AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXXX BROADCAST HOLDINGS, INC.,
XXXXXXXX BROADCAST GROUP, INC.,
and
ABRY PARTNERS, INC.
(as Stockholder Representative)
EFFECTIVE AS OF
FEBRUARY 23, 1998
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into on March 16,
1998, but is effective as of February 23, 1998, among Xxxxxxxx Broadcast
Holdings, Inc., a Delaware corporation ("Xxxxxxxx"), Xxxxxxxx Broadcast Group,
Inc., a Maryland corporation ("Xxxxxxxx"), on behalf of itself and a subsidiary
to be formed by it pursuant to Section 1.A below, and ABRY Partners, Inc., a
Delaware corporation ("ABRY Partners"), solely in its capacity as the
Stockholder Representative referred to in this Agreement.
WHEREAS, the parties to this Agreement are among the parties
to an Agreement and Plan of Merger dated as of February 23, 1998 (the "Prior
Agreement"), and the parties to the Prior Agreement have agreed to restate the
Prior Agreement by entering into this Agreement and certain other agreements;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows, effective as of the date of the Prior Agreement:
ARTICLE I
THE SPIN-OFF TRANSACTIONS
1.A. FORMATION OF MERGER SUB. On or prior to March 20, 1998,
Xxxxxxxx will form a wholly-owned Subsidiary which will be a Delaware
corporation. Such Subsidiary will be the "Merger Sub" referred to in this
Agreement. Xxxxxxxx will cause such Subsidiary to become a party to this
Agreement, the Indemnity Agreement, the Xxxxxxx Money Escrow Agreement, the
Estimate Escrow Agreement and the Indemnity Escrow Agreement by executing and
delivering to Xxxxxxxx a counterpart thereof.
1.X. XXXXXXXX TWO SPIN-OFF. At or prior to the time of the
Closing, so long as all required Consents of the FCC for the Xxxxxxxx Two
Spin-Off are then effective and any other required Consent for the Xxxxxxxx Two
Spin-Off has been obtained and is then effective, Xxxxxxxx will, and will cause
its Subsidiaries to, take such actions as may be required to (1) cause the
capital stock of Xxxxxxxx Two to be distributed to the holders of the Xxxxxxxx
Common Share Equivalents immediately prior to such distribution, with each such
holder receiving a number of shares of common stock which is equal to the number
of shares of common stock of Xxxxxxxx then held by such holders (on a
fully-diluted, as-exercised basis) and with such shares of common stock of
Xxxxxxxx Two having the same relative voting rights as such shares of common
stock of Xxxxxxxx which are then held by each of them (on a similar
fully-diluted, as-exercised basis), and (2) cause the FCC Authorizations
relating to the Xxxxxxxx Two Stations and the other assets described in the
attached Exhibit A to be transferred to Xxxxxxxx Two in consideration for a
promissory note of Xxxxxxxx Two in a principal amount equal to the amount
specified on the attached Exhibit A. The transactions described the preceding
sentence are referred to as the "Xxxxxxxx Two Spin-Off."
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1.C XXXXXXXX THREE SPIN-OFF. At or prior to the time of the
Closing, so long as all required Consents of the FCC for the Xxxxxxxx Three
Spin-Off are then effective and any other required Consent for the Xxxxxxxx
Three Spin-Off has been obtained and is then effective, Xxxxxxxx will, and will
cause its Subsidiaries to, take such actions as may be required to (1) cause the
capital stock of Xxxxxxxx Three to be distributed to the holders of the Xxxxxxxx
Common Share Equivalents immediately prior to such distribution, with each such
holder receiving a number of shares of common stock which is equal to the number
of shares of common stock of Xxxxxxxx then held by such holders (on a
fully-diluted, as-exercised basis) and with such shares of common stock of
Xxxxxxxx Three having the same relative voting rights as such shares of common
stock of Xxxxxxxx which are then held by each of them (on a similar
fully-diluted, as-exercised basis), and (2) cause the FCC Authorizations
relating to the Xxxxxxxx Three Stations and the other assets described in the
attached Exhibit B to be transferred to Xxxxxxxx Three in consideration for a
promissory note of Xxxxxxxx Three in a principal amount equal to the amount
specified on the attached Exhibit B. The transactions described in the preceding
sentence are referred to as the "Xxxxxxxx Three Spin-Off," and each of the
Xxxxxxxx Two Spin-Off and the Xxxxxxxx Three Spin- Off is referred to as a
"Spin-Off."
1.D SPIN-OFF TAXES. Xxxxxxxx and its Subsidiaries will be
responsible for the payment of any Tax arising solely by reason of either
Spin-Off (a "Spin-Off Tax"). To the extent not paid at the Effective Time, the
liability of Xxxxxxxx and its Subsidiaries (if any) for any Spin- Off Tax
arising by reason of the Xxxxxxxx Three Spin-Off (as determined in accordance
with Section 3.D(6)) will be reflected in the computation of the Current
Liabilities.
ARTICLE II
THE MERGER
2.A GENERAL. Upon and subject to the terms and conditions
stated in this Agreement, on the Closing Date, effective as of the Effective
Time, the Merger Sub will merge with and into Xxxxxxxx in accordance with the
terms and conditions of this Agreement. Xxxxxxxx will be the corporation which
survives such merger (the "Merger") and in such capacity is sometimes referred
to in this Agreement as "Post-Merger Xxxxxxxx."
2.B EFFECT ON XXXXXXXX SHARE EQUIVALENTS. Immediately after
the Closing, effective at the Effective Time, subject to the terms and
conditions of this Agreement (1) the Merger will be effected by the filing with
the Secretary of the State of Delaware of a Certificate of Merger; (2) each
Xxxxxxxx Share Equivalent outstanding at the Effective Time, by said occurrence
and with no further action on the part of the holder thereof, will be
transformed and converted into the right to receive the Merger Consideration for
such Xxxxxxxx Share Equivalent, without interest or any similar payment thereon
or with respect thereto, upon surrender of the certificate representing such
Xxxxxxxx Share Equivalent; (3) each share of common stock of the Merger Sub
outstanding immediately prior to the Effective Time will, by said occurrence and
with no further action on the part of the holder thereof, be transformed and
converted into one share of common stock of Post-Merger Xxxxxxxx, so that
immediately thereafter Xxxxxxxx will be the sole and exclusive owner of all
equity securities of Post-Merger Xxxxxxxx; and (4) Post-Merger Xxxxxxxx will be
the owner of the business, assets, rights, privileges, immunities, powers,
franchises and other attributes of Xxxxxxxx
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and the Merger Sub.
2.C CERTIFICATE OF INCORPORATION. Immediately after the
Effective Time, the certificate of incorporation of Post-Merger Xxxxxxxx will be
the certificate of incorporation of the Merger Sub as in effect immediately
prior to the Effective Time.
2.D BYLAWS. Immediately after the Effective Time, the bylaws
of Post-Merger Xxxxxxxx will be the bylaws of the Merger Sub as in effect
immediately prior to the Effective Time.
2.E BOARD OF DIRECTORS AND OFFICERS. The board of directors
and officers of the Merger Sub immediately prior to the Effective Time will be
the board of directors and the officers, respectively, of Post-Merger Xxxxxxxx
immediately after the Effective Time, and such individuals will serve in such
positions for the respective terms provided by applicable Legal Requirements or
in the bylaws of Post-Merger Xxxxxxxx until their respective successors are
elected and qualified.
2.F NAME. The name of Post-Merger Xxxxxxxx will be designated
by Xxxxxxxx.
2.G EXCHANGE PROCEDURES. At or after the Closing, each holder
of record of Xxxxxxxx Share Equivalents will deliver to Post-Merger Xxxxxxxx for
cancellation the certificate(s) representing such Xxxxxxxx Share Equivalents
(the "Old Xxxxxxxx Certificates"). Upon surrender of any Old Xxxxxxxx
Certificate for cancellation, subject to the provisions of this Agreement, (a)
the holder of such Old Xxxxxxxx Certificate will receive in exchange therefor
the Merger Consideration for the Xxxxxxxx Share Equivalents represented by such
Old Xxxxxxxx Certificate, and (b) such Old Xxxxxxxx Certificate will be
canceled. Until surrendered as contemplated by this Section 2.G, each Old
Xxxxxxxx Certificate will, at and after the Effective Time, be deemed to
represent only the right to receive, upon surrender of such Old Xxxxxxxx
Certificate, the Merger Consideration for the Xxxxxxxx Share Equivalents
represented by such Old Xxxxxxxx Certificate.
2.H NO FURTHER RIGHTS; TRANSFER OF XXXXXXXX STOCK. The Merger
Consideration paid for any Xxxxxxxx Share Equivalent in accordance with the
terms of this Agreement will be deemed to have been paid in full satisfaction of
all rights pertaining to such Xxxxxxxx Share Equivalent. At the Effective Time,
the stock transfer books of Xxxxxxxx will be closed and no transfer of Xxxxxxxx
Share Equivalents will thereafter be made.
ARTICLE III
MERGER CONSIDERATION AND CLOSING
3.A MERGER CONSIDERATION.
(1) AMOUNT FOR ALL XXXXXXXX SHARE EQUIVALENTS IN THE
AGGREGATE. The amount of the aggregate "Merger Consideration" for all
Xxxxxxxx Share Equivalents will an amount equal to the result of:
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(a) (i) the sum of (x) the product of the Cash Flow
Multiplier and the Annualized Trailing Cash Flow plus (y) if
the Cash Flow Multiplier is 12.00 and the Annualized Trailing
Cash Flow is not less than the amount of the Target Cash Flow,
then $2,620,000, plus (ii) the KOKH Amount, plus (iii) the
Adjustment Amount (the amount described in this clause (a)
being the "Base Merger Consideration") plus
(b) an amount equal to the Xxxxxxxx Receivable
Proceeds (the "Receivable Merger Consideration"), which amount
will be payable as provided in Section 3.G;
provided that, if the Closing occurs on or prior to September 21, 1998,
then the amount described in clauses (a)(i) above will not exceed
$970,000,000. Subject to Section 3.A(4), the "Cash Flow Multiplier"
means (x) 12.00, if the Closing occurs on or prior to June 23, 1998;
(y) 12.25, if the Closing occurs after June 23, 1998 and on or prior to
September 21, 1998; and (z) 12.5, if the Closing occurs after September
21, 1998. The "Target Cash Flow" means $78,115,000 plus the amount of
all discretionary contributions actually made by Xxxxxxxx and its
Subsidiaries to the 401(k) Plan with respect to any period after
December 31, 1997.
(2) AMOUNT FOR ANY PARTICULAR XXXXXXXX SHARE
EQUIVALENT. With respect to any particular Xxxxxxxx Share Equivalent,
the "Merger Consideration" means the portion of the aggregate Merger
Consideration for all Xxxxxxxx Share Equivalents which is equal to the
amount that the holder of such Xxxxxxxx Share Equivalent would receive
in respect of such Xxxxxxxx Share Equivalent if:
(a) all Xxxxxxxx Rights outstanding
immediately prior to the Effective Time were converted into or
exercised or exchanged for Xxxxxxxx Shares to the fullest
extent permitted by the terms of such Xxxxxxxx Rights,
immediately prior to the Effective Time,
(b) Xxxxxxxx (instead of the Old Xxxxxxxx
Stockholders) received an amount equal to the aggregate Merger
Consideration for all Xxxxxxxx Share Equivalents and applied a
portion of such aggregate Merger Consideration to the
redemption in full, in accordance with the provisions of its
certificate of incorporation, of all preferred stock of
Xxxxxxxx, if any, which is outstanding immediately prior to
the Effective Time, and
(c) Xxxxxxxx thereafter distributed to the
holders of the Xxxxxxxx Shares outstanding immediately prior
to the Effective Time (after giving effect to the conversions,
exercises and exchanges referred to in clause (a) above and
the redemption described in clause (b) above), in accordance
with the provisions of its certificate of incorporation, an
amount equal to the aggregate Merger Consideration for the
Xxxxxxxx Share Equivalents reduced by the amount required to
effect the redemption described in clause (b) above,
reduced, in the case of any Xxxxxxxx Right, by the exercise price (if
any) payable upon the exercise of such Xxxxxxxx Right as described in
clause (a) above. Xxxxxxxx will cause the
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holders of all Xxxxxxxx Rights to accept the Merger Consideration for
such Xxxxxxxx Right in consideration for the cancellation of such
Xxxxxxxx Right.
(3) FORM OF MERGER CONSIDERATION.
(A) FOR XXXXXXXX PREFERRED STOCK. Subject to
the provisions of Article II regarding the surrender of Old
Xxxxxxxx Certificates, the amount of the aggregate Merger
Consideration for the Xxxxxxxx Preferred Stock will be paid on
behalf of the holders of Xxxxxxxx Preferred Stock on the
Closing Date in cash by wire transfer of immediately available
funds to such bank account(s) as the Stockholder
Representative may designate to the Merger Sub not less than
two (2) Business Days prior to the Closing Date.
(B) FOR OTHER XXXXXXXX SHARE EQUIVALENTS.
Subject to the provisions of Article II regarding the
surrender of Old Xxxxxxxx Certificates, the Receivable Merger
Consideration will be paid as provided in Section 3.G, and:
(i) at the option of the Merger Sub, up to
One Hundred Million Dollars ($100,000,000) of the
aggregate amount of the estimated Base Merger
Consideration for the Xxxxxxxx Share Equivalents
which are not Xxxxxxxx Preferred Stock (the "Xxxxxxxx
Common Share Equivalents") will be paid to the
holders of Xxxxxxxx Common Share Equivalents on the
Closing Date (the "Old Xxxxxxxx Common Stockholders")
by the issuance of validly-issued, fully-paid and
nonassessable shares of Xxxxxxxx Common Stock which
have been registered under the Securities Act (and
which therefore will be tradeable on the Nasdaq
National Market upon receipt thereof), and
(ii) the remainder of the estimated amount
of such aggregate Base Merger Consideration will be
paid for the account of the Old Xxxxxxxx Common
Stockholders on the Closing Date in cash by wire
transfer of immediately available funds to such bank
account(s) as the Stockholder Representative may
designate to the Merger Sub not less than two (2)
Business Days prior to the Closing Date.
The portion of the Base Merger Consideration which is payable
in respect of the Xxxxxxxx Common Share Equivalents is
referred to as the "Xxxxxxxx Common Base Merger
Consideration." For purposes of this Section 3.A(3)(b), shares
of Xxxxxxxx Common Stock will be valued at the Average Trading
Price. Notwithstanding the foregoing, the entire amount of the
Xxxxxxxx Common Base Merger Consideration will be payable in
cash in the manner provided in clause (ii) above if on the
Closing Date shares of Xxxxxxxx Common Stock are not
registered under the Securities Exchange Act, the registration
described in clause (i) above has not been effected, and/or
shares of Xxxxxxxx Common Stock are not traded on the Nasdaq
National Market or a domestic national securities exchange.
The respective portions of the Xxxxxxxx Common Base Merger
Consideration which are payable in Xxxxxxxx Common Stock and
cash will be allocated among the Old Xxxxxxxx Common
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Stockholders pro rata according to the respective amounts of
the Xxxxxxxx Common Base Merger Consideration to be received
by them, as determined in accordance with Section 3.A(2);
provided that, in lieu of issuing a fractional share of
Xxxxxxxx Common Stock to any Old Xxxxxxxx Common Stockholder,
Xxxxxxxx or the Merger Sub will pay the Stockholder
Representative as provided in clause (ii) above (for the
account of such Old Xxxxxxxx Stockholder) an amount in cash
equal to a corresponding fraction of the Average Trading
Price.
(C) SHARE CERTIFICATES FOR ABRY FUND
PARTNERS. Xxxxxxxx and the Merger Sub acknowledge that at or
after the time of the Closing the ABRY Fund will distribute to
its partners (who may in turn distribute to their partners,
and so on) any or all of the shares of the Xxxxxxxx Common
Stock which may be issuable to the ABRY Fund as part of the
Xxxxxxxx Common Base Merger Consideration. At the request of
the Stockholder Representative, the Merger Sub will cause to
be issued and delivered to the Stockholder Representative (for
the account of the ABRY Fund) certificates for any or all of
such shares of Xxxxxxxx Common Stock, issued in such
whole-number denominations and registered in such names or
nominees, as the Stockholder Representative may request. Such
certificates will be issued in whole number of shares only,
and in lieu of any fractional share Xxxxxxxx or the Merger Sub
will pay the Stockholder Representative (for the account of
the ABRY Fund) an amount in cash equal to a corresponding
fraction of the Average Trading Price.
(D) ESCROW DEPOSIT UNDER CERTAIN
CIRCUMSTANCES. Notwithstanding the foregoing, if the Estimated
Receivable Amount set forth in Xxxxxxxx'x Estimate Report (as
it may be revised by Xxxxxxxx as provided in the penultimate
sentence of Section 3.E(2)) is less than $24,000,000, then an
amount equal to the excess of $24,000,000 over such Estimated
Receivable Amount will be withheld from the cash portion of
the Xxxxxxxx Common Base Merger Consideration to be paid to
the Stockholder Representative pursuant to Section 3.A(3)(b)
and will instead be deposited with the Estimate Escrow Agent
as the Estimate Fund.
(4) EFFECT OF DELAY.
(A) IF CAUSED BY XXXXXXXX. If the Closing is
delayed (a "Delay") solely by reason of (i) a breach by
Xxxxxxxx of its obligations under this Agreement, (ii) the
failure of a Xxxxxxxx Consent to be obtained, (iii) any loss,
damage, impairment, condemnation, confiscation or interruption
described in Section 7.L(1) or 7.L(2), and/or (iv) a delay in
the Grant of any Required FCC Consent for a Spin-Off, or in
the expiration of the applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Act, solely as a result of actions taken by
Xxxxxxxx or its Subsidiaries (items described in clauses (i),
(ii), (iii), and (iv) being "Causes"), then for purposes of
determining the Cash Flow Multiplier and the amount described
in Section 3.D(1)(b), the Closing will be deemed to have
occurred on the day upon which it would have occurred but for
such breach, failure, loss, damage, impairment, condemnation,
confiscation or interruption.
6
(B) IF CAUSED BY GROSS REVENUE SHORTFALL. As
part of the Cash Flow Report delivered pursuant to Section
7.C(1) for each of March, April and May of 1998, Xxxxxxxx will
deliver to Xxxxxxxx its good faith determination of the amount
of the Gross Revenues, determined as if the last day of the
month in question were the Measurement Date (such amount being
the "Estimated Gross Revenues" for such month). If the
Estimated Gross Revenues for each of March, April and May of
1998 set forth in the corresponding Cash Flow Reports is less
than the corresponding amount set forth in Section 10.E and
all conditions to the Closing set forth in Articles IX and X
(other than Section 10.E) have been satisfied or waived in
writing (or would be satisfied by the delivery of documents or
taking of other actions to be delivered or taken at the
Closing) on June 23, 1998, then for purposes of determining
the Cash Flow Multiplier, the Closing will be deemed to have
occurred prior to June 23, 1998, if the Closing actually
occurs on or prior to the fifth (5th) Business Day after the
delivery of the Monthly Cash Flow Report for June, 1998.
3.B ANNUALIZED TRAILING CASH FLOW.
(1) TRAILING CASH FLOW -- BASIC DEFINITION. Subject to
Sections 3.B(2), 3.B(3), 3.B(4), 3.B(5), 3.B(6), and 13.Q, the
"Trailing Cash Flow" means the amount of
(a) the consolidated net operating income of Xxxxxxxx
and its Subsidiaries for the period (the "Measurement Period")
beginning on January 1, 1998 and ending on the earlier of (i)
the last day of the last full calendar month ended prior to
the Closing Date and (ii) August 31, 1998 (such earlier date
being the "Measurement Date"),
(b) increased by the amount of all non-recurring
items incurred other than in the ordinary course of business,
corporate overhead (including management and consulting fees,
reimbursements paid or payable to ABRY Partners and all
discretionary profit-sharing and 401(k) plan contributions),
income taxes, interest expense, depreciation and amortization
(including amortization in respect of Film Obligations)
deducted in computing such net operating income,
(c) reduced by the aggregate amount of all Film
Obligations which were actually paid in cash pursuant to
Program Contracts with respect to the Stations during such
period and which became due after September 30, 1997
(determined under the terms and conditions of the related
Program Contracts as in effect on December 31, 1997, or as
initially entered into, if entered into after December 31,
1997), and
(d) further reduced by the aggregate amount of all
Film Obligations which were not paid in cash on or prior to
the Measurement Date and which became due prior to the
three-calendar-month-period ending on the Measurement Date
(determined under the terms and conditions of the related
Program Contracts as in effect on December 31, 1997, or as
initially entered into, if entered into after December 31,
1997).
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For purposes of clause (b) above, except as provided in Section 3.B(3),
"corporate overhead" is understood and agreed to include all expenses
incurred in connection with the activities of the Corporate Personnel
and (without duplication) all expenses which are not incurred for the
benefit of a single Station (with an LMA Station and the Owned Station
serving the same market being considered a single "Station" for
purposes of this sentence) and which would not be incurred for the
benefit of a single Station under customary industry practice.
(2) TREATMENT OF BARTER-RELATED ITEMS. Notwithstanding
GAAP to the extent GAAP are to the contrary, the Trailing Cash Flow
will be determined exclusive of the value of any consideration received
in barter for time on any Station pursuant to any Trade and expenses
pertaining to air time provided in barter for products or services
pursuant to any Trade.
(3) LOBBYING EXPENSES. For purposes of determining the
Trailing Cash Flow, and notwithstanding GAAP to the extent GAAP are to
the contrary, 50% (and only 50%) of the amounts paid or payable to
Policy Communications, Inc. and which are attributable to the
Measurement Period will be deemed to constitute a part of corporate
overhead, and therefore will be added pursuant to clause (b) of Section
3.B(1).
(4) TREATMENT OF CERTAIN CASCOM ITEMS. For purposes of
determining the Trailing Cash Flow, and notwithstanding GAAP to the
extent GAAP are to the contrary, any payment or accrual in respect of
the "Cascom Bonus" (as that term is defined in the Executive Employment
Agreement dated as of December 9, 1996 among Xxxxxxxx, Xxxxxxxx
Broadcasting and Xxxxxx Xxxxxx ("Xxxxxx")) (so long as, by its terms,
such Cascom Bonus will not continue to accrue after the Closing Date),
and any expense relating to or arising out of the issuance in February,
1998 of shares of Xxxxxxxx Common Stock to Xxxxxx, will be disregarded.
(5) TREATMENT OF CERTAIN LMA PAYMENTS. For purposes of
determining the Trailing Cash Flow, and notwithstanding GAAP to the
extent GAAP are to the contrary, a portion of the amount payable by
Xxxxxxxx or a Subsidiary of Xxxxxxxx under an Existing LMA for any
period which is equal to the amount of the interest expense of the
Person to whom such amount is payable for such period, plus the amount
of all repayments of the principal amount of indebtedness of such
Person from the proceeds of any such payment by Xxxxxxxx or a
Subsidiary of Xxxxxxxx, xxxx be treated as if it were interest expense
of Xxxxxxxx and its Subsidiaries.
(6) APPLICATION OF GAAP. Except as otherwise provided in
this Agreement, the Trailing Cash Flow will be determined in accordance
with GAAP.
(7) ANNUALIZED TRAILING CASH FLOW DEFINED. The
"Annualized Trailing Cash Flow" means the product of the Trailing Cash
Flow multiplied by the amount (the "Annualization Factor") set forth
below for the date which is the Measurement Date:
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Measurement Date Annualization Factor
---------------- --------------------
March 31, 1998 5.81419
April 30, 1998 3.87381
May 31, 1998 2.90996
June 30, 1998 2.34386
July 31, 1998 2.02835
August 31, 1998 1.76026
3.C KOKH AMOUNT. The "KOKH Amount" means the result of:
(1) $30,066,000, plus a yield on such amount from January
30, 1998 to the date of the Closing computed at the Yield Rate, plus
(2) for each payment made by Xxxxxxxx or any of its
Subsidiaries after January 30, 1998 in respect of the "Purchase Price"
under the KOKH Purchase Agreement or any out-of-pocket expense incurred
in connection with the transactions contemplated by the KOKH Purchase
Agreement, the amount of such payment plus a yield on such amount from
the date it was paid to the Closing Date (or, if earlier in the case of
any such expense which is later reimbursed by Xxxxxxxx, the date it is
reimbursed by Xxxxxxxx), computed at the Yield Rate, plus
(3) for each capital contribution, loan or advance to
Xxxxxxxx Broadcasting of Oklahoma City, Inc., a Delaware corporation
("SBOC"), or Xxxxxxxx Broadcasting License Holder, Inc., a Nevada
corporation ("SBLH"), by Xxxxxxxx or another Subsidiary of Xxxxxxxx
after January 30, 1998 and prior to the Closing, to the extent the
proceeds thereof were used in connection with the operations of Station
KOKH, the amount of such capital contribution, loan or advance, plus a
yield on such amount from the date of such capital contribution, loan
or advance to the Closing Date (or, if earlier, the date upon which
such capital contribution, loan or advance is repaid) computed at the
Yield Rate, less
(4) the amount of each payment made to Xxxxxxxx or
any of its Subsidiaries after January 30, 1998 pursuant to the KOKH
Purchase Agreement representing a reduction in the "Purchase Price"
thereunder or a reimbursement of expenses incurred by SBOC or SBLH, and
less
(5) the amount of any capital contribution, loan or
advance described in clause (3) above which is repaid prior to the
Adjustment Time.
The "Yield Rate" will be 7.125% per annum.
3.D ADJUSTMENT AMOUNT.
(1) BASIC DEFINITION. Subject to the provisions of
Sections 3.D(2) through 3.D(6), the "Adjustment Amount" means:
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(a) the result of the following, as of the
Adjustment Time, for Xxxxxxxx and its Subsidiaries (including
Xxxxxxxx Two and Xxxxxxxx Three, as if it each were a
Subsidiary of Xxxxxxxx at the Adjustment Time), determined on
a consolidated basis:
(i) the aggregate amount of all
cash, cash equivalents, marketable securities,
prepaid expenses, deposits (other than film deposits,
if any) held by others and any current assets
(including amounts receivable from employees and
independent contractors and co-op receivables, and
amounts payable to Xxxxxxxx or any of its
Subsidiaries by reason of the termination of any
interest rate hedging arrangement, assuming such
arrangement were terminated immediately prior to the
Adjustment Time) not otherwise described in this
clause (i), other than the Xxxxxxxx Receivables
(collectively, but excluding the Xxxxxxxx
Receivables, the "Current Assets"), reduced (below
zero, if necessary) by
(ii) the aggregate principal amount
of all outstanding Funded Indebtedness and the
aggregate principal amount of the outstanding
indebtedness guaranteed by Xxxxxxxx Broadcasting
pursuant to the Mission Guarantees, in each case
together with the amount of all unpaid accrued
interest thereon, unpaid commitment fees and costs
incurred in connection with the termination of any
interest rate hedging arrangements, assuming such
arrangement were terminated immediately prior to the
Adjustment Time, but excluding any change of control,
prepayment or other premium in respect of any such
indebtedness, and excluding in all events the
indebtedness of Xxxxxxxx Two and Xxxxxxxx Three
represented by the promissory notes issued by them in
connection with the Spin-Offs, and further reduced
(below zero, if necessary) by
(iii) without duplication of any
amount reflected in clause (ii) above, all trade
accounts payable, accrued expenses (including accrued
vacation pay) and other current liabilities
(collectively, the "Current Liabilities"), and
further reduced (below zero, if necessary) by
(iv) the aggregate amount of the
proceeds (net of taxes and disposition costs) of all
Designated Sales (as that term is defined in Section
7.A(5)(a)(y) consummated after the date of this
Agreement and prior to the Adjustment Time; increased
by
(b) the applicable amount set forth below,
if the Closing occurs on or after October 21, 1998
Closing Date Amount
------------ ------
On or after October 21, 1998 but
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prior to November 20, 1998 $10,000,000
On or after November 20, 1998 but
prior to December 20, 1998 $20,000,000
On or after December 20, 1998 but
prior to January 19, 1999 $30,000,000
On or after January 19, 1999 but
prior to February 18, 1999 $40,000,000
On or after February 18, 1999 but
prior to March 20, 1999 $50,000,000
On or after March 20, 1999 but
prior to April 19, 1998 $60,000,000
On or after April 19, 1998 $70,000,000
and reduced by
(c) the excess, if any, of (i) the product
of $1,985,422 and a fraction, the numerator of which is the
number of days during calendar year 1998 prior to the Closing
Date and the denominator of which is 365, over (ii) the
aggregate amount of the capital expenditures made by Xxxxxxxx
and its Subsidiaries during calendar year 1998 and prior to
the Adjustment Time.
