Document:

Draft:

 

Exhibit

10.1

EXECUTION

COPY

 

ASSET PURCHASE AGREEMENT

 

DATED APRIL 18, 2002

 

AMONG

 

SINCLAIR BROADCAST GROUP, INC.,

SINCLAIR COMMUNICATIONS, INC.,

 

SINCLAIR MEDIA II, INC. AND

SCI-INDIANA LICENSEE, LLC

 

as

SELLERS,

 

AND

 

TRIBUNE

BROADCASTING COMPANY

 

as BUYER

 

 

TABLE OF CONTENTS

	

  SECTION 1:  CERTAIN DEFINITIONS

  
	

  1.1.

  	

  Terms Defined in

  this Section

  
	

  1.1.

  	

  Terms Defined in

  this Section

  
	

  1.2.

  	

  Terms

  Defined Elsewhere in this Agreement

  
	

  1.3.

  	

  Rules

  of Construction

  
	

  SECTION

  2:  EXCHANGE AND TRANSFER OF ASSETS; ASSET

  VALUE

  
	

  2.1.

  	

  Agreement to

  Exchange and Transfer

  
	

  2.2.

  	

  Excluded

  Assets

  
	

  2.3.

  	

  Purchase

  Price

  
	

   

  	

  Prorations

  
	

   

  	

  Manner of

  Determining Adjustments

  
	

  2.4.

  	

  Payment of Purchase

  Price

  
	

   

  	

  Payment

  of Estimated Purchase Price At Closing

  
	

   

  	

  Payments to Reflect

  Adjustments

  
	

  2.5.

  	

  Assumption

  of Liabilities and Obligations

  
	

  SECTION

  3:  REPRESENTATIONS AND WARRANTIES OF

  SELLERS

  
	

  3.1.

  	

  Organization

  and Authority of Sellers

  
	

  3.2.

  	

  Authorization

  and Binding Obligation

  
	

  3.3.

  	

  Absence

  of Conflicting Agreements; Consents

  
	

  3.4.

  	

  Governmental

  Licenses

  
	

  3.5.

  	

  Real Property

  
	

  3.6.

  	

  Tangible Personal

  Property

  
	

  3.7.

  	

  Contracts

  
	

  3.8.

  	

  Intangibles

  
	

  3.9.

  	

  Title to

  Assets

  
	

  3.10.

  	

  Financial

  Statements

  
	

  3.11.

  	

  Taxes

  
	

  3.12.

  	

  Insurance

  
	

  3.13.

  	

  Reports

  
	

  3.14.

  	

  Personnel and

  Employee Benefits

  
	

   

  	

  Employees and Compensation

  
	

   

  	

  Pension Plans

  
	

   

  	

  Welfare Plans

  
	

   

  	

  Benefit Arrangements

  
	

   

  	

  Multiemployer Pension

  Plans

  
	

   

  	

  Delivery

  of Copies of Relevant Documents and Other Information

  
	

   

  	

  Labor Relations

  
	

  3.15.

  	

  Claims and Legal

  Actions

  
	

  3.16.

  	

  Environmental

  Compliance

  
	

  3.17.

  	

  Compliance

  with Laws

  
	

  3.18.

  	

  Absence of

  Certain Changes or Events

  
	

  3.19.

  	

  Broker

  
	

  3.20.

  	

  Transactions with

  Affiliates

  

 

i

 

	

  3.21.

  	

  Citizenship

  
	

  SECTION

  4:  REPRESENTATIONS AND WARRANTIES OF

  BUYER

  
	

  4.1.

  	

  Organization,

  Standing and Authority

  
	

  4.2.

  	

  Authorization

  and Binding Obligation

  
	

  4.3.

  	

  Absence

  of Conflicting Agreements and Required Consents

  
	

  4.4.

  	

  Brokers

  
	

  4.5.

  	

  Availability

  of Funds

  
	

  4.6.

  	

  Qualifications of Buyer

  
	

  4.7.

  	

  WARN Act

  
	

  4.8.

  	

  Buyer’s Defined

  Contribution Plan

  
	

  SECTION

  5:  OPERATION OF THE STATIONS PRIOR TO

  CLOSING

  
	

  5.1.

  	

  Contracts

  
	

  5.2.

  	

  Compensation

  
	

  5.3.

  	

  Encumbrances

  
	

  5.4.

  	

  Dispositions

  
	

  5.5.

  	

  Access

  to Information

  
	

  5.6.

  	

  Insurance

  
	

  5.7.

  	

  Licenses

  
	

  5.8.

  	

  Obligations

  
	

  5.9.

  	

  No

  Inconsistent Action

  
	

  5.10.

  	

  Maintenance

  of Assets

  
	

  5.11.

  	

  Consents

  
	

  5.12.

  	

  Books

  and Records

  
	

  5.13.

  	

  Notification

  
	

  5.14.

  	

  Financial

  Information

  
	

  5.15.

  	

  Compliance

  with Laws

  
	

  5.16.

  	

  Preservation of Business

  
	

  5.17.

  	

  Normal

  Operations

  
	

  SECTION

  6:  SPECIAL COVENANTS AND AGREEMENTS

  
	

  6.1.

  	

  FCC Consent

  
	

  6.2.

  	

  Hart-Scott-Rodino

  
	

  6.3.

  	

  Risk of Loss

  
	

  6.4.

  	

  Confidentiality

  
	

  6.5.

  	

  Cooperation

  
	

  6.6.

  	

  Control of the Station

  
	

  6.7.

  	

  Accounts

  Receivable

  
	

  6.8.

  	

  Tax-Free

  Exchange and Allocation of Purchase Price

  
	

  6.9.

  	

  Access to Books and

  Records

  
	

  6.10.

  	

  Employee

  Matters

  
	

  6.11.

  	

  Public

  Announcements

  
	

  6.12.

  	

  Disclosure

  Schedules

  
	

  6.13.

  	

  Bulk Sales

  Law

  
	

  6.14.

  	

  Adverse

  Developments

  
	

  6.15.

  	

  Title

  Insurance

  

 

ii

 

	

  6.16.

  	

  Surveys

  
	

  6.17.

  	

  Environmental Site

  Assessment

  
	

  SECTION

  7:  CONDITIONS TO OBLIGATIONS OF BUYER

  AND SELLERS

  
	

  7.1.

  	

  Conditions to

  Obligations of Buyer

  
	

   

  	

  Representations and

  Warranties

  
	

   

  	

  Covenants and Conditions

  
	

   

  	

  FCC Consent

  
	

   

  	

  Hart-Scott-Rodino

  
	

   

  	

  Governmental

  Authorizations

  
	

   

  	

  Deliveries

  
	

  7.2.

  	

  Conditions

  to Obligations of Sellers

  
	

   

  	

  Representations and

  Warranties

  
	

   

  	

  (b) Covenants and Conditions

  
	

   

  	

  FCC Consent

  
	

   

  	

  Hart-Scott-Rodino

  
	

   

  	

  Deliveries

  
	

  SECTION

  8:  CLOSING AND CLOSING DELIVERIES

  
	

  8.1.

  	

  Closing

  
	

   

  	

  Closing

  Date

  
	

   

  	

  Closing Place

  
	

  8.2.

  	

  Deliveries

  by Sellers

  
	

   

  	

  Conveyancing Documents

  
	

   

  	

  Officer’s Certificate

  
	

   

  	

  Secretary’s Certificate

  
	

   

  	

  Consents

  
	

   

  	

  Good Standing Certificates

  
	

   

  	

  Opinions of Counsel

  
	

   

  	

  FIRPTA Certificate

  
	

   

  	

  Other Documents

  
	

  8.3.

  	

  Deliveries

  by Buyer

  
	

   

  	

  Closing Payment

  
	

   

  	

  Officer’s Certificate

  
	

   

  	

  Secretary’s Certificate

  
	

   

  	

  Assumption Agreements

  
	

   

  	

  Good Standing Certificates

  
	

   

  	

  Opinion of Counsel

  
	

   

  	

  Other Documents

  
	

  SECTION

  9:  TERMINATION

  
	

  9.1.

  	

  Termination by

  Mutual Consent

  
	

  9.2.

  	

  Termination

  by Sellers

  
	

  9.3.

  	

  Termination

  by Buyer

  
	

  9.4.

  	

  Rights

  on Termination

  
	

  9.5.

  	

  Liquidated

  Damages Not a Penalty

  
	

  9.6.

  	

  Attorneys’

  Fees

  

 

iii

 

	

  9.7.

  	

  Survival

  
	

  SECTION

  10:  SURVIVAL OF REPRESENTATIONS AND

  WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES

  
	

  10.1.

  	

  Survival of

  Representations

  
	

  10.2.

  	

  Indemnification by

  Sellers

  
	

  10.3.

  	

  Indemnification by Buyer

  
	

  10.4.

  	

  Procedure for

  Indemnification

  
	

  10.5.

  	

  Certain

  Limitations

  
	

  SECTION 11:  MISCELLANEOUS

  
	

  11.1.

  	

  Fees

  and Expenses

  
	

  11.2.

  	

  Notices

  
	

  11.3.

  	

  Benefit and Binding

  Effect

  
	

  11.4.

  	

  Further

  Assurances

  
	

  11.5.

  	

  GOVERNING LAW

  
	

  11.6.

  	

  Entire

  Agreement

  
	

  11.7.

  	

  Waiver of

  Compliance; Consents

  
	

  11.8.

  	

  Headings

  
	

  11.9.

  	

  Counterparts

  
	

  11.10.

  	

  Specific

  Performance

  

 

iv

 

EXECUTION

COPY

ASSET

PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT

(this “Agreement”) is dated as of April 18, 2002, among Sinclair Broadcast

Group, Inc., a Maryland corporation (“Parent” and a “Seller”), Sinclair

Communications, Inc., a Maryland corporation (“SCI” and a “Seller”),

Sinclair Media II, Inc., a Maryland corporation and SCI-Indiana Licensee, LLC,

a Maryland limited liability company (each a “Seller” and together with

Parent and SCI, collectively, “Sellers”), and Tribune Broadcasting

Company, a Delaware corporation (“Buyer”).

 

R E C I T A L S:

 

WHEREAS, Sellers

own and operate television broadcast stations WTTV and WTTK in Indianapolis,

Indiana  (each a “Station” and

collectively the “Stations”) and own certain assets described in more detail in

Section 2 of this Agreement used or useful in connection with the operation of

the Stations;

 

WHEREAS, Parent and

SCI directly or indirectly own all of the outstanding equity interests of the

other Sellers; and

 

WHEREAS, the

parties hereto desire to enter into this Agreement to provide for the sale,

assignment, and transfer by Sellers to Buyer of the Assets (as defined below)

as provided by the terms and conditions of this Agreement.

 

A G R E E M E N T S:

 

In consideration

of the above recitals and of the mutual agreements and covenants contained in

this Agreement, the parties to this Agreement, intending to be bound legally,

agree as follows:

 

SECTION 1:  CERTAIN

DEFINITIONS

 

1.1.          Terms

Defined in this Section.  The following terms, as used in this

Agreement, have the meanings set forth in this Section:

 

“Accounts

Receivable” means the rights of Sellers as of the Closing Date to

payment in cash for the sale of advertising time and other goods and services

by the Stations prior to the Closing Date.

 

“Affiliate”

means, with respect to any Person, (a) any other Person that, directly or

indirectly through one or more intermediaries, controls, is controlled by, or

is under common control with such Person, or (b) an officer or director of such

Person or of an Affiliate of such Person within the meaning of clause (a) of

this definition.  For purposes of clause

(a) of this definition, (i) a Person shall be deemed to control another Person

if such Person (A) has sufficient power to enable such Person to elect a

majority of the board of directors of such Person, or (B) owns a majority of

the beneficial interests in income and capital of such Person;

 

 

and (ii) a Person shall

be deemed to control any partnership of which such Person is a general partner.

 

“Assets”

means the assets to be transferred or otherwise conveyed by Sellers to Buyer

under this Agreement, as specified in Section 2.1.

 

“Assumed

Contracts” means (a) all Contracts set forth on Schedule 3.7, (b)

Contracts entered into prior to the date of this Agreement in the ordinary

course of business with advertisers for the sale of advertising time or production

services with respect to the Stations for cash at rates consistent with past

practices, (c) any Contracts entered into by any Seller prior to the date of

this Agreement which are not required to be included on Schedule 3.7 hereto,

(d) any Contracts entered into by Sellers between the date of this Agreement

and the Closing Date that Buyer agrees in writing to assume, and (e) other

Contracts entered into by any Seller between the date of this Agreement and the

Closing Date in compliance with Section 

5.

 

“Business Day”

means any day other than a Saturday, a Sunday, or other day upon which banks in

New York, New York generally are not open for business.

 

“Closing”

means the consummation of the exchange and acquisition of the Assets pursuant

to this Agreement on the Closing Date in accordance with the provisions of

Section 8.1.

 

“Closing

Date” means the date on which the Closing occurs, as determined

pursuant to Section 8.1.

 

“COBRA”

means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

 

“COBRA

Employees” means any former employee of the Stations receiving

benefits under or pursuant to COBRA prior to the Effective Time.

 

“Code”

means the Internal Revenue Code of 1986, as amended.

 

“Communications

Act” means the Communications Act of 1934, as amended.

 

“Consents”

means the consents, permits, or approvals of government authorities and other

third parties necessary to transfer the Assets to Buyer or otherwise to

consummate the transactions contemplated by this Agreement, including, without limitation,

any agreement necessary from a third-party to separate out from a contract

relating to television stations other than the Stations that portion of such

contract relating to the Stations.

 

“Contaminant” shall

mean and include any pollutant, contaminant, hazardous material (as defined in

any of the Environmental Laws), toxic substances (as defined in any of the

Environmental Laws), asbestos or asbestos containing material, urea

formaldehyde, polychlorinated biphenyls, regulated substances and wastes,

radioactive materials, and petroleum

 

2

 

or petroleum by-products,

including crude oil or any fraction thereof.

 

“Contracts”

means all contracts, consulting agreements, leases, non-governmental licenses

and other agreements (including leases for personal or real property and

employment agreements), written or oral (including any amendments and other

modifications thereto) to which any Seller is a party or that are binding upon

any Seller, that relate to or affect the Assets or the business or operations

of the Stations, and that either (a) are in effect on the date of this

Agreement, including, without limitation, those listed on Schedule 3.7 hereto,

or (b) are entered into by any Seller between the date of this Agreement and

the Closing Date; provided, any contract which relates to television stations

other than the Stations shall be treated as a Contract to the extent applicable

to the Stations.

 

“Effective

Time” means 12:01 a.m., Eastern time, on the Closing Date.

 

“Environmental

Laws” shall mean and include, but not be limited to, any applicable

federal, state or local law, statute, charter, ordinance, rule or regulation or

any governmental agency interpretation, policy or guidance, including without limitation

applicable safety/environmental/health laws such as but not limited to the

Resource Conservation and Recovery Act of 1976, Comprehensive Environmental

Response Compensation and Liability Act, Federal Emergency Planning and

Community Right-to-Know Law, the Clean Air Act, the Clean Water Act, and the

Toxic Substance Control Act, as any of the foregoing have been amended, and any

permit, order, directive, court ruling or order or consent decree promulgated

or issued pursuant to any Environmental Laws which pertains to, governs, or

controls the generation, storage, remediation or removal of Contaminants or

otherwise regulates the protection of health and the environment including, but

not limited to, any of the following activities, whether on site or off

site:  (i) the emission, discharge,

release, spilling or dumping of any Contaminant into the air, surface water,

ground water, soil or substrata; or (ii) the use, generation, processing, sale,

recycling, treatment, handling, storage, disposal, transportation, labeling or

any other management of any Contaminant.

 

“ERISA”

means the Employee Retirement Income Security Act of 1974, as amended.

 

“Escrow Agent”

means Wachovia Bank.

 

“Escrow

Deposit” means the sum of Twelve Million Five Hundred Thousand Dollars

($12,500,000), which is being deposited by Buyer or the qualified intermediary

referred to in Section 6.8 with the Escrow Agent within two (2) days of the

date hereof to secure the obligations of Buyer to close under this Agreement,

with such deposit being held by the Escrow Agent in accordance with the Escrow

Agreement executed among Buyer, Sellers and Escrow Agent on the date

hereof.  Any interest or other proceeds

earned on the investment of the Escrow Deposit shall be credited to the account

of Buyer upon release of the Escrow Deposit; provided Sellers shall be entitled

to fifty percent (50%) of such interest or proceeds in the event Sellers become

entitled to receive the Escrow Deposit pursuant to Section 9.4.

 

3

 

“Excluded

Tangible Personal Property” means all tangible personal property

owned or held by Sellers other than such tangible personal property listed on

Schedule 3.6 hereto, any assets used primarily in the operation of any

television broadcast station owned, operated or, programmed by Sellers or any

Affiliate of Sellers other than the Stations, but not included in the Assets,

and any tangible personal property located at 2000 W. 41st Street, Baltimore,

Maryland 21212 or 10706 Beaver Dam Road, Cockeysville, Maryland 21030.

 

“FCC”

means the Federal Communications Commission.

 

“FCC Consent”

means action by the FCC granting its consent to the assignment of the FCC

Licenses by Sellers to Buyer as contemplated by this Agreement, including,

without limitation, the grant of authority to Buyer to operate WTTK as a

satellite of WTTV pursuant to Note 5 to 47 C.F.R. sec. 73.3555, without any

material adverse condition on such authority.

 

“FCC Licenses”

means those licenses, permits and authorizations issued by the FCC to Sellers

in connection with the business and operations of the Stations, including,

without limitation, the grant of authority to operate WTTK as a satellite of

WTTV pursuant to the satellite exception of Note 5 to 47 C.F.R. sec. 73.3555.

 

“Final Order”

shall mean an action by the FCC upon any application for FCC Consent filed by

the parties hereto for FCC consent, approval or authorization, which action has

not been reversed, stayed, enjoined, set aside, annulled or suspended, and with

respect to which action, no protest, petition to deny, petition for rehearing

or reconsideration, appeal or request for stay is pending, and as to which

action the time for filing of any such protest, petition, appeal or request and

any period during which the FCC may reconsider or review such action on its own

authority has expired.

 

“Hart-Scott-Rodino”

means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and

all Laws promulgated pursuant thereto or in connection therewith.

 

“Intangibles”

means all call letters (including “WTTV” and “WTTK”), copyrights, trademarks,

trade names, service marks, service names, licenses, patents, permits, jingles,

proprietary information, technical information and data, machinery and

equipment warranties, and other similar intangible property rights and

interests (and any goodwill associated with any of the foregoing) applied for,

issued to, or owned by Sellers or under which Sellers are licensed or

franchised and that are used in the business and operations of the Stations,

together with any additions thereto between the date of this Agreement and the

Closing Date to the extent permitted by this Agreement.

 

“Knowledge” or any

derivative thereof with respect to the Sellers means, exclusively, the actual

knowledge after reasonable investigation of (i) with respect to Parent, the

President and Chief Executive Officer or the Chief Financial Officer, Chief

Human Resources Officer, the General Counsel or any other Vice President of

Parent, (ii) any other officers of any of the

 

4

 

Sellers or (iii) the

general manager, general sales managers, business managers, and chief engineers

of each of the Stations.

 

“Laws”

means any federal, state, local, municipal, foreign, international,

multi-national, self-regulatory organization, or other administrative order,

constitution, law, ordinance, principle of common law, rule, regulation,

statute, treaty, by-laws, or the like.

 

“Leased Real

Property” means all real property and all buildings and other

improvements thereon and appurtenant thereto leased or held by Sellers and used

in the business or operation of the Stations.

 

“Licenses”

means all licenses, permits, construction permits and other authorizations

issued by the FCC, the Federal Aviation Administration, or any other federal,

state, or local governmental authorities to Sellers, currently in effect and

used in connection with the conduct of the business or operations of the

Stations, together with any additions thereto between the date of this

Agreement and the Closing Date to the extent permitted by this Agreement.

