$200,000,000
SINCLAIR CAPITAL
11-5/8% High Yield Trust Offered Preferred Securities ("HYTOPS")
guaranteed to the extent set forth in the Parent
Guarantee by Sinclair Broadcast Group, Inc.
PURCHASE AGREEMENT
------------------
March 5, 1997
SMITH BARNEY INC.
CHASE SECURITIES INC.
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Sinclair Capital (the "Trust"), a special purpose statutory
business trust created under the laws of the State of Delaware and Sinclair
Broadcast Group, Inc., a Maryland corporation and as guarantor (the "Company" or
"Guarantor") and KDSM, Inc., a Maryland corporation as depositor of the Trust
and indirect wholly owned subsidiary of the Guarantor ("KDSM, Inc.") (the Trust,
the Company and KDSM, Inc. collectively referred to as the "Offerors") propose,
upon the terms and conditions set forth herein, that the Trust issue and sell to
you as the initial purchasers (the "Initial Purchasers") an aggregate of
$200,000,000 liquidation amount of its 11-5/8% High Yield Trust Offered
Preferred Securities (liquidation amount equal to $100 per security) (the
"Preferred Securities") representing undivided beneficial interests in the
assets of the Trust, guaranteed by the Guarantor as to payments of
distributions, and as to payments on liquidation and redemption, to the extent
set forth in a guarantee agreement (the "Parent Guarantee") among the Guarantor
and First Union National Bank of Maryland as trustee (the "Guarantee Trustee").
The proceeds of the sale of the Preferred Securities and its common securities
(the "Common Securities", such Common Securities to be owned by KDSM, Inc.) by
the Trust are to be invested in 11-5/8% Senior Debentures due 2009 (the
"Debentures") of KDSM, Inc., to be guaranteed by the Guarantor in certain
circumstances (the "Parent Debenture Guarantee"), and the Debentures are to be
issued, pursuant to an Indenture (the "Indenture") among KDSM, Inc., the
Guarantor and First Union National Bank of Maryland, as trustee (the "Debenture
Trustee").
The Preferred Securities and the Common Securities are to be
issued pursuant to the terms of an amended and restated trust agreement, dated
as of March 12, 1997 (the "Trust Agreement"), among KDSM, Inc., as depositor,
First Union National Bank of Maryland, as the property trustee (the "Property
Trustee"), First Union Bank of Delaware, as the Delaware trustee (the "Delaware
Trustee") and the Administrative Trustees (the "Administrative Trustees") named
in the Trust Agreement (the Administrative Trustees, the Property Trustee and
the Delaware Trustee collectively referred to as the "Trustees").
KDSM, Inc. will also own Series C Preferred Stock of the
Company ("Parent Preferred") with a liquidation value equal to the liquidation
value of the Preferred Securities and Common Securities, collectively. KDSM,
Inc.'s obligations under the Debentures will be secured with a first priority
pledge of KDSM, Inc.'s interest in the Parent Preferred pursuant to a pledge
agreement by and between KDSM, Inc. and the collateral agent (the "Collateral
Agent") and the Trust (the "Pledge Agreement"). The Preferred Securities, the
Parent Preferred and the Debentures are collectively referred to herein as the
"Securities.
"The Offerors wish to confirm as follows their agreement with
the Initial Purchasers in connection with the purchase and resale of the
Preferred Securities.
1. Preliminary Offering Memorandum and Offering Memorandum.
The Preferred Securities will be offered and sold to the Initial Purchasers
without registration under the Securities Act of 1933, as amended (the "Act"),
in reliance on an exemption pursuant to Section 4(2) under the Act. The Offerors
have prepared a preliminary offering memorandum, dated February 24, 1997 (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated March 5,
1997 (the "Offering Memorandum"), setting forth information regarding the
Company, KDSM, Inc., the Trust, the Preferred Securities, the Parent Guarantee,
the Indenture, the Debentures, the Parent Debenture Guarantee, the Expense
Agreement, the Registration Rights Agreement, the Pledge Agreement and certain
other agreements related to the transactions contemplated herein. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto. The Offerors hereby
confirm that they have authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Preferred Securities by the Initial Purchasers.
The Offerors understand that the Initial Purchasers propose to
make offers and sales (the "Exempt Resales") of the Preferred Securities
purchased by the Initial Purchasers hereunder only on the terms and in the
manner set forth in the Preliminary Offering Memorandum and the Offering
Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered, (i) to persons
in the United States whom the Initial Purchasers reasonably believe to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
Rule 144A under the Act, as such rule may be amended from time to time ("Rule
144A"), in transactions under Rule 144A, and (ii) to a limited number of other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) and
(7) under Regulation D of the Act) ("Accredited Investors") in private sales
exempt from registration under the Act (such persons specified in clauses (i)
and (ii) being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Preferred Securities shall bear the
following legend:
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRANSFER AGENT), (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR
(E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Preferred Securities will, among holders of
certain other securities, have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement"), to be dated
the date hereof, in substantially the form of Exhibit A hereto, for so long as
any of the Securities contain restrictions on transfer.
Pursuant to the Registration Rights Agreement, the Offerors
will agree to use their best efforts to, among other things, (i) file with the
Securities and Exchange Commission (the "Commission") a registration statement
(the "Exchange Offer Registration Statement") with respect to securities
identical in all material respects to the Securities (the "Exchange Securities")
and, upon such Exchange Offer Registration Statement becoming effective, to
offer holders of the Securities the opportunity to exchange their Securities for
the Exchange Securities, (ii) file with the Commission under the circumstances
set forth therein, a registration statement on the appropriate form under the
Act relating to the resale of the Preferred Securities by certain holders
thereof from time to time in accordance with the methods of distribution set
forth in such registration statement and Rule 415 under the Act (the "Shelf
Registration Statement") and (iii) to use its best efforts to cause such
Exchange Offer Registration Statement and/or the Shelf Registration Statement to
be declared effective. If the Offerors fail to comply with the provisions of the
Registration Rights Agreement, additional distributions will be required on the
Preferred Securities as set forth in the Registration Rights Agreement.
This Agreement, the Parent Guarantee, the Indenture (including
the Parent Debenture Guarantee), the Pledge Agreement, the Expense Agreement and
the Registration Rights Agreement are hereinafter referred to collectively as
the "Operative Documents."
Capitalized terms used herein without definition have the
respective meanings specified therefor in the Offering Memorandum.
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2. Agreements to Sell, Purchase and Resell. (a) The Trust
hereby agrees, subject to all the terms and conditions set forth herein, to
issue and sell to the Initial Purchasers and, upon the basis of the
representations, warranties and agreements of the Trust herein contained and
subject to all the terms and conditions set forth herein, the Initial Purchasers
agree to purchase from the Trust, at a purchase price of 100% of the liquidation
amount thereof, the liquidation amount of Preferred Securities set forth
opposite the name of the Initial Purchasers in Schedule I hereto. As
compensation to the Initial Purchasers for their commitments hereunder, and in
view of the fact that the proceeds of the sale of the Preferred Securities will
be issued by the Trust to purchase the KDSM Senior Debentures of KDSM, Inc.,
KDSM, Inc. hereby agrees to pay at the Closing to the Initial Purchasers, a
commission equal to 2.5% of the liquidation amount per Preferred Security for
the Preferred Securities to be delivered at the Closing. Alternatively, as a
matter of convenience, the Initial Purchasers may deduct such amount from the
purchase price of the Preferred Securities and in such event the KDSM, Inc.
shall be deemed to have paid the same.
(b) The Initial Purchasers have advised the Offerors that they
propose to offer the Preferred Securities for sale upon the terms and conditions
set forth in this Agreement and in the Offering Memorandum. The Initial
Purchasers hereby represent and warrant to, and agree with, the Offerors that
the Initial Purchasers (i) are purchasing the Preferred Securities pursuant to a
private sale exempt from registration under the Act, (ii) will not solicit
offers for, or offer or sell, the Preferred Securities by means of any form of
general solicitation or general advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, and (iii) will solicit
offers for the Preferred Securities only from, and will offer, sell or deliver
the Preferred Securities as part of its initial offering, only to (A) persons in
the United States whom the Initial Purchasers reasonably believe to be Qualified
Institutional Buyers, or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, in each case, in
transactions under Rule 144A, and (B) to a limited number of Accredited
Investors that make the representations to and agreements with the Offerors
specified in Annex A to the Offering Memorandum in private sales exempt from
registration under the Act. The entire proceeds from the sale by the Trust of
the Preferred Securities to the Initial Purchasers will be combined with the
entire proceeds from the sale by the Trust to KDSM, Inc. of its Common
Securities, and will be used by the Trust, simultaneous with the consummation of
the Offering, to purchase an equivalent amount of the Debentures. The proceeds
from the sale by KDSM, Inc. of the Debentures will be used by KDSM, Inc.,
simultaneously with the consummation of the Offering, to purchase an equivalent
amount of Parent Preferred from the Company.
(c) The Initial Purchasers understand that the Offerors and,
for purposes of the opinions to be delivered to the Initial Purchasers
hereunder, counsel to the Offerors and counsel to the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations and
agreements, and the Initial Purchasers hereby consent to such reliance.
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3. Delivery of the Preferred Securities and Payment Therefor.
Delivery to the Initial Purchasers of and payment for the Preferred Securities
shall be made at the office of Smith Barney Inc., 388 Greenwich Street, New
York, NY 10013, at 9:00 A.M., New York City time, on March 12, 1997 (the
"Closing Date"). The place of closing for the Preferred Securities and the
Closing Date may be varied by agreement between the Initial Purchasers and the
Offerors.
The Preferred Securities shall be delivered to the Initial
Purchasers against payment of the purchase price therefor in immediately
available funds to the Company. The Preferred Securities will be evidenced by a
single global security in definitive form and/or by additional definitive
securities, and will be registered in the name of Cede & Co. as nominee of The
Depository Trust Company ("DTC"), and in the other cases, in such names and in
such denominations as the Initial Purchasers shall request prior to 9:30 A.M.,
New York City time, on the second Business Day preceding the Closing Date. The
Preferred Securities to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date.
4. Agreements of the Offerors. The Offerors, jointly and
severally, agree with the Initial Purchasers as follows:
(a) The Company will advise the Initial Purchasers promptly
and, if requested by either of them, will confirm such advice in writing, within
the period of time referred to in paragraph (f) below, of any change in the
Company's and its Subsidiaries' (as defined below) condition (financial or
other), business, prospects, properties, net worth or results of operations, or
of the happening of any event which makes any statement of a material fact made
in the Preliminary Offering Memorandum or the Offering Memorandum (as then
amended or supplemented) untrue or which requires the making of any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum (as
then amended or supplemented) in order to state a material fact or necessary in
order to make the statements therein not misleading, or of the necessity to
amend or supplement the Preliminary Offering Memorandum or the Offering
Memorandum (as then amended or supplemented) to comply with any law.
(b) KDSM, Inc. will advise the Initial Purchasers promptly
and, if requested by either of them, will confirm such advice in writing, within
the period of time referred to in paragraph (f) below, of any change in KDSM,
Inc.'s condition (financial or other), business, prospects, properties, net
worth or results of operations, or of the happening of any event which makes any
statement of a material fact made in the Preliminary Offering Memorandum or the
Offering Memorandum (as then amended or supplemented) untrue or which requires
the making of any additions to or changes in the Preliminary Offering Memorandum
or the Offering Memorandum (as then amended or supplemented) in order to state a
material fact or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum (as then amended or supplemented) to
comply with any law.
