Exhibit 10.9
OPTION AGREEMENT
BETWEEN
KANSAS CITY TV 62 LIMITED PARTNERSHIP,
as Seller
and
THE INDIVIDUALS NAMED HEREIN,
ON BEHALF OF AN ENTITY TO BE FORMED,
as Buyer
DATED AS OF
MAY 24, 1994
TABLE OF CONTENTS
Page No
-------
ARTICLE I
GRANT OF OPTION; GENERAL TERMS OF SALE............................................................................2
1.1 Option Grant; Assets Covered....................................................................2
(a) FCC Authorizations.....................................................................3
(b) Tangible Personal Property.............................................................3
(c) Real Property..........................................................................3
(d) Agreements for Sale of Time............................................................3
(e) Program Contracts......................................................................3
(f) Other Contracts........................................................................3
(g) Trade-marks, etc.......................................................................3
(h) Programming Copyrights.................................................................3
(i) FCC Records............................................................................4
(j) Files and Records......................................................................4
(k) Goodwill...............................................................................4
(l) Prepaid items..........................................................................4
(m) Cash...................................................................................4
(n) Receivables and Other Claims...........................................................4
1.2 Excluded Assets.................................................................................4
(a) Excluded Personal Property.............................................................4
(b) Insurance..............................................................................4
(c) Name...................................................................................5
(d) Certain Contracts......................................................................5
(e) Corporate Books and Records............................................................5
(f) Other Books and Records................................................................5
(g) Transaction Documents..................................................................5
(h) Pension Assets, Etc....................................................................5
1.3 Option Exercise.................................................................................5
1.4 Liabilities.....................................................................................5
(a) Release of Certain Liens...............................................................6
(b) Assumption of Liabilities Generally....................................................6
(c) Certain Advances.......................................................................6
ARTICLE II
CLOSING..........................................................................................................7
2.1 Exercise Price..................................................................................7
(a) Payment................................................................................7
(b) Allocation of Cash Purchase Price......................................................7
2.2 The Closing.....................................................................................7
i
2.3 Deliveries at Closing...........................................................................7
(a) Deliveries by Sellers..................................................................8
(b) Deliveries by Buyer....................................................................8
ARTICLE III
[RESERVED]........................................................................................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER...........................................................................9
4.1 Incorporation...................................................................................9
4.2 Corporate Action................................................................................9
4.3 No Defaults.....................................................................................9
4.4 Brokers........................................................................................10
ARTICLE V
COVENANTS OF SELLER..............................................................................................10
5.1 Covenants of Seller Generally..................................................................10
(a) Operation in Ordinary Course..........................................................10
(b) Restrictions..........................................................................10
(c) Organization/Goodwill.................................................................11
(d) Access to Facilities, Files, and Records. Buyers' Access Generally...................11
(e) Notice of Proceedings.................................................................11
(f) Notice of Certain Developments........................................................11
(g) No Premature Assumption of Control....................................................12
5.2 Covenants of Seller during Exercise Period.....................................................12
(a) Application for Commission Consent....................................................12
(b) Consents..............................................................................12
(c) Consummation of Sale..................................................................12
(d) Hart-Scott-Rodino.....................................................................13
ARTICLE VI
COVENANTS OF BUYER...............................................................................................13
6.1 Covenants of Buyer Generally...................................................................13
6.2 Covenants of Buyer during Exercise Period......................................................13
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS ON THE CLOSING DATE...........................................................13
7.1 Representations, Warranties, Covenants.........................................................14
7.2 Proceedings....................................................................................14
7.3 FCC Authorization..............................................................................14
ii
7.4 Hart-Scott-Rodino..............................................................................14
7.5 Other Instruments..............................................................................14
7.6 Existing Station Indebtedness..................................................................15
ARTICLE VIII
REMEDIES.........................................................................................................15
8.1 Bulk Sales Indemnity...........................................................................15
8.2 Limitation of Recourse.........................................................................15
8.3 Acknowledgment by Buyer........................................................................15
ARTICLE IX
POST-CLOSING MATTERS.............................................................................................16
9.1 Corporate Name.................................................................................16
9.2 Post-Sale Employee Matters.....................................................................16
(a) Post-Closing Employment Generally.....................................................16
(b) Notice to Continuing Employees........................................................16
(c) Responsibility for Termination Costs..................................................16
ARTICLE X
TERMINATION/MISCELLANEOUS........................................................................................16
10.1 Termination of Agreement Prior to the Closing Date.............................................16
(a) By Seller.............................................................................17
(b) By Buyer..............................................................................17
10.2 Liabilities Upon Termination...................................................................17
10.3 Expenses.......................................................................................17
10.4 Assignments....................................................................................17
10.5 Further Assurances.............................................................................18
10.6 Notices........................................................................................18
10.7 Captions.......................................................................................19
10.8 Law Governing..................................................................................19
10.9 Consent to Jurisdiction, Etc...................................................................19
10.10 Waiver of Provisions...........................................................................20
10.11 Counterparts...................................................................................20
10.12 Entire Agreement/Amendments....................................................................20
10.13 Access to Books and Record.....................................................................20
10.14 Public Announcements...........................................................................21
10.15 [RESERVED].....................................................................................21
10.16 Definitional Provisions........................................................................21
(a) Terms Defined in Appendix.............................................................21
(b) Gender and Number.....................................................................21
iii
10.17 Arbitration....................................................................................21
(a) Generally.............................................................................21
(b) Notice of Arbitration.................................................................22
(c) Selection of Arbitrator...............................................................22
(d) Conduct of Arbitration................................................................22
(e) Enforcement...........................................................................22
(f) Expenses..............................................................................22
10.18 Confidential Information: Seller...............................................................23
10.19 Confidential Information: Buyer................................................................23
10.20 Commencement of Certain Pre-Closing Activities.................................................24
iv
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT is dated as of May 24, 1994, and is
entered into between Kansas City TV 62 Limited Partnership, a Delaware limited
partnership ("Seller"), and David D. Smith, J. Duncan Smith, Frederick G. Smith
and Robert E. Smith, each, on behalf of an entity to be formed by them
("Buyer"). Other capitalized terms are defined in the Appendix to this
AGREEMENT.
RECITAL
-------
A. WHEREAS, Seller is the licensee of broadcast television
station KSMO- TV, Kansas City, Missouri (the "Station").
B. WHEREAS, Seller desires to grant to Buyer an option to
acquire the Station Assets described in more detail below, and Buyer desires to
be granted such option, all or the terms described below.
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the individuals which are parties hereto, on behalf of Buyer, and
Seller agree as follows:
ARTICLE I
GRANT OF OPTION;
----------------
GENERAL TERMS OF SALE
---------------------
1.1 Option Grant; Assets Covered. Seller hereby grants to
Buyer, and Buyer hereby accepts Seller's grant of, an option (the "Option") to
acquire the Station Assets upon the terms and conditions set forth in this
AGREEMENT. Upon and subject to the terms and conditions stated in this
AGREEMENT, or the Closing Date, Seller, as its interests may appear, shall
convey, transfer, and deliver to Buyer, and Buyer shall acquire from Seller, all
of Seller's rights in, to and under the assets and properties of Seller, real
and personal, tangible and intangible, of every kind and description which are
owned and used by Seller in connection with the business and operations of the
Station, as a going concern, including, without limitation, rights under
contracts and leases, real and personal property, plant and equipment,
inventories, intangibles, licenses and goodwill, but excluding all such assets
and properties which constitute Excluded Assets. The rights, assets, property,
and business of the Seller with respect to the Station to be transferred to
Buyer pursuant to this Section 1.1 in connection with the exercise of the Option
are referred to as the "Station Assets," and the purchase and sale of the
Station Assets pursuant to this AGREEMENT in connection with the exercise of the
option is referred to as the "Sale," Subject to Section 1.2, the Station Assets
include, without limitation, Seller's rights in, to and under the following, in
each case if and to the extent in existence and held by Seller immediately prior
to the Closing:
(a) FCC Authorizations. All licenses and
authorizations issued by the FCC to Seller with respect to the Station
(the "FCC Authorizations"), and all applications therefor, together
with any renewals, extensions, modifications thereof and additions
thereto.
