Exhibit: 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STATIONS HOLDING COMPANY, INC.,
XXXX COMMUNICATIONS SYSTEMS, INC.
AND
XXXX MIDAMERICA TELEVISION, INC.
DATED AS OF
JUNE 4, 2002
CONTENTS
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER................................ 2
1.1 Merger........................................................ 2
1.2 Time and Place of Closing..................................... 2
1.3 Effective Time................................................ 2
1.4 Execution of Support and Option Agreements.................... 2
1.5 Delivery of Letter of Credit and Escrow of Shares............. 2
ARTICLE 2 TERMS OF MERGER................................................. 3
2.1 Certificate of Incorporation.................................. 3
2.2 Bylaws........................................................ 3
2.3 Directors and Officers........................................ 3
2.4 Tax Treatment................................................. 3
ARTICLE 3 MANNER OF CONVERTING STOCK...................................... 3
3.1 Conversion of Shares.......................................... 3
3.2 Intentionally Omitted......................................... 4
3.3 Intentionally Omitted......................................... 4
3.4 Shares Held by SHC............................................ 4
3.5 Working Capital Adjustment.................................... 4
3.6 Accounting Principles......................................... 5
ARTICLE 4 EXCHANGE OF STOCK............................................... 6
4.1 Exchange Procedures........................................... 6
4.2 Rights of Former SHC Stockholders............................. 7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SHC........................... 7
5.1 Organization, Standing, and Power............................. 7
5.2 Authorization and Enforceability.............................. 8
5.3 Capitalization................................................ 9
5.4 SHC Subsidiaries.............................................. 9
5.5 Financial Statements.......................................... 9
5.6 No Undisclosed Liabilities.................................... 10
5.7 Absence of Changes............................................ 10
5.8 Tax Matters................................................... 10
5.9 Assets........................................................ 11
5.10 Real Property................................................. 11
5.11 Intentionally Omitted......................................... 12
5.12 Intellectual Property......................................... 12
5.13 Computer Software and Databases............................... 12
5.14 Accounts Receivable........................................... 12
5.15 Insurance..................................................... 12
5.16 Bonds, Letters of Credit and Guarantees....................... 13
5.17 Compliance with Law........................................... 13
5.18 Environmental................................................. 14
5.19 Litigation and Claims......................................... 15
5.20 Benefit Plans................................................. 15
5.21 Contracts..................................................... 17
-i-
5.22 Intentionally Omitted......................................... 19
5.23 Labor Matters................................................. 19
5.24 Intentionally Omitted......................................... 19
5.25 Brokers and Finders........................................... 20
5.26 Interested Transactions....................................... 20
5.27 Officers, Directors and Bank Accounts......................... 20
5.28 Statements True and Correct................................... 20
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF XXXX AND MERGER CORP............ 20
6.1 Organization, Standing, and Power............................. 20
6.2 Authority; No Breach.......................................... 20
6.3 Brokers and Finders........................................... 21
6.4 Statements True and Correct................................... 21
6.5 Escrow Shares................................................. 21
6.6 SEC Filings; Financial Statements............................. 21
6.7 No Attributable Interest...................................... 22
6.8 Litigation.................................................... 22
ARTICLE 7 COVENANTS AND ADDITIONAL AGREEMENTS OF SHC, XXXX AND
MERGER CORP................................................... 22
7.1 Mutual Covenants.............................................. 22
7.2 Covenants of SHC.............................................. 23
7.3 Adverse Changes in Condition.................................. 25
7.4 Reports....................................................... 25
7.5 Right of Inspection; Access................................... 25
7.6 Intentionally Omitted......................................... 25
7.7 FCC Matters................................................... 25
7.8 Bankruptcy Court Actions...................................... 26
7.9 Agreement as to Efforts to Consummate......................... 26
7.10 Notice of Material Developments and Confidentiality........... 26
7.11 Press Releases................................................ 27
7.12 State Takeover Laws........................................... 27
7.13 Intentionally Omitted......................................... 27
7.14 HSR Filings................................................... 27
7.15 Expenses...................................................... 27
7.16 Indemnification............................................... 27
7.17 Designated Stations Purchase Price Allocation................. 28
7.18 Delivery of Financial Statements.............................. 28
7.19 Resale Registration Statement for the Escrow Shares;
Limitations on Subsequent Transfers.......................... 29
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............... 32
8.1 Conditions to Obligations of Each Party....................... 32
8.2 Conditions to Obligations of Xxxx............................. 33
8.3 Conditions to Obligations of SHC.............................. 34
ARTICLE 9 TERMINATION..................................................... 35
9.1 Termination................................................... 35
9.2 Effect of Termination......................................... 36
-ii-
ARTICLE 10 DEFINITIONS..................................................... 37
ARTICLE 11 MISCELLANEOUS................................................... 48
11.1 Notices....................................................... 48
11.2 Entire Agreement.............................................. 49
11.3 Modifications, Amendments and Waivers......................... 49
11.4 Successors and Assigns........................................ 49
11.5 Table of Contents; Captions; References....................... 49
11.6 Governing Law................................................. 50
11.7 Pronouns...................................................... 50
11.8 Severability.................................................. 50
11.9 Counterparts.................................................. 50
11.10 Interpretations............................................... 50
11.11 Stockholder Representative.................................... 50
11.12 Non-Survival of Representations and Covenants................. 51
-iii-
EXHIBITS AND SCHEDULES
Exhibit A -- Plan Summary
Exhibit 1.4(a) -- Form of Lock Up, Voting and Consent Agreement for SHC Common Stock
Exhibit 1.4(b) -- Form of Lock Up, Voting and Consent Agreement for SHC Senior Preferred Stock
Exhibit 1.4(c) -- Form of Lock Up, Voting and Consent Agreement for SHC Junior Preferred Stock
Exhibit 1.4(d) -- Form of Lock Up, Voting and Consent Agreement for SHC Bondholders
Exhibit 1.5(a) -- Form of LC
Exhibit 1.5(b) -- Form of Share Escrow Agreement
Exhibit 8.2(d) -- Opinion of SHC's FCC Counsel
Schedule A -- List of Stations
Schedule B -- List of Signatories to Lock Up, Voting and Consent Agreements
Schedule C -- Designated Stations
Schedule D -- Planned DTV Capital Expenditures
Schedule 5.1 -- Organization, Standing and Power
Schedule 5.2 -- Authorization and Enforceability
Schedule 5.3(i) -- Reserved Stock
Schedule 5.3(ii) -- Obligations to Issue Additional Securities
Schedule 5.3(iii) -- Registration Rights
Schedule 5.3(iv) -- Record Holders
Schedule 5.4(i) -- SHC Subsidiaries
Schedule 5.4(ii) -- SHC Subsidiaries' Capital Stock
Schedule 5.4(iii) -- Voting or Disposal Contracts
Schedule 5.4(iv) -- Permitted Liens on Stock
Schedule 5.4(v) -- Other Stock or Interests Owned
Schedule 5.5 -- Financial Statements
Schedule 5.7 -- Absence of Changes
Schedule 5.8 -- Tax Matters
Schedule 5.9 -- Assets
Schedule 5.10 -- Real Property
Schedule 5.12 -- Intellectual Property
Schedule 5.13 -- Computer Software and Databases
Schedule 5.14 -- Accounts Receivable
Schedule 5.15(i) -- Insurance
Schedule 5.15(ii) -- Expired Policies
Schedule 5.15(iii) -- Cancellation Notices
Schedule 5.16 -- Bonds, Letters of Credit and Guarantees
Schedule 5.17 -- Compliance with Law
Schedule 5.18 -- Environmental
Schedule 5.19(i) -- Litigation
Schedule 5.19(ii) -- Adverse Orders
Schedule 5.19(iii) -- Regulatory Investigations
Schedule 5.19(iv) -- Litigation History
Schedule 5.19(v) -- Loss Contingencies
Schedule 5.20 -- Benefit Plans
Schedule 5.21(a)(i) -- Real Property Contracts
-iv-
Schedule 5.21(a)(ii) -- Personal Property Contracts
Schedule 5.21(a)(iii) -- Capital Assets Contracts
Schedule 5.21(a)(iv) -- Employment
Schedule 5.21(a)(v) -- Sales Representatives Contracts
Schedule 5.21(a)(vi) -- Powers of Attorney
Schedule 5.21(a)(vii) -- Programming and Network Affiliation Agreements
Schedule 5.21(a)(viii) -- Any Other Contracts Schedule 5.23 -- Labor Matters
Schedule 5.25 -- Brokers and Finders
Schedule 5.26 -- Interested Transactions
Schedule 5.27 -- Officers, Directors and Bank Accounts
Schedule 7.2 -- Covenants of SHC
Schedule 7.4 -- Reports to be Furnished
Schedule 8.2(g) -- Network Consents
-v-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of the 4th day of June, 2002,
is made and entered into by and among STATIONS HOLDING COMPANY, INC., a Delaware
corporation and debtor and debtor-in-possession ("SHC"), XXXX COMMUNICATIONS
SYSTEMS, INC., a Georgia corporation ("Xxxx") and XXXX MIDAMERICA TELEVISION,
INC., a Delaware corporation and a newly-formed wholly-owned subsidiary of Xxxx
("Merger Corp.").
PREAMBLE:
SHC is the owner and licensee, through its direct and indirect
Subsidiaries, of the various television stations listed on Schedule A hereto
(the "Current Stations") pursuant to authorizations issued by the FCC.
Concurrently with the execution of this Agreement, Benedek Broadcasting
Corporation ("BBC") (a wholly-owned subsidiary of SHC) and Benedek License
Corporation ("BLC") (a wholly-owned subsidiary of BBC) are entering into an
Asset Purchase Agreement (the "Purchase Agreement") pursuant to which BBC and
BLC will sell all of the assets related to the Current Stations listed on
Schedule C (the "Designated Stations") to Xxxxxxx Broadcasting Company, LLC, a
Delaware limited liability company (the "Purchaser"). The Current Stations other
than the Designated Stations are referred to herein as the "Stations." Xxxx,
Merger Corp. and SHC intend that, immediately after and subject to the prior
closing of the transactions contemplated by the Purchase Agreement, Xxxx shall
acquire SHC through the merger of Merger Corp. with and into SHC (the "Merger").
The Boards of Directors of Xxxx, Merger Corp. and SHC are of the opinion that
the transactions described in this Agreement are in the best interests of the
parties and their respective shareholders and stockholders. At the Effective
Time, the outstanding shares of capital stock of SHC shall be converted as
follows: (i) the outstanding shares of SHC Senior Preferred Stock shall be
converted into the right to receive a cash payment, (ii) the outstanding shares
of SHC Junior Preferred Stock shall be converted into the right to receive a
cash payment and (iii) the outstanding shares of SHC Class A Common Stock and
SHC Class B Common Stock shall be cancelled with no consideration issued in
exchange therefor.
As SHC has filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code of 1978, as amended (the "Bankruptcy Code"), the
consummation of the transactions contemplated by this Agreement shall be subject
to the approval by the Bankruptcy Court of a plan of reorganization (the "Plan
of Reorganization") that contemplates the Merger on the terms set forth herein
and that provides for the treatment of creditors and stockholders of SHC in the
manner set forth in the plan of reorganization summary attached hereto as
Exhibit A (the "Plan Summary").
Certain terms used in this Agreement are defined in Article 10 hereof.
AGREEMENT:
In consideration of the foregoing, the mutual agreements, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Merger Corp. shall be merged with and into SHC in accordance
with the provisions of Section 251 of the DGCL and with the effect provided in
Section 259 of the DGCL. SHC shall be the surviving corporation in the Merger
(the "Surviving Corporation"). The Surviving Corporation shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the respective Boards of Directors of Xxxx, Merger Corp. and SHC.
1.2 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at 9:00 A.M., Atlanta,
Georgia time on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M., Atlanta, Georgia
time), or at such other time as the parties may mutually agree (such actual date
of Closing, the "Closing Date"). The Closing shall be held at the offices of
Xxxxxx & Bird LLP, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or
at such other location as the parties may mutually agree.
1.3 EFFECTIVE TIME. The Merger and the other transactions contemplated by
this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Delaware (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each party hereto, the parties shall use
their reasonable efforts to cause the Effective Time to occur on the seventh
(7th) Business Day following the satisfaction or waiver of all of the conditions
set forth in Article 8. Notwithstanding the foregoing sentence, the Effective
Time shall not occur prior to October 1, 2002 and Xxxx may, on one occasion by
written notice to SHC, delay the Effective Time for up to one hundred twenty
(120) days in the event that there shall have occurred (i) any general
suspension of trading in equity securities in the United States securities or
financial markets for in excess of two consecutive trading days, (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks by federal or state authorities in the United States, (iii) a commencement
of a war, armed hostilities or other national or international calamity directly
involving the United States, (iv) any limitation by any governmental authority
on the extension of credit by banks or other lending institutions in the United
States, or (v) in the case of any of the foregoing existing on the date hereof,
a material acceleration or worsening thereof.
1.4 EXECUTION OF LOCK UP, VOTING AND CONSENT AGREEMENTS. Simultaneously
with the execution of this Agreement and as a condition hereto, the SHC
stockholders and bondholders set forth on Schedule B have executed and delivered
to Xxxx those certain Lock Up, Voting and Consent Agreements substantially in
the forms of Exhibit 1.4(a), Exhibit 1.4(b), Exhibit 1.4(c) and Exhibit 1.4(d).
1.5 DELIVERY OF LETTER OF CREDIT AND ESCROW OF SHARES. Simultaneously with
the execution of this Agreement, Xxxx shall (i) deliver or cause to be delivered
to SHC a standby letter of credit in the amount of twelve million five hundred
thousand dollars ($12,500,000) in the form of Exhibit 1.5(a) (the "LC") and (ii)
deposit, or cause to be deposited with the Escrow Agent a number of shares of
Xxxx Class B Common Stock having an aggregate value of twelve million five
hundred thousand dollars ($12,500,000) based on the Average Price (the "Escrow
Shares") to be applied as provided in the succeeding sentence. Xxxx shall
maintain the LC in effect until the earlier of (i) the Effective Time or (ii)
ten (10) Business Days after the termination of this Agreement; provided, that
in
-2-
the event that the LC or any replacement therefore shall expire by its terms
prior to either of the foregoing dates, Xxxx shall renew the LC or obtain a
replacement LC and deliver same to SHC at least five (5) Business Days prior to
such expiration. The LC and the Escrow Shares will be paid to SHC or Xxxx as
provided in Section 9.2(b) of this Agreement. At the Effective Time and subject
to the conditions thereto, the LC and the Escrow Shares shall be returned to
Xxxx and cancelled.
ARTICLE 2
TERMS OF MERGER
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of SHC
shall be the Certificate of Incorporation of the Surviving Corporation until
duly amended or repealed.
2.2 BYLAWS. The Bylaws of SHC shall be the Bylaws of the Surviving
Corporation until duly amended or repealed. .
2.3 DIRECTORS AND OFFICERS. The directors and officers of Merger Corp. in
office immediately prior to the Effective Time, together with such additional
Persons as may thereafter be elected, shall serve as the directors and officers,
respectively, of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation.
2.4 TAX TREATMENT. The parties hereby adopt this Agreement to be treated
for federal income tax purposes as an acquisition of the capital stock of SHC.
ARTICLE 3
MANNER OF CONVERTING STOCK
3.1 CONVERSION OF SHARES. Subject to Section 3.2, at the Effective Time,
by virtue of the Merger and without any action on the part of SHC, Xxxx, Merger
Corp., or their respective stockholders or shareholders, the stock of the
constituent corporations shall be converted as follows:
(a) Each share of Xxxx Class A Common Stock and Xxxx Class B Common
Stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding from and after the Effective Time.
(b) Each share of Merger Corp. Common Stock issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding from and
after the Effective Time and shall be converted into one share of SHC Class B
Common Stock.
(c) Each share of SHC Senior Preferred Stock (excluding shares
subject to the provisions of Section 3.4) issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall become and
be converted into the right to receive a cash payment equal to the quotient
obtained by dividing (i) the sum of $500,000,000 minus (A) the principal amount
of the Discount Notes outstanding at the Effective Time plus accrued interest
thereon through the Effective Time, determined in accordance with the Plan of
Reorganization, minus (B) the principal amount of the indebtedness outstanding
at the Effective Time under the BBC Loan Agreement plus accrued interest and any
mandatory interest payments or pre-payment penalties, premiums or other costs
thereon through the
-3-
Effective Time, determined in accordance with the Plan of Reorganization, plus
(C) subject to adjustment in accordance with Section 3.5(b), the Working Capital
Positive Adjustment, if any, minus (D) subject to adjustment in accordance with
Section 3.5(b), the Working Capital Negative Adjustment, if any, plus (E) the
DTV Positive Adjustment, if any, and minus (F) the DTV Negative Adjustment, if
any (the result of the addition and subtraction of the foregoing items in this
clause (i) being referred to in the aggregate as the "Merger Consideration")
divided by (ii) 100,000 (the number of outstanding shares of SHC Senior
Preferred Stock at the Effective Time) (the "Per Share Merger Consideration").
(d) Each share of SHC Junior Preferred Stock (excluding shares
subject to the provisions of Section 3.4) issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall become and
be converted into the right to receive a cash payment equal to the quotient
obtained by dividing (i) $2,500,000 (the "Junior Preferred Stock Merger
Consideration") by (ii) 450,000 (the number of outstanding shares of SHC Junior
Preferred Stock at the Effective Time) (the "Per Share Junior Preferred Stock
Merger Consideration").
(e) Each share of SHC Class A Common Stock and SHC Class B Common
Stock and any options or warrants to acquire such shares issued and outstanding
immediately prior to the Effective Time shall be cancelled with no consideration
issued in exchange therefor.
3.2 INTENTIONALLY OMITTED.
3.3 INTENTIONALLY OMITTED.
3.4 SHARES HELD BY SHC. Each of the shares of SHC Senior Preferred Stock
held by SHC or any of the SHC Subsidiaries other than in a fiduciary capacity
shall be canceled and retired at the Effective Time and no consideration shall
be issued in exchange therefor.