(2) CURRENT PORTION OF FUNDED INDEBTEDNESS. For purposes
of determining the Adjustment Amount, and notwithstanding GAAP to the
extent GAAP are
to the contrary, the "Current Liabilities" will not include the current
portion of any Funded Indebtedness or any accrued interest thereon.
(3) TRANSACTION EXPENSES. For purposes of determining the
Adjustment Amount, and notwithstanding GAAP to the extent GAAP are to
the contrary, the "Current Liabilities" will include (i) all amounts
incurred by Xxxxxxxx or any of its Subsidiaries (including on behalf of
any Old Xxxxxxxx Stockholder, and including the fees and disbursements
of advisors to Xxxxxxxx, Xxxxxxxx Two, Xxxxxxxx Three, the Old Xxxxxxxx
Stockholders and the Stockholder Representative), in connection with
the negotiation of, the execution of, the performance of Xxxxxxxx'x,
Xxxxxxxx Two's and Xxxxxxxx Three's obligations under, and the
consummation or preparation for consummation of the transactions
contemplated by, this Agreement and not paid prior to the Adjustment
Time (all of which amounts Xxxxxxxx and Post-Merger Xxxxxxxx will pay
and satisfy, or cause to be paid and satisfied, in full), other than
any item which this Agreement specifies is to be at any Acquiring
Party's expense, (ii) all amounts required to be paid by, or other
obligations of Xxxxxxxx, any of its Subsidiaries, Xxxxxxxx Two or
Xxxxxxxx Three from and after the Adjustment Time pursuant to the
various employment agreements among Xxxxxxxx, Xxxxxxxx
11
Broadcasting and the Corporate Personnel (each of whom it is understood
will resign or be terminated as of the Effective Time), and (iii) all
amounts required to be paid by Xxxxxxxx, any of its Subsidiaries,
Xxxxxxxx Two or Xxxxxxxx Three from and after the Adjustment Time in
connection with the termination of employment by Xxxxxxxx and its
Subsidiaries of the Corporate Personnel or any Non-Continuing Station
Manager effective as of the Closing Date.
(4) TRADE-OUT ITEMS. For purposes of determining the
Adjustment Amount, and notwithstanding GAAP to the extent GAAP are to
the contrary, with respect to Trade-Out Receivables and Trade-Out
Payables:
(a) the amount of Xxxxxxxx'x or any of its
Subsidiaries' obligations under, and the amount of the goods,
services and other items to be received under, any Trade will
be determined in accordance with standard industry valuation
methods as of the date of this Agreement (provided that, in
the case of goods, services and other items to be so received,
no such item will be valued at an amount which is greater than
the fair value of such item at the Adjustment Time);
(b) the "Current Assets" will not include
Trade-Out Receivables with respect to any Station;
(c) the "Current Liabilities" will not
include Trade-Out Payables with respect to any Station except
to the extent (and only to the extent) that the aggregate
amount of the Trade-Out Payables with respect to such Station
as of the Adjustment Time exceeds the aggregate amount of the
Trade-Out Receivables with respect to such Station as of the
Adjustment Time by more than $50,000; and
(d) for purposes of this Agreement
(including clause (c) above), each Station which is a
television translator station will be considered together with
the related Station which is a full-power television station
and all other related television translator stations.
(5) PROGRAM PAYMENTS. For purposes of determining the
Adjustment Amount, and notwithstanding GAAP to the extent GAAP are to
the contrary, "Current Assets" and "Current Liabilities" will not
include any amounts in respect of Film Obligations, except that:
(a) the Current Liabilities will include
the aggregate amount of all Film Obligations which become due
prior to the first day of the calendar month which includes
the Closing Date (determined under the terms and conditions of
the related Program Contracts as then in effect) and which are
not paid prior to the Adjustment Time;
(b) the Current Liabilities will include an
amount equal to (i) the aggregate amount of all Film
Obligations which are not paid prior to the Adjustment Time
and which become due during the calendar month which includes
the Closing
12
Date (determined under the terms and conditions of the related
Program Contracts as then in effect), multiplied by (ii) a
fraction, the numerator of which is the number of days during
such calendar month prior to, but not including, the Closing
Date, and the denominator of which is the number of days
during such calendar month;1
(c) the Current Assets will include an
amount equal to (i) the aggregate amount of all Film
Obligations which are paid prior to the Adjustment Time and
which become due during the calendar month which includes the
Closing Date (determined under the terms and conditions of the
related Program Contracts as then in effect), multiplied by
(ii) a fraction, the numerator of which is the number of days
during such calendar month on and after, but not prior to, the
Closing Date, and the denominator of which is the number of
days during such calendar month;2 and
(d) the Current Assets will include an
amount equal to the aggregate amount of all Film Obligations
which become due after the final day of the calendar month
which includes the Closing Date (determined under the terms
and conditions of the related Program Contracts as then in
effect) and which are paid prior to the Adjustment Time.
(6) TAX MATTERS. For purposes of determining the
Adjustment Amount and notwithstanding GAAP to the extent GAAP are to
the contrary:
(A) CLOSING OF BOOKS. The Tax liabilities
for each Straddle Period will be determined by closing the
books and records of Xxxxxxxx, its Subsidiaries, Xxxxxxxx Two
and Xxxxxxxx Three as of the Adjustment Time, and by treating
the portion of such Straddle Period ending on (and including)
the day prior to the Closing Date and the portion of the
Straddle Period beginning on the Closing Date as if they were
separate Tax periods, and by employing accounting methods
which are consistent with those employed in preparing the Tax
Returns for Xxxxxxxx, its Subsidiaries, Xxxxxxxx Two and
Xxxxxxxx Three in prior periods except as otherwise required
by applicable law, and which do not have the effect of
distorting income or expenses (taking into account the
transactions contemplated by this Agreement), except that
Taxes based on items other than income or sales (for this
purpose, a Tax imposed under alternative methods, at least one
of which is based on income, will be considered an income Tax)
will be computed for such Straddle Period by prorating on a
time basis between the portion of the Straddle Period
beginning on the first day of the applicable Straddle Period
and ending on (and including) the day prior to the Closing
Date and the period beginning on the Closing Date and ending
on the last day of such Straddle Period; provided that (x)
with respect to any Tax which is not
-------------------
1 e.g., if the Closing occurs on June 20, 1998, then the fraction described
in this clause (b) will be 19/30.
2 e.g., if the Closing occurs on June 20, 1998, then the fraction described
in this clause (c) will be 11/30.
13
in effect during the entire Straddle Period, the proration of
such Tax will be based on the period during the Straddle
Period that such Tax was in effect, and (y) for all such
purposes, the Xxxxxxxx Two Spin-Off will be deemed to have
occurred after the Adjustment Time and the Xxxxxxxx Three
Spin-Off will be deemed to have occurred prior to the
Adjustment Time, with the effect that any liability for
Spin-Off Taxes relating to the Xxxxxxxx Three Spin-Off, but
not Spin-Off Taxes relating to the Xxxxxxxx Two Spin-Off, will
constitute Current Liabilities.
(B) DETERMINATION OF SPIN-OFF TAX
LIABILITIES. The respective amounts of Xxxxxxxx'x, its
Subsidiaries', Xxxxxxxx Two's and Xxxxxxxx Three's aggregate
liabilities for the Spin-Off Taxes arising from the Xxxxxxxx
Two Spin- Off (the "Xxxxxxxx Two Spin-Off Tax Liability") and
the Xxxxxxxx Three Spin-Off (the "Xxxxxxxx Three Spin-Off Tax
Liability") will be determined by applying all available net
operating losses and other items of deduction and credit
(collectively, "Tax Benefits"). Those Tax Benefits which are
permitted under the applicable Legal Requirements to be
applied to reduce either the Xxxxxxxx Two Spin-Off Tax
Liability or Xxxxxxxx Three Spin-Off Tax Liability (as
distinct from those Tax Benefits which are only permitted to
be applied to reduce one such Tax Liability but not the other)
will be applied pro rata, based on the respective amounts of
the Xxxxxxxx Two Spin-Off Tax Liability for the Tax in
question and the Xxxxxxxx Three Spin-Off Tax Liability for the
Tax in question determined prior to the application of such
Tax Benefits.
(7) APPLICATION OF GAAP. Except as otherwise provided
in this Agreement, the Adjustment Amount will be determined in
accordance with GAAP.
3.E ESTIMATES OF ANNUALIZED TRAILING CASH FLOW, KOKH AMOUNT
AND ADJUSTMENT AMOUNT FOR CLOSING PURPOSES.
(1) ESTIMATES TO BE GIVEN EFFECT. For purposes of
determining the amount of Base Merger Consideration to be paid at the
Closing, the Annualized Trailing Cash Flow, the KOKH Amount and the
Adjustment Amount will be deemed to be equal to the Estimated
Annualized Trailing Cash Flow, the Estimated KOKH Amount and the
Estimated Adjustment Amount, respectively, determined under this
Section 3.E. Notwithstanding this Section 3.E and Section 3.F, if the
Annualized Trailing Cash Flow has been finally determined pursuant to
Section 3.J, then the amount so finally determined will be used to
determine the amount of the Xxxxxxxx Base Merger Consideration to be
paid at the Closing and the ultimate amount of the Xxxxxxxx Common Base
Merger Consideration, and the provisions of this Section 3.E and
Section 3.F will apply only to the KOKH Amount and the Adjustment
Amount and not the Annualized Trailing Cash Flow. For purposes of
determining the Estimated Adjustment Amount, the aggregate amount of
the Current Liabilities will be assumed to be $5,600,000 (unless
Xxxxxxxx proposes a larger amount in Xxxxxxxx'x Estimate Report).
(2) XXXXXXXX'X ESTIMATE REPORT. At least five Business
Days prior to any date scheduled for the Closing pursuant to Section
3.H, Xxxxxxxx will prepare and deliver to
14
Xxxxxxxx a written report ("Xxxxxxxx'x Estimate Report") setting forth
in reasonable detail Xxxxxxxx'x good faith estimates of the Annualized
Trailing Cash Flow, the KOKH Amount and the Adjustment Amount as of
such scheduled Closing date and Xxxxxxxx'x good faith estimate of the
gross amount of all Xxxxxxxx Receivables for which the date of the
underlying invoice is not earlier than the 120th day prior to the
Closing Date (the amount of such latter estimate being the "Estimated
Receivable Amount"). After delivery of Xxxxxxxx'x Estimate Report,
Xxxxxxxx will (and will cause its Subsidiaries to) allow Xxxxxxxx and
its legal and accounting representatives and advisors reasonable access
to Xxxxxxxx'x and its Subsidiaries' books and records to enable
Xxxxxxxx to verify the accuracy of the estimated amounts set forth in
Xxxxxxxx'x Estimate Report. Xxxxxxxx will, in good faith, consider and
make revisions to such estimated amounts, but will not be obligated to
make any adjustment with which, in good faith, it does not agree. The
estimates of the Annualized Trailing Cash Flow, the KOKH Amount and the
Adjustment Amount set forth in Xxxxxxxx'x Estimate Report," as they may
be adjusted by Xxxxxxxx as described in the preceding sentence, will be
the "Estimated Annualized Trailing Cash Flow," the "Estimated KOKH
Amount" and the "Estimated Adjustment Amount," respectively, for the
scheduled Closing date in question.
3.F FINAL DETERMINATION OF BASE MERGER CONSIDERATION AFTER THE
CLOSING.
(1) POST-CLOSING REPORT. On or prior to the one hundred
tenth (110th) day after the Closing Date, Post-Closing Xxxxxxxx will
prepare and submit to the Stockholder Representative consolidated and
consolidating statements of income for Xxxxxxxx and its Subsidiaries
for the period beginning on January 1, 1998 and ending on the
Measurement Date and consolidated and consolidating balance sheets for
Xxxxxxxx and its Subsidiaries (including each of Xxxxxxxx Two and
Xxxxxxxx Three, as if it were a Subsidiary of Xxxxxxxx as of the
Adjustment Time) as of the Adjustment Time, together with Post-Merger
Xxxxxxxx'x determination of the aggregate Base Merger Consideration
(the "Post-Closing Report"); provided that, if the Annualized Trailing
Cash Flow has been finally determined prior to the Closing pursuant to
Section 3.J, then the Post-Closing Report need not contain such
consolidated and consolidating statements of income. The Acquiring
Parties will (and will cause their respective Subsidiaries to) allow
the Stockholder Representative and its legal and accounting
representatives and advisors reasonable access to Post-Merger
Xxxxxxxx'x and its Subsidiaries' books and records to enable the
Stockholder Representative to timely review and dispute the contents of
the Post-Closing Report. Post-Closing Xxxxxxxx'x determination of the
aggregate Xxxxxxxx Common Base Merger Consideration set forth in the
Post-Closing Report will become final and binding upon the Parties and
the Old Xxxxxxxx Common Stockholders on the thirtieth (30th) day after
the Post-Closing Report is given to the Stockholder Representative
unless, prior to such thirtieth (30th) day, the Stockholder
Representative gives Post-Closing Xxxxxxxx written notice stating that
the Stockholder Representative disagrees with such determination and
stating in reasonable detail the nature, extent of, and basis for, the
Stockholder Representative's disagreement and the Stockholder
Representative's determination of the aggregate Xxxxxxxx Common Base
Merger Consideration.
(2) GOOD FAITH RESOLUTION. If the Stockholder
Representative timely gives Post-Closing Xxxxxxxx such a dispute
notice, then, during the thirty (30) days after the
15
Stockholder Representative gives such dispute notice, the Stockholder
Representative and Post-Merger Xxxxxxxx will attempt in good faith to
resolve such disagreement, and any mutual determination of the amount
of the aggregate Xxxxxxxx Common Base Merger Consideration by the
Stockholder Representative and Post-Merger Xxxxxxxx will be final and
binding upon the Parties and the Old Xxxxxxxx Stockholders on the date
of such mutual determination.
(3) ARBITRATION OF DISPUTE. If any such dispute cannot be
resolved by the Stockholder Representative and Post-Merger Xxxxxxxx on
or prior to such thirtieth (30th) day, then such dispute will be
referred to Ernst & Young, and such firm's determination of the
aggregate Xxxxxxxx Common Base Merger Consideration will be final and
binding upon the Parties and the Old Xxxxxxxx Common Stockholders on
the date such firm's report of its determination of the aggregate
Xxxxxxxx Common Base Merger Consideration has been delivered to
Post-Merger Xxxxxxxx and the Stockholder Representative.
(4) COMPUTATION AND ENTITLEMENT TO PAYMENT AFTER
RESOLUTION. If the amount of the aggregate Xxxxxxxx Common Base Merger
Consideration finally determined in accordance with this Section 3.F
exceeds the amount of the estimated Xxxxxxxx Common Base Merger
Consideration paid to the Stockholder Representative for the account of
the Old Xxxxxxxx Common Stockholders at the Closing (disregarding the
amount, if any, deposited in the Estimate Fund pursuant to Section
3.A(3)(d)) (the "Estimated Xxxxxxxx Common Base Merger Consideration"),
then (subject to the provisions of Article II regarding the surrender
of Old Xxxxxxxx Certificates) the Old Xxxxxxxx Common Stockholders will
be entitled to receive the amount of such excess pursuant to Section
3.F(5). If the Estimated Xxxxxxxx Common Base Merger Consideration
exceeds the amount of the aggregate Xxxxxxxx Common Base Merger
Consideration finally determined in accordance with this Section 3.F,
then (subject to the limitation set forth in Section 3.F(5))
Post-Merger Xxxxxxxx will be entitled to receive the amount of such
excess pursuant to Section 3.F(5). Any amount which becomes payable
pursuant to this Section 3.F(4) (except to the extent paid to
Post-Merger Xxxxxxxx from the Estimate Fund) will constitute an
adjustment of the aggregate Xxxxxxxx Common Base Merger Consideration
paid at the Closing.
(5) PAYMENT AFTER RESOLUTION.
(A) IF PAYABLE TO THE OLD XXXXXXXX
STOCKHOLDERS. Any amount which becomes payable to the Old
Xxxxxxxx Common Stockholders pursuant to Section 3.F(4) will
be paid to the Stockholder Representative, for distribution by
the Stockholder Representative to the Old Xxxxxxxx Common
Stockholders, pro rata according to the remaining amounts of
the Xxxxxxxx Common Base Merger Consideration payable to them.
Any such amount will be paid to the Stockholder Representative
from the amount (if any) deposited in the Estimate Fund
pursuant to Section 3.A(3)(d), to the extent of the amount so
deposited. If no such deposit is made, or if such deposit is
made and the amount to be paid to the Old Xxxxxxxx Common
Stockholders pursuant to Section 3.F(4) exceeds the amount so
deposited, then the amount (or the remaining amount, as
applicable) so payable (for the Old Xxxxxxxx Stockholders'
benefit) will be paid by Post-Merger Xxxxxxxx.
16
(B) IF PAYABLE TO POST-MERGER XXXXXXXX. Any
amount which becomes payable to Post-Merger Xxxxxxxx pursuant
to Section 3.F(4) will be paid from the amount (if any)
deposited in the Estimate Fund pursuant to Section 3.A(3)(d),
to the extent of the amount so deposited. If no such deposit
is made, or if such deposit is made and the amount to be paid
to Post-Merger Xxxxxxxx pursuant to Section 3.F(4) exceeds the
amount so deposited, then the amount (or the remaining amount,
as applicable) so payable to Post-Merger Xxxxxxxx may be
recovered by Post-Merger Xxxxxxxx from either or both of (i)
the proceeds of the Xxxxxxxx Receivables received by Xxxxxxxx
and its Subsidiaries during the Collection Period as provided
in Section 3.G(4) and (ii) the amounts deposited in the
Indemnity Fund, and no additional amount will be payable to
Post-Merger Xxxxxxxx (the amount, if any, deposited in the
Estimate Fund pursuant to Section 3.A(3)(d), the amount of
such proceeds of the Xxxxxxxx Receivables, and the amounts
deposited in the Indemnity Fund pursuant to Section 3.G(4)
being Post-Merger Xxxxxxxx'x sole source of payment of any
amount which may be owing to Post-Merger Xxxxxxxx by reason of
the estimated amount of the aggregate Xxxxxxxx Common Base
Merger Consideration paid to the Stockholder Representative at
the Closing being greater than the Xxxxxxxx Common Base Merger
Consideration as finally determined pursuant to this Section
3.F).
(C) INTEREST ON CERTAIN AMOUNTS. Any amount
payable by Post-Merger Xxxxxxxx pursuant to this Section
3.F(5) will bear interest at the rate of 18% per annum from
the third (3rd) Business Day after the date upon which the
aggregate Xxxxxxxx Common Base Merger Consideration is finally
determined in accordance with this Section 3.F through and
including the date upon which such amount and all such
interest are paid in full (it being understood that in no
event will interest be payable to any Old Xxxxxxxx Common
Stockholder in respect of any period prior to the date upon
which such Old Xxxxxxxx Common Stockholder surrenders the Old
Xxxxxxxx Certificate representing the Xxxxxxxx Common Share
Equivalent in question).
(D) PAYMENT OF UNDISPUTED AMOUNT. To the
extent the aggregate Xxxxxxxx Common Base Merger Consideration
and the resulting amount of any payment which may be required
pursuant to Section 3.F(4) are not in dispute, Post-Merger
Xxxxxxxx may retain proceeds of Xxxxxxxx Receivables as
provided in Section 3.G(4), Post-Merger Xxxxxxxx or the
Stockholder Representative will be entitled to withdraw
amounts from the Estimate Fund and/or the Indemnity Fund, and
the Stockholder Representative will be entitled to receive
payments from Post-Merger Xxxxxxxx (for the account of the Old
Xxxxxxxx Common Stockholders) of the amounts payable to the
Old Xxxxxxxx Common Stockholders, as the case may be.3
-------------------
3 By way of illustration, assume that (a) the Estimated Adjustment
Amount is $20,000,000, (b) neither the amount of the Annualized Trailing Cash
Flow nor the KOKH Amount is in dispute, and (c) no amount is deposited in the
Estimate Fund. If the Post-Closing Report indicates that the
17
(E) PAYMENTS FROM ESCROW FUNDS. All payments
made from the Estimate Fund or the Indemnity Fund pursuant to
this Section 3.F(5) will be requested and made in accordance
with the terms of the Estimate Escrow Agreement or the
Indemnity Escrow Agreement, as applicable. Earnings on the
amount (if any) deposited in the Estimate Fund or the
Indemnity Fund will be paid to the Person(s) ultimately
entitled to receive the amount so deposited, pro rata based on
the respective portions of the amount deposited in such Fund
to be paid to them.
(6) COSTS OF DISPUTE RESOLUTION. The prevailing party in
any determination pursuant to Section 3.F(3) will be entitled to
recover from the non-prevailing party such prevailing party's
reasonable attorneys' fees and disbursements in addition to any amount
owing to it at the Closing, and the nonprevailing party also will be
required to pay all other reasonable costs and expenses associated with
such determination; provided that (a) if the independent public
accounting firm which makes such determination is unable to determine
that a party is the prevailing party, then such costs and expenses will
be equitably allocated by such firm upon the basis of the outcome of
such determination, and (b) if such firm is unable to allocate such
costs and expenses in such a manner, then the costs and expenses of
such arbitration will be paid one-half by Post-Merger Xxxxxxxx and
one-half by the Stockholder Representative (on behalf of the Old
Xxxxxxxx Stockholders), and each of them will pay the out-of-pocket
expenses incurred by it. Such independent accounting firm may designate
the prevailing party for purposes of this Section 3.F(6).
3.G XXXXXXXX RECEIVABLES.
(1) DEFINED. The "Xxxxxxxx Receivables" means all
trade and other accounts and notes receivable of Xxxxxxxx and its
Subsidiaries (including each of Xxxxxxxx Two and Xxxxxxxx Three, for
this purpose) arising from the sale of advertising time (including
so-called "infomercials") and other paid programming time on the
Stations, determined on a consolidated basis as of the Adjustment Time.
(2) COLLECTION AND APPLICATION. On, and during the
120 days after, the Closing Date (the "Collection Period"), Post-Merger
Xxxxxxxx and Xxxxxxxx will, and will cause their respective
Subsidiaries to, use reasonable efforts in accordance with their
respective normal business practices (not including resorting to or
threatening litigation) to collect the Xxxxxxxx Receivables, including
issuing invoices for those Xxxxxxxx Receivables for which invoices have
not been issued prior to the Closing Date. Collections from any Person
which is a debtor with respect to any Xxxxxxxx Receivable (a "Xxxxxxxx
Debtor") will be applied in the chronological order of the xxxxxxxx of
Xxxxxxxx, Xxxxxxxx Two, Xxxxxxxx
-------------------
Adjustment Amount is $18,500,000 and the Stockholder Representative disputes
that determination and asserts that the Adjustment Amount is $19,000,000, then
only $500,000 is in dispute. In that case, even prior to the resolution of such
dispute, Post-Merger Xxxxxxxx will be entitled to retain from the proceeds of
the Xxxxxxxx Receivables as provided in Section 3.G(4), or withdraw from the
Indemnity Fund, $1,000,000 (along with a proportionate share of the "Escrow
Income" referred to in the Indemnity Escrow Agreement, in the case of such a
withdrawal from the Indemnity Fund).
18
Three, Post-Merger Xxxxxxxx and their respective Subsidiaries, as
applicable, to such Xxxxxxxx Debtor (i.e., to the oldest unpaid
billing first) unless (i) such Xxxxxxxx Debtor disputes in writing its
obligation to pay such billing, (ii) such Xxxxxxxx Debtor indicates in
writing that such payment is to be applied in another, specified
manner, or (iii) other facts or circumstances exist in light of which
it would be reasonable to conclude that such Xxxxxxxx Debtor does not
intend such payment to be applied in such a manner.
(3) EFFORTS BY STOCKHOLDER REPRESENTATIVE OR OLD
XXXXXXXX STOCKHOLDERS. So long as Post-Merger Xxxxxxxx and Xxxxxxxx are
in compliance with this Section 3.G, neither the Stockholder
Representative nor any Old Xxxxxxxx Stockholder will make any direct
solicitation of any Xxxxxxxx Debtor for purposes of collecting any
Xxxxxxxx Receivable during the Collection Period, except as may be
agreed to by Post-Merger Xxxxxxxx and the Stockholder Representative
and except with respect to those Xxxxxxxx Receivables which may be or
become more than 180 days past due and those Xxxxxxxx Receivables with
respect to which Post-Merger Xxxxxxxx, Xxxxxxxx or any of their
respective Subsidiaries has received written notice of a dispute from
the related Xxxxxxxx Debtor (a copy of which notice Post-Merger
Xxxxxxxx will promptly forward to the Stockholder Representative).
