EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of February 9, 2001
by and among
HARRISCOPE OF LOS ANGELES, INC.,
CERTAIN SHAREHOLDERS OF HARRISCOPE OF LOS ANGELES, INC.,
TELEMUNDO OF LOS ANGELES, INC.,
TELEMUNDO OF LOS ANGELES LICENSE CORP.
AND
TELEMUNDO COMMUNICATIONS GROUP, INC.
TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS................................................................................... 1
Section 1.1 "Accounts Receivable"...................................................................... 1
Section 1.2 "Action"................................................................................... 1
Section 1.3 "Active Employees"......................................................................... 1
Section 1.4 "Additional Harriscope Documents".......................................................... 1
Section 1.5 "Additional Purchaser's Documents"......................................................... 1
Section 1.6 "Adjustment Amount"........................................................................ 1
Section 1.7 "Adjustment Amount Calculation"............................................................ 2
Section 1.8 "Affiliate"................................................................................ 2
Section 1.9 "Affiliate Transaction".................................................................... 2
Section 1.10 "Agreement"............................................................................... 2
Section 1.11 "Assets".................................................................................. 2
Section 1.12 "Assumed Liabilities"..................................................................... 2
Section 1.13 "Assumed Plans"........................................................................... 2
Section 1.14 "Audit"................................................................................... 2
Section 1.15 "Balance Sheet"........................................................................... 2
Section 1.16 "Balance Sheet Date"...................................................................... 3
Section 1.17 "Xxxx of Sale"............................................................................ 3
Section 1.18 "BizNews"................................................................................. 3
Section 1.19 "Budget".................................................................................. 3
Section 1.20 "Business Records"........................................................................ 3
Section 1.21 "Business Taxes".......................................................................... 3
Section 1.22 "Capital Expenditures Adjustment"......................................................... 3
Section 1.23 "Closing"................................................................................. 3
Section 1.24 "Closing Balance Sheet"................................................................... 3
Section 1.25 "Closing Date"............................................................................ 3
Section 1.26 "COBRA"................................................................................... 3
Section 1.27 "COBRA Employees"......................................................................... 3
Section 1.28 "Code".................................................................................... 3
Section 1.29 "Conducted by Harriscope"................................................................. 4
Section 1.30 "Confidentiality Agreement"............................................................... 4
Section 1.31 "Contract"................................................................................ 4
Section 1.32 "Xxxxxx City Property".................................................................... 4
Section 1.33 "Damages"................................................................................. 4
Section 1.34 "Disclosure Schedule"..................................................................... 4
Section 1.35 "Displacement Permit"..................................................................... 4
Section 1.36 "Displacement Permit Expenditures"........................................................ 4
Section 1.37 "Disposition"............................................................................. 4
Section 1.38 "Domain Name Transfer Agreement".......................................................... 4
Section 1.39 "DTV Contracts"........................................................................... 4
Section 1.40 "Employee Liability"...................................................................... 4
Section 1.41 "Employee Loans".......................................................................... 4
Section 1.42 "Employee Plan"........................................................................... 4
Section 1.43 "Encino Property Lease"................................................................... 4
Section 1.44 "Environmental Claim"..................................................................... 5
Section 1.45 "Environmental Laws"...................................................................... 5
Section 1.46 "ERISA"..................................................................................... 5
Section 1.47 "ERISA Affiliate"........................................................................... 5
Section 1.48 "Escrow Agent".............................................................................. 5
Section 1.49 "Escrow Agreement".......................................................................... 5
Section 1.50 "Estimated Adjustment Amount"............................................................... 5
Section 1.51 "Excluded Assets"........................................................................... 5
Section 1.52 "Exhibit"................................................................................... 6
Section 1.53 "Expenses".................................................................................. 6
Section 1.54 "Extension Payment"......................................................................... 6
Section 1.55 "FCC"....................................................................................... 6
Section 1.56 "FCC Approval".............................................................................. 6
Section 1.57 "FCC Licenses".............................................................................. 6
Section 1.58 "Final Outside Date"........................................................................ 6
Section 1.59 "Financing"................................................................................. 6
Section 1.60 "FIRPTA Certificate"........................................................................ 6
Section 1.61 "GAAP"...................................................................................... 6
Section 1.62 "Governmental Entity"....................................................................... 6
Section 1.63 "Harriscope"................................................................................ 6
Section 1.64 "Harriscope Current Assets"................................................................. 6
Section 1.65 "Harriscope Intellectual Property".......................................................... 6
Section 1.66 "Harriscope's Financial Statements"......................................................... 6
Section 1.67 "Harriscope's Special Representations"...................................................... 7
Section 1.68 "Hemet Application"......................................................................... 7
Section 1.69 "Hemet Station"............................................................................. 7
Section 1.70 "Holdings Financial Statements"............................................................. 7
Section 1.71 "HSR Act"................................................................................... 7
Section 1.72 "Indemnified Party"......................................................................... 7
Section 1.73 "Indemnifying Party"........................................................................ 7
Section 1.74 "Independent Firm".......................................................................... 7
Section 1.75 "Infringe".................................................................................. 7
Section 1.76 "Instrument of Assignment and Assumption"................................................... 7
Section 1.77 "Intellectual Property"..................................................................... 7
Section 1.78 "Interest Rate"............................................................................. 7
Section 1.79 "Interim Outside Date"...................................................................... 7
Section 1.80 "Knowledge"................................................................................. 7
Section 1.81 "Laws"...................................................................................... 8
Section 1.82 "Leases".................................................................................... 8
Section 1.83 "Leased Real Property"...................................................................... 8
Section 1.84 "Liabilities"............................................................................... 8
Section 1.85 "Licenses".................................................................................. 8
Section 1.86 "Lien"...................................................................................... 8
Section 1.87 "Material Adverse Effect"................................................................... 8
Section 1.88 "Materials of Environmental Concern"........................................................ 8
Section 1.89 "Objection Notice".......................................................................... 8
Section 1.90 "Paid Programming".......................................................................... 8
Section 1.91 "Parent".................................................................................... 8
Section 1.92 "Permits"................................................................................... 8
Section 1.93 "Permitted Liens"........................................................................... 8
Section 1.94 "Person".................................................................................... 8
Section 1.95 "Phase II".................................................................................. 9
Section 1.96 "Plan"...................................................................................... 9
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Section 1.97 "Premises".................................................................................. 9
Section 1.98 "Power Increase Application"................................................................ 9
Section 1.99 "Profit Sharing Plan"....................................................................... 9
Section 1.100 "Program Contracts"........................................................................ 9
Section 1.101 "Pro Forma Adjustments".................................................................... 9
Section 1.102 "Proprietary Information & Technology"..................................................... 9
Section 1.103 "Purchase Price"........................................................................... 9
Section 1.104 "Purchase Price Allocation"................................................................ 9
Section 1.105 "Purchased Assets"......................................................................... 9
Section 1.106 "Purchaser"................................................................................ 10
Section 1.107 "Purchaser Parties"........................................................................ 10
Section 1.108 "Purchaser's Special Representations"...................................................... 10
Section 1.109 "Retained Liabilities"..................................................................... 10
Section 1.110 "SEC Reports".............................................................................. 11
Section 1.111 "Seller Parties"........................................................................... 11
Section 1.112 "Shareholders"............................................................................. 11
Section 1.113 "Software"................................................................................. 11
Section 1.114 "Special Contracts"........................................................................ 11
Section 1.115 "STA Request".............................................................................. 11
Section 1.116 "Station".................................................................................. 11
Section 1.117 "Sunset Boulevard Lease"................................................................... 11
Section 1.118 "Sunset Boulevard Property"................................................................ 11
Section 1.119 "Tax" or "Taxes"........................................................................... 11
Section 1.120 "Tax Records".............................................................................. 11
Section 1.121 "Tax Return"............................................................................... 12
Section 1.122 "Telemundo Licensee"....................................................................... 12
Section 1.123 "Termination List"......................................................................... 12
Section 1.124 "Third Party Claim"........................................................................ 12
Section 1.125 "Third Party Intellectual Property"........................................................ 12
Section 1.126 "Transferred Employee"..................................................................... 12
Section 1.127 "Transition Payments"...................................................................... 12
Section 1.128 "XxxXxxXxxx.xxx Preclosing Earned Equity".................................................. 12
Section 1.129 "Victorville Application".................................................................. 12
Section 1.130 "Victorville Station"...................................................................... 12
Section 1.131 "WARN Act"................................................................................. 12
Section 1.132 "Wilshire Property Lease".................................................................. 12
ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS.................................................................. 12
Section 2.1 Purchase and Sale of Purchased Assets........................................................ 12
Section 2.2 Consideration................................................................................ 13
Section 2.3 Time and Place of the Closing................................................................ 13
Section 2.4 Extension Payments........................................................................... 13
Section 2.5 Deliveries at the Closing.................................................................... 13
Section 2.6 Closing and Post-Closing Adjustment.......................................................... 14
Section 2.7 Accounts Receivable.......................................................................... 16
Section 2.8 Delivery of FCC Licenses to Purchaser Affiliate.............................................. 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF HARRISCOPE AND THE SHAREHOLDERS..................................... 16
Section 3.1 Organization and Qualification............................................................... 16
Section 3.2 Authority.................................................................................... 16
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Section 3.3 Subsidiaries; Equity Investments............................................................. 17
Section 3.4 No Conflicts................................................................................. 17
Section 3.5 Consents and Approvals....................................................................... 17
Section 3.6 Financial Statements; Operating Budget....................................................... 18
Section 3.7 Undisclosed Liabilities...................................................................... 19
Section 3.8 Absence of Certain Changes; Conduct of Business.............................................. 19
Section 3.9 Litigation................................................................................... 19
Section 3.10 Contracts and Commitments................................................................... 20
Section 3.11 Permits..................................................................................... 20
Section 3.12 Condition of Property; Assets Necessary to the Operation of Station......................... 21
Section 3.13 Tax Matters................................................................................. 21
Section 3.14 Employee Benefit Plans; ERISA............................................................... 21
Section 3.15 Labor and Personnel Matters................................................................. 22
Section 3.16 Environmental Matters....................................................................... 23
Section 3.17 Compliance with Laws........................................................................ 24
Section 3.18 The Station................................................................................. 24
Section 3.19 Title to Property........................................................................... 26
Section 3.20 Insurance................................................................................... 28
Section 3.21 Intellectual Property....................................................................... 29
Section 3.22 Customers and Suppliers..................................................................... 30
Section 3.23 Disclosure.................................................................................. 30
Section 3.24 Brokers and Finders......................................................................... 30
Section 3.25 No Condemnation or Expropriation............................................................ 30
Section 3.26 Affiliate Transactions...................................................................... 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................ 31
Section 4.1 Organization and Qualification............................................................... 31
Section 4.2 Authority.................................................................................... 31
Section 4.3 No Conflicts................................................................................. 31
Section 4.4 Consents and Approvals....................................................................... 31
Section 4.5 Disclosure................................................................................... 32
Section 4.6 Parent....................................................................................... 32
Section 4.7 FCC Qualification............................................................................ 32
ARTICLE V COVENANTS OF HARRISCOPE................................................................................ 32
Section 5.1 Conduct of Business Pending the Closing...................................................... 32
Section 5.2 Cooperation.................................................................................. 36
Section 5.3 Access to Information........................................................................ 36
Section 5.4 No Solicitation.............................................................................. 37
Section 5.5 Supplements to Schedule...................................................................... 37
Section 5.6 Operating Statements......................................................................... 37
Section 5.7 Bulk Sales................................................................................... 38
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS.................................................................... 38
Section 6.1 Records Retention............................................................................ 38
Section 6.2 Consummation of Transaction; Consents, Approvals and Filings................................. 38
Section 6.3 HSR Filings.................................................................................. 39
Section 6.4 FCC Filing................................................................................... 39
Section 6.5 Purchaser Financing.......................................................................... 39
Section 6.6 Further Assurances........................................................................... 39
Section 6.7 Public Statements............................................................................ 39
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Section 6.8 Employee and Labor Matters................................................................... 40
Section 6.9 Purchase Price Allocation.................................................................... 43
Section 6.10 Expenses.................................................................................... 43
Section 6.11 Transfer Taxes.............................................................................. 43
Section 6.12 Contract and Lease Consents................................................................. 43
Section 6.13 Specific Assets............................................................................. 44
Section 6.14 Auckland Agreements......................................................................... 44
ARTICLE VII CONDITIONS............................................................................................ 44
Section 7.1 Conditions to Each Party's Obligations to Effect the Transactions Contemplated Hereby........ 44
Section 7.2 Conditions to Obligations of Harriscope to Effect the Transactions Contemplated Hereby....... 45
Section 7.3 Conditions to Obligations of Purchaser to Effect the Transactions Contemplated Hereby........ 45
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.................................................................... 46
Section 8.1 Termination.................................................................................. 46
Section 8.2 Extension of Outside Date.................................................................... 47
Section 8.3 Effect of Termination........................................................................ 47
ARTICLE IX INDEMNIFICATION........................................................................................ 47
Section 9.1 Indemnification by Harriscope and the Shareholders........................................... 47
Section 9.2 Indemnification by Purchaser................................................................. 49
Section 9.3 Procedures Relating to Indemnification....................................................... 49
Section 9.4 Limitations on Indemnification............................................................... 50
Section 9.5 Treatment of Indemnification Payments........................................................ 51
ARTICLE X GENERAL PROVISIONS...................................................................................... 51
Section 10.1 Amendment................................................................................... 51
Section 10.2 Waiver...................................................................................... 52
Section 10.3 Notices..................................................................................... 52
Section 10.4 Interpretation.............................................................................. 53
Section 10.5 Entire Agreement; No Third-Party Beneficiaries.............................................. 54
Section 10.6 Counterparts................................................................................ 54
Section 10.7 Assignment.................................................................................. 54
Section 10.8 Severability................................................................................ 55
Section 10.9 Enforcement................................................................................. 55
Section 10.10 Other Remedies............................................................................. 55
Section 10.11 Governing Law.............................................................................. 55
Section 10.12 Consent to Jurisdiction.................................................................... 55
SCHEDULES
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Harriscope Disclosure Schedule
Schedule 6.7 Approved Statement
Schedule 6.8(f) COBRA Employees
Schedule 6.14 Letter Agreement
Schedule 7.3(b) Required Consents
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EXHIBITS
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Exhibit A-(a) Purchased Assets - FCC Licenses
Exhibit A-(b) Purchased Assets - Tangible Personal Property
Exhibit A-(c) Purchased Assets - Contracts and Leases
Exhibit A-(d) Purchased Assets - Intellectual Property
Exhibit B Form of Escrow Agreement
Exhibit C Form of Xxxx of Sale
Exhibit D-1 Form of Instrument of Assignment and Assumption (non-
FCC Licenses)
Exhibit D-2 Form of Instrument of Assignment and Assumption (FCC
Licenses)
Exhibit D-3 Domain Name Transfer Agreement
Exhibit E Form of Sunset Boulevard Lease
Exhibit F Form of Opinion of Counsel to Purchaser
Exhibit G-1 Form of Opinion of Counsel to Harriscope
Exhibit G-2 Form of Opinion of Special Counsel to Harriscope
Exhibit G-3 Form of Opinion of FCC Counsel to Harriscope
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of February 9, 2001, is by and
among Telemundo of Los Angeles, Inc., a Delaware corporation ("Purchaser"),
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Telemundo of Los Angeles License Corp., a Delaware corporation ("Telemundo
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Licensee"), Telemundo Communications Group, Inc. ("Parent"), Harriscope of Los
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Angeles, Inc., a California corporation ("Harriscope") and the Shareholders (as
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defined below).
WHEREAS, the Shareholders own, together with their spouses, children
and grandchildren, directly or indirectly through trusts, at least ninety-two
percent (92%) of the outstanding capital stock of Harriscope, which is the
licensee of and owns and operates station KWHY-TV, Channel 22, Los Angeles,
California, including KWHY-DT, Channel 42, Los Angeles, California, and KWHY-LP,
Channel 65, Santa Barbara, California; and
WHEREAS, Harriscope wishes to sell to Purchaser and Purchaser wishes
to purchase from Harriscope, all of the Purchased Assets (as defined herein) and
to assume the Assumed Liabilities (as defined herein), in each case, upon the
terms and subject to the conditions contained in this Agreement (as defined
herein).
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
Section 1.1 "Accounts Receivable" means all of the accounts
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receivable, notes and other obligations for payment of money to Harriscope
relating to the Purchased Assets (but shall not be deemed to include any
Employee Loans made to Transferred Employees).
Section 1.2 "Action" means any action, claim, suit, litigation,
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proceeding, arbitration, mediation or governmental or regulatory investigation
or audit.
Section 1.3 "Active Employees" has the meaning set forth in Section
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6.8(a) hereof.
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Section 1.4 "Additional Harriscope Documents" has the meaning set
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forth in Section 3.2 hereof.
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Section 1.5 "Additional Purchaser's Documents" has the meaning set
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forth in Section 4.2 hereof.
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Section 1.6 "Adjustment Amount" means the amount determined by adding
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(a) (i) the amounts paid or payable by Purchaser in respect of all Expenses
relating to the time period prior to the Closing Date, (ii) excess Extension
Payments paid by Purchaser in the final monthly payment in accordance with
Section 2.4 hereof, (iii) the cash equivalent of all Employee Liability
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1
credited to Transferred Employees by Purchaser in accordance with Section 6.8(b)
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hereof, (iv) any cash equivalent amount of the Profit Sharing Plan contribution
with respect to Transferred Employees required by Section 6.8(h) hereof, and (v)
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any Capital Expenditures Adjustment and subtracting therefrom (b) the amounts
paid or payable by Harriscope in respect of all Expenses relating to the time
period following the Closing Date.
Section 1.7 "Adjustment Amount Calculation" has the meaning set forth
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in Section 2.6(c) hereof.
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Section 1.8 "Affiliate" means, as to any specified Person, any other
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Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such specified Person. For
the purpose of this definition, "control," when used with respect to any
specified Person, means the power to direct or cause the direction of the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
Section 1.9 "Affiliate Transaction" means any Contract or other
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arrangement relating to the Station by, between or among Harriscope, Harriscope
Corporation, any of the shareholders or employees of Harriscope and/or any
Affiliate of any of them.
Section 1.10 "Agreement" means this Asset Purchase Agreement,
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including the Exhibits and Schedules attached hereto and incorporated herein by
this reference.
Section 1.11 "Assets" means any tangible or intangible asset
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(including Intellectual Property), both real and personal, property (including
personal property and fixtures), Contract, right or entitlement.
Section 1.12 "Assumed Liabilities" means and shall be limited to (a)
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obligations assumed by Purchaser in connection with Purchaser's assumption of
the Leases and the Contracts included in Exhibit A-(c) and other Liabilities
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specifically set forth on the Balance Sheet and related to the Purchased Assets,
increased or decreased in the ordinary course of business or as otherwise
permitted under this Agreement (other than any obligations arising out of a
breach by Harriscope with respect to such Leases and Contracts occurring prior
to the Closing Date), (b) Liabilities in respect of the Purchased Assets arising
from, or in connection with, the conduct of the Station or the ownership of the
Purchased Assets by Purchaser from and after the Closing Date, including real
and personal property taxes and assessments apportioned to Purchaser in
accordance with the method prescribed in Section 164(d) of the Code and (c)
Employee Liability; provided, however, that Assumed Liabilities shall not
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include any Retained Liabilities.
Section 1.13 "Assumed Plans" means, collectively, any health or dental
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plan listed on Section 3.14(c) of the Disclosure Schedule that is expressly
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assumed in writing by Purchaser prior to or concurrently with the Closing as
provided in Section 6.13 hereof.
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Section 1.14 "Audit" means any audit, assessment of Taxes,
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examination, investigation or other administrative proceeding by any taxing
authority, or appeal of such proceeding relating to Taxes.
Section 1.15 "Balance Sheet" has the meaning set forth in Section
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3.6(a) hereof.
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2
Section 1.16 "Balance Sheet Date" has the meaning set forth in Section
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3.6(a) hereof.
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Section 1.17 "Xxxx of Sale" has the meaning set forth in Section 2.5(a)(ii)
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hereof.
Section 1.18 "BizNews" means the operations of the English language
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financial news division of Harriscope and the internet site run by XxxXxxx0.xxx,
a division of Harriscope (both of which ceased operations in December 2000) and
XxxXxxx0.xxx, LLC, a California limited liability company that is inactive and
in the process of being dissolved and any other English language business news
service produced by Harriscope or the Station, including any broadcast of such
service on any of the Station's channels (or any other channel pursuant to a
time brokerage agreement).
Section 1.19 "Budget" has the meaning set forth in Section 3.6(d) hereof.
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Section 1.20 "Business Records" has the meaning set forth in Section 6.1
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hereof.
Section 1.21 "Business Taxes" means all Taxes relating to the operation of
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the Station and any Purchased Assets used in connection therewith (including
real and personal property taxes and assessments) and shall not include any
corporate income, franchise or similar taxes of Harriscope.