 

“Loss”

means, with respect to any Person, any and all costs, obligations, liabilities,

demands, claims, settlement payments, awards, judgments, fines, penalties, damages,

and reasonable out-of-pocket expenses, including court costs and reasonable

attorneys’ fees, whether or not arising out of a third party claim.

 

“Material

Adverse Effect” means a material adverse effect on the business,

assets or financial condition of either Station, except for any such material

adverse effect resulting from (a) general economic conditions applicable to the

television broadcast industry, or (b) circumstances that are not likely to

recur and either have been substantially remedied or can be substantially

remedied without substantial cost or delay.

 

“Owned Real

Property” means all real property and all buildings and other

improvements thereon and appurtenant thereto owned by Sellers and used in the

business or operations of the Stations.

 

“Permitted

Encumbrances” means (a) encumbrances of a landlord, or other

statutory lien for sums not yet due and payable, or a landlord’s liens arising

in the ordinary course of business for sums not yet due and payable, (b)

encumbrances arising in connection with equipment or maintenance financing or

leasing for sums not yet due and payable under the terms of the Contracts set

forth on the Schedules, which Contracts have been made available to Buyer, (c)

encumbrances for Taxes not yet delinquent or which are being contested in good

faith and by appropriate proceedings if adequate reserves with respect thereto

are maintained on Sellers’ books in accordance with generally accepted

accounting principles, or (d) encumbrances that do not materially detract from

the value of any of the Assets or materially interfere with the use thereof as

currently used.

 

5

 

“Person”

means an individual, corporation, association, partnership, joint venture,

trust, estate, limited liability company, limited liability partnership, or

other entity or organization.

 

“Real

Property” means all real property and all buildings and other

improvements thereon and appurtenant thereto, whether or not owned, leased or

held by Sellers used in the business or operations of the Stations.

 

“Real

Property Interests” means all interests in Owned Real Property and

Leased Real Property, including fee estates, leaseholds and subleaseholds,

purchase options, easements, licenses, rights to access, and rights of way, and

all buildings and other improvements thereon and appurtenant thereto, owned or

held by Sellers that are used in the business or operations of the Stations,

together with any additions, substitutions and replacements thereof and thereto

between the date of this Agreement and the Closing Date to the extent permitted

by this Agreement.

 

“Tangible

Personal Property” means all machinery, equipment, tools, vehicles,

furniture, leasehold improvements, office equipment, plant, inventory, spare

parts and other tangible personal property owned or held by Sellers that is

used or useful in the conduct of the business or operations of the Stations,

together with any additions, substitutions and replacements thereof and thereto

between the date of this Agreement and the Closing Date to the extent permitted

by this Agreement, but excluding the Excluded Tangible Personal Property.

 

“Tax”

means any federal, state, local, or foreign income, gross receipts, windfall

profits, severance, property, production, sales, use, license, excise,

franchise, capital, transfer, employment, withholding, or other tax or similar

governmental assessment, together with any interest, additions, or penalties

with respect thereto and any interest in respect of such additions or penalties.

 

“Tax Return”

means any tax return, declaration of estimated tax, tax report or other tax

statement, or any other similar filing required to be submitted to any

governmental authority with respect to any Tax.

 

1.2.          Terms Defined Elsewhere in this Agreement.  For purposes of this Agreement, the

following terms have the meanings set forth in the sections indicated:

 

	

  Agreement

  	

   

  	

  Preamble

  
	

   

  	

   

  	

   

  
	

  Allocation Schedule

  	

   

  	

  Section 6.8(b)

  
	

   

  	

   

  	

   

  
	

  Ancillary Documents

  	

   

  	

  Section 3.1

  
	

   

  	

   

  	

   

  
	

  Balance Sheet Date

  	

   

  	

  Section 3.10

  
	

   

  	

   

  	

   

  
	

  Benefit Arrangements

  	

   

  	

  Section 3.14 (a)(iv)

  

 

6

 

	

  Buyer

  	

   

  	

  Preamble

  
	

   

  	

   

  	

   

  
	

  Buyer’s Plan

  	

   

  	

  Section 4.8

  
	

   

  	

   

  	

   

  
	

  Claimant

  	

   

  	

  Section 10.4(a)

  
	

   

  	

   

  	

   

  
	

  Collection Period

  	

   

  	

  Section 6.7(a)

  
	

   

  	

   

  	

   

  
	

  Deferred Consent

  	

   

  	

  Section 5.11(b)

  
	

   

  	

   

  	

   

  
	

  Employees

  	

   

  	

  Section 3.14(a)

  
	

   

  	

   

  	

   

  
	

  Environmental

  Assessments

  	

   

  	

  Section 6.17(a)

  
	

   

  	

   

  	

   

  
	

  Estimated Purchase

  Price

  	

   

  	

  Section 2.4(a)

  
	

   

  	

   

  	

   

  
	

  Event of Loss

  	

   

  	

  Section 6.3

  
	

   

  	

   

  	

   

  
	

  FTC

  	

   

  	

  Section 4.6

  
	

   

  	

   

  	

   

  
	

  Financial Statements

  	

   

  	

  Section 3.10

  
	

   

  	

   

  	

   

  
	

  HSR Filing

  	

   

  	

  Section 6.2(a)

  
	

   

  	

   

  	

   

  
	

  HSR Termination Fee

  	

   

  	

  Section 6.2(b)

  
	

   

  	

   

  	

   

  
	

  Indemnity Cap

  	

   

  	

  Section 10.5(b)

  
	

   

  	

   

  	

   

  
	

  Indemnifying Party

  	

   

  	

  Section 10.4(a)

  
	

   

  	

   

  	

   

  
	

  Parent

  	

   

  	

  Preamble

  
	

   

  	

   

  	

   

  
	

  Pension Plan

  	

   

  	

  Section 3.14(a)(ii)

  
	

   

  	

   

  	

   

  
	

  Purchase Price

  	

   

  	

  Section 2.3(a)

  
	

   

  	

   

  	

   

  
	

  Seller

  	

   

  	

  Preamble

  
	

   

  	

   

  	

   

  
	

  SCI

  	

   

  	

  Preamble

  
	

   

  	

   

  	

   

  
	

  Stations

  	

   

  	

  Recitals

  
	

   

  	

   

  	

   

  
	

  Threshold Amount

  	

   

  	

  Section 10.5(b)

  
	

   

  	

   

  	

   

  
	

  Title Commitment

  	

   

  	

  Section 6.15

  
	

   

  	

   

  	

   

  
	

  Transferred Employees

  	

   

  	

  Section 6.10(a)

  
	

   

  	

   

  	

   

  
	

  WB

  	

   

  	

  Section 2.3(b)(vi)

  
	

   

  	

   

  	

   

  
	

  Welfare Plan

  	

   

  	

  Section 3.14(a)(i)

  

 

1.3.          Rules of

Construction.  Words used in this Agreement, regardless of

the gender and number specifically used, shall be deemed and construed to

include any other gender and any other number as the context requires.  As used in this Agreement, the word “including”

is not limiting and the word “or” is not exclusive.  Except as specifically otherwise provided in this Agreement in a

particular instance, a reference to a Section, Exhibit, or Schedule is a

reference to

 

7

 

a Section of this

Agreement, an Exhibit, or a Schedule hereto, and the terms “hereof,” “herein,”

and other like terms refer to this Agreement as a whole, including the

Schedules and Exhibits to this Agreement, and not solely to any particular part

of this Agreement.  The descriptive

headings in this Agreement are inserted for convenience of reference only and

are not intended to be a part of or to affect the meaning or interpretation of

this Agreement.  Any reference herein to

“Seller” or “Sellers” shall include each Seller individually and all Sellers

collectively, unless otherwise specified.

 

SECTION 2:  EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE

 

2.1.          Agreement

to Exchange and Transfer.  Subject to the terms and conditions set

forth in this Agreement with respect to the Stations, Sellers hereby agree to

transfer, convey, assign, and deliver to Buyer on the Closing Date, and Buyer

agrees to acquire, all of Sellers’ right, title, and interest in the tangible

and intangible assets used in connection with the conduct of the business or

operations of the Stations, together with any additions thereto between the

date of this Agreement and the Closing Date to the extent permitted by this

Agreement, but excluding the assets described in Section 2.2, free and clear of

any claims, liabilities, security interests, mortgages, liens, pledges,

charges, or encumbrances of any nature whatsoever (except for Permitted

Encumbrances), including the following:

 

(a)           the Tangible Personal Property;

 

(b)           the Real Property Interests;

 

(c)           the Licenses;

 

(d)           the Assumed Contracts;

 

(e)           the Intangibles, including the

goodwill of the Stations, if any;

 

(f)            all of Sellers’ proprietary

information, technical information and data, machinery and equipment

warranties, maps, computer discs and tapes, plans, diagrams, blueprints and

schematics, including filings with the FCC, in each case to the extent relating

to the business and operation of the Stations;

 

(g)           all choses in action of Sellers

relating to the Stations to the extent they relate to the period after the

Effective Time;

 

(h)           all books and records relating to the

business or operations of the Stations, including executed copies of the

Assumed Contracts, and all records required by the FCC to be kept by the

Stations; and

 

8

 

(i)            all of the assets reflected on the

Financial Statements, except for the Excluded Assets and those Assets disposed

of or converted into cash after the Balance Sheet Date in the ordinary course

of business.

 

2.2.          Excluded Assets.  The Assets shall exclude the following:

 

(a)           Sellers’ cash, cash equivalents and

deposits, all interest payable in connection with any such items and rights in

and to bank accounts, marketable and other securities and similar investments

of Sellers;

 

(b)           any insurance policies, promissory

notes, amounts due to Sellers from employees, bonds, letters of credit,

certificates of deposit, or other similar items, and any cash surrender value

in regard thereto; provided, that in the event any Seller is obligated to

assign to Buyer the proceeds of any such insurance policy at the time the

Closing occurs under Section 6.3, such proceeds shall be included in the

Assets;

 

(c)           any pension, profit-sharing, or

employee benefit plans, including all of Sellers’ interest in any Welfare Plan,

Pension Plan or Benefit Arrangement (each as defined in Section 3.14(a));

 

(d)           all Tangible Personal Property

disposed of or consumed in the ordinary course of business to the extent

permitted by this Agreement;

 

(e)           all Tax Returns and supporting

materials, all original financial statements and supporting materials, all

books and records that Sellers are required by law to retain, all of Sellers’

organizational documents, corporate books and records (including minute books

and stock ledgers) and originals of account books of original entry, all

records of Sellers relating to the sale of the Assets and all records and

documents related to any assets excluded pursuant to this Section 2.2;

 

(f)            any interest in and to any refunds

of federal, state, or local franchise, income, or other taxes for periods (or

portions thereof) ending on or prior to the Effective Time;

 

(g)           all Accounts Receivable;

 

(h)           all rights and claims of Sellers

whether mature, contingent or otherwise, against third parties relating to the

Assets of the Stations, arising out of events occurring prior to the Effective

Time, whether in tort, contract or otherwise, other than rights and claims

against third parties relating to the Assets which have as their basis loss,

damage or impairment of or to any of the Assets and which loss, damage or

impairment has not been restored or repaired prior to the Closing (or in the

case of a lost asset, that would have been acquired but for such loss);

 

(i)            any Contracts which are not Assumed

Contracts;

 

9

 

(j)            all of each Seller’s deposits and

prepaid expenses; provided, any deposits and prepaid expenses shall be included

in the Assets to the extent that Sellers receive a credit therefor in the

proration of the Purchase Price pursuant to Section 2.3(b);

 

(k)           all rights of Sellers under or

pursuant to this Agreement (or any other agreements contemplated hereby);

 

(l)            all rights to the names “Sinclair

Broadcast Group,” “Sinclair Communications,” “Sinclair,” “Sinclair Media” and

any logo or variation thereof and goodwill associated therewith;

 

(m)          the Excluded Tangible Personal

Property;

 

(n)           all assets owned by the Sellers,

Parent or any Affiliate of Parent, other than the Assets and the Stations;

 

(o)           all shares of capital stock,

partnership interests, interests in limited liability companies or other equity

interest, including, but not limited to, any options, warrants or voting trusts

relating thereto which are owned by Sellers; and

 

(p)           intercompany accounts receivable and

intercompany accounts payable of Sellers.

 

2.3.          Purchase Price.

 

(a)           Subject to the adjustments and

prorations as provided by this Agreement, the purchase price of the Assets (the

“PurchasePrice”) shall be One Hundred Twenty-Five Million Dollars

($125,000,000) in the aggregate. 

Subject to the provisions of this Agreement, the Escrow Deposit shall be

applied to the Purchase Price at the Closing.

 

(b)           Prorations.  The Purchase Price shall be increased or

decreased as required to effectuate the proration of revenues and expenses, as

set forth below.  Unless otherwise set

forth in this Agreement, all revenues and all expenses arising from the

operation of the Stations, including tower rental, business and license fees,

utility charges, real property and personal property, and other similar Taxes

and assessments levied against or with respect to the Assets, property and

equipment rentals, applicable copyright or other fees, sales and service

charges, payments due under affiliation agreements, film or programming license

agreements and, subject to the provisions of Section 6.10, employee

compensation, including wages (including bonuses which constitute wages),

salaries, accrued sick leave (if any), accrued vacation, and related Taxes,

shall be prorated between Buyer and sellers in accordance with the principle

that Sellers shall receive all revenues and shall be responsible for all

expenses, costs, and liabilities (accrued or otherwise) allocable to the

operations of the Stations for the period prior to the Effective Time, and

Buyer shall receive all revenues and shall be responsible for all expenses,

costs, and obligations allocable to the operations of the Stations for the

period on and after the Effective Time, subject to the following:

 

10

 

(i)            There shall be no adjustment for,

and Sellers shall remain solely liable with respect to, any Contracts not

included in the Assumed Contracts and any other obligation or liability not

being assumed by Buyer in accordance with Section 2.5.  An adjustment and proration shall be made in

favor of Buyer to the extent that Buyer (i) assumes any liability under any

Assumed Contract to refund (or to credit against payments otherwise due) any

security deposit or similar prepayment paid to Sellers by any lessee or other

third party or (ii) assumes any liability or obligation, the benefit of which

was received by any Seller prior to the Effective Time.  An adjustment and proration shall be made in

favor of Sellers to the extent Buyer receives the right to receive a refund (or

to a credit against payments otherwise due) under any Assumed Contract to any

security deposit or similar pre-payment paid by or on behalf of Sellers.

 

(ii)           An adjustment and proration shall be

made in favor of Sellers for the amount, if any, by which the fair market value

of the goods or services to be received by the Stations under their trade or

barter agreements as of the Effective Time exceeds by more than Two Hundred

Thousand Dollars ($200,000.00) the fair market value of any advertising time

remaining to be run by the Stations as of the Effective Time pursuant to such

trade or barter agreements.  An

adjustment and proration shall be made in favor of Buyer to the extent that the

amount of any advertising time remaining to be run by the Stations under their

trade or barter agreements as of the Effective Time exceeds by more than Two

Hundred Thousand Dollars ($200,000.00) the fair market value of the goods or

services to be received by the Stations as of the Effective Time pursuant to

such trade or barter agreements.

 

(iii)          There shall be no proration for

program barter, except with respect to cash consideration paid in connection

with the renewal or extension of program barter agreements listed in Schedule

3.7.

 

(iv)          An adjustment and proration shall be

made in favor of Sellers for the amount, if any, of prepaid expense, the

benefit of which accrues to Buyer hereunder, and other current assets acquired

by Buyer hereunder which are paid by Sellers to the extent such prepaid

expenses and other current assets relate to the period after the Effective

Time.

 

(v)           Except as otherwise provided in this

Section 2.3(b) or as set forth on Schedule 2.3(b)(v), an adjustment and

proration shall be made in favor of Buyer for (A) the amount, if any, of

deferred revenue, the benefit of which accrues to any Seller hereunder, and (B)

other current liabilities assumed by Buyer hereunder which are paid or

recognized by Buyer to the extent such current liabilities relate to the period

prior to the Effective Time.

 

(vi)          There shall be no proration for

payment(s) made by (A) Katz Millenium Sales and Marketing, Inc. to any of the

Sellers (or any Affiliate thereof) in connection with obtaining the right to

serve as the national sales representative of the Stations or by (B) The WB

Television Network Partners (the “WB”) to any of the Sellers (or any Affiliate

thereof) in connection with the affiliation of either of the Stations with the

WB.

 

11

 

(c)           Manner of Determining Adjustments.  The Purchase Price, taking into account the

adjustments and prorations pursuant to Section 2.3(b), will be determined in

accordance with the following procedures:

 

(i)            Sellers shall prepare and deliver to

Buyer not later than three (3) Business Days before the Closing Date a

preliminary settlement statement which shall set forth Sellers’ good faith

estimate of the adjustments to the Purchase Price under Section 2.3(b) with

respect to the Stations.  The preliminary

settlement statement shall (A) contain all information reasonably necessary to

determine the adjustments to the Purchase Price under Section 2.3(b) as to the

Stations, to the extent such adjustments can be determined or estimated as of

the date of the preliminary settlement statement, and such other information as

may be reasonably requested by Buyer, and (B) be certified by Sellers to be

true and complete to Sellers’ Knowledge as of the date thereof.

 

(ii)           Not later than ninety (90) calendar

days after the Closing Date, Buyer will deliver to Sellers a statement setting

forth Buyer’s determination of the Purchase Price and the calculation thereof

pursuant to Section 2.3(b) as to the Stations. 

Buyer’s statement (A) shall contain all information reasonably necessary

to determine the adjustments to the Purchase Price under Section 2.3(b) and

such other information as may be reasonably requested by Sellers, and (B) shall

be certified by Buyer to be true and complete to Buyer’s knowledge as of the

date thereof.  If Sellers dispute the

amount of such Purchase Price determined by Buyer, they shall deliver to Buyer

within thirty (30) calendar days after receipt of Buyer’s statement a statement

setting forth their determination of the amount of such Purchase Price.  If Sellers notify Buyer of its acceptance of

Buyer’s statement, or if Sellers fail to deliver their statement within the

thirty (30) calendar day period specified in the preceding sentence, Buyer’s

determination of the Purchase Price shall be conclusive and binding on the

parties.

 

(iii)          Buyer and Sellers shall use good faith

efforts to resolve any dispute involving the determination of the Purchase

Price paid by Buyer at the Closing.  If

the parties are unable to resolve the dispute within forty-five (45) calendar

days following the delivery of all of Buyer’s statements to be provided

pursuant to Section 2.3(c)(ii) after the Closing, Buyer and Sellers shall

jointly designate an independent certified public accounting firm of national

standing which has not regularly provided services to either the Buyer or

Sellers in the last three (3) years, who shall be knowledgeable and experienced

in the operation of television broadcasting stations, to resolve the

dispute.  If the parties are unable to

agree on the designation of an independent certified public accounting firm,

the selection of the accounting firm to resolve the dispute shall be submitted

to arbitration to be held in Baltimore, Maryland, in accordance with the

commercial arbitration rules of the Ameri­can Arbi­tra­tion Asso­ci­a­tion.  The accounting firm’s resolution of the

dispute shall be final and binding on the parties, and a judgment may be

entered thereon in any court of competent jurisdiction.  Any fees of this accounting firm, and, if

necessary, for arbitration to select such accountant, shall be divided equally

between the parties.

 

2.4.          Payment

of Purchase Price.  The Purchase Price shall be paid by Buyer to Sellers at the

Closing as follows:

 

12

 

(a)           Payment of Estimated Purchase Price At Closing.  The Purchase Price, adjusted by the

estimated adjustments pursuant to Section 2.3(b) as set forth in Sellers’

preliminary settlement statement pursuant to Section 2.3(c)(i), is referred to

as the “Estimated Purchase Price”.  At

the Closing, Buyer shall pay or cause to be paid to Sellers the Estimated

Purchase Price for the Assets by federal wire transfer of same-day funds

pursuant to wire transfer instructions, which instructions shall be delivered

to Buyer by Sellers at least two (2) Business Days prior to the Closing Date.