(4) PAYMENT OF PROCEEDS. After the end of the Collection
Period and on or prior to the 150th day after the Closing Date,
Post-Merger Xxxxxxxx will pay over an amount equal to the aggregate
proceeds received by Xxxxxxxx and its Subsidiaries in respect of
Xxxxxxxx Receivables during the Collection Period, plus interest
thereon computed as described below (collectively, the "Xxxxxxxx
Receivable Proceeds"), as follows (without set-off in respect of any
other liability or obligation of any Person, whether arising pursuant
to this Agreement or otherwise except as expressly provided in this
Section 3.G(4)):
(a) the sum of (x) an amount equal to the aggregate
amount of all Loss and Expense (as that term is defined in the
Indemnity Agreement) asserted in writing pursuant to Section 2
of the Indemnity Agreement as recoverable under Section 3 of
the Indemnity Agreement and (y) the amount which Post-Merger
Xxxxxxxx asserts in good faith it will be owed pursuant to
Section 3.F(4), if the amount of the aggregate Xxxxxxxx Common
Base Merger Consideration has not been finally determined in
accordance with Section 3.F (or, if less than such sum, the
entire amount of the Xxxxxxxx Receivable Proceeds) will be
paid to the Indemnity Escrow Agent and deposited in the
Indemnity Fund, and
(b) the remainder of the Xxxxxxxx Receivable Proceeds
will be paid to the Stockholder Representative, for the
account of the Old Xxxxxxxx Common Stockholders, as part of
the Merger Consideration for the Xxxxxxxx Common Share
Equivalents,
in each case by wire transfer of immediately available funds to the
account specified by the recipient thereof; provided that, from and
after the time when the amount of the aggregate Xxxxxxxx Common Base
Merger Consideration is finally determined in accordance with Section
3.F, if any amount is payable to Post-Merger Xxxxxxxx pursuant to
Section 3.F(4) based on such determination, then Post-Merger Xxxxxxxx
may retain from the aggregate
19
proceeds received by Xxxxxxxx and its Subsidiaries in respect of the
Xxxxxxxx Receivables during the Collection Period the amount so owed to
it, and the Xxxxxxxx Receivable Proceeds will be reduced by such
amount. At the time of the payments described in clauses (a) and (b)
above, Post-Merger Xxxxxxxx will deliver to the Stockholder
Representative a report which specifies the application to the Xxxxxxxx
Receivables and other accounts receivable of the collections received
during the Collection Period. Interest will be computed on the full
amount of the Xxxxxxxx Receivable Proceeds (exclusive of interest which
is part thereof) from and after the 74th day after the Closing to the
date upon which the payments described in clauses (a) and (b) above are
made), at the rate of 7.125% per annum.
(5) TRANSFER AFTER COLLECTION PERIOD. Immediately
following the last day of the Collection Period, Post-Merger Xxxxxxxx
and Xxxxxxxx will, and will cause their respective Subsidiaries to,
transfer and assign to the Stockholder Representative (for the account
of the Old Xxxxxxxx Common Stockholders) all rights with respect to the
Xxxxxxxx Receivables to the extent they have not then been collected in
full, together with all files concerning such Xxxxxxxx Receivables, and
Post-Merger Xxxxxxxx, Xxxxxxxx and their respective Subsidiaries will
have no further responsibilities pursuant to this Section 3.G with
respect to any Xxxxxxxx Receivable except to remit to the Stockholder
Representative (on behalf of the Old Xxxxxxxx Stockholders) as provided
in Section 3.G(4) any Xxxxxxxx Receivable Proceeds received after the
Collection Period. Such transfer, assignment and remittance will
constitute a part of the payment of the Xxxxxxxx Common Merger
Consideration.
(6) ACCESS TO INFORMATION. During and after the
Collection Period, the Acquiring Parties will, and will cause their
respective Subsidiaries to, furnish the Stockholder Representative and
its agents, representatives and advisors with all information
(including reasonable access to their respective books and records)
which the Stockholder Representative reasonably requests in order to
monitor, confirm or dispute the Acquiring Parties' compliance with this
Section 3.G.
3.H CLOSING TIME AND PLACE. Subject to Section 12.A, the
consummation of the Merger and the payment of the Base Merger Consideration for
Xxxxxxxx Share Equivalents to be paid at such time (the "Closing") will be held
in the offices of Xxxxxxxx & Xxxxx, in New York, New York, at 10:00 a.m., local
time, on the date determined pursuant to the following two sentences, or at such
other place and/or at such other time and date as the Merger Sub and Xxxxxxxx
may agree in writing. The Closing will occur on a date designated by the Merger
Sub by written notice to Xxxxxxxx not less than ten Business Days in advance of
such date (which designated date will be not later than the Expiration Date).
Notwithstanding the foregoing, but subject to Section 12.A, if on a date for the
Closing described in the preceding sentence or specified pursuant to this
sentence any condition of the Merger Sub or Xxxxxxxx specified in Article IX or
X has not been satisfied (and will not be satisfied by the delivery of documents
at the Closing) or waived in writing, then the date for the Closing will be
extended to any date specified by the Merger Sub to Xxxxxxxx with not less than
10 Business Days' notice to the other (subject to the Merger Sub's and
Xxxxxxxx'x respective conditions to the Closing set forth in Articles IX and X
being satisfied or waived in writing on such specified date); provided that any
such specified date will be on or prior to the Expiration Date.
20
3.I DELIVERIES AT THE CLOSING. All actions on the Closing Date
(including those described in Sections 11.D and 11.E) will be deemed to occur
simultaneously, and no document or payment to be delivered or made on the
Closing Date will be deemed to be delivered or made until all such documents and
payments are delivered or made to the reasonable satisfaction of Xxxxxxxx, the
Merger Sub, the Stockholder Representative and their respective legal counsel.
(1) DELIVERY OF XXXXXXX MONEY. At the Closing, to the
extent then held by the Xxxxxxx Money Escrow Agent, the Xxxxxxx Money
Fund (together with all Xxxxxxx Money Income, if any, received and held
by the Xxxxxxx Money Escrow Agent and the right to receive all Xxxxxxx
Money Income, if any, not yet received by the Xxxxxxx Money Escrow
Agent) will be delivered to the Merger Sub.
(2) DELIVERIES BY XXXXXXXX. At the Closing, Xxxxxxxx will
deliver to the Merger Sub the following:
(a) the minute book, stock transfer book and
other records relating to the internal corporate affairs of
Xxxxxxxx and each Subsidiary of Xxxxxxxx (other than Xxxxxxxx
Two and Xxxxxxxx Three) which are in Xxxxxxxx'x and its
Subsidiaries' possession, and resignations of the officers and
directors of each of Xxxxxxxx and the Subsidiaries of
Xxxxxxxx, which resignations will be effective as of the
Effective Time;
(b) all mortgage discharges or releases of
Liens that, upon the repayment in full of all outstanding
Funded Indebtedness and other obligations of Xxxxxxxx and its
Subsidiaries (other than Xxxxxxxx Two and Xxxxxxxx Three)
under the Xxxxxxxx Senior Debt Arrangements as described in
Section 11.E and all other Funded Indebtedness of Xxxxxxxx and
its Subsidiaries (other than Xxxxxxxx Two and Xxxxxxxx Three)
and all related interest and other obligations, the release of
the Mission Guarantees, any required execution and delivery
thereof by Xxxxxxxx or a Subsidiary of Xxxxxxxx (other than
Xxxxxxxx Two and Xxxxxxxx Three), and any requisite filing
thereof, will be sufficient to cause the Station Assets held
by Xxxxxxxx and its Subsidiaries (other than the assets and
properties transferred in the Spin-Offs) and the capital stock
of Xxxxxxxx'x Subsidiaries (other than Xxxxxxxx Two and
Xxxxxxxx Three) to be as described in the second sentence of
Section 4.G(1) and in Sections 4.G(4) and 4.Q;
(c) a certificate of the President or Chief
Executive Officer of Xxxxxxxx dated the Closing Date to the
effect that, except as specified in such certificate, to the
best of such officer's knowledge, the conditions set forth in
Sections 10.A(1) and 10.A(2) have been fulfilled;
(d) a certificate of Xxxxxxxx dated the
Closing Date to the effect that, except as specified in such
certificate, the conditions set forth in Sections 10.A(1) and
10.A(2) have been fulfilled;
(e) a certified copy of the resolutions or
action by written consent
21
of the board of directors and stockholders of Xxxxxxxx
authorizing the Merger and Xxxxxxxx'x execution, delivery and
performance of this Agreement;
(f) certificates as to the existence and/or
good standing of Xxxxxxxx and each of its Subsidiaries (other
than Xxxxxxxx Two and Xxxxxxxx Three), in each case issued by
the Secretary of State or a comparable official of each
jurisdiction specified for such corporation on the attached
Schedule 4O and dated on or after the fifth Business Day prior
to the Closing Date, certifying as to the existence and/or
good standing of such corporation in such jurisdictions;
(g) one or more opinions of counsel or
special counsel to Xxxxxxxx, each dated the Closing Date, as
to the matters set forth in the attached Exhibit C; and
(h) such other documents, instruments and
receipts as the Merger Sub may reasonably request in order to
effectuate the Merger and the other transactions contemplated
by this Agreement to be consummated at the Closing.
Each of the foregoing will be reasonably satisfactory in form to the
Merger Sub and its legal counsel.
(3) DELIVERIES BY THE MERGER SUB. At the Closing, the
Merger Sub will deliver or cause to be delivered to the Stockholder
Representative stock certificates for Xxxxxxxx Common Stock (if shares
of Xxxxxxxx Common Stock are to be part of the Merger Consideration)
and cash as described in Section 3.A representing the aggregate Base
Merger Consideration in respect of the Xxxxxxxx Share Equivalents,
determined based upon the Estimated Annualized Trailing Cash Flow (or
the Annualized Trailing Cash Flow, if it has been finally determined
pursuant to Section 3.J), the Estimated KOKH Amount and the Estimated
Adjustment Amount (subject to the provisions of Article II), together
with the following:
(a) a certificate of an officer or similar
official of the Merger Sub dated the Closing Date to the
effect that, except as specified in such certificate, to the
best of such officer's or official's knowledge, the conditions
set forth in Section 9.A(1) and 9.A(2) have been fulfilled;
(b) a certificate of an officer or similar
official of Xxxxxxxx dated the Closing Date to the effect
that, except as specified in such certificate, to the best of
such officer's or official's knowledge, the conditions set
forth in Sections 9.A(1) and 9.A(2) have been fulfilled;
(c) a certificate of the Merger Sub dated
the Closing Date to the effect that, except as specified in
such certificate, the conditions set forth in Sections 9.A(1)
and 9.A(2) have been fulfilled;
(d) a certificate of Xxxxxxxx dated the
Closing Date to the effect that, except as specified in such
certificate, the conditions set forth in Sections 9.A(1)
22
and 9.A(2) have been fulfilled;
(e) a certified copy of the resolutions or
action by written consent of the board of directors and
stockholders of the Merger Sub authorizing the Merger and the
Merger Sub's execution, delivery and performance of this
Agreement;
(f) a certified copy of the resolutions or
action by written consent of the board of directors of
Xxxxxxxx authorizing Xxxxxxxx'x execution, delivery and
performance of this Agreement;
(g) certificates as to the existence and/or
good standing of Xxxxxxxx and the Merger Sub, in each case
issued by the Secretary of State or a comparable official of
such jurisdictions as Xxxxxxxx may reasonably request and
dated on or after the fifth Business Day prior to the Closing
Date, certifying as to the existence and/or good standing of
such corporation in such jurisdictions;
(h) one or more opinions of counsel or
special counsel to Xxxxxxxx and the Merger Sub, each dated the
Closing Date, as to the matters set forth in the attached
Exhibit D; and
(i) such other documents, instruments and
receipts as Xxxxxxxx may reasonably request in order to
effectuate the Merger and the other transactions contemplated
by this Agreement to be consummated at the Closing (including
the registration and issuance of any Xxxxxxxx Common Stock
which is part of the Merger Consideration).
Each of the foregoing will be reasonably satisfactory in form to
Xxxxxxxx and its legal counsel.
3.J DETERMINATION OF TRAILING CASH FLOW AND GROSS REVENUES.
(1) GROSS REVENUES DEFINED. The "Gross Revenues" for any
period means the amount of the gross revenues of Xxxxxxxx and its
Subsidiaries from all sources, determined in accordance with GAAP on a
consolidated basis, but excluding revenues (other than from the sale of
advertising or paid programming time on the Stations) of a
non-recurring nature generated other than in the ordinary course of
business.
(2) EXAMINATION OF CASH FLOW REPORTS. Without limiting
Section 7.C(2), Xxxxxxxx will (and will cause its Subsidiaries to)
allow Xxxxxxxx and its legal and accounting representatives and
advisors reasonable access to Xxxxxxxx'x and its Subsidiaries' books
and records to enable Xxxxxxxx to evaluate and dispute Xxxxxxxx'x
determination of the Trailing Cash Flow and the Gross Revenues set
forth in each Cash Flow Report. Xxxxxxxx'x determination of the
Trailing Cash Flow or the Gross Revenues set forth in any Cash Flow
Report will become final and binding upon the parties to this Agreement
and the Old Xxxxxxxx Stockholders on the fifteenth (15th) Business Day
after such Cash Flow Report is given to Xxxxxxxx unless, prior to such
fifteenth (15th) Business Day, Xxxxxxxx gives
23
Xxxxxxxx written notice stating that Xxxxxxxx disagrees with such
determination and stating in reasonable detail the nature, extent of,
and basis for, Xxxxxxxx'x disagreement and Xxxxxxxx'x determination of
the Trailing Cash Flow or Gross Revenues, as the case may be, for the
period in question.
(3) GOOD FAITH RESOLUTION. If Xxxxxxxx timely gives
Xxxxxxxx such a dispute notice, then, during the five (5) Business Days
after Xxxxxxxx gives such dispute notice, Xxxxxxxx and Xxxxxxxx will
attempt in good faith to resolve such disagreement, and any mutual
determination of the amount of the Gross Revenues or the Trailing Cash
Flow, as the case may be, for the period in question by Xxxxxxxx and
Xxxxxxxx will be final and binding upon the parties to this Agreement
and the Old Xxxxxxxx Stockholders on the date of such mutual
determination.
(4) ARBITRATION OF DISPUTE. If any such dispute cannot be
resolved by Xxxxxxxx and Xxxxxxxx on or prior to such fifth (5th)
Business Day, then such dispute will be referred to Ernst & Young, and
such firm's determination of the Gross Revenues or the Trailing Cash
Flow, as the case may be, for the period in question will be final and
binding upon the parties to this Agreement and the Old Xxxxxxxx
Stockholders on the date such firm's report of its determination of the
Gross Revenues or the Trailing Cash Flow, as the case may be, for such
period has been delivered to Xxxxxxxx and Xxxxxxxx.
(5) COSTS OF DISPUTE RESOLUTION. The prevailing party in
any determination pursuant to Section 3.J(4) will be entitled to
recover from the non-prevailing party such prevailing party's
reasonable attorneys' fees and disbursements, and the nonprevailing
party also will be required to pay all other reasonable costs and
expenses associated with such determination; provided that (a) if the
independent public accounting firm which makes such determination is
unable to determine that a party is the prevailing party, then such
costs and expenses will be equitably allocated by such firm upon the
basis of the outcome of such determination, and (b) if such firm is
unable to allocate such costs and expenses in such a manner, then the
costs and expenses of such arbitration will be paid one-half by
Xxxxxxxx and one-half by Xxxxxxxx, and each of them will pay the
out-of-pocket expenses incurred by it. Such independent accounting firm
may designate the prevailing party for purposes of this Section 3.J(5).
(6) OUTDATED DETERMINATION. If the Trailing Cash Flow or
the Gross Revenues for any period believed to be the Measurement Period
are determined in accordance with this Section 3.J but such period is
not the actual Measurement Period, then the Trailing Cash Flow or the
Gross Revenues, as the case may be, will later be determined for the
actual Measurement Period in accordance with this Section 3.J.
3.K MANDATORY PAYMENT TO XXXXXXXX.
(1) WHEN MANDATORY PAYMENT BECOMES OWING AND DUE. Except
as provided in Section 12.B(4)(d), on the Approval Date a payment in
the amount of Seventy Five Million Dollars ($75,000,000) will become
owing to Xxxxxxxx by the Merger Sub. Whether or not this Agreement is
thereafter terminated pursuant to Section 12.A, such
24
payment (the "Mandatory Payment") will be due and payable upon the
termination of this Agreement pursuant to Section 12.A (or, if earlier,
the later of June 23, 1998 and the fifth Business Day after the
Approval Date), unless the Closing has occurred or the circumstances
described in Section 12.B(4)(d) apply. If the Merger Sub does not pay
such amount on or prior to such later date, then Xxxxxxxx may seek
payment of such amount from the Xxxxxxx Money Fund (including by means
a drawing under the Xxxxxxx Money Letter of Credit), in accordance with
the terms of the Xxxxxxx Money Escrow Agreement, unless the
circumstances described in Section 12.B(4)(d) exist.
(2) RETURN OF XXXXXXX MONEY FUND. Upon the making of the
Mandatory Payment, the Merger Sub will be entitled to a return of the
Xxxxxxx Money Fund. Any such return to the Merger Sub of the Xxxxxxx
Money Fund may be requested, and will be effected, in accordance with
the terms of the Xxxxxxx Money Escrow Agreement. After receipt of the
Mandatory Payment by Xxxxxxxx, at the Merger Sub's request Xxxxxxxx
will execute and deliver to the Merger Sub such joint written
instructions to the Xxxxxxx Money Escrow Agent as the Merger Sub may
reasonably request in order to effect the return of the Xxxxxxx Money
Fund to the Merger Sub.
(3) TREATMENT OF MANDATORY PAYMENT. The Parties intend
that, if the Mandatory Payment is required to be made, then the
Mandatory Payment will become the property of Xxxxxxxx, for the benefit
of its securityholders, and (whether or not the Closing occurs) will be
required to be repaid by Xxxxxxxx only as expressly provided in Section
12.B(4)(d). If the Mandatory Payment is made, then the amount of the
Mandatory Payment will constitute a prepayment of the portion of the
aggregate Base Merger Consideration payable in respect of the Xxxxxxxx
Share Equivalents and will be credited against the amount of such
portion of the aggregate Base Merger Consideration to be paid at the
Closing in cash. If this Agreement is terminated pursuant to Section
12.A after the Mandatory Payment is made, then Xxxxxxxx may retain the
Mandatory Payment except under the circumstances described in Section
12.B(4)(d). If this Agreement is terminated pursuant to Section 12.A
prior to the making of the Mandatory Payment, then the Mandatory
Payment will thereupon become due and payable, except under the
circumstances described in Section 12.A(4)(d), and the Xxxxxxx Money
Fund will not be released (except to Xxxxxxxx) until the Mandatory
Payment has been made. Unless this Agreement has been terminated
pursuant to Section 12.A and Xxxxxxxx is entitled to retain the
Mandatory Payment, Xxxxxxxx will not distribute or loan the proceeds of
the Mandatory Payment to its stockholders or their respective
Affiliates (other than Xxxxxxxx'x Subsidiaries), but may utilize all or
a portion of such proceeds to repay Indebtedness of Xxxxxxxx and its
Subsidiaries (so long as the amount repaid may be reborrowed, subject
to the satisfaction of customary conditions for the purpose of repaying
such amount to Xxxxxxxx as provided in Section 12.B(4)(d)) or for any
other purpose not prohibited hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXXX
25
Subject to Section 13.Q, Xxxxxxxx makes the following
representations and warranties:
4.A ORGANIZATION. Xxxxxxxx is a corporation which is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business or has similar status under the laws of
each jurisdiction in which such qualification is required by applicable Legal
Requirements. Xxxxxxxx has the power and authority to carry on the business
being conducted by it, to own and operate the Station Assets owned and operated
by it, and to enter into and consummate the transactions contemplated to be
consummated by it pursuant to this Agreement.
4.B ACTION. Each action necessary to be taken by or on the
part of Xxxxxxxx in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated to be consummated by
Xxxxxxxx pursuant to this Agreement and necessary to make the same effective
will be duly and validly taken by, and be effective at, the time by which such
action is required to be taken. This Agreement has been duly and validly
authorized, executed, and delivered by Xxxxxxxx and constitutes its valid and
binding agreement, enforceable against Xxxxxxxx in accordance with and subject
to its terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies.
4.C FINANCIAL STATEMENTS.
(1) DESCRIPTION OF STATEMENTS. Attached to this Agreement
as Schedule 4C are copies of (a) the audited consolidated balance sheet
of Xxxxxxxx as at December 31, 1996, and the related statements of
operations and cash flows for the period from January 4, 1996 (the date
upon which Xxxxxxxx acquired Act III) to December 31, 1996, and related
notes, all reported on by Xxxxxxxx'x independent certified public
accountants (collectively, the "12/31/96 Financial Statements"), and
(b) the internally prepared unaudited consolidated balance sheet of
Xxxxxxxx as at September 30, 1997 and the related statement of
operations for the nine-month period ended September 30, 1997 (the
"9/30/97 Financial Statements").
(2) REPRESENTATIONS AS TO 1996 STATEMENTS. The 12/31/96
Financial Statements are, in all material respects, (a) as of December
31, 1996, correct, complete and in agreement with the books and records
regularly maintained by Xxxxxxxx and its Subsidiaries, and (b) prepared
in accordance with generally accepted accounting principles applied on
a basis consistent with past practice throughout the year involved. The
12/31/96 Financial Statements present fairly, in all material respects,
the financial position of Xxxxxxxx and its Subsidiaries as at December
31, 1996 and the results of the operations and cash flow of Xxxxxxxx
and its Subsidiaries for the period covered thereby.
(3) REPRESENTATIONS AS TO 1997 STATEMENTS. When they are
delivered as provided in Section 7.C, the 12/31/97 Financial Statements
will be, in all material respects, (a) as of December 31, 1997,
correct, complete and in agreement with the books and records regularly
maintained by Xxxxxxxx and its Subsidiaries, and (b) prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with past practice throughout the year involved, and
will present fairly in all material respects, the
26
financial position of Xxxxxxxx and its Subsidiaries as at December 31,
1997 and the results of the operations and cash flow of Xxxxxxxx and
its Subsidiaries for the period covered thereby.
(4) REPRESENTATIONS AS TO INTERIM STATEMENTS. Subject to
the effect of year-end adjustments which normally would arise in the
course of an audit, the 9/30/97 Financial Statements are, as of
September 30, 1997, in all material respects, correct, complete and in
agreement with the books and records regularly maintained by Xxxxxxxx
and its Subsidiaries, and, taken together, present fairly, in all
material respects, the financial position of Xxxxxxxx and its
Subsidiaries as at September 30, 1997 and the results of the operations
of Xxxxxxxx and its Subsidiaries for the nine months then ended.
4.D BUSINESS SINCE SEPTEMBER 30, 1997. Since September 30,
1997, except to the extent required or permitted by this Agreement or as set
forth on the attached Schedule 4D, the business of the Stations has in all
material respects been conducted in the ordinary course of business and in the
same manner as it had been conducted by Xxxxxxxx and its Subsidiaries from
January 4, 1996 (the date upon which Xxxxxxxx acquired Act III) through December
31, 1996.
4.E FCC AUTHORIZATIONS. As of the date of this Agreement, each
Person specified in the attached Schedule 4E as the holder of an FCC
Authorization has been authorized by the FCC to hold and is the holder of each
of the FCC Authorizations specified for such Person on the attached Schedule 4E.
Except as set forth on the attached Schedule 4E, (i) such FCC Authorizations
constitute all of the licenses and authorizations required under the
Communications Act, or the current rules, regulations, and policies of the FCC,
for the operation of the Stations as now conducted; (ii) such FCC Authorizations
are in full force and effect and are subject to or scheduled for renewal on the
respective dates specified on the attached Schedule 4E (unless theretofore
renewed after the date of this Agreement); (iii) such FCC Authorizations are
valid for the full respective terms thereof; (iv) none of Xxxxxxxx, its
Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three has any reason to believe that
such FCC Authorizations will not be renewed for a full and customary term in the
ordinary course with no materially adverse conditions (except with respect to
general rule-making and similar matters relating generally to television
broadcast stations); (v) there is not pending, or, to the knowledge of Xxxxxxxx
or any of its Subsidiaries, threatened, any action by or before the FCC to
revoke, cancel, rescind, modify, or refuse to renew in the ordinary course any
of the FCC Authorizations, and there is not now pending, or, to the knowledge of
any such Person, threatened, issued, or outstanding by or before the FCC, any
investigation, order to show cause, notice of violation, notice of apparent
liability, or notice of forfeiture or complaint against Xxxxxxxx, any of its
Subsidiaries, Xxxxxxxx Two or Xxxxxxxx Three with respect to any Station; (vi)
the Stations are operating in compliance, in all material respects, with the FCC
Authorizations, the Communications Act, and the current rules, regulations and
policies of the FCC; (vii) to the knowledge of Xxxxxxxx and its Subsidiaries, no
Station (other than any Station which is a low-power television station) is
short-spaced, on a grandfathered basis or otherwise, to any existing broadcast
television station, outstanding construction permit or pending application
therefor, domestic or international, or to any existing or proposed TV
allotment, domestic or international; (viii) neither Xxxxxxxx, any of its
Subsidiaries, Xxxxxxxx Two nor Xxxxxxxx Three has received any written notice to
the effect that it is causing objectionable interference to the transmissions of
any other television station or communications facility or has received any
written complaints with respect thereto;
27
(ix) no other television station or communications facility is causing
objectionable interference to any Station's transmissions or the public's
reception of such transmissions; and (x) all documents required by 47 C.F.R.
Section 73.3526 to be kept in each Station's public inspection file are in such
file, and such file will be maintained in proper order and complete up to and
through the Closing Date. Except with respect to Market Cable Systems that are
parties to retransmission agreements, for each Station, there has been made a
valid election of must carry with respect to each Market Cable System. Except as
set forth on Schedule 4.E, no Market Cable System has advised Xxxxxxxx, its
Subsidiaries, Xxxxxxxx Two or Xxxxxxxx Three of any signal quality deficiency or
copyright indemnity or other prerequisite to cable carriage of any Station's
signal, and no Market Cable System has declined or threatened to decline such
carriage of such Station or failed to respond to a request for carriage of such
Station or sought any form of relief from carriage of such Station from the FCC.
Xxxxxxxx, its Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three have filed with the
FCC, on a timely basis, all material reports and other material filings required
to be filed by them in connection with the Stations pursuant to the
Communications Act and the rules, regulations and policies of the FCC.
4.F CONDITION OF ASSETS. Except as set forth on the attached
Schedule 4F, the material tangible assets of Xxxxxxxx and its Subsidiaries and
the improvements on the Realty which are used by them (a) are in all material
respects in good and technically sound operating condition (ordinary wear and
tear excepted) and are not in need of repair, (b) are in all material respects
in a condition which would be sufficient to permit the owner thereof to operate
or program the Stations (in the manner in which the Stations are operated or
programmed by Xxxxxxxx and its Subsidiaries as of the date of this Agreement) in
compliance with the terms of the FCC Authorizations, the Communications Act and
current FCC rules and regulations, and (c) have in all material respects been
maintained in a manner consistent with generally accepted standards of good
engineering practice and to the knowledge of Xxxxxxxx, all applicable federal,
state and local statutes, ordinances, rules and regulations, including, without
limitation, all applicable tower painting and lighting requirements.
4.G TITLE, ETC.