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(c) The Offerors will furnish to the Initial Purchasers,
without charge, as of the date of the Preliminary Offering Memorandum or the
Offering Memorandum, as the case may be, such number of copies of the
Preliminary Offering Memorandum or the Offering Memorandum, as the case may be,
as may then be amended or supplemented as it may reasonably request.
(d) The Offerors will not make any amendment or supplement to
the Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised.
(e) Prior to the execution and delivery of this Agreement, the
Offerors have delivered or will deliver to the Initial Purchasers, without
charge, in such quantities as the Initial Purchasers shall have requested or may
hereafter reasonably request, copies of the Preliminary Offering Memorandum. The
Offerors consent to the use, in accordance with the securities or blue sky laws
of the jurisdictions in which the Preferred Securities are offered by the
Initial Purchasers and by dealers, prior to the date of the Offering Memorandum,
of each Preliminary Offering Memorandum so furnished by the Company. The
Offerors consent to the use of the Preliminary Offering Memorandum or the
Offering Memorandum (and of any amendment or supplement thereto) in accordance
with the securities or blue sky laws of the jurisdictions in which the Preferred
Securities are offered by the Initial Purchasers and by all dealers to whom
Preferred Securities may be sold, in connection with the offering and sale of
the Preferred Securities.
(f) If, at any time prior to completion of the distribution of
the Preferred Securities by the Initial Purchasers to Eligible Purchasers, any
event shall occur that in the judgment of the Company or its counsel or in the
opinion of counsel for the Initial Purchasers should be set forth in the
Preliminary Offering Memorandum or the Offering Memorandum (as then amended or
supplemented) in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Preliminary Offering Memorandum or the Offering
Memorandum in order to comply with any law, the Offerors will forthwith prepare
an appropriate supplement or amendment thereto or such document, and will
expeditiously furnish to the Initial Purchasers and dealers a reasonable number
of copies thereof. In the event that the Offerors and the Initial Purchasers
agree that the Preliminary Offering Memorandum or the Offering Memorandum should
be amended or supplemented, the Offerors, if requested by the Initial
Purchasers, will promptly issue a press release announcing or disclosing the
matters to be covered by the proposed amendment or supplement or such document.
The Initial Purchasers agree that upon notice by the Company or its counsel,
they will suspend use of the Preliminary Offering Memorandum or Offering
Memorandum, as the case may be, as promptly as reasonably practicable after an
occurrence of an event subject to this paragraph (f), until the Offerors have
amended or supplemented the Preliminary Offering Memorandum or Offering
Memorandum to correct such misstatement or omission or to effect compliance.
6
(g) The Offerors will cooperate with the Initial Purchasers
and with their counsel in connection with the qualification of the Preferred
Securities for offering and sale by the Initial Purchasers and by dealers under
the securities or blue sky laws of such jurisdictions as the Initial Purchasers
may designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such qualification;
provided that in no event shall any of the Offerors be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Preferred Securities, in any
jurisdiction where it is not now so subject or subject itself to taxation in any
jurisdiction in which it is not now subject.
(h) So long as any of the Securities are outstanding, the
Company will furnish to the Initial Purchasers (i) as soon as available, a copy
of each report of the Company mailed to stockholders or filed with any stock
exchange or regulatory body and (ii) from time to time such other information
concerning the Company as the Initial Purchasers may reasonably request.
(i) If this Agreement shall terminate or shall be terminated
after execution and delivery pursuant to any provisions hereof (otherwise than
by notice given by the Initial Purchasers terminating this Agreement pursuant to
Section 10 hereof) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Offerors to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company and KDSM, Inc., jointly and severally, agree to reimburse the Initial
Purchasers for all out-of-pocket expenses (including fees and expenses of its
counsel) reasonably incurred by them in connection herewith, but without any
further obligation on the part of the Company for loss of profits or otherwise.
(j) The Trust will invest the proceeds received from the sale
of the Preferred Securities and the Common Securities in the Debentures and
KDSM, Inc. will invest the proceeds received from the sale of the Debentures in
the Parent Preferred. The Company will contribute or shall cause to be
contributed, to KDSM, Inc. $6.2 million to allow KDSM, Inc. to purchase the
Common Securities and KDSM, Inc. will apply such funds, or cause such funds to
be applied, to purchase such Common Securities. After paying expenses associated
with the offering made pursuant to the Preliminary Offering Memorandum and the
Offering Memorandum, the Company will use the net proceeds it receives from the
sale of the Parent Preferred in the manner specified in the Offering Memorandum
under "Use of Proceeds."
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Company has not taken, nor will
it take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Preferred Securities to facilitate the sale or resale of the Preferred
Securities. Except as permitted by the Act, the Company will not distribute any
offering material in connection with the Exempt Resales.
(l) The Company will use its best efforts to cause the
Preferred Securities to be eligible for trading on The PORTAL Market.
7
(m) From and after the Closing Date, so long as any of the
Preferred Securities are outstanding and are "Restricted Securities" within the
meaning of Rule 144(a)(3) under the Act, the Company will furnish to holders of
the Preferred Securities and prospective purchasers of Preferred Securities
designated by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act to permit compliance with Rule 144A in connection with resale of
the Preferred Securities.
(n) The Offerors agree not to sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Act) that would be integrated with the sale of the Preferred Securities in a
manner that would require the registration under the Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Preferred Securities.
(o) Each of the Offerors agree to comply with all of the terms
and conditions of the Registration Rights Agreement and all agreements set forth
in the representation letters of each of the Offerors, as the case may be, to
DTC relating to the approval of the Preferred Securities by DTC for "book entry"
transfer.
(p) The Company agrees that simultaneously with any
registration of the Preferred Securities pursuant to the Registration Rights
Agreement, or at such earlier time as may be required, the Indenture and the
Trust Agreement shall be qualified under the Trust Indenture Act of 1939 (the
"1939 Act") and any necessary supplemental indentures will be entered into in
connection therewith.
(q) The Offerors agree that, in order to render the Preferred
Securities eligible for resale pursuant to Rule 144A under the Act, while any of
the Preferred Securities remain outstanding, it will make available upon request
to any holders of Preferred Securities or prospective purchasers of Preferred
Securities the information specified in Rule 144A(d)(4), unless each of the
Offerors furnishes information to the Commission pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 as amended (the "Exchange Act").
5. Representations and Warranties of the Offerors. The
Offerors each individually (as applicable) and jointly and severally represent
and warrant to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering
Memorandum with respect to the Preferred Securities have been prepared by the
Offerors for use by the Initial Purchasers in connection with the Exempt
Resales. No order or decree preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum or any amendment or supplement thereto, or
any order asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act has been issued and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Offerors, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates and the Offering Memorandum did not or
will not, as supplemented as of the Closing Date, contain an untrue statement of
a material fact or omit to state a material fact
8
required to be stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Preliminary Offering Memorandum and Offering
Memorandum made in reliance upon and in conformity with information relating to
the Initial Purchasers furnished to the Offerors in writing by or on behalf of
the Initial Purchasers expressly for use therein.
(c) The Trust is a business trust duly created and validly
existing in good standing under the laws of the State of Delaware, with power
and authority to own, lease and operate its properties and conduct its business
as described in the Preliminary Offering Memorandum and the Offering Memorandum,
and the Trust has conducted no business to date other than as contemplated by
this Agreement, and it will conduct no business in the future that would be
inconsistent with the Trust Agreement, as amended, and the description of the
Trust set forth in the Preliminary Offering Memorandum and the Offering
Memorandum; the Trust is not a party to or bound by any agreement or instrument
other than this Agreement, the Trust Agreement and the agreements and
instruments contemplated by the Trust Agreement, the Registration Rights
Agreement and the Expense Agreement with KDSM, Inc. which is an Exhibit to the
Trust Agreement; the Trust has no liabilities or obligations other than those
arising out of the transactions contemplated by this Agreement, the Trust
Agreement, the Registration Rights Agreement and the Expense Agreement and as
described in the Preliminary Offering Memorandum and the Offering Memorandum;
based on expected operations and current law, the Trust is a statutory business
trust and is not and will not be classified as an association taxable as a
corporation for United States federal income tax purposes; and the Trust is not
a party to or subject to any action, suit or proceeding of any nature.
(d) The Preferred Securities have been duly authorized, and,
when issued and delivered to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable beneficial interests in the Trust entitled to the benefits
provided by the Trust Agreement and free of any preemptive or similar rights
whether by contract or by law; the Preferred Securities conform to the
description thereof contained in the Preliminary Offering Memorandum and the
Offering Memorandum; the Preferred Securities will have the rights set forth in
the Trust Agreement, and the terms of the Preferred Securities are valid and
binding on the Trust. The Parent Preferred has been duly authorized, and, when
issued and delivered to KDSM, Inc. against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable, and
free of any preemptive or similar rights; the Parent Preferred conforms to the
description thereof contained in the Preliminary Offering Memorandum and the
Offering Memorandum; the Parent Preferred will have the rights set forth in the
Articles Supplementary, and the terms of the Parent Preferred are valid and
binding on the Company.
(e) The holders of the Preferred Securities will be entitled
to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
(f) The Common Securities have been duly authorized and when
issued and delivered by the Trust to KDSM, Inc. against payment therefor in
accordance with the Trust
9
Agreement, will be validly issued, fully paid and non-assessable, beneficial
interests in the Trust entitled to the benefits provided by the Trust Agreement
and free of any preemptive or other similar rights whether by contract or by
law; the Common Securities will have the rights set forth in the Trust Agreement
and conform to the description thereof contained in the Preliminary Offering
Memorandum and the Offering Memorandum; and upon delivery by the Trust to KDSM,
Inc., all of the issued and outstanding Common Securities of the Trust will be
directly owned by KDSM, Inc., free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(g) The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Debentures, the
Indenture, the Registration Rights Agreement and the Parent Guarantee (such
documents collectively referred to as the "Company Agreements"). The Company
Agreements have each been authorized and when validly executed and delivered by
the Company and (i) in the case of the Indenture, by the Debenture Trustee, (ii)
in the case of the Debentures, when duly authenticated and delivered by the
Debenture Trustee and (iii) in the case of the Parent Guarantee, by the Parent
Guarantee Trustee, will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, and except to the extent rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities laws or
principles of public policy; the Debentures are entitled to the benefits of the
Indenture and will be in the form contemplated therein; and the Company
Agreements will conform to the descriptions thereof in the Preliminary Offering
Memorandum and the Offering Memorandum as amended or supplemented.
(h) The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Parent Debenture
Guarantee. The Parent Debenture Guarantee has been duly authorized and will
constitute a valid and legally binding obligation of the Company, enforceable,
upon effectiveness of the Parent Debenture Guarantee pursuant to a supplemental
indenture, in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
except to the extent rights to indemnity and contribution hereunder and
thereunder may be limited by Federal or state securities laws or principles of
public policy; the Parent Debenture Guarantee, once effective, is entitled to
the benefits of the Indenture.