 

(b)           Buyer and Sellers shall cause the

Escrow Deposit to be released to Sellers on the Closing Date as partial payment

of the Estimated Purchase Price by delivering wiring instructions to the Escrow

Agent two (2) calendar days prior to the Closing Date.

 

(c)           Payments to Reflect Adjustments.  The Purchase Price as finally determined

pursuant to Section 2.3(c) shall be paid as follows:

 

(i)            If the Purchase Price as finally

determined pursuant to Section 2.3(c) exceeds the Estimated Purchase Price,

Buyer shall pay to Sellers, in immediately available funds within five (5)

Business Days after the date on which the Purchase Price is determined pursuant

to Section 2.3(c), the difference between the Purchase Price and the Estimated

Purchase Price.

 

(ii)           If the Purchase Price as finally

determined pursuant to Section 2.3(c) is less than the Estimated Purchase

Price, Sellers shall pay to Buyer, in immediately available funds within five

(5) Business Days after the date on which the Purchase Price is determined

pursuant to Section 2.3(c), the difference between the Purchase Price and the

Estimated Purchase Price.

 

2.5.          Assumption

of Liabilities and Obligations.  As of the Closing Date, Buyer shall assume

and undertake to pay, discharge, and perform all obligations and liabilities of

Sellers under the Licenses, the Assumed Contracts, or as otherwise specifically

provided for herein to the extent that either (i) the obligations and

liabilities relate to the time after the Effective Time (including as a result

of any deferral disclosed on Schedule 2.3(b)(v)), or (ii) the Purchase Price

was reduced pursuant to Section 2.3(b) as a result of the proration of such

obligations and liabilities; provided liabilities arising under any

Environmental Laws which arise after the Effective Time shall be treated as

relating to the time after the Effective Time notwithstanding that the

conditions giving rise to such liabilities may have existed prior to the

Effective Time; provided, further, such treatment shall not limit

Buyer’s rights to indemnification pursuant to, and subject to the limitations

of, Section 10 hereof.  Except to the

extent provided to the contrary herein, Buyer shall not assume any other

obligations or liabilities of Sellers, including (1) any obligations or

liabilities under any Contract not included in the Assumed Contracts; (2) any

obligations or liabilities under the Assumed Contracts relating to the period

prior to the Effective Time, except insofar as an adjustment therefor is made

in favor of Buyer under Section 2.3(b); (3) any liabilities, claims or pending

litigation or proceedings relating to the operation of the Stations or the Real

Property Interests prior to the Effective Time; or (4) any obligations or

liabilities of Sellers under any Welfare Plan, Pension Plan or other Benefit

Arrangements.

 

13

 

SECTION 3:  REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Each Seller jointly and

severally represents and warrants to Buyer as of the date hereof and as of the

Closing Date (except for representations and warranties that speak as of a

specific date or time, in which case, such representations and warranties shall

be true and complete as of such date or time) as follows:

 

3.1.          Organization

and Authority of Sellers.  Each Seller is a corporation, limited

liability company, or limited partnership (as applicable), duly organized,

validly existing, and in good standing under the laws of the State listed on

Schedule 3.1 next to each such Seller’s name. 

Each Seller has the requisite corporate power and authority (or other

appropriate power and authority based on the structure of such Seller) to own,

lease, and operate its properties, to carry on its business in the places where

such properties are now owned, leased, or operated and such business is now

conducted, and to execute, deliver, and perform this Agreement and the

documents contemplated hereby (the “Ancillary Documents”) according to their

respective terms and to consummate the transactions contemplated hereby and

thereby.  Each Seller is duly qualified

and in good standing in each jurisdiction listed on Schedule 3.1 next to each

such Seller’s name, which are all jurisdictions in which such qualification is

required.  Except as set forth on

Schedule 3.1, no Seller is a participant in any joint venture, partnership or

similar relationship with any other Person with respect to any part of the

business or the operations of the Stations or any of the Assets.

 

3.2.          Authorization

and Binding Obligation.  The execution, delivery, and performance of

this Agreement and the Ancillary Documents by each Seller have been duly

authorized by all necessary corporate or other required action on the part of

each Seller.  This Agreement has been

duly executed and delivered by each Seller and constitutes, and each Ancillary

Document when duly executed and delivered by each Seller will constitute, its

legal, valid, and binding obligation, enforceable against it in accordance with

its terms except in each case as such enforceability may be affected by

bankruptcy, insolvency, or similar laws affecting creditors’ rights generally

and by judicial discretion in the enforcement of equitable remedies.

 

3.3.          Absence

of Conflicting Agreements; Consents.  Subject to obtaining the Consents which are

listed on Schedule 3.3, the execution, delivery, and performance by each Seller

of this Agreement and the Ancillary Documents and the consummation of the

transactions contemplated hereby and thereby (with or without the giving of

notice, the lapse of time, or both): (a) do not require the consent of any

third party; (b) will not conflict with any provision of the Articles of

Incorporation, Bylaws, or other organizational documents of Sellers; (c) will

not conflict with, result in a breach of, or constitute a material default

under any law, judgment, order, ordinance, injunction, decree, rule,

regulation, or ruling of any court or governmental instrumentality; (d) will

not conflict with, constitute grounds for termination of, result in a breach

of, constitute a default under, or accelerate or permit the acceleration of any

performance required by the terms of, any 

material agreement, instrument, license, or permit to which any Seller

is a party or by which any Seller may be bound legally; and (e) will not create

any claim, liability, mortgage,

 

14

 

lien, pledge, condition,

charge, or encumbrance (other than Permitted Encumbrances) of any nature whatsoever

upon any of the Assets.  Except for the

FCC Consent provided for in Section 6.1, the filings required by

Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described

in Schedule 3.3, no consent, approval, permit, or authorization of, declaration

to, or filing with any governmental or regulatory authority or any other third

party is required to consummate this Agreement, the Ancillary Documents or the

transactions contemplated hereby and thereby.

 

3.4.          Governmental Licenses.  Schedule 3.4 includes a true and complete

list of the FCC Licenses and any other material Licenses.  Sellers have made available to Buyer true

and complete copies of the Licenses (including any amendments and other modifications

thereto).  The Licenses have been validly

issued, and each Seller, as listed on Schedule 3.4, is the authorized legal

holder of the Licenses and those FCC Licenses listed on Schedule 3.4, as

applicable.  The Licenses and the FCC

Licenses comprise all of the material licenses, permits, and other

authorizations required from any governmental or regulatory authority for the

lawful conduct in of the business and operations of the Stations in the manner

and to the full extent they are now conducted and, except as otherwise

disclosed on Schedule 3.4, none of the Licenses is subject to any unusual or

special restriction or condition that could reasonably be expected to limit

materially the full operation of the Stations as now operated.  The FCC Licenses are in full force and

effect, are valid for the balance of the current license term, are unimpaired

by any acts or omissions of Sellers or their Affiliates, and are free and clear

of any restrictions which might limit the full operation of the Stations in the

manner and to the full extent as they are now operated (other than restrictions

under the terms of the licenses themselves or applicable to the television

broadcast industry generally).  Sellers

have fulfilled and performed in all material respects their respective

obligations under each of the Licenses, and no event has occurred or condition

or state of facts exists which constitutes or, after notice or lapse of time or

both, would constitute a material breach or default under any such

License.  Sellers have not received any

written notice of any violation of the Licenses, the Communications Act or the

rules and regulations thereunder relating to the Stations.  Except as listed on Schedule 3.4 hereto,

there are no applications, proceedings, or complaints pending or, to Sellers’

Knowledge, threatened to revoke, cancel, rescind, modify or refuse to renew in

the ordinary course of the Licenses or which may have an adverse effect on the

business or operation of the Stations (other than rulemaking proceedings that

apply to the television broadcasting industry generally).  Except as disclosed on Schedule 3.4 hereto,

Sellers are not aware of any reason why any of the FCC Licenses might not be

renewed in the ordinary course for a full term without material qualifications

or of any reason why any of the FCC Licenses might be revoked.  Except as set forth on Schedule 3.4, to

Sellers’ Knowledge, there are no facts relating to Sellers which, under the

Communications Act or the existing rules of the FCC that would reasonably be

expected to (a) disqualify Sellers from assigning the FCC Licenses to Buyer;

(b) cause the filing of any objection to the assignment of the FCC Licenses to

Buyer; (c) lead to any material delay in the processing by the FCC of the

applications for such assignment; (d) lead to a delay in the termination of the

waiting period required by Hart-Scott-Rodino; (e) lead to the denial by the FCC

of a request by Buyer for authority to operate WTTK as a satellite of WTTV

pursuant to Note 5 to 47 C.F.R. sec. 73.3555; or (f) disqualify any Seller from

consummating the

 

15

 

transactions contemplated herein within

the times contemplated herein.  An

appropriate public inspection file for each Station is maintained at such

Station’s studio in accordance with FCC rules and regulations.  Except as set forth on Schedule 3.4, access

to the Stations’ transmission facilities is restricted in accordance with the

policies, rules and regulations of the FCC.

 

3.5.          Real Property.  (a) Schedule 3.5 contains a complete description

of all Real Property Interests (including street address, owner, and Sellers’

use thereof).  The Real Property

Interests listed on Schedule 3.5 comprise all interests in real property

necessary to conduct the business and operations of the Stations as now

conducted.  Except as described on

Schedule 3.5, Sellers have good fee simple title to all fee estates included in

the Real Property Interests and good title to all other Real Property

Interests, in each case free and clear of all liens, mortgages, pledges,

covenants, easements, restrictions, encroachments, leases, charges, and other

claims and encumbrances, except for Permitted Encumbrances.  Each leasehold or subleasehold interest

included on Schedule 3.5 is legal, valid, binding, enforceable, and in full

force and effect. Neither the Seller party thereto nor, to Sellers’ Knowledge,

any other party thereto, is in default, violation, or breach under any lease or

sublease, and no event has occurred and is continuing that constitutes (with

notice or passage of time or both) a default, violation, or breach

thereunder.  Sellers have not received

any notice of a default, offset, or counterclaim under any lease or sublease

with respect to any of the Real Property Interests.  As of the date hereof and as of the Closing Date, Sellers enjoy

peaceful and undisturbed possession of the leased Real Property Interests; and

so long as Sellers fulfill their obligations under the lease therefor, Sellers

have enforceable rights to nondisturbance and quiet enjoyment against its

lessor or sublessor and, to Sellers’ Knowledge, except as set forth in Schedule

3.5, no third party holds any interest in the leased premises with the right to

foreclose upon Sellers’ leasehold or subleasehold interest.  Sellers have legal and practical access to

all of the Owned Real Property and Leased Real Property, as applicable.

 

(b)           To Sellers’ Knowledge, none of the

Real Property impermissibly encroaches on any other buildings, structures or

improvements located on adjoining real estate. 

Except as otherwise disclosed in Schedule 3.5, all towers, guy anchors,

ground radials, and buildings and other improvements included in the Assets

are, to Sellers’ Knowledge, located entirely on the Owned Real Property or the

Leased Real Property, as applicable, listed in Schedule 3.5.

 

(c)           To Sellers’ Knowledge, all buildings,

structures, and improvements included in the Assets are constructed in

conformity with, or are “grandfathered” with respect to, all “setback” lines,

easements, and other restrictions, or rights of record, or that have been

established by any applicable building or safety code or zoning ordinance,

except in any case for any of the foregoing which would not materially impair

the ability of Sellers to own or operate the Stations or which would not

involve any material cost or expense to cure or remedy.  No utility lines serving the Real Property

nor guy wires supporting any tower pass over the lands of others except where

appropriate easements have been obtained. 

All towers and other structures on the Real Property are painted and

lighted in accordance, in all material respects, with the requirements of the

applicable Licenses, the FCC, the Federal Aviation Administration and all

applicable requirements of federal, state and local law.

 

16

 

(d)           All utilities that are required for

the full and complete occupancy and use of the Real Property for the purposes

for which such properties are presently being used by Sellers, including,

without limitation, electric, water, sewer, telephone and similar services,

have been connected and are in good working order.  By the Closing Date, Sellers will have paid all charges for such

utilities, including, without limitation, any “tie-in” charges or connection

fees, except for those charges that will not become due until after the Closing

Date and that are to be prorated between pursuant to Section 2.3.

 

(e)           All Owned Real Property and Leased

Real Property (including the improvements thereon) (i) is in good condition and

repair consistent with its current use, (ii) is available for immediate use in

the conduct of the business and operations of the Stations, and (iii) complies

in all material respects with all Licenses, all applicable material building or

zoning codes and the regulations, codes, ordinances and statutes of any

governmental authority having jurisdiction, except to the extent that the

current use by Sellers, while permitted, constitutes or would constitute a

“nonconforming use” under current zoning or land use regulations.

 

(f)            Each of the towers located on the

Real Property can structurally support all of the equipment used in connection

therewith in accordance with law, governmental approvals and sound engineering

practices.

 

(g)           No eminent domain or condemnation

proceedings are pending or, to Sellers’ Knowledge, threatened with respect to

any Real Property Interests.

 

3.6.          Tangible

Personal Property.  The Tangible Personal Property (which is described in Schedule

3.6) comprises all material items of tangible personal property, other than the

Excluded Tangible Personal Property, necessary to conduct the business and

operations of the Stations as now conducted and lists of such Tangible Personal

Property have been provided to Buyer previously.  Except as described in Schedule 3.6, Sellers own and have good

title to each item of Tangible Personal Property and none of the Tangible

Personal Property owned by Sellers is subject to any security interest,

mortgage, pledge, conditional sales agreement, or other lien or encumbrance,

except for Permitted Encumbrances.  With

allowance for normal repairs, maintenance, wear and obsolescence, each material

item of Tangible Personal Property is in good operating condition and repair

and is available for immediate use in the business and operations of the

Stations.  All material items of

transmitting and studio equipment included in the Tangible Personal Property

(a) have been maintained in a manner consistent with generally accepted

standards of good engineering and industry practices, and (b) will permit the

Stations to operate in accordance with the material terms of the FCC Licenses

and the rules and regulations of the FCC and in all material respects with all

other applicable federal, state and local statutes, ordinances, rules and

regulations.

 

3.7.          Contracts.  Schedule 3.7 is a true and complete list of

all Contracts which either (a) have a remaining term (after taking into account

any cancellation rights of Sellers) of more than nine months after the date

hereof, or (b) could involve payments or other consideration in excess of

Thirty Thousand Dollars ($30,000.00) in any calendar year after the date

hereof, except

 

17

 

Contracts with

advertisers for production or the sale of advertising time on the Stations for

cash that may be canceled by Sellers without premium or penalty on not more

than ninety (90) days’ notice.  Sellers

have delivered or made available to Buyer true and complete copies of all

written Assumed Contracts and true and complete descriptions of all oral

Assumed Contracts which are required to be set forth on Schedule 3.7 (including

any amendments and other modifications to such Assumed Contracts).  Other than the Contracts listed on Schedule

3.5 and Schedule 3.7, Sellers require no Contract, lease, or other agreement to

enable them to carry on the business and operations of the Stations in all

material respects as now conducted.  All

of the Contracts are in full force and effect and are valid, binding, and

enforceable in accordance with their terms except as the enforceability of such

Contracts may be affected by bankruptcy, insolvency, or similar laws affecting

creditors’ rights generally and by judicial discretion in the enforcement of

equitable remedies.  Neither the Seller

party thereto nor, to Sellers’ Knowledge, any other party thereto, is in, or

alleged to be in, default, violation, or breach in any material respect under

any Contract, and no event has occurred and no condition or state of fact exists

that with notice or passage of time or both would constitute a default,

violation, or breach in any material respect thereunder.  Except as disclosed on Schedule 3.7, other

than in the ordinary course of business, to Sellers’ Knowledge, no party to any

Contract has any intention to (a) terminate such Contract or amend the terms

thereof, (b) refuse to renew the Contract upon expiration of its term, or (c)

renew the Contract upon expiration only on terms and conditions that are

materially more onerous than those now existing.  Except for the need to obtain the Consents listed on Schedule

3.3, the consummation of the transactions contemplated by this Agreement will

not affect the validity, enforceability, or continuation of any of the

Contracts.

 

3.8.          Intangibles.  Schedule 3.8 is a true and complete list of

all intangible assets or rights 

(exclusive of Licenses listed in Schedule 3.4) that are required to

conduct the business and operations of the Stations as now conducted.  Sellers have provided or made available to

Buyer copies of all documents establishing or evidencing the Intangibles listed

on Schedule 3.8.  Sellers own or have a

valid license to use all of the Intangibles listed on Schedule 3.8 free and

clear of all claims, liabilities, mortgages, liens, pledges, conditions,

charges or encumbrances, except for Permitted Encumbrances.  Except as set forth on Schedule 3.8, Sellers

are not and have not received any notice or demand alleging that Sellers are

infringing upon or otherwise acting adversely to any trademarks, trade names,

call letters, service marks, service names, copyrights, patents, patent

applications, know-how, methods, or processes owned by any other Person, and

there is no claim or action pending or, to Sellers’ Knowledge, threatened with

respect thereto.  To Sellers’ Knowledge,

except as set forth on Schedule 3.8, no other Person is infringing upon

Sellers’ rights or ownership interests in the Intangibles.  None of the Sellers has sold licensed or

otherwise disposed of any of the Intangibles to any Person, and none of the

Sellers has agreed to indemnify any Person for any patent, trademark, copyright

or other intellectual property infringement relating to the Intangibles or the

Stations.

 

3.9.          Title to Assets.  Except as disclosed in Schedule 3.5 or 3.6,

Sellers have, and will transfer to Buyer upon consummation of this Agreement,

good and marketable title to the Assets subject to no mortgages, pledges,

liens, security interests, encumbrances, or other charges or rights of others

of any kind or nature except for Permitted Encumbrances.

 

18

 

3.10.        Financial

Statements. 

Sellers have furnished Buyer with true and complete copies of unaudited

financial statements of the Stations containing a balance sheet and statement

of income, as, at, and for the fiscal year ended December 31, 2001, and an

unaudited balance sheet and statement of income as at and for the three (3)

months ended March 31, 2002 (the “Balance  Sheet Date”) (collectively,

the “Financial Statements”).  Except as

disclosed on Schedule 3.10 and with respect to the March 31, 2002 interim

Financial Statements, for the absence of footnotes and certain year end

adjustments, the Financial Statements have been prepared in accordance with

generally accepted accounting principles consistently applied, accurately

reflect the books, records, and accounts of Sellers and present fairly and

accurately the financial condition of the Stations as at their respective dates

and the results of operations for the periods then ended.  None of the Financial Statements understate

in any material respect the normal and customary costs and expenses of

conducting the business or operations of the Stations or overstate in any

material respect the revenue generated by the business and operations of the

Stations, in either case as such business or operations are currently

conducted, or are otherwise materially misleading regarding the operations of

the Stations.  Except as reflected in

such Financial Statements or otherwise disclosed to Buyer in writing, no event

has occurred since the Balance Sheet Date that would make the March 31, 2002

interim Financial Statements misleading in any material respect as of the date

hereof.

 

3.11.        Taxes.  Except as set forth in Schedule 3.11,

Sellers have filed or caused to be filed all Tax Returns that are required to

be filed with respect to their ownership and operation of the Stations and have

paid or caused to be paid all Taxes shown on those returns or on any Tax

assessment received by them to the extent that such Taxes have become due, or

have set aside on their books adequate reserves (segregated to the extent

required by generally accepted accounting principles) with respect

thereto.  All monies required to be

withheld by Sellers from employees of the Stations for income Taxes, social

security and other payroll Taxes have been collected or withheld, and either

paid to the respective governmental authorities or set aside in an account or

accounts for such purpose.  There are no

legal, administrative, or other Tax proceedings presently pending and, to

Sellers’ Knowledge, there are no grounds existing pursuant to which Sellers are

or could be made liable for any Taxes, the liability for which could extend to

Buyer as transferee of the business of the Stations.  There is no liability for Taxes that could give rise to a lien on

the Assets in the hands of the Buyer, excepting Permitted Encumbrances.