(1) REALTY. The attached Schedule 4G contains a
description of all parcels of Realty owned by Xxxxxxxx, its
Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three (collectively, the "Owned
Realty"). The Person designated as the "Titleholder" on the attached
Schedule 4G has good and marketable fee title to such parcel, free and
clear of all Liens, except for Permitted Encumbrances. Included in the
attached Schedule 4G is a copy of the policy (if any) insuring the
Titleholder's title thereto as of the date of this Agreement. Xxxxxxxx
and its Subsidiaries have valid leasehold interests in all real
property subject to the leases (the "Leases") described on the attached
Schedule 4G. The attached Schedule 4G contains a description of all the
material Leases to which Xxxxxxxx, any Subsidiary of Xxxxxxxx, Xxxxxxxx
Two or Xxxxxxxx Three is a party as a tenant (or subtenant) or landlord
with respect to any Station as of the date of this Agreement, other
than any lease pursuant to which Xxxxxxxx or a Subsidiary (as lessor)
leases space on a tower on terms which were customary when such lease
was entered into. Neither Xxxxxxxx, any of its Subsidiaries, Xxxxxxxx
Two nor Xxxxxxxx Three is in material default under any of the Leases,
and Xxxxxxxx, any Xxxxxxxx Subsidiary, Xxxxxxxx Two or Xxxxxxxx Three
is the holder of the leaseholds purported to be granted to it under the
Leases under which it is a lessee. Each of the Leases (x) is valid as
to Xxxxxxxx,
28
any Xxxxxxxx Subsidiary, Xxxxxxxx Two or Xxxxxxxx Three and, to the
knowledge of Xxxxxxxx, is valid as to any other party thereto, (y) is
in full force and effect and constitutes a legal and binding obligation
of, and is legally enforceable against, Xxxxxxxx, any Xxxxxxxx
Subsidiary, Xxxxxxxx Two or Xxxxxxxx Three and, to Xxxxxxxx'x
knowledge, each other party thereto, subject to the effect of
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, arrangement, moratorium or similar laws affecting the
rights of creditors generally and the availability of equitable
remedies, and (z) grants substantially the leasehold interest it
purports to grant, including any rights to nondisturbance and peaceful
and quiet enjoyment that may be contained therein. To Xxxxxxxx'x
knowledge, each party other than Xxxxxxxx, any Xxxxxxxx Subsidiary,
Xxxxxxxx Two or Xxxxxxxx Three is in compliance in all material
respects with the provisions of the Leases. The Owned Realty and the
real property subject to the Leases listed in the attached Schedule 4G
constitute all of the real property owned, leased or used by Xxxxxxxx,
any Xxxxxxxx Subsidiary, Xxxxxxxx Two or Xxxxxxxx Three in the business
and operations of the Stations which is material to the businesses and
operations of the Stations.
(2) COMPLIANCE. The Owned Realty and its present uses
comply in all material respects with all applicable zoning laws and
ordinances and no material exemption or waiver thereunder will expire
or be terminated by reason of the Merger. To the knowledge of Xxxxxxxx
and its Subsidiaries, there exists no notice of any material
uncorrected violations of housing, building, safety, or fire ordinances
with respect to the Owned Realty or the real property leased by
Xxxxxxxx or a Subsidiary pursuant to any Lease. Except as disclosed on
the attached Schedule 4G, the Owned Realty is currently serviced by a
community sewage system.
(3) CONDEMNATION OR DISPOSITION. Neither Xxxxxxxx, any of
its Subsidiaries, Xxxxxxxx Two nor Xxxxxxxx Three has received any
notice of, and none of them has knowledge of, any pending, threatened,
or contemplated condemnation proceeding affecting the Owned Realty or
the real property leased by Xxxxxxxx or a Subsidiary pursuant to any
Lease, or any part thereof, or of any sale or other disposition of the
Owned Realty or any portion thereof in lieu of condemnation.
(4) NON-REALTY. Taken together, Xxxxxxxx, its
Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three have good title to, or a
valid leasehold in, the tangible assets (other than the Realty) and
personal property included in the Station Assets, and all such assets
and personal property will on the Closing Date (after the repayment in
full of the Funded Indebtedness of Xxxxxxxx and its Subsidiaries and
all related interest and other obligations and the release of all
related Liens and the Mission Guarantees) be free and clear of all
Liens other than Permitted Encumbrances.
4.H CALL LETTERS, TRADEMARKS, ETC. Taken together, Xxxxxxxx,
its Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three possess (and immediately after
the Merger, will possess) adequate rights, licenses, or other authority to use
the call letters presently used by the Stations and all trademarks and trade
names relating to the Stations which are required for the operation of the
Stations or which are material to the conduct of the business of the Stations,
in each case as presently conducted by Xxxxxxxx and its Subsidiaries, and have
good title to such call letters, trademarks and
29
trade names which they purport to own, and Xxxxxxxx'x, its Subsidiaries',
Xxxxxxxx Two's and Xxxxxxxx'x Three's respective rights thereto are free and
clear of all Liens other than Permitted Encumbrances. None of Xxxxxxxx, its
Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three has received any written notice
with respect to any alleged infringement or unlawful or improper use of any
copyright, trademark, trade name, or other intangible property right owned or
alleged to be owned by others and used in connection with the Stations.
4.I INSURANCE. The attached Schedule 4I is, in all material
respects, a correct and complete summary of the material terms of each material
policy of insurance which is in effect on the date of this Agreement insuring
Xxxxxxxx and its Subsidiaries against loss or damage to any Station Assets by
fire, casualty and other hazards and risks relating to their tangible assets,
and each such policy of insurance is in full force and effect in all material
respects.
4.J CONTRACTS. The attached Schedule 4J contains a list of
each of the following to which any of Xxxxxxxx or its Subsidiaries is a party on
the date of this Agreement (other than any Contract (i) which does not require
Xxxxxxxx and its Subsidiaries to furnish consideration in an aggregate amount
for such Contract of more than $25,000, (ii) which is terminable by Xxxxxxxx or
any of its Subsidiaries without penalty upon advance notice of thirty (30) days
or less, (iii) which is a barter programming contract pursuant to which the
remaining telecasting term as of December 31, 1997 was twelve months or less, or
(iv) which is a Time Sale Contract):
(1) television network affiliation agreements;
(2) Trades which could require the furnishing of
advertising time on any Station at any time after the Closing Date;
(3) sales agency or advertising representation contracts;
(4) employment contracts;
(5) licenses or other contracts under which Xxxxxxxx or
any of its Subsidiaries is authorized to broadcast on any Station
filmed or taped programming supplied by others;
(6) leases of personal property which have a term,
including renewal options exercisable by any party thereto other than
Xxxxxxxx or any of its Subsidiaries, ending more than one year after
the date of this Agreement; and
(7) any other contract which is material to the business
and operation of the Stations.
Neither Xxxxxxxx, any of its Subsidiaries, Xxxxxxxx Two nor Xxxxxxxx Three is in
material breach of any contract or agreement described on the attached Schedule
4J, nor is there any fact or circumstance which, with the giving of notice or
the passage of time, or both, would constitute such a breach. Each material
Contract described on the attached Schedule 4J (other than any such Contract
which expires or is terminated in the ordinary course of business after the date
of this
30
Agreement) is in all material respects in full force and effect, valid and
binding and enforceable as to Xxxxxxxx, its Subsidiaries, Xxxxxxxx Two and/or
Xxxxxxxx Three, as applicable, and, to Xxxxxxxx'x knowledge, each other party
thereto (subject to the effect of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies).
4.K EMPLOYEES. The attached Schedule 4K lists all employees of
Xxxxxxxx or any of its Subsidiaries as of December 31, 1997 and their respective
current budgeted annual base salary and bonus or annualized wages as of such
date and their respective dates of hire. Except as described on the attached
Schedule 4J or the attached Schedule 4K, on the date of this Agreement (a)
Xxxxxxxx and its Subsidiaries have no written or oral contract of employment
with any such employee (other than a Contract for employment at the will of the
employer), and (b) Xxxxxxxx and its Subsidiaries are not a party to or subject
to any collective bargaining agreement with respect to any such employee or any
contract with any labor union or other labor organization with respect to the
Stations. Xxxxxxxx and its Subsidiaries are not parties to any pending labor
dispute affecting the Stations, nor, to the knowledge of Xxxxxxxx, is any such
dispute threatened, on the date of this Agreement and, on the Closing Date, no
such pending or threatened dispute will be material. With respect to employees
of and service providers to Xxxxxxxx and its Subsidiaries, Xxxxxxxx and the
Subsidiaries are and have been in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including any such laws respecting
employment discrimination, workers' compensation, family and medical leave, the
Immigration Reform and Control Act, and occupational safety and health
requirements, and have not and are not engaged in any unfair labor practice. The
persons classified by Xxxxxxxx and the Subsidiaries as independent contractors
do satisfy and have satisfied the requirements of law to be so classified, and
Xxxxxxxx and its Subsidiaries have in all material respects fully and accurately
reported their compensation on IRS Forms 1099 when required to do so.
4.L LITIGATION. Except as set forth on the attached Schedule
(1) on the date of this Agreement, Xxxxxxxx and its
Subsidiaries are not operating under or subject to or in default with
respect to any order, writ, injunction, or decree of any court or
federal, state, municipal, or other governmental department,
commission, board, agency, or instrumentality arising out of a
proceeding to which it is or was a party, and on the Closing Date, no
such item will have or reasonably be expected to result in a Material
Adverse Change; and
(2) on the date of this Agreement, there is no litigation
pending by or against, or to the knowledge of Xxxxxxxx threatened
against, Xxxxxxxx or any of its Subsidiaries which interferes with, or
could reasonably be expected to interfere with, (a) the operations of
the Stations as presently conducted or (b) the ability of Xxxxxxxx to
carry out the transactions contemplated to be carried out by it
pursuant to this Agreement, and on the Closing Date, no such pending or
threatened litigation will have or will reasonably be expected to
result in a Material Adverse Change.
There are no attachments, executions, or assignments for the benefit of
creditors or voluntary or
31
involuntary proceedings in bankruptcy initiated or contemplated by, or, to the
knowledge of Xxxxxxxx, threatened or pending against, Xxxxxxxx or any of its
Subsidiaries.
4.M COMPLIANCE WITH LAWS. Other than with respect to matters
disclosed in the attached Schedule 4E or the attached Schedule 4L, subject to
obtaining all applicable Consents: (a) Xxxxxxxx and its Subsidiaries, with
respect to the Station Assets, are in compliance in all material respects with
all applicable Legal Requirements, and (b) the present uses by Xxxxxxxx and its
Subsidiaries of the Station Assets which they own do not in any material respect
violate any such Legal Requirements.
4.N NO DEFAULTS. Except for (w) any item described on the
attached Schedule 4N, (x) the requisite approval of the FCC, (y) compliance with
the requirements of the Xxxx- Xxxxx-Xxxxxx Act, and (z) any Consent which may be
required under any Contract, on the Closing Date (after giving effect to all
Consents which have been obtained) neither the execution and delivery by
Xxxxxxxx of this Agreement, nor the consummation by Xxxxxxxx of the Merger or
the other transactions contemplated by this Agreement to be consummated by
Xxxxxxxx, requires any Consent under, will constitute, or, with the giving of
notice or the passage of time or both, would constitute, a material violation of
or would conflict in any material respect with or result in any material breach
of or any material default under, or will result in the creation of any Lien
(other than any Permitted Encumbrance or any Lien in favor of one or more of the
Acquiring Parties) under, any of the terms, conditions, or provisions of any
Legal Requirement to which Xxxxxxxx or any of its Subsidiaries is subject, or of
the certificate of incorporation or by-laws of Xxxxxxxx or any of its
Subsidiaries. No Lease for the main studio site of any Station, no lease
pursuant to which Xxxxxxxx, any of its Subsidiaries, Xxxxxxxx Two or Xxxxxxxx
Three leases (as lessee) space on a transmission tower for the location of any
transmission equipment of any Station, and neither Existing LMA, contains any
provision which expressly requires a Consent by reason of a merger or change of
control or ownership of Xxxxxxxx.
4.O SUBSIDIARIES.
(1) SUBSIDIARIES' STOCK. All of the issued and
outstanding capital stock of each of the corporations named on the
attached Schedule 4O (other than Xxxxxxxx, and other than Xxxxxxxx Two
and Xxxxxxxx Three, as of the Closing Date) is owned of record
(directly or indirectly through one or more of its Subsidiaries) by
Xxxxxxxx free and clear of all Liens other than Permitted Encumbrances.
All such capital stock has been validly issued and is fully paid and
nonassessable, there is not outstanding any right to acquire any
capital stock or other equity securities of any Subsidiary of Xxxxxxxx
(by exercise of any right or by conversion, exchange or otherwise), and
such capital stock is not subject to any option, warrant, voting trust,
outstanding proxy, registration rights agreement or other agreement
regarding voting rights, other than any Permitted Encumbrance.
(2) SUBSIDIARIES' STATUS. Each of Xxxxxxxx'x Subsidiaries
named on the attached Schedule 4O is a corporation duly organized,
validly existing and in good standing (or having comparable active
status) under the laws of the jurisdiction indicated on such Schedule
under the heading "Organization" and has the power and authority to
carry on the business conducted by it and own the properties owned by
it under the laws of such
32
jurisdiction and each other jurisdiction in which it is required to
have such authority. A true and correct copy of the certificate or
articles of incorporation and by-laws of each of such Subsidiary has
been provided to the Merger Sub. On the Closing Date, neither Xxxxxxxx
nor any other corporation named on the attached Schedule 4O will own
any shares of stock or other equity or debt securities of or any
interest in any Person other than another Person named on the attached
Schedule 4O, Xxxxxxxx Two or Xxxxxxxx Three.
4.P TAX MATTERS.
(1) TAX RETURNS. Except as set forth on the attached
Schedule 4P or as has not caused and is not reasonably expected to
cause a Material Adverse Change: (a) all federal, state, local and
foreign tax returns and tax reports required to be filed by Xxxxxxxx or
any of its Subsidiaries have been timely filed (taking into account any
extensions of which Xxxxxxxx or any of its Subsidiaries may have
availed itself) with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be
filed, and all of the foregoing (including any summary balance sheets
included therein) are true, correct, and complete; (b) all federal,
state, local and foreign income, profits, franchise, sales, use,
occupation, property, excise, and other taxes (including interest and
penalties) due and payable by Xxxxxxxx and its Subsidiaries have been
fully paid; (c) no issues have been raised in writing (or, to
Xxxxxxxx'x knowledge, orally) and are currently pending by the Internal
Revenue Service or any other taxing authority in connection with any of
such returns and reports; (d) no waivers of statutes of limitations as
to tax matters have been given or requested with respect to Xxxxxxxx
and its Subsidiaries; (e) the federal, state, local, and foreign income
tax and franchise tax returns of or with respect to Xxxxxxxx and its
Subsidiaries have not been examined by the Internal Revenue Service or
by appropriate state, provincial, or departmental tax authorities; (f)
no issue has been raised in writing (or, to Xxxxxxxx'x knowledge,
orally) with Xxxxxxxx or any of its Subsidiaries by any taxing
authority which can reasonably be expected to result in a deficiency
for any fiscal year or all deficiencies asserted or assessments
(including interest and penalties) made as a result of any examinations
have been fully paid, and no proposed (but unassessed) additional
taxes, interest, or penalties have been asserted; (g) neither Xxxxxxxx
nor any of its Subsidiaries is (or has ever been) a party to any Tax
sharing agreement with any Person who was not a member of an affiliated
group of corporations (as that term is defined in Section 1504(a) of
the Tax Code, or any analogous combined, consolidated or unitary group
defined under state, local or foreign Tax law) consisting in whole or
in part of the parties to such agreement, and neither Xxxxxxxx nor any
of its Subsidiaries has any liability for the Taxes of any other Person
(other than Xxxxxxxx and its Subsidiaries) pursuant to Reg. Section
1.1502-6 under the Tax Code (or any similar provision of state, local
or foreign Tax law) or as a transferee or successor or by contract; and
(h) Xxxxxxxx has provided Xxxxxxxx with copies of all federal and state
income or franchise tax returns that have been filed with respect to
Xxxxxxxx or any of its Subsidiaries since January 4, 1996.
(2) TAX ELECTIONS AND SPECIAL TAX STATUS. Except as set
forth on the attached Schedule 4P: (a) neither Xxxxxxxx nor any of its
Subsidiaries is or has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Tax Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Tax Code, and
33
Xxxxxxxx is not required to withhold tax in respect of the Merger
Consideration for the Xxxxxxxx Share Equivalents by reason of Section
1445 of the Tax Code; (b) neither Xxxxxxxx nor any of its Subsidiaries
has made any election or filed any consent pursuant to Section 341(f)
of the Tax Code relating to collapsible corporations; (c) neither
Xxxxxxxx nor any of its Subsidiaries has entered into any compensatory
agreements with respect to the performance of services which payment
thereunder would result in a nondeductible expense to Xxxxxxxx or any
of its Subsidiaries pursuant to Section 280G of the Tax Code or an
excise tax to the recipient of such payment pursuant to Section 4999 of
the Tax Code; and (d) Xxxxxxxx has not agreed to make, nor is it
required to make, any adjustment under Section 481(a) of the Tax Code
by reason of a change in accounting method or otherwise.
4.Q CAPITAL STOCK. As of the date of this Agreement, Xxxxxxxx
has authorized capital stock consisting of 90,000,000 shares of capital stock,
of which (a) 25,000,000 shares are designated Class A Common Stock, par value
$0.001 per share, of which no shares are issued and outstanding, (b) 25,000,000
shares are designated Class B-1 Common Stock, par value $0.001 per share, of
which 1,201,577 shares are issued and outstanding, (c) 25,000,000 shares are
designated Class B-2 Common Stock, par value $0.001 per share, of which
6,158,211 shares are issued and outstanding, (d) 5,000,000 shares are designated
Class C Common Stock, par value $0.001 per share, of which 1,021,872 shares are
issued and outstanding, and (e) 10,000,000 shares are designated Preferred
Stock, $0.001 par value per share, of which 1,150,000 shares are issued and
outstanding. All of the issued and outstanding capital stock of Xxxxxxxx is duly
authorized and validly issued, fully paid and nonassessable, and there are no
preemptive rights in respect thereof in favor of any Person (other than any
Person which holds Xxxxxxxx Share Equivalents). Except for warrants which are
presently exercisable for 2,406,307 shares of Class B-1 Common Stock, there are
no outstanding options, warrants or other rights to subscribe for or purchase
from Xxxxxxxx, no contracts or commitments providing for the issuance of, or the
granting of rights to acquire, and no securities convertible into or
exchangeable for, any shares of capital stock or any other ownership interest of
Xxxxxxxx.
4.R BOOKS AND RECORDS. The minute books of each of Xxxxxxxx
and its Subsidiaries contain records which are complete and accurate in all
material respects of all meetings and other corporate actions of its
stockholders, its board of directors and all committees, if any, appointed by
its board of directors. The books of accounts, ledgers, order books, records and
documents of each of Xxxxxxxx and its Subsidiaries, in all material respects,
accurately and completely reflect information relating to its business, the
nature, acquisitions, maintenance and location of its assets and the
transactions giving rise to its obligations and accounts receivable.
4.S ABSENCE OF SIGNIFICANT UNDISCLOSED LIABILITIES. Neither
Xxxxxxxx nor its Subsidiaries has any debt, liability or obligation of any kind,
whether accrued, absolute, contingent or otherwise, including any liability or
obligation on account of Taxes or any governmental charges or penalty, interest
or fines, which would be required to be reflected in Xxxxxxxx'x consolidated
balance sheet prepared in accordance with GAAP and which would have, or which in
the case of contingent or inchoate liabilities, would have if accrued or
absolute, a material adverse effect on the financial condition of Xxxxxxxx and
its Subsidiaries, other than any liability or obligation (a) reflected in any
Financial Statement, (b) identified with particularity in any attached Schedule
or arising since September 30, 1997 under any Contract which is described, or
which is not required to be described,
34
on any attached Schedule, (c) incurred in the ordinary course of business since
September 30, 1997, or (d) incurred in connection with the transactions
contemplated by this Agreement. Each of Xxxxxxxx and Xxxxxxxx Broadcasting has
filed with the Securities and Exchange Commission all material documents
required by the Securities Act or the Securities Exchange Act to be filed by it
since January 4, 1996 (the "Xxxxxxxx SEC Reports"). Neither Xxxxxxxx nor
Xxxxxxxx Broadcasting has any liability by reason of any Xxxxxxxx SEC Report not
complying in all material respects at the time of the filing thereof with the
requirements of the Securities Act, and the rules and regulations thereunder, or
the Securities Exchange Act, and the rules and regulations thereunder, as the
case may be, or containing any untrue statement of a material fact or omitting
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.T EMPLOYEE BENEFIT PLANS. Except as set forth on the
attached Schedule 4T, neither Xxxxxxxx nor its Subsidiaries maintains or is a
party to or makes contributions to any of the following: (a) any "employee
pension benefit plan," (as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA")); or (b) any "employee welfare
benefit plan" (as such term is defined in Section 3(a) of ERISA), whether
written or oral. All employee benefit plans and other Benefit Arrangements now
or formerly maintained by Xxxxxxxx or its Subsidiaries or to which Xxxxxxxx or
its Subsidiaries is obligated to contribute, are, and have in the past been, in
all material respects maintained, funded and administered in compliance with
ERISA, and other applicable law. No such employee benefit plan holds any
securities issued by Xxxxxxxx. Neither Xxxxxxxx nor any of its ERISA Affiliates
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 employee pension benefit plan subject
to Section 302 of ERISA or Section 412 of the Tax Code or Title IV of ERISA
(including any multiemployer plan). Excluding routine claims for benefits, there
are no pending claims or lawsuits by, against, or relating to any employee
benefit plans or other Benefit Arrangements that would, if successful, result in
liability of Xxxxxxxx or any of its Subsidiaries. Neither Xxxxxxxx nor any
Subsidiary has maintained or contributed to any plan intended to qualify under
Section 401(a) of the Tax Code since January 4, 1996, other than the Xxxxxxxx
Broadcasting Company 401(k) Plan (the "401(k) Plan"). The 401(k) Plan has always
qualified in all material respects in form and operation under Section 401(a) of
the Tax Code and has a currently applicable determination letter from the
Internal Revenue Service, and its trust has always been exempt under Section 501
of the Tax Code, and nothing has occurred with respect to such plan and trust
that could cause the loss of such qualification or exemption or the imposition
of any liability, lien, penalty, or tax under ERISA or the Tax Code. The
employee benefit plans and Benefit Arrangements maintained by Xxxxxxxx are not
presently under audit or examination (and have not received notice of potential
audit or examination) by any governmental authority, and no matters are pending
with respect to the 401(k) Plan under any governmental compliance programs. No
employee benefit plan or Benefit Arrangement contains any provision or is
subject to any law that would give rise to any vesting of benefits, severance,
termination, or other payments or liabilities as a result of the transactions
this Agreement contemplates, and Xxxxxxxx has not declared or paid any bonus or
other incentive compensation or established any severance plan, program, or
arrangement in contemplation of the transactions contemplated by this Agreement,
in each case other than those which have been paid or which will be included as
part of the Current Liabilities. Xxxxxxxx has made or has recorded proper
accruals for all required contributions to its employee benefit plans as of the
last day of each
35
plan's most recent fiscal year, and all benefits accrued under any unfunded
Xxxxxxxx employee benefit plan or Benefit Arrangement will have been paid,
accrued, or otherwise adequately reserved in accordance with GAAP. All group
health plans of Xxxxxxxx and its ERISA Affiliates have been operated in material
compliance with the requirements of Section 4980B (and its predecessor) and 5000
of the Code. No employee or former employee of Xxxxxxxx or its Subsidiaries, and
no beneficiary of any such employee or former employee, is, by reason of such
employee's or former employee's employment by Xxxxxxxx or such ERISA Affiliate,
entitled to receive any benefits, including death or medical benefits (whether
or not insured) beyond retirement or other termination of employment as
described in Statement of Financial Accounting Standards No. 106, other than
continuation coverage mandated under Section 4980B of the Tax Code or comparable
state law.
4.U BROKERS. There is no broker or finder or other Person who
would have any valid claim against Xxxxxxxx, any Subsidiary thereof, or any
Acquiring Party for a commission or brokerage fee in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or understanding of or action taken by Xxxxxxxx or any of its Affiliates.
4.V DISCLOSURE. To the knowledge of Xxxxxxxx, no statement of
a material fact set forth in this Article IV contains any statement of any
material fact which is untrue in any material respect or omits to state a
material fact which is necessary in order to make the statements set forth in
this Article IV not misleading in any material respect.
4.W ENVIRONMENTAL. All of the operations of Xxxxxxxx and its
Subsidiaries at or from any Realty comply in all material respects with
applicable Environmental Laws. Neither Xxxxxxxx nor its Subsidiaries has engaged
in or permitted any operations or activities upon any of the Realty for the
purpose of or involving the treatment, storage, use, generation, release,
discharge, emission, or disposal of any Hazardous Materials at the Realty,
except in substantial compliance with applicable Environmental Laws. To the
knowledge of Xxxxxxxx, there are no conditions existing at the Realty that
require, or which with the giving of notice or the passage of time or both would
likely require remedial or corrective action, removal or closure pursuant to the
Environmental Laws. To the knowledge of Xxxxxxxx, Xxxxxxxx and its Subsidiaries
have all the material permits, authorizations, licenses, consents and approvals
necessary for the current operation of the Stations and for the operations on,
in or at the Realty which are required under applicable Environmental Laws and
are in substantial compliance with the terms and conditions of all such permits,
authorizations, licenses, consents and approvals.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
XXXXXXXX AND THE MERGER SUB
Xxxxxxxx and the Merger Sub, jointly and severally, represent
and warrant as follows:
5.A INCORPORATION. Xxxxxxxx is a corporation duly organized,
validly existing, and in good standing (or has comparable active status) under
the laws of the State of Maryland, and Xxxxxxxx has the corporate power and
authority to enter into and consummate the transactions
36
contemplated to be consummated by it pursuant to this Agreement. From and after
the time it is formed, the Merger Sub will be a corporation duly organized,
validly existing, and in good standing (or has comparable active status) under
the laws of the State of Delaware and will have the corporate power and
authority to enter into and consummate the transactions contemplated to be
consummated by it pursuant to this Agreement.
5.B CORPORATE ACTION. Each action necessary to be taken by or
on the part of either Xxxxxxxx or the Merger Sub in connection with the
execution and delivery of this Agreement and the consummation of transactions
contemplated hereby to be consummated by it and necessary to make the same
effective duly and validly taken by, and be effective at, the time by which such
action is required to be taken. This Agreement has been duly and validly
authorized, executed, and delivered by each of Xxxxxxxx and the Merger Sub and
constitutes a valid and binding agreement, enforceable against each of them in
accordance with and subject to its terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement,
moratorium or similar laws affecting the rights of creditors generally and the
availability of equitable remedies.
5.C NO DEFAULTS. Except as set forth on the attached Schedule
4H, the requisite approval of the FCC and compliance with the requirements of
the Xxxx-Xxxxx-Xxxxxx Act, on the Closing Date (after giving effect to all
approvals and consents which have been obtained), neither the execution and
delivery by Xxxxxxxx or the Merger Sub of this Agreement, nor the consummation
by Xxxxxxxx or the Merger Sub of the Merger and the other transactions
contemplated by this Agreement to be consummated by it, will constitute, or,
with the giving of notice or the passage of time or both, would constitute, a
material violation of or would conflict in any material respect with or result
in any material breach of or any material default under, any of the terms,
conditions, or provisions of any Legal Requirement to which Xxxxxxxx or the
Merger Sub is subject, or of Xxxxxxxx'x or the Merger Sub's certificate of
incorporation or by-laws or similar organizational documents, or of any material
contract, agreement, or instrument to which Xxxxxxxx or the Merger Sub is a
party or by which Xxxxxxxx or the Merger Sub is bound.