(i) KDSM, Inc. has all requisite power and authority to
execute, deliver and perform its obligations under the Trust Agreement, the
Debentures, the Indenture, the Registration Rights Agreement, the Expense
Agreement and the Pledge Agreement (such documents hereinafter referred to as
the "KDSM Agreements"). The KDSM Agreements have each been duly authorized and
when validly executed and delivered by KDSM, Inc. and (i) in the case of the
Indenture, by the Debenture Trustee, (ii) in the case of the Debentures, duly
authenticated and delivered by the Debenture Trustee, (iii) in the case of the
Trust Agreement, by the Trustees, (iv) in the case of the Expense Agreement, by
the Trust, and (v) in the case of the Pledge Agreement, by the Collateral Agent
and the Trustees, will constitute valid and legally
10
binding obligations of KDSM, Inc., enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or effecting
creditors' rights and to general equity principles, and except to the extent
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy; the KDSM
Agreements will conform to the descriptions thereof in the Preliminary Offering
Memorandum and the Offering Memorandum as amended or supplemented.
(j) Pursuant to the Pledge Agreement, the Trust shall have a
valid and perfected Lien upon, and a first priority interest in, the Parent
Preferred as security for repayment of KDSM, Inc.'s obligations under the
Indenture and the Debentures.
(k) The Trust has all requisite power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement and the Expense Agreement (such documents referred to as the "Trust
Documents"). The Trust Documents have each been duly authorized and when validly
executed and delivered by the Trust and will constitute valid and legally
binding obligations of the Trust, enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or effecting
creditors' rights and to general equity principles and except to the extent
rights to indemnity and contribution thereunder may be limited by Federal or
state securities laws or principles of public policy.
(l) The execution and delivery of, and the performance by each
of the Company, KDSM, Inc. and the Trust of their respective obligations under
this Agreement has been duly and validly authorized by each of the Company,
KDSM, Inc. and the Trust and this Agreement has been duly executed and delivered
by each of the Company, KDSM, Inc. and the Trust.
(m) Each of the Company and KDSM, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of Maryland with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Preliminary Offering Memorandum and
the Offering Memorandum, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of, with respect to the Company
and the Subsidiaries, the Company and the Subsidiaries (as both later terms are
hereinafter defined) taken as a whole (a "Company Material Adverse Effect") and,
with respect to KDSM, Inc., KDSM, Inc. and its subsidiaries taken as a whole (a
"KDSM Material Adverse Effect").
(n) All the Company's subsidiaries (which include, among
others, KDSM, Inc. and the Trust, and are collectively, the "Subsidiaries") are
listed in Exhibit B. Each Subsidiary is a corporation or a trust duly organized,
validly existing and in good standing in the jurisdiction of its incorporation
or organization, as the case may be (which is listed opposite the name of each
11
subsidiary in Exhibit B hereto), with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Preliminary Offering Memorandum and the Offering Memorandum, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or qualify does not have, with respect to the Company and the
Subsidiaries, a Company Material Adverse Effect or, with respect to KDSM, Inc.
and its subsidiaries, a KDSM Material Adverse Effect; all the outstanding shares
of capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and are owned by the Company
directly, or indirectly through one of the other Subsidiaries, free and clear of
any lien, adverse claim, security interest, equity or other encumbrance, except
as described in the Preliminary Offering Memorandum and the Offering Memorandum.
(o) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and non-assessable
and are free of any preemptive or similar rights, except as described in the
Offering Memorandum.
(p) Except as described or referred to in the Preliminary
Offering Memorandum or the Offering Memorandum, there is not pending or to the
knowledge of the Offerors threatened, any action, suit, proceeding, inquiry or
investigation, to which the Company or any of the Subsidiaries is a party, or to
which the property of the Company or any of the Subsidiaries is subject, before
or brought by any court or governmental agency or body, which, if determined
adversely to the Company or any of the Subsidiaries would individually or in the
aggregate result in any material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Company
and the Subsidiaries taken as a whole or, with respect to only such matters
related to KDSM, Inc. or any of its subsidiaries, KDSM, Inc. and its
subsidiaries taken as a whole, or might materially adversely affect the
consummation of the transactions contemplated by the Preliminary Offering
Memorandum and the Offering Memorandum; and all pending legal or governmental
proceedings to which the Company or any of the Subsidiaries is a party or that
affect any of their respective properties, that are not described in the
Preliminary Offering Memorandum and the Offering Memorandum, including ordinary
routine litigation incidental to the business, would not, if determined
adversely to the Company or any of the Subsidiaries, individually or in the
aggregate, result in a Company Material Adverse Effect or, with respect to only
such matters related to KDSM, Inc. or any of its subsidiaries, a KDSM Material
Adverse Effect.
(q) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or bylaws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, or in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound and no condition or state of facts exists,
with
12
which the passage of time or the giving of notice or both would constitute such
a default, except in each case where such violation or default would not, singly
or in the aggregate, have a Company Material Adverse Effect or, with respect to
only such matters related to KDSM, Inc. or any of its subsidiaries, a KDSM
Material Adverse Effect.
(r) None of (i) the issuance and sale of the Preferred
Securities by the Trust, the compliance by the Trust with all of the provisions
of this Agreement, the Expense Agreement and the Trust Agreement, the purchase
of the Debentures by the Trust, the execution, delivery and performance by the
Trust of the Trust Agreement and the consummation by the Trust of the
transactions contemplated hereby and thereby, (ii) the issuance and sale by
KDSM, Inc. of the Debentures to the Trust, the compliance by KDSM, Inc. with all
of the provisions of this Agreement and the KDSM Agreements, the purchase of the
Parent Preferred by KDSM, Inc. and the consummation by KDSM, Inc. of the
transactions contemplated hereby and thereby, or (iii) the issuance and sale of
the Parent Preferred by the Company, the issuance of the Parent Guarantee and
the Parent Debenture Guarantee, the compliance by the Company with this
Agreement, the Company Agreements and the Parent Debenture Guarantee, and the
consummation by the Company of the transactions contemplated hereby and thereby,
(A) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Securities under the Securities Act in accordance
with the Registration Rights Agreement and the compliance with the securities or
blue sky laws of various jurisdictions) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation or bylaws, declaration or certificate of trust or
other organizational documents, of the Company or any of the Subsidiaries or (B)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or other instrument to which
the Company or any of the Subsidiaries is a party or by which any of them or any
of their respective properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(s) The accountants, Arthur Anderson LLP, Ernst & Young LLP,
KPMG Peat Marwick LLP and Price Waterhouse LLP, who have certified or shall
certify the financial statements included as part of the Preliminary Offering
Memorandum and the Offering Memorandum (or any amendment or supplement thereto),
each are independent public accountants as required by the Act.
(t) The consolidated financial statements, together with the
related schedules and notes included in the Preliminary Offering Memorandum and
the Offering Memorandum present fairly the consolidated financial position,
results of operations and changes in financial position of the entities
purported to be shown thereby at the dates and for the periods indicated and
have been prepared in accordance with generally accepted accounting principles
("GAAP")
13
applied on a consistent basis, except as otherwise stated therein. The selected
financial data and summary financial data included in the Preliminary Offering
Memorandum and the Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
consolidated financial statements included in the Preliminary Offering
Memorandum and the Offering Memorandum except as otherwise stated therein. The
pro forma financial statements and other pro forma financial information
included in the Preliminary Offering Memorandum and the Offering Memorandum
present fairly the information shown therein in accordance with the adjustments
and assumptions described therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma basis described therein
and in the opinion of the Offerors, the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(u) Except as disclosed in the Preliminary Offering Memorandum
and the Offering Memorandum (or any amendment or supplement thereto), subsequent
to the date as of which such information is given in the Preliminary Offering
Memorandum and the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole or, with respect to only such matters related to
KDSM, Inc. or any of its subsidiaries, material to KDSM, Inc. and its
subsidiaries taken as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or long-term debt, of the
Company or any of the Subsidiaries or any material adverse change, or any
development involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the Subsidiaries
taken as a whole or, with respect to only such matters relating to KDSM, Inc. or
any of its subsidiaries, KDSM, Inc. and its subsidiaries taken as a whole.
(v) Each of the Company and the Subsidiaries owns all property
(real and personal) described in the Preliminary Offering Memorandum and the
Offering Memorandum as being owned by it, free and clear of all liens, claims,
security interests or other encumbrances, except such as are described in the
Preliminary Offering Memorandum and the Offering Memorandum or with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such properties by the Company and the Subsidiaries and
could not reasonably be expected individually or in the aggregate to result in,
a Company Material Adverse Effect, and, with respect to only such matters
relating to KDSM, Inc. or any of its subsidiaries, a KDSM Material Adverse
Effect, and, all of the leases and subleases material to the business of the
Company and the Subsidiaries taken as a whole or, with respect to only such
matters related to KDSM, Inc. or any of its subsidiaries, KDSM, Inc. and its
subsidiaries taken as a whole, and under which the Company or any of the
Subsidiaries holds properties whether or not described in the Preliminary
Offering Memorandum and the Offering Memorandum, are in full force and effect
and neither the Company nor any of the Subsidiaries has any notice of any claim
of any sort that has been asserted by anyone adverse to the rights of the
Company or any of the
14
Subsidiaries under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or any of the Subsidiaries to the
continued possession of the leased or subleased premises under any such lease or
sublease, which claim could reasonably be expected individually or in the
aggregate to result in a Company Material Adverse Effect or, with respect to
only such matters relating to KDSM, Inc. or any of its subsidiaries, a KDSM
Material Adverse Effect.
(w) Each of the Company and the Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, trademarks, service marks, trade names and
know-how (including trade secrets and other patentable and/or unpatentable
proprietary or confidential information or procedures) (collectively,
"intellectual property") necessary to carry on its business as presently
operated by it, except where the failure to own or possess or have the ability
to acquire any such intellectual property would not individually or in the
aggregate result in any Company Material Adverse Effect or, with respect to only
such matters relating to KDSM, Inc. or any of its subsidiaries, any KDSM
Material Adverse Effect; and none of the Company or any of the Subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any intellectual property or of
any facts which would render any intellectual property invalid or inadequate to
protect the interest of the Company or any of the Subsidiaries therein and which
infringement or conflict could reasonably be expected in the aggregate to result
in any Company Material Adverse Effect or, with respect to only such matters
relating to KDSM, Inc. or any of its subsidiaries, any KDSM Material Adverse
Effect.
(x) Except as described in the Preliminary Offering Memorandum
and the Offering Memorandum, the Company and the Subsidiaries comply in all
material respects with all Environmental Laws (as defined below), except to the
extent that failure to comply with such Environmental Laws would not
individually or in the aggregate result in any material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole or, with respect
to only such matters relating to KDSM, Inc. or any of its subsidiaries, KDSM,
Inc. and its subsidiaries taken as a whole. To the knowledge of the Company,
none of the Company or any of the Subsidiaries is the subject of any pending or,
to the knowledge of the Company, threatened federal, state or local
investigation evaluating whether any remedial action by the Company or any of
the Subsidiaries is needed to respond to a release of any Hazardous Materials
(as defined below) into the environment, resulting from the Company's or any of
the Subsidiaries' business operations or ownership or possession of any of their
properties or assets or is in contravention of any Environmental Law that could
reasonably be expected individually or in the aggregate to result in any Company
Material Adverse Effect or, with respect to only such matters relating to KDSM,
Inc. or any of its subsidiaries, any KDSM Material Adverse Effect. None of the
Company or any of the Subsidiaries have received any notice or claim, nor are
there pending or, to the knowledge of the Company, threatened lawsuits against
them, with respect to violations of an Environmental Law or in connection with
any release of any Hazardous Material into the environment that could reasonably
be expected in the aggregate to result in any Company Material Adverse Effect
or, with respect to only such matters relating to KDSM, Inc. or any of its
subsidiaries, a KDSM Material Adverse Effect. As used herein, "Environmental
Laws" means any federal, state or
15
local law or regulation applicable to the Company's or any of the Subsidiaries'
business operation or ownership or possession of any of their properties or
assets relating to environmental matters, and "Hazardous Materials" means those
substances that are regulated by or form the basis of liability under any
Environmental Laws.