(b) Tangible Personal Property. All equipment,
vehicles, furniture, pictures, transmitting towers, transmitters,
office materials and supplies, spare parts and other tangible personal
property of every kind and description used in connection with the
business and operations of the Station.
(c) Real Property. All real property interests held
by Seller and all buildings, structures, towers, and improvements
thereon used in the business and operations of the Station, and all
other rights under any Contracts relating to real property (the "Realty
Contracts"); provided that, in the event of destruction of or damage to
any such real property interest or any improvement thereon which is not
repaired or restored prior to the Closing Date, then at the Closing
Seller shall assign to Buyer all of Seller's interest, if any, in the
proceeds (the "Proceeds") of any insurance covering such damage or
destruction.
(d) Agreements for Sale of Time. All orders,
agreements and other Contracts for the sale of advertising time
(including Trades) on the Station (collectively, the "Time Sales
Contracts"), to the extent unperformed as of the Closing Date.
(e) Program Contracts. All program licenses and
other Contracts under which Seller is authorized to broadcast film
product or programs on the Station (collectively, the "Program
Contracts").
(f) Other Contracts. All Contracts relating to the
Station to which Seller is a party with respect to the Station (other
than any Contract described in Section 1.1(c), 1.1(d) or 1.1(e) hereof)
(collectively, the "Other Assumed Contracts"), including the Program
Consulting AGREEMENT dated as of the date hereof among Seller and the
individuals which are parties hereto, on behalf of an entity to be
formed by them.
(g) Trade-marks, etc. All trademarks, service
marks, trade names, jingles, slogans, logotypes, the goodwill
associated with the foregoing, and patents, owned and used by Seller in
connection with the business and operations of the station, including,
without limitation, all Seller's rights to use the call letters
"KSMO-TV" and any related names and phrases in connection with the
Station.
(h) Programming Copyrights. All program and
programming materials and elements of whatever form or nature owned by
Seller and used solely in connection with the business and operations
of the Station, whether recorded on tape or any other substance or
intended for live performance, and whether completed or in
2
production, and all related common law and statutory copyrights owned
by or licensed to Seller and used in connection with the business and
operations of the Station.
(i) FCC Records. Subject to Section 10.13, all FCC
logs and other compliance records of Seller that relate to the
operations of the Station.
(j) Files and Records. Subject to Section 10.13,
all files and other records of Seller relating solely to the business
and operations of the Station prior to the Closing Date, including,
without limitation, all books, records, accounts, checks, payment
records, tax records (including, without limitation, payroll,
unemployment, real estate, and other tax records), and other such
similar books and records of Seller, for three (3) fiscal years
immediately preceding the Closing Date (collectively, the "Seller's
Recent Station Records").
(k) Goodwill. All of Seller's goodwill in, and
going concern value of, the Station.
(l) Prepaid items. All prepaid expenses relating to
the Station.
(m) 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,
marketable and other securities held by Seller.
(n) Receivables and Other Claims. All notes and
accounts receivable and other receivables of Seller relating to or
arising out of the operation of the Station prior to the Closing, all
security, insurance, and similar deposits, and all other claims of
Seller with respect to transactions or other conduct of the business of
the Station prior to the Closing, including, without limitation, claims
for tax refunds and claims of Seller under all Contracts with respect
to events or the period prior to the Closing.
As used in this AGREEMENT, the terms "Realty Contracts," "Time Sales Contracts,"
"Program Contracts," and "Other Assumed Contracts" do not include Contracts of
any type described above which are Excluded Contracts.
1.2 Excluded Assets. There shall be excluded from the Station
Assets and, to the extent in existence on the Closing Date, retained by Seller,
the following assets (the "Excluded Assets"):
(a) Excluded Personal Property. All personal
property located at the Boston, Massachusetts headquarters of
ABRY Communications and all proceeds thereof, and all tangible
personal property retired, disposed of or consumed in the
3
ordinary course of the business of the Station, or as
otherwise permitted by this AGREEMENT, between the date of
this AGREEMENT and the Closing Date.
(b) Insurance. Subject to section 1.1(c), all
contracts of insurance and all insurance plans and the assets thereof,
together with all rights and claims thereunder.
(c) Name. All of Seller' s rights to use the name
"ABRY," any variation thereof, or any related logo, name or phrase.
(d) Certain Contracts. All Realty Contracts, Time
Sales Contracts, Program Contracts and Other Assumed Contracts which
expire and are not renewed, or which otherwise terminate, prior to the
Closing Date (collectively, the "Excluded Contracts."
(e) Corporate Books and Records. Subject to section
10.13, all account books of original entry and other than duplicate
copies of those files and records, if any, that are maintained at any
executive office of Seller or the off ices of Seller' s parent entities
or direct or indirect equity owners, and all materials of Seller which
constitute attorney work product or contain information which is
protected by attorney-client privilege, wherever located, relating to
matters at or prior to the Closing; provided that Seller will provide
Buyer access to such work product or privileged information to the
extent necessary for Buyer to defend any claim brought against Buyer by
a Person which is not, or is not an Affiliate of, a party to this
AGREEMENT.
(f) Other Books and Records. Subject to Section
10.13, Seller's account books of original entry with respect to the
station, and all books, records, accounts, checks, payment records, tax
records (including, without limitation, payroll, unemployment, real
estate, and other tax records), and other similar books, records, and
information of Seller relating to the operation of the business of the
Station prior to the Closing Date, excluding the Seller' Recent Station
Records.
(g) Transaction Documents. All rights of Seller, or
any successor to Seller, pursuant to any Transaction Document.
(h) Pension Assets, Etc. Pension, profit sharing,
retirement, bonus, stock purchase, savings plan and trusts, 401(k)
plans, health insurance plans, and the assets thereof, and all other
plans, agreements, or understandings to provide employee welfare,
pension or other benefits of any kind for any employees (or dependents
or related persons of any employees) of Seller.
1.3 Option Exercise. In order to exercise the Option, Buyer
must deliver to Seller written notice (an "Exercise Notice") of Buyer's
intention to do so. Buyer may withdraw
respect to
4
any Exercise Notice prior to the Closing by written notice to that effect to
Seller. Upon the withdrawal of any Exercise Notice, Buyer shall reimburse Seller
for all reasonable out-of-pocket expenses incurred by Seller in connection with
its compliance with Section 5.2 with such Exercise Notice. Nothing contained in
this Section 1.3 is intended to prohibit Buyer from subsequently exercising the
Option after any such withdrawal.
1.4 Liabilities.
(a) Release of Certain Liens. At the Closing, the
Station Assets shall be sold and conveyed to Buyer free and clear of
all Liens securing the repayment of Existing Station Indebtedness
(except to the extent it is Assumed Indebtedness).
(b) Assumption of Liabilities Generally. The
"Assumed Liabilities" are the Assumed Indebtedness (if any) and all
other liabilities and obligations of Seller relating to the operation
of the Station or the ownership or operation of the Station Assets, in
each case as of the Closing Date, whether contingent or absolute, known
or unknown, accrued or not accrued, or matured or unmatured, including
all liabilities and obligations pursuant to any Realty Contract, Time
Sales Contract, Program Contract or Other Assumed Contract
(collectively, the "Assumed Contracts") in effect on the Closing Date,
in each case whether or not any Consent of any Person is required in
order to permit the assignment of Seller's rights arising under such
Contract to Buyer or the assumption of any such liability by Buyer. On
the Closing Date, Buyer will assume and agree to pay, satisfy, perform
and discharge all Assumed Liabilities. From and after the Closing,
Buyer will discharge and reimburse and hold harmless Seller against,
and Seller will not be responsible or otherwise liable for, any Assumed
Liability. Notwithstanding the foregoing, except as otherwise provided
in this Agreement, the "Assumed Liabilities" will not include, and on
the Closing Date Buyer shall not assume or thereafter be liable for,
any liability or obligation of Seller relating to any Existing Station
Indebtedness which is not Assumed Indebtedness (it being understood
that all Existing Station Indebtedness which is not Assumed
Indebtedness will be satisfied prior to, or contemporaneously with, the
Closing), or any duty, obligation, or liability of Seller relating to
any pension, 401(k) or other similar plan, agreement, or arrangement
provided by Seller to employees of Seller. Existing Station
Indebtedness is "Assumed Indebtedness" to the extent that Buyer
notifies Seller in writing that Buyer will assume such Existing Station
Indebtedness in connection with the Closing and Buyer actually so
assumes such Existing Station Indebtedness. The revenues, expenses and
liabilities of Seller or attributable to the Station and the Station
Assets will not be prorated between Buyer and Seller in connection with
the Closing.
