OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is dated as of _____ __, 1996 (the
"Option Grant Date"), and is by and among River City Broadcasting, L.P., a
limited partnership duly formed under the laws of the State of Delaware ("RCB"),
River City License Partnership, a general partnership duly formed under the laws
of the State of Missouri ("Licensee") (RCB and Licensee sometimes collectively
referred to herein as "Sellers" and individually as a "Seller"), and Sinclair
Broadcast Group, Inc., a corporation duly organized under the laws of the State
of Maryland ("Option Holder").
RECITALS
WHEREAS, Licensee is the licensee of (i) 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 referred to herein as the "Group I TV Stations"); (ii) Television
Station WSYX(TV), Columbus, Ohio (the "Columbus Station," and collectively
referred to herein with the Group I TV Stations as the "TV Stations") and (iii)
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 referred to herein as the "Radio Stations,"
and collectively as the "Stations" when referred to herein with the TV Stations
and any television or radio station with respect to which RCB or Licensee
becomes a licensee (as described in Schedule 2.2(a)(1) to the Asset Purchase
Agreement as defined below, or with the consent of Option Holder) prior to the
Asset Purchase Agreement Closing Date (the "After-Acquired Stations")), pursuant
to certain authorizations (the "FCC Authorizations") issued by the Federal
Communications Commission (the "FCC")(the Group I TV Stations, the Radio
Stations and any After-Acquired Stations being collectively referred to herein
as "Group I Stations"); and
WHEREAS, RCB owns all of the issued and outstanding capital stock (the "Sandia
Stock") of Sandia Peak Broadcasters, Inc., a Delaware corporation ("Sandia"), a
40% general partnership interest (the "Twin Peaks Partnership Interest") in Twin
Peaks Radio, a New Mexico general partnership ("Twin Peaks"); a 1% general
partnership interest (the "Twin Peaks License Partnership Interest") in Twin
Peaks Radio License Partnership, a Missouri general partnership, with the
remaining 60% general partnership interest in Twin Peaks being owned by Sandia
and the remaining 99% general partnership interest in Twin Peaks License
Partnership being owned by Twin Peaks; and Twin Peaks License Partnership is the
licensee of 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"), pursuant to certain FCC
Authorizations, and Twin Peaks owns certain assets used or useful in connection
with the operation of the New Mexico Stations (the Sandia Stock, the Twin Peaks
Partnership Interest and the Twin Peaks License Partnership Interest being
sometimes collectively referred to herein as the "RCB Twin Peaks Equity
Interests") and for purposes of the representations and warranties,
indemnification provisions and nomenclature of the Options, the New Mexico
Stations being deemed to be "Group I Stations" and the assets of the New Mexico
Stations that are of the same type as those identified in Section 1.1.A hereof
being deemed to be "License Assets"; provided, however, to the extent RCB sells
the New Mexico Stations or the RCB Twin Peaks Equity Interest (the "Twin Peaks
Sale") prior to the Option Grant Date or prior to the date Option Holder has
consummated the acquisition of the RCB Twin Peaks Equity Interest, no
representations or warranties shall be made hereunder with respect to the New
Mexico Stations or the RCB Twin Peaks Equity Interest as contemplated hereunder,
and Option Holder acknowledges and agrees that it waives its right to acquire
the RCB Twin Peaks Equity Interest and any Option with respect thereto shall
immediately terminate, and RCB shall have no obligation to sell and Option
Holder shall have no obligation to purchase, the RCB Twin Peaks Equity Interest;
and
WHEREAS, RCB owns certain Other Assets (as defined herein); and
WHEREAS, RCB has entered with Option Holder into an Asset Purchase Agreement,
dated as of April 10, 1996 (the "Asset Purchase Agreement"), pursuant to which
Option Holder is purchasing on the date hereof certain assets and rights of RCB,
as provided in the Asset Purchase Agreement; and
WHEREAS, on the date hereof (the "Asset Purchase Agreement Closing Date") in
connection with the closing of the Asset Purchase Agreement (the "Asset Purchase
Closing"), Sellers and Option Holder have entered into two Time Brokerage
Agreements (the "TBAs") pursuant to which Option Holder will provide (i) certain
commercial television programming to Sellers for the Columbus Station and (ii)
certain television and radio programming to Sellers for the Group I Stations,
all on the terms and conditions contained in such TBAs; and
WHEREAS, RCB and Licensee desire to grant an option to the Option Holder to
acquire the License Assets (as defined in Section 1.1.A herein), and the
Columbus Station Assets (as defined below), and Option Holder desires to acquire
an option to acquire the License Assets, and the Columbus Station Assets, all on
the terms described herein; and
WHEREAS, with respect to each Station, on the Option Closing Date (as defined in
Section 2.2(b) herein) applicable to such Station, Sellers will transfer and
assign to Option Holder all of the License Assets and, in the case of the Option
Closing Date for the Columbus Station (the "Columbus Option Closing Date"), will
also transfer the Columbus Station Assets (as defined below);
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
OPTION TO ACQUIRE LICENSE ASSETS AND COLUMBUS STATION ASSETS
A. Options. Upon and subject to the terms and conditions stated in
this Agreement, Sellers hereby as of the date hereof grant to Option Holder (i)
separate options to acquire (a) concurrently in their entirety at one Closing or
separately at one or more Closings, all of Sellers' rights, title and interest
in, to and under the License Assets used or held by Sellers with respect to the
Group I Stations, including (subject to RCB's right to consummate the Twin Peaks
Sale) the RCB Twin Peaks Equity Interest (the "Group I Options") and (b)
concurrently in their entirety at one Closing, all of Sellers' rights, title and
interest in, to and under the License Assets with respect to the Columbus
Station, the NewVenco Other Assets relating to the Columbus Station and the
Columbus Station Assets (the "Columbus Option"). The Group I Options and the
Columbus Option are sometimes hereinafter individually referred to as an
"Option" and collectively as the "Options".
1.1.A. Option to Acquire License Assets. Subject to the terms and
conditions stated in this Agreement, on the Option Closing Date applicable to
such Stations which are being acquired on such Option Closing Date, Sellers
shall convey, transfer, assign and deliver to Option Holder, and Option Holder
shall acquire from Sellers, all of Sellers' rights, title and interest in, to
and under all License Assets used or held for use by Sellers with respect to
such Stations, including the RCB Twin Peaks Equity Interest. As used in this
Agreement, "License Assets" used or held for use with respect to any Station
means all of Sellers' rights in, to and under the following, on the Option
Closing Date for such Station:
(a) FCC Authorizations. All FCC Authorizations issued to Licensee with
respect to the Station, including, without limitation, those shown on Schedule
1.1.A(a) to this Agreement, and all applications therefor, together with any
renewals, extensions or modifications thereof and additions thereto.
(b) Tangible Personal Property. All equipment, vehicles, furniture,
transmitters, antennae, engineering equipment, 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 Sellers and used in connection with
the business and operations of the Station, including, without limitation, those
shown on Schedule 1.1.A(b) to this Agreement, and any additions, improvements,
replacements and alterations thereto made between the date of this Agreement and
the Option Closing Date for the Station, but excluding all such property which
is consumed, retired or disposed of by Sellers in the ordinary course of their
business between the date of this Agreement and the Option Closing Date for the
Station or as otherwise permitted by this Agreement.
(c) Real Property. (i) All real property owned by Sellers listed on
Schedule 1.1.A(c) (the "Real Property"), (ii) all buildings, structures, towers,
improvements, transmitting towers and other fixtures thereon (the "Real Property
Improvements"), owned by Seller and used in the business and operations of the
Station; (iii) all other leaseholds and other interests in real property held by
Sellers (the "Leasehold Interests") listed and so designated on Schedule
1.1.A(c); and (iv) real property, and all buildings, structures and improvements
thereon and leasehold interests that are acquired by Sellers between the date
hereof and the Option Closing Date for the Station.
(d) Other Contracts. All contracts relating to any Station, other than
the TBA relating thereto, to which either Seller is a party (in addition to and
not included in those set forth in Sections 1.1.A(b) and 1.1.A(c) hereof) and
the Consent Contracts, as defined in the Asset Purchase Agreement (collectively,
"Other Contracts"), including all agreements, equipment leases and other leases
listed on Schedules 1.1.A(d) and 3.11 (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 in the ordinary course of business of
the Station between the date of this Agreement and the Option Closing Date for
the Station and all other such Contracts that will have been entered into
between the date of this Agreement and the Option Closing Date for the Station
the making of which by Sellers is permitted by this Agreement, to the extent
existing as of the Option Closing Date for the Station. As used in this
Agreement, "Contract" means, with respect to any Station, any agreement, lease,
arrangement, commitment or understanding, written or oral, expressed or implied,
to which the Station or Sellers with respect to the Station are a party or are
bound.
(e) Trademarks, Etc. All trademarks, service marks, patents, trade
names, jingles, slogans and logotypes owned and used by Sellers in connection
with the business and operations of the Station as of the date hereof,
including, without limitation, Sellers' rights to use the call letters of the
Station and any related names and phrases and those shown on Schedule 1.1.A(e)
to this Agreement and those acquired between the date hereof and the Option
Closing Date for the Station.
(f) FCC Records. All FCC logs and other records that relate to the
operations of the Station.
(g) Files and Records. All files and other records of Sellers relating
solely to the business and operations of the Station other than account books of
original entry and other than such files and records that are maintained at the
corporate offices of Sellers or RCB's general partner for tax accounting
purposes.
(h) RCB Twin Peaks Equity Interests. With respect to the New Mexico
Stations, all of the RCB Twin Peaks Equity Interests.
(i) Goodwill. All of Sellers' goodwill in and going concern value
associated with the Stations.
(j) Other Assets. All other assets of Sellers relating to the business
and operations of the Station not expressly excluded in Section 1.2 hereof.
1.1.B Transfer of Columbus Assets. Subject to the terms and conditions
stated in this Agreement, on the Columbus Option Closing Date, RCB shall convey,
transfer and deliver to Option Holder, and Option Holder shall acquire from RCB,
in addition to acquiring the License Assets relating to the Columbus Station
described in Section 1.1.A on such date, all of RCB's right, title and interest
in and to all of the assets and properties of RCB, real and personal, tangible
and intangible, which are owned and used by RCB in connection with the business
and operations of the Columbus Station, including, without limitation, rights
under contracts and leases, real and personal property, plant and equipment,
inventories and intangibles, contracts and rights, but excluding the Excluded
Assets described in Section 1.2 hereof.
The rights, assets, property and business of RCB with respect to the Columbus
Station to be transferred to Option Holder pursuant to this Section 1.1.B are
hereinafter referred to as the "Columbus Station Assets." The Columbus 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 RCB and
used in connection with the business and operations of the Columbus Station,
including, without limitation, those shown on Schedule 1.1.B(a) to this
Agreement, and any additions, improvements, replacements and alterations thereto
made between the date of this Agreement and the Columbus Option Closing Date,
but excluding all such property which is consumed, retired or disposed of by RCB
in the ordinary course of its business between the date of this Agreement and
the Columbus Option Closing Date or as otherwise permitted by this Agreement.
(b) Real Property. (i) All real property owned by RCB listed on
Schedule 1.1.B(b) to this Agreement (the "Columbus Real Property"); (ii) all
buildings, structures, improvements, transmitting towers and other fixtures
thereon (the "Columbus Real Property Improvements") owned by RCB and used in the
business and operations of the Columbus Station; (iii) the leaseholds and other
interests in real property held by RCB (the "Columbus Leasehold Interests")
listed and so designated on Schedule 1.1.B(b) to this Agreement; and (iv) real
property, and all buildings, structures and improvements thereon and leasehold
interests relating to the Columbus Station that are acquired by RCB between the
date hereof and the Columbus Option Closing Date.
(c) Other Contracts. All contracts relating to the Columbus Station to
which RCB or the Columbus Station is a party, (in addition to and not included
in those set forth in Sections 1.1.B(b) hereof) (collectively, "Columbus Other
Contracts"), including all agreements, equipment leases and other leases listed
on Schedule 1.1.B(c) to this Agreement and any network affiliation agreement, if
any, together with all such contracts that will have been entered into by RCB or
the Columbus Station in the ordinary course of business between the date of this
Agreement and the Columbus Option Closing Date, and all such other contracts
that will have been entered into by RCB or the Columbus Station between the date
of this Agreement and the Columbus Option Closing Date, the making of which by
RCB is permitted by this Agreement to the extent existing as of the Columbus
Option Closing Date. As used in this Agreement, "Columbus Contract" means any
agreement, lease, arrangement, commitment or understanding, written or oral,
expressed or implied, to which the Columbus Station, or RCB with respect to the
Columbus Station, is a party or is bound.
(d) Trademarks, Etc. All trademarks, service marks, patents, trade
names, jingles, slogans and logotypes owned and used by RCB primarily in
connection with the business and operations of the Columbus Station as of the
date hereof listed on Schedule 1.1.B(d) to this Agreement as well as any others
acquired by RCB primarily in connection with operation of the Columbus Station
between the date hereof and the Columbus Option Closing Date (collectively,
"Columbus Trademarks, Etc.").
(e) Programming Copyrights. All program and programming materials and
elements of whatever form or nature owned by RCB and used in connection with the
business and operations of the Columbus 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 RCB and used in connection with the business
and operations of the Columbus Station, together with all such programs,
materials, elements and copyrights acquired by RCB between the date hereof and
the Columbus Option Closing Date, including, without limitation, those set forth
on Schedule 1.1.B(e) to this Agreement (collectively, the "Columbus Programming
Copyrights").
(f) Files and Records. All files and other records of RCB relating
solely to the business and operations of the Columbus Station and any other
Columbus Station Assets prior to the Columbus Option Closing Date, other than
account books of original entry and such files and records that are maintained
at the corporate offices of RCB's general partner for tax and accounting
purposes.
(g) Prepaid Items. All deposits and prepaid expenses.
(h) 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 RCB (or, to the extent RCB owns such materials, of any
previous owner) with respect to the Columbus Station for each of the years to
the extent reasonably available to RCB and all interim periods following the
date hereof through and including the Columbus Option Closing Date.
(i) News Materials. All news files, archives, tapes, and other
materials stored or used by RCB relating to the news operation of the Columbus
Station, including, but not limited to, any raw film footage and other similar
materials, existing as of the date of this Agreement and through the Columbus
Option Closing Date, except for any such materials that may be disposed of or
consumed in the ordinary course of business.
(j) NewVenco Other Assets. RCB's interest set forth in Schedule
1.1.B(j) in NewVenco, Inc. relating to the Columbus Station, if any (the
"NewVenco Other Assets").
1.2 Excluded Assets. There shall be excluded from the License Assets
relating to any Station and the Columbus Assets relating to the Columbus Station
and retained by Sellers, to the extent in existence on the Option Closing Date
for such Station, the following assets (the "Excluded Assets"):
(a) 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 either Seller.
(b) Personal Property Disposed Of. All tangible personal property
disposed of or consumed in the ordinary course of the business of any Station
between the date of this Agreement and the Closing relating to such Station.
(c) 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.
(d) Claims. Any and all claims of Sellers with respect to transactions
occurring prior to the occurrence of the last Option Closing Date hereunder,
including, without limitation, rights and interests of Sellers 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 Sellers
under contracts and with respect to other transactions with respect to events
occurring prior to such last Option 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.
(e) Pension Assets, Etc. Except as otherwise provided under Section
10.1, 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 Sellers.
(f) Certain Contracts. The agreements listed on Schedule 1.2(f) hereof
(the "Excluded Contracts").
