1
Exhibit 2.7
ASSET EXCHANGE AGREEMENT
BY AND AMONG
STC BROADCASTING, INC.,
STC BROADCASTING OF VERMONT, INC.,
STC LICENSE COMPANY
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
AND
HEARST-ARGYLE STATIONS, INC.
DATED AS OF FEBRUARY 18, 1998
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2. EXCHANGE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Transfer by the STC Exchange Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Transfer by HAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Description of the Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3.1. FCC Licenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3.2. Real and Leased Property Interests.. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3.3. Tangible Personal Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3.4. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3.5. Program Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3.6. Trade-out Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3.7. Broadcast Time Sales Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3.8. Network Affiliation Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3.9. Operating Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.10. Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.11. Files and Records.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.12. Auxiliary Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.13. Permits and Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.14. Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.15. Certain Accounts Receivable.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.16. Rights Under the Xxxxxxxx Documents.. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.17. Certain Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4.1. Cash.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4.2. Certain Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4.3. Personal Property Disposed Of. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.4. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.5. Employee Plans and Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.6. Right to Tax Refunds.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.7. Certain Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.8. Third-Party Claims.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.9. Rights Under this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4.10. Rights Under the HAT Merger Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.11. Names.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.12. Deposit and Prepaid Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.13. Shared Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.14. Labor Union Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.15. Miscellaneous Excluded Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.4.16. Affiliated Transactions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.17. Assets of Other Television Stations.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5. Exchange of Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. Proration Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7. Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8. Allocation of Asset Values.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9. Assumption of Liabilities by STC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10. Assumption of Liabilities by HAT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11. Matters Related to the Burlington Stations. . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12. Matters Related to the Providence Stations. . . . . . . . . . . . . . . . . . . . . . . . . 16
2.13 Financing of Burlington Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.14. Working Capital.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY THE STC PARTIES. . . . . . . . . . . . . . . . . . . . . 18
3.1. Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3. Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4. Consents and Approvals; No Conflicts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5. Financial Statements; Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 19
3.6. Absence of Certain Changes or Events.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.7. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.8. Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.9. FCC Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10. Real Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.11. Intellectual Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.12. Station Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.13. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.15. Labor Relations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16. Environmental Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.17. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.18. Reports.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.19. Affiliated Transactions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.20. Special Purpose.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.21. Availability of Funds.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY HAT. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.1. Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3. Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4. Consents and Approvals; No Conflicts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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4.5. Financial Statements; Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 29
4.6. Absence of Certain Changes or Events.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.8. Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.9. FCC Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.10. Real Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.11. Intellectual Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.12. Station Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.13. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.14. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.15. Labor Relations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.16. Environmental Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.17. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.18. Reports.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.19. Affiliated Transactions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 5. PRE-CLOSING FILINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1. Applications for FCC Consent.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2. Xxxx-Xxxxx-Xxxxxx. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3. Non-Required Actions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 6. COVENANTS AND AGREEMENTS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1. Negative Covenants.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1.1. Dispositions; Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1.2. Accounting Principles and Practices. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1.3. Trade-out Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1.4. Broadcast Time Sales Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1.5. Network Affiliation Agreements and TBAs. . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1.6. Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1.7. Breaches.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1.8. Employee Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1.9. Actions Affecting FCC Licenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1.10. Programming.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1.11. Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1.12. Transactions With Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2.1. Preserve Existence.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2.2. Normal Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2.3. Maintain FCC Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2.4. Network Affiliation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2.5. Station Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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6.2.7. Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2.8. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2.9. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2.10. Consents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2.11. Corporate Action.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2.12. Environmental Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2.13. Xxxxxxxx Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.3. Confidentiality.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.4. Collection of Receivables.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.5. Possession and Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.6. Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.7. Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.8. Xxxxxxxx Employee Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.9. Other Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.10. Disclosure Schedules.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.11. Bulk Sales Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.12. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.13. Preservation of Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.14. Affiliated Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.15. Clear Channel Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.16. Xxxxxxxx Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.17. Environmental Remediation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.18 Certain FCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF STC. . . . . . . . . . . . . . . . . . . . . . . . 52
7.1. Closing Under the Xxxxxxxx Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.2. Representations and Covenants.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.3. Delivery of Documents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.5 ABC Affiliation Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.6. FCC Order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.7. Xxxx-Xxxxx-Xxxxxx.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.8. Legal Proceedings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HAT. . . . . . . . . . . . . . . . . . . . . . 54
8.1. Closing Under the Xxxxxxxx Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.2. Representations and Covenants.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.3. Delivery of Documents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.4. Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.5. FCC Order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.6. Xxxx-Xxxxx-Xxxxxx.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.7. Legal Proceedings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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8.8. LKE Facilitation Transactions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 9. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.1. Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.2. Time and Place of Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.3. Delivery by STC at the Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.3.1. Agreements and Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.3.2. Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.3.3. Certified Resolutions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.3.4. Officers' Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.3.5. Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.4. Delivery by HAT at the Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4.1. Agreements and Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4.2. Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4.3. Certified Resolutions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4.4. Officers' Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.4.5. Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 10. SURVIVAL; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.1. Survival of Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.2. Indemnification by STC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.3. Indemnification by HAT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.4. Limitations on Indemnification.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.5. Conditions of Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.6. Special Tax Indemnification by HAT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.7. Cure of Breach.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 11. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.1. Termination of Exchange by the Parties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.2. Termination of Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.3. Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 12. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.1. Additional Actions, Documents and Information. . . . . . . . . . . . . . . . . . . . . . . . . 65
12.2. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.3. Expenses and Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.5. Waiver.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.6. Benefit and Assignment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.7. Entire Agreement; Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.8. Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.9. Headings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.10. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.11. Signature in Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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SCHEDULES
Schedule 2.3.1 FCC Licenses
Schedule 2.3.2 Real Property Interests
Schedule 2.3.3 Tangible Personal Property
Schedule 2.3.4 Intellectual Property
Schedule 2.3.5 Program Contracts
Schedule 2.3.6 Trade-out Agreements
Schedule 2.3.8 Network Affiliation Agreements
Schedule 2.3.9 Other Operating Contracts
Schedule 2.3.10 Vehicles
Schedule 2.3.12 Auxiliary Facilities
Schedule 2.3.14 Accounts Receivable
Schedule 2.4.13 Shared Contracts
Schedule 2.4.14 Labor Union Contracts
Schedule 2.4.15 Excluded Assets
Schedule 2.4.16 Affiliated Transactions
Schedule 2.12 WNAC/WPRI Assets
Schedule 3.4 STC Consents
Schedule 3.5 STC Financial Statements
Schedule 3.6 STC Absence of Certain Changes or Events
Schedule 3.7 STC Litigation
Schedule 3.8 STC Encumbrances on Assets
Schedule 3.9 STC FCC Matters
Schedule 3.10 STC Real Property and Encumbrances
Schedule 3.14 STC Employee Benefit Plans
Schedule 3.15 STC Employee Matters
Schedule 3.16 STC Environmental Matters
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Schedule 3.17 STC Insurance
Schedule 3.19 STC Affiliated Transactions
Schedule 4.4 HAT Consents
Schedule 4.6 HAT Absence of Certain Changes or Events
Schedule 4.7 HAT Litigation
Schedule 4.8 HAT Encumbrances on Assets
Schedule 4.9 HAT FCC Matters
Schedule 4.10 HAT Real Property and Encumbrances
Schedule 4.14 HAT Employee Benefit Plans
Schedule 4.15 HAT Employee Matters
Schedule 4.16 HAT Environmental Matters
Schedule 4.17 HAT Insurance
Schedule 4.19 HAT Affiliated Transactions
Schedule 12.2 Brokers
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EXHIBITS
EXHIBIT A Form of Xxxx of Sale and Assignment of Assets
EXHIBIT B Form of Assignment of FCC Licenses
EXHIBIT C Form of Assignment of Contracts and Leases
EXHIBIT D Form of Assumption Agreement
EXHIBIT E Form of Credit Facilities
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (this "Agreement") is entered into as of
this 18th day of February, 1998, by and among STC BROADCASTING, INC., a Delaware
corporation ("STC Broadcasting"), STC BROADCASTING OF VERMONT, INC., a Delaware
corporation and a wholly-owned subsidiary of STC Broadcasting ("STCBV"), STC
LICENSE COMPANY, a Delaware corporation and wholly-owned subsidiary of STC
Broadcasting ("STC License Company"), and STC BROADCASTING OF VERMONT
SUBSIDIARY, INC., a Delaware corporation and wholly-owned subsidiary of STCBV
("STCBV Sub") (STC Broadcasting, STCBV, STC License Company and STCBV Sub are
sometimes individually referred to herein as a "STC Party" and collectively
referred to herein as "STC" or the "STC Parties"), and HEARST-ARGYLE STATIONS,
INC., a Nevada corporation ("HAT").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of July 16,
1997 (the "Heritage Agreement"), by and among Xxxxxxxx Broadcast Group, Inc., a
Maryland corporation ("Xxxxxxxx Parent"), and certain indirect subsidiaries (the
"Heritage Subsidiaries") of Heritage Media Corporation, a Delaware corporation
("HMC"), Xxxxxxxx has agreed to buy, and the Heritage Subsidiaries have agreed
to sell, certain broadcast stations owned, controlled or operated by the
Heritage Subsidiaries, including (i) television broadcast station WPTZ (TV),
Channel 0, Xxxxx Xxxx, Xxx Xxxx ("XXXX"); (ii) certain assets and rights
relating to television broadcast station WFFF-TV, Channel 44, Burlington,
Vermont ("WFFF"); and (iii) television broadcast station WNNE (TV), Channel 00,
Xxxxxxxx, Xxxxxxx ("XXXX") (WPTZ, WFFF and WNNE are collectively referred to
herein as the "Burlington Stations");
WHEREAS, STCBV and Tuscaloosa Broadcasting, Inc., a Maryland corporation
("Tuscaloosa"), WPTZ Licensee, Inc., a Maryland corporation ("WPTZ Licensee"),
and WNNE Licensee, Inc., a Maryland corporation ("WNNE Licensee") (Tuscaloosa,
WPTZ Licensee and WNNE Licensee are collectively referred to herein as
"Xxxxxxxx") have as of February 3, 1998, entered into an Asset Purchase
Agreement (the "Xxxxxxxx Agreement") pursuant to which STCBV has agreed to buy,
and Xxxxxxxx has agreed to sell, the assets of the Burlington Stations, all
subject to the terms described in the Xxxxxxxx Agreement;
WHEREAS, prior to any closing under the Xxxxxxxx Agreement, STCBV
intends to assign to STCBV Sub all of STCBV's rights under the Xxxxxxxx
Documents to acquire the Assets (as defined in the Xxxxxxxx Agreement);
WHEREAS, STC License Company is the licensee of television broadcast
station KSBW (TV), Channel 8, Salinas, California ("KSBW"), pursuant to certain
authorizations issued by the FCC, and STC Broadcasting operates KSBW and owns or
leases certain assets used in connection with the operation of KSBW (KSBW, WPTZ
and WNNE are collectively referred to herein as the "STC Stations");
11
WHEREAS, HAT is the licensee of television broadcast station WDTN (TV),
Channel 2, Dayton, Ohio ("WDTN"), pursuant to certain authorizations issued by
the FCC, and HAT operates WDTN and owns or leases certain assets used in
connection with the operation of WDTN;
WHEREAS, HAT (as successor-in-interest to WNAC Argyle Television, Inc.,
a Nevada corporation ("WNAC Argyle")) is the licensee of television broadcast
station WNAC (TV), Channel 00, Xxxxxxxxxx, Xxxxx Xxxxxx ("XXXX"), pursuant to
certain authorizations issued by the FCC (WDTN and WNAC are collectively
referred to herein as the "HAT Stations") (the STC Stations and the HAT Stations
are sometimes each individually referred to herein as a "Station");
WHEREAS, Clear Channel Television License, Inc. is the licensee of
WPRI-TV, Channel 12, Providence, Rhode Island ("WPRI"), pursuant to certain
authorizations issued by the FCC;
WHEREAS, pursuant to a Joint Marketing and Programming Agreement dated
as of June 10, 1996, and a Reciprocal Right of First Refusal dated as of June
10, 1996 (collectively, the "Clear Channel Agreements"), both between Clear
Channel Television, Inc. ("Clear Channel") and HAT (as successor-in-interest to
WNAC Argyle and Providence Argyle Television, Inc., a Delaware corporation),
each of HAT and Clear Channel have certain rights and obligations regarding WNAC
and WPRI;
WHEREAS, STC desires to assign, transfer and convey to HAT all of STC's
right, title and interest in the assets of the STC Stations, and HAT desires to
assign, transfer and convey to STC all of HAT's right, title and interest in the
Clear Channel Agreements and the assets of the HAT Stations, all subject to the
terms and conditions described in this Agreement;
WHEREAS, the parties hereto intend that certain of the conveyances
contemplated by this Agreement shall constitute a "like-kind exchange" (the
"Like-Kind Exchange") and that certain of the transactions hereunder shall
qualify as such for nonrecognition of income under Section 1031 of the Code; and
WHEREAS, in order to facilitate the Like-Kind Exchange, immediately
prior to or at the Closing hereunder, STC shall take such actions in order that
all of the FCC Licenses of the STC Stations shall be held by STC License Company
and all other Assets of STC shall be held by STC Broadcasting as contemplated by
Section 8.8 (after the consummation of any such actions, "STC Broadcasting and
"STC License Company" are sometimes referred to herein as the "STC Exchange
Entities").
WHEREAS, pursuant to a guaranty given as of the date hereof by
Hearst-Argyle Television, Inc., a Delaware corporation ("H-A"), H-A has
guaranteed to STC the prompt and complete performance of the obligations of HAT
arising under or pursuant to this Agreement.
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NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and incorporated
herein for all purposes of this Agreement (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references herein to "Articles" or "Sections" are to
Articles or Sections of this Agreement.
ARTICLE 2.
EXCHANGE OF ASSETS
2.1. TRANSFER BY THE STC EXCHANGE ENTITIES.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, (a) STC
Broadcasting shall assign, transfer, convey and deliver to HAT free and clear of
any Encumbrances other than Permitted Encumbrances, and HAT shall acquire and
accept from STC Broadcasting all right, title and interest of STC Broadcasting
in, to and under all real, personal and mixed assets, rights, benefits and
privileges, both tangible and intangible, owned, leased, used or useful by STC
Broadcasting in connection with the business and operations of the STC Stations
other than the STC License Assets (collectively, the "STC Non-License Assets");
and (b) STC License Company shall assign, transfer, convey and deliver to HAT
free and clear of any Encumbrances other than Permitted Encumbrances, and HAT
shall acquire and accept from STC License Company, all right, title and interest
of STC License Company in, to and under all STC License Assets (the STC
Non-License Assets and the STC License Assets are collectively referred to
herein as the "STC Assets"). The STC Assets shall exclude the STC Excluded
Assets described in Section 2.4.
2.2. TRANSFER BY HAT.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, (a) HAT shall
assign, transfer, convey and deliver to STC Broadcasting free and clear of any
Encumbrances other than Permitted Encumbrances, and STC Broadcasting shall
acquire and accept from HAT, all right, title and interest of HAT in, to and
under all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible, owned, leased, used or useful by HAT in connection with
the business and operations of the HAT Stations other than the HAT License
Assets (collectively, the "HAT Non-License Assets"); and (b) HAT shall assign,
transfer, convey and deliver to STC License Company (and in the case of the FCC
Licenses for WNAC, for
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assignment, transfer, conveyance and delivery by STC License Company immediately
thereafter on the Closing Date to Xxxxx Acquisition License Company, a Delaware
corporation ultimately controlled by Xxxxxx X. Xxxxx ("SALC")) free and clear of
any Encumbrances other than Permitted Encumbrances, and STC License Company
shall acquire and accept from HAT, all right, title and interest of HAT in, to
and under all HAT License Assets (the HAT License Assets and the HAT Non-License
Assets are collectively referred to herein as the "HAT Assets") (the STC Assets
and the HAT Assets are sometimes each individually referred to herein as
"Assets"). The HAT Assets shall exclude the HAT Excluded Assets described in
Section 2.4.
2.3. DESCRIPTION OF THE ASSETS.
The Assets for each Station shall include, without limitation, all of
the right, title and interest of the party transferring such Assets in, to and
under the items described below. The party transferring Assets is sometimes
referred to herein as the "Transferring Party"; and the party acquiring and
accepting Assets from the Transferring Party is sometimes referred to herein as
the "Recipient Party".
2.3.1. FCC LICENSES.
All licenses, permits and other authorizations issued by the FCC for the
operation of the Stations of the Transferring Party (the "FCC Licenses"),
including without limitation those listed in Schedule 2.3.1, and all
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto.
2.3.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property, including, without
limitation, all land, fee interests, easements and other interests of every kind
and description in real property, buildings, structures, fixtures,
appurtenances, towers and antennae, and other improvements thereon owned by the
Transferring Party and used or useful in connection with the business and
operations of its Stations ("Real Property"), including, without limitation, all
of those items listed in Schedule 2.3.2.
(b) All the real property leasehold interests,
including, without limitation, leases and subleases of any land, easements and
other real property leasehold interests of every kind and description in
real property, buildings, structures, fixtures, appurtenances, towers and
antennae, and other improvements thereon leased by the Transferring Party in
connection with the business and operations of its Stations ("Leased Property"),
including, without limitation, all of those items listed in Schedule 2.3.2.
2.3.3. TANGIBLE PERSONAL PROPERTY.
All of the furniture, fixtures, furnishings, machinery, computers,
equipment, inventory, spare parts, supplies, office materials and other
tangible property of every kind and description owned, leased or used by the
Transferring Party in connection with the
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business and operations of its Stations, together with any replacements thereof
and additions thereto made before the Closing Date, and less any retirements or
dispositions thereof made before the Closing Date in the Ordinary Course of
Business, including, without limitation, those items which have a book value in
excess of Five Thousand Dollars ($5,000), all of which are set forth and
identified in Schedule 2.3.3.
2.3.4. INTELLECTUAL PROPERTY.
All of the service marks, copyrights, franchises, trademarks, trade
names, jingles, slogans, logotypes and other similar intangible assets
maintained, owned, leased or used by the Transferring Party in connection with
the business and operations of its Stations (including any and all applications,
registrations, extensions and renewals relating thereto) (the "Intellectual
Property"), and all of the rights, benefits and privileges associated therewith
including, without limitation, the right to use the call letters for its
Stations identified in Schedule 2.3.4.
2.3.5. PROGRAM CONTRACTS.
The program licenses and contracts under which the Transferring Party is
authorized to broadcast programs on its Stations (collectively the "Program
Contracts") including, without limitation, (a) all program (cash and non-cash)
licenses and contracts listed on Schedule 2.3.5, and (b) any other such program
contracts that are entered into between the date of this Agreement and the
Closing Date in accordance with the terms of this Agreement.
2.3.6. TRADE-OUT AGREEMENTS.
All contracts and agreements (excluding Program Contracts) pursuant to
which commercial air time on the Transferring Party's Stations has been sold,
traded or bartered in consideration for any property or services in lieu of
or in addition to cash (collectively, the "Trade-out Agreements") including,
without limitation, those set forth and identified in Schedule 2.3.6.
2.3.7. BROADCAST TIME SALES AGREEMENT.
All contracts and agreements pursuant to which commercial air time on
the Transferring Party's Stations has been sold for cash (collectively the
"Time Sales Agreements").
2.3.8. NETWORK AFFILIATION AGREEMENTS.
All network affiliation agreements and other contracts of the Stations
of the Transferring Party with a television broadcast network (collectively,
the "Network Agreements") including, without limitation, those listed on
Schedule 2.3.8.
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2.3.9. OPERATING CONTRACTS.
All other operating contracts and agreements relating to the business or
operations of the Transferring Party's Stations, all material such contracts as
of the date hereof being listed on Schedule 2.3.9 (including, without
limitation, the Clear Channel Agreements, all employment agreements and talent
contracts, all leases and subleases relating to the Leased Property, all
agreements relating to any motor vehicles, and all national and local
advertising representation agreements for its Stations), together with all
contracts and agreements that will be entered into between the date of this
Agreement and the Closing Date in accordance with the terms of this Agreement
(collectively, the "Operating Contracts" and together with the Program
Contracts, Trade-out Agreements, Time Sales Agreements and Network Agreements,
the "Station Contracts").
2.3.10. VEHICLES.
All automotive equipment and motor vehicles maintained, owned, leased or
otherwise used by the Transferring Party in connection with the business and
operations of its Stations, including, without limitation, those set forth and
described in Schedule 2.3.10.
2.3.11. FILES AND RECORDS.
All engineering, business and other books, papers, logs, files and
records pertaining to the business and operations of the Transferring Party's
Stations, but not the organizational documents and records of the Transferring
Party.
2.3.12. AUXILIARY FACILITIES.
All translators, earth stations, and other auxiliary facilities, and all
applications therefor owned, leased or otherwise used or useful by the
Transferring Party in connection with the business and operations of its
Stations, including, without limitation, those set forth and described in
Schedule 2.3.12.
2.3.13. PERMITS AND LICENSES.
All permits, approvals, orders, authorizations, consents, licenses,
certificates, franchises, exemptions of, or filings or registrations with, any
court or Governmental Authority (other than the FCC) in any jurisdiction, which
have been issued or granted to or are owned or used or useful by the
Transferring Party in connection with the business and operations of its
Stations and all pending applications therefor.
2.3.14. GOODWILL.
The business of the Transferring Party's Stations as a "going concern",
customer relationships and goodwill.
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2.3.15. Certain Accounts Receivable.
As to STC, all Accounts Receivable arising out of the business and
operations of KSBW, and all Accounts Receivable arising out of the business and
operations of the Burlington Stations from the STC Transfer Date under the
Xxxxxxxx Agreement. As to HAT, all Accounts Receivable arising out of the
business and operations of WDTN. Schedule 2.3.15 contains a true and complete
list, dated as of December 31, 1997, of all Accounts Receivable with respect to
KSBW and WDTN as of such date.
2.3.16. RIGHTS UNDER THE XXXXXXXX DOCUMENTS.
As to STC, all of STCBV's rights under or pursuant to the Xxxxxxxx
Documents except to the extent that such rights pertain to or affect WFFF.
2.3.17. CERTAIN CASH.
As to STC, all cash, cash equivalents or deposits arising out of the
business and operations of the Burlington Stations from and after the STC
Transfer Date, and all interest payable in connection with any such cash, cash
equivalents or deposits after giving effect to the payment of operating expenses
of the Burlington Stations, but excluding any proceeds of a WFFF Disposition (as
defined in that certain Credit Agreement to be entered into by HAT and STCBV Sub
in connection with the Burlington Financing Amount).
2.4. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement, there shall
be excluded from the Assets of each Transferring Party and retained by such
Transferring Party, to the extent in existence as of the Closing Date, the
following assets (collectively, the "Excluded Assets") (the Excluded Assets for
the STC Stations are sometimes individually referred to herein as the "STC
Excluded Assets"; and the Excluded Assets for the HAT Stations are sometimes
individually referred to herein as the "HAT Excluded Assets").
2.4.1. CASH.
Except as set forth in Section 2.3.17, all cash, cash equivalents or
deposits held by such Transferring Party, all interest payable in connection
with any such cash, cash equivalents or deposits or short term investments, bank
balances and rights in and to bank accounts, marketable and other securities of
such Transferring Party.