 

3.12.        Insurance.  Schedule 3.12 is a true and complete list of

all insurance policies of or covering the Assets or the Stations.  All policies of insurance listed in Schedule

3.12 are in full force and effect as of the date hereof.  During the past three (3) years, no

insurance policy of Sellers or the Stations has been canceled by the insurer

due to circumstances relating specifically to the Sellers or the Stations and,

except as set forth on Schedule 3.12, no application of Sellers for insurance

has been rejected by any insurer.

 

3.13.        Reports.  All returns, reports, and statements that

the Stations are currently required to file with the FCC or Federal Aviation

Administration have been filed, and all reporting

 

19

 

requirements of the FCC

and Federal Aviation Administration have been complied with in all material

respects.  All of such returns, reports,

and statements, as filed, satisfy all applicable legal requirements.

 

3.14.        Personnel

and Employee Benefits.

 

(a)           Employees and Compensation.  Schedule 3.14 contains a true and complete

list of all employees of Sellers employed at the Stations as of March 29, 2002,

and indicates the salary and bonus, if any, to which each such Employee is

currently entitled (limited in the case of Employees who are compensated on a

commission basis to a general description of the manner in which such

commissions are determined).  Schedule

3.14 also contains a true and complete list of all employee benefit plans or

arrangements covering the employees employed at the Stations (the “Employees”),

including, with respect to the Employees, any:

 

(i)            “Employee

welfare benefit plan,” as defined in Section 3(1) of ERISA, that is maintained

or administered by Sellers or to which Sellers contribute or are required to

contribute (a “Welfare Plan”);

 

(ii)           “Employee

pension benefit plan,” as defined in Section 3(2) of ERISA, to which Sellers

contribute or are required to contribute (a “Pension Plan”);

 

(iii)          Employee

plan that is maintained in connection with any trust described in Section

501(c)(9) of the Code; and

 

(iv)          Employment,

severance, or other similar contract, arrangement, or policy and each plan or

arrangement (written or oral) providing for insurance coverage (including any

self-insured arrangements), workers’ compensation, disability benefits,

supplemental unemployment benefits, vacation benefits, or retirement benefits

or arrangement for deferred compensation, profit-sharing, bonuses, stock

options, stock appreciation rights, stock purchases, or other forms of

incentive compensation or post-retirement insurance, compensation, or benefits

that (A) is not a Welfare Plan or Pension Plan, and (B) is entered into,

maintained, contributed to, or required to be contributed to by any Seller or

under which any Seller has any liability relating to Employees (collectively,

“Benefit  Arrangements”).  Sellers maintain no other severance policies

other than those set forth on Schedule 3.14 and such policy set forth in

Schedule 3.14 does not specifically provide that a change of control or similar

event, in and of itself, constitutes termination of any employee which would

give rise to any severance payment thereunder and Sellers, except as set forth

on Schedule 3.14, have not maintained a practice of paying severance to

employees upon a change of control or similar event.

 

(b)           Pension Plans.  Sellers do not sponsor, maintain, or

contribute to any Pension Plan other than the Sinclair Broadcast Group 401(k)

Profit Sharing Plan.  Each Pension Plan

complies currently and has been maintained in substantial compliance with its

terms and, both as to form and in operation, with all requirements prescribed

by any and all statutes, orders, rules,

 

20

 

and regulations

that are applicable to such plans, including ERISA and the Code, except where

the failure to do so will not have a Material Adverse Effect.

 

(c)           Welfare

Plans.  Each Welfare

Plan complies currently and has been maintained in substantial compliance with

its terms and, both as to form and in operation, with all requirements

prescribed by any and all statutes, orders, rules, and regulations that are

applicable to such plans, including ERISA and the Code, except where the

failure to do so will not have a Material Adverse Effect.  Except as listed on Schedule 3.14(c),

Sellers do not sponsor, maintain, or contribute to any Welfare Plan that

provides health or death benefits to former employees of the Stations other

than as required by Section 4980B of the Code or other applicable laws.

 

(d)           Benefit

Arrangements.  Each

Benefit Arrangement currently complies and has been maintained both as to form

and in operation in substantial compliance with its terms and with the

requirements prescribed by all statutes, orders, rules, and regulations that

are applicable to such Benefit Arrangement, except where the failure to do so

will not have a Material Adverse Effect. 

Except for those employment agreements listed on Schedule 3.7, Sellers

have no written contract prohibiting the termination of any Employee.

 

(e)           Multiemployer

Pension Plans. 

Sellers have not at any time been a participant in any Multiemployer

Pension Plan as defined in Section 3(37) of ERISA.

 

(f)            Delivery of Copies of Relevant Documents and Other

Information.  Sellers

have delivered or made available to Buyer true and complete copies of each of

the following documents:

 

(i)            each Welfare Plan and Pension Plan

(and, if applicable, related trust agreements) and all amendments thereto and

written descriptions thereof that have been distributed to Employees, all

annuity contracts, or other funding instruments; and

 

(ii)           each Benefit Arrangement and all

amendments thereto and written descriptions thereof that have been distributed

to Employees and complete descriptions of any Benefit Arrangement that is not

in writing.

 

(g)           Labor Relations.  Except as set forth in Schedule 3.14(g), no

Seller is a party to or subject to any collective bargaining or similar

agreement or written or oral employment, severance, incentive or other similar

agreement, arrangement, commitment or understanding with any Employee.  With respect to Employees, Sellers have

complied in all material respects with all laws, rules, and regulations

relating to the employment of labor, including those related to wages, hours,

collective bargaining, occupational safety, discrimination, and the withholding

and payment of social security and other payroll related taxes, and have not

received any notice alleging that any Seller has failed to comply with any such

laws, rules, or regulations.  Except as set

forth on Schedule 3.14(g), no proceedings are pending or, to Sellers’

Knowledge, threatened, between any Seller and any Employee (singly or

collectively) that relate to the Stations. 

Except as set forth on Schedule 3.14(g), no labor union or other collective

bargaining unit represents or

 

21

 

claims to represent any

of the Employees.  Except as set forth

in Schedule 3.14(g), to Sellers’ Knowledge, there is no union campaign being

conducted to solicit cards from any Employees to authorize a union to represent

any of the employees of any Seller or to request a National Labor Relations

Board certification election with respect to any Employees.

 

3.15.        Claims

and Legal Actions.  Except as disclosed on Schedule 3.15 and except for any FCC

rulemaking proceedings generally affecting the television broadcasting industry

and not particular to Sellers, there is no claim, legal action, counterclaim,

suit, arbitration, or other legal, administrative, or tax proceeding, nor any

order, decree, or judgment, in progress or pending or, to Sellers’ Knowledge,

threatened, against or relating to the Assets or the business or operations of

the Stations, nor does any Seller have Knowledge of any basis for the same.

 

3.16.        Environmental

Compliance.

 

(a)           Except as disclosed

on Schedule 3.16, to Sellers’ Knowledge, (x) neither of the Owned Real Property

nor the Leased Real Property contain (i) any asbestos, polychlorinated

biphenyls, or any PCB contaminated oil; (ii) any Contaminants; or (iii) any

underground storage tanks; (y) there has been no release or threatened release

of any Contaminant from any underground storage tank disclosed on Schedule 3.16

which has not been remediated in material compliance with all applicable

Environmental Laws; and (z) all of the Owned Real Property. the Leased Real

Property and the Tangible Personal Property is in material compliance with all

applicable Environmental Laws.

 

(b)           Sellers have obtained all permits,

licenses, and other authorizations that are required under all Environmental Laws

that are material to the business and operations of the Stations.

 

(c)           Sellers have not received written

notice of any claim, demand, notice of potential liability, notice of violation

or demand for clean up costs by any party, including any governmental

authority, relating to alleged violations of or liability under Environmental

Laws.

 

(d)           To Sellers’ Knowledge, Sellers have

complied in all material respects with all reporting requirements under

Environmental Laws that are material to the operation of the Stations.

 

3.17.        Compliance

with Laws. 

Sellers have complied in all material respects with the Licenses and all

federal, state and local laws, rules, regulations and ordinances applicable or

relating to the ownership and operation of the Assets and the Stations, and

Sellers have not received any notice of any material violation of federal,

state and local laws, regulations and ordinances applicable or relating to the

ownership or operation of the Assets and the Stations nor, to Sellers’

Knowledge, have Sellers received any notice of any immaterial violation of

federal, state and local laws, regulations, and ordinances applicable or

relating to the ownership or operation of the Assets or the Stations.

 

22

 

3.18.        Absence

of Certain Changes or Events.  Since the Balance Sheet Date and through the

date hereof, Sellers have conducted the business and operations of the Stations

in the ordinary course and, except as disclosed in Schedule 3.18, have not:

 

(a)           made any increase in compensation

payable or to become payable to any Employee other than those in the normal and

usual course of business or in connection with any change in an employee’s

responsibilities, or any bonus payment made or promised to any Employee, or any

material change in personnel policies, employee benefits, or other compensation

arrangements affecting Employees, except for such material changes that have

been made applicable to all employees of Parent and its subsidiaries;

 

(b)           made any sale, assignment, lease, or

other transfer of assets other than in the normal and usual course of business

with suitable replacements being obtained therefor;

 

(c)           canceled any debts owed to or claims

held by Sellers, except in the normal and usual course of business;

 

(d)           made any changes in Sellers’

accounting practices;

 

(e)           suffered any material write-down of

the value of any Assets or any material write-off as uncollectable of any

Accounts Receivable; or

 

(f)            transferred or granted any right

under or entered into any settlement regarding the breach or infringement of

any license, patent, copyright, trademark, trade name, franchise, or similar

right or modified any existing right.

 

3.19.        Broker.  Except as disclosed on Schedule 3.19, no

Seller nor any Person acting on any Seller’s behalf has incurred any liability

for any finders’ or brokers’ fees or commissions in connection with the

transactions contemplated by this Agreement, and Buyer shall have no liability

for any finders’ or brokers’ fees or commissions in connection with the

transactions contemplated by this Agreement for any broker listed on Schedule

3.19 or otherwise purporting to act on any Seller’s behalf.

 

3.20.        Transactions

with Affiliates.  Except as disclosed in Schedule 3.20 or with respect to the

Excluded Tangible Personal Property, no Seller has been involved in any

business relationship with any Affiliate of any Seller, and no Affiliate of any

Seller owns any property or right, tangible or intangible, that is material to

the business and operations of the Stations.

 

3.21.        Citizenship.  None of the Sellers is a “foreign person” as

defined in Section 1445(f)(3) of the Code.

 

23

 

SECTION 4:  REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and

warrants to Sellers as of the date hereof and as of the Closing Date (except

for representations and warranties that speak as of a specific date or time, in

which case, such representations and warranties shall be true and complete as

of such date and time) as follows:

 

4.1.          Organization,

Standing and Authority.  Buyer is a corporation duly organized,

validly existing, and in good standing under the laws of Delaware and has the

requisite corporate power and authority to execute, deliver, and perform this

Agreement and the Ancillary Documents according to their respective terms to

consummate the transactions contemplated hereby and thereby and to own the

Assets.  Prior to the Closing Date,

Buyer will be qualified to do business in the States in which the Stations are

located.

 

4.2.          Authorization

and Binding Obligation.  The execution, delivery, and performance of

this Agreement and the Ancillary Documents by Buyer have been duly authorized

by all necessary action on the part of Buyer. 

This Agreement has been duly executed and delivered by Buyer and

constitutes, and each Ancillary Document when duly executed and delivered by

Buyer will constitute, a legal, valid, and binding obligation of Buyer

enforceable against Buyer in accordance with its terms except in each case as

such enforceability may be affected by bankruptcy, insolvency, or similar laws

affecting creditors’ rights generally and by judicial discretion in the

enforcement of equitable remedies.

 

4.3.          Absence

of Conflicting Agreements and Required Consents.  Subject to the receipt of the Consents, the

execution, delivery, and performance by Buyer of this Agreement and the

Ancillary Documents and the consummation of the transactions contemplated

hereby and thereby (with or without the giving of notice, the lapse of time, or

both):  (a) do not require the consent

of any third party; (b) will not conflict with the Articles of Incorporation or

Bylaws of Buyer; (c) will not conflict with, result in a breach of, or constitute

a material default under, any material law, judgment, order, ordinance,

injunction, decree, rule, regulation, or ruling of any court or governmental

instrumentality; and (d) will not conflict with, constitute grounds for

termination of, result in a breach of, constitute a default under, or

accelerate or permit the acceleration of any performance required by the terms

of, any material agreement, instrument, license, or permit to which Buyer is a

party or by which Buyer may be bound. 

Except for the FCC Consent provided for in Section 6.1, the filings

required by Hart-Scott-Rodino provided for in Section 6.2 and the other

Consents described in Schedule 4.3, no consent, approval, permit, or

authorization of, declaration to, or filing with any governmental or regulatory

authority or any other third party is required to consummate this Agreement,

the Ancillary Documents or the transactions contemplated hereby and thereby.

 

4.4.          Brokers.  Neither Buyer nor any person or entity

acting on its behalf has incurred any liability for any finders’ or brokers’

fees or commissions in connection with the transactions contemplated by this

Agreement.

 

4.5.          Availability

of Funds. 

Buyer will have available on the Closing Date sufficient funds to enable

it to consummate the transactions contemplated hereby.

 

24

 

4.6.          Qualifications

of Buyer. 

Except as disclosed in Schedule 4.6, there are no facts or proceedings

which would reasonably be expected to disqualify Buyer under the Communications

Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations

or would cause the FCC not to approve the assignment of the FCC Licenses to

Buyer or the Department of Justice and the FTC not to allow the waiting period

under Hart-Scott-Rodino to terminate within thirty (30) days of the filing

provided for in Section 6.2.  Except as

disclosed in Schedule 4.6, Buyer has no knowledge of any fact or circumstance

relating to Buyer or any of Buyer’s Affiliates that would reasonably be

expected to (a) cause the filing of any objection to the assignment of the FCC

Licenses to Buyer, (b) lead to a material delay in the processing by the FCC of

the applications for such assignment, (c) lead to a delay in the termination of

the waiting period required by Hart-Scott-Rodino, (d) lead to the denial by the

FCC of a request by Buyer for authority to operate WTTK as a satellite of WTTV

pursuant to Note 5 C.F.R. sec. 73.3555, (e) disqualify Buyer from consummating

the transactions contemplated herein within the times contemplated herein, or

(f) disqualify Buyer from receiving the assignment of the FCC Licenses from

Sellers.  Except as disclosed in

Schedule 4.6, no waiver of any FCC rule or policy is necessary to be obtained

for the grant of the applications for the assignment of the FCC Licenses to

Buyer, nor will processing pursuant to any exception or rule of general

applicability be requested or required in connection with the consummation of

the transactions herein.

 

4.7.          WARN Act.  Buyer has not made or taken, and will not

make or take, any decisions or actions concerning the employees of the Stations

after the Closing Date that would require the service of notice under the

Worker Adjustment and Retraining Notification Act of 1988, as amended.

 

4.8.          Buyer’s

Defined Contribution Plan.  Schedule 4.8 completely and accurately lists

all Buyer’s defined contribution plan or plans (the “Buyer’s Plan”) intended to

be qualified under Section 401(a) and 401(k) of the Code in which the

Transferred Employees will be eligible to participate.  Buyer has a currently applicable

determination letter from the Internal Revenue Service.

 

SECTION 5:  OPERATION OF THE STATIONS PRIOR TO CLOSING

 

Sellers covenant

and agree that between the date hereof and the Closing Date, Sellers will

operate the Stations in the ordinary course in accordance with Sellers’ past

practices (except where such conduct would conflict with the following

covenants or with other obligations of Sellers under this Agreement) and,

except as contemplated by this Agreement or with the prior written consent of

Buyer (not to be unreasonably withheld, except in the case of any Seller

entering into any Contract not involving the acquisition of programming and

involving consideration the value of which is in excess of Ten Thousand Dollars

and No Cents ($10,000) per week and the term of which exceeds fifty-two (52)

weeks, where such consent may be withheld in Buyer’s sole discretion), Sellers

will act in accordance with the following insofar as such actions relate to the

Stations:

 

25

 

5.1.          Contracts.  Sellers will not renew, extend, amend,

terminate, or waive any material right under any Contract or enter into any

Contract or commitment or incur any obligation (including obligations relating

to the borrowing of money or the guaranteeing of indebtedness and obligations

arising from the amendment of any existing Contract) that will be assumed by or

be otherwise binding on Buyer after Closing, except for (a) cash time sales

agreements and production agreements made in the ordinary course of business

consistent with Sellers’ past practices; (b) the renewal or extension of any

existing Contract on its existing terms in the ordinary course of business

(provided that such renewal or extension does not extend beyond six (6) months

except for program barter agreements listed on Schedule 3.7 where such renewal

or extension may not extend beyond twelve (12) months); (c) other Contracts

entered into in the ordinary course of business consistent with Sellers’ past

practices that do not involve consideration the value of which, individually,

is in excess of Thirty Thousand Dollars ($30,000.00) and which, in the

aggregate, is in excess of Forty Thousand Dollars ($40,000.00) measured at

Closing; and (d) trade agreements entered into in the ordinary course of

business that do not involve consideration which, individually, is in excess of

Thirty Thousand Dollars ($30,000.00) and which, in the aggregate, in excess of

Forty Thousand Dollars ($40,000.00). 

After receiving Buyer’s consent (if necessary) and, in any case,

promptly after the execution thereof, Sellers shall deliver to Buyer a list of

all Contracts entered into between the date of this Agreement and the Closing

Date that Sellers would be required to set forth on Schedule 3.7, and shall

make available to Buyer copies of such Contracts.

 

5.2.          Compensation.  Sellers shall not materially increase the

compensation, bonuses, or other benefits payable or to be payable to any person

employed in connection with the conduct of the business or operations of the

Stations, except (a) in accordance with past practices, (b) as required by an

employment agreement or consulting agreement, which employment agreements or

consulting agreements are set forth on Schedule 3.14, (c) in connection and

commensurate with the change in responsibility of any employee, or (d) as a

result of the company-wide elimination of the wage freeze currently in effect

for all employees of Parent and its subsidiaries; such elimination to be

applied at the Stations consistent with the manner in which the wage freeze is

generally eliminated at the other television broadcast stations owned by

subsidiaries of Parent.

 

5.3.          Encumbrances.  Sellers will not create, assume, or permit

to exist any mortgage, pledge, lien, or other charge or encumbrance affecting

any of the Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens

that will be removed prior to the Closing Date, and (c) Permitted Encumbrances.

 

5.4.          Dispositions.  Sellers will not sell, assign, lease, or

otherwise transfer or dispose of any of the Assets except minor amounts of

personal property (a) that are no longer used in the operations of the,

Stations and that are sold or disposed of in the ordinary course of business,

or (b) that are replaced with Assets of equivalent kind and value that are

acquired after the date of this Agreement.

 

26

 

 

5.5.          Access to

Information.  During normal business hours, upon prior

reasonable notice by Buyer, Sellers will give to Buyer and its lenders,

counsel, accountants, engineers, and other authorized representatives

reasonable access to the Stations and all books, records, and documents of

Sellers which are material to the business and operation of the Stations, and

will furnish or cause to be furnished to Buyer and its authorized

representatives all information relating to Sellers and the Stations that they

reasonably request (including any financial reports and operations reports

produced with respect to the Stations).

 

5.6.          Insurance.  Sellers or their Affiliates shall maintain

in full force and effect policies of insurance of the same type, character, and

coverage as the policies currently carried with respect to the business, and

operations of the Stations and the Assets.

 

5.7.          Licenses. 

Sellers shall not cause or permit by any act or failure to act any of

the Licenses listed on Schedule 3.4 to expire or to be revoked, suspended, or

modified or take any action that could reasonably be expected to cause the FCC

or any other governmental authority to institute proceedings for the

suspension, revocation, or material adverse modification of any of the

Licenses.  Sellers shall prosecute with

due diligence any applications to any governmental authority necessary for the

operation of the Stations.