(y) No labor problem exists with the employees of the Company
or any of the Subsidiaries or, to the knowledge of the Company, is imminent
that, in either case, could reasonably be expected individually or in the
aggregate to result in any Company Material Adverse Effect or, with respect to
only such matters relating to KDSM, Inc. or any of its subsidiaries, a KDSM
Material Adverse Effect.
(z) The Company and each of the Subsidiaries maintain
insurance of the types and in the amounts that are reasonable for the businesses
operated by them, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and the Subsidiaries against
theft, damage, destruction, acts of vandalism, liability and malpractice, all of
which insurance is in full force and effect.
(aa) The Company and each of the Subsidiaries is in compliance
with, and each such entity has not received any notice of any outstanding
violation of, all laws, regulations, ordinances and rules applicable to it and
its operations, except, in either case, where any failure by the Company or any
of the Subsidiaries to comply with any such law, regulation, ordinance or rule
would not individually or in the aggregate result in any Company Material
Adverse Effect or, with respect to only such matters relating to KDSM, Inc. or
any of its subsidiaries, a KDSM Material Adverse Effect.
(bb) To the best of the Company's knowledge, each of Baltimore
(WNUV- TV) Licensee, Inc., the licensee of WNUV-TV, Baltimore, Maryland; WVTV
Licensee, Inc. the licensee of WVTV(TV), Milwaukee, Wisconsin; WPTT, Inc., the
licensee of WPTT(TV), Pittsburgh, Pennsylvania; Raleigh (WRDC-TV) Licensee, Inc.
the licensee of WRDC(TV), Durham, North Carolina; River City License
Partnership, the licensee of KOVR(TV), Stockton, California, KDSM(TV), Des
Moines, Iowa, KDNL(TV), St. Louis, Missouri, WTTV(TV), Bloomington, Indiana,
WTTK(TV), Kokomo, Indiana, WLOS(TV), Asheville, North Carolina, WFBC-TV,
Andersen, South Carolina, KABB(TV), San Antonio, Texas, WVRV(FM), East St.
Louis, Illinois and KPNT(FM), Ste. Genevieve, Missouri; KRRT License Corp., the
licensee of KRRT(TV), Kerrville, Texas; Tiab Communications Corporation, the
licensee of WILT(AM), Mt. Pocono, Pennsylvania; WDBB-TV, Inc., the licensee of
WDBB(TV), Tuscaloosa, Alabama; and Birmingham (WABM-TV) Licensee, Inc., the
licensee of WABM(TV), Birmingham, Alabama (each individually an "LMA Station"
and together the "LMA Stations") owns or possesses all governmental licenses,
permits, certificates, consents, orders, approvals and other authorizations
necessary to own its properties, and to conduct its business in the manner
described in the Preliminary Offering Memorandum and the Offering Memorandum,
except where the failure to own or possess such licenses, permits, certificates,
consents, orders, approvals and other authorizations would not individually or
in the aggregate result in any Company Material Adverse Effect or, with respect
to only such matters relating to KDSM, Inc. or any of its subsidiaries, a KDSM
Material Adverse Effect; all of the LMA Material Licenses
16
are valid and in full force and effect; and no event, including receipt of
notice of proceedings relating to revocation or modification of any LMA Material
Licenses, has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or result in any other material
impairment of the rights of any holder of any such permit, subject in each case
to such qualifications as may be set forth in the Preliminary Offering
Memorandum and the Offering Memorandum; and, except as described in the
Preliminary Offering Memorandum and the Offering Memorandum, none of such
permits contains any restriction that is materially burdensome to the LMA
Station or the Company and its Subsidiaries; and there is in full force and
effect with each LMA Station a contract, enforceable in accordance with its
terms against the Company and against the LMA Station pursuant to which the
Company provides programming services to the LMA Station as described or except
as described in the Preliminary Offering Memorandum and the Offering Memorandum.
(cc) The Company, KDSM, Inc., and the Trust have not
distributed and, prior to the later to occur of the (i) Closing Date and (ii)
completion of the distribution of the Preferred Securities, will not distribute
any offering material in connection with the offering and sale of the Preferred
Securities other than the Preliminary Offering Memorandum and Offering
Memorandum.
(dd) Except as described in or contemplated by the Preliminary
Offering Memorandum and the Offering Memorandum, in addition to LMA Material
Licenses, each of the Company and the Subsidiaries owns or possesses all
governmental licenses, permits, certificates, consents, orders, approvals and
other authorizations necessary to own its properties and to conduct its business
in the manner described in the Preliminary Offering Memorandum and the Offering
Memorandum, except where the failure to own or possess such licenses, permits,
certificates, consents, orders, approvals and other authorizations would not
individually or in the aggregate result in any Company Material Adverse Effect
or, with respect to only such matters relating to KDSM, Inc. or any of its
subsidiaries, a KDSM Material Adverse Effect (collectively, "Material
Licenses"); all of the Material Licenses are valid and in full force and effect;
and no event, including receipt of notice of proceedings relating to revocation
or modification of any Material Licenses, has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or result
in any other material impairment of the rights of any holder of any such
Material License, subject in each case to such qualifications as may be set
forth in the Preliminary Offering Memorandum and the Offering Memorandum.
(ee) Both the Company and KDSM, Inc. maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
17
(ff) To the best of the Offerors' knowledge, neither the
Company, nor any of the Subsidiaries, nor any employee or agent of the Company
or any Subsidiary, has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum that would have a Company Material Adverse Effect or, with respect to
only such matters relating to KDSM, Inc. or any of its subsidiaries, a KDSM
Material Adverse Effect.
(gg) Except as disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum, all United States federal income tax
returns of the Company and the Subsidiaries required by law to be filed have
been filed (taking into account extensions granted by the applicable federal
governmental agency) and all taxes shown by such returns or otherwise assessed,
which are due and payable, have been paid, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been
provided and except for such taxes the payment of which would not individually
or in the aggregate result in any Company Material Adverse Effect or, with
respect to only such matters relating to KDSM, Inc. or any of its subsidiaries,
a KDSM Material Adverse Effect. All other corporate franchise and income tax
returns of the Company and the Subsidiaries required to be filed pursuant to
applicable foreign, state or local law have been filed except insofar as the
failure to file such returns would not individually or in the aggregate result
in any Company Material Adverse Effect or, with respect to only such matters
relating to KDSM, Inc. or any of its subsidiaries, a KDSM Material Adverse
Effect, and all taxes shown on such returns or otherwise assessed which are due
and payable have been paid, except for such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided and
except for such taxes the payment of which would not individually or in the
aggregate result in any Company Material Adverse Effect or, with respect to only
such matters relating to KDSM, Inc. or any of its subsidiaries, a KDSM Material
Adverse Effect.
(hh) Except as set forth in the Registration Rights Agreement
and as otherwise described in the Preliminary Offering Memorandum and the
Offering Memorandum, no holder of any security of the Company or any Subsidiary
has any right to require registration of shares of Preferred Securities or any
other security of the Offerors because of the consummation of the transactions
contemplated by this Agreement, the Preliminary Offering Memorandum and the
Offering Memorandum, or otherwise. Except as described in or contemplated by the
Preliminary Offering Memorandum and the Offering Memorandum, there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any shares of
Preferred Securities or any security convertible into or exchangeable or
exercisable for Preferred Securities.
(ii) Each of the Trust, KDSM, Inc. and the Company is not now
and, after sale of the Preferred Securities, the Debentures and the Parent
Preferred, respectively, as contemplated hereunder and application of the net
proceeds of such sale as described in the Preliminary Offering Memorandum and
the Offering Memorandum under the caption "Use of Proceeds," will not be an
"investment company" or be controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
18
(jj) When the Preferred Securities are issued and delivered
pursuant to this Agreement, such Preferred Securities will not be of the same
class (within the meaning of Rule 144A(d)(3) under the Act) as any security of
the Trust, if any, that is listed on a national securities exchange registered
under Section 6 of the Exchange Act or that is quoted in a United States
automated interdealer quotation system.
(kk) None of the Company, KDSM, Inc. or the Trust nor any
affiliate (as defined in Rule 501(b) of Regulation D ("Regulation D") under the
Act) of the Company, KDSM, Inc. nor the Trust has directly, or through any agent
(provided that no representation is made as to the Initial Purchasers or any
person acting on its behalf), (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the Act)
which is or will be integrated with the offering and sale of the Preferred
Securities in a manner that would require the registration of the Preferred
Securities under the Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offering of the Preferred Securities.
(ll) Assuming (i) that the representations and warranties in
Section 2 hereof are true, (ii) the Initial Purchasers comply with the covenants
set forth in Section 2 hereof and (iii) that each person to whom the Initial
Purchasers offer, sell or deliver the Preferred Securities is a Qualified
Institutional Buyer or an Accredited Investor, the purchase and sale of the
Preferred Securities pursuant hereto (including the Initial Purchasers' proposed
offering of the Preferred Securities on the terms and in the manner set forth in
the Preliminary Offering Memorandum and the Offering Memorandum and Section 2
hereof) is exempt from the registration requirements of the Act and no
qualification of an indenture under the United States Trust Indenture Act of
1939 with respect thereto, is required for the offer, sale and initial resale of
the Preferred Securities by the Initial Purchasers in the manner contemplated by
this Agreement.
(mm) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Preferred Securities to the Initial
Purchasers or by the Initial Purchasers to Eligible Purchasers will not involve
any prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Preliminary Offering Memorandum and the Offering
Memorandum.
(nn) The Company has filed in a timely manner each document or
report required to be filed by it pursuant to the Exchange Act and the rules and
regulations thereun- der; each such document or report and any amendment thereto
at the time it was filed conformed to the requirements of the Exchange Act and
the rules and regulations thereunder; and none of such documents or reports
contained an untrue statement of any material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
19
(oo) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-K involving the
Company or any of its Subsidiaries and any person described in such Item that
are required to be disclosed in the Preliminary Offering Memorandum or the
Offering Memorandum except as disclosed therein.
(pp) The form of certificate for the Preferred Securities
conforms to the requirements of the Business Trust Act of the State of Delaware.
6. Indemnification and Contribution. (a) The Offerors, jointly
and severally, agree to indemnify and hold harmless the Initial Purchasers and
each person, if any, who controls the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or Offering Memorandum or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information furnished in writing to the Company, KDSM, Inc. or the Trust by or
on behalf of the Initial Purchasers expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
respect to the Preliminary Offering Memorandum shall not inure to the benefit of
the Initial Purchasers (or to the benefit of any person controlling the Initial
Purchasers) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Preferred Securities by the Initial Purchasers to
any person if a copy of the Preliminary Offering Memorandum shall not have been
delivered or sent to such person at or prior to written confirmation of such
sale, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the Preliminary Offering
Memorandum was corrected in the Offering Memorandum, provided that the Company
has delivered the Offering Memorandum in requisite quantity on a timely basis to
permit delivering and sending. The foregoing indemnity agreement shall be in
addition to any liability which the Company, KDSM, Inc. or the Trust may
otherwise have.