(g) Certain Books and Records. Sellers' partnership records and other
books and records that pertain to internal partnership matters of Sellers and
Sellers' account books of original entry with respect to any Station, and all
books, records, accounts, checks, payment records, tax records (including
payroll, unemployment, real estate and other tax records) and other similar
books, records and information of Sellers relating to Sellers' operation of the
business of each Station prior to the Closing relating to such Station, with the
proviso that Option Holder shall be allowed to maintain copies of all such
records relating to the Stations, the License Assets or the Columbus Station
Assets and/or upon a written request for same shall be allowed further access to
all excluded records to the extent retained by Sellers at all reasonable times
during the term of this Agreement for a period of the (3) years after the Option
Closing Date relating thereto.
(h) Certain Prepaid Expenses. The prepaid expenses of Sellers with
respect to items that are not subject to adjustment under Section 2.5.
(i) Interests in Certain Subsidiaries. All of Sellers' interests in
the subsidiaries described in Schedule 1.2(i).
(j) River City Name. All rights to and goodwill in the name "River
City Broadcasting" and any logo, variation or derivation thereof.
1.3 Liabilities. (a) Liens. For each Station, the License Assets
used or held for use by Sellers with respect to such Station, and for the
Columbus Station, the Columbus Station Assets used or held for use by RCB with
respect to the Columbus Station, shall be sold and conveyed to Option Holder, as
of the Option Closing Date for such Station, free and clear of all liens,
security interests and encumbrances except (i) all matters of record including,
without limitation, those matters disclosed on Schedule 1.3 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; (ii)(1) liens or encumbrances on the Real Property, Real
Property Improvements, Leasehold Interests, Columbus Real Property, Columbus
Real Property Improvements and Columbus Leasehold Interests currently of record;
and (2) other liens or encumbrances on the Real Property, Real Property
Improvements and Leasehold Interests included in the License Assets and the
Columbus Real Property, Columbus Real Property Improvements and Columbus
Leasehold Interests included in the Columbus Station Assets that with respect to
(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 Stations; (iii) liens
for taxes not yet due and payable; and (iv) the Assumed Liabilities (as
hereinafter defined) and "Assumed Liabilities" as defined in the Asset Purchase
Agreement (all of the foregoing in clauses (i) through (iv) are sometimes
collectively referred to herein collectively 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 and purchase money
security interests granted by Sellers in favor of any third party securing
obligations for borrowed money)).
(b) Assumption of Liabilities. (i) Option Holder agrees that, on the
Option Closing Date relating to any Station, Option Holder shall assume,
undertake and agree to pay, satisfy, perform, discharge and be liable for, with
respect to such Station, and Sellers shall not thereafter be liable for (1) any
liabilities and obligations of Sellers that Option Holder has not previously
assumed and as the same shall exist on the Option Closing Date that arise on or
after the Option Closing Date, including all such liabilities and obligations
arising out of and related to the ownership and operation of such Station that
Option Holder has not previously assumed, including the License Assets and the
Columbus Station Assets (including under the contracts assigned pursuant to
Sections 1.1.A(c), 1.1.A(d), 1.1.B(b) and 1.1.B(c) with respect to such Station
and any contracts that are entered into after the date hereof with respect to
such Station and those liabilities and obligations referred to in Section 10.1
hereof); (2) any liability or obligation arising out of the business or
operations of any Station or any of the License Assets, arising on or after the
Option Closing Date for such Station; (3) any Assumed Liabilities, including
under any contracts assumed by Option Holder hereunder, with respect to such
Group I Station or the Columbus Station Assets with respect to the Columbus
Station; (4) any other liabilities or obligations incurred or assumed by Option
Holder with respect to any of the License Assets with respect to such Station;
(5) any liability or obligation to any Station Employee for such Station; and
(6) any duty, obligation or liability relating to any pension, 401(k) or other
similar plan, agreement or arrangement provided by Option Holder to any Station
Employee for such Station.
(ii) Additionally, with respect to the Columbus Station, Option Holder
shall assume, undertake and agree to pay, satisfy, perform, discharge and be
liable for, and Sellers shall not be liable for (1) any liability or obligation
arising out of the business or operations of the Columbus Station or any of the
Columbus Station Assets arising on or after the Columbus Option Closing Date;
(2) any liability or obligation of Option Holder for any federal, state or local
income or other taxes or, to the extent of any prorations pursuant to Section
2.2 of the Asset Purchase Agreement or for real estate attributable to any
period of time on or after the Columbus Option Closing Date and any liability or
obligation for real estate of Sellers to the extent a proration was provided for
in Section 2.2 of the Asset Purchase Agreement attributable to the period of
time prior to the Columbus Option Closing Date; (3) any liability or obligation
of Option Holder for any payroll taxes attributable to any period of time on or
after the Asset Purchase Agreement Closing Date and any liability or obligation
for payroll taxes of Sellers to the extent a proration was provided for in
Section 2.2 of the Asset Purchase Agreement attributable to the period of time
prior to the Asset Purchase Agreement Closing Date; (4) any liability or
obligation to any former employee of Sellers at the Columbus Station who has
been hired by Option Holder, attributable to any period of time on or after the
Asset Purchase Agreement Closing Date; (5) any liability or obligation arising
out of any litigation, proceeding or claim by any person or entity relating to
the business or operations of the Columbus Station, any of the Columbus Station
Assets with respect to any events or circumstances that happen or exist on or
after the Columbus Option Closing Date; and (6) any severance or other liability
arising out of the termination of any employee's employment with or by Option
Holder on or after the Closing Date on which such employee was hired by Option
Holder, and in the case of former employees of the Columbus Stations, on or
after the Asset Purchase Agreement Closing Date; and (7) any duty, obligation or
liability relating to any pension, 401(K) or other similar plan, agreement or
arrangement provided by Option Holder to any employee or former employee of
Seller on or after the Closing Date on which such employee was hired by Option
Holder, and in the case of former employees of the Columbus Station, on or after
the Asset Purchase Agreement Closing Date (all of the foregoing in this
paragraph, together with other liabilities or obligations in the preceding
paragraph and all other liabilities or obligations expressly assumed by Option
Holder hereunder, are referred to herein collectively as the "Assumed
Liabilities"). All liabilities and obligations arising of the License Assets
that do not constitute Assumed Liabilities shall be retained by Sellers and are
referred to herein as "Retained Liabilities".
To the extent, if any, any Seller makes a payment to Option Holder as a result
of any adjustment pursuant to Section 2.5 hereof, Option Holder shall then
assume and be obligated to pay such obligations and liabilities for which such
adjustment was made pursuant to Section 2.5.
(c) Consents to Contracts. Option Holder agrees that (i) on the
Columbus Option Closing Date, Option Holder will assume contracts included in
the Columbus Station Assets and the License Assets relating to the Columbus
Station and (ii) on the Option Closing Date for such Station, Option Holder
will assume the contracts included in the License Assets relating to such Group
I Station (together with any Consent Contracts, as defined in and pursuant to
Section 1.3 of the Asset Purchase Agreement), in the case of (i) and (ii) above
regardless of whether consent has been obtained in connection therewith. The
liabilities and obligations in connection with all such contracts shall also
constitute "Assumed Liabilities" for purposes of this Agreement.
1.4 Option Exercise. In order to exercise an Option, Option Holder
must deliver to Sellers written notice (an "Exercise Notice") of Option Holder's
intention to so exercise such Option and designating whether all or any one of
the Group I Options or the Columbus Option is being exercised (and in the case
of a Group I Option, designating which Stations are to be acquired thereunder).
The date upon which any Exercise Notice is given with respect to an Option shall
be referred to as the "Exercise Date" for such Option. Option Holder may
withdraw any Exercise Notice at any time prior to the related Option Closing
Date by written notice to that effect to Sellers. Upon withdrawal of any
Exercise Notice, Option Holder shall reimburse Sellers for all reasonable
out-of-pocket expenses, including, without limitation, reasonable attorneys'
fees, incurred by Sellers in connection with its compliance with Section 5.8(a)
and Section 5.8(b) with respect to such Exercise Notice. Nothing contained in
this Section 1.4 is intended to prohibit the Option Holder from subsequently
exercising an Option during the Exercise Period defined in Section 1.5 hereof
after any such withdrawal nor shall any withdrawal of any Exercise Notice extend
the terms of the Option or affect the payments referred to in Section 1.5 below.
The Group I Options may be exercised concurrently in one step or separately in
two or more steps with respect to the Group I Stations.
1.5 Terms of Option. Option Holder shall have the right to exercise
the Group I Options and the Columbus Option from the date hereof for ten (10)
years from the Option Grant Date to and including April 10, 2006 (the "Exercise
Period"). Upon the failure of Option Holder to deliver the Exercise Notice for
any unexercised Group I Option during the Exercise Period as provided herein,
such Group I Option shall expire. Upon the failure of Option Holder either to
deliver the Exercise Notice for the Columbus Option during the Exercise Period
as provided herein or to pay the Option Extension Fees (as defined below) on any
Unpaid Option (as defined below), the Columbus Option shall expire.
Notwithstanding anything to the contrary herein, the Closing on an Option may
take place after the expiration of the Exercise Period so long as Option Holder
has (i) delivered the Exercise Notice for such Option to Sellers in accordance
with Section 1.4 prior to the expiration of the then current Exercise Period and
(ii) in the case of the Columbus Option, in addition paid all Option Extension
Fees on all Unpaid Options, but in no event shall the final Closing of (1) any
Group I Option take place later than April 10, 2008 or (2) the Columbus Option
take place later than April 10, 2008.
ARTICLE 2
PAYMENTS AND CLOSING
2.1 Grant Price and Option Closing Price.
2.1.A Payment for Option Grant. In consideration of Sellers' grant of
the Options, Option Holder shall pay to Sellers Three Hundred Two Thousand
Dollars ($302,000) (the "Option Grant Price"), which shall be allocated among
the Stations in accordance with Schedule 2.1.A. The Option Grant Price shall be
allocated between the Sellers as determined by Seller and paid by Option Holder
to Sellers by wire transfer of immediately available funds to such bank
account(s) as Sellers may designate on or prior to the Option Grant Date.
2.1.B Payment Upon Option Closing and Option Extension Fees.
(a) In consideration of Sellers' performance of this Agreement and the
transfer, assignment and delivery of (i) the License Assets of the Group I
Stations, Option Holder will pay to Sellers with respect to each Group I Station
the amount allocable to such Group I Station in accordance with Schedule
2.1.B(a) (collectively, the "Group I Option Closing Price" and together with the
Columbus Option Closing Price, sometimes hereinafter referred to as the "Option
Closing Price") on or before the Columbus Option Closing Date, and (ii) the
Columbus Station Assets and the License Assets relating to the Columbus Station,
Option Holder will pay to Sellers One Hundred Thirty Million Dollars
($130,000,000) on the Columbus Option Closing Date, as adjusted pursuant to
Section 2.5 below (the "Columbus Option Closing Price"). Option Holder shall
pay the Option Closing Price at the following times:
(i) With respect to a Group I Option the Closing of which occurs prior
to the Columbus Option Closing Date, Option Holder shall pay the Option Closing
Price for such Group I Option at any time on or prior to the Columbus Option
Closing Date;
(ii) With respect to a Group I Option the Closing of which does not
occur on or prior to the Columbus Option Closing Date, Option Holder shall pay
the Option Closing Price for such Group I Option on the Columbus Option Closing
Date; and
(iii) With respect to the Columbus Option, Option Holder shall pay the
Columbus Option Closing Price on the Columbus Option Closing Date.
As used herein, at any time the "Unpaid Options" shall comprise: (i) any Group
I Option the Closing of which has occurred and with respect to which Option
Holder has not yet paid the Option Closing Price, and (ii) any Option the
Closing of which has not occurred.
(b) Until the Closing for the Columbus Station has occurred (whether or
not the Columbus Option has been exercised), unless Option Holder elects to
terminate its right to exercise the Columbus Option by written notice to
Sellers, Option Holder shall be required to pay to Sellers, on December 31,
1996, and on each March 31, June 30, September 30 and December 31 thereafter and
on the Columbus Option Closing Date or, if the Columbus Option Closing Date has
not occurred, April 10, 2008, an extension fee with respect to each Group I
Option and the Columbus Option (each, an "Option Extension Fee" and
collectively, the "Option Extension Fees"). The Option Extension Fees shall
accrue on each Unpaid Option on the basis of a 365-day year based on the actual
number of days elapsed in the period during which the Option Extension Fees
accrue. The Option Extension Fees shall be paid as follows:
(i) on December 31, 1996 (or the Columbus Option Closing Date, if
earlier), Option Holder shall pay to Sellers an Option Extension Fee with
respect to each Unpaid Option in an amount equal to (A) the product of (Y) eight
percent (8%) and (Z) the amount of the Option Closing Price attributable to such
Unpaid Option minus, in the case of an Unpaid Option that has been assigned
pursuant to Section 11.4, the Option Assignment Price for such Unpaid Option,
multiplied by (B) a fraction, the numerator of which is the number of days
elapsed from the Option Grant Date to December 31, 1996 (or the Columbus Option
Closing Date, if earlier) and the denominator of which is 365;
(ii) thereafter, on each March 31, June 30, September 30 and December
31, and on the Columbus Option Closing Date or, if the Columbus Option Closing
Date has not occurred, on April 10, 2008, Option Holder shall pay to Sellers an
Option Extension Fee calculated as follows:
(A) with respect to each Unpaid Option, for the period beginning on
January 1, 1997 and ending on the first anniversary of the Option Grant Date, an
amount equal to (A) the product of (Y) eight percent (8%) and (Z) the amount of
the Option Closing Price attributable to such Unpaid Option minus, in the case
of an Unpaid Option that has been assigned pursuant to Section 11.4, the Option
Assignment Price for such Unpaid Option, multiplied by (B) a fraction, the
numerator of which is equal to the number of days elapsed since the due date of
the previous payment of an Option Extension Fee and the denominator of which is
365;
(B) with respect to each Unpaid Option, for the period beginning on the
first day after the first anniversary of the Option Grant Date and ending on the
second anniversary of the Option Grant Date, an amount equal to (A) the product
of (Y) fifteen percent (15%) and (Z) the amount of the Option Closing Price
attributable to such Unpaid Option minus, in the case of an Unpaid Option that
has been assigned pursuant to Section 11.4, the Option Assignment Price for such
Unpaid Option, multiplied by (B) a fraction, the numerator of which is equal to
the number of days elapsed since the later of (I) the due date of the previous
payment of an Option Extension Fee and (II) the first anniversary of the Option
Grant Date, and the denominator of which is 365; and
(C) with respect to each Unpaid Option, for the period beginning on the
first day after the second anniversary of the Option Grant Date and ending on
the Columbus Option Closing Date or, if the Columbus Option Closing Date has not
occurred, April 10, 2008, an amount equal to (A) the product of (Y) twenty-five
percent (25%) and (Z) the amount of the Option Closing Price attributable to
such Unpaid Option minus, in the case of an Unpaid Option that has been assigned
pursuant to Section 11.4, the Option Assignment Price for such Unpaid Option,
multiplied by (B) a fraction, the numerator of which is equal to the number of
days elapsed since the later of (I) the due date of the previous payment of an
Option Extension Fee and (II) the second anniversary of the Option Grant Date,
and the denominator of which is 365.
(c) The Option Holder shall assume the Assumed Liabilities and other
obligations and liabilities to be assumed by Option Holder hereunder with
respect to a Group I Station or the Columbus Station on the Option Closing Date
for such Station.