2.4.2. CERTAIN ACCOUNTS RECEIVABLE.
As to STC, all accounts receivable assigned to STCBV Sub for purposes of
collection only under the Xxxxxxxx Agreement (the "Xxxxxxxx Receivables"); and,
as to HAT, all amounts which are payable to HAT under the Clear Channel
Agreements which were earned prior to the Closing Date.
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2.4.3. PERSONAL PROPERTY DISPOSED OF.
All tangible personal property disposed of or consumed in the Ordinary
Course of Business as permitted by this Agreement.
2.4.4. INSURANCE.
All contracts of insurance and all insurance plans and the assets
thereof.
2.4.5. EMPLOYEE PLANS AND ASSETS.
All Plans, Benefit Arrangements (except for any Station Contracts,
Proration Items or other matters which are specifically required to be assumed
by the Recipient Party pursuant to the terms thereof), Qualified Plans and
Welfare Plans and the assets thereof.
2.4.6. RIGHT TO TAX REFUNDS.
Any and all claims of the Transferring Party with respect to any Tax
refunds.
2.4.7. CERTAIN BOOKS AND RECORDS.
All of (a) the Transferring Party's organizational documents, corporate
books and records (including minute books and stock ledgers and records), and
originals of account books of original entry, (b) duplicated copies of any
books, records, accounts, checks, payment records, Tax records (including
payroll, unemployment, real estate and other Tax records) and other similar
books, records and information of the Transferring Party relating to the
Transferring Party's operation of the business of its Stations prior to the
Closing Date, (c) all records prepared by or on behalf of the Transferring Party
in connection with the acquisition by it or conveyance of its Stations, and (d)
all records and documents relating to any Excluded Assets.
2.4.8. THIRD-PARTY CLAIMS.
To the extent related to any Excluded Assets, all rights and claims of
the Transferring Party whether mature, contingent or otherwise, against third
parties relating to the Assets or the Stations of the Transferring Party,
whether in tort, contract, or otherwise.
2.4.9. RIGHTS UNDER THIS AGREEMENT.
All of the Transferring Party's rights under or pursuant to this
Agreement or any other rights in favor of the Transferring Party pursuant to the
other agreements contemplated hereby.
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2.4.10. RIGHTS UNDER THE HAT MERGER AGREEMENT.
As to HAT, all of HAT's rights under or pursuant to that (a) certain
Amended and Restated Agreement and Plan of Merger, dated as of March 26, 1997,
by and among The Hearst Corporation, HAT Merger Sub, Inc., HAT Contribution Sub,
Inc., Argyle Television, Inc., and (b) that certain Stock Purchase Agreement,
dated as August 26, 1994, by and among Argyle Television Holdings II, Inc. and
NPG, Inc.
2.4.11. NAMES.
As to STC, all rights to the name "Sunrise Television", "STC", "STC
Broadcasting" and any logo or variation thereof and the goodwill associated
therewith; and, as to HAT, all rights to the name "Hearst-Argyle", "Hearst" and
any logo or variation thereof and the goodwill associated therewith.
2.4.12. DEPOSIT AND PREPAID EXPENSES.
All of the Transferring Party's deposits and prepaid expenses, provided,
however, any deposit and prepaid expenses shall be included in the Assets of the
Transferring Party conveyed pursuant hereto to the extent that the Transferring
Party receives a credit therefor in the calculation of the Proration Amount
pursuant to Section 2.6.
2.4.13. SHARED CONTRACTS.
As to STC, all shared contracts and agreements relating to both the STC
Stations and any television broadcast station other than the STC Stations
(including, without limitation, WFFF, subject to Section 2.11) as identified on
Schedule 2.4.13; and, as to HAT, all shared contracts and agreements relating to
both the HAT Stations and any television broadcast station other than the HAT
Stations as identified on Schedule 2.4.13.
2.4.14. LABOR UNION CONTRACTS.
As to STC, all labor union or other collective bargaining agreements
relating to KSBW as identified on Schedule 2.4.14; and, as to HAT, all labor
union or other collective bargaining agreements relating to WDTN as identified
on Schedule 2.4.14.
2.4.15. MISCELLANEOUS EXCLUDED ASSETS.
The assets listed and identified on Schedule 2.4.15.
2.4.16. AFFILIATED TRANSACTIONS.
All of the Transferring Party's rights and obligations under any
Affiliated Transactions except to the extent any such rights or obligations are
temporarily transferred pursuant to Section 6.13, including, without limitation,
those set forth in Schedule 2.4.16.
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2.4.17. ASSETS OF OTHER TELEVISION STATIONS.
As to STC, all assets and properties of STC owned, used, held for use or
leased by STC in connection with the business and operations of any television
broadcast station other than the STC Stations (including, with out limitation,
WFFF, subject to Section 2.11); and, as to HAT, all assets and properties of HAT
owned, used, held for use or leased by HAT in connection with the business and
operations of any television broadcast station other than the HAT Stations.
2.5. EXCHANGE OF ASSETS.
2.5.1. For and in consideration of the conveyance of the STC
Assets to HAT and in addition to the assumption of Liabilities by HAT as set
forth in Section 2.10, at the Closing HAT agrees to (a) transfer to STC
Broadcasting the HAT Non-License Assets and transfer to STC License Company the
HAT License Assets, as provided for in Section 2.2, and (b) pay to STC by wire
transfer of immediately available funds to an account designated by STC the
amount of Twenty-One Million Three Hundred Sixty-Six Thousand Six Hundred and
Fifty Dollars ($21,366,650) (the "Cash Consideration"), less (i) any Burlington
Financing Amount which is not repaid by STCBV Sub as of the Closing Date, and
(ii) plus any adjustments, if any, with respect to the ABC Affiliation Agreement
as described in Section 7.5.
2.5.2. For and in consideration of the conveyance of the HAT
Assets to the STC Exchange Entities, the payment of the Cash Consideration to
STC and in addition to the assumption of Liabilities by STC as set forth in
Section 2.9, at the Closing the STC Exchange Entities agree to transfer to HAT
the STC Assets as provided for in Section 2.3.
2.6. PRORATION AMOUNTS.
2.6.1. At least five (5) days prior to the Closing Date, each
Transferring Party shall make a good faith estimate of the Proration Items for
its Stations that are customary in television broadcast station transactions
(each a "Proration Amount") to reflect that all Proration Items of the
Transferring Party's Stations shall be apportioned between the Recipient Party
and the Transferring Party in accordance with the principle that the
Transferring Party shall receive the benefit of all revenues, refunds, deposits
(other than deposits for Program Contracts which shall be prorated based on the
percentage of the term that the film or program was aired on the Transferring
Party's Stations before the Closing Date and the percentage available to be
aired on and after the Closing Date) and prepaid expenses, and shall be
responsible for all expenses, costs and liabilities allocable to the conduct of
the businesses or operations of the Transferring Party's Stations for the period
prior to the Closing Date, and the Recipient Party shall receive the benefit of
all revenues, refunds, deposits and prepaid expenses, and shall be responsible
for all expenses, costs and liabilities allocable to the conduct of the
businesses or operations of such Stations from and after the Closing Date;
provided, however, there shall be no adjustment or proration for any negative or
positive net trade balance for WPTZ or WNNE except to the extent that the
negative trade balance (i.e., the amount by which the value of goods
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or services to be received is less than the value of any advertising time
remaining to be run) for either Station exceeds Fifty Thousand Dollars ($50,000)
as of the Closing Date; provided, further, that prorations or adjustments
pursuant to this Section 2.6 shall be made with respect to WNAC and WPRI only to
the extent that there are earnings under the Clear Channel Agreements which have
not been paid to HAT and which relate to HAT's period of ownership of WNAC.
Determinations pursuant to this Section 2.6.1 shall be made in accordance with
generally accepted accounting principles consistently applied for the period
prior to the Closing Date. All Proration Amounts shall be payable in cash at
the Closing.
2.6.2. Within ninety (90) days after the Closing Date, the
Recipient Party shall deliver to the Transferring Party in writing and in
reasonable detail a good faith final determination of the Proration Amount
determined as of the Closing Date under Section 2.6.1 ("Final Proration
Amount"). The Transferring Party shall assist the Recipient Party in making
such determination, and the Recipient Party shall provide the Transferring Party
with reasonable access to the properties, books and records relating to the
Stations of the Transferring Party for the purpose of determining the Final
Proration Amount. The Transferring Party shall have the right to review the
computations and workpapers used in connection with the Recipient Party's
preparation of the Final Proration Amount. If the Transferring Party disagrees
with the amount of the Final Proration Amount determined by the Recipient Party,
the Transferring Party shall so notify the Recipient Party in writing within
thirty (30) days after the date of receipt of the Recipient Party's Final
Proration Amount, specifying in detail any point of disagreement; provided,
however, that if the Transferring Party fails to notify the Recipient Party in
writing of the Transferring Party's disagreement within such thirty (30) day
period, the Recipient Party's determination of the Final Proration Amount shall
be final, conclusive and binding on the parties. After the receipt of any
notice of disagreement, the parties shall negotiate in good faith to resolve any
disagreements regarding the Final Proration Amount. If any such disagreement
cannot be resolved by the parties within thirty (30) days after the Recipient
Party has received notice from the Transferring Party of the existence of such
disagreement, the parties shall jointly select a nationally recognized
independent public accounting firm (the "Accounting Firm"), to review the
Recipient Party's determination of the Final Proration Amount and to resolve as
soon as possible all points of disagreement raised by the Transferring Party.
All determinations made by the Accounting Firm with respect to the Final
Proration Amount shall be final, conclusive and binding on the parties. The
fees and expenses of the Accounting Firm incurred in connection with any such
determination shall be shared one-half by the Recipient Party and one-half by
the Transferring Party.
2.6.3. If the Final Proration Amount is such that the
Recipient Party's payment of the Proration Amount at the Closing was an
underpayment to the Transferring Party, then the Recipient Party shall pay such
underpayment amount to the Transferring Party in cash, within two (2) business
days following the final determination of the Final Proration Amount. If the
Final Proration Amount is such that the Recipient Party's payment of the
Proration Amount at the Closing was an overpayment to the Transferring Party,
then the Transferring Party shall pay such overpayment amount to the Recipient
Party in cash within two (2) business days following the final determination of
the Final Proration Amount. Any amounts paid pursuant to
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this Section 2.6.3 shall be by wire transfer of immediately available funds for
credit to the recipient at a bank account identified by such recipient in
writing.
2.6.4. The parties agree that prior to the date of the final
determination of the Final Proration Amount pursuant to this Section 2.6 (by the
Accounting Firm or otherwise), neither party will destroy any records pertaining
to, or necessary for, the final determination of the Final Proration Amount.
2.7. ACCOUNTS RECEIVABLE.
2.7.1. At least five (5) days prior to the Closing Date, STC
shall make a good faith estimate of the Accounts Receivable as of the Closing
Date for KSBW less five percent (5%) reserved for bad debts (the "KSBW
Receivables"), and HAT shall make a good faith estimate of the Accounts
Receivable as of the Closing Date for WDTN less five percent (5%) reserved for
bad debts (the "WDTN Receivables"). On the Closing Date, (a) if the amount of
the KSBW Receivables is greater than the amount of the WDTN Receivables, HAT
shall pay to STC, in cash, the amount of the KSBW Receivables minus the amount
of the WDTN Receivables, and (b) if the amount of the WDTN Receivables is
greater than the amount of the KSBW Receivables, STC shall pay to HAT, in cash,
the amount of the WDTN Receivables minus the amount of the KSBW Receivables.
2.7.2. Within thirty (30) days after the Closing Date, the
Recipient Party shall deliver to the Transferring Party in writing and in
reasonable detail a good faith final determination of the Accounts Receivable
acquired by the Recipient Party as of the Closing Date (the "Final AR Amount").
The Transferring Party shall assist the Recipient Party in making such
determination, and the Recipient Party shall provide the Transferring Party with
reasonable access to the books and records relating to the Stations of the
Recipient Party for the purpose of determining the final Accounts Receivable
amount. The Transferring Party shall have the right to review the computations
and work papers used in connection with the Recipient Party's preparation of the
Final AR Amount. If the Transferring Party disagrees with the Final AR Amount
determined by the Recipient Party, the Transferring Party shall so notify the
Recipient Party within thirty (30) days after the date of receipt of the
Recipient Party's Final AR Amount, specifying in detail any point of
disagreement; provided, however, that if the Transferring Party fails to notify
the Recipient Party in writing of the Transferring Party's disagreement within
such thirty (30) day period, the Recipient Party's determination of the Final AR
Amount shall be final, conclusive and binding on the parties. After the receipt
of any notice of disagreement, the parties shall negotiate in good faith to
resolve any disagreements regarding the Final AR Amount. If any such
disagreement cannot be resolved by the parties within thirty (30) days after the
Recipient Party has received notice from the Transferring Party of the existence
of such disagreement, the parties shall jointly select an Accounting Firm to
review the Recipient Party's determination of the Final AR Amount and to resolve
as soon as possible all points of disagreement raised by the Transferring Party.
All determinations made by the Accounting Firm with respect to the Final AR
Amount shall be final, conclusive and binding on the parties. The
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fees and expenses of the Accounting Firm incurred in connection with any such
determination shall be shared one-half by the Recipient Party and one-half by
the Transferring Party.
2.7.3. If the Final AR Amount is such that the Recipient
Party's payment of the Accounts Receivable amount at the Closing was an
underpayment to the Transferring Party, then the Recipient Party shall pay such
underpayment amount to the Transferring Party in cash, within two (2) business
days following the final determination of the Final AR Amount. If the Final AR
Amount is such that the Recipient Party's payment of the Accounts Receivable
amount at the Closing is an overpayment to the Transferring Party, then the
Transferring Party shall pay such overpayment to the Recipient Party in cash
within two (2) business days following the determination of the Final AR
Amount. Any amount paid pursuant to this Section 2.7 shall be by wire transfer
of immediately available funds for credit to the recipient at a bank account
identified by such recipient in writing.
2.7.4. The parties agree that prior to the date of the final
determination of the Final AR Amount pursuant to this Section 2.7 (by the
Accounting Firm or otherwise) neither party will destroy any records pertaining
to, or necessary for, the final determination of the Final AR Amount.
2.8. ALLOCATION OF ASSET VALUES.
2.8.1. The fair market value of the STC Assets and the HAT
Assets shall be determined and allocated on the basis of an appraisal (the
"Appraisal") prepared by Bond & Xxxxxx (the "Appraisal Firm"). The Appraisal
Firm shall be instructed to perform an appraisal of the classes of Assets of
each Station and to deliver a report to STC and HAT as soon as reasonably
practicable (the "Appraisal Report"). The Appraisal Report shall be subject to
the approval of HAT and STC and HAT and STC shall cooperate in good faith to
resolve any issues or differences relating to the Appraisal Report. HAT and STC
shall each pay one-half of the fees, costs and expenses of the Appraisal Firm
whether or not the transactions contemplated hereby are consummated.
2.8.2. Within thirty (30) days of receipt of the Appraisal
Report, the parties shall prepare a schedule that sets forth the "exchange
groups" and "residual groups" (as each quoted term is defined by Treas. Reg.
Section 1.1031(j)-1(b)(2)) for the exchanges contemplated by Section 6.12.2 (the
"Section 1031 Schedule"), together with each asset included in the STC Assets
and HAT Assets that belongs to the relevant exchange group or residual group.
The parties shall cooperate in good faith to resolve any issues relating to the
Section 1031 Schedule to be filed by each individual taxpayer.
2.8.3. Each party, as necessary, shall prepare IRS Form 8594
and IRS Form 8824 reflecting the fair market value of the Assets such party has
transferred and received as determined in accordance with the above provisions
and shall forward such form to the other parties within thirty (30) days after
agreement on the Section 1031 Schedule. Each party, as
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necessary, shall file their respective federal income tax returns for the tax
year in which the Closing occurs with the IRS Form 8594 and IRS Form 8824 as
prepared in accordance with the foregoing. The parties hereto hereby covenant
and agree with each other that they will not take a position on any income tax
return that is in any way inconsistent with the terms of this Section 2.8.3.
2.9. ASSUMPTION OF LIABILITIES BY STC.
2.9.1. At the Closing, STC shall assume, pay, perform,
discharge and indemnify and hold HAT harmless from and against (a) all
Liabilities arising out of events occurring on or after the Closing Date related
to the businesses or operations of the HAT Stations or the ownership of the HAT
Assets by STC, (b) all Liabilities arising out of events occurring on or after
the Closing Date with respect to the FCC Licenses of HAT, (c) all Liabilities
arising on or after the Closing Date under the Station Contracts of HAT
(including, without limitation, Trade-out Agreements) pursuant to their terms
(except for Liabilities for any breaches thereunder by HAT occurring prior to
the Closing Date), (d) all Liabilities for which there is an adjustment in favor
of STC in connection with the calculation of the Proration Amount, and (e) all
Liabilities to employees of the HAT Stations to be assumed by STC in accordance
with Section 6.9 hereof.
2.9.2. Except for the Assumed Liabilities described in this
Section 2.9, no STC Party will assume any other Liabilities of any kind or
description of HAT.
2.10. ASSUMPTION OF LIABILITIES BY HAT.
2.10.1. At the Closing, HAT shall assume, pay, perform,
discharge and indemnify and hold STC harmless from and against (a) all
Liabilities arising out of events occurring on or after the Closing Date related
to the businesses or operations of the STC Stations or the ownership of the STC
Assets by HAT, (b) all Liabilities arising out of events occurring on or after
the Closing Date with respect to the FCC Licenses of STC License Company, (c)
all Liabilities arising on or after the Closing Date under the Station Contracts
of STC (including, without limitation, Trade-out Agreements) pursuant to their
terms (except for Liabilities for any breaches thereunder by STC occurring prior
to the Closing Date), (d) all Liabilities for which there is an adjustment in
favor of HAT in connection with the calculation of the Proration Amount, (e) all
Liabilities to employees of the STC Stations to be assumed by HAT in accordance
with Section 6.8 and Section 6.9 hereof, (f) except for the WFFF Liabilities,
all Liabilities of STC under the Xxxxxxxx Documents (or Liabilities assumed
pursuant to the terms thereof), and (g) all Liabilities arising out of events
occurring on or after the Non-License Transfer (as defined in the Xxxxxxxx
Agreement) relating to the business and operations of WNNE and WPTZ (the
Liabilities described in Section 2.10.1(f) and Section 2.10.1(g) are sometimes
collectively referred to herein as the "Xxxxxxxx Liabilities").
2.10.2. Except for the Assumed Liabilities described in this
Section 2.10, HAT will not assume any other Liabilities of any kind or
description of STC.
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2.11. MATTERS RELATED TO THE BURLINGTON STATIONS.
2.11.1. HAT acknowledges and agrees that the consummation of
the purchase by STC of WPTZ and WNNE is, as of the date of this Agreement,
pending pursuant the terms of the Xxxxxxxx Agreement. Notwithstanding anything
to the contrary set forth herein or otherwise, no STC Party shall make or be
deemed to make any representations, warranties, covenants or agreements
regarding WPTZ or WNNE or any assets related thereto until the consummation of
the purchase by STC of such Stations and Assets and thereafter any
representations, warranties, covenants or agreements regarding such Stations and
Assets shall only relate to STC's period of ownership of such Stations and
Assets. In addition, the terms "STC Assets", "Assets", "STC Stations" and
"Stations" shall not include WPTZ or WNNE or the related assets of such stations
until such time as WPTZ and WNNE are acquired by STC pursuant to the Xxxxxxxx
Agreement.
2.11.2. At the Closing, STC Broadcasting (as the
successor-in-interest to STCBV Sub) agrees to assign to HAT all of STC
Broadcasting's right, title and interest in, to and under the Xxxxxxxx Documents
that relate to WPTZ, WNNE and any assets related thereto (but not including the
assets of WFFF). In the event that any such rights and interests are not
assignable, STC Broadcasting shall use commercially reasonable efforts (a) to
provide HAT the financial and business benefits HAT would have enjoyed had such
rights and interests been assignable as of the date hereof, and (b) upon the
request of HAT, to enforce in STC Broadcasting's name for the account of HAT any
rights that would otherwise have been available to HAT had the rights and
interests under the Xxxxxxxx Documents been assignable as of the date hereof.
2.11.3. Subject to the terms and conditions of Section 2.11.4
below, all of the assets used in the operation of WFFF shall be retained by STC
Broadcasting or its permitted designee, including the rights and obligations of
Heritage Media Corporation pursuant to the Broadcast Facilities Agreement and
Time Brokerage Agreement, each entered into on August 3, 1995, as amended (the
"WFFF TBA"). As of the Closing Date, HAT shall operate WFFF pursuant to the
WFFF TBA for a period up to two (2) years from the Closing Date until such time
as STC Broadcasting requests termination of such operation by HAT (the "Interim
Operation"). Under the Interim Operation, STC Broadcasting shall receive all
income net of any out-of-pocket expenses incurred by HAT for the operation of
WFFF and shall reimburse HAT if WFFF is being operated at a net deficit. STC
Broadcasting shall be responsible for all payments due to Champlain Valley
Telecasting, Inc. pursuant to the WFFF TBA during the Interim Operation. At the
conclusion of the Interim Operation, STC Broadcasting shall no longer use any of
the WPTZ facilities in connection with the operation of WFFF, other than the use
of tower and equipment space at Xxxxx Mountain, New York, until such time as STC
Broadcasting is able to relocate its transmission facilities to Mt. Mansfield,
Vermont. There will be no charges for rental of such space for a period of up
to two (2) years after the conclusion of the Interim Operation. HAT agrees to
cooperate at the sole expense of STC Broadcasting in all reasonable respects in
connection with such relocation. In the event that STC Broadcasting is
unsuccessful in relocating WFFF to Mt. Mansfield within this two (2) year
period, HAT agrees to enter into a twenty (20) year lease agreement with STC
Broadcasting for the Xxxxx Mountain space on fair
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market value terms and conditions. During the period of the Interim Operation,
STC Broadcasting shall not have the right to assign the WFFF TBA (and any rights
or obligations hereunder relating to WFFF), in whole or in part, except (a) to
any Affiliate of STC Broadcasting or (b) to any other Person with the prior
written consent of HAT (which consent shall not be unreasonably withheld,
conditioned or delayed).
2.11.4. HAT acknowledges and agrees that certain of the STC
Assets are also used, held for use or useful in connection with the business and
operations of WFFF (collectively, the "STC Shared Assets"). Prior to the
Closing, STC Broadcasting and HAT shall in good faith allocate the STC Shared
Assets between STC Broadcasting and HAT in accordance with the principle that
those STC Shared Assets used solely in connection with the business and
operations of WFFF shall be retained by STC Broadcasting and included in the STC
Excluded Assets, and all other STC Shared Assets shall be transferred to HAT.
Notwithstanding the foregoing, to the extent that any of the STC Shared Assets
retained by STC Broadcasting are necessary for HAT's operation of WPTZ and/or
WNNE after the Closing, or any of the STC Shared Assets conveyed to HAT are
necessary for STC Broadcasting's continued operation of WFFF after the Closing,
such STC Shared Assets shall be available for joint use by the parties at no
cost for a transitional period for up to two (2) years following the Closing
Date.
2.11.5. At the Closing, the parties agree to enter into a
mutually agreeable transitional services agreement which shall set forth the
terms and conditions of (a) the Interim Operation described in Section 2.11.3,
and (b) the joint use of certain STC Shared Assets described in Section 2.11.4.