5.D BROKERS. There is no broker or finder or other Person who
would have any valid claim against Xxxxxxxx (except after the Effective Time) or
any Old Xxxxxxxx Stockholder for a commission or brokerage fee in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement or understanding of or action taken by Xxxxxxxx, the Merger Sub or any
Affiliate of any of them.
5.E LITIGATION. There is no litigation pending by or against,
or to Xxxxxxxx'x or the Merger Sub's knowledge (after due inquiry) threatened
against, Xxxxxxxx or the Merger Sub related to or affecting Xxxxxxxx'x or the
Merger Sub's ability fully to carry out the transactions contemplated to be
consummated by them pursuant to this Agreement. There are no attachments,
executions, or assignments for the benefit of creditors or voluntary or
involuntary proceedings in bankruptcy contemplated by, or, to Xxxxxxxx'x or the
Merger Sub's knowledge, threatened or pending against, Xxxxxxxx or the Merger
Sub.
5.F XXXXXXXX COMMON STOCK. The Xxxxxxxx Common Stock, if any,
issued as part of the Merger Consideration will be duly authorized, validly
issued, fully-paid and nonassessable
37
and will, upon issuance and registration under the Securities Act, be tradeable
on the NASDAQ National Market without further registration under the Securities
Act or any other federal or state securities law. Xxxxxxxx has filed with the
Securities and Exchange Commission all material documents required by the
Securities Act or the Securities Exchange Act to be filed by it since January 1,
1996 (the "Xxxxxxxx SEC Reports"). As of their respective filing dates, the
Xxxxxxxx SEC Reports complied in all material respects with the requirements of
the Securities Act, and the rules and regulations thereunder, or the Securities
Exchange Act, and the rules and regulations thereunder, as the case may be, and
at the time filed with the SEC none of the SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Parties
acknowledge that no representation or warranty will be deemed to be made
pursuant to this Section 5.F if no Xxxxxxxx Common Stock is issued as part of
the Merger Consideration.
5.G DISCLOSURE. To Xxxxxxxx'x and the Merger Sub's knowledge,
no statement of a material fact set forth in this Article V contains a statement
of any material fact which is untrue in any material respect or omits to state a
material fact which is necessary in order to make the statements set forth in
this Article V not misleading in any material respect.
ARTICLE VI
APPLICATIONS FOR REQUIRED FCC CONSENT
6.A FOR SPIN-OFFS. On or prior to Xxxxx 0, 0000, Xxxxxxxx
will, and will cause its Subsidiaries to, complete the portions of the
applications for the Required FCC Consents and will file such applications with
the FCC. Xxxxxxxx will, and will cause its Subsidiaries to, diligently take or
cooperate in the taking of all steps which are reasonably within its ability to
take and which are necessary, proper, or desirable to expedite the prosecution
of such applications and to cause the Required FCC Consents expeditiously to be
Granted and expeditiously to become Final Orders, and will refrain from making
any filing or announcement or taking (or causing or assisting any other Person
to take) any other action which reasonably could be expected to delay in any
respect such Required FCC Consents being Granted or becoming Final Orders
without Xxxxxxxx'x prior written consent. Xxxxxxxx will promptly provide
Xxxxxxxx with a copy of any pleading, order, or other document served on
Xxxxxxxx or any of its Subsidiaries relating to such applications (other than
any of the same which is addressed to or states that it is to be served upon or
delivered to Xxxxxxxx or its communications counsel).
ARTICLE VII
COVENANTS OF XXXXXXXX
7.A MAINTENANCE OF BUSINESS UNTIL THE CLOSING.
(1) OPERATION IN ORDINARY COURSE . Until the Closing,
Xxxxxxxx will,
38
and will cause its Subsidiaries to, (a) with respect to the Station
Assets, continue to carry on the business and operations of the
Stations, keep the books of account, records, and files of Xxxxxxxx and
its Subsidiaries, realize upon the accounts receivable of Xxxxxxxx and
its Subsidiaries, and satisfy their accounts payable, all of which will
be carried on by Xxxxxxxx and its Subsidiaries in the ordinary and
usual course, in a manner which is consistent with their respective
past practices, (b) without limiting the generality of the foregoing,
not utilize Xxxxxxxx'x and its Subsidiaries' rights under any Program
Contract in a manner which will render exhibitions of programming
thereunder unavailable to Post- Merger Xxxxxxxx and its Subsidiaries
after the Adjustment Time, except in accordance with their past
practices, (c) promptly execute and timely file any applications
reasonably required for renewal of the FCC Authorizations, (d) timely
file (taking into account any extensions of which Xxxxxxxx or any of
its Subsidiaries may avail itself) true, correct and complete federal,
state, local and foreign tax returns and tax reports required to be
filed by Xxxxxxxx or any of its Subsidiaries, (e) fully pay all
federal, state, local and foreign income, profits, franchise, sales,
use, occupation, property, excise and other taxes (including interest
and penalties) due and payable by Xxxxxxxx and its Subsidiaries, and
(f) sell advertising time on the Stations only in the ordinary and
usual course in a manner consistent with their respective past
practices, and (g) to the extent necessary to the conduct of its
business, use reasonable efforts to (i) perform its obligations under
all Station Contracts to which it is a party, (ii) preserve the Station
Assets held by it, and (iii) maintain in full force and effect the FCC
Authorizations.
(2) MAINTENANCE OF INSURANCE. Xxxxxxxx will, and will
cause its Subsidiaries to, maintain in full force and effect through
the Closing property damage insurance with respect to the Station
Assets which is not materially less comprehensive, and in amounts which
are not materially less than, the insurance coverage described on the
attached Schedule 4I, including timely paying the premiums associated
therewith.
(3) ADDITIONAL PROGRAM CONTRACTS. Until the Closing,
Xxxxxxxx may, and may cause or permit its Subsidiaries to, enter into
any Program Contract, or effect any such amendment, termination or
modification, which is material only with the prior consent of
Xxxxxxxx, which consent may be withheld in Xxxxxxxx'x sole discretion
and will be deemed given if not denied by written notice by Xxxxxxxx to
Xxxxxxxx within five (5) Business Days after it is requested in
writing; provided that such notice and consent will not be required as
to the entry into any such Program Contracts so long as (x) the
aggregate amount of the cash payment obligations under such Program
Contracts as to which such consent is not given and not deemed given
does not exceed $50,000 for any Station, and (y) if Xxxxxxxx or any of
its Subsidiaries is required to provide advertising time in
consideration for the use of any programming covered by such Program
Contract, then the term during which such advertising time may be
required to be provided commences prior to May 31, 1999 and does not
exceed one (1) year in duration.
(4) OTHER CONTRACTS. From the date of this Agreement to
and including the Closing, Xxxxxxxx will be entitled to, and will be
entitled to cause or permit its Subsidiaries to, renew or extend the
term of any Time Sale Contract or any other Contract which, by its
terms, has expired at the time of such renewal or extension or which
would expire prior to the sixtieth day after the effective date of such
renewal or extension, and, in
39
connection therewith, to agree to increase the amounts payable or other
obligations thereunder during any such renewal or extended term in
accordance with Xxxxxxxx'x and its Subsidiaries' past practice in the
operation of the Stations, and to enter into any new Contract (other
than a Program Contract or except as prohibited by Section 7.A(5)) in
the ordinary course of its business or which is reasonably required in
order to enable it to comply with its obligations under this Agreement
(5) RESTRICTIONS. Prior to the Closing, except (i) as
otherwise permitted by Section 7.A(3) or 7.A(4), (ii) as required as
part of a Spin-Off, (iii) the transfer of the Headquarters Assets to
ABRY Partners or an Affiliate thereof for value and/or to one or more
of the Corporate Personnel as compensation, or (iv) as disclosed on the
attached Schedule 4F, Xxxxxxxx will not, and will not cause or permit
any of its Subsidiaries to, without the prior written consent of
Xxxxxxxx (to the extent the following restrictions are permitted by the
FCC and all other applicable Legal Requirements):
(a) other than in the ordinary course of
business, sell, lease (as lessor), transfer, or agree to sell,
lease (as lessor), or transfer, or agree to sell, lease (as
lessor) or transfer, any Station Assets
(x) which are required for the
operation of any Station,
or
(y) which have individually or in the
aggregate (together with all other Station Assets
transferred by Xxxxxxxx or any of its Subsidiaries
since the date of this Agreement other than in the
ordinary course of business and not replaced with
functionally equivalent or superior assets of
substantially equal or greater value) a replacement
cost in excess of $130,000 (it being understood that
sales, leases and/or transfers of Station Assets
described in this clause (y) and having an aggregate
replacement cost of $130,000 or less ("Designated
Sales") will not be prohibited by this Agreement)
without replacement thereof with a functionally equivalent or
superior asset of substantially equal or greater value;
(b) enter into any contract of employment
(other than (x) any contract for employment at the will of the
employer, (y) any contract for employment entered into in the
ordinary course of business and providing for consideration
payable upon or after termination which is consistent with
that payable under employment contracts for present or former
employees of Xxxxxxxx and its Subsidiaries having similar
seniority or responsibilities, or (z) any contract or Benefit
Arrangement not described in clause (y) with respect to the
employment of any Person whose employment will be terminated
at the time of the Closing, it being understood that the costs
of severance and other payments to be made under any contract
or Benefit Arrangement described in this clause (z) in
connection with or after such termination will be reflected in
the Current Liabilities) or collective bargaining agreement
which will be binding on Post-Merger Xxxxxxxx after the
40
Merger, or permit any increases in the compensation of the
employees of Xxxxxxxx or any of its Subsidiaries with respect
to the Stations (but excluding the Corporate Personnel), in
each case except to the extent consistent with Xxxxxxxx'x and
its Subsidiaries' past practices; provided that Xxxxxxxx and
its Subsidiaries may pay bonuses to any of their employees,
grant raises in salary and wages which do not represent, in
the aggregate, an increase in the employees' aggregate
annualized base compensation of more than 4% of the employees'
present annualized base compensation, and enter into any
employment agreement with on-air talent under which the annual
salary payable does not exceed $50,000 during any twelve-month
period;
(c) enter into any new Trade arrangement
which will involves the furnishing of advertising time in
exchange for services or merchandise after the Adjustment Time
on any Station, other than any Trade arrangement which (i)
does not involve goods and services having an aggregate fair
value in excess of $25,000, (ii) together with all other Trade
arrangements for such Station entered into after the date of
this Agreement by Xxxxxxxx and its Subsidiaries does not
involve goods and services having an aggregate fair value in
excess of $50,000, and (iii) does not have a duration in
excess of twelve months (it being understood that Xxxxxxxx and
its Subsidiaries may perform their obligations and exercise
their rights under such Trade arrangements and all Trade
arrangements in effect on the date of this Agreement);
(d) apply to the FCC for any construction
permit that would materially restrict any Station's present
operations or make any material adverse change in the
buildings or leasehold improvements which constitute Station
Assets;
(e) merge or consolidate, or agree to merge
or consolidate, with or into any other Person, other than
Xxxxxxxx or a Subsidiary of Xxxxxxxx;
(f) enter into any Contract with any of its
Affiliates (other than Xxxxxxxx or any of its Subsidiaries)
which will not be performed in its entirety or by its terms
terminate at or prior to the time of the Closing;
(g) cause any of its assets or properties to
become subject to any Lien, other than any Permitted
Encumbrance;
(h) commit any material breach of any
Contract which is described on the attached Schedule 4J or any
material Contract entered into by it after the date of this
Agreement; or
(i) change any material tax election, or
make any material change in accounting practice or policy, if
such change could reasonably be expected to have an adverse
effect on Post-Merger Xxxxxxxx, except to the extent required
by any Legal Requirement, any Contract or GAAP.
(6) EFFORTS TO PURSUE CERTAIN REMEDIES. Without
limiting the
41
foregoing, prior to the Closing, Xxxxxxxx will (and will cause its
Subsidiaries to), use reasonable efforts to assert and prosecute any
claims, and resolve any unresolved claims, for indemnity or other
payment which they may have pursuant to the Act III Purchase Agreement
and, upon request, will keep Xxxxxxxx reasonably informed of the status
of any such claim.
7.B ORGANIZATION/GOODWILL. Prior to the Closing, Xxxxxxxx
will, and will cause its Subsidiaries to, use reasonable efforts to preserve the
business organization of the Stations and preserve the goodwill of the Stations'
suppliers, customers, and others having business relations with Xxxxxxxx and its
Subsidiaries. This Section 7.B will not apply to the Corporate Personnel or any
Non-Continuing Station Manager, with respect to continued service by them after
the Closing (it being understood that the Corporate Personnel intend to resign
their respective positions with Xxxxxxxx and its Subsidiaries effective as of
the Effective Time).
7.C REPORTS; ACCESS TO FACILITIES, FILES, AND RECORDS.
(1) INTERIM REPORTS. On or prior to March 20, 1998,
Xxxxxxxx will provide to Xxxxxxxx copies of the audited consolidated
balance sheet of Xxxxxxxx and its Subsidiaries as of December 31, 1997
and the related audited statements of income and cash flows for the
twelve-month period then ended (the "12/31/97 Financial Statements)".
In addition, prior to the Closing, Xxxxxxxx will provide to Xxxxxxxx
(x) within twenty (20) days after the end of each calendar month, (i)
an income statement for such month, substantially in the form in which
Xxxxxxxx and its Subsidiaries have prepared such statements for
internal purposes prior to the date of this Agreement, and (ii) in the
case of the months of March, April, May, June, July and August 1998, a
report setting forth in reasonable detail Xxxxxxxx'x good faith
determination of the Trailing Cash Flow and the Gross Revenues, each
determined as if the last day of the applicable month were the
Measurement Date (the "Cash Flow Report" for such month), and (z) on or
prior to the Wednesday of each week, a pacing report for the prior
week, substantially in the form furnished to Xxxxxxxx by Xxxxxxxx prior
to the date of this Agreement. The statements and reports described in
the preceding sentence will be prepared in good faith consistent with
past practices but will be furnished to the Acquiring Parties without
representation or warranty as to their contents or otherwise.
(2) ACCESS GENERALLY. From time to time at the request of
any Acquiring Party, Xxxxxxxx will give or cause to be given to the
officers, employees, accountants, counsel, and representatives of each
Acquiring Party
(a) access (in the presence of any
representative designated by Xxxxxxxx, at Xxxxxxxx'x option),
upon reasonable prior notice, during normal business hours, to
all facilities, property, accounts, books, deeds, title
papers, insurance policies, licenses, agreements, contracts,
commitments, records, equipment, machinery, fixtures,
furniture, vehicles, accounts payable and receivable, and
inventories of Xxxxxxxx and its Subsidiaries (but, in any
event, not personnel, unless Xxxxxxxx otherwise consents)
related to the Stations, including for purposes of permitting
the Acquiring Parties to perform "Phase One" (and, after
consulting with Xxxxxxxx as to the scope thereof, "Phase Two")
environmental surveys with respect
42
to the Station Assets,
(b) Xxxxxxxx will use its commercially
reasonable efforts to obtain the consent of its auditors to
permit inclusion of the Financial Statements in applicable
securities filings of Xxxxxxxx and, if Xxxxxxxx requests, it
shall have the right to have the access provided by Section
7.C(2)(a) to conduct an audit of each Station's financial
information, and, subject to the foregoing, Xxxxxxxx shall
cooperate with Xxxxxxxx'x reasonable requests in connection
with such audit, including giving all reasonable consents in
connection therewith; and
(c) all such other information in Xxxxxxxx'x
and its Subsidiaries' possession concerning the affairs of the
Stations as such Acquiring Party may reasonably request,
in each case at the Acquiring Parties' expense; provided that the
foregoing does not disrupt or interfere with the business and
operations of Xxxxxxxx, its Subsidiaries or any Station in any material
respect ("materiality," for purposes of this proviso, being determined
by reference to Xxxxxxxx, each of its Subsidiaries and each Station
individually, and not taken as a whole).
7.D XXXX-XXXXX-XXXXXX MATTERS. As soon as practicable, but in
any event not later than March 20, 1998, Xxxxxxxx will complete all documents
required to be filed with the Federal Trade Commission (the "FTC") and the
United States Department of Justice (the "DOJ") with respect to itself and/or
its Affiliate(s) and concerning the Merger in order to comply with the
Xxxx-Xxxxx-Xxxxxx Act and together with Xxxxxxxx and/or the appropriate
Affiliate(s) of Xxxxxxxx who are required to join in such filings, will file the
same with the FTC and the DOJ. Xxxxxxxx will reimburse Xxxxxxxx for one-half of
the filing fees associated with all such filings. Xxxxxxxx will promptly furnish
all materials thereafter required by the FTC, the DOJ or any other governmental
entity having jurisdiction over such filings, and will take all reasonable
actions and will file and use reasonable efforts to have declared effective or
approved all documents and notifications with any such governmental entity, as
may be required under the Xxxx-Xxxxx-Xxxxxx Act or other federal antitrust laws
for the consummation of the Merger.
7.E CONSENTS. Except as provided in Sections 6.A and 7.D, it
is agreed that (1) as between Xxxxxxxx and the Acquiring Parties, it will be the
sole responsibility of the Acquiring Parties to timely obtain all Acquiring
Party Consents, including with respect to the Stations' network affiliations and
Program Contracts and with respect to the Xxxxxxxx Indentures, (2) so long as
Xxxxxxxx complies with its obligations pursuant to the following sentence and
Sections 6.A and 7.D, Xxxxxxxx, the Old Xxxxxxxx Stockholders and the
Stockholder Representative will not be liable to any Person for any failure to
obtain or other absence of any effective Acquiring Party Consent, and (3) except
as provided in Sections 10.C and 10.D, the absence of any effective Consent will
not excuse any Acquiring Party from consummating the Merger. Xxxxxxxx will send
notices requesting all Consents required under Program Contracts, and will use
reasonable efforts (without being required to make any payment not specifically
required by the terms of any licenses, leases, and other contracts), including
executing any related agreement or undertaking which does not take effect until
the Effective Time, to obtain the Xxxxxxxx Consents and to assist the Acquiring
Parties (at the
43
Acquiring Parties' request and expense) to (a) timely obtain prior all Acquiring
Party Consents or, in the absence of any Acquiring Party Consent (where
applicable), one or more replacement agreements, and (b) cause each Consent or
replacement agreement to become effective as of the time of the Xxxxxxxx Two
Spin-Off, the time of Xxxxxxxx Three Spin-Off or the Effective Time as
applicable.
7.F NOTICE OF PROCEEDINGS. Prior to the Closing, Xxxxxxxx will
promptly notify Xxxxxxxx in writing upon becoming aware of any order or decree
or any complaint praying for an order or decree restraining or enjoining the
consummation of either Spin-Off, the Merger or any other transaction
contemplated by this Agreement, or upon receiving any notice from any
governmental department, court, agency, or commission of its intention to
institute an investigation into or institute a suit or proceeding to restrain or
enjoin the consummation of either Spin-Off, the Merger or any such other
transaction, or to nullify or render ineffective this Agreement, either
Spin-Off, the Merger or any such other transaction if consummated.
7.G CONFIDENTIAL INFORMATION. If for any reason the
transactions contemplated in this Agreement are not consummated, Xxxxxxxx will
not use or disclose to any Person (except to its agents, representatives and
advisors, to its lenders and security holders and their respective agents,
representatives and advisors, or as may be required by any Legal Requirement)
any confidential information received from any Acquiring Party or any of their
respective agents, representatives and advisors (each a "disclosing party" for
purposes of this Section 7.G) in the course of investigating, negotiating, and
completing the transactions contemplated by this Agreement. Nothing will be
deemed to be confidential information for purposes of this Section 7.G that: (a)
is or was known to any Xxxxxxxx-Related Entity at the time of its initial
disclosure by a disclosing party to any Xxxxxxxx-Related Entity; (b) has become
or becomes publicly known or available other than through disclosure by any
Xxxxxxxx-Related Entity; (c) is or was rightfully received by any
Xxxxxxxx-Related Entity from any Person unrelated to any Xxxxxxxx-Related Entity
(other than any Person engaged by any Xxxxxxxx-Related Entity in connection with
the transactions contemplated by this Agreement); or (d) is or was independently
developed by any Xxxxxxxx- Related Entity.
7.H EFFORTS TO CONSUMMATE. Subject to the provisions of
Article IX and Section 12.A, Xxxxxxxx will use reasonable efforts to fulfill and
perform all conditions and obligations on its part to be fulfilled and performed
under this Agreement and to cause the conditions set forth in Articles IX and X
to be fulfilled and cause the Spin-Offs, the Merger and the other transactions
contemplated by this Agreement in connection with the Merger to be fully carried
out. Without limiting the foregoing, Xxxxxxxx will use, and will cause its
Subsidiaries to use, reasonable efforts to consummate the Merger in a manner to
avoid the increase in the Cash Flow Multiplier caused by any delay in the
Closing and the increase in the element of the Adjustment Amount described in
Section 3.D(1)(b). In addition, promptly after Xxxxxxxx becomes aware prior to
the Closing of a breach of any fact or circumstance which constitutes or would
constitute a breach of any other Party's representation or warranty set forth in
this Agreement, Xxxxxxxx will give such Party notice thereof so that such Party
may attempt to cure the same.
7.I NOTICE OF CERTAIN DEVELOPMENTS. Xxxxxxxx will give prompt
written notice to Xxxxxxxx if, prior to the Closing: (1) Xxxxxxxx or any of its
Subsidiaries receives a National Labor Relations Board union election petition
relating to employees of any Station, (2) Xxxxxxxx or any of
44
its Subsidiaries receives notice from any Market Cable System currently carrying
a Station's signal of such Market Cable System's intention to delete such
Station from carriage or change such Station's channel position on such Market
Cable System, or (3) Xxxxxxxx becomes aware of any breach of any representation
or warranty of Xxxxxxxx set forth in Article IV.
7.J UPDATED INFORMATION. Xxxxxxxx agrees to provide to
Xxxxxxxx and the Merger Sub at or prior to the Closing, for informational
purposes only, copies of all Contracts in existence at the time of the Closing
which would have been required to be described on the attached Schedule 4J if
such Contracts had existed on the date of this Agreement and which are not so
disclosed.
7.K NON-SOLICITATION. From the date of this Agreement until
the Closing or the earlier termination of this Agreement, each of ABRY Partners
and Xxxxxxxx will not, and each of them will not cause (and will use reasonable
efforts not to permit) any of its Subsidiaries, affiliates, directors, officers,
employees, representatives or agents to, directly or indirectly solicit, or
initiate, entertain or enter into any discussions or transactions with, or
encourage or provide any information to, any Person (other than any Person
described in Section 7.C(2)), concerning any sale of any of the assets of
Xxxxxxxx or its Subsidiaries (other than any sale which is not prohibited by
Section 7.A(5)) or any merger, stock acquisition or similar transaction
involving Xxxxxxxx or its Subsidiaries (other than an issuance of capital stock
or capital stock equivalents by Xxxxxxxx and the Spin-Offs); provided that
nothing in this Section 7.K will prohibit ABRY Partners or Xxxxxxxx from
furnishing, or causing or permitting any other Person to furnish, information
concerning Xxxxxxxx or its Subsidiaries to any governmental authority or court
of competent jurisdiction or any other Person as may be required by any Legal
Requirement.
7.L INTERRUPTION OF BROADCAST TRANSMISSION.
(1) NOTICE OF LOSS OR DAMAGE. In the event of any loss,
damage, impairment, confiscation or condemnation of any of the Station
Assets prior to the Approval Date that interferes with the normal
operations of the Stations, Xxxxxxxx will notify Xxxxxxxx of the same
in writing promptly after Xxxxxxxx becomes aware thereof, specifying
with reasonable particularity the loss, damage or impairment,
confiscation or condemnation incurred, the cause thereof, if known or
reasonably ascertainable, and any applicable insurance coverage. To the
extent thereof, Xxxxxxxx will apply the proceeds of any insurance
policy, judgment or award with respect thereto as necessary to repair,
replace or restore such Station Assets to their prior condition as soon
as practicable after such loss, damage, impairment, confiscation or
condemnation.
(2) INTERRUPTION OF TRANSMISSION. If before the Approval
Date, due to damage or destruction of the assets of any Station, the
regular broadcast transmission of one (1) or more of the Stations in
the normal and usual manner is interrupted for a period of twelve (12)
continuous hours or more, Xxxxxxxx will give prompt written notice
thereof to Xxxxxxxx. If prior to the Approval Date, due to damage or
destruction of the assets of one (1) or more of the Stations, the
regular broadcast transmission of one (1) or more Stations in the
normal and usual manner is interrupted such that the regular broadcast
signal of any such Station (including its effective radiated power) is
diminished in any material respect, then
45
(i) Xxxxxxxx will give written notice to Xxxxxxxx promptly after
Xxxxxxxx becomes aware thereof, and (ii) Xxxxxxxx shall have the right,
by giving prompt written notice to Xxxxxxxx to postpone the Closing for
a period up to sixty (60) days.
(3) FAILURE TO RESUME TRANSMISSION. In the event any one
(1) or more Stations' normal and usual transmission has not been
substantially resumed by the date scheduled for the Closing, as
postponed pursuant to Section 7.L(2) above, Xxxxxxxx may, pursuant to
Section 12.A(2)(c), terminate this Agreement by written notice to
Xxxxxxxx. Notwithstanding the foregoing, however, Xxxxxxxx may, at its
option, proceed to complete the Merger and complete the restoration and
replacement of any damaged assets of the Station in question after the
Closing Date, in which event: (a) all insurance or other proceeds
received in connection therewith, to the extent such proceeds are
received by Xxxxxxxx and have not therefore been used in the
restoration or replacement of such assets, will be excluded from the
Current Assets, and (b) the lesser of $5,000,000 and the excess (if
any) of the reasonable cost to complete such restoration or replacement
over the amount of such proceeds will be included in the computation of
the Current Liabilities (the exclusion of such proceeds and the
inclusion of such cost being in lieu and to the exclusion of any remedy
pursuant to the Indemnity Agreement in respect of the failure of such
restoration or replacement to be completed).
(4) INTERRUPTION NOTICE/TERMINATION. If before the
Approval Date, due to damage or destruction of the Station Assets, the
regular broadcast transmission of any Station in the normal and usual
manner is interrupted for a period of seven (7) continuous days or
more, Xxxxxxxx shall give prompt written notice thereof (the
"Interruption Notice") to Xxxxxxxx. During the two (2) Business Days
after the receipt of the Interruption Notice, Xxxxxxxx shall have the
right, in its sole and absolute discretion, by giving written notice
thereof to Xxxxxxxx to terminate this Agreement pursuant to Section
12.A(2)(c).
7.M NO PREMATURE ASSUMPTION OF CONTROL. Nothing contained in
this Agreement will give any Acquiring Party any right to control the
programming, operations, or any other matter relating to the Stations, and the
respective licensees thereof, will have complete control of the programming,
operations, and all other matters relating to the Stations (it being agreed that
in any event Xxxxxxxx will have the right to withhold its Consent to any Program
Contract to the extent provided in Section 7.A(3), if not deemed granted as
provided therein).
