Asset Purchase Agreement - River City Broadcasting LP and Sinclair Broadcast Group Inc.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of April 10, 1996,
and is by and between River City Broadcasting, L.P., a limited partnership duly
formed under the laws of the State of Delaware ("Seller"), and Sinclair
Broadcast Group, Inc., a Maryland corporation ("Buyer").
RECITALS
WHEREAS, Seller (i) owns certain assets used in connection with the business and
operations of (a) Television Stations KOVR(TV), Stockton, California, WTTV(TV),
Bloomington, Indiana, WTTK(TV), Kokomo, Indiana, KDSM-TV, Des Moines, Iowa,
KDNL-TV, St. Louis, Missouri, WLOS-TV, Asheville, North Carolina, WFBC(TV),
Anderson, South Carolina, and KABB-TV, San Antonio, Texas (collectively, the "TV
Stations") and (b) Radio Stations KBLA(AM), Santa Monica, California, WVRV(FM),
East St. Louis, Illinois, WJCE-FM, Russellville, Kentucky, KMEZ-FM, Belle
Chasse, Louisiana, WSMB(AM), New Orleans, Louisiana, WLMG-FM, New Orleans,
Louisiana, WWL(AM), New Orleans, Louisiana, KPNT(FM), Sainte Genevieve,
Missouri, WBEN(AM), Buffalo, New York, WMJQ-FM, Buffalo, New York, WWKB(AM),
Buffalo, New York, WKSE-FM, Niagara Falls, New York, WGBI(AM), Scranton,
Pennsylvania, WGGY(FM), Scranton, Pennsylvania, WILK(AM), Wilkes Barre,
Pennsylvania, WKRZ-FM, Wilkes Barre, Pennsylvania, WOGY-FM, Germantown,
Tennessee, WJCE(AM), Memphis, Tennessee, WRVR-FM, Memphis, Tennessee, WLAC(AM),
Nashville, Tennessee, and WLAC-FM, Nashville, Tennessee (collectively, the
"Radio Stations"); (ii) operates pursuant to local marketing agreements listed
on Schedule 1.1(c)(1) (the "LMAs") Television Station KRRT(TV), Kerrville, Texas
and Radio Station WXPX(AM), West Hazelton, Pennsylvania (collectively, the "LMA
Stations"); (iii) sells advertising time pursuant to joint sales agreements
listed on Schedule 1.1(c)(2) (collectively, the "JSAs") with respect to Radio
Stations WGR(AM), Buffalo, New York, WWWS(AM), Buffalo, New York and WWSH(FM),
Pittston, Pennsylvania (collectively, the "JSA Stations"); and (iv) holds an
option pursuant to that certain option agreement listed on Schedule 1.1(c)(3)
(collectively, the "Station Options") to purchase the assets or stock of
Keymarket of South Carolina, Inc., a South Carolina corporation ("KMSC"), which
owns Radio Stations WFBC(AM), Greenville, South Carolina, WFBC-FM, Greenville,
South Carolina, and WORD(AM), Spartanburg, South Carolina (collectively, the
"Option Stations"; the TV Stations and the Radio Stations and any LMA Station or
any Option Station that is purchased by Seller prior to the Closing Date or any
other television or radio station that is purchased by Seller as contemplated in
Schedule 2.2(a)(1), or with the consent of Buyer, are hereinafter collectively
referred to as the "Owned Stations" and individually as an "Owned Station"; the
Owned Stations together with the LMA Stations are hereinafter collectively
referred to as the "Stations" and individually as a "Station"); and
WHEREAS, Seller owns all of the issued and outstanding stock of Sandia Peak
Broadcasters, Inc., a Delaware corporation ("Sandia"), a 40% general partnership
interest in Twin Peaks Radio, a New Mexico general partnership ("Twin Peaks"),
and a 1% general partnership interest in Twin Peaks Radio License Partnership, a
Missouri general partnership ("Twin Peaks License Partnership") (collectively,
the "RCB Twin Peaks Equity Interest"), with the remaining 60% general
partnership interest in Twin Peaks Radio being owned by Sandia and the remaining
99% general partnership interest in Twin Peaks License Partnership being owned
by Twin Peaks Radio; and Twin Peaks Radio owns certain assets in connection with
the business and operations of, and Twin Peaks License Partnership holds certain
FCC licenses for, Radio Stations KZSS(AM), Albuquerque, New Mexico, KZRR(FM),
Albuquerque, New Mexico and KLSK(FM), Santa Fe, New Mexico (collectively,
referred to herein as the "New Mexico Stations"); and pursuant to the terms of
the Option Agreement (as defined below), Buyer will receive an option to acquire
the RCB Twin Peaks Equity Interest (although none of the assets of the New
Mexico Stations shall be transferred hereunder, for purposes of the
representations and warranties set forth in this Agreement, the New Mexico
Stations shall be deemed to be "Radio Stations" and the assets of the New Mexico
Stations that are of the same type as those described in Section 1.1 hereof
shall be deemed to be "Station Assets"); provided, however, to the extent Seller
has sold the New Mexico Stations or the RCB Twin Peaks Equity Interest prior to
Closing, no representations or warranties shall be made hereunder or under the
Option Agreement with respect to the New Mexico Stations or the RCB Twin Peaks
Equity Interest as contemplated hereunder, and Buyer acknowledges and agrees
that it waives its right to acquire the RCB Twin Peaks Equity Interest under the
Option Agreement and Seller shall have no obligation to sell, and Buyer shall
have no obligation to purchase, the RCB Twin Peaks Equity Interest.
WHEREAS, Seller owns certain assets (the "Columbus Assets") used in connection
with the business and operations of WSYX(TV), Columbus, Ohio (the "Columbus
Station"), and pursuant to the terms of the Option Agreement, Buyer will receive
an option to acquire certain of the assets owned by Seller relating to the
Columbus Station, including the License Assets (as defined below) relating to
the Columbus Station; the assets of the Columbus Station (other than (i) the
collective bargaining agreements and the employment agreements relating to
employees working for the Columbus Station who will be hired by Buyer pursuant
to the terms hereof and (ii) the programming agreements and other operating
contracts of the Columbus Station (excluding, however, real property leases and
network affiliation agreements), relating to the Columbus Station listed on
Schedules 1.1(d) and 1.1(e)) will not be transferred hereunder; for purposes of
the representations and warranties, indemnification provisions and Sections 2.2,
8.10 and 10.20 of this Agreement, the Columbus Station shall be deemed to be a
"TV Station" and the Columbus Station Assets (such term, when used herein, to
have the meaning set forth in the Option Agreement) shall be deemed to be
"Station Assets"); and
WHEREAS, Seller desires to sell, assign and transfer, and Buyer desires to
acquire, (i) certain assets used or held for use in connection with the
operation of the Owned Stations described in more detail below (other than the
assets specifically excluded as provided in this Agreement) and (ii) all of the
rights of Seller under each LMA, each JSA and each Station Option and all other
assets of Seller used or held for use in connection with any LMA Station and any
JSA Station;
NOW, THEREFORE, in consideration of the foregoing and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending legally to be bound, agree as follows:
ARTICLE 1
TRANSFER OF ASSETS
1.1 Transfer of Assets. Upon and subject to the terms and conditions
stated in this Agreement, on the Closing Date (as defined in Section 2.3
hereof), Seller shall convey, transfer and deliver to Buyer, and Buyer shall
acquire from Seller, all of Seller's right, title and interest in and to all of
the assets and properties of Seller, real and personal, tangible and intangible,
which are owned and used by Seller in connection with the business and
operations of the Owned Stations, including, without limitation, rights under
contracts and leases, real and personal property, plant and equipment,
inventories and intangibles, contracts, rights and other assets owned by Seller
relating to the LMA Stations and the JSA Stations; the Station Options; and
certain specified agreements relating to the Columbus Station, but excluding the
Excluded Assets described in Section 1.2 hereof.
The rights, assets, property and business of Seller with respect to the Stations
to be transferred to Buyer pursuant to this Section 1.1 are hereinafter referred
to as the "Station Assets." The Station Assets include the following, except to
the extent excluded pursuant to Section 1.2:
(a) Tangible Personal Property. All equipment, vehicles, furniture,
office materials and supplies, spare parts and other tangible personal property
of every kind and description owned as of the date of this Agreement by Seller
and used in connection with the business and operations of any Station, or any
JSA Station, including, without limitation, those shown on Schedule 1.1(a) to
this Agreement, and any additions, improvements, replacements and alterations
thereto made between the date of this Agreement and the Closing Date, but
excluding all such property which is consumed, retired or disposed of by Seller
in the ordinary course of its business between the date of this Agreement and
the Closing Date or as otherwise permitted by this Agreement.
(b) Real Property. (i) Certain real property owned by Seller listed on
Schedule 1.1(b) to this Agreement (the "Real Property"); (ii) all buildings,
structures, improvements and transmitting towers and other fixtures thereon (the
"Real Property Improvements") owned by Seller and used in the business and
operations of any Station or any JSA Station; (iii) the leaseholds and other
interests in real property held by Seller (the "Leasehold Interests") listed and
so designated on Schedule 1.1(b) to this Agreement; and (iv) real property, and
all buildings, structures and improvements thereon and leasehold interests that
are acquired by Seller between the date hereof and the Closing Date.
(c) LMA, JSAs and Option Agreements. All agreements to which Seller is
a party for the (i) local management of any LMA Station that are listed on
Schedule 1.1(c)(1) to this Agreement, (ii) joint sales of advertising time on
any JSA Station that are listed on Schedule 1.1(c)(2), (iii) purchase of any
Option Station that are listed on Schedule 1.1(c)(3) to this Agreement, each to
the extent unperformed as of the Closing Date, and agreements of Seller entered
into in the ordinary course of business between the date hereof and the Closing
Date for the local management of, joint sales of advertising time on, or
purchase of, any television or radio station.
(d) Program Contracts. All program licenses and contracts listed on
Schedule 1.1(d), together with any usage reports, under which Seller is
authorized to broadcast film or radio product or programs on any Station or the
Columbus Station, other than the Excluded Contracts (as defined in Section
1.2(d)), together with all program licenses and contracts that will have been
entered into by Seller in the ordinary course of business, between the date of
this Agreement and the Closing Date, and all other program licenses and
contracts entered into between the date of this Agreement and the Closing Date
the making of which by Seller is permitted by this Agreement, to the extent
existing as of the Closing Date (collectively, the "Program Contracts").
(e) Other Contracts. All contracts relating to any Station, any JSA
Station or the Columbus Station to which Seller, any Owned Station or the
Columbus Station is a party, including trade or barter arrangements (in addition
to and not included in those set forth in Sections 1.1(b), 1.1(c) and 1.1(d)
hereof) (collectively, "Other Contracts"), including all agreements, equipment
leases and other leases listed on Schedules 1.1(e) and 3.10 (and on the list of
employment agreements delivered to Buyer pursuant to Section 3.10) (as may be
entered into, amended, renewed or extended pursuant to Section 5.1) to this
Agreement, together with all such contracts that will have been entered into by
any Owned Station, by Seller or by the Columbus Station relating to any Station,
any JSA Station or the Columbus Station in the ordinary course of business
between the date of this Agreement and the Closing Date, and all such other
contracts that will have been entered into by any Owned Station, by Seller or by
the Columbus Station relating to any Station, any JSA Station or the Columbus
Station between the date of this Agreement and the Closing Date, the making of
which by Seller is permitted by this Agreement to the extent existing as of the
Closing Date. As used in this Agreement, "Contract" means any agreement, lease,
arrangement, commitment or understanding, written or oral, expressed or implied,
to which an Owned Station, or Seller with respect to any Station or any JSA
Station, is a party or is bound.
(f) Trademarks, Etc. All trademarks, service marks, patents, trade
names, jingles, slogans and logotypes owned and used by Seller in connection
with the business and operations of any Owned Station or owned and used by
Seller in connection with the business and operations of any LMA Station or any
JSA Station as of the date hereof, listed on Schedule 1.1(f) to this Agreement
as well as any others acquired by Seller in connection with the operation of any
Owned Station, any LMA Station or any JSA Station between the date hereof and
the Closing Date (collectively, "Trademarks, Etc.").
(g) Programming Copyrights. All program and programming materials and
elements of whatever form or nature owned by Seller and used in connection with
the business and operations of any Station as of the date hereof, whether
recorded on tape or any other substance or intended for live performance, and
whether completed or in production, and all related common law and statutory
copyrights owned by or licensed to Seller and used in connection with the
business and operations of any Station, including, without limitation those set
forth on Schedule 1.1(g) to this Agreement together with all such programs,
materials, elements and copyrights acquired by Seller between the date hereof
and the Closing Date (collectively, the "Programming Copyrights").
(h) Files and Records. All files and other records of Seller relating
solely to the business and operations of any Station, any JSA Station, any
Option Station and any other Station Assets prior to the Closing, other than
account books of original entry and such files and records that are maintained
at the corporate offices of Seller's general partner for tax and accounting
purposes.
(i) Prepaid Items. All deposits and prepaid expenses of Seller with
respect to items that are prorated in Section 2.2 below.
(j) Financial Statements, Books and Records. Copies of all financial
statements (whether internal, compilation, reviewed or audited), including all
books, records, accounts, checks, payment records, tax records (including
payroll, unemployment, real estate and other tax records) and other such similar
books and records, of Seller (or, to the extent Seller owns such materials, of
any previous owner) with respect to any Owned Station for the three (3) fiscal
years immediately preceding the date hereof in the case of any Owned Station
that has been owned by Seller for a period of three years or more and for which
such financial statements have been prepared prior to the date hereof and for
each of the years (under three years) to the extent reasonably available to
Seller in the case of Owned Stations that have been owned by Seller for a period
of less than three years prior to the date hereof and all interim periods
following the date hereof through and including the Closing.
(k) Agreements for Sale of Time. All orders and agreements now
existing or entered into by the Stations or by Seller relating to the Stations,
the LMA Stations, the JSA Stations or the Columbus Station in the ordinary
course of business between the date hereof and the Closing Date for the sale of
advertising time on the Stations, the LMA Stations, the JSA Stations or the
Columbus Station to the extent unperformed as of the Closing Date.
(l) News Materials. All news files, archives, tapes, and other
materials stored or used by Seller relating to the news operation of the Owned
Stations and owned by Seller relating to the news operation of the LMA Stations,
including, but not limited to, any raw film footage and other similar materials,
existing as of the date of this Agreement and through the Closing Date, except
for any such materials that may be disposed of or consumed in the ordinary
course of business.
(m) Television Affiliation Agreements, NewVenco and Alliance. All
television network affiliation agreements relating to the Stations (the
"Affiliation Agreements"), as listed on Schedule 1.1(m), if any, together with
all television Affiliation Agreements that will have been entered into by Seller
in the ordinary course of business between the date hereof and the Closing Date,
and any interest set forth in Schedule 1.1(m) relating to NewVenco, Inc. and
Television Alliance Group, Inc. in connection with the applicable affiliation
agreement, if any, but excluding any such interest relating to the Columbus
Station (the "Other Assets").
(n) Other Assets. All of the assets listed on Schedule 1.1(n) and,
except to the extent referenced in Section 1.2(f) below, all of the assets owned
by Seller relating to the business and operations of the LMA Stations and the
JSA Stations.
1.2 Excluded Assets. Buyer hereby acknowledges and agrees that there
shall be excluded from the Station Assets and retained by Seller, to the extent
in existence on the Closing Date, the following assets (the "Excluded Assets"):
(a) Personal Property Disposed Of. All tangible personal property
disposed of or consumed in the ordinary course of the business of Seller between
the date of this Agreement and the Closing Date.
(b) Insurance, Bonds, Etc. All contracts of insurance and all
insurance plans and the assets thereof and all bonds, letters of credit or
similar items and any cash surrender value in regard thereto.
(c) Claims. Any and all claims of Seller with respect to transactions
occurring prior to the Closing Date, including, without limitation, rights and
interests of Seller in and to any claims for tax refunds (including, but not
limited to, federal, state or local franchise, income or other taxes) and all
causes of action and claims of Seller under contracts and with respect to other
transactions with respect to events occurring prior to the Closing Date and all
claims for other refunds of monies paid to any governmental agency and all
claims for copyright royalties for broadcast prior to the Closing Date.
(d) Certain Contracts. The agreements listed on Schedule 1.2(d) hereof
and the Leases and the Subleases (as defined in Section 7.5 hereof) (the
"Excluded Contracts").
(e) Certain Books and Records. Seller's partnership records and other
books and records that pertain to internal partnership matters of Seller and
Seller's account books of original entry with respect to any Station, any JSA
Station, any Option Station and any other Station Assets, and all original
accounts, checks, payment records, tax records (including payroll, unemployment,
real estate and other tax records) and other similar books, records and
information of Seller relating to Seller's operation of the business of any
Station, any JSA Station, any Option Station and any other Station Assets prior
to Closing, with the proviso that Buyer shall receive on the Closing Date and be
allowed to maintain copies of all such records relating to any Station, JSA
Station, Option Station or other Station Assets and/or upon a written request
for same shall be allowed further access to all excluded records to the extent
retained by Seller, at all reasonable times for a period of three (3) years
after the Closing Date.
(f) License Assets. All (i)(1) licenses and (2) antennae,
transmitters, engineering equipment, etc., which are necessary and required by
the Federal Communications Commission (the "FCC") or otherwise and as referenced
on Schedule 1.2(f) hereof (and which are included in the Option Agreement
referred to in Sections 7.7 and 8.5 hereof), for the proper, legal and effective
operation of any Owned Station as a broadcast facility, (ii) FCC authorizations
of Seller or River City License Partnership, a Missouri general partnership
("Licensee"), all of which have been transferred to, or are held by, Licensee
with respect to any Owned Station and are referenced on Schedule 1.2(f), and all
applications therefor, together with any renewals, extensions, or modifications
thereof and additions thereto (the "FCC Authorizations"), (iii) all real
property owned by Seller referenced on Schedule 1.2(f) to this Agreement, and
all buildings, structures and improvements thereon, used in the business and
operations of any Station or any JSA Station and all other leaseholds and other
interests in real property held by Seller referenced on Schedule 1.2(f) to this
Agreement and real property, and all buildings, structures and improvements
thereon (the "Excluded Real Property"), (iv) interests in certain entities
referenced on Schedule 1.2(f), (v) call signs referenced on Schedule 1.2(f),
(vi) retransmission consent agreements referenced on Schedule 1.2(f), (vii)
other assets and contracts referenced on Schedule 1.2(f) and (viii) FCC logs and
other FCC-related records that relate to the operations of the Stations
((i)-(viii) above, together with any other items more particularly described and
defined in the Option Agreement as "License Assets" are sometimes collectively
referred to herein as "License Assets").
(g) Receivables. Except as set forth in Section 10.20, all notes and
accounts receivable and other receivables of Seller relating to or arising out
of the operation of any Station, any JSA Station or the Columbus Station prior
to Closing, including, without limitation, under network affiliation agreements
(collectively, the "Receivables").
(h) Certain Prepaid Expenses. The deposits and prepaid expenses of
Seller with respect to the items that are not subject to adjustment under
Section 2.2 hereof.
(i) Cash. All cash, cash equivalents and cash items of any kind
whatsoever, certificates of deposit, money market instruments, bank balances,
and rights in and to bank accounts, Treasury bills and marketable securities and
other securities of Seller.
(j) Pension Assets, Etc. Except as otherwise provided in Section 10.3,
pension, profit sharing, retirement, bonus, stock purchase, savings plans and
trusts, 401(k) plans, health insurance plans (including any insurance contracts
or policies related thereto), and the assets thereof and any rights thereto, and
all other plans, agreements or understandings to provide employee benefits of
any kind for employees of Seller.
(k) River City Name. All rights to and goodwill in the name "River
City Broadcasting" or any logo, variation or derivation thereof.
(l) Interests in Certain Subsidiaries. All of Seller's interests in
the subsidiaries of Seller described on Schedule 1.2(l).
(m) Columbus Station Assets. The assets owned by Seller relating to
the Columbus Station which are the subject of the Option Agreement, including
real property leases and the affiliation agreements (except for the collective
bargaining agreements and employment agreements relating thereto and the
programming agreements and other operating contracts described on Schedules
1.1(d) and 1.1(e)).
(n) Goodwill. All of Seller's goodwill in and going concern value
associated with the Stations.
1.3 Liabilities. (a) Liens. The Station Assets shall be sold and
conveyed to Buyer free and clear of all liens, security interests and
encumbrances except (i) all matters of record including, without limitation,
those matters disclosed on Schedules 1.3 and 3.6 hereto as "continuing" and,
including, without limitation, the rights of lessors with respect to any
leasehold interests in real property or operating leases for personal property
as disclosed in Schedules 1.1(b) and 1.1(e); (ii)(1) liens or encumbrances on
the Real Property, Real Property Improvements and Leasehold Interests, currently
of record; and (2) other liens or encumbrances on the Real Property, Real
Property Improvements and Leasehold Interests included in the Station Assets
that with respect to clause (ii)(2) hereof do not materially affect the value or
the current or continued use and enjoyment (to the extent such continued use and
enjoyment conforms with current use and enjoyment) thereof in the operation of
the Station Assets; (iii) liens for taxes not yet due and payable; and (iv) the
Assumed Liabilities (as hereinafter defined) (all of the foregoing in clauses
(i) through (iv) are sometimes collectively referred to herein as "Permitted
Encumbrances" but shall be deemed to exclude any judgment liens, mortgages,
capital leases or security interests or trust arrangements providing for similar
effect (including, without limitation, purchase money mortgages or purchase
money interests granted by Seller in favor of any third party securing
obligations for borrowed money)).
(b) Assumption of Liabilities. (i) Buyer agrees that, on the Closing
Date, Buyer shall assume, undertake and agree to pay, satisfy, perform,
discharge and be liable for and Seller shall not be liable for (1) the
liabilities and obligations of Seller as the same shall exist on the Closing
Date that arise out of and related to the ownership and operation of the Station
Assets (including under the contracts assigned pursuant to Sections 1.1(b), (c),
(d), (e) and (m), including the collective bargaining agreements referenced on
Schedule 3.10, and any contracts that are entered into after the date hereof as
permitted by this Agreement and those liabilities and obligations referred to in
Section 10.3 hereof) on and after the Closing Date; (2) any liability or
obligation of Buyer for any federal, state or local income or other taxes or, to
the extent of any prorations pursuant to Section 2.2 hereof, for real estate or
payroll taxes attributable to any period of time on or after the Closing Date
and any liability or obligation for real estate and payroll taxes of Seller to
the extent a proration was provided for in Section 2.2 hereof attributable to
the period of time prior to the Closing; (3) any liability or obligation to any
former employee of Seller who has been hired by Buyer, including any employee of
any Station or any JSA Station who has been hired by Buyer, attributable to any
period of time on or after the Closing Date; (4) any liability or obligation
arising out of any litigation, proceeding or claim by any person or entity
relating to the business or operations of any Station, JSA Station or any of the
Station Assets with respect to any events or circumstances that happen or exist
on or after the Closing Date; (5) any severance or other liability arising out
of the termination of any employee's employment with or by Buyer on or after the
Closing Date; and (6) any duty, obligation or liability relating to any pension,
401(k) or other similar plan, agreement or arrangement provided by Buyer to any
employee or former employee of Seller on or after the Closing Date (all of the
foregoing, together with other liabilities or obligations expressly assumed by
Buyer hereunder, are referred to herein collectively as the "Assumed
Liabilities").