2.11.6. In order to provide an equitable sharing of the
indemnities contained in Article 12 of the Xxxxxxxx Agreement and the Guaranty
of even date by Xxxxxxxx Parent, the parties will coordinate the filing of any
claims against Xxxxxxxx or Xxxxxxxx Parent so that (a) with respect to WFFF, STC
shall have the benefits of up to two percent (2%) of the Basket Amount (as
defined in the Xxxxxxxx Agreement) and the Indemnity Cap (as defined in the
Xxxxxxxx Agreement), and (b) with respect to WPTZ and WNNE, HAT shall have the
benefits of up to ninety-eight percent (98%) of the Basket Amount (as defined in
the Xxxxxxxx Agreement) and the Indemnity Cap (as defined in the Xxxxxxxx
Agreement). However, if STC, on the one hand, or HAT, on the other hand, does
not use all of its respective share of such Basket Amount or Indemnity Cap prior
to the scheduled expiration date for the filing of claims against Xxxxxxxx or
Xxxxxxxx Parent, then the parties shall cooperate so that to the fullest extent
practicable the unused portion of such share shall be made available by STC to
HAT or by HAT to STC, as the case may be, immediately prior to such scheduled
expiration date.
2.12. MATTERS RELATED TO THE PROVIDENCE STATIONS.
HAT represents and warrants to the STC Parties that the only HAT Assets
owned, leased, used or useful by HAT in connection with the business and
operations of WNAC are as set forth in Schedule 2.12 (the "Providence Assets").
In reliance upon such representation and warranty, each STC Party acknowledges
and agrees that, notwithstanding anything to the contrary set forth herein or
otherwise, HAT shall not make nor be deemed to make any
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representations, warranties, covenants or agreements regarding WNAC or WPRI or
any assets related thereto, except to the extent any such representation,
warranty, covenant or agreement relates to, or is applicable to, the Providence
Assets, the Clear Channel Agreements or the HAT Balance Sheets.
2.13 FINANCING OF BURLINGTON STATIONS.
On or prior to the acquisition of the non-licensed STC Assets from
Xxxxxxxx pursuant to the terms of the Xxxxxxxx Agreement, STCBV shall assign to
STCBV Sub all of STCBV's rights under the Xxxxxxxx Documents and HAT agrees to
loan to STCBV Sub, such amounts as are contemplated by the credit agreement,
guaranty and related documents in the form of Exhibit F (all loans thereunder
being referred to as the "Burlington Financing Amount"), and STCBV and STCBV Sub
agree to simultaneously execute and deliver to HAT, and HAT agrees to
simultaneously execute and deliver to STCBV and STCBV Sub, such credit
agreement, guaranty and related documents.
2.14. WORKING CAPITAL.
(a) From and after the STC Transfer Date through the Closing Date, HAT
agrees to make advances to STCBV Sub for the working capital requirements of
STCBV Sub in connection with the business and operations of the Burlington
Stations during such period (each a "Working Capital Advance"), as STC may
request from time to time. In order to request a Working Capital Advance,
STCBV Sub shall deliver written notice to HAT at least three (3) business days
prior to the proposed date of the Working Capital Advance, signed by or on
behalf of STCBV Sub, and specifying the following information: (i) the date of
such Working Capital Advance, (ii) the amount of such Working Capital Advance
(which amount shall not be less than Two Hundred and Fifty Thousand Dollars
($250,000)), and (iii) the number and location of the account to which funds are
to be disbursed. Upon receipt of any such notice, HAT shall deliver the amount
of the Working Capital Advance to STCBV Sub, by wire transfer of federal funds
to the account specified in such notice and within three (3) business days
following the date specified in such notice.
(b) STCBV Sub and HAT acknowledge and agree that each Working Capital
Advance shall be used by STCBV Sub for general working capital purposes in the
business and operations of the Burlington Stations from and after the STC
Transfer Date through the Closing Date, which shall include, without limitation
(i) payments of any proration amounts owed by STCBV Sub under the Xxxxxxxx
Agreement, (ii) fees under that certain TBA Agreement (as defined in the
Xxxxxxxx Agreement), and (iii) interest payments arising under the Burlington
Financing Amount. STCBV Sub acknowledges and agrees that in the event this
Agreement is terminated as provided in Section 11.2, STCBV Sub agrees to
reimburse HAT for any Working Capital Advances provided by HAT pursuant to this
Section 2.14.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY THE STC PARTIES
Each STC Party, with respect to such STC Party and with respect to the
STC Stations and STC Assets owned by such STC Party, represents and warrants to
HAT as follows:
3.1. ORGANIZATION AND STANDING.
The STC Party is duly organized, validly existing and in good standing
under the laws of the state of its organization and is or will be prior to the
Closing Date duly qualified to do business and is or will be prior to the
Closing Date in good standing in any jurisdiction where its STC Stations are
located and operated and in each other jurisdiction where and at such time as
such qualification is necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on its STC Stations. The STC Party has the corporate
power and authority to own, lease and otherwise to hold and operate its STC
Assets, to carry on the business of its STC Stations as now conducted, and to
enter into and perform the terms of this Agreement, the other STC Documents to
which the STC Party is a party and the transactions contemplated hereby and
thereby.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of the
other STC Documents to which the STC Party is a party, and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action (none of which actions has been
modified or rescinded and all of which actions are in full force and effect).
This Agreement constitutes, and upon execution and delivery of the other
agreements to which the STC Party is a party will constitute, valid and binding
agreements and obligations of the STC Party, enforceable against the STC Party
in accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity.
3.3. COMPLIANCE WITH LAWS.
To STC's knowledge, STC is in material compliance with all Laws
applicable to the STC Assets and to the business and operations of the STC
Stations. STC has obtained and holds all material permits, licenses and
approvals (none of which has been modified or rescinded and all of which are in
full force and effect) from all Governmental Authorities necessary in order to
conduct the operations of the STC Stations as presently conducted.
3.4. CONSENTS AND APPROVALS; NO CONFLICTS.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by the STC Party, will not
require any consent, approval,
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authorization or other action by, or filing with or notification to, any Person
or Governmental Authority, except as follows: (a) filings required under
Xxxx-Xxxxx-Xxxxxx, (b) consents to the assignment of the FCC Licenses by the
FCC, (c) filings, if any, with respect to real estate transfer taxes, (d)
certain of the Station Contracts may be assigned only with the consent of third
parties, as specified in Schedule 3.4, and (e) filings with the Securities and
Exchange Commission.
3.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 3.4.1 have been obtained and all filings and
notifications described in Section 3.4.1 have been made, the execution, delivery
and performance of this Agreement and the other STC Documents to which the STC
Party is a party do not and will not (a) conflict with or violate in any
material respect any Law applicable to the STC Party, its STC Assets or STC
Stations or by which any of its STC Assets or STC Stations is subject or
affected, (b) conflict with or result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
of any of the STC Party's Station Contracts or other material agreements to
which the STC Party is a party or by which the STC Party is bound or to which
any of its STC Assets or STC Stations is subject or affected, (c) result in the
creation of any Encumbrance upon its STC Assets, or (d) conflict with or violate
the organizational documents of the STC Party.
3.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
3.5.1. STC has provided to HAT unaudited balance sheets of the
STC Stations as listed on Schedule 3.5 (the "STC Balance Sheets"), and unaudited
statements of income and operating cash flows for the STC Stations as listed on
Schedule 3.5. Such financial statements (a) present fairly in all material
respects the financial condition of the STC Stations as of the date and the
results of operations and operating cash flows for the period indicated, and (b)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except that the financial statements referred to
in this Section 3.5.1 do not contain all footnotes and cash flow information
from investing and financing activities required under generally accepted
accounting principles and are subject to customary year-end adjustments). To
the knowledge of STC, the Accounts Receivable of STC shown on the balance sheets
described in this Section 3.5 and the KSBW Receivables have been collected or
are collectible in amounts not less than the amounts thereof carried on the
books of STC, except to the extent of the allowance for doubtful accounts shown
on such balance sheets.
3.5.2. There exist no Liabilities of the STC Stations relating
to, or arising out of, the business or operations of the STC Stations,
contingent or absolute, matured or unmatured, known or unknown, except (a) as
reflected on the STC Balance Sheets and (b) for Liabilities that (i) were
incurred after December 31, 1997 (the "Current Balance Sheet Date") in the
Ordinary Course of Business, or (ii) were not required to be reflected on the
STC Balance Sheets in accordance with generally accepted accounting principles
applied on a consistent basis.
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3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth and described in Schedule 3.6, since the Current
Balance Sheet Date, there has been no Material Adverse Effect on the STC
Stations. Since the Current Balance Sheet Date, the business of the STC
Stations has been conducted in the Ordinary Course of Business, and the STC
Party has not, with respect to its STC Stations or STC Assets, (a) incurred any
extraordinary loss of, or injury to, any of its STC Assets as the result of any
fire, explosion, flood, windstorm, earthquake, labor trouble, riot, accident,
act of God or public enemy or armed forces, or other casualty; (b) incurred, or
become subject to, any Liability, except current Liabilities incurred in the
Ordinary Course of Business; (c) discharged or satisfied any Encumbrance or paid
any Liability other than current Liabilities shown in the STC Balance Sheets,
current Liabilities incurred since the Current Balance Sheet Date in the
Ordinary Course of Business, and Liabilities (including, without limitation,
partial and complete prepayments) arising under any credit or loan agreement
between the STC Party and its lenders; (d) mortgaged, pledged or subjected to
any Encumbrance any of its STC Assets (except for Permitted Encumbrances); (e)
made any material change in any method of accounting or accounting practice; (f)
sold, leased, assigned or otherwise transferred any of its material STC Assets
other than obsolete STC Assets which have been replaced by suitable
replacements; (g) made any material increase in compensation or benefits payable
to any employee other than in the Ordinary Course of Business; or (h) made any
agreement to do any of the foregoing.
3.7. ABSENCE OF LITIGATION.
As of the date hereof, except as set forth in Schedule 3.7, there is no
material or, to STC's knowledge, immaterial action, suit, investigation, claim,
arbitration, litigation or similar proceeding, nor any order, decree or judgment
pending or, to STC's knowledge, threatened against STC, the STC Assets or STC
Stations before any Governmental Authority.
3.8. ASSETS.
Except for the STC Excluded Assets, the STC Assets include all of the
assets or property used or useful in the businesses of the STC Stations as
presently operated, including all of the assets or property acquired under the
Xxxxxxxx Documents. Except for leased or licensed STC Assets, STC is the owner
of, and has good title to, the STC Assets free and clear of any Encumbrances,
except for Permitted Encumbrances (including, without limitation, those items
set forth on Schedule 3.8). At the Closing, HAT shall acquire good title to,
and all right, title and interest in and to the STC Assets, free and clear of
all Encumbrances, except for Permitted Encumbrances.
3.9. FCC MATTERS.
3.9.1. STC License Company holds the FCC Licenses for the STC
Stations listed as held by the STC License Company on Schedule 2.3.1. The FCC
Licenses contained on Schedule 2.3.1 constitute all of the licenses, permits and
authorizations from the FCC that are
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required for the business and operations of the STC Stations. Except as set
forth on Schedule 3.9, such FCC Licenses are valid and in full force and effect
through the dates set forth on Schedule 2.3.1, unimpaired by any condition,
other than as set forth in such FCC Licenses. Except as set forth on Schedule
3.9, no application, action or proceeding is pending for the renewal or
modification of any of STC License Company's FCC Licenses, and, except for
actions or proceedings affecting television broadcast stations generally, no
application, complaint, action or proceeding is pending or, to STC's knowledge,
threatened that may result in the (a) the revocation, modification, non-renewal
or suspension of any of STC License Company's FCC Licenses, or (b) the issuance
of a cease-and-desist order. Except as set forth in Schedule 3.9, STC has no
knowledge of any facts, conditions or events relating to STC License Company or
its STC Stations that would reasonably be expected to cause the FCC to revoke
any of the FCC Licenses for the STC Stations or not to grant any pending
applications for renewal of any FCC Licenses for the STC Stations or to deny the
assignment of the FCC Licenses of STC License Company to HAT as provided for in
this Agreement.
3.9.2. (a) Except as disclosed in Schedule 3.9, STCBV Sub is,
and pending the closing under the Xxxxxxxx Agreement will remain legally,
financially and otherwise qualified under the Communications Act and all rules,
regulations and policies of the FCC to acquire and operate the Burlington
Stations. Except as disclosed in Schedule 3.9, there are no facts or
proceedings which would reasonably be expected to disqualify STCBV Sub under the
Communications Act or otherwise from acquiring or operating any of the
Burlington Stations or would cause the FCC not to approve the assignment of the
FCC Licenses to STCBV Sub. Except as disclosed in Schedule 3.9, STC has no
knowledge of any fact or circumstance relating to STC or any Affiliate of STC
that would reasonably be expected to (i) cause the filing of any objection to
the assignment of the FCC Licenses for the Burlington Stations from Xxxxxxxx to
STCBV Sub, or (ii) lead to a delay in the processing by the FCC of the
applications for such assignment. Except for existing waivers pertaining to the
Burlington Stations and except for the temporary waiver specified in Schedule
3.9, no waiver of any FCC rule or policy is necessary to be obtained for the
grant of the applications for the assignment of the FCC Licenses for the
Burlington Stations from Xxxxxxxx to STCBV Sub, nor will processing pursuant to
any exception or rule of general applicability be requested or required in
connection with the consummation of the transactions herein.
(b) Except as disclosed in Schedule 3.9, each of STC License
Company and SALC is, and pending the Closing will remain legally, financially
and otherwise qualified under the Communications Act and all rules, regulations
and policies of the FCC to acquire and operate WDTN and WNAC, respectively.
Except as disclosed in Schedule 3.9, there are no facts or proceedings which
would reasonably be expected to disqualify STC License Company or SALC under the
Communications Act or otherwise from acquiring or operating WDTN and WNAC,
respectively, or would cause the FCC not to approve the assignment of the FCC
Licenses of WDTN and WNAC to STC License Company and SALC, respectively. Except
as disclosed in Schedule 3.9, STC has no knowledge of any fact or circumstance
relating to STC or any Affiliate of STC that would reasonably be expected to (i)
cause the filing of any objection to the assignment of the FCC Licenses for WDTN
and WNAC from HAT to STC License
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Company and SALC, respectively, or (ii) lead to a delay in the processing by
the FCC of the applications for such assignment. Except for existing waivers
pertaining to the HAT Stations, no waiver of any FCC rule or policy is necessary
to be obtained for the grant of the applications for the assignment of the FCC
Licenses for WDTN and WNAC from HAT to STC License Company and SALC,
respectively, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein.
3.10. REAL PROPERTY.
3.10.1. STC has good and marketable fee simple title to all
fee estates included in the Real Property of STC and good title to all other
owned Real Property of STC, in each case free and clear of all Encumbrances,
except for Permitted Encumbrances (including, without limitation, those items
listed on Schedule 3.10).
3.10.2. STC has a valid leasehold interest in all Leased
Property listed as leased by STC in Schedule 2.3.2. Schedule 2.3.2 lists all
leases and subleases pursuant to which any of such Leased Property is leased by
STC in connection with the business and operations of the STC Stations. STC is
the owner and holder of all such Leased Property purported to be granted by such
leases and subleases. Each such lease and sublease is valid as to STC
thereunder and, to STC's knowledge valid as to any other party thereto, and is
in full force and effect and, to STC's knowledge, constitutes a legal and
binding obligation of, and is legally enforceable against STC and each other
party thereto and grants the leasehold interest it purports to grant, including
any rights to nondisturbance and peaceful and quiet enjoyment that may be
contained therein. The lessees and sublessees are, and to the knowledge of STC,
all other parties are, in compliance in all material respects with the
provisions of such leases and subleases.
3.10.3. The Real Property and the Leased Property of STC
listed in Schedule 2.3.2 constitute all of the real property owned, leased or
used in the business and operations of the STC Stations which is material to the
business and operations of the STC Stations.
3.10.4. No portion of the Real Property of STC or any
building, structure, fixture or improvement thereon is the subject of, or
affected by, any condemnation, eminent domain or inverse condemnation proceeding
currently instituted or pending or, to the knowledge of STC, threatened. To
STC's knowledge, and to the extent that such documents are in the possession of
STC, STC has delivered to HAT true, correct and complete copies of the following
documents with respect to its Real Property and Leased Property as identified in
Schedule 3.10: (i) deeds, by which STC has received a fee interest in any of
such Real Property; (ii) leases for all of its Leased Property; (iii) title
insurance policies or commitments; (iv) surveys; and (v) inspection reports or
other instruments or reports, including, without limitation, any phase I or
phase II environmental reports or other similar environmental reports, surveys
or assessments (including any and all amendments and other modifications of such
instruments).
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3.11. INTELLECTUAL PROPERTY.
STC possesses adequate rights, licenses and authority to use all
Intellectual Property necessary to conduct the business of the STC Stations as
presently conducted. STC has good title to all Intellectual Property
maintained, owned, leased or used in connection with the business and operations
of the STC Stations, free and clear of any Encumbrances, except for Permitted
Encumbrances. STC is not obligated to pay any royalty or other fees to anyone
with respect to the Intellectual Property of STC. STC has not received any
written notice to the effect that any service rendered by STC relating to the
business of the STC Stations may infringe, or that STC is otherwise infringing,
on any intellectual property right or other legally protectable right of
another. No director, officer or employee of STC has any interest in any
Intellectual Property.
3.12. STATION CONTRACTS.
Complete and correct copies of the Station Contracts of STC set forth in
Schedules 2.3.5, 2.3.6, 2.3.8 and 2.3.9 (which schedules, as to STC, are true
and correct in all material respects) have been made available to HAT and (a)
each such material Station Contract and, to STC's knowledge, each such
immaterial Station Contract, is in full force and effect and constitutes a
legal, valid and binding obligation of STC, and, to STC's knowledge, of each
other party thereto; (b) STC is not in breach or default in any material respect
of the terms of any such Station Contract; (c) none of the material rights of
STC under any such Station Contract will be subject to termination, nor will a
default occur, as a result of the consummation of the transactions contemplated
hereby, except to the extent that failure to obtain the prior consent to
assignment thereof of any party thereto shall or could be interpreted to
constitute a termination or modification of or a default under any such Station
Contract; and (d) to the knowledge of STC, no other party to any such Station
Contract is in breach or default in any material respect of the terms
thereunder.
3.13. TAXES.
STC has (or, in the case of returns becoming due after the date hereof
and on or before the Closing Date, will have prior to the Closing Date) duly
filed all material Tax Returns required to be filed by STC on or before the
Closing Date with respect to all material applicable Taxes. In the case of any
such Tax Returns which receive an extension for their date of filing, such Tax
Returns will be considered due on, and not considered required to be filed
before, the extended due date. All such Tax Returns are (or, in the case of
returns becoming due after the date hereof and on or before the Closing Date,
will be) true and complete in all material respects. STC has: (a) paid all
Taxes due to any Governmental Authority as indicated on such Tax Returns; or (b)
established (or, in the case of amounts becoming due after the date hereof,
prior to the Closing Date will have established) adequate reserves (in
conformity with generally accepted accounting principles consistently applied)
for the payment of such Taxes.
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3.14. EMPLOYEE BENEFIT PLANS.
3.14.1. Schedule 3.14 lists all Plans and Benefit Arrangements
maintained by or contributed to by STC for the benefit of the employees of the
STC Stations (collectively referred to as "STC Benefit Plans"). Each STC
Benefit Plan has been maintained in material compliance with its terms and with
ERISA, the Code and other applicable Laws.
3.14.2. Schedule 3.14 sets forth a list of all Qualified Plans
maintained by or contributed to by STC for the benefit of the employees of the
STC Stations. All such Qualified Plans and any related trust agreements or
annuity agreements (or any other funding document) have been maintained in
material compliance with ERISA and the Code (including, without limitation, the
requirements for tax qualification described in Section 401 thereof), other than
any Multiemployer Plan. To STC's knowledge, any trusts established under such
Plans are exempt from federal income taxes under Section 501(a) of the Code.
3.14.3. Schedule 3.14 lists all funded Welfare Plans of STC
that provide benefits to current or former employees of the STC Stations or
their beneficiaries. To STC's knowledge, the funding under each such Welfare
Plan does not exceed and has not exceeded the limitations under Sections 419A(b)
and 419A(c) of the Code. To STC's knowledge, STC is not subject to taxation on
the income of any such Welfare Plan's welfare benefit fund (as such term is
defined in Section 419(e) of the Code) under Section 419A(g) of the Code.
3.14.4. STC has no post-retirement medical, life insurance or
other benefits promised, provided or otherwise due now or in the future to
current, former or retired employees of the STC Stations.
3.14.5. To STC's knowledge, except as set forth in Schedule
3.14, STC has (a) filed or caused to be filed all returns and reports on STC's
Plans that they are required to file and (b) paid or made adequate provision for
all fees, interest, penalties, assessments or deficiencies that have become due
pursuant to those returns or reports or pursuant to any assessment or adjustment
that has been made relating to those returns or reports. All other fees,
interest, penalties and assessments that are payable by or for STC have been
timely reported, fully paid and discharged. There are no unpaid fees,
penalties, interest or assessments due from STC or from any other person that
are or could become an Encumbrance on any of the STC Assets or could otherwise
adversely affect the businesses of the STC Stations or STC Assets. To STC's
knowledge, STC has collected or withheld all amounts that are required to be
collected or withheld by it to discharge its obligations, and all of those
amounts have been paid to the appropriate Governmental Authority or set aside in
appropriate accounts for future payment when due. STC has furnished to HAT true
and complete copies of all documents setting forth the terms and funding of each
of STC's Plans.
3.14.6. Except as set forth in Schedule 3.14, neither STC nor
any ERISA Affiliate of STC has ever sponsored or maintained, had any obligation
to sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any of STC's Plans
subject to Section 302 of ERISA or Section 412 of the Code
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or Title IV of ERISA (including any Multiemployer Plan). Neither STC nor any
ERISA Affiliate of STC (since January 1, 1989) has terminated or withdrawn from
or sought a funding waiver with respect to any plan subject to Title IV of
ERISA, and no facts exist that could reasonably be expected to cause such
actions in the future; no accumulated funding deficiency (as defined in Code
Section 412), whether or not waived, exists with respect to any such plan; no
reportable event (as defined in ERISA Section 4043) has occurred with respect to
any such plan (other than events for which reporting is waived); all costs of
any such plans have been provided for on the basis of consistent methods in
accordance with sound actuarial assumptions and practices, and the assets of
each such plan, as of its last valuation date, exceeded its "Benefit
Liabilities" (as defined in ERISA Section 4001(a)(16)); and, since the last
valuation date for each such plan, no such plan has been amended or changed to
increase the amounts of benefits thereunder and, to the knowledge of STC, there
has been no event that would reduce the excess of assets over benefit
liabilities; and except as set forth in Schedule 3.14, neither STC nor any ERISA
Affiliate of STC has ever made or been obligated to make, or reimbursed or been
obligated to reimburse another employer for, contributions to any Multiemployer
Plan of STC.
3.14.7. No claims (other than for benefits in the Ordinary
Course of Business) or lawsuits are pending or, to the knowledge of STC,
threatened by, against, or relating to any of the STC Benefit Plans. To STC's
knowledge, the STC Benefit Plans are not presently under audit or examination
(nor has notice been received of a potential audit or examination) by the IRS,
the Department of Labor, or any other governmental agency or entity and no
matters are pending with respect to any Qualified Plan of STC under the IRS's
Voluntary Compliance Resolution program, its Closing Agreement Program, or other
similar programs.