(c) Certain Advances. Buyer acknowledges that, from
time to time, ABRY Communications III, L.P., a Delaware limited
partnership ("ABRY III"), may advance funds from time to time (up to
$1,700,000 in the aggregate) to fund rights payments by Seller pursuant
to Seller's Kansas City Royals baseball broadcasting rights
5
agreement, and that interest will accrue on the principal amount of
such advances (from the time the proceeds of such advances are used to
fund such rights payments) at the rate of 8.5% per annum, compounded
annually. Upon the Closing, Buyer shall assume Seller's obligation to
repay such advances, together with any accrued and unpaid interest, and
will repay such advances (together with such accrued and unpaid
interest) in full in cash.
ARTICLE II
CLOSING
-------
2.1 Exercise Price.
---------------
(a) Payment. In consideration of Seller's
performance of this Agreement and the transfer and delivery of the
Station Assets to Buyer at the Closing, Buyer will (I) pay to Seller an
amount (the "Cash Purchase Price") which is equal to the lesser of (A)
the outstanding principal amount of the Existing Station Indebtedness,
plus the amount of all unpaid accrued interest thereon and all
penalties, indemnities, reimbursements, premiums and other amounts
payable in respect thereof, in each case as of the Closing Date and in
each case to the extent the same is not Assumed Indebtedness, plus
$1.00, and (B) $9,000,000, and (ii) assume the Assumed Liabilities. The
Cash Purchase Price shall be paid by Buyer to Seller on the Closing
Date by wire transfer of immediately available funds to such bank
account(s) as Seller may designate on or prior to the Closing Date.
(b) Allocation of Cash Purchase Price. Buyer and
Seller agree that they will allocate the Cash Purchase Price among the
Station Assets based on an appraisal which is hereafter approved by
Buyer and Seller and which is set forth in a report rendered by a
nationally-recognized appraisal firm selected by Buyer and approved by
Seller (which approval Seller may not unreasonably withhold or delay),
whose fee shall be paid by Buyer. Buyer and Seller will use reasonable
efforts to ensure that such report is completed and delivered to Buyer
and Seller prior to the Closing Date. Buyer and Seller agree to file
(at such times and in such manner as may be required by applicable
Legal Requirements) all relevant returns and reports (including,
without limitation, Forms 8594, Asset Acquisition Statements, and all
income and other tax returns) on the basis of such allocations.
2.2 The Closing. Subject to Section 10.1, the closing of the
Sale and the assumption of the Assumed Liabilities (the "Assumption"), and the
consummation of all related transactions to be consummated and contemporaneously
therewith pursuant to this Agreement (collectively, the "Closing"), shall be
held after the satisfaction or Seller's waiver in writing of each of the
conditions set forth in Article VII, at the offices of Kirkland & Ellis located
in New
6
York, New York, and at the time and on the date specified by Buyer in writing to
Seller delivered not less than fifteen business days prior to such date, or at
such other place and/or at such other time and day as Seller and Buyer may agree
in writing. In connection with the Closing, the Seller will enter into
non-competition arrangements with respect to the Kansas City ADI in
substantially the form of the Non-Competition Agreements entered into by certain
investors in ABRY Communications on the date hereof.
2.3 Deliveries at Closing. All actions at the Closing shall be
deemed to occur simultaneously, and no document or payment to be delivered or
made at the Closing shall be deemed to be delivered or made until all such
documents and payments are delivered or made to the reasonable satisfaction of
Buyer, Seller and their respective counsel.
(a) Deliveries by Sellers. At the Closing, Seller
shall deliver to Buyer such instruments of conveyance and other
customary documentation as shall in form and substance be reasonably
satisfactory to Buyer and its counsel in order to effect the Sale,
including, without limitation, the following:
(1) one or more bills of sale conveying the Station
Assets;
(2) any releases of Liens that are necessary in order
to transfer the Station Assets as contemplated by
Section 1.4(a);
(3) a certified copy of the resolutions or proceedings
of Seller (or a Person which is a direct or
indirect general partner of Seller) authorizing
Seller's consummation of the Sale;
(4) a certificate as to the existence and good standing
of Seller issued by the Secretary of State of each
of the States of Delaware and Missouri, in each
case dated on or after the fifth Business Day prior
to the Closing Date, certifying as to the
qualification of Seller in each such jurisdiction;
(5) a receipt for the Cash Purchase Price;
(6) one or more opinions of Seller's counsel or special
counsel, each dated the Closing Date, each in form
and substance reasonably acceptable to Buyer;
(7) all Consents received by Seller through the Closing
Date;
(8) the non-competition agreement described in Section
2.2; and
(9) such other documents as Buyer may reasonably
request.
7
(b) Deliveries by Buyer. At the Closing, Buyer
shall deliver to Seller the Cash Purchase Price as provided in Section
2.1, repay the advance, together with the unpaid accrued interest,
described in Section 1.4(c), and deliver such instruments of assumption
and other customary documentation as shall in form and substance be
reasonably satisfactory to Seller and its counsel in order to effect
the Sale and the Assumption, including, without limitation, the
following:
(1) a certificate of Buyer dated the Closing Date to
the effect that, except as specified in such
certificate, the conditions set forth in Article
VII have been fulfilled;
(2) a certified copy of the resolutions or proceedings
of Buyer authorizing the consummation of the Sale
and the Assumption;
(3) a certificate issued by the Secretary of State of
each of the States of Missouri and Maryland, in
each case dated on or after the fifth Business Day
prior to the Closing Date, certifying as to the
incorporation and/or qualification of Buyer in each
such jurisdiction;
(4) one or more opinions of Buyer's counsel or special
counsel, each dated the Closing Date, each in form
and substance reasonably acceptable to Seller; and
(5) such other documents as Seller may reasonably
request.
ARTICLE III
[RESERVED]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Incorporation. On the Closing Date, Buyer will be a
corporation or other entity duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its purported organization and
will be in good standing under the laws of the State of Missouri. On the Closing
Date, Buyer will have the corporate or other power and authority to ratify the
8
entry into this Agreement by the individuals which are parties hereto and to
consummate the transactions contemplated by this Agreement.
4.2 Corporate Action. On the Closing Date, all actions
necessary to be taken by or on the part of Buyer in connection with the
consummation of transactions contemplated hereby to be consummated and necessary
to make the same effective will have been duly and validly taken. This Agreement
has been duly and validly authorized, executed, and delivered on behalf of Buyer
and constitutes a valid and binding agreement, enforceable against the
individuals which are parties hereto on behalf of Buyer, in accordance with and
subject to its terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or
similar laws affecting the rights of creditors generally and the availability of
equitable remedies.
4.3 No Defaults. On the Closing Date (after giving effect to
all approvals and consents which have been obtained), neither the execution and
delivery of this Agreement on behalf of Buyer, nor the consummation by Buyer of
the transactions contemplated by this Agreement to be consummated on or prior to
the Closing Date, will constitute, or, with the giving of notice or the passage
of time or both, would constitute, a material violation of or would conflict in
any material respect with or result in any material breach of or any material
default under, any of the terms, conditions, or provisions of any Legal
Requirement to which Buyer is subject, or of Buyer's certificate of
incorporation or by-laws or similar organizational documents, or of any material
contract, agreement, or instrument to which Buyer is a party of by which Buyer
is bound.