(b) If any action, suit or proceeding shall be brought against
the Initial Purchasers or any person controlling the Initial Purchasers in
respect of which indemnity may be sought against the Company, KDSM, Inc. or the
Trust, the Initial Purchasers or such controlling person shall promptly notify
the parties against whom indemnification is being sought (the "indemnifying
parties"), and such indemnifying parties shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. The
Initial Purchasers or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Initial Purchasers or such controlling person unless (i) the
indemnifying parties have agreed in writing to pay such fees and expenses, (ii)
the indemnifying parties have failed to assume the defense and employ counsel,
or (iii) the named
20
parties to any such action, suit or proceeding (including any impleaded parties)
include both the Initial Purchasers or such controlling person and the
indemnifying parties and the Initial Purchasers or such controlling person shall
have been advised by its counsel that representation of such indemnified party
and any indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf of the
Initial Purchasers or such controlling person). It is understood, however, that
the indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Initial Purchasers and controlling persons not having actual or potential
differing interests with the Initial Purchasers or among themselves, which firm
shall be designated in writing by Smith Barney Inc., and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless the Initial Purchasers, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) The Initial Purchasers agree to indemnify and hold
harmless the Offerors and their directors and officers, and any person who
controls the Offerors within the meaning of Section 15 of the Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Offerors to the Initial Purchasers, but only with respect to information
relating to the Initial Purchasers furnished in writing by or on behalf of the
Initial Purchasers expressly for use in the Preliminary Offering Memorandum or
Offering Memorandum or any amendment or supplement thereto. If any action, suit
or proceeding shall be brought against the Company, KDSM, Inc. or the Trust, any
of their respective directors or officers, or any such controlling person based
on the Preliminary Offering Memorandum or Offering Memorandum, or any amendment
or supplement thereto, and in respect of which indemnity may be sought against
the Initial Purchasers pursuant to this paragraph (c), the Initial Purchasers
shall have the rights and duties given to the Company or KDSM, Inc. or the Trust
by paragraph (b) above (except that if the Company shall have assumed the
defense thereof the Initial Purchasers shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the Initial Purchasers' expense),
and the Company, KDSM, Inc. or the Trust, the directors and officers of the
Company or KDSM, Inc. or the Trust, and any such controlling person shall have
the rights and duties given to the Initial Purchasers by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages,
21
liabilities or expenses referred to therein, then an indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Offerors on the one hand and the Initial
Purchasers on the other hand from the offering of the Preferred Securities, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Offerors on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Offerors on the
one hand and the Initial Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Offerors bear to the total underwriting discounts and
commissions received by the Initial Purchasers, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault of the
Offerors on the one hand and the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Offerors on the one hand
or by the Initial Purchasers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Offerors and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total fees received (and not reimbursed to the Offerors) by such
Initial Purchaser with respect to the Preferred Securities underwritten by it
and distributed to the public exceeds the amount of any damages which the
Initial Purchasers have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 6 are several in proportion to the respective numbers
of Preferred Securities set forth opposite their names in Schedule I hereto and
not joint.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 6 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Offerors set forth in this Agreement shall
remain
22
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of the Initial Purchasers or any person controlling the Initial
Purchasers, the Offerors, their respective directors or officers or any person
controlling the Offerors, (ii) acceptance of any Preferred Securities and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to the Initial Purchasers or any person controlling the Initial
Purchasers, or the Offerors, their respective directors or officers or any
person controlling the Offerors, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
6.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement (i) includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of any indemnified party.
7. Conditions of the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase the Preferred Securities
hereunder are subject to the following conditions:
(a) At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering Memorandum
or any amendment or supplement thereto, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the knowledge of
the Company, be contemplated. No stop order suspending the sale of the Preferred
Securities in any jurisdiction designated by the Initial Purchasers, subject to
paragraph (g) of Section 4 of this Agreement, shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company, shall be contemplated.
(b) The Company shall have contributed, or shall have caused
to be contributed, to KDSM, Inc. $6.2 million to allow KDSM, Inc. to purchase
the Common Securities and KDSM, Inc. shall have applied such funds, or shall
have caused such funds to be applied, to the purchase of the Common Securities.
(c) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries taken as a whole, not contemplated by the Preliminary Offering and
the Offering Memorandum, which in the opinion of the Initial Purchasers, would
materially adversely affect the market for the Preferred Securities, or (ii) any
event or development relating to or involving the Company, or any officer or
director of the Company, which makes any statement made in the Offering
Memorandum untrue or which, in the opinion of the Company and its counsel or the
Initial Purchasers and their counsel, requires the making of any addition to
23
or change in the Preliminary Offering Memorandum or the Offering Memorandum in
order to state a material fact required by any law to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Preliminary Offering Memorandum or the Offering Memorandum to
reflect such event or development would, in the opinion of the Initial
Purchasers, materially adversely affect the market for the Preferred Securities.
(d) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of KDSM, Inc. and its
subsidiaries taken as a whole, not contemplated by the Preliminary Offering
Memorandum or the Offering Memorandum, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the Preferred
Securities, or (ii) any event or development relating to or involving KDSM,
Inc., or any officer or director of KDSM, Inc., which makes any statement made
in the Preliminary Offering Memorandum or the Offering Memorandum untrue or
which, in the opinion of the Company and its counsel or the Initial Purchasers
and their counsel, requires the making of any addition to or change in the
Preliminary Offering Memorandum or the Offering Memorandum in order to state a
material fact required by any law to be stated therein or necessary in order to
make the statements therein not misleading, if amending or supplementing the
Preliminary Offering Memorandum or the Offering Memorandum to reflect such event
or development would, in the opinion of the Initial Purchasers, materially
adversely affect the market for the Preferred Securities.
(e) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Trust, not
contemplated by the Preliminary Offering Memorandum or the Offering Memorandum,
which in the opinion of the Initial Purchasers, would materially adversely
affect the market for the Preferred Securities, or (ii) any event or development
relating to or involving the Trust, or any trustee of the Trust, which makes any
statement made in the Preliminary Offering Memorandum or the Offering Memorandum
untrue or which, in the opinion of the Company and its counsel or the Initial
Purchasers and their counsel, requires the making of any addition to or change
in the Preliminary Offering Memorandum or the Offering Memorandum in order to
state a material fact required by any law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Preliminary Offering Memorandum or the Offering Memorandum to
reflect such event or development would, in the opinion of the Initial
Purchasers, materially adversely affect the market for the Preferred Securities.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion of Thomas & Libowitz, P.A., counsel for the Offerors, dated the
Closing Date and addressed to the Initial Purchasers, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland, with full power and
24
authority (corporate and other) to own its properties and conduct its business
as described in the Offering Memorandum, and is duly qualified to transact
business as a foreign corporation in good standing under the laws of each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification except where the failure to so qualify
would not have a material adverse effect upon its business taken as a whole;
(ii) Each of the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, with full power and
authority (corporate and other) to own its properties and conduct its business
as described in the Offering Memorandum, and is duly qualified to transact
business as a foreign corporation in good standing under the laws of each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification; and all of the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights of stockholders of such Subsidiary arising under
the corporation law of its respective jurisdiction of incorporation, its charter
or bylaws or, to the best of such counsel's knowledge, under any agreement to
which such Subsidiary is a party, and all of the outstanding shares of capital
stock of each of the Subsidiaries are owned beneficially by the Company free and
clear of all liens, encumbrances, equities and claims except as described in the
Offering Memorandum;
(iii) To the best knowledge of such counsel, except
as described or referred to in the Offering Memorandum, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which the
Company or any of the Subsidiaries is a party, or to which the property of the
Company or any of the Subsidiaries is subject, before or brought by any court or
governmental agency or body which, if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate result in any
material adverse change in the business, financial position, net worth, results
of operation or prospects, or materially adversely affect the properties and
assets collectively of the Company and the Subsidiaries taken as a whole or,
with respect to only such matters that relate to KDSM, Inc. or any of its
subsidiaries, KDSM, Inc. and its subsidiaries taken as a whole or might
materially adversely affect the consummation of the transactions contemplated by
the Offering Memorandum; and all pending legal or governmental proceedings to
which the Company or any of the Subsidiaries is a party or that affect any of
their respective properties that are not described in the Offering Memorandum,
including ordinary routine litigation incidental to the business, are considered
in the aggregate not to result in a material adverse change in the business,
financial position, net worth, results of operation or prospects, or materially
adversely affect the properties and assets collectively of the Company and the
Subsidiaries taken as a whole or, with respect to only such matters that relate
to KDSM, Inc. or any of its subsidiaries, KDSM, Inc. and its subsidiaries taken
as a whole;
(iv) The Parent Preferred has been duly authorized,
issued and delivered to KDSM, Inc. against payment therefor in accordance with
the terms hereof, and is validly issued, fully paid and non-assessable, and free
of any preemptive or similar rights; the Parent Preferred conforms to the
description thereof contained in the Offering Memorandum; the
25
Parent Preferred has the rights set forth in the Articles Supplementary, and the
terms of the Parent Preferred are valid and binding on the Company;
(v) The execution, delivery and performance (X) by
the Company of the Company Agreements, this Agreement and the Parent Debenture
Guarantee as it exists today assuming it is not currently effective and subject
to the terms and conditions of its effectiveness as set forth in the Indenture,
(Y) by KDSM, Inc. of the KDSM Agreements and this Agreement and (Z) by the
Trust, the Trust Documents, and the consummation by the Company, KDSM, Inc. and
the Trust, respectively, of the transactions contemplated thereby and compliance
by the Company, KDSM, Inc. and the Trust with the terms of the foregoing does
not and will not conflict with or result in a breach or violation by the Company
or any Subsidiary, as the case may be, of any of the terms or provisions of,
constitute a default by the Company or any Subsidiary, as the case may be,
under, or result in the creation or imposition of any lien, charge, security
interest or encumbrance upon any of the assets of the Company or any Subsidiary,
as the case may be, pursuant to the terms of (A) any material indenture,
mortgage, deed of trust, loan or credit agreement, bond, debenture, note, lease
or other agreement or instrument to which the Company or any Subsidiary, as the
case may be, is a party or to which any of them or any of their respective
properties is subject; (B) the charter or bylaws or other organizational
documents of the Company or any Subsidiary, as the case may be; or (C) any
statute, rule or regulation or, to the best of such counsel's knowledge, any
judgment, decree or order of any court or governmental agency or court or body
applicable to the Company or any of the Subsidiaries or any of their respective
properties;
(vi) Neither the Company nor any of the Subsidiaries
is in violation of its respective certificate or articles of incorporation or
bylaws, or other organizational documents, or to the knowledge of such counsel
after reasonable inquiry, is in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness, except as may be disclosed in the Offering
Memorandum;
(vii) Except as described in the Offering Memorandum,
and except for those certain stock option plans for certain employees pertaining
to Class A common stock as such stock option plans are listed as Schedule A to
this opinion, there are no outstanding options, warrants or other rights calling
for the issuance of, and such counsel does not know of any commitment, plan or
arrangement to issue, any shares of capital stock of the Company, KDSM, Inc. or
the Trust or any security convertible into or exchangeable or exercisable for
capital stock of the Company, KDSM, Inc. or the Trust, as the case may be; and
(viii) Except as described in the Offering
Memorandum, there is no holder of any security of the Company, KDSM, Inc. or the
Trust or any other person who has the right, contractual or otherwise, to cause
the Company, KDSM, Inc. or the Trust to sell or otherwise issue to them, or to
permit them to underwrite the sale of, the Preferred Securities or, except for
the Registration Rights Agreement, the right to require registration under the
Securities Act of any shares of Preferred Securities or other securities of the
Company, KDSM,
26
Inc. or the Trust, as the case may be, as a result of the transactions
contemplated by the Offering Memorandum.
