UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
One)
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from
____________ to ____________.
Commission File Number : 000-26076
SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 52-1494660
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(Address of principal executive offices)
(410) 467-5005
(Registrant's telephone number, including area code)
|
NONE
(Former name, former address and former fiscal
year-if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No[ ]
As of November 9, 1998 there are 46,928,331 shares of Class A Common Stock, $.01 par value, 49,585,328 shares of Class B Common Stock, $.01 par value and 39,581 shares of Series B Preferred Stock, $.01 par value, convertible into 287,898 shares of Class A Common Stock, of the Registrant issued and outstanding.
In addition, 2,000,000 shares of $200 million aggregate liquidation value 115/8% High Yield Trust Offered Preferred Securities of Sinclair Capital, a subsidiary trust of Sinclair Broadcast Group, Inc. are issued and outstanding.
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1998
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1997 and
September 30, 1998................................................ 3
Consolidated Statements of Operations for the Three Months and Nine
Months Ended September 30, 1997 and 1998............................ 4
Consolidated Statement of Stockholders' Equity for the Nine Months
Ended September 30, 1998............................................ 5
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1998.................................. 6
Notes to Unaudited Consolidated Financial Statements................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....................... 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................. 23
Signature......................................................... 24
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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, SEPTEMBER 30,
ASSETS 1997 1998
--------------- ----------------
CURRENT ASSETS:
Cash and cash equivalents ............................................................ $ 139,327 $ 7,408
Accounts receivable, net of allowance for doubtful accounts .......................... 123,018 153,094
Current portion of program contract costs ............................................ 46,876 66,930
Prepaid expenses and other current assets ............................................ 4,673 47,476
Deferred barter costs ................................................................ 3,727 6,882
Refundable income taxes .............................................................. 10,581 10,581
Broadcast assets held for sale ....................................................... -- 34,242
Deferred tax asset .................................................................. 2,550 7,070
----------- -----------
Total current assets .......................................................... 330,752 333,683
PROGRAM CONTRACT COSTS, less current portion ............................................. 40,609 61,599
LOANS TO OFFICERS AND AFFILIATES ......................................................... 11,088 10,242
PROPERTY AND EQUIPMENT, net .............................................................. 161,714 285,422
OTHER ASSETS ............................................................................. 168,095 46,930
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ............................................. 1,321,976 3,109,953
----------- -----------
Total Assets ......................................................................... $ 2,034,234 $ 3,847,829
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ..................................................................... $ 5,207 $ 30,682
Accrued liabilities .................................................................. 40,532 104,418
Current portion of long-term liabilities-
Notes payable and commercial bank financing ...................................... 35,215 37,500
Notes and capital leases payable to affiliates ................................... 3,073 3,481
Program contracts payable ........................................................ 66,404 92,522
Deferred barter revenues ............................................................. 4,273 6,873
----------- -----------
Total current liabilities ............................................... 154,704 275,476
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing .......................................... 1,022,934 2,265,497
Notes and capital leases payable to affiliates ....................................... 19,500 20,417
Program contracts payable ............................................................ 62,408 95,254
Deferred tax liability ............................................................... 24,092 127,242
Other long-term liabilities .......................................................... 3,611 31,170
----------- -----------
Total liabilities ........................................................ 1,287,249 2,815,056
----------- -----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES ........................................... 3,697 3,643
----------- -----------
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUB-
SIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES .................................... 200,000 200,000
----------- -----------
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY:
Series B Preferred stock, $.01 par value, 10,000,000 shares authorized and 1,071,381
and 39,581 shares issued and outstanding, respectively ............................... 10 --
Series D Preferred stock, $.01 par value, 3,450,000 shares authorized, issued
and outstanding ...................................................................... 35 35
Class A Common stock, $.01 par value, 100,000,000 and 500,000,000 shares authorized
and 27,466,860 and 46,855,622 shares issued and outstanding, respectively ............ 274 469
Class B Common stock, $.01 par value, 70,000,000 and 140,000,000 shares authorized
and 50,872,864 and 49,621,364 shares issued and outstanding .......................... 510 496
Additional paid-in capital ............................................................. 552,557 767,905
Additional paid-in capital - equity put options ........................................ 23,117 113,502
Additional paid-in capital - deferred compensation ..................................... (954) (6,924)
Accumulated deficit .................................................................... (32,261) (46,353)
----------- -----------
Total stockholders' equity ............................................... 543,288 829,130
----------- -----------
Total Liabilities and Stockholders' Equity ............................... $ 2,034,234 $ 3,847,829
=========== ===========
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The accompanying notes are an integral part of these unaudited consolidated statements.
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- ---------------------
1997 1998 1997 1998
------ ------ ----- -----
REVENUES:
Station broadcast revenues, net of agency commissions .................. $ 113,327 $ 184,945 $ 333,028 $ 451,210
Revenues realized from station barter arrangements ..................... 11,419 20,036 31,289 45,135
--------- --------- --------- ---------
Total revenues .................................................. 124,746 204,981 364,317 496,345
--------- --------- --------- ---------
Program and production ................................................. 22,016 39,145 68,776 95,213
Selling, general and administrative .................................... 27,003 45,296 78,637 105,004
Expenses realized from station barter arrangements ..................... 9,976 17,005 26,279 37,967
Amortization of program contract costs and net
realizable value adjustments ....................................... 16,151 20,046 47,069 50,589
Stock-based compensation ............................................... 117 956 350 2,327
Depreciation and amortization of property and equipment ................ 4,446 9,100 12,786 19,366
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ............. 14,325 31,009 51,717 66,180
--------- --------- --------- ---------
Total operating expenses ........................................ 94,034 162,557 285,614 376,646
--------- --------- --------- ---------
Broadcast operating income ...................................... 30,712 42,424 78,703 119,699
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount expense ..................... (25,349) (40,414) (77,342) (95,315)
Subsidiary trust minority interest expense ............................. (5,813) (5,813) (12,820) (17,438)
Gain on sale of broadcast assets ....................................... -- 6,798 -- 12,036
Unrealized loss on derivative instrument (see Note 11) ................. -- (10,150) -- (10,150)
Interest income ........................................................ 292 896 1,332 4,113
Other income (expense) ................................................. (11) 585 36 689
--------- --------- --------- ---------
Income (loss) before income tax provision ....................... (169) (5,674) (10,091) 13,634
INCOME TAX (PROVISION) BENEFIT ............................................. 70 3,500 4,170 (8,900)
--------- --------- --------- ---------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ................................ (99) (2,174) (5,921) 4,734
EXTRAORDINARY ITEM:
Loss on early extinguishment of debt net of related income tax
benefit of $7,370 .................................................. -- -- -- (11,063)
--------- --------- --------- ---------
NET LOSS ................................................................... $ (99) $ (2,174) $ (5,921) (6,329)
========= ========= ========= =========
Net loss available to common stockholders .................................. $ (274) $ (4,762) $ (6,096) (14,092)
========= ========= ========= =========
Basic loss per share before extraordinary item ............................. $ -- $ (0.05) $ (0.09) $ (0.03)
========= ========= ========= =========
Basic loss per common share ................................................ $ -- $ (0.05) $ (0.09) $ (0.15)
========= ========= ========= =========
Basic weighted average common shares outstanding ........................... 70,050 97,734 69,736 93,582
========= ========= ========= =========
Diluted loss per share before extraordinary item ........................... $ -- $ (0.05) $ (0.09) $ (0.03)
========= ========= ========= =========
Diluted loss per common share .............................................. $ -- $ (0.05) $ (0.09) $ (0.15)
========= ========= ========= =========
Diluted weighted average common and common equivalent shares
outstanding ............................................................. 78,538 99,339 77,858 95,540
========= ========= ========= =========
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The accompanying notes are an integral part of these unaudited consolidated statements.
