COLUMBUS
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 May 31, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1
OPTION TO ACQUIRE LICENSE ASSETS AND COLUMBUS STATION ASSETS
1.1 Options..............................................................2
1.1.A. Option to Acquire License Assets.....................................2
1.1.B Transfer of Columbus Assets..........................................4
1.2 Excluded Assets......................................................8
1.3 Liabilities.........................................................10
1.4 Option Exercise.....................................................12
1.5 Terms of Option. ..................................................13
ARTICLE 2
PAYMENTS AND CLOSING
2.1 Grant Price and Option Closing Price................................13
2.1.A Payment for Option Grant............................................13
2.1.B Payment of Columbus Option Closing Price and Option
Extension Fees......................................................14
2.2 Option Grant and Closing............................................17
2.3 Deliveries at Option Grant..........................................18
2.4 Deliveries at Closing...............................................19
2.5 Indemnity Adjustment................................................22
2.6 Effect of Certain Laws or Proceedings...............................22
2.7 Representations and Warranties of, and Operations by,
Sellers.............................................................24
2.8 Effect of RCB Credit Agreement......................................24
- ii -
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Organization........................................................25
3.2 Approval/Authority..................................................25
3.3 No Conflicts........................................................25
3.4 Brokers.............................................................26
3.5 FCC Authorizations..................................................26
3.6 Condition of Assets.................................................27
3.7 Title...............................................................27
3.8 Call Letters, Trademarks, Etc.......................................28
3.9 Insurance...........................................................28
3.10 Contracts...........................................................28
3.11 Employees...........................................................29
3.12 Litigation..........................................................30
3.13 Compliance with Laws................................................30
3.14 Complete Disclosure.................................................31
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OPTION HOLDER
4.1 Incorporation.......................................................31
4.2 Corporate Action....................................................31
4.3 No Conflicts........................................................31
4.4 Brokers.............................................................32
4.5 Litigation..........................................................32
4.6 Capitalization......................................................32
- iii -
ARTICLE 5
COVENANTS OF SELLERS PENDING THE CLOSING
5.1 Maintenance of Business until Closing...............................33
5.2 Goodwill/Compliance with Agreements.................................35
5.3 Reports; Access to Facilities, Files and Records....................35
5.4 Notice of Proceedings...............................................36
5.5 Confidential Information............................................36
5.6 Consummation of Option Closing......................................37
5.7 Notice of Certain Developments......................................37
5.8 Covenants of Sellers After Option Exercise..........................37
5.9 Hart-Scott-Rodino...................................................38
5.10 Use of Excess Cash Flow.............................................38
5.11 New License Subsidiary..............................................39
ARTICLE 6
COVENANTS OF OPTION HOLDER PENDING THE CLOSING
6.1 Confidential Information............................................40
6.2 Consummation of Agreement...........................................40
6.3 Notice of Proceedings...............................................41
6.4 Covenants of Option Holder After Option Exercise....................41
6.5 Notice of Material Impact...........................................42
6.6 Hart-Scott-Rodino...................................................42
6.7 New Employment Agreements...........................................42
- iv -
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF SELLERS
7.1 Representations, Warranties, Covenants..............................43
7.2 Proceedings.........................................................43
7.3 Opinion of Counsel..................................................44
7.4 FCC Authorization...................................................45
7.5 Hart-Scott-Rodino...................................................45
7.6 Termination of Certain Agreements...................................45
7.7 New Employment Agreements...........................................45
7.8 Approval of Stock Options...........................................45
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF OPTION HOLDER
8.1 Representations, Warranties, and Covenants..........................46
8.2 Proceedings.........................................................47
8.3 Opinion of Counsel..................................................47
8.4 FCC Authorizations..................................................48
8.5 Hart-Scott-Rodino...................................................48
8.6 Termination of Certain Agreements...................................48
ARTICLE 9
INDEMNIFICATION
9.1 Survival............................................................48
9.2 Indemnification of Option Holder....................................49
9.3 Indemnification of Sellers..........................................49
9.4 Limitation of Liability.............................................50
- v-
9.5 Bulk Sales Indemnity................................................52
9.6 Notice of Claims....................................................52
9.7 Defense of Third Party Claims.......................................52
9.8 Indemnity as Sole Remedy............................................53
9.9 Arbitration.........................................................53
ARTICLE 10
EMPLOYEE MATTERS
10.1 Employee Matters....................................................55
ARTICLE 11
TERMINATION/MISCELLANEOUS
11.1 Termination of Columbus Option; Notice and Cure; Certain
Remedies............................................................58
11.1.A In General..........................................................58
11.1.B Notice and Cure.....................................................59
11.1.E Certain Remedies of Option Holder...................................64
11.2 Effect of Termination and Other Limitations.........................64
11.3 Expenses............................................................65
11.4 Assignments.........................................................65
11.5 Further Assurances..................................................66
11.6 Notices.............................................................66
11.7 Captions............................................................67
11.8 Law Governing.......................................................67
11.9 Consent to Jurisdiction, Etc........................................68
11.10 Waiver of Provisions................................................68
11.11 Counterparts........................................................68
- vi-
11.12 Entire Agreement/Amendments.........................................68
11.13 Access to Books and Records.........................................69
11.14 Waiver of Final Grant by FCC........................................69
11.15 Recitals, Headings..................................................69
11.16 Severability........................................................70
11.17 Public Announcements and Press Releases.............................70
11.18 Board of Directors and Committees...................................70
11.19 List of Definitions.................................................72
11.20 No Third Party Beneficiaries........................................74
11.21 Columbus Receivables................................................74
Schedules
---------
Schedule 5.1 Maintenance of Business
Schedule 5.10 Excess Cash Flow
COLUMBUS OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is dated as of May 31, 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 Television Station WSYX(TV),
Columbus, Ohio pursuant to certain authorizations (the "FCC Authorizations")
issued by the Federal Communications Commission (the "FCC") (the "Columbus
Station" or the "Station"); and
WHEREAS, RCB owns certain Other Assets (as defined herein);
and
WHEREAS, RCB has entered with Option Holder into an Amended and
Restated Asset Purchase Agreement, dated as of April 10, 1996, as amended and
restated as of May ___, 1996 (as amended, 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 the
"Group I TBA" (which term when used herein shall have the meaning assigned to
such term in the Group I Option Agreement, as defined below) pursuant to which
Option Holder will provide certain television and radio programming to Sellers
for the Group I Stations, all on the terms and conditions contained in the Group
I TBA; 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
- 2 -
WHEREAS, on the Columbus Option Closing Date (as defined in Section
2.2(b) herein), Sellers will transfer and assign to Option Holder all of the
License Assets and the Columbus Station Assets;
WHEREAS, on the Asset Purchase Agreement Closing Date in connection
with the Asset Purchase Closing, Sellers and Option Holder are entering into a
Group I Option Agreement (the "Group I Option Agreement") pursuant to which
Option Holder will acquire an option to acquire the License Assets (as defined
in the Group I Option Agreement);
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
------------------------------------------------------------
1.1 Options. Upon and subject to the terms and conditions stated
in this Agreement, Sellers hereby as of the date hereof grant to Option Holder
an option to acquire 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" or the
"Option").
1.1.A. Option to Acquire License Assets. Subject to the terms and
conditions stated in this Agreement, on the Columbus 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 the Columbus Station. As used in this Agreement, "License Assets" used or
held for use with respect to the Station means all of Sellers' rights in, to and
under the following, on the Columbus Option Closing Date:
(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 the Group I Option Agreement, and all applications
therefor, together with any renewals, extensions or modifications thereof and
additions thereto.