3.5 WORKING CAPITAL ADJUSTMENT.
(a) At least five (5) days prior to the Closing Date, SHC shall
prepare and deliver to Xxxx a pro forma statement of the estimated Working
Capital Adjustment as of the Effective Time (the "Preliminary Working Capital
Statement"). An amount equal to eighty-five percent (85%) of the estimated
Working Capital Adjustment reflected on the Preliminary Working Capital
Statement shall be utilized in determining the Merger Consideration paid by Xxxx
at the Effective Time (the amount so utilized is referred to herein as the
"Estimated Working Capital Adjustment").
(b) As soon as practicable after the Closing and in all events
within sixty (60) days after the Closing Date, Xxxx shall prepare a final
statement of the Working Capital Adjustment as of the Effective Time (the "Final
Working Capital Statement") and shall submit such Final Working Capital
Statement to the Stockholder Representative for review and approval. The Final
Working Capital Statement shall be certified by an officer of Xxxx, on behalf of
Xxxx, to be true and complete. Xxxx shall make available to the Stockholder
Representative all information reasonably necessary to determine the correct
amount of Working Capital Adjustment, including appropriate supporting documents
and such other information as may be reasonably requested by the Stockholder
Representative. The Stockholder Representative (and his authorized
representatives) shall have the right to visit the location where Xxxx has
available the supporting documents and other information during normal business
hours to verify and review such documentation and other information upon
providing reasonable notice to Xxxx. If the Stockholder Representative disputes
the Final Working Capital Statement, he shall so notify Xxxx within thirty (30)
days after receipt of the Final Working Capital Statement setting forth in
reasonable detail the
-4-
basis for any such dispute. If the Stockholder Representative notifies Xxxx that
he accepts the Final Working Capital Statement, or fails to dispute such Final
Working Capital Statement within the thirty (30) day period specified in the
preceding sentence, Xxxx'x determination of the Final Working Capital Statement
shall be conclusive and binding on the parties upon the expiration of such
period.
(c) Xxxx and the Stockholder Representative shall use good faith
efforts to resolve any dispute involving the determination of the Working
Capital Adjustment and the Final Working Capital Statement. If the parties are
unable to resolve any dispute within fifteen (15) days following the delivery of
the Stockholder Representative's notice concerning disputed adjustments, Xxxx
and the Stockholder Representative shall jointly designate a qualified Big 4
firm of independent certified public accountants (the "Neutral Auditors") to
resolve such dispute. If the parties are unable to agree on the designation of
the Neutral Auditors, then an accounting firm will be selected by lot from two
names submitted by the Stockholder Representative and two names submitted by
Xxxx, none of which shall be employed, or shall have been employed at any time
in the past three years, by SHC, the Stockholder Representative or Xxxx. The
Neutral Auditors' resolution of the dispute shall be made within sixty (60) days
of their selection, shall be based on presentations by the Stockholder
Representative and Xxxx and not by independent financial audit, and shall be
final and binding on the parties. The Neutral Auditors' resolution of the
dispute may be enforced by any court of competent jurisdiction. All of the fees
and expenses of the Neutral Auditors shall be shared equally by Xxxx, on the one
hand, and the holders of the SHC Senior Preferred Stock, on the other hand, with
the SHC Senior Preferred Stock holders' portion being paid by an adjustment to
the Working Capital Adjustment.
(d) Within seven (7) days after the Working Capital Adjustment is
finally determined in accordance with the preceding provisions of this Section
3.5, if the Working Capital Adjustment as finally determined in accordance with
the preceding provisions of this Section 3.5 is more than the Estimated Working
Capital Adjustment Xxxx shall pay to the Exchange Agent, as an adjustment to the
amount of the Merger Consideration originally paid to the Exchange Agent
pursuant to Section 4.1, the amount by which the Working Capital Adjustment, as
so finally determined, exceeds the Estimated Working Capital Adjustment. Such
amount shall be paid in accordance with the same procedures set forth in Article
4 as applied to the initial Merger Consideration.
3.6 ACCOUNTING PRINCIPLES. Completion of the Preliminary Working Capital
Statement and Final Working Capital Statement, and determination of the Working
Capital, shall be made by the application of the following accounting
principles: All revenues (including without limitation unbilled time sales
agreements through 11:59 p.m. on the day immediately preceding the Closing Date)
and all expenses arising from the operation of the SHC Companies, including
business and non-governmental license fees, utility charges, real and personal
property taxes and assessments levied against any of the SHC Companies, property
and equipment rentals, applicable copyright or other fees, sales and service
charges, taxes, programming fees and expenses, employee compensation, including
wages, commissions, bonus pay, payroll taxes, accrued vacation, sick leave,
holiday, and compensatory pay for all employees of the SHC Companies, prepaid
and deferred items, shall be charged or credited in accordance with the methods
historically used by the SHC Companies as disclosed in their annual audited
consolidated financial statements, and prorated as of the close of business at
11:59 p.m. on the day preceding the Closing Date.
-5-
ARTICLE 4
EXCHANGE OF STOCK
4.1 EXCHANGE PROCEDURES.
(a) At or prior to the Effective Time, Xxxx shall deposit, or
shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of SHC Senior Preferred Stock, for exchange in accordance with Article 3
of this Agreement and this Article 4, the Merger Consideration as determined
utilizing the Estimated Working Capital Adjustment in accordance with Section
3.5(a), without any interest thereon (the "Exchange Fund"), to be paid pursuant
to Article 3 of this Agreement and this Article 4 in exchange for outstanding
shares of SHC Senior Preferred Stock. Pursuant to the provisions of Section
3.5(d), any required adjustment to the amount of the Merger Consideration
originally paid to the Exchange Agent shall be made within seven (7) days after
the Working Capital Adjustment is finally determined in accordance with the
provisions of Section 3.5.
(b) At the time of the mailing of the disclosure statement as
required by the Bankruptcy Code in connection with SHC's plan of reorganization
as contemplated in Section 7.8 or on such other date as Xxxx and SHC shall
mutually agree, Xxxx shall send or cause to be sent to each holder of SHC Senior
Preferred Stock and SHC Junior Preferred Stock, transmittal materials for use in
exchanging such stockholder's shares of SHC Senior Preferred Stock and SHC
Junior Preferred Stock, respectively, for such stockholder's portion of the
Merger Consideration or the Junior Preferred Stock Merger Consideration, as the
case may be, (which shall specify that delivery shall be effected, and risk of
loss and title to the shares of SHC Senior Preferred Stock shall pass, only upon
proper delivery of such shares to the Exchange Agent and that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of SHC Junior Preferred Stock shall pass, only upon proper
delivery of such certificates to Xxxx). At the Effective Time Xxxx shall
instruct the Exchange Agent to commence a wire transfer of immediately available
funds in respect of the portion of the Merger Consideration into which shares of
a stockholder's SHC Senior Preferred Stock are converted at the Effective Time
to be delivered to such stockholder or a bank account of its designation, as the
case may be, as soon as practicable after the occurrence of the later of (i)
delivery to the Exchange Agent of the appropriate transmittal materials for such
holder's shares of SHC Senior Preferred Stock and (ii) the Effective Time. Xxxx
shall cause a wire transfer of immediately available funds in respect of the
portion of the Junior Preferred Stock Merger Consideration into which shares of
a stockholder's SHC Junior Preferred Stock are converted at the Effective Time
to be delivered to such stockholder or a bank account of its designation, as the
case may be, upon the occurrence of the later of (i) delivery to Xxxx of the
appropriate transmittal materials for such holder's shares of SHC Junior
Preferred Stock and (ii) the Effective Time. No interest will be paid on any
cash to be paid pursuant to Article 3 and this Article 4 upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of SHC Senior Preferred
Stock or SHC Junior Preferred Stock, as the case may be, for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(d) Any portion of the Exchange Fund that remains unclaimed by the
former holders of SHC Senior Preferred Stock for twelve (12) months after the
Closing Date shall be paid to Xxxx. Any former holders of SHC Senior Preferred
Stock who have not theretofore complied with this Article 4 shall thereafter
look only to Xxxx for payment of the consideration deliverable in respect of
each share of SHC Senior Preferred Stock that such holder holds, as determined
pursuant to this Agreement, in each case, without any interest thereon.
-6-
4.2 RIGHTS OF FORMER SHC STOCKHOLDERS. At the Effective Time, the stock
transfer books of SHC shall be closed as to holders of SHC Capital Stock
immediately prior to the Effective Time and no transfer of SHC Capital Stock by
any such holder thereafter shall be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each share and each certificate representing shares of SHC Senior Preferred
Stock and SHC Junior Preferred Stock (other than shares or certificates for
shares to be canceled pursuant to Section 3.4 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Section 3.1 of this Agreement in exchange
therefor. In the event any SHC Senior Preferred Stock or SHC Junior Preferred
Stock certificate shall have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the Person claiming such certificate to be lost,
stolen, or destroyed and, if required by Xxxx, the posting by such Person of a
bond in such amount as Xxxx may reasonably direct as indemnity against any claim
that may be made against it with respect to such certificate, the Exchange Agent
(with respect to the shares of SHC Senior Preferred Stock) and Xxxx (with
respect to the shares of SHC Junior Preferred Stock) shall issue in exchange for
such lost, stolen, or destroyed certificate, the consideration deliverable in
respect thereof pursuant to this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SHC
Prior to the execution hereof, SHC has delivered to Xxxx and Merger Corp.
the schedules to this Agreement (the "Schedules") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (i) in
response to an express informational requirement contained in or requested by a
provision hereof or (ii) as an exception to one or more representations or
warranties contained in this Article 5; provided that the listing of an item in
one section of the Schedules shall be deemed to be a listing in the other
sections of the Schedules to the extent that such information is reasonably
determinable to be so applicable to such other section or sections of the
Schedule. The subject matter of the representations and warranties contained in
this Article 5 shall not apply to the Designated Stations. Except as provided in
the Schedules, SHC hereby represents and warrants to Xxxx and Merger Corp. as
follows (it being understood that the inclusion of any item on a Schedule hereto
shall not be deemed an acknowledgement that such item (i) is Material, (ii)
would have a Material Adverse Effect or (iii) is required to be disclosed under
this Agreement):
5.1 ORGANIZATION, STANDING, AND POWER.
(a) SHC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full corporate
power and authority, subject to Bankruptcy Court approval, to own, lease and
operate its assets and to carry on its business, as presently conducted. Each of
the SHC Subsidiaries (other than Benedek Interactive Media, LLC) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to own,
lease and operate its assets and to carry on its business, as presently
conducted. Benedek Interactive Media, LLC is a limited liability company duly
organized and validly existing under the laws of the State of Delaware and has
full power and authority to own, lease and operate its assets and to carry on
its business, as presently conducted. Except as set forth on Schedule 5.1 and
except where a failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect, each of SHC and each of the SHC
Subsidiaries is duly qualified to transact business as a foreign corporation or
limited liability company, as applicable, in good standing in the jurisdictions
listed next to its name in Schedule 5.1. Except where a failure to be so
qualified would
-7-
not, individually or in the aggregate, have a Material Adverse Effect, the SHC
Companies are not required to be qualified in any other jurisdiction.
(b) Copies which are correct and complete of the Certificate of
Incorporation or the Certificate of Formation, as applicable, and all amendments
thereto, (certified by the Secretary of State of Delaware) and By-Laws or the
Operating Agreement, as applicable, of each of the SHC Companies, and all
amendments thereto have been previously delivered or made available to Xxxx and
Merger Corp. Copies of all records of the proceedings of incorporators,
stockholders, boards of directors, authorized persons, members and committees
thereof, as applicable, of each of the SHC Companies, which are set forth in
each of the respective SHC Companies' minute books (collectively, the "Minute
Books"), are correct and complete and accurately reflect all proceedings of each
of the SHC Companies' respective incorporators, stockholders, boards of
directors, authorized persons, members and committees thereof, as applicable.
The Minute Books have been previously made available to Xxxx and Merger Corp.
for review.
5.2 AUTHORIZATION AND ENFORCEABILITY.
(a) Subject to Bankruptcy Court approval, SHC has full corporate
power and authority to enter into this Agreement and the Other Agreements.
Except for Bankruptcy Court approval of the Plan of Reorganization, the
execution, delivery and performance by SHC of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate
action. Assuming due authorization, execution and delivery of this Agreement and
the Other Agreements by Xxxx and Merger Corp., no further action or approval is
required in order to constitute this Agreement and the Other Agreements as
legal, valid and binding obligations of SHC, enforceable in accordance with
their terms, except in all cases as the enforceability of this Agreement and the
Other Agreements may be limited by or subject to, any bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and that the remedies of specific
performance, injunction, and other forms of equitable relief are subject to
certain principles of equity jurisdiction, equitable defenses and the discretion
of the court before which any proceeding therefor may be brought.
(b) Except as set forth on Schedule 5.21, neither the execution
and delivery of this Agreement or any of the Other Agreements by SHC, nor the
consummation by SHC of the transactions contemplated hereby or thereby nor
compliance by SHC with any of the provisions hereof or thereof, will (i)
conflict with or result in a breach of any provision of SHC's Certificate of
Incorporation or Bylaws, or (ii) constitute or result in a Material Default
under, or require any Consent pursuant to, or result in the creation of any Lien
on any asset of any SHC Company under, any Material network affiliation
agreement or Material programming agreement of any SHC Company, or (iii) subject
to receipt of the requisite Consents referred to in Section 8.1(a) and (b) of
this Agreement, violate in any Material respect any Law or Order applicable to
any SHC Company or any of their respective Material assets.
(c) Subject to the receipt of the requisite Consents referred to
in Section 8.1(a) and (b) of this Agreement and except for filing the
Certificate of Merger with the Secretary of State of the State of Delaware and
except as set forth on Schedule 5.2, no notice to, filing with, or Consent of,
any Regulatory Authority is necessary for the consummation by SHC of the Merger
and the other transactions contemplated in this Agreement or any of the Other
Agreements, except for any county or local Regulatory Authority notice, filing
or Consent, the violation of which individually or in the aggregate is not
Material.
-8-
5.3 CAPITALIZATION. The authorized capital stock of SHC consists, as of
the date of this Agreement, of ten million (10,000,000) shares of SHC Class A
Common Stock, of which none are issued and outstanding; ten million (10,000,000)
shares of SHC Class B Common Stock, of which seven million four hundred thousand
(7,400,000) shares are issued and outstanding; two million five hundred thousand
(2,500,000) shares of Preferred Stock, of which four hundred fifty thousand
(450,000) shares of SHC Junior Preferred Stock are issued and outstanding, and
of which one hundred thousand (100,000) shares of SHC Senior Preferred Stock are
issued and outstanding. Each of the outstanding shares of SHC Capital Stock is
duly and validly issued and outstanding, is fully paid and nonassessable and was
issued pursuant to a valid registration statement filed under the Securities Act
or a valid exemption from registration thereunder, and under all applicable
state securities laws. Except as set forth on Schedule 5.3(i), no shares of SHC
Capital Stock are reserved for issuance. Except as set forth on Schedule
5.3(ii), SHC has no obligation to issue any additional shares of SHC Capital
Stock or securities convertible or exchangeable for SHC Capital Stock, or any
Rights for the purchase of (a) any shares of SHC Capital Stock or (b) any
securities convertible into or exchangeable for any shares of SHC Capital Stock.
Except as set forth on Schedule 5.3(iii), there are no outstanding rights to
either demand registration of any shares of SHC Capital Stock under the
Securities Act, or to sell any shares of SHC Capital Stock in connection with
such a registration. Set forth on Schedule 5.3(iv) is a list which is true and
correct of (i) the record holders of the outstanding SHC Class B Common Stock as
of the date hereof, (ii) the record holders of the outstanding SHC Junior
Preferred Stock as of the date hereof, (iii) the record holders of the
outstanding SHC Senior Preferred Stock as reflected in the transfer records of
the Bank of New York, the transfer agent, (iv) the record holders of the
warrants to purchase the SHC Class A Common Stock as reflected in the transfer
records of the Bank of New York, the warrant agent and (v) the holders of
options to purchase SHC Class B Common Stock.
5.4 SHC SUBSIDIARIES. SHC has disclosed in Schedule 5.4(i) all of SHC's
Subsidiaries as of the date of this Agreement. SHC or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock or membership
interest, as applicable, of each SHC Subsidiary. No equity securities of any SHC
Subsidiary are or may become required to be issued (other than to another SHC
Company) by reason of any Rights, and except as set forth on Schedule 5.4(ii),
there are no Contracts by which any SHC Subsidiary is bound to issue (other than
to another SHC Company) additional shares of its capital stock or membership
interest, as applicable, or Rights or by which any SHC Company is or may be
bound to transfer any shares of the capital stock or membership interest, as
applicable, of any SHC Subsidiary (other than to another SHC Company). Except as
set forth on Schedule 5.4(iii), there are no Contracts relating to the rights of
any SHC Company to vote or to dispose of any shares of the capital stock or
membership interest, as applicable, of any SHC Subsidiary. All of the shares of
capital stock or membership interest, as applicable, of a SHC Subsidiary held by
a SHC Company are fully paid and, except as expressly provided otherwise under
applicable Law, nonassessable under the applicable Law of the jurisdiction in
which such Subsidiary is incorporated or organized and are owned by the SHC
Company free and clear of any Lien, except Permitted Liens or Liens that are set
forth on Schedule 5.4(iv). Except for (i) interests in the SHC Subsidiaries or
(ii) as set forth in Schedule 5.4(v), SHC does not own, directly or indirectly
(through any SHC Subsidiary or otherwise), any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any Person.
5.5 FINANCIAL STATEMENTS. SHC has disclosed in Schedule 5.5, and has
previously delivered or made available to Xxxx and Merger Corp. copies of, the
SHC Financial Statements. The SHC Financial Statements (as of the dates thereof
and for the periods covered thereby) (i) are in accordance with the books and
records of the SHC Companies, (ii) fairly present the consolidated financial
position of the SHC Companies as of the dates indicated and the consolidated
results of operations, changes in stockholders' equity, and cash flows of the
SHC Companies for the periods indicated, in accordance with
-9-
GAAP (subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments which were not or will not be material
in amount or effect and as otherwise disclosed in Schedule 5.5) and (iii) have
been prepared in accordance with GAAP.