3.14.8. With respect to each Plan of STC, there has occurred
no non-exempt "prohibited transaction" (within the meaning of Section 4975 of
the Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for STC.
3.14.9. STC has no liability with respect to any employee
benefit plan of STC that is not a STC Benefit Plan (exclusive of severance
arrangements and retention agreements) or with respect to any employee benefit
plan sponsored or maintained (or which has been or should have been sponsored or
maintained or with respect to which there has been an obligation to do so) by
any ERISA Affiliate of STC.
3.14.10. All group health plans of STC and its ERISA
Affiliates covering any current or former employees of the STC Stations have
been operated in material compliance with the requirements of Sections 4980B
(and its predecessor) and 5000 of the Code, and STC has provided, or will have
provided before the Closing Date, to individuals entitled thereto all required
notices and coverage pursuant to Section 4980B with respect to any "qualifying
event" (as defined therein) occurring before or on the Closing Date.
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3.15. LABOR RELATIONS.
Schedule 3.15 contains a true and complete list of all employees engaged
in the business or operations of the STC Stations as of the date set forth on
the list, together with such employee's position, salary and date of hire.
Schedule 3.15 lists all written employment contracts with any such employees and
all written agreements, plans, arrangements, commitments and understandings
pursuant to which STC has severance obligations with respect to such employees.
Except as set forth on Schedule 3.15, no labor union or other collective
bargaining unit represents or, to STC's knowledge, claims to represent, any of
the employees of the STC Stations. There are no strikes, work stoppages,
grievance proceedings, union organization efforts, or other controversies
pending between STC and any union or collective bargaining unit representing
(or, to STC's knowledge, claiming to represent) any employees of the STC
Stations. STC is in compliance with all Laws relating to the employment of
employees of the STC Stations or the workplace of the STC Stations, including,
without limitation, provisions relating to wages, hours, collective bargaining,
safety and health, work authorization, equal employment opportunity, immigration
and the withholding of income taxes, unemployment compensation, worker's
compensation, employee privacy and right to know and social security
contributions, except for any noncompliance which would not have a Material
Adverse Effect on the STC Stations. Except as set forth on Schedule 3.15, there
are no collective bargaining agreements relating to the STC Stations or the
business and operations thereof.
3.16. ENVIRONMENTAL MATTERS.
3.16.1. Schedule 3.16 contains a true and complete list and
brief summary of all material reports, audits and other documents relating to
the environmental condition of STC's Real Property in STC's possession.
3.16.2. Except as set forth in Schedule 3.16, to STC's
knowledge (which knowledge is based on the items set forth on Schedule 3.16),
STC is in material compliance with, and STC's Real Property and all improvements
thereon are in material compliance with, all Environmental Laws.
3.16.3. Except as set forth in Schedule 3.16, there are no
pending or, to the knowledge of STC , threatened actions, suits, claims, or
other legal proceedings based on (and STC has not received any written notice of
any complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Authority
arising out of or attributable to): (a) the current or past presence at any
part of STC's Real Property of Hazardous Materials; (b) the current or past
release or threatened release into the environment from STC's Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from STC's Real Property or
the STC Assets or businesses of the STC Stations; (d) any facility operations or
procedures of the STC Stations which do not conform to requirements of the
Environmental Laws; or (e) any violation of Environmental Laws at any part of
STC's Real Property arising from activities of the STC
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Stations involving Hazardous Materials. To the knowledge of STC, STC has been
duly issued all material permits, licenses, certificates and approvals required
under any Environmental Law.
3.17. INSURANCE.
Schedule 3.17 contains a true and complete list and brief summary of all
policies of title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance of any kind
relating to the STC Assets or the business and operations of the STC Stations.
All such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects with all requirements of Law and of all
material agreements to which STC is a party; and (c) to STC's knowledge, are
valid, outstanding, and enforceable policies and the policy holder is not in
default in any material respect thereunder.
3.18. REPORTS.
All material returns, reports and statements that the STC Stations are
currently required to file with the FCC or any governmental agency have been
timely filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with in all material
respects. All of such reports, returns and statements are complete and correct
in all material respects as filed. To STC's knowledge, all documents required
by the FCC to be deposited by STC in its public files (as defined in the rules
and regulations of the FCC) during the period of operation of the STC Stations
by STC have been deposited therein.
3.19. AFFILIATED TRANSACTIONS.
Except as set forth in Schedule 3.19, the STC Party is not now, and
during the past three (3) years has not been, a party, directly or indirectly,
to any material contract, lease, arrangement or transaction relating to its STC
Stations, whether for the purchase, lease or sale of property, for the rendition
of services or otherwise, with any Affiliate of the STC Party, or any officer,
director, employee, proprietor, partner or shareholder of the STC Party
(collectively, "STC Affiliated Transactions"). None of the STC Affiliated
Transactions which are identified on Schedule 3.19 contains terms and conditions
which are in the aggregate significantly less favorable to the STC Party and as
would be obtained in a comparable arms length transaction or transaction which
would not have occurred but for the relationship between the parties.
3.20. SPECIAL PURPOSE.
Except for Liabilities incurred in connection with the organization and
incorporation of STCBV and STCBV Sub and the transactions contemplated by this
Agreement and the Xxxxxxxx Agreement, neither STCBV nor STCBV Sub has not
incurred, directly or indirectly, any Liabilities or engaged in any business
activities of any type whatsoever or entered into any agreements or arrangements
with any Person.
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3.21. AVAILABILITY OF FUNDS.
STC will have available on the Closing Date sufficient funds to enable
it to consummate the transactions contemplated hereby and repay the Burlington
Financing Amount (less the Cash Consideration).
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY HAT
HAT represents and warrants to the STC Parties as follows:
4.1. ORGANIZATION AND STANDING.
HAT is duly organized, validly existing and in good standing under the
laws of the state of its organization and is or will be prior to the Closing
Date duly qualified to do business and is or will be prior to the Closing Date
in good standing in any jurisdiction where the HAT Stations are located and
operated and in each other jurisdiction where and at such time as such
qualification is necessary, except for those jurisdictions where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the HAT Stations. HAT has the corporate power and authority
to own, lease and otherwise to hold and operate the HAT Assets, to carry on the
business of the HAT Stations as now conducted, and to enter into and perform the
terms of this Agreement, the HAT Documents to which HAT is a party and the
transactions contemplated hereby and thereby.
4.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of the HAT
Documents to which HAT is a party, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action (none of which actions has been modified or rescinded
and all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery of the HAT Documents to which HAT
is a party will constitute, valid and binding agreements and obligations of HAT,
enforceable against HAT in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights generally and by the application of general principles of equity.
4.3. COMPLIANCE WITH LAWS.
To HAT's knowledge, HAT is in material compliance with all Laws
applicable to the HAT Assets and to the business and operations of the HAT
Stations. HAT has obtained and holds all material permits, licenses and
approvals (none of which has been modified or
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rescinded and all of which are in full force and effect) from all Governmental
Authorities necessary in order to conduct the operations of the HAT Stations as
presently conducted.
4.4. CONSENTS AND APPROVALS; NO CONFLICTS.
4.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by HAT, will not require any
consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Xxxx-Xxxxx-Xxxxxx, (b) consents to the assignment of the
FCC Licenses by the FCC, (c) filings, if any, with respect to real estate
transfer taxes, (d) certain of the Station Contracts may be assigned only with
the consent of third parties, as specified in Schedule 4.4, (e) filings with the
Securities and Exchange Commission, and (f) under H-A's indenture for certain of
H-A's bonds, H-A's Board of Directors must deliver to the trustee a resolution
determining that the consideration to be received for the HAT Stations is fair
market value and under H-A's bank credit agreement, H-A may not acquire
additional television stations unless H-A delivers certain certificates and
environmental reports to the agent bank as well as evidence that H-A will not
become liable for material Tax or ERISA liabilities as a result of such
acquisition.
4.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 4.4.1 have been obtained and all filings and
notifications described in Section 4.4.1 have been made, the execution, delivery
and performance of this Agreement and the HAT Documents to which HAT is a party
do not and will not (a) conflict with or violate in any material respect any Law
applicable to HAT, the HAT Assets or HAT Stations or by which any of the HAT
Assets or HAT Stations is subject or affected, (b) conflict with or result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) of any of HAT's Station Contracts or other
material agreements to which HAT is a party or by which HAT is bound or to which
any of the HAT Assets or HAT Stations is subject or affected, (c) result in the
creation of any Encumbrance upon the HAT Assets, or (d) conflict with or violate
the organizational documents of HAT.
4.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
4.5.1. HAT has provided to the STC Parties unaudited balance
sheets of the HAT Stations as of December 31, 1997 (the "HAT Balance Sheets"),
and unaudited statements of income and operating cash flows for the HAT Stations
for the twelve (12) month period ending December 31, 1997. Such financial
statements (a) present fairly in all material respects the financial condition
of the HAT Stations as of the date and the results of operations and operating
cash flows for the period indicated, and (b) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except that the financial statements referred to in this Section 4.5.1 do not
contain all footnotes and cash flow information from investing and financing
activities required under generally accepted accounting principles and are
subject to customary year-end adjustments). To the knowledge of HAT, the
Accounts Receivable of HAT shown on the balance sheets described in this Section
4.5 and the
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WDTN Receivables have been collected or are collectible in amounts not less
than the amounts thereof carried on the books of HAT, except to the extent of
the allowance for doubtful accounts shown on such balance sheets.
4.5.2. There exist no Liabilities of the HAT Stations relating
to, or arising out of, the business or operations of the HAT Stations,
contingent or absolute, matured or unmatured, known or unknown, except (a) as
reflected on the HAT Balance Sheets and (b) for Liabilities that (i) were
incurred after the Current Balance Sheet Date in the Ordinary Course of
Business, or (ii) were not required to be reflected on the Balance Sheets of HAT
in accordance with generally accepted accounting principles applied on a
consistent basis.
4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth and described in Schedule 4.6, since the Current
Balance Sheet Date, there has been no Material Adverse Effect on the HAT
Stations. Since the Current Balance Sheet Date, the business of the HAT
Stations has been conducted in the Ordinary Course of Business, and HAT has not,
with respect to the HAT Stations or HAT Assets, (a) incurred any extraordinary
loss of, or injury to, any of the HAT Assets as the result of any fire,
explosion, flood, windstorm, earthquake, labor trouble, riot, accident, act of
God or public enemy or armed forces, or other casualty; (b) incurred, or become
subject to, any Liability, except current Liabilities incurred in the Ordinary
Course of Business; (c) discharged or satisfied any Encumbrance or paid any
Liability other than current Liabilities shown in the HAT Balance Sheets,
current Liabilities incurred since the Current Balance Sheet Date in the
Ordinary Course of Business, and Liabilities (including, without limitation,
partial and complete prepayments) arising under any credit or loan agreement
between HAT and its lenders; (d) mortgaged, pledged or subjected to any
Encumbrance any of the HAT Assets (except for Permitted Encumbrances); (e) made
any material change in any method of accounting or accounting practice; (f)
sold, leased, assigned or otherwise transferred any of its material HAT Assets
other than obsolete HAT Assets which have been replaced by suitable
replacements; (g) made any material increase in compensation or benefits payable
to any employee other than in the Ordinary Course of Business; or (h) made any
agreement to do any of the foregoing.
4.7. ABSENCE OF LITIGATION.
As of the date hereof, except as set forth in Schedule 4.7, there is no
material or, to HAT's knowledge, immaterial action, suit, investigation, claim,
arbitration, litigation or similar proceeding, nor any order, decree or judgment
pending or, to HAT's knowledge, threatened against HAT, the HAT Assets or HAT
Stations before any Governmental Authority.
4.8. ASSETS.
Except for the HAT Excluded Assets, the HAT Assets include all of the
assets or property used or useful in the businesses of the HAT Stations as
presently operated. Except for leased or licensed HAT Assets, HAT is the owner
of, and has good title to, the HAT Assets
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free and clear of any Encumbrances, except for Permitted Encumbrances
(including, without limitation, those items set forth on Schedule 4.8). At the
Closing, the STC Exchange Entities shall acquire good title to, and all right,
title and interest in and to the HAT Assets, free and clear of all Encumbrances,
except for the Permitted Encumbrances.
4.9. FCC MATTERS.
4.9.1. HAT holds the FCC Licenses listed as held by HAT on
Schedule 2.3.1. The FCC Licenses of HAT contained on Schedule 2.3.1 constitute
all of the licenses, permits and authorizations from the FCC that are required
for the business and operations of WDTN and WNAC. Except as set forth on
Schedule 4.9, such FCC Licenses are valid and in full force and effect through
the dates set forth on Schedule 2.3.1, unimpaired by any condition, other than
as set forth in such FCC Licenses. Except as set forth on Schedule 4.9, no
application, action or proceeding is pending for the renewal or modification of
any of HAT's FCC Licenses, and, except for actions or proceedings affecting
television broadcast stations generally, no application, complaint, action or
proceeding is pending or, to HAT's knowledge, threatened that may result in the
(a) the revocation, modification, non-renewal or suspension of any of HAT's FCC
Licenses, or (b) the issuance of a cease-and-desist order. Except as set forth
in Schedule 4.9, HAT has no knowledge of any facts, conditions or events
relating to HAT or the HAT Stations that would reasonably be expected to cause
the FCC to revoke any of the FCC Licenses for the HAT Stations or not to grant
any pending applications for renewal of any FCC Licenses for the HAT Stations or
to deny the assignment of the FCC Licenses of HAT to STC License Company as
provided for in this Agreement.
4.9.2. Except as disclosed in Schedule 4.9, HAT is, and
pending the Closing will remain legally, financially and otherwise qualified
under the Communications Act and all rules, regulations and policies of the FCC
to acquire and operate the STC Stations. Except as disclosed in Schedule 4.9,
there are no facts or proceedings which would reasonably be expected to
disqualify HAT under the Communications Act or otherwise from acquiring or
operating any of the STC Stations or would cause the FCC not to approve the
assignment of the FCC Licenses of STC License Company to HAT. Except as
disclosed in Schedule 4.9, HAT has no knowledge of any fact or circumstance
relating to HAT or any Affiliate of HAT that would reasonably be expected to (a)
cause the filing of any objection to the assignment of the FCC Licenses for the
STC Stations from STC License Company to HAT, or (b) lead to a delay in the
processing by the FCC of the applications for such assignment. Except as
disclosed in Schedule 4.9 and except for existing waivers pertaining to the STC
Stations, no waiver of any FCC rule or policy is necessary to be obtained for
the grant of the applications for the assignment of the FCC Licenses for the STC
Stations from STC License Company to HAT, nor will processing pursuant to any
exception or rule of general applicability be requested or required in
connection with the consummation of the transactions herein.
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4.10. REAL PROPERTY.
4.10.1. HAT has good and marketable fee simple title to all
fee estates included in the Real Property of HAT and good title to all other
owned Real Property of HAT, in each case free and clear of all Encumbrances,
except for Permitted Encumbrances (including, without limitation, those items
listed on Schedule 4.10).
4.10.2. HAT has a valid leasehold interest in all Leased
Property listed as leased by HAT in Schedule 2.3.2. Schedule 2.3.2 lists all
leases and subleases pursuant to which any of such Leased Property is leased by
HAT in connection with the business and operations of the HAT Stations. HAT is
the owner and holder of all such Leased Property purported to be granted by such
leases and subleases. Each such lease and sublease is valid as to HAT
thereunder and, to HAT's knowledge valid as to any other party thereto, and is
in full force and effect and, to HAT's knowledge, constitutes a legal and
binding obligation of, and is legally enforceable against HAT and each other
party thereto and grants the leasehold interest it purports to grant, including
any rights to nondisturbance and peaceful and quiet enjoyment that may be
contained therein. The lessees and sublessees are, and to the knowledge of HAT,
all other parties are, in compliance in all material respects with the
provisions of such leases and subleases.
4.10.3. The Real Property and the Leased Property of HAT
listed in Schedule 2.3.2 constitute all of the real property owned, leased or
used in the business and operations of the HAT Stations which is material to the
business and operations of the HAT Stations.
4.10.4. No portion of the Real Property of HAT or any
building, structure, fixture or improvement thereon is the subject of, or
affected by, any condemnation, eminent domain or inverse condemnation proceeding
currently instituted or pending or, to the knowledge of HAT, threatened. To the
knowledge of HAT, and to the extent that such documents are in the possession of
HAT, HAT has delivered to STC true, correct and complete copies of the following
documents with respect to its Real Property and Leased Property as identified in
Schedule 4.10: (i) deeds, by which HAT has received a fee interest in any of
such Real Property; (ii) leases for all of its Leased Property; (iii) title
insurance policies or commitments; (iv) surveys; and (v) inspection reports or
other instruments or reports, including, without limitation, any phase I or
phase II environmental reports or other similar environmental reports, surveys
or assessments (including any and all amendments and other modifications of such
instruments).
4.11. INTELLECTUAL PROPERTY.
HAT possesses adequate rights, licenses and authority to use all
Intellectual Property necessary to conduct the business of the HAT Stations as
presently conducted. HAT has good title to all Intellectual Property
maintained, owned, leased or used in connection with the business and operations
of the HAT Stations, free and clear of any Encumbrances, except for Permitted
Encumbrances. HAT is not obligated to pay any royalty or other fees to anyone
with
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respect to the Intellectual Property of HAT. HAT has not received any written
notice to the effect that any service rendered by HAT relating to the business
of the HAT Stations may infringe, or that HAT is otherwise infringing, on any
intellectual property right or other legally protectable right of another. No
director, officer or employee of HAT has any interest in any Intellectual
Property.
4.12. STATION CONTRACTS.
Complete and correct copies of Station Contracts of HAT set forth in
Schedules 2.3.5, 2.3.6, 2.3.8 and 2.3.9 (which schedules, as to HAT, are true
and correct in all material respects) have been made available to STC and (a)
each such material Station Contract and, to HAT's knowledge, each such
immaterial Station Contract, is in full force and effect and constitutes a
legal, valid and binding obligation of HAT, and, to HAT's knowledge, of each
other party thereto; (b) HAT is not in breach or default in any material respect
of the terms of any such Station Contract; (c) none of the material rights of
HAT under any such Station Contract will be subject to termination, nor will a
default occur, as a result of the consummation of the transactions contemplated
hereby, except to the extent that failure to obtain the prior consent to
assignment thereof of any party thereto shall or could be interpreted to
constitute a termination or modification of or a default under any such Station
Contract; and (d) to the knowledge of HAT, no other party to any such Station
Contract is in breach or default in any material respect of the terms
thereunder.
4.13. TAXES.
HAT has (or, in the case of returns becoming due after the date hereof
and on or before the Closing Date, will have prior to the Closing Date) duly
filed all material Tax Returns required to be filed by HAT on or before the
Closing Date with respect to all material applicable Taxes. In the case of any
such Tax Returns which receive an extension for their date of filing, such Tax
Returns will be considered due on, and not considered required to be filed
before, the extended due date. All such Tax Returns are (or, in the case of
returns becoming due after the date hereof and on or before the Closing Date,
will be) true and complete in all material respects. HAT has: (a) paid all
Taxes due to any Governmental Authority as indicated on such Tax Returns; or (b)
established (or, in the case of amounts becoming due after the date hereof,
prior to the Closing Date will have established) adequate reserves (in
conformity with generally accepted accounting principles consistently applied)
for the payment of such Taxes.
4.14. EMPLOYEE BENEFIT PLANS.
4.14.1. Schedule 4.14 lists all Plans and Benefit Arrangements
maintained by or contributed to by HAT for the benefit of the employees of the
HAT Stations (collectively referred to as "HAT Benefit Plans") (the STC Benefit
Plans and the HAT Benefit Plans are sometimes individually referred to herein as
the "Benefit Plans"). Each HAT Benefit Plan has been maintained in material
compliance with its terms and with ERISA, the Code and other applicable Laws.
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4.14.2. Schedule 4.14 sets forth a list of all Qualified Plans
maintained by or contributed to by HAT for the benefit of the employees of the
HAT Stations. All such Qualified Plans and any related trust agreements or
annuity agreements (or any other funding document) have been maintained in
material compliance with ERISA and the Code (including, without limitation, the
requirements for tax qualification described in Section 401 thereof), other than
any Multiemployer Plan. To HAT's knowledge, any trusts established under such
Plans are exempt from federal income taxes under Section 501(a) of the Code.
4.14.3. Schedule 4.14 lists all funded Welfare Plans of HAT
that provide benefits to current or former employees of the HAT Stations or its
beneficiaries. To HAT's knowledge, the funding under each such Welfare Plan
does not exceed and has not exceeded the limitations under Sections 419A(b) and
419A(c) of the Code. To HAT's knowledge, HAT is not subject to taxation on the
income of any such Welfare Plan's welfare benefit fund (as such term is defined
in Section 419(e) of the Code) under Section 419A(g) of the Code.
4.14.4. HAT has no post-retirement medical, life insurance or
other benefits promised, provided or otherwise due now or in the future to
current, former or retired employees of the HAT Stations.
4.14.5. To HAT's knowledge, except as set forth in Schedule
4.14, HAT has (a) filed or caused to be filed all returns and reports on HAT's
Plans that they are required to file and (b) paid or made adequate provision for
all fees, interest, penalties, assessments or deficiencies that have become due
pursuant to those returns or reports or pursuant to any assessment or adjustment
that has been made relating to those returns or reports. All other fees,
interest, penalties and assessments that are payable by or for HAT have been
timely reported, fully paid and discharged. There are no unpaid fees,
penalties, interest or assessments due from HAT or from any other person that
are or could become an Encumbrance on any of the HAT Assets or could otherwise
adversely affect the businesses of the HAT Stations or HAT Assets. To HAT's
knowledge, HAT has collected or withheld all amounts that are required to be
collected or withheld by it to discharge its obligations, and all of those
amounts have been paid to the appropriate Governmental Authority or set aside in
appropriate accounts for future payment when due. HAT has furnished to STC true
and complete copies of all documents setting forth the terms and funding of each
of HAT's Plans.
4.14.6. Except as set forth in Schedule 4.14, neither HAT nor
any ERISA Affiliate of HAT has ever sponsored or maintained, had any obligation
to sponsor or maintain, or had any liability (whether actual or contingent, with
respect to any of its assets or otherwise) with respect to any of HAT's Plans
subject to Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA
(including any Multiemployer Plan). Neither HAT nor any ERISA Affiliate of HAT
(since January 1, 1989) has terminated or withdrawn from or sought a funding
waiver with respect to any plan subject to Title IV of ERISA, and no facts exist
that could reasonably be expected to cause such actions in the future; no
accumulated funding deficiency (as defined in Code Section 412), whether or not
waived, exists with respect to any such plan; no reportable event (as defined in
ERISA Section 4043) has occurred with respect to any such plan (other than
events for which reporting is waived); all costs of any such plans have been
provided
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for on the basis of consistent methods in accordance with sound actuarial
assumptions and practices, and the assets of each such plan, as of its last
valuation date, exceeded its "Benefit Liabilities" (as defined in ERISA Section
4001(a)(16)); and, since the last valuation date for each such plan, no such
plan has been amended or changed to increase the amounts of benefits thereunder
and, to the knowledge of HAT, there has been no event that would reduce the
excess of assets over benefit liabilities; and except as set forth in Schedule
4.14, neither HAT nor any ERISA Affiliate of HAT has ever made or been obligated
to make, or reimbursed or been obligated to reimburse another employer for,
contributions to any Multiemployer Plan of HAT.
