UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
One)
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For
the transition period from ____________ to ____________.
Commission File Number : 000-26076
SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
---------------------------
MARYLAND 52-1494660
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
10706 BEAVER DAM ROAD
COCKEYSVILLE, MARYLAND 21030
(Address of principal executive offices)
(410) 568-1500
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year-if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No[ ]
As of November 3, 1999 there were 48,882,013 shares of Class A Common Stock,
$.01 par value, 48,103,647 shares of Class B Common Stock, $.01 par value; and
3,450,000 shares of Series D preferred stock, $.01 par value, convertible into
7,561,710 shares of Class A Common Stock of the Registrant issued and
outstanding.
In addition, 2,000,000 shares of $200 million aggregate liquidation value
11 5/8% High Yield Trust Offered Preferred Securities of Sinclair Capital, a
subsidiary trust of Sinclair Broadcast Group, Inc. are issued and outstanding.
1
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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1998 and
September 30, 1999..................................................................... 3
Consolidated Statements of Operations for the Three Months and Nine Months
Ended September 30, 1998 and 1999...................................................... 4
Consolidated Statement of Stockholders' Equity for the Nine Months
Ended September 30, 1999............................................................... 5
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1999...................................................... 6
Notes to Unaudited Consolidated Financial Statements.......................................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................................. 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................... 20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................................... 21
Signature..................................................................................... 22
</TABLE>
2
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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
ASSETS 1998 1999
--------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .................................................................. $ 3,268 $ 8,362
Accounts receivable, net of allowance for doubtful accounts ................................ 196,880 183,689
Current portion of program contract costs .................................................. 60,795 86,248
Prepaid expenses and other current assets .................................................. 5,542 6,790
Deferred barter costs ...................................................................... 5,282 5,830
Broadcast assets related to discontinued operations ........................................ 499,786 516,212
Broadcast assets held for sale ............................................................. 33,747 223,938
Deferred tax asset ......................................................................... 19,209 11,933
----------- -----------
Total current assets ................................................................ 824,509 1,043,002
PROGRAM CONTRACT COSTS, less current portion ................................................... 45,608 68,462
LOANS TO OFFICERS AND AFFILIATES ............................................................... 10,041 9,233
PROPERTY AND EQUIPMENT, net .................................................................... 243,684 250,434
OTHER ASSETS ................................................................................... 82,544 98,610
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ................................................... 2,646,366 2,515,261
----------- -----------
Total Assets ............................................................................... $ 3,852,752 $ 3,985,002
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ........................................................................... $ 18,065 $ 9,583
Accrued liabilities ........................................................................ 96,350 82,941
Current portion of long-term liabilities-
Notes payable and commercial bank financing ............................................ 50,007 68,758
Notes and capital leases payable to affiliates ......................................... 4,063 5,979
Program contracts payable .............................................................. 94,780 121,168
Deferred barter revenues ................................................................... 5,625 6,301
----------- -----------
Total current liabilities ........................................................... 268,890 294,730
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing ................................................ 2,254,108 2,338,524
Notes and capital leases payable to affiliates ............................................. 19,043 35,368
Program contracts payable .................................................................. 74,152 99,170
Deferred tax liability ..................................................................... 184,736 184,736
Other long-term liabilities ................................................................ 32,181 25,154
----------- -----------
Total liabilities ................................................................... 2,833,110 2,977,682
----------- -----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES ................................................. 3,599 3,575
----------- -----------
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUB-
SIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ........................................ 200,000 200,000
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series B Preferred stock, $.01 par value, 10,000,000 shares authorized and 39,581
and 14,774 shares issued and outstanding, respectively ................................. -- --
Series D Preferred stock, $.01 par value, 3,450,000 shares authorized, issued
and outstanding ........................................................................ 35 35
Class A Common stock, $.01 par value, 100,000,000 and 500,000,000 shares authorized
and 47,445,731 and 48,819,241 shares issued and outstanding, respectively .............. 474 488
Class B Common stock, $.01 par value, 35,000,000 and 140,000,000 shares authorized
and 49,075,428 and 48,208,447 shares issued and outstanding ............................ 491 482
Additional paid-in capital ................................................................. 768,648 779,602
Additional paid-in capital - equity put options ............................................ 113,502 108,358
Additional paid-in capital - deferred compensation ......................................... (7,616) (6,314)
Accumulated deficit (59,491) (78,906)
----------- -----------
Total stockholders' equity 816,043 803,745
----------- -----------
Total Liabilities and Stockholders' Equity .......................................... $ 3,852,752 $ 3,985,002
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated statements.
3
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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency commissions ...................... $ 151,996 $ 160,880 $ 377,755 $ 484,235
Revenues realized from station barter arrangements ......................... 18,433 15,231 41,724 44,855
--------- --------- --------- ---------
Total revenues ...................................................... 170,429 176,111 419,479 529,090
--------- --------- --------- ---------
OPERATING EXPENSES:
Program and production ..................................................... 30,512 35,874 75,067 103,628
Selling, general and administrative ........................................ 33,860 35,864 78,099 99,968
Expenses realized from station barter arrangements ......................... 17,005 14,101 37,967 41,098
Amortization of program contract costs and net
realizable value adjustments ........................................... 18,958 20,120 49,501 60,091
Stock-based compensation ................................................... 850 668 2,064 2,342
Depreciation of property and equipment ..................................... 8,054 7,800 16,766 23,592
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ................. 26,658 23,766 54,760 78,521
--------- --------- --------- ---------
Total operating expenses ............................................ 135,897 138,193 314,224 409,240
--------- --------- --------- ---------
Broadcast operating income .......................................... 34,532 37,918 105,255 119,850
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount expense ......................... (40,414) (45,344) (95,315) (132,622)
Subsidiary trust minority interest expense ................................. (5,813) (5,813) (17,438) (17,438)
Gain on sale of broadcast assets ........................................... 1,248 233 1,248 233
Unrealized gain (loss) on derivative instrument ............................ (10,150) 716 (10,150) 12,302
Interest income ............................................................ 896 840 4,113 2,443
Other income (expense) ..................................................... 558 (45) 668 286
--------- --------- --------- ---------
Loss before income taxes ............................................ (19,143) (11,495) (11,619) (14,946)
INCOME TAX BENEFIT (PROVISION) ................................................. 9,480 (5,403) 543 (8,893)
--------- --------- --------- ---------
NET LOSS FROM CONTINUING OPERATIONS ............................................ (9,663) (16,898) (11,076) (23,839)
Net Income from discontinued operations, net of related income tax
provision of $5,980, $2,914, $9,443, and $8,124, respectively .............. 7,489 5,557 15,810 12,187
EXTRAORDINARY ITEM:
Loss on early extinguishment of debt net of income tax
benefit of $7,370 ...................................................... -- -- (11,063) --
NET LOSS ....................................................................... $ (2,174) $ (11,341) $ (6,329) $ (11,652)
========= ========= ========= =========
Net loss available to common stockholders ...................................... $ (4,762) $ (13,929) $ (14,092) $ (19,415)
========= ========= ========= =========
Basic loss per share from continuing operations ................................ $ (0.13) $ (0.20) $ (0.20) $ (0.33)
========= ========= ========= =========
Basic earnings per share from discontinued operations .......................... $ 0.08 $ 0.06 $ 0.17 $ 0.13
========= ========= ========= =========
Basic loss per share from extraordinary item ................................... $ -- $ -- $ (0.12) $ --
========= ========= ========= =========
Basic loss per common share .................................................... $ (0.05) $ (0.14) $ (0.15) $ (0.20)
========= ========= ========= =========
Basic weighted average common shares outstanding ............................... 97,734 96,575 93,582 96,511
========= ========= ========= =========
Diluted loss per share from continuing operations .............................. $ (0.13) $ (0.20) $ (0.20) $ (0.33)
========= ========= ========= =========
Diluted earnings per share from discontinued operations ........................ $ 0.08 $ 0.06 $ 0.17 $ 0.13
========= ========= ========= =========
Diluted loss per share from extraordinary item ................................. $ -- $ -- $ (0.12) $ --
========= ========= ========= =========
Diluted loss per common share .................................................. $ (0.05) $ (0.14) $ (0.15) $ (0.20)
========= ========= ========= =========
Diluted weighted average common and common equivalent shares
Outstanding ................................................................ 99,339 96,949 95,540 96,718
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated statements.
4
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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
SERIES B SERIES D CLASS A CLASS B ADDITIONAL CAPITAL -
PREFERRED PREFERRED COMMON COMMON PAID-IN EQUITY PUT
STOCK STOCK STOCK STOCK CAPITAL OPTIONS
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 ........... $ -- $ 35 $ 474 $ 491 $ 768,648 $ 113,502
Class B Common Stock converted ...
into Class A Common Stock .... 9 (9)
Series B Preferred Stock converted
into Class A Common Stock .... (1) 8 (7)
Class A common stock converted
into Class B Preferred Stock . 1 (6) 5
Dividends payable on Series D
Preferred Stock...............
Stock option grants exercised .... 1 1,768
Class A Common Stock
issued pursuant to employee
benefit plans ................ 2 2,793
Equity Put Options ............... 5,144 (5,144)
Net payments relating to
equity put options ........... 1,251
Amortization of deferred
compensation..................
Net loss .........................
-------------------------------------------------------------------------------------
BALANCE, September 30, 1999 .......... $ -- $ 35 $ 488 $ 482 $ 779,602 $ 108,358
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
CAPITAL - TOTAL
DEFERRED ACCUMULATED STOCKHOLDERS'
COMPENSATION DEFICIT EQUITY
----------------------------------------------
<S> <C> <C> <C>
BALANCE, December 31, 1998 ........... $ (7,616) $ (59,491) $ 816,043
Class B Common Stock converted ...
into Class A Common Stock ....
Series B Preferred Stock converted
into Class A Common Stock ....
Class A common stock converted
into Class B Preferred Stock .
Dividends payable on Series D
Preferred Stock............... (7,763) (7,763)
Stock option grants exercised .... 1,769
Class A Common Stock
issued pursuant to employee
benefit plans ................ 2,795
Equity Put Options ...............
Net payments relating to
equity put options ........... 1,251
Amortization of deferred
compensation.................. 1,302 1,302
Net loss ......................... (11,652) (11,652)
----------------------------------------------
BALANCE, September 30, 1999 .......... (6,314) $ (78,906) $ 803,745
==============================================
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated statements.
5
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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .......................................................................... $ (6,329) $ (11,652)
Adjustments to reconcile net loss to net cash flows from operating activities-
Extraordinary loss on early extinguishment of debt ............................ 18,433 --
Gain on sale of broadcast assets .............................................. (12,036) (233)
Loss (gain) on derivative instrument .......................................... 10,150 (12,302)
Amortization of debt discount ................................................. 74 74
Depreciation and amortization of property and equipment ....................... 19,366 27,030
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ..................... 66,180 91,982
Amortization of program contract costs and net realizable value adjustments ... 50,589 61,248
Amortization of deferred compensation ......................................... 1,226 1,302
Deferred tax (benefit) provision .............................................. (4,520) 7,276
Changes in assets and liabilities, net of effects of acquisitions and dispositions-
Decrease in accounts receivable, net .......................................... 7,275 20,485
Increase in prepaid expenses and other current assets ......................... (1,011) (4)
Increase (decrease) in accounts payable and accrued liabilities ............... 32,507 (17,701)
Net effect of change in deferred barter revenues
and deferred barter costs .................................................. (64) (725)
Increase in other long-term liabilities ....................................... 678 4,978
Decrease in minority interest ................................................. (54) (24)
Payments on program contracts payable ............................................. (43,810) (59,852)
----------- -----------
Net cash flows from operating activities ...................................... 138,654 111,882
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ............................................. (13,949) (19,048)
Payments for acquisition of television and radio stations ......................... (2,072,368) (226,746)
Costs related to future acquisitions and dispositions ............................. -- (6,114)
Proceeds from sale of broadcasting assets ......................................... 273,298 61,771
Loans to officers and affiliates .................................................. (1,467) (673)
Repayments of loans to officers and affiliates .................................... 2,313 1,481
Equity investments ................................................................ -- (11,842)
Distributions from joint venture
655 --
----------- -----------
Net cash flows used in investing activities ................................ (1,811,518) (201,171)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases ......... 1,799,670 298,500
Repayments of notes payable, commercial bank financing and capital leases ........ (554,802) (195,399)
Payments of costs relating to financing ........................................... (11,169) --
Proceeds from exercise of stock options ........................................... 1,064 1,769
Payment received upon execution of derivative instrument ........................ 9,450 --
Repurchases of the Company's Class A Company Stock ................................ (26,665) --
Net proceeds from issuance of Class A Common Stock .............................. 335,235 --
Dividends paid on Series D Convertible Preferred Stock ............................ (7,763) (7,763)
Net payments (proceeds) related to equity put option contracts .................. (1,499) 1,251
Repayments of notes and capital leases to affiliates .............................. (2,576) (3,975)
----------- -----------
Net cash flows from financing activities ................................... 1,540,945 94,383
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .................................. (131,919) 5,094
CASH AND CASH EQUIVALENTS, beginning of period ........................................ 139,327 3,268
----------- -----------
CASH AND CASH EQUIVALENTS, end of period .............................................. $ 7,408 $ 8,362
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated statements.
6
<PAGE>
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other
consolidated subsidiaries, which are collectively referred to hereafter as "the
Company, Companies, Sinclair or SBG." The Company owns and operates television
and radio stations throughout the United States. Additionally, included in the
accompanying consolidated financial statements are the results of operations of
certain television stations pursuant to local marketing agreements (LMAs) and
radio stations pursuant to joint sales agreements (JSAs).
INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the nine months ended September 30,
1998 and 1999 are unaudited, but in the opinion of management, such financial
statements have been presented on the same basis as the audited consolidated
financial statements and include all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of the financial
position and results of operations, and cash flows for these periods.
As permitted under the applicable rules and regulations of the Securities and
Exchange Commission, these financial statements do not include all disclosures
normally included with audited consolidated financial statements, and,
accordingly, should be read in conjunction with the consolidated financial
statements and notes thereto as of December 31, 1997, and 1998 for the years
then ended. The results of operations presented in the accompanying financial
statements are not necessarily representative of operations for an entire year.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period financial
statements to conform with the current period presentation.
DISCONTINUED OPERATIONS
During the third quarter of 1999, the Company began to execute its strategy to
divest of its radio broadcast segment. In July 1999, the Company entered into an
agreement to sell 46 of its radio stations in nine markets to Entercom
Communications Corporation ("Entercom") for $824.5 million in cash. In addition,
the Company is currently engaged in formal negotiations with Emmis
Communications Corporation ("Emmis") for the sale of its remaining radio
stations serving the St. Louis market (see Note 5). Subject to the Company's
strategy to divest of its radio broadcasting segment, "Discontinued Operations"
accounting has been adopted for the periods presented in the accompanying
financial statements and the notes thereto. As such, the results from operations
of the radio broadcast segment, net of related income taxes, has been
reclassified from income from operations and reflected as income from
discontinued operations in the accompanying income statements for all periods
presented. In addition, assets relating to the radio broadcast segment are
reflected in "Broadcast assets related to discontinued operations" in the
accompanying balance sheets for all periods presented.
7
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2. CONTINGENCIES AND OTHER COMMITMENTS:
Lawsuits and claims are filed against the Company from time to time in the
ordinary course of business. These actions are in various preliminary stages,
and no judgments or decisions have been rendered by hearing boards or courts.
After reviewing these developments to date, it is Management's opinion that the
outcome of such matters will not have a material adverse effect on the Company's
financial position or results of operations.
3. SUPPLEMENTAL CASH FLOW INFORMATION (IN THOUSANDS):
During the nine months ended September 30, 1998 and 1999, the Company's
supplemental cash flow information is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1999
---- ----
<S> <C> <C>
Interest payments............................................................... $ 101,610 $ 144,419
=========== ===========
Subsidiary trust minority interest payments..................................... $ 17,438 $ 17,438
=========== ===========
Income tax payments............................................................. $ 1,930 $ 5,872
=========== ===========
Capital lease obligations incurred.............................................. $ 3,807 $ 22,208
=========== ===========
</TABLE>
4. EARNINGS PER SHARE:
The basic and diluted earnings per share and related computations are as follows
(in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted-average number of common shares...................... 97,734 96,575 93,582 96,511
Diluted effect of outstanding stock options .................. 1,317 267 1,670 99
Diluted effect of conversion of preferred shares.............. 288 107 288 108
------------ ------------ ----------- -----------
Diluted weighted-average number of common and common
equivalent shares outstanding............................. 99,339 96,949 95,540 96,718
============ ============ =========== ===========
Net loss...................................................... $ (2,174) $ (11,341) $ (6,329) $ (11,652)
Preferred stock dividends payable............................. (2,588) (2,588) (7,763) (7,763)
------------- ------------- ------------ ------------
Net loss available to common stockholders..................... $ (4,762) $ (13,929) $ (14,092) $ (19,415)
============= ============= ============ ============
Basic loss per share from continuing operations............... $ (0.13) $ (0.20) $ (0.20) $ (0.33)
============= ============ ============ ============
Basic earnings per share from discontinued operations......... $ 0.08 $ 0.06 $ 0.17 $ 0.13
============= ============ ============ ============
Basic loss per share from extraordinary item.................. $ - $ - $ (0.12) $ -
============= ============ ============ ============
Basic loss per common share................................... $ (0.05) $ (0.14) $ (0.15) $ (0.20)
============= ============ ============ ============
Diluted loss per share from continuing operations .......... $ (0.13) $ (0.20) $ (0.20) $ (0.33)
============= ============ ============ ============
Diluted earnings per share from discontinued operations....... $ 0.08 $ 0.06 $ 0.17 $ 0.13
============= ============ ============ ============
Diluted loss per share from extraordinary item................ $ - $ - $ (0.12) $ -
============= ============ ============ ============
Diluted loss per common share................................. $ (0.05) $ (0.14) $ (0.15) $ (0.20)
============= ============ ============ ============
</TABLE>
8
<PAGE>
5. ACQUISITIONS AND DISPOSITIONS:
1999 ACQUISITIONS AND DISPOSITIONS
Guy Gannett Acquisition. In September 1998, the Company agreed to acquire from
Guy Gannett Communications its television broadcasting assets for a purchase
price of $317 million in cash (the "Guy Gannett Acquisition"). As a result of
this transaction and after the completion of related dispositions, the Company
acquired five television stations in five separate markets. In April 1999, the
Company completed the purchase of WTWC-TV, WGME-TV and WGGB-TV for a purchase
price of $111.0 million and in July 1999, the Company completed the purchase of
WICS/WICD-TV, and KGAN-TV for a purchase price of $81.0 million. The Company
financed the acquisitions by utilizing indebtedness under the 1998 Bank Credit
Agreement.
In September 1998, the Company agreed to sell the Guy Gannett television station
WOKR-TV in Rochester, New York to the Ackerley Group, Inc. for a sales price of
$125 million (the "Ackerley Disposition"). In April 1999, the Company closed on
the purchase of WOKR-TV and simultaneously completed the sale of WOKR-TV to
Ackerly.
CCA Disposition. In April 1999, the Company completed the sale of the
non-license assets of KETK-TV and KLSB-TV in Tyler-Longview, Texas to
Communications Corporation of America ("CCA") for a sales price of $36 million
(the "CCA Disposition"). In addition, CCA has an option to acquire the license
assets of KETK-TV for an option purchase price of $2 million.
St. Louis Acquisition. In August 1999, the Company completed the purchase of
radio station KXOK-FM in St. Louis, Missouri for a purchase price of $14.1
million in cash.
Barnstable Disposition. In August 1999, the Company completed the sale of the
radio stations WFOG-FM and WGH-AM/FM serving the Norfolk, Virginia market to
Barnstable Broadcasting, Inc. ("Barnstable") (the "Barnstable Disposition"). The
stations were sold to Barnstable for a sales price of $23.7 million.
PENDING DISPOSITIONS
STC Disposition. In March 1999, the Company entered into an agreement to sell to
STC the television stations WICS/WICD-TV in the Springfield, Illinois market and
KGAN-TV in the Cedar Rapids, Iowa market (the "STC Disposition"). In addition,
the Company agreed to sell the Non-License Assets and rights to program WICD in
the Springfield, Illinois market. The stations are being sold to STC for a sales
price of $81.0 million and were acquired by the Company in connection with the
Guy Gannett Acquisition. In April 1999, the Justice Department requested
additional information in response to STC's filing under the Hart-Scott-Rodino
Antitrust Improvements Act. The sale of the stations to STC has been delayed
pending resolution of the questions raised by the Justice Department. If STC is
unable to complete the purchase of these stations, the Company would continue to
own these stations. Either STC or the Company may terminate the agreement if the
transaction is not closed by March 15, 2000.
St. Louis Purchase Option. In connection with the acquisition of River City, the
Company entered into a five year agreement (the "Baker Agreement") with Barry
Baker (the Chief Executive Officer of River City) pursuant to which Mr. Baker
served as a consultant to the Company until terminating such services effective
March 8, 1999 (the "Termination Date"). As of February 8, 1999, the conditions
to Mr. Baker becoming an officer of the Company had not been satisfied, and on
that date Mr. Baker and the Company entered into a termination agreement
effective March 8, 1999. Mr. Baker had certain rights as a consequence of the
termination of the Baker Agreement. These rights included Mr. Baker's right to
purchase at fair market value the television and radio stations owned by the
Company serving the St. Louis, Missouri market.
9
<PAGE>
In June 1999, the Company received a letter from Mr. Baker in which Mr. Baker
elected to exercise his option to purchase the radio and television properties
of Sinclair in the St. Louis market for their fair market value. In his letter,
Mr. Baker names Emmis Communications Corporation ("Emmis") as his designee.
Sinclair is evaluating the validity of Mr. Baker's designation of Emmis. In
light of the foregoing, the fact that negotiations of a definitive purchase
agreement are yet to commence, that a fair market value has not been determined,
and that approvals would be required from both the Department of Justice and the
Federal Communications Commission, there can be no assurance that the
transactions contemplated by the option will be consummated.
Entercom Disposition. In July 1999, the Company entered into an agreement to
sell 46 radio stations in nine markets to Entercom Communications Corporation
("Entercom") for $824.5 million in cash. The transaction does not include the
Company's radio stations in the St. Louis market which are subject to the St.
Louis Purchase Option as previously noted. The completion of this transaction is
subject to FCC and Department of Justice approval.
6. INTEREST RATE DERIVATIVE AGREEMENTS:
As of September 30, 1999, the Company had several interest rate swap agreements
which expire from July 23, 2000 to July 15, 2007. The swap agreements set rates
in the range of 5.5% to 8.1%. Floating interest rates are based upon the three
month London Interbank Offered Rate (LIBOR) rate, and the measurement and
settlement is performed quarterly. Settlements of these agreements are recorded
as adjustments to interest expense in the relevant periods. The notional amounts
related to these agreements were $1.6 billion at September 30, 1999, and
decrease to $200 million through the expiration dates. In addition, the Company
has entered into floating rate swaps with notional amounts totaling $750
million. As of September 30, 1999, $1.7 billion or 70% of the Company's
outstanding indebtedness was either partially or entirely hedged.
The Company has no intentions of terminating these instruments prior to their
expiration dates unless it were to prepay a portion of its bank debt. The
counter parties to these agreements are international financial institutions.
The Company estimates the fair value to retire these instruments at September
30, 1999 to be $5.1 million. The fair value of the interest rate hedging
derivative instruments is estimated by obtaining quotations from the financial
institutions which are a party to the Company's derivative contracts (the
"Banks"). The fair value is an estimate of the net amount that the Company would
pay at September 30, 1999 if the contracts were transferred to other parties or
canceled by the Banks.
7. EQUITY PUT AND CALL OPTIONS:
During September 1999, the Company entered into put and call option contracts
related to the Company's common stock which mature on June 28, 2000 and March
28, 2000, respectively. These option contracts were entered into for the purpose
of hedging the dilution of the Company's common stock upon the exercise of stock
options granted and can either be physically settled in cash or net physically
settled in shares, at the election of the Company. The Company entered into 1.0
million call options for common stock and 1.7 million put options for common
stock, with a strike price of $10.45 and $9.45 per common share, respectively.
8. TREASURY OPTION DERIVATIVE INSTRUMENT:
In August 1998, the Company entered into a treasury option derivative contract
(the "Option Derivative"). The Option Derivative contract provides for 1) an
option exercise date of September 30, 2000, 2) a notional amount of $300 million
and 3) a five-year treasury strike rate of 6.14%. If the interest rate yield on
five year treasury securities is less than the strike rate on the option
exercise date, the Company would be obligated to pay five consecutive annual
payments in an amount equal to the strike rate less the five year treasury rate
multiplied by the notional amount beginning September 30, 2001 through September
30, 2006. If the interest rate yield on five year treasury securities is greater
than the strike rate on the option exercise date, the Company would not be
obligated to make any payments.
10
<PAGE>
Upon the execution of the Option Derivative contract in 1998, the Company
received a cash payment representing an option premium of $9.5 million which was
recorded in "Other long-term liabilities" in the accompanying balance sheets.
The Company is required to periodically adjust its liability to the present
value of the future payments of the settlement amounts based on the forward five
year treasury rate at the end of an accounting period.
As of September 30,1999, the Company's Option Derivative liability recorded in
"other long-term liabilities" in the accompanying consolidated balance sheet is
$6.2 million. The fair market value adjustment for the nine months ended
September 30,1999 resulted in an income statement benefit (unrealized gain) of
$12.3 million.
If the yield on five-year treasuries at September 30, 2000 were to equal the
forward five-year treasury rate on September 30, 1999 (6.02%), Sinclair would be
required to make five annual payments of approximately $360,000 each. If the
yield on five-year treasuries declines in periods before September 30, 2000,
Sinclair would be required to recognize losses. In any event, Sinclair will not
be required to make any payments until September 30, 2000.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in this Quarterly
Report and the audited financial statements and Management's Discussion and
Analysis contained in the Company's Form 10-K, as amended, for the fiscal year
ended December 31, 1998.
The matters discussed in this report include forward-looking statements. When
used in this report, the words "intends to," "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and uncertainties.
Actual results in the future could differ materially and adversely from those
described in the forward-looking statements as a result of various important
factors, including the impact of changes in national and regional economies,
successful integration of acquired television and radio stations (including
achievement of synergies and cost reductions), pricing fluctuations in local and
national advertising, volatility in programming costs, the availability of
suitable acquisitions on acceptable terms, the timely completion of dispositions
on the terms agreed to and the other risk factors set forth in the Company's
prospectus filed with the Securities and Exchange Commission on April 19, 1998,
pursuant to rule 424(b)(5). The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that may
be made to reflect any future events or circumstances.
DISCONTINUED OPERATIONS
During the third quarter of 1999, the Company began to execute its strategy to
divest of its radio broadcast segment. In July 1999, the Company entered into an
agreement to sell 46 of its radio stations in nine markets to Entercom
Communications Corporation ("Entercom") for $824.5 million in cash. In addition,
the Company is currently engaged in formal negotiations with Emmis
Communications Corporation ("Emmis") for the sale of its remaining radio
stations serving the St. Louis market. Subject to the Company's strategy to
divest of its radio broadcasting segment, "Discontinued Operations" accounting
has been adopted for the periods presented in the accompanying financial
statements and the notes thereto. As such, the results from operations of the
radio broadcast segment, net of related income taxes, has been reclassified from
income from operations and reflected as income from discontinued operations in
the accompanying income statements for all periods presented. In addition,
assets relating to the radio broadcast segment are reflected in "Broadcast
assets related to discontinued operations" in the accompanying balance sheets
for all periods presented.
12
<PAGE>
The following table sets forth certain operating data for the three months and
nine months ended September 30, 1998 and 1999:
<TABLE>
<CAPTION>
OPERATING DATA (dollars in thousands, except per share data):
- ---------------------------------------------------------------------------------------------------------------------
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net broadcast revenues (a) ..................... $ 151,996 $ 160,880 $ 377,755 $ 484,235
Barter revenues ................................ 18,433 15,231 41,724 44,855
----------- ----------- ----------- -----------
Total revenues ................................. 170,429 176,111 419,479 529,090
----------- ----------- ----------- -----------
Operating costs (b) ............................ 64,372 71,738 153,166 203,596
Expenses from barter arrangements .............. 17,005 14,101 37,967 41,098
Depreciation, amortization and stock-based
compensation (c) ............................ 54,520 52,354 123,091 164,546
----------- ----------- ----------- -----------
Broadcast operating income ..................... 34,532 37,918 105,255 119,850
Interest expense ............................... (40,414) (45,344) (95,315) (132,622)
Subsidiary trust minority interest expense (d) . (5,813) (5,813) (17,438) (17,438)
Interest and other income ...................... 1,454 795 4,781 2,729
Unrealized gain (loss) on derivative
instrument .................................. (10,150) 716 (10,150) 12,302
Gain on sale of broadcast assets ............... 1,248 233 1,248 233
----------- ----------- ----------- -----------
Loss before income taxes ....................... (19,143) (11,495) (11,619) (14,946)
Income tax benefit (provision) ................. 9,480 (5,403) 543 (8,893)
----------- ----------- ----------- -----------
Net loss from continuing operations ............ (9,663) (16,898) (11,076) (23,839)
Net income from discontinued operations,
net of income taxes ......................... 7,489 5,557 15,810 12,187
Extraordinary item, net of income taxes ........ -- -- (11,063) --
----------- ----------- ----------- -----------
Net loss ....................................... $ (2,174) $ (11,341) $ (6,329) $ (11,652)
=========== =========== =========== ===========
Net loss available to common stockholders ...... $ (4,762) $ (13,929) $ (14,092) $ (19,415)
=========== =========== =========== ===========
OTHER DATA:
Broadcast Cash Flow (e) ................. $ 78,886 $ 76,460 $ 196,552 $ 238,650
Broadcast Cash Flow margin (f) .......... 51.9% 47.5% 52.0% 49.3%
Adjusted EBITDA (g) ..................... $ 74,847 $ 71,096 $ 184,536 $ 224,544
Adjusted EBITDA margin (f) .............. 49.2% 44.2% 48.9% 46.4%
After tax cash flow (h) ................. $ 33,106 $ 27,970 $ 85,809 $ 97,040
Program contract payments ............... 14,205 19,176 43,810 59,852
Corporate expense ....................... 4,039 5,364 12,016 14,106
Capital expenditures .................... 5,650 7,478 13,949 19,048
Cash flows from operating activities .... 71,151 39,380 138,654 111,882
Cash flows from investing activities .... (1,163,190) (86,877) (1,811,518) (201,171)
Cash flows from financing activities .... 779,314 46,260 1,540,945 94,383
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
a) "Net broadcast revenue" is defined as broadcast revenue net of agency
commissions.
b) "Operating costs" include program and production expenses and selling,
general and administrative expenses.
c) "Depreciation, amortization and stock-based compensation" includes
amortization of program contract costs and net realizable value
adjustments, depreciation and amortization of property and equipment,
amortization of acquired intangible broadcasting assets and other
assets and stock-based compensation related to the issuance of common
stock pursuant to stock option and other employee benefit plans.
d) Subsidiary trust minority interest expense represents distributions on
the HYTOPS.
e) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses, stock based compensation, depreciation and
amortization (including film amortization and amortization of deferred
compensation), less cash payments for program rights. Cash program
payments represent cash payments made for current programs payable and
do not necessarily correspond to program usage. The Company has
presented broadcast cash flow data, which the Company believes is
comparable to the data provided by other companies in the industry,
because such data are commonly used as a measure of performance for
broadcast companies; however, there can be no assurance that it is
comparable. However, broadcast cash flow does not purport to represent
cash provided by operating activities as reflected in the Company's
consolidated statements of cash flows, is not a measure of financial
performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. Management believes the presentation of broadcast cash flow
(BCF) is relevant and useful because 1) BCF is a measurement utilized
by lenders to measure the Company's ability to service its debt, 2) BCF
is a measurement utilized by industry analysts to determine a private
market value of the Company's television and radio stations and 3) BCF
is a measurement industry analysts utilize when determining the
operating performance of the Company.
f) "BCF margin" is defined as broadcast cash flow divided by net broadcast
revenues. "Adjust EBITDA margin" is defined as adjusted EBITDA divided
by net broadcast revenues.
g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate
overhead expenses and is a commonly used measure of performance for
broadcast companies. The Company has presented Adjusted EBITDA data,
which the Company believes is comparable to the data provided by other
companies in the industry, because such data are commonly used as a
measure of performance for broadcast companies; however, there can be
no assurances that it is comparable. Adjusted EBITDA does not purport
to represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flows, is not a measure of
financial performance under generally accepted accounting principles
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles. Management believes the presentation of Adjusted
EBITDA is relevant and useful because 1) Adjusted EBITDA is a
measurement utilized by lenders to measure the Company's ability to
service its debt, 2) Adjusted EBITDA is a measurement utilized by
industry analysts to determine a private market value of the Company's
television and radio stations and 3) Adjusted EBITDA is a measurement
industry analysts utilize when determining the operating performance of
the Company.
h) "After tax cash flow" is defined as net income (loss) available to
common stockholders, plus depreciation and amortization (excluding film
amortization), stock-based compensation, the deferred tax provision (or
minus the deferred tax benefit) and minus the gain on sale of assets
and unrealized gain on derivative instrument (or minus the unrealized
loss on derivative instrument). The Company has presented after tax
cash flow data, which the Company believes is comparable to the data
provided by other companies in the industry, because such data are
commonly used as a measure of performance for broadcast companies;
however, there can be no assurances that it is comparable. After tax
cash flow is presented here not as a measure of operating results and
does not purport to represent cash provided by operating activities.
After tax cash flow should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. Management believes the
presentation of after tax cash flow is relevant and useful because 1)
ATCF is a measurement utilized by lenders to measure the Company's
ability to service its debt, 2) ATCF is a measurement utilized by
industry analysts to determine a private market value of the Company's
television and radio stations and 3) ATCF is a measurement analysts
utilize when determining the operating performance of the Company.
Net broadcast revenues increased to $160.9 million for the three months ended
September 30, 1999 from $152.0 million for the three months ended September 30,
1998, or 5.9%. Net broadcast revenues increased to $484.2 million for the nine
months ended September 30, 1999 from $377.8 million for the nine months ended
September 30, 1998, or 28.2%. The increase in net broadcast revenues for the
three months ended September 30, 1999 as compared to the three months ended
September 30, 1998 comprised $5.1 million related to the acquisition and
disposition of television stations and LMA transactions consummated by the
Company in 1998 and 1999 (collectively the "1998 and 1999 Transactions") and
$3.8 million related to an increase in net broadcast revenue on a same station
basis, which increased by 2.6%.
14
<PAGE>
The increase in net broadcast revenues for the nine months ended September 30,
1999 comprised $103.4 million related to the 1998 and 1999 Transactions and $3.0
million related to an increase in net broadcast revenues on a same station
basis, which increased by 1.0%. The increase in net broadcast revenues on a same
station basis for the three and nine months ended September 30, 1999 as compared
to the three and nine months ended September 30, 1998 primarily resulted from an
increase in market share and market revenue in certain of the Company's
television markets.
Operating costs increased to $71.7 million for the three months ended September
30, 1999 from $64.4 million for the three months ended September 30, 1998, or
11.3%. Operating costs increased to $203.6 million for the nine months ended
September 30, 1999, from $153.2 million for the nine months ended September 30,
1998, or 32.9%. The increase in operating costs for the three months ended
September 30, 1999 as compared to the three months ended September 30, 1998
comprised $4.0 million related to the 1998 and 1999 Transactions, $1.3 million
related to an increase in corporate overhead expenses and $2.0 million related
to an increase in operating costs on a same station basis, which increased 3.5%.
The increase in operating costs for the nine months ended September 30, 1999 as
compared to the nine months ended September 30, 1998 comprised $47.3 million
related to the 1998 and 1999 Transactions, $2.1 million related to an increase
in corporate overhead expenses and $1.0 million related to an increase in
operating costs on a same station basis, which increased 0.8%. The increases in
corporate overhead for the three and nine month periods ended September 30,1999
primarily resulted from an increase in expenses associated with managing a
larger base of operations.
Interest expense increased to $45.3 million for the three months ended September
30, 1999 from $40.4 million for the three months ended September 30, 1998, or
12.1%. Interest expense increased to $132.6 million for the nine months ended
September 30, 1999 from $95.3 million for the nine months ended September 30,
1998, or 39.1%. The increase in interest expense for the three months and nine
months ended September 30, 1999 primarily resulted from higher interest expense
related to current year acquisitions and a higher applicable interest rate
margin for borrowing under the Company's Bank Credit Agreement.
Interest and other income decreased to $0.8 million for the three months ended
September 30, 1999 from $1.5 million for the three months ended September 30,
1998. Interest and other income decreased to $2.7 million for the nine months
ended September 30, 1999 from $4.8 million for the nine months ended September
30, 1998. These decreases were primarily due to a decrease in average cash
balance, for the three months and nine months ended September 30, 1999 when
compared to the same period in 1998.
Income tax provision was $5.4 million for the three months ended September 30,
1999 as compared to an income tax benefit of $9.5 million for the three months
ended September 30, 1998. For the nine months ended September 30, 1999, the
Company recorded a tax provision of $8.9 million on pre-tax income, an effective
tax rate of 315%. In accordance with FASB 109, "Accounting for Income Taxes",
the Company applies its projected income tax rate for the year ended December
31,1999 to intraperiod financial statements. The Company's high projected tax
rate for 1999 results from book income being projected to be less than permanent
differences between book and taxable income.
The net deferred tax liability increased to $172.8 million as of September 30,
1999 from $165.5 million as of December 31, 1998. The increase in the Company's
net deferred tax liability as of September 30, 1999 as compared to December 31,
1998 primarily resulted from the Company recording a net deferred tax provision
for the nine months ended September 30,1999.
Net loss available to common stockholders for the three months ended September
30, 1999 was $13.9 million or $.14 per share compared to net loss of $4.8
million or $.05 per share for the three months ended September 30, 1998. Net
loss available to common stockholders for the nine months ended September 30,
1999 was $19.4 million or $.20 per share compared to a net loss of $14.1 million
or $.15 per share for the nine months ended September 30, 1998. Net loss
available to common stockholders increased for the nine
15
<PAGE>
months ended September 30, 1999 as compared to the nine months ended September
30, 1998 due to an increase in interest expense, a decrease in income from
discontinued operations, a decrease in interest income, and an extraordinary
loss incurred during 1998 offset by an increase in broadcast operating income
and an unrealized gain on derivative instrument. The Company's 1998
extraordinary loss of $11.1 million net of a related tax benefit of $7.4 million
resulted from the write-off of debt acquisition costs associated with
indebtedness replaced by the 1998 Bank Credit Agreement. Net loss available to
common stockholders increased for the three months ended September 30, 1999 as
compared to the three months ended September 30, 1998 because of the same
factors noted above with the exception of the extraordinary loss which was
incurred during the second quarter of 1998.
Net income from discontinued operations decreased to $5.6 million for the three
months ended September 30, 1999 from $7.5 million for the three months ended
September 30, 1998, or 25.3%. Net income from discontinued operations decreased
to $12.2 million for the nine months ended September 30, 1999 from $15.8 million
for the nine months ended September 30, 1998, or 22.8%. The decrease in net
income from discontinued operations for the three and nine months ended
September 30,1999 as compared to the same periods ended September 30, 1998
primarily resulted from dispositions consummated by the Company during the first
six months of 1998 partially offset by the acquisitions consummated by the
Company during the same period of 1998.
Broadcast cash flow decreased to $76.5 million for the three months ended
September 30, 1999 from $78.9 million for the three months ended September 30,
1998, or 3.0%. Broadcast cash flow increased to $238.7 million for the nine
months ended September 30, 1999 from $196.6 million for the nine months ended
September 30, 1998, or 21.4%. The decrease in broadcast cash flow for the three
months ended September 30, 1999 primarily resulted from an increase in operating
expenses as a percentage of net broadcast revenues and an increase in program
contract payments resulting from increased cash payments for program contracts
in the 1999 period that were not required in 1998 because sellers of stations we
acquired had, in accordance with industry practice, previously made program
contract payments relating to this period in advance of our acquisitions. The
increase in broadcast cash flow for the nine months ended September 30, 1999
primarily related to the 1998 and 1999 Transactions as broadcast cash flow on a
same station basis remained relatively consistent with the nine months ended
September 30,1998.
The Company's broadcast cash flow margin decreased to 47.5% for the three months
ended September 30, 1999 from 51.9% for the three months ended September
30,1998. The Company's broadcast cash flow margin decreased to 49.3% for the
nine months ended September 30, 1999 from 52.0% for the nine months ended
September 30, 1998. The decrease in broadcast cash flow margins for the three
and the nine months ended September 30, 1999 as compared to the three and the
nine months ended September 30, 1998 primarily resulted from increased cash
payments for program contracts in the 1999 periods that were not required in
1998 because sellers of stations we acquired had, in accordance with industry
practice, previously paid approximately $4.3 million of program contract
payments relating to these periods in advance of our acquisitions. When
comparing broadcast cash flow margins on a same station basis for the three
months ended September 30, 1998 and 1999 margins decreased from 50.1% to 49.1%.
When comparing broadcast cash flow margins on a same station basis for the nine
months ended September 30, 1998 and 1999, margins decreased from 51.2% to 50.7%.
Adjusted EBITDA decreased to $71.1 million for the three months ended September
30, 1999 from $74.8 million for the three months ended September 30, 1998, or
5.0%. Adjusted EBITDA increased to $224.5 million for the nine months ended
September 30, 1999 from $184.5 million for the nine months ended September 30,
1998, or 21.7%. The decrease in Adjusted EBITDA for the three months ended
September 30, 1999 as compared to the three months ended September 30, 1998
primarily resulted from a decrease in broadcast cash flow as noted above combine
with an increase in corporate overhead. The increases in Adjusted EBITDA for the
nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998 primarily resulted from the 1998 and 1999 Transactions. The
Company's Adjusted
16
<PAGE>
EBITDA margin decreased to 44.2% for the three months ended September 30, 1999
from 49.2% for the three months ended September 30, 1998. The Company's Adjusted
EBITDA margin decreased to 46.4% for the nine months ended September 30, 1999
from 48.9% for the nine months ended September 30, 1998. Decreases in Adjusted
EBITDA margins for the three and nine months ended September 30, 1999 as
compared to the three and nine months ended September 30, 1998 primarily
resulted from increased cash payments for program contracts in the 1999 periods
that were not required in 1998 because sellers of stations we acquired had, in
accordance with industry practice, previously paid approximately $4.3 million of
program contract payments relating to these periods in advance of our
acquisitions and from the increases in corporate overhead expenses required
because of the Company's larger base of operations.
After tax cash flow decreased to $28.0 million for the three months ended
September 30, 1999 from $33.1 million for the three months ended September 30,
1998, or 15.4%. After tax cash flow increased to $97.0 million for the nine
months ended September 30, 1999 from $85.8 million for the nine months ended
September 30, 1998 or 13.1%. The decrease in after tax cash flow for the three
months ended September 30,1999 as compared to the three months ended September
30,1998 primarily resulted from an increase in interest expense resulting from
television assets acquired during 1999 and a slight increase in interest rates
on the Company's floating rate debt. The increase in after tax cash flow for the
nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998 primarily resulted from an increase in broadcast operating
income relating to the 1998 and 1999 Transactions offset by an increase in
interest expense.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity are cash provided by operations and
availability under the 1998 Bank Credit Agreement. As of September 30, 1999, the
Company had $8.4 million in cash balances and excluding the effect of assets
held for sale and broadcast assets related to discontinued operations, working
capital of approximately $8.1 million. As of November 4, 1999, the remaining
balance available under the Revolving Credit Facility was $56.5 million. Based
on pro forma trailing cash flow levels for the twelve months ended September 30,
1999, the Company had approximately $36.7 million available of current borrowing
capacity under the Revolving Credit Facility. The 1998 Bank Credit Agreement
also provides for an incremental term loan commitment in the amount of up to
$400 million which can be utilized upon approval by the Agent bank and the
raising of sufficient commitments from banks to fund the additional loans.
In July 1999, the Company entered into an agreement to sell 46 radio stations in
nine markets to Entercom Communications Corp. ("Entercom") for $824.5 million in
cash. The transaction does not include Sinclair's radio stations in the St.
Louis market, which are subject to the St. Louis Purchase Option (see Note 5).
The transaction is subject to FCC and Department of Justice approval. The
Company intends to use proceeds from the sale to reduce debt levels which is
expected to give the Company additional borrowing capacity under the 1998 Bank
Credit Agreement. The Company may also use a portion of the proceeds to make
acquisitions or to repurchase shares of its Class A Common Stock.
In April and July 1999, the Company closed the acquisitions of the Guy Gannett
television stations. The Company has agreed to sell three of the stations to STC
for approximately $81.0 million in the STC Disposition. In April 1999, the
Justice Department requested additional information in response to STC's filing
under the Hart-Scott-Rodino Antitrust Improvements Act. The sale of the stations
to STC has been delayed pending resolution of the questions raised by the
Justice Department. If STC is unable to complete the purchase of these stations,
the Company would continue to own these stations. Either STC or the Company may
terminate the agreement if the transaction is not closed by March 15, 2000.
On April 19, 1999, the Company entered into an agreement (the "ATC Agreement")
with American Tower Corporation, an independent owner, operator and developer of
broadcast and wireless communication sites in the United States. Under the
agreement, the Company would provide American Tower access to tower sites in a
number of the Company's markets including Nashville, TN, Dayton, OH, Richmond,
VA, Mobile, AL, Pensacola, FL, San Antonio, TX, and Syracuse, NY. American Tower
would construct new towers in each of these markets and will lease space on the
towers to the Company. This is expected to provide the Company the additional
tower capacity required to develop its digital television transmission needs in
these markets at an initial capital outlay lower than would be required if the
Company constructed these towers itself. The form of the master lease has been
completed and agreed to; however, each market is subject to individual
negotiations on terms specific to that market, which are still being negotiated
with American Tower Corporation. If the Company and American Tower cannot agree
on the terms and conditions of the individual market leases, neither party will
have any obligation to the other under the ATC Agreement, which will then become
a nullity.
Net cash flows from operating activities decreased to $111.9 million for the
nine months ended September 30, 1999 from $138.7 million for the nine months
ended September 30, 1998 primarily as a result of the increase in program
contract payments. The Company made payments of interest on outstanding
indebtedness and subsidiary trust minority interest expense totaling $161.9
million during the nine months ended September 30, 1999 as compared to $119.0
million for the nine months ended September 30, 1998. Program rights payments
for the nine months ended September 30, 1999 increased $16.0 million or 36.6%.
This increase in program rights payments was comprised of $13.7 million related
to the 1998 and
18
<PAGE>
1999 Transactions and $2.3 million related to an increase in programming costs
on a same station basis which increased 5.2%.
Net cash flows used in investing activities decreased to $201.2 million for the
nine months ended September 30, 1999 from $1.8 billion for the nine months ended
September 30, 1998. For the nine months ended September 30, 1999, the Company
made cash payments of approximately $232.9 million related to the acquisition of
television and radio broadcast assets primarily by utilizing available
indebtedness under the 1998 Bank Credit Agreement. For the nine months ended
September 30, 1999, the Company received approximately $61.8 million of cash
proceeds related to the sale of certain television and radio broadcast assets
which was primarily utilized to repay indebtedness under the 1998 Bank Credit
Agreement. During the nine months ended September 30, 1999, the Company made
equity interest investments of approximately $11.8 million. The Company made
payments for property and equipment of $19.0 million for the nine months ended
September 30, 1999. The Company anticipates that future requirements for capital
expenditures will include other acquisitions if suitable acquisitions can be
identified on acceptable terms.
Net cash flows provided by financing activities decreased to $94.4 million for
the nine months ended September 30, 1999 from $1.5 billion for the nine months
ended September 30, 1998. During the nine months ended September 30, 1999, the
Company repaid $156.0 million and $37.5 million under the 1998 Bank Credit
Agreement Revolving Credit Facility and Term Loan Facility, respectively. In
addition, the Company utilized borrowings under the Revolving Credit Facility of
$298.5 million primarily to fund acquisition activity including the Guy Gannett
Acquisition.
SEASONALITY
The Company's results usually are subject to seasonal fluctuations, which result
in fourth quarter broadcast operating income being greater usually than first,
second and third quarter broadcast operating income. This seasonality is
primarily attributable to increased expenditures by advertisers in anticipation
of holiday season spending and an increase in viewership during this period. In
addition, revenues from political advertising tend to be higher in even numbered
years.
YEAR 2000
The Company has commenced a process to assure Year 2000 compliance of all
hardware, software, broadcast equipment and ancillary equipment that are date
dependent. The process involves four phases:
Phase I - Inventory and Data Collection. This phase involves an identification
of all items that are date dependent. Sinclair commenced this phase in the third
quarter of 1998, and Management estimates it has completed approximately 90% of
this phase as of the date hereof. The Company expects to complete this phase
during of the fourth quarter of 1999.
Phase II - Compliance Requests. This phase involves requests to information
technology systems vendors for verification that the systems identified in Phase
I are Year 2000 compliant. Sinclair has identified and begun to replace items
that cannot be updated or certified as compliant. Sinclair has completed the
compliance request phase of its plan as of the date hereof. In addition,
Sinclair has verified that its accounting, traffic, payroll, and local and wide
area network hardware and software systems are compliant. In addition, Sinclair
has completed the process of ascertaining that all of its personal computers and
PC applications are compliant. Sinclair is currently reviewing its news room
systems, building control systems, security systems and other miscellaneous
systems. The Company expects to complete this phase during of the fourth quarter
of 1999.
Phase III - Test, Fix and Verify. This phase involves testing all items that are
date dependent and upgrading all non-compliant devices. Sinclair expects to
complete aspects of this phase during the fourth quarter of 1999.
19
<PAGE>
Phase IV - Final Testing, New Item Compliance. This phase involves review of all
inventories for compliance and retesting as necessary. During this phase, all
new equipment will be tested for compliance. Sinclair expects to complete this
phase during the fourth quarter of 1999.
Follow up and documentation for the implementation of each phase has been
delayed from the originally scheduled completion dates due to turnover of MIS
personnel. The Company believes that it is now on schedule to complete the
documentation and remaining processes before the end of the year.
The Company has developed a contingency/emergency plan to address Year 2000
worst case scenarios. The contingency plan includes, but is not limited to,
addressing (i) regional power facilities, (ii) interruption of satellite
delivered programming, (iii) replacement or repair of equipment not discovered
or fixed during the year 2000 compliance process and (iv) local security
measures that may become necessary relating to the Company's properties. The
contingency plan involves obtaining alternative sources if existing sources of
these goods and services are not available. Although the contingency plan is
designed to reduce the impact of disruptions from these sources, there is no
assurance that the plan will avoid material disruptions in the event one or more
of these events occurs.
To date, Sinclair believes that its major systems are Year 2000 compliant. This
substantial compliance has been achieved without the need to acquire new
hardware, software or systems other than in the ordinary course of replacing
such systems. Sinclair is not aware of any non-compliance that would be material
to repair or replace or that would have a material effect on Sinclair's business
if compliance were not achieved. Sinclair does not believe that non-compliance
in any systems that have not yet been reviewed would result in material costs or
disruption. Neither is Sinclair aware of any non-compliance by its customers or
suppliers that would have a material impact on Sinclair's business.
Nevertheless, there can be no assurance that unanticipated non-compliance will
not occur, and such non-compliance could require material costs to repair or
could cause material disruptions if not repaired.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CHANGE IN MARKET RISK
As noted above, the Company's net loss for the nine months ended September 30,
1999 included recognition of a gain of $12.3 million on a treasury option
derivative instrument. Upon execution of the treasury option derivative
instrument during 1998, the Company received a cash payment of $9.5 million. The
treasury option derivative instrument will require the Company to make five
annual payments equal to the difference between 6.14% minus the interest rate
yield on five-year treasury securities on September 30, 2000 times the $300
million notional amount of the instrument. If the yield on five-year treasuries
is equal to or greater than 6.14% on September 30, 2000, the Company will not be
required to make any payment under the terms of this instrument. If the rate is
below 6.14% on that date, the Company will be required to make payments, as
described above, and the size of the payment will increase as the rate goes
down. For each accounting period, the Company recognizes unrealized gain on an
expense equal to the change in the projected liability under this arrangement
based on interest rates at the end of the period. The gain recognized in the
nine months ended September 30, 1999 reflects an adjustment of the Company's
liability under this instrument to the present value of future payments based on
the two-year forward five-year treasury rate as of September 30, 1999 for five
year treasury notes with a settlement date of September 30, 2000. If the yield
on five-year treasuries at September 30, 2000 were to equal the forward
five-year treasury rate on September 30, 1999 (6.02%), Sinclair would be
required to make five annual payments of approximately $360,000 each. If the
yield on five-year treasuries declines in periods before September 30, 2000,
Sinclair would be required to recognize losses. In any event, Sinclair will not
be required to make any payments until September 30, 2000.
20
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
10.1 Second Modification Agreement dated April 30, 1999 by and
between Guy Gannett Communications and Sinclair Communications,
Inc., to modify the Purchase Agreement dated September 4, 1998
by and between Guy Gannett Communications and Sinclair
Communications, Inc., as thereafter amended and modified.
10.2 Asset Purchase Agreement dated August 18, 1999 by and between
Sinclair Communications, Inc. and certain of its affiliates
named therein and Entercom Communications Corp.
10.3 Asset Purchase Agreement dated August 20, 1999 among Sinclair
Communications, Inc., Sinclair Media III, Inc., Sinclair Radio
of Kansas City Licensee, LLC and Entercom Communications Corp.
10.4 Amendment to Purchase Agreement, dated March 16, 1999, to amend
Purchase Agreement dated as of September 4, 1998 by and between
Guy Gannett Communications and Sinclair Communications, Inc.
10.5 Modification Agreement dated April 12, 1999 by and between Guy
Gannett Communications and Sinclair Communications, Inc., to
modify the Purchase Agreement dated September 4, 1998 by and
between Guy Gannett Communications and Sinclair Communications,
Inc., as thereafter amended.
10.6 Purchase Agreement dated March 16, 1999, by and between Sinclair
Communications, Inc. and STC Broadcasting, Inc.
10.7 Amended and Restated Purchase Agreement dated August 20, 1999
among Sinclair Communications, Inc. and certain of its
affiliates named therein and Entercom Communications Corp.
27 FDS
B) REPORTS ON FORM 8-K
None
21
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized in the city of Baltimore, Maryland
on the 12th day of November, 1999.
SINCLAIR BROADCAST GROUP, INC.
by: /s/ Thomas E. Severson
-----------------------
Thomas E. Severson
Chief Accounting Officer
Principal Accounting Officer
22
SECOND MODIFICATION AGREEMENT
This SECOND MODIFICATION AGREEMENT (this "Agreement") made as
of April 30, 1999 by and between Guy Gannett Communications, a Maine corporation
(the "Company"), and Sinclair Communications, Inc., a Maryland corporation
(together with its successors and permitted assigns, "Purchaser") to modify the
Purchase Agreement dated as of September 4, 1998 by and between the Company and
Purchaser, as amended by the Amendment thereto dated as of March 16, 1999 and
modified by the Modification Agreement dated as of April 12, 1999 (as so amended
and modified, the "Purchase Agreement").
W I T N E S S E T H :
WHEREAS, the Company and Purchaser are parties to the Purchase
Agreement, pursuant to which the Company has agreed to sell to Purchaser the
assets and business of the Company's broadcast television business, including
all business, operations and activities of, among other broadcast television
stations, Station WOKR-TV, Rochester, New York (the "Ackerley Station") and
Stations KGAN-TV, Cedar Rapids, Iowa, WICD-TV, Champaign, Illinois, and WICS-TV,
Springfield, Illinois (such three stations, collectively, the "STC Stations"),
and Purchaser has agreed to purchase such assets and business and to assume
certain liabilities related to or arising from or in connection with such assets
or business;
WHEREAS, as permitted by the Purchase Agreement and in
accordance with that certain Purchase Agreement dated as of September 25, 1998
by and between Purchaser and The Ackerley Group, Inc., as amended by the
Amendment thereto dated April 12, 1999, the closing of the purchase and sale of
the assets and business of the Ackerley Station, and the assumption of
<PAGE>
certain liabilities related to or arising from or in connection therewith (the
"First Closing") occurred on April 12, 1999;
WHEREAS, Purchaser has also entered into that certain Purchase
Agreement dated as of March 16, 1999 (the "STC Agreement") with STC
Broadcasting, Inc. ("STC"), pursuant to which Purchaser has agreed to transfer
to STC certain assets and business of the STC Stations, and STC has agreed to
acquire such assets and business and to assume certain liabilities related to or
arising from or in connection therewith;
WHEREAS, pursuant to the Purchase Agreement, the closing of
the purchase and sale of the assets and business of the Company's broadcast
television stations other than the Ackerley Station, and the assumption of
certain liabilities related to or arising from or in connection therewith (the
"Second Closing") is to occur on April 30, 1999;
WHEREAS, all conditions to the Second Closing under the
Purchase Agreement have been satisfied or waived as of the date hereof, but all
conditions to Purchaser's closing with STC under the STC Agreement have not yet
been satisfied or waived as a result of the extension of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, relating to the transactions contemplated by the STC Agreement; and
WHEREAS, as an accommodation to Purchaser to permit the
resolution of the antitrust issues arising in connection with the transactions
contemplated by the STC Agreement or to permit Purchaser to secure one or more
alternative sources of financing necessary to effect the closing of the purchase
and sale of the assets and business of the STC Stations, and the assumption of
certain liabilities related to or arising from or in connection therewith, the
Company and Purchaser desire to modify the Purchase Agreement in certain
respects to permit at
2
<PAGE>
least one separate, subsequent closing to be effected with respect to the
transactions contemplated by the Purchase Agreement regarding the STC Stations;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants contained herein, the parties, intending legally
to be bound, agree as follows:
Section 1. Closings. There shall be two separate closings of
the transactions contemplated by the Purchase Agreement to occur at the Second
Closing. The first such closing (the "Principal Closing") of the transactions
contemplated by the Purchase Agreement other than those in respect of the
Ackerley Station (the closing of which occurred on April 12, 1999) or in respect
of the STC Stations (the closing or closings of which are being deferred under
this Agreement) shall take place at 10:00 a.m., New York City time, on April 30,
1999 (such time and date being referred to herein as the "Principal Closing
Date"). The closing (the "Deferred Closing") of the transactions contemplated by
the Purchase Agreement in respect of the STC Stations shall take place at 10:00
a.m., New York City time, on a date to be agreed upon by the parties hereto
(such time and date being referred to herein as the "Deferred Closing Date");
provided, however, that the Deferred Closing Date shall not occur later than
July 30, 1999 (or, if the parties hereto request FCC consent to extend its
initial 90-day consummation period and the FCC has denied such request in
writing, the Deferred Closing Date shall occur not later than July 5, 1999)
(July 30, 1999 or July 5, 1999, as the case may be, being the "Outside Closing
Date"). At the Principal Closing, the Company will convey, assign, transfer and
deliver all of the Company's right, title and interest in and to all of the
Assets and Business other than (i) the Assets and Business that were conveyed,
assigned, transferred or delivered in connection with the First Closing (the
"Ackerley Assets" and the "Ackerley Business," respectively) and (ii) the Assets
owned or leased by, or licensed to or used or useful by, the Company exclusively
in
3
<PAGE>
connection with the STC Stations (the "STC Assets") and the business, operations
and activities of the STC Stations (the "STC Business"), and Purchaser shall
assume and agree to perform and fully discharge when due all of the Assumed
Liabilities related to arising from or in connection with the Assets or the
Business other than the Ackerley Assets, the Ackerley Business, the STC Assets
or the STC Business. At the Deferred Closing, the Company will sell, convey,
assign, transfer and deliver to Purchaser or STC, as the case may be pursuant to
Section 8(b) hereof, all of the STC Assets and the STC Business, and Purchaser
shall assume and agree to perform and fully discharge when due all of the
Assumed Liabilities related to arising from or in connection with the STC Assets
or the STC Business (the "STC Assumed Liabilities").
Section 2. Certain Payments. With respect to Business
Employees of Stations other than the Ackerley Station and the STC Stations, the
reimbursement of payments to be made pursuant to Section 5.8 of the Purchase
Agreement shall apply only to Business Employees whose employment is terminated
on or prior to 90 days after the Principal Closing Date. For the avoidance of
doubt, it is agreed that any such payment will be subject to the terms and
conditions of Section 5.8 (including, without limitation, the proviso to such
Section). With respect to Business Employees of the STC Stations, Section 5.8 of
the Purchase Agreement shall apply to Business Employees whose employment is
terminated on or prior to 90 days after the Deferred Closing Date.
Section 3. Bills of Sale, Assignments and Assumption
Agreements. (a) Notwithstanding provisions in the Purchase Agreement to the
contrary, at the Principal Closing bills of sale, assignments and assumption
agreements substantially in the forms set forth in Exhibit A hereto conveying
the Assets (with the exception of (i) the Ackerley Assets, (ii) the STC Assets,
(iii) the FCC Licenses related to Stations other than the Ackerley Station and
the
4
<PAGE>
STC Stations, which shall be conveyed to WGGB Licensee, LLC, WGME Licensee, LLC
or WTWC Licensee, LLC, as applicable, and (iv) the collective bargaining
agreements described in Section 3.10.6 of the Disclosure Schedule and the
employee benefit plans described in Section 3.14.3 of the Disclosure Schedule,
in each case other than such agreements and plans relating to Stations other
than the Ackerley Station and the STC Stations, which non-Ackerley Station and
non-STC Stations related agreements and plans shall be conveyed to Sinclair
Acquisition IV, Inc.) shall be delivered directly to Sinclair Acquisition IV,
Inc. In addition, notwithstanding provisions of the Purchase Agreement to the
contrary, at the Principal Closing an assumption agreement substantially in the
form of Exhibit B hereto and providing for assumption by Purchaser of the
Assumed Liabilities other than the Ackerley Assumed Liabilities and the STC
Assumed Liabilities shall be executed and delivered by Purchaser to the Company.
In addition, as an accommodation to Purchaser, the Company agrees that, subject
to the immediately succeeding sentence, at the request of Purchaser at the
Deferred Closing, (i) notwithstanding the provisions in the Purchase Agreement
to the contrary, an assignment of assets substantially in the form of Exhibit C
hereto (or, if such sale and assignment is to be made to Sinclair Acquisition
IV, Inc. pursuant to Section 8(b) hereof instead of directly to STC, a bill of
sale, assignment and assumption agreement substantially in the forms set forth
in Exhibit A hereto) conveying the Assets relating to the STC Stations (with the
exception of (x) the FCC Licenses, which shall be conveyed to WICD Licensee,
LLC, WICS Licensee, LLC and KGAN Licensee, LLC, as applicable, and (y) the other
License Assets (as defined in the STC Agreement) if such sale and assignment is
to be made to STC, the collective bargaining agreements described in Section
3.10.6 of the Disclosure Schedule relating to the STC Stations and the employee
benefit plans described in Section 3.14.3 of the Disclosure Schedule relating to
the STC Stations, each of
5
<PAGE>
which shall be conveyed to Sinclair Acquisition IV, Inc.), shall be delivered to
Purchaser or directly to STC, as the case may be pursuant to Section 8(b)
hereof, (ii) if the foregoing sale and assignment is being made to STC,
Purchaser and the Company shall execute and deliver a bill of sale, assignment
and assumption agreement substantially in the form of Exhibit D hereto conveying
the License Assets (other than the FCC Licenses, which shall be conveyed to WICD
Licensee, LLC, WICS Licensee, LLC and KGAN Licensee, LLC, as applicable) to
Sinclair Acquisition IV, Inc. and (iii) notwithstanding the provisions of the
Purchase Agreement to the contrary, Purchaser and the Company shall execute and
deliver an assumption agreement substantially in the form of Exhibit E hereto
and providing for the assumption by Purchaser of the STC Assumed Liabilities.
Anything in the immediately succeeding sentence to the contrary notwithstanding,
the Company's obligation to take the actions contemplated by the immediately
preceding sentence are conditioned on the following actions taking place at the
Deferred Closing (it being understood that, if such conditions are not satisfied
all STC Assets and the STC Business will be transferred directly to Sinclair
Acquisition IV, Inc.): (a) Purchaser, STC and the Company executing and
delivering to the Company a letter agreement substantially in the form of
Exhibit F hereto and (b) Purchaser executing and delivering an indemnity
agreement substantially in the form of Exhibit G hereto.
Section 4. Allocation of Purchase Price; Further Adjustments
to Purchase Price. (a) As previously agreed by the parties hereto, the purchase
price for the STC Assets and the STC Business shall be the aggregate amount of
(x) $81,000,000 of the $310,000,000 specified in Section 2.1(a) of the Purchase
Agreement as a portion of the Purchase Price plus (if greater than or equal to
zero) or minus (if less than zero), as the case may be, (y) the amount of the
Net Financial Assets based on the STC Assets and STC Assumed Liabilities as of
11:59
6
<PAGE>
p.m., New York City time, on the day immediately preceding the Principal Closing
Date, subject to adjustment pursuant to Sections 4(g) and 4(h) hereof, and
further subject to adjustment pursuant to Section 2.2 of the Purchase Agreement
(with the amount described in clause (y) being referred to as the "STC Net
Financial Assets" and the aggregate amount described in clause (x) and (y)
collectively the "STC Purchase Price").
(b) At the Principal Closing, the amounts to be delivered by
Purchaser pursuant to Section 2.1(c) of the Purchase Agreement shall be the full
Purchase Price under the Purchase Agreement minus the amounts delivered at the
First Closing to the Company, the Security Escrow Agent and the Adjustment
Escrow Agent pursuant to the Purchase Agreement and the amounts to be delivered
to the Company, the Security Escrow Agent and the Adjustment Escrow Agent at the
Deferred Closing pursuant to this Agreement (such portion of the Purchase Price
being the "Principal Purchase Price"). The amount of the Net Financial Assets
relating to the Stations other than the Ackerley Station and the STC Stations
shall be separately calculated and shall also be determined as of 11:59 p.m.,
New York City time, on the day immediately preceding the Principal Closing Date
(the "Principal Net Financial Assets"). For the avoidance of doubt, the Purchase
Price payable at the Principal Closing shall be subject to the Proposed Earnings
Adjustment in respect of 1998 BCF, which results in an increase to the Purchase
Price of $7,000,000, subject in all respects to the procedures set forth in
Section 2.2 of the Purchase Agreement.
(c) On or before the Principal Closing, the Company shall
deliver to Purchaser (i) a statement setting forth the amount estimated in good
faith by the Company to be the amount of the Principal Net Financial Assets as
of the Principal Closing Date (the "Estimated Principal Net
7
<PAGE>
Financial Assets") and (ii) a notice designating the account or accounts to
which the payment to or on behalf of the Company pursuant to Section 4(b) hereof
is to be made.
(d) At the Principal Closing, (i) $2,684,000 (the "Principal
Closing Security Escrow") of the Principal Purchase Price shall be delivered to
the Security Escrow Agent by wire transfer in immediately available funds
pursuant to the Security Escrow Agreement , as such agreement shall be modified
in accordance with this Agreement, (ii) $8,006,500 (the "Principal Closing
Adjustment Escrow") of the Principal Purchase Price shall be delivered to the
Adjustment Escrow Agent by wire transfer in immediately available funds pursuant
to the Adjustment Escrow Agreement , as such agreement shall be modified in
accordance with this Agreement, and (iii) the sum of $100,309,500 plus or minus,
as the case may be, the Estimated Principal Net Financial Assets shall be paid
by wire transfer in immediately available funds to the account or accounts
designated by the Company in accordance with Section 4(c) hereof.
(e) On or before the Deferred Closing, the Company shall
deliver to Purchaser (i) a statement setting forth the amount estimated in good
faith by the Company to be the amount of the STC Net Financial Assets as of
11:59 p.m., New York City time, on the day immediately preceding the Deferred
Closing Date (the "Estimated STC Net Financial Assets") and (ii) a notice
designating the account or accounts to which the payment to or on behalf of the
Company pursuant to Section 4(a) hereof is to be made.
(f) At the Deferred Closing, (i) $2,090,400 (the "Deferred
Closing Security Escrow") of the STC Purchase Price shall be delivered to the
Security Escrow Agent by wire transfer in immediately available funds pursuant
to the Security Escrow Agreement, as such agreement shall be modified in
accordance with this Agreement, (ii) $783,900 (the "Deferred Closing Adjustment
Escrow") of the STC Purchase Price shall be delivered to the Adjustment
8
<PAGE>
Escrow Agent by wire transfer in immediately available funds pursuant to the
Adjustment Escrow Agreement, as such agreement shall be modified in accordance
with this Agreement, and (iii) the sum of $78,125,700 plus or minus, as the case
may be, the Estimated STC Net Financial Assets plus or minus, as the case may
be, the estimated adjustment to the STC Purchase Price pursuant to Section 4(g)
hereof and plus the adjustment to the STC Purchase Price, if any, pursuant to
Section 4(h) hereof shall be paid by wire transfer in immediately available
funds to the account or accounts designated by the Company in accordance with
Section 4(e) hereof. If an Early KGAN-TV Closing shall occur, the parties hereby
agree that $20,000,000 of the $81,000,000 specified in clause (x) of Section
4(a) hereof as part of the STC Purchase Price and the appropriate proportions of
the STC Net Financial Assets and of the adjustments to the STC Purchase Price
pursuant to Sections 4(g) and 4(h) hereof shall be allocated as the purchase
price relating to the Early KGAN-TV Closing.
(g) Notwithstanding anything in the Purchase Agreement to the
contrary, the STC Purchase Price shall be decreased (if such net cash flow is
greater than or equal to zero) or increased (if such net cash flow is less than
zero), as the case may be, by the Net Cash Flow (as hereinafter defined) of the
STC Stations for the period from and including April 30, 1999 through, but not
including, the Deferred Closing Date, subject to adjustment as provided below.
For purposes of this Section 4(g), "Net Cash Flow" means (i) the earnings before
interest, income taxes, depreciation and amortization of the STC Stations for
the relevant period, calculated in conformity with GAAP and on a basis
consistent with the basis used in preparing the Unaudited Financial Statements
as of, and for year ended, December 27, 1997 referred to in Section 3.5 of the
Purchase Agreement, in each case after adding back corporate overhead expense
(to the extent otherwise deducted in computing earnings) and film and program
expenses and
9
<PAGE>
subtracting actual cash payments on film and program contracts either made or
due but not yet made (in each case adjusted to include one month's payment for
each month in which any such payment is due) less (ii) all capital expenditures
paid in respect of the STC Stations during the relevant period. The Company
shall include the amount estimated in good faith by the Company to be the amount
of the adjustment to the STC Purchase Price under this Section 4(g) in the
statement delivered to Purchaser on or before five Business Days prior to the
Deferred Closing pursuant to Section 2.1(b) (as modified by this Agreement) of
the Purchase Agreement and such adjustment shall be subject to the procedures
set forth in Section 2.2 of the Purchase Agreement; provided, however, that,
whether or not the parties agree to submit the referenced statement relating to
the Deferred Closing to certification or review by independent accountants
(other than the submission of such statement for resolution by an independent
accounting firm, the fees and expense of which the Company and Purchaser have
agreed to bear equally) (in each case which would otherwise be required under
the provisions of Section 2.2 of the Purchase Agreement), the Company shall not
be obligated to pay any fees and expenses in connection with any certification
or review relating to the determination of the STC Net Financial Assets.
(h) Notwithstanding anything in the Purchase Agreement to the
contrary, the STC Purchase Price shall be increased by the aggregate of (i) an
amount equal to $22,191.78 for each day from and including April 30, 1999
through, but not including, May 30, 1999 that the Deferred Closing shall not
have yet occurred and (ii) an amount equal to $26,630.14 for each day from and
including May 30, 1999 through and including the Outside Closing Date that the
Deferred Closing shall not have occurred; provided, however, if Purchaser shall
have elected pursuant to Section 12 hereof to have an Early KGAN-TV Closing (as
defined in Section 12(a) hereof) take place, the per diem amounts set forth in
clauses (i) and (ii) above shall be reduced,
10
<PAGE>
beginning as of the date of the Early KGAN-TV Closing (the "Early KGAN-TV
Closing Date"), to (x) $16,712.33 for each day, if any, from and including the
Early KGAN-TV Closing Date through, but not including, May 30, 1999 that the
Final Closing (as defined in Section 12(a) hereof) shall not have yet occurred
and (y) $20,054.79 for each day from and including the later of May 30, 1999 and
the Early KGAN-TV Closing Date through and including the Outside Closing Date
that the Final Closing shall not have occurred.
Section 5. Adjustment Escrow Agreement. The form of Adjustment
Escrow Agreement shall be modified to the reasonable satisfaction of the
Company, Purchaser and the Adjustment Escrow Agent to permit (i) separate
deliveries to be made in respect of the Principal Closing and the Deferred
Closing, and (ii) payment to the Company of the aggregate of the Principal
Closing Adjustment Escrow and the Deferred Closing Adjustment Escrow, less any
amounts due to Purchaser in respect of the Principal Net Financial Assets or the
STC Net Financial Assets, as the case may be, pursuant to the terms of Section
2.1(c) of the Purchase Agreement, as modified hereby.
Section 6. Security Escrow Agreement. The form of Security
Escrow Agreement shall be modified to the reasonable satisfaction of the
Company, Purchaser and the Security Escrow Agent to permit (i) separate
deliveries to be made in respect of the Principal Closing and the Deferred
Closing, and (ii) payment to the Company of the aggregate of the Principal
Closing Security Escrow and the Deferred Closing Security Escrow, less any
amounts of Claims and Damages in respect of Stations other than the Ackerley
Station on the one year anniversary of the Principal Closing Date.
Section 7. Net Financial Asset Adjustment. The Remaining Net
Financial Assets shall be comprised of (i) the Principal Net Financial Assets
and (ii) the STC Net Financial
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Assets. The calculation and release of the Principal Adjustment Escrow Account
shall be made pursuant to the procedure set forth in Section 2.2 of the Purchase
Agreement (treating the Principal Closing Date as the "Closing Date" for
purposes of such Section 2.2) and the calculation and release of the Deferred
Adjustment Escrow Account shall be made pursuant to the procedure set forth in
Section 2.2 of the Purchase Agreement (treating the Deferred Closing Date as the
"Closing Date" for purposes of such Section 2.2); provided that if the Deferred
Closing does not occur, only the Principal Net Financial Assets shall be
determined, but otherwise in accordance with the terms of Section 2.2 of the
Purchase Agreement (treating as the "Closing Date" for purposes of such Section
2.2 the Principal Closing Date when determining the Principal Net Financial
Assets).
Section 8. Closing Conditions. (a) Purchaser and the Company
each hereby acknowledges and agrees that all conditions to Closing set forth in
Articles 6 and 7 of the Purchase Agreement have been satisfied or waived as of
the date hereof for all purposes under the Purchase Agreement.
(b) Purchaser and the Company each hereby acknowledges and
agrees that following the Principal Closing the obligation of the Company to
sell, convey, assign, transfer and deliver directly to STC (or, if the closing
of all of the transactions contemplated by the STC Agreement has not occurred on
or prior to the Outside Closing Date, to Purchaser or, other than with respect
to the FCC Licenses which shall be assigned to the Person designated in the FCC
Consent, one or more wholly owned subsidiaries of Purchaser) the STC Assets and
the obligation of Purchaser to pay the STC Purchase Price in accordance with
Section 4 hereof and to assume the STC Assumed Liabilities, in each case not
later than the Outside Closing Date, shall each be irrevocable and
unconditional; provided that the Company shall not be obligated to sell, convey,
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<PAGE>
assign, transfer or deliver to Purchaser or directly to STC, as the case may be,
any of the STC Assets if Purchaser shall not have paid the STC Purchase Price in
accordance with Section 4 hereof and assumed the STC Assumed Liabilities. For
the avoidance of doubt, neither Purchaser nor the Company shall be relieved of
its obligation under this Section 8(b) even if any condition to Closing set
forth in Articles 6 or 7 of the Purchase Agreement would have ceased to have
been satisfied following the Principal Closing if any such condition were to be
considered in respect of the Deferred Closing.
Section 9. Certificate. Purchaser acknowledges that the
Company has delivered to Purchaser a certificate, dated as of the Principal
Closing Date, executed on behalf of the Company by its duly authorized officers
or representatives to the effect of Sections 6.1 and 6.2 of the Purchase
Agreement with respect all Stations other than the Ackerley Station. For the
avoidance of doubt, as previously agreed by the parties hereto, materiality (or
"Material Adverse Effect") for purposes of such certificate and all other
purposes under the Purchase Agreement has been, and shall be, determined on the
basis of all Stations taken as a whole, including the Ackerley Station and the
STC Stations; provided, however, that in determining materiality or Material
Adverse Effect, any circumstance, change in, or effect relating to, the Ackerley
Station after the First Closing Date has not been, and shall not be, taken into
consideration.
Section 10. Indemnification; Survival. The representations and
warranties of the Company contained in the Purchase Agreement or in any
certificate or special warranty deed delivered pursuant thereto and any and all
covenants and agreements therein with respect to the Ackerley Station, the
Ackerley Assets or the Ackerley Assumed Liabilities (other than those covenants
and agreements required by the Purchase Agreement to be performed after the
First Closing) shall expire with, and be terminated and extinguished upon, the
one year anniversary of
13
<PAGE>
the First Closing Date. Except as provided in the immediately proceeding
sentence, all representations and warranties of the Company or Purchaser
contained in the Purchase Agreement or in any certificate or special warranty
deed pursuant thereto and any and all covenants and agreements in the Purchase
Agreement shall expire in accordance with the terms of the Purchase Agreement
(treating the Principal Closing Date as "the Closing Date"). For purposes of
Section 8.1 and 8.2 of the Purchase Agreement, the term "Closing Date" shall be
deemed to refer to (x) the First Closing Date in respect of the Ackerley
Station, the Ackerley Assets and the Ackerley Assumed Liabilities, (y) the
Principal Closing Date in respect of the Stations (other than the Ackerley
Station and the STC Stations), Assets (other than the Ackerley Assets and the
STC Assets) and Assumed Liabilities (other than the Ackerley Assumed Liabilities
and the STC Assumed Liabilities) and (z) the date of the Final Closing (the
"Final Closing Date") in respect of the STC Stations, the STC Assets and the STC
Assumed Liabilities. Following the Principal Closing, all pre-Closing covenants
and agreements in Article 5 of the Purchase Agreement shall no longer apply to
any Station other than the STC Stations.
Section 11. Termination Rights. (a) Neither the Company nor
Purchaser shall have any right to terminate the Purchase Agreement; provided,
however, that if the Deferred Closing shall not have occurred on or before the
Outside Closing Date, the Company may terminate its obligations with respect to
the Deferred Closing and be entitled to abandon the Deferred Closing in
accordance with the procedures set forth in Section 10.1 of the Purchase
Agreement relating to termination of the Purchase Agreement. If the Company
abandons the Deferred Closing in accordance with this Section 11 then the
obligations of the Company to effect the Deferred Closing shall terminate, all
representations, warranties, convents, agreements, liabilities and obligations
of the Company under the Purchase Agreement shall thereupon
14
<PAGE>
become void and of no further effect whatsoever to the extent such
representations, warranties, covenants, agreements, liabilities and obligations
relate to the STC Stations, the STC Assets, the STC Assumed Liabilities or the
Deferred Closing, except (i) to the extent of the Company's liability for
willful material breaches of the Purchase Agreement prior to the time of such
abandonment, (ii) as set forth in Section 5.4 of the Purchase Agreement, (iii)
the obligations of the Company for its own expenses incurred in connection with
the transactions contemplated by the Purchase Agreement and this Agreement as
provided therein and modified hereby and (iv) if an Early KGAN-TV Closing shall
have occurred, to the extent such representations, warranties, covenants,
agreements, liabilities and obligations relate to Station KGAN-TV, the STC
Assets acquired, or the STC Assumed Liabilities assumed, in connection with the
Early KGAN-TV Closing, or the Early KGAN-TV Closing. For the avoidance of doubt,
the representations, warranties, convents, agreements, liabilities and
obligations of the Company under the Purchase Agreement relating to Station
WOKR-TV, Station WGGB-TV, Station WGME-TV and WTWC- TV, the assets acquired, or
the Assumed Liabilities assumed, in connection with the First Closing and the
Principal Closing, and the First Closing and the Principal Closing shall not be
affected by any abandonment pursuant to this Section 11(a), but shall expire,
and be terminated and extinguished, at the time provided in the Purchase
Agreement with respect thereto.
(b) If the Deferred Closing shall not have occurred by July 1,
1999 (if an Early KGAN-TV Closing has not occurred as permitted by Section 12
hereof) or the Outside Closing Date (if an Early KGAN-TV Closing has occurred on
or before July 1, 1999), other than as a result of a material breach by the
Company of its obligation under Section 8(b) hereof to effect the Deferred
Closing as described therein, Purchaser shall pay the Company, as liquidated
damages, the aggregate of (i) 15% of the STC Purchase Price (or, if an Early
KGAN-TV Closing
15
<PAGE>
has occurred, that portion of the STC Purchase Price not paid in connection with
the Early KGAN-TV Closing) calculated as if the Deferred Closing were to have
occurred on the Outside Closing Date (which amount represents the parties' best
estimate of the costs and expenses (including, without limitation, attorney's,
accountant's and other professionals' fees) of the Company related to the
negotiation and execution of this Agreement and the separate Deferred Closing,
which costs and amounts the parties acknowledge and agree would be otherwise
difficult to determine) and (ii) the amount of the excess, if any, of the STC
Purchase Price (or, if an Early KGAN-TV Closing has occurred, that portion of
the STC Purchase Price not paid in connection with the Early KGAN-TV Closing),
calculated as if the Deferred Closing were to have occurred on the Outside
Closing Date, over the purchase price received by the Company in respect of a
sale or sales of STC Assets and STC Business to one or more third parties on
substantially the same terms as those in the Purchase Agreement with respect to
post-closing liabilities and obligations of the seller (each, an "Alternative
Sale") (which amount the parties acknowledge and agree is not capable of
estimation as of the date hereof). The Company shall undertake the negotiations
relating to an agreement with respect to any Alternative Sale in good faith so
as to mitigate to the extent reasonably practicable any damages under clause
(ii) of the immediately preceding sentence; provided, however, that any breach
by the Company shall not void Purchaser's obligation to pay an amount under such
clause (ii), but, in the case of such breach, Purchaser's liability thereunder
shall be limited to the excess, if any, of the STC Purchase Price (or the
applicable portion of the STC Purchase Price, as the case may be) over the
purchase price that would reasonably have been received by the Company in
respect of one or more Alternative Sales if the Company were not to have so
breached its obligation under this sentence.
16
<PAGE>
The foregoing aggregate payment is intended by the parties to be liquidated
damages and not a penalty.
Section 12. Additional Separate Closing. (a) If Purchaser so
elects, the closing of the transactions contemplated by the Purchase Agreement
and this Agreement in respect of Station KGAN-TV (the "Early KGAN-TV Closing")
may take place on a date separate and earlier than the closing of the
transactions contemplated by the Purchase Agreement and this Agreement in
respect of Station WICD-TV and Station WICS-TV (the "Final Closing"), and if
Purchaser so elects, the parties hereto agree to make all appropriate changes to
this Agreement, and interpretations of the Purchase Agreement, necessary to
reflect such earlier closing; provided, however, that the parties hereby agree
that, if an Early KGAN-TV Closing were to occur, the references to "Deferred
Closing" or "Deferred Closing Date" in the proviso to the third sentence of
Section 1 hereof and in Section 11 hereof shall refer to the Final Closing.
(b) If Purchaser elects to have an Early KGAN-TV Closing take,
then, notwithstanding the provisions of Section 10.3 of the Purchase Agreement
or any other amounts required to be paid under the Purchase Agreement or this
Agreement, Purchaser shall, not later than the Early KGAN-TV Closing Date,
reimburse the Company for its reasonable costs and expenses (including, without
limitation, attorney's, accountants and other professionals' fees and expenses)
incurred in connection with effecting the Early KGAN-TV Closing. For the
avoidance of doubt, Purchaser shall not be obligated hereunder to reimburse the
Company for any costs and expenses incurred in connection with the Final
Closing, except to the extent provided in Section 11(b) hereof if the Final
Closing shall not have occurred on or before the Outside Closing Date.
Section 13. Additional Agreements. (a) Purchaser agrees to use
its best efforts to (i) assist STC in resolving the antitrust issues arising,
whether on the date hereof or at time on
17
<PAGE>
or before the Deferred Closing, in connection with the transactions contemplated
by the STC Agreement and (ii) secure one or more alternative sources of
financing, in each case such that the Deferred Closing (whether the STC Assets
are to be conveyed directly to STC or to Purchaser, as the case may be under
Section 8(b) hereof) shall occur not later than the Outside Closing Date.
(b) Notwithstanding the foregoing Section 13(a), the Deferred
Closing shall take place as soon as practicable following the satisfaction of
the condition set forth in Sections 6.4(a) and 7.4(a) of the STC Agreement, but
in no event later than ten days following the date on which such condition has
been satisfied.
(c) Notwithstanding the provisions of Section 10.3 of the
Purchase Agreement or any other amounts required to be paid under the Purchase
Agreement or this Agreement, Purchaser shall, not later than the earlier of the
Deferred Closing and the Outside Closing Date, pay to the Company in cash an
aggregate amount equal to $115,000 for each calendar month, and/or a pro-rated
portion thereof for the part of a calendar month (if any), during the period
from, but not including, May 31, 1999 through and including the Deferred Closing
Date, which amount is intended to reimburse the Company for its costs and
expenses incurred to maintain the Corporate Office (including, without
limitation, the retention of Corporate Office Employees) during such period.
(d) The parties hereby agree to each use their reasonable
efforts, to cooperate fully with each other and STC, and otherwise to use their
respective reasonable efforts to obtain the requisite clearances under the HSR
Act with respect to the transactions contemplated by the STC Agreement in
respect of the purchase and sale of the STC Stations.
(e) The parties hereby also agree to each use their reasonable
efforts, to cooperate fully with each other, and otherwise to use their
respective reasonable efforts to obtain FCC
18
<PAGE>
consent to extend its initial 90-day consummation period to the extent the
Deferred Closing, the Early KGAN-TV Closing or the Final Closing, as the case
may be, has not closed or is highly unlikely to close within the relevant period
of time.