 

5.8.          Obligations. 

Sellers shall pay all its obligations insofar as they relate to the

Stations as they become due, consistent with past practices.

 

5.9.          No

Inconsistent Action.  No Seller shall take

any action that is inconsistent with its obligations under this Agreement in

any material respect or that could reasonably be expected to hinder or delay

the consummation of the transactions contemplated by this Agreement.  Neither Sellers nor any of its respective

representatives or agents shall, directly or indirectly, solicit, initiate, or

participate in any way in discussions or negotiations with, or provide any

confidential information to, any Person (other than Buyer or any Affiliate or

associate of Buyer and their respective representatives and agents) concerning

any possible disposition of the Stations, the sale of any material assets of

the Stations, or any similar transaction.

 

5.10.        Maintenance

of Assets.  Sellers shall maintain all of the Assets in

good condition (ordinary wear, tear and casualty excepted) consistent with

their overall condition on the date of this Agreement, and use, operate, and

maintain all of the Assets in a reasonable manner.  Sellers shall maintain inventories of spare parts and expendable

supplies at levels consistent with past practices.  If any insured or indemnified loss, damage, impairment,

confiscation, or condemnation of or to any of the Assets occurs, Sellers shall

repair, replace, or restore the Assets to their prior condition as represented

in this Agreement as soon thereafter as possible, and Sellers shall use the

proceeds of any claim under any property damage insurance policy or other

recovery solely to repair, replace, or restore any of the Assets that are lost,

damaged, impaired, or destroyed.

 

27

 

5.11.        Consents.

 

(a)           Subject to Section

6.5 hereof, Sellers shall use their commercially reasonable efforts to obtain

all Consents described in Section 3.3 without any adverse change in the terms

or conditions of any Assumed Contract or License.  Sellers shall promptly advise Buyer of any difficulties

experienced in obtaining any of the Consents and of any conditions proposed,

considered, or requested for any of the Consents.

 

(b)           Anything in this

Agreement to the contrary notwithstanding, this Agreement shall not constitute

an agreement to assign or transfer any Contract or any claim, right, or benefit

arising thereunder or resulting therefrom, if an attempted assignment or

transfer thereof, without the consent of a third party thereto would constitute

a breach thereof or in any way adversely affect the rights of the Buyer

thereunder.  If such consent (a

“Deferred Consent”) is not obtained, or if an attempted assignment or transfer

thereof would be ineffective or would affect the rights thereunder so that the

Buyer would not receive all such rights, then (i) Sellers and Buyer will

cooperate, in all reasonable respects, to obtain such Deferred Consents as soon

as practicable; provided that neither Sellers nor Buyer shall have any

obligation (y) to expend funds to obtain any Deferred Consent, other than

ministerial processing fees, and out-of-pocket expenses to its attorney or

other agents incurred in connection with obtaining any Deferred Consent, or (z)

to agree to any adverse change in any License or Assumed Contract in order to

obtain a Deferred Consent, and (ii) after the Closing, until such Deferred

Consent is obtained, Sellers and Buyer will cooperate in all reasonable

respects to enter into such arrangements (including subleasing or

subcontracting if permitted) to provide to the parties the economic and

operational equivalent of obtaining such Deferred Consent  and assigning or transferring such Contract

(with the Buyer responsible for the economic equivalent of all liabilities and

obligations thereunder), including enforcement for the benefit of the Buyer of

all claims or rights arising thereunder, and the performance by the Buyer of

the obligations thereunder on a basis consistent with past practices.

 

5.12.        Books and

Records.  Sellers shall maintain their books and

records in accordance with past practices.

 

5.13.        Notification. 

Sellers shall promptly notify Buyer in writing of (i) any material

developments with respect to the business or operations of the Stations, (ii)

any material change in any of the information contained in the representations

and warranties contained in Section 3 of this Agreement, (iii) any action, suit

or proceeding instituted or threatened in writing to restrain, prohibit or

otherwise challenge the legality of any transaction contemplated by this

Agreement, (iv) any lawsuit, claim, proceeding or investigation threatened in

writing, brought, asserted in writing or commenced relating to the Assets or

the business or operations of the Stations, (v) any written notice from any

third Person alleging that the consent of such third Person is or may be

required in connection with the transactions contemplated by this Agreement and

(vi) any default under any Assumed Contract of which Sellers have Knowledge or

event which, with notice or lapse of time or both, would become such a default

on or prior to the Closing Date and of which any Seller has Knowledge.

 

5.14.        Financial

Information.  Sellers shall furnish to Buyer within thirty

(30) calendar days after the end of each month ending between the date of this

Agreement and the Closing Date a 

 

28

 

balance sheet and a

statement of income and expense for the month just ended and such other

financial information (including information on payables and receivables) as

Buyer may reasonably request.  All

financial information delivered by Sellers to Buyer pursuant to this Section

5.14 shall be prepared from the books and records of Sellers in accordance with

generally accepted accounting principles, consistently applied; shall

accurately reflect the books, records, and accounts of the Stations; shall be

complete and correct in all material respects; and shall present fairly the financial

condition of the Stations as at its respective dates and the results of

operations for the periods then ended.

 

5.15.        Compliance

with Laws.  Sellers shall comply in all material

respects with all Laws.

 

5.16.        Preservation

of Business.  Sellers shall use commercially reasonable

efforts consistent with past practices to preserve the business and

organization of each Station and to keep available to each Station its present

employees, and to preserve the audience of the Stations and each Station’s

present relationships with suppliers, advertisers, and others having business

relations with it.  Sellers shall

refrain from taking any action which would render any representation or

warranty contained in Section 3 of this Agreement inaccurate in any material respect

as of the Closing Date.

 

5.17.        Normal Operations. 

Subject to the terms and conditions of this Agreement (including,

without limitation, Section 5.1), prior to the Closing Date, Sellers shall

carry on the business and activities of the Stations, including, without

limitation, promotional activities, the sale of advertising time, entering into

other Contracts and agreements, purchasing and scheduling programming,

performing research, and operating in all material respects in accordance with

existing budgets which have heretofore been made available to Buyer and past

practice.

 

SECTION 6:  SPECIAL COVENANTS AND AGREEMENTS

 

6.1.          FCC

Consent.

 

(a)           The exchange and

transfer of the Assets as contemplated by this Agreement is subject to the

prior consent and approval of the FCC.

 

(b)           Sellers and Buyer

shall prepare and within ten (10) Business Days after the date of this

Agreement shall file with the FCC an appropriate application for FCC

Consent.  The parties shall thereafter

prosecute the application with all reasonable diligence and otherwise use their

respective best efforts to obtain a grant of the application as expeditiously

as practicable.  Each party agrees to

comply with any condition imposed on it by the FCC Consent, except that no

party shall be required to comply with a condition if (i) the condition was

imposed on it as the result of a circumstance, the existence of which does not

constitute a breach by that party of any of its representations, warranties, or

covenants hereunder, and (ii) compliance with the condition would have a

material adverse effect upon it. 

Further, Buyer shall not be required to comply with any condition that

would require it to divest WTTK, WTTV, or any other station in the Indianapolis,

Indiana market whose FCC License Buyer holds as of the date of this Agreement.

 

 

29

 

Buyer and Sellers shall

oppose any petitions to deny or other objections filed with respect to the

application for the FCC Consent and any requests for reconsideration or

judicial review of the FCC Consent.

 

(c)           Buyer shall prepare and submit as

part of the application to the FCC for FCC Consent a request for an appropriate

waiver of the FCC’s rules to permit Buyer to operate WTTK as a satellite of

WTTV pursuant to Note 5 to 47 C.F.R. sec. 73.3555, together with necessary and

sufficient materials supporting such a request.  In connection with the waiver request, Buyer shall neither

propose nor request any changes to the operation of either WTTK or WTTV.

 

(d)           If the Closing shall not have

occurred for any reason within the original effective period of the FCC Consent

and neither party shall have terminated this Agreement under Section 9, the

parties shall jointly request an extension of the effective period of the FCC

Consent.  No extension of the effective

period of the FCC Consent shall limit the exercise by either party of its right

to terminate the Agreement under Section 9.

 

6.2.          Hart-Scott-Rodino.

 

(a)           Within ten (10)

Business Days following the execution of this Agreement, Sellers and Buyer

shall complete any filing that may be required pursuant to Hart-Scott-Rodino

(each an “HSR Filing”).  Sellers and

Buyer shall diligently take, or fully cooperate in the taking of, all necessary

and proper steps and provide any additional information reasonably requested in

order to comply with the requirements of Hart-Scott-Rodino; provided, however,

that, in the event Sellers or Buyer receive a “second request” for information

from either the Federal Trade Commission or the Department of Justice with

respect to the HSR Filing, Sellers may refuse to comply with such “second

request”.  Buyer shall in no event be

obligated to comply with any order made or condition imposed by the Department

of Justice or the FTC that Buyer divest any assets or businesses, including any

businesses or assets of the Stations, or to hold separate any such assets or

businesses pending such divestiture.

 

(b)           In the event Sellers refuse to comply

with such “second request” and Buyer terminates this Agreement as provided in

Section 9.3(d) hereof, Sellers shall pay to Buyer within two (2) Business Days

after such termination in immediately available funds the amount of Two Million

Eight Hundred Thousand Dollars ($2,800,000.00) (the “HSR Termination Fee”).

 

(c)           In the event Sellers agree to comply

with such “second request,” Sellers shall not be obligated to pay to Buyer the

HSR Termination Fee, and Buyer shall agree to assume at the Effective Time the

severance agreements which Sellers determine to enter into with those employees

(or their replacements) as set forth on Schedule 6.2(c) hereof; provided

such severance agreements shall entitle such employee to receive not more than

the amounts set forth on Schedule 6.2(c); such entitlement to arise with respect

to any such employee only if such employee is terminated by Buyer within one

year following the Effective Time

 

30

 

6.3.          Risk of Loss. 

The risk of any loss, damage, impairment, confiscation, or condemnation

of any of the Assets of Sellers for any cause whatsoever shall be borne by

Sellers at all times prior to the Closing. 

In the event of loss or damage prior to the Closing Date (an “Event of

Loss”), Sellers shall use commercially reasonable efforts to fix, restore, or

replace such loss, damage, impairment, confiscation, or condemnation to its

former operational condition.  If such

repair and replacement cannot be accomplished by the scheduled Closing Date,

the Closing Date may be postponed in order for Sellers to undertake such repair

or replacement and, in such event, Buyer may elect by written notice to

Sellers:  (i) to postpone the Closing

until such time as the Assets which are subject to the Event of Loss have been

restored to their condition immediately prior to the Event of Loss; or (ii) to

consummate the Closing on the scheduled Closing Date and accept all of the

Assets as is, in which event, each Seller shall assign to Buyer at the Closing

all of its rights under any insurance policies and all insurance proceeds

covering the Event of Loss (less amounts due to the assigning party for repairs

or replacements of the property prior to Closing).

 

6.4.          Confidentiality. Except as necessary for the consummation

of the transaction contemplated by this Agreement, including Buyer’s obtaining

of financing related hereto, and except as and to the extent required by law or

the rules of any stock exchange, each party will keep confidential any

information obtained from the other party in connection with the transactions

specifically contemplated by this Agreement. 

If this Agreement is terminated, each party will return to the other

party all information obtained by the receiving party from the other party in

connection with the transactions contemplated by this Agreement.  Notwithstanding any provision to the

contrary in this Section 6.4, the Confidentiality Agreement between Sellers and

Buyer dated November 21, 2001 shall survive the execution of this Agreement and

remain in effect until terminated in accordance with its terms.  Buyer shall use its commercially reasonable

efforts to prevent its employees (and the employees of its Affiliates) from

discussing the pending sale or any actions which may be taken after the Closing

as a result of the sale; provided such employees shall be permitted to

perform their job functions in the ordinary course consistent with past

practice.

 

6.5.          Cooperation. 

Buyer and Sellers shall reasonably cooperate with each other and their

respective counsel and accountants in connection with any actions required to

be taken as part of their respective obligations under this Agreement; and in

connection with any litigation after the Closing Date which relates to the

Stations for periods prior to the Effective Time.  Buyer and Sellers shall execute such other documents as may be

reasonably necessary and desirable to the implementation and consummation of

this Agreement and otherwise use their commercially reasonable efforts to

consummate the transaction contemplated hereby and to fulfill their obligations

under this Agreement.  Notwithstanding

the foregoing, no party hereto shall have any obligation (a) to expend funds to

obtain any of the Consents, other than ministerial processing fees, and out-of-pocket

expenses to such party’s attorneys or other agents incurred in connection with

obtaining such consents, or (b) to agree to any adverse change in any License

or Assumed Contract in order to obtain a Consent required with respect thereto.

 

31

 

6.6.          Control

of the Stations.  Notwithstanding

anything contained herein to the contrary, the Closing shall not be consummated

prior to the grant by the FCC of the FCC Consent.  Buyer acknowledges and agrees that at all times commencing on the

date hereof and ending on the Closing Date, neither Buyer nor any of its

employees, agents or representatives, directly or indirectly, shall, or have

any right to, control, direct, or otherwise supervise, or attempt to control,

direct or otherwise supervise any of the management or operations of the

Stations, it being understood that the operation, management, control and

supervision of all programs, equipment, operations and other activities of the

Stations shall be the sole responsibility, and at all times prior to the

Closing Date remain within the complete control and discretion, of Sellers,

subject to the terms of Section 5 of this Agreement.

 

6.7.          Accounts

Receivable.

 

(a)           As soon as

practicable after the Closing, Sellers shall deliver to Buyer a complete and

detailed list of all the Accounts Receivable. 

During the period beginning on the Closing Date and ending on the one

hundred fiftieth (150th) day after the Closing Date (the “Collection Period”),

Buyer shall use commercially reasonable efforts, as Sellers’ agent, to collect

the Accounts Receivable in the usual and ordinary course of business, using the

Stations’ credit, sales, and other appropriate personnel in accordance with

customary practices which may include referral to a collection agency.  Notwithstanding the foregoing, Buyer shall

not be required to institute legal proceedings on Sellers’ behalf to enforce

the collection of any Accounts Receivable. 

Buyer shall not adjust any Accounts Receivable or grant credit without

Sellers’ written consent, and Buyer shall not pledge, secure, or otherwise

encumber such Accounts Receivable or the proceeds therefrom, other than to the

extent such pledge, security or encumbrance arises without any further action

not specifically required by Buyer under Buyer’s or its Affiliates’ financing

instruments or facilities in the ordinary course of business.  On or before the twelfth (12th) Business Day

after the end of each calendar month during the Collection Period, Buyer shall remit

to Sellers collections received by Buyer with respect to the Accounts

Receivable, together with a report of all amounts collected with respect to the

Accounts Receivable during, as the case may be, the period from the Closing or

the beginning of such month through the end of such month, less any reasonable

sales commissions or collection costs paid by Buyer in the ordinary course of

its business during the respective periods with respect to those Accounts

Receivable, plus any sales commission chargebacks taken by Buyer to the extent

such sales commissions were previously deducted in determining the amount to be

paid to Sellers hereunder.

 

(b)           Any payments received by Buyer during

the Collection Period from any Person that is an account debtor with respect to

any account disclosed in the list of Accounts Receivable delivered by Sellers

to Buyer shall be applied first to the invoice designated by the account debtor

and, if none, such payment shall be applied to the oldest account which is not

disputed.  Buyer shall incur no

liability to Sellers for any uncollected account, other than as a result of

Buyer’s breach of its obligations under this Section 6.7, in which case such

liability shall not exceed the amount of the disputed Accounts Receivable.  Prior to the end of the Collection Period,

neither Sellers, nor any agent of Sellers, shall make any direct solicitation

of the account 

 

32

 

debtors for payment.  After the end of the Collection Period,

Buyer shall deliver to Sellers all information for the accounts that remain

uncollected, and Sellers shall have the right, at their expense, to assist and

participate with Buyer in the collection of the unpaid Accounts Receivable.

 

(c)           At the end of the Collection Period,

Buyer shall return to Sellers all files concerning the collection or attempts

to collect the Accounts Receivable, and Buyer’s responsibility for the

collection of the Accounts Receivable shall cease.

 

6.8.          Tax-Free

Exchange and Allocation of Purchase Price.

 

(a)           Sellers acknowledge

that Buyer may desire to make a qualified tax-deferred exchange of certain

other property of like kind for the Assets, pursuant to and in accordance with

Section 1031 of the Code.  Sellers shall

cooperate, in good faith, as reasonably requested by Buyer, in enabling Buyer

to effectuate such an exchange.  Buyer

expressly reserves the right to assign its rights, but not its obligations,

under this Agreement to a “qualified intermediary” as defined in Treasury

Regulation Section 1.1031(k)-1(g)(4). Sellers’ obligation to cooperate with

Buyer in order to enable Buyer to effectuate a qualified, tax-deferred exchange

is subject to the following conditions:

 

(i)            All

of Sellers’ rights and all of Buyer’s obligations to Sellers in respect of all

other provisions of this Agreement shall not be adversely affected by any such

exchange, whether or not consummated; and

 

(ii)           Sellers

shall not in any way be liable to Buyer or any other party whatsoever for any

failure of Buyer’s proposed transaction to qualify for the desired tax-deferred

treatment.

 

(iii)          Sellers’

shall not bear any cost, expense or liability as a result of any such

tax-deferred exchange and Buyer shall indemnify Sellers from and against any

such costs, expenses or liabilities.

 

(b)           If

at any time Buyer determines not to effectuate the purchase of the Assets as

part of a tax-deferred exchange, it shall promptly notify Sellers of this fact.

Within sixty (60) days following such notification, Sellers and Buyer shall

negotiate and draft a schedule (the “Allocation Schedule”) allocating

the consideration paid to Sellers (including the Purchase Price and any

adjustments thereto and any other amounts that are properly taken into account

for Tax purposes as part of the consideration for the purchase of the Assets)

among the Assets.  The Allocation

Schedule shall be reasonable and shall be prepared in accordance with Section

1060 of the Code and the Treasury Regulations thereunder.  Buyer and Sellers shall prepare mutually

satisfactory Form(s) 8594 reflecting the Allocation Schedule and such other

information as is required and shall each file such Form(s) with their

respective federal income tax returns for the tax year in which the Closing

occurs.  If Sellers and Buyer are unable

to agree on an Allocation Schedule, Sellers and Buyer agree to retain a

nationally recognized appraisal firm experienced in valuing television

broadcast properties to appraise the Assets. The appraisal firm shall perform

 

33

 

such appraisal promptly. 

Sellers and Buyer shall each pay one-half (1/2) of the costs of such

appraisal.

 

6.9.          Access to Books and Records. 

To the extent reasonably requested by Buyer, Sellers shall provide Buyer

access and the right to copy from and after the Closing Date any books and

records relating to the Assets, but not included in the Assets.  To the extent reasonably requested by

Sellers, Buyer shall provide Sellers access and the right to copy from and

after the Closing Date any books and records relating to the Assets that are

included in the Assets.  Buyer and

Sellers shall each retain any such books and records for a period of three (3)

years (or such longer period as may be required by law or government

regulation) following the Closing Date.

 

6.10.        Employee

Matters.

 

(a)           Upon consummation of

the Closing hereunder, except for those Employees who are listed on Schedule

6.10 and designated by Sellers within sixty (60) days after the date hereof who

shall be retained by Sellers or affiliates thereof, Buyer shall offer

employment to each of the Employees of the Stations (including those on leave

of absence, whether short-term, family, maternity, short-term disability, paid,

unpaid or other and those hired after the date hereof in the ordinary course of

business, to the extent not specifically prohibited by the provisions of this

Agreement, if any), other than those Employees listed on Schedule 6.10 and

designated by Buyer within sixty (60) days after the date hereof (it being

understood that any severance liability incurred by Sellers as a result of

Buyer not offering employment to Employees who are so designated shall be

reimbursed by Buyer), at a salary and position comparable to similarly situated

employees of Buyer and at the place of employment as held by each such employee

immediately prior to the Closing Date (such employees who are given such offers

of employment are referred to herein as the “Transferred  Employees”).

