or another section, (ii) maintained outside
the United States, or (iii) individually negotiated or applicable only to one
person.
53
"Business" means the business of owning and operating the Station.
"Business Day" means any day on which banks in New York City are open
for business.
"CERCLA" has the meaning set forth in Section 5.2q of the Agreement.
"Closing" has the meaning set forth in Section 4 of the Agreement.
"Closing Date" has the meaning set forth in Section 4 of the Agreement.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Company" has the meaning set forth in the recitals to the Agreement.
"Company Benefit Arrangement" means any Benefit Arrangement the Company
or any Related Employer sponsors or maintains or with respect to which the
Company or any Related Employer has or may have any current or future liability
(whether actual, contingent, with respect to any of its assets or otherwise), in
each case with respect to any present or former directors, officers, or
employees of or service providers to the Company or any Related Employer.
"Company's Knowledge" means the actual knowledge of Xxxxxx Xxxxx, Xxxx
Xxxx, Xxxx Xxxxxxxx, Xxxx Driespul, Xxxxx Xxxxx, Xxxx Xxxxxxxx, and Xxxx Xxxxx.
"Company's Lenders" means those Persons set forth on Annex 6.
"Company Plan" means any Benefit Plan that the Company or any Related
Employer maintains or has previously maintained or to which the Company or any
Related Employer is obligated to make payments or has or may have any liability,
in each case with respect to any present or former employees of the Company or
any Related Employer.
"Contracts" means all contracts and consulting agreements, leases,
non-governmental licenses, and other agreements (other than Material Contracts),
whether written or oral, to which the Company is a party or that are binding
upon the Company and relate to or affect the Business or operations of the
Station as of the date of this Agreement.
54
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to lawfully and validly transfer
the Stock to Purchaser, to maintain the validity and effectiveness (without any
material default or violation of the terms thereof) of any Material Contract to
be transferred to Purchaser, to consummate the Xxxxx XX Spin-Off, or otherwise
to consummate the transactions contemplated by this Agreement.
"Current Assets" means, as of the Closing Date, the excess of (a)
current assets of the Company determined in accordance with GAAP, over, to the
extent included in (a) above, (b) the sum of (w) amounts due the Company under
trade agreements (x) prepaid financing costs related to the Company's debt
agreements, (y) film contract rights, and (z) amounts due from Seller or any
entity controlled by Seller.
"Current Liabilities" means, as of the Closing Date, the excess of (a)
the sum of (x) current liabilities of the Company determined in accordance with
GAAP, plus (y) the dollar value of any earned but unused vacation of any
employees of the Company (other than the Retained Employees) as of the Closing
Date, over, to the extent included in (a) above, (b) the sum of (w) amounts owed
by the Company under trade agreements, (x) accrued interest expense, (y) film
contracts payable, and (z) tax liabilities of the Company arising from the
consummation of the Xxxxx XX Spin-Off (including, without limitation, as the
result of issuance of the Note (as defined in the Grant APA). Notwithstanding
anything to the contrary contained herein, film contract payables shall not be a
reduction in the determination of the Company's current liabilities to the
extent the Company is not current in its film payment obligations.
"Deposit Escrow Agreement" has the meaning set forth in Section 3.1 of
the Agreement.
"Environment" means any surface or subsurface physical medium or
natural resource, including air, land, soil (surface or subsurface), surface
waters, ground waters, wetlands, stream and river sediments, rock and biota.
55
"Environmental Laws" means any federal, state, or local law,
legislation, rule, regulation, ordinance or code of the United States or any
subdivision thereof relating to the injury to, or the pollution or protection of
the Environment.
"Environmental Liability" means any loss, liability, damage, cost or
expense arising under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules issued thereunder, or any successor law.
"ERISA Affiliate" means any person or entity that, together with the
entity referenced, would be or was at any time treated as a single employer
under Code Section 414 or ERISA Section 4001 and any general partnership of
which the entity is or has been a general partner.