(d) Notwithstanding any other provision contained herein, except and
subject to Section 11.1.C, (i) the Group I Options shall expire on April 10,
2006 and (ii) notwithstanding the expiration or termination of a Group I Option,
such terminated Group I Option shall continue to be an Unpaid Option, and Option
Holder shall continue to be liable for the payment of the Option Closing Price
and Extension Fees attributable to such terminated Option pursuant to this
Section 2.1.B unless and until the Columbus Option is terminated as provided
herein; (iii) the Columbus Option shall expire on the first to occur of (a)
April 10, 2006 and (b) whether or not the Columbus Option has been exercised,
the date on which an Option Extension Fee for any Group I Option or the Columbus
Option is due if Option Holder shall not have paid such Option Extension Fee by
such date; (iv) it is understood and agreed by Option Holder that in no event
shall any Option Extension Fee be refundable to Option Holder hereunder; (v) if
Option Holder elects to terminate the Columbus Option, any accrued and unpaid
Option Extension Fee for any Group I Option and the Columbus Option through the
date of such written notice shall be paid by Option Holder to Sellers by wire
transfer of immediately available funds on the date of such notice of
termination; and (vi) if Option Holder elects to terminate the Columbus Option,
Option Holder shall be under no obligation to pay to Sellers any Group I Option
Closing Price or any Columbus Option Closing Price.
(e) The Option Closing Price payable for each Station and Extension
Fees attributable to such Station shall be allocated between the Sellers in such
manner as determined by the Sellers and shall be paid by Option Holder to
Sellers by wire transfer of immediately available federal funds in United States
dollars to such bank account(s) as Sellers may designate; provided, however,
that payments of One Hundred Dollars ($100.00) or less may be made by check.
2.2 Option Grant and Closing.
(a) Option Grant. The grant of the Options (the "Option Grant") shall
become effective on the Option Grant Date upon the execution of this Agreement
by all parties and the receipt of the Option Grant Price referred to in Section
2.1(a)(i).
(b) Closing. The closing of the purchase and sale with respect to a
Station upon the exercise of the Option relating to such Station (a "Closing")
shall be held in the offices of Dow, Lohnes & Albertson, 1200 New Hampshire
Avenue, N.W., Suite 800, Washington, D.C. 20036, at 10:00 a.m., local time, on a
regular business day specified by Option Holder by written notice to Sellers not
less than twenty (20) business days in advance of such specified business day,
or at such other place and/or such other day as Sellers and Option Holder may
agree in writing, provided that, in the case of the Columbus Option, in no event
shall the Closing take place after April 10, 2008 and in the case of the Group I
Options, in no event shall any Closing take place after April 10, 2008
(hereinafter referred to with respect to such Option as an "Option Closing
Date").
2.3 Deliveries at Option Grant.
(a) Deliveries by Sellers. On the Option Grant Date, Sellers have
delivered to Option Holder such customary documentation reasonably satisfactory
to Option Holder and its counsel in order to effect the transaction contemplated
by this Agreement, including, without limitation, the following:
(i) a certified copy of the resolutions or proceedings of Sellers
authorizing Sellers' consummation of the transactions contemplated by this
Agreement;
(ii) a certificate as to the existence and good standing of RCB issued
by the Secretary of State of Delaware not more than ten (10) days before this
Option Grant Date, certifying as to the incorporation and/or organization of RCB
in Delaware and, certificates issued by an appropriate governmental authority of
RCB to do business in the jurisdictions listed in Schedule 3.1, to the extent
such certificates are available, dated not more than ten (10) days before the
Option Grant Date;
(iii) a receipt for the Option Grant Price;
(iv) the opinion of Sellers' counsel in the form attached as Exhibit
8.3 to the Asset Purchase Agreement, dated as of this Option Grant Date;
(v) certificates of insurance showing Option Holder named as additional
insured as contemplated in Section 5.1; and
(vi) such other documents as Option Holder may reasonably request.
(b) Deliveries by Option Holder. On the Option Grant Date, Option
Holder have delivered to Sellers the Option Grant Price and such instruments and
other customary documentation reasonably satisfactory to Sellers and their
counsel in order to effect the transactions contemplated by this Agreement,
including, without limitation, the following:
(i) a certified copy of resolutions or proceedings of Option Holder
authorizing the consummation of the transactions contemplated by this Agreement;
(ii) a certificate issued by the Maryland Department of Assessments and
Taxation dated not more than ten (10) days before this Option Grant Date
certifying as to the incorporation and good standing and/or qualification of
Option Holder in Maryland and, to the extent available, a certificate of the
appropriate governmental authorities as to the qualification of Option Holder,
or an appropriate wholly-owned operating subsidiary of Option Holder, to
transact business in each jurisdiction in which the Stations presently transact
business from the Secretary of State or analogous entity of each such
jurisdiction, dated not more than ten (10) days before the Option Grant Date;
(iii) opinions of Option Holder's counsel and special counsel in the
forms attached as Exhibits 7.3(a) and 7.3(b), respectively, to the Asset
Purchase Agreement, each dated as of this Option Grant Date;
(iv) certificates of insurance contemplated in Section 6.5; and
(v) such further documents as Sellers may reasonably request.
2.4 Deliveries at Closing. All actions at each 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 Option Holder, Sellers and their respective counsel.
(a) Deliveries by Sellers.
(i) At each Closing, Sellers shall deliver to Option Holder such
instruments of conveyance and other customary documentation as shall in form and
substance be reasonably satisfactory to Option Holder and its counsel,
including, without limitation, the following:
(a) one or more bills of sale conveying the personal property and all
leases, contracts, and other intangible assets included in (i) the License
Assets for the Station that is the subject of such Closing and (ii) in the case
of the Columbus Station, the Columbus Station Assets;
(b) one or more assignments conveying the FCC Authorizations included
in the License Assets for the Station that is the subject of such Closing;
(c) any mortgage discharges or releases of liens that are necessary in
order to transfer (i) the License Assets for the Station that is the subject of
such Closing as contemplated by Section 1.3 and (ii) in the case of the Columbus
Station, the Columbus Station Assets;
(d) with respect to the Closing of a Group I Option, a receipt for the
Option Closing Price for the Station that is the subject of such Closing and for
the Extension Fee applicable to such Group I Option that has accrued since the
due date of the previous payment of Option Extension Fees for such Option
(unless, with respect to the Closing of a Group I Option prior to the Columbus
Option Closing Date, Option Holder defers the payment of such Option Closing
Price until the Columbus Option Closing Date), and with respect to the Closing
of the Columbus Option, a receipt for (i) the Columbus Option Closing Price,
(ii) the Option Closing Price of all Unpaid Options, and (iii) the Extension
Fees applicable to the Columbus Option and such Unpaid Options that have accrued
since the due date of the previous payment of Option Extension Fees for such
Options;
(e) all consents received by Sellers through the Option Closing Date to
the assignment to or assumption by Option Holder of licenses, contracts and
leases included in (i) the License Assets for the Station that is the subject of
such Closing and (ii) in the case of the Columbus Station, the Columbus Station
Assets;
(f) the Terminations as required by Section 8.6 hereof;
(g) documents of conveyance evidencing transfer of (i) the Real
Property included in the License Assets for the Station that is the subject of
such Closing, and (ii) the Columbus Real Property in the case of the Closing of
the Columbus Option;
(h) in the case of the Closing of the Twin Peaks Equity Interests, a
stock certificate of Sandia representing the Sandia Stock (together with a blank
stock power for the Sandia Stock);
(i) to the extent (1) consent is obtained to the transfer thereof and
(2) made available by NewVenco, Inc., in the case of the Closing of the Columbus
Option only, (a) a stock certificate of NewVenco, Inc. representing all of RCB's
interest in NewVenco, Inc. in connection with the Columbus Station (together
with a stock power endorsed in blank for such stock of NewVenco, Inc.) or (b) a
stock certificate of NewVenco, Inc. representing Option Holder's interest in
NewVenco, Inc. in connection with the Columbus Station;
(i) to the extent (1) such assets were not conveyed under the Asset
Purchase Agreement, (2) made available by NewVenco, Inc. and Television Alliance
Group, Inc. and (3) consent is obtained to the transfer thereof, (a) all stock
certificates of NewVenco, Inc. and Television Alliance Group, Inc. representing
all of RCB's interest in the Other Assets (as such term is defined in the Asset
Purchase Agreement) (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;
(ii) to the extent (1) such assets were not conveyed under the Asset
Purchase Agreement and (2) 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.); and
(j) the list of Qualified Beneficiaries entitled to Continuation
Coverage as of such Closing Date, as contemplated under Section 10.1(b).
(ii) At each Closing, and upon the written request of Option Holder at
least ten (10) business days prior to such Closing, Sellers shall deliver to
Option Holder, to the extent requested by Option Holder, the following:
(a) a certified copy of the resolutions or proceedings of each Seller
authorizing the transactions contemplated at such Closing by this Agreement;
(b) a certificate of Sellers as required by Section 8.1(c) hereof;
(c) the opinion of counsel required by Section 8.3 hereof;
(d) a certificate as to the existence and good standing of RCB issued
by the Secretary of State of the State of Delaware dated not more than ten (10)
days before the Option Closing Date and a certificate of the appropriate
governmental authorities as to RCB's qualification to transact business in
Delaware and, certificates issued by the appropriate governmental authority of
the jurisdiction in which the Station that is the subject of such Closing to the
extent RCB then transacts business in such jurisdiction and to the extent such
certificates are available, dated not more than ten (10) days before the Option
Closing Date;
(e) such other documents as Option Holder shall reasonably request.
(b) Deliveries by Option Holder.
(i) At each Closing, Option Holder shall deliver to Sellers the Closing
Price applicable to such Closing and such instruments of assumption and other
customary documentation as shall in form and substance be reasonably
satisfactory to Sellers and their counsel, including, without limitation, the
following:
(a) with respect to the Closing of a Group I Option, the Option Closing
Price for the Station that is the subject of such Closing and the Extension Fee
applicable to such Group I Option that has accrued since the due date of the
previous payment of Option Extension Fees for such Option (unless, with respect
to the Closing of a Group I Option prior to the Columbus Option Closing Date,
Option Holder defers the payment of such Option Closing Price until the Columbus
Option Closing Date), and with respect to the Closing of the Columbus Option,
(i) the Columbus Option Closing Price, (ii) the Option Closing Price of all
Unpaid Options, and (iii) the Extension Fees applicable to the Columbus Option
and such Unpaid Options that have accrued since the due date of the previous
payment of Option Extension Fees for such Options; provided that in either event
such amounts shall be delivered in the manner set forth in Section 2.1.B hereof;
(b) an assumption of liabilities pursuant to which Option Holder will
assume the Assumed Liabilities relating to the Station that is the subject of
such Closing;
(c) the Terminations as required by Section 7.6; and
(d) in the case of the Closing of the RCB Twin Peaks Equity Interests,
a receipt for the stock certificate issued to Option Holder representing the
Sandia Stock;
(ii) At each Closing, and upon the written request of Sellers at least
ten (10) business days prior to such Closing, Option Holder shall deliver to
Sellers, to the extent requested by Sellers, the following:
(a) a certified copy of the resolutions or proceedings of Option Holder
authorizing the transactions contemplated by this Agreement;
(b) a certificate of Option Holder as required by Section 7.1(c)
hereof;
(c) a certificate as to the existence and good standing of Option
Holder issued by the Maryland Department of Assessments and Taxation dated not
more than ten (10) days before the Option Closing Date and a certificate of the
appropriate governmental authorities as to the qualification of Option Holder or
an appropriate wholly-owned operating subsidiary of Option Holder to transact
business in each jurisdiction in which the Station that is the subject of such
Closing then transacts business from the Secretary of State or analogous entity
of such jurisdiction dated not more than 10 days before the Option Closing Date;
(d) the opinion of counsel required by Section 7.3 hereof;
(e) such other documents as Sellers shall reasonably request.
2.5 Adjustments.
(a) (i) TBA. The parties agree to finalize any payments due under
the TBA relating to the Station through 11:59 p.m. on the day preceding the
Option Closing Date for such Station (the "Adjustment Date").
(ii) Indemnity. To the extent that Sellers are liable for any Loss or
Expense under Article 9 hereof or under Article 9 of the Asset Purchase
Agreement, the Option Closing Price in respect of the Columbus Station shall be
reduced by the amount that Sellers are liable for in connection with such Loss
or Expense, subject to the limitations set forth in Section 9.4 hereof.
(b) (i) Pre-Closing Certificate. For the purpose of finalizing the
amounts required pursuant to Section 2.5(a)(i), Sellers shall deliver to Option
Holder, and Option Holder shall deliver to Sellers, not less than five (5) days
prior to the applicable Option Closing Date, a certificate (the "Pre-Closing
Certificate"), to be signed at such Closing by an appropriate official of such
parties after due inquiry by such official, but without any personal liability
to any such official, each of which shall specify Sellers' and Option Holder's
good faith determinations of the dollar amount under Section 2.5(a)(i),
including, without limitation, appropriate documentation supporting
determinations and calculations under Section 2.5(a).
(ii) Pre-Closing Dispute; Escrow. If Sellers or Option Holder, acting
in good faith, do not agree with any amount set forth in the other parties'
Pre-Closing Certificate, then on or prior to the second business day prior to
such Closing Date, such party (the "Disputing Party") may deliver to the other a
written report (the "Estimate Report") setting forth in reasonable detail the
Disputing Party's good faith reasonable estimate(s) of the amount(s) with which
the Disputing Party disagrees. Any estimated amount which is set forth in the
Pre-Closing Certificate and as to which the Disputing Party does not deliver its
own estimate on or prior to such second business day will be the "estimated
amount" of the adjustments under Section 2.5(a)(i) (the "Adjustment Amount"), on
the applicable Closing Date. In the case of any such estimated amount as to
which the Disputing Party delivers its own estimate, the parties 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 applicable
Closing Date. In the case of any such estimated amount as to which the
Disputing Party delivers its own estimate and Sellers and Option Holder do not
so agree, the estimate set forth in the Sellers' Pre-Closing 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 Option Closing Price
that would be determined using the amount set forth in the Sellers' Pre-Closing
Certificate (as adjusted in accordance with Section 2.5(a)(ii)) and the amount
of the Option Closing Price determined using the estimated Adjustment Amount set
forth in the Estimate Report (such amount, the "Post-Closing Estimate Fund
Deposit") will be transferred by Option Holder to Magna Trust Company, St.
Louis, Missouri or such other bank as mutually agreed to by the parties (the
"Escrow Agent"), to be held by the Escrow Agent pursuant to the Post-Closing
Escrow Agreement in the form of Exhibit 2.5(b) (with such changes as the Escrow
Agent may request), and pending final determination of the disputed amount(s) in
question pursuant to this Section 2.5(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 Option Holder or pursuant to Section
2.1.
(iii) Adjustment at Closing. At such Closing, the Option Closing Price
shall be decreased to the extent Sellers owe Option Holder funds or increased to
the extent Option Holder owes Sellers funds, based upon the amount set forth, in
the Sellers' Pre-Closing Certificate (as adjusted in accordance with Section
2.5(a)(ii)).
(iv) Post-Closing Dispute. If any such dispute cannot be resolved by
Option Holder and Sellers or their respective independent public accountants
within one hundred and eighty (80) days after the Option 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 Sellers and Option Holder.
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 Sellers, and one-half shall be paid by Option Holder.