Section 1.22 "Capital Expenditures Adjustment" means any number determined
---------------------------------
by adding (A) any positive number determined by subtracting (i) the actual
amount paid by Harriscope from January 1, 2001 to and including the Closing Date
for capital expenditures (other than the Displacement Permit Expenditures and
payments made to Thomcast pursuant to the DTV Contracts) from (ii) the product
obtained by multiplying $300,000 by a fraction, the numerator of which is the
number of days beginning January 1, 2001 up to and including the Closing Date
and the denominator of which is 365, (B) any positive number determined by
subtracting the actual amount paid by Harriscope from January 1, 2001 to and
including the Closing Date for Displacement Permit Expenditures from $116,000
and (C) any positive number determined by subtracting the actual amount paid by
Harriscope from the date hereof to and including the Closing Date to Thomcast
pursuant to the DTV Contracts from $250,000.
Section 1.23 "Closing" has the meaning set forth in Section 2.3 hereof.
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Section 1.24 "Closing Balance Sheet" has the meaning set forth in Section
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2.6(c) hereof.
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Section 1.25 "Closing Date" has the meaning set forth in Section 2.3
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hereof.
Section 1.26 "COBRA" has the meaning set forth in Section 3.14(c) hereof.
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Section 1.27 "COBRA Employees" has the meaning set forth in Section 6.8(f)
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hereof.
Section 1.28 "Code" means the Internal Revenue Code of 1986, as amended,
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and the regulations of the Internal Revenue Service thereunder.
3
Section 1.29 "Conducted by Harriscope" means as presently conducted by
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Harriscope and as proposed or contemplated to be conducted by Harriscope after
the Closing Date if Harriscope did not consummate the transactions contemplated
by this Agreement.
Section 1.30 "Confidentiality Agreement" means that certain Confidentiality
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Agreement, dated as of November 27, 2000, by and between Parent and Harriscope.
Section 1.31 "Contract" means any contract, agreement, commitment,
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indenture, lease, note, bond, mortgage, license, plan, arrangement (including
film and program licenses).
Section 1.32 "Xxxxxx City Property" means the fee interest in the land,
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buildings and equipment owned by Harriscope located at 8777 to 0000 Xxxxxxxxxx
Xxxx., Xxxxxx Xxxx, Xxxxxxxxxx.
Section 1.33 "Damages" has the meaning set forth in Section 9.1 hereof.
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Section 1.34 "Disclosure Schedule" means the Schedule prepared by
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Harriscope disclosing the information as referenced in the various Sections of
the Agreement.
Section 1.35 "Displacement Permit" has the meaning set forth in Section
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5.1(g) hereof.
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Section 1.36 "Displacement Permit Expenditures" means any capital
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expenditures related to the installation of the transmitter, antenna and related
equipment as contemplated by the Displacement Permit.
Section 1.37 "Disposition" has the meaning set forth in Section 5.4 hereof.
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Section 1.38 "Domain Name Transfer Agreement" has the meaning set forth in
--------------------------------
Section 2.5(a)(v) hereof.
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Section 1.39 "DTV Contracts" means Proposal No. CDS-1909-100599 dated as of
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October 5, 1999 by and between Thomcast and Harriscope, as amended by that
certain letter from Xxxxx Xxxxxxxx of Thomcast dated as of September 15, 2000
and Proposal No. CDS-1975-120399 dated as of December 9, 1999 by and between
Thomcast and Harriscope.
Section 1.40 "Employee Liability" has the meaning set forth in Section
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6.8(b) hereof.
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Section 1.41 "Employee Loans" means any loans made by Harriscope to any
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employees of Harriscope whose employment is in connection with operation of the
Station.
Section 1.42 "Employee Plan" has the meaning set forth in Section 6.8(b)
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hereof.
Section 1.43 "Encino Property Lease" means the lease arrangement between
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Harriscope and Xxxxxxxx, Xxxxxxxx & Xxxxxx, XX relating to the real property
located at 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxxxxxxx.
4
Section 1.44 "Environmental Claim" has the meaning set forth in Section
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3.16(c) hereof.
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Section 1.45 "Environmental Laws" has the meaning set forth in Section
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3.16(a) hereof.
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Section 1.46 "ERISA" means the Employee Retirement Income Security Act of
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1974, as amended, and the rules and regulations promulgated thereunder.
Section 1.47 "ERISA Affiliate" means any trade or business, whether or not
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incorporated, that together with Harriscope would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
Section 1.48 "Escrow Agent" has the meaning set forth in Section 2.2(b)
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hereof.
Section 1.49 "Escrow Agreement" has the meaning set forth in Section 2.2(b)
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hereof.
Section 1.50 "Estimated Adjustment Amount" has the meaning set forth in
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Section 2.6(a) hereof.
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Section 1.51 "Excluded Assets" means (a) the Harriscope Current Assets, (b)
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with respect to Harriscope, its (i) corporate charter, (ii) qualifications to
conduct business as a foreign corporation, (iii) arrangements with registered
agents relating to foreign qualifications, (iv) taxpayer and other
identification numbers, (v) seals, (vi) minute books, (vii) stock transfer
books, (viii) blank stock certificates, and (ix) other documents relating to the
organization, maintenance, and existence of the entity as a corporation, (c) all
claims, refunds, causes of action, choses in action, rights of recovery, rights
of set-off and rights of recoupment relating to the Taxes of Harriscope (other
than claims, refunds, causes of action, choses in action, rights of recovery,
rights of set-off and rights of recoupment relating to the Business Taxes of
Harriscope apportioned to Purchaser in accordance with the method prescribed in
Section 164(d) of the Code), (d) any collective bargaining agreement and the
employment agreements listed in Section 1.51(d) of the Disclosure Schedule, (e)
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all Tax Returns (other than Tax Returns related to Business Taxes) filed by
Harriscope and associated Tax Records (other than Tax Records related to
Business Taxes), (f) the vehicle listed in Section 1.51(f) of the Disclosure
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Schedule, (g) the assets used solely in connection with the operation of BizNews
listed in Section 1.51(g) of the Disclosure Schedule and any accounts receivable
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owed to BizNews, (h) the Sunset Boulevard Property and the Contracts appurtenant
thereto that are listed in Section 1.51(h) of the Disclosure Schedule, (i) the
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Xxxxxx City Property, the Encino Property Lease, the Wilshire Property Lease and
all prepaid expenses and deposits related thereto, (j) any Affiliate
Transaction, (k) any of the rights of Harriscope under this Agreement (or under
any other agreement between or among Harriscope, Purchaser, Telemundo Licensee
and/or Parent entered into on or after the date of this Agreement), (l) the
XxxXxxXxxx.xxx Preclosing Earned Equity, (m) Employee Loans related to any
employee of Harriscope who is not a Transferred Employee, (n) the insurance
policies set forth in Section 3.20 of the Disclosure Schedule and all prepaid
------------
expenses and deposits related thereto; provided that Purchaser may, at its
--------
option, elect to assume any of Harriscope's insurance policies relating to
worker compensation if Purchaser reimburses Harriscope for the prepaid expenses
and deposits related thereto; (o) any releases, settlements or Contract rights
entered into by or for the benefit of Harriscope that relate to Contracts not
included in the Purchased Assets, and (p) the Assets of Harriscope set forth in
Section 1.51(p) of the Disclosure Schedule.
---------------
5
Section 1.52 "Exhibit" means any exhibit referenced in this Agreement.
---------
Section 1.53 "Expenses" means all expenses arising from the operation of
----------
the Station and in respect of the Purchased Assets, including business and
license fees, utility charges, Business Taxes, property and equipment rentals,
applicable copyright or other fees, sales and services charges and payments in
respect of television programs (or amortization thereof in accordance with GAAP)
and similar prepaid and deferred items; provided that in no event shall Expenses
--------
be deemed to include expenses arising from the operation of the Excluded Assets.
Section 1.54 "Extension Payment" has the meaning set forth in Section 2.4
------------------- -----------
hereof.
Section 1.55 "FCC" means the Federal Communications Commission.
-----
Section 1.56 "FCC Approval" means the prior consent and approval of the FCC
--------------
(which consent shall be deemed received upon a preliminary order or decision
from the FCC that grants all consents or approvals required under the
Communications Act of 1934, as amended, and the regulations promulgated by the
FCC whether or not any appeal or request for reconsideration or review of such
order is pending).
Section 1.57 "FCC Licenses" has the meaning set forth in Section 1.105(a)
-------------- ----------------
hereof.
Section 1.58 "Final Outside Date" means December 31, 2001.
--------------------
Section 1.59 "Financing" means any arrangements made by Purchaser to
-----------
finance the transactions contemplated hereby.
Section 1.60 "FIRPTA Certificate" has the meaning set forth in Section
-------------------- -------
7.3(e) hereof.
------
Section 1.61 "GAAP" means United States generally accepted accounting
------
principles.
Section 1.62 "Governmental Entity" means any court, administrative agency
---------------------
or commission or other governmental authority or instrumentality, whether
domestic (local, state or federal) or foreign.
Section 1.63 "Harriscope" has the meaning set forth in the first
------------
introductory paragraph to this Agreement.
Section 1.64 "Harriscope Current Assets" means all (i) cash and cash
---------------------------
equivalents of Harriscope, (ii) all marketable securities of Harriscope, (iii)
Accounts Receivable, and (iv) all bank accounts maintained by Harriscope.
Section 1.65 "Harriscope Intellectual Property" has the meaning set forth
----------------------------------
in Section 3.21(a) hereof.
---------------
Section 1.66 "Harriscope's Financial Statements" has the meaning set forth
-----------------------------------
in Section 3.6(a) hereof.
--------------
6
Section 1.67 "Harriscope's Special Representations" has the meaning set
--------------------------------------
forth in Section 9.4(a) hereof.
--------------
Section 1.68 "Hemet Application" has the meaning set forth in Section
------------------- -------
5.1(h) hereof.
------
Section 1.69 "Hemet Station" has the meaning set forth in Section 5.1(h)
--------------- --------------
hereof.
Section 1.70 "Holdings Financial Statements" has the meaning set forth in
-------------------------------
Section 4.6 hereof.
-----------
Section 1.71 "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
---------
act of 1976, as amended.
Section 1.72 "Indemnified Party" has the meaning set forth in Section 9.3
------------------- -----------
hereof.
Section 1.73 "Indemnifying Party" has the meaning set forth in Section 9.3
-------------------- -----------
hereof.
Section 1.74 "Independent Firm" has the meaning set forth in Section
------------------ -------
2.6(c)(ii) hereof.
----------
Section 1.75 "Infringe" has the meaning set forth in Section 3.21(c)
---------- ---------------
hereof.
Section 1.76 "Instrument of Assignment and Assumption" has the meaning set
-----------------------------------------
forth in Section 2.5(a)(iii) hereof.
-------------------
Section 1.77 "Intellectual Property" means, collectively and individually,
-----------------------
the following: all United States, foreign, international and state (a) patents
and patent applications, industrial design registrations, certificates of
invention and utility models, and similar rights; (b) trademarks, service marks,
and trademark or service xxxx registrations and applications, trade names,
Internet domain names and key words, logos, designs, slogans, and general
intangibles of like nature, together with all goodwill related to the foregoing;
(c) copyrights, copyright registrations, renewals and applications for
copyrights, including, for the Software; (d) Software, technology, databases,
inventions, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, data, models and methodologies
(collectively, "Proprietary Information & Technology"); and (e) rights of
------------------------------------
privacy and publicity, including but not limited to the names, likenesses,
voices and biographical information of real Persons.
Section 1.78 "Interest Rate" has the meaning set forth in Section 2.6(d)
--------------- --------------
hereof.
Section 1.79 "Interim Outside Date" means June 30, 2001.
----------------------
Section 1.80 "Knowledge" means (a) with respect to Harriscope, to the
-----------
knowledge of Xxxx X. Xxxxxx, Xx., Xxxx X. "Buzz" Xxxxxx, Jr., Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxx or Xxxxx Xxxxx, in each case after due
inquiry by such individual, and (b) with respect to any Person other than
Harriscope, to the knowledge of such Person after due inquiry.
7
Section 1.81 "Laws" means all laws, statutes, rules, regulations,
------
ordinances, judgments, rulings, orders, writs, injunctions or decrees of any
Governmental Entity and other pronouncements having the effect of law of any
Governmental Entity or any other laws or reported decisions of any court
thereof.
Section 1.82 "Leases" has the meaning set forth in Section 3.19(b) hereof.
-------- ---------------
Section 1.83 "Leased Real Property" means all real property used in
----------------------
connection with the operation of the Station that is the subject of a Lease,
excluding the Encino Property Lease and the Wilshire Property Lease.
Section 1.84 "Liabilities" means liabilities and obligations, secured or
-------------
unsecured, whether absolute, accrued, contingent, fixed or otherwise, whether
known or unknown and whether or not due, including liabilities for Taxes.
Section 1.85 "Licenses" has the meaning set forth in Section 3.18(c)
---------- ---------------
hereof.
Section 1.86 "Lien" means, with respect to any Asset, any lien, mortgage,
------
deed of trust, deed to secure debt, pledge, assignment, security interest,
charge, claim, levy, or other encumbrance of any kind in respect of such Asset,
whether or not filed, recorded or otherwise perfected under applicable Laws
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to give a lien or security
interest in any Asset and any filing of or agreement to file a financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
Section 1.87 "Material Adverse Effect" means a material adverse effect on
-------------------------
the business, assets, properties or condition (financial or otherwise) or
results of operations of the Station taken as a whole or on the ability of
Harriscope to satisfy its obligations hereunder.
Section 1.88 "Materials of Environmental Concern" has the meaning set forth
------------------------------------
in Section 3.16(a) hereof.
---------------
Section 1.89 "Objection Notice" has the meaning set forth in Section
------------------ -------
2.6(c)(i) hereof.
---------
Section 1.90 "Paid Programming" has the meaning set forth in Section 5.1(d)
------------------ --------------
hereof.
Section 1.91 "Parent" has the meaning set forth in the first introductory
--------
paragraph to this Agreement.
Section 1.92 "Permits" means governmental permits, certificates, consents,
---------
approvals, authorizations, orders, licenses, variances, franchises and other
similar indicia of authority issued or granted by any Governmental Entity.
Section 1.93 "Permitted Liens" has the meaning set forth in Section 3.19(a)
----------------- ---------------
hereof.
Section 1.94 "Person" means any individual, corporation, partnership,
--------
limited liability partnership, limited liability company, joint venture,
association, joint-stock company,
8
trust, unincorporated organization or Governmental Entity, or any agency or
political subdivision thereof, or any other entity.
Section 1.95 "Phase II" has the meaning set forth in Section 5.3 hereof.
---------- -----------
Section 1.96 "Plan" means each deferred compensation and each incentive
------
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
Section 3(2) of ERISA); each employment, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to be
contributed to by Harriscope or by any ERISA Affiliate, or to which Harriscope
or an ERISA Affiliate is party, whether written or oral, for the benefit of any
director, employee or former employee of the Station.
Section 1.97 "Premises" has the meaning set forth in Section 3.19(b)(iv)
---------- -------------------
hereof.
Section 1.98 "Power Increase Application" has the meaning set forth in
----------------------------
Section 3.18(g) hereof.
---------------
Section 1.99 "Profit Sharing Plan" has the meaning set forth in Section
--------------------- -------
6.8(h) hereof.
------
Section 1.100 "Program Contracts" means all Contracts pursuant to which the
-------------------
Station or Harriscope has program (or other performance) licenses or rights
under which the Station or Harriscope is authorized to broadcast film product or
programs on the Station or otherwise relating to videotapes, tapes, films, or
other recorded material broadcast or to be broadcast by the Station, including,
all cash and non-cash (barter) program Contracts.
Section 1.101 "Pro Forma Adjustments" has the meaning set forth in Section
----------------------- -------
3.6(c) hereof.
------
Section 1.102 "Proprietary Information & Technology" has the meaning set
--------------------------------------
forth in Section 1.77 hereof.
------------
Section 1.103 "Purchase Price" has the meaning set forth in Section 2.2
---------------- -----------
hereof.
Section 1.104 "Purchase Price Allocation" has the meaning set forth in
---------------------------
Section 6.9(a) hereof.
--------------
Section 1.105 "Purchased Assets" means all of the Assets of Harriscope
------------------
owned at the Closing Date and that are used or useful in the operation of the
Station as Conducted by Harriscope, except for the Excluded Assets. The
Purchased Assets shall include the following except to the extent of the
Excluded Assets:
(a) the licenses, Permits and authorizations issued by the FCC listed
in Exhibit A-(a), together with any applications pending therefor, any renewals,
-------------
extensions or modifications thereof and additions thereto as may occur in the
ordinary course of business between the date of this Agreement and the Closing
Date (collectively, the "FCC Licenses");
------------
9
(b) any tangible personal property related to the operation of the
station with a net book value of less than $5,000 and the tangible personal
property listed in Exhibit A-(b);
-------------
(c) the Contracts, Leases, other agreements, commitments, orders, and
other items related to the Station listed individually or by category in Exhibit
-------
A-(c), that remain in effect on the Closing Date;
-----
(d) all Intellectual Property related to the Station, including the
Intellectual Property listed in Exhibit A-(d), together with any additions or
-------------
modifications thereto made by Harriscope in the ordinary course of business
between the date of such Exhibit A-(d) and the Closing Date, and all right,
-------------
title and interest of Harriscope in and to the call letters "KWHY-TV" and the
Internet domain name, "xxxx.xxx", together with all goodwill associated
therewith. The parties further agree that, from and after the Closing Date,
neither Harriscope nor its Affiliates shall retain any right, title or interest
in, or otherwise use, the trademark KWHY or any trademarks related thereto,
employing any part or variation thereof or confusingly similar thereto;
(e) the originals or true and complete copies of all of the books,
records, accounts, files, logs, ledgers, journals, advertising material and
other documents (including an electronic or hard copy of such of the foregoing
as are stored electronically in computer data bases) used in connection with the
operation of the Station and the conduct of its business up to and including the
Closing Date; and
(f) all of Harriscope's goodwill in, and going concern value of, the
Station.
The Purchased Assets shall also include all Assets described above that are
acquired by Harriscope in the ordinary course of business on a basis consistent
with past practice or as otherwise specifically permitted under this Agreement
for use in connection with the Station between the date hereof and the Closing
Date (except to the extent such Assets would constitute Excluded Assets), but
shall exclude Assets of the type described above that are disposed of, sold or
consumed after the date hereof in the ordinary course of business on a basis
consistent with past practice or as otherwise specifically permitted under this
Agreement.
Section 1.106 "Purchaser" has the meaning set forth in the first
-----------
introductory paragraph to this Agreement.
Section 1.107 "Purchaser Parties" has the meaning set forth in Section 9.1
------------------- -----------
hereof.
Section 1.108 "Purchaser's Special Representations" has the meaning set
-------------------------------------
forth in Section 9.4(a) hereof.
--------------
Section 1.109 "Retained Liabilities" means (a) any and all Liabilities of
----------------------
Harriscope, any shareholder of Harriscope or any of its Affiliates relating to
or arising out of (i) the ownership of (A) the Purchased Assets or the operation
of the Station prior to the Closing Date (including any Liability relating to or
arising out of the Action filed by Auckland Entertainment, LLC on or about
December 12, 2000 against Harriscope and C-2 Entertainment, Inc. styled Auckland
--------
Entertainment, LLC v. Harriscope of Los Angeles, Inc., et al., Los Angeles
-------------------------------------------------------------
Superior Court Case No. BC241674) and (B) the Excluded Assets, (ii) other than
Employee Liability, the employment of employees (including part-time or casual
employees), including the
10
termination of any person's employment by Harriscope at any time on or prior to
the Closing Date, any Transition Payment and any Liabilities relating to any
Plan of Harriscope other than Liabilities under the Assumed Plans that arise
solely with respect to Transferred Employees and COBRA Employees on or after the
Closing Date, (iii) all real and personal property taxes and assessments
apportioned to Harriscope in accordance with the method prescribed in Section
164(d) of the Code, and (iv) any breach by Harriscope of any agreement occurring
prior to the Closing Date, including any breach of any Contract or Lease, and
(b) any and all bonuses or other amounts owed by Harriscope to Xxxx X. Xxxxxx,
Xx., Xxxx X. Xxxxxx, Xx., Harriscope Corporation or any shareholder or Affiliate
of Harriscope.
Section 1.110 "SEC Reports" has the meaning set forth in Section 4.6
----------- -----------
hereof.
Section 1.111 "Seller Parties" has the meaning set forth in
--------------
Section 9.2 hereof.
-----------
Section 1.112 "Shareholders" means Xxxxxx X. Xxxxxx and Xxxx X.
--------------
Xxxxxx, Sr.
Section 1.113 "Software" means any and all (a) computer programs and
--------
software, including any and all software implementations of algorithms, models
and methodologies, whether in source code, object code or other form, (b)
databases, compilations, and any other electronic data files, including any and
all collections of data, (c) descriptions, flow-charts, specifications, and (d)
any other documentation or other work product related to or used in connection
with any of the foregoing.
Section 1.114 "Special Contracts" has the meaning set forth in
-------------------
Section 3.18(b) hereof.
---------------
Section 1.115 "STA Request" has the meaning set forth in
-----------
Section 5.1(g) hereof.
-------------
Section 1.116 "Station" means KWHY-TV, Channel 22, Los Angeles,
-------
California, including KWHY-DT, Channel 42, Los Angeles, California, and KWHY-LP,
Channel 65, Santa Barbara, California, and any successor channels thereto, but
in no event shall the Station be deemed to include any assets or operations
related to BizNews.
Section 1.117 "Sunset Boulevard Lease" has the meaning set forth in
----------------------
Section 2.5(a)(iv) hereof.