"Excluded Assets" has the meaning set forth in Section 2.5.
"FCC" has the meaning set forth in the recitals to the Agreement.
"FCC Application" means the application requesting the approval and
consent of the FCC to the assignment of the FCC Licenses to Xxxxx XX.
"FCC Licenses" has the meaning set forth in the recitals of the
Agreement.
"FCC Rules and Regulations" has the meaning set forth in Section 5.2g
of the Agreement.
"FCC Xxxxxxxx Application" shall mean the FCC Application filed by
Xxxxx XX and New York Television, Inc. (or such other subsidiary or designee of
Purchaser) pursuant to the Xxxxx XX APA.
"Financial Statements" means the audited balance sheet, statement of
operations and accumulated deficit, and statement of cash flow for the Company
for the period ended December 31, 1998, the draft audited balance sheet, draft
statement of operations and accumulated deficit and draft statement of cash flow
for the Company for the period ended December 31, 1999, and unaudited balance
sheet for period ending June 30, 2000.
56
"GAAP" means generally accepted accounting principles, consistently
applied.
"Xxxxx XX" means that entity formed by Seller to which the FCC Licenses
and certain other assets as required by the FCC shall be transferred pursuant to
the FCC Applications.
"Xxxxx XX APA" has the meaning set forth in the recitals.
"Xxxxx XX Spin-Off" means the assignment by the Company to Xxxxx XX of
the FCC Licenses and the License Assets (as defined in the Xxxxx XX APA)
pursuant to the FCC Application in accordance with the distribution of the
membership interests of Xxxxx XX and the Redemption and Contribution Agreement
attached hereto as Exhibit J.
"Hazardous Substances" means petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, urea formaldehyde, asbestos or any
materials containing asbestos, and any materials or substances regulated or
defined as or included in the definition of "hazardous substances, "hazardous
materials," "hazardous constituents," "toxic substances," "pollutants,"
"contaminants" under any Environmental Laws.
"H-S-R Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnification Escrow Agreement" has the meaning set forth in Section
3.1 of the Agreement.
"Indemnification Escrow" has the meaning set forth in Section 3.1 of
the Agreement.
"Intellectual Property" means the trademarks, trademark registrations
and applications therefor, service marks, service xxxx registrations and
applications therefor, copyright registrations and applications therefor and
trade names that are owned by the Company.
"IRS" means the Internal Revenue Service.
"Leased Real Property" means all real property and all buildings and
other improvements thereon and appurtenant thereto leased or held by the Company
and used in the Business or operations of the Station.
"License Assets" has the meaning set forth in the recitals.
57
"Losses" means any loss, liability, damage, cost or expense (including,
without limitation, reasonable attorneys' fees and expenses) determined in each
case on an after-tax, after-insurance coverage basis in accordance with Section
10.3(b) hereof.
"Material Adverse Effect" shall mean any circumstance, change in, or
effect on the business or the Company that, individually or in the aggregate
with any other circumstances, changes in, or effects on, the business or the
Company, taken as a whole is, or could reasonably be expected to be, (a)
materially adverse to the business, operations, prospects, or the condition
(financial or otherwise) of the Station taken as a whole, or (b) could
materially adversely effect the ability of the Purchaser or the Company to
operate or conduct the Business in the manner in which it is currently operated
or conducted.
"Material Contract" means all Contracts (including any amendments or
modifications thereto), except: (a) agreements for the cash sale of advertising
time with a term of less than six (6) months, and (b) agreements which require
(i) expenditures less than Ten Thousand Dollars ($10,000.00) individually in any
calendar year, or (ii) expenditures less than Fifty Thousand Dollars
($50,000.00) in the aggregate.
"Multiemployer Plan" means any Benefit Plan described in ERISA Section
3(37).
"Net Financial Assets" means, as of the Closing Date, (a) Current
Assets minus (b) Current Liabilities.