(v) Disbursement of Post-Closing Estimate Fund. If any funds are
transferred to the Escrow Agent to be held in the Post-Closing Estimate Fund,
then any amount which becomes payable to Option Holder or Sellers pursuant to
Section 2.5(b), together with interest accrued on such amount, will be paid to
Option Holder or Sellers from the Post-Closing Estimate Fund, to the extent of
the funds therein. If no funds are transferred to the 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 2.5(b), then any
remaining amount payable to Sellers pursuant to Section 2.5(b) will be paid by
Option Holder and any remaining amount payable to Option Holder pursuant to
Section 2.5(b) will be paid by Sellers. Any amount payable by Sellers or Option
Holder pursuant to Section 2.5(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 2.5(b) through and
including the date upon which such amount and all such interest are paid in
full.
2.6 Effect of Certain 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 Sellers, covenants of the Sellers made
herein, any condition precedent to the obligations of Option Holder set forth in
this Agreement, or any provisions relating to indemnification to be made by
Sellers 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 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 Option
Holder pursuant hereto or under the Asset Purchase Agreement (collectively, the
"Conveyed Contracts"), of (1) the transfer of the Station Assets, as defined in
and pursuant to the terms of the Asset Purchase Agreement, to Option Holder and
the transfer by Sellers of the License Assets and the Columbus Station Assets
hereunder; (2) the grant by Sellers of the Options; (3) the execution, delivery
and performance of any of the Transaction Documents; or (4) the consummation of
the other transactions contemplated hereby or by the Asset Purchase Agreement;
(b) any conflict with, violation of, termination of or breach or default under
any Laws or Conveyed Contracts as a result of the consummation of any of the
transactions contemplated hereby or by the Asset Purchase Agreement (including,
without limitation, the Transaction Documents); 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 or by the Asset Purchase Agreement (including,
without limitation, the Transaction Documents), 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 Sellers under this Agreement or any other documents related hereto;
(iii) result in the failure of any condition precedent to the
obligations of Option Holder under this Agreement or any other document related
hereto to be satisfied;
(iv) otherwise excuse Option Holder'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
Option Holder or any adjustment of the Option Closing Price;
provided that the foregoing clauses (i) through (v) shall not apply to (1) any
claim brought by a partner of Sellers alleging a violation of any Seller's
partnership agreement or any claim brought by any partner, officer, director,
agent or Affiliate of Sellers; (2) any breach by Sellers of their covenants set
forth in this Agreement; or (3) any action instituted by the Federal Trade
Commission or the Department of Justice relating to the HSR Act, in each case
which shall be governed by other applicable provisions of this Agreement.
2.7 Representations and Warranties of Sellers. The parties hereto
acknowledge and agree that notwithstanding anything in this Agreement or any
other documents related hereto to the contrary, and without expanding any
obligations of Sellers hereunder, Sellers shall have no liability hereunder (for
indemnification or otherwise) for the breach of any representation or warranty
hereunder relating to events occurring after the date hereof unless such breach
was caused by a negligent, grossly negligent or intentional wrongful action
taken by Sellers.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to the exceptions set forth in Section 8.1(a) hereof, Sellers represent
and warrant to Option Holder as follows:
3.1 Organization. RCB is a limited partnership duly formed, validly
existing and in good standing under the law of the State of Delaware. Licensee
is a general partnership duly formed and validly existing under the laws of the
State of Missouri. Each Seller has the requisite partnership power and
authority to carry on the business of the Stations now being conducted by it, to
own and operate the License Assets owned and operated by it, and to enter into
and consummate the transactions contemplated by this Agreement. RCB is
qualified to conduct the business of the Stations now being conducted by it in
each jurisdiction listed on Schedule 3.1.
3.2 Approval/Authority. All requisite partnership actions and
proceedings necessary to be taken by or on the part of each 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, or with respect to each Closing will be, duly and validly taken. This
Agreement has been duly and validly authorized, executed and delivered by each
Seller and constitutes its valid and binding agreement, 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.
3.3 No Conflicts. Except as set forth on Schedule 3.3, on this Option
Grant Date (after giving effect to all approvals and consents which have been
obtained), neither the execution and delivery by Sellers of this Agreement, nor
the consummation by either Seller of the transactions contemplated hereby 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 either
Seller is subject, or of RCB's agreement of limited partnership or Licensee's
agreement of general partnership, as the case may be, or any contract, agreement
or instrument that is required by the terms hereof to be listed on the Schedules
hereto to which either Seller is a party or by which either Seller is bound.
3.4 Brokers. Except for the fees payable to Communications Equity
Associates referenced in Section 3.14 of the Asset Purchase Agreement, there is
no broker or finder or other person or entity who would have any valid claim
against Sellers for a commission or broker's fee in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or understanding of or action taken by any Seller or any Affiliate of Seller.
3.5 FCC Authorizations. Licensee is the holder of the FCC
Authorizations listed in Schedule 1.1.A(a) to this Agreement. Such FCC
Authorizations constitute all of the licenses and authorizations required under
the Communications Act of 1934, as amended (the "Communications Act") or the
current rules and regulations and published policies of the FCC for and/or used
in the operation of the Stations as now operated by Sellers. The material FCC
Authorizations are in full force and effect and will not be subject to or
scheduled for renewal until the dates set forth in Schedule 1.1.A(a). Except as
set forth on Schedule 3.5, there is not pending, or to the actual knowledge of
Sellers, threatened, any action by or before the FCC to revoke, cancel, rescind,
modify or refuse to renew in the ordinary course any of the FCC Authorizations,
and except as set forth on Schedule 3.5, there is not now pending, or to the
actual knowledge of Sellers, threatened, issued or outstanding by or before the
FCC, any investigation, order to show cause, notice of violation, notice of
apparent liability or notice of forfeiture or complaint against Sellers with
respect to any of the Stations, except to the extent that the result of such
action, investigation, order, notice or complaint would not be 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 Option Holder thereof or (v) actions taken
by Option Holder or any Affiliate of Option Holder). To Sellers' actual
knowledge, each Station is operating in compliance in all material respects with
the FCC Authorizations, the Communications Act and the current rules and
regulations of the FCC. 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 Sellers means the conscious awareness of
facts of Sellers' Station general managers and the officers of the general
partner of Sellers after reasonable inquiry by such Station general managers and
such officers with respect to the matters related to herein as to which the
Sellers are stating their knowledge.
3.6 Condition of Assets. The material tangible assets included in the
License Assets are, in all material respects, in good and technically sound
operating condition to permit the owner thereof to operate the Stations (in the
manner in which the Stations are operated by the Sellers) in compliance with the
terms of the FCC Authorizations, the Communications Act and current FCC rules
and regulations.
3.7 Title.
(a) Schedule 1.1.A(c) contains a description of the material real
property leases (the "Leases") to which either Seller is a party as a tenant (or
subtenant) or landlord with respect to the License Assets as of the date of this
Agreement to be used under the TBAs. To the actual knowledge of Sellers,
Sellers or either of them, as the case may be, are not in material default under
any of the Leases.
(b) Except for this Option, the Permitted Encumbrances, as set forth on
Schedule 1.3 and as otherwise provided herein, Sellers have on this Option
Grant Date 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 License Assets owned
by them and good and marketable title to the Real Property, and all such assets
and Real Property are free and clear of all liens and encumbrances except for
Permitted Encumbrances.
(c) On the Option Grant Date, except for Permitted Encumbrances,
Sellers shall cause the FCC Authorizations to be free and clear of all liens,
security interests and encumbrances of any kind whatsoever and shall cause the
FCC Authorizations to remain free and clear of all such liens, security
interests and encumbrances from the Option Grant Date through the Option Closing
Date.
3.8 Call Letters, Trademarks, Etc. Except as set forth on Schedule
1.1.A(e), Sellers possess, and on the Option Closing Date shall possess,
adequate rights, licenses or other authority to use all call letters, trademarks
and trade names necessary to conduct the business of the Stations as presently
conducted by Sellers except where the failure to so possess would not cause a
material adverse change in 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 Option Holder thereof or (v) actions taken
by Option Holder or any Affiliate of Option Holder) (a "Station Material Adverse
Change"). Except as set forth on Schedule 1.1.A(e), Sellers have 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
or alleged to be owned by others and used in connection with the Stations.
Sellers represent and warrant that, except as set forth on Schedule 1.1.A(e)
hereto, none of the trademarks listed thereon have been registered.
3.9 Insurance. The Stations and the License Assets are, as of the
Option Grant Date, insured by Sellers against loss or damage by fire and other
hazards and risks of the character usually insured against by persons operating
similar properties and business under policies issued by insurers of recognized
responsibility.
3.10 Contracts. Schedules 1.1.A(c), 1.1.A(d) and 3.11 to this
Agreement contain a list of the following contracts as to which any Station or
either Seller with respect to any Station is a party, and which have been
excluded from transfer (or in the case of the Columbus Station, from
representation) under the Asset Purchase Agreement, as of the Option Grant Date,
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 a Station at any time after the Option Grant 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 either 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 other party thereto, ending more than one year after
the date of this Agreement and which involve annual payments of more than
$50,000 or $250,000 in the aggregate;
(f) material contracts not made in the ordinary and usual course of
business; and
(g) any other contracts which are material to the business and
operation of any Station and involve annual payments of more than $100,000
individually.
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 for cash at such Station's prevailing rate with not more than one
year remaining in any of their terms.
3.11 Employees. Sellers have heretofore delivered to Option Holder a
list of all employees of the Sellers as of the Option Grant Date and their
respective salaries and dates of hire. Except as described on such list or on
Schedule 3.11, after giving effect to the consummation of the Asset Purchase
Agreement Closing Sellers have no written contracts of employment with any
employee. Except as described on Schedule 3.11 after giving effect to the
consummation of the Asset Purchase Agreement Closing, neither Seller is a party
to or subject to any collective bargaining agreements with respect to any
Station nor, except as described in Schedule 3.11 after giving effect to the
consummation of the Asset Purchase Agreement Closing, does either Seller have
any other contracts with any labor union or other labor organization with
respect to any Station. Except as described on Schedule 3.11 after giving
effect to the consummation of the Asset Purchase Agreement Closing, Sellers are
not a party to any pending or, to their actual knowledge, threatened labor
dispute affecting any Station that would cause a Station Material Adverse
Change.
3.12 Litigation. Except as set forth on Schedule 3.12 hereto: (i)
Sellers, with respect to the Stations, have 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 caused or could reasonably be
expected to cause a Station Material Adverse Change; (ii) neither Seller is a
party to any pending or, to Sellers' actual knowledge, threatened litigation
affecting any of the License Assets that would cause a Station Material Adverse
Change. There are no attachments, executions or assignments for the benefit of
creditors or voluntary or involuntary proceedings in bankruptcy pending against
or contemplated by Sellers, and to Sellers' actual knowledge, no such actions
have been threatened against Sellers 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 Sellers' actual knowledge, threatened against or affecting
Sellers that would affect Sellers' 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.
3.13 Compliance with Laws. Except as set forth on Schedule 3.5,
Sellers, with respect to the Stations, are to their actual knowledge, in
compliance, except where the failure to so comply would not cause a Station
Material Adverse Change, with all applicable laws, regulations and orders, and
the present uses by Sellers of the License Assets do not, to Sellers' 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.
3.14 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.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER
Option Holder represents and warrants to Sellers as follows:
4.1 Incorporation. Option Holder is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland,
and Option Holder or an appropriate wholly-owned subsidiary of Option Holder
shall be qualified to transact business in the States of California, Illinois,
Indiana, Iowa, Kentucky, Louisiana, Missouri, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas and any other state in which a
Station is doing business as of the respective Option Closing Date of the
acquisition of License Assets in such jurisdiction, and each of Option Holder
has the corporate power and authority to enter into and consummate the
transactions contemplated by this Agreement.
4.2 Corporate Action. All corporate actions and proceedings necessary
to be taken by or on the part of Option Holder in connection with the execution
and delivery of this Agreement and the respective 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 Option Holder, and constitutes its valid
and binding agreement, 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 Option Holder
of this Agreement, nor the consummation by Option Holder 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
Option Holder is subject, or the articles of incorporation or bylaws of Option
Holder, or any contract, agreement or instrument to which Option Holder is a
party or by which it is or will be bound.
4.4 Brokers. Except for the fees payable to Smith Barney Inc. as
referenced in Section 4.4 of the Asset Purchase Agreement, 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 in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
or understanding of or action taken by Option Holder.
4.5 Litigation. There is no litigation, proceeding or investigation of
any nature pending or, to the best of Option Holder's actual knowledge,
threatened against or affecting Option Holder that would affect Option Holder's
ability fully to carry out the transactions contemplated by this Agreement or
which has or could reasonably 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 Option Holder, and no such actions have been threatened against
Option Holder. For purposes of this Agreement "actual knowledge" with respect
to Option Holder means the conscious awareness of facts of the officers of
Option Holder after reasonable inquiry by such officers with respect to the
matters referred to herein as to which Option Holder is stating its knowledge.
ARTICLE 5
COVENANTS OF SELLERS PENDING THE CLOSING
Sellers covenant and agree, from the date hereof to and including the Option
Closing Date for a Station and thereafter where so indicated (but not after the
final Option Closing Date or the earlier termination of this Agreement), that
they will act as follows with respect to such Station, and in the case of the
Columbus Station Assets, that they will act as set forth in Article 5 of the
Asset Purchase Agreement, and to the extent any conflict exists in the terms of
Article 5 hereof and Article 5 of the Asset Purchase Agreement, the terms hereof
shall govern with respect to the License Assets, including the License Assets of
the Columbus Station, and the terms of Article 5 of the Asset Purchase Agreement
shall govern with respect to the Columbus Station and the Columbus Station
Assets:
5.1 Maintenance of Business until Closing. Until the Option Closing
Date applicable to a particular station, each Seller shall, with respect to the
License Assets relating to such Station, continue to conduct its business and
operations and keep its books of account, records and files in a manner
consistent with the applicable TBA. Until the Option Closing Date applicable
with respect to the particular Station, subject to the provisions of the TBAs,
Sellers shall operate the 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, regulations and published policies.
Sellers will promptly execute and file any necessary applications for the
renewal of the FCC Authorizations.
Sellers will maintain in full force and effect through the Option Closing Date
for each Station property damage, liability and other insurance with respect to
the License Assets used or held for use by Sellers with respect to such Station
consistent with Sellers' present practices as set forth in Section 3.9, and
between the Option Grant Date and the Option Closing Date with respect to a
Station, Option Holder shall be named as an additional insured as its interests
may appear on the insurance policies carried by Sellers with respect to the
License Assets in connection with such Station thereunder.
Except as consistent with the applicable TBA, nothing contained in this
Agreement shall give Option Holder any right to control the programming,
operations or any other matter relating to any Station prior to the Option
Closing Date for such Station, and Sellers shall have complete control of the
programming, operations and all other matters relating to each Station up to the
Option Closing Date for such Station.