(f) For the avoidance of doubt, the covenants and agreements
set forth in Sections 5.1, 5.3, 5.4 and 5.10 of the Purchase Agreement shall
remain in full force and effect with respect to the business, operations and
activities of the STC Stations until such time as the Deferred Closing shall
have taken place (or, if Purchaser shall have elected pursuant to Section 12
hereof to have an Early KGAN-TV Closing take place, such covenants and
agreements shall remain in full force and effect with respect to the business,
operations and activities of all the STC Stations until such time as the Early
KGAN-TV Closing shall have taken place and, following the Early KGAN-TV Closing,
with respect to the business, operations and activities of Station WICD-TV and
WICS-TV until the earlier of the Final Closing or the Outside Closing Date.
Section 14. Other Modifications to the Purchase Agreement. (a)
With respect to the actions to be taken pursuant to Section 5.2(i) or Section
5.2(j) of the Purchase Agreement, the term "Business Employees" shall mean (i)
Business Employees other than Business Employees of the Ackerley Station and the
STC Stations in connection with the Principal Closing and (ii) Business
Employees of the STC Stations in connection with the Deferred Closing.
(b) With respect to the actions to be taken pursuant to
Section 5.2(k) of the Purchase Agreement, the terms "Closing" and "Closing Date"
shall mean the earlier of (i) the Deferred Closing and the Deferred Closing
Date, respectively, and (ii) the Outside Closing Date.
Section 15. No Third Party Rights. Nothing in this Agreement
shall be deemed to provide any Person with any legal or equitable rights,
benefits or remedies of any nature
19
<PAGE>
whatsoever under or by reason of this Agreement, the Purchase Agreement or any
certificate or instrument delivered hereto or thereto, except to the extent
previously provided in the Purchase Agreement with respect to certain wholly
owned subsidiaries of Purchaser. For the avoidance of doubt, neither STC nor any
of its affiliates will be considered an assignee of Purchaser for purposes of
the Purchase Agreement (and will not have any of Purchaser's rights or remedies
under the Purchase Agreement).
Section 16. References. All references to "this Agreement" in
the Purchase Agreement shall mean the Purchase Agreement as modified hereby.
Section 17. Definitions. All capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in the Purchase
Agreement.
Section 18. Headings. The headings of the sections of this
Agreement are inserted as a matter of convenience and for reference purposes
only and in no respect define, limit or describe the scope of this Agreement or
the intent of any section or subsection.
Section 19. Counterparts. This Agreement may be executed in
one or more counterparts and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Section 20. Governing Law. This Agreement and the rights and
duties of the parties hereunder shall be governed by, and construed in
accordance with, the laws of the State of New York.
Section 21. No Other Amendments or Modifications. This
Agreement constitutes an amendment to the Purchase Agreement and in the event of
any conflict between the terms of this Agreement and the Purchase Agreement the
terms of this Agreement will
20
<PAGE>
govern. Except as expressly contemplated to be modified hereby, the terms and
conditions of the Purchase Agreement shall continue in full force and effect.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GUY GANNETT COMMUNICATIONS
By: /s/ James Baker
-------------------------------------
Its Vice-President-Finance
SINCLAIR COMMUNICATIONS, INC.
By: /s/ David B. Amy
-------------------------------------
Name: David B. Amy
Title: Secretary
ACCEPTED AND AGREED
as of the date first above written:
WGME LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
WTWC LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
22
<PAGE>
WICS LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
WICD LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
WGGB LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
KGAN LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
WGME, INC.
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
23
<PAGE>
WTWC, INC.
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR ACQUISITION IV, INC.
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
WGGB, INC.
By: /s/ David B. Amy
-----------------------------
Name: David B. Amy
Title: Secretary
24
ASSET PURCHASE AGREEMENT
DATED AUGUST 18, 1999
AMONG
SINCLAIR COMMUNICATIONS, INC.
SINCLAIR MEDIA III, INC.
SINCLAIR RADIO OF KANSAS CITY LICENSEE, LLC
WCGV, INC.
SINCLAIR RADIO OF MILWAUKEE LICENSEE, LLC
SINCLAIR RADIO OF NEW ORLEANS, LLC
SINCLAIR RADIO OF NEW ORLEANS LICENSEE, LLC
SINCLAIR RADIO OF MEMPHIS, INC.
SINCLAIR RADIO OF MEMPHIS LICENSEE, INC.
SINCLAIR PROPERTIES, LLC
SINCLAIR RADIO OF NORFOLK/GREENSBORO LICENSEE L.P.
SINCLAIR RADIO OF NORFOLK LICENSEE, LLC
SINCLAIR RADIO OF BUFFALO, INC.
SINCLAIR RADIO OF BUFFALO LICENSEE, LLC
WLFL, INC.
SINCLAIR RADIO OF GREENVILLE LICENSEE, INC.
SINCLAIR RADIO OF WILKES-BARRE, INC.
SINCLAIR RADIO OF WILKES-BARRE LICENSEE, LLC.
as SELLERS,
AND
ENTERCOM COMMUNICATIONS CORP.
as BUYER
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. CERTAIN DEFINITIONS........................................................................................3
1.1 Terms Defined in this Section.......................................................................3
1.2 Terms Defined Elsewhere in this Agreement...........................................................9
2. EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE..............................................................11
2.1 Agreement to Exchange and Transfer.................................................................11
2.2 Excluded Assets....................................................................................12
2.3 Purchase Price.....................................................................................13
Purchase Price Increase............................................................................13
2.4 Payment of Purchase Price..........................................................................16
Payment of Estimated Purchase Price At Closing.....................................................16
Payments to Reflect Adjustments....................................................................17
2.5 Assumption of Liabilities and Obligations..........................................................17
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.................................................................17
3.1 Organization and Authority of Sellers..............................................................18
3.2 Authorization and Binding Obligation...............................................................18
3.3 Absence of Conflicting Agreements; Consents........................................................18
3.4 Governmental Licenses..............................................................................18
3.5 Real Property......................................................................................19
3.6 Tangible Personal Property.........................................................................20
3.7 Contracts..........................................................................................20
3.8 Intangibles........................................................................................21
3.9 Title to Properties................................................................................21
3.10 Financial Statements...............................................................................21
3.11 Taxes..............................................................................................22
3.12 Insurance..........................................................................................22
3.13 Reports............................................................................................22
3.14 Personnel and Employee Benefits....................................................................22
Employees and Compensation.........................................................................22
Pension Plans......................................................................................23
Welfare Plans......................................................................................23
Benefit Arrangements...............................................................................23
Multiemployer Plans................................................................................23
Delivery of Copies of Relevant Documents and Other Information.....................................24
Labor Relations....................................................................................24
3.15 Claims and Legal Actions...........................................................................24
3.16 ENVIRONMENTAL COMPLIANCE...........................................................................24
3.17 Compliance with Laws...............................................................................25
3.18 Conduct of Business in Ordinary Course.............................................................25
3.19 Transactions with Affiliates.......................................................................25
3.20 Broker.............................................................................................25
3.21 Insolvency Proceedings.............................................................................26
3.22 Year 2000 Compatibility............................................................................26
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4. REPRESENTATIONS AND WARRANTIES OF BUYER...................................................................26
4.1 Organization, Standing and Authority...............................................................26
4.2 Authorization and Binding Obligation...............................................................26
4.3 Absence of Conflicting Agreements and Required Consents............................................26
4.4 Brokers............................................................................................27
4.5 Availability of Funds..............................................................................27
4.6 Qualifications of Buyer............................................................................27
4.7 WARN Act...........................................................................................27
4.8 Buyer's Defined Contribution Plan..................................................................27
5. OPERATION OF THE STATIONS PRIOR TO CLOSING................................................................28
5.1 Contracts..........................................................................................28
5.2 Compensation.......................................................................................28
5.3 Encumbrances.......................................................................................28
5.4 Dispositions.......................................................................................28
5.5 Access to Information..............................................................................28
5.6 Insurance..........................................................................................29
5.7 Licenses...........................................................................................29
5.8 Obligations........................................................................................29
5.9 No Inconsistent Action.............................................................................29
5.10 Maintenance of Assets..............................................................................29
5.11 Consents...........................................................................................29
5.12 Books and Records..................................................................................30
5.13 Notification.......................................................................................30
5.14 Financial Information..............................................................................30
5.15 Compliance with Laws...............................................................................30
5.16 Programming........................................................................................31
5.17 Preservation of Business...........................................................................31
5.18 Normal Operations..................................................................................31
5.19 Buffalo Build-Out Property.........................................................................31
6. SPECIAL COVENANTS AND AGREEMENTS..........................................................................31
6.1 FCC Consent........................................................................................31
6.2 Hart-Scott-Rodino..................................................................................32
6.3 Risk of Loss.......................................................................................32
6.4 Confidentiality....................................................................................32
6.5 Cooperation........................................................................................32
6.6 Control of the Stations............................................................................32
6.7 Accounts Receivable................................................................................33
6.8 Allocation of Purchase Price.......................................................................33
6.9 Access to Books and Records........................................................................34
6.10 Employee Matters...................................................................................34
Certain Payments...................................................................................36
6.11 Lease..............................................................................................37
6.12 Public Announcements...............................................................................37
6.13 Disclosure Schedules...............................................................................37
6.14 Bulk Sales Law.....................................................................................37
6.15 Environmental Site Assessment......................................................................37
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
6.16 Purchase of Advertising Time.......................................................................38
6.17 Adverse Developments...............................................................................38
6.18 Title Insurance....................................................................................39
6.19 Surveys............................................................................................39
6.20 Pending Transactions...............................................................................39
6.21 Assignment of Contracts for Pending Transactions...................................................39
7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.............................................................39
7.1 Conditions to Obligations of Buyer.................................................................39
Representations and Warranties.....................................................................40
Covenants and Conditions...........................................................................40
FCC Consent........................................................................................40
Hart-Scott-Rodino..................................................................................40
Governmental Authorizations........................................................................40
Consents...........................................................................................40
Lease..............................................................................................40
Deliveries.........................................................................................40
Satisfactory Environmental Assessment..............................................................41
7.2 Conditions to Obligations of Sellers...............................................................41
Representations and Warranties.....................................................................41
Covenants and Conditions...........................................................................41
FCC Consent........................................................................................41
Hart-Scott-Rodino..................................................................................41
Deliveries.........................................................................................41
8. CLOSING AND CLOSING DELIVERIES............................................................................41
8.1 Closing............................................................................................41
Closing Date.......................................................................................41
Closing Place......................................................................................42
8.2 Deliveries by Sellers..............................................................................43
Conveyancing Documents.............................................................................43
Officer's Certificate..............................................................................43
Secretary's Certificate............................................................................43
Consents...........................................................................................43
Good Standing Certificates.........................................................................43
Opinions of Counsel................................................................................43
Lease..............................................................................................44
Other Documents....................................................................................44
8.3 Deliveries by Buyer................................................................................44
Closing Payment....................................................................................44
Officer's Certificate..............................................................................44
Secretary's Certificate............................................................................44
Assumption Agreements..............................................................................44
Good Standing Certificates.........................................................................44
Opinion of Counsel.................................................................................44
Lease..............................................................................................44
Other Documents....................................................................................44
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
9. TERMINATION...............................................................................................45
9.1 Termination by Mutual Consent......................................................................45
9.2 Termination by Seller..............................................................................45
9.3 Termination by Buyer...............................................................................45
9.4 Rights on Termination..............................................................................46
9.5 Liquidated Damages Not a Penalty...................................................................46
9.6 Specific Performance...............................................................................46
9.7 Attorneys' Fees....................................................................................47
9.8 Survival...........................................................................................47
9.9 Limitations of Termination.........................................................................47
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES.............................47
10.1 Survival of Representations........................................................................47
10.2 Indemnification by Seller..........................................................................48
10.3 Indemnification by Buyer...........................................................................48
10.4 Procedure for Indemnification......................................................................49
10.5 Certain Limitations................................................................................50
11. MISCELLANEOUS.............................................................................................50
11.1 Fees and Expenses..................................................................................50
11.2 Notices............................................................................................51
11.3 Benefit and Binding Effect.........................................................................52
11.4 Further Assurances.................................................................................53
11.5 Governing Law......................................................................................53
11.6 Entire Agreement...................................................................................53
11.7 Waiver of Compliance; Consents.....................................................................53
11.8 Headings...........................................................................................53
11.9 Counterparts.......................................................................................53
</TABLE>
LIST OF SCHEDULES
2.2 Excluded Real Property Interests
3.1 Seller's Organization
3.3 Other Disclosure Consents
3.4 FCC Licenses
3.5 Real Property Schedule
3.6 Tangible Personal Property
3.7 Contracts (general, programming, leases and employment)
iv
<PAGE>
3.8 Intangibles
3.11 Taxes
3.12 Insurance
3.14 List of Employees
3.14 (g) Labor Relations
3.15 Litigation
3.16 Environmental Compliance
3.18 Conduct of Business in Ordinary Course
3.19 Transactions with Affiliates
3.20 Broker's Schedule
4.3 Absence of Conflicting Agreements and Required Consents
4.6 Qualifications of Buyer
5.3 Encumbrances
6.8 Allocation of Purchase Price
6.10 Retention Agreements
6.10-A Excluded Employees (Retention Agreements)
6.10 (h) Employees excluded from Seller's Obligations to Reimburse
Buyer as Scheduled on Schedule 6.10 - Retention Agreements
6.15 Environmental Site Assessments
7(g) WNVZ-FM Antenna Site Lease Renewal
10.2 FCC Applications
10.5 Indemnification
v
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of
______________, 1999, by and among Sinclair Communications, Inc., a Maryland
corporation ("SCI"), Sinclair Media III, Inc. a Maryland corporation ("MEDIA
III"), Sinclair Radio of Kansas City Licensee, LLC, a Maryland limited liability
company ("KANSAS CITY LICENSEE"), WCGV, Inc., a Maryland corporation ("WCGV"),
Sinclair Radio of Milwaukee Licensee, LLC, a Maryland limited liability company
("MILWAUKEE LICENSEE"), Sinclair Radio of New Orleans, LLC, a Maryland limited
liability company ("SINCLAIR NEW ORLEANS"), Sinclair Radio of New Orleans
Licensee, LLC, a Maryland limited liability company ("NEW ORLEANS LICENSEE"),
Sinclair Radio of Memphis, Inc., a Maryland corporation ("SINCLAIR MEMPHIS"),
Sinclair Radio of Memphis Licensee, Inc., a Delaware corporation ("MEMPHIS
LICENSEE"), Sinclair Properties, LLC, a Virginia limited liability company
("PROPERTIES"), Sinclair Radio of Norfolk/Greensboro Licensee L.P., a Virginia
limited partnership ("NORFOLK/GREENSBORO LICENSEE"), Sinclair Radio of Norfolk
Licensee, LLC, a Maryland limited liability company ("NORFOLK LICENSEE"),
Sinclair Radio of Buffalo, Inc., a Maryland corporation ("SINCLAIR BUFFALO"),
Sinclair Radio of Buffalo Licensee, LLC, a Maryland limited liability company
("BUFFALO LICENSEE"), WLFL, Inc., a Maryland corporation ("WLFL"), Sinclair
Radio of Greenville Licensee, Inc., a Delaware corporation ("GREENVILLE
LICENSEE"), Sinclair Radio of Wilkes-Barre, Inc., a Maryland corporation
("SINCLAIR WILKES-BARRE"), and Sinclair Radio of Wilkes-Barre Licensee, LLC, a
Maryland limited liability company ("WILKES-BARRE LICENSEE") (each a "SELLER"
and collectively, "SELLERS"), and Entercom Communications Corp., a Pennsylvania
corporation ("BUYER").
R E C I T A L S:
WHEREAS, Properties operates radio broadcast stations WPTE-FM, Virginia
Beach, VA; WWDE-FM, Hampton, VA; and WNVZ-FM, Norfolk, VA (collectively, the
"NORFOLK STATIONS") WVKL-FM, Norfolk VA ("WVKL") and WMQX-FM, Winston-Salem, NC;
WQMG-FM, Greensboro, NC; WJMH-FM, Reidsville, NC; and WEAL-AM, Greensboro, NC
(collectively, the "GREENSBORO STATIONS") and owns or leases certain assets used
in connection with the Norfolk Stations, WVKL and the Greensboro Stations;
WHEREAS, Media III operates radio broadcast stations KCFX-FM,
Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM,
Kansas City, MO (collectively, the "KANSAS CITY STATIONS") and owns or leases
certain assets used in connection with the Kansas City Stations;
WHEREAS, Kansas City Licensee is the licensee of each of the Kansas
City Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, WCGV operates radio broadcast stations WEMP-AM, Milwaukee, WI;
WMYX-FM, Milwaukee, WI; and WXSS-FM, Wauwatosa, WI (collectively, the "MILWAUKEE
STATIONS") and owns or leases certain assets used in connection with the
Milwaukee Stations;
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WHEREAS, Milwaukee Licensee is the licensee of each of the Milwaukee
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, Sinclair New Orleans operates radio broadcast stations
WLMG-FM, New Orleans, LA; WWL-AM, New Orleans, LA; WSMB-AM, New Orleans, LA; and
WEZB-FM, New Orleans, LA (collectively, the "NEW ORLEANS STATIONS") and owns or
leases certain assets used in connection with the New Orleans Stations;
WHEREAS, New Orleans Licensee is the licensee of each of the New
Orleans Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, Sinclair New Orleans operates radio broadcast stations
WLTS-FM, Kenner, LA; and WTKL-FM, New Orleans, LA (collectively, the "PHASE II
STATIONS"), pursuant to a time brokerage agreement (the "PHASE II TBA") with
Phase II Broadcasting, Inc. ("PHASE II") and has entered into an agreement (the
"PHASE II PURCHASE AGREEMENT") with Phase II to acquire substantially all the
assets of the Phase II Stations from Phase II;
WHEREAS, Sinclair Memphis operates radio broadcast stations WRVR-FM,
Memphis, TN; WJCE-AM, Memphis, TN and WOGY-FM, Germantown, TN (collectively, the
"MEMPHIS STATIONS") and owns or leases certain assets used in connection with
the Memphis Stations;
WHEREAS, Memphis Licensee is the licensee of each of the Memphis
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, Norfolk/Greensboro Licensee is the licensee of each of the
Norfolk Stations and each of the Greensboro Stations pursuant to certain
authorizations issued by the FCC;
WHEREAS, Norfolk Licensee is the licensee of WVKL pursuant to certain
authorizations issued by the FCC;
WHEREAS, Sinclair Buffalo operates radio broadcast stations WMJQ-FM,
Buffalo, NY, WKSE-FM, Niagara Falls, NY; WBEN-AM, Buffalo, NY; WWKB-AM, Buffalo,
NY; WGR-AM, Buffalo, NY: and WWWS-AM, Buffalo, NY (collectively, the "BUFFALO
STATIONS") and owns or leases certain assets used in connection with the Buffalo
Stations;
WHEREAS, Buffalo Licensee is the licensee of each of the Buffalo
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, WLFL operates radio broadcast stations WFBC-FM, Greenville, SC
and WSPA-FM, Spartanburg, SC; WYRD-AM, Greenville, SC; WORD-AM, Spartanburg, SC;
and WSPA-AM, Spartanburg, SC (collectively, the "GREENVILLE STATIONS") and owns
or leases certain assets used in connection with the Greenville Stations;
WHEREAS, Greenville Licensee is the licensee of each of the Greenville
Stations pursuant to certain authorizations issued by the FCC;
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WHEREAS, WLFL provides sales services to radio broadcast stations
WOLI-FM, Easely, SC and WOLT-FM, Greer, SC (the "PALM STATIONS"), pursuant to
joint sales agreement with Palm Broadcasting, Inc. (the "PALM JSA") and has
exercised an option to purchase the Palm Stations pursuant to an option
agreement with Palm Broadcasting, Inc. (the "PALM OPTION AGREEMENT");
WHEREAS, Sinclair Wilkes-Barre, operates radio broadcast stations
WGGI-FM, Benton, PA; WKRZ-FM, Wilkes-Barre, PA; WGGY-FM, Scranton, PA; WILK-AM,
Wilkes-Barre, PA: WGBI-AM, Scranton, PA; WSHG-FM, Pittston, PA; WILP-AM, West
Hazelton, PA; WWFH-FM, Freeland, PA; and WKRF-FM, Tobyhanna, PA (collectively,
the "WILKES-BARRE STATIONS") and owns or leases certain assets used in
connection with the Wilkes-Barre Stations;
WHEREAS, Wilkes-Barre Licensee is the licensee of each of the
Wilkes-Barre Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for the sale, assignment and transfer by Sellers to Buyer of certain of
the assets owned, leased or used by Sellers in connection with the business and
operations of the Palm Stations and the Phase II Stations (collectively, the
"Non-Owned Stations") and the Kansas City Stations, the Milwaukee Stations, the
New Orleans Stations, the Memphis Stations, the Norfolk Stations, WVKL, the
Greensboro Stations, the Buffalo Stations, the Greenville Stations, and the
Wilkes-Barre Stations (each [including the Non-Owned Stations) a "STATION" and
collectively, the "STATIONS");
A G R E E M E N T S:
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1: CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
"ACCOUNTS RECEIVABLE" means the rights of Sellers as of the Closing
Date to payment in cash for the sale of advertising time and other goods and
services by the Stations prior to the Closing Date.
"AFFILIATE" means, with respect to any Person, (a) any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person, or (b) an officer or
director of such Person or of an Affiliate of such Person within the meaning of
clause (a) of this definition. For purposes of clause (a) of this definition,
(i) a Person shall be deemed to control another Person if such Person (A) has
sufficient power to enable such Person to elect a majority of the board of
directors of such Person, or (B) owns a majority of the beneficial interests in
income and capital of such Person;
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and (ii) a Person shall be deemed to control any partnership of which such
Person is a general partner.
"ASSETS" means the assets to be transferred or otherwise conveyed by
Sellers to Buyer under this Agreement, as specified in Section 2.1.
"ASSUMED CONTRACTS" means (a) all Contracts set forth on Schedule 3.7,
(b) Contracts entered into prior to the date of this Agreement with advertisers
for the sale of advertising time or production services for cash at rates
consistent with past practices, (c) Contracts entered into by any Seller prior
to the date of this Agreement which are not required to be included on Schedule
3.7 hereto, (d) any Contracts entered into by Sellers between the date of this
Agreement and the Closing Date that Buyer agrees in writing to assume, and (e)
other contracts entered into by Sellers between the date of this Agreement and
the Closing Date in compliance with Section 5.
"BUFFALO BUILD-OUT PROPERTY" shall have the meaning set forth in
Section 2.3(b)(iv).
"CLOSING" means the consummation of the exchange and acquisition of the
Assets pursuant to this Agreement on either one or more Closing Date in
accordance with the provisions of Section 8.1.
"CLOSING DATE" means the date on which a Closing occurs, as determined
pursuant to Section 8.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CONSENTS" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"CONTAMINANT" shall mean and include any pollutant, contaminant,
hazardous material (as defined in any of the Environmental Laws), toxic
substances (as defined in any of the Environmental Laws), asbestos or asbestos
containing material, urea formaldehyde, polychlorinated biphenyls, regulated
substances and wastes, radioactive materials, and petroleum or petroleum
by-products, including crude oil or any fraction thereof, except the term
"Contaminant" shall not include small quantities of maintenance, cleaning and
emergency generator fuel supplies customary for the operation of radio stations
and maintained in compliance with all Environmental Laws in the ordinary course
of business.
"CONTRACTS" means all contracts, consulting agreements, leases,
non-governmental licenses and other agreements (including leases for personal or
real property and employment agreements), written or oral (including any
amendments and other modifications thereto) to which Sinclair, SCI, or any
Seller is a party or that are binding upon any Seller, that relate to or affect
the Assets or the business or operations of the Stations, and that either (a)
are in effect on
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the date of this Agreement, including (without limitation) the Phase II TBA, the
Phase II Purchase Agreement, the Palm JSA, the Palm Option Agreement, and those
listed on Schedule 3.7 hereto, or (b) are entered into by any Seller between the
date of this Agreement and the Closing Date.
"DELAY AMOUNT" shall equal 0.75% of the amount which is the Initial
Purchase Price, less any portion of the Initial Purchase Price which has been
received by Sellers pursuant to any Closings which have occurred prior to the
time such payment is due.
"DEPOSIT RELEASE DATE" is the date on which a Closing has occurred for
Radio Groups for which more than forty-five percent (45%) of the Initial
Purchase Price has been paid to Sellers.
"EFFECTIVE TIME" means 12:01 a.m., Eastern time, on each Closing Date.
"ENVIRONMENTAL LAWS" shall mean and include, but not be limited to, any
applicable federal, state or local law, statute, charter, ordinance, rule or
regulation or any governmental agency interpretation, policy or guidance,
including without limitation applicable safety/environmental/health laws such as
but not limited to the Resource Conservation and Recovery Act of 1976,
Comprehensive Environmental Response Compensation and Liability Act, Federal
Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean
Water Act, and the Toxic Substance Control Act, as any of the foregoing have
been amended, and any permit, order, directive, court ruling or order or consent
decree applicable to or affecting the Property or any other property (real or
personal) used by or relating to the Station in question promulgated or issued
pursuant to any Environmental Laws which pertains to, governs, or controls the
generation, storage, remediation or removal of Contaminants or otherwise
regulates the protection of health and the environment including, but not
limited to, any of the following activities, whether on site or off site if such
could materially affect the site: (i) the emission, discharge, release, spilling
or dumping of any Contaminant into the air, surface water, ground water, soil or
substrata; or (ii) the use, generation, processing, sale, recycling, treatment,
handling, storage, disposal, transportation, labeling or any other management of
any Contaminant.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW DEPOSIT" means the sum of Fifty Million Dollars
($50,000,000.00) or, at Buyer's option, a letter of credit in favor of Sellers
in the face amount of Fifty Million Dollars ($50,000,000.00), which is being
deposited by Buyer with First Union National Bank (the "ESCROW AGENT") on the
date hereof to secure the obligations of Buyer to close under this Agreement,
with (i) such deposit being held by the Escrow Agent in accordance with the
Escrow Agreement executed among Buyer, Sellers and Escrow Agent on the date
hereof, and (ii) the Escrow Deposit, and all earnings thereon, being returned to
Buyer upon the consummation hereof.
"EXCESS AMOUNT" has the meaning set forth in Section 10.5.
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"EXCLUDED REAL PROPERTY INTERESTS" means all interests in Real Property
listed on Schedule 2.2 hereto.
"EXCLUDED TANGIBLE PERSONAL PROPERTY" means all tangible personal
property owned or held by Sellers that is located at the Excluded Real Property
other than such tangible personal property listed on Schedule 3.6 hereto, any
assets used primarily in the operation of any television broadcast station
owned, operated or programmed by Sellers or any Affiliate of Sellers, any assets
used primarily in the operation of any radio broadcast station owned, operated
or programmed by Sellers, but not included as a "Station" hereunder, and any
tangible personal property located at Suite 220, Meadow Mill at Woodberry, 3600
Clipper Mill Road, Baltimore, Maryland 21211.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
transfer of the FCC Licenses by Sellers to Buyer as contemplated by this
Agreement.
"FCC LICENSES" means those licenses, permits and authorizations issued
by the FCC to Sellers in connection with the business and operations of the
Stations.
"FINAL CLOSING DATE" means the date on which all of the Assets for all
of the Stations have been exchanged and acquired in accordance with Section 8.1.
"FINAL ORDER" shall mean an action by the Commission upon any
application for FCC Consent filed by the parties hereto for FCC consent,
approval or authorization, which action has not been reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action, no protest,
petition to deny, petition for rehearing or reconsideration, appeal or request
for stay is pending, and as to which action the time for filing of any such
protest, petition, appeal or request and any period during which the Commission
may reconsider or review such action on its own authority has expired.
"HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements
Acts of 1976, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"INTANGIBLES" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by
Sellers or under which Sellers are licensed or franchised and that are used in
the business and operations of the Stations, together with any additions thereto
between the date of this Agreement and the Closing Date.
"KNOWLEDGE" or any derivative thereof with respect to the Sellers
means, exclusively, the actual Knowledge of the President and Chief Executive
Officer or the Chief Financial Officer of Sinclair Broadcast Group, Inc.
("SINCLAIR"), the general managers of the Stations, and any
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other employee of Sinclair or SCI designated as a "vice president" or any
officer of any of the Sellers.
"LEASED REAL PROPERTY" means all real property and all buildings and
other improvements thereon and appurtenant thereto leased or held by Sellers and
used in the business or operation of the Stations.
"LICENSES" means all licenses, permits, construction permits and other
authorizations issued by the FCC, the Federal Aviation Administration, or any
other federal, state, or local governmental authorities to Sellers, currently in
effect and used in connection with the conduct of the business or operations of
the Stations (other than the Non-Owned Stations), together with any additions
thereto between the date of this Agreement and the Closing Date.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets or financial condition of the Stations taken as a whole, except
for any such material adverse effect resulting from (a) general economic
conditions applicable to the radio broadcast industry, (b) general conditions in
the markets in which the Stations operate, or (c) circumstances that are not
likely to recur and either have been substantially remedied or can be
substantially remedied without substantial cost or delay.
"MATERIAL CONTRACT" means those Assumed Contracts that are designated
on Schedules 3.5 and 3.7 as "Material Contracts."
"OWNED REAL PROPERTY" means all real property and all buildings and
other improvements thereon and appurtenant thereto owned by Sellers and used in
the business or operations of the Stations.
"PALM AMOUNT" shall equal either (a) $0 if the acquisition of the Palm
Stations by WLFL shall have occurred prior to Closing applicable to the Palm
Stations, or (b) the purchase price which Buyer would be required to pay to
acquire the Palm Stations, including, after taking into account the application
of any deposit made pursuant to the acquisition agreement without regard to
prorations or similar adjustments.
"PENDING TRANSACTION AMOUNT" means the sum of the Phase II Amount and
the Palm Amount.
"PERMITTED ENCUMBRANCES" means (a) encumbrances of a landlord, or other
statutory lien not yet due and payable, or a landlord's liens arising in the
ordinary course of business, (b) encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of the Contracts
set forth on the Schedules, which Contracts have been made available to Buyer,
(c) encumbrances for Taxes not yet delinquent or which are being contested in
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on Sellers' books in accordance with generally accepted
accounting principles, or (d) encumbrances that do not materially detract from
the value of any of the Assets or materially interfere with the use thereof as
currently used.
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"PERSON" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"PHASE II AMOUNT" shall equal either (a) $0 if the acquisition of the
Phase II Stations by Sinclair Radio of New Orleans, Inc. shall have occurred
prior to Closing applicable to the Phase II Stations, or (b) the purchase price
which Buyer would be required to pay to acquire the Phase II Stations,
including, after taking into account the application of any deposit made
pursuant to the acquisition agreement, without regard to prorations or similar
adjustments.
"RADIO GROUP" means the Stations located in the same Designated Market
Area as determined by the Arbitron Company.
"RADIO GROUP FCC CONSENT" means receipt of initial grant of the FCC
Consents as to each of the Stations in any Radio Group.
"RADIO GROUP MATERIAL ADVERSE EFFECT" means a material adverse effect
on the business, assets, or financial condition of a Radio Group taken as a
whole, except for any such material adverse effect resulting from (a) general
economic conditions applicable to the radio broadcast industry, (b) general
conditions in the markets in which the Stations comprising the Radio Group
operate, or (c) circumstances that are not likely to recur and have either been
substantially remedied or can be substantially remedied without substantial cost
or delay.
"REAL PROPERTY" means all real property and all buildings and other
improvements thereon and appurtenant thereto, whether or not owned, leased or
held by Sellers used in the business or operations of the Stations.
"REAL PROPERTY INTERESTS" means all interests in Owned Real Property
and Leased Real Property, including fee estates, leaseholds and subleaseholds,
purchase options, easements, licenses, rights to access, and rights of way, and
all buildings and other improvements thereon and appurtenant thereto, owned or
held by Sellers that are used in the business or operations of the Stations,
together with any additions, substitutions and replacements thereof and thereto
between the date of this Agreement and the Closing Date, but excluding the
Excluded Real Property Interests.
"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property owned or held by Sellers that
is used or useful in the conduct of the business or operations of the Stations,
together with any additions, substitutions and replacements thereof and thereto
between the date of this Agreement and the Closing Date, but excluding the
Excluded Tangible Personal Property.
"TAX" means any federal, state, local, or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or similar governmental assessment, together with any interest, additions,
or penalties with respect thereto and any interest in respect of such additions
or penalties.
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"TAX RETURN" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted to any governmental authority with respect to any Tax.
"THRESHOLD AMOUNT" has the meaning set forth in Section 10.5.
"UNEXPENDED REMEDIATION AMOUNT" shall mean Three Million Dollars
($3,000,000.00) minus any amounts previously expended by Sellers to remediate
any of the Real Property pursuant to Section 6.16.
"USA DIGITAL SHARES" means the 300,000 shares of common stock of USA
Digital Radio, Inc. of which Sellers are the record owner.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have the meanings set forth in the sections indicated:
Term Section
Balance Sheet Date Section 3.10
Benefit Arrangement Section 3.14 (a)(v)
Benefit Plans Section Section 3.14(a)(ii)
Buffalo Stations Recitals
Buyer Preamble
Buyer's Plan Section 4.8
Claimant Section 10.4
Collection Period Section 6.7(a)
Confidentiality Agreement Section 6.4
Deferred Contract Section 5.11(b)
Designee Section 11.3(b)
Employees Section 3.14(a)
Environmental Laws Section 3.16
Estimated Purchase Price Section 2.4(a)
Excluded Real Property Interests Section 1.1
Excluded Tangible Personal Property Section 1.1
FCC Objection Section 7.1(c)
FTC Section 4.6
Financial Statements Section 3.10
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Greensboro Stations Recitals
Greenville Stations Recitals
Hart-Scott-Rodino Filing Section 6.2
Indemnity Cap Section 10.5
Indemnifying Party Section 10.4
Initial Employee Cap Section 6.10(g)
Initial Purchase Price Section 2.3
Kansas City Stations Recitals
Kansas City Delay Amount Section 2.3(a)(ii)
Kansas City Delay Amount Date Section 2.3(a)(ii)
Lease Section 6.12
Memphis Stations Recitals
Milwaukee Stations Recitals
Multiemployer Plan Section 3.14(a)(ii)
New Orleans Stations Recitals
Non-Owned Stations Recitals
Operational Equipment Section 3.22
Norfolk Stations Recitals
Palm Amount Section 1.1
Palm JSA Recitals
Palm Option Agreement Recitals
Palm Stations Recitals
Pension Plan Section 3.14(a)(iii)
Phase II Recitals
Phase II Amount Section 1.1
Phase II Purchase Agreement Recitals
Phase II Stations Recitals
Phase II TBA Recitals
Purchase Price Section 2.3
Radio Group Section 1.1
Reimbursement Period Section 6.10(g)
Represented Employees Section 6.10(e)
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Scheduled Employees Section 6.10(g)
Scheduled Retention Agreements Section 6.10(g)
SCI Preamble
Section 6.9 Amount Section 6.9
Seller Preamble
Seller Entities Section 6.10(i)
Sellers' Employees Section 6.10(i)
Sinclair Section 1.1
Stations Recitals
Stations Delay Amount Section 2.3(a)(i)
Stations Delay Amount Date Section 2.3(a)(i)
Transferred Employees Section 6.10
WVKL Recitals
Welfare Plan Section 3.14(a)(i)
Wilkes-Barre Stations Recitals
SECTION 2: EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE
2.1 Agreement to Exchange and Transfer. Subject to the terms and conditions set
forth in this Agreement with respect to the Stations or any Radio Group, Sellers
hereby agree to transfer, convey, assign and deliver to Buyer on one or more
Closing Dates as applicable, and Buyer agrees to acquire, all of Sellers' right,
title and interest in the tangible and intangible assets used in connection with
the conduct of the business or operations of the Stations or any Radio Group, as
the case may be, together with any additions thereto between the date of this
Agreement and the applicable Closing Date, but excluding the assets described in
Section 2.2, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, charges, or encumbrances of any nature whatsoever
(except for Permitted Encumbrances), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill of the Stations, if any;
(f) The USA Digital Shares.
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(g) All of Sellers' proprietary information, technical information and
data, machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints and schematics, including filings with the FCC, in each
case to the extent relating to the business and operation of the Stations;
(h) All choses in action of Sellers relating to the Stations to the
extent they relate to the period after the Effective Time; and
(i) All books and records relating to the business or operations of the
Stations, including executed copies of the Assumed Contracts, and all records
required by the FCC to be kept by the Stations.
2.2 Excluded Assets. The Assets shall exclude the following:
(a) Sellers' cash, cash equivalents and deposits, all interest payable
in connection with any such items and rights in and to bank accounts, marketable
and other securities and similar investments of Sellers;
(b) Any insurance policies, promissory notes, amounts due to Sellers
from employees, bonds, letters of credit, certificates of deposit, or other
similar items, and any cash surrender value in regard thereto; provided, that in
the event Seller is obligated to assign to Buyer the proceeds of any such
insurance policy at the time a Closing occurs under Section 6.3, such proceeds
shall be included in the Assets;
(c) Any pension, profit-sharing, or employee benefit plans, including
all of Sellers' interest in any Welfare Plan, Pension Plan or Benefit
Arrangement (each as defined in Section 3.14(a);
(d) All Tangible Personal Property disposed of or consumed in the
ordinary course of business as permitted by this Agreement;
(e) All Tax Returns and supporting materials, all original financial
statements and supporting materials, all books and records that Sellers are
required by law to retain, all of Sellers' organizational documents, corporate
books and records (including minute books and stock ledgers) and originals of
account books of original entry, all records of Sellers relating to the sale of
the Assets and all records and documents related to any assets excluded pursuant
to this Section 2.2;
(f) Any interest in and to any refunds of federal, state, or local
franchise, income, or other taxes for periods (or portions thereof) ending on or
prior to the Closing Date;
(g) All Accounts Receivable;
(h) All rights and claims of Sellers whether mature, contingent or
otherwise, against third parties relating to the Assets of the Stations, whether
in tort, contract or otherwise, other than
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rights and claims against third parties relating to the Assets which have as
their basis loss, damage or impairment of or to any of the Assets and which
loss, damage or impairment has not been restored or repaired prior to any
Closing in which any of the Assets which has been so damaged or impaired is
being acquired by Buyer (or in the case of a lost asset, that would have been
acquired but for such loss);
(i) Any Contracts which are not Assumed Contracts;
(j) All of each Sellers' deposits and prepaid expenses; provided, any
deposits and prepaid expenses shall be included in the Assets to the extent that
Sellers receive a credit therefor in the proration of the Purchase Price
pursuant to Section 2.3(b);
(k) All rights of Sellers under or pursuant to this Agreement (or any
other agreements contemplated hereby);
(l) All rights to the names Sinclair Broadcast Group, "Sinclair
Communications," Sinclair and any logo or variation thereof and goodwill
associated therewith;
(m) The Excluded Real Property Interests;
(n) The Excluded Tangible Personal Property;
(o) All assets owned by the Sellers and used in connection with any
television or radio broadcast stations owned and/or programmed by any of the
Sellers or Sellers have the right to acquire other than the Stations, including
(without limitation) all assets related to Sellers' operation and ownership of
the Interstate Road Network and the Road Gang Coast to Coast Network; KPNT-FM,
St. Genevieve, MO; WVRV-FM, East St. Louis, IL; WIL-FM, St. Louis, MO; WRTH-AM,
St. Louis, MO; KIHT-FM, St. Louis, MO; KXOK-FM, St.
Louis, MO; KUPN-AM, Mission, KS;
(p) All shares of capital stock, partnership interests, interests in
limited liability companies or other equity interest, including, but not limited
to, any options, warrants or voting trusts relating thereto which are owned by
Sellers and not expressly specified in Section 2.1.
2.3 Purchase Price. The purchase price of the Assets (the "PURCHASE PRICE")
shall be the excess of (i) Eight Hundred Twenty Four Million Five Hundred
Thousand U.S. Dollars ($824,500,000), plus the Section 6.9 Amount over (ii) the
"Pending Transaction Amount," adjusted as provided below.
(a) Purchase Price Increase. Except as otherwise provided in this
Agreement, the Initial Purchase Price shall be increased by the Delay Amount
upon the occurrence of any of the following events:
(i) one hundred thirty five (135) days following public notice
by the FCC that applications for FCC Consent have been accepted for filing (the
"Stations Delay Amount Date") if Closing has not occurred with respect to all
Stations other than the Kansas City Stations due to the failure to receive any
necessary regulatory consent, including, but not limited to, the FCC
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Consent, any Radio Group FCC Consent, or expiration or termination under
Hart-Scott-Rodino, as a result of facts relating to Buyer or its Affiliates,
including, without limitation, such facts as are disclosed on Schedule 4.6
hereto, provided, that such Delay Amount shall be applied to the Initial
Purchase Price only for those Stations for which a Closing has not occurred
prior to the Stations Delay Amount Date, other than the Kansas City Stations, as
allocated on Schedule 6.8 (the "Stations Delay Amount"); and
(ii) one hundred fifty (150) days following public notice by
the FCC that applications for FCC Consent have been accepted for filing (the
"Kansas City Delay Amount Date") if Closing has not occurred with respect to the
Kansas City Stations due to the failure to receive any necessary consent,
including, but not limited to, the FCC Consent, any Radio Group FCC Consent, or
expiration or termination under Hart-Scott-Rodino as a result of facts relating
to Buyer or its Affiliates, provided, that such Delay Amount shall be applied to
the Initial Purchase Price for the Kansas City Stations as allocated on Schedule
6.8 (the "Kansas City Station Delay Amount"); and
(iii) each thirty (30) day period subsequent to the occurrence
of the Stations Delay Amount Date as to the Station Delay Amount and the Kansas
City Delay Amount Date as to the Kansas City Delay Amount until the later to
occur of (x) the Closing, or (y) termination of this Agreement in accordance
with its terms.
The Purchase Price and any increase due pursuant to this Section 2.3(a)
shall be paid at Closing or pro rata (based on the allocation of the Initial
Purchase Price among the Radio Groups) at a Radio Group Closing.
(b) Prorations. The Purchase Price shall be increased or decreased as
required to effectuate the proration of revenues and expenses, as set forth
below. All revenues and all expenses arising from the operation of the Stations
or Radio Group which are the subject of any Closing, including tower rental,
business and license fees, utility charges, real property and personal property
and other similar Taxes and assessments levied against or with respect to the
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, payments due under film or programming license
agreements, and employee compensation, including wages (including bonuses which
constitute wages), salaries, accrued sick leave, severance pay and related Taxes
shall be prorated between Buyer and Sellers as to those Stations for which a
Closing is to be held in accordance with the principle that Sellers shall
receive all revenues and shall be responsible for all expenses, costs and
liabilities allocable to the operations of the Stations or Radio Group, as the
case may be, for the period prior to the Effective Time of such Closing, and
Buyer shall receive all revenues and shall be responsible for all expenses,
costs and obligations allocable to the operations of the Stations for the period
after the Effective Time of such Closing, subject to the following:
(i) There shall be no adjustment for, and Sellers shall remain
solely liable with respect to, any Contracts not included in the Assumed
Contracts and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.2. An adjustment and proration shall be made in favor
of Buyer to the extent that Buyer assumes any liability under any Assumed
Contract to refund (or to credit against payments otherwise due) any security
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deposit or similar prepayment paid to Sellers by any lessee or other third
party. An adjustment and proration shall be made in favor of Sellers to the
extent Buyer receives the right to receive a refund (or to a credit against
payments otherwise due) under any Assumed Contract to any security deposit or
similar pre-payment paid by or on behalf of Sellers.
(ii) An adjustment and proration shall be made in favor of
Sellers for the amount, if any, by which the fair market value of the goods or
services to be received by any Radio Group under its trade or barter agreements
as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars
($250,000) the fair market value of any advertising time remaining to be run by
such Radio Group as of the Effective Time. An adjustment and proration shall be
made in favor of Buyer to the extent that the amount of any advertising time
remaining to be run by any Radio Group under its trade or barter agreements as
of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars
($250,000) the fair market value of the goods or services to be received by such
Radio Group as of the Effective Time.
(iii) There shall be no proration for program barter.
(iv) An adjustment and proration shall be made in favor of
Sellers for the prorata portion of the capital expenditures incurred by Sellers
in connection with the build-out of the studio/office space located at 500
Corporate Parkway, Amherst, NY 14226 (the "Buffalo Build-Out Property"), based
on the remaining potion of the initial term of the Lease relating to such
property, dated May 15, 1999, between Sinclair Radio of Buffalo, Inc. and the
Uniland Partnership of Delaware, L.P.; provided, that the adjustment and
proration to be made pursuant to this Section 2.3(b)(iv) shall not exceed the
lesser of (i) fifty percent (50%) of the capital expenditures (i.e.,
out-of-pocket construction and equipment expenses, architecture fees and
building rent prior to occupancy) paid by Sellers with respect to the Buffalo
Build-Out Property prior to Closing, and (ii) Two Million Dollars ($2,000,000).
(v) An adjustment and proration shall be made in favor of
Sellers for the amount, if any, of prepaid expense, the benefit of which accrues
to Buyer hereunder, and other current assets acquired by Buyer hereunder which
are paid by Sellers to the extent such prepaid expenses and other current assets
relate to the period after the Effective Time.
(vi) There shall be no proration for any payment(s) made by
Interep to any of the Sellers in connection with obtaining the right to serve as
the national sales representative of any of the Stations.
(c) Manner of Determining Adjustments. The Purchase Price, taking into
account the adjustments and prorations pursuant to Section 2.3(b), will be
determined in accordance with the following procedures:
(i) Sellers shall prepare and deliver to Buyer not later than
five (5) days before any Closing Date a preliminary settlement statement which
shall set forth Sellers' good faith estimate of the adjustments to the Purchase
Price under Section 2.3(b) with respect to those Stations for which Closing is
to occur. The preliminary settlement statement shall (A) contain all information
reasonably necessary to determine the adjustments to the Purchase Price under
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Section 2.3(b) as to such Station, to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (B) be
certified by Sellers to be true and complete to Sellers' Knowledge as of the
date thereof.
(ii) Not later than ninety (90) days after each Closing Date,
Buyer will deliver to Sellers a statement setting forth Buyer's determination of
the Purchase Price and the calculation thereof pursuant to Section 2.3(b) as to
the Stations for which such Closing has occurred. Buyer's statement (A) shall
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(b) relating to the applicable Closing, and such
other information as may be reasonably requested by Sellers relating to the
applicable Closing, and (B) shall be certified by Buyer to be true and complete
to Buyer's knowledge as of the date thereof. If Sellers dispute the amount of
such Purchase Price determined by Buyer, they shall deliver to Buyer within
thirty (30) days after receipt of Buyer's statement a statement setting forth
their determination of the amount of such Purchase Price. If Sellers notify
Buyer of its acceptance of Buyer's statement, or if Sellers fail to deliver
their statement within the thirty (30)-day period specified in the preceding
sentence, Buyer's determination of the Purchase Price shall be conclusive and
binding on the parties as of the last day of the thirty (30)-day period.
(iii) Buyer and Sellers shall use good faith efforts to
resolve any dispute involving the determination of the Purchase Price paid by
Buyer at any Closing. If the parties are unable to resolve the dispute within
forty-five (45) days following the delivery of all of Buyer's statements to be
provided pursuant to Section 2.3(c)(ii) after the Final Closing (or in the event
this Agreement is terminated prior to the Final Closing) forty five (45) days
following such termination, Buyer and Sellers shall jointly designate an
independent certified public accounting firm of national standing which has not
regularly provided services to either the Buyer or Sellers in the last three (3)
years, who shall be knowledgeable and experienced in the operation of radio
broadcasting stations, to resolve the dispute. If the parties are unable to
agree on the designation of an independent certified public accounting firm, the
selection of the accounting firm to resolve the dispute shall be submitted to
arbitration to be held in Baltimore, Maryland, in accordance with the commercial
arbitration rules of the American Arbitration Association. The accounting firm's
resolution of the dispute shall be final and binding on the parties, and a
judgment may be entered thereon in any court of competent jurisdiction. Any fees
of this accounting firm, and, if necessary, for arbitration to select such
accountant, shall be divided equally between the parties.
2.4 Payment of Purchase Price. The Purchase Price shall be paid by Buyer to
Sellers as follows:
(a) Payment of Estimated Purchase Price At Closing. The Purchase Price,
adjusted by the estimated adjustments pursuant to Section 2.3(b) as set forth in
Sellers' preliminary settlement statement pursuant to Section 2.3(c)(i), is
referred to as the "ESTIMATED PURCHASE PRICE." At the Closing, Buyer shall pay
or cause to be paid to Sellers the Estimated Purchase Price for the Stations or
any Radio Group subject to the Closing, as the case may be, including, if
applicable, any Delay Amount, by federal wire transfer of same-day funds
pursuant to wire transfer instructions, which instructions shall be delivered to
Buyer by Sellers at least two (2) business days prior to such Closing Date.
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(b) Buyer and Sellers shall cause the Escrow Deposit or such pro rata
portion allocable to a Radio Group Closing to be released to Sellers as partial
payment of the Estimated Purchase Price by delivering wiring instructions to the
Escrow Agent two (2) days prior to the Closing Date; provided, however, that
none of the Escrow Deposit shall be released by the parties at any Closing until
the Deposit Release Date. Once the Deposit Release Date has occurred, the
Sellers agree immediately to deliver to the Escrow Agent their consent to the
release of that pro rata portion of the Escrow Deposit attributable to Radio
Group Closings consummated prior to the Deposit Release Date. Until the Deposit
Release Date, Buyer shall deliver the entire Estimated Purchase Price at the
Closing on any Station.
(c) Payments to Reflect Adjustments. The Purchase Price as finally
determined pursuant to Section 2.3(c) shall be paid as follows:
(i) If the Purchase Price as finally determined pursuant to
Section 2.3(c) exceeds the Estimated Purchase Price, Buyer shall pay to Sellers,
in immediately available funds within five (5) business days after the date on
which the Purchase Price is determined pursuant to Section 2.3(c), the
difference between the Purchase Price and the Estimated Purchase Price.
(ii) If the Purchase Price as finally determined pursuant to
Section 2.3(c) is less than the Estimated Purchase Price, Sellers shall pay to
Buyer, in immediately available funds within five (5) business days after the
date on which the Purchase Price is determined pursuant to Section 2.3(c), the
difference between the Purchase Price and the Estimated Purchase Price.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date and
any Radio Group Closing Date as applicable, Buyer shall assume and undertake to
pay, discharge and perform all obligations and liabilities of Sellers under the
Licenses, the Assumed Contracts or as otherwise specifically provided for herein
to the extent that either (i) the obligations and liabilities relate to the time
after the Effective Time of such Closing with respect to the Stations for which
Closing has occurred, or (ii) the Purchase Price was reduced pursuant to Section
2.3(b) as a result of the proration of such obligations and liabilities. Buyer
shall not assume any other obligations or liabilities of Sellers, including (1)
any obligations or liabilities under any Contract not included in the Assumed
Contracts, (2) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Effective Time of any Closing to which such
Assumed Contracts relate, except insofar as an adjustment therefor is made in
favor of Buyer under Section 2.3(b), (3) any claims or pending litigation or
proceedings relating to the operation of the Stations prior to such Closing or
(4) any obligations or liabilities of Sellers under any employee pension,
retirement, or other benefit plans.
SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer as of the date hereof and as of any
Closing Date (except for representations and warranties that speak as of a
specific date or time, in which case, such representations and warranties shall
be true and complete as of such date or time) as follows:
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3.1 Organization and Authority of Sellers. Each Seller is a corporation,
limited liability company or limited partnership (as applicable), duly
organized, validly existing and in good standing under the laws of the State
listed on Schedule 3.1 next to each such Seller's name. Each Seller has the
requisite corporate power and authority (or other appropriate power and
authority based on the structure of such Seller) to own, lease and operate its
properties, to carry on its business in the places where such properties are now
owned, leased, or operated and such business is now conducted, and to execute,
deliver and perform this Agreement and the documents contemplated hereby
according to their respective terms. Each Seller is duly qualified and in good
standing in each jurisdiction listed on Schedule 3.1 next to each such Seller's
name, which are all jurisdictions in which such qualification is required.
Except as set forth on Schedule 3.1, no Seller is a participant in any joint
venture or partnership with any other Person with respect to any part of the
operations of the Stations or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by each Seller have been duly authorized by all
necessary corporate or other required action on the part of each Seller. This
Agreement has been duly executed and delivered by each Seller and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements; Consents. Subject to obtaining the
Consents listed on Schedules 3.3 and 3.7, the execution, delivery and
performance by each Seller of this Agreement and the documents contemplated
hereby (with or without the giving of notice, the lapse of time, or both): (a)
do not require the consent of any third party; (b) will not conflict with any
provision of the Articles of Incorporation, Bylaws or other organizational
documents of Sellers; (c) will not conflict with, result in a breach of, or
constitute a default under any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (d) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any material
agreement, instrument, license, or permit to which any Seller is a party or by
which any Seller may be bound legally; and (e) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon any of the Assets. Except for the FCC Consent provided
for in Section 6.1, the filings required by Hart-Scott-Rodino provided for in
Section 6.2 and the other Consents described in Schedules 3.3 and 3.7, no
consent, approval, permit, or authorization of, or declaration to, or filing
with any governmental or regulatory authority or any other third party is
required (a) to consummate this Agreement and the transactions contemplated
hereby, or (b) to permit Sellers to transfer and convey the Assets to Buyer.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list
of the FCC Licenses. Sellers have made available to Buyer true and complete
copies of the main Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and each Seller is the
authorized legal holder of the Licenses and those FCC Licenses listed on
Schedule 3.4. The Licenses and the FCC Licenses listed on Schedule 3.4 comprise
all of the material licenses, permits, and other authorizations required from
any governmental or
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regulatory authority for the lawful conduct in all material respects of the
business and operations of the Stations in the manner and to the full extent
they are now conducted, and, except as otherwise disclosed on Schedule 3.4, none
of the Licenses is subject to any unusual or special restriction or condition
that could reasonably be expected to limit materially the full operation of the
Stations as now operated. The FCC Licenses are in full force and effect, are
valid for the balance of the current license term applicable generally to radio
stations licensed to the same communities as the Stations, are unimpaired by any
acts or omissions of any Seller or any of its Affiliates, or the employees,
agents, officers, directors, or shareholder of any Seller or any of its
Affiliates, and are free and clear of any restrictions which might limit the
full operation of the Stations in the manner and to the full extent as they are
now operated (other than restrictions under the terms of the licenses themselves
or applicable to the radio broadcast industry generally). Except as listed on
Schedule 3.4 hereto, there are no applications, proceedings or complaints
pending or, to the knowledge of any Seller, threatened which may have an adverse
effect on the business or operation of the Stations (other than rulemaking
proceedings that apply to the radio broadcasting industry generally). Except as
disclosed on Schedule 3.4 hereto, no Seller is aware of any reason why any of
the FCC Licenses might not be renewed in the ordinary course for a full term
without material qualifications or of any reason why any of the FCC Licenses
might be revoked. The Stations are in compliance with the Commission's policy on
exposure to radio frequency radiation. No renewal of any FCC License would
constitute a major environmental action under the rules of the Commission. To
the knowledge of Sellers, there are no facts relating to Sellers which, under
the Communications Act of 1934, as amended, or the existing rules of the
Commission, would (a) disqualify any Seller from assigning any of its FCC
Licenses to Buyer, (b) cause the filing of any objection to the assignment of
the FCC Licenses to Buyer, (c) lead to a delay in the processing by the FCC of
the applications of the FCC Licenses to Buyer, (d) lead to a delay in the
termination of the waiting period required by Hart-Scott-Rodino, or (e)
disqualify any Seller from consummating the transactions contemplated herein
within the times contemplated herein. An appropriate public inspection file for
each Station is maintained at the Station's studio in accordance with Commission
rules. Access to the Stations' transmission facilities are restricted in
accordance with the policies of the Commission.
3.5 Real Property. Schedule 3.5 contains a complete description of all Real
Property Interests (including street address, owner, and Sellers' use thereof)
other than the Excluded Real Property Interests. The Real Property Interests
listed on Schedule 3.5, together with the Real Property Interests which will be
created by the execution of the Lease by Buyer and the appropriate Sellers,
comprises all interests in real property necessary to conduct the business and
operations of the Stations as now conducted. Except as described on Schedule
3.5, Sellers have good fee simple title to all fee estates included in the Real
Property Interests and good title to all other Real Property Interests, in each
case free and clear of all liens, mortgages, pledges, covenants, easements,
restrictions, encroachments, leases, charges, and other claims and encumbrances,
except for Permitted Encumbrances. Each leasehold or subleasehold interest
included as a Material Contract on Schedule 3.5 is legal, valid, binding,
enforceable and in full force and effect. To Sellers' Knowledge, each leasehold
or subleasehold designated in the Real Property Interests, but not designated as
Material Contracts on Schedule 3.5 is legal, binding and enforceable and in full
force and effect. Neither the Seller party thereto or to Sellers' Knowledge any
other party thereto, is in default, violation or breach under any lease or
sublease and no event has occurred and is continuing that constitutes (with
notice or passage of time or both) a default, violation or breach thereunder.
Sellers have not received any notice of a default, offset or
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counterclaim under any lease or sublease with respect to any of the Real
Property Interests. As of the date hereof and as of the applicable Closing Date,
Sellers enjoy peaceful and undisturbed possession of the leased Real Property
Interests; and so long as Sellers fulfill their obligations under the lease
therefor, Sellers have enforceable rights to nondisturbance and quiet enjoyment
against its lessor or sublessor, and, to the Knowledge of Sellers, except as set
forth in Schedule 3.5, no third party holds any interest in the leased premises
with the right to foreclose upon Sellers' leasehold or subleasehold interest.
Sellers have legal and practical access to all of the Owned Real Property and
Leased Real Property, as applicable. Except as otherwise disclosed in Schedule
3.5, all towers, guy anchors, ground radials, and buildings and other
improvements included in the Assets are located entirely on the Owned Real
Property or the Leased Real Property, as applicable, listed in Schedule 3.5. All
Owned Real Property and Leased Real Property (including the improvements
thereon) (a) is in good condition and repair consistent with its current use,
(b) is available for immediate use in the conduct of the business and operations
of the Stations, and (c) complies in all material respects with all applicable
material building or zoning codes and the regulations of any governmental
authority having jurisdiction, except to the extent that the current use by
Sellers, while permitted, constitutes or would constitute a "nonconforming use"
under current zoning or land use regulations. No eminent domain or condemnation
proceedings are pending or, to the knowledge of Sellers, threatened with respect
to any Real Property Interests.
3.6 Tangible Personal Property. The lists of Tangible Personal Property
comprising all material items of tangible personal property, other than the
Excluded Tangible Personal Property, necessary to conduct the business and
operations of the Stations as now conducted has been provided to Buyer
previously. Except as described in Schedule 3.6, Sellers own and have good title
to each item of Tangible Personal Property and none of the Tangible Personal
Property owned by Sellers is subject to any security interest, mortgage, pledge,
conditional sales agreement, or other lien or encumbrance, except for Permitted
Encumbrances. With allowance for normal repairs, maintenance, wear and
obsolescence, each material item of Tangible Personal Property is in good
operation condition and repair and is available for immediate use in the
business and operations of the Stations. All material items of transmitting and
studio equipment included in the Tangible Personal Property (a) have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (b) will permit the Stations and any unit auxiliaries
thereto to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC and in all material respects with all other
applicable federal, state and local statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts
which either (a) have a remaining term (after taking into account any
cancellation rights of Sellers) of more than one year after the date hereof or
(b) require expenditures in excess of Twenty Five Thousand Dollars ($25,000) in
any calendar year after the date hereof, except contracts with advertisers for
production or the sale of advertising time on the Stations for cash that may be
canceled by Sellers without penalty on not more than ninety days' notice.
Sellers have delivered or made available to Buyer true and complete copies of
all written Assumed Contracts, and true and complete descriptions of all oral
Assumed Contracts (including any amendments and other modifications to such
Contracts). Other than the Contracts listed on Schedule 3.7, Schedule 3.5, and
the Lease, Sellers require no material contract, lease, or other agreement to
enable them to carry on their business in all material respects as now
conducted. All of the Contracts are in full
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force and effect and are valid, binding and enforceable in accordance with their
terms except as the enforceability of such Contracts may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies. Neither the
Seller party thereto or, to the knowledge of Sellers, any other party thereto,
is in default, violation or breach in any material respect under any Contract
and no event has occurred and is continuing that constitutes (with notice or
passage of time or both) a default, violation, or breach in any material respect
thereunder. Except as disclosed on Schedule 3.7, other than in the ordinary
course of business, Sellers do not have Knowledge of any intention by any party
to any Contract (a) to terminate such Contract or amend the terms thereof, (b)
to refuse to renew the Contract upon expiration of its term, or (c) to renew the
Contract upon expiration only on terms and conditions that are more onerous than
those now existing. Except for the need to obtain the Consents listed on
Schedule 3.7, the exchange and transfer of the Assets in accordance with this
Agreement will not affect the validity, enforceability, or continuation of any
of the Contracts.
3.8 Intangibles. Schedule 3.8 is a true and complete list of all
Intangibles (exclusive of Licenses listed in Schedule 3.4) that are required to
conduct the business and operations of the Stations as now conducted, all of
which are valid and in good standing and uncontested. Sellers have provided or
made available to Buyer copies of all documents establishing or evidencing the
Intangibles listed on Schedule 3.8. Sellers own or have a valid license to use
all of the Intangibles listed on Schedule 3.8. Other than with respect to
matters generally affecting the radio broadcasting industry and not particular
to Sellers and except as set forth on Schedule 3.8, Sellers have not received
any notice or demand alleging that Sellers are infringing upon or otherwise
acting adversely to any trademarks, trade names, service marks, service names,
copyrights, patents, patent applications, know-how, methods, or processes owned
by any other Person, and there is no claim or action pending, or to the
Knowledge of Sellers threatened, with respect thereto. To the knowledge of
Sellers, except as set forth on Schedule 3.8, no other Person is infringing upon
Sellers rights or ownership interest in the Intangibles.
3.9 Title to Properties. Except as disclosed in Schedule 3.5 or 3.6,
Sellers have good and marketable title to the Assets subject to no mortgages,
pledges, liens, security interests, encumbrances, or other charges or rights of
others of any kind or nature except for Permitted Encumbrances.
3.10 Financial Statements. Sellers have furnished Buyer with true and
complete copies of unaudited financial statements of the Stations containing a
balance sheet and statement of income, as at and for the fiscal year ended
December 31, 1998, and an unaudited balance sheet and statement of income as at
and for the seven (7) months ended July 31, 1999 (the "BALANCE SHEET DATE")
(collectively, the "FINANCIAL STATEMENTS"). To the extent the Financial
Statements relate to the period of time during which the Stations were owned by
the Sellers (or any Affiliate thereof) the Financial Statements have been
prepared from the books and records of Sellers and have been prepared in a
manner consistent with the audited Financial Statements of Sinclair, except for
the absence of footnotes and certain year-end adjustments. The Financial
Statements accurately reflect the books, records and accounts of Sellers,
present fairly and accurately the financial condition of the Stations as at
their respective dates and the results of operations for the periods then ended
and none of the Financial Statements understates in any material respect the
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normal and customary costs and expenses of conducting the business or operations
of the Stations in any material respect as currently conducted by Sellers or
otherwise materially inaccurately reflects the operations of the Stations;
provided, that the foregoing representations are given only to the Sellers'
Knowledge to the extent the Financial Statements relate to a period of time
during which the Stations were not owned by Sellers (or an Affiliate thereof).
3.11 Taxes. Except as set forth in Schedule 3.11, Sellers have filed or
caused to be filed all Tax Returns that are required to be filed with respect to
their ownership and operation of the Stations, and have paid or caused to be
paid all Taxes shown on those returns or on any Tax assessment received by them
to the extent that such Taxes have become due, or have set aside on their books
adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no legal, administrative,
or other Tax proceedings presently pending, and there are no grounds existing
pursuant to which Sellers are or could be made liable for any Taxes, the
liability for which could extend to Buyer as transferee of the business of the
Stations.
3.12 Insurance. Schedule 3.12 is a true and complete list of all insurance
policies of or covering Sellers. All policies of insurance listed in Schedule
3.12 are in full force and effect as of the date hereof. During the past three
years, no insurance policy of Sellers or the Stations has been canceled by the
insurer and, except as set forth on Schedule 3.12, no application of Sellers for
insurance has been rejected by any insurer.
3.13 Reports. All material returns, reports and statements that the Stations
is currently required to file with the FCC or Federal Aviation Administration
have been filed, and all reporting requirements of the FCC and Federal Aviation
Administration have been complied with in all material respects. All of such
returns, reports and statements, as filed, satisfy all applicable legal
requirements.
3.14 Personnel and Employee Benefits.
(a) Employees and Compensation. Schedule 3.14 contains a true and
complete list of all employees of Sellers employed at the Stations as of June
30, 1999 who earned in excess of $20,000 in 1998 or whose present rate of pay
would cause them to earn more than that amount in 1999, and indicates the salary
and bonus, if any, to which each such Employee is currently entitled (limited in
the case of Employees who are compensated on a commission basis to a general
description of the manner in which such commissions are determined). As of the
date of this Agreement, Sellers have no knowledge that any General Manager,
Sales Manager, or Program Director employed at the Stations currently plans to
terminate employment, whether by reason of the transactions contemplated by this
Agreement or otherwise. Schedule 3.14 also contains a true and complete list of
all employee benefit plans or arrangements covering the employees employed at
the Stations (the "EMPLOYEES"), including, with respect to the Employees any:
(i) "Employee welfare benefit plan," as defined in Section
3(1) of ERISA, that is maintained or administered by Sellers or to which Sellers
contribute or are required to contribute (a "WELFARE PLAN");
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(ii) "Multiemployer pension plan," as defined in Section
3(37) of ERISA, that is maintained or administered by Sellers or to which
Sellers contribute or are required to contribute (a "MULTIEMPLOYER PLAN" and,
together with the Welfare Plans, the "BENEFIT PLANS");
(iii) "Employee pension benefit plan," as defined in Section
3(2) of ERISA (other than a Multiemployer Plan), to which Sellers contribute or
are required to contribute (a "PENSION PLAN");
(iv) Employee plan that is maintained in connection with any
trust described in Section 501(c)(9) of the Internal Revenue Code of 1986, as
amended; and
(v) Employment, severance, or other similar contract,
arrangement, or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, or retirement benefits or arrangement for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits that (A) is not a Welfare Plan, Pension
Plan, or Multiemployer Plan, and (B) is entered into, maintained, contributed
to, or required to be contributed to by any Seller or under which any Seller has
any liability relating to Employees, (collectively, "BENEFIT ARRANGEMENTS").
(b) Pension Plans. Sellers do not sponsor, maintain, or contribute to
any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing
Plan. Each Pension Plan complies currently and has been maintained in
substantial compliance with its terms and, both as to form and in operation,
with all material requirements prescribed by any and all material statutes,
orders, rules and regulations that are applicable to such plans, including ERISA
and the Code, except where the failure to do so will not have a Material Adverse
Effect.
(c) Welfare Plans. Each Welfare Plan complies currently and has been
maintained in substantial compliance with its terms and, both as to form and in
operation, with all material requirements prescribed by any and all material
statutes, orders, rules and regulations that are applicable to such plans,
including ERISA and the Code, except where the failure to do so will not have a
Material Adverse Effect. Sellers do not sponsor, maintain, or contribute to any
Welfare Plan that provides health or death benefits to former employees of the
Stations other than as required by Section 4980B of the Code or other applicable
laws.
(d) Benefit Arrangements. Each Benefit Arrangement has been maintained
in substantial compliance with its terms and with the material requirements
prescribed by all statutes, orders, rules and regulations that are applicable to
such Benefit Arrangement, except where the failure to do so will not have a
Material Adverse Effect. Except for those employment agreements listed on
Schedule 3.7, Sellers have no written contract prohibiting the termination of
any Employee.
(e) Multiemployer Plans. Except as disclosed in Schedule 3.14, Sellers
have not at any time been a participant in any Multiemployer Plan.
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(f) Delivery of Copies of Relevant Documents and Other Information.
Sellers have delivered or made available to Buyer true and complete copies of
each of the following documents:
(i) Each Welfare Plan and Pension Plan (and, if applicable,
related trust agreements) and all amendments thereto, and written descriptions
thereof that have been distributed to Employees, all annuity contracts or other
funding instruments; and
(ii) Each Benefit Arrangement and written descriptions thereof
that have been distributed to Employees and complete descriptions of any Benefit
Arrangement that is not in writing.
(g) Labor Relations. Except as set forth in Schedule 3.14(g), no Seller
is a party to or subject to any collective bargaining agreement or written or
oral employment agreement with any Employee. With respect to the Employees
Sellers have complied in all material respects with all laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and have not
received any notice alleging that any Seller has failed to comply materially
with any such laws, rules, or regulations. Except as set forth on Schedule
3.14(g), no proceedings are pending or, to the Knowledge of Sellers, threatened,
between any Seller and any Employee (singly or collectively) that relate to the
Stations. Except as set forth on Schedule 3.14(g), no labor union or other
collective bargaining unit represents or claims to represent any of the
Employees. Except as set forth in Schedule 3.14, to the Knowledge of Sellers,
there is no union campaign being conducted to solicit cards from any Employees
to authorize a union to represent any of the employees of any Seller or to
request a National Labor Relations Board certification election with respect to
any Employees.
3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15 and
except for any FCC rulemaking proceedings generally affecting the radio
broadcasting industry and not particular to any of Sellers, there is no claim,
legal action, counterclaim, suit, arbitration, or other legal, administrative,
or tax proceeding, nor any order, decree, or judgment, in progress or pending,
or to the Knowledge of Sellers threatened, against or relating to the Assets, or
the business or operations of any of the Stations, nor does any Seller know of
any basis for the same.
3.16 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed on Schedule 3.16, (x) none of the Owned Real
Property and none of the Tangible Personal Property and, to Sellers' Knowledge
(provided such knowledge qualifer shall not apply to the extent caused by the
Tangible Personal Property), none of the Leased Real Property contains (i) any
asbestos, polychlorinated biphenyls or any PCB contaminated oil; (ii) any
Contaminants; or (iii) any underground storage tanks; (y) no underground storage
tank disclosed on Schedule 3.16 has leaked and has not been remediated or leaks
and such tank is in substantial compliance with all applicable Environmental
Laws; and (z) all of the Owned Real Property and, to Sellers' Knowledge, all of
the Leased Real Property is in substantial compliance with all applicable
Environmental Laws.
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(b) Sellers have obtained all material permits, licenses and other
authorizations that are required under all Environmental Laws.
3.17 Compliance with Laws. Sellers have complied in all material respects
with the Licenses and all material federal, state and local laws, rules,
regulations and ordinances applicable or relating to the ownership and operation
of the Assets and Stations, and Sellers have not received any notice of any
material violation of federal, state and local laws, regulations and ordinances
applicable or relating to the ownership or operation of the Assets and the
Stations nor, to Sellers' Knowledge, have Sellers received any notice of any
immaterial violation of federal, state and local laws, regulations, and
ordinances applicable or relating to the ownership or operation of the Assets or
the Stations.
3.18 Conduct of Business in Ordinary Course. Since the Balance Sheet Date
and through the date hereof, Sellers have conducted their business and
operations in the ordinary course and, except as disclosed in Schedule 3.18,
have not:
(a) made any material increase in compensation payable or to become
payable to any of its employees other than those in the normal and usual course
of business or in connection with any change in an employee's responsibilities,
or any bonus payment made or promised to any of its Employees, or any material
change in personnel policies, employee benefits, or other compensation
arrangements affecting its employees;
(b) made any sale, assignment, lease, or other transfer of assets other
than in the normal and usual course of business with suitable replacements being
obtained therefor;
(c) canceled any debts owed to or claims held by Sellers, except in the
normal and usual course of business;
(d) made any changes in Sellers' accounting practices;
(e) suffered any material write-down of the value of any Assets or any
material write-off as uncorrectable of any Accounts Receivable; or
(f) transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right.
3.19 Transactions with Affiliates. Except as disclosed in Schedule 3.19 or
with respect to the Excluded Real Property Interests and the Excluded Tangible
Personal Property, no Seller has been involved in any business arrangement or
relationship with any Affiliate of Seller, and no Affiliate of any Seller owns
any property or right, tangible or intangible, that is material to the
operations of the business of the Stations.
3.20 Broker. Except as disclosed on Schedule 3.20, no Seller nor any Person
acting on its behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transactions contemplated by this
Agreement, and Buyer shall have no liability for any
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finders' or brokers' fees or commissions in connection with the transactions
contemplated by this Agreement for any broker listed on Schedule 3.20.
3.21 Insolvency Proceedings. None of the Sellers nor any of the Assets are
the subject of any pending or threatened insolvency proceedings of any
character, including, without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary. No Seller has made an assignment for the benefit of creditors or
taken any action in contemplation of or which would constitute a valid basis for
the institution of any such insolvency proceedings. No Seller is insolvent nor
will it become insolvent as a result of entering into or performing this
Agreement.
3.22 Year 2000 Compatibility. Sellers believe that the Stations' hardware,
software, broadcast and ancillary equipment (the "Operational Equipment") that
are date dependent and are material to the operation of the Stations are year
2000 compliant. To Sellers' Knowledge, there are no facts or circumstances that
would result in material costs or disruption to the operation of the Stations
due to the failure of Sellers' customers or suppliers to be year 2000 compliant.
For the purposes of this section, "Year 2000 Compliant" shall mean that the
Operational Equipment will correctly process, provide and receive date data
before, during and after December 31, 1999.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof and as of any
Closing Date (except for representations and warranties that speak as of a
specific date or time, in which case, such representations and warranties shall
be true and complete as of such date and time) as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the requisite corporate power and authority
to execute, deliver and perform this Agreement and the documents contemplated
hereby according to their respective terms and to own the Assets. Prior to the
Closing Date, Buyer will be qualified to do business in each of the States in
which any of the Stations are located.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents. Subject to
the receipt of the Consents, the execution, delivery and performance by Buyer of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (a) do not require the consent of any
third party; (b) will not conflict with the Articles of Incorporation or Bylaws
of Buyer; (c) will not conflict with, result in a breach of, or constitute a
default under, any applicable law, judgment, order, ordinance, injunction,
decree, rule,
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regulation, or ruling of any court or governmental instrumentality; and (d) will
not conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license or
permit to which Buyer is a party or by which Buyer may be bound. Except for the
FCC Consent provided for in Section 6.1. the filings required by
Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described
in Schedule 4.3, no consent, approval, permit, or authorization of, or
declaration to, or filing with any governmental or regulatory authority or any
other third party is required (a) to consummate this Agreement and the
transactions contemplated hereby, or (b) to permit Buyer to acquire the Assets
from Sellers or to assume certain liabilities and obligations of Sellers in
accordance with Section 2.5.
4.4 Brokers. Neither Buyer nor any person or entity acting on its behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Availability of Funds. Buyer will have available on the Closing Date
sufficient funds to enable it to consummate the transactions contemplated
hereby.
4.6 Qualifications of Buyer. Except as disclosed in Schedule 4.6, Buyer is,
and pending Closing will remain legally, financially and otherwise qualified
under the Communications Act, Hart-Scott-Rodino and all rules, regulations and
policies of the FCC, the Department of Justice, the Federal Trade Commission
(the "FTC") and any other governmental agency, to acquire and operate the
Stations. Except as disclosed in Schedule 4.6, there are no facts or proceedings
which would reasonably be expected to disqualify Buyer under the Communications
Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations
or would cause the FCC not to approve the assignment of the FCC Licenses to
Buyer or the Department of Justice and the FTC not to allow the waiting period
under Hart-Scott-Rodino to terminate within 30 days of the filing provided for
in Section 6.2. Except as disclosed in Schedule 4.6, Buyer has no knowledge of
any fact or circumstance relating to Buyer or any of Buyer's Affiliates that
would reasonably be expected to (a) cause the filing of any objection to the
assignment of the FCC Licenses to Buyer, (b) lead to a delay in the processing
by the FCC of the applications for such assignment or (c) lead to a delay in the
termination of the waiting period required by Hart-Scott-Rodino. Except as
disclosed in Schedule 4.6, no waiver of any FCC rule or policy is necessary to
be obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer, nor will processing pursuant to any exception or rule of
general applicability be requested or required in connection with the
consummation of the transactions herein.
4.7 WARN Act. Buyer is not planning or contemplating, and has not made or
taken any decisions or actions concerning the employees of the Stations after
the Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Notification Act of 1988, as amended, or any similar
state law.
4.8 Buyer's Defined Contribution Plan. Schedule 4.8 completely and
accurately lists all Buyer's defined contribution plan or plans (the "Buyer's
Plan") intended to be qualified under Section 401(a) and 401(k) of the Code in
which the Transferred Employees will be eligible to
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participate. Buyer has a currently applicable determination letter from the
Internal Revenue Service.
SECTION 5: OPERATION OF THE STATIONS PRIOR TO CLOSING
Sellers covenants and agrees that between the date hereof and the Final Closing
Date, Sellers will operate the Stations in the ordinary course in accordance
with Sellers' past practices (except where such conduct would conflict with the
following covenants or with other obligations of Sellers under this Agreement),
and, except as contemplated by this Agreement or with the prior written consent
of Buyer (such consent not to be unreasonably withheld), Sellers will act in
accordance with the following insofar as such actions relate to the Stations:
5.1 Contracts. Seller will not renew, extend, amend or terminate, or waive
any material right under, any Material Contract, or enter into any contract or
commitment or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness and obligations arising
from the amendment of any existing Contract, regardless of whether such Contract
is a Material Contract) that will be assumed by or be otherwise binding on Buyer
after Closing, except for (a) cash time sales agreements and production
agreements made in the ordinary course of business consistent with Seller's past
practices, (b) the renewal or extension of any existing Contract (other than
network affiliation agreements) on its existing terms in the ordinary course of
business, and (c) other contracts (other than network affiliation agreements, or
time brokerage or local marketing arrangements) entered into in the ordinary
course of business consistent with Sellers' past practices that do not, with
respect to any Radio Group, involve consideration, in the aggregate, in excess
of Fifty Thousand Dollars ($50,000) measured at Closing. Prior to the Closing
Date, Sellers shall deliver to Buyer a list of all material Contracts entered
into between the date of this Agreement and the Closing Date and shall make
available to Buyer copies of such Contracts.
5.2 Compensation. Sellers shall not materially increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Stations,
except in accordance with past practices, as required by an employment agreement
or consulting agreement or in connection and commensurate with the change in
responsibility of any employee.
5.3 Encumbrances. Sellers will not create, assume, or permit to exist any
mortgage, pledge, lien, or other charge or encumbrance affecting any of the
Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens that will be
removed prior to the Closing Date, and (c) Permitted Encumbrances.
5.4 Dispositions. Sellers will not sell, assign, lease, or otherwise
transfer or dispose of any of the Assets except (a) Assets that are no longer
used in the operations of the Stations, (b) Assets that are replaced with Assets
of equivalent kind and value that are acquired after the date of this Agreement,
and (c) any intercompany accounts receivable.
5.5 Access to Information. Upon prior reasonable notice by Buyer, Sellers
will give to Buyer and its investors, lenders, counsel, accountants, engineers
and other authorized representatives
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reasonable access to the Stations and all books, records and documents of
Sellers which are material to the business and operation of the Stations, and
will furnish or cause to be furnished to Buyer and its authorized
representatives all information relating to Sellers and the Stations that they
reasonably request (including any financial reports and operations reports
produced with respect to the Stations).
5.6 Insurance. Sellers or their Affiliates shall maintain in full force
and effect policies of insurance of the same type, character and coverage as the
policies currently carried with respect to the business, operations and assets
of the Stations.
5.7 Licenses. Sellers shall not cause or permit, by any act or failure to
act, any of the Licenses listed on Schedule 3.4 to expire or to be revoked,
suspended or modified, or take any action that could reasonably be expected to
cause the FCC or any other governmental authority to institute proceedings for
the suspension, revocation or material adverse modification of any of the
Licenses. Sellers shall prosecute with due diligence any applications to any
governmental authority necessary for the operation of the Stations.
5.8 Obligations. Sellers shall pay all its obligations insofar as they
relate to the Stations as they become due, consistent with past practices.
5.9 No Inconsistent Action. Sellers shall not take any action that
is inconsistent with its obligations under this Agreement in any material
respect or that could reasonably be expected to hinder or delay the consummation
of the transactions contemplated by this Agreement. Neither Seller nor any of
its respective representatives or agents shall, directly or indirectly, solicit,
initiate, or participate in any way in discussions or negotiations with, or
provide any confidential information to, any Person (other than Buyer or any
Affiliate or associate of Buyer and their respective representatives and agents)
concerning any possible disposition of the Stations, the sale of any material
assets of the Stations, or any similar transaction.
5.10 Maintenance of Assets. Sellers shall maintain all of the Assets in good
condition (ordinary wear, tear and casualty excepted), consistent with their
overall condition on the date of this Agreement, and use, operate and maintain
all of the Assets in a reasonable manner. Sellers shall maintain inventories of
spare parts and expendable supplies at levels consistent with past practices. If
any insured or indemnified loss, damage, impairment, confiscation, or
condemnation of or to any of the Assets occurs, Sellers shall repair, replace,
or restore the Assets to their prior condition as represented in this Agreement
as soon thereafter as possible, and Sellers shall use the proceeds of any claim
under any property damage insurance policy or other recovery solely to repair,
replace, or restore any of the Assets that are lost, damaged, impaired, or
destroyed.
5.11 Consents.
(a) Subject to Section 6.5 hereof, Sellers shall use their reasonable
efforts to obtain all Consents described in Section 3.3, without any adverse
change in the terms or conditions of any Assumed Contract or License. Sellers
shall promptly advise Buyer of any difficulties
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experienced in obtaining any of the Consents and of any conditions proposed,
considered or requested for any of the Consents.
(b) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign or transfer any Contract
or any claim, right or benefit arising thereunder or resulting therefrom, if an
attempted assignment or transfer thereof, without the consent of a third party
thereto would constitute a breach thereof or in any way adversely affect the
rights of the Buyer thereunder. If such consent (a "Deferred Consent") is not
obtained, or if an attempted assignment or transfer thereof would be ineffective
or would affect the rights thereunder so that the Buyer would not receive all
such rights, then (i) the Seller and the Buyer will cooperate, in all reasonable
respects, to obtain such Deferred Consents as soon as practicable; provided that
Sellers shall have no obligation (y) to expend funds to obtain any Deferred
Consent, other than ministerial processing fees, and Sellers' out-of-pocket
expenses to its attorney or other agents incurred in connection with obtaining
any Deferred Consent, or (z) to agree to any adverse change in any License or
Assumed Contract in order to obtain a Deferred Consent, and (ii) until such
Deferred Consent is obtained, the Seller and the Buyer will cooperate in all
reasonable respects, to provide to the Buyer the benefits under the Contract, to
which such Deferred Consent relates (with the Buyer responsible for all the
liabilities and obligations thereunder). In particular, in the event that any
such Deferred Consent is not obtained prior to Closing, then the Buyer and the
Seller shall enter into such arrangements (including subleasing or
subcontracting if permitted) to provide to the parties the economic and
operational equivalent of obtaining such Deferred Consent and assigning or
transferring such Contract, including enforcement for the benefit of the Buyer
of all claims or rights arising thereunder, and the performance by the Buyer of
the obligations thereunder on a prompt and punctual basis.
5.12 Books and Records. Sellers shall maintain their books and records
in accordance with past practices.
5.13 Notification. Sellers shall promptly notify Buyer in writing of any or
material developments with respect to the business or operations of the Stations
and of any material change in any of the information contained in the
representations and warranties contained in Section 3 of this Agreement.
5.14 Financial Information. Sellers shall furnish Buyer with sales pacing
reports for the Stations on a weekly basis and shall furnish to Buyer within
thirty (30) days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense for the month
just ended and such other financial information (including information on
payables and receivables) as Buyer may reasonably request. All financial
information delivered by Sellers to Buyer pursuant to this Section 5.14 shall be
prepared from the books and records of Sellers in accordance with generally
accepted accounting principles, consistently applied, shall accurately reflect
the books, records and accounts of the Stations, shall be complete and correct
in all material respects, and shall present fairly the financial condition of
the Stations as at their respective dates and the results of operations for the
periods then ended.
5.15 Compliance with Laws. Sellers shall comply in all material respects
with all material laws, rules and regulations.
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5.16 Programming. Sellers shall not make any material changes in the
Stations' formats, except such changes as in the good faith judgment of Seller
are required by the public interest.
5.17 Preservation of Business. Sellers shall use commercially reasonable
efforts consistent with past practices to preserve the business and organization
of the Stations and to keep available to the Stations its present employees and
to preserve the audience of the Stations and the Stations' present relationships
with suppliers, advertisers, and others having business relations with it.
5.18 Normal Operations. Subject to the terms and conditions of this
Agreement (including, without limitation, Section 5.1), prior to either the
Final Closing or a Radio Closing Date, as applicable, Sellers shall carry on the
business and activities of the Stations, including, without limitation,
promotional activities, the sale of advertising time, entering into other
contracts and agreements, purchasing and scheduling programming, performing
research, and operating in all material respects in accordance with existing
budgets and past practice and will not enter into trade and barter obligations
except in the ordinary course of business consistent with past practice.
5.19 Buffalo Build-Out Property. Sellers shall keep Buyer fully informed of
the status of the construction and build-out of the Buffalo Build-Out Property
and shall make available to Buyer for its review and approval, which approval
shall not be unreasonably withheld, notice of any material changes to the
capital expenditure budget provided to Buyer prior to the date hereof.
SECTION 6: SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent
(a) The exchange and transfer of the Assets as contemplated by this
Agreement is subject to the prior consent and approval of the FCC.
(b) Sellers and Buyer shall prepare and within seven (7) business days
after the date of this Agreement shall file with the FCC an appropriate
application for FCC Consent. The parties shall thereafter prosecute the
application with all reasonable diligence and otherwise use their respective
best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by the
FCC Consent, except that no party shall be required to comply with a condition
if (i) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by that party of any of its
representations, warranties or covenants hereunder, and (ii) compliance with the
condition would have a material adverse effect upon it. Buyer and Sellers shall
oppose any petitions to deny or other objections filed with respect to the
application for the FCC Consent and any requests for reconsideration or judicial
review of the FCC Consent.
(c) If any Closing shall not have occurred for any reason within the
original effective period of the FCC Consent or Radio Group FCC Consent, and
neither party shall have terminated this Agreement under Section 9, the parties
shall jointly request an extension of the effective period of the FCC Consent or
Radio Group FCC Consent, as the case may be. No
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extension of the effective period of the FCC Consent or Radio Group FCC Consent
shall limit the exercise by either party of its right to terminate the Agreement
under Section 9.
6.2 Hart-Scott-Rodino. Within ten (10) days following the execution of
this Agreement, Sellers and Buyer shall complete any filing that may be required
pursuant to Hart-Scott-Rodino (each an "HRS Filing"). Sellers and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Hart-Scott-Rodino.