4.4 Brokers. There is no broker or finder or other Person who
would have any valid claim against Seller for a commission or brokerage fee in
connection with this Agreement or the transactions contemplated hereby as a
result of any agreement or understanding of or action taken by Buyer or any
Affiliate of Buyer (including any individual which is a party hereto).
ARTICLE V
COVENANTS OF SELLER
-------------------
5.1 Covenants of Seller Generally. Seller covenants and agrees
that, from the date of this Agreement until the Closing, except as (I) Buyer may
otherwise consent (which consent Buyer will not unreasonably withhold or delay
upon Seller's request) or (ii) Seller may otherwise be requested by Buyer to act
or refrain from acting:
(a) Operation in Ordinary Course. From time to
time, Seller will use reasonable efforts to carry on its business and
operations and keep its books of account, records, and files in the
ordinary and usual course, in a manner which is not inconsistent with
its past practices, except as may be reasonable in light of
circumstances which are then prevailing. Notwithstanding the foregoing,
during the term of this Agreement no amount of the $250,000 annual
management fee heretofore paid by Seller to ABRY Communications will
become payable and Seller will compensate ABRY Communications for time
spent in the operation of the Station by ABRY Communications personnel
on a per-diem basis. Seller will promptly execute any
9
necessary applications for renewal of FCC Authorizations necessary for
the operation of the Station as presently conducted.
(b) Restrictions. Seller will not (to the extent
the following restrictions are permitted by the FCC and all other
applicable Legal Requirements):
(1) other than in the ordinary course of business,
sell, lease (as lessor), transfer, or agree to
sell, lease (as lessor), or transfer any material
Station Assets (other than in the ordinary course
of its business) without replacement thereof with
functionally equivalent or superior assets
(provided that nothing set forth in this Agreement
shall be deemed to prohibit Seller from paying any
amount in respect of any Existing Station
Indebtedness, including any interest, penalty,
indemnification, reimbursement, premium or other
amount relating thereto);
(2) enter into any Trades which will involve the
furnishing of advertising in exchange for
merchandise (provided that Seller may perform its
obligations and exercise its rights under Trades in
effect on the date of this Agreement); or
(3) apply to the FCC for any construction permit that
would materially restrict the Station's present
operations or make any material adverse change in
the buildings or leasehold improvements owned by
Seller.
(c) Organization/Goodwill. Seller shall use
reasonable efforts to preserve the business organization of the Station
and preserve the goodwill of the Station's suppliers, customers, and
others having business relations with it.
(d) Access to Facilities, Files, and Records.
Buyers' Access Generally. From time to time, at the request of Buyer,
Seller shall give or cause to be given to the officers, employees,
accountants, counsel, and representatives of Buyer
(1) access (in the presence of any representative
designated by Seller, at Seller's option), upon
reasonable prior notice, during normal business
hours, to all facilities, property, accounts,
books, deeds, title papers, insurance policies,
licenses, agreements, contracts, commitments,
records, equipment, machinery, fixtures, furniture,
vehicles, accounts
10
payable and receivable, and inventories of Seller
related to the Station, and
(2) all such other information in Seller's possession
concerning the affairs of the Station as Buyer may
reasonably request,
provided that the foregoing does not disrupt or interfere with the
business and operations of Seller or the Station.
(e) Notice of Proceedings. Seller will promptly
notify Buyer in writing upon becoming aware of any order or decree or
any complaint praying for an order or decree restraining or enjoining
the consummation of the Sale or the Assumption, 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 the Sale or the
Assumption, or to nullify or render ineffective this Agreement or the
Sale or the Assumption if consummated.
(f) Notice of Certain Developments. Seller shall
give prompt written notice to Buyer (1) if the Station Assets shall
have suffered damage on account of fire, explosion, or other cause of
any nature which is sufficient to prevent operation of the Station in
any material respect for more than ten (10) consecutive days, (2) if
the regular broadcast transmission of the Station in the normal and
usual manner in which it heretofore has been operating is interrupted
in a material manner for a period of more than ten (10) consecutive
days or (3) if Seller receives a National Labor Relations Board union
election petition relating to employees of the Station.
(g) No Premature Assumption of Control. Nothing
contained in this Section 5.1 shall give Buyer any right to control the
programming, operations, or any other matter relating to the Station
prior to the Closing Date, and Seller shall have complete control of
the programming, operations, and all other matters relating to the
Station up to the time of the Closing.
5.2 Covenants of Seller during Exercise Period. Seller
covenants and agrees that, after its receipt of any Exercise Notice and until
either the Closing occurs or such Exercise Notice is withdrawn or deemed to be
withdrawn pursuant to Section 1.3, in each case at Buyer's expense:
(a) Application for Commission Consent. As promptly
as practicable, Seller will complete Seller's portion of applications
to the FCC requesting the Required FCC Consents, and upon receipt of
Buyer's portion of such applications, will promptly file such
applications with the FCC jointly with Buyer. Seller will diligently
take or cooperate in the taking of all reasonable steps that are
necessary, proper, or
11
desirable to expedite the preparation of such applications and their
prosecution to a final grant. Seller will promptly provide Buyer with a
copy of any pleading, order, or other document served on Seller
relating to such applications.
(b) Consents. Seller will use reasonable efforts
(without being required to make any payment not specifically required
by the terms of any licenses, leases, and other contracts) jointly with
Buyer to (1) obtain or cause to be obtained prior
to the Closing Date all Consents or, in the absence of any Consent, one
or more replacement agreements which would be effective on or prior to
the Closing and would grant Buyer (after the Closing) substantially the
same benefits with respect to the Station as Seller enjoys with respect
to the Station immediately prior to the Closing under the replaced
Contract(s), and (2) cause each Consent or replacement agreement to
become effective as of the Closing Date (whether it is granted or
entered into prior to or after the Closing).
(c) Consummation of Sale. Subject to the provisions
of Article VII and Section 11.1, Seller shall use 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
conditions set forth in Article VII to be fulfilled and cause the Sale
and the Assumption to be consummated.
(d) Hart-Scott-Rodino. As promptly as practicable,
Seller shall prepare and file all documents with the Federal Trade
Commission and the United States Department of Justice which may be
required to comply with the Hart-Scott-Rodino Act in connection with
the Sale and the Assumption, and shall promptly furnish all materials
thereafter requested by any of the regulatory agencies having
jurisdiction over such filings, in connection with the Sale and the
Assumption. Seller will take all reasonable actions, and will file and
use reasonable efforts to have declared effective or approved all
documents and notifications with any governmental or regulatory bodies,
as may be necessary or may reasonably be requested under federal
antitrust laws for the consummation of the Sale and the Assumption.
ARTICLE VI
COVENANTS OF BUYER
------------------
6.1 Covenants of Buyer Generally. Buyer covenants and agrees
that Buyer will promptly notify Seller in writing upon becoming aware of any
order or decree or any complaint praying for an order or decree restraining or
enjoining the consummation of the Sale or the Assumption, or upon receiving any
notice from any governmental department, court, agency, or commission or its
intention to institute an investigation into or institute a suit or
12
proceeding to restrain or enjoin the consummation of the Sale or the Assumption,
or to nullify or render ineffective this Agreement or the Sale or the Assumption
if consummated.
6.2 Covenants of Buyer during Exercise Period. Buyer covenants
and agrees that, after it gives any Exercise Notice and unless and until such
Exercise Notice is withdrawn or deemed to be withdrawn pursuant to Section 1.3,
Buyer will use reasonable efforts (both prior to and after the Closing Date)
jointly with Seller to obtain or cause to be obtained prior to the Closing Date
all Consents and to execute such assumption instruments as may be required or
requested in connection with obtaining any Consent (or, in the alternative,
enter into one or more replacement agreements which would be effective on or
prior to the Closing and would grant Buyer substantially the same benefits with
respect to the Station as Seller enjoys with respect to the Station under the
replaced Contract(s) immediately prior to the Closing), so long as such
assumption instruments and/or agreements do not alter the original terms and
conditions of the Contracts in question in any material respect to the detriment
of Buyer (it being understood that Buyer will not seek any modification of any
Contract or any agreement or other arrangement between Buyer (or any of its
Affiliates) and any other party to a Contract (or any of its Affiliates) so long
as any Consent of such other party has not been obtained).