4.14.7. No claims (other than for benefits in the Ordinary
Course of Business) or lawsuits are pending or, to the knowledge of HAT,
threatened by, against, or relating to any of its Benefit Plans. To HAT's
knowledge, the HAT Benefit Plans are not presently under audit or examination
(nor has notice been received of a potential audit or examination) by the IRS,
the Department of Labor, or any other governmental agency or entity and no
matters are pending with respect to any Qualified Plan of HAT under the IRS's
Voluntary Compliance Resolution program, its Closing Agreement Program, or other
similar programs.
4.14.8. With respect to each Plan of HAT, there has occurred
no non-exempt "prohibited transaction" (within the meaning of Section 4975 of
the Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for HAT.
4.14.9. HAT has no liability with respect to any employee
benefit plan of HAT that is not a HAT Benefit Plan (exclusive of severance
arrangements and retention agreements) or with respect to any employee benefit
plan sponsored or maintained (or which has been or should have been sponsored or
maintained or with respect to which there has been an obligation to do so) by
any ERISA Affiliate of HAT.
4.14.10. All group health plans of HAT and its ERISA
Affiliates covering any current or former employees of the HAT Stations have
been operated in material compliance with the requirements of Sections 4980B
(and its predecessor) and 5000 of the Code, and HAT has provided, or will have
provided before the Closing Date, to individuals entitled thereto all required
notices and coverage pursuant to Section 4980B with respect to any "qualifying
event" (as defined therein) occurring before or on the Closing Date.
4.15. LABOR RELATIONS.
Schedule 4.15 contains a true and complete list of all employees engaged
in the business or operations of the HAT Stations as of the date set forth on
the list, together with such employee's position, salary and date of hire.
Schedule 4.15 lists all written employment contracts with any such employees and
all written agreements, plans, arrangements, commitments and understandings
pursuant to which HAT has severance obligations with respect to such employees.
Except as set forth on Schedule 4.15, no labor union or other collective
bargaining unit represents or, to HAT's knowledge, claims to represent, any of
the employees of the HAT Stations. There are no strikes, work stoppages,
grievance proceedings, union
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organization efforts, or other controversies pending between HAT and any union
or collective bargaining unit representing (or, to HAT's knowledge, claiming to
represent) any employees of the HAT Stations. HAT is in compliance with all
Laws relating to the employment of employees of the HAT Stations or the
workplace of the HAT Stations, including, without limitation, provisions
relating to wages, hours, collective bargaining, safety and health, work
authorization, equal employment opportunity, immigration and the withholding of
income taxes, unemployment compensation, worker's compensation, employee privacy
and right to know and social security contributions, except for any
noncompliance which would not have a Material Adverse Effect on the HAT
Stations. Except as set forth on Schedule 4.15, there are no collective
bargaining agreements relating to the HAT Stations or the business and
operations thereof.
4.16. ENVIRONMENTAL MATTERS.
4.16.1. Schedule 4.16 contains a true and complete list and
brief summary of all material reports, audits and other documents relating to
the environmental condition of the Real Property of HAT in HAT's possession.
4.16.2. Except as set forth in Schedule 4.16, to the knowledge
of HAT (which knowledge is based on the items set forth on Schedule 4.16), HAT
is in material compliance with, and the Real Property of HAT and all
improvements thereon are in material compliance with, all Environmental Laws.
4.16.3. Except as set forth in Schedule 4.16, there are no
pending or, to the knowledge of HAT, threatened actions, suits, claims, or other
legal proceedings based on (and HAT has not received any written notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Authority
arising out of or attributable to): (a) the current or past presence at any
part of HAT's Real Property of Hazardous Materials; (b) the current or past
release or threatened release into the environment from HAT's Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from HAT's Real Property or
the HAT Assets or businesses of the HAT Stations; (d) any facility operations or
procedures of the HAT Stations which do not conform to requirements of the
Environmental Laws; or (e) any violation of Environmental Laws at any part of
HAT's Real Property arising from activities of the HAT Stations involving
Hazardous Materials. To the knowledge of HAT, HAT has been duly issued all
material permits, licenses, certificates and approvals required under any
Environmental Law.
4.17. INSURANCE.
Schedule 4.17 contains a true and complete list and brief summary of all
policies of title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance of any kind
relating to the HAT Assets or the business and operations of the HAT Stations.
All such policies: (a) are in full force and effect; (b) are
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sufficient for compliance in all material respects with all requirements of Law
and of all material agreements to which HAT is a party; and (c) to HAT's
knowledge, are valid, outstanding, and enforceable policies and the policy
holder is not in default in any material respect thereunder.
4.18. REPORTS.
All material returns, reports and statements that the HAT Stations are
currently required to file with the FCC or any governmental agency have been
timely filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with in all material
respects. All of such reports, returns and statements are complete and correct
in all material respects as filed. To HAT's knowledge, all documents required
by the FCC to be deposited by HAT in its public files (as defined in the rules
and regulations of the FCC) during the period of operation of the HAT Stations
by HAT have been deposited therein.
4.19. AFFILIATED TRANSACTIONS.
Except as set forth in Schedule 4.19, HAT is not now, and during the
past three (3) years has not been, a party, directly or indirectly, to any
material contract, lease, arrangement or transaction relating to the HAT
Stations, whether for the purchase, lease or sale of property, for the rendition
of services or otherwise, with any Affiliate of HAT, or any officer, director,
employee, proprietor, partner or shareholder of HAT (collectively, "HAT
Affiliated Transactions") (STC Affiliated Transactions and HAT Affiliated
Transactions are sometimes collectively referred to herein as the "Affiliated
Transactions"). None of the HAT Affiliated Transactions which are identified on
Schedule 4.19 contains terms and conditions which are in the aggregate
significantly less favorable to HAT and as would be obtained in a comparable
arms length transaction or transaction which would not have occurred but for the
relationship between the parties.
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. APPLICATIONS FOR FCC CONSENT.
Within five (5) business days following the execution of this Agreement,
the parties hereto shall jointly file applications for the Stations with the FCC
requesting consent to the assignment of the FCC Licenses for the Stations as
contemplated herein (the "FCC Applications"). Each party hereto will diligently
take, or fully cooperate in the taking of, all necessary and proper steps, and
provide any additional information reasonably requested in order to obtain
promptly the requested consents and approvals of the FCC Applications by the
FCC.
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5.2. XXXX-XXXXX-XXXXXX.
Within five (5) business days following the execution of this Agreement,
the parties hereto shall complete any filing that may be required pursuant to
Xxxx-Xxxxx-Xxxxxx (each an "HSR Filing"). Each party hereto shall diligently
take, or fully cooperate in the taking of, all necessary and proper steps, and
provide any additional information reasonably requested in order to comply with,
the requirements of Xxxx-Xxxxx-Xxxxxx.
5.3. NON-REQUIRED ACTIONS.
No party hereto shall have any obligation to take any steps pursuant to
Section 5.1 or Section 5.2 which would require the divestiture of any business
or assets of any party hereto or any Affiliate thereof.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF THE PARTIES
Each party covenants and agrees with the other party as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Closing, such party will not without the prior
written consent of the other party (which consent will not be unreasonably
withheld, delayed or conditioned, except in the case of matters referred to in
Sections 6.1.7, 6.1.9 and 6.1.11, with respect to which the other party's
consent may be withheld in its sole and absolute discretion), do or agree to do
any of the following:
6.1.1. DISPOSITIONS; MERGERS.
Sell, assign, lease or otherwise transfer or dispose of any of such
party's Assets other than at substantially fair market value and in the Ordinary
Course of Business; or merge or consolidate with or into any other entity or
enter into any contracts or agreements relating thereto.
6.1.2. ACCOUNTING PRINCIPLES AND PRACTICES.
Change or modify any accounting principles or practices or any method of
applying such principles or practices.
6.1.3. TRADE-OUT AGREEMENTS.
(a) As to WPTZ and WNNE, enter into or renew any
Trade-out Agreement (excluding any film barter agreements) that would be binding
on the other party after the Closing Date, except in the Ordinary Course of
Business and which requires the provision of broadcast time having a value of
less than (a) Twenty-Five Thousand Dollars ($25,000)
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individually, and (b) together with existing Trade-out Agreements still in
effect as of the Closing Date, Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate as of the Closing Date.
(b) As to KSBW and WDTN, enter into or renew any Trade-out Agreements
(excluding any film barter agreements) that would be binding on the other party
after the Closing Date, except in the Ordinary Course of Business which requires
the provision of broadcast time having the value of less than Five Thousand
Dollars ($5,000) individually and together with existing Trade-out Agreements
still in effect as of the Closing Date, Fifty Thousand Dollars ($50,000) in the
aggregate as of the Closing Date.
6.1.4. BROADCAST TIME SALES AGREEMENTS.
Enter into or renew any Time Sales Agreement except in the Ordinary
Course of Business and which are for cash at prevailing rates for a term not
exceeding twelve (12) months.
6.1.5. NETWORK AFFILIATION AGREEMENTS AND TBAS.
Acquire or enter into or renew any TBA or network affiliation agreement.
6.1.6. ADDITIONAL AGREEMENTS.
Acquire or enter into any new Station Contracts not referred to in
Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend, alter, modify or
otherwise change any existing Station Contract, except in the Ordinary Course of
Business (collectively, "Additional Agreements"); provided, however, such party
shall not enter into (a) any Program Contract for any Station which will be
binding on the other party after the Closing Date, or (b) any other Station
Contract requiring payments by such party under each Station Contract in excess
of Five Thousand Dollars ($5,000) or Seventy-Five Thousand Dollars ($75,000) in
the aggregate.
6.1.7. BREACHES.
Do or omit to do any act which will cause a material breach of any
Station Contract.
6.1.8. EMPLOYEE MATTERS.
(a) Enter into or become subject to any employment, labor, union, or
professional service contract not terminable at will, or any bonus, pension,
insurance, profit sharing, incentive, deferred compensation, severance pay,
retirement, hospitalization, employee benefit, or other similar plan; or
increase the compensation payable or to become payable to any employee, or pay
or arrange to pay any bonus payment to any employee, except in the Ordinary
Course of Business.
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(b) As to KSBW and WDTN, hire, retain or offer employment to any new
employees.
6.1.9. ACTIONS AFFECTING FCC LICENSES.
Take any action which may jeopardize the validity or enforceability of
or rights under any FCC Licenses.
6.1.10. PROGRAMMING.
Program or broadcast any Program Contract or syndicated program, except
in the Ordinary Course of Business and consistent with the terms and conditions
of such Program Contracts.
6.1.11. ENCUMBRANCES.
Create, assume or permit to exist any Encumbrances upon any of the
Assets except for Permitted Encumbrances and Encumbrances that will be
discharged prior to or on the Closing Date.
6.1.12. TRANSACTIONS WITH AFFILIATES.
Enter into any transaction with any Affiliate of such party that will be
binding upon the other party on or after the Closing Date, except for
transactions not otherwise prohibited by this Section 6.1 and transactions
between and among Stations operating in the same DMA in the Ordinary Course of
Business, in each case on arm's length terms.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Closing, each party will:
6.2.1. PRESERVE EXISTENCE.
Preserve its corporate existence and business organization intact,
maintain its existing franchises and licenses, use commercially reasonable
efforts to preserve for the other party the relationships of its Stations with
suppliers, customers, employees and others with whom its Stations have business
relationships, and keep all of its Assets substantially in their present
condition, ordinary wear and tear excepted.
6.2.2. NORMAL OPERATIONS.
Subject to the terms and conditions of this Agreement (including,
without limitation, Section 6.1), (a) carry on the businesses and activities of
its Stations, including without limitation, promotional activities, the sale of
advertising time, entering into other contracts and agreements, or purchasing
and scheduling of programming, in the Ordinary Course of Business; (b) pay or
otherwise satisfy all obligations (cash and barter) of its Stations in
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the Ordinary Course of Business; provided, however, such party shall cause to
be brought current as of the Closing Date all payments that are due and payable
under its Station Contracts as originally contracted; (c) maintain books of
account, records, and files with respect to the business and operations of its
Stations in substantially the same manner as heretofore; and (d) maintain its
Assets in customary repair, maintenance and condition, except to the extent of
normal wear and tear, and repair or replace, consistently with the Ordinary
Course of Business, any of its Assets that may be damaged or destroyed;
notwithstanding the foregoing, each party acknowledges that the other party
shall not be obligated to spend any funds on capital expenditures after the date
hereof, except for the repair or replacement of its Assets that may be damaged
or destroyed or to comply with improvements required pursuant to the
environmental remediation described in Section 6.16.
6.2.3. MAINTAIN FCC LICENSES.
Maintain the validity of its FCC Licenses, and comply in all material
respects with all requirements of such FCC Licenses and the rules and
regulations of the FCC.
6.2.4. NETWORK AFFILIATION.
Use best efforts to maintain in full force and effect the present
network affiliation agreements for its Stations (and any and all modifications
and renewals thereof).
6.2.5. STATION CONTRACTS.
Pay and perform obligations in the Ordinary Course of Business under its
Station Contracts and under any Additional Agreements that shall be entered into
by such party pursuant to Section 6.1.6, in accordance with the respective terms
and conditions of such Station Contracts.
6.2.6. TAXES.
Pay or discharge all Taxes when due and payable.
6.2.7. ACCESS.
Prior to the Closing and for a period of five (5) years after the
Closing Date (and to the extent permitted by the Clear Channel Agreements in the
case of HAT and to the extent permitted by the Heritage Agreement and the
Xxxxxxxx Agreement in the case of STC), cause to be afforded to representatives
of the other party reasonable access during normal business hours to offices,
properties, assets, books and records, contracts and reports of its Stations, as
the other party shall from time to time reasonably request; provided, however,
that (a) such investigation shall only be upon reasonable notice and shall not
unreasonably disrupt the personnel or operations of either party or its
Stations, and (b) under no circumstances shall either party be required to
provide access to the other party or any representative of the other party (i)
any information or materials subject to confidentiality agreements with third
parties required
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to be kept confidential by applicable Laws, or (ii) any privileged
attorney-client communications or attorney work product. All requests for
access to the offices, properties, assets, books and records, contracts and
reports of the Stations of either party shall be made to such representatives as
such party shall designate, who shall be solely responsible for coordinating all
such requests and all access permitted hereunder. Each party acknowledges and
agrees that neither it nor its representatives shall contact any of the
employees, customers, suppliers, partners, or other associates or Affiliates of
the other party, in connection with the transactions contemplated hereby,
whether in person or by telephone, mail or other means of communication, without
the specific prior written authorization of such representatives of the other
party. Subject to and in accordance with the terms of this Section 6.2.7, each
party shall cooperate in all reasonable respects with the other party's request
to conduct an audit of such party's financial information as the other party may
reasonably determine is necessary to satisfy the other party's public company
reporting requirements pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934 including, without limitation, (a) using commercially
reasonable efforts to obtain the consent of such party's auditors to permit the
other party and the other party's auditors to have access to such auditors' work
papers, and (b) consenting to such access by the other party. All costs and
expenses incurred in connection with the preparation of (and assimilation of
relevant information for) any such financial statements shall be paid by the
requesting party.
6.2.8. INSURANCE.
Maintain in full force and effect all of its existing casualty,
liability, and other insurance in amounts not less than those in effect on the
date hereof.
6.2.9. FINANCIAL STATEMENTS.
Provide the other party with unaudited monthly statements of assets and
liabilities relating to the business and operations of its Stations, and monthly
statements of revenues and expenses reflecting the results of business and
operations of its Stations for January 31, 1998 and for each month thereafter,
within thirty (30) days after the end of each such month. Such party further
agrees to provide the other party with weekly sales pacing reports for its
Stations.
6.2.10. CONSENTS.
(a) Take all reasonable action required to obtain all consents,
approvals and agreements of any third parties necessary to authorize, approve or
permit the consummation of the transactions contemplated by this Agreement,
including, without limitation, any consent of the parties to the Station
Contracts designated as necessary in Schedule 3.4 and Schedule 4.4, as
applicable, in order to consummate the transactions contemplated hereby
(collectively, the "Restricted Contracts"). Notwithstanding anything to the
contrary set forth in this Agreement or otherwise, to the extent that the
consent or approval of any third party is required under any Restricted
Contract, the party to such Restricted Contract shall only be required to use
reasonable efforts (not involving the payment by such party of any money to any
party to any such Restricted Contract) to obtain such consents and approvals,
and
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in the event that such party fails to obtain any such consent or approval, the
other party shall have no right to terminate this Agreement.
(b) Notwithstanding anything to the contrary in clause (a) above, each
party shall retain, until such time as any required consents shall have been
obtained by such party, all rights to and under any Station Contract to which it
is a party which requires the consent of any other party thereto for assignment
to the other party if such consent has not been obtained on the Closing Date
(the "Deferred Contract"). Until the assignment of the Deferred Contract, (i)
the party thereto shall continue to use all commercially reasonable efforts and
the other party shall cooperate to obtain the consent and/or to remove any other
impediments to such assignment, and (ii) the parties agree to cooperate in any
lawful arrangement to provide (to the extent permitted without breach of such
Deferred Contract) that the other party shall receive the benefits of such
interest after the Closing Date to the same extent as if it were the party
thereunder. If, subsequent to the Closing Date, the party to a Deferred
Contract shall obtain required consents to assign such Deferred Contract to the
other party, such Deferred Contract for which consent to assign has been
obtained shall at that time be deemed to be conveyed, granted, bargained, sold,
transferred, setover, assigned, released, delivered and confirmed to the other
party, without need of further action or of future documentation.
6.2.11. CORPORATE ACTION.
Take all corporate action (including, without limitation, all
shareholder action), under the Law of any state having jurisdiction over such
party necessary to effectuate the transactions contemplated by this Agreement
and the other agreements to which it is a party.
6.2.12. ENVIRONMENTAL AUDIT.
Permit the other party and the other party's agents, as soon as
practical after the date hereof and upon the other party's request therefor,
access to the Real Property of such party and the Leased Property of such party
for the purpose of conducting, at the other party's expense, Phase I and Phase
II environmental audits. Any such environmental audits shall be conducted by a
reputable environmental investigatory firm of the other party's choice subject
to the reasonable approval of such party and in a manner as will not
unreasonably interfere with the normal business and operations of any of the
Stations.
6.2.13. XXXXXXXX AGREEMENT.
As to STC, STC shall consummate the acquisition of the Burlington
Stations in accordance with the provisions of the Xxxxxxxx Agreement and
promptly enforce all rights and remedies available to STC pursuant to the
Xxxxxxxx Documents.
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6.3. CONFIDENTIALITY.
The Recipient Party shall, at all times, maintain strict confidentiality
with respect to all documents and information furnished to such party by or on
behalf of the Transferring Party. Nothing shall be deemed to be confidential
information that: (a) is known to the Recipient Party at the time of its
disclosure to the Recipient Party; (b) becomes publicly known or available other
than through disclosure by the Recipient Party; (c) is received by the Recipient
Party from a third party not actually known by the Recipient Party to be bound
by a confidentiality agreement with or obligation to the Transferring Party; or
(d) is independently developed by the Recipient Party. Notwithstanding the
foregoing provisions of this Section 6.3, the Recipient Party may disclose such
confidential information (a) to the extent required or deemed advisable to
comply with applicable Laws; (b) to its officers, directors, employees,
representatives, financial advisors, attorneys, accountants, and agents with
respect to the transactions contemplated hereby (so long as such parties agree
to maintain the confidentiality of such information); and (c) to any
Governmental Authority in connection with the transactions contemplated hereby.
In the event this Agreement is terminated, each party will return to the other
party all documents and other material prepared or furnished by the other party
relating to the transactions contemplated hereunder, whether obtained before or
after the execution of this Agreement.
6.4. COLLECTION OF RECEIVABLES.
At the Closing, STC shall assign the Xxxxxxxx Receivables to HAT for
collection purposes only, and, within ten (10) business days after the Closing
Date, STC shall furnish to HAT a list of such Xxxxxxxx Receivables by accounts
and the amounts then owing. HAT agrees, during the period of days remaining
between the date of the STC Transfer Date and one hundred fifty (150) days from
such date (the "Xxxxxxxx Collection Period"), without any requirement to
litigate to collect such Xxxxxxxx Receivables, to use its reasonable efforts
(with at least the care and diligence HAT uses to collect its own accounts
receivable) to collect for STC such Xxxxxxxx Receivables and to remit to
Xxxxxxxx on the fifth (5th) day following the last day of each month occurring
during the Xxxxxxxx Collection Period (or, if any such day is a Saturday, Sunday
or holiday, on the next day on which banking transactions are resumed),
collections received by HAT with respect to such Xxxxxxxx Receivables. HAT
shall not make any referral or compromise of any Xxxxxxxx Receivable to a
collection agency or attorney for collection and shall not compromise for less
than full value any Xxxxxxxx Receivable without the prior written consent of
Xxxxxxxx. Any Xxxxxxxx Receivable not collected by HAT within the Xxxxxxxx
Collection Period shall revert to Xxxxxxxx. HAT shall reassign, without
recourse to Xxxxxxxx, each Xxxxxxxx Receivable and deliver to Xxxxxxxx, all
records relating thereto on the same day as HAT remits to Xxxxxxxx the
collections received. All payments in respect of the Xxxxxxxx Receivables
received during the Xxxxxxxx Collection Period shall be first applied to the
oldest balance then due on the Xxxxxxxx Receivables unless the account debtor
indicates in writing that payment is to be applied otherwise due to a dispute
over an Account Receivable. HAT agrees, upon the reasonable request of STC, to
furnish to STC and Xxxxxxxx periodic reports on the status of its Xxxxxxxx
Receivables. HAT shall have no right to set-off any amounts collected for the
Xxxxxxxx
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Receivable for any amounts owed to HAT by STC; provided, however, that HAT
shall have the right to seek indemnification in accordance with the terms and
conditions of this Agreement.
6.5. POSSESSION AND CONTROL.
Between the date hereof and the Closing Date, the Recipient Party shall
not directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Transferring Party's
Stations, and such operation, including complete control and supervision of all
programming, shall be the sole responsibility of the Transferring Party. On and
after the Closing Date, the Transferring Party shall have no control over, or
right to intervene, supervise, direct or participate in, the business and
operations of the Stations transferred to the Recipient Party.
6.6. RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause to the
Assets of the Transferring Party until the Closing Date shall be upon the
Transferring Party. In the event of loss or damage prior to the Closing Date
with respect to which the Transferring Party has adequate replacement cost
insurance and which has not been restored, replaced, or repaired as of the
Closing Date and if the Recipient Party shall proceed with the Closing, then the
Recipient Party shall receive at the Closing the insurance proceeds or an
assignment of the right to receive such insurance proceeds, as applicable, to
which the Transferring Party otherwise would be entitled, whereupon the
Transferring Party shall have no further liability to the Recipient Party for
such loss or damage.
6.7. PUBLIC ANNOUNCEMENTS.
Each party shall consult with the other party before issuing any press
release or otherwise making any public statements with respect to this Agreement
or the transactions contemplated herein and shall not issue any such press
release or make any such public statement without the prior written consent of
the other party, which shall not be unreasonably withheld; provided, however,
that a party may, without the prior written consent of the other party, issue
such press release or make such public statement as may be required by Law or
any listing agreement with a national securities exchange to which such party is
a party if it has used all reasonable efforts to consult with the other party
and to obtain such party's consent but has been unable to do so in a timely
manner.