6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation,
or condemnation of any of the Assets of Sellers for any cause whatsoever shall
be borne by Sellers at all times prior to the Final Closing or Radio Group
Closing, as the case may be. In the event of loss or damage prior to the Final
Closing Date or a Radio Group Closing Date, Sellers shall use commercially
reasonable efforts to fix, restore, or replace such loss, damage, impairment,
confiscation, or condemnation to its former operational condition. If Sellers
have adequate replacement cost insurance, Buyer may elect to have Sellers assign
such insurance proceeds to Buyer, in which case, Buyer shall proceed with the
Final Closing or Radio Group Closing, as the case may be, and receive at such
Closing the insurance proceeds or an assignment of the right to receive such
insurance proceeds, as applicable, to which Sellers otherwise would be entitled,
whereupon Sellers shall have no further liability to Buyer for such loss or
damage.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law, each
party will keep confidential any information obtained from the other party in
connection with the transactions specifically contemplated by this Agreement. If
this Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement. Buyer shall continue to be
bound by the terms and conditions of the Confidentiality Agreement dated June
30, 1999 between the parties hereto (the "CONFIDENTIALITY AGREEMENT").
6.5 Cooperation. Buyer and Sellers shall reasonably cooperate with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and in connection with any litigation after any Closing Date which
relate to the Stations for periods prior to the applicable Effective Time, Buyer
and Sellers shall execute such other documents as may be reasonably necessary
and desirable to the implementation and consummation of this Agreement, and
otherwise use their commercially reasonable efforts to consummate the
transaction contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, Sellers shall have no obligation (a)
to expend funds to obtain any of the Consents, other than ministerial processing
fees, and Sellers' out-of-pocket expenses to its attorney or other agents
incurred in connection with obtaining such consents, or (b) to agree to any
adverse change in any License or Assumed Contract in order to obtain a Consent
required with respect thereto.
6.6 Control of the Stations. Prior to any Closing, Buyer shall not,
directly or indirectly, control, supervise or direct, or attempt to control,
supervise or direct, the operations of the
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Stations; those operations, including complete control and supervision of all of
each Stations' programs, employees and policies, shall be the sole
responsibility of Seller.
6.7 Accounts Receivable.
(a) As soon as practicable after the Closing Date or any Radio Group
Closing Date, as the case may be, Sellers shall deliver to Buyer a complete and
detailed list of all the Accounts Receivable. During the period beginning on the
Closing Date or Radio Group Closing Date, as applicable, and ending on the last
day of the sixth full calendar month beginning after the Closing Date or Radio
Group Closing Date, as applicable (the "COLLECTION PERIOD"), Buyer shall use
commercially reasonable efforts, as Sellers' agent, to collect the Accounts
Receivable in the usual and ordinary course of business, using the Stations'
credit, sales and other appropriate personnel in accordance with customary
practices, which may include referral to a collection agency. Notwithstanding
the foregoing, Buyer shall not be required to institute legal proceedings on
Sellers' behalf to enforce the collection of any Accounts Receivable. Buyer
shall not adjust any Accounts Receivable or grant credit without Sellers'
written consent, and Buyer shall not pledge, secure or otherwise encumber such
Accounts Receivable or the proceeds therefrom. On or before the twelfth business
day after the end of each calendar month during the Collection Period, Buyer
shall remit to Sellers collections received by Buyer with respect to the
Accounts Receivable, together with a report of all amounts collected with
respect to the Accounts Receivable during, as the case may be, the period from
any Closing or the beginning of such month through the end of such month, less
any sales commissions or collection costs paid by Buyer during the respective
periods with respect to those Accounts Receivable.
(b) Any payments received by Buyer during the Collection Period from
any Person that is an account debtor with respect to any account disclosed in
the list of Accounts Receivable delivered by Sellers to Buyer shall be applied
first to the invoice designated by the account debtor and, if none, such payment
shall be applied to the oldest account which is not disputed. Buyer shall incur
no liability to Sellers for any uncollected account, other than as a result of
Buyer's breach of its obligations under this Section 6.7. Prior to the end of
the third full calendar month after any Closing, neither Sellers nor any agent
of Sellers shall make any direct solicitation of the account debtors for
payment. After the end of the third full calendar month after any Closing,
Sellers shall have the right, at their expense, to assist and participate with
Buyer in the collection of unpaid Accounts Receivable, provided, however,
Seller's collection efforts shall be commercially reasonable and consistent with
its past practices.
(c) At the end of the Collection Period, Buyer shall return to Sellers
all files concerning the collection or attempts to collect the Accounts
Receivable, and Buyer's responsibility for the collection of the Accounts
Receivable shall cease.
6.8 Allocation of Purchase Price. Buyer and Sellers agree to allocate the
Purchase Price among the Stations for all purposes (including financial
accounting and Tax purposes) as set forth on Schedule 6.8 hereto. Buyer and
Sellers agree that the fair market value of the Assets of the Stations (the
"Fair Market Value of the Assets") will be appraised by the appraisal firm of
BIA, whose expenses will be borne one-half (1/2) by Buyer and one-half (1/2) by
Sellers. Buyer and Sellers shall collaborate in good faith in the preparation of
mutually satisfactory Form(s)
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8594 reflecting the Fair Market Value of the Assets as found by BIA and such
other information as is required by the form. Buyer and Sellers shall each file
with their respective federal income tax return for the tax year in which any
Closing occurs, IRS Form(s) 8594 containing the information agreed upon by the
parties pursuant to the immediately preceding sentence. Buyer agrees to report
the purchase of the Assets of the Stations, and Sellers agree to report the sale
of such assets for income tax purposes on their respective income tax returns in
a manner consistent with the information agreed upon by the parties pursuant to
this section and contained in the IRS Form(s) 8594.
6.9 Access to Books and Records. To the extent reasonably requested by
Buyer, Sellers shall provide Buyer access and the right to copy from and after
any Closing Date any books and records relating to the Assets but not included
in the Assets. To the extent reasonably requested by Sellers, Buyer shall
provide Sellers access and the right to copy from and after the applicable
Closing Date any books and records relating to the Assets that are included in
the Assets. Buyer and Sellers shall each retain any such books and records, for
a period of three years (or such longer period as may be required by law or good
business practice) following the Final Closing Date. Subject to and in
accordance with the terms of this Section 6.9, Sellers shall cause its
accountants regularly servicing Sellers to conduct audits and reviews of
Sellers' financial information as Buyer may reasonably determine is necessary to
satisfy Buyer's due diligence, including, without limitation, (a) causing
Sellers' auditors to permit Buyer's auditors to have access to Sellers'
auditor's work papers, and (b) causing Sellers' auditors to consent to such
access by Buyer. Under no circumstance shall the preparation of any financial
statements pursuant to such audits and reviews (i) require any Seller to change
or modify any accounting policy, (ii) cause any unreasonable disruption in the
business or operations of any Station, or (iii) cause any delay that is more
than de minimis in any internal reporting requirements of any Seller. All costs
and expenses incurred in connection with the preparation of (and assimilation of
relevant information for) the audits and reviews of financial information shall
be paid by Sellers; provided, Buyer shall promptly pay upon presentation of any
invoice, as a non-refundable prepayment of the Purchase Price, for all charges
incurred in connection with such audit to the extent relating to work performed
on or after July 26, 1999 (such charges, the "Section 6.9 Amount") (it being
understood that the hourly charges of Sellers' accountants for the period of
time for which Buyer is responsible may be greater than the hourly charges
incurred by Sellers). In addition, Buyer shall be responsible for any costs and
expenses (a) associated with the inclusion of such audited financial statements
in Buyer's publicly filed documents, including, without limitation, any fees for
consents to such inclusion and a "comfort letter," and (b) incurred in
connection with any review of financial statements for the periods ended June
30, 1998 or June 30, 1999, or for any other periods other than the financial
statements for calendar year 1998.
6.10 Employee Matters.
(a) Upon consummation of the Closing or a Radio Group Closing
hereunder, Buyer shall offer employment to each of the Employees of the Stations
included in such Radio Group (including those on leave of absence, whether
short-term, long-term, family, maternity, disability, paid, unpaid or other, and
those hired after the date hereof in the ordinary course of business) at a
comparable salary, position and place of employment as held by each such
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employee immediately prior to the Closing Date (such employees who are given
such offers of employment are referred to herein as the "TRANSFERRED EMPLOYEES")
(b) Except as provided otherwise in this Section 6.10, Sellers shall
pay, discharge and be responsible for (a) all salary and wages arising out of or
relating to the employment of the Employees prior to the Closing Date or a Radio
Group Closing Date, as the case may be, and (b) any employee benefits arising
under the Benefit Plans or Benefit Arrangements of Sellers and their Affiliates
during the period prior to such Closing Date. From and after each Closing Date,
Buyer shall pay, discharge and be responsible for all salary, wages and benefits
arising out of or relating to the employment of the Transferred Employees by
Buyer on and after the Closing Date or Radio Group Closing Date, as applicable.
Buyer shall be responsible for all severance liabilities, and all COBRA
liabilities for any Transferred Employees of the Stations terminated on or after
any Closing Date, including, without limitation, any related to any deemed
termination by Sellers of the Transferred Employees as a result of the
consummation of the transaction contemplated hereby and any required pursuant to
those retention/severance agreements listed on Schedule 6.10 hereto, but
excluding any severance due as a result of those agreements listed on Schedule
6.10-A.
(c) Buyer shall cause all Transferred Employees as of any Closing Date
to be eligible to participate in its "employee welfare benefit plans" and
"employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA,
respectively) of Buyer in which similarly situated employees of Buyer are
generally eligible to participate; provided, however, that all Transferred
Employees and their spouses and dependents shall be eligible for coverage
immediately after such Closing Date (and shall not be excluded from coverage on
account of any pre-existing condition) to the extent provided under such plans
with respect to Transferred Employees.
(d) For purposes of any length of service requirements, waiting period,
vesting periods or differential benefits based on length of service in any such
plan for which a Transferred Employee may be eligible after any Closing, Buyer
shall ensure that, to the extent permitted by law, and except as limited by
Buyer's Employment Termination/Severance policy service by such Transferred
Employee with Sellers, any Affiliate of Sellers or any prior owner of the
Stations shall be deemed to have been service with the Buyer. In addition, Buyer
shall ensure that each Transferred Employee receives credit under any welfare
benefit plan of Buyer for any deductibles or co-payments paid by such
Transferred Employee and his or her dependents for the current plan year under a
plan maintained by Sellers or any Affiliate of Sellers to the extent allowable
under any such plan. Buyer shall grant credit to each Transferred Employee for
all sick leave in accordance with the policies of Buyer applicable generally to
its employees after giving effect to service for Sellers, any Affiliate of
Sellers or any prior owner of the Stations, as service for Buyer. To the extent
taken into account in determining prorations pursuant to Section 2.3 hereof,
Buyer shall assume and discharge Sellers' liabilities for the payment of all
unused vacation leave accrued by Transferred Employees as of the Closing Date or
a Radio Group Closing Date, as the case may be. To the extent any claim with
respect to such accrued vacation leave is lodged against Sellers with respect to
any Transferred Employee for which Buyer has received a proration credit, Buyer
shall, to the extent of such credit, indemnify, defend and hold harmless Sellers
from and against any and all losses, directly or indirectly, as a result of, or
based upon or arising from the same.
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(e) As soon as practicable following any Closing Date, Buyer shall make
available to the Transferred Employees Buyer's 401(k) Plan. To the extent
requested by a Transferred Employee, Sellers shall cause to be transferred to
Buyer's 401(k) Plan, in cash and in kind, all of the individual account balances
of Transferred Employees under the Sellers' Plan, including any outstanding plan
participant loan receivables allocated to such accounts.
(f) Buyer acknowledges and agrees that Buyer's obligations pursuant to
this Section 6.10 are in addition to, and not in limitation of, Buyer's
obligation to assume the employment contracts included in the Assumed Contracts.
Nothing in this Agreement shall be construed to provide employees of Sellers
with any rights under this Agreement, and no Person, other than the parties
hereto, is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall only be enforceable by, the parties hereto and their respective successors
and assigns as permitted hereunder.
(g) Certain Payments. Subject to the terms of this Section 6.10(g) and
Section 6.10(h), in the event Buyer terminates any of the Transferred Employees
during the six (6) calendar month period after the Closing Date or a Radio Group
Closing Date, as the case may be (a "Reimbursement Period"), which relates to
the Station at which such employee is employed, as applicable, Sellers shall
promptly reimburse Buyer for the amount paid by Buyer to such Terminated
Employee pursuant to the terms of the Retention Agreements listed on Schedules
6.10 (as in effect on the date hereof) (the "Scheduled Retention Agreements") as
follows: (y) the full amount of such payments in an amount not to exceed
$1,000,000 (the "Initial Employee Cap"); and (z) 50% of such payments above the
Initial Employee Cap in an amount not to exceed $500,000. The payments made
pursuant to this Section 6.10(g) shall not be counted against the Threshold
Amount. In no event shall Sellers be obligated to reimburse Buyer (i) for any
payments made by Buyer pursuant to the Scheduled Retention Agreements to
Transferred Employees terminated after the expiration of a Reimbursement Period,
or (ii) for any amount in excess of $1,500,000.
(h) Notwithstanding any provisions of Section 6.10(g) of the Asset
Purchase Agreement to the contrary, Sellers shall have no obligation to
reimburse Buyer for any severance amount (whether or not pursuant to the
Scheduled Retention Agreements), which obligations shall be the sole obligation
of Buyer regardless of when such termination occurs paid to (i) any Transferred
Employee who is terminated (a) at the request of a third party who subsequently
enters into a memorandum of understanding, letter of intent, or agreement to
acquire any of the Stations, or (b) as a result of Buyer entering into a
memorandum of understanding, letter of intent, or an agreement to sell, assign,
swap, or otherwise dispose of or convey any Station to a third party, and/or
(ii) the employees listed on Schedule 6.10(h), including, but not limited to,
any employees of the Kansas City Stations listed thereon.
(i) For twelve (12) calendar months after the Closing Date or any Radio
Group Closing Date, as applicable, (a) none of Sellers or any of their
Affiliates shall hire any of the Transferred Employees of any Radio Group for
which such Closing has occurred; provided that the provisions of this Section
6.10(i)(a) shall not apply to any Transferred Employee terminated
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by Buyer; and provided further that this Section 6.10(i)(a) does not apply to
any employees (other than the Transferred Employees) hired by the Seller
Entities (as defined below) after the Closing Date or any Radio Group Closing
Date, as applicable, and (b) other than the Transferred Employees, Buyer shall
not hire any employees of Sellers or any Affiliate or parent of Sellers (the
"Seller Entities") who are employees, as of the Closing Date or any Radio Group
Closing Date, of any of the television broadcast stations owned, operated, or
programmed by any of the Seller Entities in any market in which the Stations
broadcast ("Sellers' Employees"); provided that the provisions of this Section
6.10(i)(b) do not apply to Sellers' Employees whose employment is terminated by
the Seller Entities; and provided further that the provisions of this Section
6.10(i)(b) do not apply to any employees (other than Sellers' Employees) hired
by Buyer after the Closing Date or any Radio Group Closing Date, as applicable.
6.11 Lease. Buyer and the Sellers specified in the Lease attached hereto
as Exhibit 1 (the "LEASE") shall execute and deliver the Lease on the Closing
Date applicable to the Station to which the Lease applies.
6.12 Public Announcements. Sellers and Buyer shall consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement or the transactions contemplated herein and shall not
issue any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior written consent of the
other party, issue such press release or make such public statement as may be
required by Law or any listing agreement with a national securities exchange to
which Sinclair or Buyer is a party if it has used all reasonable efforts to
consult with the other party and to obtain such party's consent but has been
unable to do so in a timely manner.
6.13 Disclosure Schedules. Sellers and Buyer acknowledge and agree that
Sellers shall not be liable for the failure of the Schedules to be accurate as a
result of the operation of the Stations prior to a Closing in accordance with
Section 5 of this Agreement. The inclusion of any fact or item on a Schedule
referenced by a particular section in this Agreement shall, should the existence
of the fact or item or its contents be relevant to any other section, be deemed
to be disclosed with respect to such other section whether or not an explicit
cross-reference appears in the Schedules if such relevance is readily apparent
from examination of such Schedules.
6.14 Bulk Sales Law. Buyer hereby waives compliance by Sellers, in
connection with the transactions contemplated hereby, with the provisions of any
applicable bulk transfer laws.
6.15 Environmental Site Assessment.
6.15.1 Within sixty (60) days of the execution of this Agreement, Buyer
may obtain Phase I Environmental Assessments at Buyer's expense for any or all
of the parcels of the Owned or Leased Real Property set forth on Schedule 6.15
(the "Environmental Assessments"). In the event any Environmental Assessment
discloses any conditions contrary to any representations and warranties
(determined without regard to any Knowledge qualifier therein) or any potential
that such conditions may exist, the Buyer may conduct or have conducted at its
expense additional testing to confirm or negate the existence of any such
conditions. If any such Environmental Assessment or additional testing reflects
the existence of any such conditions at
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any Owned Real Property or, to the extent caused by any of the Assets, at any of
the Leased Real Property, and if, and only if, the cost of remediation exceeds
One Hundred Thousand Dollars ($100,000.00), in the aggregate for all parcels of
the Real Property, Sellers shall cause the conditions to be remedied as quickly
as possible (and in all events prior to Closing for any Radio Group for which
such property is used in the operation of any Station in such Radio Group) such
that no conditions contrary to the representations and warranties (determined
with regard to any knowledge qualifier contained therein) of this Agreement
exist; provided, however, that Sellers shall not be obligated to expend in the
aggregate in excess of Three Million Dollars ($3,000,000.00) to effect such
remediation for all Real Property to be conveyed hereunder. In the event that
such remedial action(s) does cost in the aggregate in excess of Three Million
Dollars ($3,000,000.00), Sellers may elect not to take such remedial action. In
such event, Buyer may require Sellers to proceed to the Closing of the Stations
or of one or more Radio Groups, as the case may be, and at any such Closing, the
purchase price for any of the Stations acquired at such Closing shall be reduced
by the estimated cost of remediation for that portion of the Owned Real Property
to be acquired at such Closing, not to exceed in the aggregate for all Closings
the Unexpended Remediation Amount. Alternatively, Buyer may terminate this
Agreement, and Sellers shall have no liability to Buyer as a result of such
termination. Such Environmental Assessments shall not relieve Sellers of any
obligation with respect to any representation, warranty, or covenant of Sellers
in this Agreement or waive any condition to Buyer's obligations under this
Agreement. The cost of completing the Environmental Assessments shall be paid by
Buyer.
6.15.2 Nothing in this Section 6.15 shall be deemed to extend the date
on which any Closing would otherwise occur under this Agreement.
6.16 Purchase of Advertising Time. After the Closing, Buyer agrees to
purchase for cash from Sellers over the five (5) year period subsequent to the
Closing Date, Five Million Dollars ($5,000,000) of advertising time on
television broadcast stations owned and/or programmed by Sellers or their
Affiliates at prevailing rates (taking into account the aggregate amount of the
advertising purchase), and Buyer shall use reasonable efforts to purchase such
advertising time pro rata over the five (5) year period. In the event that
Sellers (and their Affiliates) cease to own and/or program a material percentage
of television broadcast stations located in the same designated market areas as
radio broadcast stations owned and/or programmed by Buyer (or its Affiliates),
Sellers and Buyer shall negotiate in good faith to permit Buyer to expend an
appropriate amount of the advertising buy required by this Section 6.16 on
television broadcast stations previously owned and/or programmed by Sellers (and
its Affiliates), which expenditure on such television stations shall be counted
for purposes of Buyer's satisfaction of its obligation to purchase the
$5,000,000 aggregate amount of advertising time.
6.17 Adverse Developments. Sellers shall promptly notify Buyer of any
unusual or materially adverse developments that occur prior to any Closing with
respect to the Assets or the operation of the Stations; provided, however, that
Sellers' compliance with the disclosure requirements of this Section 6.17 shall
not relieve Sellers of any obligation with respect to any representation,
warranty or covenant of Sellers in this Agreement or relieve Buyer of any
obligation or duty hereunder, waive any condition to Buyer's obligations under
this Agreement, or expand or enhance any right of Buyer hereunder.
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6.18 Title Insurance. Within ten (10) days of the date of this Agreement,
each Seller shall deliver to Buyer its current title insurance policies. Sellers
shall cooperate with Buyer in obtaining the commitment of a title insurance
company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard
rates, ALTA [1992] Form extended coverage title insurance policies, insuring
Buyer's interest in the Real Property (the "Title Commitment"). The costs of the
Title Commitment and the policy to be issued pursuant to the Title Commitment
shall be paid by Buyer.
6.19 Surveys. Within sixty (60) days of the date of this Agreement, each
Seller of Real Property shall deliver to Buyer, at Buyer's expense, surveys of
the Real Property performed by surveyors reasonably acceptable to Buyer
sufficient to remove any "survey exception" from the title insurance policies to
be issued pursuant to the Title Commitments.
6.20 Pending Transactions. Nothing in this Agreement shall preclude Sellers
from completing any pending transactions, including, but not limited to, the
acquisition of the Palm Stations and the Phase II Stations in accordance with
the terms and conditions thereof.
6.21 Assignment of Contracts for Pending Transactions. In the event the
closing for the acquisition by Sellers of the Palm Stations and/or the Phase II
Stations has not occurred on or before the Final Closing Date, Sellers shall
deliver to Buyer on the Final Closing Date such documentation reasonably
requested by Buyer's counsel, allowing for the assignment to Buyer from Sellers
of Sellers' rights, duties and obligations under the Phase II Purchase Agreement
and the Palm Asset Purchase Agreement.
6.22 Cooperation on Tax Matters. The parties intend to allow for the
election by Sellers ("Election") to have the sale of all or a portion of the
Assets contemplated by this Agreement become part of a "Tax Deferred Exchange"
in accordance with the provisions of Section 1031 of the Internal Revenue Code
of 1986 (the "Code"). Buyer covenants and agrees to participate and fully
cooperate with Sellers (and any qualified intermediary (as that term is defined
in the Code) involved in the Tax Deferred Exchange), in the event of an
Election, so long as such participation and cooperation does not have an adverse
effect on Buyer. To the extent that any provision in this Section 6.22 or in
this Agreement shall be found inconsistent with or in violation of any of the
terms of Section 1031 of the Code, such provision shall be null and void, all
other provisions of this Agreement shall remain in full force and effect, and
the parties shall endeavor to agree upon alternative provisions that affect a
"Tax Deferred Exchange" of property in such manner as will comply with Section
1031 of the Code. If no such agreement is reached within a reasonable period,
then this Agreement shall be performed without an exchange of properties.
SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder with respect to the Stations or any Radio Group are subject at
Buyer's option to the fulfillment prior to or at the Closing Date or a Radio
Group Closing Date of each of the following conditions:
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(a) Representations and Warranties. All representations and warranties
of Sellers contained in this Agreement shall be true and complete at and as of
the Closing Date as though made at and as of that time, (except for
representations and warranties that speak as of a specific date or time which
need only be true and complete as of such date or time), except where the
failure to be true and complete (determined without regard to any materiality
qualifications therein) does not have a Material Adverse Effect.
(b) Covenants and Conditions. Sellers shall have performed and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date, except where
the failure to have performed and complied (determined without regard to any
materiality qualifications therein) does not have a Radio Group Material Adverse
Effect.
(c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall
have been granted, notwithstanding that it may not have yet become a "Final
Order," unless any filing is made with the FCC that pertains to or becomes
associated with any request for consent to the assignment of any of the FCC
Licenses (an "FCC Objection"), in which case, Buyer shall not be obligated to
close on a Radio Group which includes such Station to which such FCC Objection
is applicable until the FCC Consent shall have become a "Final Order," unless in
the reasonable judgment of Buyer's counsel such objection would not reasonably
be expected to result in a denial of the FCC Consent, or a Radio Group FCC
Consent, as the case may be, or the designation for hearing for the applications
for FCC Consent or a Radio Group FCC Consent, as the case may be.
(d) Hart-Scott-Rodino. All applicable waiting periods under
Hart-Scott-Rodino shall have expired or terminated.
(e) Governmental Authorizations. Sellers shall be the holder of all FCC
Licenses (other than the FCC Licenses for the Palm Stations and Phase II
Stations if Sellers have not closed on the Palm Stations and the Phase II
Stations), and there shall not have been any modification, revocation, or
non-renewal of any License that has had a Radio Group Material Adverse Effect.
No proceeding shall be pending the effect of which could be to revoke, cancel,
fail to renew, suspend, or modify materially and adversely any FCC License.
(f) Consents. All consents of third parties that are required for the
valid and binding assignment from Sellers to Buyer of all Material Contracts
marked by an asterisk on Schedules 3.5 and 3.7 with respect to a Radio Group
shall have been obtained (or available upon consummation of the Closing).
(g) Lease. Sellers shall have entered into the lease described on
Schedule 7.1(g) and (to the extent required by such lease) shall have obtained a
valid and binding assignment of such lease from Sellers to Buyer.
(h) Deliveries. Sellers shall have made or stand willing to make all
the deliveries to Buyer described in Section 8.2.
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(h) Satisfactory Environmental Assessment. To the extent that any
Environmental Assessment or additional testing conducting pursuant to Section
6.15 hereof reflects the existence of conditions contrary to any representation
or warranty in this Agreement, either (i) Sellers shall have completed the
remediation of such conditions in accordance with Section 6.15 hereof, or (ii)
Buyer shall have provided notice to Sellers of Buyer's election to proceed to
Closing with the proration to the Purchase Price specified in Section 6.15
hereof.
7.2 Conditions to Obligations of Sellers. All obligations of Sellers at
the Closing hereunder with respect to the Stations or any Radio Group are
subject at Sellers' option to the fulfillment prior to or at the Closing Date of
each of the following conditions:
(a) Representations and Warranties. All representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects at and as of the Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall
have been granted.
(d) Hart-Scott-Rodino. All applicable waiting periods under
Hart-Scott-Rodino shall have expired or terminated.
(e) Deliveries. Buyer shall have made or stand willing to make all the
deliveries described in Section 8.3.
SECTION 8: CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(i) Except as provided below in this Section 8.1 or as otherwise agreed
to by Buyer and Sellers, the Closing hereunder shall be held for all of the
Stations on a date specified by Buyer on at least five (5) days written notice
that is not earlier than the first business day after or later than ten (10)
business days after the later of the date on which all of the conditions to
Closing have been satisfied or waived; provided, that the parties acknowledge
and agree that there may be multiple Closings hereunder as follows:
(w) If a Radio Group FCC Consent for any Radio Group is issued
prior to the issuance of the FCC Consent, and the Hart-Scott-Rodino waiting
period has expired or has been terminated for such Radio Group (whether or not
the Hart-Scott-Rodino waiting period has expired or has been terminated in
respect of any other Radio Group), Closing on such Radio Group shall be set by
Buyer on at least five (5) days' written notice to Sellers, which shall be not
earlier than the first business day after such Radio Group FCC Consent is
granted and not later
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than ten (10) business days after the date on which all conditions to such
Closing have been satisfied or waived; provided that, in no event, shall a
Closing occur for less than an entire Radio Group;
(x) Notwithstanding 8.1(a)(i)(w) above, Sellers may elect to
postpone such Closing for thirty (30) days if, based on advice of Sellers'
counsel, there is a reasonable likelihood that the FCC Consent or an additional
Radio Group FCC Consent will be received during such period; provided that in
the event Sellers elect to postpone any Closing under this Section 8.1(a)(i)(x),
the Stations Delay Amount Date and/or the Kansas City Stations Delay Amount
Date, as applicable, shall be extended through the Closing Date as postponed by
Sellers and no Delay Amount shall accrue during such period with respect to the
Stations or Radio Group for which any Closing has been postponed by Seller
pursuant to this Section 8.1(a)(i)(x);
(y) For purposes of this Agreement, if there shall be multiple
Closings for the Stations, then the terms "Closing" and "Closing Date" shall
only be deemed to refer to the Stations for which the sale by Sellers, and the
purchase by Buyers, shall have occurred on such date. If a Closing Date
hereunder shall fall on a date that is not a business day, then such Closing
Date shall be the next business day.
(ii) If any event occurs that prevents signal transmission by any of
the Stations in the normal and usual manner and Sellers cannot restore the
normal and usual transmission before the date on which any Closing as to any
Radio Group to which the Station so affected belongs would otherwise occur
pursuant to this Section 8.1(a), and this Agreement has not been terminated
under Section 9, Sellers shall diligently take such action as reasonably
necessary to restore such transmission, and the Closing shall be postponed only
with respect to the Radio Group to which the Station so affected belongs until a
date within the effective period of the FCC Consent or a Radio Group FCC Consent
(as it may be extended pursuant to Section 6.1(c)) to allow Sellers to restore
the normal and usual transmission for such Station. If any Closing is postponed
pursuant to this paragraph, the date of such Closing shall be ten (10) days
after notice by Sellers to Buyer that transmission has been restored.
Notwithstanding anything to the contrary in this Agreement, Buyer shall not be
obligated to close on any Radio Group which includes any Station the
transmission of which is not operating in the normal and usual manner, unless
and until the Sellers have restored the transmission of such Station to its
normal and usual level.
(iii) If there is in effect on the date on which any Closing would
otherwise occur pursuant to this Section 8.1(a) any judgment, decree or order
that would prevent or make unlawful such Closing on that date, such Closing
shall be postponed until a date within the effective period of the FCC Consent
or the Radio Group FCC Consent, as the case may be (as it may be extended
pursuant to Section 6.1(c)), to be agreed upon by Buyer and Sellers, when such
judgment, decree, or order no longer prevents or makes unlawful such Closing. If
any Closing is postponed pursuant to this paragraph, the date of such Closing
shall be mutually agreed to by Seller and Buyer.
(b) Closing Place. All Closings hereunder shall be held at the offices
of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, MD, 21201, or any
other place that is mutually agreed upon by Buyer and Sellers.
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8.2 Deliveries by Sellers. Prior to or on any Closing Date, Sellers shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Conveyancing Documents. Duly executed deeds in form and quality
equivalent to the deeds by which Sellers obtained title, bills of sale, motor
vehicle titles, assignments, and other transfer documents that are sufficient to
vest good and marketable title to the Assets being transferred at such Closing
in the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims and obligations except for Permitted Encumbrances;
(b) Officer's Certificate. A certificate, dated as of such Closing
Date, executed by an officer of Sellers, certifying: (i) that the
representations and warranties of Sellers contained in this Agreement as to the
Radio Group for which a Closing is occurring are true and complete as of such
Closing Date as though made on and as of that date (except for representations
and warranties that speak as of a specific date or time, which need only be true
and complete as of such date or time), except to the extent that the failure of
such representations and warranties (in each case determined without regard to
any materiality qualifications contained therein) shall not have had a Material
Adverse Effect, and (ii) that Sellers, as to the Radio Group for which a Closing
is occurring, have in all respects performed and complied with all of its
obligations, covenants and agreements in this Agreement to be performed and
complied with on or prior to such Closing Date, except to the extent that the
failure to perform such covenants (in each case determined without regard to any
materiality qualifications contained therein) shall not have had a Radio Group
Material Adverse Effect.
(c) Secretary's Certificate. A certificate, dated as of such Closing
Date, executed by each of the Seller's Secretary, members, partners or
designees, as the case may be: (i) certifying that the resolutions, as attached
to such certificate, were duly adopted by such Seller's Board of Directors and
shareholders (if required) (or by the general partner in the case of a
partnership or by the members in the case of a limited liability company),
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) providing, as attachments thereto, the Articles of
Incorporation and Bylaws (or other organizational documents) of such Seller;
(d) Consents. A manually executed copy of any instrument evidencing
receipt of any Consent which has been received by Sellers which relate to the
Stations or, in the case of a Radio Group Closing, such Radio Group, the Assets
of which are being transferred at such Closing;
(e) Good Standing Certificates. To the extent available from the
applicable jurisdictions and to the extent applicable to the Stations or Radio
Group which are the subject of the Closing, certificates as to the formation
and/or good standing of each Seller issued by the appropriate governmental
authorities in the states of organization and each jurisdiction in which such
Sellers are qualified to do business, each such certificate (if available) to be
dated a date not more than a reasonable number of days prior to the applicable
Closing Date;
(f) Opinions of Counsel. Opinions of Sellers' counsel and
communications counsel dated as of the Closing Date, substantially in the form
of Exhibits 2 and 3 hereto;
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(g) Lease. Duly executed copy of the Lease; and
(h) Other Documents. Such other documents reasonably requested by Buyer
or its counsel for complete implementation of this Agreement and consummation of
the transaction contemplated hereby, including the assignments referred to in
Section 6.21, if applicable.
8.3 Deliveries by Buyer. Prior to or on any Closing Date, Buyer shall
deliver to Sellers the following, in form and substance reasonably satisfactory
to Sellers and their counsel:
(a) Closing Payment. The payment of the Estimated Purchase Price
described in Section 2.4(a) for the Stations or Radio Groups as applicable;
(b) Officer's Certificate. A certificate, dated as of such Closing
Date, executed on behalf of an officer of the Buyer, certifying (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of such Closing Date as though made on and
as of that date, and (ii) that Buyer has in all material respects performed and
complied with all of its obligations, covenants and agreements in this Agreement
to be performed and complied with on or prior to such Closing Date;
(c) Secretary's Certificate. A certificate, dated as of such Closing
Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) providing, as an attachment thereto, Buyer's
Certificate of Incorporation and Bylaws;
(d) Assumption Agreements. Appropriate assumption agreements pursuant
to which Buyer shall assume and undertake to perform Sellers' obligations and
liabilities to the extent provided under this Agreement for the Stations or
Radio Group for which a Closing occurs, including (without limitation) under the
Licenses and the Assumed Contracts;
(e) Good Standing Certificates. To the extent available from the
applicable jurisdictions, certificates as to the formation and/or good standing
of Buyer issued by the appropriate governmental authorities in the state of
organization and each jurisdiction in which Buyer is qualified to do business,
each such certificate (if available) to be dated a date not more than a
reasonable number of days prior to such applicable Closing Date;
(f) Opinion of Counsel. An opinion of Buyer's counsel dated as of the
Closing Date, substantially in the form of Exhibit 4 hereto;
(g) Lease. Duly executed copy of the Lease; and
(h) Other Documents. Such other documents reasonably requested by
Sellers or their counsel for complete implementation of this Agreement and
consummation of the transactions contemplated hereby.
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SECTION 9: TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated at any
time prior to Closing by the mutual consent of the parties.
9.2 Termination by Seller. This Agreement may be terminated by Sellers and
the sale and transfer of the Stations or any Radio Group for which a Closing has
not occurred abandoned, if:
(a) Sellers are not then in material default hereunder, upon written
notice to Buyer if on the date that would otherwise be the Final Closing Date
any of the conditions precedent to the obligations of Sellers set forth in
Sections 7.2(a), 7.2(b) and 7.2(e) of this Agreement has not been satisfied or
waived in writing by Sellers (whether or not occurring as the result of Buyer's
material breach of any provision of this Agreement);
(b) Buyer shall default in the performance of its obligations under
this Agreement in any material respect and such default is not cured within
thirty (30) days after notice thereof;
(c) Sellers are not then in material default hereunder and Final
Closing has not occurred within one (1) calendar year from the date hereof and
failure of Final Closing to have occurred is due to the failure to receive any
regulatory approval required for Final Closing, including, but not limited to,
expiration or termination of the Hart-Scott-Rodino waiting period, any FCC
Consents (including, without limitation, such facts as are disclosed on Schedule
4.6 hereto), and the failure of such consent, expiration or termination to be
granted is the result of facts relating to Buyer or any Affiliate of Buyer; or
(d) Sellers are not then in material default hereunder if Closing as to
the Stations or any Radio Group has not occurred within twenty four (24) months
from the date hereof due to the failure to receive any regulatory approval
required for Final Closing, including, but not limited to, the expiration or
termination of the Hart-Scott-Rodino waiting period of any FCC Consent, and the
failure of such consent, expiration, or termination to be granted is the result
of facts relating to Sellers.
(e) Final Closing has not occurred with respect to all of the Stations
or any Radio Group within eighteen (18) months from the date hereof, if Sellers
are not then in material default hereunder, and such Closing has not occurred
for any reason other than as provided in Section 9.2(d).
9.3 Termination by Buyer. This Agreement may be terminated by Buyer and
the exchange and transfer of the Stations or any Radio Group for which a Closing
has not occurred abandoned, if:
(a) Buyer is not then in material default, upon written notice to
Sellers if on the date that would otherwise be the Final Closing Date any of the
conditions precedent to the obligations of Buyer set forth in Sections 7.1(a),
7.1(b), 7.1(e), 7.1(f), 7.1(g), and 7(h) of this Agreement (and
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only such Sections) has not been satisfied or waived in writing by Buyer
(whether or not occurring as the result of Sellers' material breach of any
provision of this Agreement);
(b) Sellers shall have defaulted in the performance of Sellers'
obligations under this Agreement, and such default is not cured within thirty
(30) days after notice thereof and such default has had either a Radio Group
Material Adverse Effect in the case of a Radio Group Closing or a Material
Adverse Effect in the case of a Closing with respect to all of the Stations; or
(c) Buyer is not then in material default hereunder and Final Closing
has not occurred within fifteen (15) months from the date hereof and failure to
close is due to the failure to receive any regulatory approval required for
Closing, including, but not limited to, expiration or termination of the
Hart-Scott-Rodino waiting period and any FCC Consents and the failure to receive
such consent is due to facts relating to Sellers or any Affiliate of Sellers.
(d) Final Closing has not occurred with respect to all of the Stations
or any Radio Group within eighteen (18) months from the date hereof, if the
terminating party is not then in material default hereunder and such Closing has
not occurred for any reason other than as provided in Section 9.2(c).
9.4 Rights on Termination. If this Agreement is terminated by Buyer
pursuant to Section 9.3 as a result of Sellers' material breach of any provision
of this Agreement, Buyer shall be entitled to the immediate return of the Escrow
Deposit, and Buyer shall have all rights and remedies available at law or
equity, including the remedy of specific performance described in Section 9.6
below. If this Agreement is terminated by Sellers pursuant to Section 9.2,
Sellers, as their sole remedy, shall be entitled to receive the Escrow Deposit,
less any amount thereof released in accord with the provisions of this Agreement
prior to such termination, together with all interest or other proceeds from the
investment thereof, but less any compensation due Escrow Agent, as liquidated
damages in full and final settlement of all claims of Sellers under this
Agreement, and there shall be no other or further obligations or remedies of
Sellers hereunder.
9.5 Liquidated Damages Not a Penalty. With respect to the liquidated
damages as described and provided for in Section 9.4 hereof, Sellers and Buyer
hereby acknowledge and agree that the damage that may be suffered by Sellers in
the event of a default by Buyer hereunder is not readily ascertainable and that
such liquidated damages as of the date hereof are a reasonable estimate of such
damages and are intended to compensate Sellers for any such damage and are not
to be construed as a penalty.
9.6 Specific Performance. The parties recognize that if Sellers breach
this Agreement and refuse to perform under the provisions of this Agreement,
monetary damages alone would not be adequate to compensate Buyer for its injury.
Buyer shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought by Buyer to enforce this Agreement, Sellers shall waive the
defense that there is an adequate remedy at law.
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9.7 Attorneys' Fees. In the event of a default by either party that results
in a lawsuit or other proceeding for any remedy available under this Agreement,
the prevailing party shall be entitled to reimbursement from the other party of
its reasonable legal fees and expenses (whether incurred in arbitration, at
trial, or on appeal).
9.8 Survival. Notwithstanding the termination of this Agreement pursuant to
this Section 9, the obligations of Buyer and Sellers set forth in Sections 6.2,
6.4, 9, 10 (with respect to all Radio Groups for which any Closing has
occurred), and 11 shall survive such termination and the parties hereto shall
have any and all rights and remedies to enforce such obligations provided at law
or in equity or otherwise (including without limitations, specific performance).
9.9 Limitations of Termination. Any termination of this Agreement pursuant
to this Section 9 shall be only in respect of those Stations or Radio Group for
which a Closing has not occurred as of the date of such termination.
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival of Representations. All representations and warranties,
covenants and agreements of Sellers and Buyer contained in or made pursuant to
this Agreement or in any certificate furnished pursuant hereto shall survive the
Closing Date for any of the Stations acquired hereunder and shall remain in full
force and effect to the following extent: (a) representations and warranties
(other than the representations and warranties set forth in Section 3.16) shall
survive for a period of twelve (12) months after the Closing Date for such
Station or Radio Group, (b) except as otherwise provided herein, the covenants
and agreements which, by their terms, survive the Closing for such Station or
Radio Group shall continue in full force and effect until fully discharged (but
not beyond the expiration of twelve (12) months after the Closing Date for such
Station or Radio Group), and (c) any representation, warranty, covenant or
agreement that is the subject of a claim which is asserted in a reasonably
detailed writing prior to the expiration of the survival period set forth in
this Section 10.1 shall survive with respect to such claim or dispute until the
final resolution thereof; provided that notwithstanding the foregoing,
representations and warranties set forth in Section 3.16 and the covenant in
Section 6.15 shall survive for the lesser of eighteen (18) months after the
Closing Date for any Radio Group to which such representations and warranties
relate, and (ii) the expiration of the applicable statute of limitations, but,
in no event, shall the survival period in this proviso be less than one (1) year
after the Closing Date for any Radio Group to which such representations and
warranties relate; provided further that the covenants and agreements set forth
in Section 6.4 Confidentiality, Section 6.5 Cooperation, Section 6.9 Books and
Records, Section 11.1 Fees and Expenses, Section 11.2 Notices, and Section 11.3
Benefit and Binding Effect shall survive any applicable Closing for the period
provided therein or, if no period is specified, in perpetuity; and provided
finally that anything to the contrary in this Section 10.1 notwithstanding any
claim for indemnification under Section 10 hereof which is asserted in a
reasonably detailed writing prior to the expiration of the survival periods
provided in this Section 10.1 shall survive with respect to such claim or
dispute until final resolution thereof.
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10.2 Indemnification by Seller. After the Closing or a Radio Group Closing,
as applicable,, but subject to Sections 10.1 and 10.5, with respect to those
Stations for which a Closing has occurred, Sellers hereby agree to indemnify and
hold Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages arising out of or
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Sellers contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement;
(b) Any and all obligations of Sellers not assumed by Buyer pursuant to
this Agreement, including any liabilities arising at any time under any Contract
not included in the Assumed Contracts;
(c) Any loss, liability, obligation, or cost arising out of or
resulting from the failure of the parties to comply with the provisions of any
bulk sales law applicable to the transfer of the Assets;
(d) Any and all obligations, losses, liabilities, or damages arising
out of or resulting from the operation or ownership of the Stations prior to the
Closing (except any losses, liabilities or damages for which Buyer has received
a proration in its favor or a reduction in Purchase Price under Section 6.15),
including any liabilities arising under the Licenses or the Assumed Contracts to
the extent that they relate to events occurring prior to the Closing Date;
(e) Any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity; and
(f) Any and all loss, liabilities or damages arising out of or
resulting from the loss or revocation of any of the FCC Licenses as a result of
actions taken by the FCC (or, to the extent applicable, by any reviewing court)
solely in connection with the specific applications listed on Schedule 10.2.
10.3 Indemnification by Buyer. Notwithstanding any Closing, but subject to
Section 10.5, Buyer hereby agrees to indemnify and hold Sellers harmless against
and with respect to, and shall reimburse Sellers for:
(a) Any and all losses, liabilities, or damages arising out of or
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Buyer contained in this Agreement or in any certificate,
document, or instrument delivered to Sellers under this Agreement;
(b) Any and all obligations of Sellers assumed by Buyer pursuant to
this Agreement;
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(c) Any and all obligations, losses, liabilities, or damages arising
out of or resulting from the operation or ownership of the Stations after the
Closing (including, without limitation, any obligations of Sinclair, SCI, or any
Affiliate thereof pursuant to any agreements by which the obligations of any of
the Stations have been guaranteed), except any losses, liabilities or damages
for which Sellers have received a proration in their favor; and
(d) Any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification shall
be as follows:
(a) The party claiming indemnification (the "CLAIMANT") shall promptly
give notice to the party from which indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five business
days after written notice of such action, suit, or proceeding was given to
Claimant.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within the thirty-day period (or any
mutually agreed upon extension thereof), the Claimant may seek appropriate
remedy at law or equity.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification under this Agreement, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party,
provided, however, that Indemnifier may not assume control of the defense unless
it affirms in writing its obligation to indemnify Claimant for any damages
incurred by Claimant with respect to such third-party claim. If the Indemnifying
Party elects to assume control of the defense of any third-party claim, the
Claimant shall have the right to participate in the defense of such claim at its
own expense. If the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third-party claim, it shall be bound
by the results obtained in good faith by the Claimant with respect to such
claim.
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(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided in Section 10.2 and Section
10.3 shall extend to the members, partners, shareholders, officers, directors,
employees, representatives and affiliated entities of any Claimant although for
the purpose of the procedures set forth in this Section 10.4, any
indemnification claims by such parties shall be made by and through the
Claimant.
10.5 Certain Limitations.
(a) Notwithstanding anything in this Agreement to the contrary, neither
party shall indemnify or otherwise be liable to the other party with respect to
any claim for any breach of a representation or warranty, or for the breach of
any covenant contained in this Agreement, unless notice of the claim is given
within the relevant survival period specified in Section 10.1.
(b) Notwithstanding anything in this Agreement to the contrary, but
except as otherwise provided in this subsection (b) and Schedule 10.5, Sellers
shall not be liable to Buyer in respect of any indemnification hereunder except
to the extent that (i) the aggregate amount of losses of Buyer exceeds One
Million Dollars ($1,000,000) (the "Threshold Amount") (and then only to the
extent such losses exceed the excess of Five Hundred Thousand Dollars
($500,000)) over an amount (not in excess of $100,000) which Sellers are not
required to expend in environmental remediation as a result of the Environmental
Threshold Amount (such excess being the "Excess Amount") and (ii) the aggregate
amount of losses of Buyer is less than the excess of Fifty Million Dollars)
($50,000,000) over any amounts expended by Buyer pursuant to Section 6.15, or
with respect to which Buyer receives a proration in its favor under Section 6.15
(such excess being the "Indemnity Cap"); provided, the foregoing shall not be
applicable to any amounts owed in connection with the Purchase Price or the
proration adjustment thereof. In determining whether Sellers shall be obligated
to indemnify Buyer under this Section 10, once the Threshold Amount has been
satisfied, each representation and warranty and each covenant contained in this
Agreement for which indemnity may be sought hereunder shall be read solely for
purposes of determining whether a breach of such representation, warranty or
covenant has occurred without regard to materiality (including Material Adverse
Effect) qualifications that may be contained therein.
(c) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall a party be entitled to indemnification for such
party's consequential or punitive damages, regardless of the theory of recovery.
Each party hereto agrees to use reasonable efforts to mitigate any losses which
form the basis for any claim for indemnification hereunder.
SECTION 11: MISCELLANEOUS
11.1 Fees and Expenses.
(a) Buyer and Sellers shall each pay one-half of (i) any fees charged
by the FCC in connection with obtaining the FCC Consent, and (ii) any filing
fees incurred in connection with any Hart-Scott-Rodino Filings.
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(b) Buyer and Sellers shall each pay one-half (1/2) of any filing fees,
transfer taxes, document stamps, or other charges levied by any governmental
entity (other than income Taxes, which shall be the responsibility of Sellers)
on account of the transfer of the Assets from Sellers to Buyer.
(c) Except as otherwise provided in this Agreement, each party shall
pay its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar Person retained by or on behalf of such party.
11.2 Notices. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be (a) in writing, (b) sent
by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (c) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
To Buyer:
Entercom Communications Corp.
401 City Avenue, Suite 409
Bala Cynwyd, Pennsylvania 19004
Attn: David J. Field
Telecopy: (610) 660-5620
Telephone: (610) 660-5610
with a copy Latham & Watkins
(which shall 1001 Pennsylvania Avenue, Suite 1300
not constitute Washington, D.C. 20004-2505
Attn: Joseph Sullivan, Esquire
notice) to: Telecopy: (202) 637-2201
Telephone: (202) 637-2200
To Sellers:
c/o Sinclair Broadcast Group, Inc.
10706 Beaver Dam Road
Cockeysville, MD 21030
Attn: President
Telecopy: (410) 568-1533
Telephone: (410) 568-1506
with a copy Sinclair Communications, Inc.
(which shall 10706 Beaver Dam Road
not constitute Cockeysville, MD 21030
notice) to: Attn: General Counsel
Telecopy: (410) 568-1537
Telephone: (410) 568-1522
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with a copy Steven A. Thomas, Esquire
(which shall Thomas & Libowitz, P.A.
not constitute 100 Light Street, Suite 1100
notice) to: Baltimore, MD 21202-1053
Telecopy: (410) 752-2046
Telephone: (410) 752-2468
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect.
(a) Buyer shall have the right to assign all or any portion of its
rights under this Agreement to (i) any entity under common control with Buyer,
(ii) a Qualified Intermediary under Section 1031 of the Code, or (iii) any
lender or any agent for such lender(s) for collateral purposes only; provided,
that no such assignment shall relieve Buyer of its obligations hereunder.
Sellers may assign, combine, merge, or consolidate among themselves and any
Affiliate of Sellers so long as Sellers or their successors and assigns are
bound by the terms and conditions of this Agreement in all respects as if such
successors and assigns were original parties hereto, and such assignment,
combination, merger, or consolidation does not have an adverse affect on Buyer.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. No Person, other
than the parties hereto, is or shall be entitled to bring any action to enforce
any provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder. Other than as
expressly set forth in this Section 11.3(a), no party may assign or transfer all
or any portion of its rights under this Agreement without the prior written
consent of the parties hereto.
(b) Sellers acknowledge and agree that at the Closing, Buyer may
require that Sellers transfer the Assets and liabilities of any Station to a
third party designated in writing by Buyer (a "DESIGNEE") at least ten (10) days
prior to the Closing; provided, however, that (a) such Designee shall on or
prior to the Closing Date assume all assumed liabilities with respect to the
particular Station so transferred; (b) an FCC Order shall have been issued on or
prior to the Closing Date authorizing such transfer; (c) the transfer to such
Designee would not violate any laws, (d) the transfer to such Designee would not
delay in any respect the date for the Closing as required by the terms of this
Agreement; (e) such transfer to a Designee shall not relieve Buyer from any of
its obligations hereunder; (f) there shall be no assignment or transfer (actual
or implied) of this Agreement to the Designee; (g) Sellers shall have no
liabilities to any such Designee under this Agreement or otherwise; and (h) such
Designee shall deliver to the Sellers a written certificate, pursuant to which
the Designee acknowledges and agrees for the benefit of Sellers to the terms and
conditions of the designation as described herein. The parties shall cooperate
in all reasonable respects in making any modifications to the closing documents
and deliveries that may be necessary or appropriate in connection with the
transfer of Assets and liabilities of any Station to any Designee pursuant to
this Section 11.3(b).
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11.4 Further Assurances. The parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (WITHOUT REGARD TO THE
CHOICE OF LAW PROVISIONS THEREOF). In addition, each of the parties hereto
submits to local jurisdiction in the State of Maryland and agrees that any
action by any party hereunder shall be instituted in the State of Maryland.
11.6 Entire Agreement. This Agreement, the Schedules hereto, and all
documents, certificates and other documents to be delivered by the parties
pursuant hereto, collectively, represent the entire understanding and agreement
between Buyer and Sellers with respect to the subject matter of this Agreement.
This Agreement supersedes all prior negotiations between the parties and cannot
be amended, supplemented, or changed except by an agreement in writing duly
executed by each of the parties hereto and by Sinclair.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
11.8 Headings. The headings of the sections and subsections contained in
this Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
11.9 Counterparts. This Agreement may be signed in two or more counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
53
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Sellers as of the date first written above.
Buyer: Sellers:
Entercom Communication Corp.
- ---------------------------- SINCLAIR COMMUNICATIONS, INC.
By: /s/ John C. Donlevie By: /s/ David B. Amy
------------------------- --------------------------------
Name: John C. Donlevie Name: David B. Amy
---------------------------
Title: Executive Vice President Title: Secretary
--------------------------
SINCLAIR MEDIA III, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF KANSAS CITY
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
WCGV, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF MILWAUKEE
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF NEW ORLEANS, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
54
<PAGE>
SINCLAIR RADIO OF NEW ORLEANS
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF MEMPHIS, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF MEMPHIS
LICENSEE, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR PROPERTIES, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF NORFOLK/
GREENSBORO LICENSEE L.P.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF NORFOLK
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF BUFFALO, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
55
<PAGE>
SINCLAIR RADIO OF BUFFALO
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
WLFL, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF GREENVILLE
LICENSEE, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF WILKES-BARRE, INC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
SINCLAIR RADIO OF WILKES-BARRE
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
---------------------------
Title: Secretary
--------------------------
56
ASSET PURCHASE AGREEMENT
DATED AUGUST 20, 1999
AMONG
SINCLAIR COMMUNICATIONS, INC.
SINCLAIR MEDIA III, INC.
SINCLAIR RADIO OF KANSAS CITY LICENSEE, LLC
AS SELLERS,
AND
ENTERCOM COMMUNICATIONS CORP.
AS BUYER
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. CERTAIN DEFINITIONS............................................................................................1
1.1 Terms Defined in this Section...........................................................................1
1.2 Terms Defined Elsewhere in this Agreement...............................................................7
2. EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE...................................................................9
2.1 Agreement to Exchange and Transfer......................................................................9
2.2 Excluded Assets.........................................................................................9
2.3 Purchase Price.........................................................................................11
Purchase Price Increase................................................................................11
Prorations.............................................................................................11
Manner of Determining Adjustments......................................................................12
2.4 Payment of Purchase Price..............................................................................13
Payment of Estimated Purchase Price At Closing.........................................................13
Payments to Reflect Adjustments........................................................................14
2.5 Assumption of Liabilities and Obligations..............................................................14
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................................14
3.1 Organization and Authority of Sellers..................................................................15
3.2 Authorization and Binding Obligation...................................................................15
3.3 Absence of Conflicting Agreements; Consents............................................................15
3.4 Governmental Licenses..................................................................................15
3.5 Real Property..........................................................................................16
3.6 Tangible Personal Property.............................................................................17
3.7 Contracts..............................................................................................17
3.8 Intangibles............................................................................................18
3.9 Title to Properties....................................................................................18
3.10 Financial Statements...................................................................................18
3.11 Taxes..................................................................................................19
3.12 Insurance..............................................................................................19
3.13 Reports................................................................................................19
3.14 Personnel and Employee Benefits........................................................................19
Employees and Compensation.............................................................................19
Pension Plans..........................................................................................20
Welfare Plans..........................................................................................20
Benefit Arrangements...................................................................................20
Multiemployer Plans....................................................................................21
Delivery of Copies of Relevant Documents and Other Information.........................................21
Labor Relations........................................................................................21
3.15 Claims and Legal Actions...............................................................................21
3.16 Environmental Compliance...............................................................................21
3.17 Compliance with Laws...................................................................................22
3.18 Conduct of Business in Ordinary Course.................................................................22
3.19 Transactions with Affiliates...........................................................................22
3.20 Broker.................................................................................................23
3.21 Insolvency Proceedings.................................................................................23
3.22 Year 2000 Compatibility................................................................................23
4. REPRESENTATIONS AND WARRANTIES OF BUYER......................................................................23
4.1 Organization, Standing and Authority...................................................................23
4.2 Authorization and Binding Obligation...................................................................23
4.3 Absence of Conflicting Agreements and Required Consents................................................23
4.4 Brokers................................................................................................24
4.5 Availability of Funds..................................................................................24
4.6 Qualifications of Buyer................................................................................24
4.7 WARN Act...............................................................................................24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4.8 Buyer's Defined Contribution Plan......................................................................25
5. OPERATION OF THE STATIONS PRIOR TO CLOSING....................................................................25
5.1 Contracts..............................................................................................25
5.2 Compensation...........................................................................................25
5.3 Encumbrances...........................................................................................25
5.4 Dispositions...........................................................................................25
5.5 Access to Information..................................................................................26
5.6 Insurance..............................................................................................26
5.7 Licenses...............................................................................................26
5.8 Obligations............................................................................................26
5.9 No Inconsistent Action.................................................................................26
5.10 Maintenance of Assets..................................................................................26
5.11 Consents...............................................................................................26
5.12 Books and Records......................................................................................27
5.13 Notification...........................................................................................27
5.14 Financial Information..................................................................................27
5.15 Compliance with Laws...................................................................................28
5.16 Programming............................................................................................28
5.17 Preservation of Business...............................................................................28
5.18 Normal Operations......................................................................................28
5.19 Reserved...............................................................................................28
6. SPECIAL COVENANTS AND AGREEMENTS..............................................................................28
6.1 FCC Consent............................................................................................28
6.2 Hart-Scott-Rodino......................................................................................29
6.3 Risk of Loss...........................................................................................29
6.4 Confidentiality........................................................................................29
6.5 Cooperation............................................................................................29
6.6 Control of the Stations................................................................................29
6.7 Accounts Receivable....................................................................................30
6.8 Allocation of Purchase Price...........................................................................30
6.9 Access to Books and Records............................................................................31
6.10 Employee Matters.......................................................................................31
Certain Payments.......................................................................................33
6.11 Reserved...............................................................................................34
6.12 Public Announcements...................................................................................34
6.13 Disclosure Schedules...................................................................................34
6.14 Bulk Sales Law.........................................................................................34
6.15 Environmental Site Assessment..........................................................................34
6.16 Reserved...............................................................................................35
6.17 Adverse Developments...................................................................................35
6.18 Title Insurance........................................................................................35
6.19 Surveys................................................................................................35
6.20 Reserved...............................................................................................35
6.21 Reserved...............................................................................................35
6.22 Cooperation on Tax Matters.............................................................................36
6.23 Reference to Original Agreement........................................................................36
7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER................................................................36
7.1 Conditions to Obligations of Buyer.....................................................................36
Representations and Warranties.........................................................................36
Covenants and Conditions...............................................................................36
FCC Consent............................................................................................36
Hart-Scott-Rodino......................................................................................37
Governmental Authorizations............................................................................37
Consents...............................................................................................37
Deliveries.............................................................................................37
Satisfactory Environmental Assessment..................................................................37
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
7.2 Conditions to Obligations of Sellers...................................................................37
Representations and Warranties.........................................................................37
Covenants and Conditions...............................................................................37
FCC Consent............................................................................................37
Hart-Scott-Rodino......................................................................................37
Deliveries.............................................................................................37
8. CLOSING AND CLOSING DELIVERIES...............................................................................38
8.1 Closing................................................................................................38
Closing Date...........................................................................................38
Closing Place..........................................................................................38
8.2 Deliveries by Sellers..................................................................................38
Conveyancing Documents.................................................................................39
Officer's Certificate..................................................................................39
Secretary's Certificate................................................................................39
Consents...............................................................................................39
Good Standing Certificates.............................................................................39
Opinions of Counsel....................................................................................39
Other Documents........................................................................................40
8.3 Deliveries by Buyer....................................................................................40
Closing Payment........................................................................................40
Officer's Certificate..................................................................................40
Secretary's Certificate................................................................................40
Assumption Agreements..................................................................................40
Good Standing Certificates.............................................................................40
Opinion of Counsel.....................................................................................40
Other Documents........................................................................................40
9. TERMINATION...................................................................................................41
9.1 Termination by Mutual Consent..........................................................................41
9.2 Termination by Seller..................................................................................41
9.3 Termination by Buyer...................................................................................41
9.4 Rights on Termination..................................................................................42
9.5 Liquidated Damages Not a Penalty.......................................................................42
9.6 Specific Performance...................................................................................42
9.7 Attorneys' Fees........................................................................................42
9.8 Survival...............................................................................................43
9.9 Reserved...............................................................................................43
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES.................................................................................................43
10.1 Survival of Representations............................................................................43
10.2 Indemnification by Seller..............................................................................43
10.3 Indemnification by Buyer...............................................................................44
10.4 Procedure for Indemnification..........................................................................45
10.5 Certain Limitations....................................................................................45
11. MISCELLANEOUS................................................................................................46
11.1 Fees and Expenses......................................................................................46
11.2 Notices................................................................................................47
11.3 Benefit and Binding Effect.............................................................................48
11.4 Further Assurances.....................................................................................48
11.5 GOVERNING LAW..........................................................................................48
11.6 Entire Agreement.......................................................................................49
11.7 Waiver of Compliance; Consents.........................................................................49
11.8 Headings...............................................................................................49
11.9 Counterparts...........................................................................................49
</TABLE>
iii
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into on
August 20, 1999 but is effective as of August 18, 1999, by and among Sinclair
Communications, Inc., a Maryland corporation ("SCI"), Sinclair Media III, Inc. a
Maryland corporation ("MEDIA III"), Sinclair Radio of Kansas City Licensee, LLC,
a Maryland limited liability company ("KANSAS CITY LICENSEE"), (each a "SELLER"
and collectively, "SELLERS"), and Entercom Communications Corp., a Pennsylvania
corporation ("BUYER").
All references herein to the "date hereof" and the "date of this
Agreement" shall mean August 18, 1999, and all representations and warranties
herein shall be deemed to have been made as of August 18, 1999.
R E C I T A L S:
WHEREAS, Media III operates radio broadcast stations KCFX-FM,
Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM,
Kansas City, MO (collectively, the "STATIONS") and owns or leases certain assets
used in connection with the Stations;
WHEREAS, Kansas City Licensee is the licensee of each of the Kansas
City Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, the Buyer and Sellers and certain other sellers entered into
the Original Agreement and, pursuant to Section 2 of the accompanying Letter
Agreement dated August 18, 1999, the parties thereto agreed to amend and restate
the Original Agreement and to enter into this Agreement with respect to the
Stations solely for the purpose of providing separate processing of the Stations
for Hart-Scott-Rodino purposes.
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for the sale, assignment and transfer by Sellers to Buyer of certain of
the assets owned, leased or used by Sellers in connection with the business and
operations of the Stations.
A G R E E M E N T S:
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1: CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
1
<PAGE>
"ACCOUNTS RECEIVABLE" means the rights of Sellers as of the Closing
Date to payment in cash for the sale of advertising time and other goods and
services by the Stations prior to the Closing Date.
"AFFILIATE" means, with respect to any Person, (a) any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person, or (b) an officer or
director of such Person or of an Affiliate of such Person within the meaning of
clause (a) of this definition. For purposes of clause (a) of this definition,
(i) a Person shall be deemed to control another Person if such Person (A) has
sufficient power to enable such Person to elect a majority of the board of
directors of such Person, or (B) owns a majority of the beneficial interests in
income and capital of such Person; and (ii) a Person shall be deemed to control
any partnership of which such Person is a general partner.
"AGGREGATED INITIAL PURCHASE PRICE" means the amount of $824,500,000.
"ALLOCABLE ESCROW DEPOSIT" means that portion of the Escrow Deposit
equaling $7,398,425.00.
"ASSETS" means the assets to be transferred or otherwise conveyed by
Sellers to Buyer under this Agreement, as specified in Section 2.1.
"ASSUMED CONTRACTS" means (a) all Contracts set forth on Schedule 3.7,
(b) Contracts entered into prior to the date of this Agreement with advertisers
for the sale of advertising time or production services for cash at rates
consistent with past practices, (c) Contracts entered into by any Seller prior
to the date of this Agreement which are not required to be included on Schedule
3.7 hereto, (d) any Contracts entered into by Sellers between the date of this
Agreement and the Closing Date that Buyer agrees in writing to assume, and (e)
other contracts entered into by Sellers between the date of this Agreement and
the Closing Date in compliance with Section 5.
"CLOSING" means the consummation of the exchange and acquisition of the
Assets pursuant to this Agreement on the Closing Date in accordance with the
provisions of Section 8.1.
"CLOSING DATE" means the date on which the Closing occurs, as
determined pursuant to Section 8.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CONSENTS" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"CONTAMINANT" shall mean and include any pollutant, contaminant,
hazardous material
2
<PAGE>
(as defined in any of the Environmental Laws), toxic substances (as defined in
any of the Environmental Laws), asbestos or asbestos containing material, urea
formaldehyde, polychlorinated biphenyls, regulated substances and wastes,
radioactive materials, and petroleum or petroleum by-products, including crude
oil or any fraction thereof, except the term "Contaminant" shall not include
small quantities of maintenance, cleaning and emergency generator fuel supplies
customary for the operation of radio stations and maintained in compliance with
all Environmental Laws in the ordinary course of business.
"CONTRACTS" means all contracts, consulting agreements, leases,
non-governmental licenses and other agreements (including leases for personal or
real property and employment agreements), written or oral (including any
amendments and other modifications thereto) to which Sinclair, SCI, or any
Seller is a party or that are binding upon any Seller, that relate to or affect
the Assets or the business or operations of the Stations, and that either (a)
are in effect on the date of this Agreement, including those listed on Schedule
3.7 hereto, or (b) are entered into by any Seller between the date of this
Agreement and the Closing Date.
"DELAY AMOUNT" shall equal 0.75% of the Initial Purchase Price.
"DEPOSIT RELEASE DATE" is the date on which a Closing under this
Agreement and the Multi-Stations Agreement has occurred for which more than
forty-five percent (45%) of the Aggregated Initial Purchase Price has been paid
to Sellers.
"EFFECTIVE TIME" means 12:01 a.m., Eastern time, on the Closing Date.
"ENVIRONMENTAL LAWS" shall mean and include, but not be limited to, any
applicable federal, state or local law, statute, charter, ordinance, rule or
regulation or any governmental agency interpretation, policy or guidance,
including without limitation applicable safety/environmental/health laws such as
but not limited to the Resource Conservation and Recovery Act of 1976,
Comprehensive Environmental Response Compensation and Liability Act, Federal
Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean
Water Act, and the Toxic Substance Control Act, as any of the foregoing have
been amended, and any permit, order, directive, court ruling or order or consent
decree applicable to or affecting the Property or any other property (real or
personal) used by or relating to the Station in question promulgated or issued
pursuant to any Environmental Laws which pertains to, governs, or controls the
generation, storage, remediation or removal of Contaminants or otherwise
regulates the protection of health and the environment including, but not
limited to, any of the following activities, whether on site or off site if such
could materially affect the site: (i) the emission, discharge, release, spilling
or dumping of any Contaminant into the air, surface water, ground water, soil or
substrata; or (ii) the use, generation, processing, sale, recycling, treatment,
handling, storage, disposal, transportation, labeling or any other management of
any Contaminant.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW DEPOSIT" means the sum of Fifty Million Dollars
($50,000,000.00) or, at Buyer's option, a letter of credit in favor of Sellers
in the face amount of Fifty Million Dollars ($50,000,000.00), which was
deposited by Buyer with First Union National Bank (the "ESCROW
3
<PAGE>
AGENT") on August 18, 1999, pursuant to the Multi-Stations Agreement to secure
the obligations of Buyer to close under this Agreement and the Multi-Stations
Agreement, with (i) such deposit being held by the Escrow Agent in accordance
with the Escrow Agreement executed among Buyer, Sellers and Escrow Agent on
August 18, 1999 pursuant to the Multi-Stations Agreement, and (ii) the Escrow
Deposit, and all earnings thereon, being returned to Buyer upon the consummation
of this Agreement and the Multi-Stations Agreement or as otherwise provided
under the Multi-Stations Agreement.
"EXCESS AMOUNT" has the meaning set forth in Section 10.5.
"EXCLUDED REAL PROPERTY INTERESTS" means all interests in Real Property
listed on Schedule 2.2 hereto.
"EXCLUDED TANGIBLE PERSONAL PROPERTY" means all tangible personal
property owned or held by Sellers that is located at the Excluded Real Property
other than such tangible personal property listed on Schedule 3.6 hereto, any
assets used primarily in the operation of any television broadcast station
owned, operated or programmed by Sellers or any Affiliate of Sellers, any assets
used primarily in the operation of any radio broadcast station owned, operated
or programmed by Sellers, but not included as a "Station" hereunder, and any
tangible personal property located at Suite 220, Meadow Mill at Woodberry, 3600
Clipper Mill Road, Baltimore, Maryland 21211.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
transfer of the FCC Licenses by Sellers to Buyer as contemplated by this
Agreement.
"FCC LICENSES" means those licenses, permits and authorizations issued
by the FCC to Sellers in connection with the business and operations of the
Stations.
"FINAL ORDER" shall mean an action by the Commission upon any
application for FCC Consent filed by the parties hereto for FCC consent,
approval or authorization, which action has not been reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action, no protest,
petition to deny, petition for rehearing or reconsideration, appeal or request
for stay is pending, and as to which action the time for filing of any such
protest, petition, appeal or request and any period during which the Commission
may reconsider or review such action on its own authority has expired.
"HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements
Acts of 1976, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"INTANGIBLES" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by
Sellers or under which Sellers are licensed or franchised and that are used in
the business and
4
<PAGE>
operations of the Stations, together with any additions thereto between the date
of this Agreement and the Closing Date.
"KNOWLEDGE" or any derivative thereof with respect to the Sellers
means, exclusively, the actual Knowledge of the President and Chief Executive
Officer or the Chief Financial Officer of Sinclair Broadcast Group, Inc.
("SINCLAIR"), the general managers of the Stations, and any other employee of
Sinclair or SCI designated as a "vice president" or any officer of any of the
Sellers.
"LEASED REAL PROPERTY" means all real property and all buildings and
other improvements thereon and appurtenant thereto leased or held by Sellers and
used in the business or operation of the Stations.
"LICENSES" means all licenses, permits, construction permits and other
authorizations issued by the FCC, the Federal Aviation Administration, or any
other federal, state, or local governmental authorities to Sellers, currently in
effect and used in connection with the conduct of the business or operations of
the Stations (other than the Non-Owned Stations), together with any additions
thereto between the date of this Agreement and the Closing Date.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets or financial condition of the Stations taken as a whole, except
for any such material adverse effect resulting from (a) general economic
conditions applicable to the radio broadcast industry, (b) general conditions in
the markets in which the Stations operate, or (c) circumstances that are not
likely to recur and either have been substantially remedied or can be
substantially remedied without substantial cost or delay.
"MATERIAL CONTRACT" means those Assumed Contracts that are designated
on Schedules 3.5 and 3.7 as "Material Contracts."
"MULTI-STATIONS AGREEMENT" means that certain Amended and Restated
Asset Purchase Agreement dated as of August 20, 1999 but effective August 18,
1999, by and between the Multi-Stations Sellers of the Multi-Stations and the
USA Digital Shares (as defined in the Multi-Stations Agreement) and Buyer
pursuant to which the Multi-Stations Sellers have agreed to sell, and Buyer has
agreed to purchase, the Multi-Stations and the USA Digital Shares.
"MULTI-STATIONS SELLERS" means Sinclair Communications, Inc., WCGV,
Inc., a Maryland corporation, Sinclair Radio of Milwaukee Licensee, LLC, a
Maryland limited liability company, Sinclair Radio of New Orleans, LLC, a
Maryland limited liability company, Sinclair Radio of New Orleans Licensee, LLC,
a Maryland limited liability company, Sinclair Radio of Memphis, Inc., a
Maryland corporation, Sinclair Radio of Memphis Licensee, Inc., a Delaware
corporation, Sinclair Properties, LLC, a Virginia limited liability company,
Sinclair Radio of Norfolk/Greensboro Licensee L.P., a Virginia limited
partnership, Sinclair Radio of Norfolk Licensee, LLC, a Maryland limited
liability company, Sinclair Radio of Buffalo, Inc., a Maryland corporation,
Sinclair Radio of Buffalo Licensee, LLC, a Maryland limited liability company,
WLFL, Inc., a Maryland corporation, Sinclair Radio of Greenville Licensee, Inc.,
a Delaware corporation, Sinclair
5
<PAGE>
Radio of Wilkes-Barre, Inc., a Maryland corporation, and Sinclair Radio of
Wilkes-Barre Licnesee, LLC, a Maryland limited liability company.
"MULTI-STATIONS" means the following radio broadcast stations: WPTE-FM,
Virginia Beach, VA; WWDE-FM, Hampton, VA; WNVZ-FM, Norfolk, VA; WVKL-FM,
Norfolk, VA, WMQX-FM, Winston-Salem, NC; WQMG-FM, Greensboro, NC; WJMH-FM,
Reidsville, NC; WEAL-AM, Greensboro, NC; WEMP-AM, Milwaukee, WI; WMYX-FM,
Milwaukee, WI; WXSS-FM, Wauwatosa, WI; WLMG-FM, New Orleans, LA; WWL-AM, New
Orleans, LA; WSMB-AM, New Orleans, LA; WEZB-FM, New Orleans, LA; WLTS-FM,
Kenner, LA; WTKL-FM, New Orleans, LA; WRVR-FM, Memphis, TN; WJCE-AM, Memphis,
TN; WOGY-FM, Germantown, TN; WMJQ-FM, Buffalo, NY; WKSE-FM, Niagara Falls, NY;
WBEN-AM, Buffalo, NY; WWKB-AM, Buffalo, NY; WGR-AM, Buffalo, NY; and WWWS-AM,
Buffalo, NY; WGGI-FM, Benton, PA; WKRZ-FM; Wilkes-Barre, PA: WGGY-FM, Scranton,
PA; WILK-AM, Wilkes-Barre, PA; WGBI-AM, Scranton, PA; WSHG-FM, Pittston, PA;
WILP-AM, West Hazelton, PA; WWFH-FM, Freeland, PA; WKRF-FM, Tobyhanna, PA;
WOLI-FM, Easely, SC; and WOLI-FM, Greer, SC.
"ORIGINAL AGREEMENT" means that certain Asset Purchase Agreement dated
August 18, 1999, by and among the Multi-Station Sellers, Sellers hereunder, and
Buyer relating to the sale by the Multi-Stations Sellers of the Multi-Stations,
the Stations, and the USA Digital Shares to Buyer.
"OWNED REAL PROPERTY" means all real property and all buildings and
other improvements thereon and appurtenant thereto owned by Sellers and used in
the business or operations of the Stations.
"PERMITTED ENCUMBRANCES" means (a) encumbrances of a landlord, or other
statutory lien not yet due and payable, or a landlord's liens arising in the
ordinary course of business, (b) encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of the Contracts
set forth on the Schedules, which Contracts have been made available to Buyer,
(c) encumbrances for Taxes not yet delinquent or which are being contested in
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on Sellers' books in accordance with generally accepted
accounting principles, or (d) encumbrances that do not materially detract from
the value of any of the Assets or materially interfere with the use thereof as
currently used.
"PERSON" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"REAL PROPERTY" means all real property and all buildings and other
improvements thereon and appurtenant thereto, whether or not owned, leased or
held by Sellers used in the business or operations of the Stations.
"REAL PROPERTY INTERESTS" means all interests in Owned Real Property
and Leased Real Property, including fee estates, leaseholds and subleaseholds,
purchase options, easements, licenses, rights to access, and rights of way, and
all buildings and other improvements thereon and appurtenant thereto, owned or
held by Sellers that are used in the business or operations of
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the Stations, together with any additions, substitutions and replacements
thereof and thereto between the date of this Agreement and the Closing Date, but
excluding the Excluded Real Property Interests.
"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property owned or held by Sellers that
is used or useful in the conduct of the business or operations of the Stations,
together with any additions, substitutions and replacements thereof and thereto
between the date of this Agreement and the Closing Date, but excluding the
Excluded Tangible Personal Property.
"TAX" means any federal, state, local, or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or similar governmental assessment, together with any interest, additions,
or penalties with respect thereto and any interest in respect of such additions
or penalties.
"TAX RETURN" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted to any governmental authority with respect to any Tax.
"THRESHOLD AMOUNT" has the meaning set forth in Section 10.5.
"UNEXPENDED REMEDIATION AMOUNT" shall mean Three Million Dollars
($3,000,000.00) as aggregated with the Unexpended Remediation Amount under the
Multi-Stations Agreement, minus any amounts previously expended by Sellers to
remediate any of the Real Property pursuant to Section 6.16.
"USA DIGITAL SHARES" means the 300,000 shares of common stock of USA
Digital Radio, Inc. which are to be sold to Buyer under the Multi-Station
Agreement.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have the meanings set forth in the sections indicated:
Term Section
- ---- -------
Balance Sheet Date Section 3.10
Benefit Arrangement Section 3.14 (a)(v)
Benefit Plans Section Section 3.14(a)(ii)
Buyer Preamble
Buyer's Plan Section 4.8
Claimant Section 10.4
Collection Period Section 6.7(a)
Confidentiality Agreement Section 6.4
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Deferred Contract Section 5.11(b)
Designee Section 11.3(b)
Employees Section 3.14(a)
Environmental Laws Section 3.16
Estimated Purchase Price Section 2.4(a)
Excluded Real Property Interests Section 1.1
Excluded Tangible Personal Property Section 1.1
FCC Objection Section 7.1(c)
FTC Section 4.6
Financial Statements Section 3.10
Hart-Scott-Rodino Filing Section 6.2
Indemnity Cap Section 10.5
Indemnifying Party Section 10.4
Initial Employee Cap Section 6.10(g)
Initial Purchase Price Section 2.3
Lease Section 6.12
Multiemployer Plan Section 3.14(a)(ii)
Operational Equipment Section 3.22
Pension Plan Section 3.14(a)(iii)
Purchase Price Section 2.3
Reimbursement Period Section 6.10(g)
Represented Employees Section 6.10(e)
Scheduled Employees Section 6.10(g)
Scheduled Retention Agreements Section 6.10(g)
SCI Preamble
Section 6.9 Amount Section 6.9
Seller Preamble
Seller Entities Section 6.10(i)
Sellers' Employees Section 6.10(i)
Sinclair Section 1.1
Stations Recitals
Stations Delay Amount Date Section 2.3(a)(i)
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Transferred Employees Section 6.10
Welfare Plan Section 3.14(a)(i)
SECTION 2: EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE
2.1 Agreement to Exchange and Transfer. Subject to the terms and conditions set
forth in this Agreement with respect to the Stations, Sellers hereby agree to
transfer, convey, assign and deliver to Buyer on the Closing Date, and Buyer
agrees to acquire, all of Sellers' right, title and interest in the tangible and
intangible assets used in connection with the conduct of the business or
operations of the Stations, together with any additions thereto between the date
of this Agreement and the Closing Date, but excluding the assets described in
Section 2.2, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, charges, or encumbrances of any nature whatsoever
(except for Permitted Encumbrances), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill of the Stations, if any;
(f) Reserved.
(g) All of Sellers' proprietary information, technical information and
data, machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints and schematics, including filings with the FCC, in each
case to the extent relating to the business and operation of the Stations;
(h) All choses in action of Sellers relating to the Stations to the
extent they relate to the period after the Effective Time; and
(i) All books and records relating to the business or operations of the
Stations, including executed copies of the Assumed Contracts, and all records
required by the FCC to be kept by the Stations.
2.2 Excluded Assets. The Assets shall exclude the following:
(a) Sellers' cash, cash equivalents and deposits, all interest payable
in connection with any such items and rights in and to bank accounts, marketable
and other securities and similar investments of Sellers;
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(b) Any insurance policies, promissory notes, amounts due to Sellers
from employees, bonds, letters of credit, certificates of deposit, or other
similar items, and any cash surrender value in regard thereto; provided, that in
the event Sellers are obligated to assign to Buyer the proceeds of any such
insurance policy at the time a Closing occurs under Section 6.3, such proceeds
shall be included in the Assets;
(c) Any pension, profit-sharing, or employee benefit plans, including
all of Sellers' interest in any Welfare Plan, Pension Plan or Benefit
Arrangement (each as defined in Section 3.14(a);
(d) All Tangible Personal Property disposed of or consumed in the
ordinary course of business as permitted by this Agreement;
(e) All Tax Returns and supporting materials, all original financial
statements and supporting materials, all books and records that Sellers are
required by law to retain, all of Sellers' organizational documents, corporate
books and records (including minute books and stock ledgers) and originals of
account books of original entry, all records of Sellers relating to the sale of
the Assets and all records and documents related to any assets excluded pursuant
to this Section 2.2;
(f) Any interest in and to any refunds of federal, state, or local
franchise, income, or other taxes for periods (or portions thereof) ending on or
prior to the Closing Date;
(g) All Accounts Receivable;
(h) All rights and claims of Sellers whether mature, contingent or
otherwise, against third parties relating to the Assets of the Stations, whether
in tort, contract or otherwise, other than rights and claims against third
parties relating to the Assets which have as their basis loss, damage or
impairment of or to any of the Assets and which loss, damage or impairment has
not been restored or repaired prior to the Closing in which any of the Assets
which has been so damaged or impaired is being acquired by Buyer (or in the case
of a lost asset, that would have been acquired but for such loss);
(i) Any Contracts which are not Assumed Contracts;
(j) All of each Sellers' deposits and prepaid expenses; provided, any
deposits and prepaid expenses shall be included in the Assets to the extent that
Sellers receive a credit therefor in the proration of the Purchase Price
pursuant to Section 2.3(b);
(k) All rights of Sellers under or pursuant to this Agreement (or any
other agreements contemplated hereby);
(l) All rights to the names Sinclair Broadcast Group, "Sinclair
Communications," Sinclair and any logo or variation thereof and goodwill
associated therewith;
(m) The Excluded Real Property Interests;
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(n) The Excluded Tangible Personal Property;
(o) All assets owned by the Sellers and used in connection with any
television or radio broadcast stations owned and/or programmed by any of the
Sellers or Sellers have the right to acquire other than the Stations, including
(without limitation) all assets related to Sellers' operation and ownership of
the Interstate Road Network and the Road Gang Coast to Coast Network; KPNT-FM,
St. Genevieve, MO; WVRV-FM, East St. Louis, IL; WIL-FM, St. Louis, MO; WRTH-AM,
St. Louis, MO; KIHT-FM, St. Louis, MO; KXOK-FM, St. Louis, MO; KUPN-AM, Mission,
KS, the assets of the Multi-Stations, and all assets of the Multi-Stations
Sellers which are subject to the provisions of or specifically excluded from the
Multi-Stations Agreement and the USA Digital Shares;
(p) All shares of capital stock, partnership interests, interests in
limited liability companies or other equity interest, including, but not limited
to, any options, warrants or voting trusts relating thereto which are owned by
Sellers and not expressly specified in Section 2.1.
2.3 Purchase Price. The purchase price of the Assets shall be One Hundred Twenty
Two Million U.S. Dollars ($122,000,000) (the "Initial Purchase Price"), plus the
Section 6.9 Amount adjusted as provided below (the "Purchase Price").
(a) Purchase Price Increase. Except as otherwise provided in this
Agreement, the Initial Purchase Price shall be increased by the Delay Amount
upon the occurrence of any of the following events:
(i) Reserved; and
(ii) one hundred fifty (150) days following public notice by
the FCC that applications for FCC Consent have been accepted for filing (the
"Stations Delay Amount Date") if Closing has not occurred with respect to the
Stations due to the failure to receive any necessary consent, including, but not
limited to, the FCC Consent, or expiration or termination under
Hart-Scott-Rodino as a result of facts relating to Buyer or its Affiliates,
including without limitation such facts as are disclosed on Schedule 4.6; and
(iii) each thirty (30) day period subsequent to the occurrence
of the Stations Delay Amount Date until the later to occur of (x) the Closing,
or (y) termination of this Agreement in accordance with its terms.
The Purchase Price and any increase due pursuant to this Section 2.3(a)
shall be paid at Closing.
(b) Prorations. The Purchase Price shall be increased or decreased as
required to effectuate the proration of revenues and expenses, as set forth
below. All revenues and all expenses arising from the operation of the Stations,
including tower rental, business and license fees, utility charges, real
property and personal property and other similar Taxes and assessments levied
against or with respect to the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, payments due
under film or programming license
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agreements, and employee compensation, including wages (including bonuses which
constitute wages), salaries, accrued sick leave, severance pay and related Taxes
shall be prorated between Buyer and Sellers as to the Stations at Closing in
accordance with the principle that Sellers shall receive all revenues and shall
be responsible for all expenses, costs and liabilities allocable to the
operations of the Stations for the period prior to the Effective Time of
Closing, and Buyer shall receive all revenues and shall be responsible for all
expenses, costs and obligations allocable to the operations of the Stations for
the period after the Effective Time of Closing, subject to the following:
(i) There shall be no adjustment for, and Sellers shall remain
solely liable with respect to, any Contracts not included in the Assumed
Contracts and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.2. An adjustment and proration shall be made in favor
of Buyer to the extent that Buyer assumes any liability under any Assumed
Contract to refund (or to credit against payments otherwise due) any security
deposit or similar prepayment paid to Sellers by any lessee or other third
party. An adjustment and proration shall be made in favor of Sellers to the
extent Buyer receives the right to receive a refund (or to a credit against
payments otherwise due) under any Assumed Contract to any security deposit or
similar pre-payment paid by or on behalf of Sellers.
(ii) An adjustment and proration shall be made in favor of
Sellers for the amount, if any, by which the fair market value of the goods or
services to be received by the Stations under its trade or barter agreements as
of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars
($250,000) the fair market value of any advertising time remaining to be run by
the Stations as of the Effective Time. An adjustment and proration shall be made
in favor of Buyer to the extent that the amount of any advertising time
remaining to be run by the Stations under its trade or barter agreements as of
the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars
($250,000) the fair market value of the goods or services to be received by the
Stations as of the Effective Time.
(iii) There shall be no proration for program barter.
(iv) Reserved.
(v) An adjustment and proration shall be made in favor of
Sellers for the amount, if any, of prepaid expense, the benefit of which accrues
to Buyer hereunder, and other current assets acquired by Buyer hereunder which
are paid by Sellers to the extent such prepaid expenses and other current assets
relate to the period after the Effective Time.
(vi) There shall be no proration for any payment(s) made by
Interep to any of the Sellers in connection with obtaining the right to serve as
the national sales representative of any of the Stations.
(c) Manner of Determining Adjustments. The Purchase Price, taking into
account the adjustments and prorations pursuant to Section 2.3(b), will be
determined in accordance with the following procedures:
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(i) Sellers shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Sellers' good faith estimate of the adjustments to the Purchase
Price under Section 2.3(b). The preliminary settlement statement shall (A)
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(b) as to the Stations, to the extent such
adjustments can be determined or estimated as of the date of the preliminary
settlement statement, and such other information as may be reasonably requested
by Buyer, and (B) be certified by Sellers to be true and complete to Sellers'
Knowledge as of the date thereof.