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
ON THE CLOSING DATE
-------------------
The obligation of Seller to consummate the Sale on the Closing
Date is, at Seller's option, subject to the fulfillment of the following
conditions at or prior to the time of the Closing:
7.1 Representations, Warranties, Covenants.
---------------------------------------
(a) Each of the representations and warranties of
Buyer contained in this Agreement shall be true and accurate in all
material respects (except to the extent changes are permitted or
contemplated pursuant to this Agreement) both on the date of this
Agreement and as if made on and as of the Closing Date; and
(b) Buyer shall have performed and complied in all
material respects with each and every covenant and agreement required
by this Agreement to be performed or complied with by it prior to or at
the Closing (including the delivery of the Cash Purchase Price).
7.2 Proceedings.
------------
13
(a) No action or proceeding shall have been
instituted and be pending before any court or governmental body to
restrain or prohibit, or to obtain a material amount of damages in
respect of, the consummation of the Sale or the Assumption that, in the
reasonable opinion of Seller, may reasonably be expected to result in a
preliminary or permanent injunction against such consummation or, if
the Sale or the Assumption were consummated, an order to nullify or
render ineffective this Agreement or the Sale or the Assumption or for
the recovery against Seller of a material amount of damages; and
(b) none of the parties to this Agreement
(including Buyer) shall have received written notice from any
governmental body of (I) such governmental body's intention to
institute any action or proceeding to restrain or enjoin or nullify
this Agreement or the Sale or the Assumption, or to commence any
investigation (other than a routine letter of inquiry, including,
without limitation, a routine Civil Investigative Demand) into the
consummation of the Sale or the Assumption, or (ii) the actual
commencement of such an investigation which has not been disclosed to
Seller prior to the date of this Agreement.
7.3 FCC Authorization. The FCC Approval Date shall have
occurred and all Required FCC Consents shall be in full force and effect.
7.4 Hart-Scott-Rodino. Any applicable waiting period under the
Hart-Scott- Rodino Act shall have expired or been terminated.
7.5 Other Instruments. Buyer shall have delivered, or shall
stand ready to deliver, to Seller such instruments, documents, and certificates
as are contemplated by Section 2.3(b).
7.6 Existing Station Indebtedness. The aggregate amount
necessary to satisfy in full the Existing Station Indebtedness which is not
Assumed Indebtedness will not exceed the amount of the Cash Purchase Price.
ARTICLE VIII
REMEDIES
--------
8.1 Bulk Sales Indemnity. Buyer and Seller have jointly
determined that there will be no attempt to comply with the notice provisions of
any bulk sales law which may apply to the purchase and sale of the Station
Assets pursuant to this Agreement. Buyer will indemnify and hold Seller harmless
from and against any and all damages, claims, losses, expenses, costs,
obligations, and liabilities, including, without limiting the generality
14
of the foregoing, liabilities for reasonable attorneys' fees and expenses,
suffered directly or indirectly by Buyer by reason of or arising out of
non-compliance with any such bulk sales law.
8.2 Limitation of Recourse. In no event will Buyer, after the
Closing, be entitled to claim or seek any damages by reason of, or rescission
of, or any other remedy in respect of, the Sale or the Assumption or any of the
other transactions consummated pursuant to the Transaction Documents, any right
of rescission or rights to damages or other remedies which Buyer might otherwise
have being hereby expressly waived and any claims or judgments being limited
accordingly.
8.3 Acknowledgment by Buyer. Buyer has conducted and prior to
the Closing will continue to conduct, to its satisfaction, an independent
investigation and verification of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the
Station and the Station Assets. In determining to proceed with the transactions
contemplated by this Agreement, Buyer has relied, and will rely, on the
covenants of Seller and the results of such independent investigation and
verification. BUYER ACKNOWLEDGES THAT SELLER MAKES NO REPRESENTATION OR WARRANTY
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY. BUYER FURTHER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL REPRESENTATIONS AND WARRANTIES OF
ANY KIND OR NATURE (INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
WARRANTY RELATING TO THE PROJECTED, FUTURE OR HISTORICAL FINANCIAL CONDITION,
RESULTS OR OPERATIONS, ASSETS OR LIABILITIES RELATING TO THE STATION), EXPRESS
OR IMPLIED, ARE SPECIFICALLY DISCLAIMED BY SELLER. Buyer further acknowledges
that as of the date hereof Seller is in default in respect of certain of the
Existing Station Indebtedness and that, after the date of this Agreement, any or
all of the direct or indirect ownership interests in Seller may be transferred
to Persons which may have little or no net worth, and that, after the Closing,
at such time as the ultimate owners of Seller may elect, Seller and certain
entities related to Seller will be liquidated and dissolved.
ARTICLE IX
POST-CLOSING MATTERS
--------------------
9.1 Corporate Name. Promptly after the Closing Date, Seller
shall take such action as is necessary to change its partnership name in its
certificate of limited partnership filed with the Secretary of State of the
State of Delaware and all other qualifications to do business in all other
jurisdictions to a name which does not include, and which is not confusingly
similar to, the name "KSMO" or "TV 62." Notwithstanding anything in this
Agreement to the contrary, Seller shall be entitled to continue to use its
present partnership name until such time as such name change is effective and to
the extent necessary to accomplish such name change, and may endorse checks and
other instruments and execute agreements, reports, and other documents in such
name.
9.2 Post-Sale Employee Matters.
(a) Post-Closing Employment Generally. Buyer agrees
to offer on the Closing Date employment for at least 90 days to each
individual who is an employee of Seller with respect to the Station as
of the Closing Date (the "Continuing Employees"), which employment
shall be at an annual salary which is not less than the annual salary
for such employee immediately prior to the Closing Date, and such
employment shall include benefits and other terms and conditions,
including, without limitation, health, medical, life insurance, vision
and disability benefits (effective without any waiting
15
periods and without exclusion for pre-existing conditions) on terms
which shall be, for at least 90 days after the Closing Date,
substantially equivalent to those which are being provided to such
employee immediately prior to the Closing Date by Seller.
(b) Notice to Continuing Employees. Buyer
agrees that Seller may inform Seller's employees that Buyer has agreed
to offer all Continuing Employees employment as provided in this
Section 9.2.
(c) Responsibility for Termination Costs.
Buyer will assume and indemnify Seller from and against any and all
severance or other liabilities arising out of Seller's termination of
the employment of any Continuing Employment (including, without
limitation, any liabilities under the WARN Act).
ARTICLE X
TERMINATION/MISCELLANEOUS
-------------------------
10.1 Termination of Agreement Prior to the Closing Date. This
Agreement may be terminated at any time on or prior to the Closing as follows:
(a) By Seller. By Seller, by written notice (a
"Seller Termination Notice") to Buyer at any time after the fifteenth
anniversary of the date of this Agreement if (I) the Closing has not
occurred on or prior to the date upon which such Seller's Termination
Notice is given, and (II) the absence of satisfaction of any of
Seller's conditions to closing set forth in Article VII which has not
been either satisfied or waived by Seller is not caused solely by a
breach by Seller of its obligations under this Agreement.
(b) By Buyer. By Buyer, by written notice to
Seller, at any time. Neither Buyer nor Seller shall have any liability
to the other for costs, expenses, damages (consequential or otherwise),
loss of anticipated profits, or otherwise as a result of a termination
pursuant to this Section 10.1. The parties hereto agree that time is of
the essence with respect to the provisions of this Section 10.1. This
Article X will survive the termination of this Agreement pursuant to
this Section 10.1.