Prior to the Option Closing Date for a Station, except as set forth on Schedule
5.1 or as otherwise may be consistent with the applicable TBA and the third from
the last paragraph of this Section 5.1, Sellers will not, without the prior
written consent of Option Holder (to the extent the following restrictions are
permitted by the FCC and all applicable law):
(a) enter into (i) any written contract of employment or any collective
bargaining agreement that will be binding on Option Holder or (ii) permit any
increases in the compensation of any of the Station's employees, except in the
case of (i) and (ii), to the extent consistent with the applicable TBA or past
practices or as required by law or existing contract, in which case such
contracts and agreements shall be assumed by Option Holder and treated as
Assumed Liabilities hereunder; provided, however, that Sellers may pay bonuses
to any of their employees so long as such bonuses do not create a binding
obligation upon Option Holder after the applicable Closing Date;
(b) apply to the FCC for any construction permit that would materially
restrict the Station's present operations or make any material change in the
Station's buildings or leasehold improvements;
(c) (i) create or permit any lien or encumbrance, other than the
Permitted Encumbrances, on the License Assets or the Columbus Station Assets; or
(ii) 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 or consistent with the TBAs; provided, however, that
Seller shall consult with Option Holder to the extent Seller seeks to make
significant capital expenditures prior to making such capital expenditures;
(d) 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 TBAs and the
transactions contemplated hereby and thereby;
(e) 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 Sellers under, any liability of or owing to Sellers 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
or the TBA, (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; provided, however, that
notwithstanding the foregoing, except as otherwise contemplated under the third
from the last paragraph of this Section 5.1, Sellers will not incur or suffer to
exist any additional indebtedness (whether in connection with any Station or
otherwise, but excluding trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable within 90 days of the date the
respective goods are delivered or the respective services are rendered).
(f) engage with any Person in any business combination, except as
otherwise contemplated hereunder;
(g) engage in any transaction with respect to any Station with any
officer, director, or Affiliate of Sellers (or any Affiliate thereof), either
outside the ordinary course of business consistent with past practice or other
than on an arm's-length basis;
(h) enter into any contract, agreement or commitment to do or engage in
any of the foregoing;
(i) except as otherwise expressly provided for herein, sell, lease,
transfer or agree to sell, lease or transfer any Option or any License Assets;
or
(j) 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, Sellers shall be
entitled to (i) renew or extend the term of any contract listed on Schedules
1.1.A(c), 1.1.A(d), 1.1.A(i)(1) or 3.11 which, by its terms, expires or will
expire prior to April 10, 2006 and, in connection therewith, agree not to
increase the amounts payable thereunder during any such renewal term except in
accordance with the applicable Station's usual practices or the TBA relating to
the Station and (ii) take any action specified in subsections (c), (d), (e), (f)
and (h) and enter into a local management agreement in connection with 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.
Notwithstanding anything in this Agreement to the contrary, if Option Holder or
any permitted assignee under a TBA, has defaulted or breached in any material
respect its economic obligations or liabilities hereunder or under the TBA for
the Group I Stations, prior to a sale by Sellers of the Group I Station relating
thereto as set forth below, Sellers shall give Option Holder and Option Holder's
lenders ("Option Holder's Lenders") under its then existing senior credit
facility (the name and notice information regarding which Option Holder shall
provide to Sellers) notice of the breach by Sellers, and Option Holder shall be
given fifteen (15) days from the date of receipt of such notice to cure such
breach and Option Holder's Lenders shall be given ninety (90) days from the date
of receipt of such notice to cure such breach. During such cure period (or, if
Option Holder or any permitted assignee under a TBA, has defaulted or breached
in any material respect its economic obligations or liabilities hereunder or
under the TBA for the Columbus Station, during the applicable cure period under
Section 11.1.C), Sellers shall be permitted to borrow an aggregate amount not to
exceed Three Million Dollars ($3,000,000) the proceeds of which shall be used to
continue to operate such Stations. After the applicable cure periods with
respect to such breach relating to a Group I Station have expired without such
breach having been cured within such periods, Sellers shall, without being in
violation of any of the covenants set forth herein, and without being subject to
the restrictions set forth in such covenants, take such actions as Sellers in
good faith deem necessary or desirable in connection with the operations of such
Group I Stations, including without limitation, that Sellers may terminate such
TBA with respect to such Group I Station and/or may sell the Group I Station
with respect to which Option Holder or any permitted assignee under a TBA, is in
breach, and upon the sale of such Group I Station, Sellers shall, upon receipt
thereof, pay to Option Holder any amount received as payment for such Group I
Station minus (1) any non-recurring reasonable out-of-pocket costs incurred by
Sellers in connection with such sale, other than any sales commission paid by
Sellers in connection therewith, (2) any amounts owed by Option Holder to
Sellers, including, without limitation, in connection with any economic breach
by Option Holder hereunder or by Option Holder, or any permitted assignee under
the TBA, and all Option Extension Fees that are due but have not yet been paid
through the date of the closing of such sale, (3) the total amount of all
federal, state and local taxes incurred by Sellers in connection with such sale
and (4) a commission based on the total amount paid for such Group I Station
(the "Sale Price") using the Standard Formula. For purposes of this Agreement,
"Standard Formula" means (a) five percent (5%) on the first one million dollars
($1,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable; (b)
four percent (4%) on the next one million dollars ($1,000,000.00) of the Sale
Price or the Columbus Sale Price, as applicable; (c) three percent (3%) on the
next one million dollars ($1,000,000.00) of the Sale Price or the Columbus Sale
Price, as applicable; (d) two percent (2%) on the next one million dollars
($1,000,000.00) of the Sale Price or the Columbus Sale Price, as applicable; and
(e) one percent (1%) on any excess over four million dollars ($4,000,000.00) of
the Sale Price or the Columbus Sale Price, as applicable. Option Holder's Group
I Option with respect thereto shall terminate upon such sale.
Option Holder hereby appoints each Seller as its attorney-in-fact for Option
Holder with full authority in the place and stead of Option Holder and in the
name of Option Holder, in Sellers' discretion to take any action to execute any
instrument Sellers may deem necessary and advisable to accomplish such sale.
Sellers agree to act in a commercially reasonable manner in connection with the
sale of such Group I Station, and Option Holder shall cooperate with Sellers in
connection therewith. Option Holder's rights hereunder shall be subject to any
such actions as may be taken by Sellers pursuant hereto.
TO THE EXTENT SELLERS HAVE ACTED IN A COMMERCIALLY REASONABLE MANNER IN
CONNECTION WITH THE SALE OF A GROUP I STATION, NO CLAIM MAY BE MADE BY OPTION
HOLDER AGAINST SELLERS OR ITS PARTNERS, AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR
IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING
OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP
ESTABLISHED BY THE FOREGOING PARAGRAPH, OR ANY ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION THEREWITH; AND OPTION HOLDER HEREBY WAIVES, RELEASES AND AGREES
NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
5.2 Goodwill/Compliance with Agreements. Sellers shall diligently make
all commercially reasonable efforts to preserve the License Assets and the
business organization of the Stations and preserve the goodwill of the Stations'
suppliers, customers and others having business relations with the Stations in a
manner consistent with the applicable TBAs.
5.3 Reports; Access to Facilities, Files and Records. From time to
time during the Exercise Period at the request of Option Holder, Sellers shall
give or cause to be given to the officers, employees, agents and representatives
of Option Holder (a) access (in the presence of any representative designated by
Sellers), upon reasonable prior notice, during normal business hours, to the
License Assets and to all books and records relating thereto, and (b) all such
other information in Sellers' possession concerning the affairs of the Stations
as Option Holder may reasonably request, provided that the foregoing does not
unreasonably disrupt or interfere with the business and operations of Sellers or
the Stations.
5.4 Notice of Proceedings. Sellers will promptly notify Option Holder
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.
5.5 Confidential Information. Sellers shall not use or disclose to any
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 Option
Holder, including delivery of a copy of the subpoena or request, if applicable)
this Agreement or any information received from Option Holder or its agents in
the course of investigating, negotiating and performing the transactions
contemplated by this Agreement; provided, however, that Sellers may disclose
such information to Sellers' respective officers, partners, employees, lenders,
advisors, attorneys and accountants who need to know such information in
connection with the consummation of the transactions contemplated by the
Agreement and who are informed by Sellers of the confidential nature of such
information. Nothing shall be deemed confidential information that: (a) is
known to either Seller at the time of the disclosure of such information to such
Seller; (b) becomes publicly known or available other than as a result of
disclosure by or through either Seller; (c) is rightfully received by Sellers
from a third party; or (d) is independently developed by either Seller. In the
event this Agreement is terminated and the transactions contemplated hereby
abandoned, Sellers will return to the Option Holder all copies of documents,
work papers and other written confidential material obtained by Sellers in
connection with the transactions contemplated hereby.
5.6 Consummation of Option Closing. Subject to the express terms and
conditions of this Agreement, and without expanding such terms and conditions,
Sellers shall diligently make and cooperate with Option Holder in making all
commercially reasonable efforts in connection with any steps to be taken as part
of its respective obligations under this Agreement, and each of Sellers shall
diligently make and cooperate with Option Holder in making all commercially
reasonable efforts to fulfill and perform all conditions and obligations on
their 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 in connection with the Option
Exercise and Closing to be fully carried out.
5.7 Notice of Certain Developments. Sellers shall give prompt written
notice to Option Holder if prior to the Option Closing Date: (a) License Assets
shall have suffered damage on account of fire, explosion or other cause of any
nature that is sufficient to prevent operation of any Station in any material
respect for more than twenty-four (24) consecutive hours, or (b) the regular
broadcast transmission of any Station in the normal and usual manner in which it
heretofore has been operating is interrupted in any material manner for a period
of more than twenty-four (24) consecutive hours.
5.8 Covenants of Sellers After Option Exercise. Sellers covenant and
agree that, after their receipt of any Exercise Notice for the exercise of an
Option relating to a particular Station, until either the Closing for such
exercised Option occurs or such Exercise Notice is withdrawn pursuant to Section
1.4:
(a) Application for Commission Consent and Defense of Claims. Within
ten (10) days after receipt by Sellers of such Exercise Notice with respect to a
Station, Sellers will complete Sellers' portion of applications to the FCC
requesting its written consent to the assignment of the FCC Authorizations for
such Station (and any extension or renewals thereof and any necessary waiver
required under the terms of 47 C.F.R. Section 73.3555(b) with respect thereto)
to Option Holder, and upon receipt of Option Holder's portions of such
applications, will promptly file such applications with the FCC jointly with
Option Holder. Sellers will diligently take and cooperate in the taking of all
commercially reasonable steps that are necessary, proper or desirable to
expedite the preparation of such applications and their prosecution to a grant.
Sellers will promptly provide Option Holder with a copy of any pleading, order
or other document served on them relating to such applications. Sellers shall
take, and cooperate with Option Holder in taking, all commercially reasonable
steps to oppose any petition for reconsideration, application for review, or
request for judicial review of, or any other protest filed with respect to, the
issuance of the FCC consents contemplated by this Section 5.8(a).
(b) Consents. Sellers will diligently make and cooperate with Option
Holder in making all commercially reasonable efforts (without being required to
make any payment) to obtain or cause to be obtained prior to the Option Closing
Date consents to the assignment to or assumption by Option Holder of all
material licenses, leases and other contracts included in the License Assets
used or held for use by Sellers with respect to such Station that require the
consent of any third party by reason of the transactions provided for in this
Agreement.
(c) Consummation of Agreement. Subject to the terms and conditions of
this Agreement, and without expanding such terms and conditions, Sellers shall
diligently make and cooperate with Option Holder in making all commercially
reasonable efforts to fulfill and perform all conditions and obligations on
their part to be fulfilled and performed under this Agreement and to cause the
transactions contemplated by this Agreement to be fully carried out.
5.9 Hart-Scott-Rodino. To the extent required by law, Sellers, as
promptly as practicable, shall prepare and jointly file with Option Holder 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 Sellers and Option Holder with
respect to the transaction) under the HSR Act shall be borne one-half (1/2) by
Sellers and one-half (1/2) by Option Holder.
5.10 Compliance with TBAs. For so long as the applicable TBA is in
effect with respect to a Station, Sellers shall comply in all material respects
with all terms, provisions, covenants and agreements to be complied with by
Sellers under the TBA with respect to such Station.
5.11 New Mexico Stations. To the extent RCB sells the New Mexico
Stations or the RCB Twin Peaks Equity Interest after the Option Grant Date and
prior to the purchase by Option Holder of the RCB Twin Peaks Equity Interest
hereunder, RCB shall pay to Option Holder the amount paid to RCB in connection
therewith, minus (1) the non-recurring out-of-pocket costs incurred by RCB 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,
(3) the total amount of all federal, state and local income taxes incurred by
Sandia in connection with such sale, and (4) the Option Closing Price for the
RCB Twin Peaks Equity Interest. In connection with any such sale, RCB shall
provide a certificate to Option Holder as to the amount of the adjustment or the
amount to be paid by RCB hereunder together with appropriate documentation
supporting RCB's calculations.
ARTICLE 6
COVENANTS OF OPTION HOLDER PENDING THE CLOSING
Option Holder covenants and agrees that from and after the date hereof through
and including the final Option Closing Date that it will act as follows with
respect to each Station, and in the case of the Columbus Station Assets, that it
will act as set forth in Article 6 of the Asset Purchase Agreement, and to the
extent any conflict exists in the terms of Article 6 hereof and Article 6 of the
Asset Purchase Agreement with respect to the Columbus Station, the terms hereof
shall govern with respect to the License Assets, including the License Assets of
the Columbus Station, and the terms of Article 6 of the Asset Purchase Agreement
shall govern with respect to the Columbus Station and the Columbus Station
Assets:
6.1 Confidential Information. Option Holder 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 Sellers,
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 Sellers or their agents in the course of investigating, negotiating and
performing the transactions contemplated by this Agreement; provided, however,
that the Option Holder may disclose such information to Option Holder'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 Option
Holder of the confidential nature of such information. Nothing shall be deemed
to be confidential information that: (a) is known to Option Holder at the time
of its disclosure to it; (b) becomes publicly known or available other than as a
result of disclosure by or through Option Holder; (c) is rightfully received by
Option Holder from a third party; or (d) is independently developed by Option
Holder. In the event this Agreement is terminated and the purchase and sale
contemplated hereby abandoned, Option Holder will return to the appropriate
Seller all copies of documents, work papers and other written confidential
material obtained by Option Holder in connection with the transactions
contemplated hereby.
6.2 Consummation of Agreement. Subject to the provisions of Section
11.1 of this Agreement, and subject to the express terms and conditions of this
Agreement, and without expanding such terms and conditions, Option Holder shall
diligently make and cooperate with Sellers in making all commercially reasonable
efforts in connection with any steps to be taken as part of their obligations
under this Agreement, and Option Holder shall diligently make and cooperate with
Sellers 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 the transactions contemplated by this Agreement to be
fully carried out. Option Holder agrees to diligently cooperate with Sellers in
connection with obtaining consents to the assignment to, or assumption by,
Option Holder of licenses, leases and other contracts included in the License
Assets, and to execute such assumption instruments as may be required in
connection with obtaining such consents on monetary terms no less favorable to
Option Holder than those Sellers under such licenses, leases and other contracts
on the date of such assumption.
6.3 Notice of Proceedings. Option Holder will promptly notify Sellers
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 Covenants of Option Holder After Option Exercise. Option Holder
covenants and agrees that after Option Holder gives any Exercise Notice for the
exercise of an Option relating to a particular Station, and until either the
Closing occurs or such Exercise Notice is withdrawn or deemed to be withdrawn
pursuant to Section 1.4:
(a) Application For Commission Consent. Within ten (10) days after
delivery to Sellers of such Exercise Notice with respect to a Station, Option
Holder will complete Option Holder's portion of applications to the FCC
requesting its written consent to the assignment of the FCC Authorizations for
such Station (and any extension or renewals thereof and any necessary waiver
required under the terms of 47 C.F.R. Section 73.3555(b) with respect thereto)
to Option Holder, and upon receipt of Sellers' portion of such applications
pursuant to Section 5.8(a), hereof will promptly file such applications with the
FCC jointly with Sellers. Option Holder will diligently take and cooperate in
the taking of all commercially reasonable steps that are necessary, proper or
desirable to expedite the preparation of all such applications and their
prosecution to a grant. Option Holder will promptly provide Sellers with the
copy of any pleading, order or other documents served on Option Holder relating
to such applications. Option Holder shall take, and cooperate with Sellers in
taking, all commercially reasonable steps to oppose any petition for
reconsideration, application for review, or request for judicial review of, or
any other protest filed with respect to, the FCC consents contemplated by this
Section 6.4(a).