 

(b)           Except as provided otherwise in this

Section 6.10, Sellers shall pay, discharge, and be responsible for (i) all

salary and wages arising out of or relating to the employment of the Employees

prior to the Closing Date, and (ii) any employee benefits arising under the

Benefit Plans or Benefit Arrangements of Sellers and their Affiliates during the

period prior to the Closing Date.  From

and after the Effective Time, (i) Buyer shall pay, discharge, and be

responsible for all salary, wages, and benefits (including vacation pay and

sick leave pay) arising out of or relating to the employment of the Transferred

Employees by Buyer on and after the Closing Date and (ii) Buyer shall be

responsible for all severance liabilities (if any) and all COBRA liabilities

(if any) for any of the Transferred Employees of the Stations that are (y)

terminated on or after the Closing Date, and (z) terminated as a result of the

consummation of the transaction contemplated hereby, and (v) Sellers shall be

responsible for all COBRA liabilities for any of the COBRA Employees.

 

(c)           Buyer shall cause all Transferred

Employees as soon as practicable following the Closing Date to be eligible to

participate in all “employee welfare benefit plans” and “employee pension

benefit plans” (as defined in Section 3(1) and 3(2) of ERISA, respectively) of

Buyer 

 

34

 

(other than the Tribune

Company Employee Stock Ownership Plan) in which similarly situated employees of

Buyer are generally eligible to participate; provided, however, that all

Transferred Employees and, to the extent elected by any Transferred Employee,

their spouses and dependents shall be eligible for health insurance coverage

immediately after the Closing Date (and shall not be excluded from coverage on

account of any pre-existing condition) to the extent provided under such plans

with respect to Transferred Employees.

 

(d)           For purposes of any length of service

requirements, waiting period, vesting periods, or differential benefits based

on length of service in any such plan (but not for purposes of benefit

accruals, except to the extent Buyer has received a credit under Section

2.3(b)) for which a Transferred Employee may be eligible after the Closing,

Buyer shall ensure that, to the extent permitted by law, service by such

Transferred Employee with Sellers, any Affiliate of Sellers, or any prior owner

of the Stations shall be deemed to have been service with the Buyer; provided

that Sellers shall provide access to such information regarding the Transferred

Employees as provided under Section 6.9 hereof.  In addition, Buyer shall ensure that each Transferred Employee

receives credit under any welfare benefit plan of Buyer for any deductibles or

co-payments paid by such Transferred Employee and his or her dependents for the

calendar year in which the Closing Date occurs under a plan maintained by

Sellers or any Affiliate of Sellers to the extent allowable under any such

plan; provided that Sellers shall provide access to such information regarding

the Transferred Employees as provided by Section 6.9 hereof.  Buyer shall grant credit to each Transferred

Employee for all sick leave in accordance with the policies of Buyer applicable

generally to its similarly situated employees after giving effect to service

for Sellers, any Affiliate of Sellers, or any prior owner of the Stations, as

service for Buyer.  To the extent any

claim with respect to accrued vacation leave or sick leave accrued after the

Effective Time or accrued prior to the Effective Time to the extent Buyer has

received a credit under Section 2.3(b) is lodged against Sellers with respect

to any Transferred Employee, Buyer shall indemnify, defend, and hold harmless

Sellers from and against any and all Losses, directly or indirectly, as a

result of or based upon or arising from the same.

 

(e)           As soon as practicable following the

Closing Date, Buyer shall make available to the Transferred Employees Buyer’s

401(k) Plan. To the extent requested by a Transferred Employee, Sellers shall

permit a rollover, pursuant to Code Section 402(c), to Buyer’s 401(k) Plan, in

cash, of all of the individual account balances of such Transferred Employee

under the Sellers’ 401(k) Plan, including any outstanding plan participant loan

receivables allocated to such accounts subject to compliance with the

requirements of Buyer’s 401(k) Plan.

 

(f)            Buyer acknowledges and agrees that

Buyer’s obligations pursuant to this Section 6.10 are in addition to, and not

in limitation of, Buyer’s obligation to assume the employment contracts

included in the Assumed Contracts. 

Nothing in this Agreement shall be construed to provide employees of

Sellers with any rights under this Agreement, and no Person, other than the

parties hereto, is or shall be entitled to bring any action to enforce any

provision of this Agreement against any of the parties hereto, and the covenants

and agreements set forth in this 

 

35

 

Agreement shall be solely

for the benefit of, and shall only be enforceable by, the parties hereto and

their respective successors and assigns as permitted hereunder.

 

6.11.        Public

Announcements.  Sellers and Buyer shall consult with each

other before issuing any press releases or otherwise making any public

statements with respect to this Agreement or the transactions contemplated

herein and shall not issue any such press release or make any such public

statement without the prior written consent of the other party, which shall not

be unreasonably withheld; provided, however, that a party may, without the

prior written consent of the other party, issue such press release or make such

public statement as may be required by Law or any listing agreement with a

national securities exchange to which Sellers or Buyer (or their respective

corporate parent) are a party if it has used all commercially reasonable efforts

to consult with the other party and to obtain such party’s consent but has been

unable to do so in a timely manner.

 

6.12.        Disclosure

Schedules.  Sellers and Buyer acknowledge and agree that

Sellers shall not be liable for the failure of the Schedules to be accurate

after the date hereof as a result of the operation of the Stations after the

date hereof and prior to the Closing in accordance with Section 5 of this

Agreement; provided that Sellers shall in good faith attempt to provide Buyer

with prompt notice of such inaccuracy; but, in no event, no later than the

Closing Date. The inclusion of any fact or item on a Schedule referenced by a

particular section in this Agreement shall, should the existence of the fact or

item or its contents be relevant to any other section, be deemed to be

disclosed with respect to such other section whether or not an explicit

cross-reference appears in the Schedules if such relevance is readily apparent

from examination of such Schedules.

 

6.13.        Bulk Sales Law. 

Buyer hereby waives compliance by Sellers, in connection with the

transactions contemplated hereby, with the provisions of any applicable bulk

transfer laws.

 

6.14.        Adverse

Developments.  Sellers shall promptly notify Buyer of any

unusual or materially adverse developments that occur prior to the Closing with

respect to the Assets or the operation of the Stations; provided, however, that

Sellers’ compliance with the disclosure requirements of this Section 6.14 shall

not relieve Sellers of any obligation with respect to any representation,

warranty, or covenant of Sellers in this Agreement or relieve Buyer of any

obligation or duty hereunder, waive any condition to Buyer’s obligations under

this Agreement, or expand or enhance any right of Buyer hereunder.

 

6.15.        Title Insurance. 

Within ten (10) calendar days of the date of this Agreement, Sellers

shall deliver to Buyer their current available title insurance policies

relating to the Owned Real Property. 

Sellers shall cooperate with Buyer in obtaining the commitment of a

title insurance company reasonably satisfactory to Buyer agreeing to issue to

Buyer, at standard rates, ALTA 1992 Form extended coverage title insurance

policies with a zoning endorsement, insuring Buyer’s interest in the Owned Real

Property (the “Title Commitment”).  The

costs of the Title Commitment and the policy to be issued pursuant to the Title

Commitment shall be paid by Buyer.

 

36

 

6.16.        Surveys. 

Within sixty (60) calendar days of the date of this Agreement, Sellers

shall deliver to Buyer, at Buyer’s expense, surveys of the Owned Real Property

performed by surveyors reasonably acceptable to Buyer sufficient to remove any

“survey exception” from the title insurance policies to be issued pursuant to

the Title Commitments.

 

6.17.        Environmental

Site Assessment.

 

(a)           Within thirty (30)

days of the execution of this Agreement, Buyer may obtain Phase I and Phase II

Environmental Assessments (provided that such Phase II Environmental

Assessments do not unreasonably disrupt the operations of the Stations) at

Buyer’s expense for all of the Real Property Interests (the “Environmental

Assessments”).  In the event any

Environmental Assessment discloses any conditions that require remediation

under Environmental Laws or any potential that such conditions may exist, Buyer

may conduct or have conducted at its expense additional testing to confirm or

negate the existence of any such conditions. 

If any such Environmental Assessment or additional testing reflects the

existence of any such conditions at any of the Real Property Interests, Sellers

shall cause the conditions to be remedied as quickly as possible; provided,

however, that Sellers shall not be obligated to expend in the aggregate

for all parcels of the Real Property Interests of the Stations in excess of Two

Hundred Thousand Dollars ($200,000.00) to effect such remediation for all Real

Property Interests to be conveyed hereunder. 

In the event that such remedial action(s) does cost, in the aggregate,

in excess of Two Hundred Thousand Dollars ($200,000.00), Sellers may elect not

to take such remedial action.  In such

event, to the extent Closing has not already occurred, Buyer may require

Sellers to proceed to the Closing of the Stations, in which case, Buyer shall

be responsible for any expense regarding remediation in excess of Two Hundred

Thousand Dollars ($200,000.00) to the extent Buyer chooses to continue such

remediation; alternatively, Buyer may terminate this Agreement and receive

return of the Escrow Deposit (together with all interest or other proceeds from

the investment thereof), and Sellers shall have no liability to Buyer.  The cost of completing the Environmental

Assessments shall be paid by Buyer.

 

(b)           In the event

Sellers’ remediation of an Environmental Assessment is not completed prior to

Closing and Buyer chooses to proceed with Closing, Sellers shall continue to

remediate such Environmental Assessment to the extent set forth in Section

6.17(a).  Any amounts expended by Buyer

to remediate any Environmental Assessment after the Closing shall be credited

against the Threshold Amount in Section 10.5 to the extent Buyer is entitled to

indemnification for any untrue representation or breach of warranty pursuant to

Section 10.2(a).

 

SECTION 7:  CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS

 

7.1.          Conditions

to Obligations of Buyer.  All obligations of Buyer at the Closing

hereunder are subject at Buyer’s option to the fulfillment prior to or at the

Closing Date of each of the following conditions:

 

37

 

(a)           Representations and Warranties. 

All representations and warranties of Sellers contained in this

Agreement shall be true and complete at and as of the Closing Date as though

made at and as of that time (except for representations and warranties that

speak as of a specific date or time which need only be true and complete as of

such date or time), except where the failure to be true and complete

(determined without regard to any materiality qualifiers) does not have a

Material Adverse Effect.

 

(b)           Covenants and Conditions.  Each Seller shall have performed and complied with all covenants,

agreements, and conditions required by this Agreement to be performed or

complied with by it prior to or on the Closing Date, except where the failure

to have performed and complied (determined without regard to any materiality

qualifiers) does not have a Material Adverse Effect.

 

(c)           FCC Consent.  (i) The FCC

Consent shall have been granted, provided that if a petition to deny or other

third-party objection is filed with the FCC prior to the date on which the FCC

Consent is issued and becomes a Final Order, and such petition or objection is

not withdrawn as of such date and in the reasonable judgment of Buyer’s counsel

such objection would reasonably be expected to result in a reversal or

rescission of the FCC Consent, then Buyer’s obligation to effect the Closing

shall be subject to the further condition that the FCC Consent shall have

become a Final Order.

 

(ii)           Conditions which

the FCC Consent, Final Order or any other order, ruling or decree of any

judicial or administrative body specifies and requires to be satisfied prior to

transfer of the FCC Licenses to Buyer shall have been satisfied.

 

(d)           Hart-Scott-Rodino.  All applicable

waiting periods under Hart-Scott-Rodino shall have expired or terminated.

 

(e)           Governmental Authorizations.  Sellers shall be the holder of all FCC Licenses, such FCC

Licenses shall be in full force and effect and there shall not have been any

material adverse modification, revocation, or non-renewal of any License.  No proceeding shall be pending the effect of

which could be to revoke, cancel, fail to renew, suspend, or modify adversely

any FCC License.

 

(f)            Deliveries.  Sellers shall have

made or stand willing to make all the deliveries to Buyer described in Section

8.2.

 

7.2.          Conditions

to Obligations of Sellers.  All obligations of Sellers at the Closing

hereunder are subject, at Sellers’ option, to the fulfillment prior to or at

the Closing Date of each of the following conditions:

 

(a)           Representations and Warranties.  All representations and warranties of Buyer contained in this

Agreement shall be true and complete in all material respects at and as of the

Closing Date as though made at and as of that time (except for representations

and warranties 

 

38

 

that speak as of a

specific date or time which need only be true and complete as of such date or

time).

 

(b)           Covenants and Conditions.   Buyer shall have performed and complied in

all material respects with all covenants, agreements, and conditions required

by this Agreement to be performed or complied with by it prior to or on the

Closing Date.

 

(c)           FCC Consent.  The FCC Consent

shall have been granted, notwithstanding that it may not have yet become a

“Final Order”.

 

(d)           Hart-Scott-Rodino.  All applicable

waiting periods under Hart-Scott-Rodino shall have expired or terminated.

 

(e)           Deliveries.  Buyer shall have

made or stand willing to make all the deliveries described in Section 8.3.

 

SECTION 8:  CLOSING AND CLOSING DELIVERIES

 

8.1.          Closing.

 

(a)           Closing Date.

 

(i)            Except as provided

below in this Section 8.1 or as otherwise agreed to by Buyer and Sellers, the

Closing hereunder shall be held for the Stations on a date specified by Buyer

on at least five (5) Business Days’ written notice that is not earlier than the

first Business Day after or later than ten (10) Business Days after the date on

which all of the conditions to Closing have been satisfied or waived.

 

(ii)           If any event occurs

that prevents signal transmission by any Stations in the normal and usual

manner and Sellers cannot restore the normal and usual transmission before the

date on which the Closing would otherwise occur pursuant to this Section

8.1(a), and this Agreement has not been terminated under Section 9, Sellers

shall diligently take such action as reasonably necessary to restore such

transmission, and the Closing shall be postponed until a date within the effective

period of the FCC Consent (as it may be extended pursuant to Section 6.1(c)) to

allow Sellers to restore the normal and usual transmission for the

Stations.  If the Closing is postponed

pursuant to this paragraph, the date of the Closing shall be ten (10) calendar

days after notice by Sellers to Buyer that transmission has been restored.  In any case, this Section 8.1(a)(ii) shall

in no way limit Buyer’s rights under Sections 7 and 10 of this Agreement.

 

(iii)          If there is in

effect on the date on which the Closing would otherwise occur pursuant to this

Section 8.1(a) any judgment, decree, or order that would prevent or make

unlawful the Closing on that date, the Closing shall be postponed until a date

within the effective period of the FCC Consent (as it may be extended pursuant

to Section 6.1(c)), to be agreed upon by Buyer and Sellers, when such judgment,

decree, or order no longer prevents or makes 

 

39

 

unlawful such

Closing.  If the Closing is postponed

pursuant to this paragraph, the date of the Closing shall be mutually agreed to

by Sellers and Buyer.  In any case, this

Section 8.1(a)(iii) shall in no way limit Buyer’s rights under Sections 7 and

10 of this Agreement.

 

(b)           Closing Place.  The Closing

shall be held at the offices of Thomas & Libowitz, P.A., 100 Light Street,

Suite 1100, Baltimore, Maryland 21202, or any other place that is mutually

agreed upon by Buyer and Sellers.

 

8.2.          Deliveries

by Sellers.  Prior to or on the Closing Date, Sellers

shall deliver to Buyer the following, in form and substance reasonably

satisfactory to Buyer and its counsel:

 

(a)           Conveyancing Documents.  Duly executed deeds in form and quality equivalent to the deeds

by which Sellers obtained title, bills of sale, motor vehicle titles,

assignments, and other transfer documents that are sufficient to vest good and

marketable title to the Assets being transferred at the Closing in the name of

Buyer, free and clear of all mortgages, liens, restrictions, encumbrances, claims,

and obligations except for Permitted Encumbrances.

 

(b)           Officer’s Certificate.  A certificate, dated as of the Closing Date, executed by an

officer of each Seller, certifying:  (i)

that the representations and warranties of Sellers contained in this Agreement

are true and complete as of the Closing Date as though made on and as of that

date (except for representations and warranties that speak as of a specific

date or time, which need only be true and complete as of such date or time),

except to the extent that the failure of such representations and warranties to

be true and complete (determined without regard to materiality or knowledge

qualifiers) shall not have had a Material Adverse Effect, and (ii) that Sellers

have in all respects performed and complied with all of their obligations,

covenants, and agreements in this Agreement to be performed and complied with

on or prior to the Closing Date, except to the extent that the failure to

perform such covenants (determined without regard to materiality or knowledge

qualifiers) shall not have had a Material Adverse Effect.

 

(c)           Secretary’s Certificate.  A

certificate, dated as of the Closing Date, executed by each Seller’s Secretary,

members, partners, or designees, as the case may be: (i) certifying that the

resolutions, as attached to such certificate, were duly adopted by each

Seller’s Board of Directors and shareholders (if required) (or by the general

partner in the case of a partnership or by the members in the case of a limited

liability company), authorizing and approving the execution of this Agreement

and the consummation of the transactions contemplated hereby and that such

resolutions remain in full force and effect; and (ii) providing, as attachments

thereto, the Articles of Incorporation and Bylaws (or other organizational

documents) of each Seller.

 

(d)           Consents.  A manually executed copy of any instrument

evidencing receipt of any Consent which has been received by Sellers which

relate to the Stations or the Assets.

 

(e)           Good Standing Certificates. 

To the extent such certificates are granted in the applicable

jurisdictions and to the extent applicable to the Stations, certificates as to

the formation and/or good standing of each Seller issued by the appropriate

governmental authorities 

 

40

 

in the states of

organization and each jurisdiction in which Sellers are qualified to do

business, each such certificate (if available) to be dated a date not more than

a reasonable number of days to the Closing Date.

 

(f)            Opinions of Counsel. 

Opinions of Sellers’ counsel and communications counsel dated as of the

Closing Date, substantially in the form of Exhibits 1 and 2 hereto.

 

(g)           FIRPTA Certificate.  A

certification of the non-foreign status of each Seller in form and substance

reasonably satisfactory to Buyer, in accordance with Treas. Reg. § 1.1445-2(b).

 

(h)           Other Documents. 

Such other documents reasonably requested by Buyer or its counsel for

complete implementation of this Agreement and consummation of the transaction

contemplated hereby.

 

8.3.          Deliveries

by Buyer.  Prior to or on the Closing Date, Buyer shall

deliver to Sellers the following, in form and substance reasonably satisfactory

to Sellers and their counsel:

 

(a)           Closing Payment. 

The payment of the Estimated Purchase Price described in

Section 2.4(a).

 

(b)           Officer’s Certificate.  A

certificate, dated as of the Closing Date, executed on behalf of an officer of

the Buyer, certifying (i) that the representations and warranties of Buyer contained

in this Agreement are true and complete in all material respects as of the

Closing Date as though made on and as of that date (except for representations

and warranties that speak as of a specific date or time, which need only be

true and complete as of such date or time), and (ii) that Buyer has in all

material respects performed and complied with all of its obligations,

covenants, and agreements in this Agreement to be performed and complied with,

on, or prior to the Closing Date.

 

(c)           Secretary’s Certificate.  A

certificate, dated as of the Closing Date, executed by Buyer’s Secretary:  (i) certifying that the resolutions, as

attached to such certificate, were duly adopted by Buyer’s Board of Directors,

authorizing and approving the execution of this Agreement and the consummation

of the transaction contemplated hereby and that such resolutions remain in full

force and effect; and (ii) providing, as an attachment thereto, Buyer’s

Certificate of Incorporation and Bylaws.

 

(d)           Assumption Agreements.  Appropriate

assumption agreements pursuant to which Buyer shall assume and undertake to

perform Sellers’ obligations and liabilities to the extent provided under this

Agreement for the Stations and the Assets, including, without limitation, under

the Licenses and the Assumed Contracts to the extent set forth herein.