------------------
Section 1.118 "Sunset Boulevard Property" means the fee interest in
-------------------------
the land and buildings owned by Harriscope located at 0000 Xxxxxx Xxxxxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx.
Section 1.119 "Tax" or "Taxes" means all taxes, charges, fees,
--------------
duties, levies, penalties or other assessments imposed by any federal, state,
local or foreign governmental authority, including income, gross receipts,
excise, property, sales, gain, use, license, custom duty, unemployment, capital
stock, transfer, franchise, payroll, withholding, social security, minimum
estimated, profit, gift, severance, value added, disability, premium, recapture,
credit, occupation, service, leasing, employment, stamp and other taxes, and
shall include interest, penalties or additions attributable thereto or
attributable to any failure to comply with any requirement regarding Tax
Returns.
Section 1.120 "Tax Records" has the meaning set forth in Section 6.1
----------- -----------
hereof.
11
Section 1.121 "Tax Return" means any return, declaration, report,
----------
claim for refund, or information return or statement relating to Taxes,
including any such document prepared on a consolidated, combined or unitary
basis and also including any schedule or attachment thereto, and including any
amendment thereof.
Section 1.122 "Telemundo Licensee" has the meaning set forth in the
------------------
first introductory paragraph to this Agreement.
Section 1.123 "Termination List" has the meaning set forth in
----------------
Section 6.8(g) hereof.
--------------
Section 1.124 "Third Party Claim" has the meaning set forth in
-----------------
Section 9.3(a) hereof.
--------------
Section 1.125 "Third Party Intellectual Property" has the meaning
---------------------------------
set forth in Section 3.21(a) hereof.
---------------
Section 1.126 "Transferred Employee" has the meaning set forth in
--------------------
Section 6.8(a) hereof.
--------------
Section 1.127 "Transition Payments" means any severance payments or
-------------------
stay bonuses made by Harriscope to employees of Harriscope.
Section 1.128 "XxxXxxXxxx.xxx Preclosing Earned Equity" means the
---------------------------------------
equity interest in XxxXxxXxxx.xxx received by Harriscope as consideration for
the sale of advertising time on the Station and earned prior to the Closing.
Section 1.129 "Victorville Application" has the meaning set forth in
-----------------------
Section 5.1(i) hereof.
--------------
Section 1.130 "Victorville Station" has the meaning set forth in
-------------------
Section 5.1(i) hereof.
--------------
Section 1.131 "WARN Act" means the Worker Adjustment and Retraining
--------
Notification Act of 1988, as amended.
Section 1.132 "Wilshire Property Lease" means the office lease
-----------------------
arrangement between Harriscope Corporation and Equity Office Properties relating
to the real property located at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx.
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS
Section 2.1 Purchase and Sale of Purchased Assets. Upon the terms
-------------------------------------
and subject to the satisfaction of the conditions contained in this Agreement,
at the Closing, Harriscope will sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser will purchase, acquire, accept and pay for, as
hereinafter provided, the Purchased Assets.
12
Section 2.2 Consideration.
--------------
(a) In consideration for the purchase by Purchaser of the
Purchased Assets, Purchaser shall assume the Assumed Liabilities and pay to
Harriscope on the Closing Date the sum of Two Hundred Thirty Nine Million
Dollars ($239,000,000) (the "Purchase Price"), plus or minus any Estimated
--------------
Adjustment Amount in accordance with Section 2.6 hereof. The Purchase Price
-----------
shall be paid as follows: (i) Ten Million Dollars ($10,000,000) to the Escrow
Agent in accordance with subparagraph (b) below, and (ii) the balance of the
Purchase Price by wire transfer of immediately available funds to such account
or accounts as Harriscope shall have designated at least two (2) business days
prior to the Closing Date. The Purchase Price shall be subject to further
adjustment as provided herein.
(b) At the Closing, Ten Million Dollars ($10,000,000) of
the Purchase Price will be deposited in an escrow account pursuant to an escrow
agreement, substantially in the form attached hereto as Exhibit B (the "Escrow
--------- ------
Agreement") to be entered into among Purchaser, Harriscope and State Street Bank
---------
and Trust Company of California, National Association, as escrow agent (the
"Escrow Agent"), to secure Harriscope's performance under this Agreement,
------------
including to secure the performance of provisions relating to post-Closing
adjustments provided for in Section 2.6 hereof and to secure the indemnification
-----------
provided for in Article IX.
Section 2.3 Time and Place of the Closing. Upon the terms and
-----------------------------
subject to the satisfaction of the conditions contained in this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
-------
take place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx
Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at 10:00 a.m., Los Angeles time, within
ten (10) business days following the satisfaction or waiver of the conditions
contained in Section 7.1 hereof (assuming all other conditions are satisfied on
-----------
or before the Closing Date), or at such other place, date or time as the parties
may mutually agree in writing. The date and time at which the Closing actually
occurs is hereinafter referred to as the "Closing Date."
------------
Section 2.4 Extension Payments. If the Closing Date has been
------------------
extended to the Final Outside Date pursuant to Section 8.2 hereof, Purchaser
-----------
shall make monthly payments in the amount of $1,992,000 to Harriscope as
extension payments (each, an "Extension Payment") in addition to (i.e., not
-----------------
applicable against) the Purchase Price until the earlier of the Closing or the
termination of this Agreement. Such payments shall be paid in advance beginning
on July 1, 2001. If the Closing occurs during any month for which an Extension
Payment has or will be made, such final monthly payment shall be prorated to the
date immediately prior to Closing. Regardless of whether the transactions
contemplated by this Agreement are consummated, to the extent not apportioned to
Purchaser pursuant to Section 2.6 hereof, any Extension Payments paid to
-----------
Harriscope by Purchaser shall remain the property of Harriscope.
Section 2.5 Deliveries at the Closing. At the Closing,
--------------------------
(a) Purchaser will deliver to Harriscope:
(i) a duly executed counterpart of the Escrow
Agreement;
(ii) duly executed counterparts of bills of sale in
substantially the form attached hereto as Exhibit C (the "Xxxx of Sale");
--------- ------------
13
(iii) duly executed counterparts of instruments of
assignment and assumption in substantially the forms attached hereto as
Exhibit D-1 and Exhibit D-2 (collectively, the "Instrument of Assignment
----------- ----------- ------------------------
and Assumption");
--------------
(iv) duly executed counterparts of a lease with
respect to the Sunset Boulevard Property in substantially the form attached
hereto as Exhibit E (the "Sunset Boulevard Lease");
--------- ----------------------
(v) a duly executed and notarized Registrant Name
Change Agreement in substantially the form attached hereto as Exhibit D-3
-----------
(the "Domain Name Transfer Agreement"); and
------------------------------
(vi) all other documents, instruments and writings
required to be delivered by Purchaser at or prior to the Closing Date
pursuant to this Agreement.
(b) Harriscope will deliver or cause to be delivered to
Purchaser:
(i) a duly executed counterpart of the Escrow
Agreement;
(ii) the books and records relating to the Station
and the Purchased Assets, including the Contracts included in the Purchased
Assets;
(iii) duly executed counterparts of the Xxxx of
Sale;
(iv) duly executed counterparts of the Sunset
Boulevard Lease;
(v) a duly executed counterpart of the Domain Name
Transfer Agreement;
(vi) duly executed counterparts of the Instrument
of Assignment and Assumption; and
(vii) all other documents, instruments and writings
required to be delivered by Harriscope at or prior to the Closing Date
pursuant to this Agreement.
Section 2.6 Closing and Post-Closing Adjustment.
------------------------------------
(a) Ten (10) business days prior to the Closing Date, Harriscope
in cooperation with Purchaser shall cause to be prepared and delivered to
Purchaser an estimate of the Adjustment Amount based on the date of the most
recent calendar month end balance sheet prepared by Harriscope (the "Estimated
---------
Adjustment Amount").
-----------------
(b) If the Estimated Adjustment Amount is a negative number,
such Estimated Adjustment Amount shall be paid in addition to the Purchase Price
paid by Purchaser on the Closing Date pursuant to Section 2.2(a) hereof. If the
--------------
Estimated Adjustment Amount is a positive number, such Estimated Adjustment
Amount shall be deducted from the Purchase Price paid by Purchaser on the
Closing Date pursuant to Section 2.2(a) hereof.
--------------
(c) As promptly as practicable after the Closing (but in no
event later than forty-five (45) days following the Closing Date), Purchaser in
cooperation with Harriscope shall cause to be prepared and delivered to
Harriscope a balance sheet of the Station as of the
14
Closing Date (the "Closing Balance Sheet") and a calculation of the Adjustment
---------------------
Amount (the "Adjustment Amount Calculation"), specifying in reasonable detail
-----------------------------
such calculation.
(i) Within thirty (30) days after delivery to Harriscope of
the Closing Balance Sheet and the Adjustment Amount Calculation, Harriscope
shall furnish to Purchaser a statement (the "Objection Notice") setting
----------------
forth in reasonable detail any objections it has to the Adjustment Amount
Calculation. At the time of delivery of Harriscope's Objection Notice, if
any, Harriscope shall pay to Purchaser or Purchaser shall pay to
Harriscope, as applicable, any net amount not disputed by Harriscope's
Objection Notice, in accordance with subparagraph (d) below. If no
Objection Notice is received by Purchaser within such 30-day period or if
Harriscope notifies Purchaser in writing that it accepts the Adjustment
Amount Calculation, then the Adjustment Amount Calculation shall be deemed
to have been accepted by Harriscope and shall become final and binding upon
the parties hereto.
(ii) If within twenty (20) days after the delivery of the
Objection Notice, Purchaser and Harriscope are unable to agree to an
Adjustment Amount and Adjustment Amount Calculation, the parties shall
engage a "big five" accounting firm (other than a "big five" accounting
firm that is then engaged to perform auditing services with respect to
either Purchaser or Harriscope) mutually acceptable to Purchaser and
Harriscope (the "Independent Firm") to resolve any disputes regarding the
----------------
Adjustment Amount or the Adjustment Amount Calculation. Purchaser and
Harriscope will direct the Independent Firm to render a determination
within thirty (30) days of its retention and Purchaser and Harriscope and
their respective agents will cooperate with the Independent Firm during its
engagement. The Independent Firm will consider only those issues related
to the Adjustment Amount or Adjustment Amount Calculation that Purchaser
and Harriscope have been unable to resolve. The determination of the
chosen Independent Firm will be conclusive and shall become final and
binding upon the parties hereto and any amounts owing as a result thereof
shall be paid in accordance with subparagraph (d) below. Harriscope and
Purchaser shall each pay one half of the fees and expenses of such
Independent Firm.
(d) If the amount arrived at by subtracting the Adjustment
Amount from the Estimated Adjustment Amount is a positive number, Purchaser
shall pay to Harriscope within five business days of the final determination of
the Adjustment Amount (or a portion thereof) in accordance with subparagraph (c)
above (by wire transfer of immediately available funds to one or more bank
accounts designated by Harriscope not less than two (2) days prior to the
relevant payment date) such amount with interest from the Closing Date through
the date of payment at the rate of interest announced as the prime rate by The
Chase Manhattan Bank, N.A. on the Closing Date (the "Interest Rate"). If the
-------------
amount arrived at by subtracting the Adjustment Amount from the Estimated
Adjustment Amount is a negative number, Harriscope shall pay to Purchaser within
five business days of the final determination of the Adjustment Amount (or a
portion thereof) in accordance with subparagraph (c) above (by wire transfer of
immediately available funds to one or more bank accounts designated by Purchaser
not less than two (2) days prior to the relevant payment date) such amount with
interest from the Closing Date through the date of payment at the Interest Rate.
(e) The adjustments pursuant to this Section 2.6 are intended to
-----------
apportion all Expenses (i) relating to time periods ending on or prior to the
Closing Date, to Harriscope and (ii) relating to time periods beginning after
the Closing Date, to Purchaser.
15
Section 2.7 Accounts Receivable. From and after the Closing,
--------------------
Purchaser shall remit to Harriscope the amounts actually collected or received
by Purchaser with respect to the Accounts Receivable for the period prior to the
Closing Date, net of reasonable out-of-pocket collection costs paid to any non-
affiliated third party, on a monthly basis, beginning on the 15/th/ day of the
first calendar month following the Closing and continuing thereafter on a
monthly basis by the 15th day of each following calendar month. Purchaser shall
not make any referral or compromise of any of the Accounts Receivable to a
collection agency or attorney for collection and shall not settle or adjust the
amount of any of the Accounts Receivable without the prior written consent of
Harriscope. Any amounts collected by Purchaser with respect to the Accounts
Receivable shall, unless an account debtor disputes an invoice or invoices in
writing, be applied to the oldest outstanding account. Purchaser will exercise
commercially reasonable best efforts to collect such Accounts Receivable, but
will not be required to institute collection or any other court proceedings.
Harriscope agrees that until any assignment of such right and obligation to
collect the Accounts Receivable back to Harriscope as set forth below, Purchaser
shall be solely responsible for seeking collection of such Accounts Receivable
and Harriscope shall not correspond with any debtors for the purpose of
collecting such Accounts Receivable or seek payment from any debtors of such
Accounts Receivable. In the event that any of the Accounts Receivable relating
to the Station for the period prior to the Closing Date have not been collected
within 120 days after the Closing Date, Purchaser shall assign to Harriscope the
right and obligation to collect such Accounts Receivable. The parties
acknowledge and agree that the Accounts Receivable are the property of
Harriscope and all amounts collected by Purchaser with respect thereto shall be
Harriscope's property.
Section 2.8 Delivery of FCC Licenses to Purchaser Affiliate.
------------------------------------------------
Harriscope, Purchaser and Telemundo Licensee hereby agree that at the closing
the FCC Licenses shall be assigned directly to Telemundo Licensee in lieu of
being assigned to Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HARRISCOPE AND THE
SHAREHOLDERS
Harriscope and the Shareholders, jointly and severally, represent and
warrant to Purchaser, Telemundo Licensee and Parent as follows:
Section 3.1 Organization and Qualification. Harriscope is a
-------------------------------
corporation duly organized, validly existing and in good standing under the Laws
of its jurisdiction, and has the requisite power and authority to own, lease and
operate its properties (including the Purchased Assets) and to carry on its
businesses (including the operation of the Station) as it is now being
conducted. Harriscope is duly qualified or licensed to do business and in good
standing in each jurisdiction in which Harriscope maintains an office.
Harriscope has delivered to Purchaser complete and accurate copies of its
articles of incorporation and bylaws.
Section 3.2 Authority. Each of Harriscope and the Shareholders
---------
has all requisite power and authority, corporate or otherwise, to execute and
deliver this Agreement and the other agreements, documents and instruments to be
executed and delivered by it pursuant hereto (the "Additional Harriscope
---------------------
Documents") and to consummate the transactions contemplated hereby and thereby.
---------
The execution and delivery of this Agreement and the Additional Harriscope
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate or
other necessary action on the part of Harriscope or the applicable Shareholder,
and no other proceedings,
16
corporate or otherwise, on the part of Harriscope or the Shareholders are
necessary to authorize the execution and delivery of this Agreement and the
Additional Harriscope Documents and the consummation by Harriscope and the
Shareholders of the transactions contemplated hereby and thereby. This Agreement
has been duly and validly executed and delivered by Harriscope and each
Shareholder, and, assuming the due authorization, execution and delivery hereof
by Purchaser, Telemundo Licensee and Parent, constitutes a valid and binding
agreement of Harriscope and each Shareholder, enforceable against Harriscope and
each Shareholder, in accordance with its terms, except as may be limited by (x)
bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or
hereafter in effect relating to or affecting creditors' rights generally, and
(y) general principles of equity, regardless of whether enforcement is
considered in a proceeding in equity or at law.
Section 3.3 Subsidiaries; Equity Investments. Harriscope does
--------------------------------
not own, directly or indirectly, any capital stock of any corporation or have
any direct or indirect equity or ownership interest of any kind in any Person,
other than the XxxXxxXxxx.xxx Preclosing Earned Equity. The Purchased Assets do
not include any capital stock of any corporation or any equity ownership
interest of any kind in any Person.
Section 3.4 No Conflicts.
-------------
(a) Other than obtaining the FCC Approval and complying
with the HSR Act, except as set forth in Section 3.4 of the Disclosure Schedule,
-----------
none of the execution and delivery by Harriscope or the Shareholders of this
Agreement or of any of the Additional Harriscope Documents, the consummation by
Harriscope or the Shareholders of the transactions contemplated hereby or
thereby or compliance by Harriscope or the Shareholders with any of the
provisions hereof or thereof will (i) conflict with or result in a breach of any
provision of the charter, bylaws or other constitutive or governing document of
Harriscope or the Shareholders, (ii) violate or conflict with, or result in a
breach of any provision of, constitute a default (or an event that with notice
or lapse of time or both would become a default) or give to any third party any
right of termination, cancellation, amendment or acceleration under, or result
in the creation of a Lien on any of the Purchased Assets, under any of the
terms, conditions or provisions of any Contract relating to the Purchased Assets
or the Station to which Harriscope or any of the Purchased Assets are bound, or
(iii) violate or conflict with any Law applicable to Harriscope, the
Shareholders, the Purchased Assets or the business of the Station.
(b) Harriscope hereby represents that as of the date
hereof other than pursuant hereto, it (i) has not entered into any agreement
relating to a Disposition, (ii) has not agreed to negotiate with any party with
respect to a Disposition and (iii) other than obtaining the FCC Approval and
complying with the HSR Act, except as set forth in Section 3.4 of the Disclosure
-----------
Schedule, is free of any and all legal constraints to pursue and consummate the
transactions contemplated by this Agreement with Purchaser.
Section 3.5 Consents and Approvals. Other than obtaining the
----------------------
FCC Approval and complying with the HSR Act and except as set forth in Section
-------
3.5 of the Disclosure Schedule, no consent, approval, authorization or Permit
---
of, or filing with or notification to, any Governmental Entity, or any other
Person is required to be made or obtained by Harriscope or the Shareholders by
virtue of their execution, delivery or performance of this Agreement or of any
of the Additional Harriscope Documents or to avoid the loss of any Permit, or to
avoid the violation, breach or termination of, or default under, or the creation
of any Lien (other than a Permitted Lien) on any of the Purchased Assets, or to
enable Purchaser to own the Purchased Assets and continue the lawful operation
of the business of the Station as Conducted by Harriscope.
17
Section 3.6 Financial Statements; Operating Budget.
--------------------------------------
(a) Section 3.6(a) of the Disclosure Schedule sets
--------------
forth complete and accurate copies of (i) the audited balance sheet of
Harriscope as of December 31, 1999 (the "Balance Sheet Date", and such audited
------------------
December 31, 1999 balance sheet, the "Balance Sheet"), the audited balance
-------------
sheets of Harriscope as of December 31, 1998 and December 31, 1997 and the
related audited statements of income, shareholders' equity and cash flows for
the respective years then ended, together with a true and correct copy of the
report on such audited information by Xxxxxxxxxx, Xxxxx & Company and all
letters from such accountants with respect to the results of such audits, (ii)
the unaudited balance sheets of Harriscope as of November 30, 2000 and December
31, 2000, and (iii) the unaudited statements of income for the eleven (11)
months ended November 30, 1999 and November 30, 2000 and for the years ended
December 31, 1999 and December 31, 2000 in comparative format (all of the
financial statements referred to in this Section 3.6(a) being hereinafter
collectively referred to as "Harriscope's Financial Statements").
---------------------------------
(b) Harriscope's Financial Statements, including the
notes thereto, have been prepared from and are in accordance with the books and
records of Harriscope. Harriscope's Financial Statements present fairly in all
material respects the financial position and results of operations and cash
flows (and changes in financial position, if any) of Harriscope and the Station
as of the dates and for the periods indicated in conformity with GAAP applied on
a consistent basis, except as otherwise noted therein (subject, in the case of
unaudited statements to normally recurring year-end audit adjustments that are
not material either individually or in the aggregate). All revenue reported in
Harriscope's Financial Statements is properly recorded in the accounting period
to which it relates in accordance with GAAP.
(c) Section 3.6(c) of the Disclosure Schedule sets
--------------
forth complete and accurate copies of pro forma statements of income for the
eleven (11) months ended November 30, 1999 and November 30, 2000 and the years
ended December 31, 1999 and December 31, 2000, in each case indicating
adjustments to eliminate revenues and direct costs related to the operation of
BizNews, corporate expenses, including all compensation and other expenses
pertaining to Xxxx X. Xxxxxx, Xx. and management fees payable to Harriscope
Corporation, and any expenses related to or arising out of the Encino Property
Lease, the Wilshire Property Lease and the Xxxxxx City Property (collectively,
the "Pro Forma Adjustments"). The pro forma financial statements have been
---------------------
prepared on a basis consistent with the historical statements, except for the
pro forma adjustments specified therein, and give effect to assumptions made on
a reasonable basis and present fairly the financial position and results of
operations and cash flows (and changes in financial position, if any) of the
Station, after giving effect to the Pro Forma Adjustments; provided, that with
--------
respect to the allocation of general and administrative overhead expenses to
BizNews in such pro forma financial statements only, Harriscope only makes this
representation and warranty to the extent of its best good faith estimate of
such allocation.
(d) Section 3.6(d) of the Disclosure Schedule sets
--------------
forth a complete and accurate copy of Harriscope's estimated projection of
revenues and expenses for the Station for the year ending 2001 (the "Budget").
------
It is expressly understood that Harriscope makes no other representation,
warranty or covenant with respect to the Budget.