(ii) Buyer shall not assume or be liable for (1) any liability or
obligation arising out of the management, operation or sales or other
obligations in connection with any LMA Station or any JSA Station, or any of the
Station Assets or the License Assets prior to the Closing Date (except for the
Assumed Liabilities); (2) any liability or obligation under any contracts not
(except for Assumed Liabilities) expressly assumed by Buyer hereunder (subject
to Section 1.3(c) below with respect to Consent Contracts); (3) any liability or
obligation of Seller for any federal, state or local income or other taxes
(subject, in the case of real estate or payroll taxes, to the proration provided
for in Section 2.2 hereof) attributable to any period of time prior to the
Closing; (4) any liability or obligation with respect to the Excluded Contracts;
(5) any liability or obligation to any employee or former employee of Seller
attributable to any period of time prior to the Closing Date (except as
otherwise set forth herein); and (6) any liability or obligation of Seller
arising out of any litigation, proceeding or claim by any person or entity
relating to the Station Assets with respect to events or circumstances that
happened or exist prior to the Closing Date, whether or not such litigation,
proceeding or claim is pending, threatened, or asserted before, on or after the
Closing Date. It is agreed and understood by the Parties that the post-closing
liability of Seller to Buyer is limited in the manner described in Section 9.4
hereof and shall be paid solely through the mechanism of the off-set against the
Option Exercise Price as more specifically described in Section 9.4 hereof. All
liabilities and obligations arising out of the Station Assets that do not
constitute Assumed Liabilities shall be retained by Seller and are referred to
herein as "Retained Liabilities".
To the extent, if any, Seller makes a payment to Buyer as a result of any
proration or adjustment pursuant to Section 2.2 hereof, Buyer shall then assume
and shall be obligated to pay such obligations and liabilities for which such
proration or adjustment was made pursuant to Section 2.2.
(c) Consents to Contracts. (i) If any required approval of or consent
to the transfer and assignment to Buyer of any contract or equity interest
included in the Station Assets is not obtained on or before the Closing Date,
obtaining such consent shall not constitute a condition precedent to Buyer's
obligations to close hereunder. Unless Buyer otherwise requests of Seller, all
such contracts shall be assigned on the Closing Date. If Buyer requests, Seller
shall retain such contracts in respect of which consents have not been obtained
(the "Consent Contracts") until the earlier of (1) the expiration thereof
(without any extension thereunder) and (2) the final Option Closing Date (as
defined in the Option Agreement), or to the extent any such Consent Contract
does not relate to the Stations, Seller shall retain such Consent Contract until
the Columbus Option Closing Date. Buyer agrees that on such date, Seller will
assign to Buyer, and Buyer will assume from Seller, such Consent Contracts that
have not yet been transferred to Buyer regardless of whether consent has been
obtained in connection therewith, all without any liability or obligation of
Seller. Between the Closing Date and the date on which such Consent Contract is
assumed as set forth above in this paragraph, Seller shall use its commercially
reasonable efforts to obtain all required consents (which, except as provided in
clause (c)(ii) below shall not require the expenditure by Seller of any
expenses, except for ministerial processing fees in connection with assignment
of such contracts as set forth in such contracts and Seller's out-of-pocket
expenses to its attorney or other agents incurred in connection with obtaining
such consents). To the extent Seller is unable to obtain such consents, Seller
shall retain such Consent Contract, and Buyer shall, by making payments to
Seller (which Seller shall then pay to the contracting party under such Consent
Contract), pay, satisfy, perform and discharge Seller's liabilities and
obligations in connection with the Consent Contracts which are related to the
period on or after the Closing Date, and Buyer shall indemnify and hold Seller
harmless with respect to any other liabilities which arise with respect to the
Consent Contracts which are related to the period on or after the Closing Date,
including, without limitation, liabilities that arise due to the assignment of
such Consent Contracts to Buyer or the retention by Seller of such Consent
Contracts and the use thereof by Buyer, without consent. Such liabilities and
obligations in connection with the Consent Contracts shall also constitute
"Assumed Liabilities" for purposes of this Agreement.
(ii) If as a condition to the grant of consents to the real property
leases set forth on Schedule 1.1(b), the party to such lease whose consent is
required requires any cash payment to be made or any changes under such lease
resulting in material increases in the economic terms thereunder (collectively
"Consent Costs"), Seller shall be responsible for the first $150,000 (with
respect to any such single lease) and $300,000 (with respect to all such leases
collectively) of Consent Costs. Buyer shall be responsible for the next
$150,000 (with respect to any single lease) and $300,000 (with respect to such
leases collectively) of Consent Costs. With respect to the Consent Costs in
excess of such amounts, Seller and Buyer will each bear one half. The parties
agree to negotiate in good faith with respect to changes under leases that
result in material increases in the economic terms thereunder. The parties
agree to promptly notify the other, and to maintain a record, with respect to
all Consent Costs requested, and paid by either party. Nothing herein shall be
construed to limit Buyer's obligation to accept as a condition to the grant of
such consents the imposition of any reasonable non-economic changes under the
applicable contracts.
ARTICLE 2
PURCHASE; CLOSING
2.1 Purchase Price. In consideration of Seller's performance of this
Agreement and the transfer and delivery of the Station Assets to Buyer at the
Closing, (a) Buyer will pay to Seller Nine Hundred Nine Million One Hundred
Fifty Three Thousand Seven Hundred Forty Dollars ($909,153,740) (the "Cash
Purchase Price"), plus or minus the amount of any adjustments made pursuant to
Section 2.2 below and (b) Buyer will issue to Seller the number of shares of
Series A Exchangeable Preferred Stock of Buyer, par value $.01 per share, having
an aggregate Agreed Value (as defined in the Articles Supplementary referred to
below) as of the Closing Date of One Hundred Fifteen Million Dollars
($115,000,000) (the "Exchangeable Preferred Stock"), which shares shall be
exchangeable after the Closing, on the terms and conditions set forth herein,
into an equivalent number of shares of Buyer's Series B Convertible Preferred
Stock, par value $.01 per share (the "Convertible Preferred Stock"), having an
aggregate Agreed Value (as defined in the Amended Charter referred to below) of
$115,000,000 (the "Stock Purchase Price," and together with the Cash Purchase
Price, collectively, the "Purchase Price").
The Convertible Preferred Stock shall be issued by Buyer in exchange for the
Exchangeable Preferred Stock immediately after the filing by Buyer with the
Maryland Department of Assessments and Taxation, as contemplated by Section 10.4
hereof, of an amendment and restatement of Buyer's charter, which shall be in
the form of the Amended Charter (as defined below). The shares of Convertible
Preferred Stock to be issued by Buyer in exchange for the Exchangeable Preferred
Stock hereunder shall be convertible, in the aggregate, into Four Million One
Hundred Eighty-One Thousand Eight Hundred Eighteen (4,181,818) shares of Buyer's
Class A Common Stock, par value $.01 per share ("Buyer Common Stock"), subject
to adjustment upon any split, reorganization, recapitalization, combination or
dividend and certain other events affecting the Common Stock of Buyer prior to
the Closing as described in Schedule 2.1(a) (the "Anti-Dilution Adjustments")
and subject to such other adjustments from and after the Closing as may be set
forth in the Articles Supplementary.
The Exchangeable Preferred Stock shall have the designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions as set forth in the Articles Supplementary to
Buyer's existing charter, which shall be in the form of the Articles
Supplementary attached as Exhibit 2.1(b) hereof (the "Articles Supplementary").
The Convertible Preferred Stock shall have the designations, preferences and
relative participating, optional and other special rights and qualifications,
limitations and restrictions as set forth in the Articles Supplementary.
At the Closing, Buyer will assume the Assumed Liabilities. The Cash Purchase
Price shall be paid by Buyer to Seller on the Closing Date, except as otherwise
provided in the following paragraph, by wire transfer of immediately available
federal funds in United States dollars to such bank accounts as are designated
by Seller on or prior to the Closing Date.
In the event that the Buyer elects to extend the Termination Date for Extended
Periods (as defined herein) pursuant to Section 2.3(d) hereof, the Cash Purchase
Price shall be increased by Ten Million Dollars ($10,000,000) for each such
Litigation Extended Period and Five Million Dollars ($5,000,000) for the Cure
Extended Period, and Buyer shall be required to pay to Seller such additional
Cash Purchase Price, in increments of Ten Million Dollars ($10,000,000), on the
first day of each such Litigation Extended Period and Five Million Dollars
($5,000,000) on the first day of the Cure Extended Period, by wire transfer of
immediately available federal funds in United States dollars to such accounts as
are designated by Seller; provided that to the extent the final Extended Period
is to be for less than 30 (in the case of a Litigation Extended Period) or 15
(in the case of the Cure Extended Period) days, as provided for in Section
2.3(d) below, such $10,000,000 or $5,000,000, as applicable, amount payable with
respect to such Extended Period shall be reduced by an amount equal to the
product of (a) a fraction whose numerator is equal to the difference between 30
(in the case of a Litigation Extended Period) or 15 (in the case of a Cure
Extended Period) and the number of days in such final Extended Period, and whose
denominator is 30 (in the case of a Litigation Extended Period) or 15 (in the
case of the Cure Extended Period), multiplied by (b) $10,000,000 (in the case of
a Litigation Extended Period) and $5,000,000 (in the case of a Cure Extended
Period). Such payments to extend the Termination Date shall be retained by
Seller irrespective of whether Closing occurs hereunder and shall be
non-refundable to Buyer except to the extent expressly set forth in Section
10.2(c). To the extent that the Closing occurs on a Closing Date prior to the
expiration of a then current Extended Period, the Purchase Price shall be
subject to further adjustment as provided in Section 2.2(a)(vii) hereof.
2.2 Adjustments.
(a) (i) Operations. The items set forth in this Section 2.2(a)
relating to the operation of the Owned Stations and the Columbus Station, and to
the management, operations, sales or other obligations, as applicable, in
connection with the LMA Stations and the JSA Stations, and the income, expenses
and liabilities attributable thereto through 11:59 p.m. on the day preceding the
Closing Date (the "Adjustment Date") shall be for the account of Seller and,
thereafter, for the account of Buyer, and shall be prorated accordingly. Items
including, but not limited to, power and utilities charges, ad valorem property
taxes upon the basis of the most recent assessment available, business and
license fees, charges for utilities, water/sewer and natural gas, time sales
agreements, property and equipment rentals, commissions, wages, payroll taxes,
accrued vacation pay of employees of Seller who are hired by Buyer(all such
vacation pay accrued prior to the Closing Date to be the responsibility of
Seller), and rents and similar prepaid and deferred items, shall be prorated
between Seller and Buyer, the proration to be made as of the Adjustment Date.
There shall be no prorations and/or adjustments with respect to any sick leave
and personal days accrued on or prior to the Closing Date by any employees of
Seller, and the Buyer shall assume and be responsible for all liabilities in
respect thereof. All special assessments and similar charges or liens imposed
against the Real Property, Leasehold Interests or Real Property Improvements in
respect of any period of time through the Adjustment Date, whether payable in
installments or otherwise, shall be the responsibility of Seller, and amounts
payable with respect to such special assessments, charges or liens in respect of
any period of time after the Adjustment Date shall be the responsibility of
Buyer and shall be adjusted as required hereunder.
(ii) Trades. All trade, barter or similar arrangements for the sale of
advertising time other than for cash (with the exception of film or program
barter agreements and media barter agreements) ("Trades") shall be prorated
between Buyer and Seller as of the Adjustment Date. If, on the Closing Date,
the aggregate value of the performance obligations of the Stations on or after
the Closing Date under all such Trades, less the aggregate value of the goods,
services or other items to be received thereunder on or after the Closing Date,
exceeds (1) $50,000 for any Station, or (2) $250,000 in the aggregate for all
Stations, then Buyer shall receive a credit against the Cash Purchase Price for
the amount of such excess. If on the Closing Date, the aggregate value of the
goods, services or other items to be received on or after the Closing Date less
the aggregate value of the performance obligation of the Stations on or after
the Closing Date exceeds (1) $50,000 for any Station, or (2) $250,000 in the
aggregate for all Stations, then the Cash Purchase Price shall be increased by
the amount of such excess. Trades shall be valued in accordance with the
valuation method currently used by Seller, which for purposes of the preceding
sentence, means that the liability for performance obligations shall be valued
according to the applicable Station's prevailing rates as of the Closing Date,
and goods, services or other items being received shall be valued based on the
fair market value of such goods, services or other items on the Closing Date.
There shall be no other proration or adjustment with respect to Trades, and
there shall be no proration or adjustment with respect to any film or program
barter agreements, media barter agreements or program contracts all of which
(except for the Add Back Programming Liabilities) shall be assumed by Buyer as
part of the Assumed Liabilities.
(iii) Station Options and Other Acquisitions and Transactions. To the
extent that prior to the Closing Date (1) any Station Option is consummated, or
(2) Seller acquires any other television or radio station or has entered into or
enters into any other transaction contemplated in Schedule 2.2(a)(1), the Cash
Purchase Price shall be increased by (A) the non-recurring out-of-pocket costs
incurred by Seller with respect to the consummation of the Station Options and
(B) the corresponding amount relating to such other television or radio station
as set forth in Schedule 2.2(a)(1), or if not listed therein, as may be agreed
to by the parties hereto, plus the non-recurring out-of-pocket costs incurred by
Seller with respect to the consummation of such other acquisition or
transaction. To the extent that Seller has not consummated the acquisitions
contemplated on Schedule 2.2(a)(1) but has made any deposits in respect thereof,
the Cash Purchase Price shall be increased by the amount of each such deposit.
To the extent that the Station Options have not been consummated on or before
the Closing Date, the Cash Purchase Price shall be decreased in the amount of
the Option Price, as adjusted, as set forth in Section 1(c) of the Option
Agreement listed on Schedule 1.1(c)(3), as amended, in connection with the
assumption of the Station Options by Buyer hereunder.
(iv) Rich JSA. To the extent that, as of the Closing Date, WWWS(AM)
and WGR(AM), Buffalo, New York have not yet been sold by Rich Communications
Corporation ("Rich") and Seller has not received the amount that would otherwise
be payable by Rich to Seller under Section 13 of the Joint Sales Agreement with
Rich listed on Schedule 1.1(c)(2) hereof if such stations had been sold by such
date, the Cash Purchase Price shall be increased by such amount.
(v) Other. The Cash Purchase Price shall be adjusted in accordance with
Schedule 2.2(a)(v).
(vi) Bock Note. The Cash Purchase Price shall be increased by
$34,376.90 in connection with the assignment of the Promissory Note dated
September 13, 1995 in favor of Seller made by Eric J. Bock, Guy W. Bock and
Susan Bock-Dean, which is being endorsed (without recourse to Seller) to Buyer
hereunder.
(vii) Payment for Extended Period. The Cash Purchase Price shall be
decreased by the amount equal to the product of (A) a fraction whose numerator
is equal to the difference between 30 (in the case of a Litigation Extended
Period) or 15 (in the case of a Cure Extended Period) and the number of days
elapsed in the then-current Extended Period as of the Closing Date, if any, and
whose denominator is equal to 30 (in the case of a Litigation Extended Period)
or 15 (in the case of a Cure Extended Period), multiplied by (B) $10,000,000 (in
the case of a Litigation Extended Period) and $5,000,000 (in the case of a Cure
Extended Period); provided that where an Extended Period is less than 30 (in the
case of a Litigation Extended Period) or 15 (in the case of a Cure Extended
Period) days, a corresponding adjustment shall be made based upon the number of
days remaining in such Extended Period, the original number of days in such
Extended Period and the additional Cash Purchase Price payment made in respect
of such Extended Period under Section 2.1.
(viii) Alliance. The Cash Purchase Price shall be increased by
Twenty-Five Thousand Nine Hundred Sixty-Five Dollars and Seventy Cents
($25,965.70) as reimbursement for Seller's investment in Television Alliance
Group, Inc.
(ix) New Mexico Stations. To the extent Seller has sold the New Mexico
Stations or the RCB Twin Peaks Equity Interest prior to the Closing Date, the
Cash Purchase Price for all of the Stations shall be reduced by the amount paid
to Seller in connection therewith, minus (1) the non-recurring out-of-pocket
costs incurred by Seller in respect of consummation of such sale, (2) the total
amount of all federal, state and local taxes (other than income taxes) incurred
in connection with such sale and (3) the total amount of all federal, state and
local income taxes incurred by Sandia in connection with such sale. In
connection with any such sale, Seller shall provide a certificate to Buyer as to
the amount of the adjustment hereunder together with appropriate documentation
supporting Seller's calculations.
(b) (i) Prorations Certificate. For the purpose of determining the
prorations and adjustments required pursuant to Section 2.2(a), Seller shall
deliver to Buyer, not less than five (5) days prior to the Closing Date, a
certificate (the "Prorations Certificate"), to be signed at Closing by an
appropriate official of Seller after due inquiry by such official, but without
any personal liability to any such official, which specifies Seller's good faith
determination of the dollar amount of the prorations and adjustments under
Section 2.2(a), including, without limitation, appropriate documentation
supporting Seller's determinations and calculations under Section 2.2(a).
(ii) Pre-Closing Dispute; Escrow. If Buyer, acting in good faith, does
not agree with any amount set forth in the Prorations Certificate, then on or
prior to the second business day prior to the Closing Date, Buyer may deliver to
Seller a written report (the "Buyer's Estimate Report") setting forth in
reasonable detail Buyer's good faith reasonable estimate(s) of the amount(s)
with which Buyer disagrees. Any estimated amount which is set forth in the
Prorations Certificate and as to which Buyer does not deliver its own estimate
on or prior to such second business day will be the "estimated amount" of the
prorations and adjustments under Section 2.2(a) (the "Adjustment Amount") on the
Closing Date. In the case of any such estimated amount as to which Buyer
delivers its own estimate, Seller and Buyer will endeavor in good faith to agree
prior to the Closing on the appropriate amount of such estimate, and any amount
so agreed upon by them in writing prior to the Closing will be the "estimated
amount" of the Adjustment Amount on the Closing Date. In the case of any such
estimated amount as to which Buyer delivers its own estimate and Seller and
Buyer do not so agree, the estimate set forth in the Prorations Certificate will
be the "estimated amount" of the Adjustment Amount, on the Closing Date, and at
the Closing the difference (if any) between the amount of the Cash Purchase
Price that would be determined using the amount set forth in the Prorations
Certificate and the amount of the Cash Purchase Price determined using the
estimated Adjustment Amount set forth in the Buyer's Estimate Report (such
amount, the "Post-Closing Estimate Fund Deposit") will be transferred by Buyer
to Magna Trust Company, St. Louis, Missouri or such other bank as mutually
agreed to by the parties (the "Prorations Escrow Agent"), to be held by the
Prorations Escrow Agent, pursuant to the Post-Closing Escrow Agreement
substantially in the form of Exhibit 2.2(b) (with such changes as the Prorations
Escrow Agent may request), and pending final determination of the disputed
amount(s) in question pursuant to this Section 2.2(b) as set forth below, as a
fund in escrow (the "Post-Closing Estimate Fund") to provide security for the
payment of any additional amount which may be payable by Buyer pursuant to
Section 2.1.
(iii) Adjustment at Closing. At Closing, the Cash Purchase Price shall
be decreased to the extent Seller owes Buyer funds or increased to the extent
Buyer owes Seller funds, based upon the amount set forth in the Prorations
Certificate.
(iv) Closing Balance Sheet. Within one hundred and twenty (120) days
after the Closing Date, Buyer shall prepare a closing balance sheet (the
"Closing Balance Sheet") as of the close of business on the Adjustment Date and
submit it to Seller for review. To the extent Seller does not agree with any
amount set forth in the Closing Balance Sheet, Seller shall deliver written
notice of such disagreement to Buyer. Within one hundred and fifty (150) days
after the Closing Date, final adjustments pursuant to Section 2.2 shall be
determined, and any required refund or payment shall be made in accordance with
subsection (vi) below on the basis of the Closing Balance Sheet, subject to the
provisions relating to disputes provided for herein. Upon acceptance, payment
hereunder will be remitted within five (5) days thereafter. If any dispute
arises over the amount to be refunded or paid, such refund or payment shall
nonetheless be made to the extent such amount is not in dispute.
(v) Post-Closing Dispute. If any dispute cannot be resolved by Buyer
and Seller or their respective independent public accountants within one hundred
and eighty (180) days after the Closing Date, the disputed matters shall be
referred to a mutually satisfactory independent public accounting firm of
national stature which has not been employed by any party hereto for the two (2)
years preceding the date of such referral; such firm to be selected by the
independent public accountants of Seller and Buyer. The determination of such
firm shall be conclusive and binding on each party and not subject to dispute or
review. One-half of the fees of such firm shall be paid by Seller, and one-half
shall be paid by Buyer.
(vi) Disbursement of Post-Closing Estimate Fund. If any funds are
transferred to the Prorations Escrow Agent to be held in the Post-Closing
Estimate Fund, then any amount which becomes payable to Buyer or Seller pursuant
to Section 2.2(b), together with interest accrued on such amount, will be paid
to Buyer or Seller from the Post-Closing Estimate Fund, to the extent of the
funds therein. If no funds are transferred to the Prorations Escrow Agent to be
held in the Post-Closing Estimate Fund or the entire amount so transferred has
theretofore been paid pursuant to this paragraph of Section 2.2(b), then any
remaining amount payable to Seller pursuant to Section 2.2(b) will be paid by
Buyer and any remaining amount payable to Buyer pursuant to Section 2.2(b) will
be paid by Seller. Any amount payable by Seller or Buyer pursuant to Section
2.2(b) (other than to the extent that funds are available from the Post-Closing
Estimate Escrow to pay such amount) will bear interest at the prime or reference
rate of interest announced by Chemical Bank as in effect from time to time, from
the third business day after the adjusted Cash Purchase Price is determined in
accordance with Section 2.2(b) through and including the date upon which such
amount and all such interest are paid in full.
2.3 (a) The Closing. The closing of the transactions provided for in
this Agreement (the "Closing") shall be held in the offices of Dow, Lohnes &
Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C. 20036 or
such other mutually agreeable location at 10:00 a.m. on a date (the "Closing
Date") as shall be mutually agreed upon by Buyer and Seller which, subject to
the other provisions of this Section 2.3, shall not be later than the date (the
"Originally Scheduled Termination Date" and such date, as the same may be
extended pursuant to, and subject to, the provisions of this Section 2.3, the
"Termination Date") that is sixty (60) days after the date of this Agreement
(unless such sixtieth day is not a business day in Maryland, in which case on
the first business day thereafter) and, failing mutual agreement of the parties,
the Closing Date shall be on such sixtieth day (or, if not a business day in
Maryland, on the first business day thereafter); provided, however, that to the
extent Seller is not able to deliver any item set forth in Section 2.4(a) by
such sixtieth day, the Closing Date may be extended at Buyer's option without
payment of any additional consideration by Buyer, for up to an additional
fifteen (15) day period.
(b) Notwithstanding the foregoing, if on the Originally Scheduled
Termination Date the condition precedent set forth in Sections 7.4 or 8.6 hereof
has not been satisfied, either Buyer or Seller may elect to postpone the
Originally Scheduled Termination Date for up to an additional thirty (30) days
plus the number of days during the period from the date of this Agreement
through the earlier of (1) the date on which Sections 7.4 and 8.6 hereof have
been satisfied and (2) the Closing Date, during which the Federal Trade
Commission or the Department of Justice closes due to an unscheduled shutdown
(not including weekends or scheduled holidays) (together, the "Additional
Period" and the number of days in such period being referred to herein as the
"Additional Days"), and the Closing shall thereafter take place on a date
specified by written notice from such party, which date shall be not less than
five (5) days nor more than fifteen (15) days after the satisfaction of such
condition precedent, but in no event later than the date which occurs a number
of days after the Originally Scheduled Termination that is equal to the number
of Additional Days.
(c) If at the end of such Additional Period, either condition precedent
set forth in Section 7.4 or Section 8.6 has not been satisfied, either Buyer or
Seller may terminate this Agreement and the provisions of Section 10.2 shall be
applicable.