(b) Consents for Closing. Option Holder will diligently make and
cooperate in making all reasonable efforts jointly with Sellers to obtain or
cause to be obtained for the Closing prior to the Option Closing Date all
necessary consents relating to the License Assets used or held for use by
Sellers with respect to such Station and to execute such assumption instruments
as may be required in connection with obtaining such consents. Without
limitation of the foregoing, Option Holder covenants and agrees that it shall
provide on request, to any third party from whom such consent is sought, such
financial or other information as such third party may reasonably request in
order for such third party to grant such consent.
6.5 Insurance. On the Option Grant Date and at all times thereafter
until the Option Closing Date with respect to a Station, Option Holder shall
cause all parties currently named as "additional insured" on RCB's and
Licensee's policies (a list of which has been previously provided to Option
Holder) to be named as additional insured parties as their interests may appear,
under all insurance policies carried by Option Holder with respect to the
applicable Station.
6.6 Notice of Material Impact. Option Holder will promptly notify the
Sellers 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 Option Holder.
6.7 Hart-Scott-Rodino. To the extent required by law, Option Holder,
as promptly as practicable, shall prepare and jointly file with Sellers 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.
6.8 Compliance with TBAs. For so long as the applicable TBA is in
effect with respect to a Station, Option Holder shall comply in all material
respects with all terms, provisions, covenants and agreements to be complied
with by Option Holder under the TBA with respect to such Station.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF SELLERS
In the case of a closing of the Columbus Option, all of the conditions set forth
below apply with respect to the Columbus Station; in the case of a closing of a
Group I Option on the Columbus Option Closing Date, all of the conditions set
forth below (other than Sections 7.1(a) and 7.1(c)) apply with respect to the
Group I Stations that are the subject of such Group I Option; and in the case of
a closing of a Group I Option other than on the Columbus Option Closing Date,
all of the conditions set forth below (other than Section 7.1) apply with
respect to all of the Group I Stations that are the subject of such Group I
Option. The obligations of Sellers to consummate the transactions contemplated
by this Agreement with respect to a duly exercised Option from this Option Grant
Date to the Option Closing Date are, at their option, subject to the fulfillment
of the following conditions prior to or at the applicable Option Closing Date:
7.1 Representations, Warranties, Covenants.
(a) The representations and warranties of Option Holder contained in
this Agreement (and in the case of the Columbus Station, as contained in the
Asset Purchase Agreement, with respect to the Columbus Station Assets only)
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 Option
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 (or the Asset Purchase
Agreement, to the extent applicable, in the case of the Columbus Station as set
forth above);
(b) Option Holder shall have performed and complied in all material
respects with the covenants and agreements required by this Agreement (including
those included by reference under Article 6 hereof that are set forth in the
Asset Purchase Agreement) and the TBAs to be performed or complied with by them
prior to or at the Option Closing Date (including the delivery by Option Holder
of the Option Closing Price due with respect to the Option then being closed,
the Option Closing Price of all Unpaid Options, and the Extension Fees
applicable to such Option and such Unpaid Options that have accrued since the
due date of the previous payment of Option Extension Fees for such Options); and
(c) If requested by Sellers in accordance with Section 2.4(b)(ii),
Option Holder shall have delivered to Sellers a certificate of an officer of
Option Holder dated as of the Columbus Option Closing Date certifying to the
fulfillment of the conditions set forth in Section 7.1.
7.2 Proceedings.
(a) As of the Option 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 for the recovery against Sellers of such
material damages; and as of the Option 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
changes 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 Sellers of substantial damages; provided, however, that the
foregoing (a) and (b) shall not be deemed to fall within the provisions hereof,
qualify as a condition hereunder to the extent such action or proceeding is (1)
brought or caused to be brought by (i) any partner, officer, director, agent,
Affiliate or creditor of Sellers, or any other party claiming by, through or
against Sellers that is not related to Option Holder, (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 such affiliation agreement with Sellers, or any Affiliate of Sellers or
in any way relating to any television or radio network affiliation agreement of
any Seller, any Affiliate of any Seller, Option Holder or any Affiliate of
Option Holder; or (2) a Proceeding referred to in Section 2.6 hereof.
7.3 Opinion of Counsel. If requested by Sellers in accordance with
Section 2.4(b)(ii), Sellers shall have received an opinion of Option Holder's
counsel dated as of the Option Closing Date in substantially the form attached
to this Agreement as Exhibit 7.3(i) and an opinion of Option Holder's special
communications counsel, dated as of the Option Closing Date in substantially the
form attached to this Agreement as Exhibit 7.3(ii).
7.4 FCC Authorization. As of the Option Closing Date, all FCC consents
and approvals contemplated by this Agreement with respect to the Station shall
have been granted.
7.5 Hart-Scott-Rodino. To the extent required by law, the waiting
period under the HSR Act shall have expired or be 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 restraining the transactions contemplated hereby.
7.6 Termination of Certain Agreements. The Sellers shall have received
from Option Holder the termination of (i) the Leases and Subleases (as such
terms are defined in the Asset Purchase Agreement) entered into by Option Holder
and RCB with respect to the Station and (ii) the TBA relating to the Station
(together, the "Terminations").
7.7 TBAs. Option Holder or any permitted assignee shall have paid all
outstanding amounts due and owing, and performed in all material respects all
covenants and agreements to be performed by it or any permitted assignee under
the TBAs, on or before the Option Closing Date, including, without limitation,
the amount due in respect of any breach of its, or any permitted assignee's,
economic obligations or liabilities under the TBAs.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF OPTION HOLDER
In the case of a closing of the Columbus Option, all of the conditions set forth
below apply with respect to the Columbus Station and in the case of a closing of
the Group I Option, all of the conditions set forth below apply with respect to
all of the Group I Stations for which such Group I Option was exercised.
Subject to Section 2.6 hereof, the obligations of Option Holder to consummate
the transactions contemplated by this Agreement of a duly exercised Option are,
at its option, subject to the fulfillment of the following conditions prior to
or at the applicable Option Closing Date:
8.1 Representations, Warranties, and Covenants.
(a) The representations and warranties of Sellers contained in this
Agreement (and in the case of the Columbus Station, as contained in the Asset
Purchase Agreement, with respect to the Columbus Station Assets only) shall have
been true and accurate as of the date when made and shall be true and accurate
as of the Option Closing Date (except that such representations and warranties
in the Asset Purchase Agreement with respect to the Columbus Station Assets
shall only be required to be true and accurate as of the Asset Purchase 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 date
or dates except as set forth in (iii) below of this Section 8.1(a); (ii) changes
are permitted as contemplated pursuant to this Agreement (or the Asset Purchase
Agreement, to the extent applicable, in the case of the Columbus Station as set
forth above) and the TBAs, (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 in the financial condition or business of
the Stations taken as a whole, or of the License Assets taken as a whole
(provided that the foregoing shall not include any material adverse change
attributable to (v) factors affecting the television or radio industries
generally, (w) general national, regional or local economic or financial
conditions, (x) governmental or legislative laws, rules or regulations, (y) any
affiliation agreement or the lack thereof or the non-transfer to Option Holder
thereof, or (z) actions taken by Option Holder or any Affiliate of Option
Holder) (a "Material Adverse Change").
(b) Each Seller shall have performed and complied in all respects with
covenants and agreements required by this Agreement (including those included by
reference under Article 5 hereof that are set forth in the Asset Purchase
Agreement) to be performed or complied with by it prior to or at such Option
Closing Date, including the delivery to Option Holder of the instruments
conveying the License Assets that are the subject of such Closing to Option
Holder and the Columbus Station Assets in the case of the Closing with respect
to the Columbus Station, 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) If requested by Option Holder in accordance with Section
2.4(a)(ii), Sellers shall have delivered to Option Holder a certificate of an
officer of the general partner of RCB and of Licensee dated the Option Closing
Date certifying to the fulfillment of the conditions set forth in Sections
8.1(a) and 8.1(b).
8.2 Proceedings.
(a) As of the Option 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 for the recovery against Option Holder of
such material damages; and (b) as of the Option 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 Option Holder of substantial 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
Option Holder or any other party claiming by, through or against Option Holder
that is not related to Sellers, (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 Option Holder or any Affiliate of Option Holder or in
any way relating to any television or radio network affiliation agreement of any
Seller, any Affiliate of any Seller, Option Holder or any Affiliate of Option
Holder; or (2) a Proceeding referred to in Section 2.6 hereof.
8.3 Opinion of Counsel. If requested by Option Holder, in accordance
with Section 2.4(a)(ii), Option Holder shall have received an opinion of
Seller's counsel dated as of the Option Closing Date in substantially the form
attached to this Agreement as Exhibit 8.3(i), and an opinion of Sellers' special
communications counsel dated as of the Option Closing Date in substantially the
form attached to this Agreement as Exhibit 8.3(ii).
8.4 FCC Authorizations. As of the Option Closing Date, all FCC consents
and approvals as contemplated by this Agreement with respect to the Station
shall have been granted.
8.5 Hart-Scott-Rodino. To the extent required by law, 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 restraining the transactions contemplated hereby.
8.6 Termination of Certain Agreements. The Option Holder shall have
received from RCB the Terminations.
8.7 TBAs. Seller shall have performed in all material respects all
economic covenants and agreements to be performed by it under the TBAs, on or
before the Columbus Option Closing Date.
ARTICLE 9
INDEMNIFICATION
9.1 Survival. The representations and warranties of Sellers and Option
Holder contained in this Agreement (including the Schedules hereto) or in any
certificate delivered by it pursuant to Sections 2.4, 7.1 and 8.1 of this
Agreement and the covenants of Sellers and Option Holder under this Agreement to
be performed on or before an Option Closing Date (a) that relate to a Station
shall survive the Option Closing Date with respect to such Station until the
earlier of (i) a period of one (1) year after such Option Closing Date, (ii) the
final Option Closing Date or (iii) the Columbus Option Closing Date, and (b)
that do not relate to the Stations shall survive for one year from the Option
Grant Date. Option Holder's obligation to pay, perform or discharge the Assumed
Liabilities shall survive until such Assumed Liabilities have been paid,
performed or discharged in full. Sellers' obligations with respect to all
obligations and liabilities not assumed by Option Holder 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 Option Closing Date shall survive
until fully performed and discharged in full, including without limitation all
obligations and liabilities with respect to the Assumed Liabilities and the
Retained Liabilities. In the case of the representations and warranties with
respect to the Columbus Station Assets or otherwise made with respect to the
Columbus Station under the Asset Purchase Agreement, such representations and
warranties shall survive only until the first anniversary of the Asset Purchase
Closing Date.
9.2 Indemnification of Option Holder. Sellers agree that, after the
Closing, subject to the limitations in Section 9.4 below, they shall indemnify
and hold Option Holder 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 Option Holder against Sellers) by Option Holder
resulting from (i) any material breach of a representation or warranty made by
Sellers pursuant to this Agreement; (ii) any material failure by Sellers to
perform or fulfill any of their covenants or agreements set forth in this
Agreement; (iii) any failure by Sellers to pay, perform or discharge any
liabilities or obligations not specifically assumed by Option Holder pursuant to
this Agreement; (iv) any litigation, proceeding or claim by any third party
arising from the business or operations of the License Assets by Sellers prior
to the Option Grant Date, except to the extent arising from obligations or
liabilities that have been disclosed to Option Holder in this Agreement or the
Asset Purchase Agreement or the Schedules hereto (other than those set forth on
Schedule 9.2) and except to the extent arising from obligations or liabilities
of or assumed by Option Holder pursuant to this Agreement and from obligations
or liabilities incurred by Option Holder pursuant to the TBAs.
9.3 Indemnification of Sellers. Option Holder agrees that, after the
Closing, it shall indemnify and hold Sellers and their respective 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 any Seller against Option Holder) by any Seller
resulting from (i) any material breach of representation or warranty made by
Option Holder pursuant to this Agreement; (ii) any material failure by Option
Holder to perform or fulfill any of its covenants or agreements set forth in
this Agreement; (iii) any failure by Option Holder to pay, perform or discharge
any Assumed Liabilities or any other obligations or liabilities of or assumed by
Option Holder under this Agreement (including, without limitation, those set
forth in Section 10.1 hereof); or (iv) any litigation, proceeding or claim
arising from the business or operations of any of the Stations on or after the
Option Grant Date.
9.4 Limitation of Liability. (i) Notwithstanding any other provision
of this Agreement, after a Closing, neither Sellers nor Option Holder 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 Option Holder's Loss and
Expense (in the case of Sellers' indemnification of Option Holder) or Sellers'
Loss and Expense (in the case of Option Holder's indemnification of Sellers)
exceeds $500,000, in which event the indemnified party shall be entitled to
recover its aggregate Loss and Expense inclusive of $500,000 threshold; provided
that such limitation shall not apply to any indemnification obligation of Option
Holder pursuant to Section 9.3(ii), (iii) or (iv) hereunder or Sellers pursuant
to Section 9.2(ii), (iii) or (iv) hereof. Notwithstanding any provision
contained herein, in no event shall Sellers be liable for any amount, which,
when combined with any other amount for which Sellers previously have been
liable under Section 9.2 hereof and any amount for which RCB is liable, or
previously has been liable, under Section 9.2 of the Asset Purchase 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 Option Holder by Sellers for such
Loss and Expense as determined in accordance with this Article 9 hereof and
Article 9 of the Asset Purchase Agreement shall be made solely and exclusively
in the form of a deduction from the Columbus Option Closing Price that has not
yet been paid to Sellers hereunder and that once the Columbus Option Closing
Price has been paid in full or portion thereof placed in the Indemnification
Fund to Sellers or if the Columbus Option is terminated hereunder, Option Holder
shall have no further recourse against Sellers, and no other payment by Sellers
shall be required, hereunder, except for any pending claims against the amount
of the Option Closing Price placed in the Indemnification Fund.
(iii) Anything in this Agreement or any applicable law to the contrary
notwithstanding, neither Sellers (except to the extent expressly provided for in
Section 9.4(ii)) nor any partner, director, officer, employee, agent or
Affiliate of any Seller (including any shareholder, director, officer, employee,
agent or Affiliate of the general partners of any Seller) shall have any
personal liability to Option Holder as a result of the breach of any
representation, warranty, covenant or agreement of Sellers contained herein or
otherwise and shall have no personal obligation to indemnify Option Holder for
any of Option Holder's Losses or Expenses.
If Option Holder has any pending claim for indemnification against Sellers with
respect to any Loss or Expense hereunder or under the Asset Purchase Agreement
on the Columbus Option Closing Date, at the closing of the Columbus Option the
difference (if any) between the amount of the Columbus Option Closing Price and
the good faith estimate of the amount of such indemnification claim (such
amount, the "Indemnification Fund Deposit") will be paid to Seller and the
amount of the good faith estimate of such indemnification claim will be
transferred by the Option Holder to Magna Trust Company, St. Louis, Missouri or
such other bank as mutually agreed to by the parties (the "Indemnification
Escrow Agent"), to be held by the Indemnification Escrow Agent, pursuant to the
Indemnification Escrow Agreement substantially in the form of Exhibit 9.4 (with
such changes as the Indemnification Escrow Agent may reasonably request), and
pending final determination of such claim for indemnification pursuant to this
Article 9, as a fund in escrow (the "Indemnification Fund") to provide security
for the payment of such claim. Sellers shall bear the risk of loss of the
Indemnification Fund Deposit to the extent that any institutional failure by
Magna Trust Company results in the loss of the Indemnification Fund Deposit.