 

41

 

(e)           Good Standing Certificates.  A

certificate of good standing of Buyer issued by the Secretary of State of the

State of Delaware dated a date not more than a reasonable number of days prior

to the Closing Date.

 

(f)            Opinion of Counsel. 

An opinion of Buyer’s internal counsel dated as of the Closing Date,

substantially in the form of Exhibit 3 hereto.

 

(g)           Other Documents. 

Such other documents reasonably requested by Sellers or their counsel

for complete implementation of this Agreement and consummation of the

transactions contemplated hereby.

 

SECTION 9: 

TERMINATION

 

9.1.          Termination by Mutual Consent. 

This Agreement may be terminated at any time prior to Closing by the

mutual consent of the parties.

 

9.2.          Termination

by Sellers.  This Agreement may be terminated by Sellers

and the sale and transfer of the Stations abandoned, if:

 

(a)           None

of Sellers is then in material default hereunder, upon written notice to Buyer,

if on the date that would otherwise be the Closing Date any of the conditions

precedent to the obligations of Sellers set forth in Sections 7.2(a), 7.2(b)

and 7.2(e) of this Agreement have not been satisfied or waived in writing by

Sellers (whether or not occurring as the result of Buyer’s material breach of

any provision of this Agreement) and such conditions have not been satisfied

within ten (10) calendar days after written notice to Buyer thereof;

 

(b)           Buyer

shall have defaulted in the performance of its obligations under this Agreement

in any material respect and such default is not cured within thirty (30) days

after written notice to Buyer thereof, provided that Sellers are not in

material default hereunder;

 

(c)           Closing

has not occurred within eight (8) calendar months from the date hereof and

failure of Closing to have occurred is due to the failure to receive any FCC

Consents and Sellers are not then in material default hereunder;

 

(d)           Closing

has not occurred within eight (8) calendar months from the date hereof and

failure of Closing to occur is due to the failure to receive expiration or

termination of the Hart-Scott-Rodino waiting period and such failure is not the

result of a material default hereunder by Sellers; and

 

(e)           Closing

has not occurred with respect to the Stations within twelve (12) calendar

months from the date hereof if Sellers are not then in material default

hereunder and such Closing has not occurred for any reason other than as

provided in Section 9.2(c) or (d);

 

42

 

provided that nothing

herein shall relieve any party from liability for any breach of this Agreement.

 

9.3.          Termination

by Buyer.  This Agreement may be terminated by Buyer

and the sale and transfer of the Stations abandoned, if:

 

(a)            Buyer is not then in material

default hereunder, upon written notice to Sellers if on the date that would

otherwise be the Closing Date any of the conditions precedent to the

obligations of Buyer set forth in Sections 7.1(a), 7.1(b), 7.1(e) and 7.1(f) of

this Agreement (and only such Sections) has not been satisfied or waived in

writing by Buyer (whether or not occurring as the result of Sellers’ material

breach of any provision of this Agreement) and such conditions have not been

satisfied within ten (10) calendar days after written notice to Sellers

thereof;

 

(b)           Sellers shall have defaulted in the

performance of their obligations under this Agreement in any material respect

and such default is not cured within thirty (30) calendar days after written

notice to Sellers thereof, provided that Buyer is not in material default

hereunder;

 

(c)           Closing has not occurred within eight

(8) calendar months from the date hereof and failure of Closing to have occurred

is due to the failure to receive any FCC Consents, and Buyer is not then in

material default hereunder;

 

(d)           Sellers have refused to comply with a

“second request” pursuant to Section 6.2 hereof.

 

(e)           Closing has not occurred within eight

(8) calendar months from the date hereof and failure of Closing to occur is due

to the failure to receive expiration or termination of the Hart-Scott-Rodino

waiting period;

 

(f)            Closing has not occurred with

respect to the Stations within twelve (12) calendar months from the date hereof

if Buyer is not then in material default hereunder and such Closing has not

occurred for any reason other than as provided in Section 9.3(c) or (d).

 

provided that nothing

herein shall relieve any party from liability for any breach of this Agreement.

 

9.4.          Rights on

Termination.  If this Agreement is terminated by Buyer

pursuant to Section 6.17(a), Section 9.3(a), Section 9.3(b), Section 9.3(c),

Section 9.3(d) or Section 9.3(f) or by Sellers pursuant to Section 9.2(c) or

Section 9.2(e), Buyer shall be entitled to the immediate return of the Escrow

Deposit, together with all interest or other proceeds from the investment

thereof.  If this Agreement is

terminated by Sellers pursuant to Section 9.2(a), 9.2(b) or 9.2(d), or by Buyer

pursuant to Section 9.3(e), Sellers, as their sole remedy, shall be entitled to

receive the Escrow Deposit, together with fifty percent (50%) of all interest

or other proceeds from the 

 

43

 

investment thereof, as

liquidated damages in full and final settlement of all claims of Sellers under

this Agreement, and there shall be no other or further remedies of Sellers

hereunder.

 

9.5.          Liquidated

Damages Not a Penalty. 

With respect to the liquidated damages as described and provided for in

Section 9.4 hereof, Sellers and Buyer hereby acknowledge and agree that the

damage that may be suffered by Sellers in the event of a default by Buyer

hereunder is not readily ascertainable and that such liquidated damages as of

the date hereof are a reasonable estimate of such damages and are intended to

compensate Sellers for any such damage and are not to be construed as a

penalty.

 

9.6.          Attorneys’ Fees. 

In the event of a default by either party that results in a lawsuit or

other proceeding for any remedy available under this Agreement, the prevailing

party shall be entitled to reimbursement from the other party of its reasonable

legal fees and expenses (whether incurred in arbitration, at trial, or on

appeal).

 

9.7.          Survival. 

Notwithstanding the termination of this Agreement pursuant to this

Section 9, the obligations of Buyer and Sellers set forth in Sections 6.4,

6.11, 9, 10, and 11 shall survive such termination, and the parties hereto

shall have any and all rights and remedies to enforce such obligations provided

at law or in equity or otherwise (including, without limitation, specific

performance).

 

SECTION

10.  SURVIVAL OF REPRESENTATIONS AND

WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES

 

10.1.        Survival

of Representations.  All representations

and warranties, covenants, and agreements of Sellers and Buyer contained in or

made pursuant to this Agreement or in any certificate furnished pursuant hereto

shall survive the Closing Date and shall remain in full force and effect to the

following extent:  (a) representations

and warranties shall survive for a period of twelve (12) calendar months after

the Closing Date; (b) except as otherwise provided herein, the covenants and

agreements which, by their terms, survive the Closing shall continue in full

force and effect until fully discharged; and (c) any representation, warranty,

covenant, or agreement that is the subject of a claim which is asserted in a

reasonably detailed writing prior to the expiration of the survival period set

forth in this Section 10.1 shall survive with respect to such claim or dispute

until the final resolution thereof; provided that the covenants and agreements

set forth in Section 6.4 Confidentiality, Section 6.5 Cooperation, Section 6.9

Books and Records, Section 11.1 Fees and Expenses, Section 11.2 Notices, and

Section 11.3 Benefit and Binding Effect shall survive the Closing for the

period provided therein or, if no period is specified, in perpetuity.

 

10.2.        Indemnification

by Sellers.  After the Closing, but subject to Sections

10.1 and 10.5, Sellers hereby agree to jointly and severally indemnify and hold

Buyer harmless against and with respect to and shall reimburse Buyer for:

 

44

 

(a)           any and all Loss arising out of or

resulting from any untrue representation, breach of warranty, or nonfulfillment

of any covenant by Sellers contained in this Agreement or in any certificate,

document, or instrument delivered to Buyer under this Agreement (determined

without regard to materiality qualifiers);

 

(b)           any and all obligations of Sellers

not assumed by Buyer pursuant to this Agreement, including any liabilities

arising at any time under any Contract not included in the Assumed Contracts;

and

 

(c)           notwithstanding any waiver by Buyer

pursuant to Section 6.13 hereof, any Loss arising out of or resulting from the

failure of the parties to comply with the provisions of any bulk sales law

applicable to the transfer of the Assets;

 

provided, however, that

in no event shall a waiver of any closing condition by Buyer in accordance with

Section 7.1 limit Buyer’s right to indemnification under this Section 10.2.

 

10.3.        Indemnification

by Buyer.  Notwithstanding Closing, but subject to

Section 10.1 and Section 10.5, Buyer hereby agrees to indemnify and hold

Sellers harmless against and with respect to and shall reimburse Sellers for:

 

(a)           any and all Loss arising out of or

resulting from any untrue representation, breach of warranty, or nonfulfillment

of any covenant by Buyer contained in this Agreement or in any certificate,

document, or instrument delivered to Sellers under this Agreement;

 

(b)           any and all obligations of Sellers

assumed by Buyer pursuant to this Agreement;

 

(c)           any and all obligations or Loss

arising out of or resulting from the operation or ownership of the Stations

after the Closing, except any losses, liabilities, or damages for which Sellers

have received a proration in their favor; and

 

(d)           any and all obligations or Losses

arising out of or resulting from Buyer’s election to effectuate a qualified

tax-deferred exchange of certain other property of like kind for the Assets in

accordance with Section 6.8(b) hereof;

 

provided, however, that

in no event shall a waiver of any closing condition by Sellers in accordance

with Section 7.2 limit Sellers’ right to indemnification under this Section

10.3.

 

10.4.        Procedure

for Indemnification.  The procedure for

indemnification shall be as follows:

 

(a)           The party claiming indemnification

(the “Claimant”) shall promptly give notice to the party from which

indemnification is claimed (the “Indemnifying  Party”) of any claim,

whether between the parties or brought by a third party, specifying in

reasonable detail the factual basis for the claim.  If the claim relates to an action, suit, or proceeding filed by a

third 

 

45

 

party against Claimant,

such notice shall be given by Claimant within five (5) Business Days after

written notice of such action, suit, or proceeding was given to Claimant.  The failure of any Claimant to give the

notice required by this Section 10.4 shall not affect such Claimant’s rights

under this Section 10 except to the extent such failure is actually prejudicial

to the rights and obligations of the Indemnifying Party.

 

(b)           With respect to claims solely between

the parties, following receipt of notice from the Claimant of a claim, the

Indemnifying Party shall have thirty (30) calendar days to make such

investigation of the claim as the Indemnifying Party deems necessary or

desirable.  For the purposes of such

investigation, the Claimant agrees to make available to the Indemnifying Party

and its authorized representatives the information relied upon by the Claimant to

substantiate the claim.  If the Claimant

and the Indemnifying Party agree at or prior to the expiration of the thirty

(30) day period (or any mutually agreed upon extension thereof) to the validity

and amount of such claim, the Indemnifying Party shall immediately pay to the

Claimant the full amount of the claim. 

If the Claimant and the Indemnifying Party do not agree within the

thirty (30) day period (or any mutually agreed upon extension thereof), the

Claimant may seek appropriate remedy at law or equity.

 

(c)           With respect to any claim by a third

party as to which the Claimant is entitled to indemnification under this

Agreement, the Indemnifying Party shall have the right at its own expense, to

participate in or assume control of the defense of such claim, and the Claimant

shall cooperate fully with the Indemnifying Party, subject to reimbursement for

actual out-of-pocket expenses incurred by the Claimant as the result of such a

request for cooperation by the Indemnifying Party, provided, however, that

Indemnifying Party may not assume control of the defense unless it affirms in

writing its obligation to indemnify Claimant for any damages or payments

incurred by Claimant with respect to such third-party claim.  If the Indemnifying Party elects to assume control

of the defense of any third-party claim, the Claimant shall have the right to

participate in the defense of such claim at its own expense.  If the Indemnifying Party does not elect to

assume control or otherwise participate in the defense of any third-party

claim, it shall be bound by the results obtained in good faith by the Claimant

with respect to such claim.

 

(d)           If a claim, whether between the

parties or by a third party, requires immediate action, the parties will make

every effort to reach a decision with respect thereto as expeditiously as

possible.

 

(e)           Subject to Section

11.3, the indemnification rights provided in Section 10.2 and Section 10.3

shall extend to the members, partners, shareholders, officers, directors,

employees, representatives, and affiliated entities of any Claimant although

for the purpose of the procedures set forth in this Section 10.4, any

indemnification claims by such parties shall be made by and through the

Claimant.

 

46

 

10.5.        Certain

Limitations.

 

(a)           Notwithstanding

anything in this Agreement to the contrary, neither party shall indemnify or

otherwise be liable to the other party with respect to any claim for any breach

of a representation or warranty, or for the breach of any covenant contained in

this Agreement, unless notice of the claim is given within the relevant

survival period specified in Section 10.1.

 

(b)           Except as set forth

in the last sentence of this clause (b), but notwithstanding anything else in

this Agreement to the contrary, Sellers shall not be liable to Buyer in respect

of any indemnification hereunder except to the extent that (i) the aggregate

amount of Buyer’s Loss exceeds Five Hundred Thousand Dollars ($500,000.00) (the

“Threshold Amount”), and then only to the extent Buyer’s Loss exceeds Two

Hundred Fifty Thousand Dollars ($250,000), and (ii) the aggregate amount of

Buyer’s Loss is less than Thirty-Five Million Dollars ($35,000,000)  (the “Indemnity Cap”).  The Threshold Amount and the Indemnity Cap

shall not limit Sellers’ indemnification obligations under Sections 10.2(b) or

(c) herein.

 

(c)           Notwithstanding any

other provision of this Agreement to the contrary, in no event shall a party be

entitled to indemnification for such party’s incidental, consequential, or

punitive damages, regardless of the theory of recovery.  Each party hereto agrees to use reasonable

efforts to mitigate any losses which form the basis for any claim for

indemnification hereunder.

 

SECTION 11: 

MISCELLANEOUS

 

11.1.        Fees and

Expenses.

 

(a)           Buyer and Sellers

shall each pay one-half of (i) any filing fees charged by the FCC in connection

with obtaining the FCC Consent, (ii) any filing fees incurred in connection

with any Hart-Scott-Rodino Filings, and (iii) any fees charged by the Escrow

Agent in connection with the performance of its duties as Escrow Agent.

 

(b)           Except to the extent

otherwise set forth herein, Buyer and Sellers shall pay one-half of any filing

fees, transfer taxes, document stamps, or other charges levied by any

governmental entity (other than income Taxes, which shall be the responsibility

of Sellers) on account of the transfer of the Assets from Sellers to Buyer.

 

(c)           Except as otherwise

provided in this Agreement, each party shall pay its own expenses incurred in

connection with the authorization, preparation, execution, and performance of

this Agreement, including all fees and expenses of counsel, accountants, agents

and representatives, and each party shall be responsible for all fees or

commissions payable to any finder, broker, advisor, or similar Person retained

by or on behalf of such party.

 

11.2.        Notices. 

All notices, demands, and requests required or permitted to be given

under the provisions of this Agreement shall be (a) in writing, (b) sent by

telecopy (with receipt personally confirmed by telephone), delivered by

personal delivery, or sent by commercial delivery service or certified mail,

return receipt requested, (c) deemed to have been given on the date telecopied 

 

47

 

with receipt confirmed,

the date of personal delivery, or the date set forth in the records of the

delivery service or on the return receipt, and (d) addressed as follows:

 

	

   

  	

   

  	

  To Buyer:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Tribune Company

  
	

   

  	

   

  	

  435 North Michigan

  Avenue

  
	

   

  	

   

  	

  Chicago, IL  60611

  
	

   

  	

   

  	

  Attn: General Counsel

  
	

   

  	

   

  	

  Telecopy:

  	

  312-222-4206

  
	

   

  	

   

  	

  Telephone:

  	

  312-222-9100

  
	

   

  	

   

  	

   

  
	

  with a copy (which shall not constitute notice) to:

  	

   

  	

  Sidley Austin Brown

  & Wood

  
	

   

  	

   

  	

  Bank One Plaza, 10 S.

  Dearborn

  
	

   

  	

   

  	

  Chicago, IL  60603

  
	

   

  	

   

  	

  Attn:  Larry A. Barden

  
	

   

  	

   

  	

  Telecopy:

  	

  312-853-7036

  
	

   

  	

   

  	

  Telephone:

  	

  312-853-7785

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  To Sellers:

  
	

   

  	

   

  	

  c/o Sinclair Broadcast

  Group, Inc.

  
	

   

  	

   

  	

  10706 Beaver Dam Road

  
	

   

  	

   

  	

  Cockeysville, MD  21030

  
	

   

  	

   

  	

  Attn:  President

  
	

   

  	

   

  	

  Telecopy:

  	

  (410) 568-1533

  
	

   

  	

   

  	

  Telephone:

  	

  (410) 568-1506

  
	

   

  	

   

  	

   

  
	

  with a copy (which shall not constitute notice) to:

  	

   

  	

  Sinclair

  Communications, Inc.

  
	

   

  	

   

  	

  10706 Beaver Dam Road

  
	

   

  	

   

  	

  Cockeysville, MD  21030

  
	

   

  	

   

  	

  Attn:  General Counsel

  
	

   

  	

   

  	

  Telecopy:

  	

  (410) 568-1537

  
	

   

  	

   

  	

  Telephone:

  	

  (410) 568-1524

  
	

   

  	

   

  	

   

  
	

  with a copy (which shall not constitute notice) to:

  	

   

  	

  Steven A. Thomas,

  Esquire

  
	

   

  	

   

  	

  Thomas & Libowitz,

  P.A.

  
	

   

  	

   

  	

  100 Light Street, Suite

  1100

  
	

   

  	

   

  	

  Baltimore, MD

  21202-1053

  
	

   

  	

   

  	

  Telecopy:

  	

  (410) 752-2046

  
	

   

  	

   

  	

  Telephone:

  	

  (410) 752-2468

  

 

or to any other or

additional persons and addresses as the parties may from time to time designate

in a writing delivered in accordance with this Section 11.2.

 

48

 

11.3.        Benefit and Binding Effect.

 

Buyer may not

assign this Agreement to any other party without the consent of Sellers, which

consent may be withheld by Sellers in their sole and absolute discretion;

provided, Buyer shall have the right to assign all or any portion of its rights

under this Agreement without Sellers’ consent to (i) any entity under common

control with Buyer, (ii) a “qualified intermediary” under Section 1031 of the

Code in accordance with Section 6.8 hereunder, or (iii) any lender or any agent

for such lender(s) for collateral purposes only; provided, that no such

assignment (whether with or without Sellers’ consent) shall relieve Buyer of

its obligations hereunder.  Sellers may

assign, combine, merge, or consolidate among themselves and any Affiliate of

Sellers so long as Sellers or their successors and assigns are bound by the

terms and conditions of this Agreement in all respects as if such successors

and assigns were original parties hereto, and such assignment, combination,

merger, or consolidation does not have an adverse affect on Buyer.  This Agreement shall be binding upon and

inure to the benefit of the parties hereto and their respective successors and

permitted assigns.  No Person, other

than the parties hereto, is or shall be entitled to bring any action to enforce

any provision of this Agreement against any of the parties hereto, and the

covenants and agreements set forth in this Agreement shall be solely for the

benefit of, and shall be enforceable only by, the parties hereto or their

respective successors and assigns as permitted hereunder.

 

11.4.        Further

Assurances.  The parties shall take any actions and

execute any other documents that may be necessary or desirable to the

implementation and consummation of this Agreement.

 

11.5.        GOVERNING LAW. 

THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE

WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CHOICE OF LAW

PROVISIONS THEREOF).

 

11.6.        Entire

Agreement.  This Agreement, the Schedules hereto, and

all documents, certificates, and other documents to be delivered by the parties

pursuant hereto, collectively, represent the entire understanding and agreement

between Buyer and Sellers with respect to the subject matter of this

Agreement.  This Agreement supersedes

all prior negotiations between the parties and cannot be amended, supplemented,

or changed except by an agreement in writing duly executed by each of the

parties hereto.