- 3 -
(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 the Group I 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 Sellers in the
ordinary course of their business between the date of this Agreement and the
Columbus Option Closing Date or as otherwise permitted by this Agreement.
(c) Real Property. (i) All real property owned by Sellers relating
to the Columbus Station listed on Schedule 1.1.A(c) to the Group I Option
Agreement (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 relating to the Columbus Station (the "Leasehold Interests") listed and
so designated on Schedule 1.1.A(c) to the Group I Option Agreement; 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
Columbus Option Closing Date for the Station.
(d) Other Contracts. All contracts relating to the Station 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, and contemplated under, Section 1.3(c) of the Asset Purchase
Agreement (collectively, "Other Contracts"), including all agreements, equipment
leases and other leases relating to the Columbus Station 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 the Group I Option 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 Columbus Option Closing
Date and all other such Contracts that will have been entered into between the
date of this Agreement and the Columbus Option Closing Date the making of which
by Sellers is permitted by this Agreement, to the extent existing as of the
Columbus Option Closing Date. As used in this Agreement, "Contract" means, with
respect to the Columbus Station, any agreement, lease, arrangement, commitment
or
- 4 -
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 the Group I Option Agreement and those acquired between the date hereof and
the Columbus 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) Goodwill. All of Sellers' goodwill in and going concern value
associated with the Station.
(i) 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
- 5 -
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 the Group I Option 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 relating to
the Station listed on Schedule 1.1.B(b) to the Group I Option 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 relating to the Columbus Station (the "Columbus Leasehold Interests")
listed and so designated on Schedule 1.1.B(b) to the Group I Option 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, including trade or
barter arrangements (in addition to and not included in those set forth in
Sections 1.1.B(b) and 1.1.B(k) hereof) (collectively, "Columbus Other
Contracts"), including all agreements, equipment leases and other leases
relating to the Station listed on Schedule 1.1.B(c) to the Group I Option
Agreement and Schedules 1.1(e) and 3.10 to the Asset Purchase Agreement (and on
the list of employment agreements delivered to Option Holder pursuant to Section
3.10 of the Asset Purchase Agreement) (as may be entered into, amended, renewed
or extended pursuant to Section 5.1 hereof and Section 5.1 of the Asset Purchase
Agreement), 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
- 6 -
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 the Group I Option 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 relating to the Station, including,
without limitation, those set forth on Schedule 1.1.B(e) to the Group I Option
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 with respect
to items that are prorated in Section 2.2 of the Asset Purchase Agreement.
(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,
- 7 -
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) Television Affiliation Agreements and NewVenco Other Assets.
All television network affiliation agreements relating to the Columbus Station
(the "Affiliation Agreements"), as listed on Schedule 1.1(m) to the Asset
Purchase Agreement, if any, together with all television Affiliation Agreements
that will have been entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date, and any RCB's interest set forth
in Schedule 1.1.B(j) to the Group I Option Agreement in NewVenco, Inc. relating
to the Columbus Station, if any (the "NewVenco Other Assets").
(k) Program Contracts. All program licenses and contracts listed
on Schedule 1.1(d) to the Asset Purchase Agreement relating to the Columbus
Station, together with any usage reports, under which either Seller is
authorized to broadcast film or radio product or programs on the Columbus
Station, other than the Excluded Contracts (as defined in Section 1.2(f),
together with all program licenses and contracts that will have been entered
into by either Seller in the ordinary course of business, between the date of
this Agreement and the Columbus Option Closing Date, and all other program
licenses and contracts entered into between the date of this Agreement and the
Columbus Option Closing Date the making of which by Sellers is permitted by this
Agreement, to the extent existing as of the Columbus Option Closing Date
(collectively, the "Program Contracts").
(l) Agreements for Sale of Time. All orders and agreements now
existing or entered into by the Columbus Station or by Seller relating to the
Columbus Station, in the ordinary course of business between the date hereof and
the Columbus Option Closing Date for the sale of advertising time on the
Columbus Station, to the extent unperformed as of the Columbus Option Closing
Date.
- 8 -
(m) Certain Receivables. All notes and accounts receivable and
other receivables of Seller that arise out of and relate to the operation of the
Columbus Station after the Option Grant Date, including, without limitation,
under network affiliation agreements, if any, and only to the extent such items
accrue on and after the Option Grant Date and have not been collected by and
expended by Sellers in connection with the operations of the Station.
(n) 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, that arise out of and relate to the
operations of the Columbus Station after the Option Grant Date and only to the
extent such items accrue on and after the Option Grant Date and have not been
expended by Sellers in connection with the operations of the Station or used by
Sellers to make interest or other payments under the RCB Credit Agreement (as
hereinafter defined) or in accordance with Section 5.10.
1.2 Excluded Assets. There shall be excluded from the License
Assets relating to the Columbus Station and from the Columbus Station Assets and
retained by Sellers, to the extent in existence on the Columbus Option Closing
Date, 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, except as provided in Section 1.1.B(n) above.
(b) Personal Property Disposed Of. All tangible personal property
disposed of or consumed in the ordinary course of the business of the Columbus
Station between the date of this Agreement and the Closing relating to the
Columbus 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 Columbus Option Closing
Date, 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
- 9 -
claims of Sellers under contracts and with respect to other transactions with
respect to events occurring prior to the Columbus 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 Columbus Option
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) of
the Group I Option Agreement (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 the 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 the Columbus Station prior to the Closing relating to the Columbus
Station, with the proviso that Option Holder shall be allowed to maintain copies
of all such records relating to the Columbus Station, 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 Columbus 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 2.2 of the
Asset Purchase Agreement.
(i) Interests in Certain Subsidiaries. All of Sellers' interests
in the subsidiaries described in Schedule 1.2(i) to the Group I Option
Agreement.
(j) River City Name. All rights to and goodwill in the name "River
City Broadcasting" and any logo, variation or derivation thereof.
- 10 -
(k) Columbus Receivables. All notes and accounts receivable and
other receivables of Seller that arise out of and relate to the operation of the
Columbus Station prior to the Option Grant Date, including, without limitation,
under network affiliation agreements, if any (collectively, the "Columbus
Receivables").
1.3 Liabilities. (a) Liens. For the Columbus Station, the License
Assets used or held for use by Sellers with respect to the Columbus Station, and
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
Columbus Option Closing Date, 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 of the Group I Option Agreement 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 Columbus Station;
(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 Columbus Option Closing Date, Option Holder shall assume, undertake and
agree to pay, satisfy, perform, discharge and be liable for, with respect to the
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 Grant Date that arise on or
- 11 -
after the Option Grant Date, including all such liabilities and obligations
arising out of and related to the ownership and operation of the 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), 1.1.B(c), 1.1.B(j) and 1.1.B(k),
including the collective bargaining agreement referenced on Schedule 3.10 of the
Asset Purchase Agreement with respect to the Station and any contracts that are
entered into after the date hereof with respect to the 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 the Station
or any of the License Assets, arising on or after the Option Grant Date; (3) any
Assumed Liabilities, including under any contracts assumed by Option Holder
hereunder, with respect to the Columbus Station Assets; (4) any other
liabilities or obligations incurred or assumed by Option Holder with respect to
any of the License Assets; (5) any liability or obligation to any Station
Employee for the Columbus Station relating to the period on and after the Option
Grant Date; 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 the Columbus Station.
(ii) Additionally, but without relieving Sellers of their
obligations under Section 5.10, 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 Option Grant 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, for real estate or payroll taxes
attributable to any period of time on or after the Option Grant Date and any
liability or obligation for real estate and 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 Option Grant 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,
- 12 -
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
Option Grant 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
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 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 out 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 2.2 of the Asset Purchase
Agreement, Option Holder shall on the Option Closing Date assume and be
obligated to pay such obligations and liabilities for which such adjustment was
made pursuant to Section 2.2 of the Asset Purchase Agreement.