5.6 NO UNDISCLOSED LIABILITIES. As of December 31, 2001, none of the SHC
Companies had any Liabilities (whether accrued, absolute, contingent or
otherwise, and whether due or to become due) normally shown on a balance sheet
(including the footnotes thereto) prepared in accordance with GAAP which is not
shown on the December 31, 2001 consolidated balance sheet of the SHC Companies,
or disclosed herein or in a schedule hereto or in any document referred to in a
schedule or in the Financial Statements (including the footnotes thereto), which
is reasonably likely to result in a Material Adverse Effect. Except as set forth
in the December 31, 2001 consolidated balance sheet, none of the SHC Companies
has outstanding on the date hereof any Liability normally shown on a balance
sheet (including the footnotes thereto) prepared in accordance with GAAP, other
than those incurred since December 31, 2001 in the ordinary course of business
or disclosed herein or in a schedule hereto or in any document referred to in a
schedule or in the Financial Statements (including the footnotes thereto), which
is reasonably likely to result in a Material Adverse Effect.
5.7 ABSENCE OF CHANGES. Except as disclosed on Schedule 5.7, since
December 31, 2001, (i) the SHC Companies have carried on their respective
businesses in the ordinary course consistent with past practice in all Material
respects, (ii) none of the SHC Companies has directly or indirectly declared,
paid or authorized any dividends or other distributions or payments in respect
of its capital stock or other securities, except dividends, distributions or
payments made to another SHC Company and (iii) none of the SHC Companies has
made any change in any method of accounting or accounting practice except for
changes required by GAAP.
5.8 TAX MATTERS. Except as set forth in Schedule 5.8:
(a) Each of the SHC Companies has duly filed with the appropriate
Regulatory Authorities all required Material Tax Returns in all jurisdictions in
which Material Tax Returns are required to be filed as of the date hereof and
such Material Tax Returns are correct and complete in all Material respects. As
of the date hereof, none of the SHC Companies is the beneficiary of any
extension of time within which to file any Material Tax Return. All Taxes shown
on any Tax Return for all periods ending on or before December 31, 2001, have
been fully paid or appropriate deposits or adequate accruals have been made
therefor on the Balance Sheet.
(b) Since January 1, 1999, none of the SHC Companies has incurred
any liability for Taxes other than in the ordinary course of business. Since
January 1, 1999, none of the SHC Companies has been delinquent in the payment of
any Material Tax, and since January 1, 1999, no Material Liability has been
assessed, asserted or threatened in writing against any of the SHC Companies or
any of their respective assets in connection with any Tax. Since January 1,
1999, none of the SHC Companies has received any written notice of Material
assessment or proposed Material assessment in connection with any Tax Returns,
and as of the date hereof, there are no pending Tax examinations of or Tax
claims asserted in writing against any of the SHC Companies or any of their
respective assets, including without limitation, any written claim by any
Regulatory Authority in any jurisdiction where any of the SHC Companies did not
file Tax Returns that such SHC Company is or may be subject to or liable for
Taxes imposed by that Regulatory Authority or jurisdiction. There are no Liens
for any Taxes (other than any Lien for current real property or ad valorem Taxes
not yet due and payable) on any of the assets of any of the SHC Companies.
-10-
(c) Since January 1, 1999, none of SHC Companies' Tax Returns have
been audited by the IRS or any other Regulatory Authority, and since January 1,
1999 none of the SHC Companies has waived any statute of limitations in respect
of Taxes or agreed to a Tax assessment or deficiency. No Tax is required to be
withheld pursuant to Section 1445 of the Code as a result of any of the
transfers contemplated by this Agreement, and each of the SHC Companies will
provide any certificate reasonably requested by Xxxx or Merger Corp. at Closing
with respect thereto.
(d) As of the date hereof, each of the SHC Companies is in
compliance in all Material respects with, and its records contain the
information and documents (including properly completed IRS Forms W-9) necessary
to comply in all Material respects with applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify in all Material respects accounts subject to backup withholding
under Section 3406 of the Code.
(e) As of the date hereof, none of the SHC Companies has made any
payments, is obligated to make any payments, or is a party to any Contract that
could obligate it to make any payments that would be disallowed as a deduction
under Section 280G of the Code.
5.9 ASSETS. The SHC Companies have good and marketable title, free and
clear of all Liens, to all of their respective assets other than the Permitted
Liens and the Liens set forth in Schedule 5.21 and Schedule 5.9. All of the
current lender's and owner's title insurance policies issued to or on behalf of
any of the SHC Companies relating to any of the Real Property are listed on
Schedule 5.21, copies of substantially all of which have been previously made
available to Xxxx and Merger Corp. All Material tangible properties owned or
used by the SHC Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
SHC's past practices. All of the tangible properties of the SHC Companies are
adequate in all Material respects for their present uses and operation. The SHC
Companies' assets (including their respective interest in leased assets) include
all Material assets required to operate their respective businesses as presently
conducted.
5.10 REAL PROPERTY.
(a) Schedule 5.21(a)(i) contains a correct and complete list of
the locations of all of the Real Property, except for such omissions therefrom
with respect to owned Real Property which do not have an individual property
value in excess of $100,000 or having a property value in excess of $100,000 but
not in excess of $1,000,000 in the aggregate for all such owned Real Property.
(b) To SHC's Knowledge, except as set forth on Schedule
5.21(a)(i), no zoning or similar land use restrictions are presently in effect
that would impair in any Material respect the operation of the respective
businesses of the SHC Companies as presently conducted or that would impair in
any Material respect the use, occupancy and enjoyment of any of the Real
Property in the manner in which such Real Property is currently used. To SHC's
Knowledge, except as set forth on Schedule 5.21(a)(i), all of the Real Property
is in compliance in all Material respects with all applicable zoning or similar
land use restrictions of all Regulatory Authorities having jurisdiction thereof
and with all recorded restrictions, covenants and conditions affecting any of
the Real Property. Since January 1, 2001, except as set forth on Schedule
5.21(a)(i), none of the SHC Companies has received any written notice from any
Regulatory Authority with regard to Material encroachments on or off the Real
Property, Material violations of building codes, zoning, subdivision or other
similar Laws, or other Material defects in the good valid marketable and
insurable title of said Real Property.
-11-
(c) Except as set forth in Schedule 5.21(a)(i), and except for
such Contracts not required to be disclosed thereon, there are no Contracts
affecting the Real Property or any part thereof.
(d) As of the date hereof, no right of adverse possession by any
Third Party has been claimed in writing or, to the Knowledge of SHC, threatened
with respect to the Real Property and none of such property is subject to any
Order for its sale, condemnation, expropriation or taking (by eminent domain or
otherwise) by any Regulatory Authority nor has any such sale, condemnation,
expropriation or taking been proposed in writing or, to the Knowledge of SHC,
threatened.
5.11 INTENTIONALLY OMITTED.
5.12 INTELLECTUAL PROPERTY.
(a) Schedule 5.12 contains a list which is correct and complete in
all Material respects of all of the SHC Companies' Intellectual Property which
is registered with the United States Patent and Trademark Office or the
equivalent state agency and owned by the SHC Companies as of the date hereof.
The SHC Companies own or have a valid right to use all of their respective
Intellectual Property used or held for use by the SHC Companies in connection
with the operation of the SHC Companies as currently conducted by the SHC
Companies, without Materially infringing upon the rights of any other Person.
(b) No present or former officer, director, partner or employee of
any of the SHC Companies owns or has any proprietary, financial or other
interest, direct or indirect, in any Material portion of any of the SHC
Companies' Material Intellectual Property, except as described on Schedule 5.12.
5.13 COMPUTER SOFTWARE AND DATABASES. Schedule 5.13 accurately identifies
all Material Computer Software and Databases owned, licensed, leased, internally
developed or otherwise used in connection with the respective businesses of the
SHC Companies as presently conducted as of the date of this Agreement. As of the
date of this Agreement, the SHC Companies have the right to use all Material
Computer Software and Databases that are necessary to conduct the respective
businesses as presently conducted by the SHC Companies. To SHC's Knowledge, SHC
is not Materially violating any "off the shelf" or "shrink wrapped" computer
software, programs or licenses.
5.14 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 5.14, the
Accounts Receivable are (i) validly existing, (ii) enforceable by the SHC
Companies in accordance with the terms of the instruments or documents creating
them and (iii) represent monies due for, and have arisen solely out of, bona
fide sales and deliveries of goods, performance of services and other business
transactions in the ordinary course of business consistent with past practices.
None of the Accounts Receivable represents monies due for goods either sold on
consignment or sold on approval. The allowance for collection losses on the
Balance Sheet was established in the ordinary course of business consistent with
past practices and in accordance with GAAP and there are no Material defenses,
rights of set-off, counterclaims, assignments, restrictions, encumbrances or
conditions enforceable by Third Parties on or affecting any Account Receivable.
5.15 INSURANCE. All of the assets and the operations of the SHC Companies
of an insurable nature and of a character usually insured by companies of
similar size and in similar businesses are insured by any of the SHC Companies
in such amounts and against such losses, casualties or risks as is (i) usual in
such companies and for such assets, operations and businesses, (ii) required by
any Law
-12-
applicable to any of the SHC Companies, or (iii) required by any Contract of any
of the SHC Companies. Schedule 5.15(i) contains a list which is complete and
accurate in all Material respects of all insurance policies now in force and
held or owned by any of the SHC Companies and such Schedule indicates the name
of the insurer, agent, type of coverage, policy number, amount of coverage,
expiration date and any pending claims thereunder. Copies which are correct and
complete in all Material respects of all such policies have been previously
delivered or made available to Xxxx and Merger Corp. by SHC on or before the
date of this Agreement. As of the date hereof, all such policies are in full
force and effect and enforceable in accordance with their terms in all Material
respects, except as set forth on Schedule 5.15(ii). Except as set forth on
Schedule 5.15(iii), since January 1, 2001, no written notice of cancellation or
non-renewal with respect to, or disallowance of any Material claim under, any
insurance policies or binders of insurance which relate to the assets or the
operations of the SHC Companies has been received by SHC.
5.16 BONDS, LETTERS OF CREDIT AND GUARANTEES. Schedule 5.16 contains a
list which is complete and accurate in all Material respects of all bonds
(whether denominated bid, litigation, performance, fidelity, or otherwise),
letters of credit, and guarantees issued by any of the SHC Companies and now in
force or outstanding, and copies which are correct and complete in all Material
respects of all such bonds, letters of credit and guarantees have been
previously delivered or made available to Xxxx and Merger Corp. by SHC on or
before the date of this Agreement. The bonds, letters of credit and guarantees
listed in Schedule 5.16 satisfy in all Material respects requirements for bonds,
letters of credit or guarantees set forth in (i) any Law applicable to any of
the SHC Companies or their respective businesses and (ii) any Material Contracts
of any of the SHC Companies. Except as set forth on Schedule 5.16, none of the
SHC Companies are in Material Default regarding the provisions of any bond,
letter of credit or guarantee, including, without limitation, the failure to
make timely payment of all premiums and fees due thereon.
5.17 COMPLIANCE WITH LAW. Except as set forth on Schedule 5.17:
(a) Since January 1, 1999, each of the SHC Companies has complied
with and is in compliance in all Material respects with all Material Laws,
Licenses and Orders applicable to, of or binding on any of the SHC Companies,
their respective assets or their respective businesses, including without
limitation, the terms of the FCC Licenses, the Communications Act, and PUC Laws
and SHC has no Knowledge of any basis for any Material claim of current or past
non-compliance with any Material Law, License or Order. Since January 1, 1999,
SHC has not received any written notices from any Regulatory Authority with
respect to any failure or alleged failure of any of the SHC Companies to comply
in any Material respect with any Material Law, License or Order by any of the
SHC Companies, nor, to the Knowledge of SHC, are any such written notices
threatened.
(b) Benedek License Corporation holds the FCC Licenses set forth
on Schedule 5.17, which constitute all necessary authorizations from the FCC to
enable the SHC Companies to broadcast and transmit the present television
programming of the SHC Companies. Other than FCC rule making procedures of
general applicability, no application, action, proceeding, notice of violation,
order of forfeiture, or complaint is pending or, to SHC's Knowledge, threatened
in writing the effect of which would be the revocation, modification, nonrenewal
or suspension of any of the FCC Licenses, the issuance of a cease-and-desist
order, or the imposition of any administrative or judicial sanction with respect
to the SHC Companies' respective businesses that would Materially and adversely
affect any of the SHC Companies under any such FCC Licenses. As of the date
hereof, all returns, reports and statements required to be filed by any of the
SHC Companies with the FCC relating to their respective businesses have been
filed and complied with in all Material respects and are complete and correct in
all
-13-
Material respects as filed. As of the date hereof, all FCC regulatory fees
associated with FCC Licenses have been paid.
(c) Except as set forth in the Planned DTV Capital Expenditures
described in Schedule D, there are no Material capital expenditures that any of
the SHC Companies Knows will be required to be made in connection with the SHC
Companies' respective assets or their respective businesses as now conducted in
order to comply in all Material respects with any Law applicable to any of the
SHC Companies, or any of their respective assets or businesses as now conducted.
5.18 ENVIRONMENTAL. Except (i) as set forth in Schedule 5.18, (ii) as may
be reflected in the environmental assessment reports listed on Schedule 5.18 or
obtained by Xxxx and Merger Corp. as the result of the environmental due
diligence conducted by Xxxx and Merger Corp. and/or (iii) as would not otherwise
have, or be reasonably expected to result in, a Material Adverse Effect:
(a) There are no existing violations of (i) any Environmental Law,
or (ii) any Order related to environmental matters, with respect to the
ownership, use, condition or operation of the Real Property or any other asset
of any of the SHC Companies. None of the SHC Companies has used any assets or
premises of any of the SHC Companies or any part thereof for the handling,
treatment, storage, or disposal of any Hazardous Substances.
(b) No Release of any Hazardous Substances has occurred or is
occurring at any assets owned, leased, operated or managed, directly or
indirectly, by any of the SHC Companies or any part thereof while such assets
were owned, leased, operated or managed, directly or indirectly, by any of the
SHC Companies.
(c) To SHC's Knowledge, no soil or water in or under any assets
owned, leased, operated or managed, directly or indirectly, by any of the SHC
Companies has been contaminated by any Hazardous Substance while such assets
were owned, leased, operated or managed, directly or indirectly, by any of the
SHC Companies.
(d) All waste containing any Hazardous Substances generated, used,
handled, stored, treated or disposed of (directly or indirectly) by any of the
SHC Companies has been released or disposed of in substantial compliance with
all Environmental Laws.
(e) To SHC's Knowledge, no underground tanks or other underground
storage facilities presently located at any Real Property owned, leased,
operated or managed by any of the SHC Companies are causing a Release.
(f) The SHC Companies have complied in all material respects with
all applicable reporting requirements under all Environmental Laws concerning
the Release of Hazardous Substances and none of the SHC Companies has made any
such reports concerning any Real Property of any of the SHC Companies or
concerning the operations or activities of any of the SHC Companies.
(g) No building or other Improvement or any Real Property owned,
leased, operated or managed, directly or indirectly, by any of the SHC Companies
contains any friable asbestos-containing materials.
(h) Schedule 5.18 contains a list which is correct and complete of
all environmental site assessments and other studies relating to the
investigation of the possibility of the presence or
-14-
existence of any environmental matter with respect to the SHC Companies, or
their respective businesses, any assets owned, leased, operated or managed,
directly or indirectly, by any of the SHC Companies, and SHC has previously
delivered or made available to Xxxx and Merger Corp. a correct and complete copy
of each such assessment and study, except for the assessment and study related
to the studio and office located in Dothan, Alabama.
5.19 LITIGATION AND CLAIMS. As of the date hereof, except for the
Bankruptcy Case:
(a) Except as disclosed on Schedule 5.19(i), there is no Material
Litigation pending or, to the Knowledge of or any of the SHC Companies,
threatened in writing.
(b) Except as disclosed on Schedule 5.19(ii), there are no
outstanding Orders binding upon any of the SHC Companies, their respective
businesses and assets or SHC Capital Stock that would be Materially adverse or
restrictive to the business of the SHC Companies.
(c) Except as disclosed on Schedule 5.19(iii) and except as
generally applicable to the broadcasting industry, there are no pending or, to
the Knowledge of SHC, threatened investigations or inquiries regarding any of
the SHC Companies or their respective businesses or assets by any Regulatory
Authority that individually or in the aggregate would have, or be reasonably
expected to have, a Material Adverse Effect on the SHC Companies or their
respective businesses or assets.
(d) Except as disclosed on Schedule 5.19(iv), no Litigation has been
pending during the three (3) years prior to the date hereof that resulted in (i)
losses or damages to any SHC Company in excess of $250,000 individually or
$1,000,000 in the aggregate or (ii) any injunctive relief against any of the SHC
Companies.
(e) Except as disclosed on Schedule 5.19(v), in connection with the
SHC Companies' preparation of the SHC Financial Statements for the fiscal year
ended December 31, 2001, none of the SHC Companies have been advised by any
attorney representing it that there are any "loss contingencies" (as defined in
Statement of Financing Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975 ("FASB 5"), which would be required by
FASB 5 to be disclosed or accrued in financial statements of any of the SHC
Companies, were such financial statements prepared as of the date hereof.
5.20 BENEFIT PLANS.
(a) Schedule 5.20 contains and correct and complete list of (i)
every Employee Benefit Plan of any of the SHC Companies that is a defined
benefit pension plan or, a defined contribution that was in effect at any time
from January 1, 1996 through the date of this Agreement and (ii) every Employee
Benefit Plan of the SHC Companies that is not described in the foregoing clause
(i) that is currently in effect. On or after January 1, 1996, none of the SHC
Companies or any entity aggregated with any of the SHC Companies under Code
Section 414 (for purposes of this Section, an "ERISA Affiliate") has had an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and (3)(37)(A)).
No Employee Benefit Plan is or has been a multiemployer plan within the meaning
of Section 3(37) of ERISA nor a multiple employer welfare arrangement within the
meaning of Section 3(40) of ERISA. Notwithstanding the foregoing, there shall be
excluded from Schedule 5.20, any listing which is of an item that could not
result in any Material Liability.