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
ADDITIONAL
PAID-IN
SERIES B SERIES D CLASS A CLASS B ADDITIONAL CAPITAL -
PREFERRED PREFERRED COMMON COMMON PAID-IN EQUITY PUT
STOCK STOCK STOCK STOCK CAPITAL OPTIONS
---------- ---------- --------- -------- ---------- ----------
BALANCE, December 31, 1997 as previously
reported ................................ $ 10 $ 35 $ 137 $ 255 $ 552,949 $ 23,117
Two-for-one stock split .................. -- -- 137 255 (392) --
--------- --------- --------- --------- --------- ---------
BALANCE, December 31, 1997 as adjusted .... 10 35 274 510 552,557 23,117
Class B Common Stock converted
into Class A Common Stock ......... -- -- 14 (14) -- --
Series B Preferred Stock converted
into Class A Common Stock ......... (10) -- 76 -- (66) --
Dividends payable on Series D
Preferred Stock ................... -- -- -- -- -- --
Stock option grants ................... -- -- -- -- 7,196 --
Stock option grants exercised ......... -- -- -- -- 1,064 --
Class A Common Stock shares issued
pursuant to employee benefit
plans ............................... -- -- -- -- 1,482 --
Equity Put Options .................... -- -- -- -- (90,385) 90,385
Repurchase of 1,505,000 shares of
Class A Common Stock .............. -- -- (15) -- (26,650) --
Equity Put Option Premiums ............ -- -- -- -- (12,408) --
Issuance of Class A Common Stock ...... -- -- 120 -- 335,115 --
Amortization of deferred
compensation ...................... -- -- -- -- -- --
Net loss .............................. -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
BALANCE, September 30, 1998 ............... $ -- $ 35 $ 469 $ 496 $ 767,905 $ 113,502
========= ========= ========= ========= ========= =========
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ADDITIONAL
PAID-IN
CAPITAL- TOTAL
DEFERRED ACCUMULATED STOCKHOLDERS'
COMPENSATION DEFICIT EQUITY
------------- ----------- -----------
BALANCE, December 31, 1997 as previously
reported ................................... $ (954) $ (32,261) $ 543,288
Two-for-one stock split ................... -- -- --
--------- --------- ---------
BALANCE, December 31, 1997 as adjusted ...... (954) (32,261) 543,288
Class B Common Stock converted
into Class A Common Stock ........... -- -- --
Series B Preferred Stock converted
into Class A Common Stock ........... -- -- --
Dividends payable on Series D
Preferred Stock ..................... -- (7,763) (7,763)
Stock option grants ..................... (7,196) -- --
Stock option grants exercised ........... -- -- 1,064
Class A Common Stock shares issued
pursuant to employee benefit
plans ................................. -- -- 1,482
Equity Put Options ...................... -- -- --
Repurchase of 1,505,000 shares of
Class A Common Stock ................ -- -- (26,665)
Equity Put Option Premiums .............. -- -- (12,408)
Issuance of Class A Common Stock ........ -- -- 335,235
Amortization of deferred
compensation ........................ 1,226 -- 1,226
Net loss ................................ -- (6,329) (6,329)
--------- --------- ---------
BALANCE, September 30, 1998 ................. $ (6,924) $ (46,353) $ 829,130
========= ========= =========
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The accompanying notes are an integral part of these unaudited consolidated statements.
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................................................. $ (5,921) $ (6,329)
Adjustments to reconcile net loss to net cash flows from operating activities-
Extraordinary loss on early extinguishment of debt ................................ -- 18,433
Gain on sale of broadcast assets .................................................. -- (12,036)
Loss on derivative instrument ..................................................... -- 10,150
Amortization of debt discount ..................................................... -- 74
Depreciation and amortization of property and equipment ........................... 12,786 19,366
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ......................... 51,717 66,180
Amortization of program contract costs and net realizable value adjustments ....... 47,069 50,589
Amortization of deferred compensation ............................................. 350 1,226
Deferred tax benefit .............................................................. (4,751) (4,520)
Changes in assets and liabilities, net of effects of acquisitions and dispositions-
Decrease in accounts receivable, net .............................................. 15,421 7,275
Increase in prepaid expenses and other current assets ............................. (2,107) (1,011)
Increase (decrease) in accounts payable and accrued liabilities ................... (10,814) 33,779
Decrease in income taxes payable .................................................. (730) --
Net effect of change in deferred barter revenues
and deferred barter costs ...................................................... 695 (64)
Increase (decrease) in other long-term liabilities ................................ (169) 678
Decrease in minority interest ..................................................... (43) (54)
Payments on program contracts payable ................................................. (38,134) (45,082)
----------- -----------
Net cash flows from operating activities ...................................... 65,369 138,654
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ................................................. (13,240) (13,949)
Payments for acquisition of television and radio stations ............................. (184,813) (2,062,349)
Proceeds from sale of broadcasting assets ............................................. 2,000 273,298
Loans to officers and affiliates ...................................................... (832) (1,467)
Repayments of loans to officers and affiliates ........................................ 1,110 2,313
Distributions from Joint Venture ...................................................... 380 655
Payments relating to future acquisitions .............................................. -- (10,019)
----------- -----------
Net cash flows used in investing activities ....................................... (195,395) (1,811,518)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, commercial bank financing and capital leases ............. 126,500 1,799,670
Repayments of notes payable, commercial bank financing and capital leases ............ (684,632) (554,802)
Payments of costs relating to financing ............................................... (4,705) (11,169)
Proceeds from exercise of stock options ............................................... -- 1,064
Payment received upon execution of derivative instrument .............................. -- 9,450
Repurchases of the Company's Class A Company Stock .................................... (4,599) (26,665)
Net proceeds from issuance of Class A Common Stock .................................... 151,596 335,235
Net proceeds from the issuance of Series D Preferred Stock ............................ 167,472 --
Net proceed from issuance of 1997 Notes ............................................... 195,600 --
Net proceeds from subsidiary trust securities offering ................................ 192,849 --
Dividends paid on Series D Convertible Preferred Stock ................................ -- (7,763)
Payment of equity put option premium .................................................. (251) (1,499)
Repayments of notes and capital leases to affiliates .................................. (1,809) (2,576)
----------- -----------
Net cash flows from financing activities .......................................... 138,021 1,540,945
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................................. 7,995 (131,919)
CASH AND CASH EQUIVALENTS, beginning of period ............................................ 2,341 239,327
----------- -----------
CASH AND CASH EQUIVALENTS, end of period .................................................. $ 10,336 $ 107,408
=========== ===========
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The accompanying notes are an integral part of these unaudited consolidated statements.
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other consolidated subsidiaries, which are collectively referred to hereafter as "the Company, Companies, Sinclair or SBG." The Company owns and operates television and radio stations throughout the United States. Additionally, included in the accompanying consolidated financial statements are the results of operations of certain television stations pursuant to local marketing agreements (LMAs) and radio stations pursuant to joint sales agreements (JSAs).
INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the nine months ended September 30, 1997 and 1998 are unaudited, but in the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial position and results of operations, and cash flows for these periods.
As permitted under the applicable rules and regulations of the Securities and Exchange Commission, these financial statements do not include all disclosures normally included with audited consolidated financial statements, and, accordingly, should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 1996, and 1997 and for the years then ended. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year.
PROGRAMMING
The Companies have agreements with distributors for the rights to television programming over contract periods which generally run from one to seven years. Contract payments are made in installments over terms that are generally shorter than the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins and the program is available for its first showing. The portion of a program contract which becomes payable within one year is reflected as a current liability in the accompanying consolidated balance sheets.
The rights to program materials are reflected in the accompanying consolidated balance sheets at the lower of unamortized cost or estimated net realizable value. Estimated net realizable values are based upon management's expectation of future advertising revenues net of sales commissions to be generated by the program material. Amortization of program contract costs is generally computed under either a four year accelerated method or based on usage, whichever yields the greater amortization for each program. Program contract costs, estimated by management to be amortized in the succeeding year, are classified as current assets. Payments of program contract liabilities are typically paid on a scheduled basis and are not affected by adjustments for amortization or estimated net realizable value.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.