(c) Consents to Contracts. Option Holder agrees that 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 (together with any Consent Contracts, as defined in and pursuant to
Section 1.3 of the Asset Purchase Agreement), 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 the Option, Option
Holder must deliver to Sellers written notice (an "Exercise Notice") of Option
Holder's intention to so exercise the Option and designating that the Columbus
Option is being exercised. The date upon which any Exercise Notice is given with
respect to the Option shall be referred to as the "Exercise Date" for the
Option. Option Holder may withdraw any Exercise Notice at any time prior to the
Columbus Option Closing Date by written notice to that effect to Sellers. Upon
withdrawal of any Exercise Notice, Option Holder shall reimburse Sellers for all
- 13 -
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 the 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.
1.5 Terms of Option. Option Holder shall have the right to
exercise the Columbus Option from the date hereof to and including June 30,
1999, (the "Exercise Period"). Upon the failure of Option Holder either to
deliver the Exercise Notice for the Columbus Option during the Exercise Period
as provided herein, to pay any Option Extension Fee with respect to any Group I
Unpaid Option (as provided in Section 2.1.B of the Group I Option Agreement) or
to pay the Option Extension Fees on the Columbus Option as provided in Section
2.1.B of this Agreement, subject to the notice and cure periods set forth in
Section 11.1.B, the Columbus Option shall expire. Notwithstanding anything to
the contrary herein, the Closing on the Columbus Option may take place after the
expiration of the Exercise Period so long as Option Holder has (i) delivered the
Exercise Notice for the Columbus Option to Sellers in accordance with Section
1.4 prior to the expiration of the then current Exercise Period, (ii) paid all
Option Extension Fees with respect to all Group I Unpaid Options, and (iii) paid
all Option Extension Fees on the Columbus Option, but in no event shall the
Closing of the Columbus Option take place later than June 30, 1999.
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 Option, Option Holder shall pay to Sellers Seventy Thousand Dollars
($70,000) (the "Option Grant Price"). 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.
- 14 -
2.1.B Payment of Columbus Option Closing Price and
Option Extension Fees.
(a) In consideration of Sellers' performance of this Agreement and
the transfer, assignment and delivery of the Columbus Station Assets and the
License Assets relating to the Columbus Station, Option Holder will pay to
Sellers (as set forth in the next paragraph) the "Columbus Option Closing
Price," which shall be an amount equal to One Hundred Thirty Million Dollars
($130,000,000), (x) increased by (i) the Unpaid Amount (as defined below), and
(ii) any payments to the Lender pursuant to Section 2.1.B(a) of the Group I
Option Agreement and (y) reduced by payments made by Option Holder under Section
11.1.E(a), and as adjusted pursuant to Section 2.5 below. Option Holder shall
pay (or be deemed to have paid as specified below) the Columbus Option Closing
Price as follows:
(i) if the Columbus Option is exercised and the Closing of the
Columbus Option occurs as provided herein, Option Holder shall pay the Columbus
Option Closing Price on the Columbus Option Closing Date, or
(ii) if the Columbus Option is terminated and the Columbus Station
is disposed of in a disposition resulting in a Deficiency Amount pursuant to
Section 11.1.C(b), Option Holder shall be deemed to have paid the Columbus
Option Closing Price on the date the Option Holder pays the Deficiency Amount;
or
(iii) if the Columbus Option is terminated and the Columbus
Station is disposed of other than in a disposition resulting in a Deficiency
Amount pursuant to Section 11.1.C(b), Option Holder shall be deemed to have paid
the Columbus Option Closing Price on the date of such disposition.
The "Columbus Option Payment Date" means the date on which the Option Holder
pays, or is deemed to have paid, in full the Columbus Option Closing Price.
The Columbus Option Closing Price shall be paid for the benefit of
Sellers hereunder to the lenders (the "Lenders") under that certain Credit
Agreement dated as of May 31, 1996 by and among the Sellers, The Chase Manhattan
Bank, N.A., as agent and other lenders thereunder (as the same may be amended,
modified or supplemented and including any successor credit agreement or
refinancing or refunding of obligations under such credit agreement,
collectively, the "RCB Credit Agreement") to the extent, but only to the extent,
of the remaining unpaid amount of the principal, accrued and unpaid interest and
any other obligation due thereunder and under documents related thereto,
- 15 -
including any security documents (the "Unpaid Amount" or "Unpaid Amounts")as of
the date of payment of the Columbus Option Closing Price. At least one (1)
business day prior to Closing, Sellers will provide to Option Holder a
certificate setting forth whether there are any Unpaid Amounts, and, if so,
Sellers' calculation of the amount of the Columbus Option Closing Price (which
shall be made in good faith and shall be conclusive absent manifest error) that
should be paid to Lender in connection therewith. Any amount in excess of the
Unpaid Amounts shall be paid directly to Sellers.
(b) As used herein, at any time, for the purposes of calculating
the Option Extension Fees at such time, the "Columbus Unpaid Closing Price"
shall mean (x) One Hundred Thirty Million Dollars ($130,000,000), (y) plus any
payments to the Lender pursuant to Section 2.1.B(a) of the Group I Option
Agreement; provided, however, that if the Columbus Option is terminated and (z)
minus payments made by Option Holder under Section 11.1.E(a), "Columbus Unpaid
Closing Price" shall mean the amount of the Columbus Unpaid Closing Price
immediately prior to such termination, plus on each March 31, June 30, September
30 and December 31 on which Option Holder fails to pay any Option Extension Fee
with respect to any Group I Unpaid Option or the Option Extension Fee on the
Columbus Option as provided below, the amount of any such unpaid Option
Extension Fees; and provided further that if the Columbus Station is disposed of
in a disposition resulting in a Deficiency Amount pursuant to Section 11.1.C(b),
"Columbus Unpaid Closing Price" shall thereafter mean such Deficiency Amount,
minus the Closing Price for all Group I Unpaid Options, and plus, on each March
31, June 30, September 30 and December 31 on which Option Holder fails to pay
any Option Extension Fee with respect to any Group I Unpaid Option or the Option
Extension Fee on the Columbus Option as provided below, the amount of any such
unpaid Option Extension Fees.
Until the Columbus Option Payment Date, 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 Payment Date,
an extension fee with respect to the Columbus Option (each, an "Option Extension
Fee" and collectively, the "Option Extension Fees"). The Option Extension Fees
shall accrue on the Columbus Unpaid Closing Price 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) December 31, 1996 (or the Columbus Option Payment
Date, if earlier), Option Holder shall pay to Sellers an
- 16 -
Option Extension Fee in an amount equal to (A) the product of (Y) eight percent
(8%) and (Z) the Columbus Unpaid Closing Price from time to time minus, in the
case that the Columbus Option has been assigned pursuant to Section 11.4 hereof,
the Option Assignment Price for the Columbus 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 Payment 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 Payment Date, Option Holder shall
pay to Sellers an Option Extension Fee calculated as follows:
(A) 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 Columbus Unpaid
Closing Price from time to time during such period minus, in the case that the
Columbus Option has been assigned pursuant to Section 11.4 hereof, the Option
Assignment Price for the Columbus 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) 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 Columbus Unpaid Closing Price from time
to time during such period minus, in the case that the Columbus Option has been
assigned pursuant to Section 11.4 hereof, the Option Assignment Price for the
Columbus 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) for the period beginning on the first
day after the second anniversary of the Option Grant Date and ending on the
Columbus Option Payment Date, an amount equal to (A) the product of (Y)
twenty-five percent (25%) and (Z) the Columbus Unpaid Closing Price from time to
time during such period minus, in the case that the Columbus Option has been
assigned pursuant to Section 11.4 hereof, the Option Assignment Price for the
Columbus 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
- 17 -
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 the Columbus Station on the Columbus Option Closing Date.