(d) To the extent that, as of the Originally Scheduled Termination Date
(or, if applicable, as extended pursuant to Section 2.3(b) hereof), (1) any
injunction of a court or other governmental authority restrains or enjoins the
consummation of the transactions contemplated hereby, or any proceeding of the
sort falling within the provisions of Section 8.2 is pending, Buyer shall
provide copies of the documentation relating thereto to Seller and Buyer may
extend such Termination Date for additional thirty (30) day periods (or to the
extent extended on or after December 2, 1996 for the lesser period to and
including December 31, 1996) (each a "Litigation Extended Period") to and
including December 31, 1996 or (2) Buyer has received notice from Seller as
specified in the proviso in Section 10.1(a)(ii), Buyer may extend such
Termination Date for an additional fifteen (15) day period (or to the extent
extended on or after December 17, 1996 for the lesser period to and including
December 31, 1996) (the "Cure Extended Period") and together with a Litigation
Extended Period, sometimes hereafter referred to collectively as the "Extended
Periods", as applicable and individually as an "Extended Period"). The right to
extend the Termination Date pursuant to the preceding sentence shall only be
available to Buyer to the extent Buyer delivers to Seller written notice (an
"Extension Notice") on or prior to such Termination Date or any then current
Extended Period, of Buyer's intent to extend the Termination Date and Buyer
makes the payments referred to in Section 2.1 with respect to extension of the
Termination Dates on the dates specified therein. During such Extended Period,
Buyer may deliver written notice to Seller specifying that the Closing shall
take place on a specified date, within the applicable Extended Period, which
date shall not be less than five (5) business days from receipt of such notice
by Seller.
(e) Notwithstanding anything to the contrary set forth in Articles 7, 8
or 10, or otherwise herein, Buyer agrees that, if the Termination Date has been
extended by Buyer pursuant to Section 2.3(d), then
(1) Sections 8.2, 8.4, 8.6 and 8.10 shall be deemed to have been
satisfied as of the date Buyer elects to extend the Termination Date and shall
thereafter no longer constitute conditions precedent to Buyer's obligation to
close hereunder;
(2) On the Originally Scheduled Termination Date (or, if applicable, as
extended pursuant to Section 2.3(b) hereof), determination shall be made as to
the satisfaction of the condition set forth in Section 8.1(a) (and, if such
condition is satisfied, the general partner of Seller shall deliver to Buyer a
certificate of the general partner of Seller certifying to the fulfillment of
such condition) and if such condition is satisfied as of such date and such
certificate is delivered, Section 8.1(a) (and the delivery of the certificate
applicable thereto referred to in Section 8.1(c)) shall no longer constitute
conditions precedent to Buyer's obligation to close hereunder and any
determination of Seller's compliance with such representations and warranties
for purposes of indemnification hereunder or under the Option Agreement for
purposes of indemnification thereunder shall be made only as of the Originally
Scheduled Termination Date (or, if applicable, as extended pursuant to Section
2.3(b) hereof);
(3) No changes in the representations and warranties of Seller set
forth herein that are attributable to the period after the Originally Scheduled
Termination Date (or, if applicable, as extended pursuant to Section 2.3(b)
hereof), shall be taken into account for purposes of determining whether the
changes in the representations and warranties of Seller set forth herein would
cause a Material Adverse Change pursuant to Section 7.7.
(4) Satisfaction of the conditions precedent set forth in Sections
8.1(b) (and the delivery of the certificate applicable thereto referred to in
Section 8.1(c)), and delivery of documents to be delivered at Closing under
Sections 8.5, 8.7, 8.8, 8.9 and 8.11, shall be determined as of the actual date
of Closing;
(5) Satisfaction of the condition precedent set forth in Section 8.3
shall be determined as of the actual date of Closing, except that such opinion
may be modified to take into account circumstances arising after the Originally
Scheduled Termination Date (or, if applicable, as extended pursuant to Section
2.3(b) hereof); and
(6) If the Buyer elects to extend the Termination Date, thereafter
until the Closing Date Seller covenants that it shall not negligently, grossly
negligently, or intentionally and wrongfully take, or omit to take, any action
that would cause Seller's representations and warranties hereunder or under the
Option Agreement to be breached; provided it is understood and agreed that this
covenant shall be treated, as are all other covenants of Seller, as a covenant
subject to Section 8.1(b).
2.4 Deliveries at Closing. All actions at the Closing shall be deemed
to occur simultaneously, and no document or payment shall be deemed to be
delivered or made until all documents and payments are delivered or made to the
reasonable satisfaction of Buyer, Seller, and each of their respective counsel;
provided, however, the execution and delivery of the Option Agreement and the
Time Brokerage Agreements, each more fully described below, will be deemed to
occur immediately after the Closing of this Agreement.
(a) Deliveries by Seller at Closing. At the Closing, Seller shall
deliver to Buyer such instruments of conveyance and other customary
documentation as shall in form and substance be reasonably satisfactory to Buyer
and its counsel, including, without limitation, the following:
(i) one or more bills of sale conveying the personal property included
in the Station Assets;
(ii) any mortgage discharges or releases of liens that are necessary in
order for the Station Assets to be free and clear of all liens, mortgages or
security interests, other than the Permitted Encumbrances;
(iii) certificates of the general partner of Seller as required by
Section 8.1(c);
(iv) a certified copy of the resolutions or proceedings of the general
partner of Seller authorizing the transactions contemplated by this Agreement;
(v) a certificate as to the formation and good standing of Seller
issued by the Secretary of State (the "SOS") of the State of Delaware, dated not
more than ten (10) days before the Closing Date, and certificates issued by an
appropriate governmental authority as to the qualification of Seller to do
business in the jurisdictions listed in Schedule 3.1, to the extent such
certificates are available;
(vi) a receipt for the Cash Purchase Price and a receipt for the stock
certificates delivered in payment of the Stock Purchase Price;
(vii) the opinions of counsel required by Section 8.3;
(viii) all consents received by Seller through the Closing Date to the
assignment of the Program Contracts, the Other Contracts and the other
non-FCC licenses, contracts and leases included in the Station Assets;
(ix) the Time Brokerage Agreements contemplated by Sections 7.6 and
8.8;
(x) the Leases or Subleases contemplated by Sections 7.5 and 8.7;
(xi) the Option Agreement contemplated by Sections 7.7 and 8.5 (as
modified by Seller as permitted under Section 7.7 hereof);
(xii) documents of conveyance reasonably acceptable to Buyer
evidencing the transfer of the Real Property;
(xiii) the Registration Rights Agreement contemplated by Section 10.5;
(xiv) certificates of insurance showing Buyer named as an additional
insured as contemplated in Section 5.1;
(xv) to the extent (1) consent is obtained for the transfer thereof and
(2) made available by NewVenco, Inc. and Television Alliance Group, Inc., (a)
all stock certificates of NewVenco, Inc. and Television Alliance Group, Inc.
representing all of Seller's interest and investments in the Other Assets
(together with stock powers endorsed in blank for such stock certificates of
NewVenco, Inc. and Television Alliance Group, Inc., respectively) or (b) a stock
certificate of NewVenco, Inc. and Television Alliance Group, Inc. representing
Buyer's interest in the Other Assets;
(xvi) to the extent consent is obtained to the transfer thereof, a
stock certificate of Transtower, Inc. representing all of Seller's interest in
Transtower, Inc. (together with a stock power endorsed in blank for such stock
of Transtower, Inc.);
(xvii) a bill of sale and general assignment and assumption agreement,
which Seller shall cause RCB Kids Fair, Inc. ("Kids Fair") to execute in favor
of Buyer, conveying the assets of Kids Fair to Buyer;
(xviii) the list of Qualified Beneficiaries entitled to Continuation
Coverage as of the Closing Date, as contemplated under Section 10.3(b);
(xix) a Consent and Agreement in the form of Exhibit 2.4, executed by
Seller; and
(xx) such other documents as Buyer shall reasonably request.
(b) Deliveries by Buyer at Closing. At the Closing, Buyer shall
deliver to Seller the Cash Purchase Price and the Stock Purchase Price, and
Buyer shall deliver to Seller such instruments and other customary documentation
as shall in form and substance be reasonably satisfactory to Seller and its
counsel, including without limitation, the following:
(i) the Cash Purchase Price, which shall be delivered to Seller, in the
manner set forth in Section 2.1;
(ii) stock certificates of Buyer issued to Seller representing the
shares of Exchangeable Preferred Stock, which shares shall be duly and validly
issued, fully paid and nonassessable;
(iii) a certificate of Buyer as required by Section 7.1(c);
(iv) a certified copy of the resolutions or proceedings of Buyer
authorizing the transactions contemplated by this Agreement;
(v) a certificate as to the existence and good standing of Buyer issued
by the Maryland Department of Assessments and Taxation not more than ten (10)
days before the Closing Date and a certificate as to the qualification of Buyer
or an appropriate wholly-owned operating subsidiary of Buyer to do business in
the States of California, Illinois, Indiana, Iowa, Kentucky, Louisiana,
Missouri, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South
Carolina, Tennessee, Texas and any other state in which an Owned Station is
based, from the Secretary of State or analogous entity of each of such states;
(vi) the opinion of counsel required by Section 7.3;
(vii) the Leases or Subleases contemplated by Sections 7.5 and 8.7;
(viii) the Time Brokerage Agreements contemplated by Sections 7.6 and
8.8;
(ix) the Option Agreement contemplated by Sections 7.7 and 8.5,
together with evidence of payment in full of the Option Grant Price (as defined
in the Option Agreement) to the Seller and Licensee under the Option Agreement,
as specified in the Option Agreement;
(x) Buyer's charter, as amended by the Articles Supplementary as
contemplated by Section 7.9, certified as being in effect as of a date shortly
before the Closing Date by the Maryland Department of Assessments and Taxation;
(xi) the Registration Rights Agreement contemplated by Section 10.5;
(xii) certificates of insurance contemplated in Section 6.9;
(xiii) the New Employment Agreements contemplated by Section 7.8; and
(xiv) such other documents as Seller shall reasonably request.
2.5 Deliveries by Seller Prior to Closing and Upon Execution. Title
Policies. Seller shall deliver to the Buyer copies of all currently existing
owners and leasehold policies of title insurance and surveys that Seller has
received with respect to the Real Property, Leasehold Interests and Excluded
Real Property.
(b) Employment Agreement, Consulting Agreement, Voting Agreement and
Stock Option Agreements. Contemporaneously with the execution of this
Agreement, (i) Buyer and Barry Baker ("Baker") shall each have executed and
delivered to the other an employment agreement, in the form attached as Exhibit
2.5(a) (the "Employment Agreement"); (ii) Buyer and Baker shall have each
executed and delivered to the other a consulting agreement in the form attached
as Exhibit 2.5(b) (the "Consulting Agreement"); (iii) Buyer and Baker shall
have each executed and delivered to the other a stock option agreement in the
form attached as Exhibit 2.5(c) (the "Baker Stock Option Agreement"); (iv) a
stock option agreement in favor of each of the employees listed on Schedule
2.5(d) (the "Corporate Employees") in the form attached as Exhibit 2.5(d) (the
"Corporate Employee Stock Option Agreement") shall have been duly executed and
delivered by the Buyer and the options relating to the Corporate Employees set
forth in the Letter Agreement between Buyer and Seller dated the date hereof
shall have been granted to the Corporate Employees (the "Employee Letter
Agreement"); (v) a stock option agreement in favor of each of the employees
listed on Schedule 2.5(e) (the "Station Employees") in the form attached as
Exhibit 2.5(e) (the "Station Employee Stock Option Agreement") shall have been
duly executed and delivered by Buyer; (vi) the Board of Directors of Buyer shall
have adopted, and the compensation committee (and any other committee that is
required to so approve) shall have approved the awards under, the First
Amendment to Incentive Stock Option Plan in the form attached as Exhibit 2.5(f)
(the "ISO Amendment") and the 1996 Long Term-Incentive Plan in the form attached
as Exhibit 2.5(g) (the "LTIP") and the Employee Letter Agreement; (vii) a voting
agreement among David D. Smith, Frederick G. Smith, J. Duncan Smith and Robert
E. Smith, in the form attached as Exhibit 2.5(h) (the "Voting Agreement") shall
have been executed and delivered by all of the parties thereto; and (viii) Buyer
and Seller shall each have executed and delivered the Employee Letter Agreement.
Buyer will not take any action, or omit to take any action, that would cause any
of the agreements listed in (i) through (viii) of this Section 2.5(b) to be
ineffective on or before the Closing Date.
2.6 Effect of Laws or Proceedings. The parties hereto acknowledge and
agree that notwithstanding anything in this Agreement or any other documents
related hereto to the contrary (including, without limitation, any
representations or warranties made by Seller, covenants of the Seller made
herein, any condition precedent to the obligations of Buyer set forth in this
Agreement, or any provisions relating to indemnification to be made by Seller
hereunder), matters relating to, in connection with or resulting or arising
from: (a) the effect, for purposes of any laws, statutes, ordinances, rules,
regulations, orders or other actions, whenever promulgated or enacted, including
any communications or communications-related laws, statutes, ordinances, rules,
regulations, orders or other actions, whenever promulgated or enacted, and any
licenses, permits or authorizations issued by any governmental authority
(including, without limitation, the FCC) (collectively, "Laws") or any contract
or agreement to be conveyed to or assumed, directly or indirectly, by Buyer or
Option Holder pursuant hereto or under the Option Agreement (collectively,
"Conveyed Contracts"), of (1) the transfer of the Station Assets to Buyer and
the retention by Seller of the License Assets; (2) the grant by Seller and River
City License Partnership of the options under the Option Agreement; (3) the
execution, delivery and performance of any of the Transaction Documents (as
defined below); or (4) the consummation of the other transactions contemplated
hereby or by the Option Agreement; (b) any conflict with, violation of, or
breach or default under, or termination of any Laws or Conveyed Contracts as a
result of the consummation of any of the transactions contemplated hereby
(including, without limitation, the Transaction Documents) or by the Option
Agreement; or (c) any claims, actions, suits or other proceedings of any nature
whatsoever ("Proceedings"), by any person or entity (including, without
limitation, any governmental entity) by or before any court, administrative
agency or otherwise, alleging a conflict, violation of, breach or default under,
termination of, or other inconsistency with Laws or Conveyed Contracts as a
result of the consummation of any of the transactions contemplated hereby
(including, without limitation, the Transaction Documents) or by the Option
Agreement, shall not:
(i) cause or constitute, directly or indirectly, a breach by Seller of
any of its representations, warranties, covenants or agreements set forth in
this Agreement or any other document related hereto (and such representations,
warranties, covenants and agreements shall hereby be deemed to be modified
appropriately to reflect and permit the impact and existence of such Laws,
Conveyed Contracts and Proceedings and to permit any action by Seller to comply
with or attempt in good faith to comply with such Laws, Conveyed Contracts and
Proceedings);
(ii) otherwise cause or constitute, directly or indirectly, a default
or breach by Seller under this Agreement or any other documents related hereto;
(iii) result in the failure of any condition precedent to the
obligations of Buyer under this Agreement or any other document related hereto
to be satisfied;
(iv) otherwise excuse Buyer's performance of its obligations under this
Agreement or any other document related hereto; or
(v) give rise to any claim for indemnification or other compensation by
Buyer or any adjustment of the Purchase Price;
provided that the foregoing clauses (i) through (v) shall not apply to (1) any
claim brought by a partner of Seller alleging a violation of Seller's
partnership agreement or any claim brought by any partner, officer, director,
agent or Affiliate of Seller; (2) any breach by Seller of its covenants set
forth in this Agreement; or (3) any action instituted by the Federal Trade
Commission or the Department of Justice under the HSR Act, in each case which
shall be governed by other applicable provisions of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Formation. Seller is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware. Seller
has the requisite partnership power and authority to carry on the business of
the Owned Stations now being conducted by it and to own and operate the Station
Assets owned and operated by it and is qualified to conduct the business of the
Owned Stations now being conducted by it in each jurisdiction listed in Schedule
3.1.
3.2 Partnership Action. All requisite partnership actions and
proceedings necessary to be taken by or on the part of Seller in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and necessary to make the same effective have
been duly and validly taken. This Agreement has been duly and validly
authorized, executed and delivered by or on behalf of Seller and constitutes the
valid and binding agreement of Seller enforceable against Seller in accordance
with and subject to its terms, except as enforceability may be limited by laws
affecting the enforcement of creditors' rights or contractual obligations
generally and by the application of general principles of equity.
3.3 Financials. Seller has delivered to Buyer copies of (i) the
internally prepared unaudited consolidated balance sheet of Seller and its
subsidiaries as of December 31, 1995 and the related statement of operations for
the twelve-month period ended December 31, 1995 (the "1995 Internal Financial
Statements"); (ii) the internally prepared unaudited consolidated balance sheet
of Seller and its subsidiaries as of January 31, 1996 and February 29, 1996 and
the related consolidated statement of operations for the one-month and
two-month, respectively, period then ended (the "1996 Internal Financial
Statements"); and and (ii) the audited balance sheets of Seller and its
subsidiaries as of December 31, 1993 and December 31, 1994 and related
statements of operations and cash flows, and partners' equity for Seller and its
subsidiaries for the years then ended (the "1993 and 1994 Year-End Financial
Statements").
Except as set forth on Schedule 3.27, the 1995 Internal Financial Statements and
the 1993 and 1994 Year-End Financial Statements are, and the 1995 Year-End
Audited Financial Statements (as defined below) and the Closing Financial
Statements (as defined below), each to be delivered to Buyer pursuant to Section
5.3(a) hereof will be, in all material respects, (a) in agreement with the books
and records regularly maintained by Seller with respect to Seller and its
subsidiaries and (b) prepared in accordance with generally accepted accounting
principles applied on a consistent basis in all material respects (except, to
the extent not applied on a consistent basis in all material respects, as noted
thereon) and except as set forth on Schedule 3.27, and except with respect to
the 1995 Internal Financial Statements and the Closing Financial Statements the
absence of notes thereto throughout the year or period involved, and the 1995
Internal Financial Statements and the 1993 and 1994 Year-End Audited Financial
Statements present, and the 1995 Year-End Financial Statements will present,
fairly in all material respects, the financial position of Seller and its
subsidiaries as at the respective dates of the balance sheet and the results of
the operations and the cash flow of Seller and its subsidiaries for the year and
period then ended (subject, in the case of unaudited statements to normal
year-end adjustments).
December 31, 1995 is sometimes referred to herein as the "Balance Sheet Date."
3.4 Business Since the Balance Sheet Date. From the Balance Sheet Date
to the date of this Agreement, there has been no Station Material Adverse Change
(as defined in Section 3.6), or Material Adverse Change and the business of
Seller has been conducted in the ordinary course of business and in the same
manner as it was before the Balance Sheet Date except to the extent that any
differing conduct would not cause a Station Material Adverse Change.
3.5 Condition of Assets. The material tangible assets included in the
Station Assets and the Leasehold Interests are being maintained in accordance
with general industry practices in good operating condition and repair, wear and
tear in ordinary usage, insured casualty and condemnation excepted.
3.6 Title, Etc. Seller owns the Real Property and Real Property
Improvements designated as owned by Seller and leases the Leasehold Interests
designated as leased by Seller set forth on Schedule 1.1(b) in connection with
the operation of the Stations and the JSA Stations. Seller is not in default
under any of the material Leasehold Interests. Except as set forth on Schedules
3.6 and 1.3, and except to the extent that any such noncompliance would not
cause a Station Material Adverse Change (as defined below), to Seller's actual
knowledge, the Real Property and the Leasehold Interests listed on Schedule
1.1(b) and their present uses comply in all material respects with all
applicable zoning laws and ordinances; and to Seller's actual knowledge, there
exists no written notice of any uncorrected material violations of housing,
building, safety or fire ordinances with respect to the Real Property, Real
Property Improvements, or the Leasehold Interests listed on Schedule 1.1(b)
except where such violation would not cause a material adverse change in the
financial condition or business of any TV Station individually or the Radio
Stations, taken as a whole (provided that the foregoing shall not include any
material adverse change attributable to (i) factors affecting the television or
radio industries generally, (ii) general national, regional or local economic or
financial conditions, (iii) governmental or legislative laws, rules or
regulations, (iv) any affiliation agreement or the lack thereof or the
non-transfer to Buyer thereof or (v) actions taken by Buyer or any Affiliate of
Buyer) (a "Station Material Adverse Change"). For purposes of this Agreement,
"Affiliate" means with respect to a party, any Person, directly or indirectly,
controlling or controlled by such party, or any Person under direct or indirect
common control with such party (as such terms are interpreted from time to time
pursuant to the Securities Act of 1933, as amended); "Person" means and includes
natural persons, corporations, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof;
and "actual knowledge" with respect to Seller means the conscious awareness of
facts of Seller's Station general managers and the officers of the general
partner of Seller, after reasonable inquiry by such Station general managers and
such officers with respect to the matters referred to herein as to which the
Seller is stating its knowledge. Seller has not received any written notice
with respect to, and Seller has no actual knowledge of, any pending or
threatened condemnation proceeding affecting the Real Property or Leasehold
Interests listed on Schedule 1.1(b) or any part thereof or of any sale or other
disposition of the Real Property or Leasehold Interests or any portion thereof
in lieu of condemnation, that would cause a Station Material Adverse Change.
Except as set forth on Schedules 3.6 and 1.3, Seller has good, insurable and
marketable (only, with respect to insurability and marketability, as to tangible
property constituting Real Property) and indefeasible title to the tangible
assets included in the Station Assets owned by it, and all such assets will on
the Closing Date be free and clear of all security interests, mortgages,
pledges, liens, encumbrances, or charges of any nature whatsoever except for
Permitted Encumbrances.
3.7 Trademarks, Etc. Except as set forth on Schedules 1.1(f) and
1.1(g), Seller possesses adequate rights, licenses or other authority to use all
trademarks and trade names necessary to conduct the business of the Owned
Stations as presently conducted by Seller, including without limitation the
intellectual property described in Sections 1.1(f) and (g) hereof and the
respective Schedules thereto, except where the failure to so possess would not
cause a Station Material Adverse Change. Except as set forth on Schedules
1.1(f) and 1.1(g) hereto, Seller has not received any notice with respect to any
alleged infringement or unlawful or improper use of any copyright, trademark,
trade name or other intangible property right owned by others and used in
connection with the Owned Stations. Seller represents and warrants that, except
as set forth on Schedule 1.1(f) hereto, none of the trademarks listed thereon
has been registered.
3.8 Insurance. The Owned Stations and the Station Assets are, as of
the date of this Agreement, insured by Seller against loss or damage by fire and
other hazards and risks of the character usually insured against by persons
operating similar properties and businesses under policies issued by insurers of
recognized responsibility, as described on Schedule 3.8 hereof.
3.9 Contracts. Schedules 1.1(b), 1.1(c)(1),(2) and (3), 1.1(d),
1.1(e), 1.1(m) and 3.10 to this Agreement contain a complete list of the
following contracts as to which the Owned Stations or Seller with respect to the
Station Assets is a party or by which either of them is bound as of the date of
this Agreement, other than the Excluded Contracts:
(a) contracts evidencing time sales to advertisers or advertising
agencies that are "trade" or "barter" transactions that require the furnishing
of advertising time on any Owned Station or, to the extent Seller is a party
thereto, on any LMA Station or any JSA Station, at any time after the Closing
Date, and that individually involve annual payments of more than $250,000;
(b) sales agency or advertising representation contracts ending more
than one year after the date of this Agreement;
(c) employment contracts that individually involve annual base salaries
of more than $100,000;
(d) material licenses or agreements under which Seller is authorized to
broadcast on any Station filmed or taped programming supplied by others;
(e) leases of personal property which have a term, including renewal
options exercisable by any party thereto, ending more than one year after the
date of this Agreement and which involve annual payments of more than $50,000
individually or $250,000 in the aggregate;
(f) material contracts not made in the ordinary and usual course of
business;
(g) any other contracts which are material to the business and
operations of the Station Assets and involve annual payments of more than
$100,000 individually; and
(h) any television or radio network affiliation agreements.
Notwithstanding anything to the contrary in the foregoing, it is understood and
agreed that Seller is not required to list contracts entered into in the
ordinary course of business for the sale or sponsorship of advertising time on
any Station or JSA Station for cash at such Station's or JSA Station's
prevailing rate with not more than one year remaining in their terms. All
information listed on Schedule 1.1(d) regarding the Program Contracts for TV
Stations is correct and accurate in all material respects including, without
limitation, the term of such contract and the amount of any unpaid payments due
thereunder as of December 31, 1995.