In addition, such opinion shall state that such counsel has
not independently verified the accuracy, completeness or fairness of the
statements made or the information contained in the Offering Memorandum and such
counsel is not passing upon and does not assume any responsibility therefor. In
the course of the preparation by the Company and the Subsidiaries of the
Offering Memorandum, such counsel has participated in discussions with
representatives of the Initial Purchasers and those of the Company and the
Subsidiaries and their independent accountants, in which the business and
affairs of the Company and the Subsidiaries and the contents of the Offering
Memorandum were discussed. Based upon the information such counsel gained in the
course of such counsel's representation of the Company and the Subsidiaries in
connection with their preparation of the Offering Memorandum and such counsel's
participation in the discussions referred to above, no facts have come to such
counsel's attention that lead them to believe that the Offering Memorandum, or
any amendment or supplement thereto, at the time the Offering Memorandum was
issued, at the time any such amended or supplemented Offering Memorandum was
issued or at the Closing Date, contains any untrue statement of a material fact
or omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. Such
counsel need express no opinion, however, as to the financial statements,
including the notes and schedules thereto, or any other financial data included
in the Offering Memorandum.
In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the federal law of the
United States and the law of the State of Maryland, upon the opinions of counsel
satisfactory to the Initial Purchasers. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers or other appropriate
representatives of the Company and the Subsidiaries and certificates of public
officials.
(g) The Initial Purchasers shall have received on the Closing
Date, an opinion of Wilmer, Cutler & Pickering, special securities counsel for
the Offerors, dated the Closing Date and addressed to you, as Initial
Purchasers, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Maryland, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering Memorandum, and
is duly qualified to transact business as a foreign corporation in good standing
under the laws of each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification except
where the failure to so qualify would not have a material adverse effect upon
its business taken as a whole;
(ii) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body is required for the execution, delivery or performance (X) by the Company
of the Company Agreements and this Agreement, (Y) by KDSM, Inc. of the KDSM
Agreements, this Agreement and the Pledge Agreement, and
27
(Z) by the Trust of the Trust Documents, by the Company, KDSM, Inc. and the
Trust, respectively, or the consummation by the Company, KDSM, Inc. and the
Trust of the transactions contemplated by such agreements, except (A) such as
have been obtained under the Securities Act and the Exchange Act and (B) such as
may be required under state securities or blue sky laws in connection with the
purchase and distribution of the Preferred Securities by the Initial Purchasers
or as may be required by the NASD, as to each of which in clause (B) such
counsel expresses no opinion;
(iii) The descriptions in the Offering Memorandum of
statutes, legal and governmental proceedings, and contracts and other documents
present fairly in all material respects the information required to be shown;
and such counsel does not know of any statutes or regulations or any pending or
threatened legal or governmental proceedings required to be described in the
Offering Memorandum which are not described as required, nor of any contracts or
documents of a character required to be described in the Offering Memorandum.
Such counsel need express no opinion as to the description of any statute,
regulation or proceedings with respect to the regulation of the Company and the
Subsidiaries by the Federal Communications Commission;
(iv) The authorized and outstanding capital stock of
the Company and KDSM, Inc. is as set forth under the captions "Capitalization of
Sinclair" and "Capitalization of KDSM, Inc." respectively in the Offering
Memorandum; and the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
the Offering Memorandum under the caption "Description of Capital Stock";
(v) To the knowledge of counsel, all the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable and are free of any preemptive or
similar rights, except as described in the Offering Memorandum;
(vi) As of the date and time hereof and after
application of the net proceeds of sale of the Preferred Securities, KDSM Senior
Debentures and Parent Preferred as described in the Offering Memorandum, each of
the Trust, KDSM, Inc. and the Company, is not and will not be an "investment
company" and is not and will not be controlled by an investment company as the
term "investment company" is defined under the Investment Company Act of 1940,
as amended (the "1940 Act");
(vii) When the Preferred Securities are issued and
delivered pursuant to this Agreement, such Preferred Securities will not be of
the same class (within the meaning of Rule 144A(d)(3) under the Act) as any
security of the Trust, if any, that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is quoted in a United
States automated interdealer quotation system;
(viii) To the knowledge of such counsel, neither the
Company, KDSM, Inc. nor the Trust nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Company, KDSM, Inc. or
the Trust has directly, or through any agent (provided that no representation is
made as to the Initial Purchasers or any person acting on its
28
behalf), (A) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Act) which is or will
be integrated with the offering and sale of the Preferred Securities in a manner
that would require the registration of the Preferred Securities under the Act or
(B) engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offering of the Preferred
Securities;
(ix) Assuming (A) that the representations and
warranties in Section 2 hereof are true, (B) the Initial Purchasers comply with
the covenants set forth in Section 2 hereof and (C) that each person to whom the
Initial Purchasers offer, sell or deliver the Preferred Securities is a
Qualified Institutional Buyer or an Accredited Investor, the purchase and sale
of the Preferred Securities pursuant hereto (including the Initial Purchasers'
proposed offering of the Preferred Securities on the terms and in the manner set
forth in the Offering Memorandum and Section 2 hereof) is exempt from the
registration requirements of the Act and no qualification of an indenture under
the United States Trust Indenture of 1939 with respect thereto, is required for
the offer, sale, and initial resale of the Preferred Securities by the Initial
Purchasers, in the manner contemplated by this Agreement;
(x) The Trust will be classified as a grantor trust
and not as an association taxable as a corporation for United States federal
income tax purposes. Accordingly, for United States federal income tax purposes,
each beneficial owner of Preferred Securities will be treated as owning an
undivided pro rata interest in the Debentures;
(xi) The discussion set forth in the Offering
Memorandum under the heading "Certain Federal Income Tax Consequences"
constitutes, in all material respects, a fair and accurate summary of the United
States federal income tax consequences of the purchase, ownership and
disposition of Preferred Securities under current law;
(xii) The execution and delivery of, and the
performance by each of the Company, KDSM, Inc. and of their respective
obligations under this Agreement has been duly and validly authorized by each of
the Company, and KDSM, Inc. and this Agreement has been duly executed and
delivered by each of the Company, KDSM, Inc. and the Trust;
(xiii) The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Company
Agreements. The Company Agreements have each been authorized and have been
validly executed and delivered by the Company and will constitute valid and
legally binding obligations of the Company, enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, and except to the extent
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy; the Debentures
are entitled to the benefits of the Indenture and are in the form in all
material respects contemplated therein; and the Company Agreements conform to
the descriptions thereof in the Preliminary Offering Memorandum and the Offering
Memorandum, as amended or supplemented;
29
(xiv) KDSM, Inc. has all requisite power and
authority to execute, deliver and perform its obligations under the KDSM
Agreements. The KDSM Agreements have each been duly authorized and have been
validly executed and delivered by KDSM, Inc. and will constitute valid and
legally binding obligations of KDSM, Inc., enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or effecting
creditors' rights and to general equity principles, and except to the extent
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy; the KDSM
Agreements conform in all material respects to the descriptions thereof in the
Offering Memorandum as amended or supplemented;
(xv) Pursuant to the Pledge Agreement, the Trust
shall have a valid and perfected Lien upon, and a first priority interest in,
the Parent Preferred as security for repayment of KDSM, Inc.'s obligations under
the Indenture and the Debentures; and
(xvi) Assuming due authorization thereof by the
Trust, the Registra- tion Rights Agreement constitutes a valid and binding
obligation of the Trust, and is enforceable against the Trust, in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
receivership, fraudulent conveyance or transfer, reorganization, liquidation,
moratorium and other similar laws relating to or affecting creditors' rights and
remedies generally; principles of equity, including applicable law relating to
fiduciary duties; and the effect of public policy on the enforceability of
provisions relating to indemnification or contribution.
In addition, such opinion shall state that such counsel has
not independently verified the accuracy, completeness or fairness of the
statements made or the information contained in the Offering Memorandum and,
except with respect to the descriptions referred to in paragraphs (iii) and (iv)
above, such counsel is not passing upon and does not assume any responsibility
therefor. In the course of the preparation by the Offerors of the Offering
Memorandum, such counsel has participated in discussions with representatives of
the Initial Purchasers and those of the Company and the Subsidiaries and their
independent accountants, in which the business and affairs of the Company and
the Subsidiaries and the contents of the Offering Memorandum were discussed.
Based upon the information such counsel gained in the course of such counsel's
representation of the Company and the Subsidiary in connection with its
preparation of the Offering Memorandum and such counsel's participation in the
discussions referred to above, no facts have come to such counsel's attention
that lead them to believe that the Offering Memorandum, or any amendment or
supplement thereto, at the time the Offering Memorandum was issued, at the time
any such amended or supplemented Offering Memorandum was issued or at the
Closing Date, contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Such counsel need
express no opinion, however, as to the financial statements, including the notes
and schedules thereto, or any other financial information included in the
Offering Memorandum.
30
In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the federal law of the
United States, or the District of Columbia the law of the State of New York, the
law of the State of Maryland and upon the opinions of counsel satisfactory to
the Initial Purchaser. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers or other appropriate representatives of the Company and
the Subsidiaries and the Trust and certificates of public officials.
(h) You shall have received, on the Closing Date, an opinion
of Richards, Layton & Finger, special Delaware counsel for the Offerors, dated
the Closing Date and addressed to you, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Business Trust
Act, 12 Del. C. ss. 3801, et. seq. (the "Business Trust Act"), and all filings
required under the laws of the State of Delaware with respect to the creation
and valid existence of the Trust as a business trust have been made;
(ii) Under the Business Trust Act and the Trust
Agreement, the Trust has the requisite trust power and authority to own, lease
and operate its property and conduct its business, all as described in the
Offering Memorandum;
(iii) The Trust Agreement constitutes a valid and
binding obligation of KDSM, Inc., and is enforceable against KDSM, Inc., in
accordance with its terms, and the terms of the Preferred Securities as set
forth in the Trust Agreement, to the extent they are obligations of the Trust,
are valid and binding obligations of the Trust in accordance with the Trust
Agreement subject, as to enforcement, to the effect upon the Trust Agreement of
(a) bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance, fraudulent transfer and other similar laws
relating to or affecting the rights and remedies of creditors generally, (b)
principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or at
law) and (c) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution;
(iv) Under the Business Trust Act and the Trust
Agreement, the Trust has the requisite power and authority to (a) execute and
deliver, and to perform its obligations under, this Agreement, the Registration
Rights Agreement and the Expense Agreement and (b) issue and perform its
obligations under the Preferred Securities and the Common Securities;
(v) Under the Business Trust Act and the Trust
Agreement, the execution and delivery by the Trust of this Agreement, the
Registration Rights Agreement and the Expense Agreement, and the performance by
the Trust of its obligations hereunder, have been duly authorized by the
requisite trust action on the part of the Trust.