(ii) Not later than ninety (90) days after the Closing Date,
Buyer will deliver to Sellers a statement setting forth Buyer's determination of
the Purchase Price and the calculation thereof pursuant to Section 2.3(b) as to
the Stations. Buyer's statement (A) shall contain all information reasonably
necessary to determine the adjustments to the Purchase Price under Section
2.3(b), and such other information as may be reasonably requested by Sellers,
and (B) shall be certified by Buyer to be true and complete to Buyer's knowledge
as of the date thereof. If Sellers dispute the amount of such Purchase Price
determined by Buyer, they shall deliver to Buyer within thirty (30) days after
receipt of Buyer's statement a statement setting forth their determination of
the amount of such Purchase Price. If Sellers notify Buyer of its acceptance of
Buyer's statement, or if Sellers fail to deliver their statement within the
thirty (30)-day period specified in the preceding sentence, Buyer's
determination of the Purchase Price shall be conclusive and binding on the
parties as of the last day of the thirty (30)-day period.
(iii) Buyer and Sellers shall use good faith efforts to
resolve any dispute involving the determination of the Purchase Price paid by
Buyer at the Closing. If the parties are unable to resolve the dispute within
forty-five (45) days following the delivery of all of Buyer's statements to be
provided pursuant to Section 2.3(c)(ii) after the Closing, Buyer and Sellers
shall jointly designate an independent certified public accounting firm of
national standing which has not regularly provided services to either the Buyer
or Sellers in the last three (3) years, who shall be knowledgeable and
experienced in the operation of radio broadcasting stations, to resolve the
dispute. If the parties are unable to agree on the designation of an independent
certified public accounting firm, the selection of the accounting firm to
resolve the dispute shall be submitted to arbitration to be held in Baltimore,
Maryland, in accordance with the commercial arbitration rules of the American
Arbitration Association. The accounting firm's resolution of the dispute shall
be final and binding on the parties, and a judgment may be entered thereon in
any court of competent jurisdiction. Any fees of this accounting firm, and, if
necessary, for arbitration to select such accountant, shall be divided equally
between the parties.
2.4 Payment of Purchase Price. The Initial Purchase Price shall be paid by Buyer
to Sellers as follows:
(a) Payment of Estimated Purchase Price At Closing. The Initial
Purchase Price, adjusted by the estimated adjustments pursuant to Section 2.3(b)
as set forth in Sellers' preliminary settlement statement pursuant to Section
2.3(c)(i), is referred to as the "ESTIMATED PURCHASE PRICE." At the Closing,
Buyer shall pay or cause to be paid to Sellers the Estimated Purchase Price for
the Stations, including, if applicable, any Delay Amount, by federal wire
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transfer of same-day funds pursuant to wire transfer instructions, which
instructions shall be delivered to Buyer by Sellers at least two (2) business
days prior to the Closing Date.
(b) Buyer and Sellers shall cause the Escrow Deposit to be released to
Sellers as partial payment of the Estimated Purchase Price by delivering wiring
instructions to the Escrow Agent two (2) days prior to the Closing Date;
provided, however, that none of the Escrow Deposit shall be released by the
parties at the Closing until the Deposit Release Date. Once the Deposit Release
Date has occurred, the Sellers agree immediately to deliver to the Escrow Agent
their consent to the release of that pro rata portion of the Escrow Deposit
attributable to a Closing hereunder or under the Multi-Stations Agreement
consummated prior to the Deposit Release Date. Until the Deposit Release Date,
Buyer shall deliver the entire Estimated Purchase Price at the Closing for the
Stations.
(c) Payments to Reflect Adjustments. The Purchase Price as finally
determined pursuant to Section 2.3(c) shall be paid as follows:
(i) If the Purchase Price as finally determined pursuant to
Section 2.3(c) exceeds the Estimated Purchase Price, Buyer shall pay to Sellers,
in immediately available funds within five (5) business days after the date on
which the Purchase Price is determined pursuant to Section 2.3(c), the
difference between the Purchase Price and the Estimated Purchase Price.
(ii) If the Purchase Price as finally determined pursuant to
Section 2.3(c) is less than the Estimated Purchase Price, Sellers shall pay to
Buyer, in immediately available funds within five (5) business days after the
date on which the Purchase Price is determined pursuant to Section 2.3(c), the
difference between the Purchase Price and the Estimated Purchase Price.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer
shall assume and undertake to pay, discharge and perform all obligations and
liabilities of Sellers under the Licenses, the Assumed Contracts or as otherwise
specifically provided for herein to the extent that either (i) the obligations
and liabilities relate to the time after the Effective Time of the Closing, or
(ii) the Purchase Price was reduced pursuant to Section 2.3(b) as a result of
the proration of such obligations and liabilities. Buyer shall not assume any
other obligations or liabilities of Sellers, including (1) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (2) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Effective Time of the Closing to which such Assumed Contracts
relate, except insofar as an adjustment therefor is made in favor of Buyer under
Section 2.3(b), (3) any claims or pending litigation or proceedings relating to
the operation of the Stations prior to the Closing or (4) any obligations or
liabilities of Sellers under any employee pension, retirement, or other benefit
plans.
SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer as of the date hereof and as of the
Closing Date (except for representations and warranties that speak as of a
specific date or time, in which case, such representations and warranties shall
be true and complete as of such date or time) as follows:
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3.1 Organization and Authority of Sellers. Each Seller is a corporation, limited
liability company or limited partnership (as applicable), duly organized,
validly existing and in good standing under the laws of the State listed on
Schedule 3.1 next to each such Seller's name. Each Seller has the requisite
corporate power and authority (or other appropriate power and authority based on
the structure of such Seller) to own, lease and operate its properties, to carry
on its business in the places where such properties are now owned, leased, or
operated and such business is now conducted, and to execute, deliver and perform
this Agreement and the documents contemplated hereby according to their
respective terms. Each Seller is duly qualified and in good standing in each
jurisdiction listed on Schedule 3.1 next to each such Seller's name, which are
all jurisdictions in which such qualification is required. Except as set forth
on Schedule 3.1, no Seller is a participant in any joint venture or partnership
with any other Person with respect to any part of the operations of the Stations
or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by each Seller have been duly authorized by all
necessary corporate or other required action on the part of each Seller. This
Agreement has been duly executed and delivered by each Seller and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements; Consents. Subject to obtaining the
Consents listed on Schedules 3.3 and 3.7, the execution, delivery and
performance by each Seller of this Agreement and the documents contemplated
hereby (with or without the giving of notice, the lapse of time, or both): (a)
do not require the consent of any third party; (b) will not conflict with any
provision of the Articles of Incorporation, Bylaws or other organizational
documents of Sellers; (c) will not conflict with, result in a breach of, or
constitute a default under any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (d) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any material
agreement, instrument, license, or permit to which any Seller is a party or by
which any Seller may be bound legally; and (e) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon any of the Assets. Except for the FCC Consent provided
for in Section 6.1, the filings required by Hart-Scott-Rodino provided for in
Section 6.2 and the other Consents described in Schedules 3.3 and 3.7, no
consent, approval, permit, or authorization of, or declaration to, or filing
with any governmental or regulatory authority or any other third party is
required (a) to consummate this Agreement and the transactions contemplated
hereby, or (b) to permit Sellers to transfer and convey the Assets to Buyer.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list of the
FCC Licenses. Sellers have made available to Buyer true and complete copies of
the main Licenses (including any amendments and other modifications thereto).
The Licenses have been validly issued, and each Seller is the authorized legal
holder of the Licenses and those FCC Licenses listed on Schedule 3.4. The
Licenses and the FCC Licenses listed on Schedule 3.4 comprise all
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of the material licenses, permits, and other authorizations required from any
governmental or regulatory authority for the lawful conduct in all material
respects of the business and operations of the Stations in the manner and to the
full extent they are now conducted, and, except as otherwise disclosed on
Schedule 3.4, none of the Licenses is subject to any unusual or special
restriction or condition that could reasonably be expected to limit materially
the full operation of the Stations as now operated. The FCC Licenses are in full
force and effect, are valid for the balance of the current license term
applicable generally to radio stations licensed to the same communities as the
Stations, are unimpaired by any acts or omissions of any Seller or any of its
Affiliates, or the employees, agents, officers, directors, or shareholder of any
Seller or any of its Affiliates, and are free and clear of any restrictions
which might limit the full operation of the Stations in the manner and to the
full extent as they are now operated (other than restrictions under the terms of
the licenses themselves or applicable to the radio broadcast industry
generally). Except as listed on Schedule 3.4 hereto, there are no applications,
proceedings or complaints pending or, to the knowledge of any Seller, threatened
which may have an adverse effect on the business or operation of the Stations
(other than rulemaking proceedings that apply to the radio broadcasting industry
generally). Except as disclosed on Schedule 3.4 hereto, no Seller is aware of
any reason why any of the FCC Licenses might not be renewed in the ordinary
course for a full term without material qualifications or of any reason why any
of the FCC Licenses might be revoked. The Stations are in compliance with the
Commission's policy on exposure to radio frequency radiation. No renewal of any
FCC License would constitute a major environmental action under the rules of the
Commission. To the knowledge of Sellers, there are no facts relating to Sellers
which, under the Communications Act of 1934, as amended, or the existing rules
of the Commission, would (a) disqualify any Seller from assigning any of its FCC
Licenses to Buyer, (b) cause the filing of any objection to the assignment of
the FCC Licenses to Buyer, (c) lead to a delay in the processing by the FCC of
the applications of the FCC Licenses to Buyer, (d) lead to a delay in the
termination of the waiting period required by Hart-Scott-Rodino, or (e)
disqualify any Seller from consummating the transactions contemplated herein
within the times contemplated herein. An appropriate public inspection file for
each Station is maintained at the Station's studio in accordance with Commission
rules. Access to the Stations' transmission facilities are restricted in
accordance with the policies of the Commission.
3.5 Real Property. Schedule 3.5 contains a complete description of all Real
Property Interests (including street address, owner, and Sellers' use thereof)
other than the Excluded Real Property Interests. The Real Property Interests
listed on Schedule 3.5, together with the Real Property Interests which will be
created by the execution of the Lease by Buyer and the appropriate Sellers,
comprises all interests in real property necessary to conduct the business and
operations of the Stations as now conducted. Except as described on Schedule
3.5, Sellers have good fee simple title to all fee estates included in the Real
Property Interests and good title to all other Real Property Interests, in each
case free and clear of all liens, mortgages, pledges, covenants, easements,
restrictions, encroachments, leases, charges, and other claims and encumbrances,
except for Permitted Encumbrances. Each leasehold or subleasehold interest
included as a Material Contract on Schedule 3.5 is legal, valid, binding,
enforceable and in full force and effect. To Sellers' Knowledge, each leasehold
or subleasehold designated in the Real Property Interests, but not designated as
Material Contracts on Schedule 3.5 is legal, binding and enforceable and in full
force and effect. Neither the Seller party thereto or to Sellers' Knowledge any
other party thereto, is in default, violation or breach under any lease or
sublease and no event has occurred and is continuing that constitutes (with
notice or passage of time or both) a default,
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violation or breach thereunder. Sellers have not received any notice of a
default, offset or counterclaim under any lease or sublease with respect to any
of the Real Property Interests. As of the date hereof and as of the applicable
Closing Date, Sellers enjoy peaceful and undisturbed possession of the leased
Real Property Interests; and so long as Sellers fulfill their obligations under
the lease therefor, Sellers have enforceable rights to nondisturbance and quiet
enjoyment against its lessor or sublessor, and, to the Knowledge of Sellers,
except as set forth in Schedule 3.5, no third party holds any interest in the
leased premises with the right to foreclose upon Sellers' leasehold or
subleasehold interest. Sellers have legal and practical access to all of the
Owned Real Property and Leased Real Property, as applicable. Except as otherwise
disclosed in Schedule 3.5, all towers, guy anchors, ground radials, and
buildings and other improvements included in the Assets are located entirely on
the Owned Real Property or the Leased Real Property, as applicable, listed in
Schedule 3.5. All Owned Real Property and Leased Real Property (including the
improvements thereon) (a) is in good condition and repair consistent with its
current use, (b) is available for immediate use in the conduct of the business
and operations of the Stations, and (c) complies in all material respects with
all applicable material building or zoning codes and the regulations of any
governmental authority having jurisdiction, except to the extent that the
current use by Sellers, while permitted, constitutes or would constitute a
"nonconforming use" under current zoning or land use regulations. No eminent
domain or condemnation proceedings are pending or, to the knowledge of Sellers,
threatened with respect to any Real Property Interests.
3.6 Tangible Personal Property. The lists of Tangible Personal Property
comprising all material items of tangible personal property, other than the
Excluded Tangible Personal Property, necessary to conduct the business and
operations of the Stations as now conducted has been provided to Buyer
previously. Except as described in Schedule 3.6, Sellers own and have good title
to each item of Tangible Personal Property and none of the Tangible Personal
Property owned by Sellers is subject to any security interest, mortgage, pledge,
conditional sales agreement, or other lien or encumbrance, except for Permitted
Encumbrances. With allowance for normal repairs, maintenance, wear and
obsolescence, each material item of Tangible Personal Property is in good
operation condition and repair and is available for immediate use in the
business and operations of the Stations. All material items of transmitting and
studio equipment included in the Tangible Personal Property (a) have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (b) will permit the Stations and any unit auxiliaries
thereto to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC and in all material respects with all other
applicable federal, state and local statutes, ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts which
either (a) have a remaining term (after taking into account any cancellation
rights of Sellers) of more than one year after the date hereof or (b) require
expenditures in excess of Twenty Five Thousand Dollars ($25,000) in any calendar
year after the date hereof, except contracts with advertisers for production or
the sale of advertising time on the Stations for cash that may be canceled by
Sellers without penalty on not more than ninety days' notice. Sellers have
delivered or made available to Buyer true and complete copies of all written
Assumed Contracts, and true and complete descriptions of all oral Assumed
Contracts (including any amendments and other modifications to such Contracts).
Other than the Contracts listed on Schedule 3.7, Schedule 3.5, and the Lease,
Sellers require no material contract, lease, or other agreement to enable them
to
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carry on their business in all material respects as now conducted. All of the
Contracts are in full force and effect and are valid, binding and enforceable in
accordance with their terms except as the enforceability of such Contracts may
be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies. Neither the Seller party thereto or, to the knowledge of Sellers, any
other party thereto, is in default, violation or breach in any material respect
under any Contract and no event has occurred and is continuing that constitutes
(with notice or passage of time or both) a default, violation, or breach in any
material respect thereunder. Except as disclosed on Schedule 3.7, other than in
the ordinary course of business, Sellers do not have Knowledge of any intention
by any party to any Contract (a) to terminate such Contract or amend the terms
thereof, (b) to refuse to renew the Contract upon expiration of its term, or (c)
to renew the Contract upon expiration only on terms and conditions that are more
onerous than those now existing. Except for the need to obtain the Consents
listed on Schedule 3.7, the exchange and transfer of the Assets in accordance
with this Agreement will not affect the validity, enforceability, or
continuation of any of the Contracts.
3.8 Intangibles. Schedule 3.8 is a true and complete list of all Intangibles
(exclusive of Licenses listed in Schedule 3.4) that are required to conduct the
business and operations of the Stations as now conducted, all of which are valid
and in good standing and uncontested. Sellers have provided or made available to
Buyer copies of all documents establishing or evidencing the Intangibles listed
on Schedule 3.8. Sellers own or have a valid license to use all of the
Intangibles listed on Schedule 3.8. Other than with respect to matters generally
affecting the radio broadcasting industry and not particular to Sellers and
except as set forth on Schedule 3.8, Sellers have not received any notice or
demand alleging that Sellers are infringing upon or otherwise acting adversely
to any trademarks, trade names, service marks, service names, copyrights,
patents, patent applications, know-how, methods, or processes owned by any other
Person, and there is no claim or action pending, or to the Knowledge of Sellers
threatened, with respect thereto. To the knowledge of Sellers, except as set
forth on Schedule 3.8, no other Person is infringing upon Sellers rights or
ownership interest in the Intangibles.
3.9 Title to Properties. Except as disclosed in Schedule 3.5 or 3.6, Sellers
have good and marketable title to the Assets subject to no mortgages, pledges,
liens, security interests, encumbrances, or other charges or rights of others of
any kind or nature except for Permitted Encumbrances.
3.10 Financial Statements. Sellers have furnished Buyer with true and complete
copies of unaudited financial statements of the Stations containing a balance
sheet and statement of income, as at and for the fiscal year ended December 31,
1998, and an unaudited balance sheet and statement of income as at and for the
seven (7) months ended July 31, 1999 (the "BALANCE SHEET DATE") (collectively,
the "FINANCIAL STATEMENTS"). To the extent the Financial Statements relate to
the period of time during which the Stations were owned by the Sellers (or any
Affiliate thereof) the Financial Statements have been prepared from the books
and records of Sellers and have been prepared in a manner consistent with the
audited Financial Statements of Sinclair, except for the absence of footnotes
and certain year-end adjustments. The Financial Statements accurately reflect
the books, records and accounts of Sellers, present fairly and accurately the
financial condition of the Stations as at their respective dates and the results
of operations for the
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periods then ended and none of the Financial Statements understates in any
material respect the normal and customary costs and expenses of conducting the
business or operations of the Stations in any material respect as currently
conducted by Sellers or otherwise materially inaccurately reflects the
operations of the Stations; provided, that the foregoing representations are
given only to the Sellers' Knowledge to the extent the Financial Statements
relate to a period of time during which the Stations were not owned by Sellers
(or an Affiliate thereof).
3.11 Taxes. Except as set forth in Schedule 3.11, Sellers have filed or caused
to be filed all Tax Returns that are required to be filed with respect to their
ownership and operation of the Stations, and have paid or caused to be paid all
Taxes shown on those returns or on any Tax assessment received by them to the
extent that such Taxes have become due, or have set aside on their books
adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no legal, administrative,
or other Tax proceedings presently pending, and there are no grounds existing
pursuant to which Sellers are or could be made liable for any Taxes, the
liability for which could extend to Buyer as transferee of the business of the
Stations.
3.12 Insurance. Schedule 3.12 is a true and complete list of all insurance
policies of or covering Sellers. All policies of insurance listed in Schedule
3.12 are in full force and effect as of the date hereof. During the past three
years, no insurance policy of Sellers or the Stations has been canceled by the
insurer and, except as set forth on Schedule 3.12, no application of Sellers for
insurance has been rejected by any insurer.
3.13 Reports. All material returns, reports and statements that the Stations is
currently required to file with the FCC or Federal Aviation Administration have
been filed, and all reporting requirements of the FCC and Federal Aviation
Administration have been complied with in all material respects. All of such
returns, reports and statements, as filed, satisfy all applicable legal
requirements.
3.14 Personnel and Employee Benefits.
(a) Employees and Compensation. Schedule 3.14 contains a true and
complete list of all employees of Sellers employed at the Stations as of June
30, 1999 who earned in excess of $20,000 in 1998 or whose present rate of pay
would cause them to earn more than that amount in 1999, and indicates the salary
and bonus, if any, to which each such Employee is currently entitled (limited in
the case of Employees who are compensated on a commission basis to a general
description of the manner in which such commissions are determined). As of the
date of this Agreement, Sellers have no knowledge that any General Manager,
Sales Manager, or Program Director employed at the Stations currently plans to
terminate employment, whether by reason of the transactions contemplated by this
Agreement or otherwise. Schedule 3.14 also contains a true and complete list of
all employee benefit plans or arrangements covering the employees employed at
the Stations (the "EMPLOYEES"), including, with respect to the Employees any:
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(i) "Employee welfare benefit plan," as defined in Section
3(1) of ERISA, that is maintained or administered by Sellers or to which Sellers
contribute or are required to contribute (a "WELFARE PLAN");
(ii) "Multiemployer pension plan," as defined in Section 3(37)
of ERISA, that is maintained or administered by Sellers or to which Sellers
contribute or are required to contribute (a "MULTIEMPLOYER PLAN" and, together
with the Welfare Plans, the "BENEFIT PLANS");
(iii) "Employee pension benefit plan," as defined in Section
3(2) of ERISA (other than a Multiemployer Plan), to which Sellers contribute or
are required to contribute (a "PENSION PLAN");
(iv) Employee plan that is maintained in connection with any
trust described in Section 501(c)(9) of the Internal Revenue Code of 1986, as
amended; and
(v) Employment, severance, or other similar contract,
arrangement, or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, or retirement benefits or arrangement for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits that (A) is not a Welfare Plan, Pension
Plan, or Multiemployer Plan, and (B) is entered into, maintained, contributed
to, or required to be contributed to by any Seller or under which any Seller has
any liability relating to Employees, (collectively, "BENEFIT ARRANGEMENTS").
(b) Pension Plans. Sellers do not sponsor, maintain, or contribute to
any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing
Plan. Each Pension Plan complies currently and has been maintained in
substantial compliance with its terms and, both as to form and in operation,
with all material requirements prescribed by any and all material statutes,
orders, rules and regulations that are applicable to such plans, including ERISA
and the Code, except where the failure to do so will not have a Material Adverse
Effect.
(c) Welfare Plans. Each Welfare Plan complies currently and has been
maintained in substantial compliance with its terms and, both as to form and in
operation, with all material requirements prescribed by any and all material
statutes, orders, rules and regulations that are applicable to such plans,
including ERISA and the Code, except where the failure to do so will not have a
Material Adverse Effect. Sellers do not sponsor, maintain, or contribute to any
Welfare Plan that provides health or death benefits to former employees of the
Stations other than as required by Section 4980B of the Code or other applicable
laws.
(d) Benefit Arrangements. Each Benefit Arrangement has been maintained
in substantial compliance with its terms and with the material requirements
prescribed by all statutes, orders, rules and regulations that are applicable to
such Benefit Arrangement, except where the failure to do so will not have a
Material Adverse Effect. Except for those employment agreements listed on
Schedule 3.7, Sellers have no written contract prohibiting the termination of
any Employee.
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(e) Multiemployer Plans. Except as disclosed in Schedule 3.14, Sellers
have not at any time been a participant in any Multiemployer Plan.
(f) Delivery of Copies of Relevant Documents and Other Information.
Sellers have delivered or made available to Buyer true and complete copies of
each of the following documents:
(i) Each Welfare Plan and Pension Plan (and, if applicable,
related trust agreements) and all amendments thereto, and written descriptions
thereof that have been distributed to Employees, all annuity contracts or other
funding instruments; and
(ii) Each Benefit Arrangement and written descriptions thereof
that have been distributed to Employees and complete descriptions of any Benefit
Arrangement that is not in writing.
(g) Labor Relations. Except as set forth in Schedule 3.14(g), no Seller
is a party to or subject to any collective bargaining agreement or written or
oral employment agreement with any Employee. With respect to the Employees
Sellers have complied in all material respects with all laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and have not
received any notice alleging that any Seller has failed to comply materially
with any such laws, rules, or regulations. Except as set forth on Schedule
3.14(g), no proceedings are pending or, to the Knowledge of Sellers, threatened,
between any Seller and any Employee (singly or collectively) that relate to the
Stations. Except as set forth on Schedule 3.14(g), no labor union or other
collective bargaining unit represents or claims to represent any of the
Employees. Except as set forth in Schedule 3.14, to the Knowledge of Sellers,
there is no union campaign being conducted to solicit cards from any Employees
to authorize a union to represent any of the employees of any Seller or to
request a National Labor Relations Board certification election with respect to
any Employees.
3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15 and except
for any FCC rulemaking proceedings generally affecting the radio broadcasting
industry and not particular to any of Sellers, there is no claim, legal action,
counterclaim, suit, arbitration, or other legal, administrative, or tax
proceeding, nor any order, decree, or judgment, in progress or pending, or to
the Knowledge of Sellers threatened, against or relating to the Assets, or the
business or operations of any of the Stations, nor does any Seller know of any
basis for the same.
3.16 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed on Schedule 3.16, (x) none of the Owned Real
Property and none of the Tangible Personal Property and, to Sellers' Knowledge
(provided such knowledge qualifer shall not apply to the extent caused by the
Tangible Personal Property), none of the Leased Real Property contains (i) any
asbestos, polychlorinated biphenyls or any PCB contaminated oil; (ii) any
Contaminants; or (iii) any underground storage tanks; (y) no underground storage
tank disclosed on Schedule 3.16 has leaked and has not been remediated or leaks
and such tank is in substantial compliance with all applicable Environmental
Laws; and (z) all of the Owned Real
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Property and, to Sellers' Knowledge, all of the Leased Real Property is in
substantial compliance with all applicable Environmental Laws.
(b) Sellers have obtained all material permits, licenses and other
authorizations that are required under all Environmental Laws.
3.17 Compliance with Laws. Sellers have complied in all material respects with
the Licenses and all material federal, state and local laws, rules, regulations
and ordinances applicable or relating to the ownership and operation of the
Assets and Stations, and Sellers have not received any notice of any material
violation of federal, state and local laws, regulations and ordinances
applicable or relating to the ownership or operation of the Assets and the
Stations nor, to Sellers' Knowledge, have Sellers received any notice of any
immaterial violation of federal, state and local laws, regulations, and
ordinances applicable or relating to the ownership or operation of the Assets or
the Stations.
3.18 Conduct of Business in Ordinary Course. Since the Balance Sheet Date and
through the date hereof, Sellers have conducted their business and operations in
the ordinary course and, except as disclosed in Schedule 3.18, have not:
(a) made any material increase in compensation payable or to become
payable to any of its employees other than those in the normal and usual course
of business or in connection with any change in an employee's responsibilities,
or any bonus payment made or promised to any of its Employees, or any material
change in personnel policies, employee benefits, or other compensation
arrangements affecting its employees;
(b) made any sale, assignment, lease, or other transfer of assets other
than in the normal and usual course of business with suitable replacements being
obtained therefor;
(c) canceled any debts owed to or claims held by Sellers, except in the
normal and usual course of business;
(d) made any changes in Sellers' accounting practices;
(e) suffered any material write-down of the value of any Assets or any
material write-off as uncorrectable of any Accounts Receivable; or
(f) transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right.
3.19 Transactions with Affiliates. Except as disclosed in Schedule 3.19 or with
respect to the Excluded Real Property Interests and the Excluded Tangible
Personal Property, no Seller has been involved in any business arrangement or
relationship with any Affiliate of Seller, and no Affiliate of any Seller owns
any property or right, tangible or intangible, that is material to the
operations of the business of the Stations.
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3.20 Broker. Except as disclosed on Schedule 3.20, no Seller nor any Person
acting on its behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transactions contemplated by this
Agreement, and Buyer shall have no liability for any finders' or brokers' fees
or commissions in connection with the transactions contemplated by this
Agreement for any broker listed on Schedule 3.20.
3.21 Insolvency Proceedings. None of the Sellers nor any of the Assets are the
subject of any pending or threatened insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary. No Seller
has made an assignment for the benefit of creditors or taken any action in
contemplation of or which would constitute a valid basis for the institution of
any such insolvency proceedings. No Seller is insolvent nor will it become
insolvent as a result of entering into or performing this Agreement.
3.22 Year 2000 Compatibility. Sellers believe that the Stations' hardware,
software, broadcast and ancillary equipment (the "Operational Equipment") that
are date dependent and are material to the operation of the Stations are year
2000 compliant. To Sellers' Knowledge, there are no facts or circumstances that
would result in material costs or disruption to the operation of the Stations
due to the failure of Sellers' customers or suppliers to be year 2000 compliant.
For the purposes of this section, "Year 2000 Compliant" shall mean that the
Operational Equipment will correctly process, provide and receive date data
before, during and after December 31, 1999.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof and as of the
Closing Date (except for representations and warranties that speak as of a
specific date or time, in which case, such representations and warranties shall
be true and complete as of such date and time) as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has the requisite corporate power and authority to execute,
deliver and perform this Agreement and the documents contemplated hereby
according to their respective terms and to own the Assets. Prior to the Closing
Date, Buyer will be qualified to do business in each of the States in which any
of the Stations are located.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents. Subject to the
receipt of the Consents, the execution, delivery and performance by Buyer of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both):
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(a) do not require the consent of any third party; (b) will not conflict with
the Articles of Incorporation or Bylaws of Buyer; (c) will not conflict with,
result in a breach of, or constitute a default under, any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; and (d) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license or permit to which
Buyer is a party or by which Buyer may be bound. Except for the FCC Consent
provided for in Section 6.1. the filings required by Hart-Scott-Rodino provided
for in Section 6.2 and the other Consents described in Schedule 4.3, no consent,
approval, permit, or authorization of, or declaration to, or filing with any
governmental or regulatory authority or any other third party is required (a) to
consummate this Agreement and the transactions contemplated hereby, or (b) to
permit Buyer to acquire the Assets from Sellers or to assume certain liabilities
and obligations of Sellers in accordance with Section 2.5.
4.4 Brokers. Neither Buyer nor any person or entity acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Availability of Funds. Buyer will have available on the Closing Date
sufficient funds to enable it to consummate the transactions contemplated
hereby.
4.6 Qualifications of Buyer. Except as disclosed in Schedule 4.6, Buyer is, and
pending Closing will remain legally, financially and otherwise qualified under
the Communications Act, Hart-Scott-Rodino and all rules, regulations and
policies of the FCC, the Department of Justice, the Federal Trade Commission
(the "FTC") and any other governmental agency, to acquire and operate the
Stations. Except as disclosed in Schedule 4.6, there are no facts or proceedings
which would reasonably be expected to disqualify Buyer under the Communications
Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations
or would cause the FCC not to approve the assignment of the FCC Licenses to
Buyer or the Department of Justice and the FTC not to allow the waiting period
under Hart-Scott-Rodino to terminate within 30 days of the filing provided for
in Section 6.2. Except as disclosed in Schedule 4.6, Buyer has no knowledge of
any fact or circumstance relating to Buyer or any of Buyer's Affiliates that
would reasonably be expected to (a) cause the filing of any objection to the
assignment of the FCC Licenses to Buyer, (b) lead to a delay in the processing
by the FCC of the applications for such assignment or (c) lead to a delay in the
termination of the waiting period required by Hart-Scott-Rodino. Except as
disclosed in Schedule 4.6, no waiver of any FCC rule or policy is necessary to
be obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer, nor will processing pursuant to any exception or rule of
general applicability be requested or required in connection with the
consummation of the transactions herein.
4.7 WARN Act. Buyer is not planning or contemplating, and has not made or taken
any decisions or actions concerning the employees of the Stations after the
Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Notification Act of 1988, as amended, or any similar
state law.
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4.8 Buyer's Defined Contribution Plan. Schedule 4.8 completely and accurately
lists all Buyer's defined contribution plan or plans (the "Buyer's Plan")
intended to be qualified under Section 401(a) and 401(k) of the Code in which
the Transferred Employees will be eligible to participate. Buyer has a currently
applicable determination letter from the Internal Revenue Service.
SECTION 5: OPERATION OF THE STATIONS PRIOR TO CLOSING
Sellers covenant and agree that between the date hereof and the Closing Date,
Sellers will operate the Stations in the ordinary course in accordance with
Sellers' past practices (except where such conduct would conflict with the
following covenants or with other obligations of Sellers under this Agreement),
and, except as contemplated by this Agreement or with the prior written consent
of Buyer (such consent not to be unreasonably withheld), Sellers will act in
accordance with the following insofar as such actions relate to the Stations:
5.1 Contracts. Seller will not renew, extend, amend or terminate, or waive any
material right under, any Material Contract, or enter into any contract or
commitment or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness and obligations arising
from the amendment of any existing Contract, regardless of whether such Contract
is a Material Contract) that will be assumed by or be otherwise binding on Buyer
after Closing, except for (a) cash time sales agreements and production
agreements made in the ordinary course of business consistent with Seller's past
practices, (b) the renewal or extension of any existing Contract (other than
network affiliation agreements) on its existing terms in the ordinary course of
business, and (c) other contracts (other than network affiliation agreements, or
time brokerage or local marketing arrangements) entered into in the ordinary
course of business consistent with Sellers' past practices that do not involve
consideration, in the aggregate, in excess of Fifty Thousand Dollars ($50,000)
measured at Closing. Prior to the Closing Date, Sellers shall deliver to Buyer a
list of all material Contracts entered into between the date of this Agreement
and the Closing Date and shall make available to Buyer copies of such Contracts.
5.2 Compensation. Sellers shall not materially increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Stations,
except in accordance with past practices, as required by an employment agreement
or consulting agreement or in connection and commensurate with the change in
responsibility of any employee.
5.3 Encumbrances. Sellers will not create, assume, or permit to exist any
mortgage, pledge, lien, or other charge or encumbrance affecting any of the
Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens that will be
removed prior to the Closing Date, and (c) Permitted Encumbrances.
5.4 Dispositions. Sellers will not sell, assign, lease, or otherwise transfer or
dispose of any of the Assets except (a) Assets that are no longer used in the
operations of the Stations, (b) Assets that are replaced with Assets of
equivalent kind and value that are acquired after the date of this Agreement,
and (c) any intercompany accounts receivable.
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5.5 Access to Information. Upon prior reasonable notice by Buyer, Sellers will
give to Buyer and its investors, lenders, counsel, accountants, engineers and
other authorized representatives reasonable access to the Stations and all
books, records and documents of Sellers which are material to the business and
operation of the Stations, and will furnish or cause to be furnished to Buyer
and its authorized representatives all information relating to Sellers and the
Stations that they reasonably request (including any financial reports and
operations reports produced with respect to the Stations).
5.6 Insurance. Sellers or their Affiliates shall maintain in full force and
effect policies of insurance of the same type, character and coverage as the
policies currently carried with respect to the business, operations and assets
of the Stations.
5.7 Licenses. Sellers shall not cause or permit, by any act or failure to act,
any of the Licenses listed on Schedule 3.4 to expire or to be revoked, suspended
or modified, or take any action that could reasonably be expected to cause the
FCC or any other governmental authority to institute proceedings for the
suspension, revocation or material adverse modification of any of the Licenses.
Sellers shall prosecute with due diligence any applications to any governmental
authority necessary for the operation of the Stations.
5.8 Obligations. Sellers shall pay all its obligations insofar as they relate to
the Stations as they become due, consistent with past practices.
5.9 No Inconsistent Action. Sellers shall not take any action that is
inconsistent with its obligations under this Agreement in any material respect
or that could reasonably be expected to hinder or delay the consummation of the
transactions contemplated by this Agreement. Neither Seller nor any of its
respective representatives or agents shall, directly or indirectly, solicit,
initiate, or participate in any way in discussions or negotiations with, or
provide any confidential information to, any Person (other than Buyer or any
Affiliate or associate of Buyer and their respective representatives and agents)
concerning any possible disposition of the Stations, the sale of any material
assets of the Stations, or any similar transaction.
5.10 Maintenance of Assets. Sellers shall maintain all of the Assets in good
condition (ordinary wear, tear and casualty excepted), consistent with their
overall condition on the date of this Agreement, and use, operate and maintain
all of the Assets in a reasonable manner. Sellers shall maintain inventories of
spare parts and expendable supplies at levels consistent with past practices. If
any insured or indemnified loss, damage, impairment, confiscation, or
condemnation of or to any of the Assets occurs, Sellers shall repair, replace,
or restore the Assets to their prior condition as represented in this Agreement
as soon thereafter as possible, and Sellers shall use the proceeds of any claim
under any property damage insurance policy or other recovery solely to repair,
replace, or restore any of the Assets that are lost, damaged, impaired, or
destroyed.
5.11 Consents.
(a) Subject to Section 6.5 hereof, Sellers shall use their reasonable
efforts to obtain all Consents described in Section 3.3, without any adverse
change in the terms or conditions of
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any Assumed Contract or License. Sellers shall promptly advise Buyer of any
difficulties experienced in obtaining any of the Consents and of any conditions
proposed, considered or requested for any of the Consents.
(b) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign or transfer any Contract
or any claim, right or benefit arising thereunder or resulting therefrom, if an
attempted assignment or transfer thereof, without the consent of a third party
thereto would constitute a breach thereof or in any way adversely affect the
rights of the Buyer thereunder. If such consent (a "Deferred Consent") is not
obtained, or if an attempted assignment or transfer thereof would be ineffective
or would affect the rights thereunder so that the Buyer would not receive all
such rights, then (i) the Seller and the Buyer will cooperate, in all reasonable
respects, to obtain such Deferred Consents as soon as practicable; provided that
Sellers shall have no obligation (y) to expend funds to obtain any Deferred
Consent, other than ministerial processing fees, and Sellers' out-of-pocket
expenses to its attorney or other agents incurred in connection with obtaining
any Deferred Consent, or (z) to agree to any adverse change in any License or
Assumed Contract in order to obtain a Deferred Consent, and (ii) until such
Deferred Consent is obtained, the Seller and the Buyer will cooperate in all
reasonable respects, to provide to the Buyer the benefits under the Contract, to
which such Deferred Consent relates (with the Buyer responsible for all the
liabilities and obligations thereunder). In particular, in the event that any
such Deferred Consent is not obtained prior to Closing, then the Buyer and the
Seller shall enter into such arrangements (including subleasing or
subcontracting if permitted) to provide to the parties the economic and
operational equivalent of obtaining such Deferred Consent and assigning or
transferring such Contract, including enforcement for the benefit of the Buyer
of all claims or rights arising thereunder, and the performance by the Buyer of
the obligations thereunder on a prompt and punctual basis.
5.12 Books and Records. Sellers shall maintain their books and records in
accordance with past practices.
5.13 Notification. Sellers shall promptly notify Buyer in writing of any or
material developments with respect to the business or operations of the Stations
and of any material change in any of the information contained in the
representations and warranties contained in Section 3 of this Agreement.
5.14 Financial Information. Sellers shall furnish Buyer with sales pacing
reports for the Stations on a weekly basis and shall furnish to Buyer within
thirty (30) days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense for the month
just ended and such other financial information (including information on
payables and receivables) as Buyer may reasonably request. All financial
information delivered by Sellers to Buyer pursuant to this Section 5.14 shall be
prepared from the books and records of Sellers in accordance with generally
accepted accounting principles, consistently applied, shall accurately reflect
the books, records and accounts of the Stations, shall be complete and correct
in all material respects, and shall present fairly the financial condition of
the Stations as at their respective dates and the results of operations for the
periods then ended.
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5.15 Compliance with Laws. Sellers shall comply in all material respects with
all material laws, rules and regulations.
5.16 Programming. Sellers shall not make any material changes in the Stations'
formats, except such changes as in the good faith judgment of Seller are
required by the public interest.
5.17 Preservation of Business. Sellers shall use commercially reasonable efforts
consistent with past practices to preserve the business and organization of the
Stations and to keep available to the Stations its present employees and to
preserve the audience of the Stations and the Stations' present relationships
with suppliers, advertisers, and others having business relations with it.
5.18 Normal Operations. Subject to the terms and conditions of this Agreement
(including, without limitation, Section 5.1), prior to the Closing, Sellers
shall carry on the business and activities of the Stations, including, without
limitation, promotional activities, the sale of advertising time, entering into
other contracts and agreements, purchasing and scheduling programming,
performing research, and operating in all material respects in accordance with
existing budgets and past practice and will not enter into trade and barter
obligations except in the ordinary course of business consistent with past
practice.
5.19 Reserved
SECTION 6: SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent
(a) The exchange and transfer of the Assets as contemplated by this
Agreement is subject to the prior consent and approval of the FCC.
(b) Sellers and Buyer shall prepare and within seven (7) business days
after the date of this Agreement shall file with the FCC an appropriate
application for FCC Consent. The parties shall thereafter prosecute the
application with all reasonable diligence and otherwise use their respective
best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by the
FCC Consent, except that no party shall be required to comply with a condition
if (i) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by that party of any of its
representations, warranties or covenants hereunder, and (ii) compliance with the
condition would have a material adverse effect upon it. Buyer and Sellers shall
oppose any petitions to deny or other objections filed with respect to the
application for the FCC Consent and any requests for reconsideration or judicial
review of the FCC Consent.
(c) If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 9, the parties shall jointly request an
extension of the effective period of the FCC Consent, as the case may be. No
extension of the effective period of the FCC Consent shall limit the exercise by
either party of its right to terminate the Agreement under Section 9.
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6.2 Hart-Scott-Rodino. Within ten (10) days following the execution of this
Agreement, Sellers and Buyer shall complete any filing that may be required
pursuant to Hart-Scott-Rodino (each an "HRS Filing"). Sellers and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Hart-Scott-Rodino.
6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets of Sellers for any cause whatsoever shall be
borne by Sellers at all times prior to the Closing. In the event of loss or
damage prior to the Closing Date, Sellers shall use commercially reasonable
efforts to fix, restore, or replace such loss, damage, impairment, confiscation,
or condemnation to its former operational condition. If Sellers have adequate
replacement cost insurance, Buyer may elect to have Sellers assign such
insurance proceeds to Buyer, in which case, Buyer shall proceed with the Closing
, and receive at the Closing the insurance proceeds or an assignment of the
right to receive such insurance proceeds, as applicable, to which Sellers
otherwise would be entitled, whereupon Sellers shall have no further liability
to Buyer for such loss or damage.
6.4 Confidentiality. Except as necessary for the consummation of the transaction
contemplated by this Agreement, including Buyer's obtaining of financing related
hereto, and except as and to the extent required by law, each party will keep
confidential any information obtained from the other party in connection with
the transactions specifically contemplated by this Agreement. If this Agreement
is terminated, each party will return to the other party all information
obtained by the such party from the other party in connection with the
transactions contemplated by this Agreement. Buyer shall continue to be bound by
the terms and conditions of the Confidentiality Agreement dated June 30, 1999
between the parties hereto (the "CONFIDENTIALITY AGREEMENT").
6.5 Cooperation. Buyer and Sellers shall reasonably cooperate with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and in connection with any litigation after the Closing Date which
relate to the Stations for periods prior to the applicable Effective Time, Buyer
and Sellers shall execute such other documents as may be reasonably necessary
and desirable to the implementation and consummation of this Agreement, and
otherwise use their commercially reasonable efforts to consummate the
transaction contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, Sellers shall have no obligation (a)
to expend funds to obtain any of the Consents, other than ministerial processing
fees, and Sellers' out-of-pocket expenses to its attorney or other agents
incurred in connection with obtaining such consents, or (b) to agree to any
adverse change in any License or Assumed Contract in order to obtain a Consent
required with respect thereto.
6.6 Control of the Stations. Prior to the Closing, Buyer shall not, directly or
indirectly, control, supervise or direct, or attempt to control, supervise or
direct, the operations of the Stations; those operations, including complete
control and supervision of all of each Stations' programs, employees and
policies, shall be the sole responsibility of Seller.
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6.7 Accounts Receivable.
(a) As soon as practicable after the Closing Date, Sellers shall
deliver to Buyer a complete and detailed list of all the Accounts Receivable for
the Stations. During the period beginning on the Closing Date and ending on the
last day of the sixth full calendar month beginning after the Closing Date (the
"COLLECTION PERIOD"), Buyer shall use commercially reasonable efforts, as
Sellers' agent, to collect the Accounts Receivable in the usual and ordinary
course of business, using the Stations' credit, sales and other appropriate
personnel in accordance with customary practices, which may include referral to
a collection agency. Notwithstanding the foregoing, Buyer shall not be required
to institute legal proceedings on Sellers' behalf to enforce the collection of
any Accounts Receivable. Buyer shall not adjust any Accounts Receivable or grant
credit without Sellers' written consent, and Buyer shall not pledge, secure or
otherwise encumber such Accounts Receivable or the proceeds therefrom. On or
before the twelfth business day after the end of each calendar month during the
Collection Period, Buyer shall remit to Sellers collections received by Buyer
with respect to the Accounts Receivable, together with a report of all amounts
collected with respect to the Accounts Receivable during, as the case may be,
the period from the Closing or the beginning of such month through the end of
such month, less any sales commissions or collection costs paid by Buyer during
the respective periods with respect to those Accounts Receivable.
(b) Any payments received by Buyer during the Collection Period from
any Person that is an account debtor with respect to any account disclosed in
the list of Accounts Receivable delivered by Sellers to Buyer shall be applied
first to the invoice designated by the account debtor and, if none, such payment
shall be applied to the oldest account which is not disputed. Buyer shall incur
no liability to Sellers for any uncollected account, other than as a result of
Buyer's breach of its obligations under this Section 6.7. Prior to the end of
the third full calendar month after the Closing, neither Sellers nor any agent
of Sellers shall make any direct solicitation of the account debtors for
payment. After the end of the third full calendar month after the Closing,
Sellers shall have the right, at their expense, to assist and participate with
Buyer in the collection of unpaid Accounts Receivable, provided, however,
Seller's collection efforts shall be commercially reasonable and consistent with
its past practices.
(c) At the end of the Collection Period, Buyer shall return to Sellers
all files concerning the collection or attempts to collect the Accounts
Receivable, and Buyer's responsibility for the collection of the Accounts
Receivable shall cease.
6.8 Allocation of Purchase Price. Buyer and Sellers agree that the fair market
value of the Assets of the Stations (the "Fair Market Value of the Assets") will
be appraised by the appraisal firm of BIA, whose expenses will be borne one-half
(1/2) by Buyer and one-half (1/2) by Sellers. Buyer and Sellers shall
collaborate in good faith in the preparation of mutually satisfactory Form(s)
8594 (and Form 8824 to the extent applicable) reflecting the Fair Market Value
of the Assets as found by BIA and such other information as is required by the
form. Buyer and Sellers shall each file with their respective federal income tax
return for the tax year in which the Closing occurs, IRS Form(s) 8594 (and Form
8824 to the extent applicable) containing the information agreed upon by the
parties pursuant to the immediately preceding sentence. Buyer agrees to report
the purchase of the Assets of the Stations, and Sellers agree to report the sale
of
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such assets for income tax purposes on their respective income tax returns in a
manner consistent with the information agreed upon by the parties pursuant to
this section and contained in the IRS Form(s) 8594 (and Form 8824 to the extent
applicable).
6.9 Access to Books and Records. To the extent reasonably requested by Buyer,
Sellers shall provide Buyer access and the right to copy from and after any
Closing Date any books and records relating to the Assets but not included in
the Assets. To the extent reasonably requested by Sellers, Buyer shall provide
Sellers access and the right to copy from and after the applicable Closing Date
any books and records relating to the Assets that are included in the Assets.
Buyer and Sellers shall each retain any such books and records, for a period of
three years (or such longer period as may be required by law or good business
practice) following the Final Closing Date. Subject to and in accordance with
the terms of this Section 6.9, Sellers shall cause its accountants regularly
servicing Sellers to conduct audits and reviews of Sellers' financial
information as Buyer may reasonably determine is necessary to satisfy Buyer's
due diligence, including, without limitation, (a) causing Sellers' auditors to
permit Buyer's auditors to have access to Sellers' auditor's work papers, and
(b) causing Sellers' auditors to consent to such access by Buyer. Under no
circumstance shall the preparation of any financial statements pursuant to such
audits and reviews (i) require any Seller to change or modify any accounting
policy, (ii) cause any unreasonable disruption in the business or operations of
any Station, or (iii) cause any delay that is more than de minimis in any
internal reporting requirements of any Seller. All costs and expenses incurred
in connection with the preparation of (and assimilation of relevant information
for) the audits and reviews of financial information shall be paid by Sellers;
provided, Buyer shall promptly pay upon presentation of any invoice, as a
non-refundable prepayment of the Purchase Price, for all charges incurred in
connection with such audit to the extent relating to work performed on or after
July 26, 1999 (such charges, the "Section 6.9 Amount") (it being understood that
the hourly charges of Sellers' accountants for the period of time for which
Buyer is responsible may be greater than the hourly charges incurred by
Sellers). In addition, Buyer shall be responsible for any costs and expenses (a)
associated with the inclusion of such audited financial statements in Buyer's
publicly filed documents, including, without limitation, any fees for consents
to such inclusion and a "comfort letter," and (b) incurred in connection with
any review of financial statements for the periods ended June 30, 1998 or June
30, 1999, or for any other periods other than the financial statements for
calendar year 1998.
6.10 Employee Matters.
(a) Upon consummation of the Closing, Buyer shall offer employment to
each of the Employees of the Stations (including those on leave of absence,
whether short-term, long-term, family, maternity, disability, paid, unpaid or
other, and those hired after the date hereof in the ordinary course of business)
at a comparable salary, position and place of employment as held by each such
employee immediately prior to the Closing Date (such employees who are given
such offers of employment are referred to herein as the "TRANSFERRED EMPLOYEES")
(b) Except as provided otherwise in this Section 6.10, Sellers shall
pay, discharge and be responsible for (a) all salary and wages arising out of or
relating to the employment of the Employees prior to the Closing Date and (b)
any employee benefits arising under the Benefit
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Plans or Benefit Arrangements of Sellers and their Affiliates during the period
prior to the Closing Date. From and after the Closing Date, Buyer shall pay,
discharge and be responsible for all salary, wages and benefits arising out of
or relating to the employment of the Transferred Employees by Buyer on and after
the Closing Date. Buyer shall be responsible for all severance liabilities, and
all COBRA liabilities for any Transferred Employees of the Stations terminated
on or after the Closing Date, including, without limitation, any related to any
deemed termination by Sellers of the Transferred Employees as a result of the
consummation of the transaction contemplated hereby and any required pursuant to
those retention/severance agreements listed on Schedule 6.10 hereto, but
excluding any severance due as a result of those agreements listed on Schedule
6.10-A.
(c) Buyer shall cause all Transferred Employees as of the Closing Date
to be eligible to participate in its "employee welfare benefit plans" and
"employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA,
respectively) of Buyer in which similarly situated employees of Buyer are
generally eligible to participate; provided, however, that all Transferred
Employees and their spouses and dependents shall be eligible for coverage
immediately after the Closing Date (and shall not be excluded from coverage on
account of any pre-existing condition) to the extent provided under such plans
with respect to Transferred Employees.
(d) For purposes of any length of service requirements, waiting period,
vesting periods or differential benefits based on length of service in any such
plan for which a Transferred Employee may be eligible after the Closing, Buyer
shall ensure that, to the extent permitted by law, and except as limited by
Buyer's Employment Termination Severance policy service by such Transferred
Employee with Sellers, any Affiliate of Sellers or any prior owner of the
Stations shall be deemed to have been service with the Buyer. In addition, Buyer
shall ensure that each Transferred Employee receives credit under any welfare
benefit plan of Buyer for any deductibles or co-payments paid by such
Transferred Employee and his or her dependents for the current plan year under a
plan maintained by Sellers or any Affiliate of Sellers to the extent allowable
under any such plan. Buyer shall grant credit to each Transferred Employee for
all sick leave in accordance with the policies of Buyer applicable generally to
its employees after giving effect to service for Sellers, any Affiliate of
Sellers or any prior owner of the Stations, as service for Buyer. To the extent
taken into account in determining prorations pursuant to Section 2.3 hereof,
Buyer shall assume and discharge Sellers' liabilities for the payment of all
unused vacation leave accrued by Transferred Employees as of the Closing Date.
To the extent any claim with respect to such accrued vacation leave is lodged
against Sellers with respect to any Transferred Employee for which Buyer has
received a proration credit, Buyer shall, to the extent of such credit,
indemnify, defend and hold harmless Sellers from and against any and all losses,
directly or indirectly, as a result of, or based upon or arising from the same.
(e) As soon as practicable following the Closing Date, Buyer shall make
available to the Transferred Employees Buyer's 401(k) Plan. To the extent
requested by a Transferred Employee, Sellers shall cause to be transferred to
Buyer's 401(k) Plan, in cash and in kind, all of the individual account balances
of Transferred Employees under the Sellers' Plan, including any outstanding plan
participant loan receivables allocated to such accounts.
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(f) Buyer acknowledges and agrees that Buyer's obligations pursuant to
this Section 6.10 are in addition to, and not in limitation of, Buyer's
obligation to assume the employment contracts included in the Assumed Contracts.
Nothing in this Agreement shall be construed to provide employees of Sellers
with any rights under this Agreement, and no Person, other than the parties
hereto, is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall only be enforceable by, the parties hereto and their respective successors
and assigns as permitted hereunder.
(g) Certain Payments. Subject to the terms of this Section 6.10(g) and
Section 6.10(h), in the event Buyer terminates any of the Transferred Employees
during the six (6) calendar month period after the Closing Date (the
"Reimbursement Period"), which relates to the Station at which such employee is
employed, as applicable, Sellers shall promptly reimburse Buyer for the amount
paid by Buyer to such Terminated Employee pursuant to the terms of the Retention
Agreements listed on Schedules 6.10 (as in effect on the date hereof) (the
"Scheduled Retention Agreements") as follows: (y) the full amount of such
payments in an amount, when aggregated with any payments made by the
Multi-Stations Sellers under 6.10(g) of the Multi-Stations Agreement that does
not exceed $1,000,000 (the "Initial Employee Cap"); and (z) 50% of such payments
above the Initial Employee Cap in an amount, when aggregated with any payments
made by the Multi-Stations Sellers under 6.10(g) of the Multi-Stations Agreement
does not exceed $500,000. The payments made pursuant to this Section 6.10(g)
shall not be counted against the Threshold Amount. In no event shall Sellers be
obligated to reimburse Buyer (i) for any payments made by Buyer pursuant to the
Scheduled Retention Agreements to Transferred Employees terminated after the
expiration of the Reimbursement Period, or (ii) for any amount, when aggregated
with any payments made by the Multi-Stations Sellers under Section 6.10(g) under
the Multi-Stations Agreement in excess of $1,500,000.
(h) Notwithstanding any provisions of Section 6.10(g) of the Asset
Purchase Agreement to the contrary, Sellers shall have no obligation to
reimburse Buyer for any severance amount (whether or not pursuant to the
Scheduled Retention Agreements), which obligations shall be the sole obligation
of Buyer regardless of when such termination occurs paid to (i) any Transferred
Employee who is terminated (a) at the request of a third party who subsequently
enters into a memorandum of understanding, letter of intent, or agreement to
acquire any of the Stations, or (b) as a result of Buyer entering into a
memorandum of understanding, letter of intent, or an agreement to sell, assign,
swap, or otherwise dispose of or convey any Station to a third party, and/or
(ii) the employees listed on Schedule 6.10(h), including, but not limited to,
any employees of the Stations listed thereon.
(i) For twelve (12) calendar months after the Closing Date (a) none of
Sellers or any of their Affiliates shall hire any of the Transferred Employees;
provided that the provisions of this Section 6.10(i)(a) shall not apply to any
Transferred Employee terminated by Buyer; and provided further that this Section
6.10(i)(a) does not apply to any employees (other than the Transferred
Employees) hired by the Seller Entities (as defined below) after the Closing
Date, and (b) other than the Transferred Employees, Buyer shall not hire any
employees of Sellers or any Affiliate or parent of Sellers (the "Seller
Entities") who are employees, as of the Closing Date of any of the television
broadcast stations owned, operated, or programmed by any of the
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Seller Entities in any market in which the Stations broadcast ("Sellers'
Employees"); provided that the provisions of this Section 6.10(i)(b) do not
apply to Sellers' Employees whose employment is terminated by the Seller
Entities; and provided further that the provisions of this Section 6.10(i)(b) do
not apply to any employees (other than Sellers' Employees) hired by Buyer after
the Closing Date.
6.11 Reserved
6.12 Public Announcements. Sellers and Buyer shall consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement or the transactions contemplated herein and shall not
issue any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior written consent of the
other party, issue such press release or make such public statement as may be
required by Law or any listing agreement with a national securities exchange to
which Sinclair or Buyer is a party if it has used all reasonable efforts to
consult with the other party and to obtain such party's consent but has been
unable to do so in a timely manner.
6.13 Disclosure Schedules. Sellers and Buyer acknowledge and agree that Sellers
shall not be liable for the failure of the Schedules to be accurate as a result
of the operation of the Stations prior to the Closing in accordance with Section
5 of this Agreement. The inclusion of any fact or item on a Schedule referenced
by a particular section in this Agreement shall, should the existence of the
fact or item or its contents be relevant to any other section, be deemed to be
disclosed with respect to such other section whether or not an explicit
cross-reference appears in the Schedules if such relevance is readily apparent
from examination of such Schedules.
6.14 Bulk Sales Law. Buyer hereby waives compliance by Sellers, in connection
with the transactions contemplated hereby, with the provisions of any applicable
bulk transfer laws.
6.15 Environmental Site Assessment.
6.15.1 Within sixty (60) days of the execution of this Agreement, Buyer
may obtain Phase I Environmental Assessments at Buyer's expense for any or all
of the parcels of the Owned or Leased Real Property set forth on Schedule 6.15
(the "Environmental Assessments"). In the event any Environmental Assessment
discloses any conditions contrary to any representations and warranties
(determined without regard to any Knowledge qualifier therein) or any potential
that such conditions may exist, the Buyer may conduct or have conducted at its
expense additional testing to confirm or negate the existence of any such
conditions. If any such Environmental Assessment or additional testing reflects
the existence of any such conditions at any Owned Real Property or, to the
extent caused by any of the Assets, at any of the Leased Real Property, and if,
and only if, the cost of remediation, when aggregated with costs of remediation
as to the Multi-Stations, exceeds One Hundred Thousand Dollars ($100,000.00), in
the aggregate for all parcels of the Real Property to be conveyed by Sellers
hereunder and by the Multi-Stations Sellers pursuant to the Multi-Stations
Agreement, Sellers shall cause the conditions to be remedied as quickly as
possible (and in all events prior to Closing for which such property is used in
the operation of the Stations) such that no conditions contrary to the
representations and warranties (determined with regard to any knowledge
qualifier contained therein) of this
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Agreement exist; provided, however, that Sellers shall not be obligated to
expend in the aggregate for the Stations and the Multi-Stations in excess of
Three Million Dollars ($3,000,000.00) to effect such remediation for all Real
Property to be conveyed hereunder and pursuant to the Multi-Stations Agreement.
In the event that such remedial action(s) does cost in the aggregate in excess
of Three Million Dollars ($3,000,000.00), Sellers may elect not to take such
remedial action. In such event, Buyer may require Sellers to proceed to the
Closing of the Stations, and at the Closing, the purchase price for any of the
Stations acquired at the Closing shall be reduced by the estimated cost of
remediation for that portion of the Owned Real Property to be acquired at the
Closing, not to exceed in the aggregate for the Closing the Unexpended
Remediation Amount. Alternatively, Buyer may terminate this Agreement, and
Sellers shall have no liability to Buyer as a result of such termination. Such
Environmental Assessments shall not relieve Sellers of any obligation with
respect to any representation, warranty, or covenant of Sellers in this
Agreement or waive any condition to Buyer's obligations under this Agreement.
The cost of completing the Environmental Assessments shall be paid by Buyer.
6.15.2 Nothing in this Section 6.15 shall be deemed to extend the date
on which the Closing would otherwise occur under this Agreement.
6.16 Reserved
6.17 Adverse Developments. Sellers shall promptly notify Buyer of any unusual or
materially adverse developments that occur prior to the Closing with respect to
the Assets or the operation of the Stations; provided, however, that Sellers'
compliance with the disclosure requirements of this Section 6.17 shall not
relieve Sellers of any obligation with respect to any representation, warranty
or covenant of Sellers in this Agreement or relieve Buyer of any obligation or
duty hereunder, waive any condition to Buyer's obligations under this Agreement,
or expand or enhance any right of Buyer hereunder.
6.18 Title Insurance. Within ten (10) days of the date of this Agreement, each
Seller shall deliver to Buyer its current title insurance policies. Sellers
shall cooperate with Buyer in obtaining the commitment of a title insurance
company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard
rates, ALTA [1992] Form extended coverage title insurance policies, insuring
Buyer's interest in the Real Property (the "Title Commitment"). The costs of the
Title Commitment and the policy to be issued pursuant to the Title Commitment
shall be paid by Buyer.
6.19 Surveys. Within sixty (60) days of the date of this Agreement, each Seller
of Real Property shall deliver to Buyer, at Buyer's expense, surveys of the Real
Property performed by surveyors reasonably acceptable to Buyer sufficient to
remove any "survey exception" from the title insurance policies to be issued
pursuant to the Title Commitments.
6.20 Reserved
6.21 Reserved
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6.22 Cooperation on Tax Matters. The parties intend to allow for the election by
Sellers ("Election") to have the sale of all or a portion of the Assets
contemplated by this Agreement become part of a "Tax Deferred Exchange" in
accordance with the provisions of Section 1031 of the Internal Revenue Code of
1986 (the "Code"). Buyer covenants and agrees to participate and fully cooperate
with Sellers (and any qualified intermediary (as that term is defined in the
Code) involved in the Tax Deferred Exchange), in the event of an Election, so
long as such participation and cooperation does not have an adverse effect on
Buyer. To the extent that any provision in this Section 6.22 or in this
Agreement shall be found inconsistent with or in violation of any of the terms
of Section 1031 of the Code, such provision shall be null and void, all other
provisions of this Agreement shall remain in full force and effect, and the
parties shall endeavor to agree upon alternative provisions that affect a "Tax
Deferred Exchange" of property in such manner as will comply with Section 1031
of the Code. If no such agreement is reached within a reasonable period, then
this Agreement shall be performed without an exchange of properties.
6.23 Reference to Original Agreement. Buyer and Sellers agree that reference
shall be made to the Original Agreement and the accompanying Letter Agreement
dated August 18, 1999, and the Escrow Agreement dated August 18, 1999, to
resolve any ambiguity in this Agreement or any inconsistency between this
Agreement and the Multi-Station Agreement.
SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the Closing
hereunder with respect to the Stations are subject at Buyer's option to the
fulfillment prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and warranties
of Sellers contained in this Agreement shall be true and complete at and as of
the Closing Date as though made at and as of that time, (except for
representations and warranties that speak as of a specific date or time which
need only be true and complete as of such date or time), except where the
failure to be true and complete (determined without regard to any materiality
qualifications therein) does not have a Material Adverse Effect.
(b) Covenants and Conditions. Sellers shall have performed and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date, except where
the failure to have performed and complied (determined without regard to any
materiality qualifications therein) does not have a Material Adverse Effect.
(c) FCC Consent. The FCC Consent shall have been granted,
notwithstanding that it may not have yet become a "Final Order," unless any
filing is made with the FCC that pertains to or becomes associated with any
request for consent to the assignment of any of the FCC Licenses (an "FCC
Objection"), in which case, Buyer shall not be obligated to close until the FCC
Consent shall have become a "Final Order," unless in the reasonable judgment of
Buyer's counsel such objection would not reasonably be expected to result in a
denial of the FCC Consent, or the designation for hearing for the applications
for FCC Consent.
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(d) Hart-Scott-Rodino. All applicable waiting periods under
Hart-Scott-Rodino shall have expired or terminated.
(e) Governmental Authorizations. Sellers shall be the holder of all FCC
Licenses, and there shall not have been any modification, revocation, or
non-renewal of any License that has had a Material Adverse Effect. No proceeding
shall be pending the effect of which could be to revoke, cancel, fail to renew,
suspend, or modify materially and adversely any FCC License.
(f) Consents. All consents of third parties that are required for the
valid and binding assignment from Sellers to Buyer of all Material Contracts
marked by an asterisk on Schedules 3.5 and 3.7 shall have been obtained (or
available upon consummation of the Closing).
(g) Reserved
(h) Deliveries. Sellers shall have made or stand willing to make all
the deliveries to Buyer described in Section 8.2.
(i) Satisfactory Environmental Assessment. To the extent that any
Environmental Assessment or additional testing conducting pursuant to Section
6.15 hereof reflects the existence of conditions contrary to any representation
or warranty in this Agreement, either (i) Sellers shall have completed the
remediation of such conditions in accordance with Section 6.15 hereof, or (ii)
Buyer shall have provided notice to Sellers of Buyer's election to proceed to
Closing with the proration to the Purchase Price specified in Section 6.15
hereof.
7.2 Conditions to Obligations of Sellers. All obligations of Sellers at the
Closing hereunder are subject at Sellers' option to the fulfillment prior to or
at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects at and as of the Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(c) FCC Consent. The FCC Consent shall have been granted.
(d) Hart-Scott-Rodino. All applicable waiting periods under
Hart-Scott-Rodino shall have expired or terminated.
(e) Deliveries. Buyer shall have made or stand willing to make all the
deliveries described in Section 8.3.
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SECTION 8: CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(i) Except as provided below in this Section 8.1 or as otherwise agreed
to by Buyer and Sellers, the Closing hereunder shall be held for all of the
Stations on a date specified by Buyer on at least five (5) days written notice
that is not earlier than the first business day after or later than ten (10)
business days after the date on which all of the conditions to Closing have been
satisfied or waived;
(w) Reserved;
(x) Reserved;
(y) Reserved
(ii) If any event occurs that prevents signal transmission by any of
the Stations in the normal and usual manner and Sellers cannot restore the
normal and usual transmission before the date on which the Closing would
otherwise occur pursuant to this Section 8.1(a), and this Agreement has not been
terminated under Section 9, Sellers shall diligently take such action as
reasonably necessary to restore such transmission, and the Closing shall be
postponed until a date within the effective period of the FCC Consent (as it may
be extended pursuant to Section 6.1(c)) to allow Sellers to restore the normal
and usual transmission for such Station. If the Closing is postponed pursuant to
this paragraph, the date of the Closing shall be ten (10) days after notice by
Sellers to Buyer that transmission has been restored. Notwithstanding anything
to the contrary in this Agreement, Buyer shall not be obligated to close if the
transmission of any Station is not operating in the normal and usual manner,
unless and until the Sellers have restored the transmission of such Station to
its normal and usual level.
(iii) If there is in effect on the date on which the Closing would
otherwise occur pursuant to this Section 8.1(a) any judgment, decree or order
that would prevent or make unlawful the Closing on that date, the Closing shall
be postponed until a date within the effective period of the FCC Consent (as it
may be extended pursuant to Section 6.1(c)), to be agreed upon by Buyer and
Sellers, when such judgment, decree, or order no longer prevents or makes
unlawful the Closing. If the Closing is postponed pursuant to this paragraph,
the date of the Closing shall be mutually agreed to by Seller and Buyer.
(b) Closing Place. The Closing hereunder shall be held at the offices
of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, MD, 21201, or any
other place that is mutually agreed upon by Buyer and Sellers.
8.2 Deliveries by Sellers. Prior to or on Closing Date, Sellers shall deliver to
Buyer the following, in form and substance reasonably satisfactory to Buyer and
its counsel:
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(a) Conveyancing Documents. Duly executed deeds in form and quality
equivalent to the deeds by which Sellers obtained title, bills of sale, motor
vehicle titles, assignments, and other transfer documents that are sufficient to
vest good and marketable title to the Assets being transferred at the Closing in
the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims and obligations except for Permitted Encumbrances;
(b) Officer's Certificate. A certificate, dated as of the Closing Date,
executed by an officer of Sellers, certifying: (i) that the representations and
warranties of Sellers contained in this Agreement are true and complete as of
the Closing Date as though made on and as of that date (except for
representations and warranties that speak as of a specific date or time, which
need only be true and complete as of such date or time), except to the extent
that the failure of such representations and warranties (in each case determined
without regard to any materiality qualifications contained therein) shall not
have had a Material Adverse Effect, and (ii) that Sellers have in all respects
performed and complied with all of its obligations, covenants and agreements in
this Agreement to be performed and complied with on or prior to the Closing
Date, except to the extent that the failure to perform such covenants (in each
case determined without regard to any materiality qualifications contained
therein) shall not have had a Material Adverse Effect.
(c) Secretary's Certificate. A certificate, dated as of the Closing
Date, executed by each of the Seller's Secretary, members, partners or
designees, as the case may be: (i) certifying that the resolutions, as attached
to such certificate, were duly adopted by such Seller's Board of Directors and
shareholders (if required) (or by the general partner in the case of a
partnership or by the members in the case of a limited liability company),
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) providing, as attachments thereto, the Articles of
Incorporation and Bylaws (or other organizational documents) of such Seller;
(d) Consents. A manually executed copy of any instrument evidencing
receipt of any Consent which has been received by Sellers which relate to the
Stations or, the Assets of which are being transferred at the Closing;
(e) Good Standing Certificates. To the extent available from the
applicable jurisdictions, certificates as to the formation and/or good standing
of each Seller issued by the appropriate governmental authorities in the states
of organization and each jurisdiction in which such Sellers are qualified to do
business, each such certificate (if available) to be dated a date not more than
a reasonable number of days prior to the Closing Date;
(f) Opinions of Counsel. Opinions of Sellers' counsel and
communications counsel dated as of the Closing Date, substantially in the form
of Exhibits 2 and 3 hereto; and
(g) Reserved
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(h) Other Documents. Such other documents reasonably requested by Buyer
or its counsel for complete implementation of this Agreement and consummation of
the transaction contemplated hereby.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall deliver to
Sellers the following, in form and substance reasonably satisfactory to Sellers
and their counsel:
(a) Closing Payment. The payment of the Estimated Purchase Price
described in Section 2.4(a);
(b) Officer's Certificate. A certificate, dated as of the Closing Date,
executed on behalf of an officer of the Buyer, certifying (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date, and (ii) that Buyer has in all material respects performed and
complied with all of its obligations, covenants and agreements in this Agreement
to be performed and complied with on or prior to the Closing Date;
(c) Secretary's Certificate. A certificate, dated as of the Closing
Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) providing, as an attachment thereto, Buyer's
Certificate of Incorporation and Bylaws;
(d) Assumption Agreements. Appropriate assumption agreements pursuant
to which Buyer shall assume and undertake to perform Sellers' obligations and
liabilities to the extent provided under this Agreement for the Stations,
including (without limitation) under the Licenses and the Assumed Contracts;
(e) Good Standing Certificates. To the extent available from the
applicable jurisdictions, certificates as to the formation and/or good standing
of Buyer issued by the appropriate governmental authorities in the state of
organization and each jurisdiction in which Buyer is qualified to do business,
each such certificate (if available) to be dated a date not more than a
reasonable number of days prior to the Closing Date;
(f) Opinion of Counsel. An opinion of Buyer's counsel dated as of the
Closing Date, substantially in the form of Exhibit 4 hereto; and
(g) Reserved
(h) Other Documents. Such other documents reasonably requested by
Sellers or their counsel for complete implementation of this Agreement and
consummation of the transactions contemplated hereby.
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SECTION 9: TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated at any time
prior to Closing by the mutual consent of the parties.
9.2 Termination by Seller. This Agreement may be terminated by Sellers and the
sale and transfer of the Stations abandoned, if:
(a) Sellers are not then in material default hereunder, upon written
notice to Buyer if on the date that would otherwise be the Closing Date any of
the conditions precedent to the obligations of Sellers set forth in Sections
7.2(a), 7.2(b) and 7.2(e) of this Agreement has not been satisfied or waived in
writing by Sellers (whether or not occurring as the result of Buyer's material
breach of any provision of this Agreement);
(b) Buyer shall default in the performance of its obligations under
this Agreement in any material respect and such default is not cured within
thirty (30) days after notice thereof;
(c) Sellers are not then in material default hereunder and Closing has
not occurred within one (1) calendar year from the date hereof and failure of
Closing to have occurred is due to the failure to receive any regulatory
approval required for Closing, including, but not limited to, expiration or
termination of the Hart-Scott-Rodino waiting period, any FCC Consents
(including, without limitation, such facts as are disclosed on Schedule 4.6
hereto), and the failure of such consent, expiration or termination to be
granted is the result of facts relating to Buyer or any Affiliate of Buyer; or
(d) Sellers are not then in material default hereunder if the Closing
has not occurred within twenty four (24) months from the date hereof due to the
failure to receive any regulatory approval required for Closing, including, but
not limited to, the expiration or termination of the Hart-Scott-Rodino waiting
period of any FCC Consent, and the failure of such consent, expiration, or
termination to be granted is the result of facts relating to Sellers.
(e) Closing has not occurred with respect to the Stations within
eighteen (18) months from the date hereof, if Sellers are not then in material
default hereunder, and Closing has not occurred for any reason other than as
provided in Section 9.2(d).
9.3 Termination by Buyer. This Agreement may be terminated by Buyer and the
exchange and transfer of the Stations abandoned, if:
(a) Buyer is not then in material default, upon written notice to
Sellers if on the date that would otherwise be the Closing Date any of the
conditions precedent to the obligations of Buyer set forth in Sections 7.1(a),
7.1(b), 7.1(e), 7.1(f), 7.1(g), and 7(h) of this Agreement (and only such
Sections) has not been satisfied or waived in writing by Buyer (whether or not
occurring as the result of Sellers' material breach of any provision of this
Agreement);
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(b) Sellers shall have defaulted in the performance of Sellers'
obligations under this Agreement, and such default is not cured within thirty
(30) days after notice thereof and such default has had a Material Adverse
Effect; or
(c) Buyer is not then in material default hereunder and Closing has not
occurred within fifteen (15) months from the date hereof and failure to close is
due to the failure to receive any regulatory approval required for Closing,
including, but not limited to, expiration or termination of the
Hart-Scott-Rodino waiting period and any FCC Consents and the failure to receive
such consent is due to facts relating to Sellers or any Affiliate of Sellers.
(d) Closing has not occurred with respect to the Stations within
eighteen (18) months from the date hereof, if the terminating party is not then
in material default hereunder and the Closing has not occurred for any reason
other than as provided in Section 9.2(c).
9.4 Rights on Termination. If this Agreement is terminated by Buyer pursuant to
Section 9.3 as a result of Sellers' material breach of any provision of this
Agreement, Buyer shall be entitled to the immediate return of the amount of the
Allocable Escrow Deposit, and Buyer shall have all rights and remedies available
at law or equity, including the remedy of specific performance described in
Section 9.6 below. If this Agreement is terminated by Sellers pursuant to
Section 9.2, Sellers, as their sole remedy, shall be entitled to receive the
amount of the Allocable Escrow Deposit, less any amount thereof released in
accord with the provisions of this Agreement prior to such termination, together
with all interest or other proceeds from the investment thereof, but less any
compensation due Escrow Agent, as liquidated damages in full and final
settlement of all claims of Sellers under this Agreement, and there shall be no
other or further obligations or remedies of Sellers hereunder.
9.5 Liquidated Damages Not a Penalty. With respect to the liquidated damages as
described and provided for in Section 9.4 hereof, Sellers and Buyer hereby
acknowledge and agree that the damage that may be suffered by Sellers in the
event of a default by Buyer hereunder is not readily ascertainable and that such
liquidated damages as of the date hereof are a reasonable estimate of such
damages and are intended to compensate Sellers for any such damage and are not
to be construed as a penalty.
9.6 Specific Performance. The parties recognize that if Sellers breach this
Agreement and refuse to perform under the provisions of this Agreement, monetary
damages alone would not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought by Buyer to enforce this Agreement, Sellers shall waive the
defense that there is an adequate remedy at law.
9.7 Attorneys' Fees. In the event of a default by either party that results in a
lawsuit or other proceeding for any remedy available under this Agreement, the
prevailing party shall be entitled to reimbursement from the other party of its
reasonable legal fees and expenses (whether incurred in arbitration, at trial,
or on appeal).
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9.8 Survival. Notwithstanding the termination of this Agreement pursuant to this
Section 9, the obligations of Buyer and Sellers set forth in Sections 6.2, 6.4,
9, 10, and 11 shall survive such termination and the parties hereto shall have
any and all rights and remedies to enforce such obligations provided at law or
in equity or otherwise (including without limitations, specific performance).
9.9 Reserved
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival of Representations. All representations and warranties, covenants
and agreements of Sellers and Buyer contained in or made pursuant to this
Agreement or in any certificate furnished pursuant hereto shall survive the
Closing Date and shall remain in full force and effect to the following extent:
(a) representations and warranties (other than the representations and
warranties set forth in Section 3.16) shall survive for a period of twelve (12)
months after the Closing Date, (b) except as otherwise provided herein, the
covenants and agreements which, by their terms, survive the Closing shall
continue in full force and effect until fully discharged (but not beyond the
expiration of twelve (12) months after the Closing Date), and (c) any
representation, warranty, covenant or agreement that is the subject of a claim
which is asserted in a reasonably detailed writing prior to the expiration of
the survival period set forth in this Section 10.1 shall survive with respect to
such claim or dispute until the final resolution thereof; provided that
notwithstanding the foregoing, representations and warranties set forth in
Section 3.16 and the covenant in Section 6.15 shall survive for the lesser of
eighteen (18) months after the Closing Date, and (ii) the expiration of the
applicable statute of limitations, but, in no event, shall the survival period
in this proviso be less than one (1) year after the Closing Date; provided
further that the covenants and agreements set forth in Section 6.4
Confidentiality, Section 6.5 Cooperation, Section 6.9 Books and Records, Section
11.1 Fees and Expenses, Section 11.2 Notices, and Section 11.3 Benefit and
Binding Effect shall survive the Closing for the period provided therein or, if
no period is specified, in perpetuity; and provided finally that anything to the
contrary in this Section 10.1 notwithstanding any claim for indemnification
under Section 10 hereof which is asserted in a reasonably detailed writing prior
to the expiration of the survival periods provided in this Section 10.1 shall
survive with respect to such claim or dispute until final resolution thereof.
10.2 Indemnification by Seller. After the Closing but subject to Sections 10.1
and 10.5, , Sellers hereby agree to indemnify and hold Buyer harmless against
and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages arising out of or
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Sellers contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement;
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(b) Any and all obligations of Sellers not assumed by Buyer pursuant to
this Agreement, including any liabilities arising at any time under any Contract
not included in the Assumed Contracts;
(c) Any loss, liability, obligation, or cost arising out of or
resulting from the failure of the parties to comply with the provisions of any
bulk sales law applicable to the transfer of the Assets;
(d) Any and all obligations, losses, liabilities, or damages arising
out of or resulting from the operation or ownership of the Stations prior to the
Closing (except any losses, liabilities or damages for which Buyer has received
a proration in its favor or a reduction in Purchase Price under Section 6.15),
including any liabilities arising under the Licenses or the Assumed Contracts to
the extent that they relate to events occurring prior to the Closing Date;
(e) Any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity; and
(f) Any and all loss, liabilities or damages arising out of or
resulting from the loss or revocation of any of the FCC Licenses as a result of
actions taken by the FCC (or, to the extent applicable, by any reviewing court)
solely in connection with the specific applications relating to the Stations and
listed on Schedule 10.2.
10.3 Indemnification by Buyer. Notwithstanding the Closing, but subject to
Section 10.5, Buyer hereby agrees to indemnify and hold Sellers harmless against
and with respect to, and shall reimburse Sellers for:
(a) Any and all losses, liabilities, or damages arising out of or
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Buyer contained in this Agreement or in any certificate,
document, or instrument delivered to Sellers under this Agreement;
(b) Any and all obligations of Sellers assumed by Buyer pursuant to
this Agreement;
(c) Any and all obligations, losses, liabilities, or damages arising
out of or resulting from the operation or ownership of the Stations after the
Closing (including, without limitation, any obligations of Sinclair, SCI, or any
Affiliate thereof pursuant to any agreements by which the obligations of any of
the Stations have been guaranteed), except any losses, liabilities or damages
for which Sellers have received a proration in their favor; and
(d) Any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
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10.4 Procedure for Indemnification. The procedure for indemnification shall be
as follows:
(a) The party claiming indemnification (the "CLAIMANT") shall promptly
give notice to the party from which indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five business
days after written notice of such action, suit, or proceeding was given to
Claimant.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within the thirty-day period (or any
mutually agreed upon extension thereof), the Claimant may seek appropriate
remedy at law or equity.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification under this Agreement, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party,
provided, however, that Indemnifier may not assume control of the defense unless
it affirms in writing its obligation to indemnify Claimant for any damages
incurred by Claimant with respect to such third-party claim. If the Indemnifying
Party elects to assume control of the defense of any third-party claim, the
Claimant shall have the right to participate in the defense of such claim at its
own expense. If the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third-party claim, it shall be bound
by the results obtained in good faith by the Claimant with respect to such
claim.
(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided in Section 10.2 and Section
10.3 shall extend to the members, partners, shareholders, officers, directors,
employees, representatives and affiliated entities of any Claimant although for
the purpose of the procedures set forth in this Section 10.4, any
indemnification claims by such parties shall be made by and through the
Claimant.
10.5 Certain Limitations.
(a) Notwithstanding anything in this Agreement to the contrary, neither
party shall indemnify or otherwise be liable to the other party with respect to
any claim for any breach of a
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representation or warranty, or for the breach of any covenant contained in this
Agreement, unless notice of the claim is given within the relevant survival
period specified in Section 10.1.
(b) Notwithstanding anything in this Agreement to the contrary, but
except as otherwise provided in this subsection (b) and Schedule 10.5, Sellers
shall not be liable to Buyer in respect of any indemnification hereunder except
to the extent that (i) the aggregate amount of losses of Buyer, when aggregated
with the amount of losses with respect to the Multi-Stations pursuant to the
Multi-Stations Agreement, if any, exceeds One Million Dollars ($1,000,000) (the
"Threshold Amount") (and then only to the extent such losses, when aggregated
with the amount of losses with respect to the Multi-Stations pursuant to the
Multi-Stations Agreement, if any, exceed the excess of Five Hundred Thousand
Dollars ($500,000)) over an amount (not in excess of $100,000) which Sellers are
not required to expend in environmental remediation as a result of the
Environmental Threshold Amount (such excess being the "Excess Amount") and (ii)
the aggregate amount of losses of Buyer, when aggregated with the amount of
losses with respect to the Multi-Stations pursuant to the Multi-Stations
Agreement, if any, is less than the excess of Fifty Million Dollars)
($50,000,000) over any amounts expended by Buyer pursuant to Section 6.15 (as
aggregated with the Multi-Stations as set forth therein), or with respect to
which Buyer receives a proration in its favor under Section 6.15 (such excess
being the "Indemnity Cap"); provided, the foregoing shall not be applicable to
any amounts owed in connection with the Purchase Price or the proration
adjustment thereof. In determining whether Sellers shall be obligated to
indemnify Buyer under this Section 10, once the Threshold Amount has been
satisfied, each representation and warranty and each covenant contained in this
Agreement for which indemnity may be sought hereunder shall be read solely for
purposes of determining whether a breach of such representation, warranty or
covenant has occurred without regard to materiality (including Material Adverse
Effect) qualifications that may be contained therein.
(c) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall a party be entitled to indemnification for such
party's consequential or punitive damages, regardless of the theory of recovery.
Each party hereto agrees to use reasonable efforts to mitigate any losses which
form the basis for any claim for indemnification hereunder.
SECTION 11: MISCELLANEOUS
11.1 Fees and Expenses.
(a) Buyer and Sellers shall each pay one-half of (i) any fees charged
by the FCC in connection with obtaining the FCC Consent, and (ii) any filing
fees incurred in connection with any Hart-Scott-Rodino Filings.
(b) Buyer and Sellers shall each pay one-half (1/2) of any filing fees,
transfer taxes, document stamps, or other charges levied by any governmental
entity (other than income Taxes, which shall be the responsibility of Sellers)
on account of the transfer of the Assets from Sellers to Buyer.
(c) Except as otherwise provided in this Agreement, each party shall
pay its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and
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representatives, and each party shall be responsible for all fees or commissions
payable to any finder, broker, advisor, or similar Person retained by or on
behalf of such party.
11.2 Notices. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be (a) in writing, (b) sent
by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (c) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
To Buyer:
Entercom Communications Corp.
401 City Avenue, Suite 409
Bala Cynwyd, Pennsylvania 19004
Attn: David J. Field
Telecopy: (610) 660-5620
Telephone: (610) 660-5610
with a copy Latham & Watkins
(which shall 1001 Pennsylvania Avenue, Suite 1300
not constitute Washington, D.C. 20004-2505
Attn: Joseph Sullivan, Esquire
notice) to: Telecopy: (202) 637-2201
Telephone: (202) 637-2200
To Sellers:
c/o Sinclair Broadcast Group, Inc.
10706 Beaver Dam Road
Cockeysville, MD 21030
Attn: President
Telecopy: (410) 568-1533
Telephone: (410) 568-1506
with a copy Sinclair Communications, Inc.
(which shall 10706 Beaver Dam Road
not constitute Cockeysville, MD 21030
notice) to: Attn: General Counsel
Telecopy: (410) 568-1537
Telephone: (410) 568-1522
with a copy Steven A. Thomas, Esquire
(which shall Thomas & Libowitz, P.A.
not constitute 100 Light Street, Suite 1100
notice) to: Baltimore, MD 21202-1053
Telecopy: (410) 752-2046
Telephone: (410) 752-2468
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or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect.
(a) Buyer shall have the right to assign all or any portion of its
rights under this Agreement to (i) any entity under common control with Buyer,
(ii) a Qualified Intermediary under Section 1031 of the Code, or (iii) any
lender or any agent for such lender(s) for collateral purposes only; provided,
that no such assignment shall relieve Buyer of its obligations hereunder.
Sellers may assign, combine, merge, or consolidate among themselves and any
Affiliate of Sellers so long as Sellers or their successors and assigns are
bound by the terms and conditions of this Agreement in all respects as if such
successors and assigns were original parties hereto, and such assignment,
combination, merger, or consolidation does not have an adverse affect on Buyer.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. No Person, other
than the parties hereto, is or shall be entitled to bring any action to enforce
any provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder. Other than as
expressly set forth in this Section 11.3(a), no party may assign or transfer all
or any portion of its rights under this Agreement without the prior written
consent of the parties hereto.
(b) Sellers acknowledge and agree that at the Closing, Buyer may
require that Sellers transfer the Assets and liabilities of any Station to a
third party designated in writing by Buyer (a "DESIGNEE") at least ten (10) days
prior to the Closing; provided, however, that (a) such Designee shall on or
prior to the Closing Date assume all assumed liabilities with respect to the
particular Station so transferred; (b) an FCC Order shall have been issued on or
prior to the Closing Date authorizing such transfer; (c) the transfer to such
Designee would not violate any laws, (d) the transfer to such Designee would not
delay in any respect the date for the Closing as required by the terms of this
Agreement; (e) such transfer to a Designee shall not relieve Buyer from any of
its obligations hereunder; (f) there shall be no assignment or transfer (actual
or implied) of this Agreement to the Designee; (g) Sellers shall have no
liabilities to any such Designee under this Agreement or otherwise; and (h) such
Designee shall deliver to the Sellers a written certificate, pursuant to which
the Designee acknowledges and agrees for the benefit of Sellers to the terms and
conditions of the designation as described herein. The parties shall cooperate
in all reasonable respects in making any modifications to the closing documents
and deliveries that may be necessary or appropriate in connection with the
transfer of Assets and liabilities of any Station to any Designee pursuant to
this Section 11.3(b).
11.4 Further Assurances. The parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (WITHOUT REGARD TO THE CHOICE
OF LAW PROVISIONS THEREOF). IN ADDITION, EACH OF THE PARTIES HERETO SUBMITS TO
LOCAL JURISDICTION IN
48
<PAGE>
THE STATE OF MARYLAND AND AGREES THAT ANY ACTION BY ANY PARTY HEREUNDER SHALL BE
INSTITUTED IN THE STATE OF MARYLAND.