3.10 Employees. Seller has heretofore delivered to Buyer a list of all
its employees as of the date of this Agreement and their respective salaries and
dates of hire. Except as noted on such list or on Schedule 3.10, Seller has no
written contracts of employment with any employee. Except as described on
Schedule 3.10, Seller is not a party to or subject to any collective bargaining
agreements with respect to any Station nor, except as described on Schedule
3.10, does Seller have any other contracts with any labor union or other labor
organization with respect to any Station. Except as set forth on Schedules 3.10
and 3.11, Seller is not a party to any pending or, to Seller's actual knowledge,
threatened labor dispute affecting any Station that would cause a Station
Material Adverse Change.
3.11 Litigation. Except as set forth on Schedule 3.11 hereto: (i)
Seller, with respect to the Owned Stations, has not been operating under or
subject to or in default with respect to any order, writ, injunction or decree
of any court or federal, state, municipal or other governmental department,
commission, board, agency or instrumentality which has or could reasonably be
expected to cause a Station Material Adverse Change; (ii) Seller is not a party
to any litigation pending or, to Seller's actual knowledge, threatened
litigation affecting any of the Station Assets that would cause a Station
Material Adverse Change. There creditors or voluntary or involuntary
proceedings in bankruptcy pending against or contemplated by Seller, and to
Seller's actual knowledge, no such actions have been threatened against Seller
or any Station or any subsidiary of Seller. On the date hereof, except for
ongoing or planned FCC rulemakings affecting the television or radio industry
generally, there is no litigation or proceeding pending or, to Seller's actual
knowledge, threatened against or affecting Seller that would affect Seller's
ability to carry out the transactions contemplated by this Agreement or
restrain, enjoin, prohibit or render illegal the consummation of the
transactions contemplated by this Agreement.
3.12 Compliance with Laws. Seller, with respect to the Station Assets,
is to Seller's actual knowledge, in compliance, except where failure to so
comply would not cause a Station Material Adverse Change, with all applicable
laws, regulations and orders, and the present uses by Seller of the Station
Assets do not, to Seller's actual knowledge, violate any such laws, regulations
or orders, except to the extent that any such violation would not result in a
Station Material Adverse Change.
3.13 No Conflicts. Except as set forth on Schedule 3.13, on the
Closing Date, neither the execution and delivery by Seller of this Agreement,
nor the consummation by Seller of the transactions contemplated hereby would
constitute or, with the giving of notice or the passage of time or both, would
constitute a material violation of or would conflict in any material respect
with or result in any material breach of or any material default under, any of
the terms, conditions or provisions of any law or regulation to which Seller is
subject, or of the partnership agreement of Seller, or of any contract,
agreement or instrument that is required by the terms hereof to be listed on the
Schedules hereto to which Seller is a party or by which Seller is bound.
3.14 Brokers. Except for the fees payable to Communications Equity
Associates, Inc., which fees shall be paid by Seller, there is no broker or
finder or other person who would have any valid claim against any of the parties
to this Agreement for a commission or brokerage fee in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or understanding of or action taken by Seller.
3.15 Retransmission Consent Agreements. Schedule 3.15 hereto
references a list of all material retransmission consent agreements entered into
by Seller with respect to any Station and in effect on the date hereof.
3.16 Environmental. To Seller's actual knowledge and except (a) as
stated in Schedule 3.16, (b) as may be revealed by any Phase I or Phase II
environmental audit performed or caused to be performed by Buyer or (c) where
such matters would not cause a Station Material Adverse Change, neither Seller
nor the Owned Stations, (nor the LMA Stations or the JSA Stations, but without
any inquiry with respect to the LMA Stations or the JSA Stations) are subject to
any (i) "Superfund" evaluation; or (ii) any investigation or proceeding of any
governmental authority evaluating whether any remedial action is necessary to
respond to release of any chemicals, materials, substances or wastes that are
now or hereafter become defined as, or included in the definition of, "hazardous
wastes," "hazardous substances," "extremely hazardous substances," "toxic
substances," "toxic" or "hazardous pollutants," "hazardous" or "toxic
materials," "contaminants," "pollutants," or words of similar import under the
Resource Conservation and Recovery Act of 1980, as amended, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, the
Hazardous Materials Transportation Act, as amended, the Clean Air Act, as
amended, the Clean Water Act, as amended, the Toxic Substances Control act, as
amended, the Safe Drinking Water Act, as amended, the Oil Pollution Act, as
amended, and their state or local counterparts or equivalents; or (iii) any
requirement to remove asbestos material or polychlorinated biphenyls based on
Seller's present use of the applicable property. To Seller's actual knowledge
except as stated in Schedule 3.16, Seller has complied with all applicable
federal, state and local environmental laws and regulations, except where
failure to do so would not cause a Station Material Adverse Change. Except (a)
as stated in Schedule 3.16, (b) as may be revealed by any Phase I or Phase II
environmental audit performed or caused to be performed by Buyer or (c) where
such matters would not cause a Station Material Adverse Change, to Seller's
actual knowledge, but without any independent environmental assessment (except
to the extent any environmental assessment may have previously been undertaken
by Seller), as of the Closing Date, the Real Property, the Leasehold Interests
and Real Property Improvements contain no condition or substance which under the
aforesaid environmental laws and regulations thereunder, as interpreted as of
this date by judicial and regulatory authorities, will result in recovery by any
person of material remedial or removal costs, expenses or damages, or
expenditures by Buyer for abatement or remedial actions. Seller does not have
any reason as of the date of this Agreement to believe that an independent
environmental assessment would lead to the discovery of any such condition or
substance that would cause a Station Material Adverse Change.
3.17 Employee Plans. Copies of all employee benefit plans, all
employee welfare benefit plans, all employee pension benefit plans, all
multi-employer plans and all multi-employer welfare arrangements (as defined in
Sections (3), (1), (2), (37), and (40), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which are currently
maintained and/or sponsored by Seller, or to which Seller currently contributes,
or has an obligation to contribute in the future, including, without limitation,
any agreements containing "golden parachute" provisions and deferred
compensation agreements), together with any trusts related thereto and a
classification of employees covered thereby (collectively, the "Plans") have
previously been delivered to Buyer, and all of the Plans are listed on Schedule
3.17. Except to the extent listed on Schedule 3.17, no such Plan has been
terminated by Seller within the past three (3) years.
3.18 Compliance with ERISA. To the actual knowledge of Seller, except
as set forth on Schedule 3.18, neither Seller nor any Controlled Group Member
(as defined in the Internal Revenue Code of 1986, as amended (the "Code"),
Section 414(n)(6)(B)), has ever maintained or sponsored, or contributed to, an
employee pension benefit plan (as defined in ERISA Section 3(2)) which is
subject to the provisions of Title IV of ERISA. All Plans are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other laws applicable to such Plans, and, in all
material respects, have been administered, operated and managed in substantial
accordance with the governing documents. All Plans that are intended to qualify
(the "Qualified Plans") under Section 401(a) of the Code have been determined by
the Internal Revenue Service to be so qualified (except for any prototype plans
for which the Internal Revenue Service has issued a determination letter to the
creator of such plans), and copies of all current Plan determination letters,
most recent Form 5500, or, as applicable, Form 5500-C/R filed with respect to
each such qualified Plan or employee welfare benefit plan, and any attachments
to such forms have previously been delivered to Buyer by Seller. Based on
estimates prepared by Plan actuaries, the amount of unfunded benefit liabilities
(within the meaning of ERISA Section 4001(a)(18)) determined as of January 1,
1996 for all Plans subject to Title IV of ERISA does not exceed $300,000.
Neither Seller nor any Plan has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA that could
reasonably be expected to result in any liability to Buyer. Except as disclosed
in Schedule 3.18, no Plan has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(l) of ERISA. Further,
except to the extent provided in Schedule 3.18,
(i) there have been no terminations, partial terminations, or
discontinuance of contributions to any Qualified Plan without notice to and
approval by the Internal Revenue Service;
(ii) with respect to Plans which qualify as "Group Health Plans" under
Section 4980B of the Code and Section 607(1) of ERISA and related regulations
(relating to the benefit continuation rights imposed by "COBRA"), to the actual
knowledge of Seller, Buyer does not have (and will not incur as a result of this
transaction) any direct or indirect liability or is (or will be as a result of
this transaction) subject to any loss, assessment, excise tax, penalty, loss of
federal income tax deduction, or other sanction arising on account of or in
respect of any direct or indirect failure by Seller at any time prior to the
Closing Date to comply with any such federal or state benefit continuation
requirement, which is capable of being assessed or asserted before or after the
Closing Date directly or indirectly against Seller with respect to such Group
Health Plan;
(iii) a copy of the claims history of each Group Health Plan of Seller
for the past three (3) years has previously been provided to Buyer;
(iv) Seller has no retiree health care obligations to any of its
employees; and
(v) no severance pay will be due to any employee of Seller as a result
of the transaction contemplated herein.
3.19 Taxes. Each of Seller, Sandia, Twin Peaks and Twin Peaks License
Partnership has filed or will file all requisite federal, state, local and other
tax returns and paid all taxes due thereunder (including withholding tax
returns) due for all fiscal periods ended on or before the date hereof which, if
not filed, could result in the imposition of any lien or encumbrance on or
against the Station Assets and, as of the Closing Date, shall have filed or will
file all such returns due for such periods ended on or before the Closing Date
(except any such returns for which the filing date has been extended in
accordance with normal extension procedures or for which such extension period
has not expired). To the actual knowledge of Seller, there are no examinations
in progress or claims against Seller, Sandia, Twin Peaks or Twin Peaks License
Partnership for any federal, state, local and other taxes (including withholding
taxes and any penalties and interest) for any period or periods and no notice of
any claim, whether pending or threatened, for taxes has been received. The
amount shown and accrued for taxes on the 1995 Year-End Financial Statements as
of the respective date thereof are sufficient in accordance with GAAP as of such
date for the payment of all taxes of the kinds indicated (including penalties
and interest) for all fiscal periods ended on or before such date.
3.20 Certificates of Incorporation, Bylaws and Capitalization of
Sandia. A true, correct and complete copy of the certificates of incorporation
and bylaws of Sandia, as amended to date, have been provided to Buyer. The
authorized capital stock of Sandia consists solely of: (i) 1,000 shares of
Common Stock, $.01 par value per share, 110 shares of which are issued and
outstanding (the "Sandia Stock") and none of which is held as treasury stock on
the date of this Agreement. Seller has good and valid title to the Sandia
Stock, and on the Closing Date and on the Option Closing Date with respect to
the RCB Twin Peaks Equity Interest, the Sandia Stock will be free of any liens
or encumbrances other than Permitted Encumbrances; provided, however, the Sandia
Stock may be subject to such restrictions on transfer as may arise under state
and/or federal securities or communications laws. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable and to Seller's actual knowledge, have been issued in all
material respects in compliance with all applicable state and federal laws
concerning the issuance of securities and none of such shares were issued in
violation of the preemptive rights of past or present stockholders. There are
no shares reserved for issuance.
3.21 Options, Warrants, Rights re: Sandia. There are no outstanding
warrants, options (including inactive and nonqualified stock options),
agreements to subscribe for or purchase any capital stock or other securities
from Sandia or other similar rights (including conversion and preemptive
rights). There are no voting trusts or voting agreements among, or irrevocable
proxies executed by, Seller, as sole stockholder of Sandia. There are no
existing rights of Seller, as sole stockholder to require Sandia to register any
securities of Sandia or to participate with Sandia in any registration by Sandia
of its securities. There are no agreements of Seller, as sole stockholder of
Sandia providing for the purchase or sale of Sandia's capital stock.
3.22 Validity of Sandia Stock. The Sandia Stock, when transferred in
compliance with the provisions of the Option Agreement, will be validly issued,
will be fully paid and nonassessable, will be free of any preemptive rights,
duties or other governmental charges, will be free of any liens or encumbrances
other than Permitted Encumbrances and will vest in Buyer 100% of the issued and
outstanding stock of Sandia; provided, however, the Sandia Stock may be subject
to such restrictions on transfer as may arise under state and/or federal
securities or communications laws.
3.23 Partnership Agreements and Partnership Interests in Twin Peaks and
Twin Peaks License Partnership. True, correct and complete copies of the
partnership agreements of Twin Peaks Radio and Twin Peaks License Partnership,
as amended to date, have been provided to Buyer. Sandia owns a 60% general
partnership interest and Seller owns a 40% general partnership interest in Twin
Peaks (collectively, the "Twin Peaks Partnership Interest"). Twin Peaks owns a
99% general partnership interest and Seller owns a 1% general partnership
interest in Twin Peaks License Partnership (collectively, the "Twin Peaks
License Partnership Interest"). Sandia and Seller have good and valid title to
the Twin Peaks Partnership Interest, and Twin Peaks and Seller have good and
valid title to the Twin Peaks License Partnership Interest, and on the Closing
Date and on the Option Closing Date with respect to the RCB Twin Peaks Equity
Interest, the Sandia Stock, the Twin Peaks Partnership Interest and the Twin
Peaks License Partnership Interest will be free of any liens or encumbrances
other than Permitted Encumbrances; provided, however, that the Twin Peaks
Partnership Interest and the Twin Peaks License Partnership Interest may be
subject to such restrictions or transfer as may arise under state and/or federal
securities or communications laws. The Twin Peaks Partnership Interest and the
Twin Peaks License Partnership Interest have been duly authorized and validly
issued pursuant to the respective partnership agreements of Twin Peaks and Twin
Peaks License Partnership and are fully paid and nonassessable and none of such
Twin Peaks Partnership Interest or Twin Peaks License Partnership Interest have
been issued in violation of the preemptive rights of past or present partners.
The Twin Peaks Partnership Interest to be transferred to Buyer constitute all of
the issued and outstanding partnership interests in Twin Peaks. The Twin Peaks
License Partnership Interest to be transferred to Buyer constitute all of the
issued and outstanding partnership interests in Twin Peaks License Partnership.
3.24 Options, Warrants, Rights re: Twin Peaks and Twin Peaks License
Partnership. There are no outstanding warrants, options (including inactive and
nonqualified partnership unit options), agreements to subscribe for or purchase
any partnership interest or other securities from Twin Peaks or Twin Peaks
License Partnership or other similar rights (including conversion and preemptive
rights). There are no voting trusts or voting agreements among, or irrevocable
proxies executed by, the partners of Twin Peaks or Twin Peaks License
Partnership. There are no existing rights of the partners of Twin Peaks or Twin
Peaks License Partnership to require Twin Peaks or Twin Peaks License
Partnership to register any securities of Twin Peaks or Twin Peaks License
Partnership to participate with Twin Peaks or Twin Peaks License Partnership in
any registration by Twin Peaks or Twin Peaks License Partnership of its
securities. There are no agreements among the partners of Twin Peaks or Twin
Peaks License Partnership providing for the purchase or sale of partnership
units of Twin Peaks or Twin Peaks License Partnership.
3.25 Validity of Twin Peaks Partnership Interest and Twin Peaks License
Partnership Interest. The Twin Peaks Partnership Interest and Twin Peaks
License Partnership Interest, when transferred in compliance with the provisions
of the Option Agreement, will be validly issued, will be fully paid and
nonassessable, will be free of any preemptive rights, duties or other
governmental charges, and will be free of any liens or encumbrances other than
Permitted Encumbrances; provided, however, the Twin Peaks Partnership Interest
and Twin Peaks License Partnership Interest may be subject to such restrictions
on transfer as may arise under state and/or federal securities or communications
laws.
3.26 Undisclosed Liabilities. Except (i) as set forth in the 1995
Year-End Financial Statements, (ii) as set forth in Schedule 3.26 and the other
Schedules hereto and the Option Agreement and (iii) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, since the date of the most recent consolidated balance sheet of
Seller's and its subsidiaries, none of Sandia, Twin Peaks or Twin Peaks License
Partnership has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be recognized or
disclosed on a consolidated balance sheet of Seller and its subsidiaries or in
the notes thereto.
3.27 Totality of Assets. Except as set forth on Schedule 3.27, the
assets to be conveyed to and acquired by Buyer hereunder at Closing and the
Consent Contracts, together with the assets subject to the Option Agreement,
constitute all of the assets owned by Seller or its Affiliates that (i)
contributed to the generation of revenues and cash flow from operations of the
Stations as of December 31, 1995 or (ii) are used in the business of owning and
operating the Stations as presently conducted.
3.28 Complete Disclosure. The representations and warranties in this
Article 3 do not include any untrue statements of material fact or omit to state
a material fact required to be stated therein necessary to make the statements
not misleading in light of the circumstances under which they were made. If
prior to the Closing, Seller becomes aware of any material fact or circumstance
which changes in any material respect a representation or warranty of Seller set
forth or made in this Agreement, the party with such knowledge shall promptly
give written notice of such fact or circumstance to Buyer. None of (i) such
notification or (ii) any pre-closing investigation made by Buyer of Seller, its
properties, businesses, or assets, shall relieve Seller of its obligations under
this Agreement, including its representations and warranties made in this
Section 3.
3.29 Acquisition of Exchangeable Preferred Stock. With respect to the
acquisition at Closing by Seller of the Exchangeable Preferred Stock as
contemplated in Section 2.1 hereof, Seller (i) has made its own independent
investigation thereof; (ii) has been afforded reasonable access to Buyer and its
executive officers with respect thereto; and (iii) is acquiring these securities
for investment purposes only and without the intent to effect a public
distribution thereof.
3.30 Affiliate Transactions. Except for certain employment agreements
set forth on Schedule 3.10 and except as specified in Schedule 3.30, no Station
is a party to or bound by any material agreement with or has any obligation to
Seller or any officer, director, partner or Affiliate of Seller, other than
agreements and obligations on market terms entered into on an arm's length
basis.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Incorporation. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland, and has
the corporate power and authority to enter into and consummate the transactions
contemplated by this Agreement. Buyer or an appropriate wholly-owned subsidiary
of Buyer is qualified (or will be qualified as of the Closing Date) to do
business in the States of California, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Missouri, New Mexico, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Texas and any other state in which an Owned Station
is doing business.
4.2 Corporate Action. All corporate actions and proceedings necessary
to be taken by or on the part of Buyer in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and necessary to make the same effective have been duly and validly
taken. This Agreement has been duly and validly authorized, executed and
delivered by Buyer, and constitutes the valid and binding agreement of Buyer,
enforceable in accordance with and subject to its terms, except as
enforceability may be limited by laws affecting the enforcement of creditors'
rights or contractual obligations generally and by the application of general
principles of equity.
4.3 No Conflicts. Neither the execution and delivery by Buyer of this
Agreement, nor the consummation by Buyer of the transactions contemplated
hereby, would constitute or, with the giving of notice or the passage of time or
both, would constitute a material violation of or would conflict with or result
in any material breach of or any material default under, any of the terms,
conditions or provisions of any law or regulation to which Buyer is subject, or
Buyer's articles of incorporation or bylaws, or any contract, agreement or
instrument to which Buyer is a party or by which it is bound.
4.4 Brokers. Except for the fees payable to Smith Barney Inc., which
fees shall be paid by Buyer, there is no broker or finder or other person who
would have any valid claim against any of the parties to this Agreement for a
commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement or understanding
of or action taken by Buyer, after reasonable inquiry by such officers of the
matter referred to.
4.5 Litigation. There is no litigation, proceeding or investigation of
any nature pending or, to Buyer's actual knowledge, threatened against or
affecting Buyer's ability fully to carry out the transactions contemplated by
this Agreement or which has or could reasonably be expected to restrain, enjoin,
prohibit or render illegal the consummation of the transactions contemplated by
this agreement. There are no attachments, executions or assignments for the
benefit of creditors or voluntary or involuntary proceedings in bankruptcy
pending against or contemplated by Buyer, and no such actions have been
threatened against Buyer. For purposes of this Agreement, "actual knowledge"
with respect to Buyer means the conscious awareness of facts of the officers of
Buyer, after reasonable inquiry by such parties with respect to the matters
referred to herein as to which the Buyer is stating its knowledge.
4.6 Assignments. To the actual knowledge of Buyer, except as set forth
on Schedule 4.6, Buyer does not know of any reason why any party, other than
Seller, to a Program Contract or to any other contract (a "Distributor") will
not consent to the assignment of, or assumption by, Buyer of such contract.
4.7 Articles of Incorporation, Bylaws and Capitalization of Buyer. A
true, correct and complete copy of the articles of incorporation and bylaws of
Buyer, as amended to date, have been provided to Seller. The authorized capital
stock of Buyer consists solely of: (i) 35,000,000 shares of Class A Common
Stock, $.01 par value per share, 5,960,000 shares of which are issued and
outstanding and none of which is held as treasury stock on the date of this
Agreement; (ii) 35,000,000 shares of Class B Common Stock, $.01 par value per
share, 28,789,981 shares of which are issued and outstanding and none of which
is held as treasury stock on the date of this Agreement; and (iii) 5,000,000
shares of Preferred Stock, $.01 par value per share, none of the shares of which
is issued and outstanding and none of which is held as treasury stock on the
date of this Agreement. All such issued and outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable and to
Buyer's actual knowledge, have been issued in all material respects in
compliance with all applicable state and federal laws concerning the issuance of
securities and none of such shares were issued in violation of the preemptive
rights of past or present stockholders. Except as set forth on Schedule 4.8
hereto, the only shares Buyer has reserved for issuance are the shares required
for the transfer of the Exchangeable Preferred Stock pursuant to this Agreement
and for shares reserved pursuant to certain stock option plans set forth on
Schedule 4.8 hereto.
4.8 Options, Warrants, Rights. To the actual knowledge of Buyer,
except as listed on Schedule 4.8, there are no outstanding warrants, options
(including inactive and nonqualified stock options), agreements to subscribe for
or purchase any capital stock or other securities from Buyer or other similar
rights (including conversion and preemptive rights). Except as set forth in
Schedule 4.8, there are no voting trusts or voting agreements among, or
irrevocable proxies executed by, the Class B stockholders of Buyer and to the
actual knowledge of Buyer, there are no voting trusts or voting agreements
among, or irrevocable proxies created by, the stockholders of Buyer. There are
no existing rights of stockholders to require Buyer to register any securities
of Buyer or to participate with Buyer in any registration by Buyer of its
securities. There are no agreements among the Class B stockholders of Buyer
providing for the purchase or sale of Buyer's capital stock, and to the actual
knowledge of Buyer, there are no agreements among any other stockholders
providing for the purchase or sale of Buyer's capital stock.
4.9 Validity of Stock of Buyer. The Exchangeable Preferred Stock and
the Convertible Preferred Stock, when issued in compliance with the provisions
of this Agreement, will be validly issued, will be fully paid and nonassessable,
will have been issued in compliance with all applicable state and federal laws
concerning the issuance of securities and free of any preemptive rights, duties
or other governmental charges, and will be free of any liens or encumbrances;
provided, however, the Exchangeable Preferred Stock and the Convertible
Preferred Stock may be subject to such restrictions on transfer as may arise
under state and/or federal securities laws.
4.10 Offering. To the actual knowledge of Buyer, and assuming Seller's
representations in Section 3.29 hereof to be true, all offers, sales or
issuances by Buyer of its capital stock or other securities have been made in
compliance in all material respects with federal securities laws and applicable
state securities laws.
4.11 Buyer SEC Documents; Financial Statements. To Buyer's actual
knowledge, Buyer has filed all material reports, forms and other documents
required to be filed with the SEC since January 1, 1994 (such documents as filed
and amended through the date this representation is made or deemed made being
called the "Buyer SEC Documents"). As of their respective dates, the Buyer SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Buyer SEC Documents, and none of the
Buyer SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. Except to the extent that
information contained in any Buyer SEC Document has been revised or superseded
by a later-filed Buyer SEC Document filed and publicly available prior to the
date this representation is made or deemed made, none of the Buyer SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. The financial statements of Buyer included in the Buyer
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Buyer
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end adjustments). Except as
set forth in the Buyer SEC Documents, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
the date of the most recent consolidated balance sheet included in the Buyer SEC
Documents, neither Buyer nor any of its subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be recognized or disclosed on a consolidated
balance sheet of Buyer and its consolidated subsidiaries or in the notes
thereto.