-15-
(b) The Employee Benefit Plans listed on Schedule 5.20 have been
or will be made available to Xxxx for review, including correct and complete
copies of: (i) all governing plan documents, including without limitation, all
trust agreements or other funding arrangements for such Employee Benefit Plans
(including insurance Contracts), and all amendments thereto, (ii) with respect
to any such Employee Benefit Plans or amendments, all determination letters,
rulings, opinion letters, information letters, or advisory opinions issued by
the United States Internal Revenue Service, the United States Department of
Labor, or the Pension Benefit Guaranty Corporation after December 31, 1996,
(iii) annual reports or returns, audited or unaudited Financial Statements,
actuarial valuations and reports, and summary annual reports prepared for any
Employee Benefit Plan with respect to the most recent three plan years, and (iv)
the summary plan descriptions and any material modifications thereto.
(c) Except as disclosed in Schedule 5.20, all the Employee Benefit
Plans and the related trusts subject to ERISA Materially comply with and have
been administered in Material compliance with, (i) the applicable provisions of
ERISA, (ii) all applicable provisions of the Code relating to qualification and
tax exemption under Code Sections 401(a) and 501(a) or otherwise applicable to
secure intended tax consequences, (iii) all applicable state or federal
securities Laws, and (iv) all other applicable Laws and collective bargaining
agreements, and none of the SHC Companies, none of their respective Employee
Benefit Plans nor any fiduciary for any such Employee Benefit Plan has received
any notice from any Regulatory Authority questioning or challenging such
compliance. Except as disclosed on Schedule 5.20, no event has occurred which
will or could give rise to disqualification of any such plan or loss of intended
tax consequences under the Code or to any tax under Section 511 of the Code.
(d) Except as disclosed in Schedule 5.20, no Material oral or
written representation or communication with respect to any aspect of the
Employee Benefit Plans has been made to employees of any of the SHC Companies
prior to the date hereof that is not in accordance with the written or otherwise
preexisting terms and provisions of such plans. Except as disclosed in Schedule
5.20, none of the SHC Companies, nor any administrator or fiduciary of any
Employee Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner that could subject any of
the SHC Companies or Xxxx to any direct or indirect Material Liability (by
indemnity or otherwise) for breach of any fiduciary, co-fiduciary or other duty
under ERISA. Except as disclosed on Schedule 5.20, there are no unresolved
Material claims or disputes under the terms of, or in connection with, the
Employee Benefit Plans other than claims for benefits which are payable in the
ordinary course and no Litigation has been commenced with respect to any
Employee Benefit Plan.
(e) Except as disclosed in Schedule 5.20, all Employee Benefit
Plan documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary plan
descriptions issued with respect to the Employee Benefit Plans are correct and
complete, have been timely filed with the IRS and the United States Department
of Labor, have been timely distributed to participants in the Employee Benefit
Plans, and there have been no Material changes in the information set forth
therein.
(f) Except as disclosed in Schedule 5.20, no "party in interest"
(as defined in Section 3(14) of ERISA) or "disqualified person" (as defined in
Code Section 4975) of any Employee Benefit Plan has engaged in any nonexempt
"prohibited transaction" (described in Code Section 4975 or ERISA Section 406).
Except as disclosed in Schedule 5.20, there has been no (i) "reportable event"
(as defined in Section 4043 of ERISA), or event described in Sections
4041, 4042, 4062 (including ERISA Sections 4062(e)), 4064, 4069 or 4063 of
ERISA, or (ii) termination or partial termination, withdrawal or partial
withdrawal with respect to any of the ERISA Plans which any of the SHC Companies
maintains or contributes to or has maintained or contributed to. Except as
disclosed in Schedule 5.20, none of the SHC Companies has
-16-
incurred any liability under Title IV of ERISA, including any Liability that
could arise under Title IV of ERISA as a result of any of the SHC Companies'
membership in a "controlled group" as defined in ERISA Sections
4001(a)(14) and 4001(b)(1).
(g) Except as disclosed in Schedule 5.20, since the date of the
most recent actuarial valuation, there has been (i) no Material change in the
financial position of any pension plan as defined in ERISA Section 3(2) ("ERISA
Pension Plan"), (ii) no change in the actuarial assumptions with respect to any
ERISA Pension Plan, and (iii) no increase in benefits under any ERISA Pension
Plan as a result of ERISA Pension Plan amendments or changes in any applicable
regulation which is reasonably likely to have, individually or in the aggregate,
with respect to all of the foregoing a Material Adverse Effect on the funding
status of such ERISA Pension Plan. Except as disclosed in Schedule 5.20, all
contributions with respect to an Employee Benefit Plan of SHC or of an ERISA
Affiliate that is subject to Code Section 412 or ERISA Section 302 have been, or
will be, timely made and there is no Lien or expected to be a Lien under Code
Section 412(n) or ERISA Section 302(f) or tax under Code Section 4971. No ERISA
Pension Plan of any of the SHC Companies or of an ERISA Affiliate has a
"liquidity shortfall" as defined in Code Section 412(m)(5). No event described
in Code Section 401(a)(29) has occurred or can reasonably be expected to occur
with respect to SHC or its ERISA Affiliates. All premiums required to be paid
under ERISA Section 4006 have been paid by the SHC Companies and by any Person
aggregated with any of the SHC Companies under ERISA Sections 4001(a)(14)
and 4001(b)(1).
(h) Except as disclosed in Schedule 5.20, none of the SHC
Companies has, and does not, maintain an Employee Benefit Plan providing welfare
benefits (as defined in ERISA Section 3(1)) to employees after retirement or
other separation of service except to the extent required under Part 6 of Title
I of ERISA or Code Section 4980B or their successors. No tax under Code Sections
4980B or 5000 has been incurred with respect to any Employee Benefit Plan and no
circumstances exist which could give rise to such taxes.
(i) Except as disclosed on Schedule 5.20, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated by this Agreement will (1) entitle any current or former employee
of any of the SHC Companies to severance pay, unemployment compensation or any
payment contingent upon a change in control or ownership of any of the SHC
Companies, or (2) accelerate the time of payment or vesting, or increase the
amount, of any compensation due to any such employee or former employee.
(j) Except as disclosed on Schedule 5.20, no individuals
participating in (or eligible to participate in) any Employee Benefit Plan
maintained (or contributed to) by any of the SHC Companies are independent
contractors.
5.21 CONTRACTS.
(a) Lists.
(i) Real Property. Schedule 5.21(a)(i) is a list of all
Contracts of any of the SHC Companies affecting or relating to the Real
Property, including, without limitation, Contracts evidencing Liens (other
than Permitted Liens) (other than Contracts affecting rights in the Real
Property in which (i) any SHC Company is the lessor or (ii) any Contract
which individually does not involve the payment by any of the SHC
Companies of more than $100,000 annually or involving more than $100,000
annually but not more than $2,000,000 in the aggregate for all such
Contracts).
-17-
(ii) Personal Property. Schedule 5.21(a)(ii) is a list of all
Contracts of any of the SHC Companies affecting or relating to the
Personal Property, including, without limitation, Contracts evidencing
Liens (other than Contracts affecting rights in the Personal Property
which individually do not involve the payment by any of the SHC Companies
of more than $100,000 annually or involving more than $100,000 annually
but not more than $2,000,000 in the aggregate for all such Contracts).
(iii) Capital Assets. Schedule 5.21(a)(iii) is a list of all
outstanding Contracts of any of the SHC Companies for the acquisition or
disposition of capital assets of the SHC Companies (other than Contracts
entered into in the ordinary course of business consistent with past
practice and other than Contracts which individually do not involve the
payment by any of the SHC Companies of more than $100,000 annually or
involving more than $100,000 annually but not more than $2,000,000 in the
aggregate for all such Contracts).
(iv) Employment. Schedule 5.21(a)(iv) is a list of all
Contracts of any of the SHC Companies with any employee or officer of any
of the SHC Companies (other than those entered into in the ordinary course
of business consistent with past practice that are terminable within one
year from the date hereof by any of the SHC Companies or other than those
Contracts which individually do not involve the payment by any of the SHC
Companies of more than $100,000 annually or involve more than $100,000
annually but not more than $2,000,000 in the aggregate for all such
Contracts).
(v) Sales Representatives. Schedule 5.21(a)(v) is a list of
all Contracts of any of the SHC Companies with any agent, broker, sales
representative of, or any Person in a similar representative capacity for,
the SHC Companies (other than those Contracts which individually do not
involve the payment by any of the SHC Companies of more than $100,000
annually or involve more than $100,000 annually but not more than
$2,000,000 in the aggregate for all such Contracts).
(vi) Powers of Attorney. Schedule 5.21(a)(vi) is a list of all
powers of attorney given by any of the SHC Companies in connection with
any Litigation or any filing with a Regulatory Authority, whether limited
or general, to any Person continuing in effect.
(vii) Programming and Network Affiliation Agreements. Schedule
5.21(a)(vii) is a list of (A) all network affiliation agreements and (B)
all programming agreements of any of the SHC Companies (other than those
Programming Contracts which individually do not involve the payment by any
of the SHC Companies of $100,000 annually or involve more than $100,000
annually but not more than $2,000,000 in the aggregate for all such
Contracts).
(viii) Any Other Contracts. Schedule 5.21(a)(viii) is a list
of any other Contracts of the SHC Companies (other than (i) those
Contracts which individually do not involve the payment by any of the SHC
Companies of $100,000 annually or involve more than $100,000 annually but
not more than $2,000,000 in the aggregate for all such Contracts), (ii)
those Contracts involving the sales of advertising time entered into in
the ordinary course of business, (iii) retransmission consents and (iv)
Tradeout Agreements entered into in the ordinary course of business), but
including Contracts that (A) evidence, create, guarantee or service
indebtedness of any of the SHC Companies, (B) establish or provide for any
joint venture, partnership or similar arrangement involving any of the SHC
Companies, or (C) guarantee or endorse the Liabilities of any other
Person.
-18-
Notwithstanding the foregoing, the cumulative aggregate amount of all
omissions from the Schedules referred to above shall not exceed
$5,000,000.
The lists in all Schedules referred to above are correct and
complete in all Material respects.
(b) Copies. Copies which are correct and complete in all Material
respects of all the written Contracts, and correct and complete descriptions of
all oral Contracts, required to be set forth in Schedule 5.21, have been
previously delivered or made available to Xxxx and Merger Corp. on or before the
date hereof.
(c) No Default. Except as set forth on Schedule 5.21(c), neither
SHC nor, to SHC's Knowledge, any other party is in Material Default under any of
the Contracts referred to in Section 5.21(a).
(d) Assurances. Each of the written Contracts referred to in this
Section 5.21 is in full force and effect in all Material respects and
constitutes a valid, legal and binding agreement of the parties thereto,
enforceable in accordance with its terms, except for bankruptcy, insolvency,
reorganization, moratorium or other Laws affecting creditors' rights generally.
5.22 INTENTIONALLY OMITTED.
5.23 LABOR MATTERS. Schedule 5.23 contains a list which is correct and
complete in all Material respects as of the date hereof, of all employees of the
SHC Companies whose compensation (excluding commissions) for the first three
months of 2002 as annualized exceeds $100,000. Except (i) disclosed on Schedule
5.23, (ii) for those employees with written employment Contracts, or (iii) as
required by Law, the employment of all employees of the SHC Companies is
terminable at will by the SHC Companies, subject only to the payment of
severance in accordance with the SHC Companies' policies and procedures
therefor. Except as and to the extent set forth in Schedule 5.23, (i) none of
the SHC Companies is a party to any union agreement or collective bargaining
agreement with any labor organization or employee association applicable to any
employees of the SHC Companies and as of the date hereof, to SHC's Knowledge, no
attempt to organize any of the employees of the SHC Companies has been made,
proposed or threatened in writing, (ii) none of the SHC Companies, since January
1, 2001, has had any Material Equal Employment Opportunity Commission charges or
other Material claims of employment discrimination made against it, (iii) no
Material wage and hour department investigations, since January 1, 2001, have
been made of any of the SHC Companies, (iv) no labor strike, slowdown, stoppage
or lockout is pending or to SHC's Knowledge, threatened in writing against or
affecting the SHC Companies, (v) no Material unfair labor practice charge or
complaint against any of the SHC Companies, is or since January 1, 2001, has
been pending or, to the Knowledge of SHC, threatened before the National Labor
Relations Board or any similar Regulatory Authority, and (vi) none of the SHC
Companies have received any written notice that any of the executive officers
will terminate his or her employment currently or at any time within sixty (60)
days after the Closing Date or will otherwise not be available to the SHC
Companies. To the best of SHC's Knowledge, since January 1, 2001, the SHC
Companies have not effected any facility closing, mass layoff or other similar
transaction that would result in a Material liability or obligation to the SHC
Companies under the Worker Adjustment and Retraining Notification Act or any
similar applicable state or local Law.
5.24 INTENTIONALLY OMITTED.
-19-
5.25 BROKERS AND FINDERS. Except as set forth on Schedule 5.25, no finder
or any agent, broker or other Person acting pursuant to authority of any of the
SHC Companies are entitled to any commission or finder's fee in connection with
the transactions contemplated by this Agreement.
5.26 INTERESTED TRANSACTIONS. Except as set forth in Schedule 5.26, none
of the SHC Companies is a party to any Contract or other transaction with any
Affiliate of any of the SHC Companies, any Related Person of any Affiliate of
any of the SHC Companies (other than as a stockholder or employee of the SHC
Companies or with or between another SHC Company other than with respect to any
Designated Stations), or any Person in which any of the foregoing (individually
or in the aggregate) beneficially or legally owns, directly or indirectly, five
percent (5%) or more of the equity or voting interests. Except as described in
Schedule 5.26, none of the Persons described in the first sentence of this
Section 5.26 owns, or during the last three (3) years has owned, directly or
indirectly, beneficially or legally, (individually or in the aggregate) five
percent (5%) or more of the equity or voting interests of any Person that
competes with the SHC Companies or their respective businesses as presently
conducted.
5.27 OFFICERS, DIRECTORS AND BANK ACCOUNTS. Schedule 5.27 lists (i) the
names of all officers and directors of each of the SHC Companies and (ii) the
name and location of each bank or other institution in which any of the SHC
Companies has any deposit account in which any of the SHC Companies has any
interest or access and all account numbers.
5.28 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
SHC nor any statement, certificate or instrument furnished or to be furnished to
Xxxx pursuant to this Agreement or any other document, agreement or instrument
referred to herein or therein, including, without limitation, the Financial
Statements, contains any untrue statement of Material fact or omits to state a
Material fact necessary to make the statements contained therein not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF XXXX AND MERGER CORP
Xxxx and Merger Corp., jointly and severally, hereby represent and
warrant to SHC as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Xxxx is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia, and has full corporate power and authority to own, lease and operate
its assets and carry on its business, as presently conducted. Each of the Xxxx
Subsidiaries is a corporation or limited partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has full power, corporate or otherwise, and authority to own, lease and
operate its assets and carry on its business, as presently conducted.
6.2 AUTHORITY; NO BREACH.
(a) Xxxx and Merger Corp. each have full corporate power and
authority to enter into this Agreement and the Other Agreements. The execution,
delivery, and performance by Xxxx and Merger Corp. of its obligations hereunder
and thereunder have been duly and validly authorized by all necessary corporate
action. Assuming due authorization, execution and delivery of this Agreement and
the Other Agreements by SHC, no further action or approval is required in order
to constitute this Agreement and the Other Agreements as legal, valid, and
binding obligations of Xxxx and Merger Corp, enforceable against Xxxx and Merger
Corp. in accordance with their terms (except in all cases as
-20-
enforceability of this Agreement and the Other Agreements may be limited by or
subject to, any bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally
and the remedies of specific performance, injunction and other forms of
equitable relief are subject to certain principles of equity jurisdiction,
equitable defenses and the discretion of the court before which any proceeding
therefor may be brought).
(b) Neither the execution and delivery of this Agreement or any of
the Other Agreements by Xxxx or Merger Corp., nor the consummation by Xxxx or
Merger Corp. of the transactions contemplated hereby or thereby, nor compliance
by Xxxx or Merger Corp. with any of the provisions hereof or thereof, will (i)
conflict with or result in a breach of any provision of Xxxx'x Amended Articles
of Incorporation or Bylaws, (ii) conflict with or result in a breach of any
provision of Merger Corp.'s Certificate of Incorporation or Bylaws, or (iii)
subject to receipt of the requisite Consents referred to in Section 8.1(a) and
(b) of this Agreement, violate in any Material respects any Law or Order
applicable to any Xxxx Company or any of their respective Material assets.
(c) Subject to the receipt of the requisite Consents referred to
in Section 8.1(a) and (b) of this Agreement and except for filing the
Certificate of Merger with the Secretary of State of the State of Delaware, no
notice to, filing with or Consent of, any Regulatory Authority is necessary for
the consummation by Xxxx and Merger Corp. of the Merger and the other
transactions contemplated in this Agreement or any of the Other Agreements,
except for any county or local Regulatory Authority notice, filing or Consent
the violation of which individually or in the aggregate is not Material.
6.3 BROKERS AND FINDERS. No finder or any agent, broker or other Person
acting pursuant to authority of any of the Xxxx Companies is entitled to any
commission or finder's fee in connection with the transactions contemplated by
this Agreement.
6.4 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
Xxxx, nor any statement, certificate or instrument furnished or to be furnished
to SHC pursuant to this Agreement or any other document, agreement or instrument
referred to herein or therein, contains any untrue statement of Material fact or
omits to state a Material fact necessary to make the statements contained
therein not misleading.
6.5 ESCROW SHARES. The Escrow Shares have been duly authorized, and are
validly issued and outstanding, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof.
6.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Xxxx has filed all forms, reports, and documents required to
be filed by Xxxx with the SEC since January 1 of the second complete fiscal year
preceding the date of this Agreement (collectively, the "Xxxx SEC Reports"). The
Xxxx SEC Reports (i) at the time filed, complied in all Material respects with
the applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated in such Xxxx SEC Reports or necessary in
order to make the statements in such Xxxx SEC Reports, in light of the
circumstances under which they were made, not misleading.
-21-
(b) Each of the Xxxx Financial Statements (including, in each
case, any related notes) contained in the Xxxx SEC Reports, including any Xxxx
SEC Reports filed after the date of this Agreement until the Closing Date,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC), and fairly presented or will fairly present the consolidated financial
position of the Xxxx Companies as of the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be Material
in amount or effect.