ARTICLE VIII
COVENANTS OF XXXXXXXX AND THE MERGER SUB
8.A XXXX-XXXXX-XXXXXX MATTERS. On or prior to March 20, 1998,
Xxxxxxxx will complete all documents required to be filed with the FTC and the
DOJ with respect to itself and/or its Affiliate(s) and concerning the Merger in
order to comply with the Xxxx-Xxxxx-Xxxxxx Act and together with Xxxxxxxx and/or
the appropriate Affiliate(s) of Xxxxxxxx who are required to join in such
filings, will file the same with the FTC and the DOJ. Xxxxxxxx will pay the
filing fees associated with all such filings (subject to partial reimbursement
by Xxxxxxxx as provided in Section 7.D). Xxxxxxxx
46
and the Merger Sub will promptly furnish all materials thereafter required by
the FTC, the DOJ or any other governmental entity having jurisdiction over such
filings, and will take all reasonable actions and will file and use reasonable
efforts to have declared effective or approved all documents and notifications
with any such governmental entity, as may be required under the
Xxxx-Xxxxx-Xxxxxx Act or other federal antitrust laws for the consummation of
the Merger.
8.B CONFIDENTIAL INFORMATION. If for any reason the
transactions contemplated in this Agreement are not consummated, each of
Xxxxxxxx and the Merger Sub will not use or disclose to any Person (except to
its agents, representatives and advisors, to its lenders and their respective
agents, representatives and advisors, or as may be required by any Legal
Requirement) any confidential information received from Xxxxxxxx, any of its
Subsidiaries, Xxxxxxxx Two or Xxxxxxxx Three or any of their respective agents,
representatives and advisors (each a "disclosing party" for purposes of this
Section 8.B) in the course of investigating, negotiating, and completing the
transactions contemplated by this Agreement. Nothing will be deemed to be
confidential information for purposes of this Section 8.B that: (a) is or was
known to any Xxxxxxxx-Related Entity at the time of its initial disclosure by a
disclosing party to any Xxxxxxxx-Related Entity; (b) has become or becomes
publicly known or available other than through disclosure by any
Xxxxxxxx-Related Entity; (c) is or was rightfully received by any
Xxxxxxxx-Related Entity from any Person unrelated to any Xxxxxxxx-Related Entity
(other than any Person engaged by any Xxxxxxxx- Related Entity in connection
with the transactions contemplated by this Agreement); or (d) is or was
independently developed by any Xxxxxxxx-Related Entity. In addition, the Merger
Sub agrees to be bound by the same obligations as Xxxxxxxx is bound pursuant to
the confidentiality agreement dated as of November 20, 1997 between Xxxxxxxx and
Xxxxxxxx Broadcasting, which confidentiality agreement will survive the
execution and delivery of this Agreement and will survive the execution and
termination of this Agreement, and no provision of this Section 8.B will be
deemed to supersede or in any way limit any obligation or right under such
confidentiality agreement.
8.C EFFORTS TO CONSUMMATE. Subject to the provisions of
Article X and Section 12.A, each of Xxxxxxxx and the Merger Sub will use
reasonable efforts to fulfill and perform all conditions and obligations on its
part to be fulfilled and performed under this Agreement and to cause the
conditions set forth in Articles IX and X to be fulfilled and cause each
Spin-Off, the Merger and the transactions contemplated by this Agreement in
connection with the Merger to be fully carried out. In addition, promptly after
Xxxxxxxx or the Merger Sub becomes aware prior to the Closing of a breach of any
fact or circumstance which constitutes or would constitute a breach of any
representation or warranty of Xxxxxxxx set forth in this Agreement, Xxxxxxxx
will give Xxxxxxxx notice thereof so that Xxxxxxxx may attempt to cure the same.
8.D NOTICE OF PROCEEDINGS. Each of Xxxxxxxx and the Merger Sub
will promptly notify Xxxxxxxx (prior to the Closing) or the Stockholder
Representative (after the Closing) in writing upon becoming aware of any order
or decree or any complaint praying for an order or decree restraining or
enjoining the consummation of either Spin-Off, the Merger or any other
transaction contemplated by this Agreement, or upon receiving any notice from
any governmental department, court, agency, or commission of its intention to
institute an investigation into or institute a suit or proceeding to restrain or
enjoin the consummation of either Spin-Off, the Merger or any such other
transaction, or to nullify or render ineffective this Agreement, either
Spin-Off, the Merger or any such other transaction, if consummated. Xxxxxxxx
will give the Stockholder Representative prompt
47
written notice if any Acquiring Party becomes aware of any breach of any
representation or warranty of any Acquiring Party set forth in Article V.
8.E CONTINUED EMPLOYMENT.
(1) GENERALLY. Except as provided in Section 8.E(2), the
Merger Sub, in its capacity as Post-Merger Xxxxxxxx after the Effective
Time, agrees to employ after the Closing, directly or indirectly
through one or more of its Subsidiaries, all of those Persons who are
common law employees of Xxxxxxxx and its Subsidiaries at the time of
the Closing at the same rates of base pay and the other terms and
conditions applicable to such employment at such time, and Xxxxxxxx and
the Merger Sub agree to indemnify and hold harmless the Old Xxxxxxxx
Stockholders, the Stockholder Representative and the present and former
officers, directors, employees and agents of each of the Old Xxxxxxxx
Stockholders, the Stockholder Representative, Xxxxxxxx and their
respective Subsidiaries in respect of any loss, liability, cost,
damage, claim or expense which may be incurred by or asserted against
any of them arising out of or relating to any failure or refusal to so
employ any such Person (including any change in any term or condition
of such employment), or the termination of the employment of any such
Person, at or after the Closing. Without limiting the foregoing
indemnity, it is acknowledged that except as provided in any agreement
referred to on the attached Schedule 4J, such employees will continue
to be at-will employees, and the respective employers may terminate
their employment or change their terms of employment at will, and/or
Post-Merger Xxxxxxxx or its Subsidiaries may cover such employees under
existing or new benefit plans, programs, and arrangements, and may
amend or terminate the terms of any such plans, programs, or
arrangements at any time (in each case, without reducing the indemnity
obligation set forth in the preceding sentence). No employee or
beneficiary of Post- Merger Xxxxxxxx or its Subsidiaries may xxx to
enforce the terms of this Agreement, including specifically this
Section 8.E, and no such employee or beneficiary shall be treated as a
third party beneficiary of this Agreement.
(2) EXCLUDED EMPLOYEES. The provisions of Section 8.E(1)
will not apply to the Corporate Personnel, the Non-Continuing Station
Managers or any Person employed by Xxxxxxxx or any of its Subsidiaries
pursuant to an agreement of a type described in clause (z) of Section
7.A(5)(b). Xxxxxxxx will cause the employment of each Non-Continuing
Manager and the Corporate Personnel to be terminated, effective as of
the time of the Closing. The liabilities of Xxxxxxxx and its
Subsidiaries for amounts required to be paid in connection with or
after the termination of any such excluded Person whose employment is
terminated prior to or at the time of the Closing will be reflected in
the computation of the Current Liabilities.
8.F SECTION 338 ELECTION. Without the Stockholder
Representative's prior written consent, Xxxxxxxx will not, and will not cause or
permit any of its Subsidiaries to, make an election under Section 338 of the Tax
Code, or under any analogous provision of any other Legal Requirements relating
to Taxes, with respect to the Merger.
ARTICLE IX
48
CONDITIONS TO THE OBLIGATIONS OF SULLIVANAT THE CLOSING
The obligation of Xxxxxxxx to consummate the Merger is, at
Xxxxxxxx'x option, subject to the fulfillment of the following conditions at the
time of the Closing (Xxxxxxxx expressly acknowledging that the effectiveness of
the Xxxxxxxx Consents is not a condition to such obligation):
9.A REPRESENTATIONS, WARRANTIES, COVENANTS.
(1) Each of the representations and warranties of the
Acquiring Parties set forth in Article V, considered without regard to
any materiality qualifiers contained therein, will be deemed to be made
again at and as of the time of the Closing (other than any such
representation or warranty which is expressly made with reference to a
time prior to the time of the Closing, which will be deemed remade as
of such time only), and taken as a whole such representations and
warranties, as so remade, will have been true and accurate in all
material respects, except to the extent of deviations therefrom
permitted or contemplated by this Agreement; and
(2) each Acquiring Party will in all material respects
have performed and complied with the covenants and agreements required
by this Agreement to be performed or complied with by it prior to or at
the time of the Closing, taken as a whole (other than the delivery of
the Merger Consideration for the Xxxxxxxx Share Equivalents, which the
Merger Sub will have established to Xxxxxxxx'x reasonable satisfaction
that it is prepared to deliver).
9.B PROCEEDINGS.
(1) No action or proceeding will have been instituted and
be pending before any court or governmental body to restrain or
prohibit, or to obtain a material amount of damages in respect of, the
consummation of the transactions contemplated by this Agreement that,
in the reasonable opinion of Xxxxxxxx, may reasonably be expected to
result in a preliminary or permanent injunction against such
consummation or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement
or such transactions or for the recovery against any Xxxxxxxx- Related
Entity or any officer, director or stockholder of any Xxxxxxxx-Related
Entity of a material amount of damages; and
(2) no Party will have received written notice from any
governmental body of (a) such governmental body's intention to
institute any action or proceeding to restrain or enjoin or nullify
this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including,
without limitation, a routine Civil Investigative Demand) into the
consummation of the transactions contemplated by this Agreement, or (b)
the actual commencement of such an investigation, in each case unless
the same has been withdrawn, resolved, concluded or abandoned.
9.C XXXX-XXXXX-XXXXXX. The requisite waiting period under the
Xxxx-Xxxxx- Xxxxxx Act for the consummation of the Merger will have expired or
been terminated.
49
9.D SPIN-OFFS. The Required FCC Consent for each Spin-Off will
have been Granted and be in full force and effect and all Acquiring Party
Consents for the Spin-Offs will have been obtained and be in full force and
effect; provided that the Grant and effectiveness of such Required FCC Consent
and the effectiveness of such Acquiring Party Consents will not be conditions to
Xxxxxxxx'x obligation to consummate the Merger so long as any Xxxxxxxx Consent
for the Spin-Offs is not in effect.
9.E SUFFICIENT FUNDS TO SATISFY OBLIGATIONS. Xxxxxxxx will
have received evidence which is reasonably satisfactory to Xxxxxxxx to the
effect that the Merger Sub and Post- Merger Xxxxxxxx and/or its Subsidiaries
have or will have the funds described in Section 11.E.
9.F XXXXXXXX COMMON STOCK. If the Merger Sub has elected to
pay part of the Merger Consideration for the Xxxxxxxx Share Equivalents in the
form of shares of Xxxxxxxx Common Stock as provided in Section 3.A(3), then
Xxxxxxxx will have taken such actions as may be required, or are reasonably
requested by the Stockholder Representative, in order that the Xxxxxxxx Common
Stock be registered and tradeable as described in Section 3.C(3), including any
registration, notice of issuance or other action or notice to or by NASDAQ,
Nasdaq National Market or any relevant securities exchange in order that such
shares of Xxxxxxxx Common Stock be tradeable thereon.
9.G OTHER. The Merger Sub will have delivered, or will stand
ready to deliver, to Xxxxxxxx such instruments, documents, and certificates as
are contemplated by Section 3.I(3).
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF
THE MERGER SUB AT THE CLOSING
The obligations of the Merger Sub to pay the Merger
Consideration for the Xxxxxxxx Share Equivalents and consummate the Merger on
the Closing Date are, at the Merger Sub's option, subject to the fulfillment of
the following conditions at the time of the Closing (Xxxxxxxx and the Merger Sub
expressly acknowledging that neither the availability to the Merger Sub of funds
sufficient to pay such Merger Consideration and to fulfill the obligations under
Section 11.E, nor the effectiveness of the Acquiring Party Consents, is a
condition to such obligations):
10.A REPRESENTATIONS, WARRANTIES, COVENANTS.
(1) Each of the representations and warranties of
Xxxxxxxx and set forth in Article IV (other than any representation or
warranty which speaks as of a time after the Closing), considered
without regard to any materiality qualifiers contained therein, will be
deemed to be made again at and as of the time of the Closing (other
than any such representation or warranty which is expressly made with
reference to a time prior to the time of the Closing, which will be
deemed remade as of such time only), and taken as a whole such
representations and warranties, as so remade, will have been true and
accurate, except to the extent of deviations therefrom which are
permitted or contemplated by this Agreement or which, in the aggregate,
do not constitute and have not caused a Material Adverse Change;
50
and
(2) Xxxxxxxx will in all material respects have performed
and complied with the covenants and agreements required by this
Agreement to be performed or complied with by it prior to or at the
time of the Closing, taken as a whole.
10.B PROCEEDINGS.
(1) No action or proceeding will have been instituted and
be pending before any court or governmental body to restrain or
prohibit, or to obtain a material amount of damages in respect of, the
consummation of the transactions contemplated by this Agreement that,
in the reasonable opinion of Xxxxxxxx, xxx reasonably be expected to
result in a preliminary or permanent injunction against such
consummation or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement
or such transactions or for the recovery against any Xxxxxxxx- Related
Entity or any officer, director or stockholder of any Xxxxxxxx-Related
Entity of a material amount of damages; and
(2) no Party will have received written notice from any
governmental body of (a) such governmental body's intention to
institute any action or proceeding to restrain or enjoin or nullify
this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including,
without limitation, a routine Civil Investigative Demand) into the
consummation of the transactions contemplated by this Agreement, or (b)
the actual commencement of such an investigation, in each case unless
the same has been withdrawn, resolved, concluded or abandoned.
10.C XXXX-XXXXX-XXXXXX AND OTHER CONSENTS. The requisite
waiting period under the Xxxx-Xxxxx-Xxxxxx Act for the consummation of the
Merger will have expired or been terminated and all Xxxxxxxx Consents will have
been obtained and be effective. If the representation and warranty set forth in
the final sentence of Section 4.N is untrue, then each Consent of a type
described therein will have been obtained and be effective.
10.D SPIN-OFFS. The Required FCC Consents for the Spin-Offs
will have been Granted and be in full force and effect and Xxxxxxxx will stand
ready to effect, or will have effected, the Spin-Offs, and each of Xxxxxxxx Two
and Xxxxxxxx Three will have entered into the New LMA applicable to it; provided
that the foregoing will not be conditions to the Merger Sub's obligation to
consummate the Merger so long as any Acquiring Party Consent to a Spin-Off or
the Merger is not in effect.
10.E MINIMUM GROSS REVENUES. The amount of the Gross Revenues
for the Measurement Period will have been determined in accordance with Section
3.J and will be not less than the amount set forth below:
51
Last Day of
Measurement Period Gross Revenues
------------------ --------------
March 31, 1998 $32,042,000
April 30, 1998 $44,913,000
May 31, 1998 $58,693,000
June 30, 1998 $71,630,000
July 31, 1998 $82,729,000
August 31, 1998 $94,391,000
10.F LIMIT ON DISSENTERS. The holders of Xxxxxxxx Common Stock
who have demanded appraisal pursuant to Section 262 of the Delaware General
Corporation Act and who have not subsequently withdrawn or waived (or been
deemed to have withdrawn or waived) or who are not otherwise barred from
requiring any such appraisal, if there are any such holders at the time of the
Closing, will not hold Xxxxxxxx Common Stock which (absent such right of
appraisal) would be entitled to receive in excess of 6% of the aggregate Merger
Consideration for the Xxxxxxxx Share Equivalents (determined based on the
Estimated Annualized Trailing Cash Flow, or the Annualized Trailing Cash Flow,
if it has been finally determined in accordance with Section 3.J, and the
Estimated KOKH Amount and the Estimated Adjustment Amount determined pursuant to
Section 3.E) if the Merger were consummated.
10.G OTHER INSTRUMENTS. Xxxxxxxx will have delivered, or will
stand ready to deliver, to the Merger Sub such instruments, documents, and
certificates as are contemplated by Section 3.I(2).
ARTICLE XI
POST-CLOSING MATTERS
11.A SURVIVAL. The representations, warranties and
certifications of the Parties contained in or made pursuant to this Agreement
(including any certification contained in any certificate to be delivered
pursuant to Section 3.I) will survive the execution of this Agreement and the
Closing only to the extent expressly provided in the Indemnity Agreement. The
covenants and agreements of the Parties set forth in this Agreement will survive
until performed and discharged in full.
11.B LIMITATION OF RECOURSE. Except as provided in the
Indemnity Agreement, after the Closing, no claim may be brought or maintained
against any Party or any Old Xxxxxxxx Stockholder or any of their respective
present or former officers, directors, employees or other affiliates by any
Party or Old Xxxxxxxx Stockholder or any of its successors or assigns, and no
recourse may be sought or granted against any Person, by virtue of or based upon
any alleged misstatement, omission, inaccuracy in, or breach of any
representation, warranty or certification of any Party set forth in or made
pursuant to this Agreement, and in no event xxxx Xxxxxxxx or Post-Merger
Xxxxxxxx be entitled to claim or seek any rescission of the Merger or any of the
other
52
transactions consummated pursuant to the Transaction Documents, any such right
of rescission or rights to damages which any such Party might otherwise have
being hereby expressly waived and any claims or judgments being limited
accordingly; provided that nothing in this Agreement will constitute a waiver of
or limit any Old Xxxxxxxx Stockholder's recourse or remedy pursuant to any
federal or state securities laws arising out of or relating to the offering or
issuance of Xxxxxxxx Common Stock hereunder.
11.C ACKNOWLEDGMENT BY THE ACQUIRING PARTIES. Each of the
Acquiring Parties has conducted, to its satisfaction, an independent
investigation and verification of Xxxxxxxx, its Subsidiaries, the Stations and
the Station Assets and the financial condition, results of operations, assets,
liabilities, properties and projected operations of Xxxxxxxx, its Subsidiaries,
the Stations and the Station Assets. In determining to enter into this Agreement
and proceed with the transactions contemplated by this Agreement, each Acquiring
Person has relied on the covenants of Xxxxxxxx, the results of such independent
investigation and verification and the representations and warranties of
Xxxxxxxx (in conjunction with the Schedules hereto) set forth in this Agreement
(including the certifications to be made in any certificate to be delivered
pursuant to Section 3.I), all of which each Acquiring Party acknowledges and
agrees will survive for a limited duration. SUCH REPRESENTATIONS, WARRANTIES AND
CERTIFICATIONS CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS, WARRANTIES AND
CERTIFICATIONS WITH RESPECT TO XXXXXXXX, ITS SUBSIDIARIES, THE STATIONS AND THE
STATION ASSETS TO THE ACQUIRING PARTIES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND EACH ACQUIRING PARTY UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT ALL OTHER REPRESENTATIONS, WARRANTIES AND CERTIFICATIONS OF ANY KIND
OR NATURE AND WHETHER ORAL OR CONTAINED IN ANY WRITING OTHER THAN THIS AGREEMENT
OR ANY SUCH CERTIFICATE (INCLUDING WITHOUT LIMITATION, ANY REPRESENTATION,
WARRANTY OR CERTIFICATION RELATING TO THE PROJECTED, FUTURE OR HISTORICAL
FINANCIAL CONDITION, RESULTS OR OPERATIONS, ASSETS OR LIABILITIES RELATING TO
THE STATIONS) ARE SPECIFICALLY DISCLAIMED BY XXXXXXXX, THE STOCKHOLDER
REPRESENTATIVE, THE OFFICERS OF XXXXXXXX AND ITS SUBSIDIARIES AND THE OLD
XXXXXXXX STOCKHOLDERS.
11.D CORPORATE NAMES. After the Merger (but on the Closing
Date), Post- Merger Xxxxxxxx will take and will cause its Subsidiaries to take
such action as is necessary to change its corporate name in its certificate or
articles of incorporation filed with the Secretary of State or similar official
of the jurisdiction of its incorporation to a name which does not include, and
is not confusingly similar to, the name "Xxxxxxxx" and will cease the use of all
Xxxxxxxx Broadcasting logos or any similar xxxx. Notwithstanding anything in
this Agreement to the contrary, Post-Merger Xxxxxxxx and its Subsidiaries will
be entitled to continue to use its present corporate name until such time as
such name change is effective and to the extent necessary to accomplish such
name change, and may endorse checks and other instruments in such name.
11.E SATISFACTION OF CERTAIN OBLIGATIONS. On the Closing Date,
immediately after the Effective Time, the Merger Sub will, and Xxxxxxxx will
cause Post-Merger Xxxxxxxx and each of Post-Merger Xxxxxxxx'x Subsidiaries to,
pay in full all Funded Indebtedness of Xxxxxxxx and its Subsidiaries pursuant
to, and otherwise satisfy all obligations of Xxxxxxxx and its
53
Subsidiaries under, the Xxxxxxxx Senior Debt Arrangements and the Mission
Guarantees (other than Funded Indebtedness incurred pursuant to any Xxxxxxxx
Indenture, to the extent any Consent necessary to permit the same to remain
outstanding after the Closing) . Without limiting the foregoing, Xxxxxxxx will
cause Post-Merger Xxxxxxxx and/or one or more of its Subsidiaries to have on the
Closing Date funds which are sufficient to permit Post-Merger Xxxxxxxx and/or
its Subsidiaries to take the actions contemplated by this Section 11.E and will
cause the Merger Sub to have funds necessary to permit the Merger Sub to pay the
Merger Consideration for the Xxxxxxxx Share Equivalents and make the deposit (if
any) in the Estimate Fund pursuant to Section 3.A(3)(d).
ARTICLE XII
TERMINATION
12.A TERMINATION OF AGREEMENT PRIOR TO CLOSING. Subject to
Section 12.A(3), this Agreement may be terminated at any time prior to the
Closing as follows:
(1) BY XXXXXXXX. By Xxxxxxxx, by written notice (a
"Xxxxxxxx Termination Notice") to Xxxxxxxx:
(a) at any time when any material breach by
any Acquiring Party of its obligations pursuant to this
Agreement has occurred and is continuing, if both
(i) such breach materially and
adversely affects the likelihood that any of the
conditions set forth in any of Article IX or Article
X which has not been satisfied or waived will be
satisfied or materially and adversely affects any
Party's ability to comply with its obligations
pursuant to this Agreement, and
(ii) at least thirty days have
elapsed since Xxxxxxxx gave Xxxxxxxx written notice
requesting that such Acquiring Party cure such
breach,
unless prior to the giving of the Xxxxxxxx Termination Notice
each such breaching Acquiring Party has cured such breach;
(b) at any time after the Merger Sub has
failed to make the Mandatory Payment when required by Section
3.K(1), if the Merger Sub has not made the Mandatory Payment
prior to the giving of such Xxxxxxxx Termination Notice (in
which event the termination of this Agreement pursuant to the
delivery of such Xxxxxxxx Termination Notice will be effective
at 5:00 p.m., Boston, Massachusetts, time, on the second
Business Day after such Notice is given, unless the Mandatory
Payment is made prior to such time);
(c) at any time after the Expiration Date,
if
54
(i) as of the Expiration Date, each
of Xxxxxxxx'x and the Merger Sub's conditions to
closing set forth in Articles IX and X was satisfied
or waived in writing,
(ii) as of the Expiration Date, (x)
each of Xxxxxxxx'x and the Merger Sub's conditions to
closing set forth in Articles IX and X (other than
any set forth in Sections 9.D and 10.D) was satisfied
or waived in writing, (y) the Required FCC Consent
has been Granted and each Xxxxxxxx Consent for the
Spin-Offs had been obtained, and (z) any Acquiring
Party Consent for a Spin-Off was not obtained,
(iii) the absence of satisfaction of
each of Xxxxxxxx'x and the Merger Sub's conditions to
closing set forth in Articles IX and X which was not
waived in writing or satisfied as of the Expiration
Date was caused by a breach by one or more of the
Acquiring Parties of any of its or their
representations, warranties and/or obligations under
this Agreement and/or the failure of any Acquiring
Party Consent to have been obtained,
(iv) the Approval Date had not
occurred on or prior to the Expiration Date as a
result of any breach by one or more of the Acquiring
Parties of any provision of this Agreement, or
(v) one or more of the Acquiring
Parties and the Affiliates thereof refused, failed or
declined to take any action (other than divesting
itself of a broadcast television or radio station of
which it or one of its Subsidiaries is the licensee
or terminating any time brokerage or similar
arrangement) which the FCC, the FTC, the DOJ or the
staff of any of them indicates to any Acquiring Party
or agent thereof is a condition to the grant of the
Required FCC Consent or the expiration or termination
of the requisite waiting period under the Xxxx-Xxxxx-
Xxxxxx Act for the Merger; or
(d) at any time after the Expiration Date,
in any circumstance which is not described in Section
12.A(1)(c), unless the absence of satisfaction of each of
Xxxxxxxx'x and the Merger Sub's closing conditions set forth
in Articles IX and X which has not been satisfied or waived in
writing has been caused by a breach by Xxxxxxxx of its
obligations under this Agreement.
(2) BY XXXXXXXX. By Xxxxxxxx, by written notice (a
"Xxxxxxxx Termination Notice") to Xxxxxxxx:
(a) at any time when any material breach by
Xxxxxxxx of its obligations pursuant to this Agreement has
occurred and is continuing, if both
(i) such breach materially and
adversely affects the likelihood that any of the
conditions set forth in Article IX or Article X will
be satisfied or materially and adversely affects any
Party's ability to comply
55
with its obligations pursuant to this Agreement and
(ii) at least thirty days have
elapsed since Xxxxxxxx gave Xxxxxxxx written notice
requesting that Xxxxxxxx cure such breach,
unless prior to the giving of such Xxxxxxxx Termination Notice
Xxxxxxxx has cured such breach;
(b) at any time on or prior to the fifth
(5th) Business Day after Xxxxxxxx delivers to Xxxxxxxx any
amendment and restatement or modification of any attached
Schedule pursuant to Section 13.P, if such amendment and
restatement or modification reflects any fact or circumstance
which (alone or in the aggregate with all other facts and
circumstances reflected in the attached Schedules as so
amended and restated or modified and not reflected in the
attached Schedules as initially attached to this Agreement)
represents or has caused a Material Adverse Change;
(c) (i) at any time when there has occurred
a Material Adverse Change and at least 30 days have elapsed
since Xxxxxxxx gave Xxxxxxxx notice of the occurrence of such
Material Adverse Change, unless the facts or circumstances
causing or constituting such Material Adverse Change have been
cured or otherwise no longer exist, or (ii) under the
circumstances described in Section 7.L(3) or 7.L(4);
(d) at any time during the five (5) Business
Days after the amount of the Gross Revenues (as if the
Measurement Date were June 30, 1998) is finally determined
pursuant to Section 3.J, if such amount is less than
$71,630,000;
(e) at any time after the Expiration Date,
under any circumstances described in Section 12.A(1)(c); or
(f) at any time after the Expiration Date,
in any case not described in Section 12.A(2)(e).
(3) WHEN TERMINATION NOT PERMITTED. Xxxxxxxx may not
terminate this Agreement pursuant to Section 12.A(1) at any time when
Xxxxxxxx is in material breach of a material obligation under this
Agreement. Xxxxxxxx may not terminate this Agreement pursuant to
Section 12.A(2) (other than pursuant to Section 12.A(2)(e)) at any time
when any Acquiring Party is in material breach of a material obligation
under this Agreement.
12.B SURVIVAL OF CERTAIN PROVISIONS; REMEDIES.