ARTICLE 5
COVENANTS OF SELLER PENDING AND AFTER THE CLOSING DATE
Seller covenants and agrees, from the date hereof to and including the Closing
Date and thereafter where so indicated, that it will act as follows:
5.1 Maintenance of Business. Seller shall, through the Closing Date,
with respect to the Station Assets and the License Assets, continue to conduct
its business and operations and keep its books of account, records and files in
the ordinary and usual course of business. Seller shall from this date forward
and at all times thereafter (subject to the provisions of the Option Agreement
and the Time Brokerage Agreements) continue to operate the Owned Stations in all
material respects in accordance with the terms of the FCC Authorizations and in
compliance in all material respects with all applicable laws and FCC rules and
regulations and published policies. Seller will promptly execute, or cause
Licensee to execute, as appropriate, any necessary applications for the renewal
of the FCC Authorizations.
Seller will maintain in full force and effect through the Closing Date property
damage, liability and other insurance with respect to the Station Assets and the
License Assets consistent with Seller's present practices, and on and after the
Closing Date through the Option Closing Date (as defined in the Option
Agreement) with respect to each Station for which Buyer is entitled to exercise
an Option (as defined in the Option Agreement), Buyer shall be named as an
additional insured as its interests may appear on the insurance policies carried
by Seller with respect to the Station and the License Assets in connection with
such Station.
Nothing contained in this Agreement shall give Buyer any right from this date
forward or at any time thereafter to control the programming, operations or any
other matter relating to any Station, any JSA Station or any Option Station, and
Seller shall have complete control of the programming, operations and all other
matters relating to the Stations and, to the extent applicable, the JSA
Stations, subject to the effect of the Time Brokerage Agreements referred to in
Sections 7.6 and 8.8 hereof.
Prior to the Closing Date, except as set forth in Schedule 5.1 or as otherwise
permitted by the last paragraph of this Section 5.1, Seller will not without the
prior written consent of Buyer (to the extent the following restrictions are
permitted by the FCC and all applicable law):
(a) sell, lease, transfer or agree to sell, lease or transfer any
Station Assets or License Assets which are material to the operation of any
Station, considered as a whole, or which have individually a value in excess of
$50,000 or in the aggregate have a value in excess of $250,000 without
replacement thereof with a substantially equivalent asset of substantially
equivalent kind, condition, and value;
(b) enter into (i) any written contract of employment or any collective
bargaining agreement which will be binding on Buyer, or (ii) permit any
increases in the compensation of any of the employees of any Owned Station or to
the extent any employee is employed by Seller, of any LMA Station or any JSA
Station, except in the case of (i) and (ii) to the extent consistent with past
practices, consistent with the Employee Letter Agreement, or as required by law
or existing contract, in which case such contracts and agreements shall be
assumed by Buyer and treated as Assumed Liabilities hereunder (except as
otherwise contemplated under Section 6.8); provided, however, that Seller may
pay bonuses to any of its employees so long as such bonuses do not create a
binding obligation upon Buyer after the Closing Date;
(c) enter into any contracts under which Seller is authorized to
broadcast programming on any Station except to the extent consistent with past
practices;
(d) apply to the FCC for any construction permit that would materially
restrict any Station's present operations or make any material change in the
Real Property or Leasehold Interests;
(e) modify in any material respect any Plan (except as required by law
after consultation with Buyer) to the detriment of Buyer;
(f) violate, breach or default under, in any material respect, or take
or fail to take any action that (with or without notice or lapse of time or
both) would constitute a material violation or breach of, or default under, any
term or provision of any material contract or license of any Station, other than
as a result of this Agreement, the Option Agreement, the Time Brokerage
Agreements and the transactions contemplated hereby and thereby;
(g) incur, purchase, cancel, prepay or otherwise provide for a complete
or partial discharge in advance of a scheduled payment date with respect to, or
waive any right of Seller under, any liability of or owing to Seller in
connection with any Station, other than (i) in the ordinary course of business
consistent with past practice, (ii) as contemplated pursuant to this Agreement,
(iii) the pay-off of any debt of Seller on or prior to the Closing, or (iv) in
an aggregate amount not to exceed $1,000,000;
(h) engage with any Person in any business combination, except as
otherwise contemplated hereunder (including without limitation, as contemplated
under Section 2.2 and the schedules related thereto);
(i) engage in any transaction with respect to any Station with any
officer, director, or Affiliate of Seller (or any Affiliate thereof), either
outside the ordinary course of business consistent with past practice or other
than on an arm's-length basis;
(j) make capital expenditures or commitments for additions to property,
plant or equipment constituting capital assets on behalf of any Station outside
the ordinary course of business; provided, however, that Seller shall consult
with Buyer to be extent Seller seeks to make significant capital expenditures
prior to making such capital expenditures;
(k) enter into any contract, agreement or commitment to do or engage in
any of the foregoing; or
(l) enter into and record any easements or restrictive covenants that
would materially adversely affect the value or the current or continued use and
enjoyment (to the extent such continued use and enjoyment conforms with current
use and enjoyment) of the property to which they relate without the consent of
Option Holder, which consent will not be unreasonably withheld.
Notwithstanding anything in this Agreement to the contrary, Seller shall be
entitled to (i) renew or extend the term of any contract listed on Schedules
1.1(b), 1.1(c)(1), (2) and (3), 1.1(d), 1.1(e), 1.1(m) and 3.10 (and on the list
of employment agreements delivered to Buyer pursuant to Section 3.10) which, by
its terms, expires or will expire prior to December 31, 1996 and, in connection
therewith, agrees not to increase the amounts payable thereunder during any such
renewal term except in accordance with the usual practices of the related
Station and except as set forth above in Section 5.1(b), (ii) take any action
specified in subsections (b), (c), (d), (e), (f), (g), (h), (j) and (k) of this
Section 5.1 in connection with any acquisition of a television or radio station
(including the consummation of any Station Option) or other transaction, as
contemplated under Section 2.2(a)(iii) above and (iii) take any action specified
in subsections (a), (e), (f), (g), (h), (j) and (k) and enter into a local
management agreement in connection with the sale of the New Mexico Stations or
the RCB Twin Peaks Equity Interest (the "Twin Peaks Sale") at the time of entry
into any agreement of sale for the New Mexico Stations or the RCB Twin Peaks
Equity Interest.
5.2 Organization/Goodwill. Seller shall from this date forward and at
all times thereafter diligently make all commercially reasonable efforts to
preserve the Station Assets and the business organization of the Owned Stations
and preserve the goodwill of the Owned Stations' suppliers, customers and others
having business relations with it.
5.3 Reports; Access to Facilities, Files and Records.
(a) Seller will, as soon as practicable after completion and receipt of
the auditors report, provide to Buyer a copy of the audited consolidated balance
sheet of Seller and its subsidiaries as of December 31, 1995 and the related
consolidated statements of operations and cash flows and partners' equity for
Seller and its subsidiaries for the year then ended (the "1995 Year-End
Financial Statements"). In addition, Seller will, as soon as practicable after
the Closing, deliver to Buyer internally prepared unaudited consolidated balance
sheet of Seller and its subsidiaries as of the Closing Date and the related
consolidated statement of operations for the period January 1, 1996 through the
Closing Date (the "Closing Financial Statements")
(b) Seller will, within thirty (30) days after completion, provide to
Buyer, for informational purposes only (and without making any representation or
warranty with respect thereto), copies of Seller's monthly consolidated balance
sheet and operating statement which, in each case, are prepared internally for
management purposes in the ordinary course between the date hereof and the
Closing Date.
(c) At the request of Buyer, Seller shall from time to time give or
cause to be given to the officers, employees, accountants, counsel and
representatives of Buyer (i) access (in the presence of a representative
designated by Seller), upon reasonable prior notice, during normal business
hours to the Station Assets and to all books and records relating thereto, and
(ii) all such other information concerning the affairs of the Owned Stations
and, to the extent reasonably available to Seller, concerning the affairs of the
LMA Station, as Buyer may reasonably request, provided that the foregoing does
not disrupt or interfere with the business and operations of any of the
Stations.
5.4 Consents. Seller shall diligently make and cooperate with Buyer in
making all commercially reasonable efforts (without being required to make any
payment except as expressly provided for in Section 1.3(c) hereof) to obtain or
cause to be obtained prior to the Closing Date consents to the assignment to, or
assumption by, Buyer of all material licenses (other than the License Assets),
leases and other contracts included in the Station Assets that require the
consent of any third party by reason of the transactions provided for in this
Agreement. To the fullest extent practicable without causing a default under
the Consent Contract and without any expense to Seller, Seller shall cooperate
with Buyer in any reasonable arrangement deemed necessary or desirable by Buyer
to provide to Buyer, after the Closing Date, the economic and other benefits of
the Consent Contracts, including the enforcement of Seller's rights against
third parties under the Consent Contracts.
5.5 Notice of Proceedings. Seller shall promptly notify Buyer in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereunder, or upon receiving any notice from
any governmental department, court, agency or commission of its intention to
institute an investigation into or to institute a suit or proceeding to restrain
or enjoin the consummation of this Agreement or such transactions, or to nullify
or render ineffective this Agreement or such transactions if consummated.
5.6 Confidential Information. Seller shall not use or disclose to
third parties (except as may be necessary for the consummation of the
transactions contemplated hereby, or as required by law, including without
limitation, in connection with legal proceedings relating to this Agreement and
the transactions contemplated hereby, or otherwise pursuant to subpoena or the
request of a governmental authority, and then only with prior notice to Buyer,
including delivery of a copy of the subpoena or request, if applicable), this
Agreement or any information received from Buyer or its agents in the course of
investigating, negotiating and performing the transactions contemplated by this
Agreement; provided, however, that Seller may disclose such information to
Seller's officers, directors, partners, employees, lenders, advisors, attorneys
and accountants who need to know such information in connection with the
consummation of the transactions contemplated by this Agreement and who are
informed by Seller of the confidential nature of such information. Nothing
shall be deemed to be confidential information that: (a) is known to Seller at
the time of the disclosure of such information to it; (b) becomes publicly known
or available other than as a result of disclosure by or through Seller; (c) is
rightfully received by Seller from a third party; or (d) is independently
developed by Seller. In the event this Agreement is terminated and the
transactions contemplated hereby abandoned, Seller will return to the Buyer all
copies of documents, work papers and other written confidential material
obtained by Seller in connection with the transactions contemplated hereby.
5.7 Consummation of Agreement. Subject to the express terms and
conditions of this Agreement, and without expanding such terms and conditions,
Seller shall diligently cooperate with Buyer in making all commercially
reasonable efforts in connection with any steps to be taken as part of its
respective obligations under this Agreement, and Seller shall diligently make
and cooperate in making commercially reasonable efforts to fulfill and perform
all conditions and obligations on its part to be fulfilled and performed under
this Agreement and to cause all terms and conditions set forth herein to be
fulfilled and to cause the transactions contemplated by this Agreement to be
fully carried out.
5.8 Notice of Certain Developments. Seller shall give prompt written
notice to Buyer (a) if the Station Assets shall have suffered damage on account
of fire, explosion or other cause of any nature that (i) is sufficient to
prevent operation of any Owned Station or any LMA Station or JSA Station in any
material respect for more than twenty-four (24) consecutive hours or (ii) causes
a Material Adverse Change; (b) if the regular broadcast transmission of any
Owned Station in the normal and usual manner in which it heretofore has been
operating is interrupted in any material manner for a period of twenty-four (24)
consecutive hours or more; (c) if the Stations, or any one of them, receives
notice from any market cable system currently carrying the Station's signal of
such market cable system's intention to delete any of the Stations from carriage
or change any Station's channel position on such market cable system; (d) if
Seller enters into any contract or agreement entered into after the date hereof
to be assumed by Buyer hereunder or under the Option Agreement that would be
required to be listed on the schedules hereto or under the Option Agreement; or
(e) if Seller acquires any other television or radio station or enters into any
other transaction contemplated in Schedule 2.2(a)(1).
5.9 Hart-Scott-Rodino. As soon as possible after the date hereof, but
in no event later than five (5) business days after the date hereof, Seller
shall prepare and jointly file with Buyer all documents with the Federal Trade
Commission and the United States Department of Justice, as are required to
comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR Act"), and shall promptly furnish all materials thereafter requested by
any of the regulatory agencies having jurisdiction over such filings. In such
event, the parties shall cooperate fully and shall use their commercially
reasonable efforts to expedite compliance with the HSR Act. Any filing fees
(including, by Seller and Buyer, and to the extent necessary, BV and Baker) with
respect to the transaction under the HSR Act shall be borne one-half (1/2) by
Seller and one-half (1/2) by Buyer.
5.10 Updated Information. Seller shall provide to Buyer on or shortly
prior to the Closing Date a list of any additional material leases or contracts
entered into subsequent to the date of this Agreement that would have been
required to be listed on Schedules 1.1(b), (d) or (e) hereto pursuant to Article
3 hereof if such leases or contracts existed on the date of this Agreement and a
list of any real property acquired between the date hereof and the Closing Date.
5.11 Environmental Audit. Seller shall permit the Buyer and Buyer's
agents, as soon as practical after the date hereof and upon Buyer's request
therefor, access to the Real Property and the Real Property Improvements and
except to the extent prohibited by the applicable leases, to the Leasehold
Interests for the purpose of conducting, at Buyer's expense, Phase I and Phase
II environmental audits. Any such environmental audits shall be conducted by a
reputable environmental investigatory firm of the Buyer's choice subject to the
reasonable approval of Seller and in a manner as will not unreasonably interfere
with the normal business and operations of any of the Stations.
5.12 Programming. Seller shall write down and fully amortize,
effective as of December 31, 1995, and shall cause to be paid and discharged in
full on or prior to the Closing, all programming liabilities with regard to
Program Contracts that are subject to the "add back" adjustments set forth on
Schedule 2.2(a)(2) (the "Add Back Programming Liabilities").
5.13 Film Payments and Capital Leases. Except as provided under
Section 2.2 with respect to Add Back Programming Liabilities, on or prior to
Closing Date, Seller shall bring current as of the Closing Date all payments
under film contracts including any sports rights fees or payments in accordance
with the terms of such film contracts or agreements to broadcast any sporting
events (as originally contracted, or in the case of the contract with respect to
M*A*S*H at WTTV-TV/WTTK-TV, as may have been modified and in existence on the
date hereof). On or prior to the Closing Date, Seller shall retire and pay in
full any and all capital lease payments owed by Seller and pay any and all
related option prices relating to capital leases held by Seller.
5.14 Down Payment. Seller shall not distribute the Down Payment to its
partners prior to the earlier of (i) the Closing Date or (ii) the termination of
this Agreement where Seller is entitled to retain the Down Payment. Upon
receipt of the Down Payment, until the earlier of (i) the Closing Date or (ii)
the termination of this Agreement where Seller is entitled to retain the Down
Payment, Seller shall take one or more of the following actions: (1) place the
Down Payment (or any portion thereof) in a bank account of Seller which permits
Seller to have immediate access thereto; (2) use the Down Payment (or any
portion thereof) to make payments under Seller's bank debt; provided that at all
times Seller shall have the ability, subject to the terms thereof, to reborrow
funds under revolving or other line of credit or similar lending facility in the
total amount of the Down Payment used to make payments under the Seller's bank
debt; (3) have cash, marketable securities or other assets readily convertible
into cash in an amount that is at least equal to the amount of the Down Payment;
or (4) any combination of (1) - (3) above so long as the aggregate amount
accessible in such account, such revolving or other line of credit or similar
facility and such liquid assets shall be at least equal to the Down Payment.
5.15 No Solicitation. Until this Agreement is terminated by its terms,
Seller will not (i) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to any (A) merger or consolidation
with or into, (B) acquisition or purchase of substantially all of the assets of
or substantially all of the equity interest in or (C) similar transaction or
business combination involving the Seller or all of the Stations or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any other Person to do or seek any of the
foregoing. Until this Agreement is terminated by its terms, Seller will notify
Buyer if any Person makes any proposal or offer with respect to any of the
foregoing. Seller will not enter into any agreement to transfer, or grant any
option or right to acquire, substantially all of the partnership interests of
Seller to any Person other than Buyer prior to the termination of this
Agreement. It is understood and agreed by Buyer that, notwithstanding anything
in this Agreement to the contrary, no breach of this Section 5.15 by Seller will
excuse Buyer from its obligation, if any, to consummate the transactions
contemplated hereunder.
ARTICLE 6
COVENANTS OF BUYER
Buyer covenants and agrees that from the date hereof to and including the
Closing Date and thereafter where so indicated, that it will act as follows:
6.1 Confidential Information. Buyer shall not use or disclose to third
parties (except as may be necessary for the consummation of the transactions
contemplated hereby, or as required by law, including, without limitation, in
connection with legal proceedings relating to this Agreement and the
transactions contemplated hereby, or otherwise pursuant to subpoena or the
request of a governmental authority, and then only with prior notice to the
other parties hereto, including delivery of a copy of the subpoena or request,
if applicable) this Agreement or any information (including, without limitation,
financial information and information regarding program contracts and revenue)
received from the other parties hereto or their agents in the course of
investigating, negotiating and performing the transactions contemplated by this
Agreement; provided, however, that the Buyer may disclose such information to
Buyer's officers, directors, employees, lenders, advisors, attorneys and
accountants who need to know such information in connection with the
consummation of the transactions contemplated by this Agreement and who are
informed by Buyer of the confidential nature of such information. Nothing shall
be deemed to be confidential information that: (a) is known to Buyer at the
time of its disclosure to it; (b) becomes publicly known or available other than
as a result of disclosure by or through Buyer; (c) is rightfully received by
Buyer from a third party; or (d) is independently developed by Buyer. In the
event this Agreement is terminated and the purchase and sale contemplated hereby
abandoned, Buyer will return to Seller all copies of documents, work papers and
other written confidential material obtained by Buyer in connection with the
transactions contemplated hereby.
6.2 Consummation of Agreement. Subject to the express terms and
conditions of this Agreement, and without expanding such terms and conditions,
Buyer shall diligently make and cooperate with Seller in making all commercially
reasonable efforts in connection with any steps to be taken as part of its
obligations under this Agreement, and Buyer shall diligently make and cooperate
with Seller in making all commercially reasonable efforts to fulfill and perform
all conditions and obligations on its part to be fulfilled and performed under
this Agreement and to cause all terms and conditions set forth herein to be
fulfilled and to cause the transactions contemplated by this Agreement to be
fully carried out. Buyer agrees to diligently cooperate with Seller in
connection with obtaining consents to the assignment to, or assumption by, Buyer
of licenses, leases and other contracts included in the Station Assets, and to
execute such assumption instruments as may be required in connection with
obtaining such consents on monetary terms no less favorable to Buyer than those
of Seller under such licenses, leases and other contracts on the date of such
assumption; provided, however, that Buyer's cooperation and actions pursuant
hereto shall not limit Seller's obligations with respect to the Consent
Contracts set forth in Sections 1.3 and 5.4 hereof, or Buyer's obligations with
respect to the Consent Contracts set forth in Section 1.3 hereof, or be deemed a
waiver of any rights of Buyer or Seller with respect thereto.
6.3 Notice of Proceedings. Buyer will promptly notify Seller in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereunder, or upon receiving any notice from
any governmental department, court, agency or commission of its intention to
institute an investigation into or institute a suit or proceeding to restrain or
enjoin the consummation of this Agreement or such transactions, or to nullify or
render ineffective this Agreement or such transactions if consummated.
6.4 Hart-Scott-Rodino. As soon as possible after the date hereof, but
in no event later than five (5) business days after the date hereof, Buyer shall
prepare and jointly file with Seller all documents with the Federal Trade
Commission and the United States Department of Justice as are required to comply
with the HSR Act, and shall promptly furnish all materials thereafter requested
by any of the regulatory agencies having jurisdiction over such filings. In
such event, the parties shall cooperate fully and shall use their commercially
reasonable efforts to expedite compliance with the HSR Act. Any related filing
fees under the HSR Act shall be paid in accordance with Section 5.9 hereof.
6.5 Consents and Assignments. Buyer covenants and agrees that it shall
provide, on request, to a Distributor such financial or other information as the
Distributor may reasonably request in order for the Distributor to consent to
the assignment to, and assumption by, Buyer of any Program Contract or other
contract.
6.6 Capitalization of Buyer. Prior to the Closing Date, Buyer will not
without the prior written consent of Seller (to the extent the following
restrictions are permitted by the FCC and all applicable Law):
(a) amend its articles of incorporation or by-laws, as applicable,
except for the filing of the Articles Supplementary;
(b) effect any stock split or otherwise change its capitalization as it
exists on the date hereof except as set forth in the Articles Supplementary and
as set forth on Schedule 6.6 hereto;
(c) issue any stock or make any filing with the SEC, other than any
filings required hereunder or made in the ordinary course of business as a
public reporting company; or
(d) circulate to potential investors any materials in connection with
any proposed securities offering.
6.7 Notice of Material Impact. Buyer will promptly notify Seller in
writing of any significant developments that have, or could reasonably be
expected to have, a material adverse impact on the condition (financial or
otherwise) of the business or any material asset of Buyer.
6.8 New Employment Agreements. On or prior to the Closing Date, Buyer
shall have caused Sinclair Communications, Inc. ("SCI"), or the SCI Entity, as
defined in, and specified under, the Employee Letter Agreement, as the case may
be, to have executed and delivered to Seller the New Employment Agreements (as
defined in Section 7.8) and Buyer shall have assumed the New Employment
Agreements specified in the Employee Letter Agreement from SCI.
6.9 Insurance. On the Closing Date and at all times thereafter, Buyer
shall cause all parties currently named as "additional insured" on RCB's
policies (a list of which has been previously provided to Buyer) to be named as
additional insured parties as their interests may appear, under all insurance
policies carried by Buyer with respect to the Stations and the JSA Stations.
6.10 Stock Options. On or prior to the Closing Date, Buyer shall have
granted the options contemplated under the Station Employee Letter Agreement to
each Station Employee who has entered into an employment agreement substantially
in the form of Exhibit 7.8 on or prior to Closing.
6.11 Amended Charter. On or prior to Closing Date, Buyer will submit
to Seller a form of an amendment and restatement of Buyer's charter, which shall
be in the form of Articles of Amendment and Restatement to the Articles of
Incorporation of Buyer which shall permit the issuance of the Convertible
Preferred Stock as contemplated under Section 2.1 and performance by the Buyer
of all obligations in respect thereof, including, without limitation, the
authorization of additional shares of Class A Common Stock, and which shall be
in form and substance reasonably satisfactory to Seller (the "Amended Charter").
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by this
Agreement to occur on the date scheduled for Closing are, at its option, subject
to the fulfillment of the following conditions prior to or at the Closing Date:
7.1 Representations, Warranties, Covenants.
(a) The representations and warranties of Buyer contained in this
Agreement shall have been true and accurate in all material respects as of the
date when made and shall be true and accurate in all material respects as of the
Closing Date, except to the extent any such representation or warranty is
expressly stated only as of a specified earlier date or dates, in which case
such representation or warranty shall be true and accurate in all material
respects as of such earlier date or dates and except to the extent changes are
permitted or contemplated pursuant to this Agreement;
(b) Buyer shall have performed and complied in all material respects
with the covenants and agreements required by this Agreement to be performed or
complied with by them prior to or at the Closing Date, including, without
limitation, delivery in full of the Purchase Price; and
(c) Buyer shall have delivered to Seller a certificate of an officer of
Buyer dated the Closing Date certifying to the fulfillment of the conditions set
forth in Sections 7.1(a) and 7.1(b).