2. CONTINGENCIES AND OTHER COMMITMENTS:
Lawsuits and claims are filed against the Company from time to time in the ordinary course of business. These actions are in various preliminary stages, and no judgments or decisions have been rendered by hearing boards or courts. After reviewing these developments to date, it is Management's opinion that the outcome of such matters will not have a material adverse effect on the Company's financial position or results of operations.
3. FINANCIAL INFORMATION BY SEGMENT (IN THOUSANDS):
As of September 30, 1998, the Company consisted of two principal business segments - television broadcasting and radio broadcasting. As of the date hereof, the Company owns or provides programming services pursuant to LMAs to 56 television stations located in 36 geographically diverse markets in the continental United States. The Company owns or provides programming services pursuant to JSAs to 51 radio stations in 10 geographically diverse markets. Substantially all revenues represent income from unaffiliated companies.
TELEVISION TELEVISION
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
---- ---- ---- ----
Net broadcast revenues............................................ $ 96,245 $ 151,996 $ 287,616 $ 377,755
Barter revenues................................................... 10,842 18,433 29,622 41,724
------------ ------------ ----------- ------------
Total revenues.................................................... 107,087 170,429 317,238 419,479
------------ ------------ ----------- ------------
Station operating expenses........................................ 47,915 81,377 140,562 191,133
Depreciation, program amortization and stock-based
compensation.................................................. 19,151 27,862 57,518 68,331
Amortization of intangibles and other assets...................... 13,461 26,658 44,362 54,760
------------ ------------ ---------- -----------
Station broadcast operating income................................ $ 26,560 $ 34,532 $ 74,796 $ 105,255
============ =========== ========== ===========
Total assets...................................................... $ 1,575,512 $ 3,319,940 $1,575,512 $ 3,319,940
============ =========== ========== ===========
Capital expenditures.............................................. $ 4,549 $ 4,873 $ 10,790 $ 11,003
============ =========== ========== ===========
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RADIO RADIO
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
---- ---- ---- ----
Net broadcast revenues............................................ $ 17,082 $ 32,949 $ 45,412 $ 73,455
Barter revenues................................................... 577 1,603 1,667 3,411
------------ ----------- ----------- ------------
Total revenues.................................................... 17,659 34,552 47,079 76,866
------------ ----------- ----------- ------------
Station operating expenses........................................ 11,080 20,069 33,130 47,051
Depreciation, program amortization and stock-based
compensation.................................................. 1,563 2,240 2,687 3,951
Amortization of intangibles and other assets...................... 864 4,351 7,355 11,420
------------ ----------- ---------- -----------
Station broadcast operating income................................ $ 4,152 $ 7,892 $ 3,907 $ 14,444
============ =========== ========== ===========
Total assets...................................................... $ 305,264 $ 527,889 $ 305,264 $ 527,889
============ =========== ========== ===========
Capital expenditures.............................................. $ 405 $ 777 $ 2,450 $ 2,946
============ =========== =========== ===========
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4. SUPPLEMENTAL CASH FLOW INFORMATION (IN THOUSANDS):
During the nine months ended September 30, 1997 and 1998, the Company's supplemental cash flow information is as follows:
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1998
---- ----
Interest payments............................................................... $ 83,279 $ 101,610
============ ===========
Subsidiary trust minority interest payments..................................... $ 11,819 $ 17,438
============ ===========
Income tax payments............................................................. $ 5,798 $ 1,930
============ ===========
Capital lease obligations incurred.............................................. $ 10,973 $ 3,807
============ ===========
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5. EARNINGS PER SHARE:
The basic and diluted earnings per share and related computations are as follows (in thousands, except per share data):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
---- ---- ---- ----
Weighted-average number of common shares...................... 70,050 97,734 69,736 93,582
Diluted effect of outstanding stock options .................. 404 1,317 34 1,670
Diluted effect of conversion of preferred shares.............. 8,084 288 8,088 288
------------- ------------ ------------- -----------
Diluted weighted-average number of common and common
equivalent shares outstanding............................. 78,538 99,339 77,858 95,540
============ ============ ============ ===========
Net loss...................................................... $ (99) $ (2,174) $ (5,921) $ (6,329)
Preferred stock dividends payable............................. (175) (2,588) (175) (7,763)
------------- ------------- ------------- ------------
Net loss available to common stockholders..................... $ (274) $ (4,762) $ (6,096) $ (14,092)
============= ============= ============= ============
Basic loss per common share
before extraordinary items............................... $ - $ (0.05) $ (0.09) $ (0.03)
============= ============ ============ ============
Basic loss per common share................................... $ - $ (0.05) $ (0.09) $ (0.15)
============= ============ ============ ============
Diluted loss per common share
before extraordinary items............................... $ - $ (0.05) $ (0.09) $ (0.03)
============= ============ ============ ============
Diluted loss per common share................................. $ - $ (0.05) $ (0.09) $ (0.15)
============= ============ ============ ============
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6. 1998 BANK CREDIT AGREEMENT:
In order to expand its borrowing capacity to fund future acquisitions and obtain more favorable terms with its banks, the Company obtained a new $1.75 billion senior secured credit facility (the "1998 Bank Credit Agreement"). The 1998 Bank Credit Agreement was executed in May of 1998 and includes (i) a $750.0 million term loan facility repayable in consecutive quarterly installments commencing on March 31, 1999 and ending on September 15, 2005; and (ii) a $1.0 billion reducing Revolving Credit Facility. Availability under the Revolving Credit Facility reduces quarterly, commencing March 31, 2001 and terminating on September 15, 2005. Not
more than $350.0 million of the Revolving Credit Facility will be available for issuances of letters of credit. The 1998 Bank Credit Agreement also includes a standby uncommitted multiple draw term loan facility of $400.0 million. The Company is required to prepay the term loan facility and reduce the revolving credit facility with (i) 100% of the net proceeds of any casualty loss or condemnation; (ii) 100% of the net proceeds of any sale or other disposition by the Company of any assets in excess of $100.0 million in the aggregate for any fiscal year, to the extent not used to acquire new assets; and (iii) 50% of excess cash flow (as defined) if the Company's ratio of debt to EBITDA (as defined) exceeds a certain threshold. The 1998 Bank Credit Agreement contains representations and warranties, and affirmative and negative covenants, including limitations on additional indebtedness, customary for credit facilities of this type. The 1998 Bank Credit Agreement is secured only by a pledge of the stock of each subsidiary of the Company other than KDSM, Inc., KDSM Licensee, Inc., Cresap Enterprises, Inc. and Sinclair Capital. The Company is also required to satisfy certain financial covenants.
As a result of entering into the Company's 1998 Bank Credit Agreement, the Company incurred debt acquisition costs of $10.9 million and recognized an extraordinary loss of $11.1 million net of a tax benefit of $7.4 million. The extraordinary loss represents the write-off of debt acquisition costs associated with indebtedness replaced by the new facility.
7. COMMON STOCK SPLIT:
On April 30, 1998, the Company's Board of Directors approved a two-for-one stock split of its Class A and Class B Common Stock to be distributed in the form of a stock dividend. As a result of this action, 23,963,013 and 24,984,432 shares of Class A and Class B Common Stock, respectively, were issued to shareholders of record as of May 14, 1998. The stock split has been retroactively reflected in the accompanying consolidated financial statements and related notes thereto.
8. EQUITY OFFERING:
On April 14, 1998, the Company and certain stockholders of the Company completed a public offering of 12,000,000 and 4,060,374 shares, respectively, of Class A Common Stock (the Common Stock Offering). The shares were sold for an offering price of $29.125 per share and generated proceeds to the Company of $335.2 million, net of underwriters' discount and other offering costs of approximately $14.3 million. The Company utilized the proceeds to repay indebtedness under the 1997 Bank Credit Agreement.