6.8. XXXXXXXX EMPLOYEE MATTERS.
6.8.1. At the Closing, HAT shall offer employment to each of
the employees of WNNE and WPTZ (including those on leave of absence, whether
short-term, long-term, family, maternity, disability, paid, unpaid or other), at
a comparable salary, position and place of employment as held by each such
employee immediately prior to the Closing Date (such employees who are given
such offers of employment and accept such offers and are employed by
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HAT are referred to herein as the "Xxxxxxxx Employees"). Nothing in this
Section 6.8.1 is intended to guarantee employment for any Xxxxxxxx Employee for
any length of time after the Closing Date.
6.8.2. Except as provided otherwise in this Section 6.8, STC
shall pay, discharge and be responsible for (a) all salary and wages arising out
of or relating to the employment of the employees of WNNE and WPTZ prior to the
Closing Date and (b) any employee benefits arising under the Benefit Plans of
STC and its Affiliates during the period prior to the Closing Date. From and
after the Closing Date, HAT shall pay, discharge and be responsible for all
salary, wages and benefits arising out of or relating to the employment of the
Xxxxxxxx Employees by HAT on and after the Closing Date. HAT shall be
responsible for all severance Liabilities, and all COBRA Liabilities for any
Xxxxxxxx Employees terminated by HAT on or after the Closing Date.
6.8.3. HAT shall cause all Xxxxxxxx Employees as of the
Closing Date to be eligible to participate in its "employee welfare benefit
plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2)
of ERISA, respectively) to the extent required under the Xxxxxxxx Agreement.
6.8.4. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service in any such plan for which a Xxxxxxxx Employee may be eligible after the
Closing, HAT shall ensure that, to the extent permitted by law, service by such
Xxxxxxxx Employee with the Heritage Subsidiaries, Xxxxxxxx, STC or any of their
respective Affiliates shall be deemed to have been service with HAT. In
addition, HAT shall ensure that each Xxxxxxxx Employee receives credit under any
welfare benefit plan of HAT for any deductibles or co-payments paid by such
Xxxxxxxx Employee and his or her dependents for the current plan year under a
plan maintained by the Heritage Subsidiaries, Xxxxxxxx, STC or any of their
respective Affiliates. HAT shall grant credit to each Xxxxxxxx Employee for all
sick leave in accordance with the policies of HAT applicable generally to its
employees after giving effect to service for STC as service for HAT. To the
extent taken into account in determining the Final Proration Amount, HAT shall
assume and discharge STC's Liabilities for the payment of all unused vacation
leave accrued by Xxxxxxxx Employees as of the Closing Date. To the extent any
claim with respect to such accrued vacation leave is lodged against STC, with
respect to any Xxxxxxxx Employee, HAT shall indemnify, defend and hold harmless
STC from and against any and all losses, directly or indirectly, as a result of,
or based upon or arising from the same.
6.8.5. As soon as practicable following the Closing Date, HAT
shall establish and maintain a defined contribution plan or plans (which may be
a preexisting plan or plans (the "HAT Retirement Plan") intended to be qualified
under Section 401(a) and 401(k) of the Code for the benefit of the Xxxxxxxx
Employees. Effective as of the Closing Date, STC shall cause appropriate
amendments to be made to its retirement savings plan (the "STC Retirement Plan")
to provide that the Xxxxxxxx Employees shall be fully vested in their accounts
under the STC Retirement Plan. As soon as practicable after the Closing Date,
HAT shall take all necessary action to qualify the HAT Retirement Plan under the
applicable provisions of the Code
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(including but not limited to Section 401), if it is not yet so qualified, and
HAT and STC shall make any and all filings and submissions to the appropriate
governmental agencies required to be made by them in connection with the
transfer of assets described hereafter. As soon as practicable following the
earlier of the receipt of a favorable determination letter from the Internal
Revenue Service regarding the qualified status of both the STC Retirement Plan
and the HAT Retirement Plan (each as amended to the date of transfer) or sooner,
if STC and HAT so agree, STC shall cause to be transferred to the HAT Retirement
Plan, in cash, all of the individual account balances of Xxxxxxxx Employees
under the STC Retirement Plan, including any outstanding plan participant loan
receivables allocated to such accounts.
6.8.6 . HAT acknowledges and agrees that its obligations
pursuant to this Section 6.8 are in addition to, and not in limitation of, HAT's
obligation to assume the employment contracts set forth on Schedule 2.3.9.
6.8.7. Except as otherwise provided in this Section 6.8 or in
any employment, severance or retention agreements of any Xxxxxxxx Employees, all
Xxxxxxxx Employees shall be at-will employees, and HAT may terminate their
employment or change their terms of employment at will. No employee (or
beneficiary of any employee) of WPTZ or WNNE may xxx to enforce the terms of
this Agreement, including specifically this Section 6.8, and no employee or
beneficiary shall be treated as a third party beneficiary of this Agreement.
Except to the extent provided for herein, HAT may cover the Xxxxxxxx Employees
under existing or new benefit plans, programs, and arrangements, and may amend
or terminate any such plans, programs, or arrangements at any time.
6.9. OTHER EMPLOYEE MATTERS.
6.9.1. Except for the Xxxxxxxx Employees (who are addressed in
Section 6.8), at least five (5) days prior to the Closing Date, the Recipient
Party shall designate in writing which employees of the Transferring Party's
Stations the Recipient Party shall offer employment after the Closing Date (all
such employees shall be referred to herein as the "Designated Employees"; all
other employees shall be referred to herein as the "Non-Transferred Employees").
As of the Closing Date, the Recipient Party shall offer employment to each of
the Designated Employees (including those on leave of absence, whether
short-term, long-term, family, maternity, disability, paid, unpaid or other), on
terms and conditions set by the Recipient Party (such employees who are given
such offers of employment and accept such offers and are employed by the
Recipient Party are referred to herein as the "Transferred Employees"). Nothing
in this Section 6.9.1 is intended to guarantee employment for any Transferred
Employee for any length of time after the Closing Date.
6.9.2. Except as provided otherwise in this Section 6.9, the
Transferring Party shall pay, discharge and be responsible for (a) all salary
and wages arising out of or relating to the employment of the employees of its
Stations prior to the Closing Date, (b) all accrued and unpaid vacation pay, (c)
any employee benefits arising under the Benefit Plans of the Transferring Party
and its Affiliates during the period prior to the Closing Date and (d) all
severance Liabilities and all COBRA Liabilities for any Non-Transferred
Employees (subject to
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the Recipient Party's reimbursement obligations set forth in Section 6.9.8).
From and after the Closing Date, the Recipient Party shall pay, discharge and be
responsible for all salary, wages and benefits arising out of or relating to the
employment of the Designated Employees by the Recipient Party on and after the
Closing Date. The Recipient Party shall be responsible for all severance
Liabilities, and all COBRA Liabilities for any Designated Employees terminated
by the Recipient Party on or after the Closing Date.
6.9.3. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service pursuant to any employment program provided by the Recipient Party in
any such plan for which a Transferred Employee may be eligible after the
Closing, the Recipient Party shall ensure that, to the extent permitted by law,
service by such Transferred Employee with the applicable Station or any
Affiliate of the Station shall be deemed to have been service with the Recipient
Party.
6.9.4. Each party acknowledges and agrees that its obligations
pursuant to this Section 6.9 are in addition to, and not in limitation of, such
party's obligation to assume the employment contracts of the other party set
forth on Schedule 2.3.9.
6.9.5. Except as otherwise provided in this Section 6.9 or in
any employment, severance or retention agreements of any Designated Employees,
all Designated Employees shall be at-will employees, and the Recipient Party may
terminate their employment or change their terms of employment at will. No
employee (or beneficiary of any employee) of the Stations may xxx to enforce the
terms of this Agreement, including specifically this Section 6.9, and no
employee or beneficiary shall be treated as a third party beneficiary of this
Agreement. Except to the extent provided for herein, the Recipient Party may
cover the Designated Employees under existing or new benefit plans, programs,
and arrangements, and may amend or terminate any such plans, programs, or
arrangements at any time.
6.9.6. The Recipient Party agrees to reimburse the
Transferring Party for all severance Liabilities and COBRA Liabilities for
Non-Transferred Employees which are paid by the Transferring Party pursuant to
Section 6.9.2 and which are consistent with the Transferring Party's severance
policy in effect as of the date hereof and disclosed to the Recipient Party.
6.10. DISCLOSURE SCHEDULES.
(a) STC hereby acknowledges that for business reasons HAT has not been
able to deliver a complete set of the Schedules for the HAT Stations referred to
herein prior to the date hereof. HAT covenants that HAT shall deliver to STC
and to STC's counsel a complete set of the Schedules for the HAT Stations (and
copies of all materials identified on the Schedules, as reasonably required to
support such Schedules or as otherwise requested by STC) within ten (10)
business days after the execution and delivery of this Agreement. On the date
of receipt, an officer of HAT shall certify in writing that the Schedules (and
supporting materials) delivered to STC and STC's counsel are complete and
correct. STC shall have ten (10) business days following the date of receipt by
STC and STC's counsel of the complete and correct set of the Schedules (and
supporting materials) for the HAT Stations (the "Schedule Review Period")
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to review such Schedules and to determine in the good faith exercise of STC's
reasonable business judgment whether the items referenced therein are acceptable
to STC. If STC, after reasonable consultation with HAT, determines in the good
faith exercise of STC's reasonable business judgment that the items referred to
in the HAT Schedules are not acceptable, STC shall be entitled to terminate this
Agreement pursuant to the terms set forth in Section 11.2(b).
(b) The parties acknowledge and agree that each party shall have the
right from time to time after the date hereof to update or correct solely
Schedules 2.3.5, 2.3.6, 2.3.8, 2.3.9, 3.4, 4.4, 3.17 and 4.17 attached hereto
solely to reflect actions by such party (and, in the case of STC, actions by
Xxxxxxxx or the Heritage Subsidiaries) after the date hereof which are not
prohibited by Section 6.1 hereof. The inclusion of any fact or item on a
Schedule referenced by a particular section in this Agreement shall, should the
existence of the fact or item or its contents, be relevant to any other section,
be deemed to be disclosed with respect to such other section whether or not an
explicit cross-reference appears in the Schedules.
6.11. BULK SALES LAWS.
Each party hereby waives compliance by the other party, in connection
with the transactions contemplated hereby, with the provisions of any applicable
bulk transfer laws.
6.12. TAX MATTERS.
6.12.1. Each party represents, warrants, covenants and agrees
with the other party that for tax purposes the exchange of Assets is not
effective until the Closing Date. The parties agree that all Tax returns and
reports shall be filed consistent with the sale of assets taking place as
aforesaid.
6.12.2. The parties intend that the following exchanges of
Assets pursuant to this Agreement shall qualify as "like kind" exchanges under
Section 1031 of the Code: (a) for the STC Exchange Entities, the exchange by the
STC Exchange Entities of KSBW for the HAT Assets, and (b) for HAT, the exchange
by HAT of the HAT Assets for the STC Assets. The parties acknowledge and agree
that the exchange by the STC Exchange Entities of WNNE and WPTZ is not intended
to qualify for the STC Exchange Entities as a "like kind" exchange under Section
1031 of the Code.
6.12.3. STC covenants with and warrants to HAT, and HAT
covenants with and warrants to STC, that (a) in no Tax return hereafter filed by
STC or any Affiliate of STC, or by HAT or any Affiliate of HAT, or any of their
respective representatives, successors or assigns, will STC or HAT or any of
their respective representatives, successors or assigns, treat any exchanges
described herein inconsistently with or differently than as described herein,
and (b) in no tax audit, tax examination, tax review or tax litigation will STC
or any Affiliate of STC, or HAT or any Affiliate of HAT, or any of their
respective representatives, successors or assigns, treat any such exchange
inconsistently with or differently than as described herein. Each party agrees
to cooperate with the other party in order that STC and HAT effectuate the
tax-deferred
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exchanges as described herein of like-kind property pursuant to Section 1031 of
the Code. The parties agree to execute such agreements and other documents as
may be necessary to complete and otherwise effectuate these tax-deferred
exchanges.
6.12.4. In order to facilitate the Like-Kind Exchange as
contemplated hereunder, STC agrees to take such actions prior to the Closing
(subject to applicable regulatory requirements) as are necessary (the "LKE
Facilitation Transactions") so that immediately prior to the Closing and the
consummation of the Like-Kind Exchange STC Broadcasting shall own all of the STC
Non-License Assets and STC License Company shall own all of the STC License
Assets (the "Preferred STC Ownership"). Notwithstanding anything in this
Agreement to the contrary, the parties acknowledge and agree that STC shall have
the right, without the prior consent of HAT (provided that STC delivers written
notice to HAT of STC's intent to exercise such right at least three (3) days
prior to Closing), to take such actions in order to facilitate the Like-Kind
Exchange in a manner which minimizes the tax consequences to STC of the
transactions contemplated herein provided that the tax consequences for HAT are
the same as if the Preferred STC Ownership structure was used and the
transactions hereunder shall not be adversely affected except that in no event
shall STCBV fail to assign to STCBV Sub all rights under the Xxxxxxxx Documents
or STCBV Sub fail to be the entity which acquires WPTZ and WNNE from Xxxxxxxx as
contemplated by Section 8.1.
6.12.5. HAT acknowledges and agrees that STC may elect to
facilitate the exchanges contemplated by this Agreement by the use of a
"qualified intermediary" as defined in Treas. Reg. (S)1.1031(k)-1(g)(4) ("QI")
for purposes of engaging in the exchange of the STC License Assets. If STC so
elects, STC shall provide notice to HAT of STC's election, and thereafter both
HAT and STC may at the Closing (but immediately prior to the consummation of the
exchange of Assets contemplated in Article 2) assign such party's rights in
respect of such party's License Assets under this Agreement to a QI (but such
assignment shall not relieve either party of such party's obligations under this
Agreement). Each party shall cooperate with all reasonable requests of the
other party and the QI in arranging and effecting the transfer of the License
Assets to and from the QI. Without limiting the generality of the foregoing, if
STC has given notice of STC's intention to effect the exchange of the Assets
with a QI, (i) HAT shall promptly provide STC with written acknowledgment of
such notice, (ii) at Closing, each party shall deliver such party's License
Assets plus the amount of cash if any, required to complete the exchange to the
QI rather than to the other party (which delivery shall discharge the obligation
of such party to make delivery of the License Assets (and such cash) hereunder),
and (iii) at Closing, accept delivery of the other party's License Assets from
the QI rather than from the other party.
6.13. PRESERVATION OF BOOKS AND RECORDS.
For a period of five (5) years after the Closing Date, each party agrees
not to dispose of, and agrees to provide the other party reasonable access to,
any material books or records in such party's possession immediately after the
Closing Date that relate to the business or operations of its Stations prior to
the Closing Date.
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6.14. AFFILIATED TRANSACTIONS.
If as of the Closing Date a Recipient Party desires to continue any
Affiliated Transactions of a Transferring Party, such Recipient Party shall
provide such Transferring Party written notice at least ten (10) days prior to
the Closing Date designating which Affiliated Transactions shall continue after
the Closing Date; provided, however, the parties acknowledge and agree that no
Affiliated Transactions shall continue for a period in excess of sixty (60) days
after the Closing Date.
6.15. CLEAR CHANNEL AGREEMENTS.
HAT shall not (a) do or omit to do any act which will cause a material
breach under any of the Clear Channel Agreements, or (b) amend, modify,
terminate or agree to amend, modify or terminate any of the Clear Channel
Agreements without the prior written consent of STC.
6.16. XXXXXXXX AGREEMENT.
STC shall not (a) do or omit to do any act which will cause a breach
under the Xxxxxxxx Agreement, or (b) amend, modify, terminate, grant or consent
to a waiver under, or agree to amend, modify, terminate, grant or consent to a
waiver under, the Xxxxxxxx Agreement without the prior written consent of HAT.
6.17. ENVIRONMENTAL REMEDIATION.
The parties acknowledge and agree that certain environmental remediation
is required at WDTN and KSBW and that (a) HAT shall, at its own cost, take
whatever remedial actions are necessary to cause the abandoned underground
storage tanks at WDTN to be in compliance in all material respects with
Environmental Laws, and (b) STC shall, at its own cost, take whatever remedial
actions are necessary to cause the retrofitting at KSBW to be in compliance in
all material respects with Environmental Laws.
6.18 CERTAIN FCC MATTERS
(a) Without the prior written consent of HAT, STC covenants and agrees
that, prior to the Closing, neither STC, SALC nor any Affiliated Entities of STC
or SALC shall acquire any new or increased "attributable interest," as defined
in the FCC rules, in any media property ("Further Media Interest"), which
Further Media Interest could not be held together with the HAT Stations by STC
License Company and SALC as contemplated herein following the Closing Date under
the rules and regulations of the FCC.
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(b) Without the prior written consent of STC, HAT covenants and agrees
that, prior to the Closing, neither HAT nor any Affiliated Entities of HAT shall
acquire any Further Media Interest, which Further Media Interest could not be
held together with the STC Stations by HAT and Affiliated Entities of HAT as
contemplated herein following the Closing Date under the rules and regulations
of the FCC.
ARTICLE 7.
CONDITIONS PRECEDENT TO
OBLIGATIONS OF STC
The obligations of STC under this Agreement to proceed with the Closing
are subject to the satisfaction (or waiver in writing by STC) at or prior to the
Closing of each of the following conditions:
7.1. CLOSING UNDER THE XXXXXXXX AGREEMENT.
STCBV Sub shall have acquired WPTZ and WNNE and the related Assets
(including, without limitation, the FCC Licenses) (as such terms are defined in
the Xxxxxxxx Agreement) pursuant to the terms of the Xxxxxxxx Agreement.
7.2. REPRESENTATIONS AND COVENANTS.
The representations and warranties of HAT made in this Agreement shall
be true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date
(except as modified by the Schedules updated after the date hereof in accordance
with Section 6.10 and except for representations and warranties that speak as of
a specific date or time other than the Closing Date, (which need only be true
and correct in all material respects as of such date or time)), and the
covenants and agreements of HAT required to be performed on or before the
Closing Date in accordance with the terms of this Agreement shall have been
performed in all respects, except to the extent that the failure of such
representations and warranties to be true and correct and the failure to perform
such covenants shall not have, when considered together, had a Material Adverse
Effect on the HAT Stations.
7.3. DELIVERY OF DOCUMENTS.
HAT shall have delivered to STC all contracts, agreements, instruments
and documents required to be delivered by HAT to STC pursuant to Section 9.4.
7.4 CONSENTS.
HAT shall have obtained all consents, authorizations or approvals
necessary to effect valid assignments to STC of the main transmission tower and
studio leases for WDTN.
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7.5 ABC AFFILIATION AGREEMENT.
(a) HAT shall have assigned to STC a written network affiliation
agreement with the American Broadcasting Company ("ABC") for WDTN that provides
for (i) Two Million Dollars ($2,000,000) of annual compensation from ABC (ii) a
duration of at least five (5) years after the Closing Date, and (iii) terms and
conditions that are otherwise consistent with the current programming at WDTN
(the "ABC Affiliation Agreement"); provided, however, that HAT shall not be
obligated to assign the ABC Affiliation Agreement if STC provides written notice
to HAT within thirty (30) days of the date of this Agreement that STC shall not
require HAT to obtain the consent of ABC to the assignment of the ABC
Affiliation Agreement to STC as a condition to Closing.
(b) STC and HAT acknowledge and agree that if the ABC Affiliation
Agreement does not provide for Two Million Dollars ($2,000,000) of annual
compensation from ABC, the Cash Consideration payable hereunder by HAT shall be
increased by the amount of (i) Two Million Dollars ($2,000,000) minus the actual
annual compensation received from ABC, multiplied by (ii) Twelve and one-half
(12.5). In addition, if the ABC Affiliation Agreement contains terms and
conditions which are inconsistent with any obligations under any Station
Contracts to be assumed by STC hereunder, the Cash Consideration payable
hereunder by HAT shall also be increased by the amount of Losses to be incurred
by STC as a result of STC's inability to fully use STC's rights under such
Station Contracts.
7.6. FCC ORDER.
The FCC Order shall have been issued with respect to each Station and
shall be in effect.
7.7. XXXX-XXXXX-XXXXXX.
All applicable waiting periods under Xxxx-Xxxxx-Xxxxxx shall have
expired or terminated.
7.8. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any court or
Governmental Authority of competent jurisdiction shall be in effect that
restrains or prohibits the transactions contemplated by this Agreement.
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ARTICLE 8.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF HAT
The obligations of HAT under this Agreement to proceed with the Closing
are subject to the satisfaction (or waiver in writing by HAT) at or prior to the
Closing of each of the following conditions:
8.1. CLOSING UNDER THE XXXXXXXX AGREEMENT.
STCBV shall have assigned all of its rights under the Xxxxxxxx Documents
to STCBV Sub and STCBV Sub shall have acquired WPTZ and WNNE and the related
Assets (including, without limitation, the FCC Licenses) (as such terms are
defined in the Xxxxxxxx Agreement) pursuant to the terms of the Xxxxxxxx
Agreement.
8.2. REPRESENTATIONS AND COVENANTS.
The representations and warranties of STC made in this Agreement shall
be true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date
(except as modified by the Schedules updated after the date hereof in accordance
with Section 6.10 and except for representations and warranties that speak as of
a specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time)), and the covenants
and agreements of STC required to be performed on or before the Closing Date in
accordance with the terms of this Agreement shall have been performed in all
respects, except to the extent that the failure of such representations and
warranties to be true and correct and the failure to perform such covenants
shall not have, when considered together, had a Material Adverse Effect on the
STC Stations.
8.3. DELIVERY OF DOCUMENTS.
STC shall have delivered to HAT all contracts, agreements, instruments
and documents required to be delivered by STC to HAT pursuant to Section 9.3.
8.4. CONSENTS.
STC shall have obtained all consents, authorizations or approvals
necessary to effect valid assignments to HAT of the Network Agreement for KSBW.
8.5. FCC ORDER.
The FCC Order shall have been issued with respect to each Station and
shall be in effect.
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8.6. XXXX-XXXXX-XXXXXX.
All applicable waiting periods under Xxxx-Xxxxx-Xxxxxx shall have
expired or terminated.
8.7. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any court or
Governmental Authority of competent jurisdiction shall be in effect that
restrains or prohibits the transactions contemplated by this Agreement.
8.8. LKE FACILITATION TRANSACTIONS.
Immediately prior to or at the Closing, STC shall have consummated the
LKE Facilitation Transactions, if necessary.
ARTICLE 9.
CLOSING
9.1. CLOSING.
The closing of the exchange of the Assets hereunder (the "Closing")
shall be held on a date that is the fifth business day after all conditions
precedent to the Closing set forth in Articles 7 and 8 hereof are satisfied or
waived (the "Closing Date").
9.2. TIME AND PLACE OF CLOSING.
The Closing shall be held at 10:00 A.M. local time on the Closing Date
at the offices of Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000,
XxXxxx, Xxxxxxxx, or at such other time and place as the parties may agree.