(e) Harriscope and Purchaser agree to cooperate and
consult with each other with respect to the audit of the financial statements of
Harriscope for the year ended December 31, 2000. Harriscope agrees that
Purchaser may conduct through its independent public accountants, at its own
expense, its own audit of the financial statements of Harriscope for the year
ended December 31, 2000. Purchaser's independent public accountants shall agree
not to
18
share with Purchaser specific salaries, advertising rates or customer
information prior to the Closing without the prior written consent of
Harriscope.
(f) Harriscope intends to air all programs that are licensed to
it pursuant to any Program Contract listed or described in Exhibit A-(c) hereto
and Harriscope's Financial Statements accurately reflect provisions for obsolete
or excessive program rights, including those that Harriscope does not intend to
air or pursuant to the terms of the applicable Program Contract cannot air.
Section 3.7 Undisclosed Liabilities. Except as set forth in
-----------------------
Section 3.7 of the Disclosure Schedule, there are no Liabilities with respect to
-----------
the Station, except (a) as and to the extent set forth on the Balance Sheet, (b)
as incurred in connection with the transactions contemplated, or as provided, by
this Agreement, or (c) as incurred since the Balance Sheet Date in the ordinary
course of business and consistent with past practice.
Section 3.8 Absence of Certain Changes; Conduct of Business. Except as
-----------------------------------------------
set forth in Section 3.8 of the Disclosure Schedule, since the Balance Sheet
-----------
Date:
(a) the business of the Station has been conducted only in the
ordinary course, consistent with past practice, and there has not occurred or
arisen any event, individually or in the aggregate, having, or that, insofar as
reasonably can be foreseen, in the future is likely to have, a Material Adverse
Effect;
(b) Harriscope has not suffered any extraordinary losses or any
material damage, destruction or other casualty losses with respect to the
Purchased Assets or waived any rights of substantial value;
(c) except in the ordinary course of business and other than
with respect to BizNews, there have not occurred any acquisitions or
dispositions of any property or asset (real, personal or mixed, tangible or
intangible) relating to the business or operations of the Station,
(d) other than with respect to BizNews, there have not occurred
any commitments to acquire or dispose of any property or assets (real, personal
or mixed, tangible or intangible), or entry or commitment to enter into any
contract, agreement or commitment relating to the business or operations of the
Station, in any such case that involves more than $100,000;
(e) Harriscope has not made any material change in accounting
methods, accounting principles or accounting practices relating to the business
and operations of the Station; and
(f) Harriscope has not permitted or allowed any of its property
or assets (real, personal or mixed, tangible or intangible) to be subjected to
any material Lien, except for Liens for Taxes not yet due and for which there
are adequate accruals in Harriscope's Financial Statements in accordance with
GAAP.
Section 3.9 Litigation. Except as set forth in Section 3.9 of the
---------- -----------
Disclosure Schedule, there is no Action pending, or, to the Knowledge of
Harriscope, threatened against Harriscope or affecting the Station (and none of
Harriscope or the Shareholders is aware of any basis for any such Action), nor
is there any judgment, decree, order, injunction, writ or ruling of any
Governmental Entity or any arbitrator outstanding against Harriscope or
affecting the Station
19
(except for any such Action, judgment, decree, order, injunction, writ or ruling
of general applicability to television broadcast stations). Purchaser shall not
have responsibility for, and shall not share in any proceeds from, any such
Action set forth in Section 3.9 of the Disclosure Schedule.
-----------
Section 3.10 Contracts and Commitments.
--------------------------
(a) Other than Special Contracts and Contracts that do not
require annual payments in excess of $25,000 (other than any employment
Contracts, which are listed or described regardless of the annual payments
required), Section 3.10 of the Disclosure Schedule sets forth a complete and
------------
accurate list and (in the case of oral Contracts) description of each Contract
relating to the Purchased Assets or the Station to which Harriscope is a party
or by which Harriscope or any of the Purchased Assets are bound. Unless
otherwise so noted in Section 3.10 of the Disclosure Schedule, each Contract
------------
included in the Purchased Assets was entered into in the ordinary course of
business.
(b) Harriscope has provided to Purchaser a complete and
accurate copy of each written Contract (other than Special Contracts) set forth
in the Disclosure Schedule, and, except as set forth in Section 3.10 of the
------------
Disclosure Schedule, Harriscope has not received any written notice from any
party to any such Contract of the termination or threatened termination thereof
(other than the termination of Special Contracts as such Contracts expire or are
terminated in the ordinary course of business). Except as set forth in Sections
--------
3.4, 3.5 or 3.10 of the Disclosure Schedule, each of the Contracts included in
--- --- ----
the Purchased Assets is in full force and effect and constitutes a legal, valid
and binding obligation of Harriscope, enforceable against Harriscope in
accordance with its terms and, to the Knowledge of Harriscope, constitutes a
legal, valid and binding obligation of each other Person that is a party
thereto, enforceable against each such other Person in accordance with its
terms. Except as set forth in Section 3.5 of the Disclosure Schedule, each of
-----------
the Contracts included in the Purchased Assets may be assigned by Harriscope to
Purchaser without the consent or approval of any other Person and, upon
consummation of the transactions contemplated by this Agreement (including the
assignment of such Contract to Purchaser) will remain in full force and effect
and will not create a right of any other Person that is a party thereto to
terminate such Contract based upon such assignment. Except as set forth in
Sections 3.4 or 3.10 of the Disclosure Schedule, with respect to each such
------------ ----
Contract included in the Purchased Assets there is not any default or event
that, with notice or lapse of time or both, would constitute a default on the
part of Harriscope (nor, to Harriscope's Knowledge, on the part of any other
party thereto).
Section 3.11 Permits. Sections 3.11 and 3.16(a) of the Disclosure
------- ------------- -------
Schedule set forth a complete and accurate list of all Permits held by
Harriscope that are necessary for the operation of the Station. Harriscope has
all Permits required by Law or governmental regulations from all applicable
Governmental Entities that are necessary to operate the Station as presently
conducted, except where the failure to have any such Permit has not had and is
not reasonably likely to have a Material Adverse Effect. Harriscope is not in
default under, or in violation of or noncompliance with any of such Permits,
except for any such default, violation or noncompliance that would not,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth in Section 3.11 of the Disclosure Schedule, each Permit listed in Section
------------ -------
3.11 of the Disclosure Schedule may be assigned or otherwise transferred by
----
Harriscope to Purchaser without the consent or approval of any other Person and,
upon consummation of the transactions contemplated by this Agreement (including
the assignment or other transfer of such Permit to Purchaser), will remain in
full force and effect and will not create a right of any other Person to
terminate or revoke, modify or condition such Permit based on such assignment.
20
Section 3.12 Condition of Property; Assets Necessary to the
----------------------------------------------
Operation of Station.
---------------------
(a) Except as set forth in Section 3.12(a) of the
---------------
Disclosure Schedule, all tangible Assets of Harriscope used in operating the
Station are in suitable condition for the purposes for which they are intended
or are being used, are in sufficient working order.
(b) Except as set forth in Section 3.12(b) of the
---------------
Disclosure Schedule, the Purchased Assets include all of the Assets reasonably
necessary to carry on the operations of the Station as Conducted by Harriscope
and the towers, antenna system and other facilities used in connection with the
transmission of television broadcast signals by the Station comply in all
material respects with all of the engineering and technical requirements of the
FCC and have been maintained in a manner consistent with standards of good
engineering practice.
Section 3.13 Tax Matters.
------------
(a) Harriscope has duly filed all Tax Returns that are
required to be filed and has duly paid or caused to be duly paid in full or made
provision in accordance with GAAP for the payment of all Taxes (as hereinafter
defined) for all periods or portions thereof ending through the date hereof. All
such Tax Returns are correct and complete and accurately reflect all liability
for Taxes for the periods covered thereby.
(b) There are no (i) audit reports, letter rulings,
technical advice memoranda and similar documents issued by a Governmental Entity
and received by Harriscope on or after January 1, 1996 relating to Taxes due
from or with respect to Harriscope, or (ii) closing agreements entered into by
or on behalf of Harriscope with any taxing authority with respect to Taxes in
each case existing on the date hereof.
(c) There are no liens for Taxes upon Purchased Assets or
any property or assets of Harriscope, except for statutory liens for Taxes not
yet due. No Audit is presently pending with regard to any Taxes or Tax Returns
of Harriscope and Harriscope has not received notification that any Audit is
contemplated or may be initiated.
(d) There are no unresolved questions or claims concerning
Tax liability of Harriscope with respect to the Station.
(e) Harriscope has not received written notice of any claim
made by an authority in a jurisdiction where Harriscope does not file Tax
Returns that Harriscope is or may be subject to taxation by that jurisdiction
and has no reason to believe to any such claim will be made.
(f) No property of Harriscope is property that Harriscope
or any party to the transaction contemplated hereby is or will be required to
treat as being owned by another Person pursuant to Section 168(f)(8) of the Code
(as in effect prior to the amendment of the Tax Reform Act of 1986) or is "tax
exempt use property" within the meaning of Section 168 of the Code.
Section 3.14 Employee Benefit Plans; ERISA.
-----------------------------
(a) There are no liens against the Purchased Assets
under Section 412(n) of the Code or Sections 302(f) or 4068 of ERISA.
21
(b) Neither Harriscope nor any ERISA Affiliate is or was obligated
to contribute to any multi-employer plan within the meaning of Section 3(37) of
ERISA or any plan subject to Title IV of ERISA.
(c) From and after the Closing, Purchaser shall have no obligation
to contribute to, or any liability in respect of, any Plan, other than
obligations and liabilities arising on or after the Closing Date with respect to
Assumed Plans. Each Assumed Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and Section 4980B of the Code ("COBRA").
-----
(d) Harriscope has no Knowledge that any provision of any Plan
which is intended to be "qualified" within the meaning of Section 401(a) of the
Code, or any matter relating to or arising out of the operation of any such
Plan, would result in any such Plan failing to be so qualified. To Harriscope's
Knowledge, distributions from Harriscope's 401(k) Plan, other than distributions
described in Section 402(c)(4)(A), (B) or (C) of the Code, will be "eligible
rollover distributions" within the meaning of Section 402(c)(4) of the Code.
(e) There are no pending, threatened or, to the Knowledge of
Harriscope, anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
Section 3.15 Labor and Personnel Matters.
----------------------------
(a) Section 3.15(a) of the Disclosure Schedule lists the directors,
---------------
executive officers and other employees of Harriscope, their respective job
titles and compensation, including commissions to sales personnel (in the case
of compensation, either individually or by category) as of January 1, 2001.
Harriscope has no dispute existing, or to the Knowledge of Harriscope,
threatened, involving strikes, work stoppages, slow downs or lockouts. There
are no grievance proceedings or claims of unfair labor practices filed or, to
the Knowledge of Harriscope, threatened to be filed with the National Labor
Relations Board or any California state agency against Harriscope. There is no
union representation or organizing effort pending or, to the Knowledge of
Harriscope, threatened against Harriscope. Harriscope has not agreed to
recognize any union or other collective bargaining unit and is not party to or
bound by any collective bargaining agreement or any other agreements with a
labor union. To the Knowledge of Harriscope, as of the date hereof, no Person
referred to in Section 3.15(a) of the Disclosure Schedule is in is in material
---------------
violation of any material term of any employment contract. Harriscope has
furnished a true and correct copy of the current employee manual for the
Station. Harriscope is in compliance in all material respects with all
applicable Laws respecting employment and employment practices (including part-
time or casual employees and the provision of benefits, if any, to such
employees), terms and conditions of employment, health and safety, and wages and
hours. Harriscope has not received written notice of any investigation, charge
or complaint against Harriscope pending before the Equal Employment Opportunity
Commission or any other federal or state government agency or court or other
tribunal regarding an unlawful employment practice. There are no complaints,
lawsuits, arbitrations or other proceedings pending, or to Harriscope's
Knowledge, threatened by or on behalf of any present or former employee of
Harriscope alleging breach of any express or implied contract of employment.
Harriscope is and has been in compliance with all notice and other requirements
under the WARN Act or similar state statute.
22
(b) Since the enactment of the WARN Act, (i) Harriscope has not
effectuated a "plant closing" (as defined in the WARN Act) in connection with
the Station (ii) there has not occurred a "mass layoff" (as defined in the WARN
Act) in connection with the Station, and (iii) none of the employees of
Harriscope has suffered an "employment loss" (as defined in the WARN Act) during
the six (6) month period prior to the date hereof except as set forth in Section
-------
3.15(b) of the Disclosure Schedule.
-------
Section 3.16 Environmental Matters.
----------------------
(a) Harriscope is in full compliance with all applicable federal,
state, local and foreign Laws and regulations relating to pollution or
protection of human health or the environment, including ambient air, surface
water, ground water, land surface or subsurface strata, and natural resources
(together "Environmental Laws" and including Laws and regulations relating to
------------------
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic or hazardous substances or wastes, petroleum and
petroleum products, asbestos or asbestos-containing materials, polychlorinated
biphenyls, lead or lead-based paints or materials, or radon ("Materials of
------------
Environmental Concern")), or otherwise relating to the manufacture, generation,
---------------------
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern, or the preservation of the
environment or mitigation of adverse effects thereon and each Law and regulation
with regard to record keeping, notification, disclosure, and reporting
requirements respecting Materials of Environmental Concern. Such compliance
includes, but is not limited to, the possession by Harriscope of all permits and
other governmental authorizations required under all applicable Environmental
Laws, and compliance with the terms and conditions thereof. All Permits
currently held by Harriscope pursuant to the Environmental Laws are identified
in Section 3.16(a) of the Disclosure Schedule.
---------------
(b) Harriscope has not received any written communication (or to
Harriscope's Knowledge, oral communication), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that Harriscope
is not in full compliance with any Environmental Laws, and, to the Knowledge of
Harriscope, there are no circumstances that may prevent or interfere with such
full compliance in the future.
(c) Harriscope has not received written notice (or to Harriscope's
Knowledge, oral notice) (an "Environmental Claim") from any Person alleging
-------------------
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated by
Harriscope or (ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law, that in either case is pending or, to the
Knowledge of Harriscope, threatened against Harriscope or against any person or
entity whose liability for any Environmental Claim Harriscope has retained or
assumed either contractually or by operation of law.
(d) To Harriscope's Knowledge, and except for the discovery of a
dry cleaning business previously operated on the Sunset Boulevard Property
during a Phase I investigation conducted by Purchaser and except for possible
radio frequency exposures to Harriscope employees at the Leased Real Property at
Mount Xxxxxx as referenced in the Engineering Statement of Xxxx X. Xxxxxxx,
dated August 28, 1998, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Material of Environmental Concern, that
could reasonably be expected to form the basis of any Environmental Claim
against Harriscope or against any
23
person or entity whose liability for any Environmental Claim Harriscope has
retained or assumed either contractually or by operation of law.
(e) Without in any way limiting the generality of the foregoing,
(i) all on-site and off-site locations where Harriscope has (previously or
currently) stored, disposed or arranged for the disposal of Materials of
Environmental Concern from the Sunset Boulevard Property or to Harriscope's
Knowledge any Leased Real Property are identified in Section 3.16(e) of the
---------------
Disclosure Schedule, (ii) all underground storage tanks, and the capacity and
contents of such tanks, located at the Sunset Boulevard Property or any Leased
Real Property are identified in Section 3.16(e) of the Disclosure Schedule,
---------------
(iii) except as set forth in Section 3.16(e) of the Disclosure Schedule, to
---------------
Harriscope's Knowledge there is no asbestos contained in or forming part of any
building, building component, structure or office space at the Sunset Boulevard
Property or any Leased Real Property, and (iv) except as set forth in Section
-------
3.16(e) of the Disclosure Schedule, no PCBs or PCB-containing items are used or
-------
stored at the Sunset Boulevard Property or any Leased Real Property.
(f) Harriscope has provided to Purchaser all environmental-related
assessments, reports, data, results of investigations or audits, such as Phase I
or Phase II reports and other written documentation that is in the possession of
or reasonably available to Harriscope regarding the environmental condition of,
the business of Harriscope related, directly or indirectly, to the Station, or
the compliance (or noncompliance) by Harriscope with any Environmental Laws
related, directly or indirectly, to the Station.
(g) Except as otherwise provided in this Agreement, Harriscope is
not required by virtue of the transactions set forth herein and contemplated
hereby, or as a condition to the effectiveness of any transactions contemplated
hereby, (i) to perform a site assessment for Materials of Environmental Concern,
(ii) to remove or remediate Materials of Environmental Concern, (iii) to give
notice to or receive approval from any governmental authority, or (iv) to record
or deliver to any person or entity (other than to Purchaser pursuant to
California Health and Safety Code Section 25359.7) any disclosure document or
statement pertaining to environmental matters.
Section 3.17 Compliance with Laws. The business of the Station
---------------------
has not been and is not now being conducted in violation of any applicable Law,
except for violations that in the aggregate have not had and are not reasonably
likely to have a Material Adverse Effect. Harriscope has not received any
written notification (or to Harriscope's Knowledge, oral notification) of any
asserted present failure or failure within the past three (3) years by
Harriscope to comply with such laws, rules or regulations. Other than as set
forth in Section 3.16(d) hereof regarding environmental matters, Harriscope has
---------------
no Knowledge of any condition currently or previously existing on the Sunset
Boulevard Property or any Leased Real Property or any portion thereof that may
give rise to any violation of any applicable law if it were disclosed to the
authorities having jurisdiction over the Leased Real Property.
Section 3.18 The Station. Without limiting the generality of any
------------
other representation, warranty or agreement contained herein:
(a) All material reports required to be filed with the FCC
(including ownership reports, renewal applications and DTV ancillary fee
reports) or any other governmental agency, department or body in respect of the
Station have been filed in a substantially timely manner and in all material
respects are complete and true and present accurately the information contained
therein. Copies of all such reports for the past two (2) years
24
and copies of all other written communications received by Harriscope from or
transmitted by Harriscope to the FCC with respect to the Station for the past
two (2) years have been made available to Purchaser, and Harriscope has
authorized Purchaser through its representatives to review all files at the FCC
relating to Harriscope.
(b) Section 3.18(b) of the Disclosure Schedule contains a complete
---------------
and accurate general summary (other than with respect to the individual terms of
each such Contract or any sensitive competitive information which is not
supplied) of Contracts related to paid programming, spot advertising, block
sales and sales of brokered or bartered time to which Harriscope is a party or
by which Harriscope or any of the Purchased Assets are bound (collectively,
"Special Contracts"). Harriscope has not entered into, and prior to November
-----------------
30, 2001 will not enter into, any Special Contracts that relate to any date
after December 31, 2001. Based on Harriscope's bookings for Contracts for cash
sales of spot advertising as of January 29, 2001, the average unit price for
cash spot sales for the first quarter of 2001 is higher than the actual average
unit price for cash spot sales for the first quarter of 2000. The average unit
price is determined by dividing the total cash bookings for spot advertising
sales in a particular month by the total number of spots which generated such
revenues. As of January 29, 2001, for the time periods Harriscope has committed
to with respect to Contracts related to sales of brokered or bartered time for
2001, the revenue associated with such Contracts is higher than the revenue
associated with Contracts related to sales of brokered or bartered time for the
comparable time periods in 2000.
(c) Harriscope owns, possesses or holds (i) all rights granted by
the FCC to use the call letters as used in connection with, or necessary for,
the conduct of the present operations of the Station, and (ii) the FCC Licenses
and all other licenses, Permits, authorizations issued by any other Governmental
Entity to Harriscope or any Affiliate of Harriscope in connection with the
business and operations of the Station (collectively, "Licenses"). To the
--------
Knowledge of Harriscope, such Licenses have been validly issued and Harriscope
is the authorized holder thereof. Harriscope and the Station have performed and
complied in all material respects with all of the terms and provisions of all of
such Licenses. As of the date hereof, Harriscope has not received notice that
any Person other than Harriscope owns, possesses or holds any interest in any of
such call letters or Licenses.
(d) The Licenses are in full force and effect. To the Knowledge of
Harriscope, except as set forth in Section 3.18(d) of the Disclosure Schedule,
---------------
no action has been taken or is threatened (except for any such actions being
taken or threatened of general applicability to television broadcast stations)
and no act or omission by Harriscope presents a reasonable risk of (i) resulting
in the revocation, modification, or suspension of, or other action likely to
prejudice the regular renewal of, the Licenses, or (ii) adversely affecting the
FCC applications contemplated by Section 6.4 hereof. To the Knowledge of
-----------
Harriscope, except as set forth in Section 3.18(d) of the Disclosure Schedule,
---------------
there is no Law or proceeding preventing or impairing, or purporting or
proposing to prevent or impair, in any material respect, the conduct of the
business and operations of the Station as they have heretofore been carried
(except for any such Laws or proceedings of general applicability to television
broadcast stations). The facilities, equipment and operations of the Station
comply with all material requirements of all Licenses, the Communications Act of
1934, as amended, and the rules, regulations, policies and procedures of the
FCC.