If any funds are transferred to the Indemnification Escrow Agent to be held in
the Indemnification Fund, then any amount which becomes payable to Option Holder
or Sellers pursuant to a determination of such claim for indemnification,
together with any interest earned thereon, will be paid to Option Holder or
Sellers from the Indemnification Fund, to the extent of the funds therein. To
the extent any amount is payable to Option Holder from the Indemnification Fund,
Option Holder shall receive such amount plus any interest accrued in such
account allocable to such amount, and the balance of such account, if any, shall
be paid to Sellers. To the extent any amount is payable to Sellers from the
Indemnification Fund, Sellers shall receive such amount plus any interest
accrued in such account allocable to such amount, and Option Holder shall pay to
Sellers the difference, if any, between any such interest accrued in such
account and the interest that would have accrued with respect to the amount
payable to Sellers from the Indemnification Fund, utilizing the Applicable
Interest Rate (as defined below) applicable on the Columbus Option Closing Date
through the date such funds are paid to Sellers, as such may change from time to
time in accordance with the following sentence. For purposes of this Section
9.4, "Applicable Interest Rate" means (i) on or before the first anniversary of
the Option Grant Date, eight percent (8%) per annum, (ii) after the first
anniversary of the Option Grant Date but on or before the second anniversary of
the Option Grant Date, fifteen percent (15%) per annum, and (iii) after the
second anniversary of the Option Grant Date, twenty-five percent (25%) per
annum, which amount shall accrue on the basis of a 365-day year based on the
number of days elapsed in the period during which it accrues.
9.5 Bulk Sales Indemnity. Option Holder hereby waives compliance with
the provisions of any applicable bulk transfer laws. Subject to the limitations
set forth in Section 9.4 above, Sellers further agree to indemnify and hold
Option Holder harmless from and indemnify Option Holder 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 Option Holder as a result of this Agreement and the TBAs
and/or Option Holder's failure to pay the same when due.
9.6 Notice of Claims. If either Option Holder, on the one hand, or
Sellers on the other hand, believes in good faith that it has suffered or
incurred any Loss and Expense, such Seller shall notify the Option Holder in
writing and, in any event, within one year from the Option Closing Date with
respect to the related Station, 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 Option 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 Asset Purchase Agreement (subject to Section 9.4) and the
Registration Rights Agreement, the TBAs, 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 (as such documents are
described in the Asset Purchase Agreement and, 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 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, Sellers, on the one
hand, and Option Holder, 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 10
EMPLOYEE MATTERS
10.1 Employee Matters. The following provisions shall act exclusively
for the benefit of parties to this Agreement and not for the benefit of any
other person or entity:
(a) Effective as of each Option Closing Date, the Option Holder shall
offer employment to each employee of Sellers who is employed at any Station
immediately prior to the Option Closing Date with respect to such Station (the
"Station Employees") on terms and conditions which are substantially similar in
the aggregate to the terms and conditions of employment of the Option Holder's
employees as of the Option Closing Date, including the provision of retirement
and health care benefits, except as any employment agreement between Option
Holder and any Assumed Employee may otherwise require. The Option Holder shall
assume all contracts of employment of the Station 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, Option
Holder shall assume the terms thereof. Each Station Employee shall receive
credit for past service with the Sellers for all purposes under the Option
Holder's benefit plans.
(b) Option Holder 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 the
Sellers or any entity required to be combined with the Sellers (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" arising
with respect to employment at any Station on or prior to the Option Closing Date
with respect to such Station. For purposes of this Section 10.1(b), a
Qualified Beneficiary will be deemed to experience a Qualifying Event or to be
receiving Continuation Coverage "arising with respect to employment" at a
Station if such Qualified Beneficiary is or was an employee of the Station or is
or was the spouse or other covered dependent of such employee. Schedule 10.1
identifies all Qualified Beneficiaries entitled to Continuation Coverage under
any Seller's Group Health Plan on the date of this Agreement, and Sellers shall
deliver at each Option 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) Option Holder shall offer health plan coverage to all Station
Employees under the terms and conditions generally applicable to the Option
Holder's employees as of the Option Closing Date. For purposes of providing
such coverage, the Option Holder shall waive all preexisting condition
limitations for all Station Employees covered by any Seller's group health plan
as of the Option Closing Date and shall provide such health care coverage
effective as of the Option Closing Date without the application of any
eligibility period for coverage. In addition, the Option Holder shall credit
all employee payments toward deductible and co-payment obligations limits under
the Seller's health care plans for the plan year which includes the Option
Closing Date as if such payments had been made for similar purposes under the
Option Holder's health care plans during the plan year which includes the Option
Closing Date, with respect to the Station Employees.
(d) Option Holder shall grant Station 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 Station Employees as of the Closing
Date, and, Option Holder shall grant Station Employees credit for and shall be
responsible for any liabilities with respect to any accrued but unused vacation
for such employees.
(e) Except as otherwise provided in Section 10.1(f), within a
reasonable period of time after each Option Closing Date, RCB shall transfer
from the River City Investment and Retirement Plan ("RCB's 401(k) Plan") to the
Sinclair Broadcast Group, Inc. 401(k) Profit Sharing Plan and Trust ("Option
Holder's 401(k) Plan") an amount, in cash, equal to the aggregate account
balances held in the RCB's 401(k) Plan as of the date of transfer with respect
to all Station Employees. Prior to the date of such transfer, and as
preconditions thereto: (1) the Option Holder shall use commercially reasonable
efforts to deliver to Sellers a copy of the most recently issued Internal
Revenue Service ("IRS") determination letter (or other proof satisfactory to
counsel for the Sellers) that Option Holder's 401(k) Plan is qualified under the
Code, and (2) Sellers shall use commercially reasonable efforts to deliver to
the Option Holder a copy of the most recently issued IRS determination letter
(or other proof satisfactory to counsel for the Option Holder) that RCB's 401(k)
Plan is qualified under the Code. Sellers shall not take any action with
respect to RCB's 401(k) Plan to create a right on behalf of the Station
Employees to distribution of plan assets from RCB's 401(k) Plan prior to such
transfer. Subsequent to the transfer of assets to the Option Holder's 401(k)
Plan, neither the Sellers nor RCB's 401(k) Plan shall retain any liability with
respect to such Station Employees to provide them with benefits in accordance
with the terms of RCB's 401(k) Plan. On or prior to the Option Closing Date,
Sellers shall deliver to Option Holder a list of all Station Employees,
indicating thereon the total amount deferred in pre-tax dollars to RCB's 401(k)
Plan by each of the Station Employees under the terms of Section 402(g) of the
Code with respect to the plan year of RCB's 401(k) Plan in which Closing occurs.
Sellers and the Option Holder 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 10.1.
(f) The Option Holder agrees, effective as of the final Option Closing
Date under this Option Agreement, to fully assume sponsorship of RCB's 401(k)
Plan including all obligations of the sponsor to contribute to and administer
the plan. Sellers and the Option Holder agree to perform all acts necessary or
proper to consummate the assumption of RCB's 401(k) Plan, including but not
limited to the making of all proper filings with the IRS and the Department of
Labor and the receipt of all necessary notices or approvals from governmental
agencies.
(g) The Option Holder agrees that the Sellers may inform its employees
that the Option Holder has agreed that the Station Employees will be offered
employment as provided in this Section 10.1; provided, however, that Option
Holder shall have the right to approve any written statement to be made by
Sellers in connection therewith.
ARTICLE 11
TERMINATION/MISCELLANEOUS
11.1 Termination of Options.
11.1.A Columbus Option. If not exercised on or prior to April 10,
2006, in accordance with the terms and conditions specified herein, the Columbus
Option shall expire and terminate. Subject to Section 11.1.C below, the
Columbus Option may also be terminated at any time on or prior to April 10, 2008
as follows:
(a) By Sellers:
(i) if any of the conditions provided in Article 7 hereof have not been
met by the date scheduled for the Closing of the Columbus Option pursuant to
Section 2.2 and have not been waived, provided that Sellers are not in default
under or breach in any material respect of their representations and warranties,
covenants or agreements under this Agreement and the failure to meet such
conditions is not due to Sellers' breach of the Agreement;
(ii) if Option Holder fails to deliver any payment with respect to the
Group I Options or the Columbus Option as required by Sections 2.1.A or 2.1.B by
or at the time such payment is due thereunder;
(iii) if Option Holder or any permitted assignee has defaulted or
breached in any material respect its representations, warranties, covenants or
agreements under the TBA for the Columbus Station; or
(iv) if the Columbus Option Closing Date has not occurred on or prior
to April 10, 2008.
(b) By Option Holder:
(i) if any of the conditions provided in Article 8 hereof have not been
met by the date scheduled for the Closing of such Option pursuant to Section 2.2
and have not been waived provided that Option Holder is not in default or breach
in any material respect of its representations and warranties, covenants or
agreements under this Agreement, and the failure to meet such conditions is not
due to Option Holder's breach of the Agreement; or
(ii) upon written notice by Option Holder to Sellers.
(c) By Either Option Holder or Sellers as follows: by mutual written
consent of Option Holder and Sellers.
11.1.B Group I Options. If not exercised on or prior to April 10,
2006, in accordance with the terms and conditions specified herein, the
applicable unexercised Group I Option shall expire and terminate. Subject to
Section 11.1.D., a Group I Option may be terminated by Sellers at any time on or
after April 10, 2008 if the Option Closing Date has not occurred on or prior to
April 10, 2008.
11.1.C Notice and Cure. Notwithstanding anything to the contrary in
the foregoing, to the extent that Option Holder has taken, or failed to take,
any of the actions otherwise contemplated under Section 11.1.A(a)(i), (ii) or
(iii) prior to a termination under such provisions by Sellers, Sellers shall
give Option Holder and Option Holder's Lenders under its then existing senior
credit facility (the name and notice information regarding which Option Holder
shall provide to Sellers) notice thereof, and (x) in the case of a breach under
Section 11.1.A(a)(i) or (iii) or Section 11.1.B, Option Holder shall be given
thirty (30) days from the date of receipt of such notice to cure such breach and
the Option Holder's Lenders shall be given ninety (90) days from the date of
receipt of such notice to cure such breach and (y) in the case of a breach under
Section 11.1.A(a)(ii), Option Holder shall be given fifteen (15) days from the
date of receipt of such notice to cure such breach and Option Holder's Lenders
shall be given ninety (90) days from the date of receipt of such notice to cure
such breach. After the applicable cure periods with respect to such breach have
expired without such breach having been cured within such periods, Sellers shall
have the right to terminate hereunder.
11.1.D Certain Remedies. (a) To the extent Sellers (i) terminate the
Columbus Option in accordance with Section 11.1.A(a), and (ii) sell the Columbus
Station, Sellers shall, upon receipt thereof, pay to Option Holder any amount
received as payment for the Columbus Station in excess of the Closing Price of
all Unpaid Options minus (1) any non-recurring reasonable out-of-pocket costs
incurred by Sellers in connection with such sale, other than any sales
commission paid by Sellers in connection therewith, (2) any amounts owed by
Option Holder to Sellers, including, without limitation, in connection with any
economic breach by Option Holder under Section 11.1.A(a) and the Option
Extension Fees that are due but have not been paid through the date of the
closing of such sale and (3) the total amount of all federal, state and local
taxes incurred by Sellers in connection with such sale and (4) the Standard
Formula on the total amount paid for the Columbus Station (the "Columbus Sale
Price"). Sellers agree to act in a commercially reasonable manner in connection
with the sale of the Columbus Station, and Option Holder shall cooperate with
Sellers in connection therewith. The Columbus Option shall terminate upon such
sale. Option Holder's rights hereunder shall be subject to any actions as may
be taken by Sellers pursuant hereto.
TO THE EXTENT SELLERS HAVE ACTED IN A COMMERCIAL REASONABLE MANNER IN CONNECTION
WITH THE SALE OF THE COLUMBUS STATION, NO CLAIM MAY BE MADE BY OPTION HOLDER
AGAINST SELLERS OR ITS PARTNERS, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN
RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED
ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING OUT OF OR
IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED
BY THE FOREGOING PARAGRAPH, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND OPTION HOLDER HEREBY WAIVES, RELEASES AND AGREES NOT
TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
(b) On the date of this Agreement, Sellers shall have received from
Option Holder, an irrevocable standby letter of credit issued by Option Holder's
Lenders for the account of Sellers in the amount of $2,000,000, which shall have
no conditions to drawing other than notice from Sellers that Option Holder or
any permitted assignee under a TBA has defaulted in its obligations under a TBA
relating to a Station, and Sellers shall have the right to draw down all amounts
set forth on Schedule 11.1.D for each Station for which the Option Closing Date
has not yet occurred, and following each draw down by Sellers, Option Holder
shall replenish such letter of credit such that at all times such letter of
credit shall be an amount equal to the aggregate of all amounts set forth on
Schedule 11.1.D for each Station for which an Option has not yet been exercised.
11.2 Effect of Termination and Other Limitations. (a) In the event of
termination, as provided in Section 11.1, the obligations of the parties hereto
shall terminate without any liability or obligation on the part of Sellers or
Option Holder, except that (i) the provisions of Sections 3.4, 4.4, 5.5, 6.1,
11.3, 11.4-11.12, 11.15-11.17 and 11.19 shall survive, and (ii) to the extent
that such termination results from the willful and material breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement, the non-defaulting parties' rights to pursue all legal or
equitable remedies for breach of contract or otherwise, including the right to
specific performance or damages or both, shall survive and the non-prevailing
party in any lawsuit related to any such pursuit shall pay the attorney's fees
of the prevailing party. Without limiting the generality of the foregoing,
neither Option Holder, on the one hand, nor Sellers, on the other hand, may rely
on the failure of any condition precedent set forth in Articles 7 or 8, as
applicable, to be satisfied if such failure was caused by such 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.
(b) Anything in this Agreement or any applicable law to the contrary
notwithstanding, neither any Seller (except to the extent expressly provided for
in Section 11.2(a)) nor any partner, director, officer, employee, agent or
Affiliate of any Seller (including any shareholder, director, officer, employee,
agent or Affiliate of the general partner of the Seller) shall have any personal
liability to Option Holder 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 Option Holder for any of Option Holder's
remedies hereunder.
11.3 Expenses. Subject to the provisions of Sections 3.4 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 Sellers on the one hand, and Option Holder on the other, shall each pay
one-half of any sales or transfer taxes (including any real property transfer
taxes) arising from transfer of the License Assets and the Columbus Station
Assets and any FCC filing fees.
11.4 Assignments. This Agreement shall not be assigned by any party
hereto without the prior written consent of the other parties except as
specified herein, as follows:
(i) Option Holder or any permitted assignee of Option Holder may assign
its rights and interests hereunder with respect to any Option provided that (1)
Option Holder gives Sellers written notice thereof; (2) such assignment shall
not relieve Sinclair Broadcast Group, Inc. or any assignee hereof or of any
other Option Holder of any of its obligations or liabilities hereunder; (3) such
assignment would not violate any applicable laws, rules, regulations or policies
of any applicable governmental authority; and (4) if Option Holder assigns an
Option pursuant to this subsection (i) and if any amounts are paid to Option
Holder in connection therewith, Option Holder shall, on the date any such
payment is received, pay such amount to Sellers, which amount shall be referred
to as the "Option Assignment Price" for such Option.