7.2 Proceedings.
(a) As of the Closing Date, no action or proceeding shall have been
instituted and be pending before any court or governmental body to materially
restrain or prohibit, or to obtain material damages in respect of, the
consummation of this Agreement that may reasonably be expected to result in a
permanent injunction against such consummation or, if the transactions
contemplated hereby were consummated, an order to nullify or render ineffective
this Agreement or such transactions or the recovery against Seller of such
material damages; and (b) As of the Closing Date, none of the parties to this
Agreement shall have received written notice (other than a letter of inquiry)
from any governmental body of its intention to institute any action or
proceeding to materially restrain or enjoin or nullify, or to obtain material
damages in respect of, this Agreement or the transactions contemplated hereby
that may reasonably be expected to result in a permanent injunction against such
consummation or, if the transactions contemplated hereby were consummated, an
order to nullify or render ineffective this Agreement or such transactions or
the recovery against Seller of such material damages; provided, however, that
the foregoing (a) and (b) shall not be deemed to fall within the provisions
hereof or qualify as a condition hereunder to the extent such action or
proceeding is (1) brought or caused to be brought (i) by any partner, officer,
director, agent, Affiliate or creditor of Seller, or any other party claiming
by, through or against Seller that is not related to Buyer, (ii) any third party
or agent of such party to any Contract relating to any consent required to
convey any such Contract or (iii) by any party or agent of such party, who is
currently a party to any such affiliation agreement with Seller, Licensee or any
Affiliate of Seller or Licensee or in any way relating to any television or
radio network affiliation agreement of Seller, Licensee, any Affiliate of Seller
or Licensee, Buyer or any Affiliate of Buyer or (2) a Proceeding referred to in
Section 2.6 hereof.
7.3 Opinion of Counsel. Seller shall have received opinions of counsel
to Buyer dated the Closing Date, in substantially the forms attached to this
Agreement as Exhibits 7.3(a) and 7.3(b).
7.4 Hart-Scott-Rodino. The waiting period under the HSR Act shall have
expired or been terminated, and there shall not be pending any action instituted
by the Federal Trade Commission or the Department of Justice under the HSR Act,
and there shall not be outstanding any order of a court relating thereto,
restraining the transactions contemplated hereby.
7.5 Leases/Subleases. Seller shall have received copies from Buyer of
certain leases (the "Leases") or subleases (the "Subleases") for the Real
Property and the Leasehold Interests (other than with respect to the Columbus
Stations) fully executed by the Buyer, which will enable Seller to continue to
operate the Owned Stations consistent with (i) previous operating expenses and
practices, (ii) its FCC Authorizations, and (iii) all FCC rules, regulations and
procedures. The Leases and/or Subleases to be delivered hereunder and which are
contemplated hereby shall be reasonably acceptable to Seller, and the Subleases
shall be consistent in all material terms with the material terms of the
existing leases for the Leasehold Interests. The term of each Lease and
Sublease shall be coterminous with the term of the Option relating to the Owned
Station to which such Lease or Sublease applies.
7.6 Time Brokerage Agreements. Buyer shall have entered into and
delivered to Seller time brokerage agreements with Seller for the Group I
Stations (as defined in the Option Agreement) and for the Columbus Station in
substantially the forms of Exhibits 7.6(a) and 7.6(b), respectively hereto (the
"Time Brokerage Agreements") fully executed by Buyer.
7.7 Option Agreement. Seller shall have received from Buyer an option
agreement substantially in the form of Exhibit 7.7 hereto, as such agreement may
be modified after the date hereof by Seller to give effect to changes in the
representations and warranties of Seller and Licensee (including the exhibits
and schedules thereto) appropriate to reflect changes occurring or arising after
the date hereof that, together with any changes to the representations and
warranties of Seller set forth herein, would not cause a Material Adverse Change
(as defined in Section 8.10) (the "Option Agreement"), fully executed by Buyer.
7.8 New Employment Agreements. Buyer shall have caused SCI, or the SCI
Entity, as defined in, and specified under, the Employee Letter Agreement, as
the case may be, to have executed and delivered employment agreements with the
persons listed on Schedule 7.8 (or any replacement person designated by Seller,
including any person designated to fill a "TBD" position, to fill such position)
substantially in the form of Exhibit 7.8 and subject to the limitations set
forth in the Employee Letter Agreement (the "New Employment Agreements") and
Buyer shall have assumed the New Employment Agreements specified in the Employee
Letter Agreement.
7.9 Articles Supplementary. The Articles Supplementary shall have been
filed as an amendment to the existing charter of Buyer with the Maryland
Department of Assessments and Taxation.
7.10 Material Adverse Change. There shall not have been a material
adverse change in Buyer's financial condition or business taken as a whole
(provided that the foregoing shall not include any material adverse change
attributable to (i) factors affecting the television or radio industries
generally, (ii) general national, regional or local economic or financial
conditions, (iii) governmental or legislative laws, rules or regulations or (iv)
actions taken by Seller or any Affiliate of Seller).
7.11 Approval of Stock Options. All necessary consents of the
directors (including any committees thereof) of Buyer to approve all of the
stock options described in the Baker Stock Option Agreement, the Corporate
Employee Stock Option Agreements contemplated by the Employee Letter Agreement
and the Station Employee Stock Option Agreement shall not have been rescinded or
revoked and shall be in full force and effect.
7.12 Stock Options. Buyer shall have granted the options contemplated
under the Employee Letter Agreement to each Station Employee who has entered
into an employment agreement in the form of Exhibit 7.8.
7.13 Amended Charter. The Buyer shall have submitted to Seller the
Amended Charter, in form and substance reasonably satisfactory to Seller.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by this
Agreement to occur on the date scheduled for Closing are, at its option, subject
to the fulfillment of the following conditions prior to or at the Closing Date;
provided that it is understood and agreed by Buyer that the provisions hereof
shall be subject to the provisions of Section 2.3(e) hereof:
8.1 Representations, Warranties, Covenants.
(a) The representations and warranties of Seller contained in this
Agreement shall have been true and accurate as of the date when made and shall
be true and accurate as of the Closing Date, except to the extent (i) any such
representation or warranty is expressly stated only as of a specified earlier
date or dates, in which case such representation and warranty shall be true and
accurate as of such earlier specified date or dates except as set forth in (iii)
below of this Section 8.1(a), (ii) changes are permitted or contemplated
pursuant to this Agreement or (iii) the consequence of the matter set forth in
such representation and warranty having failed to be true and accurate as of the
date when made, on the Closing Date or on such earlier specified date would not
result in a Material Adverse Change.
(b) Seller shall have performed and complied in all respects with the
covenants and agreements required by this Agreement to be performed or complied
with by it prior to or at the Closing Date, except to the extent that the
consequence of the failure of Seller to have so performed or complied would not
result in a Material Adverse Change.
(c) The general partner of Seller shall have delivered to Buyer a
certificate of an officer of the general partner of Seller dated the Closing
Date certifying to the fulfillment of the conditions set forth in Section 8.1(a)
and 8.1(b).
8.2 Proceedings.
(a) As of the Closing Date, no action or proceeding shall have been
instituted and be pending before any court or governmental body to restrain
materially or prohibit, or to obtain material damages in respect of, the
consummation of this Agreement that may reasonably be expected to result in a
permanent injunction against such consummation or, if the transactions
contemplated hereby were consummated, an order to nullify or render ineffective
this Agreement or such transactions or for the recovery against Buyer of such
material damages; and (b) as of the Closing Date, none of the parties to this
Agreement shall have received written notice (other than a letter of inquiry)
from any governmental body of its intention to institute any action or
proceeding to materially restrain, enjoin or nullify, or to obtain material
damages in respect of, this Agreement or the transactions contemplated hereby
that may reasonably be expected to result in a permanent injunction against such
consummation or, if the transactions contemplated hereby were consummated, an
order to nullify or render ineffective this Agreement or such transactions or
the recovery against Buyer of such material damages; provided, however, that the
foregoing (a) and (b) shall not be deemed to fall within the provisions hereof
or qualify as a condition hereunder to the extent such action or proceeding is
(1) brought or caused to be brought by (i) any stockholder, bondholder, officer,
director, agent, Affiliate or creditor of Buyer or any other party claiming by,
through or against Buyer that is not related to Seller,(ii) any third party or
agent of such party to any Contract relating to any consent required to convey
any such Contract, or (iii) any party or agent of such party, who is currently a
party to any such affiliation agreement with Buyer or any Affiliate of Buyer or
in any way relating to any television or radio network affiliation agreement of
Seller, Licensee, any Affiliate of Seller or Licensee or Buyer or any Affiliate
of Buyer; or (2) a Proceeding referred to in Section 2.6 hereof.
8.3 Opinion of Counsel. Buyer shall have received an opinion of
counsel to Seller dated the Closing Date in substantially the form attached to
this Agreement as Exhibit 8.3.
8.4 Damage to the Assets. The Station Assets shall not have suffered
damage on account of fire, explosion or other similar cause of any nature that
causes a Material Adverse Change; provided, however, that if, after Seller has
duly notified Buyer of such damage, Buyer does not notify Seller that Buyer is
terminating this Agreement pursuant to Section 10.1(b)(iii) hereof within the
time period specified therein, then Buyer shall be deemed to have waived this
condition of Closing.
8.5 Option Agreement. Buyer shall have received from Seller the Option
Agreement fully executed by Seller and Licensee.
8.6 Hart-Scott-Rodino. The waiting period under the HSR Act shall have
expired or been terminated, and there shall not be pending any action instituted
by the Federal Trade Commission or the Department of Justice under the HSR Act,
and there shall not be outstanding any order of a court relating thereto,
restraining the transaction contemplated hereby.
8.7 Leases/Subleases. Buyer shall have received from Seller, fully
executed by Seller, the Leases and/or Subleases referred to in Section 7.5
hereof.
8.8 Time Brokerage Agreements. The Buyer shall have received from
Seller the Time Brokerage Agreements, fully executed by Seller.
8.9 Add Back Programming Liabilities. Buyer shall have received
evidence that Seller has paid all Add Back Programming Liabilities.
8.10 Material Adverse Change. Since the date of this Agreement, there
shall not have been a material adverse change in Seller's and its subsidiaries'
financial condition or business taken as a whole, or of the Station Assets taken
as a whole (provided that the foregoing shall not include any material adverse
change attributable to (i) factors affecting the television or radio industries
generally, (ii) general national, regional or local economic or financial
conditions, (iii) governmental or legislative laws, rules or regulations, (iv)
any affiliation agreement or the lack thereof or the non-transfer to Buyer
thereof or (v) actions taken by Buyer or any Affiliate of Buyer) (a "Material
Adverse Change").
8.11 Certain Financial Statements. Seller shall have delivered to
Buyer (a) on or prior to the Closing Date, unaudited financial statements (i)
for the period from January 1, 1994 to September 8, 1994 with respect to the
television stations acquired from Continental Broadcasting Company, (ii) for the
period from January 1, 1995 to July 7, 1995 with respect to the radio stations
acquired from Keymarket of New Orleans, Inc., Keymarket of NEPA, Inc.,
Lackazerne, Inc., Keymarket of Buffalo, Inc., Keymarket of Nashville, Inc.,
Keymarket of Los Angeles, and Keymarket Communications, and (b) not later than
ten (10) business days prior to the Closing Date, the 1995 Year-End Financial
Statements.
8.12 Marcus Non-Compete. Buyer shall have received the non-competition
letter agreement executed by Larry D. Marcus in substantially the form of
Exhibit 8.12 hereto.
ARTICLE 9
INDEMNIFICATION
9.1 Survival. The representations and warranties of Seller and Buyer
contained in this Agreement (including the Schedules hereto) or in any
certificate delivered by it or made pursuant to Sections 2.4, 7.1, and 8.1 of
this Agreement shall survive the Closing Date for a period of one (1) year after
the Closing Date. Except as provided below in this Section 9.1, the covenants of
Seller and Buyer under this Agreement to be performed on or before the Closing
Date shall survive the Closing Date for a period of one year after the Closing
Date. Buyer's obligation to pay, perform or discharge the Assumed Liabilities
shall survive until such Assumed Liabilities have been paid, performed or
discharged in full. Seller's obligations with respect to all obligations and
liabilities not assumed by Buyer pursuant to this Agreement shall survive until
such obligations and liabilities have been paid, performed or discharged in
full. The covenants and agreements contained in this Article 9 shall continue
in full force and effect until fully discharged. Any other covenants or
agreements contained herein or made pursuant hereto which by their terms are to
be performed after the Closing shall survive until fully performed and
discharged in full, including without limitation all obligations and liabilities
with respect to the Assumed Liabilities, the Retained Liabilities and the
Consent Contracts.
9.2 Indemnification of Buyer. Seller agrees that after the Closing,
subject to the limitations in Section 9.4 below, it shall indemnify and hold
Buyer and its officers, directors, employees, agents and Affiliates harmless
from and against any and all damages, claims, losses, expenses, costs,
obligations and liabilities including, without limiting the generality of the
foregoing, liabilities for reasonable attorneys' fees and expenses ("Loss and
Expense") suffered (whether any such claim arises out of a third party action or
is made by Buyer against Seller) by Buyer resulting from (i) any material breach
of any representation or warranty made by Seller pursuant to this Agreement;
(ii) any material failure by Seller to perform or fulfill any of its covenants
or agreements set forth in this Agreement; (iii) any failure by Seller to pay,
perform or discharge any liabilities or obligations not specifically assumed by
Buyer pursuant to this Agreement; or (iv) any litigation, proceeding or claim by
any third party arising from the business or operations of the Station Assets by
Seller prior to the Closing Date, except to the extent arising from obligations
or liabilities that have been disclosed to Buyer in this Agreement or the Option
Agreement in the Schedules hereto or thereto (other than those set forth on
Schedule 9.2) and except to the extent arising for obligations or liabilities of
or assumed by Buyer pursuant to this Agreement.
9.3 Indemnification of Seller. Buyer agrees that, after the Closing,
it shall indemnify and hold Seller and its officers, directors, partners,
employees, agents and Affiliates harmless from and against any and all Loss and
Expense suffered (whether any such claim arises out of a third party action or
is made by Seller against Buyer) by Seller resulting from (i) any material
breach of any representation or warranty made by Buyer pursuant to this
Agreement; (ii) any material failure by Buyer to perform or fulfill any of its
covenants or agreements set forth in this Agreement; (iii) any failure by Buyer
to pay, perform or discharge any Assumed Liabilities or any other obligations or
liabilities of or assumed by Buyer under this Agreement (including, without
limitation, those set forth in Section 10.3 hereof); or (iv) any litigation,
proceeding, or claim arising from the business or operations of the Station
Assets on or after the Closing Date.
9.4 Limitation of Liability. (i) Notwithstanding any other provision
of this Agreement, after the Closing, neither Seller nor Buyer shall indemnify
or otherwise be liable to the other unless (a) the party seeking indemnification
has complied with the terms of, including the time limits set forth in, Section
9.6 and (b) the aggregate amount of Buyer's Loss and Expense (in the case of
Seller's indemnification of Buyer) or Seller's Loss and Expense (in the case of
Buyer's indemnification of Seller) exceeds $500,000, in which event the
indemnified party shall be entitled to recover its aggregate Loss and Expense
inclusive of such $500,000 threshold; provided that such limitation shall not
apply to any indemnification obligation of Buyer pursuant to Section 9.3(ii),
(iii) or (iv) hereof or Seller pursuant to 9.2(ii), (iii) or (iv) hereof.
Notwithstanding any provision contained herein, in no event shall Seller be
liable for any amount, which, when combined with any other amounts for which
Seller previously has been liable under Section 9.2 hereof and any amount for
which Seller and Licensee are liable, or previously have been liable, under
Section 9.2 of the Option Agreement is in excess of $50,000,000.
(ii) Notwithstanding anything in this Agreement to the contrary, it is
understood and agreed that any amounts owed to Buyer by Seller for such Loss and
Expense as determined in accordance with this Article 9 shall be made solely and
exclusively in the form of a deduction from the Columbus Option Closing Price
(as defined in the Option Agreement) that has not yet been paid to Seller and
Licensee under the Option Agreement and that once the Columbus Option Closing
Price has been paid in full to Seller and Licensee or a portion thereof placed
in the Indemnification Fund (as defined in and pursuant to the terms of the
Option Agreement) or if the Columbus Option is terminated under the Option
Agreement, Buyer shall have no further recourse against Seller or Licensee, and
no other payment by Seller shall be required, hereunder, except for any then
pending claims against the amount of the Columbus Option Closing Price placed in
the Indemnification Fund.
(iii) Anything in this Agreement or any applicable law to the contrary
notwithstanding, neither Seller (except to the extent expressly provided for in
Section 9.4(ii)) nor any partner, director, officer, employee, agent or
Affiliate of Seller (including any shareholder, director, officer, employee,
agent or Affiliate of the general partner of the Seller) shall have any personal
liability to Buyer as a result of the breach of any representation, warranty,
covenant or agreement of Seller contained herein or otherwise and shall have no
personal obligation to indemnify Buyer for any of Buyer's Losses or Expenses.
9.5 Bulk Sales Indemnity. Buyer hereby waives compliance with the
provisions of any applicable bulk transfer laws. Subject to the limitations set
forth in Section 9.4 above, Seller further agrees to indemnify and hold Buyer
harmless from and indemnify Buyer against any and all Loss and Expense relating
to any claims made by creditors, with respect to non-compliance with any bulk
transfer law, except to the extent that such claims result from the Assumed
Liabilities and other obligations or liabilities to be paid or discharged by
Buyer as a result of this Agreement and/or Buyer's failure to pay the same when
due.
9.6 Notice of Claims. If Buyer or Seller believes that it has suffered
or incurred any Loss and Expense, such party shall notify the other promptly in
writing and, in any event, within one year of the date of this Agreement,
describing such Loss and Expense, the factual basis for such claim, the amount
thereof, estimated in good faith, and the method of computation of such Loss and
Expense, all with reasonable particularity and containing a reference to the
provisions of this Agreement in respect of which such Loss and Expense shall
have occurred. If any action at law or suit in equity is instituted by a third
party with respect to which any of the parties intends to claim any liability or
expense as Loss and Expense under this Article 9, such party shall within twenty
(20) days after receiving written notice thereof (or sooner to the extent the
indemnifying party would not have time to adequately take the actions
contemplated under Section 9.7), notify the indemnifying party of such action or
suit.
9.7 Defense of Third Party Claims. The indemnifying party under this
Article 9 shall have the right to conduct and control through counsel of its own
choosing the defense of any third party claim, action or suit (and the
indemnified party shall cooperate fully with the indemnifying party), but the
indemnified party may, at its election, participate in the defense of any such
claim, action or suit at its sole cost and expense provided that, if the
indemnifying party shall fail to defend any such claim, action or suit, then the
indemnified party may defend through counsel of its own choosing such claim,
action or suit, and (so long as it gives the indemnifying party at least fifteen
(15) days' notice of the terms of the proposed settlement thereof and permits
the indemnifying party to then undertake the defense thereof) settle such claim,
action or suit, and to recover from the indemnifying party the amount of such
settlement or of any judgment and the costs and expenses of such defense. The
indemnifying party shall not compromise or settle any third party claim, action
or suit without the prior written consent of the indemnified party, which
consent will not be unreasonably withheld or delayed.
9.8 Indemnity as Sole Remedy. After the Closing Date, indemnification
pursuant to this Article 9 shall be the sole and exclusive remedy of any party
to this Agreement for any breach of a representation, warranty or covenant made
or obligation undertaken by any other party, or for any Loss or Expense arising
out of or relating to the items listed in Sections 9.2 and 9.3 or otherwise
related to the transactions contemplated hereby, other than in respect of the
Registration Rights Agreement, the Time Brokerage Agreements, the Option
Agreement, the Employment Agreement, the Consulting Agreement, the Baker Stock
Option Agreement, the Corporate Employee Stock Option Agreement, the Station
Employee Stock Option Agreement, the Employee Letter Agreement, the Voting
Agreement, the ISO Amendment, the LTIP, the Amended Charter or the Articles
Supplementary (collectively, the "Transaction Documents") which shall be
governed by their terms, whether such claim may be asserted as a breach of
contract, tort or otherwise.
9.9 Arbitration. To the fullest extent not prohibited by law, any
controversy, claim or dispute arising out of or relating to Article 9 of this
Agreement, including the determination of the determination of the scope or
applicability of this Agreement to arbitrate, shall be settled by final and
binding arbitration in accordance with the rules then in effect of the American
Arbitration Association ("AAA"), as modified or supplemented under this section,
and subject to the Federal Arbitration Act, 9 U.S.C. Sections 1-16. The
decision of the arbitrators shall be final and binding provided that, where a
remedy for breach is prescribed hereunder or limitations on remedies are
prescribed, the arbitrators shall be bound by such restrictions, and judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
If any series of claims arising out of the same or related transactions shall
involve claims which are arbitrable under the preceding paragraph and claims
which are not, the arbitrable claims shall first be finally determined before
suit may be instituted upon the others and the parties will take such action as
may be necessary to toll any statutes of limitations, or defenses based upon the
passage of time, that are applicable to such non-arbitrable claims during the
period in which the arbitrable claims are being determined.
In the event of any controversy, claim or dispute that is subject to arbitration
under this Section 9.9, any party thereto may commence arbitration hereunder by
delivering notice to the other party or parties thereto. The arbitration panel
shall consist of three arbitrators, appointed in accordance with the procedures
set forth in this paragraph. Within ten (10) business days of delivery of the
notice of commencement of arbitration referred to above, Seller, on the one
hand, and Buyer, on the other hand, shall each appoint one arbitrator, and the
two arbitrators so appointed shall within ten (10) business days of their
appointment mutually agree upon and appoint one additional arbitrator (or, if
such arbitrators cannot agree on an additional arbitrator, the additional
arbitrator shall be appointed by the AAA as provided under its rules); provided,
that persons eligible to be selected as arbitrators shall be limited to
attorneys at law who (i) are on the AAA's Large, Complex Case Panel, (ii) have
practiced law for at least 15 years as an attorney specializing in either
general commercial litigation or general corporate and commercial matters and
(iii) are experienced in matters involving the broadcasting industry.
The arbitration hearing shall commence no later than thirty (30) business days
after the completion of the selection of the arbitrators. Consistent with the
intent of the parties hereto that the arbitration be conducted as expeditiously
as possible, the parties agree that (i) discovery shall be limited to the
production of such documents and the taking of such depositions as the
arbitrators determine are reasonably necessary to the resolution of the
controversy, claim or dispute and (ii) the arbitrators shall limit the
presentation of evidence by each side in such arbitration to not more than ten
(10) full days (or the equivalent thereof) or such shorter period as the
arbitrators shall determine to be necessary in order to resolve the controversy,
claim or dispute. The arbitrators shall be instructed to render a decision
within ten (10) business days of the close of the arbitration hearing. If
arbitration has not been completed within ninety (90) days of the commencement
of such arbitration, any party to the arbitration may initiate litigation upon
ten (10) days written notice to the other party(ies); provided, however, that if
one party has requested the other to participate in an arbitration and the other
has failed to participate, the requesting party may initiate litigation before
the expiration of such ninety-day period; and provided further, that if any
party to the arbitration fails to meet any of the time limits set forth in this
Section 9.9 or set by the arbitrators in the arbitration, any other party may
provide ten (10) days written notice of its intent to institute litigation with
respect to the controversy, claim or dispute without the need to continue or
complete the arbitration and without awaiting the expiration of such ninety-day
period. The parties hereto further agree that if any of the rules of the AAA
are contrary to or conflict with any of the time periods provided for hereunder,
or with any other aspect of the matters set forth in this Section 9.9, that such
rules shall be modified in all respects necessary to accord with the provisions
of this Section 9.9 (and the arbitrators shall be so instructed by the parties).
The arbitrators shall base their decision on the terms of this Agreement and
applicable law and judicial precedent which a United States District Court
sitting in the District of Maryland (Southern Division) would apply in the event
the dispute were litigated in such court, and shall render their decision in
writing and include in such decision a statement of the findings of fact and
conclusions of law upon which the decision is based. Each party agrees to
cooperate fully with the arbitrator(s) to resolve any controversy, claim or
dispute. The arbitrators shall not be empowered to award punitive damages or
damages in excess of actual damages. The venue for all arbitration proceedings
shall be Rockville, Maryland.