6.7 NO ATTRIBUTABLE INTEREST. Xxxx and Merger Corp. are legally and
financially qualified under the Communications Act to enter into this
Agreement and the Other Agreements, as applicable, and to consummate the
transactions contemplated hereby. In connection with the transactions
contemplated by this Agreement and the Other Agreements, it is not necessary
for Xxxx, Merger Corp. or any Affiliate of Xxxx or Merger Corp. (or any Person
who has an attributable interest in Xxxx under the Communications Act) to seek
or obtain any waiver from the FCC, dispose of any interest in any media or
communications property or interest (including, without limitation, any of the
Stations or any part thereof), terminate any venture or arrangement, or
effectuate any changes or restructuring of its ownership, including, without
limitation, the withdrawal or removal of officers or directors or the
conversion or repurchase of equity securities of Xxxx, Merger Corp. or any
Affiliate of Xxxx or Merger Corp. or owned by Xxxx, Merger Corp. or any
Affiliate of Xxxx or Merger Corp. (or any Person in which Xxxx, Merger Corp.
or any Affiliate of Xxxx or Merger Corp. has any attributable interest under
the Communications Act). Xxxx and Merger Corp. are able to certify on an FCC
Form 314 that they are financially qualified.
6.8 LITIGATION.
(a) No Litigation is pending or, to Xxxx'x or Merger Corp.'s
knowledge, threatened in writing, which, if adversely determined, would affect
Xxxx or Merger Corp.'s ability to carry out this Agreement or the Other
Agreements.
(b) There are no outstanding Orders binding upon any of the Xxxx
Companies, their respective businesses or Xxxx'x capital stock which prohibit
Xxxx'x or Merger Corp.'s ability to carry out this Agreement or the Other
Agreements.
ARTICLE 7
COVENANTS AND ADDITIONAL AGREEMENTS OF SHC, XXXX AND MERGER CORP.
7.1 MUTUAL COVENANTS. Unless the prior written consent of Xxxx or SHC
shall have been obtained, and except (x) for the sale of the Designated Stations
to the Purchaser pursuant to the Purchase Agreement and any and all actions
required, necessary or advisable in order to comply with the Purchase Agreement
and to consummate the transactions contemplated thereby and (y) as otherwise
expressly contemplated herein, from the date of this Agreement until the Closing
Date or termination of this Agreement, each party shall and shall cause each of
its Subsidiaries to (i) operate its business only in the usual, regular, and
ordinary course, (ii) use commercially reasonable efforts to preserve intact its
business organizations and assets and maintain its rights and franchises, and
(iii) take no action that
-22-
would Materially adversely affect the ability of any party to (a) obtain any
Consents required for the transactions contemplated hereby, or (b) perform its
covenants and agreements under this Agreement in all Material respects and to
consummate the Merger and to satisfy the conditions to Closing set forth in
Article 8; provided, however, that the foregoing shall not prevent any Xxxx
Company from discontinuing or disposing of any of its assets or business, or,
subject to Section 7.7(b), from acquiring or agreeing to acquire any other
Person or any assets thereof, if such action is, in the judgment of Xxxx,
desirable in the conduct of the business of Xxxx and its Subsidiaries.
7.2 COVENANTS OF SHC. Except as specifically contemplated or permitted by
this Agreement or as disclosed in Schedule 7.2, from the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
SHC covenants and agrees that it will not do or agree or commit to do, or permit
any of its Subsidiaries to do or agree or commit to do, any of the following
without the prior written consent of Xxxx (which consent shall not be withheld
unreasonably):
(a) amend the Certificate of Incorporation, Bylaws, or other
governing instruments of any SHC Company;
(b) (i) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money (other than
indebtedness of a SHC Company to another SHC Company) in excess of an aggregate
of $500,000 (for the SHC Companies on a consolidated basis including the capital
leases described in clause (iii) below), (ii) impose, or suffer the imposition,
on any share of stock held by any SHC Company of any Lien or (iii) enter into
any new capital leases or extend the term of any existing capital leases (other
than any capital lease with respect to automobiles, weather systems and others
in process entered into in the ordinary course of business and consistent with
past practices) in excess of an aggregate of $500,000 (for the SHC Companies on
a consolidated basis including the debt described in clause (i) above);
(c) repurchase, redeem, or otherwise acquire or exchange, directly
or indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any SHC Company, or declare or pay any dividend or make any
other distribution in respect of any SHC Capital Stock other than the
declaration of normal and mandatory accrued dividends on the SHC Senior
Preferred Stock and the SHC Junior Preferred Stock;
(d) issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the issuance
of, or otherwise permit to become outstanding, any additional shares of SHC
Capital Stock or any other capital stock of any SHC Company, or any stock
appreciation rights, or any option, warrant, conversion, or other Right to
acquire any such stock, or any security convertible into any such stock (other
than the issuance of SHC Class A Common Stock upon the exercise of any warrants
therefor outstanding on the date hereof);
(e) adjust, split, combine, or reclassify any capital stock of any
SHC Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of SHC Capital Stock or sell, lease,
mortgage, or otherwise dispose of or otherwise encumber any shares of capital
stock of any Subsidiaries of SHC (unless any such shares of stock are sold or
otherwise transferred to another SHC Company) or any assets other than in the
ordinary course of business consistent with past practices for reasonable and
adequate consideration;
(f) acquire direct or indirect control over, or invest in equity
securities of, any Person;
-23-
(g) grant any increase in compensation or benefits to the
employees or officers of any SHC Company except as required by Law or Contract
or except such increases as are in the ordinary course of business consistent
with past practices and consistent in all Material respects with the 2002
operating budget (or the 2003 operating budget if the Closing does not occur
prior to January 1, 2003) of the SHC Companies; pay any bonus except pursuant to
the provisions of any Contract or any applicable program or plan adopted prior
to the date of this Agreement consistent in all Material respects with the 2002
operating budget (or the 2003 operating budget if the Closing does not occur
prior to January 1, 2003) of the SHC Companies; enter into or amend any
severance agreements with officers of any SHC Company; or grant any increase in
fees or other increases in compensation or other benefits to directors of any
SHC Company;
(h) voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits;
(i) except in the ordinary course of business and consistent with
past practices or with respect to the renewal, amendment or extension of any
collective bargaining agreement to which any of the SHC Companies is a party,
enter into or amend any employment Contract between any SHC Company and any
Person (unless such amendment is required by Law or Contract) that the SHC
Company does not have the unconditional right to terminate without Liability
(other than Liability for services already rendered), at any time on or after
the Effective Time;
(j) adopt any new employee benefit plan or program of any SHC
Company or make any Material change in or to any existing employee benefit plans
or programs of any SHC Company other than any such new plan or change that is
required by Law or any collective bargaining agreement to which any of the SHC
Companies is a party or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan;
(k) make any significant change in any accounting methods,
principles, or practices or systems of internal accounting controls, except as
may be necessary to conform to changes in regulatory accounting requirements or
GAAP;
(l) commence or settle any Material Litigation other than in
accordance with past practice or to the extent the same is covered by insurance;
provided, however, that, except to the extent specifically reserved against in
the SHC Financial Statements dated prior to the date of this Agreement, no SHC
Company shall settle any Litigation involving any Liability of any SHC Company
for Material money damages or imposing Material restrictions upon the operations
of any SHC Company;
(m) except in the ordinary course of business consistent with past
practices, enter into or terminate any Material Contract or make any Material
change in any Contract;
(n) fail to promptly notify Xxxx of any inquiry, investigation,
or proceeding related to any of the Stations that is initiated by the FCC;
(o) fail to use all commercially reasonable efforts to promptly
remedy any Material adverse change, condition or event that causes or is
reasonably likely to cause any of the Stations to be or go off the air; or
(p) request the Bankruptcy Court to take any action or to grant
any approval to any action or matter that is in any way inconsistent with this
Agreement.
-24-
Notwithstanding any of the foregoing provisions of this Section 7.2, prior to
the Closing, control of the operation of the Stations shall remain exclusively
with the SHC Companies. Additionally, none of the foregoing provisions of this
Section 7.2 shall limit or prohibit any of the SHC Companies from taking or
omitting to take any actions or entering into any agreements or understandings
with respect to the Designated Stations or in connection with the sale thereof
pursuant to the terms and conditions of the Purchase Agreement; provided,
however, that any such action or inaction does not have any adverse effect on
SHC or any of the Stations after the Closing.
7.3 ADVERSE CHANGES IN CONDITION. SHC agrees to give written notice
promptly to Xxxx upon becoming aware of the occurrence or impending occurrence
of any event or circumstance relating to it or any of its Subsidiaries that is
reasonably likely to cause or constitute a Material breach of any of its
representations, warranties, or covenants contained herein, or have a Material
Adverse Effect and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.4 REPORTS. SHC and its Subsidiaries shall file all reports required to
be filed by it with Regulatory Authorities between the date of this Agreement
and the Effective Time and SHC shall deliver to Xxxx copies of any of the
reports filed by SHC listed on Schedule 7.4.
7.5 RIGHT OF INSPECTION; ACCESS. SHC shall give to Xxxx and its designees,
during normal working hours upon prior notice, reasonable access to all of their
assets, Contracts, reports and other records of the SHC Companies and shall
furnish to Xxxx and its designees all additional financial, legal and other
information with respect to the SHC Companies and their respective assets and
businesses that Xxxx may reasonably request and which are normally prepared in
the ordinary course of business and consistent with past practice of any of the
SHC Companies. SHC shall also allow and arrange for Xxxx and its designees
reasonable access and opportunity, during normal business hours upon prior
notice, to consult and meet with the executive officers, directors, attorneys
and accountants of the SHC Companies, and with the consent of SHC, which consent
shall not be withheld unreasonably, to consult and meet with the employees of
the SHC Companies. SHC shall instruct such individuals to cooperate fully with
Xxxx and its designees. Xxxx and its designees shall have the right to request
copies of any of the records referred to above.
7.6 PURCHASE AGREEMENT. Prior to the date of this Agreement, SHC has
provided to Xxxx the form of the Purchase Agreement relating to the sale of the
Designated Stations. SHC shall not amend or agree to amend the Purchase
Agreement in a manner that, after the Effective Time, would be adverse to any of
the SHC Companies, without Xxxx'x consent, which consent shall not be withheld
unreasonably.
7.7 FCC MATTERS.
(a) As promptly as practical following the date of this Agreement
and in all events within ten (10) Business Days after the date of this
Agreement, SHC and Xxxx shall prepare and file, and SHC and Xxxx shall cause
their Subsidiaries to prepare and file, with the FCC all necessary applications
for approval of the transactions contemplated in this Agreement. In connection
therewith, Xxxx shall provide the information requested by the FCC and take
actions reasonably necessary to enable the FCC to grant the applications within
the time periods contemplated by this Agreement.
-25-
(b) SHC and Xxxx further covenant that from the date hereof until
the Effective Time, without the prior written consent of SHC or Xxxx, as the
case may be, neither SHC nor Xxxx shall take any action, and SHC and Xxxx shall
not permit their Subsidiaries to take any action, that could reasonably be
likely to Materially adversely affect, or delay or interfere with, obtaining the
FCC Order or complying with or satisfying the terms thereof, including without
limitation, acquiring any new or increased attributable interest, as defined in
the FCC rules, in any media property, which property could not be held (without
the need for a waiver) in common control by SHC and Xxxx following the Effective
Time.
(c) The SHC Companies shall use commercially reasonable efforts to
continue the construction and initiate operations of digital television
facilities with respect to the Stations in accordance with the plan set forth in
Schedule D hereto. SHC shall keep Xxxx reasonably informed of the progress of
such construction and initiation and consult with Xxxx on a periodic basis with
respect to the digital conversion matters referred to above.
7.8 BANKRUPTCY COURT ACTIONS. All of the obligations of SHC under this
Agreement are subject to the approval of the Bankruptcy Court. Within 30 days
following the date of this Agreement, SHC shall file with the Bankruptcy Court
(i) a motion seeking entry of the Confirmation Order and (ii) a motion seeking
approval of a disclosure statement with respect thereto, approval of procedures
to solicit votes on the Plan of Reorganization, and scheduling a hearing on the
confirmation of the Plan of Reorganization, which motion shall seek to schedule
hearings on disclosure statement approval and Plan of Reorganization
confirmation on the shortest time periods permitted by the Bankruptcy Court
pursuant to the Federal Rules of Bankruptcy Procedure, Xxxxx 00, Xxxxxx Xxxxxx
Code and the local rules of the Bankruptcy Court. SHC shall make available to
Xxxx the form of orders, motions, Plan of Reorganization and disclosure
statement referred to in this Section 7.8 intended to be submitted by SHC and
shall afford Xxxx the reasonable opportunity to comment thereon prior to the
filing thereof and each of the Plan of Reorganization and disclosure statement
shall conform to the Plan Summary.
7.9 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement (but no sooner than October 1,
2002), the transactions contemplated by this Agreement, including, without
limitation, using its reasonable efforts to lift or rescind any Order adversely
affecting its ability to consummate the transactions contemplated herein and to
cause to be satisfied the conditions applicable to such party referred to in
Article 8 of this Agreement; provided, however, that nothing herein shall
preclude either party from exercising its rights under this Agreement. Each
party shall use, and shall cause each of its Subsidiaries to use, its reasonable
efforts to obtain all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement.
7.10 NOTICE OF MATERIAL DEVELOPMENTS AND CONFIDENTIALITY.
(a) Prior to the Effective Time, (i) SHC shall keep Xxxx advised
of all Material developments relevant to its business and to consummation of the
transactions contemplated hereby and (ii) Xxxx shall keep SHC advised of all
Material developments relevant to consummation of the transactions contemplated
hereby.
(b) Each party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other party concerning its and its
-26-
Subsidiaries' businesses, operations, and financial positions and shall not use
such information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each party shall promptly return all documents and copies
thereof, and all work papers containing confidential information received from
the other party.
7.11 PRESS RELEASES. Prior to the Effective Time, SHC and Xxxx shall
consult with each other as to the form and substance of any press release or
other public disclosure (other than Bankruptcy Court filings made by SHC)
materially related to this Agreement or any other transaction contemplated
hereby; provided, however, that nothing in this Section 7.11 shall be deemed to
prohibit any party from making any disclosure which its counsel advises as
necessary or advisable in order to satisfy such party's disclosure obligations
imposed by Law or the rules of any relevant stock exchange.
7.12 STATE TAKEOVER LAWS. SHC shall take all necessary steps to exempt the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of, any applicable Takeover Laws.
7.13 INTENTIONALLY OMITTED.
7.14 HSR FILINGS. SHC and Xxxx shall, as promptly as practicable following
the execution of this Agreement, and in all events within fifteen (15) days
after the date of this Agreement, and in cooperation with each other, file with
the Department of Justice and the Federal Trade Commission the premerger
notification and report form and any other documents required under the
Xxxx-Xxxxx Act, and each shall use its commercially reasonable efforts to obtain
earliest termination of all waiting periods under the Xxxx-Xxxxx Act. Xxxx shall
pay all the fees incident to the filings under the Xxxx-Xxxxx Act.
7.15 EXPENSES. Except as provided in the following sentence, regardless of
whether the transactions contemplated by this Agreement are consummated, SHC
shall be responsible for all expenses and fees incurred by the SHC Companies in
connection with the transactions contemplated hereby and Xxxx shall be
responsible for all expenses and costs incurred by it in connection with the
transactions contemplated hereby. SHC and Xxxx shall each pay one-half of the
processing fees incident to the filing of the transfer of control applications
with the FCC.
7.16 INDEMNIFICATION.
(a) For a period of six years after the Effective Time, Xxxx shall
indemnify, defend and hold harmless the present and former directors, officers,
employees and agents of the SHC Companies (each, an "Indemnified Party") against
all Liabilities arising out of actions or omissions arising out of the
Indemnified Party's service or services as directors, officers, employees or
agents of any of the SHC Companies or, at any of the SHC Companies' request, of
another corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under Delaware
Law, by the SHC Companies' Certificates of Incorporation and Bylaws and any
indemnification agreements, in each case as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation and whether or not Xxxx is insured against any such matter.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 7.16, upon learning of any such Liability or
Litigation, shall promptly notify Xxxx thereof. In the event of any such
Litigation (whether arising before or after the Effective Time and if, after the
Effective Time, arising up to the sixth anniversary thereof), (i) Xxxx shall
have the right to assume the
-27-
defense thereof and Xxxx shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
Xxxx elects not to assume such defense or counsel for the Indemnified Parties
advises that there are substantive issues that raise conflicts of interest
between Xxxx and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Xxxx shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that Xxxx shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction; (ii) the Indemnified Parties will cooperate in the defense of
any such Litigation; and (iii) Xxxx shall not be liable for any settlement
effected without its prior written consent, which consent will not be withheld
unreasonably; and provided further that Xxxx shall not have any obligation
hereunder to any Indemnified Party when and if and to the extent a court of
competent jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(c) If Xxxx or any successors or assigns shall consolidate with or
merge into any other Person and shall not be the continuing or surviving Person
of such consolidation or merger or shall transfer all or substantially all of
its assets to any Person, then and in each case, proper provision shall be made
so that the successors and assigns of Xxxx shall assume the obligations set
forth in this Section 7.16.
(d) The provisions of this Section 7.16 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
7.17 DESIGNATED STATIONS PURCHASE PRICE ALLOCATION. In connection with
Section 4.3 of the Purchase Agreement, SHC shall, and shall cause BBC and BLC
to, deliver to Xxxx the Allocation Schedule (as defined therein) as promptly as
possible after SHC's (or BBC's and BLC's) receipt of the Allocation Schedule.
SHC shall, and shall cause BBC and BLC to, timely request and follow Xxxx'x
reasonable instructions with respect to the Allocation Schedule, any Objection
Notice, any Benedek Allocation Schedule (as such terms are defined in the
Purchase Agreement), and any independent appraisal with respect thereto.