11.6 Entire Agreement. This Agreement, the Schedules hereto, and all documents,
certificates and other documents to be delivered by the parties pursuant hereto,
collectively, represent the entire understanding and agreement between Buyer and
Sellers with respect to the subject matter of this Agreement. This Agreement
supersedes all prior negotiations between the parties and cannot be amended,
supplemented, or changed except by an agreement in writing duly executed by each
of the parties hereto and by Sinclair.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
11.8 Headings. The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
11.9 Counterparts. This Agreement may be signed in two or more counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
49
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Sellers as of the date first written above.
Buyer: Sellers:
Entercom
- ---------------------------- SINCLAIR COMMUNICATIONS, INC.
By: /s/ John C. Donlevie By: /s/ David B. Amy
------------------------- --------------------------
Name: John C. Donlevie Name: David B. Amy
Title: Executive Vice President Title: Secretary
SINCLAIR MEDIA III, INC.
By: /s/ David B. Amy
--------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF KANSAS CITY
LICENSEE, LLC
By: /s/ David B. Amy
--------------------------
Name: David B. Amy
Title: Secretary
50
AMENDMENT TO PURCHASE AGREEMENT
This AMENDMENT (this "Amendment") made as of March 16, 1999 to the
Purchase Agreement dated as of September 4, 1998 (the "Purchase Agreement") by
and between Guy Gannett Communications, a Maine corporation (the "Company"), and
Sinclair Communications, Inc., a Maryland corporation (together with its
successors and permitted assigns, "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company and Purchaser are parties to the Purchase
Agreement;
WHEREAS, the Company and Purchaser desire to amend the Purchase
Agreement in certain respects.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, the parties, intending legally to be
bound, agree as follows:
Section 1. Real Estate. Section 1.1(d) of the Disclosure Schedule is
hereby amended and restated in its entirety to be the exhibit to this Agreement
designated as "Section 1.1(d)."
Section 2. Closing Date. The first sentence of Section 1.6 of the
Purchase Agreement is hereby amended and restated to read as follows:
"Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been terminated pursuant to Section 10.1
hereof, the closing (the "Closing") of the transactions herein contemplated
shall take place at 10:00 a.m., New York City time, on April 30, 1999, or
as soon thereafter as the conditions set forth in Articles 6 and 7 hereof
have each been satisfied or waived (such time and date being referred to
herein as the "Closing Date"), at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York, or at such other place
as the Company and Purchaser shall agree."
Section 3. Purchase Price. Section 2.1(a) of the Purchase Agreement is
hereby amended and restated in its entirety to read as follows:
"In consideration of the sale of the Assets and the Business hereunder,
Purchaser shall (i) pay the Company in cash the aggregate amount of (x)
$310,000,000, plus (y) if the earnings before interest, taxes, depreciation
and amortization of the Stations for the fiscal year ending December 26,
1998, calculated in conformity with GAAP and on a basis consistent with the
basis used in preparing the Unaudited Financial Statements as of, and for
year ended, December 31, 1997 referred to in Section 3.5 hereof, in each
case after adding back corporate
<PAGE>
overhead expense (to the extent otherwise deducted in computing earnings)
and film and program expenses and subtracting cash payments on film and
program contracts, whether or not actually made, that would have been due
pursuant to the payment terms of such contracts during the relevant period
in the ordinary course and without regard to prepayments or other
extraordinary payments not contractually required and in each case
excluding the results of operations of WOKR-TV (Rochester, New York) (the
"1998 BCF"), exceeds $12,700,000, an amount equal to 14.57 times the
difference between the 1998 BCF and $12,700,000 (but in no event shall the
amount of the addition pursuant to this clause (y) be more than
$7,000,000), (the "Earnings Adjustment") plus (if greater than or equal to
zero) or minus (if less than zero), as the case may be, (z) the amount of
the Net Financial Assets as of 11:59 p.m., New York City time, on the day
immediately preceding the Closing Date, subject to adjustment pursuant to
Section 2.2 hereof (the "Purchase Price") and (ii) assume the Assumed
Liabilities."
Section 4. Allocation of the Purchase Price. (a) The first two
sentences of Section 2.5 of the Purchase Agreement are hereby amended and
restated to read as follows:
"No later than the Closing Date, Purchaser and the Company shall jointly
determine the proper allocation of the Purchase Price among the Stations,
provided that the parties hereto agree that the proper allocation of the
Purchase Price to WOKR-TV (Rochester, New York), and the proper allocation
of such allocated Purchase Price among specified categories of assets, are
as set forth in Section 2.5 of the Disclosure Schedule. No later than 90
days following the Closing Date, Purchaser shall have engaged a nationally
recognized appraiser to determine, and such appraiser shall have so
determined, the proper allocation of the Purchase Price allocated to, and
the Assumed Liabilities relating to, each Station among the Assets of each
Station, in each case in accordance with Section 1060 of the Code and the
Treasury Regulations promulgated thereunder (the "Allocation"), provided
that the parties hereto agree that no part of the Purchase Price shall be
allocated to any of the agreements referred to in Section 1.1(r) hereof."
(b) The Purchase Agreement is hereby amended to incorporate, as Section
2.5 of the Disclosure Schedule, the exhibit to this Agreement designated as
"Section 2.5."
Section 5. Conduct of the Business Prior to Closing. The first sentence
of Section 5.1(a) of the Purchase Agreement is hereby amended and restated to
read as follows:
"Between the date hereof and the Closing, except as contemplated by this
Agreement or as described in either Section 3.7 or Section 5.1 of the
Disclosure Schedule, or except with the consent of Purchaser (which consent
shall not be unreasonably withheld), the Company will operate the Business
in the ordinary course of business consistent with past practice and shall
use commercially reasonable efforts to (1) preserve intact the Business and
preserve the Business's
<PAGE>
relationships with customers, suppliers, licensees, licensors, the networks
with whom the Stations are affiliated and others having business dealings
with the Stations, (2) maintain the Business's inventory of supplies, parts
and other materials and keep its books of account, records and files, in
each case in the ordinary course of business consistent with past practice,
(3) maintain the material items of Real Property, Leased Property and
Equipment substantially in their present condition, ordinary wear and tear
excepted, (4) pay or discharge all cash and barter obligations in the
ordinary course of business, (5) bring current as of the day immediately
preceding the day of the Closing Date all payments due and payable under
Program Contracts in accordance with their terms as in effect on the date
hereof (with respect to Program Contracts existing as of the date hereof)
or on the date originally entered into (with respect to Program Contracts
entered into after the date hereof) and (6) maintain its corporate
existence."
Section 6. Employee Benefit Matters. (a) The first sentence of Section
5.2(f) of the Purchase Agreement is hereby amended and restated to read as
follows:
"From and after the Closing, Purchaser shall assume sponsorship of the
WOKR-TV Partners 401(k) Plan, the TV Employees Pension Plan, and assume
responsibilities of all Employee Benefits Plans that provide
post-retirement life insurance or health, or short-term or long-term
disability benefits and be responsible for any benefits under such Employee
Benefit Plans (i) to which any current, former or inactive Business
Employee or Corporate Office Employee, or a beneficiary or dependent of any
current, former or inactive Business Employee or Corporate Office Employee
(each a "Beneficiary"), has already become entitled, (ii) which commenced
or (iii) to which any current, former or inactive Business Employee or
Corporate Office Employee has already become qualified by reason of age and
years of service as of the Closing, to the extent such persons are
identified in Section 5.1.1 or Section 5.1.2 of the Disclosure Schedule
(which sections shall be updated, if necessary, at Closing."
(b) Sections 5.2(i) and 5.2(j) of the Purchaser Agreement are hereby
amended and restated in their entirety to read as follows:
"(i) With respect to the Guy Gannett Retirement Plan (the "Seller
Pension Plan"), the Company and the Purchaser agree as follows:
(A) Prior to the Closing Date, the Company shall establish a spin off
defined benefit plan (the "TV Employees Pension Plan") and trust (the
"Trust") for the post-Closing benefit of the Business Employees and
Beneficiaries who participate in the Seller Pension Plan. With respect to
the Seller Pension Plan, Business Employees shall cease to accrue benefits
and service credits under such Plan as of the Closing. As soon as
practicable following the Closing, the Company shall cause its actuary to
calculate the amount of assets to be allocated to the TV Employees Pension
Plan for the benefit of the Business Employees and Beneficiaries. Such
allocation shall be calculated under Section 414(l)(2) of the Code, without
regard to paragraph 2(d) thereof. The Company shall
<PAGE>
cause the amount of assets (the "Section 414 Amount") (determined as of the
end of the month in which the Closing occurs) to be transferred to the
Trust. The Company shall not amend the Seller Pension Plan or the TV
Employees Pension Plan to 100% vest Business Employees' benefits under such
Plans. Contingent upon the transfer of the Initial Transfer Amount (as
described in Section 5.2(i)(B) hereof) to the TV Employees Pension Plan,
Purchaser shall assume all liabilities of the Company and its affiliates
with respect to Business Employees and Beneficiaries under the Seller
Pension Plan and Trust and shall become with respect to such Business
Employees and Beneficiaries responsible for all acts, omissions and
transactions under or in connection with such Seller Pension Plan and
Trust, whether arising before, on or after the Closing, except for (i) if
the Company has obtained at or prior to the Closing a prepaid fiduciaries'
insurance and indemnification policy substantially on the terms set forth
in Section 5.2(i) of the Disclosure Schedule under which Purchaser is a
named insured (a" Prepaid Fiduciary Insurance Policy"), liabilities arising
out of willful misconduct or gross negligence of the trustees before the
Closing and (ii) if the Company is unable to obtain such policy,
liabilities arising out of willful misconduct, recklessness or negligence
of the trustees before the Closing.
(B) All transfers to the TV Employees Pension Plan shall be made in
accordance with the provisions of this Section 5.2(i). As soon as
practicable, but in no event after the later of (i) 30 days after the
Closing Date or (ii) 45 days after the filing of Form 5310A by the Seller
Pension Plan ("Initial Transfer Date"), the Company shall cause its trust
to make an initial transfer of assets in cash equal to at least 80% of the
amount estimated by the Company in good faith to be equal to X (as defined
below) ("Initial Transfer Amount"). As soon as practicable after the final
determination of the amounts to be transferred ("True-Up Date"), the
Company shall, except as otherwise provided herein, cause a second transfer
to be made in cash of the "True-Up Amount." The True-Up Amount shall be
equal to the sum of the following amount with respect to the Seller Pension
Plan:
(X minus Initial Transfer Amount), minus benefit payments and
reasonable administration expenses attributable to Business Employees
and Beneficiaries, adjusted for Earnings,
where X equals the Section 414 Amount. "Earnings" shall be calculated (i)
from the date as of which the Section 414 Amount is determined until the
Initial Transfer Date on the amount equal to the Initial Transfer Amount
using the rate paid on a 90-day Treasury Bill on the auction date
coincident with or immediately preceding the Closing, (ii) on an amount
equal to X minus the sum of the Initial Transfer Amount plus benefit
payments and reasonable administrative expenses attributable to Business
Employees and Beneficiaries using (A) with respect to the period from the
Initial Transfer to the last day of the month preceding the True-Up Date,
the cumulative rate of return (considering both gain and loss) earned or
lost on the assets of the trust from which the True-Up Amount is being
transferred and (B) with respect to the period from the first day of the
month in which the True-Up Date occurs to the True-Up Date the rate paid on
a 90-Day Treasury Bill on the auction date coincident with or immediately
preceding the first day of the
<PAGE>
month in which the True-Up Date occurs. If the Initial Transfer Amount
increased by benefit payments and reasonable administrative expenses
attributable to Business Employees and Beneficiaries exceeds X, as soon as
practicable following such determination Purchaser shall cause a transfer
to be made in cash to the Seller Pension Plan equal to the difference
between (a) the Initial Transfer Amount increased by the benefit payments
and reasonable administrative expenses attributable to Business Employees
and Beneficiaries and (b) X as (i) adjusted downward to reflect Earnings on
X, minus benefits payments and reasonable administrative expenses, from the
date as of which the Section 414 Amount is determined until the Initial
Transfer Date using the rate paid on a 90-day Treasury Bill on the auction
date coincident with or immediately preceding the Closing and (ii) adjusted
upward to reflect Earnings on the Initial Transfer Amount increased by the
benefit payments and reasonable administrative expenses attributable to
Business Employees and Beneficiaries, and reduced by X from the Initial
Transfer Date until the True-Up Date, such Earnings shall be calculated
using (A) with respect to the period from that Initial Transfer Date to the
last day of the month preceding such True-Up Amount transfer, the
cumulative rate of return (considering both gain and loss) on the assets of
the Seller Pension Plan and (B) with respect to the period from the first
day of the month in which the True-Up Amount transfer occurs and the date
of such True-Up Amount transfer, the rate paid on a 90-Day Treasury Bill on
the auction date coincident with or immediately preceding the first day of
the month in which the transfer occurs. The Initial Transfer Amount and
True-Up Amount shall be transferred in cash. The amounts to be transferred
pursuant to this Section 5.2(i) shall be adjusted to the extent necessary
to satisfy Section 414(l) of the Code, and any regulations promulgated
thereunder.
(C) For the purposes of this Section 5.2(i), the Section 414 Amount
shall be determined by an enrolled actuary designated by the Company, using
the same assumptions and methodologies used by the Company for valuation of
the Seller Pension Plan for funding purposes under Sections 404 and 412 of
the Code. The Company shall provide any actuary designated by Purchaser
with all information reasonably necessary to review the calculation of the
Section 414 Amount in all material respects and to verify that such
calculations have been performed in a manner consistent with the terms of
this Agreement. If there is a good faith dispute between the Company's
actuary and the Purchaser's actuary as to the amount to be transferred to
any plan, and such dispute remains unresolved for 15 days, the chief
financial officers of the respective companies shall endeavor to resolve
the issue. Should such dispute remain unresolved for 20 days, the Company
and Purchaser shall select and appoint a third actuary who is mutually
satisfactory to the parties hereto. Such third party actuary shall be
instructed to render its decision within 20 days and such decision shall be
conclusive as to any dispute for which the third party actuary was
appointed. The cost of such third party actuary shall be divided equally
between the Company and Purchaser. Each party shall be responsible for the
cost of its own actuary.
(D) Purchaser shall take all action necessary to qualify the TV
Employees Pension Plan under the applicable provisions of the Code and
Purchaser and the Company shall cooperate to make any and all filings and
submissions to the appropriate
<PAGE>
governmental agencies required to be made by Purchaser as are appropriate
in effectuating the provisions hereof.
(E) In anticipation of making the Initial Transfer in cash, the
Company may liquidate, at any time, any or all the investments of the
Seller's Pension Plan.
(F) Notwithstanding Section 5.2(i)(B) and (E) hereof, the parties may
agree to a transfer of assets from the Seller Pension Plan to the TV
Employees Pension Plan in kind. The parties shall arrange the manner of any
transfer and allocation of the assets in kind as of the date as of which
the Section 414 Amount is determined, making appropriate adjustments for
benefits and reasonable administration expenses attributable to Business
Employees and Beneficiaries. Such transfer may be made in one or more
installments.
(G) Notwithstanding Section 5.1(i)(A),(B) and (F) hereof, (x) if the
Closing occurs on or before May 1, 1999, the determination of the Section
414 Amount will be as of the close of business on April 30, 1999 and the
parties anticipate that the Initial Transfer Date will be June 1, 1999 or
(y) if the Closing occurs between May 2 and May 15, 1999, the determination
of the Section 414 Amount will be as of May 31, 1999 and the parties
anticipate that the Initial Transfer Date will be June 1, 1999.
(j) With respect to the Guy Gannet Voluntary Investment Plan (the
"Defined Contribution Plan"), the Company and Purchaser agree as follows:
(A) The Business Employees shall cease to accrue benefits and service
credits under the Defined Contribution Plan as of the Closing and,
effective as of the Closing, Purchaser shall designate a savings plan (or
plans) (in accordance with this Section 5.2(j)) ("Purchaser Savings Plan")
and associated trust (or trusts) to hold the assets of the plan for the
Business Employees, to be effective as of the Closing, and shall provide to
the Company evidence reasonably satisfactory to the Company that the
Purchaser Savings Plan and the associated trust have been established and
that the Purchaser Savings Plan qualifies under the requirements of Section
401(a) of the Code, and that the trust is exempt from tax under Section
501(a) of the Code. The Company shall provide to Purchaser evidence
reasonably satisfactory to Purchaser that the Defined Contribution Plan
remains qualified under the requirements of Section 401(a) of the Code.
Provided that the Company and Purchaser have received evidence reasonably
satisfactory to them in accordance with the preceding sentences, as soon as
is reasonably practicable following the Closing, the Company shall take or
cause to be taken all action required or appropriate to transfer the
account balances of all Business Employees and Beneficiaries to the trust
associated with the Purchaser Savings Plan in a trustee to trustee
transfer. The transfer will be done in cash with account balances as of the
Closing transferred to the Purchaser Savings Plan as soon as practicable
after the Closing. The transfer may be made in one or more installments,
with the amounts of the transfers reflecting all account activity and those
fees and expenses reasonably estimated through the Closing. The actual
mechanics of the transfer(s) shall be accomplished in a manner mutually
agreed
<PAGE>
upon by the Company and the Purchaser guided by practices reasonable
consistent with the operation of the Defined Contribution Plan. If however
the parties agree that the transfer shall be made in kind, such transfers
may be made in two or more installments, the first such installment being
the aggregate amount of the applicable account balances as of April 1,
1999, reflecting all account transfers, loan payments and other appropriate
distributions requested by participants as of April 1, 1999, and those fees
and expenses known or reasonably estimated through the Closing. The
subsequent transfer(s) shall constitute the remainder of the assets in the
participant accounts adjusted for plan expenses, loan payments and other
appropriate distributions, charges and credits including earnings on such
accounts if not included in prior installments. The actual mechanics of the
transfers (including any return payments to reflect excess transfers due to
market fluctuations or otherwise, if any) shall be accomplished in a manner
mutually agreed upon by the Company and the Purchaser. All transfers shall
be made in an amount equal to the value of the account balances to be
transferred, determined as of the close of business on the last Business
Day immediately preceding each such transfer, except that to the extent a
Business Employee's or Beneficiary's account balance in the Defined
Contribution Plan includes one or more promissory notes evidencing a
participant loan or loans, such promissory notes shall be transferred in
kind for the Business Employee's or Beneficiary's credit under the
Purchaser Savings Plan. The Purchaser shall collect by payroll deduction
from payrolls paid by the Purchaser after the Closing and promptly pay over
to the applicable trustee of the Purchaser Savings Plan all loan payments
required on participant loans made by the Defined Contribution Plan to any
Business Employee and the Purchaser shall cause the appropriate plan
administrator to apply the payments to the appropriate promissory notes.
Contingent upon the transfer of the account balances to each of the
Purchaser Savings Plans, Purchaser shall assume, and Parent shall cause
Purchaser to assume, all liabilities of Company and its affiliates with
respect to Business Employees and Beneficiaries under the Defined
Contribution Plan and shall become with respect to such Business Employees
and Beneficiaries responsible for all acts, omissions and transactions
under or in connection with such Defined Contribution Plan, whether arising
before, on or after the Closing, except for (i) if the Company has obtained
at or prior to the Closing a Prepaid Fiduciary Insurance Policy,
liabilities arising out of willful misconduct or gross negligence of the
trustees before the Closing and (ii) if the Company is unable to obtain
such policy, liabilities arising out of willful misconduct, recklessness or
gross negligence of the trustees before the Closing."
(c) Section 5.1.1 of the Disclosure Schedule is hereby amended and
restated in its entirety to be the exhibit to this Agreement designated as
"Section 5.1.1."
(d) The Purchase Agreement is hereby amended to incorporate, as Section
5.1.2 of the Disclosure Schedule, the exhibit to this Agreement designated as
"Section 5.1.2."
(e) The Purchase Agreement is hereby amended to add to the portion of
Section 5.2 of the Disclosure Schedule designated as "5.2(a)," the Employee
Benefit Plans, books and records relating to the Guy Gannett Voluntary
Investment Plan (401(k)).
<PAGE>
Section 7. Definitions. (a) The definition of "Maine Media Purchase
Agreement" provided in Article 9 of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
"Maine Media Purchase Agreement means the Purchase Agreement dated as
of August 14, 1998 by and among the Company, Newco, Seattle Times Company
and Times Communications Co., as amended."
(b) The definition of "Material Adverse Effect" provided in Article 9
of the Purchase Agreement is hereby amended and restated in its entirety to read
as follows:
"Material Adverse Effect means any circumstance, change in, or effect
on the Company that has a material adverse effect on the business, results
of operations or financial condition of the Business; provided, however,
that Material Adverse Effect (A) shall not include adverse effects
resulting from (or, in the case of effects that have not yet occurred,
reasonably likely to result from) (i) general economic or industry
conditions that have a similar effect on other participants in the
industry, (ii) regional economic or industry conditions that have a similar
effect on other participants in the industry in such region, (iii) the
failure of Purchaser to give any requested consent pursuant to Section
5.1(a) or (iv) any act of Purchaser and (B) shall not include adverse
circumstances, changes in or effects on the financial, business or
operational performance, results of operations, financial condition or
employees (whether as to any individual or in the aggregate) of the
Business (excluding any such performance, financial condition or employees
of Station WOKR-TV (Rochester, New York) only) occurring on or after April
1, 1999."
(c) The first two sentences of the definition of "Net Financial Assets"
provided in Article 9 of the Purchase Agreement are hereby amended and restated
to read as follows:
"Net Financial Assets means the result of (i) the aggregate amount of
current assets of the Business to be assigned to Purchaser under this
Agreement, excluding for purposes of this calculation, the current portion
of rights under Program Contracts (except as provided otherwise herein),
less (ii) the aggregate amount of current liabilities of the Business to be
assumed by Purchaser under this Agreement, excluding for purposes of this
calculation the current portion of obligations under Program Contracts
(except as provided otherwise herein), less (iii) the aggregate amount of
the Company's liability for supplemental retirement and deferred
compensation under the Employee Benefit Plans set forth in Section 9 of the
Disclosure Schedule and for Continuation Coverage with respect to Corporate
Office Employees, in each case to the extent not paid by the Company prior
to the Closing and excluding the current portion of such liability, if any,
to the extent such portion is included as a current liability in clause
(ii), in each case as of the relevant date of calculation and calculated
(except as otherwise provided in Section 9 of the Disclosure Schedule) in
conformity with GAAP and on a basis consistent with the basis used in
preparing the Unaudited Financial Statements as of, and for the year ended,
December 31, 1997 referred to in Section 3.5 hereof.
<PAGE>
Net Financial Assets expressly shall not include, as either assets or
liabilities, the rights and obligations under Program Contracts; provided,
however, that notwithstanding any prior practice or lack thereof relating
thereto, (x) any programming downpayments made prior to the date hereof
under Program Contracts in advance of customary payment terms, to the
extent not amortized as of the relevant date of calculation as more fully
described in the example set forth in Section 9 of the Disclosure Schedule,
shall be expressly included in the current assets, (y) any regularly
scheduled payments due and unpaid as of the day immediately preceding the
day of the Closing Date under Program Contracts in accordance with their
terms as in effect on the date hereof (with respect to Program Contracts
existing as of the date hereof) or on the date originally entered into
(with respect to Program Contracts entered into after the date hereof))
shall be expressly included in the current liabilities and (z) any
prepayments of regularly scheduled amounts due on or after the Closing
Date, but made prior to the Closing Date under Program Contracts shall be
expressly included in the current assets."
(d) The definition of "New Pension Plan" provided in Article 9 of the
Purchase Agreement is hereby deleted in its entirety.
(e) Clause (v) of the definition of "Permitted Exceptions" provided in
Article 9 of the Purchase Agreement is hereby amended and restated to read as
follows:
"(v) survey exceptions, rights of way, easements, reciprocal easement
agreements and other Encumbrances on title to real property shown in the
title insurance commitments April 28, 1998 (for the property referred to as
parcels 2- A, 15-L, 17, 18, 19-A and 19-B, 70 and 71 in Section 1.1(d) of
the Disclosure Schedule), April 24, 1998 (for the property referred to as
parcel 29 in Section 1.1(d) of the Disclosure Schedule) and May 1, 1998
(for the property referred to as parcel 84 in Section 1.1(d) of the
Disclosure Schedule), May 4, 1998 (for the property referred to as parcels
34-A, 75 and 75-L in Section 1.1(d) of the Disclosure Schedule), May 5,
1998 (for the property referred to as parcels 72, 72- L and 83 in Section
1.1.(d) of the Disclosure Schedule), May 6, 1998 (for the property referred
to as parcel 77-L in Section 1.1.(d) of the Disclosure Schedule), May 7,
1998 (for the property referred to as parcels 80 and 81 in Section 1.1.(d)
of the Disclosure Schedule), May 10, 1998 (for the property referred to as
parcel 82- L in Section 1.1.(d) of the Disclosure Schedule), May 15, 1998
(for the property referred to as parcels 60, 61 and 64 in Section 1.1.(d)
of the Disclosure Schedule), May 18, 1998 (for the property referred to as
parcel 74 in Section 1.1.(d) of the Disclosure Schedule), May 21, 1998 (for
the property referred to as parcels 90 and 91 in Section 1.1.(d) of the
Disclosure Schedule) and June 12, 1998 (for the property referred to as
parcel 100 in Section 1.1.(d) of the Disclosure Schedule), or that do not,
individually or in the aggregate, materially adversely affect the use of
such property in the conduct of the Company's business as it is being
conducted prior to the Closing;"
<PAGE>
(f) The following new definition of "TV Employees Pension Plan" shall
be inserted in alphabetical order in Article 9 of the Purchase Agreement:
"TV Employees Pension Plan has the meaning set forth in Section 5.2
hereof."
Section 8. References. All references to "this Agreement" in the
Purchase Agreement shall mean the Purchase Agreement as amended hereby.
Section 9. Definitions. All capitalized terms not otherwise defined in
this Amendment shall have the meanings set forth in the Purchase Agreement.
Section 10. Headings. The headings of the sections of this Amendment
are inserted as a matter of convenience and for reference purposes only and in
no respect define, limit or describe the scope of this Amendment or the intent
of any section or subsection.
Section 11. Counterparts. This Amendment may be executed in one or more
counterparts and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 12. Governing Law. This Amendment and the rights and duties of
the parties hereunder shall be governed by, and construed in accordance with,
the laws of the State of New York.
Section 13. No Other Amendments. Except as expressly amended hereby,
the terms and conditions of the Purchase Agreement shall continue in full force
and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
GUY GANNETT COMMUNICATIONS
By: /s/ James Baker
------------------------------------
Name: James Baker
Title: Vice President Finance
SINCLAIR COMMUNICATIONS, INC.
By: /s/ David B. Amy
------------------------------------
Name: David B. Amy
Title: Secretary
ACCEPTED AND AGREED
as of the date first above written:
WGME LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
WTWC LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
<PAGE>
WICS LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
WICD LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
WGGB LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
KGAN LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
WOKR LICENSEE, LLC
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
<PAGE>
WGME, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
WTWC, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR ACQUISITION IV, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
WGGB, INC.
By: /s/ David B. Amy
--------------------------------
Name: David B. Amy
Title: Secretary
MODIFICATION AGREEMENT
This MODIFICATION AGREEMENT (this "Agreement") made as of April 12,
1999 by and between Guy Gannett Communications, a Maine corporation (the
"Company"), and Sinclair Communications, Inc., a Maryland corporation (together
with its successors and permitted assigns, "Purchaser") to modify the Purchase
Agreement dated as of September 4, 1998 by and between the Company and
Purchaser, as amended by the Amendment thereto dated as of March 16, 1999 (as so
amended, the "Purchase Agreement").
W I T N E S S E T H :
WHEREAS, the Company and Purchaser are parties to the Purchase
Agreement, pursuant to which the Company has agreed to sell to Purchaser the
assets and business of the Company's broadcast television business, including
all business, operations and activities of, among other broadcast television
stations, Station WOKR-TV, Rochester, New York ("Station WOKR-TV"), and
Purchaser has agreed to purchase such assets and business and to assume certain
liabilities related to or arising from or in connection with such assets or
business;
WHEREAS, pursuant to that certain Purchase Agreement dated as of
September 25, 1998 as amended by the Amendment dated April 12, 1999 (as so
amended, the "Ackerley Agreement") by and between Purchaser and The Ackerley
Group, Inc. ("Ackerley"), Purchaser has agreed to transfer to Ackerley, or
directly to an affiliate of Ackerley, the assets and business of Station
WOKR-TV, and Ackerley has agreed to acquire, or to cause such affiliate to
acquire, such assets and business and to assume certain liabilities related to
or arising from or in connection with such assets or business;
WHEREAS, Ackerley's rights under the Ackerley Agreement have been
assigned to its wholly owned subsidiary Central NY News, Inc. ("CNYN"), which
assignment, however,
<PAGE>
did not relieve Ackerley from its duties and obligations of performance under
the Ackerley Agreement;
WHEREAS, pursuant to a letter agreement dated March 16, 1999, the
Company and Purchaser agreed, among other things, to negotiate in good faith, at
the request of Purchaser, with respect to causing a separate, earlier closing to
be effected for the sale to Purchaser or its wholly owned subsidiary of the
assets relating to Station WOKR-TV, and the assumption by Purchaser or such
subsidiary of the pertinent liabilities relating thereto;
WHEREAS, as a result of such negotiations, the Company and Purchaser
desire to modify the Purchase Agreement in certain respects to permit such
separate, earlier closing to be effected; and
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, the parties, intending legally to be
bound, agree as follows:
Section 1. Closings. There shall be two separate closings of the
transactions contemplated by the Purchase Agreement. The first such closing (the
"First Closing") of the transactions contemplated in the Purchase Agreement with
respect to Station WOKR-TV shall take place at 10:00 a.m., New York City time,
on the date hereof (such time and date being referred to herein as the "First
Closing Date"). The closing (the "Second Closing") of the other transactions
contemplated in the Purchase Agreement shall take place at 10:00 a.m., New York
City time, on April 30, 1999 (such time and date being referred to herein as the
"Second Closing Date"), or, if the conditions to Closing set forth in Articles 6
and 7 of the Purchase Agreement have not been satisfied or waived by April 30,
1999 (after giving effect to any modifications thereto contained in this
Modification Agreement), as soon (but not less than two Business Days)
thereafter as the conditions set forth in Article 6 and 7 of the Purchase
Agreement have been
2
<PAGE>
satisfied or waived (after giving effect to any modifications thereto contained
in this Modification Agreement). At the First Closing, the Company will convey,
assign, transfer and deliver certain of the Assets (as defined in the Purchase
Agreement) relating to Station WOKR-TV to CNYN and the Purchaser (the "WOKR
Assets") and the Purchaser and CNYN shall assume and agree to perform and fully
discharge when due all of the Assumed Liabilities (as defined in the Purchase
Agreement) arising out of or relating to Station WOKR-TV (the "WOKR Assumed
Liabilities"). At the Second Closing, the Company will sell, convey, assign,
transfer and deliver all of the Assets other than the WOKR Assets (the "Non-WOKR
Assets") and the Purchaser shall assume and agree to perform and fully discharge
when due all of the Assumed Liabilities other than the WOKR Assumed Liabilities.
Section 2. Certain Payments. With respect to Business Employees of
Station WOKR-TV, the reimbursement of payments to be made pursuant to Section
5.8 of the Purchase Agreement shall apply only to Business Employees whose
employment is terminated on or prior to 90 days after the First Closing Date.
For the avoidance of doubt, it is agreed that any such payment will be subject
to the terms and conditions of Section 5.8 (including, without limitation, the
proviso to such Section). With respect to Business Employees of Stations other
than Station WOKR-TV, Section 5.8 of the Purchase Agreement shall apply to
Business Employees whose employment is terminated on or prior to 90 days after
the Second Closing Date.
Section 3. Sales Tax. The Company shall pay one-half of all applicable
sales tax relating to the sale of the Assets, provided that for purposes of
calculation of such tax, it shall be assumed that there shall be (x) only one
taxable transaction relating to the WOKR Assets and (y) only one taxable
transaction relating to the Non-WOKR Assets (provided that in no event will the
Company pay more than it would have paid had there been a single transfer of all
Assets to
3
<PAGE>
the Purchaser pursuant to the Purchase Agreement). Such obligation shall be in
lieu of any other obligation to pay sales tax on account of the sale of the
Assets as set forth in Section 10.10 of the Purchase Agreement. Purchaser shall
cause the sum of $204,200 to be delivered to the Company at the First Closing
and the Company shall submit the sum of $408,400 to the State of New York
Department of Taxation and Finance.
Section 4. Bill of Sale. Notwithstanding provisions in the Purchase
Agreement to the contrary, at the First Closing a bill of sale, assignment and
assumption agreement substantially in the form of Exhibit A hereto conveying the
WOKR Assets (with the exception of the FCC Licenses related to Station WOKR-TV,
which shall be conveyed to WOKR Licensee, LLC, and the collective bargaining
agreement described in Section 3.10.6 of the Disclosure Schedule relating to
Station WOKR-TV and the employee benefit plans described in Section 3.14.3 of
the Disclosure Schedule, both of which shall be conveyed to Sinclair Acquisition
IV, Inc.) shall be delivered directly to CNYN. In addition, notwithstanding
provisions of the Purchase Agreement to the contrary, at the First Closing an
assumption agreement substantially in the form of Exhibit B hereto but providing
for assumption by Purchaser of the WOKR Assumed Liabilities shall be executed
and delivered by Purchaser to the Company and a side letter substantially in the
form set forth in Exhibit C hereto shall be executed and delivered by and to the
Purchaser, the Company and CNYN. In addition, as an accommodation to Purchaser,
the Company agrees that, subject to the immediately succeeding sentence, at the
request of Purchaser at the Second Closing, (i) notwithstanding the provisions
in the Purchase Agreement to the contrary, a bill of sale and assignment
substantially in the form of Exhibit A, but conveying the Assets relating to
Station WICS-TV, Springfield, Illinois, Station WICD-TV, Champaign, Illinois and
KGAN-TV, Cedar Rapids, Iowa (with the exception of (x)
4
<PAGE>
the FCC Licenses and certain related assets related to such stations, which
shall be conveyed to WICS Licensee, LLC, WICD Licensee, LLC and KGAN Licensee,
LLC, respectively, and (y) the collective bargaining agreements described in
Section 3.10.6 of the Disclosure Schedule relating to such Stations and the
employee benefit plans described in Section 3.14.3 of the Disclosure Schedule
relating to such Stations, which shall be conveyed to Sinclair Acquisition IV,
Inc.) (collectively, the "STC Assets") shall be delivered directly to STC
Broadcasting, Inc., (ii) the Purchaser and the Company shall execute and deliver
a Bill of Sale, Assignment and Assumption Agreement in accordance with Section
1.7(a) of the Purchase Agreement (provided that the WOKR Assets, the STC Assets
and the WOKR Assumed Liabilities shall be excluded from such Bill of Sale,
Assignment and Assumption Agreement) and (iii) notwithstanding the provisions of
the Purchase Agreement to the contrary, the Purchaser and the Company shall
execute and deliver an assumption agreement substantially in the form as Exhibit
B hereto, but providing for assumption by Purchaser of the Assumed Liabilities
relating to Station WICS-TV, Springfield, Illinois, Station WICD-TV, Champaign,
Illinois and KGAN-TV, Cedar Rapids, Iowa, it being understood that the actions
contemplated by this sentence shall not amend, modify or otherwise affect any of
the conditions precedent set forth in Articles 6 and 7 of the Purchase Agreement
(which shall be construed as if all of the Non-WOKR Assets were being
transferred directly to Purchaser). Anything in the immediately succeeding
sentence to the contrary notwithstanding, the Company's obligation to take the
actions contemplated by the immediately preceding sentence are conditioned on
the following actions taking place at the Second Closing (it being understood
that, if such conditions are not satisfied all Non-WOKR Assets will be
transferred directly to Purchaser) either (I) (a) Purchaser, STC Broadcasting,
Inc. and the Company executing and delivering to the Company a letter agreement
substantially in the form of Exhibit
5
<PAGE>
C (but substituting STC for CNYN and making other conforming modifications) and
(b) Purchaser executing and delivering an indemnity agreement substantially in
the form of Exhibit B (but substituting the Assumed Liabilities relating to
Station KGAN-TV, Station WICS-TV and Station WICD-TV for the WOKR-TV Assumed
Liabilities and other conforming modifications) or (II) the matters addressed in
Exhibits C and D shall have otherwise been addressed to the reasonable
satisfaction of the parties.
Section 5. Allocation of Purchase Price. (a) As previously agreed by
the parties hereto, the purchase price for the WOKR Assets shall be the
aggregate amount of (x) $125,000,000 of the $310,000,000 specified in Section
2.1(a) of the Purchase Agreement as a portion of the Purchase Price plus (if
greater than or equal to zero) or minus (if less than zero), as the case may be,
(y) the amount of the Net Financial Assets based on the WOKR-TV Assets and WOKR
Assumed Liabilities as of 11:59 p.m., New York City time, on the day immediately
preceding the First Closing Date, subject to adjustment pursuant to Section 2.2
of the Purchase Agreement (with the amount described in clause (y) being
referred to as the "WOKR Net Financial Assets" and the aggregate amount
described in clause (x) and (y) collectively the "Station WOKR-TV Purchase
Price").
(b) On or before the First Closing, the Company shall deliver to
Purchaser (i) a statement setting forth the amount estimated in good faith by
the Company to be the amount of the WOKR Net Financial Assets as of the First
Closing Date (the "Estimated WOKR Net Financial Assets") and (ii) a notice
designating the account or accounts to which the payment to or on behalf of the
Company pursuant to Section 2(a) hereof is to be made.
(c) At the First Closing, (i) $3,225,600 (the "First Closing Security
Escrow") of the Station WOKR-TV Purchase Price shall be delivered to the
Security Escrow Agent by wire
6
<PAGE>
transfer in immediately available funds pursuant to the Security Escrow
Agreement, as such agreement shall be modified in accordance with this
Agreement, (ii) $1,209,600 (the "First Closing Adjustment Escrow") of the
Station WOKR-TV Purchase Price shall be delivered to the Adjustment Escrow Agent
by wire transfer in immediately available funds pursuant to the Adjustment
Escrow Agreement, as such agreement shall be modified in accordance with this
Agreement, and (iii) the sum of $120,564,800 plus the Estimated WOKR Net
Financial Assets shall be paid by wire transfer in immediately available funds
to the account or accounts designated by the Company in accordance with Section
2(b) hereof.
(d) At the Second Closing, the amounts to be delivered by Purchaser
pursuant to Section 2.1(c) of the Purchase Agreement shall be the full Purchase
Price under the purchase Agreement minus the amounts delivered at the First
Closing to the Company, the Security Escrow Agent and the Adjustment Escrow
Agent pursuant to Section 2(c) hereof; provided, however, that the amount of the
Net Financial Assets relating to the Stations other than Station WOKR-TV shall
be separately calculated and shall be determined as of 11:59 p.m., New York City
time, on the day immediately preceding the Second Closing Date (the "Remaining
Net Financial Assets"). For the avoidance of doubt, the Purchase Price payable
at the Second Closing shall be subject to the Earnings Adjustment in respect of
1998 BCF (if any).
(e) The first sentence of Section 4 of that certain Amendment to the
Purchase Agreement dated March 16, 1999 shall be and hereby is amended and
restated to read in its entirety as follows:
No later than the Second Closing Date, Purchaser and the Company shall
jointly determine the proper allocation of the Purchase Price among the
Stations other than Station WOKR-TV. The parties agree that the proper
allocation of the $125,000,000 base Purchase Price for Station WOKR-TV
among specified categories of assets shall be as set forth in Section
2.5 of the Disclosure Schedule.
7
<PAGE>
Section 2.5 of the Disclosure Schedule is hereby amended and restated
in its entirety to be the exhibit to this Agreement designated as Section 2.5.
Section 6. Adjustment Escrow Agreement. The form of Adjustment Escrow
Agreement shall be modified to the reasonable satisfaction of the Company,
Purchaser and the Adjustment Escrow Agent to permit (i) separate deliveries to
be made in respect of the First Closing and the Second Closing, and (ii) payment
to the Company of the First Closing Adjustment Escrow, less any amounts of
Claims and Damages in respect of Station WOKR-TV, pursuant to the terms of
Section 2.1(c) of the Purchase Agreement, as modified hereby.
Section 7. Security Escrow Agreement. The form of Security Escrow
Agreement shall be modified to the reasonable satisfaction of the Company,
Purchaser and the Security Escrow Agent to permit (i) separate deliveries to be
made in respect of the First Closing and the Second Closing, and (ii) payment to
the Company of the First Closing Security Escrow, less any amounts of Claims and
Damages in respect of Station WOKR-TV, on the one year anniversary of the First
Closing Date.
Section 8. Net Financial Asset Adjustment. The Net Financial Assets
shall be comprised of (i) the WOKR Net Financial Assets and (ii) the Remaining
Net Financial Assets. If the Second Closing occurs within 30 days of the First
Closing, there shall be a single Net Financial Assets calculation and release of
the Adjustment Escrow Account pursuant to the procedure set forth in Section 2.2
of the Purchase Agreement (treating the Second Closing Date as the "Closing
Date" for purposes of such Section 2.2). If the Second Closing is delayed more
than 30 days after the First Closing or does not occur, the WOKR Net Financial
Assets and the Remaining Net Financial Assets shall be determined separately,
but otherwise in accordance with the terms of Section 2.2 of the Purchase
Agreement (treating as the "Closing Date" for purposes
8
<PAGE>
of such Section 2.2 (x) the First Closing Date when determining the WOKR Net
Financial Assets and (y) the Second Closing Date when determining the Remaining
Net Financial Assets).
Section 9. Consents. Purchaser acknowledges that it has received and,
to the extent contemplated by the relevant consent, signed each of the consents
attached as Exhibit C to that certain letter agreement dated March 16, 1999,
copies of which are attached hereto. Purchaser hereby agrees that if any consent
contemplated by Section 6.4(ii) of the Purchase Agreement has been or is
obtained (a "Received Consent") but such Received Consent is subsequently
superceded or otherwise rendered ineffective in connection with a consent having
been obtained to allow the transfer of the asset contemplated therein directly
to STC Broadcasting, Inc., (which consent to transfer to STC Broadcasting has
not been rendered ineffective as of the Second Closing Date, provided that this
parenthetical shall not apply if such consent to transfer to STC Broadcasting is
rendered ineffective due to the failure of the Sinclair/STC Broadcasting
transaction to close or the termination of the Sinclair/STC Broadcasting
purchase agreement) the Company shall be deemed to have satisfied the condition
set forth in Article 6 of the Purchase Agreement with respect to such Received
Consent for all purposes of Article 6 of the Purchase Agreement.
Section 10. Certificates; Certain Conditions. (a) As a condition to the
obligations of Purchaser to consummate the transactions contemplated by the
Purchase Agreement to occur at the First Closing, the Company shall deliver to
Purchaser a certificate, dated as of the First Closing Date, executed on behalf
of the Company by its duly authorized officers or representatives to the effect
of Sections 6.1 and 6.2 of the Purchase Agreement with respect only to Station
WOKR-TV.
9
<PAGE>
(b) As a condition to the obligations of Purchaser to consummate the
transactions contemplated by the Purchase Agreement to occur at the Second
Closing, in satisfaction of the conditions set forth in Section 6.3 of the
Purchase Agreement the Company shall deliver to Purchaser a certificate, dated
as of the Second Closing Date, executed on behalf of the Company by its duly
authorized officers or representatives to the effect of Sections 6.1 and 6.2 of
the Purchase Agreement with respect to all Stations (other than Station WOKR-TV)
taken as a whole. The conditions precedent set forth in Sections 6.1 and 6.2
shall be limited to the truth and correctness of the representations,
warranties, covenants and agreements as they apply only to the Stations other
than Station WOKR-TV. The condition precedent set forth in Section 6.11 shall be
limited to the Stations other than Station WOKR-TV.
(c) For the avoidance of doubt, for purposes of clauses (a) and (b)
above, materiality (or "Material Adverse Effect") for all purposes under the
Purchase Agreement shall be determined on the basis of all Stations taken as a
whole, including Station WOKR-TV (and the certificates delivered pursuant to
clauses (a) and (b) above may reflect such treatment), provided, however that in
determining materiality or Material Adverse Effect, any circumstance, change in,
or effect relating to Station WOKR-TV after the First Closing Date shall not be
taken into consideration.
Section 11. Indemnification; Survival. The representations and
warranties of the Company contained in the Purchase Agreement or in any
certificate or special warranty deed delivered pursuant thereto and any and all
covenants and agreements therein with respect to Station WOKR-TV, the WOKR
Assets or the WOKR Assumed Liabilities (other than those covenants and
agreements required by the Purchase Agreement to be performed after the First
Closing) shall expire with, and be terminated and extinguished upon, the one
year anniversary of
10
<PAGE>
the First Closing Date. Except as provided in the immediately proceeding
sentence, all representations and warranties of the Company or Sinclair
contained in the Purchase Agreement or in any certificate or special warranty
deed pursuant thereto and any and all covenants and agreements in the Purchase
Agreement shall expire in accordance with the terms of the Purchase Agreement
(treating the Second Closing as "the Closing"). For purposes of Section 8.1(a)
and 8.1(b) of the Purchase Agreement, the term "Closing Date" shall be deemed to
refer to (x) the First Closing Date in respect of Station WOKR-TV, the WOKR
Assets and the WOKR Assumed Liabilities and (y) the Second Closing Date in
respect of the Stations (other than Station WOKR-TV), Assets (other than the
WOKR Assets) and Assumed Liabilities (other than the WOKR Assumed Liabilities).
Following the First Closing, all pre-Closing covenants and agreements in Article
5 of the Purchase Agreement shall no longer apply to Station WOKR-TV.
Section 12. Termination Rights. On and after the occurrence of the
First Closing, neither the Company nor the Purchaser shall have any right to
terminate the Purchase Agreement. After the occurrence of the First Closing, if
any event occurs that would allow the Purchaser or the Company to terminate the
Purchase Agreement pursuant to Section 10.1 of the Purchase Agreement (without
giving effect to the immediately preceding sentence and substituting the words
"Second Closing" for the term "Closing" each place it appears in Section 10.1),
then at such time as such party would otherwise be entitled to terminate the
Purchase Agreement such party shall be entitled to abandon the Second Closing in
accordance with the procedures set forth in Section 10.1 of the Purchase
Agreement relating to termination of the Purchase Agreement. If a party abandons
the Second Closing in accordance with this Section then the obligations of the
Purchaser and the Company to effect the Second Closing shall terminate, all
representations, warranties, convents, agreements, liabilities and obligations
of the Purchaser and the Company
11
<PAGE>
under the Purchase Agreement shall thereupon become void and of no further
effect whatsoever other than to the extent such representations, warranties,
covenants, agreements, liabilities and obligations relate to the WOKR Station,
the WOKR Assets, the WOKR Assumed Liabilities or the First Closing (in which
case they shall remain in full force and effect subject to the terms and
conditions of the Purchase Agreement and this Agreement), in each case except
(i) to the extent of a party's liability for willful material breaches of the
Purchase Agreement prior to the time of such abandonment, (ii) as set forth in
Section 5.4 of the Purchase Agreement and (iii) the obligations of each party
for its own expenses incurred in connection with the transactions contemplated
by the Purchase Agreement and this Agreement as provided therein and herein.
Section 13. No Third Party Rights. Nothing in this Agreement shall be
deemed to provide any Person with any legal or equitable rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement, the
Purchase Agreement or any certificate or instrument delivered hereto or thereto,
except to the extent previously provided in the Purchase Agreement with respect
to certain wholly owned subsidiaries of Purchaser. For the avoidance of doubt,
neither Ackerley nor any of its affiliates will be considered an assignee of the
Purchaser for purposes of the Purchase Agreement (and will not have any of the
Purchaser's rights or remedies under the Purchase Agreement).
Section 14. References. All references to "this Agreement" in the
Purchase Agreement shall mean the Purchase Agreement as modified hereby.
Section 15. Definitions. All capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Purchase Agreement.
12
<PAGE>
Section 16. Headings. The headings of the sections of this Agreement
are inserted as a matter of convenience and for reference purposes only and in
no respect define, limit or describe the scope of this Agreement or the intent
of any section or subsection.
Section 17. Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 18. Governing Law. This Agreement and the rights and duties of
the parties hereunder shall be governed by, and construed in accordance with,
the laws of the State of New York.
Section 19. No Other Amendments or Modifications. This Agreement
constitutes an amendment to the Purchase Agreement and in the event of any
conflict between the terms of this Agreement and the Purchase Agreement the
terms of this Agreement will govern. Except as expressly contemplated to be
modified hereby, the terms and conditions of the Purchase Agreement shall
continue in full force and effect.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GUY GANNETT COMMUNICATIONS
By: /s/ James Baker
----------------------------------
Its Vice-President-Finance
SINCLAIR COMMUNICATIONS, INC.
By: /s/ David B. Amy
----------------------------------
Name: David B. Amy
Title: Secretary
ACCEPTED AND AGREED
as of the date first above written:
WGME LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
WTWC LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
14
<PAGE>
WICS LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
WICD LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
WGGB LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
KGAN LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
WOKR LICENSEE, LLC
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
15
<PAGE>
WGME, INC.
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
WTWC, INC.
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR ACQUISITION IV, INC.
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
WGGB, INC.
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
Title: Secretary
16
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of this
16th day of March, 1999, by and between SINCLAIR COMMUNICATIONS, INC., a
Maryland corporation (the "COMPANY"), and STC BROADCASTING, INC., a Delaware
corporation ("PURCHASER").
WHEREAS, the Company and Guy Gannett Communications ("GANNETT") entered
into that certain Purchase Agreement dated September 4, 1998, as amended on
March 16, 1999 (the "GANNETT PURCHASE AGREEMENT"), pursuant to which the Company
agreed to purchase substantially all of the assets of the Gannett Television
Stations, including television broadcast stations WICS-TV, Channel 20,
Springfield, Illinois; WICD-TV, Channel 15, Champaign, Illinois; and KGAN-TV,
Channel 2, Cedar Rapids, Iowa (each a "STATION" and collectively, the
"Stations"); and
WHEREAS, the Company desires to sell, assign and transfer to Purchaser
the assets and business of the Stations as described below, and Purchaser
desires to purchase and acquire the assets and business of the Stations as
described below, on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties, intending legally to be bound, agree as follows:
[A LIST OF DEFINED TERMS IS PROVIDED IN ARTICLE 9 HEREOF.]
ARTICLE 1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 ASSETS TO BE ACQUIRED.
Upon the terms and subject to the satisfaction of the conditions set
forth herein, the Company shall sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase, acquire, accept and pay for, all right,
title and interest of the Company and Gannett in and to all of the real,
personal and mixed properties, assets and other rights, both tangible and
intangible (other than the Excluded Assets), owned or leased by, or licensed to
or used or useful by, the Company and Gannett in connection with the Business
and the Stations (collectively, the "ASSETS"), which Assets shall consist of all
of the Assets relating to the Stations that the Company (and its successors and
assigns) have acquired or have the right to acquire, pursuant to the Gannett
Purchase Agreement.
<PAGE>
Without limiting the generality of the foregoing, the Assets shall
include the following:
(a) the FCC Licenses;
(b) the Equipment;
(c) all translators, earth stations and other auxiliary facilities, and
all applications therefor;
(d) the Real Property and Leased Property as set forth in Section
1.1(d) of the Disclosure Schedule;
(e) all orders and agreements for the sale of advertising time on the
Stations for cash, and all trade, barter and similar agreements, excluding
Program Contracts (which are provided for below), for the sale of advertising
time on the Stations for any property or services in lieu of or in addition to
cash, and any other orders and agreements relating to the Stations and entered
into (other than in violation of this Agreement or the Gannett Purchase
Agreement) between the date of the Gannett Purchase Agreement and the Transfer
Date;
(f) all film and program licenses and contracts under which the Company
or Gannett has the right to broadcast film product or programs on the Stations
("PROGRAM CONTRACTS"), including all cash and non-cash (barter) program
contracts and including, without limitation, the Program Contracts set forth in
Section 3.10 of the Disclosure Schedule and any other Program Contracts relating
to the Stations and entered into (other than in violation of this Agreement or
the Gannett Purchase Agreement) between the date of the Gannett Purchase
Agreement and the Transfer Date;
(g) all other contracts and agreements related to the Business,
including, without limitation, network affiliation agreements, all employment
contracts entered into with television talent and other Business Employees, all
collective bargaining agreements with respect to any Business Employees, any
time brokerage agreements and all national or local advertising representation
agreements for the Stations, including, without limitation, the contracts and
agreements set forth in Section 3.10 of the Disclosure Schedule, and any other
such contracts and agreements relating to the Stations and entered into (other
than in violation of this Agreement or the Gannett Purchase Agreement) between
the date of the Gannett Purchase Agreement and the Transfer Date;
(h) the Intellectual Property, including, without limitation, the Call
Letters;
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(i) all programs and programming materials used in connection with the
Business, whether recorded on tape or any other media or intended for live
performance, and whether completed or in production, and all related common law
and statutory copyrights owned by or licensed to the Company or Gannett and used
or useful in connection with the Business;
(j) all FCC logs and other records that relate to the operation of the
Stations;
(k) except as set forth in Section 1.2 hereof, all files, books and
other records relating to the Business, including, without limitation, written
technical information, data, specifications, research and development
information, engineering, drawings, manuals, computer programs, tapes and
software relating directly to the Business, other than duplicate copies of
account books of original entry and duplicate copies of such files and records,
if any, that are maintained at the corporate offices of the Company or Gannett
for tax and accounting purposes;
(l) all of the goodwill in, and "going concern" value of, the Business;
(m) all accounts, notes and accounts receivable of the Business and the
Stations relating to or arising out of the business and operations of the
Stations and the Business during the period prior to the Transfer Date;
(n) all deposits, reserves and prepaid expenses of the Business (other
than those relating to Excluded Assets or Liabilities that are not Assumed
Liabilities);
(o) to the extent transferable under applicable law, all franchises,
approvals, permits, licenses, orders, registrations, certificates, exemptions,
variances and similar rights obtained from Governmental Authorities (other than
the FCC Licenses) in any jurisdiction that had issued or granted such items to
the Company or Gannett, or that the Company or Gannett otherwise owns or uses,
in each case relating to the Business, and all pending applications therefor;
and
(p) except as set forth in Section 1.2 hereof, all insurance proceeds
and claims therefor arising out of or related to (i) damage, destruction or loss
of any property or asset used or useful in connection with the Business to the
extent of any damage or destruction that remains unrepaired, or to the extent
any property or asset remains unreplaced, at the Non-License Transfer Date or
the Closing Date, as applicable, and (ii) any other matters related to, or
involving the Business, including, without limitation, employment practices.
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1.2 EXCLUDED ASSETS.
Notwithstanding anything to the contrary herein, all of the assets
listed on Section 1.2 of the Disclosure Schedule or defined in the Gannett
Purchase Agreement as Excluded Assets (collectively, the "Excluded Assets")
shall be excluded from the Assets.
1.3 ASSUMPTION OF LIABILITIES.
(a) On and after the Non-License Transfer Date, Purchaser will assume
and agree to perform and fully discharge when due, except to the extent that
such Liabilities constitute Retained Liabilities, the following Liabilities of
the Company or Gannett: (i) those solely related to or solely arising from or in
connection with the Assets or the Business (other than the License Assets); and
(ii) those partly related to any contract or agreement for the Stations that are
also related to other Gannett Television Stations, but not related to any other
assets or business of Gannett or the Company (any such contract or agreement
being a "GROUP CONTRACT"), but only to the extent the Liabilities under any such
Group Contract relate to or arise from or are in connection with the Assets or
the Business, whether such Liabilities specified in clause (i) or (ii) are
incurred or arise prior to, on or after the Non-License Transfer Date,
including, without limitation, those obligations of the Company relating to the
Business to be assumed by Purchaser pursuant to Section 5.2 hereof.
(b) On and after the Closing Date, to the extent not assumed by
Purchaser at the Non-License Transfer, Purchaser will assume and agree to
perform and fully discharge when due, except to the extent that any Liabilities
constitute Retained Liabilities, the following Liabilities of the Company or
Gannett: (i) those solely related to or solely arising from or in connection
with the Assets or the Business; (ii) those partly related to any Group
Contract, but only to the extent the Liabilities under any such Group Contract
relate to or arise from or are in connection with the Assets or the Business,
and (iii) those solely related to or solely arising from or in connection with
the License Assets listed in Section 1.4 of the Disclosure Schedule, whether
such Liabilities specified in clause (i), (ii) or (iii) are incurred or arise
prior to, on or after the Closing Date, including, without limitation, those
obligations of the Company relating to the Business to be assumed by Purchaser
pursuant to Section 5.2 hereof (the Liabilities assumed by Purchaser pursuant to
Sections 1.3(a) and (b) hereof shall be collectively be referred to herein as
the "ASSUMED LIABILITIES").
(c) Except for the Assumed Liabilities and except as otherwise
expressly provided in this Agreement, Purchaser will assume no other Liabilities
or
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any kind of description (collectively, the "RETAINED LIABILITIES"). The Retained
Liabilities include, without limitation, any of the following Liabilities:
(i) any of the Liabilities defined in the Gannett
Purchase Agreement as "Retained Liabilities";
(ii) any of the Company's obligations hereunder;
(iii) any Liability for federal, state or local income
taxes of Gannett or the Company, their respective
stockholders or any other Person;
(iv) any Liabilities relating to the Corporate Office
except for the Purchaser's reimbursement obligation
pursuant to Section 5.9(b) hereof;
(v) any Liabilities relating to current, former or
inactive Corporate Office Employees;
(vi) any Liabilities under any Employee Benefit Plans of
Gannett or the Company except to the extent assumed
by Purchaser pursuant to Section 5.2 and Section 5.9
hereof;
(vii) any Liability of Gannett or the Company arising from
Indebtedness or any overdrafts on any bank accounts
of Gannett or the Company;
(viii) any Liability for dividends; and
(ix) any Liability with respect to the Gannett Television
Stations (other than the Stations) under any Group
Contract or otherwise.
(d) The Company shall retain, and shall continue to be responsible
after the Transfer Date for, all Retained Liabilities and all other Liabilities
of the Company and Gannett that are not Assumed Liabilities.
1.4 NON-LICENSE TRANSFER; CLOSING.
(a) Unless this Agreement shall have been terminated and the
transactions herein shall have been terminated pursuant to Section 10.1 hereof,
provided that the conditions set forth in Article 6 (except for Section 6.6) and
Article 7 (except for Section 7.6) shall have been satisfied and the Closing
shall not have occurred, there shall be a closing (the "NON-LICENSE TRANSFER")
for the
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purchase and sale of all of the Assets (other than the Assets which are listed
in Section 1.4 of the Disclosure Schedule (the "LICENSE ASSETS"), at 10:00 a.m.
New York City time on a date specified by Purchaser that is within the later of
(i) ten (10) days after the date on which all applicable waiting periods under
the HSR Act shall have expired or terminated, or (ii) the date, time and place
of the closing under the Gannett Purchase Agreement as long as Purchaser shall
have received at least ten (10) days prior written notice from the Company of
the date of the Gannett closing (the date on which the Non-License Transfer
shall occur pursuant to this Section 1.4(a) is referred to herein as the
"NON-LICENSE TRANSFER DATE"); provided, however, that the Company and Purchaser
shall take such reasonable actions as may be necessary to hold the Non-License
Transfer simultaneously with the closing of the Gannett Purchase Agreement. If
the Non-License Transfer shall occur simultaneously with the closing under the
Gannett Purchase Agreement, then the Non-License Transfer shall occur at the
place of the closing under the Gannett Purchase Agreement, or at such other
place as the parties shall agree in writing. Otherwise, the Non-License Transfer
shall occur at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive,
Suite 1100, McLean, Virginia 22102, or at such other place as the Company and
Purchaser shall agree in writing. At the Non-License Transfer, each of the
parties hereto shall take, or cause to be taken, all such actions and deliver,
or cause to be delivered, all such documents, instruments, certificates and
other items as may be required under this Agreement or otherwise, in order to
perform or fulfill all covenants and agreements on its part to be performed at
or prior to the Non-License Transfer. The Non-License Transfer shall be
effective as of 12:01 a.m., New York City time, on the day of the Non-License
Transfer Date.
(b) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been terminated pursuant to Section
10.1 hereof, the closing (the "CLOSING") of the transactions herein contemplated
shall take place at 10:00 a.m., New York City time, on a date specified by
Purchaser that is within ten (10) days following the satisfaction or waiver of
the conditions set forth in Articles 6 and 7 hereof, or at such other time and
date as the Company and Purchaser shall agree in writing (such time and date of
the Closing being referred to herein as the "CLOSING DATE"), at the offices of
Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite 1100, McLean, Virginia
22102, or at such other place as the Company and Purchaser shall agree in
writing. At the Closing, each of the parties hereto shall take, or cause to be
taken, all such actions and deliver, or cause to be delivered, all such
documents, instruments, certificates and other items as may be required under
this Agreement or otherwise, in order to perform or fulfill all covenants and
agreements on its part to be performed at or prior to the Closing. The Closing
shall be effective as of 12:01 a.m., New York City time, on the day of the
Closing Date.
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<PAGE>
(c) In the event that the closing of the Company's acquisition of the
Stations pursuant to the Gannett Purchase Agreement does not occur
simultaneously with the Transfer Date hereunder, the Company and Purchaser
acknowledge and agree that (i) the representations, warranties, covenants and
agreements made by Gannett under the Gannett Purchase Agreement which relate to
the Stations shall be deemed (A) incorporated by reference into the terms
hereof, and (B) restated by the Company for the benefit of Purchaser as of the
Transfer Date as though the Company was Gannett under the Gannett Purchase
Agreement; provided, that, without limiting the Company's representations,
warranties, covenants and agreements hereunder, such additional representations,
warranties, covenants and agreements from the Gannett Purchase Agreement shall
apply only with respect to the period of ownership of the Stations and the
Assets by the Company and the Company's successors and assigns; (ii) on or prior
to the fifth (5th) Business Day prior to the Transfer Date, the Disclosure
Schedule hereto shall be updated and amended by the Company to reflect the
updates and amendments to the Disclosure Schedule that are necessary in order
for the Company to restate such representations and warranties hereunder as of
the Transfer Date; provided, however, no such updates or amendments shall be
made which would constitute a violation of this Agreement or the Gannett
Purchase Agreement; and (iii) in addition to the Assets described in Section 1.1
hereof, the "Assets" shall include the Assets of the Business and the Stations
with respect to which the Company and the Company's successors and assigns shall
have acquired from and after the closing under the Gannett Purchase Agreement.
(d) If the Closing shall not have occurred on or prior to such date
which is four (4) years after the date of this Agreement, the Company and
Purchaser acknowledge and agree to cooperate and use commercially reasonable
efforts to consummate the sale to a third party of both the License Assets and
the Non-License Assets in an orderly and mutually satisfactory manner (the
"THIRD PARTY SALE"). At the closing of the Third Party Sale pursuant to this
Section 1.4(d), the proceeds therefrom shall be paid as follows: (i) any amounts
of the Purchase Price hereunder not previously paid to the Company shall be paid
directly to the Company, and (2) any other amounts shall be paid directly to the
Purchaser. Any such payments shall be by wire transfer of immediately available
funds to an account identified by the recipient party in writing.
1.5 ADDITIONAL CLOSING DELIVERIES.
(a) At the Non-License Transfer and the Closing, as applicable, the
Company shall deliver to Purchaser:
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(i) a duly executed counterpart of the Bill of Sale, Assignment
and Assumption Agreement substantially in the form set forth in Exhibit A hereto
(the "BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT");
(ii) at the Closing only, a duly executed counterpart of the
Assignment of FCC Licenses, substantially in the form set forth in Exhibit B
hereto (the "ASSIGNMENT OF FCC LICENSES");
(iii) instruments of assignment with respect to all of the
Company's rights and interests in the Leased Property and special warranty deeds
(of a type equivalent to that known in New York as a "bargain and sale deed with
covenants against grantor's actions") with respect to all of the Company's
rights and interests in the Real Property, in recordable form sufficient to
convey to Purchaser all of the Company's rights and interests or rights and
interest in the Leased Property and the Real Property acquired by the Company
from Gannett pursuant to the Gannett Purchase Agreement;
(iv) an owner's affidavit, gap indemnity and such other
customary documents and certificates as may be reasonably required by
Purchaser's title insurance company with respect to Purchaser's title insurance
of the Real Property and any Leased Property;
(v) evidence reasonably satisfactory to Purchaser that the
third-party insurance policies listed in Section 3.9 of the Disclosure Schedule
are in full force and effect with respect to the period prior to the Transfer
Date (together with appropriate evidence showing loss payable and/or additional
insured clauses or endorsements, as reasonably requested by Purchaser, in favor
of Purchaser);
(vi) a certificate, dated as of the Transfer Date, executed on
behalf of the Company by the Company's duly authorized officers that, except as
disclosed in Section 3.8 of the Disclosure Schedule (or otherwise disclosed
pursuant to such certificate) (a) there are no Actions against the Company or,
to the Company's knowledge, Gannett relating to the Business or the Assets
pending, or, to the Company's Knowledge, threatened to be brought by or before
any Governmental Authority, and (b) neither the Company nor, to the Company's
Knowledge, Gannett is subject to any Governmental Orders (nor, are there any
such Governmental Orders threatened to be imposed by any Governmental Authority)
relating to the Business or the Assets;
(vii) domain name transfer agreements in form and substance
reasonably satisfactory to Purchaser to perfect the transfer to Purchaser of all
of the domain names of the Stations;
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<PAGE>
(viii) all other instruments of conveyance and transfer sufficient
to convey the Assets to Purchaser;
(ix) at the Non-License Transfer only, a duly executed
counterpart of the Time Brokerage Agreement, substantially in the form set forth
in Exhibit C hereto (the "TIME BROKERAGE AGREEMENT"); and
(x) all other documents, instruments and writings required to
be delivered by the Company at or prior to the Closing Date or the Non-License
Transfer Date, as applicable, pursuant to this Agreement.
(b) At the Non-License Transfer and the Closing, as applicable,
Purchaser shall deliver to Company:
(i) the Purchase Price in accordance with Section 2.3 hereof;
(ii) a duly executed counterpart of the Bill of Sale, Assignment
and Assumption Agreement;
(iii) at the Closing only, a duly executed counterpart of the
Assignment of FCC Licenses;
(iv) at the Non-License Transfer only, a duly executed
counterpart of the Time Brokerage Agreement; and
(v) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date or the Non-License
Transfer Date, as applicable, pursuant to this Agreement.
(c) Purchaser shall, at any time prior to, at or after the Transfer
Date, take or cause to be taken such further actions, and execute, deliver and
file or cause to be executed, delivered and filed such further documents and
instruments, as may be reasonably requested by the Company in connection with
the consummation of the transactions contemplated by this Agreement. The Company
shall, at any time prior to, at or after the Transfer Date, take or cause to be
taken such further actions, and execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, as may be
reasonably requested by Purchaser in connection with the consummation of the
transactions contemplated by this Agreement.
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<PAGE>
1.6 DUE DILIGENCE, DELIVERY OF DISCLOSURE SCHEDULE AND PURCHASER
TERMINATION RIGHT.
The Company hereby acknowledges and agrees that neither the Company nor
Gannett has delivered all due diligence materials or the Disclosure Schedule
with respect to the Stations to Purchaser prior to the date hereof. Subject to
the receipt of any required prior approvals from Gannett, the parties,
therefore, acknowledge and agree that (a) Purchaser shall be permitted to
conduct a due diligence review of the Business and Assets upon, and at all times
after the execution and delivery of this Agreement pursuant to the terms and
conditions of this Agreement, and (b) the Company shall deliver to Purchaser and
to Purchaser's counsel a complete set of the Disclosure Schedule for the
Stations (and copies of all materials identified on the Disclosure Schedule, as
reasonably required to support such Disclosure Schedule or as otherwise
reasonably requested by Purchaser) as soon as possible after the execution and
delivery of this Agreement. Purchaser shall have the right, in its sole and
absolute discretion and for any reason, to terminate this Agreement at any time
prior to 5:00 p.m. (New York City time) on the date which is the tenth (10th)
Business Day after the date hereof (the "Diligence Termination Deadline")
pursuant to Section 10.1(a)(ii) hereof. Such termination right of Purchaser is
in addition to, and shall not limit or diminish, any other termination rights or
other remedies available to Purchaser hereunder or at law or in equity.
ARTICLE 2. PURCHASE PRICE.
2.1 ESCROW DEPOSIT.
For and in partial consideration of the execution and delivery of this
Agreement, provided, that this Agreement shall not have been terminated and the
transactions herein contemplated shall not have been terminated pursuant to
Sections 10.1(a)(ii) or 10.1(a)(iii) hereof, Purchaser shall deposit within
twelve (12) Business Days after the execution and delivery of this Agreement
with the Deposit Escrow Agent an original, irrevocable letter of credit in a
form reasonably acceptable to the Company (the "LETTER OF CREDIT"), issued for
the benefit of the Company and the Deposit Escrow Agent by The Chase Manhattan
Bank for an amount equal to Eight Million One Hundred Thousand Dollars
($8,100,000) (the "ESCROW DEPOSIT"), such Letter of Credit to be dealt with in
accordance with the terms and provisions of the Deposit Escrow Agreement, dated
as of the date of the delivery of the Letter of Credit to the Deposit Escrow
Agent, among the Company, Purchaser and the Deposit Escrow Agent, in the form
attached hereto as Exhibit D (the "DEPOSIT ESCROW AGREEMENT"). Purchaser and the
Company shall cause the Letter of Credit to be returned to Purchaser on the
Transfer Date.
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<PAGE>
2.2 PURCHASE PRICE.
(a) In consideration of the sale of the Assets and the Business
hereunder, Purchaser shall (i) pay the Company in cash the aggregate amount of
Eighty One Million Dollars ($81,000,000) (the "BASE PURCHASE PRICE"), plus (if
the Estimated Net Financial Assets are greater than zero) or minus (if the
Estimated Net Financial Assets are less than zero), as the case may be, the
Estimated Net Financial Assets (the Base Purchase Price, as adjusted by the Net
Financial Assets, the "PURCHASE PRICE") and (ii) assume the Assumed Liabilities.
(b) As promptly as possible but no later than three (3) Business Days
prior to the Transfer Date, the Company shall deliver to Purchaser a statement
setting forth the amount estimated in good faith by the Company to be the amount
of the Net Financial Assets as of the Transfer Date (the "ESTIMATED NET
FINANCIAL ASSETS").
2.3 PAYMENT OF PURCHASE PRICE.
(a) At the Non-License Transfer, Purchaser shall pay to the Company the
sum of Seventy-Six Million Dollars ($76,000,000) of the Base Purchase Price plus
(if the Estimated Net Financial Assets are greater than zero) or minus (if the
Estimated Net Financial Assets are less than zero), as the case may be, the
Estimated Net Financial Assets, by wire transfer in immediately available funds
to an account or accounts which shall be designated by the Company not less than
three (3) Business Days prior to the Transfer Date.
(b) One (1) year after the date hereof (the "FIRST YEAR ANNIVERSARY
DATE"), Purchaser shall pay the Company the sum of Two Million Dollars
($2,000,000) of the Purchase Price, by wire transfer in immediately available
funds to an account or accounts which shall be designated by the Company not
less than three (3) Business Days prior to the First Year Anniversary Date.
(c) If the Closing shall not have occured on or prior to the date which
is two (2) years after the date hereof (the "SECOND YEAR ANNIVERSARY DATE"),
Purchaser shall pay the Company the sum of Three Million Dollars ($3,000,000) of
the Purchase Price, by wire transfer in immediately available funds to an
account or accounts which shall be designated by the Company not less than three
(3) Business Days prior to the Second Year Anniversary Date.
(d) The Purchase Price (less any amounts of the Purchase Price paid to
the Company at the Non-License Transfer, on the First Year Anniversary Date and
on the Second Year Anniversary Date) shall be paid by Purchaser to the
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Company at the Closing by wire transfer of immediately available funds to an
account or accounts which shall be designated by the Company not less than three
(3) Business Days prior to the Closing Date.
(e) To the extent that any payments described in Section 2.3(a) or
Section 2.3(b) are not paid when due in accordance with the terms hereof, any
unpaid payments shall accrue interest at a rate per annum of twelve percent
(12%) until paid in full.
2.4 POST-CLOSING ADJUSTMENT.
(a) The parties agree that no later than seventy-five (75) days after
the Transfer Date (or such later date on which such statement reasonably can be
prepared and delivered in light of the compliance of Purchaser and the Company
with their obligations set forth in next two succeeding sentences), the Company
shall deliver to Purchaser, in the form received by the Company from Gannett (i)
a statement of the actual Net Financial Assets as of 11:59 p.m., New York City
time, on the day immediately preceding the Transfer Date (the "CLOSING
STATEMENT") certified by PriceWaterhouseCoopers L.L.P., independent accountants
for Gannett, to be prepared (except as otherwise provided in Section 9 of the
Disclosure Schedule to the Gannett Purchase Agreement) in conformity with GAAP
and on a basis consistent with the basis used in preparing the Unaudited
Financial Statements as of, and for the year ended, December 27, 1997, referred
to in Section 3.5 of the Gannett Purchase Agreement, except to the extent of any
position taken as the result of such statements being prepared on a consolidated
basis, and (ii) a determination of the amount by which the actual Net Financial
Assets are less than or greater than the Estimated Net Financial Assets.
Purchaser shall provide the Company and Gannett, and Gannett's independent
accountants, access at all reasonable times to the relevant personnel,
properties, books and records of the Business for such purposes and to assist
the Company and Gannett, and Gannett's independent accountants, in preparing the
Closing Statement. Purchaser's assistance shall include, without limitation, the
closing of the books of the Business as of the Transfer Date, the preparation of
schedules supporting the amounts set forth in the general ledger and other books
and records of the Business, and such other assistance as the Company, Gannett
or Gannett's independent accountants may reasonably request. During the
twenty-five (25) day period following the delivery by the Company of the Closing
Statement referred to in the first sentence of this Section 2.4(a), Purchaser
and its independent accountants will be permitted to review the working papers
of the Company and of Gannett and its independent accountants relating to the
preparation of the Closing Statement to the same extent as such working papers
have been made available to the Company by Gannett pursuant to the Gannett
Purchase Agreement. If, within twenty-five (25) days after
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delivery by the Company of the Closing Statement, Purchaser notifies the Company
that it disagrees with the Closing Statement, the Company shall attempt to
resolve the disagreement with Gannett. In the event the Company and Purchaser
cannot agree with respect to the Closing Statement within five (5) days of the
notice of disagreement provided by Purchaser to the Company, then the
determination shall be submitted for resolution promptly to an independent
nationally recognized accounting firm (the "ACCOUNTING FIRM"), jointly selected
by the Company and Purchaser, whose determination (the "ACCOUNTING FIRM
DETERMINATION") shall be instructed by the parties to be made within twenty (20)
days and be binding upon all parties hereto, and the fees and expenses of which
shall be borne equally by Purchaser and the Company to the extent that such fees
and expenses are allocable to the transactions contemplated by this Agreement.
The Purchaser agrees that the accounting firm selected by Gannett and the
Company pursuant to Section 2.3(a) of the Gannett Purchase Agreement shall be
the Accounting Firm hereunder as long as such firm has not been engaged by
Gannett or the Company during the three (3) year period prior to the date
hereof. In the event that (whether expressly or by failure of Purchaser to
provide notice of any disagreement within the applicable period) Purchaser
agrees with the determination of the final Net Financial Assets set forth in the
Closing Statement without submitting the matter for an Accounting Firm
Determination, the Net Financial Assets set forth in the Closing Statement shall
be the final determination of the Net Financial Assets. The amount of Net
Financial Assets as of 11:59 p.m., New York City time, on the day immediately
preceding the Closing Date, as definitively determined pursuant to this Section
2.4(a) is referred to herein as the "ACTUAL NET FINANCIAL ASSETS".
(b) If the Actual Net Financial Assets are greater than the Estimated
Net Financial Assets, then Purchaser shall pay the Company in cash, within two
(2) Business Days following the determination of the Actual Net Financial
Assets, an amount equal to such difference, plus interest on the amount of such
difference at the rate of eight percent (8%) per annum from the Transfer Date to
the date of such payment to the Company. If the Actual Net Financial Assets are
less than the Estimated Net Financial Assets, then the Company shall pay the
Purchaser in cash within two (2) Business Days following the determination of
the Actual Net Financial Assets, an amount equal to such difference, plus
interest on the amount of such difference at the rate of eight percent (8%) per
annum from the Transfer Date to the date of such payment to Purchaser. The
amounts paid pursuant to this Section 2.4(b) shall be by wire transfer of
immediately available funds for credit to the recipient at a bank account
identified by such recipient in writing.
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2.5 ALLOCATION OF THE BASE PURCHASE PRICE.
The Company and Purchaser agree to allocate the Base Purchase Price
among the Stations for all purposes (including financial, accounting and tax
purposes) in accordance with Section 2.5 of the Disclosure Schedule. The Company
and Purchaser agree to engage Bond & Pecaro, a nationally recognized appraisal
firm, to appraise the classes of Assets of each Station in accordance with the
allocation for the Stations set forth in Section 2.5 of the Disclosure Schedule
and in accordance with Section 1060 of the Code and the Treasury Regulations
promulgated thereunder (the "ALLOCATION"). The Allocation shall be binding upon
Purchaser and the Company, and none of the parties hereto shall file, or cause
to be filed, any Tax Return, Internal Revenue Service Form 8594 or other form,
or take a position with any Tax authority or jurisdiction, that is inconsistent
with the Allocation without obtaining the prior written consent of the Company
or Purchaser, as the case may be. The fees and disbursements of the appraiser
engaged in connection with the Allocation as to the Assets of the Stations shall
be paid one-half (1/2) by Purchaser and one-half (1/2) by the Company.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.
The Company represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND STANDING.
The Company is a corporation duly incorporated, validly existing, and
in good standing under the laws of the State of Maryland. The Company and, to
the Company's Knowledge, Gannett have all requisite corporate power and
authority to own, lease and operate their respective properties and assets and
to conduct their business as it is now being conducted. The Company is and, to
the Company's Knowledge, Gannett is, duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state in which the
operation of its business or ownership of its assets makes such qualification
necessary, except where the failure to so qualify or be in good standing would
not reasonably be expected to have a Material Adverse Effect.
3.2 BINDING AGREEMENT.
The Company has all requisite corporate power and authority to enter
into this Agreement, to execute and deliver this Agreement and the other
Transaction Documents, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution
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and delivery of this Agreement and the other Transaction Documents by the
Company and the consummation by the Company of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate and
stockholder action on the part of the Company. This Agreement has been, and on
the Non-License Transfer Date and on the Closing Date the other Transaction
Documents will be, duly executed and delivered on behalf of the Company and,
assuming the due authorization, execution and delivery by Purchaser, constitutes
a legal, valid and binding obligation of the Company enforceable in accordance
with its terms, subject to applicable bankruptcy and similar laws affecting the
rights of creditors generally and to general principles of equity (whether
applied at law or equity).
3.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in Section 3.3 of the Disclosure Schedule, the
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents (and to the extent that the Assets are transferred
directly from Gannett to the Purchaser, to the Company's Knowledge, Gannett) do
not and will not (a) violate, conflict with or result in the breach or default
of any provision of the articles of incorporation or bylaws of the Company, (b)
conflict with or violate in any material respect any material Law or material
Governmental Order applicable to the Company or any of its properties or assets
or to the Assets or the Business, (c) except for (i) the notification
requirements of the HSR Act and (ii) such filings with, and orders of, the FCC
as may be required under the Communications Act and the FCC's rules and
regulations in connection with this Agreement and the transactions contemplated
hereby, require any material consent, approval, authorization or other order of,
action by, registration or filing with or declaration or notification to any
Governmental Authority, or (d) conflict with, result in any violation or breach
of, constitute a default (or event which with the giving of notice, or lapse of
time or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Assets, or result in the imposition or acceleration of any payment,
time of payment, vesting or increase in the amount of compensation or benefit
payable, pursuant to any Material Contract.
3.4 EQUITY INVESTMENTS.
The Assets do not include any capital stock of any corporation or any
equity interest in any Person.
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3.5 FINANCIAL STATEMENTS.
(a) The Company has furnished, or prior to the Diligence Termination
Deadline will furnish, to Purchaser the balance sheets for each of the Stations
as of December 31, 1994, December 31, 1995, December 31, 1996, December 31,
1997, and December 31, 1998, and statements of operations for each of the
Stations for the years then ended (such financial statements are collectively
referred to herein as the "UNAUDITED FINANCIAL STATEMENTS"). Except as otherwise
disclosed in Section 3.5 of the Disclosure Schedule, to the Company's Knowledge,
the Unaudited Financial Statements (including any notes thereto) present fairly,
in all material respects, the financial position of the Stations, as of the
dates thereof and the results of operations for the Stations for the periods
then ended and have been prepared in conformity with GAAP.
(b) Except as set forth in Section 3.5 of the Disclosure Schedule, to
the Company's Knowledge, there are no liabilities or obligations, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due), of any Station of a nature required by GAAP to be reflected
in a corporate balance sheet, except such liabilities and obligations (i) that
are adequately accrued or reserved against in the Unaudited Financial Statements
or disclosed in the notes thereto, (ii) that were incurred after December 31,
1998, either in the ordinary course of business consistent with past practice or
in connection with the transactions contemplated by this Agreement, or (iii)
that are immaterial in amount.
3.6 TITLE TO ASSETS; RELATED MATTERS.
To the Company's Knowledge, except for Permitted Exceptions or as
disclosed in Section 3.6 of the Disclosure Schedule (a) Gannett has good, valid
and marketable title (as measured in the context of their current uses) to, or,
in the case of leased or subleased assets, valid and subsisting leasehold
interests (as measured in the context of their current uses) in, or otherwise
has the right to use, all of the Assets, free and clear of all Encumbrances
(except for any assets sold or otherwise disposed of, or with respect to which
the lease, sublease or other right to use such Asset has expired or has been
terminated, in each case after the date hereof solely to the extent permitted
under Section 5.1(a) hereof), (b) each lease or sublease pursuant to which any
Leased Property is leased by Gannett is, to the Company's Knowledge, legal,
valid and binding on Gannett and the Company (as the case may be) and, to the
Company's Knowledge, the other parties thereto and grants the leasehold interest
it purports to grant, including, without limitation, any rights to
nondisturbance and peaceful and quiet enjoyment that may be contained therein
and, to the Company's Knowledge, Gannett and each other party thereto is in
compliance in all material respects with the provisions of such leases and
subleases,
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(c) to the Company's Knowledge, the Assets, together with the Excluded Assets,
constitute all the assets and rights of Gannett and its Affiliates used in or
necessary for the operation of the Business as currently conducted, (d) to the
Company's Knowledge, except for Equipment scheduled to be replaced by Gannett's
capital expenditure budget, the Real Property, Leased Property and Equipment is,
in all material respects, in good operating condition and repair (ordinary wear
and tear excepted) taking into account the age thereof, (e) to the Company's
Knowledge, there are no contractual or legal restrictions to which Gannett or
the Company is a party or by which the Real Property is otherwise bound that
preclude or restrict in any material respect Gannett's ability to use the Real
Property for the purposes for which it is currently being used and (f) no
portion of the Real Property or Leased Property is the subject of, or affected
by, any condemnation, eminent domain or inverse condemnation proceeding
currently instituted or, to the Company's Knowledge, threatened. At each of the
Non-License Transfer and the Closing, as applicable, the Company (or Gannett)
shall sell, convey, assign, transfer and deliver to Purchaser all of the
Company's (or Gannett's) right, title and interest in and to all of the Assets,
free and clear of all Encumbrances other than Permitted Exceptions and
Encumbrances arising from Purchaser's acts. Section 1.1(d) of the Disclosure
Schedule contains a true and correct list of all Real Property owned by Gannett
used in the Business (other than the Excluded Assets).
3.7 ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS.
To the Company's Knowledge, since June 30, 1998, except as otherwise
provided in or contemplated by this Agreement or as disclosed in Section 3.7 of
the Disclosure Schedule:
(a) other than in the ordinary course of business consistent with past
practice neither the Company nor Gannett has sold, transferred, leased,
subleased, licensed or otherwise disposed of any material assets used in the
Business, other than the sale of obsolete Equipment;
(b) (i) neither the Company nor Gannett has granted any increase, or
announced any increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable to any of the Business Employees,
including, without limitation, any increase or change pursuant to any Employee
Benefit Plan, or (ii) established, increased or accelerated the payment or
vesting of any benefits under any Employee Benefit Plan with respect to Business
Employees, in either case except (A) as required by Law, (B) that involve only
increases consistent with the past practices of Gannett or (C) as required under
any existing agreement or arrangement;
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(c) neither the Company nor Gannett has made any material change in any
method of accounting or accounting practice or policy used by Gannett or the
Company with respect to the Stations, other than changes required by Law or
under GAAP;
(d) neither the Company nor Gannett has suffered any extraordinary
casualty loss or damage with respect to any material assets used in the
Business, whether or not covered by insurance;
(e) there has not been any Material Adverse Effect;
(f) except in connection with the transactions contemplated hereby, the
Business has been conducted in all material respects only in the ordinary and
usual course consistent with past practice;
(g) neither the Company nor Gannett has created, incurred, assumed or
guaranteed any Indebtedness, except for net borrowings under existing lines of
credit;
(h) other than in the ordinary course of business, neither the Company
nor Gannett has compromised, settled, granted any waiver or release relating to,
or otherwise adjusted any Action, material Liabilities or any other material
claims or material rights of the Business; and
(i) neither the Company nor Gannett has entered into any agreement,
contract, commitment or arrangement to do any of the foregoing.
3.8 LITIGATION.
Except as disclosed in Section 3.8 of the Disclosure Schedule, as of
the date hereof, (a) there are no Actions against the Company or, to the
Company's Knowledge, Gannett relating to the Business or the Assets pending, or,
to the Company's Knowledge, threatened to be brought by or before any
Governmental Authority, (b) neither the Company nor, to the Company's Knowledge,
Gannett is subject to any Governmental Orders (nor, are there any such
Governmental Orders threatened to be imposed by any Governmental Authority)
relating to the Business or the Assets, and (c) there is no Action pending or,
to the Company's Knowledge, threatened to be brought before any Governmental
Authority, that seeks to question, delay or prevent the consummation of the
transactions contemplated hereby.
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3.9 INSURANCE.