ARTICLE
TERMINATION/MISCELLANEOUS
10.1 Termination of Agreement. This Agreement may be terminated at any
time on or prior to the Closing Date as follows:
(a) By Seller:
(i) if Buyer fails to comply with Section 6.4 hereof within ten (10)
business days after Seller notifies Buyer that Buyer has not complied with such
Section; provided that, in the case termination is based on Buyer's failure to
comply with Section 6.4, Seller shall have complied with Section 5.9; or
(ii) if any of the conditions provided in Article 7 have not been met
by the Termination Date and have not been waived, provided that Seller is not in
default or breach in any material respect of its representations and warranties,
covenants or agreements under this Agreement and that the failure to meet such
conditions is not due to Seller's breach of the Agreement; provided, however,
that if on such date the conditions specified in Section 7.1(a) and (b) hereof
have not been satisfied, Seller shall deliver written notice thereof to Buyer
and Buyer's senior lenders ("Buyer's Lenders") under its then existing senior
credit facility (the name and notice information regarding which Buyer shall
provide to Seller), and Seller shall not be entitled to terminate this Agreement
until (1) after it has delivered such notice; (2) after delivery of such notice,
if Buyer fails to make the payment required pursuant to Sections 2.1 and 2.3(d);
or (3) if the payment is made pursuant to Sections 2.1 and 2.3(d), if such
conditions have not been satisfied in full within fifteen (15) days following
receipt of such notice.
(b) By Buyer:
(i) if Seller fails to comply with Section 5.9 hereof within ten (10)
business days after Buyer notifies Seller that Seller has not complied with such
Section; provided that, in the case termination is based on Seller's failure to
comply with Section 5.9, Buyer shall have complied with Section 6.4; or
(ii) subject to the provisions of Section 2.3(e) hereof, if any
conditions provided in Article 8 have not been met by the Termination Date and
have not been waived, provided that Buyer is not in default or breach in any
material respect of its representations and warranties, covenants or agreements
under this Agreement and that the failure to meet such conditions is not due to
Buyer's breach of the Agreement; or
(iii) no later than thirty (30) business days after Seller has notified
Buyer pursuant to Section 8.4 of the occurrence of any damage or event as
described in Section 8.4.
(c) By Either Buyer or Seller as follows:
(i) by mutual written consent of Buyer and Seller.
No party hereto shall have any liability to any other for costs, expenses,
damages, loss of anticipated profits or otherwise as a result of a termination
pursuant to this Section 10.1 except as provided in Section 10.2 hereof.
10.2 Liabilities Upon Termination.
(a) Concurrent with the execution hereof, Buyer is delivering Sixty
Million Dollars ($60,000,000) (the "Down Payment") to Seller by wire transfer of
immediately available funds which will be held and disbursed pursuant to the
terms hereof. At Closing, the Cash Purchase Price shall be reduced by the Down
Payment. To the extent the Down Payment is applied to the Cash Purchase Price or
is paid to Buyer pursuant to Section 10.2(c), the Down Payment shall be deemed
to include the "Down Payment Interest", which means interest on the Down Payment
calculated at a rate of four percent (4%) per annum on the basis of a 365-day
year based on the actual number of days the Down Payment was held by Seller.
(b) The full amount of the Down Payment shall be retained by Seller if
the Agreement is terminated by Seller pursuant to Section 10.1(a), except if
termination is due to a failure of Section 7.4 to be satisfied and Buyer is not
in default of its obligations under this Agreement, then, and in such event, the
Down Payment shall be payable by Seller to Buyer, together with the Down Payment
Interest.
(c) The full amount of the Down Payment shall be payable to Buyer by
Seller if the Agreement is terminated by Buyer pursuant to Section 10.1(b), and
the full amount of any additional Cash Purchase Price payments previously made
by Buyer in connection with any Extended Periods pursuant to Section 2.1 hereof
shall be payable to Buyer by Seller only if the Agreement is terminated by Buyer
pursuant to Section 10.1(b)(ii) as a result of the Seller's grossly negligent or
willful and wrongful breach of its obligations under this Agreement.
(d) The full amount of the Down Payment shall be payable pursuant to
the joint agreement of Buyer and Seller in the event that this Agreement is
terminated by Buyer and Seller pursuant to Section 10.1(c)(i).
(e) In the event of termination, as provided in Section 10.1, the
provisions of Section 3.14, 4.4, 5.6, 6.1, this 10.2, 10.7-10.15, 10.17-10.19
and 10.22 shall survive. The sole and exclusive remedy of Seller in connection
with its termination of this Agreement or a failure of performance or compliance
by Buyer with any covenant or agreement contained in this Agreement prior to the
Closing shall be the right of Seller to retain the Down Payment as provided in
this Section 10.2 and any additional Cash Purchase Price payments previously
made by Buyer hereunder. The sole and exclusive remedies of Buyer in connection
with Buyer's termination of this Agreement for any failure of performance or
compliance by Seller with any covenant or agreement contained in this Agreement
prior to the Closing shall be limited to (i) their right to a return of the Down
Payment, and under certain circumstances, additional Cash Purchase Price
payments made by Buyer hereunder, each as expressly provided in this Section
10.2, (ii) their right to seek specific enforcement of this Agreement against
Seller; provided, that Buyer shall not be entitled to specific performance
unless it shall have complied with and shall not be in breach of the material
terms and conditions of this Agreement, and (iii) the right to bring claim(s)
for actual but not consequential or incidental damages; provided, however, that
notwithstanding anything to the contrary in the foregoing, to the extent that
Seller breaches its obligation to close hereunder after all conditions provided
in Article 7 have been met by Buyer or waived by Seller and Buyer stands ready,
willing and able to close hereunder, (x) Buyer shall have the right to bring an
action for specific performance and to the extent Buyer is not granted specific
performance or elects not to bring an action for specific performance, Seller
shall pay to Buyer Sixty Million Dollars ($60,000,000) but Buyer shall have no
other rights or remedies hereunder and (y) if Seller then enters into a binding
agreement within one year from the date of this Agreement to sell substantially
all of the assets of Seller or substantially all of the partnership interests in
Seller for an amount in excess of the value of the Purchase Price, Seller shall
pay to Buyer (1) the difference between the value of the Purchase Price and the
value of the total purchase price received by Seller in connection therewith
minus (2) $60,000,000. Buyer's remedies are cumulative and not intended to be
limited by the doctrine of election of remedies. Without limiting the
generality of the foregoing, neither Buyer nor Seller may rely on the failure of
any condition precedent set forth in Articles 7 and 8, as applicable, to be
satisfied if such failure was caused by such other party's (or parties') failure
to act in good faith, or a breach of or failure to perform its representations,
warranties, covenants or other obligations in accordance with the terms of this
Agreement.
(f) Anything in this Agreement or any applicable law to the contrary
notwithstanding, neither Seller (except to the extent expressly provided for in
Section 10.1(e)) nor any partner, director, officer, employee, agent or
Affiliate of Seller (including any shareholder, director, officer, employee
agent or Affiliate of the general partner of the Seller) shall have any personal
liability to Buyer as a result of the breach of any representation, warranty,
covenant or agreement of Seller contained herein or otherwise and shall have no
personal obligation to Buyer for any of Buyer's remedies hereunder.
10.3 Employee Matters. The following provisions shall act exclusively
for the benefit of the parties to this Agreement and not for the benefit of any
other person or entity:
(a) Effective as of the Closing Date, Buyer shall offer employment to
each employee of Seller who is employed at any Station, any JSA Station or the
Columbus Station immediately prior to the Closing Date (collectively, the
"Assumed Employees"), other than those employees designated by Seller that are
to be retained by Seller under the TBA. Except as otherwise provided in this
Section 10.3 or as any employment agreement between Buyer and any Assumed
Employee may otherwise require, the Buyer shall offer employment to the Assumed
Employees on terms and conditions that are substantially similar in the
aggregate to the terms and conditions of employment of Buyer's employees as of
the Closing Date, including the provision of retirement and health care
benefits. Buyer shall assume all contracts of employment of the Assumed
Employees and notwithstanding anything in the foregoing to the contrary, to the
extent such employment contract or collective bargaining agreement assumed
hereunder provides for terms and conditions in addition to those referenced in
the preceding sentence, Buyer shall assume the terms thereof. Each Assumed
Employee shall receive credit for past service with Seller for all purposes
under Buyer's benefits plans. With respect to the employees of the Columbus
Station, from and after the date hereof through and including the Columbus
Option Closing Date (as defined in the Option Agreement) or, if applicable, 60
days after the termination of the Option with respect to Columbus under the
Option Agreement, Buyer agrees that it will not, nor will it permit any
Affiliate of Buyer to, enter into an agreement that would restrict or prohibit
any such employee from being employed by Seller in the future.
(b) Buyer shall assume full responsibility and liability for offering
and providing "Continuation Coverage" to any "Qualified Beneficiary" who is
covered by a "Group Health Plan" sponsored or contributed to by Seller or any
entity required to be combined with Seller (within the meaning of Sections
414(b), (c), (m) or (o) of the Code) and who has experienced a "Qualifying
Event" or is receiving "Continuation Coverage" on or prior to the Closing Date.
Schedule 10.3 identifies all Qualified Beneficiaries entitled to Continuation
Coverage under any Seller Group Health Plan on the date of this Agreement, and
Seller shall deliver on the Closing Date a list of Qualified Beneficiaries
entitled to Continuation Coverage as of such date. "Continuation Coverage,"
"Qualified Beneficiary," "Qualifying Event" and "Group Health Plan" all shall
have the meanings given such terms under Section 4980B of the Code and Section
601 et seq. of ERISA.
(c) Buyer shall offer health plan coverage to all Assumed Employees
under the terms and conditions generally applicable to Buyer's employees as of
the Closing Date. For purposes of providing such coverage, Buyer shall waive
all preexisting condition limitations for all Assumed Employees covered by
Seller's group health plan as of the Closing Date and shall provide such health
care coverage effective as of the Closing Date without the application of any
eligibility period for coverage. In addition, Buyer shall credit all employee
payments toward deductible and co-payment obligations limits under Seller's
health care plans for the plan year which includes the Closing Date as if such
payments had been made for similar purposes under Buyer's health care plans
during the plan year which includes the Closing Date, with respect to the
Assumed Employees.
(d) Buyer shall grant Assumed Employees credit for and shall assume and
be responsible for any liabilities with respect to sick leave and personal days
accrued but unused by any Assumed Employees as of the Closing Date, and, subject
to the proration provided for in Section 2.2(a)(i), Buyer shall grant Assumed
Employees credit for and shall assume and be responsible for any liabilities
with respect to any accrued but unused vacation for such employees as of the
Closing Date.
(e) Seller currently maintains the WLOS TV, Inc. Retirement Plan (the
"WLOS Plan"), a defined benefit pension plan for the benefit of certain
employees. The WLOS Plan has been frozen and all future benefit accruals
ceased, effective as of January 10, 1994. Buyer agrees, effective as of the
Closing Date to fully assume sponsorship of such plan including all obligations
of the sponsor to contribute to and administer the plan. Buyer and Seller agree
to perform all acts necessary or proper to consummate the assumption of the WLOS
Plan, including, but not limited to, the making of all proper filings with the
Internal Revenue Service and the Department of Labor and the receipt of all
necessary notices or approvals from governmental agencies.
(f) Within a reasonable period of time after the Closing Date, Seller
shall transfer from the River City Investment and Retirement Plan (the "Seller
401(k) Plan") to the Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan
and Trust ("Buyer's 401(k) Plan") an amount, in cash, equal to the aggregate
account balances held in the Seller 401(k) Plan as of the date of transfer with
respect to all Assumed Employees. Prior to the date of such transfer, and as
preconditions thereto: (i) Buyer shall use commercially reasonable efforts to
deliver to Seller a copy of the most recently issued Internal Revenue Service
("IRS") determination letter (or other proof satisfactory to counsel for Seller)
that Buyer's 401(k) Plan is qualified under the Code, and (ii) Seller shall use
commercially reasonable efforts to deliver to Buyer a copy of the most recently
issued IRS determination letter (or other proof satisfactory to counsel for the
Buyer) that the Seller 401(k) Plan is qualified under the Code (including, to
the extent relevant, a determination letter issued to a prototype plan adopted
by Seller). Subsequent to the transfer of assets to Buyer's 401(k) Plan,
neither Seller nor the Seller 401(k) Plan shall retain any liability with
respect to such Assumed Employees to provide them with benefits in accordance
with the terms of the Seller 401(k) Plan. On or prior to the Closing Date,
Seller shall deliver to Buyer a list of all Assumed Employees, indicating
thereon the total amount deferred in pre-tax dollars to the Seller 401(k) Plan
by each Assumed Employee under the terms of Section 402(g) of the Code with
respect to the plan year of the Seller 401(k) Plan in which Closing occurs.
Seller and Buyer agree to cooperate with respect to any government filing,
including, but not limited to, the filing of IRS Forms 5310-A, if necessary, to
effect the transfer of assets contemplated by this Section 10.3.
(g) Buyer agrees that Seller may inform its employees that Buyer has
agreed that the employees will be offered employment as provided in this Section
10.3; provided, however, that Buyer shall have the right to approve any written
statement to be made by Seller in connection therewith.
(h) Seller currently maintains retiree medical coverage for certain
employees and former employees listed on Schedule 10.3 (the "Retirees") and
Buyer hereby agrees to continue such retiree medical coverage for the Retirees.
Retiree coverage offered by Buyer under this Section 10.3(h) will be under the
same terms and conditions generally applicable to Buyer's current employees,
subject to offsets, at the option of Buyer, for any health care benefits,
whether from a governmental source or from other employers, payable to the
affected former employees of Seller.
10.4 Proxy Statement; Special Stockholders Meeting to Approve Amended
Charter. Buyer agrees that, as soon as practicable after the Closing Date but
in no event more than sixty (60) days after the Closing Date, it shall cause to
be filed with the Securities and Exchange Commission (the "SEC") proxy statement
materials for the purpose of soliciting proxies from the holders of Buyer Common
Stock in order to approve, at the next regularly scheduled or special meeting of
Buyer's stockholders (which meeting, in any event shall be scheduled to occur
not more than 90 days after the Closing Date), (i) the adoption of an amendment
and restatement of Buyer's charter in the form of the Amended Charter, which is
necessary in order to effect the issuance of the Convertible Preferred Stock as
contemplated under Section 2.1 hereof, and (ii) to approve the Consulting
Agreement, Employment Agreement, the ISO Amendment and the LTIP and the issuance
of all of the stock options described in the Baker Stock Option Agreement, the
Corporate Employee Stock Option Agreement, the Station Employee Stock Option
Agreement and to the extent approval is necessary, the Employee Letter
Agreement. Buyer shall use its commercially reasonable efforts to obtain such
clearance by the SEC of such proxy statement materials as promptly as possible,
and as soon as is permissible under the rules and regulations of the SEC, Buyer
shall cause definitive copies of such proxy materials to be distributed to
Buyer's stockholders. Buyer thereafter shall use its commercially reasonable
efforts to obtain the approval of its stockholders to the adoption of Amended
Charter and the approval of the other matters described in this Section 10.4.
Buyer shall cause the Amended Charter to be filed with the Maryland Department
of Assessments and Taxation as soon as practicable after the adoption thereof by
its stockholders. Prior to such filing of the Amended Charter, Buyer will not,
without the prior written consent of Seller (to the extent the following
restrictions are permitted by the FCC and all applicable Law):
(a) amend its articles of incorporation or by-laws, as applicable,
except for the filing of the Articles Supplementary; or
(b) effect any stock split or otherwise change its capitalization as it
exists on the date hereof except as set forth in the Articles Supplementary and
as set forth on Schedule 6.6 hereto.
Buyer shall issue the Convertible Preferred Stock to Seller in exchange for the
Exchangeable Preferred Stock immediately after the filing by Buyer with the
Maryland Department of Assessments and Taxation of the Amended Charter.
Thereafter, Seller shall be permitted to distribute such shares of Convertible
Preferred Stock to its partners and warrant holders and to the stockholders of
Seller's corporate general partner, and such transferees also shall become
parties to the Registration Rights Agreement with respect to the shares of Buyer
Common Stock underlying such Convertible Preferred Stock; provided that if
Seller has not received the Convertible Preferred Stock within twelve (12)
months after the Closing Date, it shall be permitted to distribute the
Exchangeable Preferred Stock to the same parties to whom the Convertible
Preferred Stock may be transferred. Buyer shall cooperate with Seller in all
respects in connection with such distribution of shares of Exchangeable
Preferred Stock (to the extent applicable) and Convertible Preferred Stock
(including, without limitation, in connection with the issuance to such
transferees of Seller of new share certificates for such Convertible Preferred
Stock in such share denominations (not to exceed in the aggregate the number of
shares issuable to Seller in exchange for the Exchangeable Preferred Stock) as
shall be designated by Seller to Buyer in writing); provided, however, that
prior to such distribution to such transferees, Seller shall have caused such
persons or entities to whom such shares are to be transferred to deliver to
Buyer such representation letters and stockholder questionnaires as Buyer may
reasonably request in order for Buyer to comply with the applicable requirements
of federal and state securities laws relevant to such distribution.
10.5 Registration Statement; Nasdaq Listing. Buyer agrees that, in no
event more than sixty (60) days after the date as of which it has filed the
Amended Charter with the Maryland Department of Assessments and Taxation, it
shall file with the SEC, in accordance with the Registration Rights Agreement,
substantially in the form of Exhibit 10.5 hereto (the "Registration Rights
Agreement"), and the applicable provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-3 (or such other form as may be
appropriate) with respect to the resale by Seller or such partners of Seller or
stockholders of the corporate general partner of Seller (as shall be designated
in writing by Seller to Buyer) of the shares of Buyer Common Stock underlying
the Convertible Preferred Stock which is to be issued as contemplated under
Section 2.1 hereof, which registration statement shall be kept effective in
accordance with the Registration Rights Agreement (such registration statement
is hereinafter referred to as the "Registration Statement"). Buyer shall
otherwise comply with the applicable provisions of the Registration Rights
Agreement in seeking to obtain the effectiveness thereof as soon after the
filing thereof as is reasonably practicable. In connection with any such
Registration Statement, Seller shall furnish (and shall cause such partners of
Seller or stockholders of the corporate general partner of Seller as have been
designated by Seller to receive shares of Convertible Preferred Stock, as
contemplated above, to furnish) all information (financial and other) that is
requested by the Staff of the SEC or is reasonably required under the applicable
SEC rules and forms on a timely basis to enable Buyer to comply with its
obligations under this Section 10.5 and the Registration Rights Agreement.
Buyer also shall apply, prior to or concurrently with the filing of the
Registration Statement, to the Nasdaq National Market System for the listing of
the Buyer Common Stock underlying the Convertible Preferred Stock and shall use
commercially reasonably efforts to obtain approval for the listing of such
stock.
10.6 Expenses. Subject to the provisions of Sections 5.9, 3.14 and
4.4, each party hereto shall bear all of its expenses incurred in connection
with the transactions contemplated by this Agreement, including, without
limitation, accounting and legal fees incurred in connection herewith; provided,
however, that Seller on the one hand, and Buyer on the other hand, shall each
pay one-half of any sales or transfer taxes (including any real property
transfer taxes) arising from transfer of the Station Assets.
10.7 Assignments. This Agreement shall not be assigned by any party
hereto without the prior written consent of the other parties except that Buyer
may assign its rights and interests hereunder (in whole or in part as to any
Station or JSA Station) to a direct or indirect wholly-owned subsidiary of Buyer
or of Buyer in which event such assignee shall be responsible for all
representations, covenants and agreements of Buyer hereunder as if such assignee
was a party hereto provided that Buyer gives Seller written notice thereof and
that any such assignment above shall not relieve Sinclair Broadcast Group, Inc.
or any permitted assignee of any of its obligations or liabilities hereunder
(including, without limitation, the obligations of Buyer hereunder to issue
shares of its capital stock pursuant to Section 2.1 and the obligations
specified in Sections 10.4 and 10.5 hereof). To the extent of any such
assignment by Buyer in accordance with the terms of Section 10.5 hereof, Seller
shall deliver any such documents contemplated under Section 2.4(a) to such
assignee provided that once such delivery shall have been made to such assignee,
Seller's obligations hereunder with respect to such delivery shall be deemed to
have been discharged. It is understood and agreed that Seller may assign its
rights to receive hereunder, or otherwise distribute, the Stock Purchase Price
to the partners of Seller. It is understood and agreed that nothing herein
shall be deemed to prohibit a transfer of control of Seller or Licensee or the
assignment of any FCC Authorizations of the other License Assets by Seller or
Licensee. Any attempt to assign this Agreement without any required consent
shall be void. It is understood and agreed that nothing herein shall be deemed
to expand the rights granted hereunder to any permitted assignee, which rights
shall be in combination with, and not in addition to, the rights of Buyer. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
10.8 Further Assurances. Subject to the terms and conditions of this
Agreement, from time to time prior to, at and after the Closing Date, each party
hereto will use commercially reasonable efforts to take, or cause to be taken,
all such actions and to do or cause to be done, all things, necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the sale contemplated by this Agreement and the consummation of the other
transactions contemplated hereby, including executing and delivering such
documents as the other party being advised by counsel shall reasonably request
in connection with the consummation of this Agreement and the consummation of
the other transactions contemplated hereby, including, without limitation, the
execution and delivery of any and all confirmatory and other instruments, in
addition to those to be delivered on the Closing Date.
10.9 Notices. All notices, demands and other communications which may
or are required to be given hereunder or with respect hereto shall be in
writing, shall be delivered personally or sent by nationally recognized
overnight delivery service, charges prepaid, or by registered or certified mail,
return-receipt requested, or by facsimile transmission, and shall be deemed to
have been given or made when personally delivered, the next business day after
delivery to such overnight delivery service, when dispatched by facsimile
transmission, five (5) days after deposited in the mail, first class postage
prepaid, addressed as follows:
(a) If to Seller:
River City Broadcasting, L.P.
1215 Cole Street
St. Louis, Missouri 63106
Telecopier: (314) 259-5709
Attn.: Mr. Barry Baker and
Mr. Larry D. Marcus
Telecopier: (314) 259-5709
with a copy to:
Dow, Lohnes & Albertson
A Professional Limited Liability Company
1200 New Hampshire Ave., N.W.
Suite 800
Washington, D.C. 20036-6802
Attn.: Leonard J. Baxt, Esq.
Telecopier: (202) 776-2222
and with a copy to:
Baker & Botts
800 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2916
Attn.: Andrew M. Baker, Esq.
Telecopier: (214) 953-6503
or to such other address as Seller may from time to time designate.
(b) If to Buyer:
Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn.: Mr. David D. Smith
Telecopier: (410) 467-5043
with a copy to:
Thomas & Libowitz, P.A.
The USF&G Tower
100 Light Street
Suite 1100
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas, Esq.
Telecopier: (410) 752-2046
or to such other address as Buyer may from time to time designate.
10.10 Captions. The captions of Articles and Sections of this
Agreement are for convenience only, and shall not control or affect the meaning
or construction of any of the provisions of this Agreement.
10.11 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND WITHOUT REFERENCE TO ITS
PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE
UNITED STATES GOVERNS THE TRANSACTIONS CONTEMPLATED HEREBY.