(vi) The Preferred Securities have been duly
authorized by the Trust Agreement and are duly and validly issued and, subject
to the qualifications set forth in this paragraph (vi), fully paid and
nonassessable undivided beneficial interests in the assets of the
31
Trust and are entitled to the benefits provided by the Trust Agreement. The
holders of the Preferred Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware; provided, that such counsel may note that the holders
of the Preferred Securities may be obligated, pursuant to the Trust Agreement,
to (a) provide indemnity or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of the certificates for
such Preferred Securities (the "Preferred Securities Certificates") and the
issuance of replacement Preferred Securities Certificates and (b) provide
security or indemnity in connection with requests of or directions to the
Property Trustee to exercise its rights and remedies under the Trust Agreement;
(vii) The Common Securities have been duly authorized
by the Trust Agreement and are validly issued and represent undivided beneficial
interests in the Trust;
(viii) Under the Business Trust Act and the Trust
Agreement, the issuance of the Preferred Securities and the Common Securities is
not subject to preemptive rights;
(ix) The issuance and sale by the Trust of the
Preferred Securities and the Common Securities, the execution, delivery and
performance by the Trust of this Agreement, the consummation by the Trust of the
transactions contemplated thereby and compliance by the Trust with its
obligations thereunder will not violate (a) any of the provisions of the Trust
Agreement or (b) any applicable Delaware law or administrative regulation;
(x) No authorization, approval, consent or order of
any Delaware court or Delaware governmental authority or agency is required to
be obtained by the Trust solely in connection with the issuance and sale of the
Preferred Securities and the Common Securities. (In rendering the opinion
expressed in this paragraph (x), such counsel need express no opinion concerning
the securities laws of the State of Delaware.); and
(xi) Assuming that the Trust derives no income from
or connected with sources within the State of Delaware and has no assets,
activities (other than having a Delaware trustee as required by the Business
Trust Act and the filing of documents with the Delaware Secretary of State) or
employees in the State of Delaware, the holders of the Preferred Securities
(other than those holders of the Preferred Securities who reside or are
domiciled in the State of Delaware) will have no liability for income taxes
imposed by the State of Delaware solely as a result of their participation in
the Trust, and the Trust will not be liable for any income tax imposed by the
State of Delaware.
Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers or other appropriate representatives of the Company and
the Subsidiaries and certificates of public officials.
(i) The Initial Purchaser shall have received an Opinion,
dated the Closing Date of Fisher, Wayland, Cooper, Leader & Zaragoza, L.L.P.,
regulatory counsel for the
32
Company, KDSM, Inc. and the Trust in form and substance satisfactory to the
Initial Purchaser to the effect that:
(i) Except for such Federal Communications Commission (the
"FCC") approvals that have already been obtained, which approvals, to such
counsel's knowledge, are in full force and effect, no FCC approval,
authorization, consent or license is required under the Communications Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Communications Laws") for the transactions contemplated in the Company
Agreements (including the Parent Debenture Guarantee), the KDSM Agreements and
the Trust Documents, and the issuance and sale under this Agreement by the Trust
of the Preferred Securities. The execution, delivery and performance in
accordance with their terms of the Company Agreements (including the Parent
Debenture Guarantee), the KDSM Agreements and the Trust Documents by the
Company, KDSM, Inc. or the Trust, as the case may be, will not violate the
Communications Laws. It should be noted that, under the Communications Laws, FCC
approval is required prior to the transfer of control of the Company or any of
the Subsidiaries which hold broadcast licenses or the assignment of any FCC
licenses or authorizations or prior to the exercise of any voting rights or
management authority over the Company or any of the Subsidiaries which hold
broadcast licenses to the extent that such exercise constitutes a transfer of
control of the Company or any of such Subsidiaries or an assignment of any FCC
licenses or authorizations.
(ii) The following Subsidiaries are the licensees of the
respective stations as identified below, and are authorized to own and operate
their respective stations:
Subsidiary Station
---------- -------
Chesapeake Television Licensee, Inc. WBFF-TV
Baltimore, MD
WTTE, Channel 28 Licensee, Inc. WTTE-TV
Columbus, OH
WPGH Licensee, Inc. WPGH-TV
Pittsburgh, PA
33
WCGV Licensee, Inc. WCGV-TV
Milwaukee, Wisconsin
WTTO Licensee, Inc. WTTO-TV
Birmingham, Alabama
WLFL Licensee, Inc. WLFL-TV
Raleigh, North Carolina
WTVZ Licensee, Inc. WTVZ-TV
Norfolk, Virginia
WSTR Licensee, Inc. WSTR-TV
Cincinnati, Ohio
KSMO Licensee, Inc. KSMO-TV
Kansas City, MO
WYZZ Licensee Inc. WYZZ (TV)
Bloomington, Illinois
Superior OK License Corp. KOCB (TV)
Oklahoma City, OK
Superior KY License Corp. WDKY-TV
Danville, KY
WSMH Licensee, Inc. WSMH (TV)
Flint, MI
Sinclair Radio of Los Angeles Licensee, Inc. KBLA (AM)
Santa Monica, CA
Sinclair Radio of New Orleans Licensee, WWL (AM), New Orleans, Louisiana
Inc. WSMB (AM), New Orleans, Louisiana
WLMG (FM), New Orleans, Louisiana
KMEZ (FM), Belle Chasse, Louisiana
Sinclair Radio of Buffalo Licensee, Inc. WBEN (AM), Buffalo, New York
WWKB (AM), Buffalo, New York
WMJQ (FM), Buffalo, New York
WKSE (FM), Niagara Falls, New York
34
Sinclair Radio of Memphis Licensee, Inc. WJCE (AM), Memphis, Tennessee
WRVR-FM, Memphis, Tennessee
WOGY-FM, Germantown, Tennessee
Sinclair Radio of Nashville Licensee, Inc. WLAC (AM), Nashville, Tennessee
WLAC-FM, Nashville, Tennessee
WJZC-FM, Russellville, Kentucky
Sinclair Radio of Wilkes-Barre Licensee, WGBI (AM), Scranton, Pennsylvania
Inc. WILK (AM), Wilkes-Barre, Pennsylvania
WGGY (FM), Scranton, Pennsylvania
WKRZ (FM), Wilkes-Barre, Pennsylvania
WILP (AM), West Hazelton, Pennsylvania
WWFH (FM), Freeland, Pennsylvania
To such counsel's knowledge, all of the FCC Material Licenses are valid and in
full force and effect. The stations identified in this Paragraph (ii) are
collectively referred to as the "Stations."
(iii) To the best of such counsel's knowledge,
Baltimore (WNUV- TV) Licensee, Inc. is the licensee of WNUV-TV, Baltimore,
Maryland; WVTV Licensee, Inc. is the licensee of WVTV(TV), Milwaukee, Wisconsin;
WPTT, Inc. is the licensee of WPTT(TV), Pittsburgh, Pennsylvania; Raleigh
(WRDC-TV) Licensee, Inc. is the licensee of WRDC(TV), Durham, North Carolina;
River City License Partnership is the licensee of KOVR(TV), Stockton,
California, KDSM(TV), Des Moines, Iowa, KDNL(TV), St. Louis Missouri, WTTV(TV),
Bloomington, Indiana, WTTK(TV), Kokomo, Indiana, WLOS(TV), Asheville, North
Carolina, WFBC-TV, Anderson, South Carolina, KABB(TV), San Antonio, Texas,
WVRV(FM), East St. Louis, Illinois and KPNT(FM), Ste. Genevieve, Missouri; KRRT
License Corp., is the licensee of KRRT(TV), Kerrville, Texas; Tiab
Communications Corporation is the licensee of WILT(AM), Mt. Pocono,
Pennsylvania; WDBB-TV, Inc. is the licensee of WDBB(TV), Tuscaloosa, Alabama;
and Birmingham (WABM-TV) Licensee, Inc., is the licensee of WABM(TV),
Birmingham, Alabama. To the best of such counsel's knowledge, Baltimore
(WNUV-TV) Licensee, Inc., WVTV Licensee, Inc., WPTT, Inc., Raleigh (WRDC-TV)
Licensee, Inc., River City License Partnership, KRRT License Corp., Inc.,
Friendship Communications, Inc., Tiab Communications Corporation, WDBB-TV, Inc.,
and Birmingham (WABM-TV) Licensee, Inc., (collectively the "LMA Station
Licensees") each are authorized to own and operate their respective LMA stations
(each individually a "LMA Station" and collectively the "LMA Stations". To such
counsel's knowledge, the licenses held by the LMA Station Licensees to own and
operate their respective LMA Stations are valid and in full force and effect.
(iv) Except as set forth in the Offering Memorandum,
to such counsel's knowledge, there are no proceedings pending or threatened in
writing under the Communications Laws that are specifically directed against the
Company or the Subsidiaries or the Stations before or by the FCC or any court
having jurisdiction over matters arising under the
35
Communications Laws, relating to any invalidity, revocation, or modification of
any material FCC Licenses, wherein an unfavorable ruling, decision, or finding
would materially and adversely change the financial condition, business or
properties of the Company and the Subsidiaries and the Trust separately or taken
as a whole. To such counsel's knowledge, based solely upon such counsel's
examination of records available for public insepection at the FCC in
Washington, D.C., the Stations are operating in compliance with their respective
material FCC Licenses, except possibly for noncompliance that would not have a
material adverse effect on the financial condition, business or properties of
the Company and the Subsidiaries separately or taken as a whole.
(v) The statements in the Offering Memorandum under
the captions (a) "RISK FACTORS--Competition" "--Impact of New Technologies,"
"--Governmental Regulations; Necessity of Maintaining FCC Licenses," "--Multiple
Ownership Rules and Effect on LMAs," and "--LMAs - Rights of Preemption and
Termination" and (b) "BUSINESS-- Federal Regulation of Television and Radio
Broadcasting" insofar as such statements constitute a summary of material
Communications Laws and material proceedings, fairly and in all material
respects present the information contained under such captions in light of the
circumstances in which such statements are made, and to the extent they
constitute matters of law and legal conclusions under the Communications Laws,
fairly and in all material respects accurately present the information contained
under such captions in light of the circumstances in which such statements are
made.
Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers or other appropriate representatives of the Company and
the Subsidiaries and certificates of public officials.
(j) The Initial Purchasers shall have received on the Closing
Date an opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
Initial Purchasers, dated the Closing Date and addressed to you, as Initial
Purchasers, with respect to the matters agreed upon. In addition, such opinion
shall also state the following: In the course of the preparation by the Offerors
of the Offering Memorandum, such counsel participated in conferences with
certain of the officers and representatives of, and the independent public
accountants for, the Offerors, at which the Offering Memorandum were discussed.
Between the date thereof and the time of delivery of such opinion, such counsel
attended additional conferences with certain of the officers and representatives
of the Offerors, at which the contents of the Offering Memorandum were discussed
to a limited extent. Given the limitations inherent in the independent
verification of factual matters and the character of determinations involved in
the offering process, such counsel is not passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum and has not made any independent check or
verification thereof. Subject to the foregoing and on the basis of the
information gained in the performance of the services referred to above,
including information obtained from officers and other representatives of, and
the independent public accountants for, the Offerors, no facts have come to such
counsel's attention that cause such counsel to believe that the Offering
Memorandum as of its date contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the
36
statements therein in light of the circumstances under which they were made not
misleading. Also, subject to the foregoing, no facts have come to such counsel's
attention in the course of proceedings described in the second sentence of this
paragraph that cause such counsel to believe that the Offering Memorandum, at
the Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading. Such counsel express no view or belief, however, with respect to
financial statements, notes or schedules thereto or other financial information
included in or omitted from the Offering Memorandum.