(d) Notwithstanding any other provision contained herein, except
and subject to Section 11.1.B, (i) the Columbus Option shall expire on the first
to occur of (a) June 30, 1999 and (b) whether or not the Columbus Option has
been exercised, the date on which an Option Extension Fee for any Group I Unpaid
Option or the Columbus Option is due if Option Holder shall not have paid such
Option Extension Fee by such date; (ii) it is understood and agreed by Option
Holder that in no event shall any Option Extension Fee be refundable to Option
Holder hereunder; and (iii) if the Columbus Option is terminated, Option Holder
shall continue to pay the Option Extension Fees required by Section 2.1.B until
Option Holder pays, or is deemed to have paid, the Columbus Option Closing Price
on the Columbus Option Payment Date.
(e) The Columbus Option Closing Price and Extension Fees
attributable to the Columbus Option 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 Columbus Option (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
the Station upon the exercise of the Columbus Option (the "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,
- 18 -
provided that in no event shall the Closing take place after June 30, 1999
(hereinafter referred to with respect to such Option as the "Columbus 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 Ohio, 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;
and
(v) 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
- 19 -
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 Ohio from the Secretary of State or analogous entity of
Ohio, 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, and an opinion confirming the representations set
forth in Section 4.3 each dated as of this Option Grant Date; and
(iv) 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 the 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 Columbus Station and (ii) the Columbus Station
Assets;
(b) one or more assignments conveying the FCC
Authorizations included in the License Assets for the Columbus Station;
(c) any mortgage discharges or releases of liens that are
necessary in order to transfer (i) the License Assets for the Columbus Station
as contemplated by Section 1.3 and (ii) the Columbus Station Assets;
(d) a receipt for (i) the Columbus Option Closing Price,
(ii) the Option Closing Price (as defined in the Group I Option Agreement) of
all Unpaid Options, and (iii) the Extension Fees applicable to the Columbus
Option and such Unpaid Options
- 20 -
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 Columbus
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
Columbus Station and (ii) 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 Columbus Station that is
the subject of the Closing, and (ii) the Columbus Real Property;
(h) 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) the list of Qualified Beneficiaries entitled to
Continuation Coverage as of the Closing Date, as contemplated under Section
10.1(b).
(ii) At the Closing, and upon the written request of Option
Holder at least ten (10) business days prior to the 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 the 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 Columbus
- 21 -
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 Ohio to the
extent RCB then transacts business in Ohio and to the extent such certificates
are available, dated not more than ten (10) days before the Columbus Option
Closing Date;
(e) such other documents as Option Holder shall
reasonably request.
(b) Deliveries by Option Holder.
(i) At the Closing, Option Holder shall deliver to Sellers and
to Lender to the extent set forth in Section 2.1.B(a) above, the Columbus Option
Closing Price and to Sellers 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) (i) the Columbus Option Closing Price, (ii)
the Group I Option Closing Price (as defined in the Group I Option Agreement) of
all Group I Unpaid Options, and (iii) the Extension Fees applicable to the
Columbus Option and such Group I Unpaid Options that have accrued since the due
date of the previous payment of Option Extension Fees for such Options; provided
that 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 Columbus
Station;
(c) the Terminations as required by Section 7.6; and
(d) the New Employment Agreements contemplated by
Section 7.7.
(ii) At the Closing, and upon the written request of Sellers
at least ten (10) business days prior to the 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;
- 22 -
(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 Columbus 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 Ohio to the extent RCB then
transacts business in Ohio and to the extent such certificates are available
from the Secretary of State or analogous entity of Ohio dated not more than 10
days before the Columbus 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 Indemnity Adjustment. 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 Columbus Option Closing Price 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.
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
- 23 -
Agreement, to Option Holder and the transfer by Sellers of the License Assets
and the Columbus Station Assets hereunder and the License Assets (as defined in
the Group I Option Agreement); (2) the grant by Sellers of the Columbus Option
and the Options (as defined in the Group I Option Agreement); (3) the execution,
delivery and performance of any of the Transaction Documents; or (4) the
consummation of the other transactions contemplated hereby, by the Group I
Option Agreement 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, by the Group I Option Agreement 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, by the Group I
Option Agreement or by the Asset Purchase Agreement (including, without
limitation, the Transaction Documents), shall not:
(i) cause or constitute, directly or indirectly, a breach by
either 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
- 24 -
(v) give rise to any claim for indemnification or other
compensation by Option Holder or any adjustment of the Columbus 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, and Operations by, 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) (i)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 or (ii) in connection with the
operations of the Station after the Option Grant Date unless Sellers' conduct
was grossly negligent or intentionally wrongful actions were taken by Sellers in
connection therewith.
2.8 Effect of RCB Credit Agreement. Notwithstanding anything to
the contrary in this Agreement, including, without limitation, Article 5 hereof,
to the extent that (i) Sellers take any action that Sellers are required to take
or that Sellers deem necessary to take, or fail to take any action that Sellers
are prohibited from taking, under the terms of the RCB Credit Agreement or any
document related thereto (including the security documents related thereto) but
which in any event would cause Sellers to be in breach of, or in default under,
this Agreement or (ii) Lender takes any action under that RCB Credit Agreement
or any document related thereto (including the security documents related
thereto), the result of which would cause Sellers to be in breach of, or in
default under, this Agreement, such action or inaction shall be deemed to be
permitted hereunder; Sellers and Lender shall be permitted to take such action
or Sellers shall be permitted to not take such action, and Sellers shall have no
liability whatsoever to Option Holder in connection therewith.
Option Holder and RCB agree that notwithstanding anything to the
contrary in the Cure Rights Agreement dated as of May 31, 1996 by and among
Option Holder, certain subsidiaries of Option
- 25 -
Holder, The Chase Manhattan Bank, N.A. and Sellers or in the RCB Credit
Agreement (and documents related thereto), none of the rights and obligations of
Option Holder hereunder shall be affected thereby.
Notwithstanding anything to the contrary in this Agreement, to the
extent that there is a disposition of any of the partnership interests in
Licensee in connection with any exercise by Lender of its remedies under the RCB
Credit Agreement, all rights of Licensee under this Agreement shall be deemed to
be rights of RCB hereunder.
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 Columbus Station 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 Columbus Station now
being conducted by it in Ohio.
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 to the Group
I Option Agreement, on this Option Grant Date (after giving effect to all
approvals and consents which have been
- 26 -
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
to the Group I Option Agreement 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 relating to the Columbus Station listed in Schedule 1.1.A(a) to
the Group I Option 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 Columbus
Station 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) to the Group I Option Agreement. Except as
set forth on Schedule 3.5 to the Group I Option Agreement, 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 to the
Group I Option Agreement, 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
the Columbus Station, 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
- 27 -
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, the Columbus 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' Columbus Station general manager and the officers of the
general partner of Sellers after reasonable inquiry by the Columbus 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 Columbus Station
(in the manner in which the Columbus Station is 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) to the Group I Option Agreement
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 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 to the Group I Option Agreement 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
- 28 -
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
Columbus Option Closing Date.
3.8 Call Letters, Trademarks, Etc. Except as set forth on Schedule
1.1.A(e) to the Group I Option Agreement, Sellers possess, and on the Columbus
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 Columbus Station 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 the Station, (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 Station. Sellers
represent and warrant that, except as set forth on Schedule 1.1.A(e) to the
Group I Option Agreement, none of the trademarks listed thereon have been
registered.