(1) GENERAL. No Party will have any liability to any
other Party for costs, expenses, damages (consequential or otherwise),
loss of anticipated profits, or otherwise as a result of a termination
pursuant to Section 12.A, except as provided in Section 12.B(2),
12.B(3) or 12.B(4). The Parties agree that time is of the essence with
respect to the provisions of Sections 3.H., 3.K and 12.A. Sections 7.G
and 7.B, this Article XII and Article XIII will survive the termination
of this Agreement pursuant to Section 12.A.
56
(2) DISPOSITION OF XXXXXXX MONEY FUND AND INCOME. If this
Agreement is terminated pursuant to any of Sections 12.A(1)(a),
12.A(1)(b), 12.A(1)(c) or 12.A(2)(e), then the Xxxxxxx Money Fund will
be paid to Xxxxxxxx (unless the Mandatory Payment has theretofore been
made to Xxxxxxxx), and all Xxxxxxx Money Income will be paid to
Xxxxxxxx. If this Agreement is terminated pursuant to any of Sections
12.A(1)(d), 12.A(2)(a), 12.A(2)(b), 12.A(2)(c), 12.A(2)(d) or
12.A(2)(f), then the Xxxxxxx Money Fund and all Xxxxxxx Money Income
will be paid to Xxxxxxxx (unless the Mandatory Payment is due and
payable and has not been paid, in which case the Mandatory Payment will
be made from the Xxxxxxx Money Fund and the Xxxxxxx Money Income, and
the remainder thereof will be paid to Xxxxxxxx). Any payment to be made
pursuant to this Section 12.B(2) may be requested, and will be made, in
accordance with the Xxxxxxx Money Escrow Agreement.
(3) FOR XXXXXXXX. Xxxxxxxx'x sole and exclusive remedy
for any termination of this Agreement or any failure of performance or
compliance by any Acquiring Party with any covenant or agreement
contained in this Agreement prior to the Closing will be Xxxxxxxx'x
right (if any) to receive the Xxxxxxx Money Fund as provided in the
Xxxxxxx Money Escrow Agreement (or its right, if any, to receive or
retain the Mandatory Payment, unless otherwise expressly provided in
Section 12.B(4)(d), as liquidated damages and not as a penalty).
(4) FOR THE ACQUIRING PARTIES. The Acquiring Parties'
sole and exclusive remedies for the termination of this Agreement or
any failure of performance or compliance by Xxxxxxxx with any covenant
or agreement contained in this Agreement prior to the Closing will be
(a) in the case of any such termination
pursuant to Section 12.A, Xxxxxxxx'x right (if any) to receive
the Xxxxxxx Money Fund and the Xxxxxxx Money Income (including
the right to any Xxxxxxx Money Income not yet received by the
Xxxxxxx Money Escrow Agent) as provided in Section 12.B(2) and
the Xxxxxxx Money Escrow Agreement;
(b) in the case of any such failure, their
respective rights (if any) under applicable law or equitable
principles to seek damages in respect of their direct
out-of-pocket losses or expenses (but not any damages in
respect of lost profits or other similar or consequential or
incidental damages) occasioned by and as a consequence of such
breach;
(c) their respective rights (if any) under
applicable law or equitable principles to seek specific
enforcement of this Agreement against Xxxxxxxx, including
specific enforecement of Xxxxxxxx'x obligation to consummate
the Merger (subject to FCC approval and other required
Consents being obtained), it being acknowledged by Xxxxxxxx
that the Acquiring Parties would not have an adequate remedy
at law in the event of any such failure, provided that no
Acquiring Party will be entitled to such specific performance
unless (i) each Acquiring Party has complied in all material
respects with its material obligations under this Agreement
and (ii) either (A) each condition to closing of Xxxxxxxx set
forth in Article IX has been
57
satisfied or waived in writing or (B) the absence of
satisfaction of each such condition to closing which has not
been satisfied or waived in writing is caused solely by a
breach by Xxxxxxxx of its obligations under this Agreement;
(d) in the case of any such failure after
the Approval Date, the release of the Merger Sub from the
obligation to pay, or the return of, as the case may be, the
Mandatory Payment, if (i) Xxxxxxxx has terminated this
Agreement pursuant to Section 12.A(2)(a) or Section
12.A(2)(d), (ii) each Acquiring Party complied in all material
respects with its material obligations under this Agreement
prior to such termination, and (iii) if Xxxxxxxx terminated
this Agreement pursuant to Section 12.A(2)(a), then either (A)
each condition to closing set forth in Articles IX was
satisfied or waived in writing as of the Expiration Date or
(B) the absence of satisfaction of each such condition which
was not satisfied or waived in writing as of the Expiration
Date was caused solely by a breach by Xxxxxxxx of its
obligations under this Agreement (it being agreed that, except
as expressly provided in this Section 12.B(4)(d), if the
Approval Date occurs and this Agreement is terminated prior to
the Closing, then the Merger Sub will nonetheless be required
to make the Mandatory Payment and, if the Mandatory Payment
has been made prior to such termination, then Xxxxxxxx will be
entitled to retain the Mandatory Payment); and
(e) if (i) Xxxxxxxx has terminated this
Agreement pursuant to Section 12.A(2)(a) based on a willful
breach of this Agreement by Xxxxxxxx, (ii) the circumstances
described in clauses (ii) and (iii) of Section 12.B(4)(d)
apply, and (iii) Xxxxxxxx has disclaimed in writing its right
to seek specific performance as described in Section
12.B(4)(c) or Xxxxxxxx has asserted such right and such remedy
has been denied in a final, nonappealable judgment on the
grounds that the obligation of Xxxxxxxx to consummate the
Merger hereunder is not of a type for which specific
enforcement is an available remedy, then in addition to
Xxxxxxxx'x right to receive the Xxxxxxx Money Fund as the
Xxxxxxx Money Income as provided in Section 12.B(4)(a), upon
the occurrence of the event described in clause (iii) above,
Xxxxxxxx will pay to Xxxxxxxx the amount of Seventy Five
Million Dollars ($75,000,000) in cash as liquidated damages.
ARTICLE XIII
MISCELLANEOUS
13.A EXPENSES. Except as otherwise expressly provided in this
Agreement, Xxxxxxxx will bear all of the expenses incurred prior to the Closing
by Xxxxxxxx and the Stockholder Representative in connection with the
transactions contemplated by this Agreemen, and each of the Acquiring Parties
will bear all of its expenses incurred in connection with the transactions
contemplated by this Agreement, in each case including, without limitation,
account ing and legal fees incurred in connection herewith.
13.B ASSIGNMENTS.
58
(1) BY XXXXXXXX. This Agreement may not be assigned by
Xxxxxxxx without the prior written consent of the Acquiring Parties.
(2) BY XXXXXXXX OR THE MERGER SUB. Prior to the Closing,
this Agreement may be assigned by Xxxxxxxx or the Merger Sub (or the
Merger Sub may cease to be a wholly-owned Subsidiary of Xxxxxxxx prior
to the Closing) only with the prior written consent of Xxxxxxxx, except
that at any time Xxxxxxxx or the Merger Sub may assign its rights and
interests hereunder absolutely to one or more directly or indirectly
wholly-owned Subsidiaries of Xxxxxxxx without obtaining such consent;
provided in each case, that the assigning Person gives Xxxxxxxx, prior
to the Closing, or the Stockholder Representative, after the Closing,
prior written notice of such assignment and that such assignment will
not delay the satisfaction of any condition to closing set forth in
this Agreement, and provided further that any such assignment will not
relieve the assigning Person of any of its obligations or liabilities
hereunder.
(3) EXCEPTIONS. Notwithstanding the foregoing, any Party
may assign its rights under this Agreement for collateral purposes only
to any lender to it, or any agent for any such lender(s), without the
consent of any other Party, and any such lender or agent may transfer
such rights pursuant to the exercise of remedies with respect to such
collateral security to any other Person (it being understood that any
such lender or agent will be a third-party beneficiary of the agreement
constituted by this Section 13.B(3)).
(4) GENERAL RULES. Any attempt to assign this
Agreement or any rights or obligations hereunder without first
obtaining any consent which is required by this Section 13.B will be
void. This Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns. Each Old Xxxxxxxx Stockholder is an express third-party
beneficiary of this Agreement.
13.C FURTHER ASSURANCES. From time to time prior to, at, and
after the Closing, each Party will execute all such instruments and take all
such actions as any other of them, being advised by counsel, may reasonably
request in connection with carrying out and effectuating the intent and purpose
hereof, and all transactions and things contemplated by this Agreement,
including the execution and delivery of any and all consents, confirmatory and
other instruments, in addition to those to be delivered at the Closing, and any
and all actions which may reasonably be necessary to complete the transactions
contemplated hereby.
13.D NOTICES. All notices, demands, and other communications
which may or are required to be given under or with respect to this Agreement
will be in writing, will be delivered personally or sent by nationally
recognized overnight delivery service, charges prepaid, or by registered or
certified mail, return-receipt requested, and will be deemed to have been given
or made when personally delivered, or on the next Business Day after delivery to
such overnight delivery service, or on the fifth day after it is deposited in
the mail, registered or certified, first class postage prepaid, as the case may
be, if addressed as follows:
59
(1) If to Xxxxxxxx (prior to the Closing) or the
Stockholder Representative:
c/o ABRY Partners, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx, President
with a copy (which will not constitute notice to Xxxxxxxx
or the Stockholder Representative) to:
Xxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxx
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address and/or with such other copies as the
Person to whom such notice is to be given may from time to
time designate by notice to the Acquiring Parties given in
accordance with this Section 13.D.
(2) If to Xxxxxxxx, the Merger Sub or Post-Merger
Xxxxxxxx:
Xxxxxxxx Broadcast Group, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, President
with a copy (which will not constitute notice to
Xxxxxxxx, the Merger Sub or Post-Merger Xxxxxxxx) to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxxx, P.A.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
and
Xxxxxxxx Communications, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
and
Xxxxxx Xxxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxxxxxx
60
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
or to such other address and/or with such other copies as
the Person to whom such notice is to be given may from
time to time designate by notice to Xxxxxxxx (if prior to
the Closing) and the Stockholder Representative given in
accordance with this Section 13.D.
13.E CAPTIONS. The captions of Articles and Sections of this
Agreement are for convenience only, and will not control or affect the meaning
or construction of any of the provisions of this Agreement.
13.F LAW GOVERNING. THIS AGREEMENT WILL BE GOVERNED BY,
CONSTRUED, AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCES TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE UNITED STATES GOVERNS THE
TRANSACTIONS CONTEMPLATED HEREBY.
13.G WAIVER OF PROVISIONS. The terms, covenants,
representations, warranties, and conditions of this Agreement may be waived as
to any Party only by a written instrument executed by such Party. The terms,
covenants, representations, warranties, and conditions of this Agreement may be
waived as to any Old Xxxxxxxx Stockholder only by a written instrument executed
by Xxxxxxxx, prior to the Closing, or the Stockholder Representative, after the
Closing. The failure of any Party or any Old Xxxxxxxx Stockholder at any time or
times to require performance of any provision of this Agreement will in no
manner affect the right at a later date to enforce the same. No waiver by or on
behalf of any Party to this Agreement or any Old Xxxxxxxx Stockholder of any
condition or the breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, will be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
13.H COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, and all counterparts so executed will constitute one (1)
agreement binding on all of the parties hereto, notwithstanding that all the
parties hereto are not signatory to the same counterpart.
13.I ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits hereto) and the confidentiality agreement referred to in Section
8.C (including the Acquiring Parties' obligations with respect thereto, as
provided in Section 8.C), constitute the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersede any and all prior
agreements, understandings, negotiations, and discussions, whether oral or
written, between them relating to the subject matter hereof.
13.J ACCESS TO BOOKS AND RECORDS.
(1) Post-Merger Xxxxxxxx will, and will cause its
Subsidiaries to, preserve for not less than five (5) years after the
Closing Date all books and records included in the
61
Station Assets. After such five-year period, Post-Merger Xxxxxxxx will
not, and will not cause or permit its Subsidiaries to, destroy any
books or records relating to the conduct of business of the Stations
prior to the Effective Time unless Post-Merger Xxxxxxxx first offers to
transfer such books and records to the Stockholder Representative at no
cost to the Stockholder Representative, and if Post-Merger Xxxxxxxx is
requested to do so, Post-Merger Xxxxxxxx will transfer, or cause a
Subsidiary of Post-Merger Xxxxxxxx to transfer, such books or records
to the Stockholder Representative.
(2) At the request of the Stockholder Representative,
Post-Merger Xxxxxxxx will, and will cause each of its Subsidiaries to,
permit the Stockholder Representative (including its officers,
employees, accountants, and counsel) any access, upon reasonable prior
written notice during normal business hours, to all of its property,
accounts, books, contracts, records, accounts payable and receivable,
records of employees, FCC logs and other information concerning the
affairs or operation of the Stations as the Stockholder Representative
may reasonably request for any reasonable purpose relating to the
transactions contemplated by this Agreement or the ownership or
operation of any Station prior to the Effective Time, and to make
extracts or copies from the foregoing at the Stockholder
Representative's expense. At Post-Merger Xxxxxxxx'x request, prior to
receiving any such requested information, the Stockholder
Representative will execute a confidentiality agreement with respect
thereto which is reasonably acceptable to Post-Merger Xxxxxxxx.
13.K PUBLIC ANNOUNCEMENTS. Prior to the Closing, no Party
will, except by mutual agreement of Xxxxxxxx and Xxxxxxxx (including agreement
as to content, text and method of distribution or release), make any press
release or other public announcement or disclosure concerning the transactions
contemplated by this Agreement, except as may be required by any Legal
Requirement (including filings and reports required to be made with or pursuant
to the rules of the Securities and Exchange Commission); provided that, prior to
making any such announcement or disclosure required by any Legal Requirement, to
the extent practicable, the disclosing Party gives each Person named above prior
written notice of the context, text and content of, the method of distribution
or release of, and all other material facts concerning, such disclosure.
13.L DISCLOSURE. If and to the extent that any information
required to be furnished by Xxxxxxxx in any attached Schedule is contained in
this Agreement or in any attached Schedule, such information will be deemed to
have been included in each other attached Schedule in which such information is
required to be included to the extent its relevance to such latter Schedule is
reasonably apparent. By including any information in any attached Schedule,
Xxxxxxxx will not be deemed to have admitted or acknowledged that such
information is material to or outside the ordinary course of the business of
Xxxxxxxx or any Station.
13.M DEFINITIONAL PROVISIONS.
(1) TERMS DEFINED IN APPENDIX. Each capitalized term
which is used and not otherwise defined in this Agreement or any
attached Schedule has the meaning which is specified for such term in
the Appendix which is attached to this Agreement.
62
(2) MATERIALITY. For purposes of Sections 9.A(2), and
10.A(2), materiality (as embodied in the phrase "in all material
respects" will be measured by reference to the business or operations
of the Stations, taken as a whole, the value of the Station Assets,
taken as a whole, or the ability of Xxxxxxxx or Xxxxxxxx and the Merger
Sub, taken as a whole, as the case may be, to perform or carry out the
transactions contemplated by this Agreement, as the context requires.
(3) KNOWLEDGE. As used in this Agreement, the term
"knowledge" of Xxxxxxxx will refer only to the actual knowledge,
without any particular inquiry (except as specified in this Agreement),
of the Corporate Personnel, Xxxxxx Xxxxx and Xxxxx Xxxxxxx, after
inquiry of the general managers of the Stations; and the "knowledge" of
Xxxxxxxx or the Merger Sub will refer only to the actual knowledge,
without any particular inquiry (except as specified in this Agreement)
of Xxxxx Xxxxx and Xxxxx Xxx.
(4) INTERPRETATION. Words used in this Agreement,
regardless of the gender and number specifically used, will be deemed
and construed to include any other gender, masculine, feminine or
neuter, and any other number, singular or plural, as the context
requires. Whether or not used in conjunction with the words "without
limitation" or words of similar import, the term "including" as used in
this Agreement imports that the items referred to are illustrative only
and do not purport to be a complete listing of the items of the type in
question. The wording of the provisions of this Agreement is the result
of arms-length negotiations among the parties to this Agreement and was
selected by them to reflect their mutual intentions; therefore, no
party will be deemed the "drafter" of this Agreement and no rule of
strict construction will be applied against or in favor of any party to
this Agreement.
13.N ARBITRATION.
(1) GENERALLY. Except as expressly provided in the
Estimate Escrow Agreement or the Indemnity Escrow Agreement or for
purposes of pursuing any remedy pursuant to Section 12.B(3)(b), the
arbitration procedures described in this Section 13.N will be the sole
and exclusive method of resolving and remedying claims arising under
this Agreement and the other Transaction Documents ("Disputes");
provided that nothing in this Section 13.N will prohibit a Party from
instituting litigation to enforce any Final Arbitration Award. Except
as otherwise provided in the Commercial Arbitration Rules of the
American Arbitration Association as in effect from time to time (the
"AAA Rules"), the arbitration procedures described in this Section 13.N
and any Final Arbitration Award will be governed by, and will be
enforceable pursuant to, the Uniform Arbitration Act as in effect in
the State of New York from time to time. No Person will be entitled to
claim or recover punitive damages in any such proceeding.
(2) NOTICE OF ARBITRATION. If a Party asserts that there
exists a Dispute, then such Person (the "Disputing Person") will give
each other Person involved in such Dispute a written notice setting
forth the nature of the asserted Dispute. If all such Persons do not
resolve any such asserted Dispute prior to the tenth Business Day after
such notice is given, then the Disputing Person may commence
arbitration pursuant to this Section 13.N
63
by giving each other Person involved in such Dispute a written notice
to that effect (an "Arbitration Notice"), setting forth any matters
which are required to be set forth therein in accordance with the AAA
Rules. Unless otherwise notified, the Acquiring Parties are entitled to
assume that the Stockholder Representative is authorized to act on
behalf of each Old Xxxxxxxx Stockholder with respect to any Dispute.
(3) SELECTION OF ARBITRATOR. The Persons involved in such
Dispute will attempt to select a single arbitrator by mutual agreement.
If no such arbitrator is selected prior to the twentieth Business Day
after the related Arbitration Notice is given, then an arbitrator which
is experienced in matters of the type which are the subject matter of
the Dispute will be selected in accordance with the AAA Rules.
(4) CONDUCT OF ARBITRATION. The arbitration will be
conducted under the AAA Rules, as modified by any written agreement
among the Persons involved in such Dispute. The arbitrator will conduct
the arbitration in a manner so that the final result, determination,
finding, judgment or award determined by the arbitrator (the "Final
Arbitration Award") is made or rendered as soon as practicable, and the
Persons involved in such Dispute will use reasonable efforts to cause a
Final Arbitration Award to occur not later than the sixtieth day after
the arbitrator is selected. Any Final Arbitration Award will be final
and binding upon the Persons involved in such Dispute, and there will
be no appeal from or reexamination of any Final Arbitration Award,
except as provided in the Uniform Arbitration Act, as in effect in the
State of New York from time to time.
(5) ENFORCEMENT. A Final Arbitration Award may be
enforced in any state or federal court having jurisdiction over the
subject matter of the related Dispute.
(6) EXPENSES. The prevailing Person(s) in any arbitration
proceeding in connection with this Agreement will be entitled to
recover from the non-prevailing Person(s) their reasonable attorneys'
fees and disbursements in addition to any damages or other remedies
awarded to such prevailing Person(s), and the non-prevailing Person(s)
will be required to pay all other costs and expenses associated with
the arbitration; provided that (i) if an arbitrator is unable to
determine that a Person is a prevailing Person in any such arbitration
proceeding, then such costs and expenses will be equitably allocated by
such arbitrator upon the basis of the outcome of such arbitration
proceeding, and (ii) if such arbitrator is unable to allocate such
costs and expenses in such a manner, then the costs and expenses of
such arbitration will be paid one-half by Xxxxxxxx and one-half by
Xxxxxxxx, and each Party will pay the out-of-pocket expenses incurred
by it. As part of any Final Arbitration Award, the arbitrator may
designate the prevailing Person(s) for purposes of this Section
13.N(6). Except as provided in the preceding sentences, each Person
involved in a Dispute will bear its own costs and expenses (including
legal fees and disbursements) in connection with any such proceeding or
submission.
13.O STOCKHOLDER REPRESENTATIVE.
(1) APPOINTMENT; AUTHORITY GENERALLY. On behalf of the
Old Xxxxxxxx Stockholders, Xxxxxxxx hereby appoints ABRY Partners as
the initial Stockholder
64
Representative under this Agreement, to serve in accordance with the
terms, conditions and provisions of this Agreement, and ABRY Partners,
by its execution of this Agreement, hereby agrees to act as such, upon
the terms, conditions and provisions of this Agreement. From and after
the Closing, the Stockholder Representative will be authorized to act
on behalf of the Old Xxxxxxxx Stockholders in accordance with this
Agreement.
(2) AUTHORIZATION. The Stockholder Representative, in
such capacity, will be entitled to take all actions on behalf of the
holders of Xxxxxxxx Shares or the Old Xxxxxxxx Stockholders, as the
case may be, with respect to this Agreement and the other agreements
contemplated hereby, and omit to take any action, each as directed by
(a) prior to the Effective Time, the holders
of capital stock of Xxxxxxxx having a majority of the voting
power represented by the outstanding capital stock of Xxxxxxxx
at the time in question, and
(b) after the Effective Time, Persons who
immediately prior to the Effective Time held Xxxxxxxx Shares
which represented a majority of the voting power of the
Xxxxxxxx Shares,
(in either case, the "Majority Xxxxxxxx Stockholders"). The Stockholder
Representative may be removed and replaced from time to time as the
representative of the holders of the Xxxxxxxx Shares or the Old
Xxxxxxxx Stockholders by written notice given by the Majority Xxxxxxxx
Stockholders to Xxxxxxxx (prior to the Effective Time) and the
Acquiring Parties.
(3) RESPONSIBILITY. The Stockholder Representative will
have no duties or responsibilities except those expressly set forth in
this Agreement or any other agreement which may be entered into by it
hereunder. The Stockholder Representative will have no responsibility
for the validity of this Agreement or any agreement referred to in this
Agreement or for the performance of any such agreements by any party
thereto or for the interpretation of any of the provisions of any such
agreements. The Stockholder Representative's liability in fulfilling
its duties will be limited to bad faith, willful misconduct or gross
negligence on its part. The Stockholder Representative will be
protected in acting upon any certificate, notice or other instrument
whatsoever received by the Stockholder Representative as to its due
execution, the validity and effectiveness of its provisions, and the
truth and accuracy of any information therein contained that the
Stockholder Representative in good faith believes to be genuine and to
have been signed or presented by a proper Person or Persons. The
Stockholder Representative may, in its sole discretion, consult with
and obtain advice from legal counsel and any other Person in the event
of any question as to any of the provisions of this Agreement, any
other agreement entered into in connection herewith or its duties
hereunder or thereunder. The reasonable cost of such services, to the
extent not borne by Xxxxxxxx, xxxx be borne among the Old Xxxxxxxx
Stockholders who held Xxxxxxxx Shares immediately prior to the Merger
Effective Time, pro rata in accordance with the respective amounts of
the Merger Consideration to be received by them in respect of the
Xxxxxxxx Shares.
(4) RESIGNATION; REPLACEMENT. The Stockholder
Representative will
65
have the right, in its sole discretion, to resign as the Stockholder
Representative (in its capacity as the representative of the holders of
Xxxxxxxx Shares or the Old Xxxxxxxx Stockholders) at any time by giving
at least 30 days prior written notice to Xxxxxxxx (prior to the
Effective Time) and the Acquiring Parties. In such event, Xxxxxxxx
(prior to the Effective Time) or the Majority Xxxxxxxx Stockholders
(after the Effective Time) will promptly appoint another Stockholder
Representative to represent the holders of Xxxxxxxx Shares and the Old
Xxxxxxxx Stockholders and give notice of such selection to the
Acquiring Parties and the Old Xxxxxxxx Stockholders (after the
Effective Time). Such resignation of the Stockholder Representative
will be effective upon such notice being given and such new Stockholder
Representative's acceptance of such appointment and will relieve the
resigning Stockholder Representative of all duties and responsibilities
of the Stockholder Representative in such capacity thereafter arising.
13.P COMPLETION OF XXXXXXXX'X SCHEDULES. The Acquiring Parties
acknowledge that Xxxxxxxx has executed this Agreement without having the
opportunity to request of personnel of the Stations information which may be
material to the preparation of the attached Schedules referred to in Article IV
(and that, therefore, some or all of such attached Schedules may not be correct
and complete and, as a result, some or all of the representations and warranties
set forth in Article IV which refer to such attached Schedules may not be true
and correct). On or prior to Xxxxx 0, 0000, Xxxxxxxx may deliver to Xxxxxxxx an
amendment and restatement of any such attached Schedule, or any portion thereof,
or a supplement to any such attached Schedule or any portion thereof, which may
be required in order to accurately depict facts and circumstances which exist on
the date of this Agreement (or any other applicable date referred to in any such
representation or warranty), and the attached Schedule or portion thereof in
question will be deemed to have been so amended and restated or modified, as the
case may be, as of the time of the execution and delivery of this Agreement. The
Acquiring Parties' sole and exclusive remedy under this Agreement with respect
to any matter which may be disclosed by any such amendment and restatement or
supplement will be Xxxxxxxx'x right (if any) to terminate this Agreement as
described in Section 12.A(2)(b).
13.Q TREATMENT OF STATION KOKH. Each Acquiring Party
acknowledges that, notwithstanding any language to the contrary in this
Agreement, Xxxxxxxx has not made and will not make any representation, warranty
or certification of any kind with respect to Station KOKH (including with
respect to the assets, liabilities and operations related to Station KOKH), and
no representation or warranty set forth in Article IV, and no certification
relating thereto delivered pursuant to Sections 3.I, will be deemed to apply to
Station KOKH (including to any related asset, liability or operations). The
Annualized Trailing Cash Flow, the Gross Revenues, the Current Assets, the
Current Liabilities and the Xxxxxxxx Receivables will be determined without
regard to the results of operations and assets of Station KOKH.
[SIGNATURE PAGES TO FOLLOW
--REST OF PAGE LEFT INTENTIONALLY BLANK]
66
IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed by their duly authorized officers, all as of
the day and year first above written.
XXXXXXXX BROADCAST HOLDINGS, INC.
By:
----------------------------------------------
Its:
---------------------------------------------
XXXXXXXX BROADCAST GROUP, INC.,
in its own right and on behalf of a Subsidiary
to be formed by it
By:
----------------------------------------------
Its:
---------------------------------------------
ABRY PARTNERS, INC.
By:
----------------------------------------------
Its:
---------------------------------------------
67
APPENDIX
ADDITIONAL DEFINED TERMS. The following capitalized terms have
the following meanings when used in this Agreement and the Schedules attached to
this Agreement:
"ABRY FUND" means ABRY Broadcast Partners II, L.P., a Delaware
limited partnership and a stockholder of Xxxxxxxx.
"ACQUIRING PARTIES" means Xxxxxxxx, the Merger Sub and
Post-Merger Xxxxxxxx.
"ACQUIRING PARTY CONSENTS" means all Consents other than the
Required FCC Consent, any Consent required under the Xxxx-Xxxxx-Xxxxxx
Act, or any Xxxxxxxx Consent.