9. ACQUISITIONS AND DISPOSITIONS:
1998 ACQUISITIONS AND DISPOSITIONS
Heritage Acquisition. In July 1997, the Company entered into a purchase agreement to acquire certain assets of the radio and television stations of Heritage for approximately $630 million (the "Heritage Acquisition"). Pursuant to the Heritage Acquisition, and after giving effect to the STC Disposition, Entercom Disposition and Centennial Disposition and a third party's exercise of its option to acquire radio station KCAZ in Kansas City, Missouri, the Company has acquired or is providing programming services to three television stations in two separate markets and 13 radio stations in four separate markets. In July 1998, the Company acquired three radio stations in the New Orleans, Louisiana market and simultaneously disposed of two of those stations (see the Centennial Disposition below).
STC Disposition. In February 1998, the Company entered into agreements to sell to STC Broadcasting of Vermont, Inc. ("STC") two television stations and the Non-License Assets and rights to program a third television station, all of which were acquired in the Heritage Acquisition. In April 1998, the Company closed on the sale of the non-license assets of the three television stations in the Burlington, Vermont and Plattsburgh, New York market for aggregate consideration of approximately $70.0 million. During the third quarter of 1998, the Company sold the license assets for a sales price of $2.0 million.
Montecito Acquisition. In February 1998, the Company entered into an agreement to acquire all of the capital stock of Montecito Broadcasting Corporation ("Montecito") for approximately $33 million (the "Montecito Acquisition"). Montecito owns all of the issued and outstanding stock of Channel 33, Inc. which owns and operates KFBT-TV in Las Vegas, Nevada. Currently, the Company is a Guarantor of Montecito Indebtedness of approximately $33.0 million. The Company cannot acquire Montecito unless and until FCC rules permit SBG to own the broadcast license for more than one station in the Las Vegas market, or unless the Company no longer owns the broadcast license for KVWB-TV in Las Vegas. At any time the Company, at its option, may transfer the rights to acquire the stock of Montecito. In April 1998 the Company began programming KFBT-TV through an LMA upon expiration of the applicable HSR Act waiting period.
WSYX Acquisition and Sale of WTTE License Assets. In April 1998, the Company exercised its option to acquire the non-license assets of WSYX-TV in Columbus, Ohio from River City Broadcasting, LP ("River City") for an option exercise price and other costs of approximately $228.6 million. In August 1998, the Company exercised its option to acquire the WSYX License Assets for an option exercise price of $2.0 million and simultaneously sold the WTTE license assets to Glencairn, Ltd. for a sales price of $2.3 million. In connection with the sale of the WTTE license assets, the Company recognized a $2.3 million gain.
SFX Disposition. In May 1998, the Company completed the sale of three radio stations to SFX Broadcasting, Inc. for aggregate consideration of approximately $35.0 million ("the SFX Disposition"). The radio stations sold are located in the Nashville, Tennessee market. In connection with the disposition, the Company recognized a $5.2 million gain on the sale.
Lakeland Acquisition. In May 1998, the Company acquired 100% of the stock of Lakeland Group Television, Inc. ("Lakeland") for cash payments of approximately $53.0 million (the "Lakeland Acquisition"). In connection with the Lakeland Acquisition, the Company now owns television station KLGT-TV in Minneapolis/St. Paul, Minnesota.
Entercom Disposition. In June 1998, the Company completed the sale of seven radio stations acquired in the Heritage acquisition. The seven stations are located in the Portland, Oregon and Rochester, New York markets and were sold for aggregate consideration of approximately $126.9 million. .
Sullivan Acquisition. In July 1998, the Company acquired 100% of the stock of Sullivan Broadcast Holdings, Inc. and Sullivan Broadcasting Company II, Inc. for cash payments of approximately $962.3 million (the "Sullivan Acquisition"). The Company financed the acquisition by utilizing indebtedness under the 1998 Bank Credit Agreement. In connection with the acquisition, the Company has acquired the right to program 12 additional television stations in 10 separate markets. In a subsequent closing, which is expected to occur in the fourth quarter of 1998, the Company will acquire the stock of a company that owns the license assets of six of the stations. In addition, the Company expects to enter into new LMA agreements with respect to four of the stations and will continue to program two of the television stations pursuant to existing LMA agreements.
Max Media Acquisition. In July 1998, the Company directly or indirectly acquired all of the equity interests of Max Media Properties LLC, for $252.2 million (the "Max Media Acquisition"). The Company financed the acquisition by utilizing existing cash balances and indebtedness
under the 1998 Bank Credit Agreement. In connection with the acquisition, the Company now owns or provides programming services to nine additional television stations in six separate markets and eight radio stations in two separate markets.
Centennial Disposition. In July 1998, the Company completed the sale of the assets of radio stations WRNO-FM, KMEZ-FM and WBYU-AM in New Orleans, Louisiana to Centennial Broadcasting for $16.1 million in cash and recognized a loss on the sale of $2.7 million. The Company acquired KMEZ-FM in connection with the River City Acquisition in May of 1996 and acquired WRNO-FM and WBYU-AM in New Orleans from Heritage Media Group, Inc. ("Heritage") in July 1998. The Company was required to divest WRNO-FM, KMEZ-FM and WBYU-AM to meet certain regulatory ownership guidelines.
Greenville Acquisition. In July 1998, the Company acquired three radio stations in the Greenville/Spartansburg market from Keymarket Radio of South Carolina, Inc. for a purchase price consideration involving the forgiveness of approximately $8.0 million of indebtedness to Sinclair. Concurrently with the acquisition, the Company acquired an additional two radio stations in the same market from Spartan Broadcasting for a purchase price of approximately $5.2 million.
Radio Unica Disposition. In July 1998, the Company completed the sale of KBLA-AM in Los Angeles, California to Radio Unica, Corp. for approximately $21.0 million in cash. In connection with the disposition, the Company recognized a $8.4 million gain.
PENDING ACQUISITIONS AND DISPOSITIONS
Petracom Disposition. In July 1998, the Company entered into an agreement to sell to Petracom Media, Inc. the radio stations WGH-AM, WGH-FM and WFOG-FM in the Norfolk, Virginia market for approximately $23 million in cash (the "Petracom Disposition"). FCC restrictions required the Company to agree to divest certain of the radio stations it owns in the Norfolk, Virginia market by the time it completed the Max Media acquisition. The Company expects to complete the Petracom Disposition in the fourth quarter of 1998.
Buffalo Acquisition. In August 1998, the Company entered into an agreement with Western New York Public Broadcasting Association to acquire the television station WNEQ in Buffalo, NY for a purchase price of $33 million in cash (the "Buffalo Acquisition"). The Company expects to close the sale upon FCC approval and the termination of the applicable waiting period under the HSR Act. In addition, the sale is contingent upon FCC de-reservation of the station for commercial use.
Albany Acquisition. In August 1998, the Company entered into an agreement with WMHT Educational Telecommunications to acquire the television station WMHQ in Albany, NY for a purchase price of $23 million in cash (the "Albany Acquisition"). The Company expects to close the sale upon FCC approval and termination of the applicable waiting period under the HSR Act.
Guy Gannett Acquisition. In September 1998, the Company agreed to acquire from Guy Gannett Communications its television broadcasting assets for a purchase price of $310 million in cash (the "Guy Gannett Acquisition"). As a result of this transaction, the Company will acquire seven television stations in six markets. The FCC must approve the Guy Gannet Acquisition, which the Company expects to complete in the first quarter of 1999. The Company expects to finance the acquisition with a combination of bank borrowings, the issuance of debt or equity securities and the use of cash proceeds resulting from the Company's planned disposition of certain broadcast assets.
Ackerly Disposition. In September 1998, the Company agreed to sell WOKR-TV in Rochester, New York to the Ackerly Group, Inc. for a purchase price of $125 million (the "Ackerly Disposition"). The Company previously entered into an agreement to acquire WOKR-TV as part of the Guy Gannett Acquisition. The FCC must approve the disposition, which the Company expects to close in the first quarter of 1999.