7.18 DELIVERY OF FINANCIAL STATEMENTS. SHC shall deliver to Xxxx (i)
within twenty (20) days following the end of each month correct and complete
copies of all unaudited monthly consolidated income statements of the SHC
Companies for each month ending after the date of this Agreement and prior to
the Closing Date in the format historically utilized internally by the SHC
Companies and (ii) within forty-five (45) days following the end of each
calendar quarter correct and complete copies of all unaudited quarterly
consolidated balance sheets, income statements and statements of cash flows of
the SHC Companies for each calendar quarter ending after the date of this
Agreement and prior to the Closing Date in the format historically utilized
internally by the SHC Companies. In addition, if the Closing has not yet
occurred, SHC shall deliver to Xxxx within seventy (70) days following December
31, 2002 correct and complete copies of the audited consolidated balance sheet
of the SHC Companies at December 31, 2002, and the audited consolidated
statement of income and statement of cash flows of the SHC Companies for the
year then ended.
-28-
7.19 RESALE REGISTRATION STATEMENT FOR THE ESCROW SHARES; LIMITATIONS
ON SUBSEQUENT TRANSFERS.
(a) In the event of a termination of this Agreement and the
delivery of the Escrow Shares as provided in Section 9.2(b) of this Agreement,
Xxxx agrees to file with the SEC a registration statement (the "Registration
Statement") under the Securities Act with respect to the resale or distribution
of the Escrow Shares by SHC and/or an Affiliate of SHC within thirty (30) days
after such termination. The registration provided by this Section 7.19 shall be
effected by the filing of a registration statement on Form S-3 or, if such form
is unavailable, Form S-1 or Form S-4, which shall provide for sales to be made
on a continuous basis pursuant to Rule 415 under the Securities Act (or any
similar rule that may be adopted by the SEC). Xxxx shall use its reasonable best
efforts to cause such Registration Statement to become effective at the earliest
practicable time. Xxxx agrees to keep the Registration Statement filed pursuant
to this Section 7.19 continuously effective and current for a period to expire
upon the earlier of (i) six (6) months following the effectiveness of the
Registration Statement, or (ii) the date that all of the Escrow Shares covered
by the Registration Statement have been sold or distributed thereunder. Xxxx
also agrees that it will cause the Escrow Shares to be promptly listed with the
New York Stock Exchange. In connection with the preparation of the Registration
Statement, SHC agrees to provide any and all information regarding SHC and the
resale or distribution of the Escrow Shares required to be included in the
Registration Statement.
(b) SHC agrees that during the Make Whole Period it will sell the
Escrow Shares only in a manner designed to maximize the proceeds therefrom
consistent with commercially reasonable trade execution practices.
(c) SHC agrees that neither it nor any of its Affiliates will
sell, distribute or otherwise transfer (or consent to any sale, distribution or
transfer of), or enter into any agreement or commitment to undertake any of the
foregoing, any of the Escrow Shares other than:
(i) pursuant to the Registration Statement; or
(ii) in a manner exempt from registration, in which event it
shall have delivered to Xxxx an opinion of counsel reasonably acceptable to Xxxx
and its counsel that registration is not required under the Securities Act or
under any applicable securities laws of any jurisdiction.
(d) All expenses incident to Xxxx'x performance of or compliance
with this Section 7.19, including without limitation all registration and
filling fees, fees for listing the securities on the New York Stock Exchange,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, fees and disbursements of custodians and all independent certified
public accountants, and other Persons retained by Xxxx, shall be borne by Xxxx.
The expenses of SHC, including the cost of its legal counsel and brokerage and
other transaction fees, shall be borne by SHC.
(e) (i) Xxxx agrees to indemnify, to the extent permitted by Law,
each Person selling or distributing securities under the Registration Statement,
such Person's officers, directors, partners, agents and Affiliates and each
other Person that controls such Person (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof and whether or
not such indemnified party is a party thereto) and expenses, including without
limitation the reasonable fees, disbursements and other charges of legal counsel
and reasonable costs of investigation, to which such indemnitee may become
subject under the Securities Act or otherwise, insofar as losses are caused by
(x) any untrue or alleged untrue statement of material fact contained in the
Registration Statement (or any prospectus included therein) or any
-29-
amendment thereof or supplement thereto, (y) any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (z) any violation or alleged violation by
Xxxx of the Securities Act or Exchange Act, any state securities Laws or any
rules or regulations of the New York Stock Exchange, except in each case insofar
as the same are caused by or contained in any information furnished in writing
to Xxxx by such Person expressly for use therein or by such Person's failure to
deliver a copy of the Registration Statement (or prospectus included therein) or
any amendments or supplements thereto after Xxxx has furnished such Person with
a sufficient number of copies of the same.
(ii) Each Person (including, without limitation, SHC) that is
selling or distributing securities under the Registration Statement shall
furnish to Xxxx in writing such information concerning such Person and the
distribution of the Escrow Shares as Xxxx reasonably requests for use in
connection with such Registration Statement and, to the extent permitted
by Law, shall indemnify Xxxx, its directors and officers and each Person
who controls Xxxx (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from (x) any
untrue or alleged untrue statement of material fact contained in the
Registration Statement (or any prospectus included therein) or any
amendment thereof or supplement thereto, (y) any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (z) any violation or
alleged violation by Xxxx of the Securities Act or Exchange Act, but only
to the extent that such untrue statement, omission or violation is
contained in or directly results from any information so furnished in
writing by such Person; provided, however, that the obligation to
indemnify shall be individual, not joint and several, for each such Person
and shall be limited to the net amount of proceeds received by such Person
from the sale or distribution of securities pursuant to such Registration
Statement.
(iii) The indemnification provided for under this Section
7.19(e) shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and
shall survive the transfer of the Escrow Shares. Xxxx also agrees to make
such provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event Xxxx'x indemnification is
unavailable for any reason such that such provisions provide the same
obligations and benefits to the indemnified party as those which would
have been applicable had the indemnification provisions set forth above
had been available.
(f) If the indemnification provided for in Section 7.19(e) shall
for any reason be unavailable to an indemnified party under subsection (i) or
(ii) of Section 7.19(e) in respect of any loss or action in respect thereof,
then, in lieu of the amount paid or payable under subsection (i) or (ii) of
Section 7.19(e), the indemnified party and the indemnifying party under
subsection (i) or (ii) of Section 7.19(e) shall contribute to the aggregate
losses (including legal or other expenses reasonably incurred in connection with
investigating the same except as limited by Section 7.19(e)) (i) in such
proportion as is appropriate to reflect the relative fault of SHC, on the one
hand, and Xxxx, on the other hand, which resulted in such loss or action in
respect thereof, with respect to the statements, omissions or action which
resulted in such loss or action in respect thereof, as well as any other
relevant equitable considerations, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable Law, in such proportion as shall be
appropriate to reflect the relative benefits received by SHC, on the one hand,
and Xxxx, on the other hand, from the sale of the Escrow Shares; provided,
however, that, for purposes of this clause (ii), the relative benefits received
by SHC shall be deemed not to exceed the net amount received by SHC from the
sale of the Escrow Shares. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any
-30-
Person who was not guilty of such fraudulent misrepresentation. In addition, no
Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or loss effected without such Person's consent.
(g) SHC agrees and acknowledges that the certificates representing
the Escrow Shares, and any other securities issued in respect thereto or any
other securities not registered under the Securities Act, shall be stamped or
otherwise imprinted with restrictive legends in customary form. Any such legends
shall be removed upon the sale of the Escrow Shares pursuant to the Registration
Statement or an exemption from registration under the Securities Act.
(h) The Registration Statement shall not be deemed to be
effective:
(i) unless it has been declared effective by the SEC and
remains effective in compliance with the provisions of the Securities Act
and the Laws of any state or other jurisdiction applicable to the
disposition of the Escrow Shares covered by the Registration Statement
until such time as all of such Escrow Shares have been disposed of in
accordance with such Registration Statement.
(ii) if, after it has become effective, such Registration
Statement is interfered with by any stop order, injunction or other order
or requirement of the SEC or other Regulatory Authority for any reason
other than a violation of applicable Law solely by SHC and/or an Affiliate
of SHC and has not thereafter become effective.
(i) Xxxx shall, as expeditiously as possible:
(i) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration
Statement effective and to comply with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Escrow
Shares covered by the Registration Statement until such time as all of the
Escrow Shares have been disposed of in accordance with the method of
disposition set forth in the Registration Statement;
(ii) furnish to SHC and/or an Affiliate of SHC covered by the
Registration Statement such number of copies of such drafts and final
conformed versions of the Registration Statement and of each such
amendment and supplement thereto (in each case including all exhibits and
any documents incorporated by reference), such number of copies of such
drafts and final versions of the prospectus contained in the Registration
Statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as SHC and/or an Affiliate of SHC may reasonably
request in writing;
(iii) use its reasonable best efforts (A) to register or
qualify all Escrow Shares and other securities covered by the Registration
Statement under such other securities or blue sky laws of such states or
other jurisdictions of the United States of America as SHC and/or an
Affiliate of SHC covered by the Registration Statement shall reasonably
request in writing, (B) to keep such registration or qualification in
effect for so long as the Registration Statement remains in effect and (C)
to take any other action that may be reasonably necessary or advisable to
enable SHC and/or an Affiliate of SHC to consummate the disposition in
such U.S. jurisdictions as SHC shall reasonably request, except that Xxxx
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it
-31-
would not but for the requirements of this subsection (iii) be obligated
to be so qualified, to subject itself to taxation in such jurisdiction or
to consent to general service of process in any such jurisdiction;
(iv) notify SHC upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and promptly
prepare and furnish to SHC a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Escrow Shares, such
prospectus, as supplemented or amended, shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstance under which they were made;
and
(v) enter into such customary agreements and take such other
actions as SHC shall reasonably request in order to expedite or facilitate
the disposition of such Escrow Shares.
(j) In connection with the preparation and filing of the
Registration Statement under the Securities Act pursuant to this
Agreement, Xxxx shall give SHC, its counsel and accountants the reasonable
opportunity to participate in the preparation of the Registration
Statement, each prospectus included therein, or filed with the SEC, and
each amendment thereof or supplement thereto, and shall give each of them
reasonable access to its books and records and such reasonable
opportunities to discuss the business of Xxxx with its officers and the
independent public accountants who have certified its financial statements
as shall be necessary, in the reasonable opinion of SHC, to conduct a
reasonable investigation within the meaning of the Securities Act.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by the parties pursuant to Section 11.3 of
this Agreement to the extent permitted by Law:
(a) Bankruptcy Court Approval. The Bankruptcy Court shall have
approved the Confirmation Order and the Confirmation Order shall have become a
Final Bankruptcy Court Order.
(b) Regulatory Approvals.
(i) The FCC shall have issued the FCC Order, without any
condition or qualification materially adverse to Xxxx, SHC or their
respective Subsidiaries, or materially adverse to the acquisition of
control of SHC and its Subsidiaries by Xxxx as provided in this Agreement.
-32-
(ii) All waiting periods applicable to this Agreement and the
transactions contemplated hereby under the Xxxx-Xxxxx Act shall have
expired or been terminated.
(c) Legal Proceedings. No Order shall be in effect to enjoin,
restrain or prohibit the consummation of the transactions contemplated by this
Agreement and no action or proceeding shall have been instituted by any
Regulatory Authority seeking any such Order which Order would reasonably be
expected to have a Material Adverse Effect.
(d) Designated Stations. The transactions contemplated by the
Purchase Agreement shall have been consummated unless the failure to consummate
such transactions is the result of either the wrongful refusal of the Purchaser
to consummate such transactions or the election by the Purchaser not to
consummate such transactions by reason of the failure of BBC to satisfy the
conditions set forth in Sections 13.1.1 or 13.1.2 of the Purchase Agreement. In
the event the transactions contemplated by the Purchase Agreement shall not have
been consummated as a result of FCC action or inaction, each of Xxxx and SHC
agree to use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement and the Purchase Agreement at the
earliest practicable date.
8.2 CONDITIONS TO OBLIGATIONS OF XXXX. The obligations of Xxxx to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by Xxxx pursuant to Section 11.3 of this Agreement:
(a) Representations and Warranties. The representations and
warranties made by SHC set forth in this Agreement shall be correct and complete
at the Effective Time with the same force and effect as if such representations
and warranties had been made on and as of the Effective Time (except that
representations and warranties that by their terms are made as of a specified
date shall be correct and complete only as of such date) except for
representations and warranties the inaccuracies of which relate to matters that
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on SHC; provided, however, that for purposes of this sentence
only, those representations and warranties that are qualified by references to
"Material" or "Material Adverse Effect" or variations of such terms shall not be
deemed to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of each of the SHC Companies to be performed and
complied with pursuant to this Agreement and the Other Agreements provided for
herein prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) Certificates. SHC shall have delivered to Xxxx (i) a
certificate or certificates dated as of the Closing Date certifying as to the
fulfillment of the conditions contained in Sections 8.2(a) and 8.2(b) of this
Agreement and (ii) certified copies of resolutions duly adopted by the Board of
Directors of SHC authorizing the execution, delivery and performance of this
Agreement, and the consummation of the transactions provided for herein.
(d) Opinion of Counsel. Xxxx shall have received a written opinion
of Xxxxxxxxx & Xxxxxxx, FCC counsel to SHC, dated as of the Closing Date and
substantially in the form of Exhibit 8.2(d).
-33-
(e) Return of LC. SHC shall have returned the LC to Xxxx.
(f) FCC Order. The FCC Order shall have become a Final FCC Order.
For purposes of this Agreement: "Final FCC Order" means an FCC Order (a) which
has not been vacated, reversed, stayed, set aside, annulled or suspended, (b)
with respect to which no appeal, request for stay, or petition for rehearing,
reconsideration or review by any Person or by the FCC on its motion, is pending,
and (c) as to which the time for filing any such appeal, request, petition, or
similar document or the time for reconsideration or review by the FCC on its own
motion under the express provisions of the Communications Act, has expired (or
if any such appeal, request, petition or similar document has been filed, the
FCC Order has been upheld in a proceeding pursuant thereto and no additional
review or reconsideration may be sought).
(g) Network Consents. SHC shall have obtained and delivered to
Xxxx the written consents (or waivers with respect thereto) required by any of
the network affiliation agreements listed on Schedule 8.2(g) as a result of the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, without any Material modification to the terms
thereof in effect on the date of this Agreement.
(h) Litigation. No Litigation pending or threatened involving any
of the SHC Companies (whether or not disclosed in the Schedules), if adversely
determined, individually or in the aggregate would have, or be reasonably
expected to have, a Material Adverse Effect on the SHC Companies or their
respective businesses or assets.
8.3 CONDITIONS TO OBLIGATIONS OF SHC. The obligations of SHC to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by SHC pursuant to Section 11.3 of this Agreement:
(a) Representations and Warranties. Except as provided in the
following sentence, the representations and warranties made by Xxxx and Merger
Corp. set forth in this Agreement shall be correct and complete at the Effective
Time with the same force and effect as if such representations and warranties
had been made on and as of the Effective Time (except that representations and
warranties that by their terms are made as of some specified date shall be
correct and complete only as of such date) except for representations and
warranties the inaccuracies of which relate to matters that are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Xxxx or Merger Corp.; provided, however, that for purposes of this sentence
only, those representations and warranties which are qualified by references to
"Material" or "Material Adverse Effect" or variations of such terms shall not be
deemed to include such qualifications. The foregoing sentence shall not in any
manner whatsoever apply to any inaccuracy in the representations and warranties
contained in Section 6.8 of this Agreement as a result of any application for
review or petition for reconsideration of, or appeal from, the FCC Order.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Xxxx and Merger Corp. to be performed and complied
with pursuant to this Agreement and the Other Agreements provided for herein
prior to the Effective Time shall have been duly performed and complied with in
all Material respects.
(c) Certificates. Xxxx and Merger Corp. shall each have delivered
to SHC (i) a certificate or certificates dated as of the Closing Date certifying
as to the fulfillment of the conditions
-34-
contained in Sections 8.3(a) and 8.3(b) of this Agreement and (ii) certified
copies of resolutions duly adopted by the Boards of Directors of Xxxx and Merger
Corp. authorizing the execution, delivery and performance of this Agreement, and
the consummation of the transactions provided for herein.
ARTICLE 9
TERMINATION
9.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the Bankruptcy Court, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) By mutual consent of Xxxx and SHC; or
(b) By Xxxx or SHC (provided that the terminating party is not
then in Material breach of any representation or warranty contained in this
Agreement or in Material breach of any covenant or other agreement contained in
this Agreement) in the event of the inaccuracy of any representation or warranty
of the non-terminating party contained in this Agreement which (i) would
reasonably be expected to have or result in a Material Adverse Effect on the
non-terminating party and (ii) cannot be or has not been cured within thirty
(30) days after the giving of written notice to the non-terminating party of
such inaccuracy, which written notice shall describe in reasonable detail the
Material breach giving rise to the right to terminate this Agreement; or
(c) By Xxxx or SHC (provided that the terminating party is not
then in Material breach of any representation or warranty contained in this
Agreement or in Material breach of any covenant or other agreement contained in
this Agreement) in the event of a Material breach by the non-terminating party
of any covenant or agreement contained in this Agreement that cannot be or has
not been cured within thirty (30) days after the giving of written notice to the
non-terminating party of such breach, which written notice shall describe in
reasonable detail the Material breach giving rise to the right to terminate this
Agreement; provided, however, that Xxxx shall have no right of cure with respect
to any breach of its obligation to pay the Merger Consideration or the Junior
Preferred Stock Merger Consideration; or
(d) By Xxxx or SHC in the event that the Merger shall not have
been consummated by March 31, 2003 (or such later date up to one hundred twenty
(120) days thereafter to which the Effective Time may be delayed by Xxxx
pursuant to Section 1.3), in each case only if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
Material breach of this Agreement by the party electing to terminate pursuant to
this Section 9.1(d); provided, however, that for purposes of this Section
9.1(d), the March 31, 2003 termination date specified herein shall be
automatically extended by one day for each day that the Closing has not occurred
as a result of the failure of the condition contained in Section 8.1(d); or
(e) By Xxxx or SHC if it is reasonably anticipated that any of the
conditions precedent to the obligations of such party to consummate the Merger
(other than the condition precedent set forth in Section 8.1(d)) cannot be
satisfied or fulfilled by the date specified in Section 9.1(d) of this Agreement
and such failure was not the fault of the terminating party.