"ACT III" means Act III Broadcasting, Inc., a predecessor by
merger to Xxxxxxxx Broadcasting.
"ACT III PURCHASE AGREEMENT" means the Stock Purchase
Agreement dated as of June 19, 1995, among A-3 Acquisition, Inc., Act
III and certain of the stockholders of Act III, as amended and in
effect from time to time.
"ADJUSTMENT TIME" means, with respect to each Station, 12:01
a.m., local time, on the Closing Date.
"AFFILIATE" of any Person means any other Person which is
controlled by, controls, or is under common control with, such first
Person.
"AFFILIATED GROUP" means an affiliated group of corporations,
as that term is defined in Section 1504(a) of the Tax Code (or in any
analogous combined, consolidated or unitary group defined under state,
local or foreign income Tax law).
"APPROVAL DATE" means the first day upon which the Required
FCC Consent has been Granted and the requisite waiting period under the
Xxxx-Xxxxx-Xxxxxx Act for the consummation of such Merger has expired
or been terminated.
"AVERAGE TRADING PRICE" means the average of the Closing
Trading Prices for the third Business Day prior to the Closing Date and
the nine (9) preceding Business Days. The "CLOSING TRADING PRICE" for
any day means the closing price of Xxxxxxxx Common Stock on the Nasdaq
National Market as of 4:00 P.M., New York time, on such day.
"BENEFIT ARRANGEMENT" means any benefit arrangement,
obligation, custom, or practice 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 an employee benefit
plan under ERISA), including employment agreements, severance
agreements, executive compensation arrangements, stock options,
restricted stock rights and performance unit awards, incentive
68
programs or arrangements, sick leave, vacation pay, severance pay
policies, plant closing benefits, salary continuation for disability,
consulting, or other compensation arrangements, workers' compensation,
retirement, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs, employee discounts, employee
loans, employee banking privileges, any plans subject to Section 125 of
the Tax Code, and any plans providing benefits or payments in the event
of a change of control, change in ownership, or sale of a substantial
portion (including all or substantially all) of the assets of any
business or portion thereof, in each case with respect to any present
or former employees, directors, or agents.
A "BUSINESS DAY" means any day other than a Saturday, a Sunday
or another day upon which banks in New York, New York generally are not
open for business.
"CLOSING DATE" means the date upon which the Closing occurs.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended and as in effect from time to time.
"CONSENT" means any consent, order, approval, authorization or
other action of, or any filing with or notice to or other action by or
with respect to, any Person which is required for any of the execution,
delivery or performance of this Agreement, the consummation of either
Spin-Off, the Merger, or the conduct of the business of Xxxxxxxx Two,
Xxxxxxxx Three or Post-Merger Xxxxxxxx or any of its Subsidiaries or
the holding or utilization of any Station Asset thereafter, whether
such requirement arises pursuant to any Legal Requirement, Contract, a
Person's organizational documents or otherwise, including any of the
foregoing which is required in order to prevent a breach of or a
default under or a termination or modification of any Contract.
"CONTRACT" means any agreement, lease, arrangement,
commitment, or understanding to which Xxxxxxxx or any of its
Subsidiaries, with respect to the Stations, is a party.
"CORPORATE PERSONNEL" means J. Xxxxxx Xxxxxxxx, Xxxxx Xxxxxx,
Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxxxx and any
successor to any of them in his capacity as an employee of Xxxxxxxx and
its Subsidiaries, Xxxxxxxx Two or Xxxxxxxx Three.
"XXXXXXX MONEY ESCROW AGENT" means the "Escrow Agent" to which
the Xxxxxxx Money Escrow Agreement refers.
"XXXXXXX MONEY ESCROW AGREEMENT" means the Escrow Agreement
entered into among Xxxxxxxx, Xxxxxxxx (on behalf of the Merger Sub) and
The Chase Manhattan Bank (as Escrow Agent) dated as of the date of this
Agreement, as such agreement is in effect from time to time.
"XXXXXXX MONEY FUND" means the "Escrow Fund" to which the
Xxxxxxx Money Escrow Agreement refers.
69
"XXXXXXX MONEY INCOME" means the "Escrow Income" to which the
Xxxxxxx Money Escrow Agreement refers.
"XXXXXXX MONEY LETTER OF CREDIT" means a stand-by letter of
credit delivered to the Xxxxxxx Money Escrow Agent on the date of this
Agreement issued by The Chase Manhattan Bank in the face amount of
$75,000,000 and otherwise substantially in the form of the attached
Exhibit E, or any replacement stand-by letter of credit delivered to
the Xxxxxxx Money Escrow Agent in accordance with the Xxxxxxx Money
Escrow Agreement.
"ENVIRONMENTAL LAWS" means the rules and regulations of the
FCC, the United States Environmental Protection Agency and any other
federal, state or local government authority pertaining to human
exposure to RF radiation and all applicable rules and regulations of
federal, state and local laws, including statutes, regulations,
ordinances, codes, and rules, as amended, relating to the discharge of
air pollutants, water pollutants or process waste water or hazardous or
toxic substances, including the Federal Solid Waste Disposal Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Occupational Safety and Health Act of 1970, each as amended,
regulations of the Occupational Safety and Health Administration and
regulations of any state department of natural resources or state
environmental protection agency now in effect.
"EFFECTIVE TIME" means the time of the filing of the
Certificate of Merger described in Article II.
"ERISA AFFILIATE" means any Person that, together with
Xxxxxxxx, would be or was at any time treated as a single employer
under Section 414 of the Code or 4001 of ERISA and any general
partnership of which Xxxxxxxx or any Subsidiary of Xxxxxxxx is or has
been a general partner.
"ESTIMATE ESCROW AGENT" means the "Escrow Agent" to which the
Estimate Escrow Agreement refers.
"ESTIMATE ESCROW AGREEMENT" means the Estimate Escrow
Agreement entered into among the Stockholder Representative, Xxxxxxxx
(on behalf of the Merger Sub) and The Chase Manhattan Bank (as Escrow
Agent) dated as of the date of this Agreement, as such agreement is in
effect from time to time.
"ESTIMATE FUND" means the "Escrow Fund" to which the Estimate
Escrow Agreement refers.
"EXISTING LMAS" means the time brokerage and local marketing
agreements pursuant to which Xxxxxxxx and its Subsidiaries conduct
their operations with respect to the LMA Stations.
70
"EXPIRATION DATE" means May 16, 1999.
"FCC" means the Federal Communications Commission or any
successor thereto.
"FCC AUTHORIZATIONS" means the authorizations issued by the
FCC and described on the attached Schedule 4E.
"FILM OBLIGATIONS" means all cash payment obligations of
Xxxxxxxx or any of its Subsidiaries under any Program Contract.
A "FINAL ORDER" means the Required FCC Consent if (a) the
Required FCC Consent has been Granted and has not been reversed,
stayed, set aside, enjoined, annulled or suspended (whether under
Section 402 or 405 of the Communications Act or otherwise) and (b) (i)
no request has been filed for administrative or judicial review,
reconsideration, appeal, certiorari or stay and the time for filing any
such request and for the FCC to review the Required FCC Consent on its
own motion has expired, or (2) if such a review, reconsideration or
appeal has occurred, such review, reconsideration or appeal has been
denied and the time for further review, reconsideration or appeal has
expired.
"FUNDED INDEBTEDNESS" means the indebtedness for borrowed
money of Xxxxxxxx and its Subsidiaries under the Xxxxxxxx Senior Debt
Arrangements, the indebtedness for borrowed money of Xxxxxxxx and its
Subsidiaries represented by the Xxxxxxxx Notes, and all other
indebtedness of Xxxxxxxx and its Subsidiaries for money borrowed by
them. As used herein, the term "money borrowed" does not refer to the
receipt or benefit of trade credit for the purchase of goods or
services.
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time, as applied by Xxxxxxxx and
its Subsidiaries from time to time.
The Required FCC Consent is "GRANTED" on the effective date,
as determined under the FCC's rules, regulations and policies, of the
grant thereof by the FCC or its staff.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as in effect from time to time.
"HAZARDOUS MATERIAL" means any substance or waste containing
any hazardous substance, pollutant or contaminant, as those terms are
defined, in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ss.9601 et seq., and any
other substance similarly defined or identified in any applicable
Environmental Laws, including toxic materials or harmful physical
agents, as defined in the Occupational Safety and Health Act of 1979,
as amended, 29 U.S.C. ss.651 et seq. "Hazardous Materials" includes
asbestos, asbestos-containing materials, petroleum and petroleum-based
products, polycholorinated biphenyls (PCBs), infectious wastes and
radioactive materials and wastes.
"HEADQUARTERS ASSETS" means the assets of Xxxxxxxx and its
Subsidiaries located in the offices of Xxxxxxxx and its Subsidiaries
located in Franklin, Tennessee, and Boston, Massachusetts, and any
so-called "personal seat license" or other right of Xxxxxxxx or any of
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its Subsidiaries to subscribe for tickets to events at the stadium
presently being constructed or proposed to be constructed in the
Nashville, Tennessee, metropolitan area.
"INDEMNITY AGREEMENT" means the Indemnity Agreement entered
into among Xxxxxxxx, Xxxxxxxx and certain other Persons dated as of the
date of this Agreement, as such agreement is in effect from time to
time.
"INDEMNITY ESCROW AGENT" means the "Escrow Agent" to which the
Indemnity Escrow Agreement refers.
"INDEMNITY ESCROW AGREEMENT" means the Escrow Agreement
entered into among the Stockholder Representative, Xxxxxxxx and certain
other Persons and The Chase Manhattan Bank (as Escrow Agent) dated as
of the date of this Agreement, as such agreement is in effect from time
to time.
"INDEMNITY FUND" means the "Escrow Fund" to which the
Indemnity Escrow Agreement refers.
"KOKH PURCHASE AGREEMENT" means the Asset Purchase Agreement
dated as of January 6, 1998 among Xxxxxxxx, SBOC and SBLH, as in effect
from time to time.
"LEGAL REQUIREMENTS" means the Communications Act, the rules,
regulations and published policies of the FCC, and all other federal,
state and local laws, rules, regulations, ordinances, judgments, orders
and decrees.
"LIEN" means any mortgage, pledge, hypothecation, encumbrance,
lien (statutory or otherwise), preference, priority or other security
agreement of any kind or nature whatsoever (including any conditional
sale or other title retention agreement and any lease having
substantially the same effect as any of the foregoing and any
assignment or deposit arrangement in the nature of a security device).
"LMA STATIONS" means broadcast television station WUXP,
Nashville, Tennessee; and broadcast television station WUPN-TV,
Greensboro, North Carolina; in each case together with all related
translator stations (if any).
"MARKET CABLE SYSTEM" means, with respect to any Station, any
cable television system located within such Station's television
market, as that term is defined in Section 76.55(e) of the rules of the
FCC.
"MATERIAL ADVERSE CHANGE" means a material adverse change
after the date of this Agreement in the operations, business, financial
condition or results of operations of the Stations, taken as a whole,
or in the condition of the Station Assets, taken as a whole (as
compared with the operations, business, financial condition and results
of operations of the Stations, taken as a whole, and the condition of
the Station Assets, taken as a whole, on the date of this Agreement)
which occurs on or prior to the Approval Date; provided that none of
the following (or any combination thereof) will be a Material Adverse
Change: (i) a
72
change in the financial performance of the Stations; (ii) any change
caused in whole or in part by (A) any change in employees, suppliers or
customers of the Stations, (B) a change in general economic, financial
or capital market conditions on a national, state, regional or local
basis, (C) a change in conditions (including legislation, regulations
or competitive activities) applicable to the broadcast television
industry generally on a national, state, regional or local basis, (D)
any matter disclosed on the attached Schedules to this Agreement, (E)
the establishment of a union or collective bargaining arrangement, or
actual or threatened union organizing activity, involving employees of
Xxxxxxxx, any of its Subsidiaries, Xxxxxxxx Two or Xxxxxxxx Three, (F)
the departure of any employees of Xxxxxxxx, any of its Subsidiaries,
Xxxxxxxx Two or Xxxxxxxx Three after the date of this Agreement,
whether or not in anticipation of the Merger, or (G) the loss of cable
system carriage of any Station.
"MISSION GUARANTEES" means the (i) Guaranty of Xxxxxxxx dated
as of July 11, 1996 in favor of NationsBank of Texas, N.A., and any
other lenders referred to therein relating to certain indebtedness of
Mission Broadcasting I, Inc., a Delaware corporation, and (ii) the
Guaranty of Xxxxxxxx dated as of July 29, 1996 in favor of NationsBank
of Texas, N.A., and any other lenders referred to therein relating to
certain indebtedness of Mission Broadcasting II, Inc., a Delaware
corporation, in each case as in effect from time to time.
"9-5/8% INDENTURE" means the Indenture dated as of December
15, 1993 among Xxxxxxxx Broadcasting (as the successor by merger to Act
III), its Subsidiaries and The State Street Bank and Trust Company, as
successor trustee, as in effect from time to time.
"9-5/8% NOTES" means the 9-5/8% Notes due 2003 of Xxxxxxxx
Broadcasting (as the successor by merger to Act III) issued pursuant to
the 9-5/8% Indenture, as such Notes are in effect from time to time.
"NEW LMAS" means the Xxxxxxxx Two LMA and the Xxxxxxxx Three
LMA.
"NON-CONTINUING STATION MANAGER" means any general manager or
general sales manager of a Station, if Xxxxxxxx notifies Xxxxxxxx in
writing not fewer than 10 days prior to the Closing Date that Xxxxxxxx
desires that the employment of such general manager or general sales
manager be terminated effective as of the Closing Date and Xxxxxxxx
does not withdraw such notice by contrary written notice to Xxxxxxxx on
or prior to the Closing Date.
"OLD XXXXXXXX STOCKHOLDER" means any holder of record of any
Xxxxxxxx Share Equivalent immediately prior to the Effective Time.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the
conduct of business by Xxxxxxxx and is Subsidiaries, substantially
consistent with their respective past practices.
"OWNED STATIONS" means broadcast television station WZTV,
Nashville, TN; broadcast television station WUTV, Buffalo, New York;
broadcast television station WXLV-TV, Winston-Salem, North Carolina;
broadcast television station WRGT-TV, Dayton, Ohio; broadcast
television station WRLH-TV, Richmond, Virginia; broadcast television
station
00
XXXX-XX, Xxxxxxxxxx, Xxxx Xxxxxxxx; broadcast television station WUHF,
Rochester, New York; broadcast television station WTAT-TV, Charleston,
South Carolina; broadcast television station WFXV, Utica, New York;
low-power television station WPNY-LP, Rome, New York; broadcast
television station WMSN-TV, Madison, Wisconsin; and Station KOKH; in
each case together with all associated translator stations (if any)
owned by Xxxxxxxx or any of its Subsidiaries immediately prior to the
Spin-Offs.
"PARTIES" means the parties to this Agreement.
"PERMITTED ENCUMBRANCES" means (i) Liens arising by operation
of law and securing the payment of Taxes which are not yet due and
payable, (ii) with respect to any property leased by Xxxxxxxx, any of
its Subsidiaries, Xxxxxxxx Two or Xxxxxxxx Three as lessee, the
interest of the lessor in such property, (iii) easements,
rights-of-way, reservations of rights, conditions or covenants, zoning,
building or similar restrictions or other non-monetary Liens or defects
that do not, individually or in the aggregate, materially interfere
with the use of the affected property in the operation of the Stations
as currently conducted or as presently proposed by Xxxxxxxx and its
Subsidiaries to be conducted, (iv) restrictions on transfer imposed
under state or federal securities laws or pursuant to the
Communications Act or the FCC Regulations, (v) Liens disclosed on the
attached Schedule 4G, including those described in the title policies
which are a part of such Schedule, and (vi) Liens securing indebtedness
under the Xxxxxxxx Senior Debt Arrangements, other Funded Indebtedness
and the Mission Guarantees.
A "PERSON" means any individual, partnership, limited
liability company, joint venture, corporation, trust, unincorporated
association or government or department thereof.
"PROGRAM CONTRACTS" means all program licenses and other
Contracts which authorize the broadcast of film product or programs on
any Station, including those described under the heading "Program
Contracts" on the attached Schedule 4J and any of the same entered into
after the date of this Agreement and prior to the Closing in accordance
with this Agreement, and any of the same which are not required to be
described on any Schedule to this Agreement by reason of the
dollar-amount or term thresholds set forth in Section 4.J, in each case
to the extent existing and as in effect from time to time.
"REALTY" means all real property interests described on the
attached Schedule 4G.
"REQUIRED FCC CONSENT" means the action(s) or order(s) by the
FCC granting its Consent to the transfer of the FCC Authorizations in
the Spin-Offs, in each case without any condition which in the
reasonable judgment of Xxxxxxxx and the Acquiring Parties is adverse to
such Person (or, in Xxxxxxxx'x or the Stockholder Representative's
reasonable judgment, adverse to any of the Old Xxxxxxxx Stockholders or
the stockholders of Xxxxxxxx Two or Xxxxxxxx Three), as the case may
be, in any material respect.
"SALE OF XXXXXXXX" means any transfer, or transfer of control,
of all or substantially all of the assets of Xxxxxxxx, its
Subsidiaries, Xxxxxxxx Two and Xxxxxxxx Three, taken as a whole,
whether by means of a sale of assets, merger, stock acquisition or
similar transaction,
74
other than to the ABRY Fund or an Affiliate of the ABRY Fund.
"SECURITIES ACT" means the Securities Act of 1933, as amended
and in effect from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended and in effect from time to time.
"XXXXXXXX COMMON STOCK" means the Class A Common Stock of
Xxxxxxxx, par value $0.01 per share.
"XXXXXXXX-RELATED ENTITY" means Xxxxxxxx, the Merger Sub, any
direct or indirect assignee or proposed assignee (by operation of law
or otherwise) of any of the rights of any of them pursuant to this
Agreement or any other agreement contemplated hereby, any direct or
indirect successor or proposed successor to Post-Merger Xxxxxxxx'x and
its Subsidiaries' or Xxxxxxxx Two's business or operation with respect
to any Station, or any Affiliate or any of them.
"STATION ASSETS" means all of Xxxxxxxx'x and its Subsidiaries'
rights in, to and under the assets and properties of the Stations, real
and personal, tangible and intangible, of every kind and description
which are owned and used by Xxxxxxxx or its Subsidiaries in connection
with the business and operations of the Stations, including rights
under con tracts and leases, real and personal property, plant and
equipment, inventories, intangibles, licenses and goodwill, and all
other assets and properties of Xxxxxxxx and its Subsidiaries used
solely in connection with the operation of any Station; provided that
the Station Assets will not include the Headquarters Assets.
"STATION KOKH" means broadcast television station KOKH-TV,
Oklahoma City, Oklahoma, together with all related translator stations
(if any) owned by Xxxxxxxx and its Subsidiaries immediately prior to
the Spin-Offs.
"STATIONS" means the Owned Stations and the LMA Stations.
"STOCKHOLDER REPRESENTATIVE" means ABRY Partners, Inc., a
Delaware corporation, or any successor thereto as the Stockholder
Representative designated pursuant to Section 13.O.
"STRADDLE PERIOD" means any Taxable period beginning before
and ending on or after the Closing Date.
With respect to any Person, a "SUBSIDIARY" means any
corporation, partnership, limited liability company, association or
other business entity of which, at the time of such reference, (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof, or a
majority economic interest, is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that
75
Person or a combination thereof, or (ii) if a partnership, limited
liability company, association or other business entity, a majority of
the partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by any Person or one
or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons will be deemed to have a majority
ownership interest in a partnership, limited liability company,
association or other business entity if such Person or Persons will be
allocated a majority of partnership, company, association or other
business entity gains or losses or will be or control the managing
director or general partner of such partnership, company, association
or other business entity.
"XXXXXXXX BROADCASTING" means Xxxxxxxx Broadcasting Company,
Inc., a Delaware corporation.
"XXXXXXXX COMMON STOCK" means Xxxxxxxx Shares which are common
stock.
"XXXXXXXX CONSENTS" means all Consents of the board of
directors or stockholders of Xxxxxxxx or any of its Subsidiaries and
all Consents (if any) for a Spin-Off required under any lease under
which Xxxxxxxx or a Subsidiary (as lessee) leases space on a tower for
the location of any assets described on the attached Exhibit A or the
attached Exhibit B.
"XXXXXXXX INDENTURES" means the 9-5/8% Indenture, the 10-1/4%
Indenture and the 13-1/4% Indenture.
"XXXXXXXX NOTES" means the 9-5/8% Notes, the 10-1/4% Notes and
the 13-1/4% Notes.
"XXXXXXXX PREFERRED STOCK" means the Series A Preferred Stock
of Xxxxxxxx, par value $0.001 per share.
"XXXXXXXX-RELATED ENTITY" means any Affiliate of ABRY Partners
Inc. or ABRY Broadcast Partners II, L.P., including Xxxxxxxx and each
of its Subsidiaries, prior to the Effective Time.
"XXXXXXXX RIGHT" means any security or right issued by
Xxxxxxxx which is not a Xxxxxxxx Share, which is outstanding
immediately prior to the Effective Time and which is directly or
indirectly convertible into or exercisable or exchangeable for any
capital stock of Xxxxxxxx at such time.
"XXXXXXXX SENIOR DEBT ARRANGEMENTS" means the Credit Agreement
dated as of January 4, 1996 among Sullivan, Sullivan Broadcasting, the
various Agents and co-Agents referred to therein, and the several
Lenders from time to time parties thereto, together with all "Loan
Documents" and other documents and instruments relating to the
"Obligations" referred to therein, in each case as in effect from time
to time.
"SULLIVAN SHARE" means any share of capital stock of Sullivan
which is outstanding immediately prior to the Effective Time.
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"SULLIVAN SHARE EQUIVALENT" means any Sullivan Right or
Sullivan Share.
"SULLIVAN THREE" means Sullivan Broadcasting Company III,
Inc., a Delaware corporation.
"SULLIVAN THREE LMA" means a local marketing or time brokerage
agreement to be entered into at the time of the Closing pursuant to
which Sinclair or a Subsidiary of Sinclair will have the right to sell
all or substantially all of the advertising time on the Sullivan Three
Stations and having such other terms and conditions as Sinclair may
propose and which are reasonably acceptable to Sullivan Three.
"SULLIVAN THREE STATIONS" means broadcast television station
WRGT-TV, Dayton, Ohio; broadcast television station WVAH-TV,
Charleston, West Virginia; broadcast television station WTAT-TV,
Charleston, South Carolina; broadcast television station WFXV-TV,
Utica, New York; low-power television station WPNY-LP, Rome, New York;
and Station KOKH; in each case together with all associated translator
stations (if any) owned by Sullivan or any of its Subsidiaries
immediately prior to the Spin-Offs.
"SULLIVAN TWO" means Sullivan Broadcasting Company II, Inc., a
Delaware corporation.
"SULLIVAN TWO LMA" means a local marketing or time brokerage
agreement to be entered into at the time of the Closing pursuant to
which Sinclair or a Subsidiary of Sinclair will have the right to sell
all or substantially all of the advertising time on the Sullivan Two
Stations and having such other terms and conditions as Sinclair may
propose and which are reasonably acceptable to Sullivan Two.
"SULLIVAN TWO STATIONS" means the Stations which are not
Sullivan Three Stations.
"TAX" (and, with correlative meaning, "Taxes", "Taxable" and
"Taxing") means any (A) federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profits,
environmental (including under Section 59A of the Tax Code), customs,
duties, real property, real property gains, personal property, capital
stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax of any kind whatsoever,
including any interest, penalties or additions to tax or additional
amounts in respect of the foregoing; (B) liability of any corporation
for the payment of any amounts of the type described in clause (A)
arising as a result of being (or ceasing to be) a member of any
Affiliated Group (or being included in any Tax Return relating
thereto); and (C) liability for the payment of any amounts of the type
described in clause (A) or (B) as a result of any express or implied
obligation to indemnify or otherwise assume or succeed to the liability
of any other Person.
"TAX CODE" means the Internal Revenue Code of 1986, as amended
(including, where applicable, the Internal Revenue Code of 1954, as
amended).
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"10-1/4% INDENTURE" means the Indenture dated as of December
21, 1995 among Sullivan Broadcasting, its Subsidiaries and The State
Street Bank and Trust Company, as trustee, as in effect from time to
time.
"10-1/4% NOTES" means the 10-1/4% Senior Subordinated Notes
due 2005 of Sullivan Broadcasting issued pursuant to the
10-1/4%Indenture, as such Notes are in effect from time to time.
"13-1/4% INDENTURE" means the Indenture dated as of December
21, 1995 among Sullivan and the Bank of New York, as trustee, as in
effect from time to time.
"13-1/4% NOTES" means the 13-1/4% Senior Accrual Debentures
due 2006 of Sullivan issued pursuant to the 13-1/4% Indenture, as such
Debentures are in effect from time to time.
"TIME SALE CONTRACTS" means all orders, agreements and other
Contracts existing on the date of this Agreement, or entered into in
the ordinary course of business of any Stations, or as otherwise
permitted by this Agreement, between the date of this Agreement and the
Closing, for the sale of advertising time (other than any Trades) on
any Station; provided that any so-called barter Program Contract will
be deemed to constitute a "Program Contract," and not a "Time Sale
Contract," for purposes of this Agreement.
"TRADE" means any trade, barter or similar arrangement for the
sale of advertising time other than for cash (other than any film or
program barter arrangements and radio barter arrangements) on any
Station; provided that any so-called barter Program Contract will be
deemed to constitute a "Program Contract," and not a "Trade," for
purposes of this Agreement.
"TRADE-OUT PAYABLES" means all obligations of Sullivan or any
of its Subsidiaries to provide advertising time arising under any Trade
arrangement, whenever made.
"TRADE-OUT RECEIVABLES" means all current assets of Sullivan
or any of its Subsidiaries which are goods or services receivable by
Sullivan or any of its Subsidiaries arising under any Trade
arrangement, whenever made, and all other accounts receivable of
Sullivan or any of its Subsidiaries which at the option of the obligor
thereof may be satisfied or discharged other than in money.
"TRANSACTION DOCUMENTS" means this Agreement and all
agreements between or among any or all of the Sullivan-Related Entities
and the Sinclair-Related Entities relating thereto, in each case as in
effect from time to time.
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LIST OF SCHEDULES
Schedule 4C Financial Statements
Schedule 4D Certain Developments
Schedule 4E FCC Matters
Schedule 4F Certain Asset-Related Matters
Schedule 4G Ownership and Other Matters
Schedule 4I Insurance
Schedule 4J Contracts
Schedule 4K Employees
Schedule 4L Litigation
Schedule 4N Conflicts
Schedule 4O Subsidiaries, Organization and Qualification
Schedule 4P Tax Matters
Schedule 4T Employee Benefit Matters
Schedule 5E Sinclair's FCC-Related Disclosures
LIST OF EXHIBITS
Exhibit A Sullivan Two Spin-Off Assets
Exhibit B Sullivan Three Spin-Off Assets
Exhibit C Opinions of Sullivan's Counsel
Exhibit D Opinions of Sinclair's and the Merger Sub's Counsel
Exhibit E Form of Earnest Money Letter of Credit
79