3.9 Insurance. The Station 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 the Group
I Option Agreement contain a list of the following contracts as to which the
Station or either Seller with respect to the Station is a party, and which have
been excluded from
- 29 -
transfer under, or excluded from the representations and warranties set forth
in, 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 the 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 the 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 the 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 Sellers are not required to list contracts entered
into in the ordinary course of business for the sale or sponsorship of
advertising time on the Station for cash at the 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 to the Group I Option Agreement or on Schedule 3.10 to the Asset
Purchase Agreement, 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
- 30 -
3.11 to the Group I Option Agreement or on Schedule 3.10 to the Asset Purchase
Agreement 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 the Station nor, except as described in
Schedule 3.11 to the Group I Option Agreement or Schedule 3.10 to the Asset
Purchase Agreement 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 the Station. Except as
described on Schedule 3.11 to the Group I Option Agreement or Schedule 3.10 to
the Asset Purchase Agreement 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 the Station that
would cause a Station Material Adverse Change.
3.12 Litigation. Except as set forth on Schedule 3.12 to the Group
I Option Agreement hereto: (i) Sellers, with respect to the Station, 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 the 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 to
the Group I Option Agreement, Sellers, with respect to the Station, 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
- 31 -
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, when
combined with the representations and warranties made under the Asset Purchase
Agreement, do not 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 State of Ohio and any other state
in which the Station is doing business as of the Columbus 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 (including, without limitation, the performance
of the obligations under Section 11.1.C(b)(iv), 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
- 32 -
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 (including, without limitation, Option Holder's Debt Documents) 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.
4.6 Capitalization. As of May 22, 1996, Option Holder contributed
all of the capital stock of each subsidiary of Option Holder that carries on any
business related to the broadcast industry (collectively, the "Broadcasting
Subsidiaries"), to SCI (as defined below).
ARTICLE 5
COVENANTS OF SELLERS PENDING THE CLOSING
Sellers covenant and agree, from the date hereof to and including the
Columbus Option Closing Date (or the earlier termination of the Columbus
Option), (i) that they will act as follows with respect to the Station, and (ii)
that they will act
- 33 -
as set forth in Article 5 of the Asset Purchase Agreement (including, without
limitation, Section 5.9), 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, 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. Sellers shall operate
the Station 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 Columbus
Option Closing Date property damage, liability and other insurance with respect
to the License Assets used or held for use by Sellers with respect to the
Station consistent with Sellers' present practices as set forth in Section 3.9.
Nothing contained in this Agreement shall give Option Holder any right
to control the programming, operations or any other matter relating to the
Station prior to the Columbus Option Closing Date, and Sellers shall have
complete control of the programming, operations and all other matters relating
to the Station up to the Columbus Option Closing Date.
Prior to the Columbus Option Closing Date, except as set forth on
Schedule 5.1 to this Agreement and 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) take any of the following actions relating to the Station:
(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) 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 Columbus
Option Closing Date;
- 34 -
(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 the Station outside the
ordinary course of business; 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 the Station, other
than as a result of this Agreement, the Option Agreement, 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 the Station, other than (i) in the ordinary course of
business consistent with past practice, (ii) as contemplated pursuant to this
Agreement, (iii) the pay-off of any debt of Seller on or prior to the Closing or
(iv) in an aggregate amount (when combined with amounts under Section 5.1(e)(iv)
of the Group I Option Agreement) not to exceed $1,000,000; provided, however,
that notwithstanding the foregoing, except as otherwise contemplated under the
last paragraph of this Section 5.1, Sellers will not incur or suffer to exist
any additional indebtedness (whether in connection with the 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 the Station with
any officer, director, or Affiliate of Sellers (or any Affiliate thereof),
either outside the ordinary course of
- 35 -
business consistent with past practice or ther 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 the 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 renew or extend the term of any contract relating to the
Station listed on Schedules 1.1.A(c), 1.1.A(d), 1.1.A(i)(1) or 3.11 to the Group
I Option Agreement which, by its terms, expires or will expire prior to June 30,
1999 and, in connection therewith, agree not to increase the amounts payable
thereunder during any such renewal term except in accordance with the Station's
usual practices.
Notwithstanding anything in this Agreement to the contrary, if Option
Holder has defaulted or breached in any material respect its economic
obligations or liabilities hereunder, during the applicable cure period under
Section 11.1.B, Sellers shall be permitted to borrow an aggregate amount, when
combined with amounts borrowed under the third from the last paragraph of
Section 5.1 of the Group I Option Agreement, does not exceed Three Million
Dollars ($3,000,000) the proceeds of which shall be used to continue to operate
the Station.
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 Station and preserve the goodwill of the Station's
suppliers, customers and others having business relations with the Station.
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
- 36 -
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
Station 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 Station.
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.
- 37 -
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 Columbus 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 the Station
in any material respect for more than twenty-four (24) consecutive hours, or (b)
the regular broadcast transmission of the 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
the Option, until either the Closing 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,
Sellers will complete Sellers' portion of applications to the FCC requesting its
written consent to the assignment of the FCC Authorizations for the Station (and
any extension or renewals thereof and any necessary waiver required under the
terms of 47 C.F.R. ss. 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
- 38 -
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
Columbus 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 the 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, including the transfer of the License Assets and the
Columbus Station Assets under the HSR Act shall be borne one-half (1/2) by
Sellers and one-half (1/2) by Option Holder.
5.10 Use of Excess Cash Flow. With respect to each fiscal year of
Sellers, Sellers shall use the Excess Cash Flow (as defined in Schedule 5.10)
for such fiscal year as follows:
(a) Sellers shall have the right to distribute to its partners
an amount equal to the product of (i) the Tax Percentage (as herein defined),
and (ii) such Excess Cash Flow; and
- 39 -
(b) Thereafter, Sellers shall use the Excess Cash Flow
remaining after Section 5.10(a) as follows:
(i) Sellers shall retain 10% of such remaining Excess
Cash Flow for use in the operation of the Columbus Station; and
(ii) Sellers shall use the Excess Cash Flow remaining
after Sections 5.10(a) and 5.10(b)(i) to prepay principal under the RCB Credit
Agreement at the times specified under the RCB Credit Agreement.
As used herein, "Tax Percentage" means a fraction, expressed as a percentage,
the numerator of which is the Grossed-Up Rate Differential (as defined herein)
and the denominator of which is one (1) plus the Grossed-Up Rate Differential.
The "Grossed-Up Rate Differential" means (i) the excess of (A) the Highest
Ordinary Tax Rate, over (B) .40, divided by (ii) one (1) minus (B) the Highest
Ordinary Tax Rate. The "Highest Ordinary Tax Rate" means the greater of (a) the
combined marginal federal, state, and local income tax rate applicable to the
ordinary income of an individual residing in New York City as of the end of the
fiscal year to which a distribution pursuant to Section 5.10 relates, or (b) the
combined marginal federal, state, and local income tax rate applicable to the
ordinary income of a corporation located in New York City as of the end of the
fiscal year to which a distribution pursuant to Section 5.10 relates.
5.11 New License Subsidiary. As soon as practicable after the date
hereof, Sellers will use commercially reasonable efforts to form a license
partnership subsidiary similar to Licensee ("Licensee II") and to file
appropriate applications with the FCC to cause the transfer of the FCC
Authorizations held by Licensee to Licensee II. Upon completion of the transfer
of the FCC Authorizations, Licensee II will become a party to this Agreement and
replace Licensee hereunder.