10. INTEREST RATE DERIVATIVE AGREEMENTS:
As of September 30, 1998, the Company had several interest rate swap agreements relating to the Company's indebtedness that expire from July 7, 1999 to July 15, 2007. The swap agreements set rates in the range of 5.48% to 8.13%. The notional amounts related to these agreements were $1.5 billion at September 30, 1998, and decrease to $200 million through the expiration dates. The Company has no intentions of terminating these instruments prior to their expiration dates unless it were to prepay a portion of its bank debt.
The floating interest rates are based upon the three month London Interbank Offered Rate (LIBOR) rate, and the measurement and settlement is performed quarterly. Settlements of these agreements are recorded as adjustments to interest expense in the relevant periods. Premiums paid under certain of these agreements were approximately $146,000 in 1998 and are amortized over the life of the agreements as a component of interest expense. The counter parties to these agreements are major national financial institutions. The Company estimates the aggregate cost to retire these instruments at September 30, 1998 to be $14.0 million.
During 1998, FASB issued SFAS 133 "Accounting for Derivative Instruments and for Hedging Activities" ("FAS 133"). FAS 133 establishes accounting and reporting standards for derivative investments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. FAS 133 is effective for the Company beginning January 1, 2000. The Company is evaluating its eventual impact on its financial statements.
11. TREASURY OPTION DERIVATIVE INSTRUMENT:
In August 1998, the Company entered into a treasury option derivative contract (the "Option Derivative"). The Option Derivative contract provides for 1) an option exercise date of September 30, 2000, 2) a notional amount of $300 million and 3) a five-year treasury strike rate of 6.14%. If the interest rate yield on five year treasury securities is less than the strike rate on the option exercise date, the Company would be obligated to pay five consecutive annual payments in an amount equal to the strike rate less the five year treasury rate multiplied by the notional amount beginning September 30, 2001 through September 30, 2006. If the interest rate yield on five year treasury securities is greater than the strike rate on the option exercise date, the Company would not be obligated to make any payments.
Upon the execution of the Option Derivative contract, the Company received a cash payment representing an option premium of $9.5 million which was recorded in "Other long-term liabilities" in the accompanying balance sheets. The Company is required to periodically adjust its liability to the present value of the future payments of the settlement amounts based on the forward five year treasury rate at the end of an accounting period. This fair market value adjustment resulted in an unrealized loss of $10.2 million for the three and nine months ended September 30, 1998.
12. EQUITY PUT AND CALL OPTIONS
In July 1998, the Company entered into put and call option contracts related to the Company's common stock (the "July Options"). In September 1998, the Company entered into additional put and call option contracts related to the Company's common stock (the "September Options"). These option contracts are settled in cash or net physically in shares, at the election of the Company. The Company entered into these option contracts for the purpose of hedging the dilution of the Company's common stock upon the exercise of stock options granted. The July Options included 2,700,000 call options for common stock and 2,700,000 put options for common stock, with a strike price of $33.27 and $28.93 per common share, respectively. The September Options included 700,000 call options for common stock and 467,000 put options for common stock, with a strike price of $17.53 and $28.00 per common share, respectively. In connection with the July Options, the Company is required to make quarterly payments of $1.1 million beginning October 2, 1998 through July 2, 2001. The Company recorded this obligation as a liability and a reduction of additional paid-in capital in the accompanying balance sheet. In addition, an option premium amount of $700,000 was paid related to the September Options which was recorded as a reduction of additional paid-in capital. To the extent that the Company entered into put option contracts, the additional paid-in capital amounts were adjusted accordingly and reflected as Equity Put Options in the accompanying balance sheet as of September 30, 1998.
13. UNAUDITED PRO FORMA SUMMARY RESULTS OF OPERATIONS:
The following unaudited pro forma summary presents the consolidated results of operations for the nine months ended September 30, 1997 and 1998 as if significant acquisitions and dispositions completed through September 30, 1998 had occurred at the beginning of 1997. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had significant acquisitions and dispositions been made as of that date or of results which may occur in the future.
September, 30,
1997 1998
---- ----
Net revenues.................................. $551,250 $ 597,710
========= ===========
Loss before extraordinary item................ $(27,766) $ (9,899)
========= ============
Net Loss...................................... $(34,046) $ (20,962)
========= ===========
Basic and diluted loss per common share before
extraordinary item.......................... $ (0.51) $ (0.19)
========= ===========
Net loss available to common shareholders..... $(41,809) $ (28,725)
========= ===========
Basic and diluted loss per common share....... $ (0.60) $ (0.31)
========= ===========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the audited financial statements and Management's Discussion and Analysis contained in the Company's Form 10-K, as amended, for the fiscal year ended December 31, 1997.
The matters discussed below include forward-looking statements. Such statements are subject to a number of risks and uncertainties, such as the impact of changes in national and regional economies, successful integration of acquired television and radio stations (including achievement of synergies and cost reductions), pricing fluctuations in local and national advertising, availability of capital and volatility in programming costs. Additional risk factors regarding the Company are set forth in the Company's prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) on April 19, 1998.
The following table sets forth certain operating data for the three months and nine months ended September 30, 1997 and 1998:
OPERATING DATA (dollars in thousands, except per share data):
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THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1997 1998 1997 1998
----------- ----------- ----------- -----------
Net broadcast revenues (a) ........................ $ 113,327 $ 184,945 $ 333,028 $ 451,210
Barter revenues ................................... 11,419 20,036 31,289 45,135
----------- ----------- ----------- -----------
Total revenues .................................... 124,746 204,981 364,317 496,345
----------- ----------- ----------- -----------
Operating costs (b) ............................... 49,019 84,441 147,413 200,217
Expenses from barter arrangements ................. 9,976 17,005 26,279 37,967
Depreciation, amortization and stock-based
compensation (c) ............................... 35,039 61,111 111,922 138,462
----------- ----------- ----------- -----------
Broadcast operating income ........................ 30,712 42,424 78,703 119,699
Interest expense .................................. (25,349) (40,414) (77,342) (95,315)
Subsidiary trust minority interest expense (d) .... (5,813) (5,813) (12,820) (17,438)
Interest and other income ......................... 281 1,481 1,368 4,802
Net gain on sale of assets ........................ -- 6,798 -- 12,036
Unrealized loss on derivative instrument .......... -- (10,150) -- (10,150)
----------- ----------- ----------- -----------
Net income (loss) before income taxes ............. (169) (5,674) (10,091) 13,634
Income tax (provision) benefit .................... 70 3,500 4,170 (8,900)
----------- ----------- ----------- -----------
Net income (loss) before extraordinary item ....... (99) (2,174) (5,921) 4,734
Extraordinary item ................................ -- -- -- (11,063)
----------- ----------- ----------- -----------
Net loss .......................................... $ (99) $ (2,174) $ (5,921) $ (6,329)
=========== =========== =========== ===========
BROADCAST CASH FLOW (BCF) DATA:
Television BCF (e) ............................. $ 50,508 $ 78,886 $ 148,540 $ 196,552
Radio BCF (e) .................................. 6,829 14,750 14,397 30,230
----------- ----------- ----------- -----------
Consolidated BCF (e) ........................... $ 57,337 $ 93,636 $ 162,937 $ 226,782
=========== =========== =========== ===========
Television BCF margin (f) ...................... 52.5% 51.9% 51.6% 52.0%
Radio BCF margin (f) ........................... 40.0% 44.8% 31.7% 41.2%
Consolidated BCF margin (f) .................... 50.6% 50.6% 48.9% 50.3%
OTHER DATA:
Adjusted EBITDA (g) ............................ $ 53,876 $ 88,918 $ 152,491 $ 213,079
Adjusted EBITDA margin (f) ..................... 47.5% 48.1% 45.8% 47.2%
After tax cash flow (h) ........................ $ 21,269 $ 33,106 $ 54,006 $ 85,809
Program contract payments ...................... 11,875 14,617 38,134 45,082
Corporate expense .............................. 3,461 4,718 10,446 13,703
Capital expenditures ........................... 4,954 5,650 13,240 13,949
Cash flows from operating activities ........... 22,886 71,151 65,369 138,654
Cash flows from investing activities ........... (81,593) (1,163,190) (195,395) (1,811,518)
Cash flows from financing activities ........... 66,303 779,314 138,021 1,540,945
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a) "Net broadcast revenue" is defined as broadcast revenue net of agency commissions.