Consent to Jurisdiction, Etc. EXCEPT AS SET FORTH IN SECTION 9.9 HEREOF, THE
PARTIES HERETO HEREBY IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION AND
VENUE OF ANY FEDERAL COURT LOCATED IN THE DISTRICT OF MARYLAND (SOUTHERN
DIVISION) OR TO THE EXTENT SUCH COURTS ARE NOT AVAILABLE, ANY COURT IN THE STATE
OF MARYLAND LOCATED IN THE COUNTY OF MONTGOMERY, MARYLAND, IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE
PARTIES HERETO HEREBY WAIVE PERSONAL SERVICE OF ANY PROCESS IN CONNECTION WITH
ANY SUCH ACTION OR PROCEEDING AND AGREE THAT THE SERVICE THEREOF MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL ADDRESSED TO OR BY PERSONAL DELIVERY TO THE OTHER
PARTY AT SUCH OTHER PARTY'S ADDRESS SET FORTH PURSUANT TO PARAGRAPH 10.9 HEREOF.
IN THE ALTERNATIVE, IN ITS DISCRETION, ANY OF THE PARTIES HERETO MAY EFFECT
SERVICE UPON ANY OTHER PARTY IN ANY OTHER FORM OR MANNER PERMITTED BY LAW.
10.13 Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party
at any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
10.14 Counterparts. This Agreement may be executed in two (2) or more
counterparts, and all counterparts so executed shall constitute one (1)
agreement binding on all of the parties hereto, notwithstanding that all the
parties are not signatory to the same counterpart.
10.15 Entire Agreement/Amendments. This Agreement (including the
Exhibits and Schedules hereto) and the documents delivered pursuant to the
Agreement or other written agreements among the parties, dated the date hereof
or hereafter, constitute the entire agreement among the parties pertaining to
the subject matter hereof and supersede any and all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, between them relating to the subject matter hereof. No amendment or
waiver of any provision of this Agreement shall be binding unless executed in
writing by the party to be bound thereby.
10.16 Access to Books and Records. Buyer shall preserve until the
later of (i) three (3) years after the Closing Date and (ii) the date on which
Buyer has no further obligations under the Option Agreement all books and
records of Seller. At the request of Seller, Buyer agrees to give to the
officers, partners, employees, agents, accountants and counsel of Seller access,
upon reasonable prior notice during normal business hours, to the property,
accounts, books, contracts, records, accounts payable and receivable, records of
employees of Seller (as Seller may have been reorganized) and other information
concerning the affairs of Seller, any Station, any JSA Station, any Option
Station or any of the Station Assets, except as may be prohibited by law, and to
the employees of Buyer as Seller may reasonably request. Subsequent to the
Closing Date, Seller shall have no obligation to retain books and records
relating to Seller or the Station Assets. To the extent any such books and
records are retained, then for a period not to exceed three (3) years after the
Closing Date, at the request of Buyer, Seller agrees to give the officers,
employees, accountants and counsel of Buyer access, upon reasonable prior notice
during normal business hours, to the books, records and files retained by Seller
with respect to the business and operation of Seller, any Station, any JSA
Station or any Option Station by Seller as Buyer may reasonably request in
connection with an audit of any Station, any JSA Station or any Option Station.
Each of Buyer and Seller shall be permitted at their own expense to make
extracts from or copies of the foregoing books, records and files of the other
party.
10.17 Public Announcements and Press Releases. Neither Seller nor
Buyer shall, except by mutual agreement, make any press release or other public
announcement (written or oral) concerning this Agreement or the transactions
contemplated by this Agreement, except as may be required by any law, rule or
regulation (including, without limitation, filings and reports required to be
made with or pursuant to the rules of the SEC) or any by existing contract,
license, or agreement to which it is a party and provided that the party
required to make such announcement shall provide a draft copy thereof to the
other parties hereto, and consult with such other parties concerning the timing
and content of such announcement, before such announcement is made.
10.18 Headings. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
10.19 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law 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 or unenforceable, 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 to
the end that the transactions contemplated hereby are fulfilled to the greatest
extent possible.
10.20 Receivables. (a) For the Collection Period (as defined below),
Buyer, as agent for Seller, shall collect on behalf of Seller all Receivables
with the same care and diligence as Buyer uses with respect to its own accounts
receivable, except that Buyer shall not be obligated to use any extraordinary
efforts for collection, including without limitation, institution of litigation,
and shall not refer any of the Receivables to a collection agency or to an
attorney for collection, or compromise, settle or adjust the amount of any
Receivable, except with the prior written approval of Seller.
(b) To the extent that (i) Twenty Million Dollars ($20,000,000) or more
in receivables from account debtors of Seller is outstanding on the Closing
Date, the Initial $20,000,000 Receivables Amount shall be divided equally
between Buyer and Seller and during the Collection Period, Buyer shall remit to
Seller one-half of all payments received by Buyer from account debtors of Seller
up to the Initial $20,000,000 Receivables Amount and all payments in excess of
the Initial $20,000,000 Receivables Amount; and (ii) less than Twenty Million
Dollars ($20,000,000) in receivables from account debtors of Seller is
outstanding on the Closing Date, the amount in excess of Ten Million Dollars
($10,000,000) (the "Initial Excess Amount") shall be divided equally between
Buyer and Seller, and during the Collection Period, Buyer shall remit to Seller
one half of all payments received by Buyer from account debtors of Seller up to
the Initial Excess Amount and thereafter Buyer shall retain the difference
between one half of the Initial Excess Amount and Ten Million Dollars
($10,000,000).
(c) To the extent the Collection Period has not yet ended because one
hundred twenty (120) days have not yet passed since the Closing Date thereafter,
all payments received from account debtors shall first be applied in reduction
of the oldest outstanding balance due from such account debtor, except to the
extent: (a) any account debtor specifically identifies the invoice being paid,
in which case, the account debtor's instructions shall govern; or (b) an account
is disputed by the account debtor as properly due, and the account debtor has so
notified Buyer in writing, in which case, all payments received shall be applied
as provided in (a) above, except to the extent of such dispute. Buyer will
promptly give Seller written notice of any such dispute with respect to which
Buyer has received notice from the account debtor.
(d) Buyer shall remit all payments owed to Seller (as set forth in this
Section 10.20) on the fifteenth day and the last day of each month.
(e) So long as Buyer is in compliance with this Section 10.20, during
the Collection Period none of Seller or any of its representatives or agents,
shall make any direct solicitation of the account debtors for collection
purposes or other direct attempts to collect from account debtors during such
Collection Period except as may be agreed to by Buyer, except with respect to
those accounts which may be or become more than ninety (90) days past due, and
except those accounts from which Buyer has received written notice of a dispute
from the account debtor.
(f) "Collection Period" means the period from the Closing Date through
the later of (i) one hundred twenty (120) days after the Closing Date, and (ii)
the date on which the Buyer shall have collected (a) the first Twenty Million
Dollars ($20,000,000) in payments from account debtors of Seller (the "Initial
$20,000,000 Receivables Amount") or (b) to the extent that less than Twenty
Million Dollars (20,000,000) in receivables from account debtors of Seller is
outstanding on the Closing Date, the Initial Receivables Amount plus the
difference between one-half of the Initial Receivables Amount and Ten Million
Dollars ($10,000,000).
(g) Upon the conclusion of the Collection Period, Buyer shall remit to
Seller all amounts collected by Buyer from account debtors not previously
remitted to Seller that are in excess of the $10,000,000 to be retained by Buyer
hereunder, shall assign to Seller all uncollected Receivables and shall furnish
Seller with a list of the amounts collected during such period and all files
concerning any uncollected Receivables, and Buyer shall have no further
responsibilities hereunder except to remit promptly to Seller any amounts
subsequently received by it on account of the Receivables.
10.21 Board of Directors and Committees. From and after the Closing
Date, Buyer shall cause (i) each of (1) Baker and (2) Roy F. Coppedge (or such
other individual as may be designated by Boston Ventures Limited Partnership IV
and Boston Ventures Limited Partnership IVA (collectively, "Boston Ventures"))
(the "BV Designee") to receive notice of all meetings of the Board of Directors
of Buyer and to be permitted to attend such meetings, (ii) Baker to receive
notice of all meetings of any executive and finance committees and to be
permitted to attend such meetings, and (iii) the BV Designee to receive notice
of all meetings of any compensation and finance committees and to be permitted
to attend such meetings. In addition, if the Board of Directors or any
executive, finance or compensation committee of Buyer plans to take actions by
written consent in lieu of a meeting, then Buyer shall cause Baker (in the case
of the Board of Directors and any executive and finance committees) and the BV
Designee (in the case of the Board of Directors and any finance and compensation
committees) to receive a copy of the form of consent documents relating to such
actions at the same time that such documents are circulated or distributed to
the members of the Board of Directors, executive, finance or compensation
committees, as applicable. In addition, as soon as permissible under the rules
of the FCC and applicable laws, Buyer shall cause (i) each of Baker and the BV
Designee to be appointed as members of the Board of Directors of Buyer, (ii)
Baker to be appointed as a member of any executive committee and, to the extent
established, the finance committee and (iii) the BV Designee to be appointed as
a member of any finance committee, to the extent established, and the
compensation committee. Buyer's Board of Directors (which presently consists of
seven (7) directors) has duly adopted resolutions which have fixed the number of
members of (x) directors of Buyer at nine (9) directors, (y) the executive
committee at six (6) members, and (z) the compensation committee at six (6)
members and such resolutions also have designated Baker and the BV Designee, as
applicable, to fill the directorships on the Buyer's Board of Directors and
memberships on such committees pursuant to the terms of this Agreement. To the
extent that the Buyer or the Board of Directors establishes a finance committee,
it shall designate each of Baker and the BV Designee as members of the finance
committee. Baker shall be entitled to be a director of Buyer and a member of
the executive committee and, to the extent established, the finance committee
for so long as he remains an employee of Buyer, and BV shall be entitled to have
the BV Designee be a director of Buyer and a member of the compensation
committee and, to the extent established, the finance committee until the first
to occur of (i) the later of (a) the fifth anniversary of the Closing Date and
(b) the expiration of the initial five-year term of Barry Baker's Employment
Agreement with Buyer and (ii) such time, after Buyer has issued the Convertible
Preferred Stock to Seller or to its partners, as Boston Ventures no longer owns,
of record or beneficially to the extent of its interest as a limited partner of
Seller, at least 721,115 shares of Buyer Common Stock, on an "as converted"
basis, as such number may be adjusted pursuant to stock splits, stock
combinations, reclassifications or recapitalizations of Buyer occurring after
the date hereof.
10.22 List of Definitions. The following is a list of certain terms
used in this Agreement and a reference to the Section hereof in which such term
is defined:
Terms Section
AAA Section 9.9
Add Back Programming Liabilities Section 5.12
Additional Days Section 2.3(b)
Additional Period Section 2.3(b)
Adjustment Amount Section 2.2(b)
Adjustment Date Section 2.2(a)(i)
Affiliate Section 3.6
Affiliation Agreements Section 1.1(m)
Agreement Preamble
Amended Charter Section 6.11
Anti-Dilution Adjustments Section 2.1(i)
Articles Supplementary Section 2.1
Assumed Employees Section 10.3(a)
Assumed Liabilities Section 1.3
Balance Sheet Date Section 3.3
Baker Section 2.5(b)
Baker Stock Option Agreement Section 2.5(b)
Boston Ventures Section 10.21
Buyer Preamble
Buyer Common Stock Section 2.1
Buyer SEC Documents Section 4.11
Buyer's Estimate Report Section 2.2(b)
Buyer's 401(k) Plan Section 10.3(f)
Buyer's Lenders Section 10.1(a)(ii)
BV Designee Section 10.21
Cash Purchase Price Section 2.1
Closing Section 2.3(a)
Closing Balance Sheet Section 2.2(b)
Closing Date Section 2.3(a)
Closing Financial Statements Section 5.3(a)
Code Section 3.18
Collection Period Section 10.20
Columbus Assets Recitals
Columbus Station Recitals
Consent Contracts Section 1.3
Consent Costs Section 1.3
Consulting Agreement Section 2.5(b)
Contract Section 1.1(e)
Convertible Preferred Stock Section 2.1
Conveyed Contracts Section 2.6
Corporate Employees Section 2.5(b)
Corporate Employee Stock Option Agreement Section 2.5(b)
Cure Extended Period Section 2.3(d)
Distributor Section 4.6
Down Payment Section 10.2(a)
Down Payment Interest Section 10.2(a)
Employee Letter Agreement Section 2.5(b)
Employment Agreement Section 2.5(b)
ERISA Section 3.17
Exchangeable Preferred Stock Section 2.1
Excluded Assets Section 1.2
Excluded Contracts Section 1.2(d)
Excluded Real Property Section 1.2(f)
Extended Periods Section 2.3(d)
Extension Notice Section 2.3(d)
FCC Section 1.2(f)
FCC Authorizations Section 1.2(f)
HSR Act Section 5.9
Initial Excess Amount Section 10.20
Initial $20,000,000 Receivables Amount Section 10.20
IRS Section 10.3(f)
ISO Amendment Section 2.5(b)
JSAs Recitals
JSA Stations Recitals
Kids Fair Section 2.4(a)(xvii)
KMSC Recitals
Laws Section 2.6
Leasehold Interests Section 1.1(b)
Leases Section 7.5
License Assets Section 1.2(f)
Licensee Section 1.2(f)
Litigation Extended Period Section 2.3(d)
LMAs Recitals
LMA Stations Recitals
Loss and Expense Section 9.2
LTIP Section 2.5(b)
Material Adverse Change Section 8.10
New Employment Agreements Section 7.8
New Mexico Stations Recitals
1993 and 1994 Year-End Financial Statements Section 3.3
1995 Internal Financial Statements Section 3.3
1995 Year-End Financial Statements Section 5.3(a)
1996 Internal Financial Statements Section 3.3
Option Agreement Section 7.7
Option Stations Recitals
Originally Scheduled Termination Date Section 2.3(a)
Other Assets Section 1.1(m)
Other Contracts Section 1.1(e)
Owned Stations Recitals
Permitted Encumbrances Section 1.3
Person Section 3.6
Plans Section 3.17
Post-Closing Estimate Fund Section 2.2(b)
Post Closing Estimate Fund Deposit Section 2.2(b)
Proceedings Section 2.6
Program Contracts Section 1.1(d)
Programming Copyrights Section 1.1(g)
Prorations Escrow Agent Section 2.2(b)
Prorations Certificate Section 2.2(b)
Purchase Price Section 2.1
Qualified Plans Section 3.18
Radio Stations Recitals
Rich Section 2.2(a)(iv)
RCB Twin Peaks Equity Interest Recitals
Real Property Section 1.1(b)
Real Property Improvements Section 1.1(b)
Receivables Section 1.2(g)
Registration Rights Agreement Section 10.5
Registration Statement Section 10.5
Retained Liabilities Section 1.3
Retirees Section 10.3(h)
Sandia Recitals
Sandia Stock Section 3.20
SCI Section 6.8
SEC Section 10.4
Seller Preamble
Seller 401(k) Plan Section 10.3(f)
SOS Section 2.4(a)(v)
Station Assets Section 1.1
Station Employee Stock Option Agreement Section 2.5(b)
Station Employees Section 2.5(b)
Station Material Adverse Change Section 3.6
Station Options Recitals
Stations Recitals
Stock Purchase Price Section 2.1
Subleases Section 7.5
Termination Date Section 2.3(a)
Time Brokerage Agreements Section 7.6
Trademarks, Etc. Section 1.1(f)
Trades Section 2.2(a)(ii)
Transaction Documents Section 9.8
TV Stations Recitals
Twin Peaks Recitals
Twin Peaks License Partnership Recitals
Twin Peaks License Partnership Interest Section 3.23
Twin Peaks Partnership Interest Section 3.23
Twin Peaks Sale Section 5.1(l)
Voting Agreement Section 2.5(b)
WLOS Plan Section 10.3(e)
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their duly authorized officers, all as of the day and year first above
written.
BUYER:
SINCLAIR BROADCAST GROUP, INC.
By: _________________________
Name:
Title:
SELLER:
RIVER CITY BROADCASTING, L.P.
By: Better Communications, Inc., its General Partner
By: _________________________
Name:
Title:
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 TRANSFER OF ASSETS
1.1 Transfer of Assets
1.2 Excluded Assets
1.3 Liabilities
ARTICLE 2 PURCHASE; CLOSING
2.1 Purchase Price
2.2 Adjustments
2.3 The Closing
2.4 Deliveries at Closing
2.5 Deliveries by Seller Prior to Closing and Upon Execution
2.6 Effect of Laws or Proceedings
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Formation
3.2 Partnership Action
3.3 Financials
3.4 Business Since the Balance Sheet Date
3.5 Condition of Assets
3.6 Title, Etc.
3.7 Trademarks, Etc.
3.8 Insurance
3.9 Contracts
3.10 Employees
3.11 Litigation
3.12 Compliance with Laws
3.13 No Conflicts
3.14 Brokers
3.15 Retransmission Consent Agreements
3.16 Environmental
3.17 Employee Plans
3.18 Compliance with ERISA
3.19 Taxes
3.20 Certificates of Incorporation, Bylaws and Capitalization of Sandia
3.21 Options, Warrants, Rights re: Sandia
3.22 Validity of Sandia Stock
3.23 Partnership Agreements and Partnership Interests in Twin Peaks and Twin
Peaks License Partnership
3.24 Options, Warrants, Rights re: Twin Peaks and Twin Peaks License
Partnership
3.25 Validity of Twin Peaks Partnership Interest and Twin Peaks License
Partnership Interest
3.26 Undisclosed Liabilities
3.27 Totality of Assets
3.28 Complete Disclosure
3.29 Acquisition of Exchangeable Preferred Stock
3.30 Affiliate Transactions
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Incorporation
4.2 Corporate Action
4.3 No Conflicts
4.4 Brokers
4.5 Litigation
4.6 Assignments
4.7 Articles of Incorporation, Bylaws and Capitalization of Buyer
4.8 Options, Warrants, Rights
4.9 Validity of Stock of Buyer
4.10 Offering
4.11 Buyer SEC Documents; Financial Statements
ARTICLE 5 COVENANTS OF SELLER PENDING AND AFTER THE CLOSING DATE
5.1 Maintenance of Business
5.2 Organization/Goodwill
5.3 Reports; Access to Facilities, Files and Records
5.4 Consents
5.5 Notice of Proceedings
5.6 Confidential Information
5.7 Consummation of Agreement
5.8 Notice of Certain Developments
5.9 Hart-Scott-Rodino
5.10 Updated Information
5.11 Environmental Audit
5.12 Programming
5.13 Film Payments and Capital Leases
5.14 Down Payment
5.15 No Solicitation
ARTICLE 6 COVENANTS OF BUYER
6.1 Confidential Information
6.2 Consummation of Agreement
6.3 Notice of Proceedings
6.4 Hart-Scott-Rodino
6.5 Consents and Assignments
6.6 Capitalization of Buyer
6.7 Notice of Material Impact
6.8 New Employment Agreements
6.9 Insurance
6.10 Stock Options
6.11 Amended Charter
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLER
7.1 Representations, Warranties, Covenants
7.2 Proceedings
7.3 Opinion of Counsel
7.4 Hart-Scott-Rodino
7.5 Leases/Subleases
7.6 Time Brokerage Agreement
7.7 Option Agreement
7.8 New Employment Agreements
7.9 Articles Supplementary
7.10 Material Adverse Change
7.11 Approval of Stock Options
7.12 Stock Options
7.13 Amended Charter
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF BUYER
8.1 Representations, Warranties, Covenants
8.2 Proceedings
8.3 Opinion of Counsel
8.4 Damage to the Assets
8.5 Option Agreement
8.6 Hart-Scott-Rodino
8.7 Leases/Subleases
8.8 Time Brokerage Agreements
8.9 Add Back Programming Liabilities
8.10 Material Adverse Change
8.11 Certain Financial Statements
8.12 Marcus Non-Compete
ARTICLE 9 INDEMNIFICATION
9.1 Survival
9.2 Indemnification of Buyer
9.3 Indemnification of Seller
9.4 Limitation of Liability
9.5 Bulk Sales Indemnity
9.6 Notice of Claims
9.7 Defense of Third Party Claims
9.8 Indemnity as Sole Remedy
9.9 Arbitration
ARTICLE 10 TERMINATION/MISCELLANEOUS
10.1 Termination of Agreement
10.2 Liabilities Upon Termination
10.3 Employee Matters
10.4 Proxy Statement; Special Stockholders Meeting to Approve Amended
Charter
10.5 Registration Statement; Nasdaq Listing
10.6 Expenses
10.7 Assignments
10.8 Further Assurances
10.9 Notices
10.10 Captions
10.11 Law Governing
10.12 Consent to Jurisdiction, Etc.
10.13 Waiver of Provisions
10.14 Counterparts
10.15 Entire Agreement/Amendments
10.16 Access to Books and Records
10.17 Public Announcements and Press Releases
10.18 Headings
10.19 Severability
10.20 Receivables
10.21 Board of Directors and Committees
10.22 List of Definitions
Exhibits
Exhibit 2.1(b) Articles Supplementary
Exhibit 2.2(b) Post-Closing Escrow Agreement
Exhibit 2.4 Consent and Agreement
Exhibit 2.5(a) Employment Agreement
Exhibit 2.5(b) Consulting Agreement
Exhibit 2.5(c) Baker Stock Option Agreement
Exhibit 2.5(d) Corporate Employee Stock Option Agreement
Exhibit 2.5(e) Station Employee Stock Option Agreement
Exhibit 2.5(f) First Amendment to Incentive Stock Option Plan
Exhibit 2.5(g) Long Term Incentive Plan
Exhibit 2.5(h) Voting Agreement
Exhibit 7.3(a) Opinion of Counsel to Buyer
Exhibit 7.3(b) Opinion of Special Counsel to Buyer
Exhibit 7.6(a) Time Brokerage Agreement for Group I Stations
Exhibit 7.6(b) Time Brokerage Agreement for Columbus Station
Exhibit 7.7 Option Agreement
Exhibit 7.8 New Employment Agreements
Exhibit 8.3 Opinion of Counsel to Seller
Exhibit 8.12 Marcus Non-Compete
Exhibit 10.5 Registration Rights Agreement
Schedules
Schedule 1.1(a) Tangible Personal Property
Schedule 1.1(b) Real Property
Schedule 1.1(c)(1) LMAs
Schedule 1.1(c)(2) JSAs
Schedule 1.1(c)(3) Option Agreement
Schedule 1.1(d) Program Contracts
Schedule 1.1(e) Other Contracts
Schedule 1.1(f) Trademarks, Etc.
Schedule 1.1(g) Programming Copyrights
Schedule 1.1(m) Affiliation Agreements, NewVenco and Alliance
Schedule 1.1(n) Other Assets
Schedule 1.2(d) Excluded Contracts
Schedule 1.2(f) License Assets
Schedule 1.2(l) Interests in Certain Subsidiaries
Schedule 1.3 Liabilities
Schedule 2.1(a) Anti-Dilution Adjustments
Schedule 2.2(a)(1) Other Acquisitions and Transactions
Schedule 2.2(a)(2) Add Backs
Schedule 2.2(a)(v) Other Adjustment
Schedule 2.5(d) Corporate Employees
Schedule 2.5(e) Station Employees
Schedule 3.1 Qualifications
Schedule 3.6 Title, Etc.
Schedule 3.8 Insurance
Schedule 3.10 Certain Employee Matters and Collective Bargaining
Agreements
Schedule 3.11 Litigation
Schedule 3.13 No Conflicts
Schedule 3.15 Retransmission Consent Agreements
Schedule 3.16 Environmental
Schedule 3.17 Employee Plans
Schedule 3.18 Compliance with ERISA
Schedule 3.26 Undisclosed Liabilities
Schedule 3.27 Totality of Assets
Schedule 3.30 Affiliate Transactions
Schedule 4.6 Assignments
Schedule 4.8 Options, Warrants, Rights
Schedule 5.1 Maintenance of Business
Schedule 6.6 Changes in Capitalization of Buyer
Schedule 7.8 New Employment Agreements
Schedule 9.2 Indemnification of Buyer
Schedule 10.3 Employee Matters
<PAGE>
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
RIVER CITY BROADCASTING, L.P.,
AS SELLER,
AND
SINCLAIR BROADCAST GROUP, INC.
AS BUYER
DATED AS OF APRIL 10, 1996