(ii) To the extent of any such assignment by Option Holder in
accordance with the terms of this Section 11.4, Sellers 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, Sellers' obligations
hereunder with respect to such delivery shall be deemed to have been discharged.
It is understood and agreed that nothing herein shall be deemed to prohibit a
transfer of control of any Seller or Licensee or the assignment of any FCC
Authorizations or any of the other License Assets by Sellers provided that
Sellers agree to amend any filings contemplated under Section 5.8(a) to the
extent necessary in connection therewith. Any attempt to assign this Agreement
without the 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 Option Holder. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
11.5 Further Assurances. Subject to the terms and conditions of this
Agreement, from time to time prior to, at and after the Option Grant 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 either the Option Grant Date or any Option
Closing Date.
11.6 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 any Seller:
River City Broadcasting, L.P.
1215 Cole Street
St. Louis, Missouri 63106-3897
Attn.: Mr. Barry A. 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
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 any Seller may from time to time designate.
(b) If to Option Holder:
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 Option Holder may from time to time designate.
11.7 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.
11.8 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE 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 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 11.6 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.
11.10 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.
11.11 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.
11.12 Entire Agreement/Amendments. This Agreement and the TBAs
(including the Exhibits and Schedules hereto and thereto) and the documents
delivered pursuant to this 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.
11.13 Access to Books and Records. Option Holder shall preserve for at
least three (3) years after the Option Closing Date all books and records
included in the License Assets and the Columbus Station Assets. At the request
of Sellers, Option Holder agrees to give to the officers, partners, employees,
agents, accountants and counsel of Sellers access, upon reasonable prior notice
during normal business hours, to the property, accounts, books, contracts,
records, accounts payable and receivable, records of employees of Sellers and
other information concerning the affairs of any Station, any of the License
Assets or any of the Columbus Station Assets, except as may be prohibited by
law, and to the employees of Option Holder as Sellers may reasonably request.
Sellers shall have no obligation to retain books and records relating to the
License Assets or the Columbus Station Assets, subsequent to the Closing
relating to such License Assets or the Columbus Station Assets, as applicable.
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 Option Holder,
Sellers agree to give the officers, employees, accountants and counsel of Option
Holder access, upon reasonable prior notice during normal business hours, to the
books, records and files retained by Sellers with respect to the business and
operation of any Station by Sellers as Option Holder may reasonably request in
connection with an audit of any Station. Each of Option Holder and Sellers
shall be permitted at their own expense to make extracts from or copies of the
foregoing books, records and files of the other party.
11.14 Waiver of Final Grant by FCC. Option Holder and Sellers agree to
proceed to effect a Closing with respect to a Station as provided in Section
2.2(b) hereof, on Initial Grant, as defined below. "Initial Grant" shall be
defined for the purposes of this Agreement as the date of the publication of the
FCC "Public Notice" announcing the grant of the "Assignment Application(s)" for
the FCC licenses for such Station to be transferred hereunder which contains no
conditions materially adverse to Option Holder. The terms "Public Notice" and
"Assignment Application(s)" have the same meaning herein as are generally given
to such terms under existing FCC rules, regulations and procedures.
11.15 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.
11.16 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.
11.17 Public Announcements and Press Releases. Prior to the final
Option Closing Date, neither Sellers nor Option Holder 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. No press releases or other public announcements
concerning this Agreement or the transactions contemplated hereby shall be made
by any party hereto without the prior written consent of the other parties
unless the first such party is legally compelled to do so.
11.18 Board of Directors and Committees. From and after the Asset
Purchase Agreement Closing Date, Option Holder shall cause (i) each of (1) Barry
Baker ("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 Option Holder 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 Option Holder plans to take actions by written consent
in lieu of a meeting, then Option Holder 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, Option Holder shall cause (i) each of Baker and
the BV Designee to be appointed as members of the Board of Directors of Option
Holder, (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. Option Holder'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 Option Holder 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 Option Holder's
Board of Directors and memberships on such committees pursuant to the terms of
this Agreement. To the extent that the Option Holder 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 Option Holder and a member of the executive committee and, to the
extent established, the finance committee for so long as he remains an employee
of Option Holder, and BV shall be entitled to have the BV Designee be a director
of Option Holder 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 Asset Purchase Agreement Closing Date and (b)
the expiration of the initial five-year term of Barry Baker's Employment
Agreement with Option Holder and (ii) such time, after Option Holder has issued
the Convertible Preferred Stock to RCB 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 RCB, at least 721,115 shares of Option Holder Common Stock,
on an "as converted" basis, as such number may be adjusted pursuant to stock
splits, stock combinations, reclassifications or recapitalizations of Option
Holder occurring after the date hereof.
11.19 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
Adjustment Amount Section 2.5(b)
Adjustment Date Section 2.5(a)
Affiliate Section 3.5
After-Acquired Stations Recitals
Agreement Preamble
Applicable Interest Rate Section 9.4(a)(i)
Asset Purchase Agreement Recitals
Asset Purchase Agreement Closing Date Recitals
Asset Purchase Closing Recitals
Assumed Liabilities Section 1.3
Baker Section 11.18
Boston Ventures Section 11.18
BV Designee Section 11.18
Closing Section 2.2(b)
Columbus Contract Section 1.1.B(c)
Columbus Leasehold Interest Section 1.1.B(b)
Columbus Option Section 1.1
Columbus Option Closing Date Recitals
Columbus Option Closing Price Section 2.1(a)
Columbus Other Contracts Section 1.1.B(c)
Columbus Programming Copyrights Section 1.1.B(e)
Columbus Real Property Section 1.1.B(b)
Columbus Real Property Improvements Section 1.1.B(b)
Columbus Sale Price Section 11.1(c)
Columbus Station Recitals
Columbus Station Assets Section 1.1.B
Columbus Trademarks, Etc. Section 1.1.B(d)
Communications Act Section 3.5
Contract Section 1.1.A(d)
Conveyed Contracts Section 2.6
Disputing Party Section 2.5(b)
Escrow Agent Section 2.5(b)
Estimate Report Section 2.5(b)
Excluded Assets Section 1.2
Excluded Contracts Section 1.2(f)
Exercise Date Section 1.4
Exercise Notice Section 1.4
Exercise Period Section 1.5
FCC Recitals
FCC Authorizations Recitals
Group I Options Section 1.1
Group I Option Closing Price Section 2.1.B(a)
Group I Stations Recitals
Group I TV Stations Recitals
HSR Act Section 5.9
Indemnification Escrow Agent Section 9.4(a)(i)
Indemnification Fund Section 9.4(a)(i)
Indemnification Fund Deposit Section 9.4(a)(i)
Initial Grant Section 11.14
IRS Section 10.1(e)
Laws Section 2.6
Leasehold Interests Section 1.1.A(c)
Leases Section 3.7(a)
Licensee Preamble
License Assets Section 1.1.A
Loss and Expense Section 9.2
Material Adverse Change Section 8.1(a)
New Mexico Stations Recitals
NewVenco Other Assets Section 1.1.B(j)
Option Section 1.1
Option Assignment Price Section 11.4(a)(i)
Option Closing Date Section 2.2(b)
Option Closing Price Section 2.1.B(a)
Option Extension Fees Section 2.1.B(b)
Option Grant Section 2.2(a)
Option Grant Date Preamble
Option Grant Price Section 2.1.A
Option Holder Preamble
Option Holder's 401(k) Plan Section 10.1(e)
Option Holder's Lenders Section 5.1(i)
Other Contracts Section 1.1.A(d)
Permitted Encumbrances Section 1.3
Person Section 3.5
Post-Closing Estimate Fund Section 2.5(b)
Post-Closing Estimate Fund Deposit Section 2.5(b)
Pre-Closing Certificate Section 2.5(b)
Proceedings Section 2.6
Radio Stations Recitals
RCB Preamble
RCB's 401(k) Plan Section 10.1(e)
RCB Twin Peaks Equity Interests Recitals
Real Property Section 1.1.A(c)
Real Property Improvements Section 1.1.A(c)
Retained Liabilities Section 1.3
Sale Price Section 5.1(i)
Sandia Recitals
Sandia Stock Recitals
Sellers Preamble
Standard Formula Section
Station Employees Section 10.1(a)
Station Material Adverse Change Section 3.8
Stations Recitals
TBAs Recitals
Terminations Section 7.6
Transaction Documents Section 9.8
TV Stations Recitals
Twin Peaks Recitals
Twin Peaks License Partnership Interest Recitals
Twin Peaks Partnership Interest Recitals
Twin Peaks Sale Recitals
Unpaid Option Section 2.1.B(a)
11.20 No Third Party Beneficiaries. No person other than Option Holder
or Sellers shall have any right to enforce any provision of this Agreement or
have any "third party beneficiary" rights hereunder, other than Option Holder's
Lenders with respect to Section 11.4 hereof and Boston Ventures and Baker with
respect to Section 11.18 hereof and except as expressly provided in a separate
agreement dated as of the date of the Asset Purchase Agreement among Option
Holder, Sellers and Option Holder's Lenders.
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.
RIVER CITY BROADCASTING, L.P.
By: Better Communications, Inc., its General Partner
By: ________________________(SEAL)
Name:
Title:
RIVER CITY LICENSE PARTNERSHIP
By: River City Broadcasting, L.P.
By: Better Communications, Inc.,
its General Partner
By: ________________________(SEAL)
Name:
Title:
OPTION HOLDER:
SINCLAIR BROADCAST GROUP, INC.
By: __________________________(SEAL)
Name:
Title:
TABLE OF CONTENTS
ARTICLE 1 OPTION TO ACQUIRE LICENSE ASSETS AND COLUMBUS STATION ASSETS
1.1 Options
1.1.A. Option to Acquire License Assets
1.1.B Transfer of Columbus Assets
1.2 Excluded Assets
1.3 Liabilities
1.4 Option Exercise
1.5 Terms of Option
ARTICLE 2 PAYMENTS AND CLOSING
2.1 Grant Price and Option Closing Price
2.1.A Payment for Option Grant
2.1.B Payment Upon Option Closing and Option Extension Fees
2.2 Option Grant and Closing
2.3 Deliveries at Option Grant
2.4 Deliveries at Closing
2.5 Adjustments
2.6 Effect of Certain Laws or Proceedings
2.7 Representations and Warranties of Sellers
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Organization
3.2 Approval/Authority
3.3 No Conflicts
3.4 Brokers
3.5 FCC Authorizations
3.6 Condition of Assets
3.7 Title
3.8 Call Letters, Trademarks, Etc.
3.9 Insurance
3.10 Contracts
3.11 Employees
3.12 Litigation
3.13 Compliance with Laws
3.14 Complete Disclosure
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER
4.1 Incorporation
4.2 Corporate Action
4.3 No Conflicts
4.4 Brokers
4.5 Litigation
ARTICLE 5 COVENANTS OF SELLERS PENDING THE CLOSING
5.1 Maintenance of Business until Closing
5.2 Goodwill/Compliance with Agreements
5.3 Reports; Access to Facilities, Files and Records
5.4 Notice of Proceedings
5.5 Confidential Information
5.6 Consummation of Option Closing
5.7 Notice of Certain Developments
5.8 Covenants of Sellers After Option Exercise
5.9 Hart-Scott-Rodino
5.10 Compliance with TBAs
5.11 New Mexico Stations
ARTICLE 6 COVENANTS OF OPTION HOLDER PENDING THE CLOSING
6.1 Confidential Information
6.2 Consummation of Agreement.
6.3 Notice of Proceedings
6.4 Covenants of Option Holder After Option Exercise
6.5 Insurance
6.6 Notice of Material Impact
6.7 Hart-Scott-Rodino
6.8 Compliance with TBAs
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF SELLERS
7.1 Representations, Warranties, Covenants
7.2 Proceedings
7.3 Opinion of Counsel
7.4 FCC Authorization
7.5 Hart-Scott-Rodino
7.6 Termination of Certain Agreements
7.7 TBAs
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF OPTION HOLDER
8.1 Representations, Warranties, and Covenants
8.2 Proceedings
8.3 Opinion of Counsel
8.4 FCC Authorizations
8.5 Hart-Scott-Rodino
8.6 Termination of Certain Agreements
8.7 TBAs
ARTICLE 9 INDEMNIFICATION
9.1 Survival
9.2 Indemnification of Option Holder
9.3 Indemnification of Sellers
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 EMPLOYEE MATTERS
10.1 Employee Matters
ARTICLE 11 TERMINATION/MISCELLANEOUS
11.1 Termination of Options
11.1.A Columbus Option
11.1.B Group I Options
11.1.C Notice and Cure
11.1.D Certain Remedies
11.2 Effect of Termination and Other Limitations
11.3 Expenses
11.4 Assignments
11.5 Further Assurances
11.6 Notices
11.7 Captions
11.8 Law Governing
11.9 Consent to Jurisdiction, Etc.
11.10 Waiver of Provisions
11.11 Counterparts
11.12 Entire Agreement/Amendments
11.13 Access to Books and Records
11.14 Waiver of Final Grant by FCC
11.15 Headings
11.16 Severability
11.17 Public Announcements and Press Releases
11.18 Board of Directors and Committees
11.19 List of Definitions
11.20 No Third Party Beneficiaries
Exhibits
Exhibit 2.5(b) Post-Closing Escrow Agreement
Exhibit 7.3(i) Opinion of Counsel to Option Holder
Exhibit 7.3(ii) Opinion of Counsel to Option Holder (FCC)
Exhibit 8.3(i) Opinion of Counsel to Sellers
Exhibit 8.3(ii) Opinion of Counsel to Sellers (FCC)
Exhibit 9.4 Indemnification Escrow Agreement
Schedules
Schedule 1.1.A(a) FCC Authorizations
Schedule 1.1.A(b) Tangible Personal Property
Schedule 1.1.A(c) Real Property
Schedule 1.1.A(d) Other Contracts
Schedule 1.1.A(e) Trademarks, Etc.
Schedule 1.1.B(a) Columbus Tangible Personal Property
Schedule 1.1.B(b) Columbus Real Property
Schedule 1.1.B(c) Columbus Other Contracts
Schedule 1.1.B(d) Columbus Trademarks, Etc.
Schedule 1.1.B(e) Columbus Programming Copyrights
Schedule 1.1.B(j) NewVenco Other Assets
Schedule 1.2(f) Excluded Contracts
Schedule 1.2(i) Interests in Certain Subsidiaries
Schedule 1.3 Liabilities
Schedule 2.1.A Allocation of Option Grant Price among Stations
Schedule 2.1.B(a) Allocation of Option Closing Price among Stations
Schedule 3.1 Qualifications
Schedule 3.3 No Conflicts
Schedule 3.5 FCC Authorizations
Schedule 3.11 Certain Employee Matters
Schedule 3.12 Litigation
Schedule 5.1 Maintenance of Business
Schedule 9.2 Indemnification of Option Holder
Schedule 10.1 Employee Matters
Schedule 11.1.D Notice and Cure
EXHIBIT 7.7 TO THE
ASSET PURCHASE AGREEMENT
[THIS AGREEMENT MAY BE MODIFIED BY SELLERS
PRIOR TO EXECUTION IN ACCORDANCE WITH SECTION 7.7 OF
THE ASSET PURCHASE AGREEMENT]
OPTION AGREEMENT
BY AND AMONG
RIVER CITY BROADCASTING, L.P.
AND
RIVER CITY LICENSE PARTNERSHIP,
AS SELLERS,
AND
SINCLAIR BROADCAST GROUP, INC.,
AS OPTION HOLDER
DATED AS OF ______ __, 1996