(e) To the Knowledge of Harriscope, the operation and maintenance
by Harriscope of the towers, antenna system and other facilities relating to the
Station or used in connection with the transmission of television broadcast
signals by the Station therefrom do not
25
violate any zoning or building ordinance or code, regulation, Law or restrictive
covenant, or rights of any other Person in any respect that could have a
Material Adverse Effect. Within the past two years, no notice has been received
by Harriscope to the effect that (and, to the Knowledge of Harriscope, no claim
has been made that) the towers, antenna system or other facilities used in
connection with the transmission of television broadcast signals by the Station
are in violation of any zoning or building ordinance, regulation, Law,
restrictive covenant, requirement or right of any Person. If Harriscope becomes
aware of any such claim or any such notice is given to Harriscope, Harriscope
will advise Purchaser of such claim or notice immediately.
(f) Other than as set forth in Section 3.18(f) of the Disclosure
---------------
Schedule, Harriscope has elected must carry status on all cable systems in the
Los Angeles designated market area. Except as set forth in Section 3.18(f) of
---------------
the Disclosure Schedule, the Station is currently being carried on all such
cable systems.
(g) Harriscope has applied for and received authorization from the
FCC to commence digital television operations on KWHY-DT, Channel 42, Los
Angeles, California, using an auxiliary antenna as specified in FCC Construction
Permit No. BPCDT-19990924AAV. Harriscope has applied for maximized digital
television facilities for KWHY-DT (Application No. BMCDT-20000428ABX, accepted
May 24, 2000) (the "Power Increase Application"). To the Knowledge of
--------------------------
Harriscope, no additional applications or construction activities are required
for digital television operations to achieve or maintain compliance with current
FCC requirements for digital television operations.
Section 3.19 Title to Property.
------------------
(a) Except as set forth in Section 3.19(a) of the Disclosure
---------------
Schedule and except for personal property of which Harriscope is a lessee, all
the personal property included in the Purchased Assets is owned by Harriscope
free and clear of all Liens except Liens imposed by operation of law for current
Taxes not yet due and payable in the ordinary course of business ("Permitted
---------
Liens"). Immediately after the Closing, Purchaser will have good and marketable
-----
title to all the personal property included in the Purchased Assets, other than
leased personal property, free and clear of any Lien other than Permitted Liens.
(b) Section 3.19(b) of the Disclosure Schedule contains a complete
---------------
and accurate list of all leases that are included in the Purchased Assets
pursuant to which Harriscope leases real property, whether as landlord or tenant
or sublessee, true copies of which leases together with all amendments thereto
(as now in effect) have previously been delivered to Purchaser. With respect to
each lease described in Section 3.19(b) of the Disclosure Schedule (the
---------------
"Leases"), except as set forth in such Section 3.19(b) of the Disclosure
------ ---------------
Schedule, the following representations are true and correct:
(i) Except for those amendments and agreements listed in
Section 3.19(b) of the Disclosure Schedule, each of the Leases is
---------------
unmodified, in full force and effect and constitutes a legal, valid and
binding obligation of Harriscope and, to the Knowledge of Harriscope, each
other Person that is a party thereto, enforceable against Harriscope and,
to the Knowledge of Harriscope, such other Person in accordance with its
terms.
26
(ii) Harriscope is not in material default under any of the
Leases and to the Knowledge of Harriscope no event has occurred that with
the passage of time or notice or both would become a material default under
any of the Leases;
(iii) To the Knowledge of Harriscope, no other party is in
material default under any of the Leases and no event has occurred that
with the passage of time or notice or both would become a material default
by any other party under any of the Leases;
(iv) Harriscope's leasehold estate with respect to the premises
that is the subject of each of the Leases (the "Premises") has no been
--------
assigned, mortgaged, pledged, encumbered or otherwise transferred or
sublet, in whole or in part, except for any Permitted Liens, and to the
actual knowledge of Harriscope the landlord's fee estate with respect to
any of the Premises has not been assigned, mortgaged, pledged, encumbered
or otherwise transferred or sublet in whole or in part except by the
Leases;
(v) The Leases evidence the entire written agreement with
respect to the use and operation of each of the Premises between each of
the landlords and Harriscope;
(vi) All rent billed to date and payable by Harriscope, as
tenant under each of the Leases, has been paid;
(vii) The deposits and guaranties listed in Section 3.19(b) of
---------------
the Disclosure Schedule are the only deposits and guaranties that have been
delivered in connection with the Leases;
(viii) There are no non-disturbance or ground lease recognition
agreements pertaining to the Premises to which Harriscope is a party and,
to the Knowledge of Harriscope, there are no superior leases of the
Premises existing as of the date hereof;
(ix) Harriscope has received no written notices (or to
Harriscope's Knowledge, oral notices) of violations of applicable Laws,
ordinances, codes, regulations, orders or requirements of any Federal,
state or municipal governmental authority having jurisdiction with respect
to the Premises that have not been cured and dismissed. Except as set
forth in Section 3.19(b) of the Disclosure Schedule, to Harriscope's
---------------
Knowledge, the Premises are free of asbestos, asbestos-containing
materials, PCB's or other substances generally regarded as hazardous or
toxic and the Premises comply with the Americans with Disabilities Act; and
(x) assuming that any necessary consents are obtained,
Purchaser, as assignee of Harriscope pursuant to the Instrument of
Assignment and Assumption, will be entitled to exercise all of the rights
and privileges of the tenant under each of the Leases subject to and in
accordance with the terms thereto.
(c) Harriscope agrees to furnish to Purchaser within ten business
days (or if such documents are not available from the City of Los Angeles within
such ten business days, promptly after they become available) after the
execution of this Agreement true and complete copies of all certificates of
occupancy, permits and licenses held by Harriscope in connection with the
ownership, use, operation, leasing and maintenance, as applicable, of the
00
Xxxxxx Xxxxxxxxx Property that are either within its possession or obtainable
from the City of Los Angeles Department of Building and Safety. Harriscope has
obtained (or, to the Knowledge of Harriscope, the fee owner of any Leased Real
Property has obtained) all appropriate certificates of occupancy, permits,
licenses, easements and rights of way, including proofs of dedication, required
to use and operate the Sunset Boulevard Property and the Leased Real Property in
all material respects in the same manner in which the Sunset Boulevard Property
and the Leased Real Property is currently being used and operated. The current
use and occupation of any portion of the Sunset Boulevard Property and, to the
Knowledge of Harriscope, the Leased Real Property does not violate in any
material respect any of such certificates of occupancy, permits or licenses. No
such approvals, permits or licenses will be required, as a result of the
transactions contemplated by this Agreement, to be issued after the date hereof
in order to permit Harriscope to own or operate the Sunset Boulevard Property or
the Leased Real Property in all material respects in the same manner as
heretofore owned or operated, other than any such approvals, permits or licenses
that are ministerial in nature and are normally issued in due course upon
application therefore without further action by the applicant.
(d) All utilities presently serving the Sunset Boulevard Property
and the Leased Real Property are presently adequate to service the existing
normal operations of Harriscope and the Station.
(e) The Sunset Boulevard Property is owned in fee by Harriscope
free and clear of all Liens, except Permitted Liens.
Section 3.20 Insurance. Section 3.20 of the Disclosure
---------- ------------
Schedule sets forth a complete and accurate list of all policies or binders of
fire, liability, product liability, worker's compensation, vehicular, errors and
omissions insurance for news operations and other insurance bonds that insure
the operations of the Station and are currently in effect, copies of which have
been furnished to Purchaser. Such policies include all policies that are
required in connection with the operation of the Station, as presently
conducted, by applicable Laws or regulations or by the terms of any Contract.
Such insurance is carried by financially sound and reputable insurers
unaffiliated with Harriscope in such amounts and against such risks as are
sufficient and adequate to protect the Station in accordance with normal
industry practice. All such policies are in full force and effect and no notice
of cancellation or termination has been received by Harriscope with respect to
any such policy. No insurance coverage with respect to the Station is maintained
through self-insurance, other than the deductible portion of any policy. There
are no outstanding unsettled claims under any such policy or binder that
individually, or in the aggregate, exceed the coverage of any such policy or
binder. There is no failure by Harriscope to pay premiums when due, and there is
no material inaccuracy in any application for such policies or binders.
Harriscope has not received any written notice of cancellation or non-renewal of
any such policy or binder. Harriscope has not received any notice from any of
its insurance carriers that any insurance premiums will be materially increased
in the future or that any insurance coverage listed in Section 3.20 of the
------------
Disclosure Schedule will not be available in the future on substantially the
same terms as now in effect. Harriscope has not received any written notice of,
or other writing referring to, any requirements or recommendations by any
insurance company that has issued a policy covering any part of the Leased Real
Property or the Sunset Boulevard Property or by any board of fire underwriters
or other body exercising similar functions, requiring or recommending any
repairs or work to be done on any part of the Leased Real Property or the Sunset
Boulevard Property, which repair or work has not been completed.
28
Section 3.21 Intellectual Property.
----------------------
(a) Section 3.21(a) of the Disclosure Schedule sets forth a true,
---------------
correct and complete list of all material Intellectual Property owned by
Harriscope, (e.g., not licensed to Harriscope by third parties) and used in the
operation of the Station as Conducted by Harriscope ("Harriscope Intellectual
-----------------------
Property"). Harriscope does not own any patents, registered trademarks or
--------
registered copyrights that are used in connection with the Station. Section
-------
3.10 of the Disclosure Schedule sets forth among other agreements a true,
----
correct and complete list of all material agreements pursuant to which
Harriscope licenses Intellectual Property owned by third parties for use in the
operation of the Station ("Third Party Intellectual Property"). The Purchased
---------------------------------
Assets include all the Intellectual Property used in the operation of the
Station as Conducted by Harriscope.
(b) Except as otherwise disclosed in Section 3.21(b) of the
---------------
Disclosure Schedule, Harriscope is the sole and exclusive owner of all
Harriscope Intellectual Property. Except as set forth in Section 3.21(b) of the
---------------
Disclosure Schedule, Harriscope has not licensed, sublicensed, assigned,
optioned or otherwise granted or transferred any of its rights, titles or
interests in or to any Harriscope Intellectual Property or Third Party
Intellectual Property. Except as set forth in Section 3.21(b) of the Disclosure
---------------
Schedule, all Harriscope Intellectual Property is valid and subsisting. All
agreements relating to Third Party Intellectual Property are in full force and
effect and constitute legal, valid and binding obligations of Harriscope,
enforceable against Harriscope in accordance with their terms and, to the
Knowledge of Harriscope (it being understood that Harriscope has not performed
any chain of title investigation or due diligence with respect to agreements
relating to Third Party Intellectual Property or with respect to Third Party
Intellectual Property), constitute legal, valid and binding obligations of each
other Person that is a party thereto.
(c) Except as set forth in Section 3.21(c) of the Disclosure
---------------
Schedule, to the Knowledge of Harriscope (without due inquiry) the operation of
the Station as Conducted by Harriscope does not infringe, misappropriate, dilute
or otherwise violate or constitute the unauthorized use or disclosure of, either
directly or indirectly, ("Infringe") any Intellectual Property owned or
--------
controlled by a third party, nor violate any antitrust or competition Laws, and
is not libelous, slanderous, defamatory, obscene, or violative of any publicity,
privacy or other personal rights. Except as set forth in Section 3.21(c) of the
---------------
Disclosure Schedule, Harriscope has not received written notice of, nor does
Harriscope have Knowledge of, any claim that any of its operations, activities,
products or publications Infringes on any Intellectual Property right of a third
party, or that Harriscope is illegally or otherwise using the trade secrets,
formulae or any other Intellectual Property rights of others. Harriscope has no
disputes with or claims against any third party that such party is Infringing on
any Harriscope Intellectual Property or Third Party Intellectual Property.
(d) Harriscope takes reasonable measures to protect the
confidentiality of its material Proprietary Information & Technology. To the
Knowledge of Harriscope, no Proprietary Information & Technology material to the
business of Harriscope has been disclosed or authorized to be disclosed by
Harriscope to any third party, including any advisor, supplier, customer or any
other third parties having access thereto, other than pursuant to an agreement
that adequately protects Harriscope's proprietary interests in and to such
Proprietary Information & Technology.
29
(e) No shareholder, member, director, officer, employee, agent,
consultant, advisor, customer or other business partner of Harriscope has any
right, title or interest in or to any of the Harriscope Intellectual Property.
(f) Except as set forth in Section 3.21(f) of the Disclosure
---------------
Schedule, the consummation of the transactions contemplated hereby will not
result in the loss, dilution or impairment of Harriscope's right to own or use
any of the Intellectual Property included in the Purchased Assets (other than
insomuch as such rights are transferred to Purchaser hereunder) and, except as
set forth in Section 3.5 of the Disclosure Schedule, no consents are required in
-----------
order for Purchaser to assume the rights and obligations of Harriscope under any
agreements pertaining to the Third Party Intellectual Property.
Section 3.22 Customers and Suppliers. Section 3.22 of the
------------------------ ------------
Disclosure Schedule sets forth (i) a list of all of Harriscope's customers from
which Harriscope realized revenues of at least $25,000 during the eleven month
period ending November 30, 2000 or the year ending December 31, 1999; and (ii) a
list of each consultant, independent contractor and supplier of goods and
materials to which Harriscope made payments aggregating $10,000 or more during
the eleven month period ending November 30, 2000 or the year ending December 31,
1999. Except to the extent set forth in Section 3.22 of the Disclosure Schedule,
------------
there has not been any material adverse change in the business relationship of
Harriscope with any customer from which Harriscope realized revenues of at least
$500,000 during the year ending December 31, 2000 or with any programming
supplier to which Harriscope made payments aggregating $100,000 or more during
the year ending December 31, 2000.
Section 3.23 Disclosure. No representation or warranty of
-----------
Harriscope or the Shareholders contained in this Agreement and no statement
contained in any certificate, Exhibit or Schedule furnished or to be furnished
by or on behalf of Harriscope or the Shareholders pursuant to this Agreement
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary (i) in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading or (ii) in order to fully and fairly provide the
information required to be provided in any such document, certificate, Exhibit
or Schedule.
Section 3.24 Brokers and Finders. Neither Harriscope nor any
--------------------
of its respective directors, officers, members, partners or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or similar payments in connection
with the transactions contemplated by this Agreement.
Section 3.25 No Condemnation or Expropriation. Harriscope has
---------------------------------
not received notice that the whole or any portion of the Leased Real Property or
any other assets of Harriscope is subject to any governmental decree or order to
be sold, is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, and to the Knowledge
of Harriscope, no such condemnation, expropriation or taking is being
threatened.
Section 3.26 Affiliate Transactions. Except as set forth in
-----------------------
Section 3.26 of the Disclosure Schedule, Harriscope has not entered into and is
------------
not subject to any Affiliate Transaction.
30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser, Telemundo Licensee and Parent jointly and severally
represent and warrant to Harriscope and the Shareholders as follows:
Section 4.1 Organization and Qualification. Each of
-------------------------------
Purchaser, Telemundo Licensee and Parent is a corporation duly organized,
validly existing and in good standing under the Laws of the state of Delaware
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted.
Section 4.2 Authority. Each of Purchaser, Telemundo Licensee
----------
and Parent has all requisite power and authority to execute and deliver this
Agreement and the other agreements, documents and instruments to be executed and
delivered by Purchaser, Telemundo Licensee or Parent pursuant hereto (the
"Additional Purchaser's Documents") and to consummate the transactions
--------------------------------
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Additional Purchaser's Documents by Purchaser, Telemundo Licensee or
Parent, and the consummation by Purchaser, Telemundo Licensee or Parent of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary action on the part of Purchaser, Telemundo Licensee
and Parent and no other proceedings on the part of Purchaser, Telemundo Licensee
or Parent are necessary to authorize the execution and delivery of this
Agreement and the Additional Purchaser's Documents by Purchaser, Telemundo
Licensee or Parent and the consummation by Purchaser, Telemundo Licensee and
Parent of the transactions contemplated hereby and thereby. This Agreement has
been duly and validly executed and delivered by each of Purchaser, Telemundo
Licensee and Parent and, assuming the due authorization, execution and delivery
hereof by Harriscope and the Stockholders, constitutes a valid and binding
agreement of Purchaser, Telemundo Licensee and Parent, enforceable in accordance
with its terms, subject as to enforcement to (a) bankruptcy, insolvency,
reorganization, moratorium and other similar Laws now or hereafter in effect
relating to or affecting creditors' rights generally, and (b) general principles
of equity, regardless of whether enforcement is considered in a proceeding in
equity or at law.
Section 4.3 No Conflicts. Other than obtaining the FCC
-------------
Approval and complying with the HSR Act, none of the execution and delivery by
Purchaser, Telemundo Licensee and Parent of this Agreement or of any of the
Additional Purchaser's Documents, the consummation by Purchaser, Telemundo
Licensee and Parent of the transactions contemplated hereby or thereby or
compliance by Purchaser, Telemundo Licensee and Parent with any of the
provisions hereof or thereof will (a) conflict with or result in a breach of any
provision of the charter or bylaws of Purchaser, Telemundo Licensee or Parent,
(b) violate or conflict with any order, writ, injunction, decree, statute, rule
or regulation applicable to Purchaser, Telemundo Licensee or Parent or (c)
constitute a breach or default under any Contract to which Purchaser, Telemundo
Licensee or Parent is bound, where such breach or obligation would reasonably be
expected to have a material adverse effect on Purchaser's, Telemundo Licensee's
or Parent's ability to perform its obligations hereunder.
Section 4.4 Consents and Approvals. Other than obtaining the
-----------------------
FCC Approval and complying with the HSR Act, no consent, approval, authorization
or Permit of, or filing with or notification to, any Governmental Entity, or any
other Person is required to be made or obtained by Purchaser or Telemundo
Licensee or Parent by virtue of its execution, delivery or performance of this
Agreement or of any of the Additional Purchaser's Documents or to enable
31
Purchaser, Telemundo Licensee or Parent to consummate the transactions
contemplated by this Agreement.
Section 4.5 Disclosure. No representation or warranty of Purchaser or
----------
Telemundo Licensee or Parent contained in this Agreement and no statement
contained in any certificate, Exhibit or Schedule furnished or to be furnished
by or on behalf of Purchaser, Telemundo Licensee or Parent to Harriscope or any
of its representatives pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact necessary (i) in order to make the statements herein or therein, in light
of the circumstances under which they were made, not misleading or (ii) in order
to fully and fairly provide the information required to be provided in any such
document, certificate, Exhibit or Schedule.
Section 4.6 Parent. Parent is the sole stockholder of Telemundo
------
Holdings, Inc. The audited and unaudited consolidated financial statements of
Telemundo Holdings, Inc. (the "Holdings Financial Statements") included in the
-----------------------------
forms, reports and documents filed by Telemundo Holdings, Inc. with the
Securities and Exchange Commission (the "SEC Reports") have been prepared in
-----------
accordance with GAAP applied on a consistent basis (except as otherwise stated
in the Holdings Financial Statements, including the related notes, and except
that the interim financial statements do not contain all of the footnote
disclosures required by GAAP) and fairly present in all material respects the
financial position of Telemundo Holdings, Inc. and its consolidated subsidiaries
as of the dates thereof and the results of their operations and their cash flows
for the periods then ended, subject, in the case of the interim unaudited
financial statements, to normal year-end audit adjustments, which, except as
disclosed in the SEC Reports, would not be material in amount or effect.
Section 4.7 FCC Qualification. To the Knowledge of Parent, Purchaser
-----------------
and Telemundo Licensee, no action has been taken or is threatened (except for
actions being taken or threatened of general applicability to television
broadcast stations), and no act or omission of Parent, Purchaser or Telemundo
Licensee presents a reasonable risk of adversely affecting the FCC applications
contemplated by Section 6.4 hereof.
-----------
ARTICLE V
COVENANTS OF HARRISCOPE
Harriscope and Purchaser agree as follows:
Section 5.1 Conduct of Business Pending the Closing. (a) From the
---------------------------------------
date hereof through the Closing Date, except as may be expressly permitted or
contemplated by this Agreement or as otherwise agreed to in writing by
Purchaser, Harriscope shall cause the business of the Station to be conducted in
the usual, regular and ordinary course of business, consistent with past
practice, shall maintain customary levels of marketing and promotion efforts and
expenditures and shall use all commercially reasonable efforts to preserve
intact the business of the Station, keep available the services of its employees
and preserve its relationships with customers, suppliers, licensees, licensors,
distributors, agents and others having business dealings with the Station.