-35-
9.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1 of this Agreement, this Agreement shall become void and have no
effect, except that (i) the provisions of this Section 9.2, Article 11 and
Sections 1.5, 7.10(b), 7.15 and 7.19 of this Agreement shall survive any such
termination, and (ii) subject to the provisions of Section 9.2(b), a termination
pursuant to Section 9.1(b), 9.1(c) or 9.1(e) of this Agreement shall not relieve
the breaching party from Liability for an uncured breach of a representation,
warranty, covenant, or agreement giving rise to such termination.
(b)
(i) If the non-occurrence of Closing is the result of a
Material Default by Xxxx of any of its representations or warranties or
any of its covenants or agreements hereunder, and SHC has not Materially
Defaulted on any of its representations or warranties or any of its
covenants or agreements hereunder, then (A) SHC may draw on the LC and (B)
SHC shall instruct the Escrow Agent to deliver to SHC the Escrow Shares
pursuant to the Share Escrow Agreement. The aggregate proceeds of the
drawing on the LC and the Escrow Shares shall total twenty five million
dollars ($25,000,000) (the "Default Payment"); provided, however, that
Xxxx shall have the option, in its sole discretion, of replacing some or
all of the Escrow Shares with a cash payment, so long as any such cash
payment is a whole number multiple of $500,000, by providing timely notice
in accordance with the Escrow Agreement.
(ii) In the event the Escrow Shares are paid to SHC pursuant
to the Share Escrow Agreement and:
(A) in compliance with Section 7.19, SHC sells any of
the Escrow Shares within six (6) months of the initial date of
effectiveness of the Registration Statement (provided that if it does not
remain continuously effective throughout such six (6) month period, such
six (6) month period shall be extended by the number of days on which the
Registration Statement is not effective) (the "Make Whole Period") and the
average price per share of all such sales during such Make Whole Period
(the "Average Escrow Share Sales Price") is less than the Average Price,
Xxxx shall pay to SHC an amount equal to (i) the difference between the
Average Price and the Average Escrow Share Sales Price multiplied by (ii)
the number of Escrow Shares sold during such Make Whole Period; or
(B) SHC sells any of the Escrow Shares within the Make
Whole Period and the Average Escrow Share Sales Price is greater than the
Average Price, SHC shall pay to Xxxx an amount equal to (i) the difference
between the Average Escrow Share Sales Price and the Average Price
multiplied by (ii) the number of Escrow Shares sold during such Make Whole
Period.
To the extent that any Escrow Shares remain unsold following the
Make Whole Period and the average closing price of Xxxx Class B Common
Stock on the New York Stock Exchange (or the principal national exchange
on which such Common Stock is then listed) for the five (5) trading days
ending on the last day of the Make Whole Period is greater than the
Average Price, SHC shall pay to Xxxx the difference between such average
and the Average Price multiplied by the number of unsold shares.
-36-
Any payment to be made pursuant to this Section 9.2(b)(ii) shall be
made one time and within three (3) Business Days after the earlier of (1)
(I) the expiration of the six (6) month period referenced above and (II)
receipt of a notice regarding any monies owed and (2) (I) the date on
which all Escrow Shares are sold and (II) receipt of a notice regarding
any monies owed. Any payment to be made by any party pursuant to this
Section 9.2(b)(ii) shall be made in immediately available United States
funds.
(iii) The Default Payment to be made to SHC pursuant to this
Section 9.2(b) shall be deemed to be liquidated damages paid to compensate
SHC for the damages resulting to SHC from Xxxx'x default, if, and only if,
Xxxx Materially complies with Section 7.19 and this Section 9.2. The
parties agree that actual damages pursuant to a breach of this Agreement
prior to the Effective Time would be impossible to measure. Receipt of the
Default Payment shall be the sole and exclusive remedy that SHC shall have
in the event of such default and shall constitute a waiver of any and all
other legal or equitable rights or remedies that SHC may otherwise have as
a result of a default by Xxxx. In consideration of the receipt of the
Default Payment as liquidated damages, SHC may not obtain any further
legal or equitable relief, including specific performance, to which it may
otherwise have been entitled and Xxxx shall have no further Liability to
SHC as a result of any such default.
(iv) If the Closing does not occur due to the nonfulfillment
of any of the conditions in Sections 8.1 or 8.2, without Xxxx being in
Material Default in the performance of any of its representations or
warranties or any of its covenants or agreements under this Agreement, SHC
shall not be entitled to the LC or the Escrow Shares and, promptly after
the termination of this Agreement, the LC and the Escrow Shares shall be
returned to Xxxx.
ARTICLE 10
DEFINITIONS
(a) The terms set forth below shall have the meaning ascribed thereto in
the referenced sections:
TERM SECTION
Average Escrow Share Sales Price.................................. 9.2(b)(ii)(A)
Bankruptcy Code................................................... Preamble
BBC............................................................... Preamble
BLC............................................................... Preamble
Closing........................................................... 1.2
Closing Date...................................................... 1.2
Current Stations.................................................. Preamble
Default Payment................................................... 9.2(b)
Designated Stations............................................... Preamble
Effective Time.................................................... 1.3
ERISA Affiliate................................................... 5.20(a)
ERISA Pension Plan................................................ 5.20(g)
Escrow Shares..................................................... 1.5
Estimated Working Capital Adjustment.............................. 3.5(a)
Exchange Fund..................................................... 4.1(a)
Final Working Capital Statement................................... 3.5(b)
-00-
XXXX XXXXXXX
FASB 5............................................................ 5.19(d)
Xxxx.............................................................. Introduction
Indemnified Party 7.16(a)
Junior Preferred Stock Merger Consideration....................... 3.1(d)
LC................................................................ 1.5
Make Whole Period................................................. 9.2(b)(ii)(A)
Merger............................................................ Preamble
Merger Consideration.............................................. 3.1(c)
Merger Corp....................................................... Introduction
Minute Books...................................................... 5.1(b)
Neutral Auditors.................................................. 3.5(c)
Per Share Junior Preferred Stock Merger Consideration............. 3.1(d)
Per Share Merger Consideration.................................... 3.1(c)
Plan of Reorganization............................................ Preamble
Plan Summary...................................................... Preamble
Preliminary Working Capital Statement............................. 3.5(a)
Purchase Agreement................................................ Preamble
Purchaser......................................................... Preamble
Registration Statement............................................ 7.21(a)
SHC............................................................... Introduction
Stations.......................................................... Preamble
Surviving Corporation............................................. 1.1
WARN Act.......................................................... 5.23
(b) The following terms (in their singular and plural forms as
appropriate) as used in this Agreement shall have the meanings set forth below
unless the context requires otherwise:
"ACCOUNTS RECEIVABLE" means, as of any applicable date, all accounts
receivable, notes receivable, and other monies due to SHC or any of its
Subsidiaries for sales and deliveries of goods, performance of services
and other business transactions (whether or not on the books of SHC or any
of its Subsidiaries).
"AFFILIATE" of a Person means: (i) any Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person, (ii) any executive officer,
director or partner or direct or indirect beneficial or legal owner of any
ten percent (10%) or greater equity or voting interest of such Person; or
(iii) any entity for which a Person described in (ii) above acts in any
such capacity.
"AGREEMENT" means this Agreement (including the Preamble), including
the Exhibits and Schedules delivered pursuant hereto or referred to
herein, each of which is incorporated herein by reference.
"AVERAGE PRICE" means the average of the trading prices of Xxxx
Class B Common Stock as reported on the New York Stock Exchange (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source selected by Xxxx) for the twenty (20) consecutive
full trading days in which such shares are traded on the New York Stock
Exchange ending at the close of trading on the second full trading day
immediately preceding the date of this Agreement. If the price of Xxxx
Class B Common Stock is adjusted at any time following
-38-
the first (1st) day of such period and prior to the date of this Agreement
as a result of an action by Xxxx resulting in a share split, reverse share
split, share dividend or similar recapitalization, then all prices
preceding such adjustment shall themselves be adjusted so as to be
comparable with those following such adjustment.
"BALANCE SHEET" means the consolidated audited balance sheet of SHC
and its Subsidiaries as of December 31, 2001 and included in the SHC
Financial Statements.
"BANKRUPTCY CASE" means the voluntary petition for relief filed by
SHC under chapter 11 of title 11 of the United States Code in the
Bankruptcy Court on March 22, 2002, Case No. 02-10822.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for
the District of Delaware.
"BBC LOAN AGREEMENT" means the Loan Agreement dated as of May 20,
1999, as amended as of June 18, 1999 and as of March 22, 2000 by and among
SHC, Benedek Broadcasting Corporation, the Financial Institutions
Signatory Thereto and Toronto Dominion (Texas), Inc. as Administrative
Agent and Collateral Agent.
"BUSINESS DAY" means a day other than a Saturday, a Sunday, a day on
which banking institutions in the States of Georgia or New York are
authorized or obligated by law or required by executive order to be
closed, or a day on which the New York Stock Exchange is closed.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended, and the rules, regulations, and orders of the FCC promulgated
thereunder.
"COMPUTER SOFTWARE" means all computer programs, materials, tapes,
source and object codes (other than off the shelf and "shrink wrapped"
programs and software) as well as all documentation and listings related
thereto used in the respective businesses of the SHC Companies.
"CONFIRMATION ORDER" means the order of the Bankruptcy Court
confirming the Plan of Reorganization pursuant to Section 1129 of the
Bankruptcy Code.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order or License.
"CONTRACT" means any written or oral contract, agreement,
understanding, lease, usufruct, plan, instrument, commitment, restriction,
arrangement, obligation, undertaking, practice or authorization of any
kind or character or other document, in each case to which any Person is a
party or that is binding on any Person or its securities, assets or
business.
"DATABASES" means databases in all forms, versions and media as well
as all documentation and listings therefor used by the SHC Companies,
other than Licenses.
-39-
"DEFAULT" means (1) a breach of, default under, or misrepresentation
in or with respect to any Contract or License, (2) the occurrence of an
event that with the passage of time or the giving of notice or both would
constitute a breach of, default under, or misrepresentation in any
Contract or License, or (3) the occurrence of an event that with or
without the passage of time or the giving of notice or both would give
rise to a right of any Person to exercise any remedy or obtain any relief
under, terminate or revoke, suspend, cancel, or modify or change the
current terms of, or renegotiate, or to accelerate the maturity or
performance of, or to increase or impose any Liability under, any
Contract, Law, Order or License.
"DESIGNATED STATIONS" means those Stations listed on Schedule C.
"DGCL" means the General Corporation Law of the State of Delaware.
"DISCOUNT NOTES" means the 13-1/4% Senior Subordinated Discount
Notes Due 2006 issued by SHC.
"DTV" means digital television.
"DTV EXPENDITURES" means the aggregate amount incurred by the SHC
Companies with respect to the DTV conversion of the Stations through the
Effective Time, such amount to be determined in accordance with a
certificate signed by both the Treasurer and the Senior Vice
President-Planning and Technology of SHC to be delivered by SHC at the
Effective Time.
"DTV NEGATIVE ADJUSTMENT" means the amount, if any, by which the DTV
Expenditures are less than the DTV Target. If the DTV Expenditures are
greater than the DTV Target, then the DTV Negative Adjustment shall be
zero.
"DTV POSITIVE ADJUSTMENT" means the amount, if any, by which the DTV
Expenditures are greater than the DTV Target. If the DTV Expenditures are
less than the DTV Target, then the DTV Positive Adjustment shall be zero.
"DTV TARGET" means the amount, as of the Effective Time, that the
SHC Companies would have spent on the DTV conversion of the Stations had
SHC made such expenditures in accordance with the DTV budget set forth on
Schedule D, such amount to be determined in accordance with such Schedule
D.
"EMPLOYEE BENEFIT PLAN" means collectively, each Material pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus or other incentive plan,
any other written or unwritten employee program, arrangement, agreement or
understanding, whether arrived at through collective bargaining or
otherwise, any medical, vision, dental or other health plan, any life
insurance plan, or any other employee benefit plan or fringe benefit plan,
including, without limitation, any "employee benefit plan," as that term
is defined in Section 3(3) of ERISA currently or previously adopted,
maintained by, sponsored in whole or in part by, or contributed to by SHC
or any SHC Subsidiary or ERISA Affiliate thereof or under which SHC or any
SHC Subsidiary or any ERISA Affiliate thereof has any Material Liability
for the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries are eligible to participate. "Employee Benefit Plans" also
means any Material plans, programs,
-40-
agreements, arrangements or understandings previously maintained by,
sponsored in whole or in part by, or contributed to by SHC, or any SHC
Subsidiary or ERISA Affiliate thereof that could result in a Material
Liability to SHC, including but not limited to, any plan covered by or
subject to Title IV of ERISA. Employee Benefit Plans include (but are not
limited to) "employee benefit plans" as defined in Section 3(3) of ERISA
and any other Material plan, fund, policy, program, practice, custom,
understanding or arrangement providing compensation or other benefits to
any current or former officer or employee or director or independent
contractor of SHC, or any SHC Subsidiary, or any dependent or beneficiary
thereof, maintained by SHC, or any SHC Subsidiary or under which SHC, or
any SHC Subsidiary has any obligation or Material Liability, whether or
not they are or are intended to be (i) covered or qualified under the
Code, ERISA or any other applicable Law, (ii) written or oral, (iii)
funded or unfunded, (iv) actual or contingent, or (v) generally available
to any or all employees (or former employees) of SHC, or any SHC
Subsidiary (or their beneficiaries or dependents), including, without
limitation, all incentive, bonus, deferred compensation, flexible spending
accounts, cafeteria plans, vacation, holiday, medical, disability, share
purchase or other similar plans, policies, programs, practices or
arrangements.
"ENVIRONMENTAL LAWS" means all applicable Laws, now or hereafter in
effect, imposing liability, establishing standards of conduct or otherwise
relating to pollution or protection of the environment (including, without
limitation, natural resources, surface water, groundwater, soils, and
ambient air), human health and safety, land use matters or the presence,
use, generation, treatment, storage, disposal, Release or threatened
Release, transport or handling of Hazardous Substances, including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.), the
Federal Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air
Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), the Oil Pollution Act of 1990 (33 U.S.C.
Section 2701 et seq.), and the Safe Drinking Water Act (42 U.S.C. Section
300 et seq.).
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
"ERISA PLAN" means any Employee Benefit Plan which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA,
or an "employee welfare benefit plan" as that term is defined in Section
3(1) of ERISA.
"ESCROW AGENT" means SunTrust Bank, as escrow agent under the Share
Escrow Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE AGENT" means The Bank of New York acting as exchange agent
hereunder.
"FCC" means the Federal Communications Commission.
"FCC LICENSES" means all licenses, permits, and authorizations
issued by the FCC for the operation of the Stations as currently operated.
-41-
"FCC ORDER" means the grant of the applications filed pursuant to
Section 7.7(a) of this Agreement, signifying the approval of the FCC to
all necessary transactions contemplated herein.
"FINAL BANKRUPTCY COURT ORDER" means an order or judgment of the
Bankruptcy Court, or other court of competent jurisdiction with respect to
the subject matter, which has not been reversed, stayed, modified or
amended, and as to which the time to appeal or seek certiorari has expired
and no appeal or petition for certiorari has been timely taken, or as to
which any appeal that has been taken or any petition for certiorari that
has been or may be filed has been resolved by the highest court to which
the order or judgment was appealed or from which certiorari was sought.
"GAAP" means generally accepted accounting principles consistently
applied.
"XXXX CLASS A COMMON STOCK" means the no par value Class A Common
Stock of Xxxx.
"XXXX CLASS B COMMON STOCK" means the no par value Class B Common
Stock of Xxxx.
"XXXX COMPANIES" means, collectively, Xxxx and all of Xxxx'x
Subsidiaries.
"XXXX-XXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, 15 U.S.C.A. Section 18(a), as amended, and all Laws
promulgated thereunder.
"HAZARDOUS SUBSTANCES" means (a) any substance, material, element,
compound, waste or chemical, whether solid, liquid or gaseous which is
defined, listed or otherwise classified or regulated in any way as a
"contaminant," "pollutant," "toxic pollutant," "toxic substance,"
"hazardous substance," "hazardous waste," "special waste," or "solid
waste" under any Environmental Laws; (b) petroleum and its refined
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic as defined by any Environmental Laws,
including, without limitation, corrosivity, ignitability, toxicity or
reactivity as well as any radioactive or explosive materials; (e) radon;
and (f) any raw materials, building components (including, without
limitation, friable asbestos-containing materials) and manufactured
products containing hazardous substances listed or classified as such
under Environmental Laws.
"IMPROVEMENTS" means all buildings, structures, fixtures and other
improvements included in the Real Property.
"INTELLECTUAL PROPERTY" means (i) patents and pending patent
applications together with any and all continuations, divisions, reissues,
extensions and renewals thereof, (ii) trade secrets, know-how, inventions,
formulae and processes, whether trade secrets or not, (iii) trade names,
trademarks, service marks, logos, assumed names, brand names and all
registrations and applications therefor together with the goodwill of the
business symbolized thereby, (iv) copyrights and any registrations and
applications therefor, (v) technology rights and licenses, and (vi) all
other intellectual property owned by, registered in the name of, or used
in the business of a Person or in which a Person or its business has any
interest.
"IRS" means the Internal Revenue Service of the United States of
America.
-42-
"KNOWLEDGE" or "KNOWN" with respect to SHC means the actual personal
knowledge of the following individuals: K. Xxxxx Xxxxx, A. Xxxxxxx
Xxxxxxx, Xxxxx Xxxx, Xxxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx and
Xxxx Xxxxxx, after reasonable due inquiry and all facts that any of the
foregoing individuals reasonably should have known after due inquiry.
"LAW" means any code, law, ordinance, regulation, rule, or statute
of any Regulatory Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, expense (including, without
limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills and checks presented to banks for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute, contingent, liquidated, unliquidated, matured,
unmatured or otherwise.
"LICENSE" means any license, franchise, permit, easement, right,
certificate, authorization, approval or filing to which any Person is a
party or that is or may be binding on any Person or its securities,
property or business.