10.2 Liabilities Upon Termination. Buyer's sole and exclusive
remedy for any failure of performance or compliance by Seller with any covenant
or agreement contained in this Agreement prior to the Closing shall be (I)
Buyer's right, if any, under applicable law or equitable principles, to seek
damages in respect of Buyer's direct out-of-pocket losses or expenses (but not
any damages in respect of lost profits or other similar or consequential
damages) occasioned by and as a consequence of Seller's breach; and (ii) Buyer's
right, if any, under applicable law or equitable principles, to seek specific
enforcement or this Agreement
16
against Seller subject to FCC approval and other required approvals; provided
that Buyer shall not be entitled to specific performance with respect to the
consummation of the Sale unless (A) each condition to closing set forth in
Article VII has been satisfied or waived in writing by Seller or (B) the absence
of satisfaction of each such condition to closing which has not been satisfied
or waived in writing by Seller is caused solely by a breach by Seller or its
obligations under this Agreement.
10.3 Expenses. Except as otherwise expressly provided in this
Agreement, each of Seller and Buyer shall bear all of its expenses incurred in
connection with the transaction contemplated by this Agreement, including,
without limitation, accounting and legal fees incurred in connection herewith
(it being understood that Seller may pay such expenses out of the Station Assets
and, to the extent not paid prior to the Closing, Seller's obligations to pay
such expenses will be Assumed Liabilities).
10.4 Assignments. This Agreement shall not be assigned by
Seller without the prior written consent of Buyer; provided that after the
Closing, Seller may assign its rights pursuant to this Agreement to any other
Person in connection with the dissolution, liquidation or winding up or
administration of the affairs of such Seller. Upon the formation of Buyer, the
rights under this Agreement of the individuals which are parties hereto may be
assigned to Buyer, so long as Buyer assumes the obligations of such individuals
under this Agreement by executing an instrument which is reasonably satisfactory
in form and substance to Seller. Until written evidence of such assignment and
assumption is given to Seller, Seller may rely on any act of any one or more of
the individuals which are parties hereto as being the act of Buyer and Buyer
will be bound by all such acts so relied upon by Seller. After such assignment
to, and assumption by, Buyer, Buyer's rights under this Agreement may be
assigned by Buyer only with the prior written consent of Seller, said consent
not to be unreasonably withheld, except that Buyer may assign its rights and
interests hereunder absolutely to one or more directly or indirectly
wholly-owned subsidiaries of Sinclair; provided, in each case, that Buyer gives
Seller prior written notice of such assignment and provided further that no such
assignment shall relieve the assigning Person of any of its obligations or
liabilities hereunder. Notwithstanding the foregoing, the parties hereto hereby
agree that: (I) the rights of Buyer under this Agreement may be collaterally
assigned to The Chase Manhattan Bank, N.A., as agent for certain lenders (in
such capacity, the "Agent") to secure obligations owing by Buyer to the Agent
and such lenders and (ii) the Agent may transfer such rights pursuant to its
exercise of remedies with respect to such collateral security to any other
person or entity with the prior written consent of Seller, which consent may not
be unreasonably withheld (it being understood and agreed that the Agent shall be
a third party beneficiary of the agreement constituted by this sentence). Any
attempt to assign this Agreement without first obtaining any consent which is
required by this Section 10.4 shall be void. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10.5 Further Assurances. From time to time prior to, at, and
after the Closing Date, each party hereto will execute all such instruments and
take all such actions as another party hereto, being advised by counsel, shall
reasonably request in connection with carrying out
17
and effectuating the intent and purpose hereof, and all transactions and things
contemplated by this Agreement, including, without limitation, the execution and
delivery of any and all confirmatory and other instruments, in addition to those
to be delivered on the Closing Date, as the case may be, and any and all actions
which may reasonably be necessary to complete the transactions contemplated
hereby.
10.6 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, and shall be deemed to have been given or made when
personally delivered, the next business day after delivery to such overnight
delivery service, five (5) days after deposited in the mail, first class postage
prepaid, as the case may be, addressed as follows:
(a) If to Seller:
c/o ABRY Communications
18 Newbury Street
Boston, Massachusetts 02216
Attn: Mr. Andrew Banks
Mr. Royce Yudkoff
with a copy (which will not constitute
notice to Seller) to:
--------------------
John L. Kuehn
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
or to such other address and/or with such other copies as Seller may from time
to time designate by notice to Buyer (or, prior to the assignment and assumption
contemplated by the second sentence of Section 10.4, the individuals which are
parties hereto) given in accordance with this Section 10.6.
(b) If to Buyer (or to such individuals):
c/o Sinclair Broadcasting Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: Mr. David D. Smith
with a copy (which will not constitute
notice to Buyer or such individuals) to:
----------------------------------------
18
Steven A. Thomas, Esquire
Thomas & Libowitz, P.A.
The USF&G Tower
100 Light Street, Suite 1100
Baltimore, Maryland 21202
or to such other address and/or with such other copies as Buyer may from time to
time designate by notice to Seller given in accordance with this Section 10.6.
10.7 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.
10.8 Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND, WITHOUT
REFERENCES TO ITS PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO THE EXTENT THAT THE
FEDERAL LAW OF THE UNITED STATES GOVERNS THE TRANSACTIONS CONTEMPLATED HEREBY.
10.9 Consent to Jurisdiction, Etc. SUBJECT TO SECTION 10.17,
IN THE EVENT OF ANY ACTION OF PROCEEDING WITH RESPECT TO ANY MATTER PERTAINING
TO THIS AGREEMENT, THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY CONSENT TO
THE EXCLUSIVE JURISDICTION AND VENUES OF THE COURTS OF THE STATE OF MARYLAND AND
OF ANY FEDERAL COURT LOCATED IN BALTIMORE, MARYLAND IN CONNECTION WITH ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE TRANSACTION DOCUMENTS.
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 IN
ACCORDANCE WITH SECTION 10.6. IN THE ALTERNATIVE, IN ITS DISCRETION, ANY OF THE
PARTIES HERETO MAY EFFECT SERVICE UPON ANY OTHER PARTY IN ANY OTHER FORM OR
MANNER PERMITTED BY LAW.
10.10 Waiver of Provisions. The terms, covenants,
representations, warranties, and conditions of this Agreement may be waived only
by a written instrument executed by the Person waiving compliance. The failure
of Buyer or Seller 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 Buyer or Seller 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.
19
10.11 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 hereto are not signatory to the same counterpart.
10.12 Entire Agreement/Amendments. This Agreement (including
the Schedules hereto), the other Transaction Documents and the Confidentiality
Agreement dated October 15, 1992 between Buyer and ABRY Communications,
constitute the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersede any and all prior and contemporaneous
agreements understandings, negotiations, and discussions, whether oral or
written, between them relating to the subject matter hereof. No amendment or
waiver of any provision of this Agreement shall be binding unless executed in
writing by the party to be found thereby.
10.13 Access to Books and Records.
----------------------------
(a) Buyer shall preserve for not less than five (5)
years after the Closing Date all books and records included in the
Station Assets. After such five-year period, Buyer will not destroy any
books or records relating to the conduct of business of the Station
prior to the Closing unless Buyer first offers to transfer such books
and records to Seller at no cost to Seller, and if Buyer is requested
to do so, Buyer will transfer such books or records to Seller.
(b) After the Closing, Seller will not destroy any
books or records relating to the conduct of business of the Station
prior to the Closing Date unless Seller first offers to transfer such
books and records to Buyer at no cost to Buyer, and if Seller is
requested to do so, Seller will transfer such books or records to
Buyer.
(c) At the request of any other party to this
Agreement, Buyer and Seller will permit each other (including such
other party's officers, employees, accountants, and counsel) any
access, upon reasonable prior written notice during normal business
hours, to all of its property, accounts, books, contracts, records,
accounts payable and receivable, records of employees, FCC logs and
other information concerning the affairs or operation of the Station as
such other party to this Agreement may reasonably request for any
reasonable purpose, and to make extracts or copies from the foregoing
at the requesting party's expense.