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 Columbus Option Closing Date that it will act as
follows with respect to the Station, and that it will act as set forth in
Article 6 of the Asset Purchase Agreement (including, without limitation,
Section 6.4), 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
- 40 -
Columbus Station, the terms hereof shall govern with respect to the License
Assets 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 will not take any actions
in contravention of this
- 41 -
Agreement, including, without limitation, Buyer will not enter into any
agreement, or take any action, that would prohibit or restrict Option Holder's
performance of the obligations under Section 11.1.C(b)(iv). 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 the Option, 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, the 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 the Station (and
any extension or renewals thereof and any necessary waiver required under the
terms of 47 C.F.R. ss. 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
- 42 -
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 Columbus Option
Closing Date all necessary consents relating to the License Assets used or held
for use by Sellers with respect to the 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 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.
6.6 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.
6.7 New Employment Agreements. On or prior to the Columbus Option
Closing Date, Option Holder shall have caused Sinclair Communications, Inc.
("SCI"), or the SBG Entity, as defined in, and specified under, the Amended
Employee Letter Agreement (which term when used herein shall have the meaning
assigned to such term in the Asset Purchase Agreement), as the case may be, to
have executed and delivered to Sellers the New Employment Agreements relating to
Station Employees (as defined in Section 7.7).
- 43 -
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. The obligations of
Sellers to consummate the transactions contemplated by this Agreement with
respect to the duly exercised Option from this Option Grant Date to the Columbus
Option Closing Date are, at their option, subject to the fulfillment of the
following conditions prior to or at the Columbus Option Closing Date:
7.1 Representations, Warranties, Covenants.
(a) The representations and warranties of Option
Holder contained in this Agreement (and 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 Columbus 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) to be performed or complied with by
them prior to or at the Columbus Option Closing Date (including the delivery by
Option Holder of the Option Closing Price due, the Option Closing Price (as
defined in the Group I Option Agreement) 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.
- 44 -
(a) As of the Columbus 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 Columbus 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 Columbus Option Closing Date in substantially the form
attached to the Group I Option Agreement as Exhibit 7.3(i) (with such changes as
may be necessary to reference this Agreement, rather than the Group I Option
Agreement) and an opinion confirming the representation set forth in Section 4.3
and an opinion of Option Holder's special communications counsel, dated as of
the Columbus Option Closing Date in substantially the form attached to the Group
I Option Agreement as Exhibit 7.3(ii) (with such changes as may be necessary to
reference this Agreement, rather than the Group I Option Agreement).
- 45 -
7.4 FCC Authorization. As of the Columbus 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 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 (the "Terminations").
7.7 New Employment Agreements. Option Holder shall have caused
SCI, or the SBG Entity, as defined in, and specified under, the Amended Employee
Letter Agreement, as the case may be, to have executed and delivered employment
agreements with the persons listed under the Columbus Station on Schedule 7.8 to
the Asset Purchase Agreement (or any replacement person designated by Seller,
including any person designated to fill a "TBD" position, to fill such position)
substantially in the form of Exhibit 7.8 to the Asset Purchase Agreement and
subject to the limitations set forth in the Amended Employee Letter Agreement
(the "New Employment Agreements").
7.8 Approval of Stock Options. All necessary consents of the
directors (including any committees thereof) of Option Holder to approve all of
the stock options relating to the Station Employees contemplated by the Amended
Employee Letter Agreement and the Station Employee Stock Option Agreement (as
such terms are defined in the Asset Purchase Agreement) shall not have been
rescinded or revoked and shall be in full force and effect.
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. Subject to Section
2.6 hereof, the obligations of Option Holder to consummate the transactions
contemplated by this Agreement of the duly exercised Option are, at its option,
subject to the fulfillment of the following conditions prior to or at the
Columbus Option Closing Date:
- 46 -
8.1 Representations, Warranties, and Covenants.
(a) The representations and warranties of Sellers contained
in this Agreement (and 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 Columbus
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 Group I TBA, (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 Columbus Option Closing Date or on such earlier specified date
would not result in a material adverse change in the financial condition or
business of the Group I Stations and the Columbus Station 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
the Columbus Option Closing Date, including the delivery to Option Holder of the
instruments conveying the License Assets to Option Holder and the Columbus
Station Assets, 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
- 47 -
Licensee dated the Columbus 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 Columbus 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 Columbus
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 Columbus Option Closing Date in
substantially the form attached to the Group I Option Agreement as Exhibit
8.3(i) (with such changes as may be necessary to reference this Agreement,
rather than the Group I Option Agreement), and an opinion of Sellers' special
- 48 -
communications counsel dated as of the Columbus Option Closing Date in
substantially the form attached to the Group I Option Agreement as Exhibit
8.3(ii) (with such changes as may be necessary to reference this Agreement,
rather than the Group I Option Agreement.
8.4 FCC Authorizations. As of the Columbus 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.
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 the Columbus Option Closing Date (a) that relate to
the Station shall survive until the Columbus Option Closing Date, and (b) that
do not relate to the Station 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 Columbus 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
- 49 -
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 to the Group I Option Agreement (other
than those set forth on Schedule 9.2 to the Group I Option Agreement relating to
the Station) and except to the extent arising from obligations or liabilities of
or assumed by Option Holder pursuant to this Agreement.
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 the Station on or after the Option
Grant Date.
- 50 -
9.4 Limitation of Liability. (i) Notwithstanding any other
provision of this Agreement, after the 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 hereunder when combined with any Loss and Expense under the
Group I Option Agreement (in the case of Sellers' indemnification of Option
Holder) or Sellers' Loss and Expense hereunder when combined with any Loss and
Expense under the Group I Option Agreement (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 under the Group I Option Agreement or Sellers pursuant to
Section 9.2(ii), (iii) or (iv) hereunder or under the Group I Option Agreement.
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 and any amount for which Sellers are liable, or
previously have been liable under Section 9.2 of the Group I Option Agreement,
is in excess of $50,000,000.
(ii) Notwithstanding anything in this Agreement to the
contrary, it is understood and agreed that any amounts owed to Option Holder by
Sellers for such Loss and Expense as determined in accordance with this Article
9 hereof, Article 9 of the Group I Option Agreement 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 Columbus
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,
- 51 -
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, under the Group I Option
Agreement 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 to the Group I Option Agreement (with
such changes as may be necessary to refer to this Agreement, rather than the
Group I Option Agreement, and 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
- 52 -
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, the Group I
Option Agreement and the Group I TBA 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 within the applicable periods specified in Section 9.1 above, 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
- 53 -
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 Columbus 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), the
Group I Option Agreement (subject to Section 9.4 thereof), the Registration
Rights Agreement, the Group I TBA, the Employment Agreement, the Consulting
Agreement, the Baker Stock Option Agreement, the Corporate Employee Stock Option
Agreement, the Station Employee Stock Option Agreement, the Amended 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. ss.ss. 1-16. The decision of the arbitrators
shall be final and binding provided that, where a remedy for breach is
prescribed hereunder or
- 54 -
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
- 55 -
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 the Columbus Option Closing Date, the
Option Holder shall offer employment to each employee of Sellers who is employed
at the Station immediately prior to the Columbus Option Closing Date (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
- 56 -
employees as of the Columbus Option Closing Date, including the provision of
retirement and health care benefits, except as otherwise provided in this
Section 10.1 or any employment agreement between Option Holder and any Station
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 the Station on or prior to the Columbus Option
Closing Date. 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 the 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 10.3 to the Asset Purchase
Agreement 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 on the Columbus 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 Columbus 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 Columbus Option Closing Date and shall provide such health
care coverage effective as of the Columbus 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-
- 57 -
payment obligations limits under the Seller's health care plans for the plan
year which includes the Columbus 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 Columbus 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, subject to the proration provided for in Section 2.2(a) of
the Asset Purchase Agreement 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 as of the Columbus Option Closing Date.