"LIEN" means any mortgage, lien, security interest, pledge,
hypothecation, encumbrance, restriction, reservation, encroachment,
infringement, easement, conditional sale agreement, title retention or
other security arrangement, defect of title, adverse right or interest or
charge of, on, or with respect to any property or property interest.
"LITIGATION" means any action, administrative or other proceeding,
arbitration, cause of action, claim, complaint, criminal prosecution,
hearing, investigation, litigation filed or brought against any SHC
Company by any Person alleging potential liability against or affecting
SHC or any of its Subsidiaries, their respective assets (including,
without limitation, Material Contracts relating to SHC or any of its
Subsidiaries) , any of their respective Employee Benefit Plans, any
fiduciary for any such Employee Benefit Plan with respect to any of such
Employee Benefit Plans, before or by any Regulatory Authority or
arbitration, mediation or similar tribunal filed or brought against any
SHC Company.
"LOCK UP, VOTING AND CONSENT AGREEMENTS" means the various Lock Up,
Voting and Consent Agreements entered into by and between SHC and the
stockholders and bondholders that are signatories thereto.
"MATERIAL" or "MATERIALLY" shall be determined in light of the facts
and circumstances of the matter in question and, in the case of SHC, as to
the SHC Companies taken as a whole, but not including the Designated
Stations.
"MATERIAL ADVERSE EFFECT" means (A) any Material adverse effect on
(i) the business, operations, assets, Liabilities, condition (financial or
otherwise) or results of operations of such Person together with its
Subsidiaries and parent entity taken as a whole (in the case of SHC,
excluding the Designated Stations), (ii) the ability of such party to
consummate timely the transactions contemplated by this Agreement, or
(iii) the ability of such party to perform timely any of its Material
obligations under this Agreement or any of the Other Agreements, if such
change or effect Materially impairs the ability of such party to perform
its Material obligations hereunder or thereunder, taken as a whole.
-43-
"MERGER CORP. COMMON STOCK" means the no par value common stock of
Merger Corp.
"NEW YORK STOCK EXCHANGE" means the New York Stock Exchange, Inc.
"ORDER" means any decree, injunction, judgment, order, ruling, writ,
quasi-judicial decision or award or administrative decision or award of
any federal, state, local, foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority to which any
Person is a party or that is or may be binding on any Person or its
securities, assets or business.
"OTHER AGREEMENTS" means the agreements, documents, assignments and
instruments to be executed and delivered by SHC, Xxxx or Merger Corp., as
applicable, pursuant to this Agreement.
"PERMITTED LIENS" means any and all of (i) Liens for inchoate
mechanics' and materialmen's Liens for construction in progress and
workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business, (ii) Liens for Taxes not yet due and payable,
and for Taxes being contested in good faith, (iii) Liens and imperfections
of title the existence of which does not materially detract from the
value, of or materially interfere with the use and enjoyment, of the
property subject thereto or affected thereby, for the same uses and
operations as currently conducted and (iv) with respect to Real Property,
provided that the following are not violated by existing Improvements in
any Material respect and do not prohibit or Materially restrict the
continued use and operation of such Real Property for the same uses and
operations as currently conducted, (A) covenants, restrictions,
agreements, reservations, easements, and rights of way that would be shown
by a current title report, (B) conditions that would be shown by a current
survey, title report or physical inspection or (C) zoning, building or
other similar restrictions imposed by applicable Law.
"PERSON" means a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a business association,
corporation, general partnership, joint venture, limited partnership,
limited liability company or trust.
"PERSONAL PROPERTY" means collectively all of the personal property
or interests therein owned, leased, used or controlled by any of the SHC
Companies including, without limitation, machinery, tools, equipment
(including office equipment and supplies), furniture, furnishings,
vehicles, leasehold improvements, all other tangible personal property
other than inventory (which is specifically excluded from the Personal
Property).
"PUC LAWS" means local public utility commission laws, rules and
regulations.
"REAL PROPERTY" means collectively all the real property or
interests therein owned, leased, occupied, used or controlled by any of
the SHC Companies, together with (i) all rights, easements, tenements,
hereditaments, appurtenances, privileges, immunities, mineral rights and
other benefits belonging or appertaining thereto which run with said real
property and (ii) all right, title and interest, if any, of any of the SHC
Companies in and to (A) any land lying in the bed of any street, road,
avenue, open or proposed, adjoining said real property, (B) any award made
or to be made in lieu of the land described in the preceding clause (A),
(C) any unpaid condemnation award for any of said real property, and (D)
all strips and rights-of-way abutting or
-44-
adjoining said real property, if any. The Real Property includes, without
limitation, all of the right, title and interest of any of the SHC
Companies in and to all buildings, structures, building fixtures and other
improvements located on the land described in the preceding sentence.
"REGULATORY AUTHORITY" means any federal, state, county, local,
foreign or other governmental or public agency, instrumentality,
commission, authority, board or body, including without limitation the
Federal Trade Commission, the United States Department of Justice, the
FCC, the Pension Benefit Guaranty Corporation and the Bankruptcy Court.
"RELATED PERSON" means, with regard to any natural Person, its
spouse, parent, sibling, child, aunt, uncle, niece, nephew, in-law,
grandparent and grandchild (including by adoption) and any trustees or
other fiduciaries for the benefit of such relatives.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Substances (including the
abandonment or discarding of barrels, containers and other closed
receptacles containing any Hazardous Substances) into the indoor or
outdoor environment.
"RIGHTS" means, with respect to any Person, securities, or
obligations convertible into or exercisable for, or giving any Person any
right to subscribe for or acquire, or any options, calls, or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market
price or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE ESCROW AGREEMENT" means the escrow agreement in substantially
the form of Exhibit 1.5(b).
"SHC CAPITAL STOCK" means, collectively, the SHC Class A Common
Stock, SHC Class B Common Stock, the SHC Junior Preferred Stock and the
SHC Senior Preferred Stock.
"SHC CLASS A COMMON STOCK" means the $.01 par value Class A Common
Stock of SHC.
"SHC CLASS B COMMON STOCK" means the $.01 par value Class B Common
Stock of SHC.
"SHC COMPANIES" means SHC and each of the SHC Subsidiaries.
"SHC FINANCIAL STATEMENTS" means the financial statements of SHC set
forth in Schedule 5.5.
"SHC JUNIOR PREFERRED STOCK" means the $.01 par value Series C
Junior Discount Preferred Stock of SHC.
-45-
"SHC SENIOR PREFERRED STOCK" means the $.01 par value eleven and
one-half percent (11-1/2%) Senior Exchangeable Preferred Stock of SHC.
"SHC SUBSIDIARIES" means each of SHC's Subsidiaries, including
without limitation, Benedek Broadcasting Corporation, Benedek License
Corporation, Benedek Cable, Inc. and Benedek Interactive Media, LLC.
"STOCKHOLDER REPRESENTATIVE" means the Person(s) appointed as the
Stockholder Representative pursuant to Section 11.11, which initially
shall be Noraland Finances Ltd.-BVI.
"SUBSIDIARIES" means any Person of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such Person, is at the time directly or
indirectly owned or controlled by another Person, or by any one or more
Subsidiaries of such other Person, or by such other Person and one or more
of its Subsidiaries or Affiliates.
"TAKEOVER LAWS" means any applicable state "moratorium," "control
share," "fair price," "business combination," or other anti-takeover laws
and regulations.
"TAX" or "TAXES" means any federal, state, county, local, foreign
and other taxes, assessments, charges, fees, and impositions, including
interest and penalties thereon or with respect thereto, whether disputed
or not.
"TAX RETURNS" means all returns, reports, filings, declarations and
statements relating to Taxes that are required to be filed, recorded, or
deposited with any Regulatory Authority, including any attachment thereto
or amendment thereof.
"THIRD PARTY" or "THIRD PARTIES" means any Person that is not Xxxx
or SHC or an Affiliate of Xxxx or SHC.
"TRADEOUT AGREEMENT" means any Contract, pursuant to which any of
the SHC Companies has sold or traded commercial air time of any of the
Stations in consideration of any property or services in lieu of or in
addition to cash, excluding all film and program barter agreements.
"WORKING CAPITAL" means the amount, as of the Effective Time, of the
consolidated current assets of the SHC Companies less the amount of the
consolidated current liabilities of the SHC Companies determined in
accordance with the provisions of Sections 3.5 and 3.6 and GAAP, except
that:
(i) consolidated current liabilities shall not include any
amounts due under or in respect of (a) the SHC Discount
Notes, (b) the BBC Loan Agreement, (c) the capital leases,
notes and mortgages identified on any of the Schedules
referred to in Section 5.21 and (d) any accrued interest or
other charges on any of the foregoing;
(ii) the consolidated current assets and consolidated current
liabilities attributable to the Designated Stations
(determined based on the current assets to be transferred
to, and the current liabilities to be assumed by, the
-46-
Purchaser under the Purchase Agreement) shall be excluded
from the determination of Working Capital;
(iii) the current liability accrual in respect of the WOWT
pension plan shall be the same amount as reflected in the
Balance Sheet (such amount is $957,344 as of December 31,
2001) less actual cash payments made by the SHC Companies
to the WOWT pension trust fund from December 31, 2001
through the Closing Date.
(iv) to the extent unpaid at the Effective Time, amounts payable
under the Retention Agreements shall be included as a
current liability (to avoid duplication, to the extent not
already included on either the Preliminary Working Capital
Statement or the Final Working Capital Statement, as the
case may be);
(v) amounts attributable to Notes Receivable Officers shall
be excluded from the determination of Working Capital;
(vi) amounts attributable to deferred income tax assets shall
be excluded from the determination of Working Capital;
(vii) all amounts payable or benefits to be provided by Xxxx or
any SHC Company under that certain letter agreement of even
date herewith between Xxxx and Xxxxxxx, Xxxxx and Xxxxxxx
Xxxxxxx shall be excluded from the determination of Working
Capital;
(viii) to the extent unpaid at the Effective Time, amounts due to
Xxxxxxx Xxxxx & Co. under the engagement letter dated March
22, 2002 shall be included as a current liability (to avoid
duplication, to the extent not already included on either
the Preliminary Working Capital Statement or the Final
Working Capital Statement, as the case may be) and shall be
paid by the Surviving Corporation; and
(ix) to the extent unpaid at the Effective Time, amounts due
to SHC's professionals in connection with the Bankruptcy
Case, shall be set aside in escrow account with an escrow
agent selected by SHC to be disbursed therefrom in
accordance with an order of the Bankruptcy Court and the
amount so set aside shall not be included as a current
asset, and the liability for such payment shall not be
included as a current liability, in the determination of
Working Capital.
"WORKING CAPITAL ADJUSTMENT" means the Working Capital Negative
Adjustment or the Working Capital Positive Adjustment, as the case may be.
"WORKING CAPITAL NEGATIVE ADJUSTMENT" means the amount, if any, by
which the Working Capital is less than the Working Capital Target. If the
Working Capital exceeds the Working Capital Target, then the Working
Capital Negative Adjustment shall be zero.
-47-
"WORKING CAPITAL POSITIVE ADJUSTMENT" means the amount, if any, by
which the Working Capital exceeds the Working Capital Target. If the
Working Capital is less than the Working Capital Target, then the Working
Capital Positive Adjustment shall be zero.
"WORKING CAPITAL TARGET" means $12,200,000.
ARTICLE 11
MISCELLANEOUS
11.1 NOTICES.
(a) All notices, requests, demands and other communications
hereunder shall be (i) delivered by hand, (ii) mailed by registered or certified
mail, return receipt requested, first class postage prepaid and properly
addressed, (iii) sent by national overnight courier service, or (iv) sent by
facsimile, graphic scanning or other telegraphic communications equipment to the
parties or their assignees, addressed as follows:
To SHC: STATIONS HOLDING COMPANY, INC.
0000 Xxxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: K. Xxxxx Xxxxx
Facsimile: (000) 000-0000
with copies to: SHACK XXXXXX XXXX XXXXXXXX & XXXXXXX P.C.
000 Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
To Xxxx: XXXX COMMUNICATIONS SYSTEMS, INC.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
with copies to: XXXXXX & BIRD LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
(b) All notices, requests, instructions or documents given to any
party in accordance with this Section 11.1 shall be deemed to have been given
(i) on the date of receipt if delivered by hand, overnight courier service or if
sent by facsimile, graphic scanning or other telegraphic communications
equipment or (ii) on the date three (3) Business Days after depositing with the
United States Postal Service if mailed by United States registered or certified
mail, return receipt requested, first class postage prepaid and properly
addressed.
-48-
(c) Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this Section
11.1.
11.2 ENTIRE AGREEMENT. This Agreement (including the Preamble), the
Schedules, and the Exhibits hereto constitute the entire agreement between the
parties relating to the subject matter hereof and thereof and supersede all
prior oral and written, and all contemporaneous oral negotiations, discussions,
writings and agreements relating to the subject matter of this Agreement.
11.3 MODIFICATIONS, AMENDMENTS AND WAIVERS.
(a) Prior to or at the Effective Time, Xxxx, acting through the
Board of Directors of Xxxx, chief executive officer or other authorized officer,
shall have the right to waive any Material Default in the performance of any
term of this Agreement by any of the SHC Companies, to waive or extend the time
for the compliance or fulfillment by the SHC Companies of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of the SHC Companies under this Agreement, except
any condition which, if not satisfied, would result in the Material violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Xxxx.
(b) Prior to or at the Effective Time, the SHC Companies acting
through the Board of Directors of SHC or an authorized officer, shall have the
right to waive any Material Default in the performance of any term of this
Agreement by Xxxx or Merger Corp., to waive or extend the time for the
compliance or fulfillment by Xxxx or Merger Corp. of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Xxxx or Merger Corp. under this Agreement,
except any condition which, if not satisfied, would result in the Material
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of SHC.
(c) The failure or delay of any party at any time or times to
require performance of any provision of this Agreement shall in no manner affect
its right to enforce that provision. No single or partial waiver by any party of
any condition of this Agreement, or the breach of any term, agreement or
covenant or the inaccuracy of any representation or warranty of this Agreement,
whether by conduct or otherwise, in any one or more instances shall be construed
or deemed to be a further or continuing waiver of any such condition, breach or
inaccuracy or a waiver of any other condition, breach or inaccuracy.
11.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties hereto, and
their respective successors, designees and assigns, but no assignment shall
relieve any party of the obligations hereunder. This Agreement or any portion
thereof cannot be assigned by any party without the prior written consent of the
other parties hereto; provided, however, that Xxxx may assign this Agreement
without the consent of the other parties to any of its lenders as collateral
security and that Merger Corp., without the consent of the other parties, may
assign this Agreement to any Affiliate of Xxxx.
11.5 TABLE OF CONTENTS; CAPTIONS; REFERENCES. The table of contents and
the captions and other headings contained in this Agreement as to the contents
of particular articles, sections, paragraphs or other subdivisions contained
herein are inserted for convenience of reference only and are in no way to be
construed as part of this Agreement or as limitations on the scope of the
particular articles, sections, paragraphs or other subdivisions to which they
refer and shall not affect the interpretation or meaning of this Agreement. All
references in this Agreement to "Section" or "Article" shall be deemed to be
references to a Section or Article of this Agreement.
-49-
11.6 GOVERNING LAW. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
contracts made and performed therein, without giving effect to the conflict of
laws principles thereof.
11.7 PRONOUNS. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
11.8 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby. To the extent such
determination is reasonably likely to give rise to a Material Adverse Effect,
the parties shall endeavor in good faith to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as practicable to that of the invalid, illegal or unenforceable
provisions.
11.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but all of such counterparts
shall together constitute one and the same instrument.
11.10 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Xxxx or SHC, whether
under any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and their attorneys and shall be
construed and interpreted according to the ordinary meaning of the words used so
as fairly to accomplish the purposes and intentions of all parties hereto.
11.11 STOCKHOLDER REPRESENTATIVE.
(a) By accepting the Merger Consideration, each of the holders of
SHC Junior Preferred Stock and SHC Senior Preferred Stock hereby irrevocably
makes, constitutes, and appoints the Stockholder Representative as the
representative, agent and true and lawful attorney in fact of and for each of
the Stockholders in connection with this Agreement. Each of the Stockholders
hereby authorizes and empowers the Stockholder Representative to make or give
any approval, waiver, request, consent, instruction or other communication on
behalf of each of the Stockholders with respect to the Working Capital
Adjustment. Upon the death, resignation or incapacity of the Stockholder
Representative, or at any other time, a successor may be appointed by the vote
of the holders of a majority of the SHC Senior Preferred Stock outstanding
immediately prior to the Effective Time, so long as such successor shall agree
in writing to accept such appointment in accordance with the terms hereof.
Notice of the selection of a successor Stockholder Representative appointed in
the manner permitted in this Section 11.11 shall be provided to Xxxx and Merger
Corp. promptly.
(b) By accepting the Merger Consideration, each Stockholder hereby
agrees to indemnify and to save and hold harmless the Stockholder Representative
from any liability incurred by the Stockholder Representative based upon or
arising out of any act, whether of omission or commission, of the Stockholder
Representative pursuant to the authority herein granted, other than acts,
whether of omission or commission, of the Stockholder Representative that
constitute gross negligence or willful misconduct in the exercise by the
Stockholder Representative of the authority herein granted.
-50-
11.12 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants and agreements of the
parties shall not survive the Effective Time, except for those covenants and
agreements contained herein which by their terms apply in whole or in part after
the Effective Time.
-51-
[SIGNATURES ON FOLLOWING PAGES]
-52-
IN WITNESS WHEREOF, SHC, Xxxx and Merger Corp. have duly executed this
Agreement under seal as of the date first above written.
STATIONS HOLDING COMPANY, INC.
Debtor and Debtor-In-Possession
By: /s/ K. Xxxxx Xxxxx
------------------------------------------
Name:
Title:
XXXX COMMUNICATIONS SYSTEMS, INC.:
By: /s/ J. Xxxx Xxxxxxxx
------------------------------------------
Name: J. Xxxx Xxxxxxxx
Title: President
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President - Acquisitions
MERGER CORP.:
XXXX MIDAMERICA TELEVISION, INC.
By: /s/ J. Xxxx Xxxxxxxx
------------------------------------------
Name: J. Xxxx Xxxxxxxx
Title: Chairman of the Board and President
-53-