b) "Operating costs" include program and production expenses and selling, general and administrative expenses.
c) "Depreciation, amortization and stock-based compensation" includes amortization of program contract costs and net realizable value adjustments, depreciation and amortization of property and equipment, amortization of acquired intangible broadcasting assets and other assets and stock-based compensation related to the issuance of common stock pursuant to stock option and other employee benefit plans.
d) Subsidiary trust minority interest expense represents distributions on the HYTOPS.
e) "Broadcast cash flow" is defined as broadcast operating income plus corporate expenses, depreciation and amortization (including film amortization and amortization of deferred compensation), less cash payments for program rights. Cash program payments represent cash payments made for current programs payable and do not necessarily correspond to program usage. The Company has presented broadcast cash flow data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies; however, there can be no assurance that it is comparable. However, broadcast cash flow does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flows, is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Management believes the presentation of broadcast cash flow (BCF) is relevant and useful because 1) BCF is a measurement utilized by lenders to measure the Company's ability to service its debt, 2) BCF is a measurement utilized by industry analysts to determine a private market value of the Company's television and radio stations and 3) BCF is a measurement industry analysts utilize when determining the operating performance of the Company.
f) "BCF margin" is defined as broadcast cash flow divided by net broadcast revenues. "Adjust EBITDA margin" is defined as adjusted EBITDA divided by net broadcast revenues.
g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate expenses and is a commonly used measure of performance for broadcast companies. The Company has presented Adjusted EBITDA data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies; however, there can be no assurances that it is comparable. Adjusted EBITDA does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flows, is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Management believes the presentation of Adjusted EBITDA is relevant and useful because 1) Adjusted EBITDA is a measurement utilized by lenders to measure the Company's ability to service its debt, 2) Adjusted EBITDA is a measurement utilized by industry analysts to determine a private market value of the Company's television and radio stations and 3) Adjusted EBITDA is a measurement industry analysts utilize when determining the operating performance of the Company.
h) "After tax cash flow" is defined as net income (loss) available to common shareholders, plus extraordinary items (before the effect of related tax benefits) plus depreciation and amortization (excluding film amortization), stock-based compensation, unrealized loss on derivative instrument, the deferred tax provision (or minus the deferred tax benefit) and minus the gain on sale of assets. The Company has presented after tax cash flow data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies; however, there can be no assurances that it is comparable. After tax cash flow is presented here not as a measure of operating results and does not purport to represent cash provided by operating activities. After tax cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Management believes the presentation of after tax cash flow is relevant and useful because 1) ATCF is a measurement utilized by lenders to measure the Company's ability to service its debt, 2) ATCF is a measurement utilized by industry analysts to determine a private market value of the Company's television and radio stations and 3) ATCF is a measurement analysts utilize when determining the operating performance of the Company.
Net broadcast revenues increased to $184.9 million for the three months ended September 30, 1998 from $113.3 million for the three months ended September 30, 1997, or 63.2%. The increase in net broadcast revenues for the three months ended September 30, 1998 comprised $71.1
million related to businesses acquired or disposed of by the Company in 1998 (the "1998 Transactions") and $0.5 million related to an increase in net broadcast revenue on a same station basis. On a same station basis, revenues were negatively impacted by a decrease in revenues in the Baltimore, Milwaukee, Norfolk and Raleigh markets. The Company's television stations in these markets experienced a decrease in ratings which resulted in a loss in revenues and market revenue share. In the Raleigh and Norfolk television markets, the Company's affiliation agreements with Fox expired on August 31, 1998 which further contributed to a decrease in ratings and revenues. In the Baltimore market, the addition of a new UPN affiliate competitor contributed to a loss in ratings and market revenue share. An additional factor which negatively impacted station revenues for the three month period was the loss of General Motors advertising revenues caused by a strike of its employees. These decreases in revenue on a same station basis were offset by revenue growth at certain of the Company's other television and radio stations combined with an increase in network compensation revenue and political advertising revenue.
Net broadcast revenues increased to $451.2 million for the nine months ended September 30, 1998 from $333.0 million for the nine months ended September 30, 1997, or 35.5%. The increase in net broadcast revenues for the nine months ended September 30, 1998 comprised $112.5 million related to the 1998 Transactions and $5.7 million related to an increase in net broadcast revenues on a same station basis, which increased by 1.7%. On a same station basis, revenues were affected by the same circumstances noted above.
Operating costs increased to $84.4 million for the three months ended September 30, 1998 from $49.0 million for the three months ended September 30, 1997, or 72.2%. Operating costs increased to $200.2 million for the nine months ended September 30, 1998, from $147.4 million for the nine months ended September 30, 1997, or 35.8%. The increase in operating costs for the three months ended September 30, 1998 as compared to the three months ended September 30, 1997 comprised $34.2 million related to the 1998 Transactions, $1.3 million related to an increase in corporate overhead expenses, offset by a $0.1 million decrease in operating costs on a same station basis. The increase in operating costs for the nine months ended September 30, 1998 as compared to the nine months ended September 30, 1997 comprised $49.5 million related to the 1998 Transactions and $3.3 million related to an increase in corporate overhead expenses. Operating costs on a same station basis remained relatively unchanged during these periods. The increase in corporate expenses for the three and nine months ended September 30, 1998 primarily resulted from an increase in legal fees and an increase in salary costs incurred to managing a larger base of operations.
Interest expense increased to $40.4 million for the three months ended September 30, 1998 from $25.3 million for the three months ended September 30, 1997, or 59.7%. Interest expense increased to $95.3 million for the nine months ended September 30, 1998 from $77.3 million for the nine months ended September 30, 1997, or 23.3%. The increase in interest expense for the three months and nine months ended September 30, 1998 primarily related to indebtedness incurred by the Company to finance acquisitions and LMA transactions consummated by the Company during 1998 (the "1998 Acquisitions"). Subsidiary Trust Minority Interest Expense of $5.8 million for the three months ended September 30, 1998 and $17.4 million for the nine months ended September 30, 1998 is related to the private placement of $200 million aggregate liquidation rate of 115/8% High Yield Trust Offered Preferred Securities (the "HYTOPS") completed March 12, 1997. The increase in Subsidiary Trust Minority Interest Expense for the
nine month period ended September 30, 1998 as compared to the nine month period ended September 30, 1997 related to the HYTOPS being outstanding for a partial period during 1997.
Interest and other income increased to $1.5 million for the three months ended September 30, 1998 from $0.3 million for the three months ended September 30, 1997. Interest and other income increased to $4.8 million for the nine months ended September 30, 1998 from $1.4 million for the nine months ended September 30, 1997. These increases were primarily due to higher average cash balances and related interest income for the nine month period ended September 30, 1998.
Income tax benefit increased to $3.5 million for the three months ended September 30, 1998 from an income tax benefit of $0.1 million for the three months ended September 30, 1997. The increase in the income tax benefit for the three months ended September 30, 1998 as compared to the three months ended September 30, 1997 primarily related to an increase in pre-tax loss. For the nine months ended September 30, 1998, the Company recorded a tax provision of $8.9 million on pre-tax income before extraordinary item of $13.6 million, an effective tax rate of 65.4%. In addition, the Company recorded an extraordinary loss of $11.1 million net of a related tax benefit of $7.4 million. The Company's effective tax rate on income before taxes and extraordinary items increased to 65.4% for the nine months ended September 30, 1998 as compared to 41.3% for the nine months ended September 30, 1997 because permanent differences between book and tax income are a higher percentage of pre-tax income for the nine month period ended September 30, 1998 than for the prior year period. This increase in permanent items primarily resulted from stock acquisitions consummated during 1998 including the Lakeland, Sullivan and Max Media acquisitions.