Without limiting the generality of the foregoing, without the prior written
consent of Purchaser, during the period from the date hereof to the Closing
Date, Harriscope shall not:
32
(i) enter into any material Contracts (other than as
specifically permitted pursuant to subclause (iii) below) or commitments
outside the ordinary course of business without the prior written consent
of Purchaser (which consent shall not be unreasonably withheld or delayed);
(ii) enter into any trade or barter Contract with annual
consideration in excess of $40,000;
(iii) make any material change to the program schedule
or enter into any material Program Contract without consulting with
Purchaser in accordance with subsection (d) below;
(iv) enter into any Paid Programming Contract that would
require the Station to run such Paid Programming, unless such Paid
Programming Contract is cancelable (i) within 60 days' notice or (ii) upon
notice that the Station has determined to air regular programming in lieu
of the Paid Programming in the time period provided for in such Paid
Programming Contract;
(v) amend or propose to amend its charter, bylaws or
certificate of formation or reclassify or recapitalize its capital
structure if such actions would have, or be reasonably likely to have, a
Material Adverse Effect or adversely affect Harriscope's ability to
consummate the transactions contemplated hereby;
(vi) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business,
any Person or any division thereof or (B) any assets (other than Program
Contracts in accordance subsection (iii) above) that are material,
individually or in the aggregate, to the Station (excluding capital
equipment purchased in the ordinary course of business);
(vii) sell (including by sale-leaseback), lease, transfer,
license (whether on an exclusive or non-exclusive basis), mortgage or
otherwise encumber or subject to any Lien, any Purchased Assets or
interests therein, other than in the ordinary course of business and
consistent with past practice;
(viii) incur or become contingently liable with respect
to any indebtedness for borrowed money or guarantee any such indebtedness
or issue any debt securities or warrants or other rights to acquire any
debt securities of Harriscope;
(ix) except as permitted by subsection (x) below, enter
into or amend any employment, severance, special pay arrangement with
respect to termination of employment or other arrangement or agreement with
any employee (other than any Transition Payment or the hiring of an at-will
employee) or adopt any new policy with respect to the foregoing matters;
provided, that Harriscope may terminate any part-time employee in its
--------
reasonable discretion and any full-time employee in its reasonable
discretion after meaningful consultation with Purchaser and may enter into
severance arrangements at Harriscope's expenses in connection with the
foregoing consistent with past practice; provided, further, that such
-------- -------
terminations do not result in Material Adverse Effect;
33
(x) grant an increase in the salary, wages or other
compensation (including commissions to sales personnel, but excluding any
Transition Payment) as set forth in Section 3.15(a) of the Disclosure
---------------
Schedule, except to the extent that such increases do not exceed $100,000
in the aggregate; provided, that this limitation shall not apply to the
--------
extent that such increase is necessary to match a written offer of
employment providing a higher level of compensation from Purchaser or an
Affiliate of Purchaser to any on-air or other key news employee of
Harriscope and the $100,000 amount referenced above shall be increased to
$150,000 if the Interim Outside Date is extended pursuant to Section 8.2
-----------
hereof;
(xi) except as permitted by subsection (x) above, adopt,
enter into, or become obligated under any new (or amend any existing),
bonus, commission, profit sharing, compensation, collective bargaining,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee or retiree, except
as required to comply with changes in applicable Laws occurring after the
date hereof (other than with respect to Transition Payments);
(xii) enter into any Contract, license or other agreement
that contains any provision that, as a result of the consummation of the
transactions contemplated by this Agreement, would (assuming that the other
party's consent or approval is not obtained, to the extent required) result
in any penalty, additional payments or forfeiture that would be payable or
sufferable by Purchaser at or after the Closing Date;
(xiii) take any action that would, or could reasonably be
expected to, result in (A) any of the representations and warranties of
Harriscope set forth in this Agreement that are qualified as to materiality
becoming untrue, (B) any of such representations and warranties that are
not so qualified becoming untrue in any material respect or (C) any of the
conditions set forth in Article VII not being satisfied;
(xiv) fail to renew any Permit; or
(xv) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Harriscope shall make capital expenditures in cash
throughout the period beginning as of the date hereof and ending on the Closing
Date as required in the ordinary course of business.
(c) Harriscope shall promptly advise Purchaser of any change or
event (including any change or event relating to a third party) (i) having, or
that, insofar as can reasonably be foreseen, would have, a Material Adverse
Effect or (ii) to the Knowledge of Harriscope, that would cause any of the
representations and warranties set forth herein, including the information set
forth on the Disclosure Schedule, or information supplied by Harriscope to
Purchaser in accordance with Section 5.6 hereof to contain any untrue statement
-----------
of material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) Notwithstanding anything to the contrary herein, Harriscope
shall not (i) air infomercials or other so called "paid-programming"
(collectively, "Paid Programming")
----------------
34
for any longer time increments or at any different programmed time periods than
as currently in effect, (ii) without the prior written consent (which consent
shall not be unreasonably withheld or delayed) of Purchaser (unless obtaining
such consent is impossible due to the exigency of the situation, in which case
Harriscope shall promptly notify Purchaser of any such action), materially
reduce the amounts or change the times of locally-produced programming
(including news programming) currently aired, and (iii) make any material change
to the program schedule or enter into any material Program Contract without
first consulting with Purchaser in a manner that provides Purchaser with a
meaningful opportunity to consider such change or Program Contract (unless
consulting with Purchaser is impossible due to the exigency of the situation, in
which case Harriscope shall promptly notify Purchaser of any such action).
(e) Except for maintenance, acts of "force majeure" and past
practice in compliance with applicable law, Harriscope shall continuously
operate the Station in compliance with Section 73.1560(c) of the FCC's rules and
regulations. To the extent that Harriscope becomes aware of an event, other
than as set forth in the immediately preceding sentence, that would cause the
Station to operate outside of the parameters set forth in Section 73.1560(c) of
the FCC's rules and regulations for more than six consecutive hours, Harriscope
shall promptly notify Purchaser in writing.
(f) Harriscope agrees to prosecute with due diligence the Power
Increase Application.
(g) Within 20 days of this Agreement, Harriscope will file with
the FCC a request for special temporary authority (the "STA Request") to operate
-----------
KWHY-LP at variance from its licensed parameters with a transmitter power output
of 1 kw; provided that to the extent Harriscope is unable to file the STA
--------
Request due to events reasonably beyond its control, such 20 day period shall be
extended until the earlier of (i) resolution of such events and (ii) the day
prior to the Closing. Harriscope will prosecute the STA Request with due
diligence and shall provide Purchaser with a copy of the FCC's grant of the STA
Request. Harriscope will purchase a new transmitter for KWHY-LP's operations on
Channel 22, as authorized by Permit FCC File No. BPTTL-19981201JA) (the
"Displacement Permit").
-------------------
(h) Harriscope will provide to Purchaser within thirty (30) days
of the date hereof, an engineering study analyzing the Application of the Puri
Family Limited Partnership, FCC File No. BNPTTL-20000831BLO, (the "Hemet
-----
Application") seeking FCC authority for a construction permit to operate a low
-----------
power television station on Channel 22, serving Hemet, California (the "Hemet
-----
Station"), and in particular the potential for interference to be caused by the
-------
Hemet Station to KWHY-TV. If such engineering study indicates the potential for
interference to KWHY-TV and upon the FCC's acceptance of the Hemet Application
Harriscope agrees that prior to the Closing it will take all actions to oppose
the grant of the Hemet Application, including without limitation filing with the
FCC a petition to deny, informal objection or petition for reconsideration.
Harriscope shall consult with Purchaser prior to the filing of any such
objection or petition. From and after the Closing, Harriscope agrees to
cooperate with Purchaser with respect to Purchaser's opposition of the Hemet
Application.
(i) Harriscope will provide to Purchaser within thirty (30) days
of the date hereof, an engineering study analyzing the Application of Xxxxxx
Valley Public Translator, FCC File No. BNPTTL-20000831CHL, (the "Victorville
-----------
Application") seeking FCC authority for a construction permit to operate a low
-----------
power television station on Channel 15, serving Victorville, California (the
"Victorville Station"), and in particular the potential for interference to be
-------------------
caused by the Victorville Station to KWHY-TV. If such engineering study
indicates the
35
potential for interference to KWHY-TV, and upon the FCC's acceptance of the
Victorville Application for filing Harriscope agrees that prior to the Closing
it will take all actions to oppose the grant of the Victorville Application,
including without limitation filing with the FCC a petition to deny, informal
objection or petition for reconsideration. Harriscope shall consult with
Purchaser prior to the filing of any such objection or petition. From and after
the Closing, Harriscope agrees to cooperate with Purchaser with respect to
Purchaser's opposition of the Victorville Application.
Section 5.2 Cooperation. Subject to compliance with applicable Laws,
-----------
from the date hereof through the Closing Date, Harriscope shall confer on a
regular and frequent basis with one or more representatives of Purchaser (who
shall initially be Xxxxx Xxxxxxx) to report operational matters of materiality
and the general status of ongoing operations of the Station. After Purchaser has
delivered to Harriscope the list of employees contemplated by Section 6.8(a)
--------------
hereof, Harriscope will promptly make available to Purchaser prior to the
Closing Date all materials and information related to Employee Liability,
Employee Loans and Employee Plans reasonably requested by Purchaser to
facilitate implementation of the employee benefits provisions of this Agreement.
Notwithstanding the foregoing, between the date of this Agreement and the
Closing Date, Purchaser shall not directly or indirectly control, supervise or
direct or attempt to control, manage, supervise or direct the operation of the
Station or the conduct of its business, all of which shall remain and be the
sole responsibility of and under the complete discretion of Harriscope.
Section 5.3 Access to Information. Harriscope will make available to
---------------------
Purchaser in a timely fashion all materials (other than, to the extent not
already disclosed, specific salaries, advertising rates or customer information)
reasonably requested by Purchaser. Harriscope will cooperate with Purchaser to
provide access to Harriscope's employees, third party suppliers or other third
parties for due diligence or related matters. Purchaser will not, and Purchaser
will use its best efforts to cause its officers, directors, shareholders,
employees, agents and representatives not to, make any statement to, or
otherwise communicate (whether orally or in writing) with, any customer of, or
supplier to, Harriscope regarding this Agreement or the transactions
contemplated hereby or the status of Harriscope's relationship with such
customer or supplier except for statements substantially in the form set forth
in Schedule 6.7 hereto or any other statement or communication (a) with respect
------------
to which Harriscope shall have previously consented or (b) that shall have been
provided to Purchaser by Harriscope for the express purpose of making a
statement to, or otherwise communicating with any such customer or supplier.
Purchaser will have the right to enter the premises and facilities of the
Station at reasonable times to conduct those tests and investigations that
Purchaser reasonably deems necessary and to assure, among other things, that the
Station is being operated in compliance with FCC rules and all other Federal,
state and local requirements; Purchaser will have reasonable access to the
Station's employees; and Harriscope will cooperate fully with Purchaser in its
performance of any tests or investigations, provided that Purchaser shall not
--------
conduct any digging or excavation or other underground work without the prior
written consent of Harriscope, which consent shall not be unreasonably withheld,
and Harriscope shall be permitted to reasonably participate in any such work to
the extent of decisions relating to where such underground work will be
performed, and that Purchaser shall not conduct any subsurface ("Phase II")
--------
environmental investigation or subsurface remediation at the Sunset Boulevard
Property. In the event that Purchaser is required by Law or ordered by directive
of any Governmental Entity to conduct any such investigation or subsurface
remediation, Purchaser shall promptly notify Harriscope with respect thereto and
shall reasonably cooperate with any action by Harriscope to obtain an
appropriate protective order or, after consultation with Purchaser, to take
other appropriate legal action with respect thereto. Subject to the provisions
and limitations set forth in Section 9.1(b) hereof, Harriscope shall have
--------------
36
the right to control, and shall undertake and be responsible for, any such
investigation or remediation required by Law or directive, and Purchaser shall
reasonably cooperate in any such investigation or remediation. Purchaser shall
have the right to investigate above-ground conditions at the Sunset Boulevard
Property, and shall have the right to control, and shall undertake and be
responsible for any contamination directly caused by or for Purchaser, including
any investigation or remediation of asbestos-containing materials at the Sunset
Boulevard Property that is disturbed or damaged by Purchaser in connection with
any renovations undertaken by Purchaser at the Sunset Boulevard Property;
provided that Purchaser shall not be obligated for any remediation or
investigation of above ground conditions at the Sunset Boulevard Property not
directly caused by or for Purchaser including any conditions relating to
asbestos-containing materials not directly caused by or for Purchaser.
Harriscope agrees that Purchaser may make any such materials or other
information available to its directors, officers, employees, agents,
accountants, attorneys, investment bankers, lenders, consultants and
representatives who have a need to know such information and who are advised of
the confidential and propriety nature of such information, and Purchaser agrees
to direct such persons to keep such materials or other information confidential.
Section 5.4 No Solicitation. From the date hereof through the earlier
---------------
of (i) the termination of this Agreement and (ii) the Closing Date, Harriscope
will not, and Harriscope will use its best efforts to cause its officers,
directors, shareholders, employees, agents and representatives not to, solicit,
discuss, authorize or negotiate with any other Person or entertain or consider
any other proposals relating to the possible disposition of the Station or any
material assets thereof, or any interest therein, including, by way of entering
into any local marketing agreement, time brokerage agreement or similar
contract, commitment, understanding or arrangement (collectively, a
"Disposition"). Harriscope shall immediately notify Purchaser (a) after receipt
-----------
of any offer or indication that any Person is considering making an offer for
any such Disposition, which notice shall include the terms and conditions of
such offer or indication, and (b) upon receipt of any request for nonpublic
information relating to Harriscope or for access to the properties, books or
records of Harriscope from any Person that may be considering any such
Disposition.
Section 5.5 Supplements to Schedule. From time to time prior to the
-----------------------
Closing Date, Harriscope shall supplement or amend the Disclosure Schedule
referred to herein with respect to any matter arising after the date hereof
that, if existing or occurring at the date hereof, would have been required to
be set forth or described in such Disclosure Schedule. No supplement or
amendment to the Disclosure Schedule provided to Purchaser in accordance with
this Section 5.5 after the date hereof shall have any effect in determining the
-----------
fulfillment of the conditions set forth in Article VII or for the purposes of
determining whether any Person is entitled to indemnification pursuant to
Article IX unless Purchaser specifically agrees thereto in writing.
Section 5.6 Operating Statements. Prior to the Closing Date,
--------------------
Harriscope shall furnish to Purchaser monthly and annual operating schedules
with respect to the business of the Station, to the extent prepared by
Harriscope in accordance with its usual practices, and monthly financial
information prepared in the ordinary course of business consistent with past
practice, commencing as of and for the monthly period ending January 31, 2001,
such statements to be delivered not later than 20 days after the end of the
respective periods to which they relate.
(b) Prior to the Closing Date, Harriscope shall furnish to
Purchaser copies of all sales pacing reports, to the extent prepared by
Harriscope in accordance with its usual practices and a description of any
changes to programming schedules with respect to the
37
business of the Station, such report or description to be delivered not later
than 10 days after the preparation of the report or change to such programming
schedule.
Section 5.7 Bulk Sales. To the extent permitted by law, each of the
----------
parties hereto waives compliance with any applicable bulk sales laws, including
the Uniform Commercial Code Bulk Transfer provisions. Each of Harriscope and the
Shareholders agrees to pay and discharge in due course and will indemnify and
save harmless Parent, Purchaser and Telemundo Licensee, from and against all
claims made by creditors of Harriscope, including expenses and attorneys' fees
incurred by Parent, Purchaser or Telemundo Licensee in defending against such
claims, except those expressly assumed by Purchaser pursuant hereto.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Records Retention. Purchaser and Harriscope agree that so
-----------------
long as any books, records and files, including Tax Records (collectively, the
"Business Records"), retained by Harriscope relating to the business of the
----------------
Station, or the Business Records of Harriscope delivered to the control of
Purchaser pursuant to this Agreement, remain in existence and available, each
Party (at its expense) shall have the right upon prior notice to inspect and to
make copies of the same at any time during business hours for any proper
purpose. Each Party shall undertake reasonable measures (a) to preserve in good
order to the extent required by law the Business Records of Harriscope retained
by each party respectively, (b) not destroy or allow the destruction of any such
Business Records without first offering in writing to deliver them to the other
party, (c) each retain to the extent required by law and provide the other party
with any records or other information relating to liability for Taxes, and (d)
each provide the other party with any final determination of any such amount
required to be shown on any Tax Return of the other for any period. Without
limiting the generality of the foregoing, each Party shall retain until the
expiration of the applicable statutory period of limitations (including any
extensions), complete copies of all Tax Returns, supporting work schedules and
other records or information (collectively, "Tax Records"), delivered to such
-----------
Party, or retained by such Party, pursuant to this Agreement, that are relevant
to such Tax Returns for all tax periods or portions thereof ending before or
including the Closing Date.
Section 6.2 Consummation of Transaction; Consents, Approvals and
----------------------------------------------------
Filings. Subject to the terms and conditions of this Agreement, each of the
-------
parties hereto shall use all commercially reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
and effecting all necessary registrations and filings. Purchaser shall make or
cause to be made all filings and submissions under Laws applicable to Purchaser,
if any, as may be required for the consummation of the transactions contemplated
by this Agreement. Harriscope shall make or cause to be made all such other
filings and submissions and the status of the waivers, consents and approvals
described therein under Laws applicable to Harriscope, if any, as may be
required for the consummation of the transactions contemplated by this
Agreement. Purchaser and Harriscope shall coordinate and cooperate in exchanging
such information and reasonable assistance as may be requested by any of them in
connection with the filings and submissions contemplated by this Section 6.2.
-----------
Purchaser and Harriscope shall each promptly provide the other or their
respective counsel with copies of all filings made by such party with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
38
Section 6.3 HSR Filings. Each of Harriscope and Purchaser represents
-----------
that Harriscope and an Affiliate of Purchaser, as applicable, filed premerger
notifications under the HSR Act on December 18, 2000, with the Federal Trade
Commission and the Antitrust Division of the Department of Justice, and that
"early termination" of the waiting period under the HSR Act was granted
effective January 11, 2001, of which the parties' respective contact persons for
such filings were notified by letters of the same date from the Federal Trade
Commission. The filing fee associated with such premerger notifications was
paid, and shall be borne, by Purchaser.
Section 6.4 FCC Filing. In addition to and not in limitation of the
----------
covenants contained in Section 6.2 hereof, each party shall proceed as
-----------
expeditiously as practicable to prepare and file with the FCC no later than five
(5) business days after the date of this Agreement the requisite assignment of
license application and other documents in the name of the parties to obtain the
approval of the FCC to the assignment of the FCC Licenses to Telemundo Licensee
as herein contemplated. The parties shall take all steps necessary to prosecute
such applications with diligence and shall diligently oppose any objections to,
appeals from or petitions to reconsider such approval of the FCC, to the end
that FCC approval may be obtained as soon as practicable. Harriscope and
Telemundo Licensee shall each bear its own legal fees and other costs and
expenses with respect to the filing and prosecution of such applications, except
that any filing fees assessed by the FCC shall be borne by Telemundo Licensee.
The parties agree not to take any action that such party knows or has reason to
know would materially adversely affect approval by the FCC to the assignment of
the FCC Licenses to Telemundo Licensee as herein contemplated.
Section 6.5 Purchaser Financing. In no event shall Purchaser's
-------------------
inability to obtain financing (other than as a result of a breach by Harriscope)
be a condition to Purchaser's obligations hereunder. Other than as provided for
in existing Contracts, Harriscope agrees not to take or permit any action that
would restrict the ability of Purchaser to grant or create Liens on the
Purchased Assets following the Closing.
Section 6.6 Further Assurances. In case at any time after the Closing
------------------
Date any further action is necessary or desirable to transfer or record the
transfer of any of the Purchased Assets to Purchaser or Telemundo Licensee or to
assign any rights arising prior to the Closing under the Contracts included in
the Purchased Assets to Harriscope to the extent Harriscope requires such rights
to settle Retained Liabilities, or to otherwise carry out the purposes of this
Agreement, the proper officers and directors of Purchaser and Harriscope shall
execute, acknowledge, deliver and perform, or cause to be executed,
acknowledged, delivered and performed, all such further acts, transfers,
conveyances, powers of attorney, assurances and documents (including
assignments, acknowledgments and consents and other instruments of transfer) and
shall take, or cause to be taken, such further action, in each case to the
extent consistent with this Agreement and not inconsistent with applicable Laws.
Section 6.7 Public Statements. The parties shall consult with each
-----------------
other prior to issuing any press release or making any public announcement with
respect to this Agreement, or the transactions contemplated hereby (including
the financial terms hereunder) prior to the Closing Date, and shall not issue
any such press release or public announcement prior to such consultation or to
which the other party shall reasonably object, except as may be required by law
or judicial process. Harriscope will not, and Harriscope will use its best
efforts to cause its officers, directors, shareholders, employees, agents and
representatives not to, make any statement to, or otherwise communicate (whether
orally or in writing) with, any customer of, or supplier to, Harriscope,
regarding this Agreement or the transactions contemplated hereby except for
statements substantially in the form set forth in Schedule 6.7 hereto or any
------------
other statement or
39
communication (a) with respect to which Purchaser shall have previously
consented or (b) that shall have been provided to Harriscope by Purchaser for
the express purpose of making a statement to, or otherwise communicating with,
any such customer.
Section 6.8 Employee and Labor Matters.
---------------------------
(a) Employees. Purchaser may, but is not obligated to, offer
---------
employment to Harriscope's employees working at the Station as of the Closing
Date on terms and conditions to be determined by Purchaser as of the Closing
Date in its sole discretion; provided, however, that Purchaser shall make
-------- -------
employment offers to sufficient numbers of Harriscope's active employees working
at the Station as of the Closing Date other than employees who qualify as part-
time employees in accordance with 20 CFR (S)693.3 (the "Active Employees") such
----------------
that termination of employment by Harriscope of its Active Employees not offered
employment by Purchaser would not result in a "mass layoff" under the WARN Act,
exclusive of any aggregation with layoffs effected by Harriscope in connection
with BizNews, provided, however, that, notwithstanding the foregoing, in no
-------- -------
event will Purchaser be required to offer employment to more than 86 of the
Active Employees. Within 60 days following the date hereof, Purchaser shall
deliver to Harriscope a list of employees of Harriscope to whom Purchaser
intends to offer employment at the Station effective as of the Closing Date. Any
employee who accepts employment by Purchaser as of the Closing Date as a result
of an offer by Purchaser shall be considered a "Transferred Employee".