 

11.7.        Waiver of

Compliance; Consents.  Except as otherwise

provided in this Agreement, any failure of any of the parties to comply with

any obligation, representation, warranty, covenant, agreement, or condition

herein may be waived by the party entitled to the benefits thereof only by a

written instrument signed by the party granting such waiver, but such waiver or

failure to insist upon strict compliance with such obligation, representation,

warranty, covenant, agreement, or condition shall not operate as a waiver of,

or estoppel with respect to, any subsequent or other failure.  Whenever this Agreement requires or permits

consent by or on behalf of any party hereto, such consent shall be given in writing

in a manner consistent with the requirements for a waiver of compliance as set

forth in this Section 11.7.

 

49

 

11.8.        Headings.  The

headings of the sections and subsections contained in this Agreement are

inserted for convenience only and do not form a part or affect the meaning,

construction or scope thereof.

 

11.9.        Counterparts. 

This Agreement may be signed in two or more counterparts with the same

effect as if the signature on each counterpart were upon the same instrument.

 

11.10.      Specific Performance. 

Sellers and Buyer acknowledge that the Stations are of a special,

unique, and extraordinary character, and that damages alone are an inadequate

remedy for a breach of this Agreement by Sellers.  Accordingly, as an alternative to termination of this Agreement

under Section 9.3, if Buyer is not then in material default hereunder, Buyer

shall be entitled, in the event of Sellers’ breach, to enforce this Agreement

(subject to obtaining any required approval of the FCC and the expiration or

termination of the waiting period under Hart-Scott-Rodino) by a decree of

specific performance or injunctive relief requiring Sellers to fulfill their

obligations under this Agreement.  Such

right of specific performance or injunctive relief shall be deemed an election

of remedies by Buyer, and Buyer shall not be entitled to recover damages or to

pursue any other remedies available to Buyer for Sellers’ breach with respect

to which Buyer has been awarded specific performance or injunctive relief.  In any action to enforce specifically

Sellers’ obligation to close the transactions contemplated by this Agreement,

Sellers shall waive the defense that there is an adequate remedy at law or in

equity and any requirement that Buyer prove actual damages.

 

[Signatures Begin on Following Page]

 

50

 

IN WITNESS WHEREOF, this Agreement has been

executed by the duly authorized officers of Buyer and Sellers as of the date

first written above.

 

	

  Buyer:

  	

  Sellers:

  
	

   

  	

   

  
	

  TRIBUNE BROADCASTING

  	

  SINCLAIR BROADCAST

  GROUP, INC.

  
	

  COMPANY

  	

   

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  	

   

  	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

   

  	

   

  	

  Title:

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  SINCLAIR

  COMMUNICATIONS, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  SINCLAIR MEDIA II, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  SCI-INDIANA LICENSEE,

  LLC

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  
										

 

51

 

EXHIBIT

1

 

DRAFT

 

Tribune Broadcasting Company

435 North Michigan Avenue

Chicago, Illinois 60611

Attention:  Thomas Leach

 

	

   

  	

  Re:

  	

  Asset Purchase

  Agreement, dated as of April 18, 2002, by and among Sinclair Broadcast Group,

  Inc., Sinclair Communications, Inc., Sinclair Media II, Inc., SCI-Indiana

  Licensee, LLC and Tribune Broadcasting Company

  

 

Gentlemen:

 

We have acted as counsel to Sinclair Broadcast Group, Inc.,

Sinclair Communications, Inc., and Sinclair Media II, Inc., each a Maryland corporation (collectively,

referred to herein as “Maryland Corporate Sellers”), and SCI-Indiana

Licensee, LLC a Maryland limited liability company (referred to herein as the “Maryland LLC Seller”) (the Maryland

Corporate Sellers and Maryland LLC Seller are collectively referred to herein

as “Sellers”) in connection with the transactions contemplated by that certain

Asset Purchase Agreement, dated as of April 18, 2002, (the “Asset Purchase

Agreement”), by and between Sellers and Buyer. This opinion is being delivered

to you pursuant to Section 8.2(f) of the Asset Purchase Agreement.  All capitalized terms used herein but not

otherwise defined in this opinion shall have the meanings ascribed thereto in

the Asset Purchase Agreement.

 

We have reviewed the Asset Purchase Agreement and such other company

records of Sellers, certificates of public officials, certificates of officers

of Sellers and other documents and have made such examinations of law and fact

as we have deemed necessary or relevant in connection with the opinions set

forth below.  In rendering the following

opinions, we have assumed, without investigation, the authenticity of any

document or other instrument submitted to us as an original, the conformity of

the originals of any document or other instruments submitted to us as a copy,

the legal capacity of natural persons, and the genuineness of all signatures on

such originals or copies.  We have also

assumed, but have not independently verified, all documents executed by a party

other than officers and agents of Sellers, were duly and validly executed and

delivered by such party and are legal, valid and binding obligations of such

party enforceable against the party in accordance with their respective terms.

 

With respect to questions of fact, we have relied, without independent

inquiry or verification by us, solely upon (a) the representations and

warranties set forth in the Asset Purchase Agreement, (b) written and oral

representations of officers of Sellers, and (c) certificates of public

officials, and we do not opine in any respect as to the accuracy of any such

facts.  We have conducted no independent

investigation whatsoever of any factual matter.  Certain of the opinions given herein 

 

 

are

qualified by the phrases “best of our knowledge,” “to our knowledge,” “known to

us” or similar phrases.  In each such

case, such knowledge refers only to the actual existing knowledge of attorneys

in our firm involved in representing Sellers in the preparation of this opinion

with only such investigation as is specifically referred to in this opinion,

without any further investigation or inquiry. 

Such terms do not include any knowledge of other attorneys within our

firm or any constructive or imputed notice of any matters or items of

information.  When a statement in this

opinion is made “to our knowledge,” it means that none of the attorneys in our

firm involved in representing the Sellers in the preparation of this opinion

has actual existing knowledge that the statement is false; it does not mean

that any of such attorneys necessarily has actual existing knowledge of facts

that would suggest the statement as true.

 

This opinion is limited to the laws of the State of Maryland, the

General Corporation Law of the State of Delaware and the federal law of the

United States of America (collectively, “Applicable Law”), except that

Applicable Law includes only laws and regulations that a lawyer exercising

customary professional diligence would reasonably recognize as being directly

applicable to the transactions contemplated by the Asset Purchase Agreement. We

express no opinion as to choice of law or conflicts of law rules or the laws of

any states or jurisdictions other than as specified above.

 

Statements in this opinion as to the legality, validity, binding effect

and enforceability of the Asset Purchase Agreement are subject to limitations

imposed by bankruptcy, insolvency, reorganization, moratorium or similar laws

and related court decisions of general applicability relating to or affecting

creditors’ rights generally and to the application of general equitable

principles.

 

In addition, without limitation of any of the foregoing, we express no

opinion herein as to (i) any provision of the Asset Purchase Agreement that

provides for indemnification to the extent such provision may be limited by

applicable law, (ii) any consents of third parties that may be required in

connection with the transfer and assignment of any of the Assets or the effects

of the failure to have obtained any such consents that may be required, (iii)

bulk transfer or sales laws, (iv) matters arising under the Communications Act

of 1934, as amended, or the laws, rules, regulations or policies of the Federal

Communications Commission, or (v) antitrust laws.

 

Based upon the foregoing, subject to the assumptions, limitations and

exceptions contained herein, we are of the opinion that:

 

	

  1.

  	

   

  	

  Each

  Maryland Corporate Seller is a corporation duly organized, validly existing

  and in good standing under the laws of the State of Maryland.

  
	

   

  	

   

  	

   

  
	

  2.

  	

   

  	

  The

  Maryland LLC Seller is a limited liability company duly organized, validly

  existing, and in good standing under the laws of the State of Maryland.

  
	

   

  	

   

  	

   

  
	

  3.

  	

   

  	

  The

  execution, delivery and performance by each Seller of the Asset Purchase

  Agreement and each of the Ancillary Documents to which it is a

  

 

2

 

	

   

  	

   

  	

  party

  and the consummation by Sellers of the transactions contemplated thereby have

  been duly authorized by all necessary corporate or other required action on

  the part of each Seller.

  
	

   

  	

   

  	

   

  
	

  4.

  	

   

  	

  The

  Asset Purchase Agreement and each of the Ancillary Documents have been duly

  executed and delivered by each Seller that is a party thereto, and the Asset

  Purchase Agreement constitutes a legal, valid and binding obligation,

  enforceable against each Seller in accordance with its terms.

  

 

We express no opinion as to the effect of the violation of any law or

regulation that may be applicable to the Sellers as a result of the involvement

of parties other than the Sellers in the transactions contemplated by the Asset

Purchase Agreement because of the legal or regulatory status of such other

parties or because of any other facts specifically pertaining to any of them.

 

The information set forth herein is as of the date hereof.  We assume no obligation to advise you of

changes that may thereafter be brought to our attention.  Our opinions are based on statutory

provisions and judicial decisions in effect at the date hereof, and we do not

opine with respect to any law, regulation, rule or governmental policy that may

be enacted or adopted after the date hereof nor assume any responsibility to

advise you of future changes in our opinions.

 

This

letter is solely for your information in connection with the consummation of

the transactions contemplated by the Asset Purchase Agreement and is not to be

reproduced, quoted, in whole or in part, or otherwise referred to in any of

your financial statements or public releases, nor is it to be filed with any

governmental agency or relied upon by any

other person or for any purposes whatsoever without the prior written consent

of a member of this firm.

 

	

   

  	

  Very

  truly yours,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  THOMAS & LIBOWITZ, P.A.

  

 

3

 

EXHIBIT

2

 

DRAFT

 

                        , 2002

 

Gentlemen:

 

We have acted as

special communications counsel for Sinclair Broadcast Group, Inc., a Maryland

corporation, Sinclair Media II, Inc., a Maryland corporation, and SCI-Licensee

LLC, a Maryland limited liability company (collectively, the “Companies”),

and have represented the Companies in connection with the Asset Purchase

Agreement, dated as of April 18, 2002 

(“Agreement”), among the Companies and Tribune Broadcasting, Inc.

(“Buyer”), only as Federal Communications Commission (“FCC”)

counsel.  This opinion is being

delivered pursuant to Section 8.2 (f) of the Agreement.  In delivering this opinion, we are engaged

and acting solely as special communications counsel for the Companies, and we

are not engaged or acting as counsel of any type for you or any other person or

entity.  When used herein, “or” shall

mean “and/or” unless the context otherwise requires.  All capitalized terms used herein and not otherwise defined herein

shall have the meanings assigned to them in the Agreement.

 

This opinion is

limited strictly to matters arising under the Communications Act of 1934, as

amended, and the published rules, regulations, and policies promulgated

thereunder by the FCC (collectively, “Communications Laws”), and we

express no opinion on any other matter whatsoever.  Furthermore, this opinion is limited to the opinions expressly

stated herein.  No implication shall be

drawn from anything herein that has the effect of extending any such opinion

beyond what is expressly stated in such opinion.

 

In delivering this

opinion, we have assumed without investigation the genuineness of all

signatures, the legal capacity of all natural persons, the authenticity of all

documents examined by us, whether or not they are originals, the conformity of

all copies or facsimile transmissions to the originals of the same, whether or

not they are certified to be true copies, the conformity of all unexecuted

documents presented to us as final versions thereof to the executed originals

of the same, and the accuracy and completeness of all public records,

including, but not limited to, those of the FCC.

 

The opinions

expressed in this letter are based upon the current law and facts presently

known to us, and are not guarantees or assurances of any future fact, event,

occurrence, omission, or condition or that any law, statute, rule, regulation,

policy, order, case, or interpretation of the same will not change in the

future.  Moreover, this opinion

addresses matters only as of the date of this opinion and we specifically

disclaim all responsibility whatsoever for advising you of changes in matters

addressed herein occurring after such date.

 

 

We have undertaken

no on-site inspection, independent evaluation of the technical aspects, or

visual or aural monitoring whatsoever of the Companies, properties of the

Companies, or television stations WTTV, Bloomington, Indiana and WTTK, Kokomo,

Indiana (collectively, the “Stations”), nor have we examined the actual

day-to-day operations of the Stations, and, accordingly, we express no opinion

with respect to such matters.  Except as

otherwise specifically stated herein, we have undertaken no independent inquiry

whatsoever of any of the matters addressed in this opinion.  Furthermore, although we have no firsthand

knowledge of the citizenship, attributable or non-attributable media interests,

or character or other qualifications under the Communications Laws of the

Companies, principals of the Companies, or any other person or entity having

any present or proposed connection with the Companies, we are presently aware

of no facts that lead us to believe that any of the opinions expressed below,

as qualified and limited by this letter, are untrue in any material respect.

 

As used in this

letter, the phrases “our knowledge,” “known to us,” or “we are presently aware”

or similar phrases mean the current actual knowledge, that is, the conscious

awareness of facts or other information, of lawyers currently affiliated with

this firm who have given substantive legal attention to representation of the

Companies in connection with the transactions contemplated under the Agreement,

including but not limited to the preparation of this letter.

 

We express no

opinion whatsoever in this letter as to your qualifications under the

Communications Laws, or such qualifications of your assigns, if any, to have an

ownership interest in or to control, directly or indirectly, any license or

other authorization issued by the FCC or any person or entity holding such

license or authorization.

 

In connection with

the issuance of this letter, we have examined only the publicly available

records of the principal office of the FCC located in Washington, D.C. as

of                           2002,

together with such provisions of the Communications Laws as we have deemed

necessary as a basis for the opinions expressed below.  With respect to questions of fact relevant

to the opinions expressed herein, we have assumed and relied, without

independent inquiry or verification by us, upon the accuracy and completeness

of:  (a) all statements, certifications,

representations and warranties set forth in the Agreement and in the

applications on FCC Form 314 filed with the FCC on                       , 2002, requesting FCC consent to the

assignment of the Stations to Buyer; and (b) the information located in the

publicly available electronic databases and the publicly available files in the

public reference room of the FCC in Washington, D.C. at the times inspected

that relate to the Stations (such FCC information, the “FCC Review Materials”).  We have not examined or investigated the

records which may be available in any other office within the FCC.  You should be aware that certain records of

the FCC are public as a matter of law (for example, under the federal Freedom

of Information Act).  Such records,

however, may not have been included in the FCC Review Materials at the time

that we examined those materials in connection with this opinion.  Accordingly, we express no opinion regarding

the completeness of the FCC Review Materials at the time we reviewed them.  Furthermore, there may be records of matters

pending at the FCC that were not available for inspection by the public as a

matter of law that we did not examine.

 

2

 

Based upon the

foregoing, and subject in all respects to the qualifications and limitations

set forth in this letter, we are of the opinion that:

 

1.     The Companies have been authorized by the FCC to hold the FCC

licenses, permits and authorizations as listed in Exhibit A hereto (the

“FCC Licenses”).  All of such FCC

Licenses are in full force and effect. 

The FCC Licenses include all FCC licenses, permits and authorizations

necessary to operate the Stations on the frequencies and in the communities of

license listed in Exhibit A.

 

2.             The FCC has granted its consent to

the assignment of the Stations to Buyer (the “FCC Consent”).  The time within which any party in interest

other than the FCC may seek administrative or judicial reconsideration or

review of such consent has expired and, to our knowledge, no petition for such

reconsideration or review was timely filed with the FCC or with a court of

competent jurisdiction.  The normal time

within which the FCC may review such consent on its own motion has expired and,

to our knowledge, the FCC has not undertaken such review.

 

3.             Except for rulemaking proceedings

or similar proceedings of general applicability to entities such as the

Companies or to facilities such as the Stations, to our knowledge, there is not

now pending any action or proceeding by or before the FCC with respect to the

Stations that would reasonably be expected to have a material adverse effect

upon the Stations.

 

This opinion is

(i) solely for your information in connection with the transactions

contemplated under the Agreement, (ii) not to be relied upon by any other

person or entity for any reason (iii) not to be quoted in whole or in part or

otherwise referred to in any document except as directly a part of and related

to such transactions, and (iv), except as otherwise required by applicable law,

not to be filed with or provided to any government agency or any other entity

or person whatsoever.

 

	

   

  	

  Very truly yours,

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  SHAW PITTMAN

  

 

3

 

EXHIBIT

3

 

DRAFT

 

[Date]

 

Sinclair Broadcast Group, Inc.

Sinclair Communications, Inc.

Sinclair Media II, Inc.

SCI-Indiana Licensee, LLC

10706 Beaver Dam Road

Cockeysville, MD 21030

 

	

  Re:

  	

  Asset Purchase Agreement, dated as of April 18,

  2002, by and among Sinclair Broadcast Group, Inc., Sinclair Communications,

  Inc., Sinclair Media II, Inc., SCI-Indiana Licensee, LLC and Tribune

  Broadcasting Company (the “Agreement”)

  

 

Ladies and Gentlemen:

 

Reference is made to the Agreement relating to the sale by Sellers of

the assets of broadcast television stations WTTV-TV (Indianapolis, IN) and

WTTK-TV (Kokomo, IN) to Buyer, as contemplated by the Agreement.  I am counsel to and Assistant Secretary of

Buyer and as such I am familiar with the transactions contemplated by the

Agreement.  Capitalized terms not

defined herein have the meanings specified in the Agreement.

 

Pursuant to the requirements of Section 8.3(f) of the Agreement, this

will advise you that in the opinion of the undersigned:

 

1.                                       Buyer is a corporation duly organized,

validly existing and in good standing under the laws of the State of Delaware.

 

2.                                       The execution, delivery and performance

by Buyer of the Agreement and each of the Ancillary Documents to which it is a

party and the consummation by Buyer of the transactions contemplated thereby

have been duly authorized by all necessary corporate or other required action

on the part of Buyer.

 

3.                                       The Agreement and each of the Ancillary

Documents to which Buyer is a party have been duly executed and delivered by

Buyer, and the Agreement constitutes a legal, valid and binding obligation,

enforceable against Buyer in accordance with its terms.

 

For the purpose of rendering the foregoing opinions, I have relied, as

to various questions of fact material to such opinions, upon the

representations made in the Agreement and upon certificates of officers of

Buyer.  I have examined originals, or

copies of originals certified to my satisfaction, of such agreements,

documents, certificates and other statements of government officials and other

instruments material to such opinions. 

I have also examined such questions 

 

 

of law and have satisfied myself as to such matters of fact, in each

case, as I have deemed relevant and necessary as a basis for this opinion.  I have assumed the authenticity of all

documents submitted to me as originals, the genuineness of all signatures, the

legal capacity of all natural persons and the conformity with the original

documents of any copies thereof submitted to me for my examination.

 

The opinions rendered above are limited to the General Corporation Law

of the State of Delaware, the federal laws of the United States of America and

the laws of the State of Illinois.

 

This opinion letter is being delivered solely for the benefit of the

persons to whom it is addressed, accordingly, it may not be quoted, filed with

any governmental authority or other regulatory agency or otherwise circulated

or utilized for any other purpose without my prior written consent.

 

Very truly yours,

 

 

Mark W. Hianik

 

2AMENDMENT TO PROMISSORY NOTE

Exhibit

10.1

 

AMENDMENT TO EXECUTIVE

STOCK PLEDGE, SECURITY AND

RETENTION AGREEMENT

 

This agreement is to amend certain provisions of that

certain Executive Stock Pledge, Security and Retention Agreement dated April

18, 2001 (the “Pledge Agreement”) from Kevin G. Kerns (“Executive”) and payable

to Apropos Technology, Inc., an Illinois corporation (the “Company”).  Terms used herein but not defined herein

shall have the meanings ascribed to such terms as set forth in the Pledge

Agreement.

 

The reference in the second sentence of Section 2 of

the Pledge Agreement to one year from the date hereof is replaced with two

years from the date hereof.

 

Agreed and accepted to this 25th day of March, 2002.

 

	

  /s/ Kevin G. Kerns

  	

   

  	

   

  	

   

  	

   

  	

  Apropos Technology, Inc.

  
	

  Executive

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  By:

  	

   /s/ Frank

  Leonard

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Its: Chief Financial Officer

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]