Section 3.9 of the Disclosure Schedule lists all insurance policies as
of the date hereof relating to the Assets or the Business (the "INSURANCE
POLICIES"). Except as set forth in either Section 3.9 or Section 3.14 of the
Disclosure Schedule, (a) to the Company's Knowledge, all insurance policies
relating to the Assets or Business to which the Company or Gannett is a party or
under which the Assets or the Business is covered (or replacement policies
therefor) are in full force and effect and, to the Company's Knowledge, all
premiums due have been paid and are not in default, (b) to the Company's
Knowledge, no notice of cancellation or non-renewal with respect to, or
disallowance of any claim under, any such policy has been received by either the
Company or Gannett, and (c) to the Company's Knowledge, neither the Company nor
Gannett has been refused insurance with respect to the Business or Assets, nor,
to the Company's Knowledge, has coverage with respect to the Business or Assets
been previously canceled or limited by an insurer to which Gannett or the
Company has applied for such insurance or with which the Company or, to the
Company's Knowledge, Gannett has held insurance within the last three years.
3.10 MATERIAL CONTRACTS.
Section 3.10 of the Disclosure Schedule sets forth all Material
Contracts relating to the Stations, including, without limitation, all
amendments thereof, as of the date hereof. To the extent received by the Company
from Gannett, complete and accurate copies of all written Material Contracts
listed in Section 3.10 of the Disclosure Schedule and accurate summaries of the
material terms of all oral contracts and agreements (which would be Material
Contracts if in writing) have been delivered or made available to Purchaser
(except as otherwise noted therein). Except as set forth in Section 3.10 of the
Disclosure Schedule, to the Company's Knowledge, (a) each Material Contract and
each other contract or agreement that is material to the Business is legal,
valid and binding on Gannett and, to the Company's Knowledge, the other parties
thereto, (b) to the Company's Knowledge, neither the Company nor Gannett is in
default under any Material Contract or other contract or agreement that is
material to the Business and no event has occurred or failed to occur that, with
or without the giving of notice or the lapse of time or both, would result in
such a default and (c) to the Company's Knowledge, no other party to any
Material Contract or other contract or agreement that is material to the
Business has breached or is in default thereunder.
3.11 PERMITS AND LICENSES; COMPLIANCE WITH LAW.
(a) Except as disclosed in Section 3.11 of the Disclosure Schedule, (i)
to the Company's Knowledge, Gannett currently holds all the material permits,
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licenses, authorizations, certificates, exemptions and approvals of Governmental
Authorities or other Persons including, without limitation, Environmental
Permits, necessary for the current operation and the conduct (as it is being
conducted prior to the Transfer Date) of the Business, other than the FCC
Licenses (which are provided for in Section 3.12 hereof) (collectively,
"PERMITS"), and all material Permits are in full force and effect, (ii) to the
Company's Knowledge, since November 1, 1996, Gannett has not received any
written notice from any Governmental Authority revoking, canceling, rescinding,
modifying or refusing to renew any material Permit and, (iii) to the Company's
Knowledge, Gannett is in material compliance with the requirements of all
material Permits.
(b) Except as disclosed in Section 3.11 of the Disclosure Schedule, to
the Company's Knowledge, (i) Gannett is in compliance in all material respects
with all Laws and Governmental Orders, other than the FCC Licenses, the
Communications Act and the rules and regulations of the FCC (which are provided
for in Section 3.12 hereof), applicable to the conduct of the Business as it is
being conducted prior to the Transfer Date, and (ii) Gannett has not been
charged, since November 1, 1996, by any Governmental Authority with a violation
of any Law or any Governmental Order relating to the Stations, which charge has
not been fully resolved and, to the extent required, accounted for.
3.12 FCC LICENSES.
Except as disclosed in Section 3.12 of the Disclosure Schedule, (a) to
the Company's Knowledge, Gannett holds, and immediately prior to the Closing the
Company will hold, the FCC Licenses listed in Section 3.12 of the Disclosure
Schedule, which FCC Licenses expire on the respective dates set forth in Section
3.12 of the Disclosure Schedule; (b) to the Company's Knowledge, Section 3.12 of
the Disclosure Schedule sets forth a true and complete list of any and all
pending applications filed with the FCC by Gannett, true and complete copies of
which (to the extent received from Gannett by the Company) have been delivered
to Purchaser or made available for inspection by Purchaser; (c) to the Company's
Knowledge, the FCC Licenses listed in Section 3.12 of the Disclosure Schedule
constitute all of the licenses and authorizations required under the
Communications Act and the current rules and regulations of the FCC in
connection with the operation of the Stations as currently operated; (d) to the
Company's Knowledge, the FCC Licenses are in full force and effect through the
dates set forth in Section 3.12 of the Disclosure Schedule, and there is not
pending or, to the Company's Knowledge, threatened any action by or before the
FCC to revoke, suspend, cancel, rescind, modify, or refuse to renew in the
ordinary course any of the FCC Licenses; (e) to the Company's Knowledge, the
Stations are operating in compliance with the FCC Licenses and in compliance in
all material
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respects with the Communications Act and the current rules and regulations of
the FCC and have been assigned digital television frequencies; and (f) to the
Company's Knowledge, there exist no facts, conditions or events relating to
Gannett or the Company that would reasonably be expected to cause the revocation
of FCC Licenses or denial by the FCC of the application for consent to the
assignment of the FCC Licenses as provided in this Agreement or the Gannett
Purchase Agreement. To the Company's Knowledge, Gannett has filed all reports,
forms and statements, including, without limitation, construction permit
applications for digital television channels required to be filed by Gannett
with the FCC and maintained in its public files in accordance with the rules and
regulations of the FCC.
3.13 ENVIRONMENTAL MATTERS.
Except as disclosed in Section 3.13 of the Disclosure Schedule, to the
Company's Knowledge, (a) Hazardous Materials have not been Released on any Real
Property except in material compliance with applicable Law; (b) there have been
no events related to the Business or the Real Property that would reasonably be
expected to give rise to any material liability under any Environmental Law; (c)
the Business, the Real Property and the Leased Property is now, and for the past
five (5) years has been, in material compliance with all applicable
Environmental Laws and there are no extant conditions that would reasonably be
expected to constitute an impediment to such compliance in the future; (d) the
Business has disposed of all wastes arising from or otherwise relating to its
business, including those wastes containing Hazardous Materials, in material
compliance with all applicable Environmental Laws (including the filing of any
required reports with respect thereto) and Environmental Permits and (e) there
are no pending or, to the Company's Knowledge, threatened Environmental Claims
against Gannett relating to the Real Property.
3.14 EMPLOYEE BENEFIT MATTERS.
The Company has made available to Purchaser copies of all material
Employee Benefit Plans (including, without limitation, all plans governed by
ERISA, providing pension benefits or providing health, life insurance or
disability benefits) relating to the Stations), which plans are set forth in
Section 3.14 of the Disclosure Schedule. To the Company's Knowledge and except
as set forth in Section 3.14 of the Disclosure Schedule, all such Employee
Benefit Plans are in compliance with the terms of the applicable plan and the
requirements prescribed by applicable law currently in effect with respect
thereto (including Sections 4980B and 5000 of the Code) and, to the Company's
Knowledge, Gannett has performed in all material respects all obligations
required to be performed by it under, and is not in default under or in
violation of, any of the terms of such Employee Benefit Plans
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where any such noncompliance, nonperformance, default or violation would,
individually or in the aggregate, be reasonably expected to result in liability
in excess of Twenty-Five Thousand Dollars ($25,000). To the Company's Knowledge,
Gannett has no post-retirement welfare obligations with respect to the Business.
To the Company's Knowledge, Gannett has not incurred, and, to the Company's
Knowledge, no event, transaction or condition has occurred or exists which is
reasonably expected to result in the occurrence of any liability to the Pension
Benefit Guaranty Corporation (other than contributions to the plan and premiums
to the Pension Benefit Guaranty Corporation which, in either event, are not in
default) or any "withdrawal liability" within the meaning of Section 4201 of
ERISA, or any other liability pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating to
employee benefit plans, in any such case relating to any Employee Benefit Plan
or any pension plan maintained by any company that during the last five years
was or currently would be treated as a single employer with the Company or
Gannett, as the case may be, under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA AFFILIATE"), where individually or in the aggregate, in any of
such events, any such liability would be in excess of Twenty-Five Thousand
Dollars ($25,000). To the Company's Knowledge, except as set forth in Section
3.14 of the Disclosure Schedule and except for such matters that would not,
individually or in the aggregate, reasonably be expected to result in liability
in excess of Twenty-Five Thousand Dollars ($25,000), each Employee Benefit Plan
relating to the Stations intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter that
such plan is so qualified and the trusts maintained thereunder are exempt from
taxation under Section 501(a) of the Code and, to the Company's Knowledge, is so
qualified, and no such Employee Benefit Plan holds employer securities. To the
Company's Knowledge and except as set forth in Section 3.14 of the Disclosure
Schedule, neither Gannett nor any ERISA Affiliate has ever made or been
obligated to make, or reimbursed or been obligated to reimburse another employer
for, contributions to any multiemployer plan (as defined in ERISA Section
3(37)). To the Company's Knowledge and except as set forth in Section 3.14 of
the Disclosure Schedule, the Employee Benefit Plans are not presently under
audit or examination (and have not received notice of a potential audit or
examination) by any governmental authority, and no matters are pending with
respect to the Qualified Plan under any governmental compliance programs. To the
Company's Knowledge, with respect to each Employee Benefit Plan of the Stations,
there have been no violations of Code Section 4975 or ERISA Sections 404 or 406
as to which successful claims would, individually or in the aggregate, result in
liability in excess of Twenty-Five Thousand Dollars ($25,000) for Gannett, the
Company or any Person required to be indemnified by either of them. To the
Company's Knowledge, except as set forth in Section 3.14 of the Disclosure
Schedule, and except as expressly provided in this Agreement, the consummation
of
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the transactions contemplated by this Agreement will not (i) entitle any current
or former employee or officer of the Business to severance pay, unemployment
compensation or other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer. To the Company's Knowledge, there are no pending or threatened or
anticipated claims by or on behalf of any Employee Benefit Plan relating to the
Stations, by any employee or beneficiary covered under any such plan, or
otherwise involving any such plan (other than routine claims for benefits) where
any such pending, threatened or anticipated claims would, individually or in the
aggregate, reasonably be expected to result in liability in excess of
Twenty-Five Thousand Dollars ($25,000). The Twenty-Five Thousand Dollars
($25,000) liability threshold in this Section 3.14 is intended to apply only to
this Section 3.14, and is in no way intended to be used in defining materiality
anywhere in this Agreement.
3.15 LABOR RELATIONS.
To the Company's Knowledge, Section 3.15 of the Disclosure Schedule
sets forth a list of all labor organizations recognized as representing the
employees of the Business. Complete and accurate copies of all collective
bargaining agreements and other labor union contracts relating to employees of
the Stations and any such labor organizations have been delivered or made
available to Purchaser. Except as disclosed in Section 3.8 or Section 3.15 of
the Disclosure Schedule, (a) to the Company's Knowledge, there are no collective
bargaining agreements or other labor union contracts applicable to employees of
the Business, (b) to the Company's Knowledge, there are no strikes, slowdowns or
work stoppages pending or, to the Company's Knowledge, threatened between
Gannett and any employees of the Business, and Gannett has not experienced any
such strike, slowdown, or work stoppage within the past two (2) years, in each
case, as of the date of the Gannett Purchase Agreement, (c) to the Company's
Knowledge, there are no pending or threatened grievance or arbitration
proceedings arising under any collective bargaining agreements or labor
contracts affecting any employees of the Business, (d) to the Company's
Knowledge, there are no unfair labor practice complaints pending or, to the
Company's Knowledge, threatened against the Business relating to employees of
the Business before the National Labor Relations Board or any other Governmental
Authority or, to the Company's Knowledge, any current union representation
questions involving employees of the Business, (e) to the Company's Knowledge,
Gannett is in compliance in all material respects with its obligations under all
Laws and Governmental Orders governing its employment practices with respect to
employees of the Business, including, without limitation, provisions relating to
wages, hours and equal opportunity, employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform and Control Act,
and occupational safety and health requirements, (f) to the
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Company's Knowledge, all Persons classified by Gannett as independent
contractors with respect to the Business do satisfy the requirements of law to
be so classified, and, to the Company's Knowledge, Gannett has fully and
accurately reported their compensation on IRS Forms 1099 when required to do so,
and (g) to the Company's Knowledge, there is no charge or compliance proceeding
actually pending or, to the Company's Knowledge, threatened against the Company
or Gannett with respect to employees of the Business before the Equal Employment
Opportunity Commission or any state, local, or foreign agency responsible for
the prevention of unlawful employment practices.
3.16 INTELLECTUAL PROPERTY.
To the Company's Knowledge, Section 3.16 of the Disclosure Schedule
includes a complete list of all call letters of the Stations (the "CALL
LETTERS"). Except as disclosed in Section 3.16 of the Disclosure Schedule, to
the Company's Knowledge, (a) the rights of Gannett, and immediately prior to the
Transfer Date, the Company, in or to the Call Letters and, to the Company's
Knowledge, the other Intellectual Property do not conflict with or infringe on
the rights of any other Person, (b) the Company has not and, to the Company's
Knowledge, Gannett has not, received any claim from any Person that the rights
of Gannett or the Company in or to the Intellectual Property conflict with or
infringe on the rights of any other Person and, to the Company's Knowledge, no
such claim is threatened, (c) to the Company's Knowledge, Gannett owns (free and
clear of any Encumbrances other than Permitted Exceptions), is licensed or
otherwise has the right to use all Intellectual Property necessary for the
conduct of the Business as currently conducted by Gannett (free and clear of any
Encumbrances other than Permitted Exceptions), except where the failure to have
such rights would not reasonably be expected to impair the operations of the
Business in any material respect and (d) to the Company's Knowledge, no other
Person is infringing or diluting the rights of Gannett with respect to the
Intellectual Property.
3.17 TAXES.
Except as disclosed in Section 3.17 of the Disclosure Schedule and
except relating exclusively to the Gannett Maine Media Business, to the
Company's Knowledge (a) all material Tax Returns required to be filed by Gannett
(or to the extent required to be filed by the Company) relating to the Business
have been timely filed and all such Tax Returns are correct and complete in all
material respects; (b) all Taxes required to be paid by Gannett (or to the
extent required to be paid by the Company) relating to the Business, whether or
not shown as due on such Tax Returns, have been timely paid other than such
Taxes, if any, as are described in Section 3.17 of the Disclosure Schedule and
are being contested in good faith; (c) there is no action, suit, proceeding,
investigation, audit or claim pending
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or, to the Company's Knowledge, threatened with respect to Taxes of Gannett or
the Company relating to the Stations or for which Gannett or the Company may be
liable, and no adjustment relating to such Taxes of Gannett or the Company
relating to the Stations has been proposed in writing by any Tax authority and
remains unresolved; (d) there are, and immediately prior to the Transfer Date
there will be, no Tax liens on any of the assets of the Business (other than
liens for Taxes that are not yet due and payable); and (e) all Taxes that the
Business is required to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Tax authority.
3.18 COMMISSIONS.
There is no broker or finder or other Person who has any valid claim
against the Company, Purchaser, or any of their respective Affiliates or any of
their respective assets for a commission, finders' fee, brokerage fee or other
similar fee in connection with this Agreement, or the transactions contemplated
hereby, by virtue of any actions taken by on or behalf of the Company, its
stockholders or the Company's officers, employees or agents.
3.19 AFFILIATE TRANSACTIONS.
Except as set forth in Section 3.19 of the Disclosure Schedule or as
expressly otherwise provided or permitted in this Agreement, to the Company's
Knowledge, since December 27, 1997, Gannett has not engaged in any transaction
with any Affiliate thereof that was material to the Business, and, to the
Company's Knowledge, Gannett is not a party to any material agreements or
arrangements relating to the Stations with any Affiliates that will continue in
effect after the Transfer Date for the Purchaser that are not immediately
terminable by the Purchaser without payment of any penalty or premium.
3.20 GANNETT PURCHASE AGREEMENT.
The Company and its Affiliates have not waived any of their rights or
conditions under the Gannett Purchase Agreement related to the Stations. Neither
the Company nor Gannett is in material breach of, and has not defaulted under,
any of the terms of the Gannett Purchase Agreement. The Gannett Purchase
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy and
similar laws affecting the rights of creditors generally and to general
principles of equity (whether applied at law or equity). The Company is not and,
to Company's Knowledge, Gannett is not, subject to any judgment, award, order,
writ, injunction, arbitration decision or decree which prohibits the performance
of the Gannett Purchase Agreement or the consummation of any transaction
contemplated under
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the Gannett Purchase Agreement. There is no Action (a) pending or, to the
Company's Knowledge, threatened against or affecting the Company or (b) to the
Company's Knowledge, pending or threatened against or affecting Gannett in any
federal, state or local court, or before any Governmental Authority or
arbitrator that would adversely affect the ability of the Company or Gannett to
consummate, or that would prohibit, the transactions contemplated under the
Gannett Purchase Agreement related to the Stations.
3.21 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty made by the Company in this Article 3, to
the Company's Knowledge, contains any untrue statement of a material fact or
omits a material fact necessary in order to make the representation or warranty
not misleading.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Company as follows:
4.1 ORGANIZATION AND STANDING.
Purchaser is a corporation duly incorporated, validly existing, and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to conduct its business.
4.2 BINDING AGREEMENT.
Purchaser has all requisite corporate power and authority to enter into
this Agreement, to execute and deliver this Agreement and the other Transaction
Documents, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Transaction Documents by Purchaser and
the consummation by Purchaser of its obligations hereunder and thereunder have
been duly and validly authorized by all necessary corporate and stockholder
action on the part of Purchaser. This Agreement has been and, on the Non-License
Transfer Date and the Closing Date, the other Transaction Documents will be,
duly executed and delivered on behalf of Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding
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obligation of Purchaser enforceable in accordance with its terms,
subject to applicable bankruptcy and similar laws affecting the rights of
creditors generally and to general principles of equity (whether applied at law
or equity).
4.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
The execution, delivery and performance by Purchaser of this Agreement
and the other Transaction Documents do not and will not (a) violate, conflict
with or result in the breach or default of any provision of the certificate or
articles of incorporation or by-laws of Purchaser, (b) materially conflict with
or materially violate any material Law or material Governmental Order applicable
to Purchaser or any of its properties or assets, (c) except for (i) the
notification requirements of the HSR Act, (ii) such filings with, and orders of,
the FCC as may be required under the Communications Act and the FCC's rules and
regulations in connection with this Agreement and the transactions contemplated
hereby as provided for in Section 4.7 hereof (including Section 4.7 of the
Disclosure Schedule) or otherwise hereunder, and (iii) such matters that would
not reasonably be expected to materially impair or delay the consummation of the
transactions contemplated hereby, require any consent, approval, authorization
or other order of, action by, registration or filing with or declaration or
notification to any Governmental Authority or any other Person or (d) except for
such matters that would not reasonably be expected to materially impair or delay
the consummation of the transaction contemplated hereby, conflict with, result
in any violation or breach of, constitute a default (or event which with the
giving of notice, or lapse of time or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Purchaser's assets pursuant to,
any note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license or permit, or franchise to which Purchaser is a party or by which its
assets are bound.
4.4 LITIGATION.
Except as described in Section 4.4 of the Disclosure Schedule, there
are no Actions pending or, to Purchaser's knowledge, threatened to be brought by
or before any Governmental Authority, against Purchaser or any of its Affiliates
that (a) seek to question, delay or prevent the consummation of the transactions
contemplated hereby or (b) would reasonably be expected to affect adversely the
ability of Purchaser to fulfill its obligations hereunder, including without
limitation, Purchaser's obligations under Articles 1 and 2 hereof.
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4.5 COMMISSIONS.
There is no broker or finder or other Person who has any valid claim
against the Company, Purchaser, any of their respective Affiliates or any of
their respective assets for a commission, finders' fee, brokerage fee or other
similar fee in connection with this Agreement, or the transactions contemplated
hereby, by virtue of any actions taken by on or behalf of Purchaser, or its
officers, employees or agents.
4.6 FINANCING.
Purchaser will at the Non-License Transfer and the Closing have
sufficient funds to pay the amounts of the Purchase Price payable at the
Non-License Transfer and the Closing pursuant to this Agreement and otherwise to
satisfy its obligations hereunder.
4.7 PURCHASER'S QUALIFICATION.
Except as set forth in Section 4.7 of the Disclosure Schedule, (a)
Purchaser does not know of any fact or circumstance that could reasonably be
expected to result in a finding by the FCC that Purchaser is not qualified
legally, financially or otherwise to be the licensee of the Stations as its
operations are now being conducted and (b) except for the FCC's Duopoly Rule, a
waiver of which will be requested by Purchaser (or Purchaser shall be
restructured to comply with), Purchaser does not know of any policy, rule,
regulation or ruling of the FCC that could reasonably be expected to be violated
by the acquisition of the Stations by Purchaser.
4.8 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty made by Purchaser in this Article 4, to
the Purchaser's Knowledge, contains any untrue statement of a material fact or
omits a material fact necessary in order to make the representation or warranty
not misleading.
ARTICLE 5.
COVENANTS AND AGREEMENTS.
5.1 CONDUCT OF THE BUSINESS PRIOR TO CLOSING; ACCESS.
The Company covenants as follows:
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(a) Between the date hereof and the Closing, except as contemplated by
this Agreement or as described in Section 5.1 of the Disclosure Schedule, or
except with the written consent of Purchaser (which consent shall not be
unreasonably withheld), the Company will (or will cause Gannett to the extent
possible under the Gannett Purchase Agreement) operate the Business in the
ordinary course of business consistent with past practice and shall use
commercially reasonable efforts to (i) preserve intact the Business and preserve
the Business's relationships with customers, suppliers, licensees, licensors,
the networks with whom the Stations are affiliated and others having business
dealings with the Stations; (ii) maintain the Business's inventory of supplies,
parts and other materials and keep its books of account, records and files, in
each case in the ordinary course of business consistent with past practice;
(iii) maintain the material items of Real Property, Leased Property and
Equipment substantially in their present condition, ordinary wear and tear
excepted; (iv) pay or discharge all cash and barter obligations in the ordinary
course of business; (v) bring current as of the day immediately preceding the
Transfer Date all payments due and payable under Program Contracts in accordance
with their terms as in effect on the date hereof (with respect to Program
Contracts existing as of the date hereof) or on the date originally entered into
(with respect to Program Contracts entered into after the date hereof); and (vi)
maintain its corporate existence.
(b) Without limiting the generality of Section 5.1(a), between the date
hereof and the Closing, except as contemplated by this Agreement or as described
in Section 5.1 of the Disclosure Schedule, or except with the written consent of
Purchaser (which consent shall not be unreasonably withheld, except in the case
of any consent relating to the entering into of any Program Contract providing
for payments in excess of Thirty Thousand Dollars ($30,000) or having a term
greater than one (1) year (other than any Program Contract that will be fully
satisfied, discharged and performed prior to the Closing), in which case
Purchaser may grant or withhold its consent in Purchaser's absolute discretion
(and the parties hereto further agree that no such consent unreasonably withheld
shall be taken into account in any determination of whether a Material Adverse
Effect has occurred), and any consent shall be deemed given unless withheld in
writing no later than three (3) Business Days after Purchaser's receipt of a
written request for such consent), the Company will not (and, to the extent
provided for in the Gannett Purchase Agreement, will cause Gannett not to, to
the extent possible under the Gannett Purchase Agreement) with respect to the
Business:
(i) create, assume or subject any of the assets of the Business
to any Encumbrance, other than Permitted Exceptions and Encumbrances that will
be released at or prior to the Non-License Transfer and the Closing;
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(ii) make any material changes in the operations of the Business;
(iii) other than, in each case, in the ordinary course of business
consistent with past practice, sell, transfer, lease, sublease, license or
otherwise dispose of any material assets of the Business, other than the sale of
obsolete Equipment that has been or is replaced with Equipment of like kind;
(iv) (A) grant any increase, or announce any increase, in the
wages, salaries, compensation, bonuses, incentives, pension or other benefits
payable to any of the officers or key employees of the Business, including,
without limitation, any increase or change pursuant to any Employee Benefit
Plan, or (B) establish or increase or promise to increase or accelerate the
payment or vesting of any benefits under any Employee Benefit Plan with respect
to officers or employees of the Business, in the case of either (A) or (B)
except (I) as required by Law, (II) that involve only increases consistent with
the past practices of the Company or Gannett (or as otherwise required or
allowed under the Gannett Purchase Agreement, as the case may be, but in no
event more than five percent (5%), (III) as required under any existing
agreement or arrangement, (IV) that involve increases related to promotions to
the extent such increases result in the compensation and benefits of the
relevant employee being consistent with the compensation and benefits provided
to the holder of such position in the past or (V) that relate to the
supplemental executive retirement plans identified in Section 3.14 of the
Disclosure Schedule;
(v) make any change in any method of accounting or accounting
practice or policy used by the Company or Gannett in respect of the Business,
other than as required by law or under GAAP;
(vi) fail to maintain in full force and effect all of its
existing casualty, liability or other insurance relating to the Stations through
the Non-License Transfer and the Closing in amounts at least equal to those in
effect on the date hereof;
(vii) (A) amend the payment terms of any Program Contract to
provide that payments that would otherwise be made prior to the Non-License
Transfer or the Closing are made after the Non-License Transfer or the Closing
or (B) acquire, enter into, modify, change or extend the term of (x) any Program
Contract providing for payments in excess of Ten Thousand Dollars ($10,000) or
with a term greater than one year or (y) Program Contracts not subject to clause
(x) that in the aggregate provide for payments in excess of Two Hundred Thousand
Dollars ($200,000);
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(viii) acquire, enter into, modify, change or extend the term of any
Material Contract, provided that this clause (viii) will not apply to the
acquisition or entering into of any new Material Contract not otherwise subject
to clauses (i) to (vii) or clauses (ix) to (xv) of this Section 5.1(b) with
respect to which all Liabilities of the Company thereunder relating to the
Stations will be fully satisfied, discharged and performed prior to the Transfer
Date with no adverse effect on Purchaser;
(ix) compromise, settle, grant any waiver or release relating to,
or otherwise adjust, any material Action, material Liabilities or any other
material claims or material rights relating to the Stations;
(x) enter into any new agreement, contract, commitment or
arrangement with any Affiliate of the Company that will be binding upon
Purchaser, the Assets or the Stations after the Non-License Transfer or the
Closing Date;
(xi) apply to the FCC for any construction permit that would
adversely affect the Stations present operations, or make any material change in
the Stations buildings, leasehold improvements, or fixtures;
(xii) except with respect to promotion during ratings sweep periods
(which shall not be subject to this clause (xii)), enter into any trade, barter
or similar agreements (other than Program Contracts) for the sale of advertising
time that would be binding on the Stations or Purchaser after the Non-License
Transfer or the Closing for any property or services in lieu of or in addition
to cash that requires the provision of broadcast time having a value that
exceeds Ten Thousand Dollars ($10,000) in any individual agreement or Two
Hundred Thousand Dollars ($200,000) in the aggregate;
(xiii) take any action, or refrain from taking any action, that
would constitute a material breach of, constitute a default (or event which with
the giving of notice, or lapse of time or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, any Material Contract;
(xiv) enter into or renew any time sales agreement except in the
ordinary course of business for a term not exceeding twelve (12) months; or
(xv) enter into any agreement, contract, commitment or arrangement
to do any of the foregoing.
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(c) Pending the Non-License Transfer and the Closing, the Company
shall:
(i) to the extent allowed by Gannett under the Gannett Purchase
Agreement or otherwise, give to Purchaser and its representatives reasonable
access during normal business hours to all of the employees, properties, books
and records of Gannett or the Company that relate to the Stations and, to the
extent available from, or allowed by, Gannett pursuant to the Gannett Purchase
Agreement or otherwise, furnish Purchaser and its representatives with such
information concerning the Stations as Purchaser may reasonably require,
including such access and cooperation as may be necessary to allow Purchaser and
its representatives to interview the employees, to examine the books and records
of the Stations, and to inspect the Real Property and Equipment (which right of
access shall not be exercised in any way which would unreasonably interfere with
the normal operations, business or activities of the Stations);
(ii) to the extent allowed by Gannett under the Gannett Purchase
Agreement or otherwise, cooperate in all reasonable respects with Purchaser's
request to conduct an audit of the financial information of the Stations as
Purchaser may reasonably determine is necessary to satisfy Purchaser's senior
lenders and Purchaser's public company reporting requirements pursuant to the
Securities Act of 1933 or the Securities Exchange Act of 1934 including, without
limitation, (A) using commercially reasonable efforts to obtain the consent of
the auditors of Gannett and/or the Company to permit Purchaser and Purchaser's
auditors to have access to such auditors' work papers, (B) consenting to such
access by Purchaser and (C) using commercially reasonable efforts to cause
Gannett to execute and deliver to Purchaser's independent auditors such
customary management representation letters as the auditors may require as a
condition to such auditors ability to deliver an unqualified report upon the
audited financial statements of the Stations;
(iii) to the extent provided by Gannett pursuant to the Gannett
Purchase Agreement or otherwise, furnish to Purchaser within twenty (20) days
after the end of each month ending between the date of this Agreement and the
Transfer Date an unaudited statement of income and expense and a balance sheet
for the Stations for the month just ended; and
(iv) to the extent provided by Gannett pursuant to the Gannett
Purchase Agreement or otherwise, from time to time, furnish to Purchaser such
additional information (financial or otherwise) concerning the Stations as
Purchaser may reasonably request (which right to request information shall not
be exercised in any way which would unreasonably interfere with the normal
operations, business or activities of the Stations).
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(d) The Company will deliver to Purchaser, within ten (10) Business
Days after delivery or receipt, copies of any reports, applications or
communications to or from the FCC or its staff related to the Stations which are
delivered or received between the date of the Gannett Purchase Agreement and the
Transfer Date.
5.2 POST-CLOSING COVENANTS AND AGREEMENTS, AND OTHER EMPLOYEE
BENEFIT MATTERS.
(a) Purchaser shall at all reasonable times after reasonable notice to
Purchaser from and after the Transfer Date, make available without cost, for
inspection and/or copying by the Company and any Person that was a stockholder
of Gannett during any of the tax years (or portions thereof) immediately
preceding the closing under the Gannett Purchase Agreement for which the
relevant statute of limitations (including any waiver thereof) has not expired,
or their respective representatives, the books and records of the Business
transferred to Purchaser from the Company at the Non-License Transfer or the
Closing, as the case may be. Such books and records shall be preserved by
Purchaser until the later of the closing by tax audit of, or the expiration of
the relevant statute of limitations (including any waiver thereof) with respect
to, all open tax periods of Gannett and such stockholders prior to and including
the time immediately prior to the Transfer Date. After the period set forth
above, Purchaser may destroy the books and records in its possession unless,
before expiration of such notice period the Company objects in writing to the
destruction of any or all of such books and records, in which case, such books
and records shall be delivered to the Company. Notwithstanding the foregoing,
Purchaser shall continue to preserve and, at all reasonable times after the
Transfer Date, to make available without cost, for inspection and/or copying by
any Person that was a trustee or other fiduciary under the Employee Benefit
Plans identified in Section 5.2(a) of the Disclosure Schedule, the books and
records of such Employee Benefit Plan transferred to Purchaser from the Company
at the Non-License Transfer or the Closing, as the case may be, and the books
and records of the Business relating thereto.
(b) At least five (5) Business Days prior to the Transfer Date, the
Company shall provide to Purchaser a true and complete list of the names, titles
and annual compensation of each of the employees (including inactive employees)
of the Stations. Effective as of the Transfer Date, except for such employees of
the Stations which are retained by the Company pursuant to the terms of the Time
Brokerage Agreement who shall be offered employment by Purchaser as of the
Closing Date, and the employees identified in Section 5.2(b) of the Disclosure
Schedule (the "EXCLUDED EMPLOYEES"), Purchaser shall offer employment to all
then employees of the Stations, on such terms and conditions as Purchaser shall
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establish (except that base cash compensation shall be comparable to their
existing base cash compensation), subject to the terms of any collective
bargaining agreement assumed by Purchaser under Section 5.2(e) and any
employment agreements with specific Business Employees, and shall assume
responsibility for all inactive employees of the Stations, subject to the terms
of this Section 5.2 and the collective bargaining agreements assumed by
Purchaser under Section 5.2(e); provided, however, that any employee of the
Stations who is not actively employed on the Transfer Date shall be offered
employment by Purchaser following the end of any inactive period (whether on
account of leave, layoff, injury or disability) but only to the extent that the
Company would have been obligated to offer active employment to such person upon
the end of such inactive period under the Gannett Purchase Agreement.
Notwithstanding the foregoing, Purchaser shall not have any obligation to offer
employment to any employees of the Corporate Office ("CORPORATE OFFICE
EMPLOYEES"), as described in Section 5.2(b) of the Disclosure Schedule. Nothing
in this Section 5.2(b) is intended to limit the ability of Purchaser to
terminate the employment of any employee after the Transfer Date.
(c) Subject to applicable law and the terms of any collective
bargaining agreement assumed pursuant to this Agreement, if any, Purchaser shall
establish and maintain for a period of one (1) year after the Transfer Date or
the term of their employment by Purchaser, whichever is less, for employees of
the Stations as of the Transfer Date, benefits that, in the aggregate, are no
less favorable than the benefits maintained by the Purchaser for similarly
situated employees of Purchaser, provided that the foregoing will not prohibit
or in any manner restrict Purchaser from terminating or changing the individual
terms of employment of any Business Employee or require Purchaser to maintain
any specific benefits or Employee Benefit Plans. Purchaser shall give employees
of the Stations as of the Transfer Date and former and inactive Business
Employees credit for their service with the Company and Gannett or any of their
Subsidiaries prior to the Transfer Date, to the same extent that such service
would have been credited by Purchaser (if they had been employed by Purchaser
for such period of service), for all purposes under all employee benefit plans
or arrangements maintained by Purchaser for current, former and inactive
Business Employees (including any waiting periods). In addition, Purchaser
shall, if applicable, (i) cause any pre-existing condition limitation to be
waived and (ii) give effect, in determining any deductible and maximum
out-of-pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to current, former and inactive Business Employees with respect to
similar plans maintained by the Company or Gannett prior to the Transfer Date.
(d) Purchaser will assume and indemnify and hold harmless the Company
Indemnified Parties against all Liabilities with respect to severance
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benefits arising in connection with or following the Transfer Date pursuant to
the agreements set forth in Sections 3.14.1 and 3.14.2 of the Disclosure
Schedule (subject to the right of recovery set forth in Section 5.9), or
pursuant to any collective bargaining agreement or other agreements with
Business Employees assumed either pursuant to this Agreement or by operation of
law. With respect to all current and inactive Business Employees immediately
prior to the Transfer Date not covered by the agreements referenced in the
immediately preceding sentence, (i) for a period ending not less than one year
after the Transfer Date, Purchaser will provide such Business Employees with the
same severance benefits as Purchaser provides for similarly situated employees
of Purchaser (which benefits, as of the date hereof, are described in Section
5.2(d) of the Disclosure Schedule) and (ii) Purchaser will assume and indemnify
and hold harmless the Company Indemnified Parties against all Liabilities with
respect to severance benefits of Purchaser arising in connection with or
following the Transfer Date.
(e) From and after the Transfer Date, Purchaser shall assume all of the
collective bargaining agreements and labor union contracts described in Section
5.2(e) of the Disclosure Schedule (including, without limitation, pursuant to
the specified provisions of the collective bargaining agreements set forth in
Section 5.2(e) of the Disclosure Schedule) with respect to any Business
Employees existing immediately prior to the Transfer Date.
(f) From and after the Transfer Date, Purchaser shall assume
responsibilities of all Employee Benefits Plans described in Section 5.2(f) of
the Disclosure Schedule that provide post-retirement life insurance or health,
or short-term or long-term disability benefits and be responsible for any
benefits under such Employee Benefit Plans (i) to which any current, former or
inactive Business Employee, or a beneficiary or dependent of any current, former
or inactive Business Employee ("BENEFICIARY"), has already become entitled, or
(ii) to which any current, former or inactive Business Employee has already
become qualified by reason of age and years of service as of the Transfer Date,
to the extent such persons are identified in Section 5.2(f) of the Disclosure
Schedule (which section shall be updated, if necessary, at the Non-License
Transfer or the Closing, as applicable). From and after the Transfer Date,
Purchaser shall also pay to the Business Employees listed in Section 5.2(f) of
the Disclosure Schedule the supplemental retirement benefits provided under the
applicable Gannett supplemental retirement plan.
(g) From and after the Transfer Date, Purchaser shall assume and be
responsible for any workers' compensation benefits payable to a Business
Employee, Beneficiary or dependent of a Business Employee on or after the
Transfer Date, including any such benefits that are attributable to any injury
or
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illness that occurred or existed prior to the Transfer Date to the extent not
covered by the Company's workers' compensation insurance policy.
(h) For a period of ninety (90) days after the Transfer Date, Purchaser
shall not implement any employment terminations, layoffs or hours reductions or
take any other action which could result in a "plant closing" or "mass layoff",
as those terms are defined in the Worker Adjustment and Retraining Notification
Act of 1988 ("WARN") or similar events under applicable state law, affecting in
whole or in part any facility, site of employment or operating unit, or any
employee employed by the Stations, or which could require either Purchaser or
the Company to give notice or take any other action required by WARN or
applicable state law.
(i) From and after the Transfer Date, Purchaser shall assume the
Company's and Gannett's obligations and liabilities with respect to COBRA
continuation coverage under Section 4980B of the Code and Section 601 of ERISA
("CONTINUATION COVERAGE") with respect to Business Employees and shall provide
Continuation Coverage to the Business Employees under Purchaser's health and
medical plans (A) with respect to any Business Employees who remain employed
with either the Company or Gannett through the Transfer Date, for a period of
eighteen (18) months after the Transfer Date or, if earlier, until becoming
eligible for comparable coverage from another employer and (B) with respect to
any Business Employees whose employment shall have terminated prior to the
Transfer Date, for remainder of the period with respect to which Continuation
Coverage would otherwise have been available to them had the Company or Gannett,
as the case may be, continued to maintain a group health plan; provided, that
consistent with the Continuation Coverage, Purchaser shall have the right to
charge each Business Employee for such Business Employee's portion of any
Continuation Coverage.
5.3 COOPERATION.
Following the execution of this Agreement, Purchaser and the Company
agree as follows:
(a) The parties and their Affiliates shall each use their reasonable
efforts, and shall cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions with respect to, any filings (other
than filings with the FCC, which are provided for in clause (b) below),
applications, requests, or actions which are or may be necessary to obtain the
consents, approvals, authorizations or other orders of any Governmental
Authority which are or may be necessary in order to accomplish the transactions
contemplated by this Agreement; and, without limiting the generality of the
foregoing, the parties and their Affiliates shall use
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their respective reasonable efforts to prepare and file as promptly as
practicable, but in any event no later than five (5) Business Days after the
date hereof (unless the Company designates in writing that the filing shall be
delayed to a date no later than the first (1st) Business Day after the Diligence
Termination Deadline), all of the information called for in the Notification and
Report Form required under the HSR Act and to prepare and file any supplemental
information, also in a timely fashion, which may be required by the United
States Department of Justice or the Federal Trade Commission pursuant to such
Notification and Report Form Filings, and otherwise to use their respective
reasonable efforts to obtain the requisite clearances.
(b) The parties and their Affiliates shall cooperate fully with each
other in preparing, filing, prosecuting, and taking any other actions with
respect to filings with the FCC related to the transactions contemplated by this
Agreement, including, without limitation, preparation of an application for the
assignment of all of the FCC Licenses to Purchaser and any filings by Purchaser
requesting temporary waivers for no more than nine (9) months of the FCC's
applicable ownership rules necessary to permit the parties to consummate the
transactions contemplated by this Agreement. As promptly as practicable, but in
any event not later than ten (10) Business Days after the Diligence Termination
Deadline, the Company and Purchaser shall jointly file the application with the
FCC requesting the FCC Consent, including, without limitation, requesting,
consenting to, and taking and otherwise seeking any action in connection with a
conditional waiver of the FCC's Duopoly Rule. The Company and Purchaser shall
use their respective reasonable best efforts, diligently take all necessary and
proper actions and provide any additional information requested by the FCC in
order to obtain promptly the FCC Consent. Notwithstanding the foregoing or any
other provision of this Agreement, neither Purchaser nor its officers, directors
or Affiliates shall request a permanent waiver of the FCC's applicable ownership
rules or request, consent to, take or otherwise seek or pursue any action that
is inconsistent with the transactions contemplated by this Agreement or that
reasonably could be expected to materially impede or materially delay the FCC
Consent or otherwise materially impede or materially delay the consummation of
the transactions contemplated by this Agreement; and the receipt of any
permanent waiver of the foregoing FCC rules shall not be a condition to the
obligation of Purchaser to consummate the transactions contemplated hereby.
Neither Purchaser nor any of its officers, directors or Affiliates will take any
action that would result in any change in the matters set forth in Section 4.7
hereof that would reasonably be expected to materially delay or otherwise
materially impair Purchaser's ability to consummate the transactions
contemplated hereby. After the date hereof, Purchaser or its Affiliates may
enter into transactions that implicate the FCC multiple ownership
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rules so long as such transactions would not reasonably be expected to
materially impede or materially delay the Closing
(c) (i) If Purchaser (or its Affiliates) or the Company receives an
administrative or other order or notification relating to any violation or
claimed violation of the rules and regulations of the FCC, or of any
Governmental Authority, that could affect Purchaser's or the Company's ability
to consummate the transactions contemplated hereby, or (ii) should Purchaser (or
its Affiliates) become aware of any fact (including any change in law or
regulations (or any interpretation thereof by the FCC)) relating to the
qualifications of Purchaser (and its controlling persons) that reasonably could
be expected to cause the FCC to withhold the FCC Consent, Purchaser (in the case
of clauses (i) and (ii)) or the Company (in the case of clause (i)) shall
promptly notify the other party or parties thereof and shall use its reasonable
best efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement; and no such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
(d) The parties shall each use their reasonable best efforts to obtain
as promptly as reasonably practical all consents that may be required in
connection with the assignment to the Purchaser at the Non-License Transfer and
the Closing, as applicable, of all the Company's right, title and interest in
and to all Material Contracts as such are acquired by the Company pursuant to
the Gannett Purchase Agreement and all other agreements of the Business to which
the Company or Gannett is a party, provided that (i) neither the Company nor
Purchaser shall be required to make any payment to any party to any such
Material Contract or other agreement in order to obtain any such consent (except
the Company agrees to pay any amounts outstanding as of the Transfer Date under
any such Material Program Contracts as provided for in Section 5.1(a)(v).
(e) To the extent that there are third-party insurance policies
maintained by Gannett covering any Claims or Damages relating to the assets,
business, operations, conduct and employees (including, without limitation,
former employees) of the Business arising out of or relating to occurrences
prior to the Transfer Date, the Company shall use all reasonable efforts to
cause Purchaser to be named as an additional insured with respect to such
policies.
(f) Subject to the terms and conditions of this Agreement, each of the
parties agrees 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 to consummate and make effective the Non-License Transfer and the
Closing and the other transactions contemplated hereby as soon as practicable.
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5.4 CONFIDENTIALITY.
(a) The terms of the Confidentiality Agreement by and between Purchaser
and the Company are herewith incorporated by reference and shall continue in
full force and effect as between Purchaser and the Company at all times prior to
the Transfer Date, and shall remain in effect as between Purchaser and the
Company in accordance with its terms even if this Agreement is terminated.
(b) Before and after the Transfer Date, each of the parties shall
maintain the confidentiality of the financial and tax information of the Persons
other than the Company in the possession of the Company under terms similar to
those set forth in the Confidentiality Agreement by and between Purchaser and
the Company with respect to "Evaluation Material" as though such terms continued
after the Transfer Date.
5.5 PUBLIC ANNOUNCEMENTS.
Except as otherwise required by law or the rules of any stock exchange,
the form and substance of the initial public announcement of this Agreement and
the transactions contemplated hereby, and the time of such announcement, shall
be approved in advance by the parties and the parties shall not issue any other
report, statement or press release or otherwise make any public announcement
with respect to this Agreement and the transactions contemplated hereby without
prior consultation in good faith with the other party hereto.
5.6 NO SOLICITATION.
The Company shall not, and shall cause its officers, directors,
representatives, affiliates and associates not to, (a) initiate contact with,
solicit, encourage or respond to any inquiries or proposals by, or (b) enter
into any discussions or negotiations with, or disclose, directly or indirectly,
any information concerning, the Business, the Assets or the Stations, or afford
any access to the Company's or Gannett's properties, books and records to any
Person in connection with any possible proposal for the acquisition (directly or
indirectly, whether by purchase, merger, consolidation or otherwise) of all or
substantially all of the Business, the Assets or the Stations. The Company
agrees to terminate immediately any such discussions or negotiations.
5.7 EMPLOYEES.
From and after the date hereof to the first anniversary of the Transfer
Date, neither the Company, nor any of its Affiliates shall solicit or offer
employment to or hire or employ or otherwise compensate any employee or former
employee
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(who is an employee of a Station as of the date hereof) of the Stations
(including any individual who may become employed during the one (1) year period
following the Transfer Date) at any other location; provided, however, that the
foregoing shall not apply to the Excluded Employees, or to any employee of a
Station who is terminated by Purchaser without cause after the Transfer Date.
5.8 NO ADDITIONAL REPRESENTATIONS.
Purchaser acknowledges that it and its representatives have been
permitted access to books and records, facilities, equipment, tax returns,
contracts and agreements, insurance policies (or summaries thereof), and other
properties and assets of the Stations and that they and their representatives
have had an opportunity to meet with the officers and employees of the Company
to discuss the Stations and the Business, properties and assets. PURCHASER
ACKNOWLEDGES THAT NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE ANY
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE ACCURACY OR
COMPLETENESS OF ANY INFORMATION REGARDING THE STATION OR THE BUSINESS FURNISHED
OR MADE AVAILABLE TO PURCHASER AND ITS REPRESENTATIVES EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT.
5.9 CERTAIN PAYMENTS.
(a) Pursuant to the terms of the Gannett Purchase Agreement, the
Company has certain rights and obligations with respect to the Severance
Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule of
the Gannett Purchase Agreement, which Severance Agreements include those listed
in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule hereto (the "STC
SCHEDULED SEVERANCE AGREEMENTS"). Promptly, but in no event later than five (5)
Business Days prior to any payment due under the STC Scheduled Severance
Agreements to any employee of the Stations terminated by Purchaser prior to
ninety (90) days after the closing date under the Gannett Purchase Agreement,
Purchaser shall notify the Company of the amount to be paid to such employee,
and the Company shall make the payment to such terminated employee as provided
by the STC Scheduled Severance Agreements (a "STC SEVERANCE PAYMENT"); provided
that the maximum amount that the Company shall be required to pay for all
Business Employees as defined hereunder pursuant to this Section 5.9, after
reimbursement from the Purchaser in the succeeding sentence, shall be the
greater of (i) Two Hundred Twenty Two Thousand Ninety-Seven Dollars
($222,097.00), or (ii) Eight Hundred Fifty Thousand Dollars ($850,000.00) minus
all amounts reimbursed by Gannett to the Company pursuant to Section 5.8(a) of
the Gannett Purchase Agreement for all the Gannett Television Stations other
than the Stations. Within five (5) Business Days after the Company makes an STC
Severance Payment,
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Purchaser shall reimburse the Company for fifty percent (50%) of the amount of
such payment. In addition to any reimbursement by Purchaser under this Section
5.9, to the extent provided by Section 5.8(a) of the Gannett Purchase Agreement,
the Company will be entitled to reimbursement as provided by the Gannett
Purchase Agreement, and nothing in this Agreement or the Gannett Purchase
Agreement shall be construed to give Purchaser any right of recovery to
Purchaser pursuant to Section 5.8(a) of the Gannett Purchase Agreement.
(b) Pursuant to Section 5.8(b) of the Gannett Purchase Agreement,
Gannett will cease operations and vacate the Gannett Corporate Offices, and the
Company has agreed that it will pay, indemnify, and hold harmless Gannett from
and against fifty percent (50%) of all Claims and Damages (including, without
limitation, all rent or other payments made under the Corporate Office Lease
arising out of or relating to the Corporate Office Lease) to the extent such
Claims and Damages arise out of or relate to (x) the termination of the
Corporate Office Lease or (y) the post-closing period after the date in which
the Corporate Office Employees cease using the Corporate Office. Such payments
by the Company thereunder are required under the Gannett Purchase Agreement to
be made by the Company as the related Claims and Damages are incurred. To the
extent the Company is required to make any such payments, Purchaser shall
reimburse and pay over to the Company 26.13% of all such payments made by the
Company (up to the maximum amount of $52,258). Purchaser acknowledges and agrees
that Gannett may terminate the Corporate Office Lease on such terms as Gannett
shall determine and otherwise take such action as Gannett determines in
connection with Gannett vacating the Corporate Office.
5.10 BULK SALES LAWS.
The parties agree to waive compliance with the provisions of the bulk
sales law of any jurisdiction. The Company will indemnify and hold harmless
Purchaser from and against any and all Liabilities which may be asserted by
third parties against Purchaser as a result of such noncompliance.
5.11 CONTROL OF THE STATIONS.
Prior to the Closing Date, control of the Stations (including, without
limitation, control over their finances, personnel and programming) shall remain
with the Company or Gannett, as the case may be. The Company and Purchaser
acknowledge and agree that neither Purchaser nor any of its employees, agents or
representatives, directly or indirectly, shall, or shall have any right to,
control, direct or otherwise supervise the Stations, it being understood that
supervision of all programs, equipment, operations and other activities of the
Stations shall be the sole responsibility of, and at all times prior to the
Closing Date remain under the
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complete control and direction of, the Company or, if prior to the closing under
the Gannett Purchase Agreement, Gannett.
5.12 USE OF CERTAIN NAMES.
After the Transfer Date, neither Purchaser nor any of its Affiliates
shall use "Sinclair", "Sinclair Broadcast", "Sinclair Television", "Sinclair
Communications", "Guy Gannett", "Gannett", or any name or term confusingly
similar to the "Sinclair" names in any corporate name or in connection with the
operation of any business.
5.13 NEWS SHARING ARRANGEMENTS.
(a) The Company and Purchaser shall use commercially reasonable and
good faith efforts to enter into a news sharing agreement with Purchaser for
sharing of news operations between television station WEYI-TV, Flint, Michigan,
and WSMH-TV, Flint, Michigan in a form of agreement to be mutually agreed upon
by Purchaser and the Company prior to the Diligence Termination Deadline and
consistent with Section 5.13 of the Disclosure Schedule. If prior to the
Diligence Termination Deadline the parties cannot agree on a form of a mutually
acceptable news share agreement for WSMH-TV, (i) the Company shall be entitled,
in the Company's sole and absolute discretion, to terminate this Agreement
pursuant to Section 10.1(a)(iii), and (ii) the Purchaser shall be entitled, in
the Purchaser's sole and absolute discretion, to terminate, upon written notice
to the Company, the Purchaser's obligations under this Section 5.13 (a) or
otherwise to provide news sharing arrangements for WSMH-TV as provided herein.
(b) The Company and Purchaser shall use commercially reasonable and
good faith efforts to enter into a mutually acceptable news sharing agreement
for sharing of news operations between WUHF-TV, Rochester, New York, and
WROC-TV, Rochester, New York, in a form of agreement to be mutually agreed upon
by Purchaser and the Company prior to the Diligence Termination Deadline and
consistent with Section 5.13 of the Disclosure Schedule. If prior to the
Diligence Termination Deadline the parties cannot agree on a form of a mutually
acceptable news share agreement for WUHF-TV, (i) the Company shall be entitled,
in the Company's sole and absolute discretion, to terminate this Agreement
pursuant to Section 10.1(a)(iii), and (ii) the Purchaser shall be entitled, in
the Purchaser's sole and absolute discretion, to terminate, upon written notice
to the Company, the Purchaser's obligations under this Section 5.13 (b) or
otherwise to provide news sharing arrangements for WUHF-TV as provided herein.
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5.14 RIGHTS UNDER THE GANNETT PURCHASE AGREEMENT.
The Company covenants and agrees with Purchaser as follows with respect
to the Company's rights and obligations under the Gannett Purchase Agreement:
(a) The Company shall enforce all of the Company's rights under the
Gannett Purchase Agreement or any opinions of counsel delivered pursuant thereto
at Purchaser's request as such rights pertain to the Stations and the Assets,
including, without limitation, causing Gannett to act in conformity with the
Gannett Purchase Agreement and requiring Gannett to conduct the business of the
Stations in the ordinary course of business in accordance with the terms of the
Gannett Purchase Agreement (including, without limitation, the provisions of
Section 5.1 of the Gannett Purchase Agreement), and to the extent consistent
with the foregoing, in the same manner in which the same have heretofore been
conducted with the intent of preserving the ongoing operations and business of
the Stations. This covenant shall survive the Non-License Transfer and the
Closing for the period that the Company has any rights under the Gannett
Purchase Agreement or any opinions of counsel delivered pursuant thereto.
(b) The Company shall use the Company's reasonable best efforts to
close the transactions contemplated by the Gannett Purchase Agreement as they
pertain to the Stations in a timely fashion consistent with the terms of such
agreement and shall notify Purchaser in writing of the date, time and place of
the closing under the Gannett Purchase Agreement at least ten (10) days prior to
the date of such closing; provided, however, that the Company shall not waive
any of its rights or conditions under the Gannett Purchase Agreement as they
pertain to any of the Stations (including, without limitation, any conditions to
the obligations of the Company to consummate the transactions under the Gannett
Purchase Agreement), or enter into any amendment or modification to any
provisions of the Gannett Purchase Agreement that affects the Company's rights
or conditions thereunder with respect to any of the Stations. The Company shall
enforce the Company's rights to the fullest extent possible under the Gannett
Purchase Agreement as such rights pertain to the Stations, unless otherwise
directed by Purchaser.
(c) To the extent that the Company receives notifications or
information from Gannett with respect to the Stations under the Gannett Purchase
Agreement or otherwise becomes aware of any breach of any representation,
warranty, covenant or agreement in the Gannett Purchase Agreement, in each case
with respect to the Stations, the Company shall promptly notify Purchaser and
provide such information to Purchaser, and thereafter use reasonable best
efforts to enforce, perform or waive any provision of the Gannett Purchase
Agreement
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pertaining to the Stations as may reasonably be requested by Purchaser;
provided, that the Company shall not be obligated to take any action at
Purchaser's request inconsistent with its rights and obligations under the
Gannett Purchase Agreement.
(d) Any proceeds received by the Company from the exercise of the
Company's rights which relate to the Stations against Gannett and its respective
Affiliates shall be paid over to Purchaser within five (5) Business Days of
receipt by the Company, less any reasonable costs and expenses of enforcement
incurred by the Company in such exercise.
(e) Subject to the provisions of the Time Brokerage Agreement, the
Company shall cooperate with Purchaser in connection with the Company's review,
analysis and monitoring of the Assets, the Business and the operations of the
Stations to the end that an efficient transfer of the Assets and the Business
may be made at the Non-License Transfer and the Closing and the operations and
the business of the Stations may continue on an uninterrupted basis. The Company
shall obtain Purchaser's consent prior to the exercise of the Company's rights
under the Gannett Purchase Agreement as such rights pertain to the Stations
(other than the right to consummate the acquisition of the Stations upon
satisfaction of all conditions thereto). In addition to providing information
required hereunder or reasonably requested, the Company agrees to promptly
notify Purchaser of any material problems or developments of which the Company
becomes aware with respect to any Assets or the Business.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement to occur at the Non-License Transfer and the
Closing are, at its option, subject to satisfaction of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained herein
shall be true and correct at and as of the Non-License Transfer Date or the
Closing Date, as applicable, as though each such representation and warranty
were made at and as of such time, other than such representations and warranties
as are made as of a specific date, in each case except for changes that are
expressly contemplated by this Agreement and except for such failures to be true
and correct that would not reasonably be expected to have a Material Adverse
Effect.
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6.2 PERFORMANCE BY THE COMPANY.
All of the covenants and agreements to be complied with and performed
by the Company on or before the Non-License Transfer Date or the Closing Date,
as applicable, shall have been complied with or performed, except for such
failures to comply with or perform that would not reasonably be expected to have
a Material Adverse Effect.
6.3 CERTIFICATES.
The Company shall have delivered to Purchaser (a) a certificate, dated
as of the Non-License Transfer Date or the Closing Date, as applicable, executed
on behalf of the Company by its duly authorized officers to the effect of
Sections 6.1, 6.2 and 6.12; and (b) a certificate, dated as of the Non-License
Transfer Date or the Closing Date, as applicable, executed on behalf of the
Company by its duly authorized officers that (i) the Company has not waived any
of the Company's rights or any conditions under the Gannett Purchase Agreement,
(ii) the Company has not breached the Gannett Purchase Agreement in any material
respect and, to the Company's knowledge, Gannett has not breached the Gannett
Purchase Agreement in any material respect, and (iii) the acquisition of the
Stations by the Company from Gannett has been consummated in accordance with the
terms and conditions of the Gannett Purchase Agreement.
6.4 CONSENTS; NO OBJECTIONS.
(a) The applicable waiting periods under the HSR Act shall have expired
or been terminated;
(b) The parties shall have received all the authorizations, consents,
orders and approvals from Governmental Authorities and consents from third
parties, in each case listed or described in Section 6.4 of the Disclosure
Schedule (which Section includes all of the real estate leases for the towers,
transmitters and television broadcasting studios of the Stations and all of the
network affiliation agreements of the Stations); and
(c) The parties shall have received all authorizations, consents,
orders and approvals from Governmental Authorities necessary to transfer the
material Permits relating to the operation of the towers, transmitters and
television broadcasting studios of the Stations, as such facilities are
operating on the date hereof, except in each case where the failure to receive
such authorizations, consents, orders or approvals would not reasonably be
expected to materially adversely affect the operations of such facilities, or
where such authorizations,
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consents, orders or approvals are customarily obtained after the closing of a
transaction of this nature.
6.5 NO PROCEEDINGS OR LITIGATION.
No preliminary or permanent injunction or other order or decree issued
by any United States federal or state Governmental Authority, nor any Law
promulgated or enacted by any United States federal or state Governmental
Authority, that restrains, enjoins or otherwise prohibits the transactions
contemplated hereby or limits the ability in any material respect of the rights
of the Company or Purchaser to hold the Assets (excluding the FCC Licenses) and
conduct the Business as it is being conducted as of the Non-License Transfer
Date or the Closing Date, as applicable, or imposes civil or criminal penalties
on any stockholder, director or officer of Purchaser if such transactions are
consummated, shall be in effect.
6.6 FCC CONSENT.
The FCC Consent shall have been issued with respect to the Stations
without any conditions that are materially adverse to Purchaser and such FCC
Consent shall have become a Final Order; provided, however, that there shall be
no requirement that the FCC Order shall have been issued as of the Non-License
Transfer Date.
6.7 NO MATERIAL ADVERSE CHANGE.
Since the date of the Gannett Purchase Agreement through the
Non-License Transfer Date or the Closing Date, as applicable, there shall not
have occurred any Material Adverse Effect.
6.8 OPINIONS OF COUNSEL.
Purchaser shall have received an opinion of Fisher, Wayland, Cooper,
Leader & Zaragoza L.L.P., dated the Non-License Transfer Date or the Closing
Date, as applicable, substantially in the form of Exhibit E hereto.
6.9 CERTAIN CERTIFIED MATTERS.
Purchaser shall have received a copy of (i) the resolutions of the
board of directors of the Company, certified as being correct and complete and
then in full force and effect, authorizing the execution, delivery and
performance of this Agreement and the other the documents, instruments and
writings to be delivered by the Company at or prior to Closing Date or the
Non-License Transfer Date, as applicable, and the consummation of the
transactions contemplated hereby
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and thereby and (ii) a copy of the Certificate of Incorporation and Bylaws of
the Company, certified by a duly authorized officer of the Company as being
true, correct and complete as of the Closing Date.
6.10 GOOD STANDING CERTIFICATE.
Purchaser shall have received a certificate as to the formation and
good standing of the Company issued by the Secretary of State of Maryland, dated
not more than five (5) days before the Non-License Transfer Date or the Closing
Date, as applicable, and for the states of Illinois and Iowa, a certificate as
to the good standing of the Person transferring the Stations to Purchaser as of
such date, issued by the Secretary of State of such jurisdiction, dated not more
than five (5) days before the Non-License Transfer Date or the Closing Date, as
applicable.
6.11 NO TRANSMISSION DEFECTS.
There shall not exist any loss or damage at any Station which has
resulted in the regular broadcast transmission of such Station (including such
Station's effective radiated power) to be diminished in any material respect;
provided, that if any such loss or damage does exist, then either or both of the
Company and Purchaser shall be entitled, by written notice to the other, to
postpone the Non-License Transfer Date or the Closing Date, as applicable, for a
period of up to sixty (60) days to resume such Station's broadcast transmission.
6.12 CLOSING ON THE GANNETT PURCHASE AGREEMENT.
The closing, as defined in the Gannett Purchase Agreement, with respect
to all of the Gannett Television Stations shall have occurred or occur
simultaneously with the Non-License Transfer, in accordance with the terms and
conditions of the Gannett Purchase Agreement; and the representations and
warranties of the Company set forth in Section 3.20 hereof shall be true and
correct in all respects at and as of the Non-License Transfer Date or the
Closing Date, as applicable, as though each such representation and warranty
were made at and as of such time (except for representations and warranties that
speak of a specific date or time other than the Non-License Transfer Date or the
Closing Date, as applicable, which need only be true and correct in all material
respects as of such date or time).
6.13 DELIVERIES.
The Company (or Gannett, if applicable) shall have delivered to the
Purchaser all contracts, agreements, instruments and documents required to be
delivered by the Company to Purchaser pursuant to Section 1.5.
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ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to consummate the transactions
contemplated by this Agreement to occur at the Non-License Transfer or the
Closing are, at its option, subject to satisfaction of each of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Purchaser contained herein shall
be true and correct in all material respects at and as of the Non-License
Transfer Date or the Closing Date, as applicable, as though each such
representation and warranty were made at and as of such time, other than such
representations and warranties as are made as of a specific date, in each case
except for changes that are expressly contemplated by this Agreement.
7.2 PERFORMANCE BY PURCHASER.
All of the covenants and agreements to be complied with and performed
by Purchaser on or prior to the Non-License Transfer Date or the Closing Date,
as applicable, shall have been complied with or performed, in all material
respects, except for such failures to comply with or perform that would not,
individually or in the aggregate, reasonably be expected to be materially
adverse to the Company.
7.3 CERTIFICATE.
Purchaser shall have delivered to the Company a certificate, dated as
of the Non-License Transfer Date or the Closing Date, as applicable, executed on
behalf of Purchaser by its duly authorized officers or representatives to the
effect of Sections 7.1 and 7.2.
7.4 CONSENTS; NO OBJECTIONS.
(a) The applicable waiting periods under the HSR Act shall have expired
or been terminated; and
(b) The parties shall have received all the authorizations, consents,
orders and approvals from Governmental Authorities and consents from third
parties, in each case listed or described on Section 7.4 to the Disclosure
Schedule.
7.5 NO PROCEEDINGS OR LITIGATION.
No preliminary or permanent injunction or other order or decree issued
by any United States federal or state Governmental Authority, nor any Law
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promulgated or enacted by any United States federal or state Governmental
Authority, that restrains, enjoins or otherwise prohibits the transactions
contemplated hereby, or imposes civil or criminal penalties on any stockholder,
director or officer of the Company if such transactions are consummated, shall
be in effect.
7.6 FCC CONSENT.
The FCC Consent shall have been issued with respect to the Stations,
notwithstanding that it may not have yet become a Final Order; provided,
however, that there shall be no requirement that the FCC Order shall have been
issued as of the Non-License Transfer Date..
7.7 CERTAIN CERTIFIED MATTERS.
The Company shall have received a copy of (i) the resolutions of the
board of directors of Purchaser, certified as being correct and complete and
then in full force and effect, authorizing the execution, delivery and
performance of this Agreement and the other the documents, instruments and
writings to be delivered by Purchaser at or prior to Closing Date or the
Non-License Transfer Date, as applicable, and the consummation of the
transactions contemplated hereby and thereby and (ii) a copy of the Certificate
of Incorporation and Bylaws of Purchaser, certified by a duly authorized officer
of Purchaser as being true, correct and complete as of the Closing Date.
7.8 GOOD STANDING CERTIFICATE.
The Company shall have received a certificate as to the formation and
good standing of Purchaser issued by the Secretary of State of Delaware, dated
not more than five (5) days before the Non-License Transfer Date or the Closing
Date, as applicable, and for the states of Illinois and Iowa as to the good
standing of Purchaser issued by the Secretary of State of such jurisdiction,
dated not more than five (5) days before the Non-License Transfer Date or the
Closing Date, as applicable.
7.9. CLOSING ON GANNETT PURCHASE AGREEMENT.
The closing, as defined in the Gannett Purchase Agreement, shall have
occurred or occur simultaneously with the Non-License Transfer or the Closing,
as applicable, hereunder.
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7.10 DELIVERIES.
The Purchaser shall have delivered to the Company all contracts,
agreements, instruments and documents required to be delivered by the Purchaser
to the Company pursuant to Section 1.5.
ARTICLE 8. INDEMNIFICATION.
8.1 INDEMNIFICATION BY THE COMPANY.
Subject in all respects to the provisions of this Article 8, the
Company hereby agrees to indemnify and hold harmless on and after the Transfer
Date, Purchaser and its stockholders and Affiliates and their respective
officers, directors, employees and agents, and their respective and successors
and permitted assigns (the "PURCHASER INDEMNIFIED PARTIES") from and against any
Claims and Damages asserted against or incurred by them, directly or indirectly,
in connection with, arising out of or relating to (a) any breach on the part of
the Company of any representation or warranty made by the Company in this
Agreement or any Transaction Document or in any certificate delivered pursuant
to this Agreement, (b) any breach on the part of Gannett of any representation
or warranty made by Gannett in the Gannett Purchase Agreement with respect to
the Stations or the Assets, (c) any breach on the part of the Company of any
covenant or agreement made by the Company in this Agreement or any Transaction
Document, (d) any breach on the part of Gannett of any covenant or agreement
made by Gannett in the Gannett Purchase Agreement with respect to the Stations
or the Assets, or (e) any Retained Liabilities.
8.2 INDEMNIFICATION BY PURCHASER.
Subject in all respects to the provisions of this Article 8, Purchaser
hereby agrees to indemnify and hold harmless on and after the Transfer Date, the
Company and its stockholders and Affiliates and their respective officers,
directors, employees and agents, and their respective successors and permitted
assigns (collectively the "COMPANY INDEMNIFIED PARTIES"), from and against any
Claims and Damages asserted against or incurred by them, directly or indirectly,
in connection with, arising out of or relating to (a) any breach on the part of
Purchaser of any representation or warranty made by Purchaser in this Agreement
or any Transaction Document or in any certificate delivered pursuant to this
Agreement, (b) any breach on the part of Purchaser of any covenant or agreement
made by the Purchaser in this Agreement or any Transaction Document, or (c) any
Assumed Liabilities. The parties acknowledge and agree that none of Gannett, any
of its stockholders or Affiliates, or any of their respective officers,
directors, employees,
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agents, successors or assigns shall be "Company Indemnified Parties" or
"Beneficiaries" for any purposes of this Agreement or any other Transaction
Document.
8.3 LIMITATIONS ON INDEMNIFICATION CLAIMS AND LIABILITY; TERMINATION
OF INDEMNIFICATION.
(a) The obligations to indemnify and hold harmless a Person pursuant to
Sections 8.1(a), (b), (c) and (d) and Sections 8.2(a) and 8.2(b) shall terminate
when the applicable representation, warranty, covenant or agreement terminates
pursuant to Section 10.12; provided, however, that the obligation to indemnify
and hold harmless under such Sections shall not terminate with respect to any
claim as to which the Person to be indemnified shall have, before the
termination of the applicable representation, warranty, covenant or agreement,
previously made a claim for indemnification by delivering a notice to the
indemnifying party in accordance with Section 8.5. The obligations to indemnify
and hold harmless a Person pursuant to Section 8.1(e) and Section 8.2(c) shall
not terminate.
(b) The Company shall not be obligated to indemnify or hold harmless
any Purchaser Indemnified Party under Section 8.1(a), (b), (c) and (d), unless
and until all Claims and Damages exceed in the aggregate Two Hundred Thousand
Dollars ($200,000) (the "BASKET AMOUNT"), in which case the Company will
(subject to the other provisions of this Article 8) only be obligated to
indemnify and hold harmless the Purchaser Indemnified Parties for all of such
Claims or Damages under Section 8.1(a), (b), (c) or (d) in the aggregate in
excess of One Hundred Thousand Dollars ($100,000); provided that the provisions
of this Section 8.3(b) will not apply to any breach of any Post-Closing
Agreements; provided further that the Basket Amount shall not be applicable to
any amounts owed in connection with the determination of the Actual Net
Financial Assets pursuant to Section 2.4, to the payment and reimbursement
obligations set forth in Section 5.9 or to the indemnities set forth in Section
8.1(e).
(c) The maximum aggregate liability of the Company with respect to all
claims for indemnification under Section 8.1(a), (b), (c) or (d) will be limited
to the amount of Three Million Dollars ($3,000,000).
(d) Notwithstanding anything to the contrary in this Agreement and
except for fraud, the indemnifications in Sections 8.1 and 8.2 hereof will be
the sole and exclusive remedies available to Purchaser and the Company and their
respective stockholders and Affiliates and all of their respective officers,
directors, employees, agents, successors and assigns, after the Transfer Date
for any claims arising out of or relating to any breaches of any representations
or warranties or
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any covenants or agreements contained in this Agreement, or any certificate
delivered pursuant to this Agreement or otherwise in connection with this
Agreement. Any claim for indemnification must be made as provided in Sections
8.5 and 8.6 hereof.
8.4 COMPUTATION OF CLAIMS AND DAMAGES.
Whenever the Indemnitor is required to indemnify and hold harmless the
Indemnitee from and against and hold the Indemnitee harmless from, or to
reimburse the Indemnitee for, any item of Claim or Damage, the Indemnitor will,
subject to the provisions of this Article 8, pay the Indemnitee the amount of
the Claim or Damage (a) reduced by any amounts to which the Indemnitee is
entitled from third parties in connection with such Claim or Damage
("REIMBURSEMENTS"), (b) reduced by the Net Proceeds of any insurance policy
payable to the Indemnitee with respect to such Claim or Damage and (c) reduced
appropriately to take into account any Tax Benefit to the Indemnitee with
respect to such Claim or Damage through and including the tax year in which the
indemnification payment is made, net of all income Taxes resulting or that will
result from the indemnification payment. For purposes of this Section 8.4, (i)
"NET PROCEEDS" shall mean the insurance proceeds payable, less any deductibles,
co-payments, premium increases, retroactive premiums or other payment
obligations (including attorneys' fees and other costs of collection) that
relates to or arises from the making of the claim for indemnification and (ii)
"TAX BENEFIT" shall mean any benefit to be recognized by the Indemnitee in
connection with the Claim or Damage based upon the highest blended (federal,
state, local and foreign) marginal income Tax rate applicable to the Indemnitee
during the taxable year for which a return was most recently filed with the
Internal Revenue Service (based on the date of the claim for indemnification).
The Indemnitor shall use commercially reasonable efforts (the expenses of which
shall be considered Claims and Damages for purposes of the relevant indemnity
claim) to pursue Reimbursements or Net Proceeds that may reduce or eliminate
Claims and Damages. If any Indemnitee receives any Reimbursement, Tax Benefit or
Net Proceeds after an indemnification payment is made which relates thereto or
if any Indemnitee receives a Tax Benefit arising after the tax year in which an
indemnification payment is made which relates thereto, the Indemnitee shall
promptly repay to the Indemnitor such amount of the indemnification payment as
would not have been paid had the Reimbursement, Tax Benefit or Net Proceeds
reduced the original payment (any such repayment shall be a credit against any
applicable indemnification threshold or limitation set forth in Section 8.3(b)
hereof) at such time or times as and to the extent that such Reimbursement, Tax
Benefit or Net Proceeds is actually received.
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8.5 NOTICE OF CLAIMS.
Upon obtaining knowledge of any Claim or Damage which has given rise
to, or could reasonably give rise to, a claim for indemnification hereunder, the
Person seeking indemnification (the "Indemnitee") shall, as promptly as
reasonably practicable (but in no event later than thirty (30) days) following
the date the Indemnitee has obtained such knowledge, give written notice (a
"NOTICE OF CLAIM") of such claim to the other party (the "INDEMNITOR"). The
Indemnitee shall furnish to the Indemnitor in good faith and in reasonable
detail such information as the Indemnitee may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). No failure
or delay by the Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of the Indemnitor to indemnify and hold the
Indemnitee harmless, except to the extent that such failure or delay shall have
adversely affected the Indemnitor's ability to defend against, settle or satisfy
any liability, damage, loss, claim or demand for which such Indemnitee is
entitled to indemnification hereunder. For purposes of this Section 8.5, a
Notice of Claim given in good faith must include a good faith estimate of the
amount of the claim to the extent it is reasonably practicable to determine such
estimate.
8.6 DEFENSE OF THIRD PARTY CLAIMS.
If any claim set forth in the Notice of Claim given by an Indemnitee
pursuant to Section 8.5 hereof is a claim asserted by a third party, the
Indemnitor shall have thirty (30) days after the date that the Notice of Claim
is given by the Indemnitee to notify the Indemnitee in writing of the
Indemnitor's election to defend such third party claim on behalf of the
Indemnitee. If the Indemnitor elects to defend such third party claim, the
Indemnitee shall make available to the Indemnitor and its agents and
representatives all witnesses, pertinent records, materials and information in
the Indemnitee's possession or under the Indemnitee's control as is reasonably
required by the Indemnitor and shall otherwise cooperate with and assist the
Indemnitor in the defense of such third party claim, and so long as the
Indemnitor is defending such third party claim in good faith, the Indemnitee
shall not pay, settle or compromise such third party claim. If the Indemnitor
elects to defend such third party claim, the Indemnitee shall have the right to
participate in the defense of such third party claim, at the Indemnitee's own
expense. In the event, however, that the Indemnitee reasonably determines that
representation by counsel to the Indemnitor of both the Indemnitor and the
Indemnitee may present such counsel with a conflict of interest, then such
Indemnitee may employ separate counsel to represent or defend it in any such
action or proceeding and the
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Indemnitor will, subject to the provisions of this Article 8, pay the reasonable
fees and disbursements of such counsel. If the Indemnitor does not elect to
defend such third party claim or does not defend such third party claim in good
faith, the Indemnitee shall have the right, in addition to any other right or
remedy it may have hereunder, at the Indemnitor's expense, to defend such third
party claim; provided, however, that such Indemnitee's defense of or its
participation in the defense of any such third party claim shall not in any way
diminish or lessen the indemnification obligations of the Indemnitor under this
Article 8. If the Indemnitor shall assume the defense of a third party claim, it
shall not settle such claim without the prior written consent of the Indemnitee
(a) unless such settlement includes as an unconditional term thereof the giving
by the claimant of a release of the Indemnitee from all Liability with respect
to such claim or (b) if such settlement involves the imposition of equitable
remedies or the imposition of any obligations on such Indemnitee other than
financial obligations for which such Indemnitee will be indemnified hereunder.
If the Indemnitee is defending a third party claim it will not settle such claim
without prior written consent of the Indemnitor, which will not be unreasonably
withheld or delayed.
8.7 THIRD PARTY BENEFICIARIES.
Each of the Purchaser Indemnified Parties and the Company Indemnified
Parties shall be third party beneficiaries and entitled to enforce the
provisions of this Article 8; provided, however, that none of the Business
Employees shall be third party beneficiaries of any provision of this Agreement
or any other Transaction Document, including, without limitation, the provisions
of Section 5.2 of this Agreement.
ARTICLE 9. DEFINITIONS.
Unless otherwise stated in this Agreement, the following capitalized
terms have the following meanings:
Accounting Firm has the meaning set forth in Section 2.4(a).
Accounting Firm Determination has the meaning set forth in Section
2.4(a).
Action means any action, suit, claim, arbitration, or proceeding or
investigation (of which the Company has knowledge) commenced by or pending
before any Governmental Authority.
Actual Net Financial Assets has the meaning set forth in Section 2.4(a)
hereof.
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Affiliate means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such specified Person.
Agreement or this Agreement means this Purchase Agreement dated as of
the date first above written (including the Exhibits hereto and the Disclosure
Schedule) and all amendments hereto made in accordance with the provisions of
Section 10.8 hereof.
Allocation has the meaning set forth in Section 2.5 hereof.
Assets has the meaning set forth in Section 1.1 hereof.
Assignment of FCC Licenses has the meaning set forth in Section
1.5(a)(ii) hereof.
Assumed Liabilities means the Liabilities assumed by Purchaser pursuant
to Sections 1.3(a) and (b) hereof.
Base Purchase Price has the meaning set forth in Section 2.2(a).
Basket Amount has the meaning set forth in Section 8.3(b).
Beneficiary has the meaning set forth in Section 5.2(f) hereof.
Bill of Sale, Assignment and Assumption Agreement has the meaning set
forth in Section 1.5(a)(i) hereof.
Business means all of the Company's business, operations and activities
of the Stations acquired by the Company from Gannett pursuant to the Gannett
Purchase Agreement or otherwise used by the Company in the business, operations
and activities of the Stations.
Business Day means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in the City of
New York.
Business Employees means all current, former and inactive employees of
the Stations. For the avoidance of doubt, Corporate Office Employees will not be
considered Business Employees.
Call Letters has the meaning set forth in Section 3.16 hereof.
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CERCLA means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended.
Claims and Damages means, after taking into account amounts received by
Purchaser under Section 5.14(d) hereof, any and all losses, claims, demands,
liabilities, obligations, actions, suits, orders, statutory or regulatory
compliance requirements, or proceedings asserted by any Person (including,
without limitation, Governmental Authorities), and all damages, costs, expenses,
assessments, judgments, recoveries and deficiencies, including interest,
penalties, investigatory expenses, consultants' fees, and reasonable attorneys'
fees and costs (including, without limitation, costs incurred in enforcing the
applicable indemnity), of every kind and description, contingent or otherwise,
incurred by or awarded against a party, provided that "Claims and Damages" shall
not include any indirect, consequential, incidental, exemplary or punitive
damages or other special damages or lost profits (except to the extent payable
to a third party as a result of a third party claim).
Closing has the meaning set forth in Section 1.4(b) hereof.
Closing Date has the meaning set forth in Section 1.4(b) hereof.
Closing Statement has the meaning set forth in Section 2.4(a) hereof.
Code means the Internal Revenue Code of 1986, as amended.
Communications Act means the Communications Act of 1934, as amended.
Company has the meaning specified in the introductory paragraph to this
Agreement.
Company Indemnified Parties shall have the meaning set forth in Section
8.2.
Company Permitted Assignee has the meaning set forth in Section 10.5(a)
hereof.
Continuation Coverage has the meaning set forth in Section 5.2(i)
hereof.
Control (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, of the power to direct or to cause
the direction of the affairs or management of a Person, whether through the
ownership of voting securities, by contract or otherwise, including, without
limitation, the
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ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
Corporate Office means the corporate office of Gannett located at One
City Center, Portland, Maine, that provides certain support to the Business and
the Maine Media Business.
Corporate Office Employees has the meaning set forth in Section 5.2(b).
Corporate Office Lease means the Lease dated as of February 16, 1989,
between Gannett and One City Center Associates, and all addenda and amendments
thereto and memoranda relating thereto.
Deposit Escrow Agent means United Bank, 1667 K Street, N.W.,
Washington, D.C. 20006.
Deposit Escrow Agreement has the meaning set forth in Section 2.1
Diligence Termination Deadline has the meaning set forth in Section
1.6.
Disclosure Schedule means the Disclosure Schedule, dated as of the date
hereof, delivered to Purchaser by the Company in connection with this Agreement.
Employee Benefit Plans means all "employee benefit plans" within the
meaning of Section 3(3) of ERISA, all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
employee benefit plans, programs, policies or arrangements, employment
agreements, severance agreements, severance pay policies, plant closing
benefits, executive compensation arrangements, sick leave, vacation pay, salary
continuation for disability, consulting, or other compensation arrangements,
worker's compensation, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, employee discounts, employee
loans, employee banking privileges, any plans subject to Section 125 of the
Code, and any plans providing benefits or payments in the event of a change of
control, change in ownership, or sale of a substantial portion (including all or
substantially all) of the assets of any business or portion thereof, in each
case with respect to any present or former employees, directors, or agents and
without regard to whether the plan or arrangement was previously terminated (if
potential liabilities remain) or compensation agreements, in each case for the
benefit of, or relating to, any current employee or former employee of the
Business.
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Encumbrance means any security interest, pledge, mortgage, lien
(including, without limitation, tax liens), charge, encumbrance, easement,
adverse claim, preferential arrangement, restriction or defect in title.
Environmental Claims means any and all actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, investigations,
proceedings, consent orders or consent agreements relating in any way to any
Environmental Law, any Environmental Permit, Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment,
including, without limitation (a) by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages and (b) by any
Person for damages, contributions, indemnification, cost recovery, compensation
or injunctive relief.
Environmental Law means any Law relating to the environment, health,
safety or Hazardous Materials, in force and effect on the date hereof or, in the
case of the Company's certificate to be delivered in accordance with the
provisions of Section 6.3 hereof, on the Closing Date (exclusive of any
amendments or changes to such Law or any regulations promulgated thereunder or
orders, decrees or judgments issued pursuant thereto which are enacted,
promulgated or issued after the date hereof, or in the case of such certificate,
on or after the Closing Date), including but not limited to CERCLA; the Resource
Conservation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. Sections 6901 et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 6901 et seq.; the Clean Water Act, 33 U.S.C. Sections
1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601
et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq.; the Atomic Energy
Act, 42 U.S.C. Sections 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sections 136 et seq.; and the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 1101 et seq.
Environmental Permits means all permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental Law.
Equipment means all of the tangible personal property, machinery,
equipment, vehicles, rolling stock, furniture, and fixtures of every kind and
description in which the Company has an interest or which the Company acquires
from Gannett pursuant to the Gannett Purchase Agreement by ownership or lease,
and used or useful in connection with the Business, together with any
replacements thereof or additions thereto, made in the ordinary course of
business between the date of the Gannett Purchase Agreement and the Transfer
Date.
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ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
ERISA affiliate has the meaning set forth in Section 3.14.
Escrow Deposit has the meaning set forth in Section 2.1.
Estimated Net Financial Assets has the meaning set forth in Section
2.2(b) hereof.
Excluded Assets has the meaning set forth in Section 1.2 hereof.
FCC means the Federal Communications Commission.
FCC Consent means a public notice of the FCC, or of the Chief, Mass
Media Bureau or Video Services Division, acting under delegated authority,
consenting to the assignment of the FCC Licenses to Purchaser.
FCC Licenses means all licenses, permits and other authorizations
issued by the FCC to the Company used for or in connection with the Stations,
and all applications therefor, together with any renewals, extensions or
modifications thereof and additions thereto between the date of the Gannett
Purchase Agreement and the Closing.
Final Order means the FCC Consent as to which the time for filing a
request for administrative or judicial review, or for instituting administrative
review sua sponte, shall have expired without any such filing having been made
or notice of such review having been issued; or, in the event of such filing or
review sua sponte, as to which such filing or review shall have been disposed of
favorably to the grantee and the time for seeking further relief with respect
thereto shall have expired without any request for such further relief having
been filed.
First Year Anniversary Date has the meaning set forth in Section 2.3(b)
GAAP means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved.
Gannett has the meaning set forth in the recitals to this Agreement.
Gannett Corporate Office means the corporate office of Gannett located
at One City Center, Portland, Maine, that provides certain support to Gannett
and its business.
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Gannett FCC Licenses means all licenses, permits and other
authorizations issued by the FCC to Gannett used for or in connection with the
Gannett Television Stations and all applications therefor, together with any
renewals, extensions, or modifications thereof and additions thereto between the
date of the Gannett Purchase Agreement and the Closing.
Gannett Maine Media Business means the newspaper publishing business
which publishes the Portland Press Herald and Maine Sunday Telegram, the
Kennebec Journal and the Central Maine Morning Sentinel, and certain related
businesses in Maine (including, without limitation, the "New Media Development
Group", an Internet-based media business; "Voice Information Services", a
telephone information and marketing service; "Guy Gannett Direct", a direct
marketing operation; a telephone directory business; an integrated marketing
group; and the Coastal Journal, a controlled circulation weekly), and all
assets, liabilities, operations and activities of, and all rights of, Gannett in
the operations of such businesses.
Gannett Purchase Agreement shall have the meaning set forth in the
Recitals.
Gannett Television Stations means the following television broadcasting
station properties: WOKR-TV, Rochester, New York; WICS-TV, Springfield,
Illinois; WICD-TV, Champaign, Illinois; WGGB-TV, Springfield, Massachusetts;
WGME-TV, Portland, Maine; KGAN-TV, Cedar Rapids, Iowa; WTWC-TV, Portland, Maine;
and WTWC-TV, Tallahassee, Florida.
Governmental Authority means any United States federal, state or local
government or any foreign government, any governmental, regulatory, legislative,
executive or administrative authority, agency or commission or any court,
tribunal, or judicial body.
Governmental Order means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority. Governmental Orders shall not include Permits.
Group Contract has the meaning set forth in Section 1.3(a) hereof.
Hazardous Materials means wastes, substances, materials (whether
solids, liquids or gases), petroleum and petroleum products, byproducts or
breakdown products, radioactive materials, and any other chemicals that are
deemed hazardous, toxic, pollutants or contaminants, or substances designated,
classified or regulated as being "hazardous" or "toxic", or words of similar
import, under any Environmental Law.
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HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
Indebtedness means obligations with regard to borrowed money and shall
expressly not include either accounts payable or accrued liabilities that are
incurred in the ordinary course of business or obligations under operating
leases regardless of how such leases may be classified or accounted for on
financial statements.
Indemnitee has the meaning set forth in Section 8.5 hereof.
Indemnitor has the meaning set forth in Section 8.5 hereof.
Intellectual Property means all patents, trademarks, trade names,
domain names, service marks, copyrights and other similar intangible assets, and
applications, registrations, extensions and renewals for any of the foregoing,
and other intellectual property owned, leased or used by the Company in the
operation of the Stations or acquired by the Company from Gannett under the
Gannett Purchase Agreement and used in the Business, including, without
limitation, Call Letters, computer software and programs, of the Company used in
the Business or acquired by the Company from Gannett under the Gannett Purchase
Agreement and used in the Business, whether owned or used by, or licensed to,
the Company or acquired by the Company from Gannett under the Gannett Purchase
Agreement.