9.3. DELIVERY BY STC AT THE CLOSING.
At or before the Closing, STC shall deliver to HAT the following:
9.3.1. AGREEMENTS AND INSTRUMENTS
The following bills of sale, assignments and other instruments of
transfer with respect to the STC Assets, dated as of the Closing Date and duly
executed by the applicable STC Exchange Entity:
(a) a Xxxx of Sale;
(b) an Assignment of FCC Licenses;
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(c) an Assignment of Contracts and Leases;
(d) an Assumption Agreement;
(e) certificates of title with respect to motor
vehicles of the STC Exchange Entities listed on
Schedule 2.3.10 or if any such motor vehicles are
leased by any STC Exchange Entity, an assignment
of such lease; and
(f) special or limited warranty deeds for all Real
Property owned by the STC Exchange Entities in the
form appropriate to the jurisdictions in which
such Real Property is located.
9.3.2. CONSENTS.
Copies of all consents STC has been able to obtain to effect the
assignment to HAT of STC's Station Contracts listed on Schedule 3.4.
9.3.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the board of directors of each STC Party,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement, and of
the other agreements to which such STC Party is a party, and the consummation
of the transactions contemplated hereby and thereby.
9.3.4. OFFICERS' CERTIFICATES.
(a) A certificate of each STC Party certifying the
matters set forth in Section 8.2;
(b) A certificate of each STC Party as to the
incumbency of the representatives of such STC Party executing this Agreement or
any of the other agreements to which such STC Party is a party; and
(c) A certificate of STC Broadcasting certifying that
all amounts due and payable as of the Closing Date under any of STC's Station
Contracts relating to KSBW have been paid in full.
9.3.5. GOOD STANDING CERTIFICATES.
To the extent available from the applicable jurisdictions, certificates
as to the formation and/or good standing of each STC Party issued by the
appropriate governmental authorities in the states of organization and each
jurisdiction in which such STC Party is qualified to do business, each such
certificate (if available) to be dated a date not more than a reasonable number
of days prior to the Closing Date.
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9.4. DELIVERY BY HAT AT THE CLOSING.
At or before the Closing, HAT shall deliver to STC the following:
9.4.1. AGREEMENTS AND INSTRUMENTS
The following bills of sale, assignments and other instruments of
transfer with respect to the HAT Assets, dated as of the Closing Date and duly
executed by HAT:
(a) a Xxxx of Sale;
(b) an Assignment of FCC Licenses;
(c) an Assignment of Contracts and Leases;
(d) an Assumption Agreement;
(e) certificates of title with respect to motor vehicles of
HAT listed on Schedule 2.3.10 or if any such motor
vehicles are leased by HAT, an assignment of such lease;
and
(f) special or limited warranty deeds for all Real Property
owned by HAT in the form appropriate to the jurisdictions
in which such Real Property is located.
9.4.2. CONSENTS.
(a) Copies of all consents HAT has been able to obtain
to effect the assignment to STC of HAT's Station Contracts listed on Schedule
4.4.
(b) Copies of all consents or notices required under
the Clear Channel Agreements as are required to comply with the terms thereof
and to validly assign the Clear Channel Agreements to STC.
9.4.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the board of directors of HAT, certified as
being correct and complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement, and of the other
agreements to which HAT is a party, and the consummation of the transactions
contemplated hereby and thereby.
9.4.4. OFFICERS' CERTIFICATES.
(a) A certificate of HAT certifying the matters set
forth in Section 7.2;
(b) A certificate of HAT as to the incumbency of the
representatives of HAT executing this Agreement or any of the other agreements
to which HAT is a party; and
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(c) A certificate of HAT certifying that all amounts
due and payable as of the Closing Date under any of HAT's Stations Contracts
relating to WDTN have been paid in full.
9.4.5. GOOD STANDING CERTIFICATES.
To the extent available from the applicable jurisdictions, certificates
as to the formation and/or good standing of HAT issued by the appropriate
governmental authorities in the states of organization and each jurisdiction in
which HAT is qualified to do business, each such certificate (if available) to
be dated a date not more than a reasonable number of days prior to the Closing
Date.
ARTICLE 10.
SURVIVAL; INDEMNIFICATION
10.1. SURVIVAL OF REPRESENTATIONS.
10.1.1. Unless otherwise set forth herein (including, without
limitation, Section 10.1.2), all representations and warranties, covenants and
agreements of the parties hereto contained in or made pursuant to this Agreement
or in any certificate furnished pursuant hereto shall survive the Closing Date
and shall remain in full force and effect to the following extent: (a)
representations and warranties shall survive for a period of twelve (12) months
after the Closing Date, (b) the covenants and agreements which by their terms
survive the Closing shall continue in full force and effect until fully
discharged (but not beyond the expiration of twelve (12) months after the
Closing Date except in the case of the indemnities set forth in clauses (a),
(b), (d) and (g) of Section 10.2, clauses (a), (b), (d) and (g) of Section 10.3
and Section 10.6 which shall survive indefinitely), and (c) any representation,
warranty, covenant or agreement that is the subject of a claim which is asserted
in a reasonably detailed writing prior to the expiration of the survival period
set forth in this Section 10.1.1, shall survive with respect to such claim or
dispute until the final resolution thereof.
10.1.2. No claim for indemnification may be made pursuant to
this Article 10 after the survival period set forth in this Section 10.1.
10.2. INDEMNIFICATION BY STC.
Subject to the conditions and provisions of Section 10.4 and Section
10.5, from and after the Closing Date, STC agrees to indemnify, defend and hold
harmless HAT from and against and in any respect of, on a net after-tax basis,
any and all Losses, asserted against, resulting to, imposed upon or incurred by
HAT, directly or indirectly, by reason of or resulting from: (a) any failure by
STC to pay, perform or discharge any Liabilities not assumed by HAT pursuant
hereto; (b) the business or operations of KSBW during the period prior to the
Closing Date; (c) any misrepresentation or breach of the representations and
warranties of STC contained in or made pursuant to this Agreement or any STC
Document (it being agreed that for this
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purpose the representations and warranties made in the certificates delivered
pursuant to Section 9.3.4(a) shall not be qualified by references to Material
Adverse Effect set forth in Section 8.2); (d) any breach by STC of any covenants
of STC contained in or made pursuant to this Agreement or any other STC Document
except for covenants relating to WPTZ and WNNE (which are addressed in Section
10.2(h)); (e) the failure of STC to comply with the provisions of any applicable
bulk transfer law; (f) any breach of the covenants and agreements of STC
contained in Section 6.18; (g) any WFFF Liabilities; or (h) any Xxxxxxxx
Liabilities arising as a result of the willful misconduct, gross negligence or
bad faith of STC.
10.3. INDEMNIFICATION BY HAT.
Subject to the conditions and provisions of Section 10.4 and Section
10.5, from and after the Closing Date, HAT agrees to indemnify, defend and hold
harmless STC from and against and in any respect of, on a net after-tax basis,
any and all Losses, asserted against, resulting to, imposed upon or incurred by
STC, directly or indirectly, by reason of or resulting from: (a) any failure by
HAT to pay, perform or discharge any Liabilities not assumed by STC pursuant
hereto; (b) the business or operations of the HAT Stations during the period
prior to the Closing Date (except to the extent STC has assumed the Liability
for any such Losses pursuant hereto); (c) any misrepresentation or breach of the
representations and warranties of HAT contained in or made pursuant to this
Agreement or any HAT Document (it being agreed that for this purpose the
representations and warranties made in the certificates delivered pursuant to
Section 9.4.4(a) shall not be qualified by references to Material Adverse Effect
set forth in Section 7.2); (d) any breach by HAT of any covenants of HAT
contained in or made pursuant to this Agreement or any other HAT Document; (e)
the failure of HAT to comply with the provisions of any applicable bulk transfer
law; (f) any breach of the covenants and agreements of HAT contained in Section
6.18; or (g) any Xxxxxxxx Liabilities (but excluding any such Xxxxxxxx
Liabilities arising as a result of the willful misconduct, gross negligence or
bad faith of STC).
10.4. LIMITATIONS ON INDEMNIFICATION.
10.4.1. Notwithstanding any other provision of this Agreement
to the contrary, in no event shall Losses include a party's incidental,
consequential or punitive damages, regardless of the theory of recovery. Each
party hereto agrees to use reasonable efforts to mitigate any Losses which form
the basis for any claim for indemnification hereunder.
10.4.2. Notwithstanding any other provision of this Agreement
to the contrary, neither party shall be liable to the other party in respect of
any indemnification hereunder except to the extent that the aggregate amount of
Losses of the other party under this Agreement exceeds Five Hundred Thousand
Dollars ($500,000) (the "Basket Amount"), in which event the Indemnified Party
shall be entitled to seek indemnity from each Indemnifying Party for the full
amount of such Losses; provided, however, the Basket Amount shall not be
applicable to any amounts owed in connection with the determination of the
Proration Amount pursuant to Section 2.6, to the determination of the Accounts
Receivable amount pursuant to Section 2.7, risk of loss matters pursuant to
Section 6.6, the obligations with respect to employee
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matters pursuant to Section 6.8 and Section 6.9 or to the indemnities set forth
in clauses (a), (b), (e), (f), (g) and (h) of Section 10.2 and clauses (a), (b),
(e), (f) and (g) of Section 10.3.
10.4.3. Each party (a "recipient party") shall notify the
other party in writing (the "representing party") reasonably promptly of any
perceived breach by the representing party of which the recipient party has
knowledge of any representations, warranties, covenants and agreements, and of
any Losses (including a brief description of the same) of the recipient party
caused thereby. In the event of any breach that is cured prior to the Closing
Date in accordance with the terms of this Agreement, the representing party
shall have no obligation under Section 10.2 or Section 10.3 or otherwise to
indemnify the recipient party with respect to such Losses.
10.5. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of the parties hereunder with respect to
their respective indemnities pursuant to this Article 10, resulting from any
Losses, shall be subject to the following terms and conditions:
10.5.1. The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Losses promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
10.5.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
of such Losses at the Indemnifying Party's risk and expense.
10.5.3. In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof). In such event, the
Indemnifying Party shall pay to the Indemnified Party, in addition to the other
sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
10.5.4. Anything in this Section 10.5 to the contrary
notwithstanding, (a) if there is a reasonable possibility that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Losses, (b) the Indemnifying Party shall not, without the
Indemnified Party's
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written consent, settle or compromise any Losses or consent to entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Losses in form and substance satisfactory to the
Indemnified Party, and (c) in the event that the Indemnifying Party undertakes
defense of any Losses, the Indemnified Party, by counsel or other representative
of its own choosing and at its sole cost and expense, shall have the right to
consult with the Indemnifying Party and its counsel or other representatives
concerning such Losses and the Indemnifying Party and the Indemnified Party and
their respective counsel or other representatives shall cooperate with respect
to such Losses and (d) in the event that the Indemnifying Party undertakes
defense of any Losses, the Indemnifying Party shall have an obligation to keep
the Indemnified Party informed of the status of the defense of such Losses and
furnish the Indemnified Party with all documents, instruments and information
that the Indemnified Party shall reasonably request in connection therewith.
10.6. SPECIAL TAX INDEMNIFICATION BY HAT.
(a) The parties acknowledge and agree that STC does not intend to
acquire WPTZ and WNNE for productive use in a trade or business or for
investment within the meaning of Section 1031 of the Code ("Productive
Use/Investment Property") and the parties do not intend for WPTZ and WNNE to be
treated as property exchanged by STC under this Agreement for property of a
like-kind. STC covenants and agrees not to take any position on any income tax
return that is in any way inconsistent with the foregoing.
(b) HAT agrees to indemnify, defend and hold harmless (the "Tax
Indemnity") STC and each member of STC's federal consolidated group
(collectively, the "STC Indemnified Party") from and against, and in any respect
of, any and all Losses or any net increase in any Taxes (collectively, the "Tax
Increase") to the STC Indemnified Party that is asserted against, resulting to,
imposed upon or incurred by any STC Indemnified Party in connection with any
assertion by the Internal Revenue Service that the exchange of WPTZ and WNNE
pursuant to this Agreement constitutes Productive Use/Investment Property. The
Tax Increase shall be computed by (i) determining the amount obtained by
multiplying (A) the projected increases and decreases in federal, state and
local income or gains of the STC Indemnified Parties for 1998 and each later
taxable year on account of the increases and decreases in income or gains each
year resulting from treatment of WPTZ and WNNE as Productive Use/Investment
Property, by (B) the highest marginal federal, state and local tax rates
applicable to a corporation under applicable law as of the Closing, and (ii)
discounting the net increases or decreases in potential Taxes described in
clause (i) to the date of Closing using a discount rate of 7% per year. The
amount of any Tax Indemnity payment by HAT to an STC Indemnified Party pursuant
to this Section 10.6(b) shall be further increased by an amount (the "Gross-Up
Payment") such that after payment by any STC Indemnified Party of any such
Taxes, including any Taxes imposed on the Gross-Up Payment, STC shall receive
from HAT an amount as if no Taxes had been payable. For purposes of computing
any Taxes relevant to this Section 10.6, any STC Indemnified Party shall be
assumed to be a corporation that is fully taxable on all of its income or gains
at the highest applicable marginal rates for the Taxes at issue as of the
Closing.
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(c) Each STC Indemnified Party agrees that in the event it receives
notice, whether oral or written, of any federal, state or local examination,
audit, proposed adjustment, or other administrative or court proceeding, suit,
dispute or other claim (a "Tax Claim") that may affect HAT's liability under
this Section 10.6, the STC Indemnified Party shall promptly notify HAT; provided
that the failure to give such notice shall not affect the rights of the STC
Indemnified Party hereunder except to the extent that HAT shall have suffered
actual damage by reason of such failure. HAT shall be entitled at its sole
discretion and expense to handle and control the defense of any Tax Claim, and
the STC Indemnified Party shall cooperate with HAT in this regard by giving HAT
and its representatives the opportunity to negotiate, settle or dispute the Tax
Claim together with reasonable assistance including, without limitation,
reasonable access to all relevant information, books and records. In no event
may the STC Indemnified Party compromise or settle any Tax Claim without first
obtaining the written consent of HAT.
10.7. CURE OF BREACH.
Notwithstanding any other provision of this Agreement to the contrary, a
breach by any party hereto of any representations and warranties or a failure to
perform any covenant or agreement hereunder may be cured by such party prior to
the Closing Date (a) by making payment to a third party or taking other action
to discharge the Losses, (b) by placing an amount equal to the Losses in an
escrow account under an escrow arrangement reasonably satisfactory to STC and
HAT or (c) a combination of the foregoing. If the foregoing actions fully cure
the breach, the breaching party shall have no obligation under this Article 10
or otherwise to indemnify the other party with respect to the Losses caused by
such breach; if such actions partially cure the breach, the breaching party
shall continue to have an obligation under this Article 10 to indemnify the
other party with respect to the remaining portion of the Losses caused by such
breach.
ARTICLE 11.
TERMINATION
11.1. TERMINATION OF EXCHANGE BY THE PARTIES.
11.1.1. The obligation of the parties to consummate the
closing of the exchange of the Assets contemplated by Article 2 may be
terminated at any time prior to such closing by:
(a) the mutual consent of STC and HAT;
(b) STC if HAT shall default in the performance of its
obligations under this Agreement in any material respect and such default is not
cured within thirty (30) days after notice thereof, and provided that STC shall
not then be in material default in the performance of STC's obligations
hereunder;
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(c) HAT if any STC Party shall default in the
performance of its obligations under this Agreement in any material respect and
such default is not cured within thirty (30) days after notice thereof, and
provided that HAT shall not then be in material default in the performance of
HAT's obligations hereunder; and
(d) either HAT or STC if such closing shall not have
occurred on or prior to such date which is two (2) years after the date of this
Agreement (provided that the party seeking to terminate shall not have such
termination right if such party is in breach of this Agreement and such breach
caused such closing to fail to occur).
11.1.2. Anything contained in this Agreement to the contrary
notwithstanding, in the event that (a) the obligation of the parties to
consummate the closing of the exchange of the Assets contemplated by Article 2
shall be terminated pursuant to Section 11.1, and (b) HAT shall have provided
all required portions of the Burlington Financing Amount to STCBV Sub in
connection with the acquisition of any assets by STC under the Xxxxxxxx
Agreement, then in lieu of such exchange of Assets transaction (x) the LKE
Facilitation Transactions shall not be consummated and (y) STCBV Sub shall sell,
assign, transfer, convey and deliver to HAT, free and clear of any Encumbrances
other than those Permitted Encumbrances which are applicable to WPTZ and WNNE,
and HAT shall purchase, acquire and accept from STCBV Sub, all right, title and
interest of STCBV Sub in, to and under all real, personal and mixed assets,
rights, benefits and privileges, both tangible and intangible, owned, leased,
used or useful by STCBV Sub in connection with the business and operations of
WPTZ and WNNE (collectively, the "Cash Purchase Assets"), in each case on the
identical terms and conditions as would have otherwise applied if the closing of
the exchange of the Assets contemplated by Article 2 had occurred except as
follows:
(i) All provisions of this Agreement, including but not
limited to those provisions contained in Article 2, which relate to the HAT
Stations shall be disregarded insofar as such provisions relate to the HAT
Stations;
(ii) All provisions of this Agreement, including but
not limited to those provisions contained in Article 2, which relate to KSBW
shall be disregarded insofar as such provisions relate to KSBW;
(iii) In lieu of the closing of the exchange of the
Assets contemplated by Article 2, the term "Closing" will be deemed to refer to
the closing of the purchase and sale of the Cash Purchase Assets described in
this Section 11.1;
(iv) In lieu of the provisions of Section 2.5, the
following shall apply: For and in consideration of the conveyance of Cash
Purchase Assets to HAT and in addition to the assumption of Liabilities by HAT
as set forth in Section 2.10, at the Closing HAT agrees to pay to STCBV Sub an
amount equal to that portion of the Purchase Price (as defined in the Xxxxxxxx
Agreement) which shall theretofore have been paid by STC pursuant to the
Xxxxxxxx Agreement (but excluding any proration amounts), either by wire
transfer of immediately
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available funds to an account designated by STC or by set off against any
outstanding Burlington Financing Amount;
(v) In lieu of Section 2.8, the following shall apply:
The payment made by HAT to STCBV Sub pursuant to subparagraph (iv) above shall
be allocated among the Cash Purchase Assets in accordance with the Appraisal,
unless the parties otherwise agree, and all Tax returns and reports shall be
filed consistent with such allocation;
(vi) At the Closing, in lieu of the applicable STC
Exchange Entity, STCBV Sub will deliver the bills of sale, assignments and other
instruments of transfer described in Section 9.3.1 with respect to the Cash
Purchase Assets; and
(vii) The following Sections of this Agreement shall be
deemed to be void and shall have no further force and effect: 2.5, 2.7, 2.8,
6.12 and 10.6.
11.2. TERMINATION OF AGREEMENT.
This Agreement shall automatically terminate without further action by
the parties upon the termination of the Xxxxxxxx Agreement in accordance with
its terms. This Agreement may also be terminated by:
(a) HAT by written notice of termination delivered to STC at any time
prior to July 26, 1998 if the acquisition by Xxxxxxxx of the Burlington Stations
under the Heritage Agreement shall not have occurred on or prior to July 16,
1998;
(b) STC by written notice of termination delivered to HAT if (i) HAT
shall not have delivered a complete set of the Schedules for the HAT Stations
(and supporting materials) within ten (10) business days after the execution and
delivery of this Agreement, or (ii) at any time prior to the end of the Schedule
Review Period pursuant to Section 6.10(a); and
(c) STC by written notice of termination delivered to HAT at any time
prior to the closing of the exchange of the Assets contemplated by Article 2 if
(i) HAT shall have defaulted in its obligation to provide the initial funding of
the Burlington Financing Amount as required under Section 2.13, or (ii) if prior
to the funding of any portion of the Burlington Financing Amount, there shall
have been a default by HAT in the performance of its obligations under this
Agreement in any material respect and such default is not cured within thirty
(30) days after notice thereof, and provided that STC shall not then be in
material default in the performance of STC's obligations hereunder.
11.3. EFFECT OF TERMINATION.
11.3.1. In the event this Agreement is terminated as provided
in Section 11.2, this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; provided, however, that the obligations of the parties
set forth in Section 2.14 (which relate to reimbursement by STCBV
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Sub of any Working Capital Advances), Section 6.3, and Section 12.3, shall
survive such termination and the parties hereto shall have any and all remedies
to enforce such obligations provided at law or in equity or otherwise
(including, without limitation, specific performance); and provided, further
that such termination shall not affect the liability of any party hereto with
respect to any breach of this Agreement by such party occurring prior to such
termination.
11.3.2. In the event that the Xxxxxxxx Agreement is terminated
as provided therein and Xxxxxxxx is entitled to the Deposit under the Letter of
Credit (each as defined in the Xxxxxxxx Agreement), HAT shall reimburse STC for
the amount of the Deposit; provided, however, there shall not have been a
material breach or default by STC under the Xxxxxxxx Agreement.
ARTICLE 12.
GENERAL PROVISIONS
12.1. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.
The Transferring Party agrees that it will, at any time, prior to, at or
after the Closing Date, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments and obtain such consents, as may be reasonably
requested by the Recipient Party in connection with the consummation of the
exchange contemplated by this Agreement.
12.2. BROKERS.
Except for the fees payable as set forth in Schedule 12.2, STC
represents to HAT that STC has not engaged, or incurred any unpaid liability
(for any brokerage fees, finders' fees, commissions or otherwise) to, any
broker, finder or agent in connection with the transactions contemplated by this
Agreement; except for the fees payable as set forth in Schedule 12.2, HAT
represents to STC that HAT has not engaged, or incurred any unpaid liability
(for any brokerage fees, finders' fees, commissions or otherwise) to, any
broker, finder or agent in connection with the transactions contemplated by this
Agreement; and STC agrees to indemnify HAT, and HAT agrees to indemnify STC,
against any claims asserted against the other party for any such fees or
commissions by any person purporting to act or to have acted for or on behalf of
the indemnifying party. Notwithstanding any other provision of this Agreement,
this representation and warranty shall survive the Closing without limitation
and shall not be subject to the Basket Amount contained in Section 10.4.2.
12.3. EXPENSES AND TAXES.
(a) Unless otherwise provided herein, each party hereto shall pay its
own expenses incurred in connection with this Agreement and in the preparation
for and consummation of the transactions provided for herein, including, without
limitation, all costs
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and expenses incurred in connection with any title insurance policies, surveys
or environmental assessments (including the environmental remediation described
in Section 6.16) obtained by such party (and in the case of STC, all expenses
incurred by STC in connection with STC's financing required to consummate the
transactions contemplated herein). Notwithstanding the foregoing, HAT and STC
shall each pay one-half of (i) all sales (including, without limitation, bulk
sales), use, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes and fees
("Transfer Taxes") applicable to, imposed upon or arising out of the conveyances
of the Assets whether now in effect or hereinafter adopted and regardless of
which party such Transfer Tax is imposed upon, (ii) any FCC filing fees incurred
in connection with the assignment of the FCC Licenses, and (iii) any fees and
expenses incurred in connection with any HSR Filings, and (iv) any fees and
expenses incurred in connection with the use of a QI as contemplated by Section
6.12.