--------------------
Harriscope shall be responsible for giving WARN notices to any of its employees
(other than Transferred Employees) terminated on or after the Closing Date.
(b) Transferred Employees. Each Transferred Employee who is
---------------------
hired by Purchaser or one or more of its Affiliates shall be eligible to receive
benefits under Employee Plans (as such term is defined below) sponsored or
maintained by Purchaser or its Affiliates, or to which Purchaser or its
Affiliates contribute, which, in the aggregate, are at least as favorable to
such Transferred Employee as, at Purchaser's election, either the benefits for
which similarly situated employees of Purchaser or its Affiliates are eligible
under Employee Plans maintained or sponsored by Purchaser or its Affiliates (or
to which Purchaser or its Affiliates contribute for their employees) or the
benefits that Harriscope provided to Transferred Employees as of the date of
this Agreement. Each Transferred Employee's period of service with Harriscope or
any Affiliate of Harriscope shall be counted in determining eligibility for and
vesting of benefits, but not for benefit accrual or determination of level or
amount of benefits, under each applicable Employee Plan to the same extent such
service was credited for such purpose by Harriscope. Purchaser shall (a) waive
all preexisting condition limitations and waiting periods with respect to
participation and coverage requirements applicable to Transferred Employees
under any welfare benefit plans of Purchaser or an Affiliate that such employees
are eligible to participate in on or after the Closing Date, other than
limitations or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Closing Date under any
welfare benefit plan maintained by Harriscope for such employees immediately
prior to the Closing Date and (b) provide each Transferred Employee with credit
for any co-payments and deductibles paid pursuant to any welfare benefit plan
maintained by Harriscope during the plan year commencing immediately prior to
the Closing Date in satisfying any applicable co-payment or deductible
requirements under any welfare benefit plans that such employees are eligible to
participate in after the Closing Date for such plan year. In the event that any
Transferred Employee receives an "eligible rollover distribution" (within the
meaning of Section 402(c)(4) of the Code) from a Plan qualified under Section
401 of the Code and maintained or sponsored by Harriscope or one of its
Affiliates, Purchaser shall cause a defined contribution plan qualified under
Section 401 of the Code and maintained or sponsored by Purchaser or one of its
Affiliates
40
to accept a direct rollover of such eligible rollover distribution (including,
any portion of such eligible rollover distribution comprised of the outstanding
balance of a loan from such Plan qualified under Section 401 of the Code and
maintained or sponsored by Harriscope or one of its Affiliates to such
Transferred Employee). For purposes of this Section 6.8(b), the term "Employee
-------------- --------
Plan" means any benefit arrangement, pension plan, or welfare plan, or any plan
----
or arrangement maintained or sponsored by Purchaser or its Affiliates, or to
which Purchaser or its Affiliates contribute, which would be a Plan if it were
sponsored or maintained by Harriscope or one of its Affiliates. It is expressly
understood that Purchaser shall not assume any liability with respect to the
Transferred Employees for benefits, severance pay, pay in lieu of notice or any
other employee liability whatsoever (including any Transition Payment) other
than earned but unpaid salary, wages, bonuses and accrued but unpaid vacation
days, in each case, pertaining to any Transferred Employee that accrued or arose
on or before the Closing Date (such earned but unpaid salary, wages, bonuses and
accrued but unpaid vacation days for all Transferred Employees, together with
any obligations or liabilities under Assumed Plans arising on or after the
Closing Date and Purchaser's obligations under Section 6.8(f) hereof, is
--------------
collectively referred to herein as "Employee Liability") and Purchaser shall be
------------------
reimbursed by Harriscope therefor through the adjustment mechanism set forth in
Section 2.6 hereof.
-----------
(c) Harriscope's Payment to Employees. Harriscope shall pay all
---------------------------------
of its employees and consultants all sums, if any, that are due as of the
Closing Date for earned but unpaid salary, wages and/or benefits, including any
Transition Payment and accrued but unpaid vacation days (other than Employee
Liability) and personal holidays, expense account reimbursements, severance pay,
and pay in lieu of notice of termination. It is expressly understood that,
except as provided for in this Agreement, Purchaser is not assuming any
liability with respect to Harriscope's present and former employees and
consultants for, without limitation, earned but unpaid salary, wages, benefits,
severance pay, pay in lieu of notice, or any other employee or consultant
liability whatsoever pertaining to (x) any Transferred Employee that accrued or
arose prior to or on the Closing Date or (y) any other employee that accrued or
arose at any time, and Harriscope is solely responsible for such obligations.
Harriscope agrees not to enforce any non-competition, confidentiality, or
proprietary rights agreement or provision, to the extent such enforcement would
in any way interfere with (i) Purchaser's employment of any employee or (ii) the
ability of Purchaser to conduct its business.
(d) Purchaser Not Assuming Obligations. Nothing in this
----------------------------------
Agreement shall be construed or interpreted to mean that Purchaser is assuming
or has assumed any Liability (other than Employee Liability) relating to or
arising from any of Harriscope's employee's employment or consultant's
relationship with or termination from Harriscope. Without limiting the
foregoing, Purchaser is not assuming and has not assumed any Plan (other than
the Assumed Plans) and is not assuming and has not assumed any of Harriscope's
obligations or liabilities under any Plan, except for obligations or liabilities
under the Assumed Plans and except for Purchaser's obligations under Section
-------
6.8(f) hereof, in each case arising on or after the Closing Date including
------
liabilities with respect to accrued or future benefits under any such Plans, or
any other liabilities or obligations concerning or relating to any current or
former employees of Harriscope, except as expressly provided in this Agreement.
(e) Harriscope's Indemnification with Respect to Employees.
------------------------------------------------------
Harriscope shall indemnify Purchaser, its Affiliates and each of their officers,
directors, partners, principals, employees and agents against and hold them
harmless from any loss, Liability, claim, damage or expense (including
reasonable legal fees and expenses) suffered or incurred by such Indemnified
Party arising from, relating to or otherwise in respect of any Plan of
Harriscope or any of the employment by Harriscope at any time of any Person,
including employees, or any
41
agent, contractor or consultant retained or employed by, on behalf of or
otherwise relating to Harriscope, except for claims and liabilities under the
Assumed Plans and except for Purchaser's obligations under Section 6.8(f)
--------------
hereof, in each case arising on or after the Closing Date. Without limiting the
foregoing, Harriscope's agreement to indemnify and hold harmless, as set forth
in the preceding sentence, includes but is not limited to claims or Actions
asserted by any Person for wrongful termination, impairment of ability to
compete in the open labor market, breach of an express or implied contract,
breach of the covenant of good faith and fair dealing, breach of fiduciary duty,
fraud, misrepresentation, defamation, slander, infliction of emotional distress,
disability, loss of future earnings, and claims under the California
Constitution or the Constitution of any other state where Harriscope engages in
business, the United States Constitution, applicable state and federal fair
employment Laws, federal equal employment opportunity Laws and federal and state
labor statutes and regulations, including but not limited to, the Civil Rights
Act of 1964, as amended, the Fair Labor Standards Act, as amended, the National
Labor Relations Act, as amended, the Labor-Management Relations Act, as amended,
the WARN Act, the Americans With Disabilities Act of 1990, the Rehabilitation
Act of 1973, as amended, ERISA, and the Age Discrimination in Employment Act of
1967, as amended.
(f) COBRA. On and after the Closing Date, Purchaser shall
-----
provide group health plan continuation coverage that meets the requirements of
COBRA to each employee or former employee of Harriscope or its ERISA Affiliates
(i) whose employment with Harriscope or one of its ERISA Affiliates terminates
as of the Closing Date, (ii) who otherwise constitutes an "M&A Qualified
Beneficiary" of Harriscope or its ERISA Affiliates with respect to the
transactions described in this Agreement within the meaning of Treasury
Regulation Section 55.4980B-9 or (iii) who worked primarily for BizNews
(collectively, "COBRA Employees"). All COBRA Employees known to Harriscope as of
---------------
the date of this Agreement are listed on Schedule 6.8(f) hereto.
---------------
(g) WARN Act. From and after the date hereof, Harriscope shall
--------
not effectuate (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment of Harriscope, or (ii) a "mass layoff" (as defined in the WARN
Act) affecting any site of employment of Harriscope without complying fully with
any and all notice obligations (and/or pay in lieu of notice) under the WARN Act
or any similar obligation under applicable state, local or foreign Law requiring
notice (and/or pay in lieu of notice) to employees in the event of a plant
closing or layoff. Harriscope shall indemnify Purchaser, its Affiliates and each
of their officers, directors, partners, principals, employees and agents against
and hold them harmless from any loss, Liability, claim, damage or expense
(including reasonable legal fees and expenses) incurred in connection with any
suit or claim of violation brought against any such Indemnified Party under the
WARN Act or any similar state, local or foreign Law that relates to actions
taken by Harriscope with regard to any site of employment or one or more
facilities or operating units within any site of employment of Harriscope
affected by the transactions contemplated by this Agreement. For purposes of the
WARN Act and this Agreement, the Closing Date is and shall be the same as the
"effective date" within the meaning of the WARN Act. At the Closing Date,
Harriscope shall deliver a list (the "Termination List") of all employees of
----------------
Harriscope who have suffered an "employment loss" (as defined in the WARN Act)
during the 90-day period prior to the Closing Date (other than any employee who
worked primarily for BizNews), and specifies the date of each "employment loss".
Purchaser agrees not to cause sufficient numbers of Transferred Employees (when
aggregated with the employees on the Termination List) to suffer an "employment
loss" (as defined in the WARN Act) within 90 days of the latest termination date
set forth on the Termination List, such that a notice or notices would be
required under the WARN Act.
42
(h) Profit Sharing Contribution. Harriscope shall either (i)
---------------------------
make a contribution, on or before the Closing, to the Harriscope 401(k) Profit
Sharing Plan (the "Profit Sharing Plan") equal to six percent of the Transferred
-------------------
Employee's total compensation from January 1, 2001 to and including the Closing
Date, or (ii) agrees that a cash equivalent amount of such contribution shall be
added to Purchaser's credits set forth in subsection (a) of the definition of
"Adjustment Amount" in Section 1.6 hereof. Such contribution or cash equivalent
-----------
amount shall be in addition to, and not in lieu of, any Harriscope matching
contribution with respect to the 2001 plan year.
Section 6.9 Purchase Price Allocation.
--------------------------
(a) The Purchase Price shall be initially allocated among the
Purchased Assets by Purchaser in compliance with Section 1060 of the Code and
the Treasury regulations promulgated thereunder to be set forth as soon as
practicable, which allocation shall be binding on Purchaser and Harriscope (the
"Purchase Price Allocation"), unless Harriscope notifies Purchaser in writing of
-------------------------
its reasonable disagreement with Purchaser's allocation within ten (10) days of
the receipt of the Purchase Price Allocation, in which case each of Purchaser
and Harriscope shall use its reasonable best efforts and act in good faith to
reach an agreement as to the final purchase price allocation. The allocation
principles used to determine the Purchase Price Allocation will be the result of
a thorough analysis of the assets and liabilities of Harriscope. Purchaser and
Harriscope each agree to file their respective Tax Returns, reports, and forms,
including Internal Revenue Service Form 8594, in a manner consistent with the
Purchase Price Allocation. For purposes of the preparation of Form 8594, the
taxpayer identification numbers of Purchaser and Harriscope are as follows: (1)
as to Purchaser, #00-0000000, and (2) as to Harriscope, #00-0000000. If any
computation or allocation pursuant to this Section 6.9 is questioned, audited or
-----------
disputed by any Governmental Entity, the party receiving notice thereof will
promptly notify and consult with the other party.
(b) After the Closing Date, Purchaser and Harriscope shall not
(i) take any position in any Tax Return, report, or form, including any
amendments thereto, or (ii) reach any settlement or agreement in respect of any
Audit that, in either case, is inconsistent with the Purchase Price Allocation,
unless such inconsistency is mandated by applicable Law. If such inconsistency
is mandated by applicable Law, the party taking such position shall provide
timely and reasonable notice to the other party of such inconsistency and its
effect on the Purchase Price Allocation.
Section 6.10 Expenses. Other than as specifically set forth herein, all
---------
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including attorneys' fees and expenses) shall
be paid by the party incurring such costs and expenses.
Section 6.11 Transfer Taxes. Purchaser will pay any transfer taxes,
---------------
sales taxes, document stamps or other charges levied by any governmental entity
on account of the transactions contemplated by this Agreement.
Section 6.12 Contract and Lease Consents. In the event the consent or
----------------------------
approval of any party is required in connection with the consummation of the
transactions contemplated hereby in order to assign any Contract or Lease
included in the Purchased Assets and such consent has not been obtained,
Harriscope shall enter into one or more arrangements reasonably satisfactory to
both parties such that Purchaser will receive the benefits of each such Contract
43
and/or Lease and will be responsible for certain obligations thereunder (subject
to the provisions therein) notwithstanding that such consent or approval shall
not have been obtained.
Section 6.13 Specific Assets. By notice in writing to Harriscope
----------------
prior to or concurrently with the Closing, Purchaser may elect to assume any of
Harriscope's insurance policies relating to worker compensation and any of
Harriscope's health or dental plans listed on Section 3.14(c) of the Disclosure
---------------
Schedule, in each case if Purchaser reimburses Harriscope for the prepaid
expenses and deposits related thereto and expressly assumes all obligations and
liabilities arising from and after the Closing Date associated therewith.
Section 6.14 Auckland Agreements. Harriscope agrees to work in good
--------------------
faith using its commercially reasonable best efforts to execute (or cause the
execution of) prior to the later of (i) February 16, 2001 and (ii) the date by
which Harriscope is ultimately required (taking into account any stipulated
extensions) to file its response to the Auckland Litigation (as defined in
Section 3.9 of the Disclosure Schedule) (a) the Settlement Agreement and Mutual
-----------
General Release by and between Auckland Entertainment, LLC and Harriscope, (b)
the Program License Agreement by and between Auckland Entertainment, LLC and
Harriscope regarding "Cuanto Cuesta El Show" and (c) the Program License
Agreement by and between Auckland Entertainment, LLC and Harriscope regarding a
program to be determined by the terms thereof, each substantially in the form
provided by Harriscope to Auckland Entertainment, LLC on February 3, 2001.
Harriscope and Purchaser agree that upon the execution of the Program License
Agreement by and between Auckland Entertainment, LLC and Harriscope regarding
"Cuanto Cuesta El Show" and the Program License Agreement by and between
Auckland Entertainment, LLC and Harriscope regarding a program to be determined
by the terms thereof substantially in the form provided by Harriscope to
Auckland Entertainment, LLC on February 3, 2001, the Purchased Assets shall be
deemed to include such program license agreements. Notwithstanding the
foregoing, in no event shall Harriscope's obligation to use commercially
reasonable best efforts pursuant to the first sentence of this Section 6.14
------------
require Harriscope to modify any of the economic provisions of, or materially
modify any of the other provisions of, the agreements referenced in subsections
(a), (b) and (c) above. Concurrently with the execution of the agreements
referenced in subsections (a), (b) and (c) above, Parent and Harriscope agree to
execute the letter agreement substantially in the form attached as Schedule 6.14
-------------
hereto.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Transactions Contemplated Hereby. The respective obligations of each party to
--------------------------------
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) No temporary restraining order, preliminary or
permanent injunction or other order or decree by any court of competent
jurisdiction that prevents the consummation of the transactions contemplated
hereby or imposes material conditions with respect thereto shall have been
issued and remain in effect (each party agreeing to use its commercially
reasonable best efforts to have any such injunction, order or decree lifted);
(b) No action shall have been taken, and no statute, rule
or regulation shall have been enacted, by any state or Federal government or
governmental agency that would
44
prevent the consummation of the transactions contemplated by this Agreement or
imposes material conditions with respect thereto;
(c) The FCC Approval shall have been obtained; and
(d) All other consents and approvals of Governmental Entities,
including under the HSR Act, legally required for the consummation of the
transactions contemplated by this Agreement shall have been obtained and be in
effect at the Closing Date, except those for which failure to obtain such
consents and approvals would not, individually or in the aggregate, have a
Material Adverse Effect or materially impair the ability of any party to this
Agreement to consummate the transactions contemplated by this Agreement.
Section 7.2 Conditions to Obligations of Harriscope to Effect the
-----------------------------------------------------
Transactions Contemplated Hereby. The obligations of Harriscope to effect the
---------------------------------
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following additional conditions:
(a) Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and the representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all material respects (if not
qualified by materiality) and true and correct (if so qualified) on and as of
the date of this Agreement and at and as of the Closing Date as if made at and
as of the Closing Date, except to the extent that any such representation or
warranty expressly relates to another date (in which case, as of such date) and
Harriscope shall have received a certificate signed on behalf of Purchaser by
the President of Purchaser, to such effect; and
(b) Harriscope shall have received an opinion of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, counsel to Purchaser, setting forth the matters
listed in Exhibit F hereto.
---------
Section 7.3 Conditions to Obligations of Purchaser to Effect the
----------------------------------------------------
Transactions Contemplated Hereby. The obligations of Purchaser to effect the
---------------------------------
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following additional conditions:
(a) Harriscope and each of the Shareholders shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and the representations and
warranties of Harriscope and the Shareholders contained in this Agreement shall
be true and correct in all material respects (if not qualified by materiality)
and true and correct (if so qualified) on and as of the date of this Agreement
and at and as of the Closing Date as if made at and as of the Closing Date,
except to the extent that any such representation or warranty expressly relates
to another date (in which case, as of such date) and Purchaser shall have
received a certificate signed on behalf of Harriscope by the President of
Harriscope, to such effect; provided, that if all breaches hereunder, taken as a
--------
whole, are not reasonably likely to have a Material Adverse Effect, such
breaches shall not be taken into account as a condition to the Closing but
Harriscope shall remain liable therefor pursuant to Article IX below.
(b) The consent or approval of each third party whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any Contract set forth on Schedule 7.3(b) hereto shall have been
---------------
obtained without the imposition of any conditions that will be materially
adverse to the Station.
45
(c) Purchaser shall have received opinions of (i) Xxxxxxx &
Kagon, Law Corporation, counsel to Harriscope, setting forth the matters listed
in Exhibit G-1 hereto, (ii) Irell & Xxxxxxx LLP, special counsel to Harriscope,
-----------
setting forth the matters listed in Exhibit G-2 hereto, and (iii) Xxxx and
-----------
Marks, FCC counsel to Harriscope, substantially in the form attached hereto as
Exhibit G-3.
-----------
(d) Since the Balance Sheet Date, whether or not in the ordinary
course of business, there shall not have occurred or arisen any event,
condition, or state of facts that has resulted in, or has a significant
likelihood of resulting in, a Material Adverse Effect (other than a Material
Adverse Effect caused primarily by changes affecting the Spanish television
broadcast industry in Los Angeles or the Los Angeles broadcast television market
generally).
(e) Harriscope shall have delivered a certification of non-
foreign status ("FIRPTA Certificate") for Harriscope in the form and manner that
------------------
complies with the requirements of Section 1445 of the Code and the regulations
promulgated thereunder and any other certifications which may be required under
applicable law with respect to the transfer of the Purchased Assets. If
Harriscope shall fail to deliver the FIRPTA Certificate or any other tax
certification required to be delivered by Harriscope pursuant hereto, Purchaser
may (but shall not be required to) withhold from the cash payable at the Closing
and pay over to the appropriate taxing authority an amount equal to, in the case
of a failure to provide a certification of non-foreign status in compliance with
Section 1445 of the Code and the regulations promulgated thereunder, ten percent
(10%) of the total "amount realized" (as defined in Section 1445 of the Code)
and, in the case of a failure to provide any other certification, such amount as
necessary to cover such Taxes, based on Purchaser's estimate of the amount of
such potential liability.
(f) Purchaser shall be satisfied that Harriscope will deliver
possession of the premises subject of the Sunset Boulevard Lease immediately
following the Closing.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
------------
prior to the Closing Date:
(a) by the mutual written consent of Purchaser and Harriscope;
(b) by Purchaser or Harriscope by written notice to the other
party if (i) the Closing Date shall not have occurred on or before the Interim
Outside Date, subject to Section 8.2 below, (ii) there shall be any law or
-----------
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or (iii) any court of competent jurisdiction in
the United States or any State shall have issued an order, judgment or decree
(other than a temporary restraining order) restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, judgment or
decree shall have become final and nonappealable;
(c) by Purchaser if there has been a material breach by
Harriscope of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within ten (10) business days
following receipt by the breaching party of notice of such breach (provided,
--------
that if all such breaches hereunder, taken as a whole, are not reasonably likely
to have a Material Adverse Effect, this Agreement may not be terminated by
46
Purchaser pursuant to this subsection (c), but Harriscope shall remain liable
therefor pursuant to Article IX below);
(d) by Harriscope if there has been a material breach by
Purchaser of any representation, warranty, covenant or agreement set forth in
this Agreement, which breach has not been cured within ten (10) business days
following receipt by the breaching party of notice of such breach (or in the
case of a breach by Purchaser of Section 2.4 hereof, within three (3) business
-----------
days following receipt by Purchaser of notice of such breach);
(e) by Purchaser at any time after the Interim Outside Date.
provided, that the right to terminate this Agreement (x) under Section 8.1(b)(i)
-------- -----------------
hereof shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing Date to occur on or before such date and (y) under
Sections 8.1(c) and 8.1(d) hereof shall not be available to any party who at
--------------- ------
such time is in material breach of any representation, warranty, covenant or
agreement set forth in this Agreement.