Knowledge with respect to the Company means the actual knowledge of the
officers and employees of the Company regarding (a) information relating to the
Stations disclosed by Gannett to the Company in the Gannett Purchase Agreement
or any Schedule, Exhibit or documents delivered to the Company in connection
therewith, and (b) information relating to the Stations that the Company has
been made aware of since September 4, 1998.
Law means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or other requirement or rule of law including,
without limitation zoning laws and housing, building, safety or fire ordinances
or codes.
Leased Property means all real property of every kind and description
leased by the Company or rights to such leases or leased property acquired by
the Company from Gannett pursuant to the Gannett Purchase Agreement and used in
connection with the Business, together (to the extent leased by the Company or
obtained from Gannett pursuant to the Gannett Purchase Agreement) with all
buildings and other structures, towers, antennae, facilities or improvements
currently or hereafter located thereon, all fixtures, systems, equipment and
items of personal property of the Company or acquired by the Company from
Gannett pursuant to the Gannett Purchase Agreement attached or appurtenant
thereto and
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all easements, licenses, rights and appurtenances relating to the foregoing,
including, without limitation, the leased property referred to in Section 1.1(d)
of the Disclosure Schedule.
Letter of Credit has the meaning set forth in Section 2.1.
Liabilities means as to any Person all debts, adverse claims,
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured, determined or determinable, known or unknown, including,
without limitation, those arising under any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order, writ, stipulation or
other governmental requirement (including, without limitation, any environmental
law), action, suit, arbitration, proceeding or investigation or governmental
permit, license, authorization, certificate or approval and those arising under
any contract, agreement, arrangement, commitment or undertaking.
License Assets has the meaning set forth in Section 1.4 hereof.
Material Adverse Effect means any circumstance, change in, or effect on
the Company or the Stations that has a material adverse effect on the business,
results of operations or financial condition of the Stations, taken as a whole;
provided, however, that Material Adverse Effect shall not include adverse
effects resulting from (or, in the case of effects that have not yet occurred,
reasonably likely to result from) (i) general economic or industry conditions
that have a similar effect on other participants in the industry, (ii) regional
economic or industry conditions that have a similar effect on other participants
in the industry in such region, (iii) the fact that the Purchaser unreasonably
withheld Purchaser's consent with respect to any Program Contract pursuant to
Section 5.1 of the Agreement, or (iv) any act of Purchaser.
Material Contracts means the written agreements (including, without
limitation, amendments thereto), contracts, policies, plans, mortgages,
understandings, arrangements or commitments relating to the Business, to which
Gannett or the Company is a party or by which its assets are bound as described
below:
(i) any agreement or contract providing for payments to any Person in
excess of Fifty Thousand Dollars ($50,000) per year or Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate over the five (5) year period
commencing on the date hereof;
(ii) all time brokerage agreements and affiliation agreements with
television networks;
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(iii) any license or contract pursuant to which Gannett or the Company
is authorized to broadcast film or taped programming supplied by others in
excess of Ten Thousand Dollars ($10,000) or having a term of more than one (1)
year;
(iv) any employment agreement, consulting agreement or similar contract
providing for payments to any individual in excess of Fifty Thousand Dollars
($50,000) per year or One Hundred Thousand Dollars ($100,000) in the aggregate
over the five (5) year period commencing on the date hereof;
(v) any retention or severance agreement or contract with respect to
any Person who is to be employed by Purchaser following the Closing;
(vi) all collective bargaining agreements or other union contracts;
(vii) (A) any lease of Equipment or license with respect to Intellectual
Property (other than licenses granted in connection with the purchase of
equipment or other assets) by Gannett or the Company from another Person
providing for payments to another Person in excess of Twenty-Five Thousand
Dollars ($25,000) per year or Seventy-Five Thousand Dollars ($75,000) in the
aggregate over the five (5) year period commencing on the date hereof; or (B)
any lease of Real Property by Gannett or the Company from another Person;
(viii) any lease of Equipment or Real Property or license with respect
to Intellectual Property (other than licenses granted in connection with the
purchase of equipment or other assets) by Gannett or the Company to another
Person providing for payments to Gannett or the Company in excess of Twenty
Thousand Dollars ($20,000) per year or Fifty Thousand Dollars ($50,000) in the
aggregate over the five (5) year period commencing on the date hereof;
(ix) any joint venture, partnership or similar agreement or contract;
(x) any agreement or contract under which Gannett or the Company has
loaned any money in excess of One Million Dollars ($1,000,000) or issued or
received any note, bond, indenture or other evidence of indebtedness in excess
of One Million Dollars ($1,000,000);
(xi) any agreement or contract under which Gannett or the Company has
directly or indirectly guaranteed Indebtedness in an amount in excess of One
Million Dollars ($1,000,000);
(xii) any agreement or contract under which Gannett or the Company has
directly or indirectly guaranteed liabilities or obligations of others which do
not constitute Indebtedness;
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(xiii) any covenant not to compete or contract or agreement,
understanding, arrangement or any restriction whatsoever limiting in any respect
the ability of the Company to compete in any line of business or with any Person
or in any area; and
(xiv) any agreement or contract between Gannett or the Company and any
officer, director, stockholder or employee of the Business or any of their
family members providing for payments in excess of Five Thousand Dollars
($5,000) (other than agreements covered in clause iv) (or that would have been
covered in clause (iv) but for the monetary limits thereunder) or agreements or
contracts containing terms substantially similar to terms available to employees
generally).
Material Contracts shall not include any and all (w) contracts,
purchase orders, purchase commitments, leases and agreements entered into in the
ordinary course of business and relating to the Company (other than those
described in clauses (v), (vii), (viii) or (ix) above) that (A) are terminable
at will without payment of premium or penalty by the Company or (B) are
terminable on not more than sixty (60) days' written notice without payment of
premium or penalty and do not involve the obligation of the Company to make
payments in excess of Ten Thousand Dollars ($10,000) during the sixty (60) day
period commencing on the Closing; (x) contracts with respect to time sales (or
other promotion or sponsorship sales) to advertisers or advertising agencies
(including, without limitation, "trade" or "barter" agreements), sales agency or
advertising representation contracts, and barter obligations or commitments to
suppliers of programming; and (y) contracts with respect to the sale of
production time and/or production services relating to advertising or with
respect to other services.
Net Financial Assets means the result of (i) the aggregate amount of
current assets of the Business to be assigned to Purchaser under this Agreement,
excluding for purposes of this calculation, the current portion of rights under
Program Contracts (except as provided otherwise herein), less (ii) the aggregate
amount of current liabilities of the Business to be assumed by Purchaser under
this Agreement, excluding for purposes of this calculation the current portion
of obligations under Program Contracts (except as provided otherwise herein),
less (iii) the aggregate amount of the Company's liability for supplemental
retirement and deferred compensation under the Employee Benefit Plans relating
to the Business Employees set forth in Section 9 of the Disclosure Schedule to
the extent not paid by Gannett prior to the Transfer Date and excluding the
current portion of such liability, if any, to the extent such portion is
included as a current liability in clause (ii), in each case as of the relevant
date of calculation and calculated (except as otherwise provided in Section 9 of
the Disclosure Schedule) in conformity with GAAP. Net Financial Assets expressly
shall not include, as either assets or liabilities, the rights and obligations
under Program Contracts; provided, however,
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that notwithstanding any prior practice or lack thereof relating thereto, (x)
any programming downpayments made in advance of customary payment terms, to the
extent not amortized as of the relevant date of calculation as more fully
described in the example set forth in Section 9 of the Disclosure Schedule,
shall be expressly included in the current assets, (y) any regularly scheduled
payments due and unpaid as of the day immediately preceding the Transfer Date
under Program Contracts in accordance with their terms as in effect on the date
hereof (with respect to Program Contracts existing on the date hereof) or on the
date originally entered into (with respect to Program Contracts entered into
after the date hereof) shall be expressly included in the current liabilities
and (z) any prepayments of regularly scheduled amounts due on or after the
Transfer Date, but made prior to the Transfer Date under Program Contracts shall
be expressly included in the current assets. Without limiting the generality of
the foregoing and subject to the immediately preceding sentence, for purposes of
determining the amount of Net Financial Assets, all revenues and all expenses
arising from the operation of the Stations, including, without limitation, tower
rental, business and license fees, utility charges, real and personal property
taxes and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, Taxes (except for
Taxes arising from the transfer of the Assets under this Agreement which shall
be apportioned between Purchaser and the Company pursuant to Section 10.10
hereof), employee compensation, including wages, salaries, commissions, music
license fees and similar prepaid and deferred items, shall be prorated as of the
relevant date of calculation in accordance with GAAP.
Net Proceeds has the meaning set forth in Section 8.4 hereof.
Non-License Assets means the Assets, other than the License Assets.
Non-License Transfer has the meaning set forth in Section 1.4(a).
Non-License Transfer Date has the meaning set forth in Section 1.4(a).
Notice of Claim has the meaning set forth in Section 8.5 hereof.
Permits has the meaning set forth in Section 3.11(a) hereof.
Permitted Exceptions means each of the following:
(i) liens for taxes, assessments and governmental charges or levies not
yet due and payable or the validity of which is being contested in good faith by
appropriate proceedings;
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(ii) Encumbrances imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens, arising in
the ordinary course of business;
(iii) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations;
(iv) survey exceptions, rights of way, easements, reciprocal easement
agreements and other Encumbrances on title to real property set forth in Section
1.1(d) of the Disclosure Schedule or that do not, individually or in the
aggregate, materially adversely affect the use of such property in the conduct
of the Company's business as it is being conducted prior to the Transfer Date;
(v) zoning laws and other land use restrictions that do not in any
material respect (a) detract from or impair the value or the use of the property
subject thereto, or (b) impair the operation of the Stations as it is being
conducted prior to the Closing in accordance with the provisions of the Gannett
Purchase Agreement;
(vi) security interests in favor of suppliers of goods for which payment
has not been made in the ordinary course of business consistent with past
practice;
(vii) Encumbrances on the interests of the lessors of properties used by
the Stations in which the Company or Gannett holds a leasehold interest; and
(viii) any and all other Encumbrances that do not materially detract from
or materially impair the value or the use of the property subject thereto for
the purposes currently utilized in the operation of the Stations.
Person means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
Post-Closing Agreements means those covenants and agreements required
by this Agreement to be performed after the Non-License Transfer or the Closing,
as applicable.
Program Contracts has the meaning set forth in Section 1.1(f) hereof.
Purchase Price has the meaning set forth in Section 2.2(a).
Purchaser has the meaning specified in the introductory paragraph to
this Agreement.
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Purchaser Indemnified Parties has the meaning set forth in Section 8.1
hereof.
Purchaser Permitted Assignee has the meaning set forth in Section
10.5(b) hereof.
Real Property means all real property of every kind and description and
related mineral rights owned by the Company or acquired by the Company from
Gannett pursuant to the Gannett Purchase Agreement and used in connection with
the Business, together with all buildings and other structures, towers,
antennae, facilities or improvements currently or hereafter located thereon, all
fixtures, systems, equipment and items of personal property of the Company or
acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing, including, without limitation, the
owned property set forth in Section 1.1(d) of the Disclosure Schedule.
Reimbursements has the meaning set forth in Section 8.4 hereof.
Release means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
environment.
Second Year Anniversary Date has the meaning set forth in Section
2.3(c).
Stations shall have the meaning set forth in the Recitals.
STC Scheduled Severance Agreements has the meaning set forth in Section
5.9(a).
STC Severance Payment has the meaning set forth in Section 5.9(a).
Subsidiary of any Person means (i) any corporation more than fifty
percent (50%) of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
is owned by such Person directly or indirectly, through Subsidiaries and (ii)
any partnership, limited partnership, limited liability company, associates,
joint venture or other entity in which such Person directly or indirectly
through Subsidiaries has more than a fifty percent (50%) equity interest.
Tax or Taxes means any and all taxes, fees, withholdings, levies,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation,
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taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth, taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added or gains taxes, license, registration and
documentation fees, and customs duties, tariffs and similar charges.
Tax Benefit has the meaning set forth in Section 8.4 hereof.
Tax Return means any report, return, document, declaration or other
information or filing required to be supplied to any Tax authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns, any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
Termination Date has the meaning set forth in Section 10.1(a)(iv)
hereof.
Third Party Sale has the meaning set forth in Section 1.4(d).
Time Brokerage Agreement has the meaning set forth in Section
1.5(a)(ix).
Transaction Documents mean this Agreement; the Bill of Sale, Assignment
and Assumption Agreement; the Assignment of FCC Licenses; the Time Brokerage
Agreement; and the Deposit Escrow Agreement.
Transfer Date means the earlier of the Non-License Transfer and the
Closing Date.
Unaudited Financial Statements has the meaning set forth in Section
3.5(a) hereof.
WARN has the meaning set forth in Section 5.2(h).
ARTICLE 10. MISCELLANEOUS PROVISIONS.
10.1 TERMINATION RIGHTS.
(a) This Agreement may be terminated:
(i) by mutual consent of the parties;
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(ii) by Purchaser by written notice of termination delivered to
the Company pursuant to Section 1.6 prior to the Diligence Termination Deadline;
(iii) by the Company by written notice of termination delivered to
Purchaser prior to the Diligence Termination Deadline, if the parties hereto
cannot agree on the forms of news share agreement as provided for in Section
5.13.
(iv) by either the Company or Purchaser, provided such party is
not then in material default hereunder, upon written notice to the other party,
if the Transfer Date has not occurred on or before the date that is one (1) year
after the date of this Agreement (the "TERMINATION DATE");
(v) by (A) the Company prior to the Transfer Date, or (B)
Purchaser at any time, upon written notice to the other party, if any
Governmental Authority shall have issued a statute, rule, regulation, order,
decree or injunction or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Closing hereunder or the closing under
the Gannett Purchase Agreement and such statute, rule, regulation, order, decree
or injunction or other action shall have become final and nonappealable,
provided that this clause (v) will not be applicable to actions of the FCC
subject to clause (vi) below;
(vi) by (A) the Company prior to the Transfer Date, or (B)
Purchaser at any time, upon written notice to the other party, if (i) the FCC,
or the Chief, Mass Media Bureau of the FCC, acting under delegated authority,
shall have denied the application for assignment of the Gannett FCC Licenses to
the Company, (ii) the FCC, or the Chief, Mass Media Bureau of the FCC, acting
under delegated authority, shall have denied the application for assignment of
the FCC Licenses to Purchaser, (iii) the parties' request for administrative or
judicial review, or the FCC's administrative review sua sponte, shall not have
been disposed of favorably to the parties and (iv) the parties have no further
relief available to them;
(vii) by Purchaser, by written notice to the Company, if there
has been a material breach by the Company of any representation, warranty,
covenant or agreement set forth in this Agreement such that the conditions
precedent set forth in Section 6.1 or 6.2 hereof would not be satisfied, which
breach has not been cured within twenty (20) Business Days following receipt by
the Company of written notice of such breach from Purchaser;
(viii) prior to the Transfer Date, by the Company, by written
notice to Purchaser if there has been a material breach by Purchaser of any
representation, warranty, covenant or agreement set forth in this Agreement such
that the conditions precedent set forth in Section 7.1 or 7.2 hereof would not
be
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satisfied, which breach has not been cured within twenty (20) Business Days
following receipt by Purchaser of written notice of such breach from the
Company;
(ix) by Purchaser by written notice to the Company, if the FCC
has revoked the Company's or Gannett's FCC License for the Stations; or
(x) automatically prior to the Transfer Date without further
action by the parties upon the termination of the Gannett Purchase Agreement in
accordance with its terms.
(b) If this Agreement is terminated pursuant to Section 10.1(a)(i),
(iv), (v), (vi), (vii), (ix) or (x) hereof, Purchaser shall receive the
immediate return of the Letter of Credit.
(c) If this Agreement is terminated pursuant to Section 10.1(a)(i),
(ii), (iii), (iv), (v), (vi), (vii), (ix) or (x) hereof this Agreement shall
thereupon become void and of no further effect whatsoever, and the parties shall
be released and discharged of all obligations under this Agreement, except (i)
to the extent of a party's liability for willful material breaches of this
Agreement prior to the time of such termination, and (ii) the obligations of
each party for its own expenses incurred in connection with the transactions
contemplated by this Agreement as provided herein.
(d) If this Agreement is terminated pursuant to Section 10.1(a)(viii)
hereof, the Company's sole and exclusive remedy under this Agreement shall be to
receive the Escrow Deposit by drawing down on the Letter of Credit (without
setoff deduction or counterclaim) as liquidated damages, and upon such payment,
Purchaser shall be discharged from all further liability under this Agreement.
10.2 LITIGATION COSTS.
If any litigation with respect to the obligations of the parties under
this Agreement results in a final nonappealable order of a court of competent
jurisdiction that results in a final disposition of such litigation, the
prevailing party, as determined by the court ordering such disposition, shall be
entitled to reasonable attorneys' fees as shall be determined by such court.
Contingent or other percentage compensation arrangements shall not be considered
reasonable attorneys' fees.
10.3 EXPENSES.
Except as otherwise specifically provided in this Agreement, all costs
and expenses, including, without limitation, fees and disbursements of counsel,
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financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Non-License Transfer or the Closing
shall have occurred, provided that the Company and Purchaser shall each be
responsible and pay fifty percent (50%) of the HSR Act filing fee (unless this
Agreement is terminated by Purchaser prior to the Diligence Termination Deadline
whereupon the Company shall be responsible for the entire HSR Act filing fee)
and the filing fees payable to the FCC in connection with the filing of the
application for assignment of the FCC Licenses.
10.4 NOTICES.
Any notice, demand, claim, notice of claim, request or communication
required or permitted to be given under the provisions of this Agreement shall
be in writing and shall be deemed to have been duly given (i) upon delivery if
delivered in person, (ii) on the next Business Day after the date of mailing if
mailed by registered or certified mail, postage prepaid and return receipt
requested, (iii) on the next Business Day after the date of delivery to a
national overnight courier service, or (iv) upon transmission by facsimile (if
such transmission is confirmed by the answerback of the facsimile machine of the
addressee) if delivered through such services to the following addresses, or to
such other address as any party may request by notifying in writing all of the
other parties to this Agreement in accordance with this Section 10.4.
If to Purchaser:
STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Fax: (727) 821-8092
with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr., Esq.
Fax: (214) 740-7355
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<PAGE>
and
Hogan & Hartson L.L.P.
8300 Greensboro Drive
Suite 1100
McLean, Virginia 22102
Attn: Richard T. Horan, Jr., Esq.
Fax: (703) 610-6200
If to Company:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: President
Fax: (410) 467-5043
with copy to:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: General Counsel
Fax: (410) 662-4707
and
Thomas & Libowitz, P.A.
100 Light Street
Suite 1100
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas, Esq.
Fax: (410) 752-2046
Any such notice shall be deemed to have been received on the date of
personal delivery, the date set forth on the Postal Service return receipt, or
the date of delivery shown on the records of the overnight courier, as
applicable.
10.5 BENEFIT AND ASSIGNMENT.
(a) The Company shall not assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
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Purchaser and any purported assignment contrary to the terms hereof shall be
null, void and of no force and effect; provided, however, the Company shall be
entitled, without the consent of Purchaser, to assign the Company's rights
hereunder to any direct or indirect wholly-owned subsidiaries of the Company to
which the Company shall have assigned the rights of the Company to the Assets of
the Stations under the Gannett Purchase Agreement in accordance with the terms
of the Gannett Purchase Agreement (each a "COMPANY PERMITTED ASSIGNEE");
provided, that the Company gives Purchaser written notice thereof and any such
Company Permitted Assignee shall be responsible for all representations,
covenants and agreements of the Company hereunder as if such Company Permitted
Assignee was a party hereto, and any such assignment shall not relieve the
Company of any of its Liabilities hereunder (including, without limitation, any
obligation pursuant to Article 8 hereof).
(b) Purchaser shall not assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
the Company and any purported assignment contrary to the terms hereof shall be
null, void and of no force and effect; provided, however, Purchaser shall be
entitled, without the consent of the Company, to assign Purchaser's rights and
interests hereunder (in whole or in part as to any Station) (i) prior to the
Transfer Date, to any Affiliate of Purchaser (each a "PURCHASER PERMITTED
ASSIGNEE"); provided, that Purchaser gives the Company written notice thereof
and such Purchaser Permitted Assignee shall be responsible for all
representations, covenants and agreements of Purchaser hereunder as if such
assignee was a party hereto, and any such assignment shall not relieve Purchaser
of any of its Liabilities hereunder (including, without limitation, any
obligation pursuant to Article 8 hereof), and (ii) from and after the Transfer
Date, to any Person.
(c) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns as permitted
hereunder. Except as set forth in Section 8.7, no Person, other than the parties
hereto and their respective successors and assigns as permitted hereunder, is or
shall be entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto. Except as set forth in Section 8.7, the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
10.6 WAIVER.
Any party to this Agreement may (a) extend the time for the performance
of any of the obligations or other acts of any other party, (b) waive any
inaccuracies in the representations and warranties of any other party contained
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herein or in any document delivered by any other party pursuant hereto or (c)
waive compliance with any of the agreements or conditions of any other party
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any such rights.
10.7 SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
10.8 AMENDMENT.
This Agreement may not be amended or modified except (a) by an
instrument in writing signed by, or on behalf of, the Company and Purchaser or
(b) by a waiver in accordance with Section 10.6 hereof.
10.9 EFFECT AND CONSTRUCTION OF THIS AGREEMENT.
This Agreement embodies the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior agreements, arrangements and understandings, whether written or oral,
relating to matters provided for herein. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual agreement, and this Agreement shall not be deemed to have been prepared
by any single party hereto. Disclosure of any fact or item in the Disclosure
Schedule referenced by a particular paragraph or section in this Agreement
shall, should the existence of the fact or item or its contents be relevant to
any other paragraph or section, be deemed to be disclosed with respect to that
other paragraph or section whether or not a specific cross reference appears, if
the disclosure in respect of the one paragraph or section is reasonably
sufficient to inform the reader of the information required to be disclosed in
respect such other paragraph or section.
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<PAGE>
Disclosure of any fact or item in the Disclosure Schedule shall not necessarily
mean that such item or fact, individually or in the aggregate, is material to
the business, results of operations or financial condition of the Stations. Time
shall be of the essence in enforcing and applying the covenants and conditions
set forth in this Agreement. The headings of the sections and subsections of
this Agreement are inserted as a matter of convenience and for reference
purposes only and in no respect define, limit or describe the scope of this
Agreement or the intent of any section or subsection. This Agreement may be
executed in one or more counterparts and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. This Agreement and the rights and duties of the parties hereunder
shall be governed by, and construed in accordance with, the laws of the State of
New York, without giving effect to the conflicts of law principles thereof
(other than Section 5-1401 of the New York General Obligations Law).
10.10 TRANSFER AND CONVEYANCE TAXES.
Purchaser and the Company shall each be liable for and shall pay
one-half of all applicable sales, transfer, recording, deed, stamp and other
similar non-income taxes, imposed in connection with transfers and conveyances
of the Assets, including, without limitation, any real property transfer or
gains taxes (if any), resulting from the consummation of the transactions
contemplated by this Agreement.
10.11 SPECIFIC PERFORMANCE.
Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (a) waive, in any action for specific
performance, the defense of adequacy of a remedy at law and (b) shall be
entitled, in addition to any other remedy to which they may be entitled at law
or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court having jurisdiction thereover.
10.12 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The respective representations, warranties, covenants and agreements of
the Company and Purchaser contained herein or in any certificate and any and all
covenants and agreements herein or therein shall survive the Non-License
Transfer Date or the Closing Date, as applicable, and shall remain in full force
and effect to the following extent: (a) representations and warranties with
respect to
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the Non-License Assets shall survive for a period of twelve (12) months after
the Non-License Transfer Date; (b) representations and warranties with respect
to the License Assets shall survive for a period of twelve (12) months after the
Closing Date; (c) the covenants and agreements with respect to the Non-License
Assets which by their terms survive the Non-License Transfer Date shall continue
in full force and effect until fully discharged; (d) the covenants and
agreements with respect to the License Assets which by their terms survive the
Closing Date shall continue in full force and effect until fully discharged; (e)
the Company's obligations with respect to all obligations and liabilities not
assumed by Purchaser shall survive until such obligations and liabilities have
been paid, performed or discharged in full; (f) Purchaser's obligations with
respect to all obligations and liabilities assumed by Purchaser hereunder shall
survive until such obligations and liabilities have been paid, performed or
discharged in full; (g) the covenants and agreements in Article 8 shall continue
in full force and effect until fully discharged; and (h) any representation,
warranty, covenant or agreement that is the subject of a claim which is asserted
prior to the expiration of the survival period set forth in this Section 10.12,
shall survive with respect to such claim or dispute until the final resolution
thereof; provided, however, that unless Purchaser shall notify the Company of
any Claim or Damages at least ten (10) days prior to the expiration of the
survival period set forth in clause (a) or (b) above, the Company shall have no
obligation to indemnify Purchaser under Section 8.1(a) with respect to such
Claim or Damages.
ARTICLE 11. NO PERSONAL LIABILITY FOR REPRESENTATIVES, STOCKHOLDERS, DIRECTORS
OR OFFICERS.
(a) Purchaser understands, acknowledges and agrees that the directors
and officers and consultants of the Company and Gannett and the trustees under
the Employee Benefit Plans have performed, or may perform, certain acts required
or permitted under this Agreement on behalf of the Company or Gannett to
facilitate the transactions among the parties to this Agreement contemplated
herein. Notwithstanding anything to the contrary contained herein, no
stockholder, director or officer of the Company or Gannett, any such consultant,
or any such trustee (or any Affiliate of the foregoing) shall, under any
circumstances, have, and the Purchaser hereby absolves all such Persons from,
any personal liability to the Purchaser (and each of their Affiliates) for such
acts to the extent deemed to be actions by or on behalf of the Company or
Gannett.
(b) The Company understands, acknowledges and agrees that the directors
and officers and consultants of Purchaser have performed, or may perform,
certain acts required or permitted under this Agreement on behalf of Purchaser
to facilitate the transactions among the parties to this Agreement contemplated
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<PAGE>
herein. Notwithstanding anything to the contrary contained herein, no
stockholder, director or officer of Purchaser or any such consultant (or any
Affiliate of the foregoing) shall, under any circumstances, have, and the
Company hereby absolves all such Persons from, any personal liability to the
Company (and each of their Affiliates) for such acts to the extent deemed to be
actions by or on behalf of Purchaser.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the day and year first above written.
SINCLAIR COMMUNICATIONS, INC.
By: /s/ David B. Amy
---------------------------------
Name: David B. Amy
-------------------------------
Title: Secretary
------------------------------
STC BROADCASTING, INC.
By: /s/ David A. Fitz
---------------------------------
Name: David A. Fitz
-------------------------------
Title: Chief Financial Officer
------------------------------
<PAGE>
PURCHASE AGREEMENT
BY AND BETWEEN
SINCLAIR COMMUNICATIONS, INC.
AND
STC BROADCASTING, INC.
DATED AS OF MARCH 16, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE 1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES..............................................................1
1.1 Assets to Be Acquired................................................................................1
1.2 Excluded Assets......................................................................................4
1.3 Assumption of Liabilities............................................................................4
1.4 Non-License Transfer; Closing........................................................................5
1.5 Additional Closing Deliveries........................................................................7
1.6 Due Diligence, Delivery of Disclosure Schedule and Purchaser Termination Right......................10
ARTICLE 2. PURCHASE PRICE........................................................................................10
2.1 Escrow Deposit......................................................................................10
2.2 Purchase Price......................................................................................11
2.3 Payment of Purchase Price...........................................................................11
2.4 Post-Closing Adjustment.............................................................................12
2.5 Allocation of the Base Purchase Price...............................................................14
ARTICLE 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY................................................14
3.1 Organization and Standing...........................................................................14
3.2 Binding Agreement...................................................................................14
3.3 Absence of Conflicting Agreements or Required Consents..............................................15
3.4 Equity Investments..................................................................................15
3.5 Financial Statements................................................................................16
3.6 Title to Assets; Related Matters....................................................................16
3.7 Absence of Certain Changes, Events and Conditions...................................................17
3.8 Litigation..........................................................................................18
3.9 Insurance...........................................................................................19
3.10 Material Contracts.................................................................................19
3.11 Permits and Licenses; Compliance with Law..........................................................19
3.12 FCC Licenses.......................................................................................20
3.13 Environmental Matters..............................................................................21
3.14 Employee Benefit Matters...........................................................................21
3.15 Labor Relations....................................................................................23
3.16 Intellectual Property..............................................................................24
3.17 Taxes..............................................................................................24
3.18 Commissions........................................................................................25
3.19 Affiliate Transactions.............................................................................25
3.20 Gannett Purchase Agreement.........................................................................25
3.21 Accuracy and Completeness of Representations and Warranties........................................26
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................26
4.1 Organization and Standing...........................................................................26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.2 Binding Agreement...................................................................................26
4.3 Absence of Conflicting Agreements or Required Consents..............................................27
4.4 Litigation..........................................................................................27
4.5 Commissions.........................................................................................28
4.6 Financing...........................................................................................28
4.7 Purchaser's Qualification...........................................................................28
4.8 Accuracy and Completeness of Representations and Warranties.........................................28
ARTICLE 5. COVENANTS AND AGREEMENTS..............................................................................28
5.1 Conduct of the Business Prior to Closing; Access....................................................28
5.2 Post-Closing Covenants and Agreements, and Other Employee Benefit Matters...........................33
5.3 Cooperation.........................................................................................36
5.4 Confidentiality.....................................................................................39
5.5 Public Announcements................................................................................39
5.6 No Solicitation.....................................................................................39
5.7 Employees...........................................................................................39
5.8 No Additional Representations.......................................................................40
5.9 Certain Payments....................................................................................40
5.10 Bulk Sales Laws....................................................................................41
5.11 Control of the Stations............................................................................41
5.12 Use of Certain Names...............................................................................42
5.13 News Sharing Arrangements..........................................................................42
5.14 Rights Under the Gannett Purchase Agreement........................................................43
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER................................................................44
6.1 Representations and Warranties......................................................................44
6.2 Performance by the Company..........................................................................45
6.3 Certificates........................................................................................45
6.4 Consents; No Objections.............................................................................45
6.5 No Proceedings or Litigation........................................................................46
6.6 FCC Consent.........................................................................................46
6.7 No Material Adverse Change..........................................................................46
6.8 Opinions of Counsel.................................................................................46
6.9 Certain Certified Matters...........................................................................46
6.10 Good Standing Certificate..........................................................................47
6.11 No Transmission Defects............................................................................47
6.12 Closing on the Gannett Purchase Agreement..........................................................47
6.13 Deliveries.........................................................................................47
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE COMPANY..............................................................48
7.1 Representations and Warranties......................................................................48
7.2 Performance by Purchaser............................................................................48
7.3 Certificate.........................................................................................48
7.4 Consents; No Objections.............................................................................48
7.5 No Proceedings or Litigation........................................................................48
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7.6 FCC Consent.........................................................................................49
7.7 Certain Certified Matters...........................................................................49
7.8 Good Standing Certificate...........................................................................49
7.9. Closing on Gannett Purchase Agreement..............................................................49
7.10 Deliveries.........................................................................................50
ARTICLE 8. INDEMNIFICATION.......................................................................................50
8.1 Indemnification by the Company......................................................................50
8.2 Indemnification by Purchaser........................................................................50
8.3 Limitations on Indemnification Claims and Liability; Termination of Indemnification.................51
8.4 Computation of Claims and Damages...................................................................52
8.5 Notice of Claims....................................................................................53
8.6 Defense of Third Party Claims.......................................................................53
8.7 Third Party Beneficiaries...........................................................................54
ARTICLE 9. DEFINITIONS...........................................................................................54
ARTICLE 10. MISCELLANEOUS PROVISIONS.............................................................................68
10.1 Termination Rights.................................................................................68
10.2 Litigation Costs...................................................................................70
10.3 Expenses...........................................................................................70
10.4 Notices............................................................................................71
10.5 Benefit and Assignment.............................................................................72
10.6 Waiver.............................................................................................73
10.7 Severability.......................................................................................74
10.8 Amendment..........................................................................................74
10.9 Effect and Construction of this Agreement..........................................................74
10.10 Transfer and Conveyance Taxes.....................................................................75
10.11 Specific Performance..............................................................................75
10.12 Survival of Representations, Warranties and Covenants.............................................75
ARTICLE 11. NO PERSONAL LIABILITY FOR REPRESENTATIVES, STOCKHOLDERS, DIRECTORS OR OFFICERS.......................76
</TABLE>
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<PAGE>
EXHIBITS
Exhibit A Bill of Sale, Assignment and Assumption Agreement
Exhibit B Assignment of FCC Licenses
Exhibit C Time Brokerage Agreement
Exhibit D Deposit Escrow Agreement
Exhibit E FCC Opinion
<PAGE>
DISCLOSURE SCHEDULE
Section 1.1(d) Real Property
Section 1.2 Excluded Assets
Section 1.4 License Assets
Section 2.5 Allocation of Base Purchase Price
Section 3.3. Absence of Conflicting Agreements or Required Consents
Section 3.5. Financial Statements
Section 3.6. Title to Assets; Related Matters
Section 3.7. Absence of Certain Changes, Events and Conditions
Section 3.8. Litigation
Section 3.9. Insurance
Section 3.10. Material Contracts
Section 3.11 Permits
Section 3.12 FCC Licenses
Section 3.13 Environmental Matters
Section 3.14 Employee Benefits
Section 3.14.1 Non-Corporate Employees (other than division heads)
Section 3.14.2 Severance and Retention Agreements - Division Heads
Section 3.15 Labor Relations
Section 3.16 Intellectual Property
Section 3.17 Taxes
Section 3.19 Affiliate Transactions
Section 4.4 Purchaser Litigation
Section 4.7 Purchaser's Qualification
Section 5.1 Conduct of Business Prior to Closing
Section 5.2 Post-Closing Covenants and Agreements
Section 5.13 News Share Arrangements
Section 6.4 Material Consents Required as a Condition of the
Purchaser's Obligation to Close
Section 7.4 Material Consents Required as a Condition of the
Company's Obligation to Close
Section 9 Closing Statement Differences
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
DATED AUGUST 20, 1999
AMONG
SINCLAIR COMMUNICATIONS, INC.
WCGV, INC.
SINCLAIR RADIO OF MILWAUKEE LICENSEE, LLC
SINCLAIR RADIO OF NEW ORLEANS, LLC
SINCLAIR RADIO OF NEW ORLEANS LICENSEE, LLC
SINCLAIR RADIO OF MEMPHIS, INC.
SINCLAIR RADIO OF MEMPHIS LICENSEE, INC.
SINCLAIR PROPERTIES, LLC
SINCLAIR RADIO OF NORFOLK/GREENSBORO LICENSEE L.P.
SINCLAIR RADIO OF NORFOLK LICENSEE, LLC
SINCLAIR RADIO OF BUFFALO, INC.
SINCLAIR RADIO OF BUFFALO LICENSEE, LLC
WLFL, INC.
SINCLAIR RADIO OF GREENVILLE LICENSEE, INC.
SINCLAIR RADIO OF WILKES-BARRE, INC.
SINCLAIR RADIO OF WILKES-BARRE LICENSEE, LLC.
as SELLERS,
AND
ENTERCOM COMMUNICATIONS CORP.
as BUYER
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. CERTAIN DEFINITIONS............................................................................................3
1.1 Terms Defined in this Section...........................................................................3
1.2 Terms Defined Elsewhere in this Agreement...............................................................9
Greenville Stations....................................................................................10
2. EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE..................................................................11
2.1 Agreement to Exchange and Transfer.....................................................................11
2.2 Excluded Assets........................................................................................12
2.3 Purchase Price.........................................................................................14
Purchase Price Increase................................................................................14
Prorations.............................................................................................14
Manner of Determining Adjustments......................................................................16
2.4 Payment of Purchase Price..............................................................................16
Payment of Estimated Purchase Price At Closing.........................................................17
Payments to Reflect Adjustments........................................................................17
2.5 Assumption of Liabilities and Obligations..............................................................17
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................................18
3.1 Organization and Authority of Sellers..................................................................18
3.2 Authorization and Binding Obligation...................................................................18
3.3 Absence of Conflicting Agreements; Consents............................................................18
3.4 Governmental Licenses..................................................................................19
3.5 Real Property..........................................................................................19
3.6 Tangible Personal Property.............................................................................20
3.7 Contracts..............................................................................................21
3.8 Intangibles............................................................................................21
3.9 Title to Properties....................................................................................21
3.10 Financial Statements...................................................................................22
3.11 Taxes..................................................................................................22
3.12 Insurance..............................................................................................22
3.13 Reports................................................................................................22
3.14 Personnel and Employee Benefits........................................................................22
Employees and Compensation.............................................................................22
Pension Plans..........................................................................................23
Welfare Plans..........................................................................................23
Benefit Arrangements...................................................................................24
Multiemployer Plans....................................................................................24
Delivery of Copies of Relevant Documents and Other Information.........................................24
Labor Relations........................................................................................24
3.15 Claims and Legal Actions...............................................................................24
3.16 Environmental Compliance...............................................................................25
3.17 Compliance with Laws...................................................................................25
3.18 Conduct of Business in Ordinary Course.................................................................25
3.19 Transactions with Affiliates...........................................................................26
3.20 Broker.................................................................................................26
3.21 Insolvency Proceedings.................................................................................26
3.22 Year 2000 Compatibility................................................................................26
4. REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................26
4.1 Organization, Standing and Authority...................................................................26
4.2 Authorization and Binding Obligation...................................................................27
4.3 Absence of Conflicting Agreements and Required Consents................................................27
4.4 Brokers................................................................................................27
4.5 Availability of Funds..................................................................................27
4.6 Qualifications of Buyer................................................................................27
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4.7 WARN Act...............................................................................................28
4.8 Buyer's Defined Contribution Plan......................................................................28
5. OPERATION OF THE STATIONS PRIOR TO CLOSING....................................................................28
5.1 Contracts..............................................................................................28
5.2 Compensation...........................................................................................28
5.3 Encumbrances...........................................................................................29
5.4 Dispositions...........................................................................................29
5.5 Access to Information..................................................................................29
5.6 Insurance..............................................................................................29
5.7 Licenses...............................................................................................29
5.8 Obligations............................................................................................29
5.9 No Inconsistent Action.................................................................................29
5.10 Maintenance of Assets..................................................................................29
5.11 Consents...............................................................................................30
5.12 Books and Records......................................................................................30
5.13 Notification...........................................................................................30
5.14 Financial Information..................................................................................31
5.15 Compliance with Laws...................................................................................31
5.16 Programming............................................................................................31
5.17 Preservation of Business...............................................................................31
5.18 Normal Operations......................................................................................31
5.19 Buffalo Build-Out Property.............................................................................31
6. SPECIAL COVENANTS AND AGREEMENTS..............................................................................31
6.1 FCC Consent............................................................................................31
6.2 Hart-Scott-Rodino......................................................................................32
6.3 Risk of Loss...........................................................................................32
6.4 Confidentiality........................................................................................32
6.5 Cooperation............................................................................................32
6.6 Control of the Stations................................................................................33
6.7 Accounts Receivable....................................................................................33
6.8 Allocation of Purchase Price...........................................................................34
6.9 Access to Books and Records............................................................................34
6.10 Employee Matters.......................................................................................35
Certain Payments.......................................................................................36
6.11 Lease..................................................................................................37
6.12 Public Announcements...................................................................................37
6.13 Disclosure Schedules...................................................................................37
6.14 Bulk Sales Law.........................................................................................38
6.15 Environmental Site Assessment..........................................................................38
6.16 Purchase of Advertising Time...........................................................................39
6.17 Adverse Developments...................................................................................39
6.18 Title Insurance........................................................................................39
6.19 Surveys................................................................................................39
6.20 Pending Transactions...................................................................................39
6.21 Assignment of Contracts for Pending Transactions.......................................................39
6.22 Cooperation on Tax Matters...................................................ERROR! BOOKMARK NOT DEFINED.
6.23 Reference to Original Agreement........................................................................40
7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.................................................................40
7.1 Conditions to Obligations of Buyer.....................................................................40
Representations and Warranties.........................................................................40
Covenants and Conditions...............................................................................40
FCC Consent............................................................................................40
Hart-Scott-Rodino......................................................................................41
Governmental Authorizations............................................................................41
Consents...............................................................................................41
Lease..................................................................................................41
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Deliveries.............................................................................................41
Satisfactory Environmental Assessment..................................................................41
7.2 Conditions to Obligations of Sellers...................................................................41
Representations and Warranties.........................................................................41
Covenants and Conditions...............................................................................41
FCC Consent............................................................................................42
Hart-Scott-Rodino......................................................................................42
Deliveries.............................................................................................42
8. CLOSING AND CLOSING DELIVERIES................................................................................42
8.1 Closing................................................................................................42
Closing Date...........................................................................................42
Closing Place..........................................................................................43
8.2 Deliveries by Sellers..................................................................................43
Conveyancing Documents.................................................................................43
Officer's Certificate..................................................................................43
Secretary's Certificate................................................................................44
Consents...............................................................................................44
Good Standing Certificates.............................................................................44
Opinions of Counsel....................................................................................44
Lease..................................................................................................44
Other Documents........................................................................................44
8.3 Deliveries by Buyer....................................................................................44
Closing Payment........................................................................................44
Officer's Certificate..................................................................................44
Secretary's Certificate................................................................................45
Assumption Agreements..................................................................................45
Good Standing Certificates.............................................................................45
Oinion of Counsel......................................................................................45
Lease..................................................................................................45
Other Documents........................................................................................45
9. TERMINATION..................................................................................................45
9.1 Termination by Mutual Consent..........................................................................45
9.2 Termination by Seller..................................................................................45
9.3 Termination by Buyer...................................................................................46
9.4 Rights on Termination..................................................................................47
9.5 Liquidated Damages Not a Penalty.......................................................................47
9.6 Specific Performance...................................................................................47
9.7 Attorneys' Fees........................................................................................47
9.8 Survival...............................................................................................47
9.9 Limitations of Termination.............................................................................47
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES.............................................................................................48
10.1 Survival of Representations............................................................................48
10.2 Indemnification by Seller..............................................................................48
10.3 Indemnification by Buyer...............................................................................49
10.4 Procedure for Indemnification..........................................................................49
10.5 Certain Limitations....................................................................................50
11. MISCELLANEOUS...............................................................................................51
11.1 Fees and Expenses......................................................................................51
11.2 Notices................................................................................................52
11.3 Benefit and Binding Effect.............................................................................53
11.4 Further Assurances.....................................................................................53
11.4 GOVERNING LAW..........................................................................................53
11.6 Entire Agreement.......................................................................................54
11.7 Waiver of Compliance; Consents.........................................................................54
11.8 Headings...............................................................................................54
11.9 Counterparts...........................................................................................54
</TABLE>
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this "Agreement")
is entered into on August 20, 1999, but is effective as of August 18, 1999, by
and among Sinclair Communications, Inc., a Maryland corporation ("SCI"), WCGV,
Inc., a Maryland corporation ("WCGV"), Sinclair Radio of Milwaukee Licensee,
LLC, a Maryland limited liability company ("MILWAUKEE LICENSEE"), Sinclair Radio
of New Orleans, LLC, a Maryland limited liability company ("SINCLAIR NEW
ORLEANS"), Sinclair Radio of New Orleans Licensee, LLC, a Maryland limited
liability company ("NEW ORLEANS LICENSEE"), Sinclair Radio of Memphis, Inc., a
Maryland corporation ("SINCLAIR MEMPHIS"), Sinclair Radio of Memphis Licensee,
Inc., a Delaware corporation ("MEMPHIS LICENSEE"), Sinclair Properties, LLC, a
Virginia limited liability company ("PROPERTIES"), Sinclair Radio of
Norfolk/Greensboro Licensee L.P., a Virginia limited partnership
("NORFOLK/GREENSBORO LICENSEE"), Sinclair Radio of Norfolk Licensee, LLC, a
Maryland limited liability company ("NORFOLK LICENSEE"), Sinclair Radio of
Buffalo, Inc., a Maryland corporation ("SINCLAIR BUFFALO"), Sinclair Radio of
Buffalo Licensee, LLC, a Maryland limited liability company ("BUFFALO
LICENSEE"), WLFL, Inc., a Maryland corporation ("WLFL"), Sinclair Radio of
Greenville Licensee, Inc., a Delaware corporation ("GREENVILLE LICENSEE"),
Sinclair Radio of Wilkes-Barre, Inc., a Maryland corporation ("SINCLAIR
WILKES-BARRE"), and Sinclair Radio of Wilkes-Barre Licensee, LLC, a Maryland
limited liability company ("WILKES-BARRE LICENSEE") (each a "SELLER" and
collectively, "SELLERS"), and Entercom Communications Corp., a Pennsylvania
corporation ("BUYER").
This Agreement amends and restates in its entirety the Asset Purchase
Agreement dated as of August 18, 1999 by and between Sellers, the Kansas City
Sellers and Buyer (the "Original Purchase Agreement"). All references herein to
"date hereof" and "date of this Agreement" shall mean August 18, 1999, and all
representations and warranties made herein shall be deemed to have been made as
of August 18, 1999. The Exhibits and Schedules attached to the Original Purchase
Agreement are hereby superceded by the Exhibits and Schedules attached hereto.
R E C I T A L S:
WHEREAS, Properties operates radio broadcast stations WPTE-FM, Virginia
Beach, VA; WWDE-FM, Hampton, VA; and WNVZ-FM, Norfolk, VA (collectively, the
"NORFOLK STATIONS") WVKL-FM, Norfolk VA ("WVKL") and WMQX-FM, Winston-Salem, NC;
WQMG-FM, Greensboro, NC; WJMH-FM, Reidsville, NC; and WEAL-AM, Greensboro, NC
(collectively, the "GREENSBORO STATIONS") and owns or leases certain assets used
in connection with the Norfolk Stations, WVKL and the Greensboro Stations;
1
<PAGE>
WHEREAS, WCGV operates radio broadcast stations WEMP-AM, Milwaukee, WI;
WMYX-FM, Milwaukee, WI; and WXSS-FM, Wauwatosa, WI (collectively, the "MILWAUKEE
STATIONS") and owns or leases certain assets used in connection with the
Milwaukee Stations;
WHEREAS, Milwaukee Licensee is the licensee of each of the Milwaukee
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, Sinclair New Orleans operates radio broadcast stations
WLMG-FM, New Orleans, LA; WWL-AM, New Orleans, LA; WSMB-AM, New Orleans, LA; and
WEZB-FM, New Orleans, LA (collectively, the "NEW ORLEANS STATIONS") and owns or
leases certain assets used in connection with the New Orleans Stations;
WHEREAS, New Orleans Licensee is the licensee of each of the New
Orleans Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, Sinclair New Orleans operates radio broadcast stations
WLTS-FM, Kenner, LA; and WTKL-FM, New Orleans, LA (collectively, the "PHASE II
STATIONS"), pursuant to a time brokerage agreement (the "PHASE II TBA") with
Phase II Broadcasting, Inc. ("PHASE II") and has entered into an agreement (the
"PHASE II PURCHASE AGREEMENT") with Phase II to acquire substantially all the
assets of the Phase II Stations from Phase II;
WHEREAS, Sinclair Memphis operates radio broadcast stations WRVR-FM,
Memphis, TN; WJCE-AM, Memphis, TN and WOGY-FM, Germantown, TN (collectively, the
"MEMPHIS Stations") and owns or leases certain assets used in connection with
the Memphis Stations;
WHEREAS, Memphis Licensee is the licensee of each of the Memphis
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, Norfolk/Greensboro Licensee is the licensee of each of the
Norfolk Stations and each of the Greensboro Stations pursuant to certain
authorizations issued by the FCC;
WHEREAS, Norfolk Licensee is the licensee of WVKL pursuant to certain
authorizations issued by the FCC;
WHEREAS, Sinclair Buffalo operates radio broadcast stations WMJQ-FM,
Buffalo, NY, WKSE-FM, Niagara Falls, NY; WBEN-AM, Buffalo, NY; WWKB-AM, Buffalo,
NY; WGR-AM, Buffalo, NY: and WWWS-AM, Buffalo, NY (collectively, the "BUFFALO
STATIONS") and owns or leases certain assets used in connection with the Buffalo
Stations;
WHEREAS, Buffalo Licensee is the licensee of each of the Buffalo
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, WLFL operates radio broadcast stations WFBC-FM, Greenville, SC
and WSPA-FM, Spartanburg, SC; WYRD-AM, Greenville, SC; WORD-AM, Spartanburg, SC;
and WSPA-AM, Spartanburg, SC (collectively, the "GREENVILLE STATIONS") and owns
or leases certain assets used in connection with the Greenville Stations;
2
<PAGE>
WHEREAS, Greenville Licensee is the licensee of each of the Greenville
Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, WLFL provides sales services to radio broadcast stations
WOLI-FM, Easely, SC and WOLT-FM, Greer, SC (the "PALM STATIONS"), pursuant to
joint sales agreement with Palm Broadcasting, Inc. (the "PALM JSA") and has
exercised an option to purchase the Palm Stations pursuant to an option
agreement with Palm Broadcasting, Inc. (the "PALM OPTION AGREEMENT");
WHEREAS, Sinclair Wilkes-Barre, operates radio broadcast stations
WGGI-FM, Benton, PA; WKRZ-FM, Wilkes-Barre, PA; WGGY-FM, Scranton, PA; WILK-AM,
Wilkes-Barre, PA: WGBI-AM, Scranton, PA; WSHG-FM, Pittston, PA; WILP-AM, West
Hazelton, PA; WWFH-FM, Freeland, PA; and WKRF-FM, Tobyhanna, PA (collectively,
the "WILKES-BARRE STATIONS") and owns or leases certain assets used in
connection with the Wilkes-Barre Stations;
WHEREAS, Wilkes-Barre Licensee is the licensee of each of the
Wilkes-Barre Stations pursuant to certain authorizations issued by the FCC;
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for the sale, assignment and transfer by Sellers to Buyer of certain of
the assets owned, leased or used by Sellers in connection with the business and
operations of the Palm Stations and the Phase II Stations (collectively, the
"Non-Owned Stations") and the Milwaukee Stations, the New Orleans Stations, the
Memphis Stations, the Norfolk Stations, WVKL, the Greensboro Stations, the
Buffalo Stations, the Greenville Stations, and the Wilkes-Barre Stations (each
[including the Non-Owned Stations) a "STATION" and collectively, the
"STATIONS");
A G R E E M E N T S:
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1: CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
"ACCOUNTS RECEIVABLE" means the rights of Sellers as of any Closing
Date to payment in cash for the sale of advertising time and other goods and
services by the Stations prior to any Closing Date.
"AFFILIATE" means, with respect to any Person, (a) any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person, or (b) an officer or
director of such Person or of an Affiliate of such Person within the meaning of
clause (a) of this
3
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definition. For purposes of clause (a) of this definition, (i) a Person shall be
deemed to control another Person if such Person (A) has sufficient power to
enable such Person to elect a majority of the board of directors of such Person,
or (B) owns a majority of the beneficial interests in income and capital of such
Person; and (ii) a Person shall be deemed to control any partnership of which
such Person is a general partner.
"ALLOCABLE ESCROW DEPOSIT" means that portion of the Escrow Deposit
equaling $42,601,575.00.
"ASSETS" means the assets to be transferred or otherwise conveyed by
Sellers to Buyer under this Agreement, as specified in Section 2.1.
"ASSUMED CONTRACTS" means (a) all Contracts set forth on Schedule 3.7,
(b) Contracts entered into prior to the date of this Agreement with advertisers
for the sale of advertising time or production services for cash at rates
consistent with past practices, (c) Contracts entered into by any Seller prior
to the date of this Agreement which are not required to be included on Schedule
3.7 hereto, (d) any Contracts entered into by Sellers between the date of this
Agreement and the Closing Date that Buyer agrees in writing to assume, and (e)
other contracts entered into by Sellers between the date of this Agreement and
the Closing Date in compliance with Section 5.
"BUFFALO BUILD-OUT PROPERTY" shall have the meaning set forth in
Section 2.3(b)(iv).
"CLOSING" means the consummation of the exchange and acquisition of the
Assets pursuant to this Agreement on either one or more Closing Date in
accordance with the provisions of Section 8.1.
"CLOSING DATE" means the date on which a Closing occurs, as determined
pursuant to Section 8.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CONSENTS" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"CONTAMINANT" shall mean and include any pollutant, contaminant,
hazardous material (as defined in any of the Environmental Laws), toxic
substances (as defined in any of the Environmental Laws), asbestos or asbestos
containing material, urea formaldehyde, polychlorinated biphenyls, regulated
substances and wastes, radioactive materials, and petroleum or petroleum
by-products, including crude oil or any fraction thereof, except the term
"Contaminant" shall not include small quantities of maintenance, cleaning and
emergency generator fuel supplies customary for the operation of radio stations
and maintained in compliance with all Environmental Laws in the ordinary course
of business.
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<PAGE>
"CONTRACTS" means all contracts, consulting agreements, leases,
non-governmental licenses and other agreements (including leases for personal or
real property and employment agreements), written or oral (including any
amendments and other modifications thereto) to which Sinclair, SCI, or any
Seller is a party or that are binding upon any Seller, that relate to or affect
the Assets or the business or operations of the Stations, and that either (a)
are in effect on the date of this Agreement, including (without limitation) the
Phase II TBA, the Phase II Purchase Agreement, the Palm JSA, the Palm Option
Agreement, and those listed on Schedule 3.7 hereto, or (b) are entered into by
any Seller between the date of this Agreement and the Closing Date.
"DELAY AMOUNT" shall equal 0.75% of the amount which is the Initial
Purchase Price, less any portion of the Initial Purchase Price which has been
received by Sellers pursuant to any Closings which have occurred prior to the
time such payment is due.
"DEPOSIT RELEASE DATE" is the date on which a Closing has occurred for
Radio Groups for which more than forty-five percent (45%) of the Initial
Purchase Price has been paid to Sellers.
"EFFECTIVE TIME" means 12:01 a.m., Eastern time, on each Closing Date
and the Closing Date for the Kansas City Stations.
"ENVIRONMENTAL LAWS" shall mean and include, but not be limited to, any
applicable federal, state or local law, statute, charter, ordinance, rule or
regulation or any governmental agency interpretation, policy or guidance,
including without limitation applicable safety/environmental/health laws such as
but not limited to the Resource Conservation and Recovery Act of 1976,
Comprehensive Environmental Response Compensation and Liability Act, Federal
Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean
Water Act, and the Toxic Substance Control Act, as any of the foregoing have
been amended, and any permit, order, directive, court ruling or order or consent
decree applicable to or affecting the Property or any other property (real or
personal) used by or relating to the Station in question promulgated or issued
pursuant to any Environmental Laws which pertains to, governs, or controls the
generation, storage, remediation or removal of Contaminants or otherwise
regulates the protection of health and the environment including, but not
limited to, any of the following activities, whether on site or off site if such
could materially affect the site: (i) the emission, discharge, release, spilling
or dumping of any Contaminant into the air, surface water, ground water, soil or
substrata; or (ii) the use, generation, processing, sale, recycling, treatment,
handling, storage, disposal, transportation, labeling or any other management of
any Contaminant.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW DEPOSIT" means the sum of Fifty Million Dollars
($50,000,000.00) or, at Buyer's option, a letter of credit in favor of Sellers
in the face amount of Fifty Million Dollars ($50,000,000.00), which was
deposited by Buyer with First Union National Bank (the "ESCROW AGENT") on August
18, 1999 to secure the obligations of Buyer to close under this Agreement and
the Kansas City Agreement, with (i) such deposit being held by the Escrow Agent
in
5
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accordance with the Escrow Agreement executed among Buyer, Sellers and Escrow
Agent on August 18, 1999, and (ii) the Escrow Deposit, and all earnings thereon,
being returned to Buyer upon the consummation of this Agreement and the Kansas
City Agreement or as otherwise provided herein.
"EXCESS AMOUNT" has the meaning set forth in Section 10.5.
"EXCLUDED REAL PROPERTY INTERESTS" means all interests in Real Property
listed on Schedule 2.2 hereto.
"EXCLUDED TANGIBLE PERSONAL PROPERTY" means all tangible personal
property owned or held by Sellers that is located at the Excluded Real Property
other than such tangible personal property listed on Schedule 3.6 hereto, any
assets used primarily in the operation of any television broadcast station
owned, operated or programmed by Sellers or any Affiliate of Sellers, any assets
used primarily in the operation of any radio broadcast station owned, operated
or programmed by Sellers, but not included as a "Station" hereunder, and any
tangible personal property located at Suite 220, Meadow Mill at Woodberry, 3600
Clipper Mill Road, Baltimore, Maryland 21211.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
transfer of the FCC Licenses by Sellers to Buyer as contemplated by this
Agreement.
"FCC LICENSES" means those licenses, permits and authorizations issued
by the FCC to Sellers in connection with the business and operations of the
Stations.
"FINAL CLOSING DATE" means the date on which all of the Assets for all
of the Stations have been exchanged and acquired in accordance with Section 8.1.
"FINAL ORDER" shall mean an action by the Commission upon any
application for FCC Consent filed by the parties hereto for FCC consent,
approval or authorization, which action has not been reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action, no protest,
petition to deny, petition for rehearing or reconsideration, appeal or request
for stay is pending, and as to which action the time for filing of any such
protest, petition, appeal or request and any period during which the Commission
may reconsider or review such action on its own authority has expired.
"HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements
Acts of 1976, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"INTANGIBLES" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by
Sellers or under which Sellers are licensed or franchised and that are used in
the business and
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operations of the Stations, together with any additions thereto between the date
of this Agreement and the Closing Date.
"KANSAS CITY AGREEMENT" means that certain Asset Purchase Agreement
dated as of the date hereof (but effective August 18, 1999) by and between the
Kansas City Sellers and Buyer pursuant to which the Kansas City Sellers have
agreed to sell, and Buyer has agreed to purchase, the Kansas City Stations.
"KANSAS CITY SELLERS" means Sinclair Media III, Inc. and Sinclair Radio
of Kansas City Licensee, LLC.
"KANSAS CITY STATIONS" means KCFX-FM, Harrisonville, MO; KQRC-FM,
Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM, Kansas City, MO.
"KNOWLEDGE" or any derivative thereof with respect to the Sellers
means, exclusively, the actual Knowledge of the President and Chief Executive
Officer or the Chief Financial Officer of Sinclair Broadcast Group, Inc.
("SINCLAIR"), the general managers of the Stations, and any other employee of
Sinclair or SCI designated as a "vice president" or any officer of any of the
Sellers.
"LEASED REAL PROPERTY" means all real property and all buildings and
other improvements thereon and appurtenant thereto leased or held by Sellers and
used in the business or operation of the Stations.
"LICENSES" means all licenses, permits, construction permits and other
authorizations issued by the FCC, the Federal Aviation Administration, or any
other federal, state, or local governmental authorities to Sellers, currently in
effect and used in connection with the conduct of the business or operations of
the Stations (other than the Non-Owned Stations), together with any additions
thereto between the date of this Agreement and the Closing Date.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets or financial condition of the Stations taken as a whole, except
for any such material adverse effect resulting from (a) general economic
conditions applicable to the radio broadcast industry, (b) general conditions in
the markets in which the Stations operate, or (c) circumstances that are not
likely to recur and either have been substantially remedied or can be
substantially remedied without substantial cost or delay.
"MATERIAL CONTRACT" means those Assumed Contracts that are designated
on Schedules 3.5 and 3.7 as "Material Contracts."
"OWNED REAL PROPERTY" means all real property and all buildings and
other improvements thereon and appurtenant thereto owned by Sellers and used in
the business or operations of the Stations.
"PALM AMOUNT" shall equal either (a) $0 if the acquisition of the Palm
Stations by WLFL shall have occurred prior to Closing applicable to the Palm
Stations, or (b) the purchase
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price which Buyer would be required to pay to acquire the Palm Stations,
including, after taking into account the application of any deposit made
pursuant to the acquisition agreement without regard to prorations or similar
adjustments.
"PENDING TRANSACTION AMOUNT" means the sum of the Phase II Amount and
the Palm Amount.
"PERMITTED ENCUMBRANCES" means (a) encumbrances of a landlord, or other
statutory lien not yet due and payable, or a landlord's liens arising in the
ordinary course of business, (b) encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of the Contracts
set forth on the Schedules, which Contracts have been made available to Buyer,
(c) encumbrances for Taxes not yet delinquent or which are being contested in
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on Sellers' books in accordance with generally accepted
accounting principles, or (d) encumbrances that do not materially detract from
the value of any of the Assets or materially interfere with the use thereof as
currently used.
"PERSON" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"PHASE II AMOUNT" shall equal either (a) $0 if the acquisition of the
Phase II Stations by Sinclair Radio of New Orleans, Inc. shall have occurred
prior to Closing applicable to the Phase II Stations, or (b) the purchase price
which Buyer would be required to pay to acquire the Phase II Stations,
including, after taking into account the application of any deposit made
pursuant to the acquisition agreement, without regard to prorations or similar
adjustments.
"RADIO GROUP" means the Stations located in the same Designated Market
Area as determined by the Arbitron Company.
"RADIO GROUP FCC CONSENT" means receipt of initial grant of the FCC
Consents as to each of the Stations in any Radio Group.
"RADIO GROUP MATERIAL ADVERSE EFFECT" means a material adverse effect
on the business, assets, or financial condition of a Radio Group taken as a
whole, except for any such material adverse effect resulting from (a) general
economic conditions applicable to the radio broadcast industry, (b) general
conditions in the markets in which the Stations comprising the Radio Group
operate, or (c) circumstances that are not likely to recur and have either been
substantially remedied or can be substantially remedied without substantial cost
or delay.
"REAL PROPERTY" means all real property and all buildings and other
improvements thereon and appurtenant thereto, whether or not owned, leased or
held by Sellers used in the business or operations of the Stations.
"REAL PROPERTY INTERESTS" means all interests in Owned Real Property
and Leased Real Property, including fee estates, leaseholds and subleaseholds,
purchase options, easements, licenses, rights to access, and rights of way, and
all buildings and other improvements thereon
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and appurtenant thereto, owned or held by Sellers that are used in the business
or operations of the Stations, together with any additions, substitutions and
replacements thereof and thereto between the date of this Agreement and the
Closing Date, but excluding the Excluded Real Property Interests.
"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property owned or held by Sellers that
is used or useful in the conduct of the business or operations of the Stations,
together with any additions, substitutions and replacements thereof and thereto
between the date of this Agreement and the Closing Date, but excluding the
Excluded Tangible Personal Property.
"TAX" means any federal, state, local, or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or similar governmental assessment, together with any interest, additions,
or penalties with respect thereto and any interest in respect of such additions
or penalties.
"TAX RETURN" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted to any governmental authority with respect to any Tax.
"THRESHOLD AMOUNT" has the meaning set forth in Section 10.5.
"UNEXPENDED REMEDIATION AMOUNT" shall mean Three Million Dollars
($3,000,000.00) as aggregated with the Unexpended Remediation Amount under the
Kansas City Agreement, minus any amounts previously expended by Sellers to
remediate any of the Real Property pursuant to Section 6.16.
"USA DIGITAL SHARES" means the 300,000 shares of common stock of USA
Digital Radio, Inc. of which Sellers are the record owner.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have the meanings set forth in the sections indicated:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Balance Sheet Date Section 3.10
Benefit Arrangement Section 3.14 (a)(v)
Benefit Plans Section Section 3.14(a)(ii)
Buffalo Stations Recitals
Buyer Preamble
Buyer's Plan Section 4.8
Claimant Section 10.4
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Collection Period Section 6.7(a)
Confidentiality Agreement Section 6.4
Deferred Contract Section 5.11(b)
Designee Section 11.3(b)
Employees Section 3.14(a)
Environmental Laws Section 3.16
Estimated Purchase Price Section 2.4(a)
Excluded Real Property Interests Section 1.1
Excluded Tangible Personal Property Section 1.1
FCC Objection Section 7.1(c)
FTC Section 4.6
Financial Statements Section 3.10
Greensboro Stations Recitals
Greenville Stations Recitals
Hart-Scott-Rodino Filing Section 6.2
Indemnity Cap Section 10.5
Indemnifying Party Section 10.4
Initial Employee Cap Section 6.10(g)
Initial Purchase Price Section 2.3
Lease Section 6.12
Memphis Stations Recitals
Milwaukee Stations Recitals
Multiemployer Plan Section 3.14(a)(ii)
New Orleans Stations Recitals
Non-Owned Stations Recitals
Operational Equipment Section 3.22
Original Agreement Recitals
Norfolk Stations Recitals
Palm Amount Section 1.1
Palm JSA Recitals
Palm Option Agreement Recitals
Palm Stations Recitals
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Pension Plan Section 3.14(a)(iii)
Phase II Recitals
Phase II Amount Section 1.1
Phase II Purchase Agreement Recitals
Phase II Stations Recitals
Phase II TBA Recitals
Purchase Price Section 2.3
Radio Group Section 1.1
Reimbursement Period Section 6.10(g)
Represented Employees Section 6.10(e)
Scheduled Employees Section 6.10(g)
Scheduled Retention Agreements Section 6.10(g)
SCI Preamble
Section 6.9 Amount Section 6.19
Seller Preamble
Seller Entities Section 6.10(i)
Sellers' Employees Section 6.10(i)
Sinclair Section 1.1
Stations Recitals
Stations Delay Amount Section 2.3(a)(i)
Stations Delay Amount Date Section 2.3(a)(i)
Transferred Employees Section 6.10
WVKL Recitals
Welfare Plan Section 3.14(a)(i)
Wilkes-Barre Stations Recitals
</TABLE>
SECTION 2: EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE
2.1 Agreement to Exchange and Transfer. Subject to the terms and conditions
set forth in this Agreement with respect to the Stations or any Radio Group,
Sellers hereby agree to transfer, convey, assign and deliver to Buyer on one
or more Closing Dates as applicable, and Buyer agrees to acquire, all of
Sellers' right, title and interest in the tangible and intangible assets used
in connection with the conduct of the business or operations of the Stations
or any Radio Group, as the case may be, together with any additions thereto
between the date of this Agreement and the applicable Closing Date, but
excluding the assets described in Section 2.2, free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, charges, or
11
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encumbrances of any nature whatsoever (except for Permitted Encumbrances),
including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill of the Stations, if any;
(f) The USA Digital Shares.
(g) All of Sellers' proprietary information, technical information and
data, machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints and schematics, including filings with the FCC, in each
case to the extent relating to the business and operation of the Stations;
(h) All choses in action of Sellers relating to the Stations to the
extent they relate to the period after the Effective Time; and
(i) All books and records relating to the business or operations of
the Stations, including executed copies of the Assumed Contracts, and all
records required by the FCC to be kept by the Stations.
2.2 Excluded Assets. The Assets shall exclude the following:
(a) Sellers' cash, cash equivalents and deposits, all interest payable
in connection with any such items and rights in and to bank accounts, marketable
and other securities and similar investments of Sellers;
(b) Any insurance policies, promissory notes, amounts due to Sellers
from employees, bonds, letters of credit, certificates of deposit, or other
similar items, and any cash surrender value in regard thereto; provided, that in
the event Seller is obligated to assign to Buyer the proceeds of any such
insurance policy at the time a Closing occurs under Section 6.3, such proceeds
shall be included in the Assets;
(c) Any pension, profit-sharing, or employee benefit plans, including
all of Sellers' interest in any Welfare Plan, Pension Plan or Benefit
Arrangement (each as defined in Section 3.14(a);
(d) All Tangible Personal Property disposed of or consumed in the
ordinary course of business as permitted by this Agreement;
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<PAGE>
(e) All Tax Returns and supporting materials, all original financial
statements and supporting materials, all books and records that Sellers are
required by law to retain, all of Sellers' organizational documents, corporate
books and records (including minute books and stock ledgers) and originals of
account books of original entry, all records of Sellers relating to the sale of
the Assets and all records and documents related to any assets excluded pursuant
to this Section 2.2;
(f) Any interest in and to any refunds of federal, state, or local
franchise, income, or other taxes for periods (or portions thereof) ending on or
prior to the Closing Date;
(g) All Accounts Receivable;
(h) All rights and claims of Sellers whether mature, contingent or
otherwise, against third parties relating to the Assets of the Stations, whether
in tort, contract or otherwise, other than rights and claims against third
parties relating to the Assets which have as their basis loss, damage or
impairment of or to any of the Assets and which loss, damage or impairment has
not been restored or repaired prior to any Closing in which any of the Assets
which has been so damaged or impaired is being acquired by Buyer (or in the case
of a lost asset, that would have been acquired but for such loss);
(i) Any Contracts which are not Assumed Contracts;
(j) All of each Sellers' deposits and prepaid expenses; provided, any
deposits and prepaid expenses shall be included in the Assets to the extent that
Sellers receive a credit therefor in the proration of the Purchase Price
pursuant to Section 2.3(b);
(k) All rights of Sellers under or pursuant to this Agreement (or any
other agreements contemplated hereby);
(l) All rights to the names Sinclair Broadcast Group, "Sinclair
Communications," Sinclair and any logo or variation thereof and goodwill
associated therewith;
(m) The Excluded Real Property Interests;
(n) The Excluded Tangible Personal Property;
(o) All assets owned by the Sellers and used in connection with any
television or radio broadcast stations owned and/or programmed by any of the
Sellers or Sellers have the right to acquire other than the Stations, including
(without limitation) all assets related to Sellers' operation and ownership of
the Interstate Road Network and the Road Gang Coast to Coast Network; KPNT-FM,
St. Genevieve, MO; WVRV-FM, East St. Louis, IL; WIL-FM, St. Louis, MO; WRTH-AM,
St. Louis, MO; KIHT-FM, St. Louis, MO; KXOK-FM, St. Louis, MO; KUPN-AM, Mission,
KS; KCFX-FM, Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO;
and KXTR-FM, Kansas City, MO;
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<PAGE>
(p) All shares of capital stock, partnership interests, interests in
limited liability companies or other equity interest, including, but not limited
to, any options, warrants or voting trusts relating thereto which are owned by
Sellers and not expressly specified in Section 2.1.
2.3 Purchase Price. The purchase price of the Assets shall be the excess of the
sum of (i) Seven Hundred Two Million Five Hundred Thousand Dollars
($702,500,000) (the "Initial Purchase Price"), plus the Section 6.9 Amount over
(ii) the "Pending Transaction Amount," adjusted as provided below (the "PURCHASE
PRICE").
(a) Purchase Price Increase. Except as otherwise provided in this
Agreement, the Initial Purchase Price shall be increased by the Delay Amount
upon the occurrence of any of the following events:
(i) one hundred thirty five (135) days following public notice
by the FCC that applications for FCC Consent have been accepted for filing (the
"Stations Delay Amount Date") if Closing has not occurred with respect to all
Stations other than the Kansas City Stations due to the failure to receive any
necessary regulatory consent, including, but not limited to, the FCC Consent,
any Radio Group FCC Consent, or expiration or termination under
Hart-Scott-Rodino, as a result of facts relating to Buyer or its Affiliates,
including, without limitation, such facts as are disclosed on Schedule 4.6
hereto, provided, that such Delay Amount shall be applied to the Initial
Purchase Price only for those Stations for which a Closing has not occurred
prior to the Stations Delay Amount Date, as allocated on Schedule 6.8 (the
"Stations Delay Amount"); and
(ii) [RESERVED]
(iii) each thirty (30) day period subsequent to the occurrence
of the Stations Delay Amount Date as to the Station Delay Amount until the later
to occur of (x) the Closing, or (y) termination of this Agreement in accordance
with its terms.
The Purchase Price and any increase due pursuant to this Section 2.3(a)
shall be paid at Closing or pro rata (based on the allocation of the Initial
Purchase Price among the Radio Groups) at a Radio Group Closing.
(b) Prorations. The Purchase Price shall be increased or decreased as
required to effectuate the proration of revenues and expenses, as set forth
below. All revenues and all expenses arising from the operation of the Stations
or Radio Group which are the subject of any Closing, including tower rental,
business and license fees, utility charges, real property and personal property
and other similar Taxes and assessments levied against or with respect to the
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, payments due under film or programming license
agreements, and employee compensation, including wages (including bonuses which
constitute wages), salaries, accrued sick leave, severance pay and related Taxes
shall be prorated between Buyer and Sellers as to those Stations for which a
Closing is to be held in accordance with the principle that Sellers shall
receive all revenues and shall be responsible for all expenses, costs and
liabilities allocable to the operations of the Stations or Radio Group, as the
case may be, for the period prior to the Effective Time of such Closing, and
Buyer shall receive all revenues and shall be responsible for
14
<PAGE>
all expenses, costs and obligations allocable to the operations of the Stations
for the period after the Effective Time of such Closing, subject to the
following:
(i) There shall be no adjustment for, and Sellers shall remain
solely liable with respect to, any Contracts not included in the Assumed
Contracts and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.2. An adjustment and proration shall be made in favor
of Buyer to the extent that Buyer assumes any liability under any Assumed
Contract to refund (or to credit against payments otherwise due) any security
deposit or similar prepayment paid to Sellers by any lessee or other third
party. An adjustment and proration shall be made in favor of Sellers to the
extent Buyer receives the right to receive a refund (or to a credit against
payments otherwise due) under any Assumed Contract to any security deposit or
similar pre-payment paid by or on behalf of Sellers.
(ii) An adjustment and proration shall be made in favor of
Sellers for the amount, if any, by which the fair market value of the goods or
services to be received by any Radio Group under its trade or barter agreements
as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars
($250,000) the fair market value of any advertising time remaining to be run by
such Radio Group as of the Effective Time. An adjustment and proration shall be
made in favor of Buyer to the extent that the amount of any advertising time
remaining to be run by any Radio Group and the Kansas City Stations under its
trade or barter agreements as of the Effective Time exceeds by more than Two
Hundred Fifty Thousand Dollars ($250,000) the fair market value of the goods or
services to be received by such Radio Group as of the Effective Time.
(iii) There shall be no proration for program barter.
(iv) An adjustment and proration shall be made in favor of
Sellers for the prorata portion of the capital expenditures incurred by Sellers
in connection with the build-out of the studio/office space located at 500
Corporate Parkway, Amherst, NY 14226 (the "Buffalo Build-Out Property"), based
on the remaining potion of the initial term of the Lease relating to such
property, dated May 15, 1999, between Sinclair Radio of Buffalo, Inc. and the
Uniland Partnership of Delaware, L.P.; provided, that the adjustment and
proration to be made pursuant to this Section 2.3(b)(iv) shall not exceed the
lesser of (i) fifty percent (50%) of the capital expenditures (i.e.,
out-of-pocket construction and equipment expenses, architecture fees and
building rent prior to occupancy) paid by Sellers with respect to the Buffalo
Build-Out Property prior to Closing, and (ii) Two Million Dollars ($2,000,000).
(v) An adjustment and proration shall be made in favor of
Sellers for the amount, if any, of prepaid expense, the benefit of which accrues
to Buyer hereunder, and other current assets acquired by Buyer hereunder which
are paid by Sellers to the extent such prepaid expenses and other current assets
relate to the period after the Effective Time.
(vi) There shall be no proration for any payment(s) made by
Interep to any of the Sellers in connection with obtaining the right to serve as
the national sales representative of any of the Stations.
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<PAGE>
(c) Manner of Determining Adjustments. The Purchase Price, taking into
account the adjustments and prorations pursuant to Section 2.3(b), will be
determined in accordance with the following procedures:
(i) Sellers shall prepare and deliver to Buyer not later than
five (5) days before any Closing Date a preliminary settlement statement which
shall set forth Sellers' good faith estimate of the adjustments to the Purchase
Price under Section 2.3(b) with respect to those Stations for which Closing is
to occur. The preliminary settlement statement shall (A) contain all information
reasonably necessary to determine the adjustments to the Purchase Price under
Section 2.3(b) as to such Stations, to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (B) be
certified by Sellers to be true and complete to Sellers' Knowledge as of the
date thereof.
(ii) Not later than ninety (90) days after each Closing Date,
Buyer will deliver to Sellers a statement setting forth Buyer's determination of
the Purchase Price and the calculation thereof pursuant to Section 2.3(b) as to
the Stations for which such Closing has occurred. Buyer's statement (A) shall
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(b) relating to the applicable Closing, and such
other information as may be reasonably requested by Sellers relating to the
applicable Closing, and (B) shall be certified by Buyer to be true and complete
to Buyer's knowledge as of the date thereof. If Sellers dispute the amount of
such Purchase Price determined by Buyer, they shall deliver to Buyer within
thirty (30) days after receipt of Buyer's statement a statement setting forth
their determination of the amount of such Purchase Price. If Sellers notify
Buyer of its acceptance of Buyer's statement, or if Sellers fail to deliver
their statement within the thirty (30)-day period specified in the preceding
sentence, Buyer's determination of the Purchase Price shall be conclusive and
binding on the parties as of the last day of the thirty (30)-day period.
(iii) Buyer and Sellers shall use good faith efforts to resolve
any dispute involving the determination of the Purchase Price paid by Buyer at
any Closing. If the parties are unable to resolve the dispute within forty-five
(45) days following the delivery of all of Buyer's statements to be provided
pursuant to Section 2.3(c)(ii) after the Final Closing (or in the event this
Agreement is terminated prior to the Final Closing) forty five (45) days
following such termination, Buyer and Sellers shall jointly designate an
independent certified public accounting firm of national standing which has not
regularly provided services to either the Buyer or Sellers in the last three (3)
years, who shall be knowledgeable and experienced in the operation of radio
broadcasting stations, to resolve the dispute. If the parties are unable to
agree on the designation of an independent certified public accounting firm, the
selection of the accounting firm to resolve the dispute shall be submitted to
arbitration to be held in Baltimore, Maryland, in accordance with the commercial
arbitration rules of the American Arbitration Association. The accounting firm's
resolution of the dispute shall be final and binding on the parties, and a
judgment may be entered thereon in any court of competent jurisdiction. Any fees
of this accounting firm, and, if necessary, for arbitration to select such
accountant, shall be divided equally between the parties.
2.4 Payment of Purchase Price. The Purchase Price shall be paid by Buyer to
Sellers as follows:
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(a) Payment of Estimated Purchase Price At Closing. The Purchase Price,
adjusted by the estimated adjustments pursuant to Section 2.3(b) as set forth in
Sellers' preliminary settlement statement pursuant to Section 2.3(c)(i), is
referred to as the "ESTIMATED PURCHASE PRICE." At the Closing, Buyer shall pay
or cause to be paid to Sellers the Estimated Purchase Price for the Stations or
any Radio Group subject to the Closing, as the case may be, including, if
applicable, any Delay Amount, by federal wire transfer of same-day funds
pursuant to wire transfer instructions, which instructions shall be delivered to
Buyer by Sellers at least two (2) business days prior to such Closing Date.
(b) Buyer and Sellers shall cause the Escrow Deposit or such pro rata
portion allocable to a Radio Group Closing to be released to Sellers as partial
payment of the Estimated Purchase Price by delivering wiring instructions to the
Escrow Agent two (2) days prior to the Closing Date; provided, however, that
none of the Escrow Deposit shall be released by the parties at any Closing until
the Deposit Release Date. Once the Deposit Release Date has occurred, the
Sellers agree immediately to deliver to the Escrow Agent their consent to the
release of that pro rata portion of the Escrow Deposit attributable to Radio
Group Closings consummated prior to the Deposit Release Date. Until the Deposit
Release Date, Buyer shall deliver the entire Estimated Purchase Price at the
Closing on any Station.
(c) Payments to Reflect Adjustments. The Purchase Price as finally
determined pursuant to Section 2.3(c) shall be paid as follows:
(i) If the Purchase Price as finally determined pursuant to
Section 2.3(c) exceeds the Estimated Purchase Price, Buyer shall pay to Sellers,
in immediately available funds within five (5) business days after the date on
which the Purchase Price is determined pursuant to Section 2.3(c), the
difference between the Purchase Price and the Estimated Purchase Price.
(ii) If the Purchase Price as finally determined pursuant to
Section 2.3(c) is less than the Estimated Purchase Price, Sellers shall pay to
Buyer, in immediately available funds within five (5) business days after the
date on which the Purchase Price is determined pursuant to Section 2.3(c), the
difference between the Purchase Price and the Estimated Purchase Price.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date and any
Radio Group Closing Date as applicable, Buyer shall assume and undertake to pay,
discharge and perform all obligations and liabilities of Sellers under the
Licenses, the Assumed Contracts or as otherwise specifically provided for herein
to the extent that either (i) the obligations and liabilities relate to the time
after the Effective Time of such Closing with respect to the Stations for which
Closing has occurred, or (ii) the Purchase Price was reduced pursuant to Section
2.3(b) as a result of the proration of such obligations and liabilities. Buyer
shall not assume any other obligations or liabilities of Sellers, including (1)
any obligations or liabilities under any Contract not included in the Assumed
Contracts, (2) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Effective Time of any Closing to which such
Assumed Contracts relate, except insofar as an adjustment therefor is made in
favor of Buyer under Section 2.3(b), (3) any claims or pending litigation or
proceedings relating to the operation of the Stations prior to such
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Closing or (4) any obligations or liabilities of Sellers under any employee
pension, retirement, or other benefit plans.
SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer as of the date hereof and as of any
Closing Date (except for representations and warranties that speak as of a
specific date or time, in which case, such representations and warranties shall
be true and complete as of such date or time) as follows:
3.1 Organization and Authority of Sellers. Each Seller is a corporation, limited
liability company or limited partnership (as applicable), duly organized,
validly existing and in good standing under the laws of the State listed on
Schedule 3.1 next to each such Seller's name. Each Seller has the requisite
corporate power and authority (or other appropriate power and authority based on
the structure of such Seller) to own, lease and operate its properties, to carry
on its business in the places where such properties are now owned, leased, or
operated and such business is now conducted, and to execute, deliver and perform
this Agreement and the documents contemplated hereby according to their
respective terms. Each Seller is duly qualified and in good standing in each
jurisdiction listed on Schedule 3.1 next to each such Seller's name, which are
all jurisdictions in which such qualification is required. Except as set forth
on Schedule 3.1, no Seller is a participant in any joint venture or partnership
with any other Person with respect to any part of the operations of the Stations
or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by each Seller have been duly authorized by all
necessary corporate or other required action on the part of each Seller. This
Agreement has been duly executed and delivered by each Seller and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements; Consents. Subject to obtaining the
Consents listed on Schedules 3.3 and 3.7, the execution, delivery and
performance by each Seller of this Agreement and the documents contemplated
hereby (with or without the giving of notice, the lapse of time, or both): (a)
do not require the consent of any third party; (b) will not conflict with any
provision of the Articles of Incorporation, Bylaws or other organizational
documents of Sellers; (c) will not conflict with, result in a breach of, or
constitute a default under any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (d) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any material
agreement, instrument, license, or permit to which any Seller is a party or by
which any Seller may be bound legally; and (e) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon any of the Assets. Except for the FCC Consent provided
for in Section 6.1, the filings required by Hart-Scott-Rodino provided for in
Section 6.2 and the other Consents described in Schedules 3.3 and 3.7, no
consent, approval, permit, or
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authorization of, or declaration to, or filing with any governmental or
regulatory authority or any other third party is required (a) to consummate this
Agreement and the transactions contemplated hereby, or (b) to permit Sellers to
transfer and convey the Assets to Buyer.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list of the
FCC Licenses. Sellers have made available to Buyer true and complete copies of
the main Licenses (including any amendments and other modifications thereto).
The Licenses have been validly issued, and each Seller is the authorized legal
holder of the Licenses and those FCC Licenses listed on Schedule 3.4. The
Licenses and the FCC Licenses listed on Schedule 3.4 comprise all of the
material licenses, permits, and other authorizations required from any
governmental or regulatory authority for the lawful conduct in all material
respects of the business and operations of the Stations in the manner and to the
full extent they are now conducted, and, except as otherwise disclosed on
Schedule 3.4, none of the Licenses is subject to any unusual or special
restriction or condition that could reasonably be expected to limit materially
the full operation of the Stations as now operated. The FCC Licenses are in full
force and effect, are valid for the balance of the current license term
applicable generally to radio stations licensed to the same communities as the
Stations, are unimpaired by any acts or omissions of any Seller or any of its
Affiliates, or the employees, agents, officers, directors, or shareholder of any
Seller or any of its Affiliates, and are free and clear of any restrictions
which might limit the full operation of the Stations in the manner and to the
full extent as they are now operated (other than restrictions under the terms of
the licenses themselves or applicable to the radio broadcast industry
generally). Except as listed on Schedule 3.4 hereto, there are no applications,
proceedings or complaints pending or, to the knowledge of any Seller, threatened
which may have an adverse effect on the business or operation of the Stations
(other than rulemaking proceedings that apply to the radio broadcasting industry
generally). Except as disclosed on Schedule 3.4 hereto, no Seller is aware of
any reason why any of the FCC Licenses might not be renewed in the ordinary
course for a full term without material qualifications or of any reason why any
of the FCC Licenses might be revoked. The Stations are in compliance with the
Commission's policy on exposure to radio frequency radiation. No renewal of any
FCC License would constitute a major environmental action under the rules of the
Commission. To the knowledge of Sellers, there are no facts relating to Sellers
which, under the Communications Act of 1934, as amended, or the existing rules
of the Commission, would (a) disqualify any Seller from assigning any of its FCC
Licenses to Buyer, (b) cause the filing of any objection to the assignment of
the FCC Licenses to Buyer, (c) lead to a delay in the processing by the FCC of
the applications of the FCC Licenses to Buyer, (d) lead to a delay in the
termination of the waiting period required by Hart-Scott-Rodino, or (e)
disqualify any Seller from consummating the transactions contemplated herein
within the times contemplated herein. An appropriate public inspection file for
each Station is maintained at the Station's studio in accordance with Commission
rules. Access to the Stations' transmission facilities are restricted in
accordance with the policies of the Commission.
3.5 Real Property. Schedule 3.5 contains a complete description of all Real
Property Interests (including street address, owner, and Sellers' use thereof)
other than the Excluded Real Property Interests. The Real Property Interests
listed on Schedule 3.5, together with the Real Property Interests which will be
created by the execution of the Lease by Buyer and the appropriate Sellers,
comprises all interests in real property necessary to conduct the business and
operations of the Stations as now conducted. Except as described on Schedule
3.5, Sellers have good fee simple title to all fee estates included in the Real
Property Interests and good title to all
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other Real Property Interests, in each case free and clear of all liens,
mortgages, pledges, covenants, easements, restrictions, encroachments, leases,
charges, and other claims and encumbrances, except for Permitted Encumbrances.
Each leasehold or subleasehold interest included as a Material Contract on
Schedule 3.5 is legal, valid, binding, enforceable and in full force and effect.