10.14 Public Announcements. Prior to the Closing, neither
Buyer (including any individual which is a party hereto) nor Seller shall,
except by mutual agreement with the other of them (including agreement as to
content, text and method or distribution or release), make any press release or
other public announcement or disclosure concerning the transactions contemplated
by this Agreement, except as may be required by any Legal Requirement
(including, without limitation, filings and reports required to be made with or
pursuant to the rules of the Securities and Exchange Commission; provided that,
prior to making any such announcement or disclosure required by any Legal
Requirement, to the extent practicable, the
20
disclosing Person gives to Buyer (in the case of a disclosure by Seller) or
Seller (in the case of a disclosure by Buyer or any such individual) prior
written notice of the context, text and content of the method of distribution or
release of, and all other material facts concerning, such disclosure.
10.15 [RESERVED]
10.16 Definitional Provisions.
-----------------------
(a) Terms Defined in Appendix. Each capitalized
term which is used and not otherwise defined in this Agreement has the meaning
which is specified for such term in the Appendix which is attached to this
Agreement.
(b) Gender and Number. Words used in this
Agreement, regardless of the gender and number specifically used, will be deemed
and construed to include any other gender, masculine, feminine or neuter, and
any other number, singular or plural, as the context requires.
10.17 Arbitration.
(a) Generally. Buyer and Seller agree that the
arbitration procedures described in this Section 10.17 will be the sole and
exclusive method of resolving and remedying any claim for indemnification or
other remedy arising under this Agreement (collectively, "Disputes"); provided
that nothing in this Section 10.17 will prohibit a party from instituting
litigation to enforce any Final Arbitration Award. Buyer and Seller agree that,
except as otherwise provided in the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time (the "AAA Rules"), the
arbitration procedures described in this Section 10.17 and any Final Arbitration
Award will be governed by, and will be enforceable pursuant to, the Uniform
Arbitration Act as in effect in the State of Maryland from time to time. No
Person will be entitled to claim or recover punitive damages in any such
proceeding.
(b) Notice of Arbitration. If Buyer or Seller
asserts that there exists a Dispute, then such Person (the "Disputing Person")
will give the other of them a written notice setting forth the nature of the
asserted Dispute. If Buyer and Seller do not resolve any such asserted Dispute
prior to the tenth Business Day after such notice is given, then the Disputing
Person may commence arbitration pursuant to this Section 10.17 by giving the
other of them a written notice to that effect (an "Arbitration Notice"), setting
forth any matters which are required to be set forth therein in accordance with
the AAA Rules.
(c) Selection of Arbitrator. Buyer and Seller will
attempt to select a single arbitrator by mutual agreement. If no such arbitrator
is selected prior to the twentieth Business Day after the related Arbitration
Notice is given, then an arbitrator which is
21
experienced in matters of the type which are the subject matter of the Dispute
will be selected in accordance with the AAA Rules.
(d) Conduct of Arbitration. The arbitration will be
conducted under the AAA Rules, as modified by any written agreement between
Buyer and Seller. The arbitrator will conduct the arbitration in a manner so
that the final result, determination, finding, judgment or award determined by
the arbitrator (the "Final Arbitration Award") is made or rendered as soon as
practicable, and the parties will use reasonable efforts to cause a Final
Arbitration Award to occur not later than the sixtieth day after the arbitrator
is selected. Any Final Arbitration Award will be final and binding upon Buyer
and Seller,, and there will be no appeal from or reexamination of any Final
Arbitration Award, except in the case of fraud, perjury or evident partiality or
misconduct by the arbitrator prejudicing the rights of Buyer or Seller or to
correct manifest clerical errors.
(e) Enforcement. Buyer and Seller agree that a
Final Arbitration Award may be enforced in any state or federal court having
jurisdiction over the subject matter of the related Dispute.
(f) Expenses. A prevailing party in any arbitration
proceeding in connection with this Agreement shall be entitled to recover from
the non-prevailing party its reasonable attorneys' fees and disbursements in
addition to any damages or other remedies awarded to such prevailing party, and
the non-prevailing party also will be required to pay all other costs and
expenses associated with the arbitration; provided that (1) if an arbitrator is
unable to determine that a party is a prevailing party in any such arbitration
proceeding, then such costs and expenses will be equitably allocated by such
arbitrator upon the basis of the outcome of such arbitration proceeding, and (2)
if such arbitrator is unable to allocate such costs and expenses and expenses in
such a manner, then the costs and expenses of such arbitration will be paid
one-half by Buyer and one-half by Seller, and each of them will pay the
out-of-pocket expenses incurred by it or on its behalf. As part of any Final
Arbitration Award, the arbitrator may designate the prevailing party for
purposes of this Section 10.17. Except as provided in the preceding sentences,
each party to this Agreement will bear its own costs and expenses (including
legal fees and disbursements) in connection with any such proceeding or
submission.
10.18 Confidential Information: Seller. Until the
Closing Date, Seller shall not use or disclose to any person (except as may be
required by Legal Requirement) any confidential information received from any
ABRY Buyer or its agents in the course of investigating, negotiating, and
completing the transactions contemplated by this Agreement or any other ABRY
Agreement. For purposes of this Section 10.18, nothing shall be deemed to be
confidential information that: (a) is known to any ABRY Seller at the time of
its initial disclosure to any ABRY Seller or any representative or Affiliate of
any ABRY Seller; (b) becomes publicly known or available other than through
disclosure by any ABRY Seller; (c) is rightfully received by Seller from any
Person unrelated to any ABRY Seller (other than any Person engaged by any ABRY
Seller in connection with the transactions contemplated by any ABRY Purchase
Agreement); or (d) is independently developed by any ABRY Seller. For
22
purposes of this Agreement, any information which Seller or any of its agents
obtains or has obtained from any other ABRY Seller or its agents and which such
ABRY Seller or agent obtained from any ABRY Buyer or its agent will be deemed to
have been obtained by such Seller from an ABRY Buyer.
10.19 Confidential Information: Buyer. Until the Closing Date,
Buyer (including each individual which is a party hereto) shall not use for its
or any other Persons benefit and shall not disclose to any other Person (except
as may be required by Legal Requirement) any confidential information
(including, without limitation, financial information and information regarding
program contracts and revenue) received from any ABRY Seller or its agent or
pertaining to any ABRY Seller or any Group Station in the course of
investigating, negotiating, and performing the transactions contemplated by this
Agreement or any other ABRY Agreement. For purposes of this Section 10.19,
nothing shall be deemed to be confidential information that: (a) is known to an
ABRY Buyer at the time of its initial disclosure to any ABRY Buyer or any
representative or Affiliate of any ABRY Buyer; (b) becomes publicly known or
available other than through disclosure by any ABRY Buyer or any Person
described in Section 5.1(d)(2); (c) is rightfully received by any ABRY Buyer
from an unrelated Person (other than any other ABRY Buyer or any Person engaged
by any ABRY Buyer in connection with the transactions contemplated by any ABRY
Purchase Agreement); or (d) is independently developed by any ABRY Buyer. Buyer
and each individual which is a party hereto agrees to be bound by the
obligations of Sinclair pursuant to, and no provision of this Section 10.19 will
be deemed to supersede or in any way limit any obligation or right of Sinclair,
Buyer or any such individual under, the Confidentiality Agreement dated October
15, 1992 between Sinclair and ABRY Communications which Confidentiality
Agreement will survive the execution and termination of this Agreement. For
purposes of this Agreement, any information which Buyer or any such individual
or any agent of any of them obtains or has obtained from any other ABRY Buyer or
its agents and which such other ABRY Buyer or agent obtained from any ABRY
Seller or its agent will be deemed to have been obtained by Sinclair, Buyer or
such individual from an ABRY Seller.