Section 8.2 Extension of Outside Date.
--------------------------
(a) If the only condition to the Closing set forth in Section
-------
7.1 hereof that has not been satisfied on or before the Interim Outside Date is
---
the receipt of the FCC Approval, then the Closing Date shall be extended to any
date on or prior to the Final Outside Date.
(b) Purchaser agrees that in the event the Closing Date is
extended as provided above, it will make such reasonable modifications and
adjustments based upon advice of counsel as are necessary to secure regulatory
approvals (including by avoiding or setting aside any preliminary or permanent
injunction or other order of any United States federal, state or local court or
other governmental authority), including by assigning all or a portion of its
rights under this Agreement (which assignment shall be permitted by Harriscope)
or by taking actions to make arrangements for the use of an independent trust or
to effect the sale of certain businesses or voting securities of Purchaser.
Section 8.3 Effect of Termination. In the event of termination of this
----------------------
Agreement by either Purchaser or Harriscope as provided in Section 8.1 hereof,
-----------
this Agreement shall forthwith become void (except for the Confidentiality
Agreement and as set forth in this Section 8.3, in Sections 6.7 and 6.10 hereof,
----------- ------------ ----
and Articles IX and X, which shall survive such termination) and there shall be
no liability on the part of Purchaser or Harriscope except for any breach of any
of their obligations under the Confidentiality Agreement or under Sections 6.7
------------
and 6.10 hereof or Articles IX and X. Notwithstanding the foregoing, no party
----
hereto shall be relieved from liability for any material breach of this
Agreement.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification by Harriscope and the Shareholders.
--------------------------------------------------
Harriscope and the Shareholders, jointly and severally, shall indemnify
Purchaser, its Affiliates and each of their officers, directors, partners,
principals, employees and agents (collectively, the "Purchaser Parties") against
-----------------
and hold them harmless (without duplication) from any loss, Liability, claim,
47
damage or expense (including reasonable legal fees and expenses) (collectively,
"Damages") suffered or incurred by any such Purchaser Party arising from,
-------
relating to or otherwise in respect of (i) all Retained Liabilities; (ii) any
breach of, or inaccuracy in, any representation or warranty of Harriscope in
this Agreement or the Disclosure Schedule, the Exhibits and Schedules hereto or
any other certificate or instrument delivered pursuant hereto or in connection
herewith (it being agreed and acknowledged by the parties that for the sole
purpose of the right to indemnification pursuant to this Section 9.1, the
-----------
representations and warranties of Harriscope contained herein shall not be
deemed qualified by any references herein to materiality generally or to whether
or not any such breach or inaccuracy results or may result in a Material Adverse
Effect and the Shareholders shall only be required to indemnify the Purchaser
Parties with respect to breaches of Harriscope's Special Representations); (iii)
any breach of any covenant of Harriscope contained in this Agreement; (iv) any
exposure to the Purchaser Parties as a result of the application of Section 6901
of the Code; (v) any Taxes in respect of the conduct of the business of the
Station on or prior to the Closing Date; and (vi) the content displayed or
services offered under or in connection with the Internet domain name,
"xxxx.xxx", prior to and including the Closing Date or Harriscope's failure to
comply with applicable Laws and regulations or to obtain any necessary licenses,
approvals or consents in connection therewith.
(b) Harriscope and the Shareholders, jointly and severally,
shall indemnify the Purchaser Parties against and hold them harmless from any
Damages suffered or incurred, directly or indirectly, by any such Purchaser
Party arising from, relating to or otherwise in respect of (i) any pollution or
threat to human health or the environment that is related in any way to the
management, use, control, ownership or operation of (A) the Sunset Boulevard
Property, including all on-site and off-site activities related thereto or
resulting therefrom, directly or indirectly, involving Materials of
Environmental Concern, and that occurs, exists, arises out of conditions or
circumstances that occur or exist, or is caused at any time, whether before or
after the Closing Date, and notwithstanding any qualifications or limitations to
any representations or warranties of Harriscope or the Shareholders (including
any qualifications or limitations set forth in Sections 3.16 and 3.17 hereof,
------------- ----
including any Schedules thereto and including any post-Closing migration of
Materials of Environmental Concern to the extent not caused by a Purchaser
Party) other than any investigation or remediation of asbestos-containing
materials at the Sunset Boulevard Property that are disturbed or damaged by
Purchaser in connection with any renovations undertaken by Purchaser and (B) the
Leased Property, including all on-site and off-site activities related thereto
or resulting therefrom, directly or indirectly, involving Materials of
Environmental Concern, and that occurs, exists, arises out of conditions or
circumstances that occur or exist, or is caused at any time prior to the Closing
Date, and notwithstanding any qualifications or limitations to any
representations or warranties of Harriscope or the Shareholders (including any
qualifications or limitations set forth in Sections 3.16 and 3.17 hereof,
------------- ----
including any Schedules thereto), (ii) any Environmental Claim asserted against
one or more of the Purchaser parties for any actual or alleged violation of
Environmental Laws arising from the management, use, control, ownership or
operation of (x) the Sunset Boulevard Property, whether occurring before or
after the Closing Date or (y) the Leased Real Property occurring on or prior to
the Closing Date and (iii) any Environmental Claim against any Person for whom
Harriscope or the Shareholders assume or retain, or have assumed or retained,
liability, whether contractually or by operation of law; provided, however, that
-------- -------
Harriscope and the Shareholders shall not have liability for violations of
Environmental Laws for which Purchaser is directly responsible due to its own
operation of the Sunset Boulevard Property or the release or disposal of
Materials of Environmental Concern by or for a Purchaser Party after the Closing
at or from the Sunset Boulevard Property during the term of the Sunset Boulevard
Lease. In the event that Harriscope believes that a Purchaser Party is
responsible hereunder for the release or disposal of Materials of Environmental
Concern that may have commingled with other contamination at or
48
about the Sunset Boulevard Property, Harriscope shall have the burden of proving
by a preponderance of evidence whether and to the extent that such release or
disposal was caused by or for a Purchaser Party; Purchaser's obligation therefor
shall only be to the extent so proved by Harriscope.
Section 9.2 Indemnification by Purchaser. Purchaser, Telemundo Licensee
-----------------------------
and Parent, jointly and severally, shall indemnify Harriscope and its Affiliates
and each of their respective officers, directors, employees and agents
(collectively, the "Seller Parties") against and hold them harmless from any
--------------
Damages suffered or incurred by any such Seller Party arising from, relating to
or otherwise in respect of (a) all Assumed Liabilities; (b) any breach of, or
inaccuracy in, any representation or warranty of Purchaser, Telemundo Licensee
or Parent contained in this Agreement or any certificate, instrument or other
document delivered pursuant hereto or in connection herewith (it being agreed
and acknowledged by the parties that for the sole purpose of Harriscope's right
to indemnification pursuant to this Section 9.2, the representations and
-----------
warranties of Purchaser, Telemundo Licensee and Parent contained herein shall
not be deemed qualified by any references herein to materiality generally or to
whether or not any such breach or inaccuracy results or may result in a Material
Adverse Effect); (c) any breach of any covenant of Purchaser contained in this
Agreement; and (d) (i)any pollution or threat to human health or the environment
that is related in any way to the management, use, control, or operation of the
Leased Property, including all on-site and off-site activities related thereto
involving Materials of Environmental Concern, and that occurs, exists, arises
out of conditions or circumstances that occur or exist, or is caused, at any
time after the Closing Date; (ii) any Environmental Claim asserted against any
Seller Party for any actual or alleged violation of Environmental Laws arising
from the management, use, control, or operation of the Leased Real Property
occurring after the Closing Date and (iii) any Environmental Claim against any
Person for whom any Purchaser Party assumes or retains, or have assumed or
retained, liability, whether contractually or by operation of law.
Section 9.3 Procedures Relating to Indemnification.
---------------------------------------
(a) Each Person to be indemnified pursuant to Sections 9.1 or
------------
9.2 hereof (the "Indemnified Party") agrees to give prompt notice to the
--- -----------------
indemnifying party (the "Indemnifying Party") of the assertion of any claim, or
------------------
the commencement of any Action, brought against or sought to be collected by a
third party from the Indemnified Party (each a "Third Party Claim"), in respect
-----------------
of which indemnity may be sought by an Indemnified Party under Sections 9.1 or
------------
9.2 hereof; provided, that the omission so to promptly notify the Indemnifying
--- --------
Party with respect to a Third Party Claim will not relieve the Indemnifying
Party from any liability that it may have to such Indemnified Party under
Sections 9.1 or 9.2 hereof, except to the extent that such failure has
------------ ---
materially prejudiced such Indemnifying Party with respect to the defense of
such Third Party Claim. Upon receiving such notice, the Indemnifying Party shall
be entitled to assume, at its sole expense, the defense thereof, with counsel
reasonably satisfactory to the Indemnified Party and, after written notice from
the Indemnifying Party to such Indemnified Party of its election so to assume
the defense of such Third Party Claim within ten business days after receipt of
the notice from the Indemnified Party of such Third Party Claim, the
Indemnifying Party shall not be liable to such Indemnified Party hereunder for
legal expenses of other counsel subsequently incurred by such Indemnified Party
in connection with the defense thereof, unless (i) the Indemnifying Party agrees
to pay such fees and expenses, or (ii) the Indemnifying Party fails promptly to
assume such defense or fails to employ counsel reasonably satisfactory to such
Indemnified Party, or (iii) the named parties to any such Third Party Claim
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party or an Affiliate of the Indemnifying Party, and a material
conflict may exist between such
49
Indemnified Party and the Indemnifying Party or such Affiliate. In the event of
any clause (i), (ii) and (iii) of the immediately preceding sentence, if such
Indemnified Party notifies the Indemnifying Party in writing, the Indemnifying
Party shall not have the right to control the defense thereof and such
Indemnified Party shall have the right to employ its own counsel in connection
with such Third Party Claim and the reasonable fees and expenses of such counsel
shall be paid, as incurred, by the Indemnifying Party, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
Third Party Claim or separate but substantially similar or related Third Party
Claims in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties. The Indemnifying Party shall be liable for Damages arising
out of any settlement of any Third Party Claim. Neither party, considering the
Indemnifying Party as one party and the Indemnified Party as the other party,
shall (i) settle or compromise or consent to the entry of any judgment in or
otherwise seek to terminate any pending or threatened Third Party Claim without
the consent of the other party, which consent shall not be unreasonably
withheld, or (ii) without the prior written consent of the other party effect
any settlement or compromise or consent to the entry of any judgment in or
otherwise seek to terminate any pending or threatened proceeding in respect of
which such other party is, or with reasonable foreseeability could have been, a
party and indemnity could have been sought hereunder by such other party for a
Third Party Claim brought against or sought to be collected from such other
party, unless in the case of either (i) or (ii) immediately above such
settlement, compromise, consent to judgment or termination includes an
unconditional release of such other party from all liability arising out of such
proceeding (provided, that, whether or not such a release is required to be
--------
obtained, the Indemnifying Party shall remain liable to such Indemnified Party
in accordance with Sections 9.1 or 9.2 hereof in the event that a Third Party
------------ ---
Claim is subsequently brought against or sought to be collected from such
Indemnified Party). The indemnification required by Sections 9.1 or 9.2 hereof,
------------ ---
as the case may be, shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or loss, liability, claim, damage or expense is incurred.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party under Sections 9.1 or 9.2 hereof that does not
------------ ---
involve a Third Party Claim being asserted against or sought to be collected
from such Indemnified Party, the Indemnified Party shall deliver notice of such
claim with reasonable promptness to the Indemnifying Party. The failure by any
Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to such Indemnified Party
under Sections 9.1 or 9.2 hereof except to the extent that the Indemnifying
------------ ---
Party demonstrates that it has been materially prejudiced by such failure. If
the Indemnifying Party disputes its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party agree to proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be settled by litigation in a court of
competent jurisdiction.
Section 9.4 Limitations on Indemnification.
-------------------------------
(a) Subject to the provisions of Section 9.4(c) below, all
--------------
representations and warranties of Harriscope and the Shareholders contained in
this Agreement (other than claims with respect to Section 3.1 (organization and
-----------
qualification), Section 3.2 (authority), Section 3.3 (subsidiaries), Sections
----------- ----------- --------
3.11 or 3.18 solely to the extent it relates to FCC matters, Section 3.13 (tax
---- ---- ------------
matters), Section 3.14 (ERISA), Sections 3.16 or 9.1(b) (environmental), or
------------ ------------- ------
Section 3.17 (compliance with laws) solely to the extent it relates to
------------
organization and qualification, authority, FCC, tax, ERISA or environmental
(collectively,
50
"Harriscope's Special Representations")), shall survive the Closing and continue
------------------------------------
in full force and effect for a period equal to eighteen (18) months from the
Closing. Subject to the provisions of Section 9.4(c) below, each of the
--------------
covenants made by Harriscope or the Shareholders herein and each of Harriscope's
Special Representations shall survive the Closing and continue in full force and
effect until sixty (60) days after the expiration of the statute of limitations
applicable to the subject thereof. Subject to the provisions of Section 9.4(c)
--------------
below, all representations and warranties of Purchaser contained in this
Agreement, (other than claims with respect to Section 4.1 (organization and
-----------
qualification) and Section 4.2 (authority) (collectively, "Purchaser's Special
----------- -------------------
Representations")), shall survive the Closing and continue in full force and
---------------
effect for a period equal to eighteen (18) months from the Closing. Subject to
the provisions of Section 9.4(c) below, each of the covenants of Purchaser made
--------------
herein and Purchaser's Special Representations shall survive the Closing and
continue in full force and effect until sixty (60) days after the expiration of
the statute of limitations applicable to the subject thereof. A claim by an
Indemnified Party for indemnification under this Article IX shall be ineffective
unless such Indemnified Party delivers a written claim for indemnification
within the survival period specified in this Section 9.4(a) applicable to the
--------------
representation or warranty that is the subject of the claim.
(b) Subject to the provisions of Section 9.4(c) below, the
--------------
parties agree that (i) Harriscope and the Shareholders shall not be obligated to
indemnify Purchaser for any Damages caused by or arising out of, and Purchaser
shall not be entitled to make any claim for Damages due to, any breach of any
representation or warranty made by Harriscope or the Shareholders herein, unless
and until the aggregate amount of all claims for Purchaser's Damages shall be
equal to Three Hundred Thousand Dollars ($300,000), (ii) if the aggregate amount
of all claims for Purchaser's Damages is greater than Three Hundred Thousand
Dollars ($300,000), all amounts in respect of claims for Purchaser's Damages
shall be payable by Harriscope or the Shareholders upon demand by Purchaser;
(iii) the aggregate liability of Harriscope for Purchaser's Damages caused by or
arising out of any breach of any representation or warranty made by Harriscope
or the Shareholders in this Agreement (other than claims with respect to
Harriscope's Special Representations) shall not exceed $10.0 million; and (iv)
the aggregate liability of Harriscope and the Shareholders for Purchaser's
Damages caused by or arising out of any breach of any covenant contained in this
Agreement or any breach of any representation or warranty made by Harriscope or
the Shareholders contained in Harriscope's Special Representations shall not
exceed the Purchase Price.
(c) Notwithstanding anything to the contrary set forth herein,
no limitation or condition of liability or indemnity applicable to any party
shall apply to fraud-in-fact.
Section 9.5 Treatment of Indemnification Payments. Any payment for
-------------------------------------
indemnification pursuant to this Article IX shall, to the extent permitted by
applicable Law, be treated as an adjustment to the Purchase Price.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Amendment. This Agreement may not be amended except by an
----------
instrument in writing signed on behalf of each of the parties hereto.
51
Section 10.2 Waiver. The failure of any party hereto to comply with
-------
any representation, warranty, covenant or agreement contained in this Agreement
may be waived only by a written instrument signed by the party granting such
waiver. No action taken pursuant to this Agreement, including any investigation
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representation, warranty,
covenant or agreement contained in this Agreement, and no failure by any party
to take any action with respect to any breach of this Agreement or default by
any other party shall constitute a waiver of such party's right to enforce any
provision hereof or to take any such action. The waiver by any party hereto of a
breach of any provision hereunder shall not operate as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
Section 10.3 Notices. Any notices or other communications required or
--------
permitted hereunder shall be in writing and shall be deemed duly given upon (a)
transmitter's confirmation of a receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(c) the expiration of five (5) business days after the day when mailed by
certified or registered mail, postage prepaid, addressed to the parties at the
following addresses (or at such other address as the parties hereto shall
specify by like notice):
If to Parent, Purchaser or Telemundo Licensee, to:
Telemundo Communications Group, Inc., Telemundo of Los Angeles, Inc.
and/or Telemundo of Los Angeles License Corp.
c/o Telemundo Communications Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxx
with copies (which shall not constitute notice to Parent, Purchaser or
Telemundo Licensee) to:
Telemundo Communications Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
and
Telemundo Communications Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
52
Attention: Xxx Xxxxxx
If to Harriscope, to:
Harriscope of Los Angeles, Inc.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxx, Xx.
with copies (which shall not constitute notice to Harriscope) to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
If to the Shareholders, to:
Xx. Xxxx X. Xxxxxx, Xx.
c/o Harriscope of Los Angeles, Inc.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
with copies (which shall not constitute notice to Harriscope) to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
Section 10.4 Interpretation.
---------------
(a) When a reference is made in this Agreement to a section,
article, paragraph, Exhibit or Schedule, such reference shall be to a section,
article, paragraph, Exhibit or Schedule of this Agreement unless otherwise
clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(d) All accounting terms not defined in this Agreement shall
have the meanings determined by GAAP as of the date of this Agreement.
53
(e) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(f) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(g) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-enactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(h) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
(i) The right to indemnification or other remedy based on
Harriscope's representations, warranties, covenants and obligations will not be
affected by any investigation conducted with respect to, or any knowledge of
Purchaser, Telemundo Licensee or Parent acquired (or capable of being acquired)
at any time, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant or obligation.
(j) For all purposes under this Agreement, the period prior to
the Closing Date shall be deemed to end at 11:59 pm on the Closing Date and the
period following the Closing Date shall be deemed to commence at 12:00 am on the
day immediately following the Closing Date.
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. This
-----------------------------------------------
Agreement, including the documents referred to herein (including the
Confidentiality Agreement), (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except as
otherwise provided in Article IX hereof, is not intended to confer upon any
Person other than the parties any rights or remedies.
Section 10.6 Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same agreement.
Section 10.7 Assignment. Other than as specifically set forth in
-----------
Section 8.2(b) hereof, neither this Agreement nor any of the rights, interests
--------------
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that, subject to any required FCC approval
or restrictions, (a) Purchaser may assign, in its sole discretion, any or all of
its rights, interests and obligations under this Agreement to any of its direct
or indirect wholly owned subsidiaries; provided, however, that the financial
-------- -------
ability of any subsidiary assignee to fulfill Purchaser's obligations under this
Agreement shall be equal or greater to Purchaser's financial ability to fulfill
its obligations under this Agreement, (b) Purchaser may collaterally assign its
54
rights hereunder to lenders providing all or any portion of the Financing or
lenders providing loans for any refinancing thereof, and (c) Purchaser may
assign the benefit of any representations and warranties made by Harriscope and
the Stockholders in this Agreement to lenders providing all or any portion of
the Financing or lenders providing loans for any refinancing thereof. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by, the parties and their respective successors
and assigns.
Section 10.8 Severability. If any provision of this Agreement shall
-------------
be held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 10.9 Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.10 Other Remedies. Except as otherwise provided herein,
---------------
any and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
Section 10.11 Governing Law. This Agreement shall be construed,
--------------
interpreted and governed in accordance with the Laws of the State of California
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 10.12 Consent to Jurisdiction. Each party hereby irrevocably
------------------------
submits to the exclusive jurisdiction of the United States District Court for
the Central District of California or any court of the State of California
located in the City of Los Angeles in any Action arising out of or relating to
this Agreement, the Additional Harriscope Documents or the Additional
Purchaser's Documents or any of the transactions contemplated hereby or thereby
and agrees that any such Action shall be brought only in such court, provided,
--------
however, that such consent to jurisdiction is solely for the purpose referred to
-------
in this Section 10.12 and shall not be deemed to be a general submission to the
-------------
jurisdiction of said courts or in the State of California other than for such
purpose. Each party hereby irrevocably waives, to the fullest extent permitted
by Law, any objection that it may now or hereafter have to the laying of the
venue of any such Action brought in such a court and any claim that such Action
brought in such a court has been brought an inconvenient forum.
55
IN WITNESS WHEREOF, Purchaser, Harriscope and the Shareholders have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, as of the date first written above.
HARRISCOPE:
----------
HARRISCOPE OF LOS ANGELES, INC.
By: /s/ Xxxx X. Xxxxxx, Xx.
-------------------------------------
Name: XXXX X. XXXXXX, XX.
Title: President & CEO
THE SHAREHOLDERS:
----------------
/s/ Xxxx X. Xxxxxx, Xx.
-----------------------------------------
Xxxx X. Xxxxxx, Xx., an individual
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx, an individual
PURCHASER:
----------
TELEMUNDO OF LOS ANGELES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer and
Treasurer
TELEMUNDO LICENSEE:
-------------------
TELEMUNDO OF LOS ANGELES LICENSE CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer and
Treasurer
PARENT:
------
TELEMUNDO COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxx X. XxXxxxxx
--------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President and CEO