The net deferred tax liability increased to $120.2 million as of September 30, 1998 from $21.5 million as of December 31, 1997. The increase in the Company's net deferred tax liability as of September 30, 1998 as compared to December 31, 1997 primarily resulted from the Company recording a net deferred tax liability related to the stock acquisitions noted above.
Net loss for the three months ended September 30, 1998 was $2.2 million or $.02 per share compared to net loss of $0.1 million for the three months ended September 30, 1997. Net loss for the nine months ended September 30, 1998 was $6.3 million or $.07 per share compared to a net loss of $5.9 million or $.08 per share for the nine months ended September 30, 1997. Net loss increased for the nine months ended September 30, 1998 as compared to the nine months ended September 30, 1997 due to an increase in broadcast operating income, a gain on the sale of broadcast assets, an increase in interest and other income, offset by an increase in interest expense, an increase in subsidiary trust minority interest expense, the recognition of an unrealized loss of $10.2 million on a derivative instrument and the recognition of an extraordinary loss. The Company's extraordinary loss of $11.1 million net of a related tax benefit of $7.4 million resulted from the write-off of debt acquisition costs associated with indebtedness replaced by the 1998 Bank Credit Agreement. Net loss increased for the three months ended September 30, 1998 as compared to the three months ended September 30, 1997 because of the same factors noted above with the exception of subsidiary trust minority interest expense, which remained consistent for the periods.
As noted above, the Company's net loss for the three and nine months ended September 30, 1998 included recognition of a loss of $10.2 million on a treasury option derivative instrument. Upon execution of the treasury option derivative instrument, the Company received a cash
payment of $9.5 million. The treasury option derivative instrument will require the Company to make five annual payments equal to the difference between 6.14% and the interest rate yield on five year treasury securities on September 30, 2000 times the $300 million notional amount of the instrument. The loss recognized for the three months ended September 30, 1998 reflects an adjustment of the Company's liability under this instrument to the present value of future payments based on the two year forward five year treasury rate as of September 30, 1998. If the yield on five year treasuries at September 30, 2000 were to equal the two year forward five year treasury rate on September 30, 1998 (4.53%), Sinclair would be required to make five annual payments of approximately $4.8 million each. If the yield on five year treasuries declines further in periods before September 30, 2000, Sinclair will be required to recognize further losses. In any event, Sinclair will not be required to make any payments until September 30, 2000, and will never be required to make any payment if the five year treasury rate on that date is greater than 6.14%. Any payments on the instrument would likely be offset by reductions in the Company's interest rate on its floating rate debt or on any debt issued to redeem its 10% Senior Subordinated Notes due 2005, which are first callable on September 30, 2000.
Broadcast cash flow increased to $93.6 million for the three months ended September 30, 1998 from $57.3 million for the three months ended September 30, 1997, or 63.4%. Broadcast cash flow increased to $226.8 million for the nine months ended September 30, 1998 from $162.9 million for the nine months ended September 30, 1997, or 39.2%. The increase in broadcast cash flow for the three months ended September 30, 1998 comprised $36.6 million related to the 1998 Transactions offset by a $0.3 million decrease in broadcast cash flow on a same station basis, which decreased by 0.4%. The increase in broadcast cash flow for the nine months ended September 30, 1998 was comprised of $61.1 million related to the 1998 Transactions and $2.8 million related to an increase in broadcast cash flow on a same station basis, which increased by 1.6%. Broadcast cash flow for the three and six month periods on a same station basis was negatively impacted by decreases in revenue at certain of the Company's stations offset by certain other revenue increases as noted above.
The Company's broadcast cash flow margin remained consistent at 50.6% for the three months ended September 30, 1998 and 1997. The Company's broadcast cash flow margin increased to 50.3% for the nine months ended September 30, 1998 from 48.9% for the nine months ended September 30, 1997. The increase in broadcast cash flow margins for the nine months ended September 30, 1998 as compared to the nine months ended September 30, 1997 primarily resulted from a lag in program contract payments for certain of the television broadcasting assets acquired during 1998 of approximately $4.3 million and an increase in radio station broadcast cash flow margins. When comparing broadcast cash flow margins on a same station basis for the three months ended September 30, 1997 and 1998 margins decreased from 50.7% to 50.2%. When comparing broadcast cash flow margins on a same station basis for the nine months ended September 30, 1997 and 1998, margins remained consistent at 49.1%.
Adjusted EBITDA increased to $88.9 million for the three months ended September 30, 1998 from $53.9 million for the three months ended September 30, 1997, or 64.9%. Adjusted EBITDA increased to $213.1 million for the nine months ended September 30, 1998 from $152.5 million for the nine months ended September 30, 1997, or 39.7%. These increases in Adjusted EBITDA for the three and nine months ended September 30, 1998 as compared to the three and nine months ended September 30, 1997 resulted from the 1998 Acquisitions. The Company's Adjusted EBITDA margin increased to 48.1% for the three months ended September 30, 1998
from 47.5% for the three months ended September 30, 1997. The Company's Adjusted EBITDA margin increased to 47.2% for the nine months ended September 30, 1998 from 45.8% for the nine months ended September 30, 1997. Increases in Adjusted EBITDA margins for the three and nine months ended September 30, 1998 as compared to the three and nine months ended September 30, 1997 primarily resulted from the same circumstances affecting broadcast cash flow margin as noted above.
After tax cash flow increased to $33.1 million for the three months ended September 30, 1998 from $21.3 million for the three months ended September 30, 1997, or 55.4%. After tax cash flow increased to $85.8 million for the nine months ended September 30, 1998 from $54.0 million for the nine months ended September 30, 1997 or 58.9%. The increase in after tax cash flow for the three and nine months ended September 30, 1998 as compared to the three and nine months ended September 30, 1997 primarily resulted from an increase in broadcast operating income relating to the 1998 Transactions offset by an increase in interest expense and subsidiary trust minority interest expense related to the HYTOPS.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Company had $7.4 million in cash balances and excluding the effect of assets held for sale, working capital of approximately $24.0 million. The Company's decrease in cash to $7.4 million at September 30, 1998 from $139.3 million at December 31, 1997 primarily resulted from the 1998 Acquisitions. As of November 4, 1998 and based on trailing cash flow levels for the twelve months ended September 30, 1998, the Company had approximately $173.0 million available of current borrowing capacity under the Revolving Credit Facility (which represents the remaining balance available). The 1998 Bank Credit Agreement also provides for an incremental term loan commitment in the amount of up to $400 million which can be utilized upon approval by the Agent bank and the raising of sufficient commitments from banks to fund the additional loans.
The Company has current acquisition commitments of approximately $241.0 million net of proceeds anticipated from the sale of WOKR-TV to the Ackerly Group for $125.0 million (collectively, the "Pending Transactions"). In order to complete the Pending Transactions during the first quarter of 1999 and also remain in compliance with certain of its debt covenants, the Company estimates that it would be required to generate proceeds from station dispositions of approximately $100 million or alternatively raise proceeds from common or preferred stock securities issuances of approximately $50 million. The Company has announced that it intends to enter into agreements to sell selected television and radio stations with a value of up to $500 million during the fourth quarter of 1998 and early 1999 though it has not entered into any agreements for such sales, other than the WOKR-TV disposition referred to above. The Company's other primary sources of liquidity are cash provided by operations and availability under the Bank Credit Agreement. The Company anticipates that funds from operations, existing cash balances, the availability of the Revolving Credit Facility under the 1998 Bank Credit Agreement and the proceeds from the sale of certain stations will be sufficient to meet its working capital, capital expenditure commitments, debt service requirements and current acquisition commitments.