10.20 Commencement of Certain Pre-Closing Activities. No party
shall be required to comply with or otherwise perform its covenants and
agreements set forth in Sections 5.2 or 6.2 with respect to any exercise of the
Option so long as such party reasonably concludes that it is not likely that the
condition set forth in Section 7.6 will be satisfied unless and until the
holders of the Existing Station Indebtedness have entered into agreements which
will permit the condition set forth in Section 7.6 to be satisfied.
23
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.
KANSAS CITY TV 62 LIMITED PARTNERSHIP
By: ABRY communications II, L.P.
Its: General Partner
By: BVC Communications III, Inc.
Its: Managing General Partner
By:
-----------------
Its:
-----------------
---------------------
David D. Smith
---------------------
J. Duncan Smith
---------------------
Frederick G. Smith
---------------------
Robert E. Smith
24
APPENDIX
Cross-References. The following is a list of the capitalized terms
which are used in this Agreement and the corresponding provision in which each
such term is defined:
Term Provision
- ---- ---------
AAA Rules Section 10.17(a)
ABRY Appendix
ABRY Buyer Appendix
ABRY Seller Appendix
Affiliate Appendix
Arbitration Section 10.17(b)
Assumed Contract Section 1.4(b)
Assumed Indebtedness Section 1.4(b)
Assumed Liabilities Section 1.4(b)
Assumption Section 2.2
BBM Appendix
Business Day Appendix
Buyer Preamble
Cash Purchase Price Section 2.1(a)
Chesapeake Appendix
Closing Section 2.2
Closing Date Appendix
Communications Act Appendix
Consent Appendix
Continuing Employees Section 9.2
Contract Appendix
Copley Appendix
Disputes Section 10.17(a)
Disputing Person Section 10.17(b)
Exercise Notice Section 1.3
Excluded Assets Section 1.2
Excluded Contracts Section 1.2(e)
Existing Station Indebtedness Appendix
FCC Appendix
FCC Approval Date Appendix
FCC Authorizations Section 1.1(a)
Final Arbitration Award Section 10.17(d)
Group Stations Appendix
Hart-Scott-Rodino Act Appendix
Legal Requirements Appendix
Lien Appendix
New WCGV Appendix
New WTTO Appendix
25
Option Section 1.1
Other Assumed Contracts Section 1.1(f)
Person Appendix
Proceeds 1.1(c)
Program Contracts Section 1.1(e)
Realty Contracts Section 1.1(c)
Required FCC Consent Appendix
Sale Section 1.1
Seller Preamble
Seller's Termination Notice Section 10.1(a)
Seller's Recent Station Records Section 1.1(j)
Sinclair Appendix
Station Assets Section 1.1
Station Recital A
Super 18 Appendix
Time Sales Contracts Section 1.1(d)
Trades Appendix
Transaction Documents Appendix
WARN Act Appendix
WCGV Appendix
WNUV Appendix
WSTR Appendix
WSTR Purchase Agreement Appendix
WTTO Appendix
Additional Defined Terms. In addition, the following capitalized terms
have the following meaning when used in this Agreement and the Schedules
attached to this Agreement:
"ABRY" means ABRY Communications, L.P., a Delaware limited partnership.
"ABRY Buyer" means Sinclair, Buyer (including each individual which is
a party hereto), Chesapeake, New WCGV, New WTTO, or any direct or indirect
assignee of any of the rights of any of them pursuant to any Transaction
Document, or any Affiliate of any of them.
"ABRY Agreements" means this Agreement and any other agreement which
has been or may hereafter be entered into by Seller or its Affiliates and Buyer
or its Affiliates with respect to the transfer or operation of any assets
relating to any Group Station.
"ABRY Seller" means ABRY, BBM, BVC, Copley, Seller, Super 18, WCGV,
WNUV (prior to the date hereof only), WSTR, WTTO, or any direct or indirect
assignee of any of the rights of any of them pursuant to any Transaction
Document, or any Affiliate of any of them.
"BBM" means BBM Partners, L.P., a Delaware limited partnership.
26
A "Business Day" means any day other than a Saturday, Sunday or other
day upon which banks in New York, New York are not open for business.
"Chesapeake" means Chesapeake Television, Inc., a Maryland corporation.
"Closing Date" means the date upon which the Closing occurs.
"Communications Act" means the Communications Act of 1934, as in effect
from time to time.
With respect to any Contract, a "Consent" means any consent or approval
of any Person other than any party to this Agreement which, in accordance with
the terms of such Contract, is required to be obtained in order to permit the
consummation of the Sale or the Assumption.
"Contract" means any agreement, lease, arrangement, commitment, or
understanding to which Seller with respect to the Station is a party.
"Copley" means Copley Place Capital Group, a Massachusetts general
partnership.
"Existing Station Indebtedness" at any time means the indebtedness of
Seller which is described in Schedule 1.4 attached hereto, plus all unpaid
accrued interest thereon and all penalties, indemnities, reimbursements,
premiums and other amounts payable in respect thereof, as of such time.
"FCC" means the Federal Communications Commission or any successor
thereto.
"FCC Approval Date" means the first day upon which each Required FCC
Consent is effective.
"Group Stations" means the Station, broadcast television station
WTTO-TV, Birmingham, Alabama, broadcast television station WCGV-TV, Milwaukee,
Wisconsin, broadcast television station WVTV-TV, Milwaukee, Wisconsin, broadcast
television station WNUV-TV, Baltimore, Maryland, and broadcast television
station WSTR-TV, Cincinnati, Ohio.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as in effect from time to time.
"Legal Requirements" means the Communications Act, the rules,
regulations and policies of the FCC, and all other federal state and local laws,
rules, regulations, ordinances, judgments, orders and decrees.
"Lien" means any mortgage, pledge, hypothecation, encumbrance, lien
(statutory or otherwise), preference, priority or other security agreement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement and any lease having
27
substantially the same effect as any of the foregoing and any assignment or
deposit arrangement in the nature of a security device).
"New WCGV" means WCGV Inc., a Maryland corporation.
"New WTTO" means WTTO, Inc., a Maryland corporation.
A "Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated association or government or department
thereof.
A "Required FCC Consent" means any action or order by the FCC granting
its consent to the assignment to Buyer (or its permitted assignee) pursuant to
this Agreement of any FCC Authorization without any condition which in the
reasonable judgment of Buyer or Seller is adverse to Buyer or Seller, as the
case may be, in any material respect.
"Sinclair" means Sinclair Broadcasting Group, Inc., a Maryland
corporation.
"Super 18" means Super 18 Television Limited Partnership, a Delaware
limited partnership.
"Trades" means all trade, barer or similar arrangements for the sale of
advertising time other than for cash (other than any firm or program barer
arrangements and radio barter arrangements) on the Station.
"Transaction Documents" means this Agreement, the other ABRY Agreements
and all other documents executed and delivered in connection therewith, in each
case as in effect from time to time.
"WARN Act" means the federal Worker Adjustment and Retraining
Notification Act or any applicable state law or other Legal Requirement
regarding termination of employees, in each case, as in effect from time to
time.
28
Schedule 1.4
------------
Outstanding Debt
as of March 31, 1994
Kansas City (KSMO)
Philips Credit Corporation $ 9,611.007 + $492,708
accrued interest
KZKC Television Inc. $ 8,000,000 + $1,747,728
accrued interest
Fries $ 129,645
Disney 547,822
Columbia 1,494,327
MCA 1,141,459
MGM 1,013,764
Paramount 890,942
Fox 571,217
Warner 3,020,821
C. Burnett 338,246
Worldvision 154,989
Misc. 444,496
Total Debt $19,851,443
29
EXHIBIT B
---------
LIENS AND ENCUMBRANCES
----------------------
Pledge and encumbrance of KSMO Option in favor of The Chase Manhattan
Bank (National Association) pursuant to that certain Pledge and Security
Agreement dated December 12, 1994 by and between David D. Smith, Frederick G.
Smith, J. Duncan Smith and Robert E. Smith (each individually, as "Obligor" and,
collectively, the "Obligors"); and The Chase Manhattan Bank (National
Association).
0