(e) Except as otherwise provided in Section 10.1(f), within a
reasonable period of time after the Columbus 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 Columbus 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
- 58 -
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 later of
the Columbus Option Closing Date, the termination of this Agreement and the
final Option Closing Date under the Group I 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 Columbus Option; Notice and Cure;
Certain Remedies.
11.1.A In General. The Columbus Option shall expire and terminate if
RCB is in default under the RCB Credit Agreement and Lender has begun to
exercise its remedies under the security documents relating to the RCB Credit
Agreement, subject to the terms of the Cure Rights Agreement dated as of May 31,
1996, among Sellers, Buyer and The Chase Manhattan Bank, N.A. Subject to Section
11.1.B below, the Columbus Option may also be terminated at any time on or prior
to June 30, 1999 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;
- 59 -
(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 hereof or under any applicable provision of the Group I Option
Agreement by or at the time such payment is due thereunder;
(iii) if the Columbus Option Closing Date has not occurred on
or prior to June 30, 1999.
(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 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) or (ii)
prior to a termination under such provisions by Sellers, 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 thereof, and (x) in the
case of a breach under Section 11.1.A(a)(i), 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.
- 60 -
11.1.C Certain Remedies. (a)(i) The "Columbus Sale Price" means the
excess, if any, of (A) any amount received as payment for the Columbus Station
(including amounts received that are used to discharge the Unpaid Amount), over
(B) the sum of (i) any non-recurring reasonable out-of-pocket costs incurred by
Sellers in connection with such disposition, other than any sales commissions
paid by Sellers in connection therewith, (ii) the total amount of all federal,
state and local taxes incurred by Sellers in connection with such sale, (iii)
the Standard Formula (as defined below) on the amount received by Sellers on
such disposition, (iv) the Columbus Option Closing Price and the Closing Price
for all Group I Unpaid Options, (v) all Option Extension Fees with respect to
the Columbus Option and all Group I Unpaid Options that are due but have not
been paid through the date of such disposition, and (vi) any other 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).
(ii) The "Deficiency Amount" means the excess, if
any, of (A) the sum of (i) any non-recurring reasonable out-of-pocket costs
incurred by Sellers in connection with such disposition, other than any sales
commissions paid by Sellers in connection therewith, (ii) the total amount of
all federal, state and local taxes incurred by Sellers in connection with such
sale, (iii) the Standard Formula (as defined below) on the amount received by
Sellers on such disposition, (iv) the Columbus Option Closing Price and the
Closing Price for all Group I Unpaid Options, (v) all Option Extension Fees with
respect to the Columbus Option and all Group I Unpaid Options that are due but
have not been paid through the date of such disposition, and (vi) any other
amounts owned by Option Holder to Sellers, including, without limitation, in
connection with any economic breach by Option Holder under Section 11.1.A(a),
over (B) the amount received by Sellers on such disposition (including amounts
received that are used to discharge the Unpaid Amount).
(b) (i) To the extent Sellers (A) terminate the Columbus
Option in accordance with Section 11.1.A(a), and (B) sell the Columbus Station,
Sellers shall, upon receipt thereof, pay to Option Holder the Columbus Sale
Price.
(ii) If (x) at any time, including, without
limitation, upon or after expiration or termination of the Columbus Option, the
Columbus Station (or the assets thereof) is sold or otherwise disposed of by
Sellers or through foreclosure or otherwise under the RCB Credit Agreement (or
documents related thereto, including any security documents), whether pursuant
to this Section 11.1 or otherwise, and whether directly or indirectly, through a
sale of assets or partnership interests in
- 61 -
RCB and/or Licensee, or any combination thereof, and (y) such disposition
results in a Deficiency Amount, Option Holder (notwithstanding any assignment by
Option Holder of any of its rights hereunder pursuant to Section 11.4) shall pay
such Deficiency Amount in immediately available funds to Sellers on the date of
such disposition of the Columbus Station.
(iii) Notwithstanding anything in the foregoing
to the contrary, other than as provided in subsection (iv) of this Section
11.1.C(b), Option Holder shall not be obligated to pay the Deficiency Amount to
the extent that making such payment would cause a default, or otherwise be
prohibited, under the credit agreement relating to Option Holder's then existing
senior credit facility or under the Indenture relating to Option Holder's 10%
Senior Subordinated Notes due 2003 or under the Indenture relating to Option
Holder's 10% Senior Subordinated Notes due 2005 (such credit agreement and
indentures collectively referred to herein as "Option Holder's Debt Documents").
To the extent that making a payment in an amount less than the total amount of
the Deficiency Amount would not cause such a default or otherwise be so
prohibited, Option Holder shall pay the maximum amount of the Deficiency Amount
without causing such default or violating such prohibition. Without limiting the
rights of Sellers as specified in subsection (iv) of this Section 11.1.C(b) and
to the extent not otherwise satisfied under such subsection (iv), Option Holder
shall pay the Deficiency Amount, plus all Option Extension Fees with respect to
the Columbus Option and all Group I Unpaid Options that have accrued after the
date of such disposition and through the payment of the Deficiency Amount, to
the extent not already paid to Sellers on the first business day when such
payment would not cause such default or violate such prohibition, and Option
Holder shall use commercially reasonable efforts to make such payments as soon
as possible.
(iv)(1) If any such default or prohibition would occur
as a result of the payment of the Deficiency Amount (in whole or in part),
Option Holder shall, within ninety (90) days after the date the Deficiency
Amount was otherwise due, if the Deficiency Amount (and any accrued Extension
Fees) have not otherwise been satisfied in full, issue to Sellers registered
(with the SEC and any applicable state agencies), publicly tradeable, common
equity securities of Option Holder in an amount set forth in clause (2) below.
Such securities shall be duly and validly issued, fully paid and nonassessable
and shall be free of preemptive rights. Such securities shall be allocated among
Sellers as Sellers shall determine and shall notify Option Holder in writing
prior to the date of issuance. Such securities shall be listed on any national
securities exchange on which Option Holder's other equity securities are listed
(or, if Option Holder's other securities are not listed at such time, the
- 62 -
securities shall be listed on NASDAQ or the New York Stock Exchange) and such
securities shall be able to immediately be sold by Sellers or the Distributees
(as defined below) in a public or private offering and shall not be subject to
any restrictions under applicable securities laws on disposition by Sellers or
their Distributees (as defined below). If requested by Sellers, such securities
will be issued directly to the partners of RCB and to the shareholders of the
general partner of RCB (collectively, the "Distributees"), and RCB shall have
the right to distribute any securities received by it to its Distributees, and
in the event of such direct issuance or distribution, such securities in the
hands of the Distributees shall have the same characteristics as if held by the
Sellers as provided in the preceding sentences hereof.
(2) The securities to be issued pursuant to clause (1) above,
shall have a fair market value on the date of issuance equal to the Deficiency
Amount not yet paid, plus all Option Extension Fees with respect to the Columbus
Option and all Group I unpaid options that have accrued after the date of
disposition of the Columbus Station and through the date of issuance of the
securities that have not been paid.
(3) To the extent Sellers (or the Distributees through the
general partner of RCB) elect to sell all or any portion of such securities to
be issued pursuant to clause (1) above on the date of issuance in an
underwritten secondary offering to be consummated on the date of issuance,
Sellers (or the Distributees) shall give Option Holder notice of such election a
reasonable amount of time in advance of the projected date of issuance. If
Sellers (or Distributees) make such election, consummation of such offering and
the receipt by Sellers (or Distributees) of net proceeds therefrom equal to not
less than the Deficiency Amount shall be a condition to the issuance of such
securities by Option Holder. Sellers (or Distributees) shall have the right to
select a managing underwriter for such offering who, after consultation with
Option Holder, shall have the right to determine the sale price for such
securities and the number of shares to be issued. Option Holder will cooperate
with the managing underwriter and Sellers (and Distributees) in connection with
such sale, and will take such actions and execute such documents as the managing
underwriter and Sellers (or Distributees) may reasonably request, including,
without limitation, filing all necessary registration statements and related
documents and prosecuting such filings diligently, executing an underwriting
agreement in customary form, entering into a contribution and indemnification
agreement with Sellers and Distributees in customary form and making senior
officers available for "road show" presentations.