"Owned Real Property" means all real property and all buildings and
other improvements thereon and appurtenant thereto owned by the Company and used
or useful in the Business or the operations of the Station.
"Pension Plan" means any Benefit Plan subject to Code Section 412 or
ERISA Section 302 or Title IV (including any Multiemployer Plan) or any
comparable plan not covered by ERISA.
58
"Permitted Encumbrances" means matters that do not prohibit the
continued existence and/or continued use (as presently used) or maintenance of
the buildings, structures or improvements presently located on the Leased Real
Property. Notwithstanding the foregoing, any matter shown on Schedule 5.2d shall
be considered a Permitted Encumberance.
"Person" means a natural person, a governmental entity, agency or
representative (at any level of government), a corporation, partnership, joint
venture or other entity or association, as the context requires.
"Phantom Shares" means those interests listed on Annex 3.
"Phantom Stockholders" means those Persons listed on Annex 3.
"Phase I Reports" has the meaning set forth in Section 5.2q(iii).
"Purchase Price" has the meaning set forth in Section 3.1 of the
Agreement.
"Purchaser" has the meaning set forth in the preamble to the Agreement.
"Purchaser's Bring-Down Certificate" has the meaning set forth in
Section 11.2 (a) of the Agreement.
"Purchaser's Knowledge" means the actual knowledge, after due inquiry,
of the officers of Purchaser.
"Purchase Order" has the meaning set forth in Section 11.1(k).
"Purchase Order Amount" has the meaning set forth in Section 11.1(k).
"Qualified Plan" means any Benefit Plan intended to meet the
requirements of Code Section 401(a), including any already terminated plan.
"Real Property Interests" means all interest in Owned Real Property and
Leased Real Property, including fee estates, leaseholds and subleaseholds,
purchase options, easements, licenses, rights to access and rights of way, and
all buildings and other improvements thereon and appurtenant thereto owned or
held by the Company that are used or useful in the Business or operations of the
Station, together with any additions, substitutions, and replacements thereof
and thereto between the date of this Agreement and the Closing Date.
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"Retained Employees" has the meaning set forth in Section 9.8(a).
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller's Bring-Down Certificate" has the meaning set forth in Section
11.1(a) of this Agreement.
"Station" has the meaning set forth in the recitals to the Agreement.
"Stock" has the meaning set forth in the recitals to the Agreement.
"Stock Purchase Warrants" means those warrants attached to this
Agreement as Exhibit F.
"Tax" or "Taxes" means all taxes, including, but not limited to, income
(whether net or gross), excise, property, sales, transfer, gains, gross
receipts, occupation, privilege, payroll, wage, unemployment, workers'
compensation, social security, occupation, use, value added, franchise, license,
severance, stamp, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), capital stock, withholding, disability, registration,
alternative or add-on minimum, estimated or other tax of any kind whatsoever
(whether disputed or not) imposed by any Tax Authority, including any related
charges, fees, interest, penalties, additions to tax or other assessments.
"Tax Authority" means any federal, national, foreign, state, municipal
or other local government, any subdivision, agency, commission or authority
thereof, or any quasi-governmental body or other authority exercising any taxing
or tax regulatory authority.
"Tax Liability" means any liability for a Tax.
"Taxable Period" means any taxable year or any other period that is
treated as a taxable year with respect to which any Tax may be imposed under any
applicable statute, rule or regulation.
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"Tax Proceeding" means any audit, examination, claim or other
administrative or judicial proceeding involving Taxes.
"Tax Returns" means all returns, reports, forms, estimates, information
returns and statements (including any related or supporting information) filed
or to be filed with any Tax Authority in connection with the determination,
assessment, collection or administration of any Taxes.
"Time Brokerage Agreement" means that agreement attached hereto as
Exhibit C.
"Warrant Holders" means those Persons listed on Annex 4.
"Working Capital Shortfall" has the meaning set forth in Section
3.2(i).