In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the federal law of the
United States, the law of the State of New York, and the General Corporation Law
of the State of Delaware, upon the opinions of counsel satisfactory to the
Initial Purchasers. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers or other appropriate representatives of the Company and
the Subsidiaries and the Trust and certificates of public officials.
(k) The Initial Purchasers shall have received letters
addressed to you, as Initial Purchasers, and dated the date hereof and the
Closing Date from Arthur Andersen LLP, Ernst & Young LLP, KPMG Peat Marwick LLP
and Price Waterhouse LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.
(l) There shall not have been any change in the capital stock
of the Company nor any material increase in the short-term or long-term debt of
the Company, KDSM, Inc. or the Trust (other than in the ordinary course of
business) from that set forth or contemplated in the Offering Memorandum (or any
amendment or supplement thereto); (ii) there shall not have been, since the
respective dates as of which information is given in the Offering Memorandum (or
any amendment or supplement thereto), except as may otherwise be stated in the
Offering Memorandum (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole or, with respect to only such matters relating to
KDSM, Inc. or any of its subsidiaries, of KDSM, Inc. and its subsidiaries taken
as a whole; (iii) the Company and the Subsidiaries shall not have any
liabilities or obligations, direct or contingent (whether or not in the ordinary
course of business), that are material to the Company and the Subsidiaries,
taken as a whole or, with respect to only such matters relating to KDSM, Inc. or
any of its subsidiaries, to KDSM, Inc. and its subsidiaries, taken as a whole,
other than those reflected in the Offering Memorandum (or any amendment or
supplement thereto); (iv) the Trust shall not have any liabilities or
obligations, direct or contingent, other than those arising under the Trust
Agreement and the Trust's organizational documents and (v) all the
representations and warranties of the Company, KDSM, Inc. and the Trust
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and the Initial Purchasers shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief accounting officer of the Company and of KDSM, Inc. (or such other
officers as are
37
acceptable to the Initial Purchasers), to the effect set forth in this Section
7(l) and in Section 7(p) hereof.
(m) The Company, KDSM, Inc. or the Trust shall not have failed
at or prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(n) There shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined for purposes
of Rule 436(g) under the Act, that (i) it is downgrading its rating assigned to
any class of securities of the Company, or (ii) it is reviewing its ratings
assigned to any class of securities of KDSM, Inc. with a view to possible
downgrading, or with negative implications, or direction not determined.
(o) The Preferred Securities shall have been approved for
trading on PORTAL.
(p) The Company, KDSM, Inc. and the Trust shall have furnished
or caused to be furnished to the Initial Purchasers such further certificates
and documents as the Initial Purchasers shall have requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for the
Initial Purchasers.
Any certificate or document signed by any officer of the
Company, KDSM, Inc. or the Trust and delivered to the Initial Purchasers, or to
counsel for the Initial Purchasers, shall be deemed a representation and
warranty by the Company, KDSM, Inc. or the Trust to the Initial Purchasers as to
the statements made therein.
8. Expenses. The Company and KDSM, Inc. agree to pay, jointly
and severally, the following costs and expenses and all other costs and expenses
incident to the performance by it of its obligations hereunder: (i) the
preparation, printing or reproduction of the Preliminary Offering Memorandum and
the Offering Memorandum (including financial statements thereto), and each
amendment or supplement to any of them, this Agreement, the Indenture and the
other Operative Documents; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Preliminary Offering Memorandum and the Offering
Memorandum, and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of the
Preferred Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Preferred Securities, including any stamp
taxes in connection with the original issuance and sale of the Preferred
Securities; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental "blue sky memoranda" and all other agreements
or documents printed (or reproduced) and delivered in connection with the
offering of the Preferred Securities; (v) the application for quotation of the
Preferred Securities on the PORTAL market; (vi) the lodging, meals and expenses
incurred by or on behalf of the Company's officers in connection with
presentations to prospective purchasers of
38
the Preferred Securities; (vii) the registration or the qualification of the
Preferred Securities for offer and sale under the securities or blue sky laws of
the several states as provided in Section 4(g) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Initial Purchasers relating
to the preparation, printing or reproduction, and delivery of the preliminary
and supplemental blue sky memoranda and such qualification); (viii) the fees and
expenses of the Company's, KDSM, Inc.'s and the Trust's accountants and the fees
and expenses of counsel (including local and special counsel) for the Company,
KDSM, Inc. and the Trust and (ix) the filing fees and other reasonable fees and
expenses of counsel for the Initial Purchasers in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.
9. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
10. Termination of Agreement. This Agreement shall be subject
to termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the Closing Date (i) trading in securities generally on the
New York Stock Exchange or the American Stock Exchange or NASDAQ National Market
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York or Maryland shall have been declared,
or (iii) there shall have occurred any outbreak or escalation of hostilities or
other U.S., international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in the judgment of the Initial
Purchasers, impracticable or inadvisable to commence or continue the offering of
the Preferred Securities on the terms set forth on the cover page of the
Offering Memorandum or to enforce contracts for the resale of the Preferred
Securities by the Initial Purchasers. Notice of such termination may be given to
the Company or KDSM, Inc. by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
11. Information Furnished by the Initial Purchasers. The
statements set forth in the first sentence of the last paragraph on the cover
page, the stabilization legend on the inside front cover and the statements in
the fourth and eighth paragraphs under the caption"Plan of Distribution" in the
Preliminary Offering Memorandum and Offering Memorandum, constitute the only
information furnished by or on behalf of the Initial Purchasers as such
information is referred to in Sections 5(b) and 6 hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4,
9 and 10 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, KDSM, Inc. or the
Trust, at the office of the Company at 2000 West 41st Street, Baltimore,
Maryland 21211, Attention: David D. Smith, President, with a copy to Sinclair
Communications, Inc., 2000 West 41st Street, Baltimore, MD 21211, Attention:
General Counsel and a copy to Thomas & Libowitz, P.A., 100 Light Street, Suite
1100, Baltimore, Maryland 21202, Attention: Steven A. Thomas, Esq. and a copy to
Wilmer, Cutler & Pickering, 100 Light Street, Baltimore, MD 21202, Attention:
John B. Watkins, Esq.; (ii) if to the Initial Purchasers, to Smith Barney Inc.,
388 Greenwich Street, New York, NY 10013,
39
Attention: Manager, Investment Banking Division with a copy to Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
Attention: Valerie Ford Jacob, Esq.
This Agreement has been and is made solely for the benefit of
the Initial Purchasers, the Company, KDSM, Inc. and the Trust, the directors and
officers of the Company, KDSM, Inc. and the Trust and the controlling persons
referred to in Section 6 hereof and their respective successors and assigns, to
the extent provided herein, and no other person shall acquire or have any right
under or by virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from the Initial Purchasers of any of the Preferred Securities in his status as
such purchaser.
13. APPLICABLE LAW; COUNTERPARTS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK
AND WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
40
Please confirm that the foregoing correctly sets forth the
agreement between the Company, KDSM, Inc., the Trust and the Initial Purchasers.
Very truly yours,
SINCLAIR BROADCAST GROUP, INC.
By: /s/ David D. Smith
---------------------------------
David D. Smith
Title: President
KDSM, INC
By: /s/ David D. Smith
---------------------------------
David D. Smith
Title: President
SINCLAIR CAPITAL
By: /s/ David D. Smith
---------------------------------
David D. Smith
Title: Administrative Trustee
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
CHASE SECURITIES INC.
By: /s/ Douglas Hust
-------------------------------------
(Smith Barney Inc.)
On behalf of the Initial Purchasers
SCHEDULE I
NAME OF COMPANY
Principal Amount
Initial Purchaser of Preferred Securities
- ----------------- -----------------------
Smith Barney Inc. $160,000,000
Chase Securities Inc. 40,000,000
Total $200,000,000
EXHIBIT A
Registration Rights Agreement
EXHIBIT B
Company's Subsidiaries
- ----------------------------------------------------------------------------------------------------------------------------
Name of Subsidiary State of Incorpora- Qualifications
tion/
Organization
- ----------------------------------------------------------------------------------------------------------------------------
Chesapeake Television, Inc. Maryland North Carolina
South Carolina
Texas
California
- ----------------------------------------------------------------------------------------------------------------------------
Chesapeake Television Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
FSF-TV, Inc. North Carolina
- ----------------------------------------------------------------------------------------------------------------------------
KABB Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
KDNL Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
KDSM, Inc. Maryland Iowa
- ----------------------------------------------------------------------------------------------------------------------------
KDSM Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
KSMO, Inc. Maryland Missouri
- ----------------------------------------------------------------------------------------------------------------------------
KSMO Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
KUPN, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
KUPN Licensee, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
SCI-Indiana Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
SCI- Sacramento Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Communications, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Albuquerque, Inc. Maryland New Mexico
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Albuquerque Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Buffalo, Inc. Maryland New York
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Buffalo Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Greenville, Inc. Maryland North Carolina
South Carolina
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Greenville Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Los Angeles, Inc. Maryland California
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Los Angeles Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Memphis, Inc. Maryland Tennessee
Kentucky
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Memphis Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Nashville, Inc. Maryland Tennessee
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Nashville Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of New Orleans, Inc. Maryland Louisiana
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of New Orleans Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of St. Louis, Inc. Maryland Missouri
Illinois
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of St. Louis Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Wilkes-Barre, Inc. Maryland Pennsylvania
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Radio of Wilkes-Barre Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Superior Communications of Kentucky, Inc. Delaware Kentucky
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Superior Communications of Oklahoma, Inc. OK
- ----------------------------------------------------------------------------------------------------------------------------
Superior KY License Corp. Delaware Kentucky
- ----------------------------------------------------------------------------------------------------------------------------
Superior OK License Corp. Delaware Oklahoma
- ----------------------------------------------------------------------------------------------------------------------------
Tuscaloosa Broadcasting, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WCGV, Inc. Maryland Wisconsin
- ----------------------------------------------------------------------------------------------------------------------------
WCGV Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
WDBB, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WLFL, Inc. Maryland North Carolina
- ----------------------------------------------------------------------------------------------------------------------------
WLFL Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
WLOS Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
WPGH, Inc. Maryland Pennsylvania
Missouri
- ----------------------------------------------------------------------------------------------------------------------------
WPGH Licensee, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WSMH, Inc. Maryland Michigan
- ----------------------------------------------------------------------------------------------------------------------------
WSMH Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
WSTR, Inc. Maryland Ohio
- ----------------------------------------------------------------------------------------------------------------------------
WSTR Licensee, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WSYX, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WTTE, Channel 28, Inc. Maryland Ohio
Indiana
- ----------------------------------------------------------------------------------------------------------------------------
WTTE, Channel 28 Licensee, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WTTO, Inc. Maryland Alabama
- ----------------------------------------------------------------------------------------------------------------------------
WTTO Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
WTVZ, Inc. Maryland Virginia
- ----------------------------------------------------------------------------------------------------------------------------
WTVZ Licensee, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
WYZZ, Inc. Maryland Illinois
- ----------------------------------------------------------------------------------------------------------------------------
WYZZ Licensee, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------
Cresap Enterprises, Inc. Maryland
- ----------------------------------------------------------------------------------------------------------------------------
Sinclair Capital, a special purpose statutory business trust Delaware
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