To Sellers' Knowledge, each leasehold or subleasehold designated in the Real
Property Interests, but not designated as Material Contracts on Schedule 3.5 is
legal, binding and enforceable and in full force and effect. Neither the Seller
party thereto or to Sellers' Knowledge any other party thereto, is in default,
violation or breach under any lease or sublease and no event has occurred and is
continuing that constitutes (with notice or passage of time or both) a default,
violation or breach thereunder. Sellers have not received any notice of a
default, offset or counterclaim under any lease or sublease with respect to any
of the Real Property Interests. As of the date hereof and as of the applicable
Closing Date, Sellers enjoy peaceful and undisturbed possession of the leased
Real Property Interests; and so long as Sellers fulfill their obligations under
the lease therefor, Sellers have enforceable rights to nondisturbance and quiet
enjoyment against its lessor or sublessor, and, to the Knowledge of Sellers,
except as set forth in Schedule 3.5, no third party holds any interest in the
leased premises with the right to foreclose upon Sellers' leasehold or
subleasehold interest. Sellers have legal and practical access to all of the
Owned Real Property and Leased Real Property, as applicable. Except as otherwise
disclosed in Schedule 3.5, all towers, guy anchors, ground radials, and
buildings and other improvements included in the Assets are located entirely on
the Owned Real Property or the Leased Real Property, as applicable, listed in
Schedule 3.5. All Owned Real Property and Leased Real Property (including the
improvements thereon) (a) is in good condition and repair consistent with its
current use, (b) is available for immediate use in the conduct of the business
and operations of the Stations, and (c) complies in all material respects with
all applicable material building or zoning codes and the regulations of any
governmental authority having jurisdiction, except to the extent that the
current use by Sellers, while permitted, constitutes or would constitute a
"nonconforming use" under current zoning or land use regulations. No eminent
domain or condemnation proceedings are pending or, to the knowledge of Sellers,
threatened with respect to any Real Property Interests.
3.6 Tangible Personal Property. The lists of Tangible Personal Property
comprising all material items of tangible personal property, other than the
Excluded Tangible Personal Property, necessary to conduct the business and
operations of the Stations as now conducted has been provided to Buyer
previously. Except as described in Schedule 3.6, Sellers own and have good title
to each item of Tangible Personal Property and none of the Tangible Personal
Property owned by Sellers is subject to any security interest, mortgage, pledge,
conditional sales agreement, or other lien or encumbrance, except for Permitted
Encumbrances. With allowance for normal repairs, maintenance, wear and
obsolescence, each material item of Tangible Personal Property is in good
operation condition and repair and is available for immediate use in the
business and operations of the Stations. All material items of transmitting and
studio equipment included in the Tangible Personal Property (a) have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (b) will permit the Stations and any unit auxiliaries
thereto to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC and in all material respects with all other
applicable federal, state and local statutes, ordinances, rules and regulations.
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3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts which
either (a) have a remaining term (after taking into account any cancellation
rights of Sellers) of more than one year after the date hereof or (b) require
expenditures in excess of Twenty Five Thousand Dollars ($25,000) in any calendar
year after the date hereof, except contracts with advertisers for production or
the sale of advertising time on the Stations for cash that may be canceled by
Sellers without penalty on not more than ninety days' notice. Sellers have
delivered or made available to Buyer true and complete copies of all written
Assumed Contracts, and true and complete descriptions of all oral Assumed
Contracts (including any amendments and other modifications to such Contracts).
Other than the Contracts listed on Schedule 3.7, Schedule 3.5, and the Lease,
Sellers require no material contract, lease, or other agreement to enable them
to carry on their business in all material respects as now conducted. All of the
Contracts are in full force and effect and are valid, binding and enforceable in
accordance with their terms except as the enforceability of such Contracts may
be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies. Neither the Seller party thereto or, to the knowledge of Sellers, any
other party thereto, is in default, violation or breach in any material respect
under any Contract and no event has occurred and is continuing that constitutes
(with notice or passage of time or both) a default, violation, or breach in any
material respect thereunder. Except as disclosed on Schedule 3.7, other than in
the ordinary course of business, Sellers do not have Knowledge of any intention
by any party to any Contract (a) to terminate such Contract or amend the terms
thereof, (b) to refuse to renew the Contract upon expiration of its term, or (c)
to renew the Contract upon expiration only on terms and conditions that are more
onerous than those now existing. Except for the need to obtain the Consents
listed on Schedule 3.7, the exchange and transfer of the Assets in accordance
with this Agreement will not affect the validity, enforceability, or
continuation of any of the Contracts.
3.8 Intangibles. Schedule 3.8 is a true and complete list of all Intangibles
(exclusive of Licenses listed in Schedule 3.4) that are required to conduct the
business and operations of the Stations as now conducted, all of which are valid
and in good standing and uncontested. Sellers have provided or made available to
Buyer copies of all documents establishing or evidencing the Intangibles listed
on Schedule 3.8. Sellers own or have a valid license to use all of the
Intangibles listed on Schedule 3.8. Other than with respect to matters generally
affecting the radio broadcasting industry and not particular to Sellers and
except as set forth on Schedule 3.8, Sellers have not received any notice or
demand alleging that Sellers are infringing upon or otherwise acting adversely
to any trademarks, trade names, service marks, service names, copyrights,
patents, patent applications, know-how, methods, or processes owned by any other
Person, and there is no claim or action pending, or to the Knowledge of Sellers
threatened, with respect thereto. To the knowledge of Sellers, except as set
forth on Schedule 3.8, no other Person is infringing upon Sellers rights or
ownership interest in the Intangibles.
3.9 Title to Properties. Except as disclosed in Schedule 3.5 or 3.6, Sellers
have good and marketable title to the Assets subject to no mortgages, pledges,
liens, security interests, encumbrances, or other charges or rights of others of
any kind or nature except for Permitted Encumbrances.
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3.10 Financial Statements. Sellers have furnished Buyer with true and complete
copies of unaudited financial statements of the Stations containing a balance
sheet and statement of income, as at and for the fiscal year ended December 31,
1998, and an unaudited balance sheet and statement of income as at and for the
seven (7) months ended July 31, 1999 (the "BALANCE SHEET DATE") (collectively,
the "FINANCIAL STATEMENTS"). To the extent the Financial Statements relate to
the period of time during which the Stations were owned by the Sellers (or any
Affiliate thereof) the Financial Statements have been prepared from the books
and records of Sellers and have been prepared in a manner consistent with the
audited Financial Statements of Sinclair, except for the absence of footnotes
and certain year-end adjustments. The Financial Statements accurately reflect
the books, records and accounts of Sellers, present fairly and accurately the
financial condition of the Stations as at their respective dates and the results
of operations for the periods then ended and none of the Financial Statements
understates in any material respect the normal and customary costs and expenses
of conducting the business or operations of the Stations in any material respect
as currently conducted by Sellers or otherwise materially inaccurately reflects
the operations of the Stations; provided, that the foregoing representations are
given only to the Sellers' Knowledge to the extent the Financial Statements
relate to a period of time during which the Stations were not owned by Sellers
(or an Affiliate thereof).
3.11 Taxes. Except as set forth in Schedule 3.11, Sellers have filed or caused
to be filed all Tax Returns that are required to be filed with respect to their
ownership and operation of the Stations, and have paid or caused to be paid all
Taxes shown on those returns or on any Tax assessment received by them to the
extent that such Taxes have become due, or have set aside on their books
adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no legal, administrative,
or other Tax proceedings presently pending, and there are no grounds existing
pursuant to which Sellers are or could be made liable for any Taxes, the
liability for which could extend to Buyer as transferee of the business of the
Stations.
3.12 Insurance. Schedule 3.12 is a true and complete list of all insurance
policies of or covering Sellers. All policies of insurance listed in Schedule
3.12 are in full force and effect as of the date hereof. During the past three
years, no insurance policy of Sellers or the Stations has been canceled by the
insurer and, except as set forth on Schedule 3.12, no application of Sellers for
insurance has been rejected by any insurer.
3.13 Reports. All material returns, reports and statements that the Stations is
currently required to file with the FCC or Federal Aviation Administration have
been filed, and all reporting requirements of the FCC and Federal Aviation
Administration have been complied with in all material respects. All of such
returns, reports and statements, as filed, satisfy all applicable legal
requirements.
3.14 Personnel and Employee Benefits.
(a) Employees and Compensation. Schedule 3.14 contains a true and
complete list of all employees of Sellers employed at the Stations as of June
30, 1999 who earned in excess of $20,000 in 1998 or whose present rate of pay
would cause them to earn more than that amount in 1999, and indicates the salary
and bonus, if any, to which each such Employee is currently
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entitled (limited in the case of Employees who are compensated on a commission
basis to a general description of the manner in which such commissions are
determined). As of the date of this Agreement, Sellers have no knowledge that
any General Manager, Sales Manager, or Program Director employed at the Stations
currently plans to terminate employment, whether by reason of the transactions
contemplated by this Agreement or otherwise. Schedule 3.14 also contains a true
and complete list of all employee benefit plans or arrangements covering the
employees employed at the Stations (the "EMPLOYEES"), including, with respect to
the Employees any:
(i) "Employee welfare benefit plan," as defined in Section
3(1) of ERISA, that is maintained or administered by Sellers or to which Sellers
contribute or are required to contribute (a "WELFARE PLAN");
(ii) "Multiemployer pension plan," as defined in Section 3(37)
of ERISA, that is maintained or administered by Sellers or to which Sellers
contribute or are required to contribute (a "MULTIEMPLOYER PLAN" and, together
with the Welfare Plans, the "BENEFIT PLANS");
(iii) "Employee pension benefit plan," as defined in Section
3(2) of ERISA (other than a Multiemployer Plan), to which Sellers contribute or
are required to contribute (a "PENSION PLAN");
(iv) Employee plan that is maintained in connection with any
trust described in Section 501(c)(9) of the Internal Revenue Code of 1986, as
amended; and
(v) Employment, severance, or other similar contract,
arrangement, or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, or retirement benefits or arrangement for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits that (A) is not a Welfare Plan, Pension
Plan, or Multiemployer Plan, and (B) is entered into, maintained, contributed
to, or required to be contributed to by any Seller or under which any Seller has
any liability relating to Employees, (collectively, "BENEFIT ARRANGEMENTS").
(b) Pension Plans. Sellers do not sponsor, maintain, or contribute to
any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing
Plan. Each Pension Plan complies currently and has been maintained in
substantial compliance with its terms and, both as to form and in operation,
with all material requirements prescribed by any and all material statutes,
orders, rules and regulations that are applicable to such plans, including ERISA
and the Code, except where the failure to do so will not have a Material Adverse
Effect.
(c) Welfare Plans. Each Welfare Plan complies currently and has been
maintained in substantial compliance with its terms and, both as to form and in
operation, with all material requirements prescribed by any and all material
statutes, orders, rules and regulations that are applicable to such plans,
including ERISA and the Code, except where the failure to do so will not have a
Material Adverse Effect. Sellers do not sponsor, maintain, or contribute to any
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Welfare Plan that provides health or death benefits to former employees of the
Stations other than as required by Section 4980B of the Code or other applicable
laws.
(d) Benefit Arrangements. Each Benefit Arrangement has been maintained
in substantial compliance with its terms and with the material requirements
prescribed by all statutes, orders, rules and regulations that are applicable to
such Benefit Arrangement, except where the failure to do so will not have a
Material Adverse Effect. Except for those employment agreements listed on
Schedule 3.7, Sellers have no written contract prohibiting the termination of
any Employee.
(e) Multiemployer Plans. Except as disclosed in Schedule 3.14, Sellers
have not at any time been a participant in any Multiemployer Plan.
(f) Delivery of Copies of Relevant Documents and Other Information.
Sellers have delivered or made available to Buyer true and complete copies of
each of the following documents:
(i) Each Welfare Plan and Pension Plan (and, if applicable,
related trust agreements) and all amendments thereto, and written descriptions
thereof that have been distributed to Employees, all annuity contracts or other
funding instruments; and
(ii) Each Benefit Arrangement and written descriptions thereof
that have been distributed to Employees and complete descriptions of any Benefit
Arrangement that is not in writing.
(g) Labor Relations. Except as set forth in Schedule 3.14(g), no Seller
is a party to or subject to any collective bargaining agreement or written or
oral employment agreement with any Employee. With respect to the Employees
Sellers have complied in all material respects with all laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and have not
received any notice alleging that any Seller has failed to comply materially
with any such laws, rules, or regulations. Except as set forth on Schedule
3.14(g), no proceedings are pending or, to the Knowledge of Sellers, threatened,
between any Seller and any Employee (singly or collectively) that relate to the
Stations. Except as set forth on Schedule 3.14(g), no labor union or other
collective bargaining unit represents or claims to represent any of the
Employees. Except as set forth in Schedule 3.14, to the Knowledge of Sellers,
there is no union campaign being conducted to solicit cards from any Employees
to authorize a union to represent any of the employees of any Seller or to
request a National Labor Relations Board certification election with respect to
any Employees.
3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15 and except
for any FCC rulemaking proceedings generally affecting the radio broadcasting
industry and not particular to any of Sellers, there is no claim, legal action,
counterclaim, suit, arbitration, or other legal, administrative, or tax
proceeding, nor any order, decree, or judgment, in progress or pending, or to
the Knowledge of Sellers threatened, against or relating to the Assets, or the
business or operations of any of the Stations, nor does any Seller know of any
basis for the same.
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3.16 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed on Schedule 3.16, (x) none of the Owned Real
Property and none of the Tangible Personal Property and, to Sellers' Knowledge
(provided such knowledge qualifer shall not apply to the extent caused by the
Tangible Personal Property), none of the Leased Real Property contains (i) any
asbestos, polychlorinated biphenyls or any PCB contaminated oil; (ii) any
Contaminants; or (iii) any underground storage tanks; (y) no underground storage
tank disclosed on Schedule 3.16 has leaked and has not been remediated or leaks
and such tank is in substantial compliance with all applicable Environmental
Laws; and (z) all of the Owned Real Property and, to Sellers' Knowledge, all of
the Leased Real Property is in substantial compliance with all applicable
Environmental Laws.
(b) Sellers have obtained all material permits, licenses and other
authorizations that are required under all Environmental Laws.
3.17 Compliance with Laws. Sellers have complied in all material respects with
the Licenses and all material federal, state and local laws, rules, regulations
and ordinances applicable or relating to the ownership and operation of the
Assets and Stations, and Sellers have not received any notice of any material
violation of federal, state and local laws, regulations and ordinances
applicable or relating to the ownership or operation of the Assets and the
Stations nor, to Sellers' Knowledge, have Sellers received any notice of any
immaterial violation of federal, state and local laws, regulations, and
ordinances applicable or relating to the ownership or operation of the Assets or
the Stations.
3.18 Conduct of Business in Ordinary Course. Since the Balance Sheet Date and
through the date hereof, Sellers have conducted their business and operations in
the ordinary course and, except as disclosed in Schedule 3.18, have not:
(a) made any material increase in compensation payable or to become
payable to any of its employees other than those in the normal and usual course
of business or in connection with any change in an employee's responsibilities,
or any bonus payment made or promised to any of its Employees, or any material
change in personnel policies, employee benefits, or other compensation
arrangements affecting its employees;
(b) made any sale, assignment, lease, or other transfer of assets other
than in the normal and usual course of business with suitable replacements being
obtained therefor;
(c) canceled any debts owed to or claims held by Sellers, except in the
normal and usual course of business;
(d) made any changes in Sellers' accounting practices;
(e) suffered any material write-down of the value of any Assets or any
material write-off as uncorrectable of any Accounts Receivable; or
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(f) transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right.
3.19 Transactions with Affiliates. Except as disclosed in Schedule 3.19 or with
respect to the Excluded Real Property Interests and the Excluded Tangible
Personal Property, no Seller has been involved in any business arrangement or
relationship with any Affiliate of Seller, and no Affiliate of any Seller owns
any property or right, tangible or intangible, that is material to the
operations of the business of the Stations.
3.20 Broker. Except as disclosed on Schedule 3.20, no Seller nor any Person
acting on its behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transactions contemplated by this
Agreement, and Buyer shall have no liability for any finders' or brokers' fees
or commissions in connection with the transactions contemplated by this
Agreement for any broker listed on Schedule 3.20.
3.21 Insolvency Proceedings. None of the Sellers nor any of the Assets are the
subject of any pending or threatened insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary. No Seller
has made an assignment for the benefit of creditors or taken any action in
contemplation of or which would constitute a valid basis for the institution of
any such insolvency proceedings. No Seller is insolvent nor will it become
insolvent as a result of entering into or performing this Agreement.
3.22 Year 2000 Compatibility. Sellers believe that the Stations' hardware,
software, broadcast and ancillary equipment (the "Operational Equipment") that
are date dependent and are material to the operation of the Stations are year
2000 compliant. To Sellers' Knowledge, there are no facts or circumstances that
would result in material costs or disruption to the operation of the Stations
due to the failure of Sellers' customers or suppliers to be year 2000 compliant.
For the purposes of this section, "Year 2000 Compliant" shall mean that the
Operational Equipment will correctly process, provide and receive date data
before, during and after December 31, 1999.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof and as of any
Closing Date (except for representations and warranties that speak as of a
specific date or time, in which case, such representations and warranties shall
be true and complete as of such date and time) as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has the requisite corporate power and authority to execute,
deliver and perform this Agreement and the documents contemplated hereby
according to their respective terms and to own the Assets. Prior to the Closing
Date, Buyer will be qualified to do business in each of the States in which any
of the Stations are located.
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4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents. Subject to the
receipt of the Consents, the execution, delivery and performance by Buyer of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (a) do not require the consent of any
third party; (b) will not conflict with the Articles of Incorporation or Bylaws
of Buyer; (c) will not conflict with, result in a breach of, or constitute a
default under, any applicable law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license or permit to which Buyer is a party or by which
Buyer may be bound. Except for the FCC Consent provided for in Section 6.1. the
filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other
Consents described in Schedule 4.3, no consent, approval, permit, or
authorization of, or declaration to, or filing with any governmental or
regulatory authority or any other third party is required (a) to consummate this
Agreement and the transactions contemplated hereby, or (b) to permit Buyer to
acquire the Assets from Sellers or to assume certain liabilities and obligations
of Sellers in accordance with Section 2.5.
4.4 Brokers. Neither Buyer nor any person or entity acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Availability of Funds. Buyer will have available on the Closing Date
sufficient funds to enable it to consummate the transactions contemplated
hereby.
4.6 Qualifications of Buyer. Except as disclosed in Schedule 4.6, Buyer is, and
pending Closing will remain legally, financially and otherwise qualified under
the Communications Act, Hart-Scott-Rodino and all rules, regulations and
policies of the FCC, the Department of Justice, the Federal Trade Commission
(the "FTC") and any other governmental agency, to acquire and operate the
Stations. Except as disclosed in Schedule 4.6, there are no facts or proceedings
which would reasonably be expected to disqualify Buyer under the Communications
Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations
or would cause the FCC not to approve the assignment of the FCC Licenses to
Buyer or the Department of Justice and the FTC not to allow the waiting period
under Hart-Scott-Rodino to terminate within 30 days of the filing provided for
in Section 6.2. Except as disclosed in Schedule 4.6, Buyer has no knowledge of
any fact or circumstance relating to Buyer or any of Buyer's Affiliates that
would reasonably be expected to (a) cause the filing of any objection to the
assignment of the FCC Licenses to Buyer, (b) lead to a delay in the processing
by the FCC of the applications for such assignment or (c) lead to a delay in the
termination of the waiting period required by Hart-Scott-Rodino.
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Except as disclosed in Schedule 4.6, no waiver of any FCC rule or policy is
necessary to be obtained for the grant of the applications for the assignment of
the FCC Licenses to Buyer, nor will processing pursuant to any exception or rule
of general applicability be requested or required in connection with the
consummation of the transactions herein.
4.7 WARN Act. Buyer is not planning or contemplating, and has not made or taken
any decisions or actions concerning the employees of the Stations after the
Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Notification Act of 1988, as amended, or any similar
state law.
4.8 Buyer's Defined Contribution Plan. Schedule 4.8 completely and accurately
lists all Buyer's defined contribution plan or plans (the "Buyer's Plan")
intended to be qualified under Section 401(a) and 401(k) of the Code in which
the Transferred Employees will be eligible to participate. Buyer has a currently
applicable determination letter from the Internal Revenue Service.
SECTION 5: OPERATION OF THE STATIONS PRIOR TO CLOSING
Sellers covenants and agrees that between the date hereof and Final Closing
Date, Sellers will operate the Stations in the ordinary course in accordance
with Sellers' past practices (except where such conduct would conflict with the
following covenants or with other obligations of Sellers under this Agreement),
and, except as contemplated by this Agreement or with the prior written consent
of Buyer (such consent not to be unreasonably withheld), Sellers will act in
accordance with the following insofar as such actions relate to the Stations:
5.1 Contracts. Seller will not renew, extend, amend or terminate, or waive any
material right under, any Material Contract, or enter into any contract or
commitment or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness and obligations arising
from the amendment of any existing Contract, regardless of whether such Contract
is a Material Contract) that will be assumed by or be otherwise binding on Buyer
after Closing, except for (a) cash time sales agreements and production
agreements made in the ordinary course of business consistent with Seller's past
practices, (b) the renewal or extension of any existing Contract (other than
network affiliation agreements) on its existing terms in the ordinary course of
business, and (c) other contracts (other than network affiliation agreements, or
time brokerage or local marketing arrangements) entered into in the ordinary
course of business consistent with Sellers' past practices that do not, with
respect to any Radio Group, involve consideration, in the aggregate, in excess
of Fifty Thousand Dollars ($50,000) measured at Closing. Prior to the applicable
Closing Date, Sellers shall deliver to Buyer a list of all material Contracts
entered into between the date of this Agreement and the applicable Closing Date
and shall make available to Buyer copies of such Contracts.
5.2 Compensation. Sellers shall not materially increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Stations,
except in accordance with past practices, as required by an employment agreement
or consulting agreement or in connection and commensurate with the change in
responsibility of any employee.
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5.3 Encumbrances. Sellers will not create, assume, or permit to exist any
mortgage, pledge, lien, or other charge or encumbrance affecting any of the
Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens that will be
removed prior to the applicable Closing Date, and (c) Permitted Encumbrances.
5.4 Dispositions. Sellers will not sell, assign, lease, or otherwise transfer or
dispose of any of the Assets except (a) Assets that are no longer used in the
operations of the Stations, (b) Assets that are replaced with Assets of
equivalent kind and value that are acquired after the date of this Agreement,
and (c) any intercompany accounts receivable.
5.5 Access to Information. Upon prior reasonable notice by Buyer, Sellers will
give to Buyer and its investors, lenders, counsel, accountants, engineers and
other authorized representatives reasonable access to the Stations and all
books, records and documents of Sellers which are material to the business and
operation of the Stations, and will furnish or cause to be furnished to Buyer
and its authorized representatives all information relating to Sellers and the
Stations that they reasonably request (including any financial reports and
operations reports produced with respect to the Stations).
5.6 Insurance. Sellers or their Affiliates shall maintain in full force and
effect policies of insurance of the same type, character and coverage as the
policies currently carried with respect to the business, operations and assets
of the Stations.
5.7 Licenses. Sellers shall not cause or permit, by any act or failure to act,
any of the Licenses listed on Schedule 3.4 to expire or to be revoked, suspended
or modified, or take any action that could reasonably be expected to cause the
FCC or any other governmental authority to institute proceedings for the
suspension, revocation or material adverse modification of any of the Licenses.
Sellers shall prosecute with due diligence any applications to any governmental
authority necessary for the operation of the Stations.
5.8 Obligations. Sellers shall pay all its obligations insofar as they relate to
the Stations as they become due, consistent with past practices.
5.9 No Inconsistent Action. Sellers shall not take any action that is
inconsistent with its obligations under this Agreement in any material respect
or that could reasonably be expected to hinder or delay the consummation of the
transactions contemplated by this Agreement. Neither Seller nor any of its
respective representatives or agents shall, directly or indirectly, solicit,
initiate, or participate in any way in discussions or negotiations with, or
provide any confidential information to, any Person (other than Buyer or any
Affiliate or associate of Buyer and their respective representatives and agents)
concerning any possible disposition of the Stations, the sale of any material
assets of the Stations, or any similar transaction.
5.10 Maintenance of Assets. Sellers shall maintain all of the Assets in good
condition (ordinary wear, tear and casualty excepted), consistent with their
overall condition on the date of this Agreement, and use, operate and maintain
all of the Assets in a reasonable manner. Sellers shall maintain inventories of
spare parts and expendable supplies at levels consistent with past
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practices. If any insured or indemnified loss, damage, impairment, confiscation,
or condemnation of or to any of the Assets occurs, Sellers shall repair,
replace, or restore the Assets to their prior condition as represented in this
Agreement as soon thereafter as possible, and Sellers shall use the proceeds of
any claim under any property damage insurance policy or other recovery solely to
repair, replace, or restore any of the Assets that are lost, damaged, impaired,
or destroyed.
5.11 Consents.
(a) Subject to Section 6.5 hereof, Sellers shall use their reasonable
efforts to obtain all Consents described in Section 3.3, without any adverse
change in the terms or conditions of any Assumed Contract or License. Sellers
shall promptly advise Buyer of any difficulties experienced in obtaining any of
the Consents and of any conditions proposed, considered or requested for any of
the Consents.
(b) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign or transfer any Contract
or any claim, right or benefit arising thereunder or resulting therefrom, if an
attempted assignment or transfer thereof, without the consent of a third party
thereto would constitute a breach thereof or in any way adversely affect the
rights of the Buyer thereunder. If such consent (a "Deferred Consent") is not
obtained, or if an attempted assignment or transfer thereof would be ineffective
or would affect the rights thereunder so that the Buyer would not receive all
such rights, then (i) the Seller and the Buyer will cooperate, in all reasonable
respects, to obtain such Deferred Consents as soon as practicable; provided that
Sellers shall have no obligation (y) to expend funds to obtain any Deferred
Consent, other than ministerial processing fees, and Sellers' out-of-pocket
expenses to its attorney or other agents incurred in connection with obtaining
any Deferred Consent, or (z) to agree to any adverse change in any License or
Assumed Contract in order to obtain a Deferred Consent, and (ii) until such
Deferred Consent is obtained, the Seller and the Buyer will cooperate in all
reasonable respects, to provide to the Buyer the benefits under the Contract, to
which such Deferred Consent relates (with the Buyer responsible for all the
liabilities and obligations thereunder). In particular, in the event that any
such Deferred Consent is not obtained prior to Closing, then the Buyer and the
Seller shall enter into such arrangements (including subleasing or
subcontracting if permitted) to provide to the parties the economic and
operational equivalent of obtaining such Deferred Consent and assigning or
transferring such Contract, including enforcement for the benefit of the Buyer
of all claims or rights arising thereunder, and the performance by the Buyer of
the obligations thereunder on a prompt and punctual basis.
5.12 Books and Records. Sellers shall maintain their books and records in
accordance with past practices.
5.13 Notification. Sellers shall promptly notify Buyer in writing of any or
material developments with respect to the business or operations of the Stations
and of any material change in any of the information contained in the
representations and warranties contained in Section 3 of this Agreement.
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5.14 Financial Information. Sellers shall furnish Buyer with sales pacing
reports for the Stations on a weekly basis and shall furnish to Buyer within
thirty (30) days after the end of each month ending between the date of this
Agreement and the Final Closing Date a statement of income and expense for the
month just ended and such other financial information (including information on
payables and receivables) as Buyer may reasonably request. All financial
information delivered by Sellers to Buyer pursuant to this Section 5.14 shall be
prepared from the books and records of Sellers in accordance with generally
accepted accounting principles, consistently applied, shall accurately reflect
the books, records and accounts of the Stations, shall be complete and correct
in all material respects, and shall present fairly the financial condition of
the Stations as at their respective dates and the results of operations for the
periods then ended.
5.15 Compliance with Laws. Sellers shall comply in all material respects with
all material laws, rules and regulations.
5.16 Programming. Sellers shall not make any material changes in the Stations'
formats, except such changes as in the good faith judgment of Seller are
required by the public interest.
5.17 Preservation of Business. Sellers shall use commercially reasonable efforts
consistent with past practices to preserve the business and organization of the
Stations and to keep available to the Stations its present employees and to
preserve the audience of the Stations and the Stations' present relationships
with suppliers, advertisers, and others having business relations with it.
5.18 Normal Operations. Subject to the terms and conditions of this Agreement
(including, without limitation, Section 5.1), prior to either the Final Closing
or a Radio Closing Date, as applicable, Sellers shall carry on the business and
activities of the Stations, including, without limitation, promotional
activities, the sale of advertising time, entering into other contracts and
agreements, purchasing and scheduling programming, performing research, and
operating in all material respects in accordance with existing budgets and past
practice and will not enter into trade and barter obligations except in the
ordinary course of business consistent with past practice.
5.19 Buffalo Build-Out Property. Sellers shall keep Buyer fully informed of the
status of the construction and build-out of the Buffalo Build-Out Property and
shall make available to Buyer for its review and approval, which approval shall
not be unreasonably withheld, notice of any material changes to the capital
expenditure budget provided to Buyer prior to the date hereof.
SECTION 6: SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent
(a) The exchange and transfer of the Assets as contemplated by this
Agreement is subject to the prior consent and approval of the FCC.
(b) Sellers and Buyer shall prepare and within seven (7) business days
after the date of this Agreement shall file with the FCC an appropriate
application for FCC Consent. The parties shall thereafter prosecute the
application with all reasonable diligence and otherwise use their
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respective best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by the
FCC Consent, except that no party shall be required to comply with a condition
if (i) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by that party of any of its
representations, warranties or covenants hereunder, and (ii) compliance with the
condition would have a material adverse effect upon it. Buyer and Sellers shall
oppose any petitions to deny or other objections filed with respect to the
application for the FCC Consent and any requests for reconsideration or judicial
review of the FCC Consent.
(c) If any Closing shall not have occurred for any reason within the
original effective period of the FCC Consent or Radio Group FCC Consent, and
neither party shall have terminated this Agreement under Section 9, the parties
shall jointly request an extension of the effective period of the FCC Consent or
Radio Group FCC Consent, as the case may be. No extension of the effective
period of the FCC Consent or Radio Group FCC Consent shall limit the exercise by
either party of its right to terminate the Agreement under Section 9.
6.2 Hart-Scott-Rodino. Within ten (10) days following the execution of this
Agreement, Sellers and Buyer shall complete any filing that may be required
pursuant to Hart-Scott-Rodino (each an "HRS Filing"). Sellers and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Hart-Scott-Rodino.
6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets of Sellers for any cause whatsoever shall be
borne by Sellers at all times prior to the Final Closing or Radio Group Closing,
as the case may be. In the event of loss or damage prior to the Final Closing
Date or a Radio Group Closing Date, Sellers shall use commercially reasonable
efforts to fix, restore, or replace such loss, damage, impairment, confiscation,
or condemnation to its former operational condition. If Sellers have adequate
replacement cost insurance, Buyer may elect to have Sellers assign such
insurance proceeds to Buyer, in which case, Buyer shall proceed with the Final
Closing or Radio Group Closing, as the case may be, and receive at such Closing
the insurance proceeds or an assignment of the right to receive such insurance
proceeds, as applicable, to which Sellers otherwise would be entitled, whereupon
Sellers shall have no further liability to Buyer for such loss or damage.
6.4 Confidentiality. Except as necessary for the consummation of the transaction
contemplated by this Agreement, including Buyer's obtaining of financing related
hereto, and except as and to the extent required by law, each party will keep
confidential any information obtained from the other party in connection with
the transactions specifically contemplated by this Agreement. If this Agreement
is terminated, each party will return to the other party all information
obtained by the such party from the other party in connection with the
transactions contemplated by this Agreement. Buyer shall continue to be bound by
the terms and conditions of the Confidentiality Agreement dated June 30, 1999
between the parties hereto (the "CONFIDENTIALITY AGREEMENT").
6.5 Cooperation. Buyer and Sellers shall reasonably cooperate with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of
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their respective obligations under this Agreement, and in connection with any
litigation after any Closing Date which relate to the Stations for periods prior
to the applicable Effective Time, Buyer and Sellers shall execute such other
documents as may be reasonably necessary and desirable to the implementation and
consummation of this Agreement, and otherwise use their commercially reasonable
efforts to consummate the transaction contemplated hereby and to fulfill their
obligations under this Agreement. Notwithstanding the foregoing, Sellers shall
have no obligation (a) to expend funds to obtain any of the Consents, other than
ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney
or other agents incurred in connection with obtaining such consents, or (b) to
agree to any adverse change in any License or Assumed Contract in order to
obtain a Consent required with respect thereto.
6.6 Control of the Stations. Prior to any Closing, Buyer shall not, directly or
indirectly, control, supervise or direct, or attempt to control, supervise or
direct, the operations of the Stations; those operations, including complete
control and supervision of all of each Stations' programs, employees and
policies, shall be the sole responsibility of Seller.
6.7 Accounts Receivable.
(a) As soon as practicable after the Closing Date or any Radio Group
Closing Date, as the case may be, Sellers shall deliver to Buyer a complete and
detailed list of all the Accounts Receivable. During the period beginning on the
Closing Date or Radio Group Closing Date, as applicable, and ending on the last
day of the sixth full calendar month beginning after the Closing Date or Radio
Group Closing Date, as applicable (the "COLLECTION PERIOD"), Buyer shall use
commercially reasonable efforts, as Sellers' agent, to collect the Accounts
Receivable in the usual and ordinary course of business, using the Stations'
credit, sales and other appropriate personnel in accordance with customary
practices, which may include referral to a collection agency. Notwithstanding
the foregoing, Buyer shall not be required to institute legal proceedings on
Sellers' behalf to enforce the collection of any Accounts Receivable. Buyer
shall not adjust any Accounts Receivable or grant credit without Sellers'
written consent, and Buyer shall not pledge, secure or otherwise encumber such
Accounts Receivable or the proceeds therefrom. On or before the twelfth business
day after the end of each calendar month during the Collection Period, Buyer
shall remit to Sellers collections received by Buyer with respect to the
Accounts Receivable, together with a report of all amounts collected with
respect to the Accounts Receivable during, as the case may be, the period from
any Closing or the beginning of such month through the end of such month, less
any sales commissions or collection costs paid by Buyer during the respective
periods with respect to those Accounts Receivable.
(b) Any payments received by Buyer during the Collection Period from
any Person that is an account debtor with respect to any account disclosed in
the list of Accounts Receivable delivered by Sellers to Buyer shall be applied
first to the invoice designated by the account debtor and, if none, such payment
shall be applied to the oldest account which is not disputed. Buyer shall incur
no liability to Sellers for any uncollected account, other than as a result of
Buyer's breach of its obligations under this Section 6.7. Prior to the end of
the third full calendar month after any Closing, neither Sellers nor any agent
of Sellers shall make any direct solicitation of the account debtors for
payment. After the end of the third full calendar month after any Closing,
Sellers shall have the right, at their expense, to assist and participate with
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Buyer in the collection of unpaid Accounts Receivable, provided, however,
Seller's collection efforts shall be commercially reasonable and consistent with
its past practices.
(c) At the end of the Collection Period, Buyer shall return to Sellers
all files concerning the collection or attempts to collect the Accounts
Receivable, and Buyer's responsibility for the collection of the Accounts
Receivable shall cease.
6.8 Allocation of Purchase Price. Buyer and Sellers agree to allocate the
Purchase Price among the Stations for all purposes (including financial
accounting and Tax purposes) as set forth on Schedule 6.8 hereto. Buyer and
Sellers agree that the fair market value of the Assets of the Stations (the
"Fair Market Value of the Assets") will be appraised by the appraisal firm of
BIA, whose expenses will be borne one-half (1/2) by Buyer and one-half (1/2) by
Sellers. Buyer and Sellers shall collaborate in good faith in the preparation of
mutually satisfactory Form(s) 8594 (and Form 8824 to the extent applicable)
reflecting the Fair Market Value of the Assets as found by BIA and such other
information as is required by the form. Buyer and Sellers shall each file with
their respective federal income tax return for the tax year in which any Closing
occurs, IRS Form(s) 8594 (and Form 8824 to the extent applicable) containing the
information agreed upon by the parties pursuant to the immediately preceding
sentence. Buyer agrees to report the purchase of the Assets of the Stations, and
Sellers agree to report the sale of such assets for income tax purposes on their
respective income tax returns in a manner consistent with the information agreed
upon by the parties pursuant to this section and contained in the IRS Form(s)
8594 (and Form 8824 to the extent applicable).
6.9 Access to Books and Records. To the extent reasonably requested by Buyer,
Sellers shall provide Buyer access and the right to copy from and after any
Closing Date any books and records relating to the Assets but not included in
the Assets. To the extent reasonably requested by Sellers, Buyer shall provide
Sellers access and the right to copy from and after the applicable Closing Date
any books and records relating to the Assets that are included in the Assets.
Buyer and Sellers shall each retain any such books and records, for a period of
three years (or such longer period as may be required by law or good business
practice) following the Final Closing Date. Subject to and in accordance with
the terms of this Section 6.9, Sellers shall cause its accountants regularly
servicing Sellers to conduct audits and reviews of Sellers' financial
information as Buyer may reasonably determine is necessary to satisfy Buyer's
due diligence, including, without limitation, (a) causing Sellers' auditors to
permit Buyer's auditors to have access to Sellers' auditor's work papers, and
(b) causing Sellers' auditors to consent to such access by Buyer. Under no
circumstance shall the preparation of any financial statements pursuant to such
audits and reviews (i) require any Seller to change or modify any accounting
policy, (ii) cause any unreasonable disruption in the business or operations of
any Station, or (iii) cause any delay that is more than de minimis in any
internal reporting requirements of any Seller. All costs and expenses incurred
in connection with the preparation of (and assimilation of relevant information
for) the audits and reviews of financial information shall be paid by Sellers;
provided, Buyer shall promptly pay upon presentation of any invoice, as a
non-refundable prepayment of the Purchase Price, for all charges incurred in
connection with such audit to the extent relating to work performed on or after
July 26, 1999 (such charges, the "Section 6.9 Amount") (it being understood that
the hourly charges of Sellers' accountants for the period of time for which
Buyer is responsible may be greater than the hourly charges incurred by
Sellers).
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In addition, Buyer shall be responsible for any costs and expenses (a)
associated with the inclusion of such audited financial statements in Buyer's
publicly filed documents, including, without limitation, any fees for consents
to such inclusion and a "comfort letter," and (b) incurred in connection with
any review of financial statements for the periods ended June 30, 1998 or June
30, 1999, or for any other periods other than the financial statements for
calendar year 1998.
6.10 Employee Matters.
(a) Upon consummation of the Closing or a Radio Group Closing
hereunder, Buyer shall offer employment to each of the Employees of the Stations
included in such Radio Group (including those on leave of absence, whether
short-term, long-term, family, maternity, disability, paid, unpaid or other, and
those hired after the date hereof in the ordinary course of business) at a
comparable salary, position and place of employment as held by each such
employee immediately prior to the Closing Date (such employees who are given
such offers of employment are referred to herein as the "TRANSFERRED EMPLOYEES")
(b) Except as provided otherwise in this Section 6.10, Sellers shall
pay, discharge and be responsible for (a) all salary and wages arising out of or
relating to the employment of the Employees prior to the Closing Date or a Radio
Group Closing Date, as the case may be, and (b) any employee benefits arising
under the Benefit Plans or Benefit Arrangements of Sellers and their Affiliates
during the period prior to such Closing Date. From and after each Closing Date,
Buyer shall pay, discharge and be responsible for all salary, wages and benefits
arising out of or relating to the employment of the Transferred Employees by
Buyer on and after the Closing Date or Radio Group Closing Date, as applicable.
Buyer shall be responsible for all severance liabilities, and all COBRA
liabilities for any Transferred Employees of the Stations terminated on or after
any Closing Date, including, without limitation, any related to any deemed
termination by Sellers of the Transferred Employees as a result of the
consummation of the transaction contemplated hereby and any required pursuant to
those retention/severance agreements listed on Schedule 6.10 hereto, but
excluding any severance due as a result of those agreements listed on Schedule
6.10-A.
(c) Buyer shall cause all Transferred Employees as of any Closing Date
to be eligible to participate in its "employee welfare benefit plans" and
"employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA,
respectively) of Buyer in which similarly situated employees of Buyer are
generally eligible to participate; provided, however, that all Transferred
Employees and their spouses and dependents shall be eligible for coverage
immediately after such Closing Date (and shall not be excluded from coverage on
account of any pre-existing condition) to the extent provided under such plans
with respect to Transferred Employees.
(d) For purposes of any length of service requirements, waiting period,
vesting periods or differential benefits based on length of service in any such
plan for which a Transferred Employee may be eligible after any Closing, Buyer
shall ensure that, to the extent permitted by law, and except as limited by
Buyer's Employment Termination/Severance policy service by such Transferred
Employee with Sellers, any Affiliate of Sellers or any prior owner of the
Stations shall be deemed to have been service with the Buyer. In addition, Buyer
shall ensure
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that each Transferred Employee receives credit under any welfare benefit plan of
Buyer for any deductibles or co-payments paid by such Transferred Employee and
his or her dependents for the current plan year under a plan maintained by
Sellers or any Affiliate of Sellers to the extent allowable under any such plan.
Buyer shall grant credit to each Transferred Employee for all sick leave in
accordance with the policies of Buyer applicable generally to its employees
after giving effect to service for Sellers, any Affiliate of Sellers or any
prior owner of the Stations, as service for Buyer. To the extent taken into
account in determining prorations pursuant to Section 2.3 hereof, Buyer shall
assume and discharge Sellers' liabilities for the payment of all unused vacation
leave accrued by Transferred Employees as of the Closing Date or a Radio Group
Closing Date, as the case may be. To the extent any claim with respect to such
accrued vacation leave is lodged against Sellers with respect to any Transferred
Employee for which Buyer has received a proration credit, Buyer shall, to the
extent of such credit, indemnify, defend and hold harmless Sellers from and
against any and all losses, directly or indirectly, as a result of, or based
upon or arising from the same.
(e) As soon as practicable following any Closing Date, Buyer shall make
available to the Transferred Employees Buyer's 401(k) Plan. To the extent
requested by a Transferred Employee, Sellers shall cause to be transferred to
Buyer's 401(k) Plan, in cash and in kind, all of the individual account balances
of Transferred Employees under the Sellers' Plan, including any outstanding plan
participant loan receivables allocated to such accounts.
(f) Buyer acknowledges and agrees that Buyer's obligations pursuant to
this Section 6.10 are in addition to, and not in limitation of, Buyer's
obligation to assume the employment contracts included in the Assumed Contracts.
Nothing in this Agreement shall be construed to provide employees of Sellers
with any rights under this Agreement, and no Person, other than the parties
hereto, is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall only be enforceable by, the parties hereto and their respective successors
and assigns as permitted hereunder.
(g) Certain Payments. Subject to the terms of this Section 6.10(g) and
Section 6.10(h), in the event Buyer terminates any of the Transferred Employees
during the six (6) calendar month period after the Closing Date or a Radio Group
Closing Date, as the case may be (a "Reimbursement Period"), which relates to
the Station at which such employee is employed, as applicable, Sellers shall
promptly reimburse Buyer for the amount paid by Buyer to such Terminated
Employee pursuant to the terms of the Retention Agreements listed on Schedules
6.10 (as in effect on the date hereof) (the "Scheduled Retention Agreements") as
follows: (y) the full amount of such payments in an amount, when aggregated with
the payments made by the Kansas City Sellers under 6.10(g) of the Kansas City
Agreement, that does not to exceed $1,000,000 (the "Initial Employee Cap"); and
(z) 50% of such payments above the Initial Employee Cap in an amount, when
aggregated with payments made by the Kansas City Sellers under 6.10(g) of the
Kansas City Agreement, that does not to exceed $500,000. The payments made
pursuant to this Section 6.10(g) shall not be counted against the Threshold
Amount. In no event shall Sellers be obligated to reimburse Buyer (i) for any
payments made by Buyer pursuant to the Scheduled Retention Agreements to
Transferred Employees terminated after the expiration of a Reimbursement Period,
or (ii) for any amount, when aggregated with any payments made by
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the Kansas City Sellers under 6.10(g) of the Kansas City Agreement, in excess of
$1,500,000.
(h) Notwithstanding any provisions of Section 6.10(g) of the Asset
Purchase Agreement to the contrary, Sellers shall have no obligation to
reimburse Buyer for any severance amount (whether or not pursuant to the
Scheduled Retention Agreements), which obligations shall be the sole obligation
of Buyer regardless of when such termination occurs paid to (i) any Transferred
Employee who is terminated (a) at the request of a third party who subsequently
enters into a memorandum of understanding, letter of intent, or agreement to
acquire any of the Stations, or (b) as a result of Buyer entering into a
memorandum of understanding, letter of intent, or an agreement to sell, assign,
swap, or otherwise dispose of or convey any Station to a third party, and/or
(ii) the employees listed on Schedule 6.10(h), including, but not limited to,
any employees of the Kansas City Stations listed thereon.
(i) For twelve (12) calendar months after the Closing Date or any Radio
Group Closing Date, as applicable, (a) none of Sellers or any of their
Affiliates shall hire any of the Transferred Employees of any Radio Group for
which such Closing has occurred; provided that the provisions of this Section
6.10(i)(a) shall not apply to any Transferred Employee terminated by Buyer; and
provided further that this Section 6.10(i)(a) does not apply to any employees
(other than the Transferred Employees) hired by the Seller Entities (as defined
below) after the Closing Date or any Radio Group Closing Date, as applicable,
and (b) other than the Transferred Employees, Buyer shall not hire any employees
of Sellers or any Affiliate or parent of Sellers (the "Seller Entities") who are
employees, as of the Closing Date or any Radio Group Closing Date, of any of the
television broadcast stations owned, operated, or programmed by any of the
Seller Entities in any market in which the Stations broadcast ("Sellers'
Employees"); provided that the provisions of this Section 6.10(i)(b) do not
apply to Sellers' Employees whose employment is terminated by the Seller
Entities; and provided further that the provisions of this Section 6.10(i)(b) do
not apply to any employees (other than Sellers' Employees) hired by Buyer after
the Closing Date or any Radio Group Closing Date, as applicable.
6.11 Lease. Buyer and the Sellers specified in the Lease attached hereto as
Exhibit 1 (the "LEASE") shall execute and deliver the Lease on the Closing Date
applicable to the Station to which the Lease applies.
6.12 Public Announcements. Sellers and Buyer shall consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement or the transactions contemplated herein and shall not
issue any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior written consent of the
other party, issue such press release or make such public statement as may be
required by Law or any listing agreement with a national securities exchange to
which Sinclair or Buyer is a party if it has used all reasonable efforts to
consult with the other party and to obtain such party's consent but has been
unable to do so in a timely manner.
6.13 Disclosure Schedules. Sellers and Buyer acknowledge and agree that Sellers
shall not be liable for the failure of the Schedules to be accurate as a result
of the operation of the Stations prior to a Closing in accordance with Section 5
of this Agreement. The inclusion of any fact or item on a Schedule referenced by
a particular section in this Agreement shall, should the
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existence of the fact or item or its contents be relevant to any other section,
be deemed to be disclosed with respect to such other section whether or not an
explicit cross-reference appears in the Schedules if such relevance is readily
apparent from examination of such Schedules.
6.14 Bulk Sales Law. Buyer hereby waives compliance by Sellers, in connection
with the transactions contemplated hereby, with the provisions of any applicable
bulk transfer laws.
6.15 Environmental Site Assessment.
6.15.1 Within sixty (60) days of the execution of this Agreement, Buyer
may obtain Phase I Environmental Assessments at Buyer's expense for any or all
of the parcels of the Owned or Leased Real Property set forth on Schedule 6.15
(the "Environmental Assessments"). In the event any Environmental Assessment
discloses any conditions contrary to any representations and warranties
(determined without regard to any Knowledge qualifier therein) or any potential
that such conditions may exist, the Buyer may conduct or have conducted at its
expense additional testing to confirm or negate the existence of any such
conditions. If any such Environmental Assessment or additional testing reflects
the existence of any such conditions at any Owned Real Property or, to the
extent caused by any of the Assets, at any of the Leased Real Property, and if,
and only if, the cost of remediation, when aggregated with costs or remediation
as to the Kansas City Stations, exceeds One Hundred Thousand Dollars
($100,000.00), in the aggregate for all parcels of the Real Property to be
conveyed by Sellers hereunder and the Kansas City Sellers pursuant to the Kansas
City Agreement shall cause the conditions to be remedied as quickly as possible
(and in all events prior to Closing for any Radio Group for which such property
is used in the operation of any Station in such Radio Group) such that no
conditions contrary to the representations and warranties (determined with
regard to any knowledge qualifier contained therein) of this Agreement exist;
provided, however, that Sellers shall not be obligated to expend in the
aggregate for all parcels of the Real Property of Stations and the Kansas City
Stations in excess of Three Million Dollars ($3,000,000.00) to effect such
remediation for all Real Property to be conveyed hereunder and under the Kansas
City Agreement. In the event that such remedial action(s) does cost in the
aggregate in excess of Three Million Dollars ($3,000,000.00), Sellers may elect
not to take such remedial action. In such event, Buyer may require Sellers to
proceed to the Closing of the Stations or of one or more Radio Groups, as the
case may be, and at any such Closing, the purchase price for any of the Stations
acquired at such Closing shall be reduced by the estimated cost of remediation
for that portion of the Owned Real Property to be acquired at such Closing, not
to exceed in the aggregate for all Closings the Unexpended Remediation Amount.
Alternatively, Buyer may terminate this Agreement, and Sellers shall have no
liability to Buyer as a result of such termination. Such Environmental
Assessments shall not relieve Sellers of any obligation with respect to any
representation, warranty, or covenant of Sellers in this Agreement or waive any
condition to Buyer's obligations under this Agreement. The cost of completing
the Environmental Assessments shall be paid by Buyer.
6.15.2 Nothing in this Section 6.15 shall be deemed to extend the date
on which any Closing would otherwise occur under this Agreement.
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6.16 Purchase of Advertising Time. After the Closing, Buyer agrees to purchase
for cash from Sellers over the five (5) year period subsequent to the Closing
Date, Five Million Dollars ($5,000,000) of advertising time on television
broadcast stations owned and/or programmed by Sellers or their Affiliates at
prevailing rates (taking into account the aggregate amount of the advertising
purchase), and Buyer shall use reasonable efforts to purchase such advertising
time pro rata over the five (5) year period. In the event that Sellers (and
their Affiliates) cease to own and/or program a material percentage of
television broadcast stations located in the same designated market areas as
radio broadcast stations owned and/or programmed by Buyer (or its Affiliates),
Sellers and Buyer shall negotiate in good faith to permit Buyer to expend an
appropriate amount of the advertising buy required by this Section 6.16 on
television broadcast stations previously owned and/or programmed by Sellers (and
its Affiliates), which expenditure on such television stations shall be counted
for purposes of Buyer's satisfaction of its obligation to purchase the
$5,000,000 aggregate amount of advertising time.
6.17 Adverse Developments. Sellers shall promptly notify Buyer of any unusual or
materially adverse developments that occur prior to any Closing with respect to
the Assets or the operation of the Stations; provided, however, that Sellers'
compliance with the disclosure requirements of this Section 6.17 shall not
relieve Sellers of any obligation with respect to any representation, warranty
or covenant of Sellers in this Agreement or relieve Buyer of any obligation or
duty hereunder, waive any condition to Buyer's obligations under this Agreement,
or expand or enhance any right of Buyer hereunder.
6.18 Title Insurance. Within ten (10) days of the date of this Agreement, each
Seller shall deliver to Buyer its current title insurance policies. Sellers
shall cooperate with Buyer in obtaining the commitment of a title insurance
company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard
rates, ALTA [1992] Form extended coverage title insurance policies, insuring
Buyer's interest in the Real Property (the "Title Commitment"). The costs of the
Title Commitment and the policy to be issued pursuant to the Title Commitment
shall be paid by Buyer.
6.19 Surveys. Within sixty (60) days of the date of this Agreement, each Seller
of Real Property shall deliver to Buyer, at Buyer's expense, surveys of the Real
Property performed by surveyors reasonably acceptable to Buyer sufficient to
remove any "survey exception" from the title insurance policies to be issued
pursuant to the Title Commitments.
6.20 Pending Transactions. Nothing in this Agreement shall preclude Sellers from
completing any pending transactions, including, but not limited to, the
acquisition of the Palm Stations and the Phase II Stations in accordance with
the terms and conditions thereof.
6.21 Assignment of Contracts for Pending Transactions. In the event the closing
for the acquisition by Sellers of the Palm Stations and/or the Phase II Stations
has not occurred on or before the Final Closing Date, Sellers shall deliver to
Buyer on the Final Closing Date such documentation reasonably requested by
Buyer's counsel, allowing for the assignment to Buyer from Sellers of Sellers'
rights, duties and obligations under the Phase II Purchase Agreement and the
Palm Asset Purchase Agreement.
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6.22 Cooperation on Tax Matters. The parties intend to allow for the election by
Sellers ("Election") to have the sale of all or a portion of the Assets
contemplated by this Agreement become part of a "Tax Deferred Exchange" in
accordance with the provisions of Section 1031 of the Internal Revenue Code of
1986 (the "Code"). Buyer covenants and agrees to participate and fully cooperate
with Sellers (and any qualified intermediary (as that term is defined in the
Code) involved in the Tax Deferred Exchange), in the event of an Election, so
long as such participation and cooperation does not have an adverse effect on
Buyer. To the extent that any provision in this Section 6.22 or in this
Agreement shall be found inconsistent with or in violation of any of the terms
of Section 1031 of the Code, such provision shall be null and void, all other
provisions of this Agreement shall remain in full force and effect, and the
parties shall endeavor to agree upon alternative provisions that affect a "Tax
Deferred Exchange" of property in such manner as will comply with Section 1031
of the Code. If no such agreement is reached within a reasonable period, then
this Agreement shall be performed without an exchange of properties.
6.23 Reference to Original Agreement. Buyer and Sellers agree that reference
shall be made to the Original Agreement and the accompanying Letter Agreement
dated August 18, 1999, and the Escrow Agreement dated August 18, 1999, to
resolve any ambiguity in this Agreement or any inconsistency between this
Agreement and the Kansas City Agreement.
SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the Closing
hereunder with respect to the Stations or any Radio Group are subject at Buyer's
option to the fulfillment prior to or at the Closing Date or a Radio Group
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and warranties
of Sellers contained in this Agreement shall be true and complete at and as of
the Closing Date as though made at and as of that time, (except for
representations and warranties that speak as of a specific date or time which
need only be true and complete as of such date or time), except where the
failure to be true and complete (determined without regard to any materiality
qualifications therein) does not have a Material Adverse Effect.
(b) Covenants and Conditions. Sellers shall have performed and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date, except where
the failure to have performed and complied (determined without regard to any
materiality qualifications therein) does not have a Radio Group Material Adverse
Effect.
(c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall
have been granted, notwithstanding that it may not have yet become a "Final
Order," unless any filing is made with the FCC that pertains to or becomes
associated with any request for consent to the assignment of any of the FCC
Licenses (an "FCC Objection"), in which case, Buyer shall not be obligated to
close on a Radio Group which includes such Station to which such FCC Objection
is applicable until the FCC Consent shall have become a "Final Order," unless in
the reasonable judgment of Buyer's counsel such objection would not reasonably
be expected to result in a
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denial of the FCC Consent, or a Radio Group FCC Consent, as the case may be, or
the designation for hearing for the applications for FCC Consent or a Radio
Group FCC Consent, as the case may be.
(d) Hart-Scott-Rodino. All applicable waiting periods under
Hart-Scott-Rodino shall have expired or terminated.
(e) Governmental Authorizations. Sellers shall be the holder of all FCC
Licenses (other than the FCC Licenses for the Palm Stations and Phase II
Stations if Sellers have not closed on the Palm Stations and the Phase II
Stations), and there shall not have been any modification, revocation, or
non-renewal of any License that has had a Radio Group Material Adverse Effect.
No proceeding shall be pending the effect of which could be to revoke, cancel,
fail to renew, suspend, or modify materially and adversely any FCC License.
(f) Consents. All consents of third parties that are required for the
valid and binding assignment from Sellers to Buyer of all Material Contracts
marked by an asterisk on Schedules 3.5 and 3.7 with respect to a Radio Group
shall have been obtained (or available upon consummation of the Closing) .
(g) Lease. Seller shall have entered into the lease described on
Schedule 7.1(g) and (to the extent required by such lease) shall have obtained a
valid and binding assignment of such lease from Sellers to Buyer.
(h) Deliveries. Sellers shall have made or stand willing to make all
the deliveries to Buyer described in Section 8.2.
(i) Satisfactory Environmental Assessment. To the extent that any
Environmental Assessment or additional testing conducting pursuant to Section
6.15 hereof reflects the existence of conditions contrary to any representation
or warranty in this Agreement, either (i) Sellers shall have completed the
remediation of such conditions in accordance with Section 6.15 hereof, or (ii)
Buyer shall have provided notice to Sellers of Buyer's election to proceed to
Closing with the proration to the Purchase Price specified in Section 6.15
hereof.
7.2 Conditions to Obligations of Sellers. All obligations of Sellers at the
Closing hereunder with respect to the Stations or any Radio Group are subject at
Sellers' option to the fulfillment prior to or at the Closing Date of each of
the following conditions:
(a) Representations and Warranties. All representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects at and as of the Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
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(c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall
have been granted.
(d) Hart-Scott-Rodino. All applicable waiting periods under
Hart-Scott-Rodino shall have expired or terminated.
(e) Deliveries. Buyer shall have made or stand willing to make all the
deliveries described in Section 8.3.
SECTION 8: CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(i) Except as provided below in this Section 8.1 or as otherwise agreed
to by Buyer and Sellers, the Closing hereunder shall be held for all of the
Stations on a date specified by Buyer on at least five (5) days written notice
that is not earlier than the first business day after or later than ten (10)
business days after the date on which all of the conditions to Closing have been
satisfied or waived; provided, that the parties acknowledge and agree that there
may be multiple Closings hereunder as follows:
(w) If a Radio Group FCC Consent for any Radio Group is issued
prior to the issuance of the FCC Consent, and the Hart-Scott-Rodino waiting
period has expired or has been terminated for such Radio Group (whether or not
the Hart-Scott-Rodino waiting period has expired or has been terminated in
respect of any other Radio Group), Closing on such Radio Group shall be set by
Buyer on at least five (5) days' written notice to Sellers, which shall be not
earlier than the first business day after such Radio Group FCC Consent is
granted and not later than ten (10) business days after the date on which all
conditions to such Closing have been satisfied or waived; provided that, in no
event, shall a Closing occur for less than an entire Radio Group;
(x) Notwithstanding 8.1(a)(i)(w) above, Sellers may elect to
postpone such Closing for thirty (30) days if, based on advice of Sellers'
counsel, there is a reasonable likelihood that the FCC Consent or an additional
Radio Group FCC Consent will be received during such period; provided that in
the event Sellers elect to postpone any Closing under this Section 8.1(a)(i)(x),
the Stations Delay Amount Date and/or the Kansas City Stations Delay Amount
Date, as applicable, shall be extended through the Closing Date as postponed by
Sellers and no Delay Amount shall accrue during such period with respect to the
Stations or Radio Group for which any Closing has been postponed by Seller
pursuant to this Section 8.1(a)(i)(x);
(y) For purposes of this Agreement, if there shall be multiple
Closings for the Stations, then the terms "Closing" and "Closing Date" shall
only be deemed to refer to the Stations for which the sale by Sellers, and the
purchase by Buyers, shall have occurred on such date. If a Closing Date
hereunder shall fall on a date that is not a business day, then such Closing
Date shall be the next business day.
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(ii) If any event occurs that prevents signal transmission by any of
the Stations in the normal and usual manner and Sellers cannot restore the
normal and usual transmission before the date on which any Closing as to any
Radio Group to which the Station so affected belongs would otherwise occur
pursuant to this Section 8.1(a), and this Agreement has not been terminated
under Section 9, Sellers shall diligently take such action as reasonably
necessary to restore such transmission, and the Closing shall be postponed only
with respect to the Radio Group to which the Station so affected belongs until a
date within the effective period of the FCC Consent or a Radio Group FCC Consent
(as it may be extended pursuant to Section 6.1(c)) to allow Sellers to restore
the normal and usual transmission for such Station. If any Closing is postponed
pursuant to this paragraph, the date of such Closing shall be ten (10) days
after notice by Sellers to Buyer that transmission has been restored.
Notwithstanding anything to the contrary in this Agreement, Buyer shall not be
obligated to close on any Radio Group which includes any Station the
transmission of which is not operating in the normal and usual manner, unless
and until the Sellers have restored the transmission of such Station to its
normal and usual level.
(iii) If there is in effect on the date on which any Closing would
otherwise occur pursuant to this Section 8.1(a) any judgment, decree or order
that would prevent or make unlawful such Closing on that date, such Closing
shall be postponed until a date within the effective period of the FCC Consent
or the Radio Group FCC Consent, as the case may be (as it may be extended
pursuant to Section 6.1(c)), to be agreed upon by Buyer and Sellers, when such
judgment, decree, or order no longer prevents or makes unlawful such Closing. If
any Closing is postponed pursuant to this paragraph, the date of such Closing
shall be mutually agreed to by Seller and Buyer.
(b) Closing Place. All Closings hereunder shall be held at the offices
of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, MD, 21201, or any
other place that is mutually agreed upon by Buyer and Sellers.
8.2 Deliveries by Sellers. Prior to or on any Closing Date, Sellers shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Conveyancing Documents. Duly executed deeds in form and quality
equivalent to the deeds by which Sellers obtained title, bills of sale, motor
vehicle titles, assignments, and other transfer documents that are sufficient to
vest good and marketable title to the Assets being transferred at such Closing
in the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims and obligations except for Permitted Encumbrances;
(b) Officer's Certificate. A certificate, dated as of such Closing
Date, executed by an officer of Sellers, certifying: (i) that the
representations and warranties of Sellers contained in this Agreement as to the
Radio Group for which a Closing is occurring are true and complete as of such
Closing Date as though made on and as of that date (except for representations
and warranties that speak as of a specific date or time, which need only be true
and complete as of such date or time), except to the extent that the failure of
such representations and warranties (in each case determined without regard to
any materiality qualifications contained therein) shall not have had a Material
Adverse Effect, and (ii) that Sellers, as to the Radio Group for which a Closing
is occurring, have in all respects performed and complied with all of its
obligations,
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covenants and agreements in this Agreement to be performed and complied with on
or prior to such Closing Date, except to the extent that the failure to perform
such covenants (in each case determined without regard to any materiality
qualifications contained therein) shall not have had a Radio Group Material
Adverse Effect.
(c) Secretary's Certificate. A certificate, dated as of such Closing
Date, executed by each of the Seller's Secretary, members, partners or
designees, as the case may be: (i) certifying that the resolutions, as attached
to such certificate, were duly adopted by such Seller's Board of Directors and
shareholders (if required) (or by the general partner in the case of a
partnership or by the members in the case of a limited liability company),
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) providing, as attachments thereto, the Articles of
Incorporation and Bylaws (or other organizational documents) of such Seller;
(d) Consents. A manually executed copy of any instrument evidencing
receipt of any Consent which has been received by Sellers which relate to the
Stations or, in the case of a Radio Group Closing, such Radio Group, the Assets
of which are being transferred at such Closing;
(e) Good Standing Certificates. To the extent available from the
applicable jurisdictions and to the extent applicable to the Stations or Radio
Group which are the subject of the Closing, certificates as to the formation
and/or good standing of each Seller issued by the appropriate governmental
authorities in the states of organization and each jurisdiction in which such
Sellers are qualified to do business, each such certificate (if available) to be
dated a date not more than a reasonable number of days prior to the applicable
Closing Date;
(f) Opinions of Counsel. Opinions of Sellers' counsel and
communications counsel dated as of the Closing Date, substantially in the form
of Exhibits 2 and 3 hereto;
(g) Lease. Duly executed copy of the Lease; and
(h) Other Documents. Such other documents reasonably requested by Buyer
or its counsel for complete implementation of this Agreement and consummation of
the transaction contemplated hereby, including the assignments referred to in
Section 6.21, if applicable.
8.3 Deliveries by Buyer. Prior to or on any Closing Date, Buyer shall deliver to
Sellers the following, in form and substance reasonably satisfactory to Sellers
and their counsel:
(a) Closing Payment. The payment of the Estimated Purchase Price
described in Section 2.4(a) for the Stations or Radio Groups as applicable;
(b) Officer's Certificate. A certificate, dated as of such Closing
Date, executed on behalf of an officer of the Buyer, certifying (i) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of such Closing Date as though made on and
as of that date, and (ii) that Buyer has in all material respects performed and
complied with all of its obligations, covenants and agreements in this Agreement
to be performed and complied with on or prior to such Closing Date;
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(c) Secretary's Certificate. A certificate, dated as of such Closing
Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transaction contemplated hereby and that such resolutions remain in full
force and effect; and (ii) providing, as an attachment thereto, Buyer's
Certificate of Incorporation and Bylaws;
(d) Assumption Agreements. Appropriate assumption agreements pursuant
to which Buyer shall assume and undertake to perform Sellers' obligations and
liabilities to the extent provided under this Agreement for the Stations or
Radio Group for which a Closing occurs, including (without limitation) under the
Licenses and the Assumed Contracts;
(e) Good Standing Certificates. To the extent available from the
applicable jurisdictions, certificates as to the formation and/or good standing
of Buyer issued by the appropriate governmental authorities in the state of
organization and each jurisdiction in which Buyer is qualified to do business,
each such certificate (if available) to be dated a date not more than a
reasonable number of days prior to such applicable Closing Date;
(f) Opinion of Counsel. An opinion of Buyer's counsel dated as of the
Closing Date, substantially in the form of Exhibit 4 hereto;
(g) Lease. Duly executed copy of the Lease; and
(h) Other Documents. Such other documents reasonably requested by
Sellers or their counsel for complete implementation of this Agreement and
consummation of the transactions contemplated hereby.
SECTION 9: TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated at any time
prior to Closing by the mutual consent of the parties.
9.2 Termination by Seller. This Agreement may be terminated by Sellers and the
sale and transfer of the Stations or any Radio Group for which a Closing has not
occurred abandoned, if:
(a) Sellers are not then in material default hereunder, upon written
notice to Buyer if on the date that would otherwise be the Final Closing Date
any of the conditions precedent to the obligations of Sellers set forth in
Sections 7.2(a), 7.2(b) and 7.2(e) of this Agreement has not been satisfied or
waived in writing by Sellers (whether or not occurring as the result of Buyer's
material breach of any provision of this Agreement);
(b) Buyer shall default in the performance of its obligations under
this Agreement in any material respect and such default is not cured within
thirty (30) days after notice thereof;
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(c) Sellers are not then in material default hereunder and Final
Closing has not occurred within one (1) calendar year from the date hereof and
failure of Final Closing to have occurred is due to the failure to receive any
regulatory approval required for Final Closing, including, but not limited to,
expiration or termination of the Hart-Scott-Rodino waiting period, any FCC
Consents (including, without limitation, such facts as are disclosed on Schedule
4.6 hereto), and the failure of such consent, expiration or termination to be
granted is the result of facts relating to Buyer or any Affiliate of Buyer; or
(d) Sellers are not then in material default hereunder if Closing as to
the Stations or any Radio Group has not occurred within twenty four (24) months
from the date hereof due to the failure to receive any regulatory approval
required for Final Closing, including, but not limited to, the expiration or
termination of the Hart-Scott-Rodino waiting period of any FCC Consent, and the
failure of such consent, expiration, or termination to be granted is the result
of facts relating to Sellers.
(e) Final Closing has not occurred with respect to all of the Stations
or any Radio Group within eighteen (18) months from the date hereof, if Sellers
are not then in material default hereunder, and such Closing has not occurred
for any reason other than as provided in Section 9.2(d).
9.3 Termination by Buyer. This Agreement may be terminated by Buyer and the
exchange and transfer of the Stations or any Radio Group for which a Closing has
not occurred abandoned, if:
(a) Buyer is not then in material default, upon written notice to
Sellers if on the date that would otherwise be the Final Closing Date any of the
conditions precedent to the obligations of Buyer set forth in Sections 7.1(a),
7.1(b), 7.1(e), 7.1(f), 7.1(g), and 7(h) of this Agreement (and only such
Sections) has not been satisfied or waived in writing by Buyer (whether or not
occurring as the result of Sellers' material breach of any provision of this
Agreement);
(b) Sellers shall have defaulted in the performance of Sellers'
obligations under this Agreement, and such default is not cured within thirty
(30) days after notice thereof and such default has had either a Radio Group
Material Adverse Effect in the case of a Radio Group Closing or a Material
Adverse Effect in the case of a Closing with respect to all of the Stations; or
(c) Buyer is not then in material default hereunder and Final Closing
has not occurred within fifteen (15) months from the date hereof and failure to
close is due to the failure to receive any regulatory approval required for
Closing, including, but not limited to, expiration or termination of the
Hart-Scott-Rodino waiting period and any FCC Consents and the failure to receive
such consent is due to facts relating to Sellers or any Affiliate of Sellers.
(d) Final Closing has not occurred with respect to all of the Stations
or any Radio Group within eighteen (18) months from the date hereof, if the
terminating party is not then in material default hereunder and such Closing has
not occurred for any reason other than as provided in Section 9.2(c).
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9.4 Rights on Termination. If this Agreement is terminated by Buyer pursuant to
Section 9.3 as a result of Sellers' material breach of any provision of this
Agreement, Buyer shall be entitled to the immediate return of the Allocable
Escrow Deposit, and Buyer shall have all rights and remedies available at law or
equity, including the remedy of specific performance described in Section 9.6
below. If this Agreement is terminated by Sellers pursuant to Section 9.2,
Sellers, as their sole remedy, shall be entitled to receive the Allocable Escrow
Deposit, less any amount thereof released in accord with the provisions of this
Agreement prior to such termination, together with all interest or other
proceeds from the investment thereof, but less any compensation due Escrow
Agent, as liquidated damages in full and final settlement of all claims of
Sellers under this Agreement, and there shall be no other or further obligations
or remedies of Sellers hereunder.
9.5 Liquidated Damages Not a Penalty. With respect to the liquidated damages as
described and provided for in Section 9.4 hereof, Sellers and Buyer hereby
acknowledge and agree that the damage that may be suffered by Sellers in the
event of a default by Buyer hereunder is not readily ascertainable and that such
liquidated damages as of the date hereof are a reasonable estimate of such
damages and are intended to compensate Sellers for any such damage and are not
to be construed as a penalty.
9.6 Specific Performance. The parties recognize that if Sellers breach this
Agreement and refuse to perform under the provisions of this Agreement, monetary
damages alone would not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought by Buyer to enforce this Agreement, Sellers shall waive the
defense that there is an adequate remedy at law.
9.7 Attorneys' Fees. In the event of a default by either party that results in a
lawsuit or other proceeding for any remedy available under this Agreement, the
prevailing party shall be entitled to reimbursement from the other party of its
reasonable legal fees and expenses (whether incurred in arbitration, at trial,
or on appeal).
9.8 Survival. Notwithstanding the termination of this Agreement pursuant to this
Section 9, the obligations of Buyer and Sellers set forth in Sections 6.2, 6.4,
9, 10 (with respect to all Radio Groups for which any Closing has occurred), and
11 shall survive such termination and the parties hereto shall have any and all
rights and remedies to enforce such obligations provided at law or in equity or
otherwise (including without limitations, specific performance).
9.9 Limitations of Termination. Any termination of this Agreement pursuant to
this Section 9 shall be only in respect of those Stations or Radio Group for
which a Closing has not occurred as of the date of such termination.
47
<PAGE>
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival of Representations. All representations and warranties, covenants
and agreements of Sellers and Buyer contained in or made pursuant to this
Agreement or in any certificate furnished pursuant hereto shall survive the
Closing Date for any of the Stations acquired hereunder and shall remain in full
force and effect to the following extent: (a) representations and warranties
(other than the representations and warranties set forth in Section 3.16) shall
survive for a period of twelve (12) months after the Closing Date for such
Station or Radio Group, (b) except as otherwise provided herein, the covenants
and agreements which, by their terms, survive the Closing for such Station or
Radio Group shall continue in full force and effect until fully discharged (but
not beyond the expiration of twelve (12) months after the Closing Date for such
Station or Radio Group), and (c) any representation, warranty, covenant or
agreement that is the subject of a claim which is asserted in a reasonably
detailed writing prior to the expiration of the survival period set forth in
this Section 10.1 shall survive with respect to such claim or dispute until the
final resolution thereof; provided that notwithstanding the foregoing,
representations and warranties set forth in Section 3.16 and the covenant in
Section 6.15 shall survive for the lesser of eighteen (18) months after the
Closing Date for any Radio Group to which such representations and warranties
relate, and (ii) the expiration of the applicable statute of limitations, but,
in no event, shall the survival period in this proviso be less than one (1) year
after the Closing Date for any Radio Group to which such representations and
warranties relate; provided further that the covenants and agreements set forth
in Section 6.4 Confidentiality, Section 6.5 Cooperation, Section 6.9 Books and
Records, Section 11.1 Fees and Expenses, Section 11.2 Notices, and Section 11.3
Benefit and Binding Effect shall survive any applicable Closing for the period
provided therein or, if no period is specified, in perpetuity; and provided
finally that anything to the contrary in this Section 10.1 notwithstanding any
claim for indemnification under Section 10 hereof which is asserted in a
reasonably detailed writing prior to the expiration of the survival periods
provided in this Section 10.1 shall survive with respect to such claim or
dispute until final resolution thereof.
10.2 Indemnification by Seller. After the Closing or a Radio Group Closing, as
applicable,, but subject to Sections 10.1 and 10.5, with respect to those
Stations for which a Closing has occurred, Sellers hereby agree to indemnify and
hold Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages arising out of or
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Sellers contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement;
(b) Any and all obligations of Sellers not assumed by Buyer pursuant to
this Agreement, including any liabilities arising at any time under any Contract
not included in the Assumed Contracts;
48
<PAGE>
(c) Any loss, liability, obligation, or cost arising out of or
resulting from the failure of the parties to comply with the provisions of any
bulk sales law applicable to the transfer of the Assets;
(d) Any and all obligations, losses, liabilities, or damages arising
out of or resulting from the operation or ownership of the Stations prior to the
Closing (except any losses, liabilities or damages for which Buyer has received
a proration in its favor or a reduction in Purchase Price under Section 6.15),
including any liabilities arising under the Licenses or the Assumed Contracts to
the extent that they relate to events occurring prior to the Closing Date;
(e) Any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity; and
(f) Any and all loss, liabilities or damages arising out of or
resulting from the loss or revocation of any of the FCC Licenses as a result of
actions taken by the FCC (or, to the extent applicable, by any reviewing court)
solely in connection with the specific applications relating to the Stations and
listed on Schedule 10.2.
10.3 Indemnification by Buyer. Notwithstanding any Closing, but subject to
Section 10.5, Buyer hereby agrees to indemnify and hold Sellers harmless against
and with respect to, and shall reimburse Sellers for:
(a) Any and all losses, liabilities, or damages arising out of or
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant by Buyer contained in this Agreement or in any certificate,
document, or instrument delivered to Sellers under this Agreement;
(b) Any and all obligations of Sellers assumed by Buyer pursuant to
this Agreement;
(c) Any and all obligations, losses, liabilities, or damages arising
out of or resulting from the operation or ownership of the Stations after the
Closing (including, without limitation, any obligations of Sinclair, SCI, or any
Affiliate thereof pursuant to any agreements by which the obligations of any of
the Stations have been guaranteed), except any losses, liabilities or damages
for which Sellers have received a proration in their favor; and
(d) Any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification shall be
as follows:
(a) The party claiming indemnification (the "CLAIMANT") shall promptly
give notice to the party from which indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim,
49
<PAGE>
whether between the parties or brought by a third party, specifying in
reasonable detail the factual basis for the claim. If the claim relates to an
action, suit, or proceeding filed by a third party against Claimant, such notice
shall be given by Claimant within five business days after written notice of
such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within the thirty-day period (or any
mutually agreed upon extension thereof), the Claimant may seek appropriate
remedy at law or equity.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification under this Agreement, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party,
provided, however, that Indemnifier may not assume control of the defense unless
it affirms in writing its obligation to indemnify Claimant for any damages
incurred by Claimant with respect to such third-party claim. If the Indemnifying
Party elects to assume control of the defense of any third-party claim, the
Claimant shall have the right to participate in the defense of such claim at its
own expense. If the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third-party claim, it shall be bound
by the results obtained in good faith by the Claimant with respect to such
claim.
(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided in Section 10.2 and Section
10.3 shall extend to the members, partners, shareholders, officers, directors,
employees, representatives and affiliated entities of any Claimant although for
the purpose of the procedures set forth in this Section 10.4, any
indemnification claims by such parties shall be made by and through the
Claimant.
10.5 Certain Limitations.
(a) Notwithstanding anything in this Agreement to the contrary, neither
party shall indemnify or otherwise be liable to the other party with respect to
any claim for any breach of a representation or warranty, or for the breach of
any covenant contained in this Agreement, unless notice of the claim is given
within the relevant survival period specified in Section 10.1.
(b) Notwithstanding anything in this Agreement to the contrary, but
except as otherwise
50
<PAGE>
provided in this subsection (b) and Schedule 10.5, Sellers shall not be liable
to Buyer in respect of any indemnification hereunder except to the extent that
(i) the aggregate amount of losses of Buyer, when aggregated with the amount of
losses with respect to the Kansas City Stations pursuant to the Kansas City
Agreement, if any, exceeds One Million Dollars ($1,000,000) (the "Threshold
Amount") (and then only to the extent such losses, when aggregated with the
amount of losses with respect to the Kansas City Stations pursuant to the Kansas
City Agreement, if any, exceed the excess of Five Hundred Thousand Dollars
($500,000)) over an amount (not in excess of $100,000) which Sellers are not
required to expend in environmental remediation as a result of the Environmental
Threshold Amount (such excess being the "Excess Amount"), and (ii) the aggregate
amount of losses of Buyer, when aggregated with the amount of losses with
respect to the Kansas City Stations pursuant to the Kansas City Agreement, if
any, is less than the excess of Fifty Million Dollars) ($50,000,000) over any
amounts expended by Buyer pursuant to Section 6.15 (as aggregated with the
Kansas City Stations as set forth therein), or with respect to which Buyer
receives a proration in its favor under Section 6.15 (such excess being the
"Indemnity Cap"); provided, the foregoing shall not be applicable to any amounts
owed in connection with the Purchase Price or the proration adjustment thereof.
In determining whether Sellers shall be obligated to indemnify Buyer under this
Section 10, once the Threshold Amount has been satisfied, each representation
and warranty and each covenant contained in this Agreement for which indemnity
may be sought hereunder shall be read solely for purposes of determining whether
a breach of such representation, warranty or covenant has occurred without
regard to materiality (including Material Adverse Effect) qualifications that
may be contained therein.
(c) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall a party be entitled to indemnification for such
party's consequential or punitive damages, regardless of the theory of recovery.
Each party hereto agrees to use reasonable efforts to mitigate any losses which
form the basis for any claim for indemnification hereunder.
SECTION 11: MISCELLANEOUS
11.1 Fees and Expenses.
(a) Buyer and Sellers shall each pay one-half of (i) any fees charged
by the FCC in connection with obtaining the FCC Consent, and (ii) any filing
fees incurred in connection with any Hart-Scott-Rodino Filings.
(b) Buyer and Sellers shall each pay one-half (1/2) of any filing fees,
transfer taxes, document stamps, or other charges levied by any governmental
entity (other than income Taxes, which shall be the responsibility of Sellers)
on account of the transfer of the Assets from Sellers to Buyer.
(c) Except as otherwise provided in this Agreement, each party shall
pay its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar Person retained by or on behalf of such party.
51
<PAGE>
11.2 Notices. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be (a) in writing, (b) sent
by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (c) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
To Buyer:
Entercom Communications Corp.
401 City Avenue, Suite 409
Bala Cynwyd, Pennsylvania 19004
Attn: David J. Field
Telecopy: (610) 660-5620
Telephone: (610) 660-5610
with a copy Latham & Watkins
(which shall 1001 Pennsylvania Avenue, Suite 1300
not constitute Washington, D.C. 20004-2505
Attn: Joseph Sullivan, Esquire
notice) to: Telecopy: (202) 637-2201
Telephone: (202) 637-2200
To Sellers:
c/o Sinclair Broadcast Group, Inc.
10706 Beaver Dam Road
Cockeysville, MD 21030
Attn: President
Telecopy: (410) 568-1533
Telephone: (410) 568-1506
with a copy Sinclair Communications, Inc.
(which shall 10706 Beaver Dam Road
not constitute Cockeysville, MD 21030
notice) to: Attn: General Counsel
Telecopy: (410) 568-1537
Telephone: (410) 568-1522
with a copy Steven A. Thomas, Esquire
(which shall Thomas & Libowitz, P.A.
not constitute 100 Light Street, Suite 1100
notice) to: Baltimore, MD 21202-1053
Telecopy: (410) 752-2046
Telephone: (410) 752-2468
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
52
<PAGE>
11.3 Benefit and Binding Effect.
(a) Buyer shall have the right to assign all or any portion of its
rights under this Agreement to (i) any entity under common control with Buyer,
(ii) a Qualified Intermediary under Section 1031 of the Code, or (iii) any
lender or any agent for such lender(s) for collateral purposes only; provided,
that no such assignment shall relieve Buyer of its obligations hereunder.
Sellers may assign, combine, merge, or consolidate among themselves and any
Affiliate of Sellers so long as Sellers or their successors and assigns are
bound by the terms and conditions of this Agreement in all respects as if such
successors and assigns were original parties hereto, and such assignment,
combination, merger, or consolidation does not have an adverse affect on Buyer.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. No Person, other
than the parties hereto, is or shall be entitled to bring any action to enforce
any provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder. Other than as
expressly set forth in this Section 11.3(a), no party may assign or transfer all
or any portion of its rights under this Agreement without the prior written
consent of the parties hereto.
(b) Sellers acknowledge and agree that at any Closing, Buyer may
require that Sellers transfer the Assets and liabilities of any Station to a
third party designated in writing by Buyer (a "DESIGNEE") at least ten (10) days
prior to the Closing; provided, however, that (a) such Designee shall on or
prior to the Closing Date assume all assumed liabilities with respect to the
particular Station so transferred; (b) an FCC Order shall have been issued on or
prior to the Closing Date authorizing such transfer; (c) the transfer to such
Designee would not violate any laws, (d) the transfer to such Designee would not
delay in any respect the date for the Closing as required by the terms of this
Agreement; (e) such transfer to a Designee shall not relieve Buyer from any of
its obligations hereunder; (f) there shall be no assignment or transfer (actual
or implied) of this Agreement to the Designee; (g) Sellers shall have no
liabilities to any such Designee under this Agreement or otherwise; and (h) such
Designee shall deliver to the Sellers a written certificate, pursuant to which
the Designee acknowledges and agrees for the benefit of Sellers to the terms and
conditions of the designation as described herein. The parties shall cooperate
in all reasonable respects in making any modifications to the closing documents
and deliveries that may be necessary or appropriate in connection with the
transfer of Assets and liabilities of any Station to any Designee pursuant to
this Section 11.3(b).
11.4 Further Assurances. The parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (WITHOUT REGARD TO THE CHOICE
OF LAW PROVISIONS THEREOF). IN ADDITION, EACH OF THE PARTIES HERETO SUBMITS TO
LOCAL JURISDICTION IN THE STATE OF MARYLAND AND AGREES THAT ANY ACTION BY ANY
PARTY HEREUNDER SHALL BE INSTITUTED IN THE STATE OF MARYLAND.
53
<PAGE>
11.6 Entire Agreement. This Agreement, the Schedules hereto, and all documents,
certificates and other documents to be delivered by the parties pursuant hereto,
collectively, represent the entire understanding and agreement between Buyer and
Sellers with respect to the subject matter of this Agreement. This Agreement
supersedes all prior negotiations between the parties and cannot be amended,
supplemented, or changed except by an agreement in writing duly executed by each
of the parties hereto and by Sinclair.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
11.8 Headings. The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
11.9 Counterparts. This Agreement may be signed in two or more counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, this Amended and Restated Asset Purchase Agreement has been
executed by the duly authorized officers of Buyer and Sellers as of the date
first written above.
Buyer: Sellers:
Entercom
- ---------------------------- SINCLAIR COMMUNICATIONS, INC.
By: /s/ John C. Donlevie By /s/ David B. Amy
------------------------- -----------------------------------
Name: John C. Donlevie Name: David B. Amy
Title: Executive Vice President Title: Secretary
WCGV, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF MILWAUKEE
LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF NEW ORLEANS, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF NEW ORLEANS
LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF MEMPHIS, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
55
<PAGE>
SINCLAIR RADIO OF MEMPHIS
LICENSEE, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR PROPERTIES, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF NORFOLK/
GREENSBORO LICENSEE L.P.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF NORFOLK
LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF BUFFALO, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF BUFFALO
LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
WLFL, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
56
<PAGE>
SINCLAIR RADIO OF GREENVILLE
LICENSEE, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF WILKES-BARRE, INC.
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
SINCLAIR RADIO OF WILKES-BARRE
LICENSEE, LLC
By: /s/ David B. Amy
-----------------------------------
Name: David B. Amy
Title: Secretary
57
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000912752
<NAME> SINCLAIR BROADCAST GROUP
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 8,362
<SECURITIES> 0
<RECEIVABLES> 187,484
<ALLOWANCES> 3,795
<INVENTORY> 0
<CURRENT-ASSETS> 1,043,002
<PP&E> 332,676
<DEPRECIATION> 82,242
<TOTAL-ASSETS> 2,985,002
<CURRENT-LIABILITIES> 294,730
<BONDS> 750,000
200,000
35
<COMMON> 970
<OTHER-SE> 802,740
<TOTAL-LIABILITY-AND-EQUITY> 3,985,002
<SALES> 0
<TOTAL-REVENUES> 529,090
<CGS> 0
<TOTAL-COSTS> 409,240
<OTHER-EXPENSES> 2,174
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132,622
<INCOME-PRETAX> 14,946
<INCOME-TAX> 8,893
<INCOME-CONTINUING> (23,839)
<DISCONTINUED> 12,187
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,652)
<EPS-BASIC> (.20)<F1>
<EPS-DILUTED> (.20)<F1>
<FN>
a) This information has been prepared in accordance with SFAS No 128, Earnings
per Share. The basic and diluted EPS calculations have been entered in
place of primary and diluted, respectively.
</FN>
</TABLE>