- 63 -
If Sellers or Distributees elect to sell all or any portion of the
securities to be issued pursuant to clause (1) above after the date of issuance
in an underwritten secondary offering, the provisions of the preceding paragraph
shall apply and Option Holder shall take all actions reasonably necessary to
enable Sellers or Distributees to effect a public offering of the securities
after receipt of such securities by Sellers or Distributees.
(4) Option Holder shall promptly pay after request by Sellers
(or Distributees) all expenses incurred by Sellers (or Distributees) in
connection with any offering and sale of the securities to be issued pursuant to
clause (1) above, including without limitation, commissions payable in
connection with such sale, underwriters discounts and reasonable attorneys fees.
(c) For purposes of this Agreement, "Standard Formula" means
(a) five percent (5%) on the first one million dollars ($1,000,000.00) of the
total amount paid for the Columbus Station; (b) four percent (4%) on the next
one million dollars ($1,000,000.00) of the total amount paid for the Columbus
Station; (c) three percent (3%) on the next one million dollars ($1,000,000.00)
of the total amount paid for the Columbus Station; (d) two percent (2%) on the
next one million dollars ($1,000,000.00) of the total amount paid for the
Columbus Station; and (e) one percent (1%) on any excess over four million
dollars ($4,000,000.00) of the total amount paid for the Columbus Station. For
purposes of this Section 11.1.C(c), the total amount paid for the Columbus
Station shall include amounts received that were used to discharge the Unpaid
Amount.
(d) 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 the Columbus Option Payment Date. Option Holder's rights
hereunder shall be subject to any actions as may be taken by Sellers pursuant
hereto.
(e) TO THE EXTENT SELLERS HAVE ACTED IN A COMMERCIALLY
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
- 64 -
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.
11.1.E Certain Remedies of Option Holder. (a) To the extent that
Sellers have made distributions to their partners in violation of Section 5.10
and Sellers do not have funds to pay amounts due and owing under the RCB Credit
Agreement, Sellers will use commercially reasonable efforts to provide notice to
Option Holder that such payment will not be made by Sellers. Option Holder shall
have the right to make any payments due and owing under the RCB Credit Agreement
for a period of sixty (60) days following such notice. Any amounts so paid by
Option Holder shall be subtracted from the One Hundred Thirty Million Dollars
($130,000,000) due under the Columbus Option Closing Price.
(b) To the extent Sellers have not made distributions to their
partners in violation of Section 5.10 but Sellers do not have the funds to pay
amounts due and owing under the RCB Credit Agreement, Sellers will use
commercially reasonable efforts to provide notice to Option Holder that such
payment will not be made. Option Holder shall have the right to make any
payments due and owing under the RCB Credit Agreement for a period of sixty (60)
days following such notice.
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 2.1.B, 3.4,
4.4, 5.5, 6.1, 11.1-11.12, and 11.15-11.19 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
- 65 -
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 the 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 the 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.
Notwithstanding the foregoing, it is understood and agreed that Option Holder
shall not assign its obligations to pay any Deficiency Amount or to perform the
obligations set forth in Section 11.1.C(b)(iv).
(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
- 66 -
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 the
Columbus 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:
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
- 67 -
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.
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
- 68 -
LAWS, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE UNITED STATES GOVERNS THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.9 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 (including the
Exhibits and Schedules to the Group I Option Agreement and the Asset Purchase
Agreement relating to the Station) and to the extent applicable, the
Modification Agreement dated May 10, 1996 between RCB and Option Holder and the
letter dated May 10, 1996 from the parties' counsel to the Department of Justice
in connection therewith, 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
- 69 -
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 Columbus 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 (as Sellers may have been reorganized) and other information concerning
the affairs of the 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 Columbus Option Closing Date. 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 the Station by Sellers as Option Holder may reasonably request in connection
with an audit of the 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 the 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 the 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 Recitals, Headings. The Recitals contained in this Agreement
shall be deemed to be a binding part of this Agreement. The Article and Section
headings contained in this
- 70 -
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 Columbus
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
- 71 -
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.
- 72 -
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
Affiliate Section 3.5
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
Broadcasting Subsidiaries Section 4.5
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 Section 2.2(b)
Columbus Option Closing Price Section 2.1.B(a)
Columbus Other Contracts Section 1.1.B(c)
Columbus Option Payment Date Section 2.1.B(a)
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 Receivables Section 1.2(k)
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)
Columbus Unpaid Closing Price Section 2.1.B(b)
Columbus Unpaid Option Section 2.1.B(a)
Communications Act Section 3.5
Contract Section 1.1.A(d)
Conveyed Contracts Section 2.6
Deficiency Amount Section 11.1.C(ii)
Excess Amount Section 11.1.C(i)
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
Grossed-Up Rate Differential Section 5.10
Group I Option Agreement Recitals
Group I Stations Recitals
- 73 -
Group I TBA Recitals
Group I Unpaid Options Section 2.1.B(a)
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)
Lender Section 2.1.B(a)
Licensee Preamble
License Assets Section 1.1.A
Licensee II Section 5.11
Loss and Expense Section 9.2
Material Adverse Change Section 8.1(a)
New Employment Agreements Section 7.7
NewVenco Other Assets Section 1.1.B(j)
Option Section 1.1
Option Assignment Price Section 11.4(a)(i)
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 Debt Documents Section 11.1.C(b)(iii)
Option Holder's 401(k) Plan Section 10.1(e)
Option Holder's Lenders Section 11.1(c)
Other Contracts Section 1.1.A(d)
Permitted Encumbrances Section 1.3
Person Section 3.5
Proceedings Section 2.6
Program Contracts Section 1.1.B(k)
RCB Preamble
RCB Credit Agreement Section 2.1.B(a)
RCB's 401(k) Plan Section 10.1(e)
Real Property Section 1.1.A(c)
Real Property Improvements Section 1.1.A(c)
Retained Liabilities Section 1.3
SCI Section 6.7
Sellers Preamble
Standard Formula Section 11.1.C(c)
Station Employees Section 10.1(a)
Station Material Adverse Change Section 3.8
Station Recitals
Tax Percentage Section 5.10
Terminations Section 7.6
Transaction Documents Section 9.8
Unpaid Amounts Section 2.1.B(a)
- 74 -
Unpaid Options 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.
11.21 Columbus Receivables. To the extent that after the Columbus
Option Closing Date, Option Holder receives amounts in respect of the Columbus
Receivables, Option Holder shall promptly pay to Sellers all amounts collected
by Option Holder in connection with the Columbus Receivables.
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: /s/ Larry D. Marcus
-----------------------------------
Name: Larry D. Marcus
Title: Vice President
RIVER CITY LICENSE PARTNERSHIP
By: River City Broadcasting, L.P.
By: Better Communications, Inc.,
its General Partner
By: /s/ Larry D. Marcus
-----------------------------------
Name: Larry D. Marcus
Title: Vice President
OPTION HOLDER:
SINCLAIR BROADCAST GROUP, INC.
By: /s/ David B. Amy
----------------------------------
Name: David B. Amy
Title: Chief Financial Officer