(b) HAT acknowledges and agrees that STC is acquiring WPTZ and WNNE
for HAT's benefit, and HAT agrees to reimburse STC for all costs and expenses
incurred by STC under the Xxxxxxxx Documents, including, without limitation, (i)
the costs of the letter of credit deposited by STC pursuant to the Xxxxxxxx
Agreement (provided that there shall not have been a material breach or default
by STC under the Xxxxxxxx Agreement which results in the forfeiture of the
letter of credit to Xxxxxxxx), and (ii) STC's share of costs and expenses
required to be paid by STC pursuant to Section 15.3 of the Xxxxxxxx Agreement;
provided, however, all expenses of counsel and accountants of any STC Party in
connection with the negotiation and documentation of the Xxxxxxxx Documents and
the consummation of the transactions contemplated therein and all expenses of
STC in connection with STC's financing required to repay the Burlington
Financing Amount (net of the Cash Consideration) shall be paid by STC.
(c) Subject to HAT's obligations to reimburse STC for all costs and
expenses incurred by STC under the Xxxxxxxx Documents pursuant to Section
12.3(b), from and after the Closing, STC agrees to remit to HAT any monies
received from Xxxxxxxx or held for the benefit of STC under the Xxxxxxxx
Agreement that relate to WPTZ and WNNE.
12.4. NOTICES.
All notices, demands, requests, or other communications which may be or
are required to be given or made by any party to any other party pursuant to
this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, delivered by overnight air courier, or transmitted by telegram, telex,
or facsimile transmission addressed as follows:
If to STC:
STC Broadcasting, Inc.
0000 0xx Xxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
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Attn: Xxxxx Xxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
and to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Xx.
Fax: (000) 000-0000
If to HAT:
Hearst-Argyle Television, Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall be given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
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12.5. WAIVER.
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instrument or
document given in connection with or pursuant to this Agreement shall impair any
such right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be
valid against any party hereto unless made in writing and signed by the party
against whom enforcement of such waiver is sought and then only to the extent
expressly specified therein.
12.6. BENEFIT AND ASSIGNMENT.
12.6.1. Neither party shall assign this Agreement, in whole or
in part, whether by operation of law or otherwise, without the prior written
consent of the other party and any purported assignment contrary to the terms
hereof shall be null, void and of no force and effect; provided, however, each
party consents to the assignment of this Agreement to a QI as contemplated by
Section 6.12.
12.6.2. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto (and any STC Indemnified Party) and their
respective successors and assigns as permitted hereunder. No Person, other than
the parties hereto (and any STC Indemnified Party) and their respective
successors and assigns as permitted hereunder, is or shall be entitled to bring
any action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the parties hereto
(and any STC Indemnified Party) or their respective successors and assigns as
permitted hereunder.
12.7. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Schedules and Exhibits hereto and the
other instruments and documents referred to herein or delivered pursuant hereto,
contains the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior oral or written agreements, commitments
or understandings with respect to such matters. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and duly executed by each of the parties hereto.
12.8. SEVERABILITY.
If any part of any provision of this Agreement or any other contract,
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
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12.9. HEADINGS.
The headings of the sections and subsections contained in this Agreement
are inserted for convenience only and do not form a part or affect the meaning,
construction or scope thereof.
12.10. GOVERNING LAW.
This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed
under and in accordance with the laws of the State of New York, excluding the
choice of law rules thereof.
12.11. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none of which
need contain the signatures of all parties, each of which shall be deemed to be
an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Asset
Exchange Agreement, or has caused this Asset Exchange Agreement to be duly
executed and delivered in its name on its behalf, all as of the day and year
first above written.
STC BROADCASTING, INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
80
HEARST-ARGYLE STATIONS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
Senior Vice President
81
ANNEX I
DEFINITIONS
"ABC" shall have the meaning specified in Section 7.5.
"ABC AFFILIATION AGREEMENT" shall have the meaning set forth in Section
7.5.
"ACCOUNTING FIRM" shall have the meaning set forth in Section 2.6.2.
"ACCOUNTS RECEIVABLE" means all cash accounts receivable with respect
to a Station as of the end of the broadcast day immediately preceding the
Closing Date.
"ADDITIONAL AGREEMENTS" shall have the meaning set forth in Section
6.1.6.
"AFFILIATE" shall mean, with respect to any Person, any other Person
that, (a) directly or indirectly is in control of, is controlled by, or is
under common control with, the first Person, (b) is an officer, director,
trustee, partner (general or limited), employee or holder of five percent (5%)
or more of any class of any voting or non-voting securities or other equity in
the first Person, (c) is an officer, director, trustee, partner (general or
limited), employee or holder of five percent (5%) or more of any class of the
voting or non-voting securities or other equrity in any Person which directly or
indirectly is in control of, is controlled by, or is under common control with,
the first Person, and (d) any Family of any individual included in (a), (b) or
(c). For purposes of this definition, "control" (including with correlative
meanings "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of either (X) five percent (5%) or more of
the voting power of the securities having ordinary voting power for the
election of directors of the first Person, or (Y) the power to direct or cause
the direction of the management or policies of the first Person (whether
through ownership of securities, partnership interests or any other ownership
or debt interests, by contract or otherwise).
"AFFILIATED ENTITIES" shall mean, with respect to any Person, any other
Person that directly or indirectly is in control of, is controlled by, or is
under common control with, the first Person.
"AFFILIATED TRANSACTIONS" shall have the meaning set forth in Section
4.19.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"APPLICANT" shall have the meaning set forth in Section 3.9.3.
"APPRAISAL" shall have the meaning set forth in Section 2.8.1.
"APPRAISAL FIRM" shall have the meaning set forth in Section 2.8.1.
"APPRAISAL REPORT" shall have the meaning set forth in Section 2.8.1.
82
"ASSETS" shall have the meaning set forth in Section 2.2.
"ASSIGNMENT OF CONTRACTS AND LEASES" means that certain Assignment of
Contracts and Leases, dated as of the Closing Date and executed by the
Transferring Party, substantially in the form attached hereto as Exhibit C.
"ASSIGNMENT OF FCC LICENSES" means that certain Assignment of FCC
Licenses, dated as of the Closing Date and executed by the Transferring Party,
substantially in the form attached hereto as Exhibit B.
"ASSUMED LIABILITIES" mean the Liabilities assumed by the Recipient
Party pursuant to Section 2.9 or Section 2.10, as the case may be.
"ASSUMPTION AGREEMENT" means that certain Assumption Agreement, dated
the Closing Date and executed by the parties, substantially in the form
attached hereto as Exhibit D.
"BASKET AMOUNT" shall have the meaning set forth in Section 10.4.2.
"BENEFIT ARRANGEMENT" means any benefit arrangement, obligation, custom,
or practice, whether or not legally enforceable, to provide benefits, other
than salary, as compensation for services rendered, to present or former
directors, employees, agents, or independent contractors, other than any
obligation, arrangement, custom or practice that is a Plan, including, without
limitation, employment agreements, executive compensation arrangements,
incentive programs or arrangements, sick leave, vacation pay, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, perquisite, company cars, any
plans subject to Code Section 125, and any plans providing benefits or payments
in the event of a change of control, change in ownership, or sale of a
substantial portion (including all or substantially all) of the assets of any
business or portion thereof, in each case with respect to any present or former
employees, directors, or agents.
"BENEFIT LIABILITIES" shall have the meaning set forth in Section
3.14.6.
"BENEFIT PLANS" shall have the meaning set forth in Section 4.14.1.
"XXXX OF SALE" means that certain Xxxx of Sale and Assignment of
Assets, dated as of the Closing Date and executed by the Transferring Party,
substantially in the form attached hereto as Exhibit A.
"BURLINGTON FINANCING AMOUNT" shall have the meaning set forth in
Section 2.13.
"BURLINGTON STATIONS" shall have the meaning set forth in the Recitals.
"CASH CONSIDERATION" shall have the meaning set forth in Section 2.5.1.
ANNEX I-2
83
"CASH PURCHASE ASSETS" shall have the meaning set forth in Section
11.1.2.
"CLEAR CHANNEL" shall have the meaning set forth in the Recitals.
"CLEAR CHANNEL AGREEMENTS" shall have the meaning set forth in the
Recitals.
"CLOSING" shall have the meaning set forth in Section 9.1.
"CLOSING DATE" shall have the meaning set forth in Section 9.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"CURRENT BALANCE SHEET DATE" shall have the meaning set forth in
Section 3.5.2.
"DEFERRED CONTRACT" shall have the meaning set forth in Section
6.2.10(b).
"DESIGNATED EMPLOYEES" shall have the meaning set forth in Section
6.9.1.
"DMA" means the designated market area for a particular television or
radio station as determined by the X.X. Xxxxxxx Co.
"ENCUMBRANCES" mean any mortgages, pledges, liens, security interests,
defects in title, easements, rights-of-way, encumbrances, restrictions and any
other matters affecting title.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, ("CERCLA") as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"), 42 U.S.C. Section 9601 et
seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et seq.; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601 et seq.;
the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; or any other applicable federal, state, or local laws
relating to Hazardous Materials generation, production, use, storage, treatment,
transportation or disposal, or the protection of the environment from Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"ERISA AFFILIATE" means any person that, together with the referenced
party, would be or was prior to March 17, 1997 treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA.
"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.4.
ANNEX I-3
84
"FAMILY" of an individual includes (a) the individual, (b) the
individual's spouse and former spouses and any other natural person who resides
with such individual, and (c) any other natural person who is related to the
individual or any person described in the preceding clause (b) within the
second degree.
"FCC" means the Federal Communications Commission.
"FCC APPLICATIONS" shall have the meaning set forth in Section 5.1.
"FCC LICENSES" shall have the meaning set forth in Section 2.3.1.
"FCC ORDER" means an order or orders of the FCC, or of the Chief, Mass
Media Bureau of the FCC, acting under delegated authority, consenting to the
assignment to the Recipient Party of the FCC Licenses for the Transferring
Party's Stations.
"FINAL AR AMOUNT" shall have the meaning set forth in Section 2.7.2.
"FINAL PRORATION AMOUNT" shall have the meaning set forth in Section
2.6.2.
"FURTHER MEDIA INTEREST" shall have the meaning set forth in Section
6.18.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, court,
commission, department, instrumentality or administration of the United States
government, any foreign government, any state government or any local or other
governmental body in a state, territory or possession of the United States or
the District of Columbia.
"XXXX-XXXXX-XXXXXX" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"HAT" shall have the meaning set forth in the Preamble.
"HAT AFFILIATED TRANSACTIONS" shall have the meaning set forth in
Section 4.19.
"HAT ASSETS" shall have the meaning set forth in Section 2.2.
"HAT BALANCE SHEETS" shall have the meaning set forth in Section 4.5.1.
"HAT BENEFIT PLANS" shall have the meaning specified in Section 4.14.1.
"HAT DOCUMENTS" shall mean the Xxxx of Sale and Assignment of Assets,
the Assignment of FCC Licenses, the Assignment of Contracts and Leases, the
Assumption Agreement, and the real property deeds delivered pursuant to Section
9.4.1(f).
"HAT EXCLUDED ASSETS" shall have the meaning set forth in Section 2.4.
"HAT LICENSE ASSETS" shall mean the FCC licenses of the HAT Stations.
ANNEX I-4
85
"HAT NON-LICENSE ASSETS" shall have the meaning set forth in Section
2.2.
"HAT RETIREMENT PLAN" shall have the meaning set forth in Section
6.8.5.
"HAT STATIONS" shall have the meaning set forth in the Recitals.
"HAZARDOUS MATERIALS" means any wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic, pollutants,
or contaminants, including without limitation, substances defined as "hazardous
wastes," "hazardous substances," "toxic substances," "radioactive materials," or
other similar designations in, or otherwise subject to regulation under, any
Environmental Laws.
"HERITAGE AGREEMENT" shall have the meaning set forth in the Recitals.
"HERITAGE SUBSIDIARIES" shall have the meaning set forth in the
Recitals.
"HMC" shall have the meaning set forth in the Recitals.
"HSR FILING" shall have the meaning set forth in Section 5.2.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the respective
meanings set forth in Section 10.5.1.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
2.3.4.
"INTERIM OPERATION" shall have the meaning set forth in Section 2.11.3.
"KSBW" shall have the meaning set forth in the Recitals.
"KSBW RECEIVABLES" shall have the meaning set forth in Section 2.7.1.
"LAWS" means any federal, state or local law, foreign law, statute,
code, ordinance, regulation, order, writ, injunction, judgment or decree
applicable to the specified Person and to the businesses and assets thereof.
"LEASED PROPERTY" shall have the meaning set forth in Section 2.3.2(b).
"LIABILITIES" shall mean, as to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of such
Person, whether accrued, vested or otherwise, whether in contract, tort, strict
liability or otherwise and whether or not actually reflected, or required by
generally accepted accounting principles to be reflected, in such Person's
balance sheets or other books and records.
"LICENSE ASSETS" shall mean individually the STC License Assets and the
HAT License Assets.
"LIKE-KIND EXCHANGE" shall have the meaning set forth in the Recitals.
ANNEX I-5
86
"LKE FACILITATION TRANSACTIONS" shall have the meaning set forth in
Section 6.12.4.
"LOSSES" means any and all demands, claims, complaints, actions or
causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages, liabilities, obligations (including those arising
out of any action, such as any settlement or compromise thereof or judgment or
award therein) and any costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements.
"MATERIAL ADVERSE EFFECT" on either party's Stations means a material
adverse effect on the business, assets or financial condition of such Stations
taken as a whole, except for any such material adverse effect resulting from
(a) general economic conditions applicable to the television broadcast
industry, (b) general conditions in the markets in which such Stations operate,
(c) circumstances that are not likely to recur and either have been
substantially remedied or can be substantially remedied without substantial
cost or delay, or (d) the refusal by the other party to consent to any new
Program Contract.
"MULTIEMPLOYER PLAN" means any Plan described in Section 3(37) of
ERISA.
"NETWORK AGREEMENTS" shall have the meaning set forth in Section 2.3.8.
"NON-TRANSFERRED EMPLOYEES" shall have the meaning set forth in Section
6.9.1.
"OPERATING CONTRACTS" shall have the meaning set forth in Section
2.3.9.
"ORDINARY COURSE OF BUSINESS" of a party's Stations means the ordinary
course of business of such Stations consistent with past practices of such
party both with respect to type and amount; any actions taken pursuant to the
requirements of law or contracts existing on the date hereof shall be deemed to
be action in the Ordinary Course of Business.
"PERMITTED ENCUMBRANCES" means (a) Encumbrances of a landlord, or
other statutory lien not yet due and payable, or a landlord's liens arising in
the Ordinary Course of Business, (b) Encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of a Station
Contract set forth on the Schedules, (c) Encumbrances arising pursuant to the
terms of leases on Real Property or Leased Property as set forth on Schedule
2.3.1 and Schedule 2.3.8 which are subject to any lease or sublease to a third
party, (d) Encumbrances for Taxes not yet due and payable or which are being
contested in good faith and by appropriate proceedings if adequate reserves
with respect thereto are maintained on the contesting party's books in
accordance with generally accepted accounting principles, (e) Encumbrances that
do not materially detract from the value of any of the Assets or materially
interfere with the use thereof as currently used, or (f) those Encumbrances on
Schedule 3.8 and Schedule 3.10 with respect to STC and those Encumbrances on
Schedule 4.8 and Schedule 4.10 with respect to HAT.
ANNEX I-6
87
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other
form of business or legal entity or Governmental Authority.
"PLAN" of either party means any plan, program or arrangement, whether
or not written, that is or was an "employee benefit plan" as such term is
defined in Section 3(3) of ERISA and (a) which was or is established or
maintained by such party or any ERISA Affiliate for the benefit of any current
or former employees of its Stations; (b) to which such party contributed or was
obligated to contribute or to fund or provide benefits or had any liability
(whether actual or contingent) with respect to any of its assets or otherwise
for the benefit of any current or former employees of its Stations; or (c)
which provides or promises benefits to any person who performs or who has
performed services for its Stations and because of those services is or has
been (i) a participant therein or (ii) entitled to benefits thereunder.
"PREFERRED STC OWNERSHIP" shall have the meaning set forth in Section
6.12.4.
"PROGRAM CONTRACTS" shall have the meaning set forth in Section 2.3.5.
"PRORATION AMOUNT" shall have the meaning set forth in Section 2.6.1.
"PRORATION ITEMS" shall mean any power and utility charges, business
and license fees (including retroactive adjustments thereof), sales and service
charges, commissions, special assessments, and rental payments and personal and
real estate Taxes and assessments with respect to the Real Property, taxes
(except for Taxes arising from the transfer of the Assets hereunder), deposits,
Trade-out Agreements, unused sick leave pursuant to any collective bargaining
agreements and other similar prepaid and deferred items and any other operating
expenses incurred in the Ordinary Course of Business (except with respect to
Program Contracts, only those payments due and payable during the month in
which the Closing Date occurs shall be prorated). The parties acknowledge and
agree that there shall be excluded from Proration Items the following: (a)
severance pay relating to any employee of the Transferring Party who shall have
been terminated prior to the Exchange Date, (b) any Liabilities not being
assumed by the Recipient Party in accordance with Section 2.8, and (c) all
accrued and unpaid vacation pay.
"PROVIDENCE ASSETS" shall have the meaning set forth in Section 2.12.
"QI" shall have the meaning set forth in Section 6.12.5.
"QUALIFIED PLAN" of either party means a Plan that satisfies, or is
intended by such party to satisfy, the requirements for tax qualification
described in Section 401 of the Code including, without limitation, any Plan
that was terminated on or after July 1, 1989, as to which such party may have
any actual or contingent liability.
"REAL PROPERTY" shall have the meaning set forth in Section 2.3.2(a).
"RECIPIENT PARTY" shall have the meaning set forth in Section 2.3.
ANNEX I-7
88
"RESTRICTED CONTRACTS" shall have the meaning set forth in Section
6.2.10(a).
"SALC" shall have the meaning set forth in Section 2.2.
"SCHEDULE REVIEW PERIOD" shall have the meaning set forth in Section
6.10(a).
"SCHEDULES" shall mean the disclosure schedules delivered by the
parties in connection herewith.
"SECTION 1031 SCHEDULE" shall have the meaning set forth in Section
2.8.2.
"XXXXXXXX" shall have the meaning set forth in the Recitals.
"XXXXXXXX AGREEMENT" shall have the meaning set forth in the Recitals.
"XXXXXXXX COLLECTION PERIOD" shall have the meaning set forth in
Section 6.4.
"XXXXXXXX DOCUMENTS" shall mean the Xxxxxxxx Agreement and any other
agreements, documents or certificates contemplated thereby or delivered in
connection therewith.
"XXXXXXXX FILING DATE" shall have the meaning set forth in Section
3.9.3.
"XXXXXXXX LIABILITIES" shall have the meaning set forth in Section
2.10.1.
"XXXXXXXX PARENT" shall have the meaning set forth in the Recitals.
"XXXXXXXX RECEIVABLES" shall have the meaning set forth in Section
2.4.2.
"STATION" and "STATIONS" shall have the meaning set forth in the
Recitals.
"STATION CONTRACTS" shall have the meaning set forth in Section 2.3.9.
"STC" shall have the meaning set forth in the Preamble.
"STC AFFILIATED TRANSACTIONS" shall have the meaning set forth in
Section 3.19.
"STC ASSETS" shall have the meaning set forth in Section 2.1.
"STC BALANCE SHEETS" shall have the meaning set forth in Section 3.5.1.
"STC BENEFIT PLANS" shall have the meaning specified in Section 3.14.1.
"STC BROADCASTING" shall have the meaning set forth in the Preamble.
"STCBV" shall have the meaning set forth in the Preamble.
ANNEX I-8
89
"STCBV SUB" shall have the meaning set forth in the Preamble.
"STC DOCUMENTS" shall mean the Xxxx of Sale and Assignment of Assets,
the Assignment of FCC Licenses, the Assignment of Contracts and Leases, the
Assumption Agreement, and the real property deeds delivered pursuant to Section
9.3.1(f).
"STC EXCHANGE ENTITIES" shall have the meaning set forth in the
Preamble.
"STC EXCLUDED ASSETS" shall have the meaning set forth in Section 2.4.
"STC INDEMNIFIED PARTY" shall have the meaning set forth in Section
10.6(b).
"STC LICENSE ASSETS" shall mean the FCC Licenses of the STC Stations.
"STC LICENSE COMPANY" shall have the meaning set forth in the Preamble.
"STC NON-LICENSE ASSETS" shall have the meaning set forth in Section
2.1.
"STC PARTIES" shall have the meaning set forth in the Preamble.
"STC STATIONS" shall have the meaning set forth in the Recitals.
"STC RETIREMENT PLAN" shall have the meaning set forth in Section
6.8.5.
"STC TRANSFER DATE" shall have the meaning ascribed to such term under
the Xxxxxxxx Agreement.
"TAX CLAIM" shall have the meaning set forth in Section 10.6(c).
"TAX INCREASE" shall have the meaning set forth in Section 10.6(b).
"TAXES" means all federal, state and local taxes (including, without
limitation, income, profit, franchise, sales, use, real property, personal
property, ad valorem, excise, employment, social security and wage withholding
taxes) and installments of estimated taxes, assessments, deficiencies, levies,
imports, duties, license fees, registration fees, withholdings, or other
similar charges of every kind, character or description imposed by any
Governmental Authorities.
"TAX RETURNS" of either party means all federal, state, local, foreign
and other applicable Tax returns, declarations of estimated Tax reports
required to be filed by such party in connection with the business and
operations of its Stations (without regard to extensions of time permitted by
law or otherwise).
"TBA" means any time brokerage agreement, local marketing arrangement,
joint sales agreement, joint operating agreement, limited management agreement
or other similar agreement or contract.
ANNEX I-9
90
"TIME SALES AGREEMENTS" shall have the meaning set forth in Section
2.3.7.
"TRADE-OUT AGREEMENTS" shall have the meaning set forth in Section
2.3.6.
"TRANSFER TAXES" shall have the meaning set forth in Section 12.3(a).
"TRANSFERRED EMPLOYEES" shall have the meaning set forth in Section
6.9.1.
"TRANSFERRING PARTY'S PLAN" shall have the meaning set forth in Section
6.9.4.
"TUSCALOOSA" shall have the meaning set forth in the Recitals.
"WELFARE PLAN" means an "employee welfare benefit plan" as such term is
defined in Section 3(1) of ERISA.
"WDTN" shall have the meaning set forth in the Recitals.
"WDTN RECEIVABLES" shall have the meaning set forth in Section 2.7.1.
"WFFF" shall have the meaning set forth in the Recitals.
"WFFF LIABILITIES" shall mean all Liabilities of STC relating solely to
WFFF under the Xxxxxxxx Documents (or Liabilities relating solely to WFFF
assumed pursuant to the terms thereof), and all Liabilities arising out of
events occurring on or after the Non-License Transfer (as defined in the
Xxxxxxxx Agreement) relating solely to the business and operations of WFFF.
"WFFF TBA" shall have the meaning set forth in Section 2.11.3.
"WNAC" shall have the meaning set forth in the Recitals.
"WNAC/ARGYLE" shall have the meaning set forth in the Recitals.
"WNNE" shall have the meaning set forth in the Recitals.
"WNNE LICENSEE" shall have the meaning set forth in the Recital.
"WORKING CAPITAL ADVANCE" shall have the meaning set forth in Section
2.14.
"WPRI" shall have the meaning set forth in the Recitals.
"WPTZ" shall have the meaning set forth in the Recitals.
"WPTZ LICENSEE" shall have the meaning set forth in the Recitals.
ANNEX I-10