Net cash flows from operating activities increased to $138.7 million for the nine months ended September 30, 1998 from $65.4 million for the nine months ended September 30, 1997 primarily as a result of the 1998 Transactions. The Company made payments of interest on outstanding
indebtedness and subsidiary trust minority interest expense totaling $119.0 million during the nine months ended September 30, 1998 as compared to $95.1 million for the nine months ended September 30, 1997. Program rights payments for the nine months ended September 30, 1998 increased $6.9 million or 18.2%. This increase in program rights payments was comprised of $4.1 million related to the 1997 and 1998 Transactions and $2.9 million related to an increase in programming costs on a same station basis which increased 7.6%.
Net cash flows used in investing activities increased to $1.8 billion for the nine months ended September 30, 1998 from $195.4 million for the nine months ended September 30, 1997. For the nine months ended September 30, 1998, the Company made cash payments of approximately $2.1 billion related to the acquisition of television and radio broadcast assets primarily by utilizing available indebtedness under the 1998 Bank Credit Agreement. These payments included $230.6 million related to the WSYX Acquisition, $53.0 million related to the Lakeland Acquisition, $570.4 million related to the Heritage Acquisition, $962.3 million related to the Sullivan Acquisition, $239.4 million related to the Max Media Acquisition and $6.6 million related to other acquisitions. For the nine months ended September 30, 1998, the Company received approximately $273.3 million of cash proceeds related to the sale of certain television and radio broadcast assets which was primarily utilized to repay indebtedness under the 1998 Bank Credit Agreement. These cash proceeds included $126.9 million related to the Entercom Disposition, $72.0 million related to the STC Disposition, $35.0 million related to the SFX Disposition, $21.0 million related to the Radio Unica Disposition, $16.1 million related to the Centennial Disposition and $2.3 million related to the sale of other broadcast assets. For the nine months ended September 30, 1998, the Company made cash payments related to the Buffalo Acquisition of $3.3 million and made cash payments of $6.7 million for deposits and other costs related to other future acquisitions. The Company made payments for property and equipment of $13.9 million for the nine months ended September 30, 1998. The Company anticipates that future requirements for capital expenditures will include other acquisitions if suitable acquisitions can be identified on acceptable terms.
Net cash flows provided by financing activities increased to $1.5 billion for the nine months ended September 30, 1998 from $138.0 million for the nine months ended September 30, 1997. In April 1998, the Company and certain Series B Preferred stockholders of the Company completed a public offering of 12,000,000 and 4,060,374 shares, respectively of Class A Common Stock. The shares were sold for an offering price of $29.125 per share and generated proceeds to the Company of $335.2 million, net of underwriters' discount and other offering costs of approximately $14.3 million. The Company utilized proceeds to repay indebtedness under the 1997 Bank Credit Agreement. In May 1998, the Company entered into the 1998 Bank Credit Agreement in order to expand its borrowing capacity for future acquisitions and obtain more favorable terms with its banks. A portion of the proceeds of the initial borrowing under the 1998 Bank Credit Agreement was used to repay all outstanding indebtedness related to the 1997 Bank Credit Agreement. In addition, during September 1998, the Company repurchased 1,505,000 shares of its Class A Common Stock for an aggregate purchase price of $26.7 million, an average share price of $17.72.
YEAR 2000 COMPLIANCE
The Company has commenced a process to assure Year 2000 compliance of all hardware, software, broadcast equipment and ancillary equipment that are date dependent. The process involves four phases:
Phase I - Inventory and Data Collection. This phase involves an identification of all items that are date dependent. Sinclair commenced this phase in the second quarter of 1998, and has substantially completed this phase as of the date hereof.
Phase II - Compliance Requests. This phase involves requests to information technology systems vendors for verification that the systems identified in Phase I are Year 2000 compliant. Sinclair will identify and begin to replace items that cannot be updated or certified as compliant. Sinclair has completed the compliance request phase of its plan as of the date hereof. In addition, Sinclair has verified that its accounting, traffic, payroll, and local and wide area network hardware and software systems are compliant. In addition, Sinclair has determined that substantially all of its personal computers and PC applications are compliant. Sinclair is currently reviewing its newsroom systems, building control systems, security systems and other miscellaneous systems.
Phase III - Test, Fix and Verify. This phase involves testing all items that are date dependent and upgrading all non-compliant devices. Sinclair expects to complete this phase during the first and second quarters of 1999.
Phase IV - Final Testing, New Item Compliance. This phase involves review of all inventories for compliance and retesting as necessary. During this phase, all new equipment will be tested for compliance. Sinclair expects to complete this phase by the end of the third quarter of 1999.
To date, Sinclair believes that its major systems are Year 2000 compliant. This substantial compliance has been achieved without the need to acquire new hardware, software or systems other than in the ordinary course of replacing such systems. Sinclair is not aware of any non-compliance that would be material to repair or replace or that would have a material effect on Sinclair's business if compliance were not achieved. Sinclair does not believe that non-compliance in any systems that have not yet been reviewed would result in material costs or disruption. Neither is Sinclair aware of any non-compliance by its customers or suppliers that would have a material impact on Sinclair's business. Nevertheless, there can be no assurance that unanticipated non-compliance will not occur, and such non-compliance could require material costs to repair or could cause material disruptions if not repaired.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
10.1 Employment Agreement by and between Sinclair Broadcast Group, Inc. and
J. Duncan Smith dated as of June 12, 1998
10.2 Employment Agreement by and between Sinclair Broadcast Group, Inc. and
Frederick G. Smith dated as of June 30, 1998
10.3 Amended Employment Agreement by and between Sinclair Broadcast Group,
Inc. and David B. Amy dated as of September 15, 1998
10.4 Purchase Agreement by and between Guy Gannett Communications and
Sinclair Communications, Inc. dated as of September 4, 1998
10.5 Purchase Agreement by and between Sinclair Communications, Inc. and the
Ackerly Group, Inc. dated as of September 25, 1998
27 Financial Data Schedule
B) REPORTS ON FORM 8-K
The Company filed a current Report on Form 8-K/A dated September 14, 1998 reporting on items 5 and 7 to update pro forma financial information for the Company showing the effect of the Sullivan and Max Media acquisitions since January 1, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized in the city of Baltimore, Maryland on the 13th day of November, 1998.
SINCLAIR BROADCAST GROUP, INC.
by: /s/ David B. Amy
------------------------------
David B. Amy
Chief Financial Officer
Principal Accounting Officer
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of this 12th day of June 1998 (the "Effective Date"), between Sinclair Broadcast Group, Inc., a Maryland corporation ("SBG"), and J. Duncan Smith ("Employee").
R E C I T A L S
A. SBG, through its wholly owned subsidiaries and affiliates, owns or operates television and radio broadcast stations.
B. Employee is currently employed as a Vice President of SBG.
C. SBG desires to continue to employ Employee as a Vice President of SBG, and Employee desires to accept such employment.
D. SBG and Employee desire to set forth the terms of employment of Employee with SBG as a Vice President.
NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants herein contained, the parties hereto agree as follows:
1. DUTIES.
1.1. DUTIES UPON EMPLOYMENT. Upon the terms and subject to the other provisions of this Agreement, commencing on the date hereof (the "Effective Date"), Employee will continue to be employed by SBG in Baltimore, Maryland as Secretary to SBG. As Secretary, Employee will:
(a) report to the SBG Board of Directors (the "Board"), and the Chief Executive Officer of SBG (the "CEO"); and
(b) have such responsibilities and perform such duties as may from time to time be established by the CEO, and/or the Board.
1.2 PERFORMANCE OF SERVICES. While an employee of SBG, Employee agrees to contribute his best efforts and time to the business of SBG and shall render the services to the best of his ability on behalf of SBG. The Employee shall comply with all laws, statutes, rules and regulations relating to his services.
2. TERM.
2.1. TERM. The term of Employee's employment as a Vice President of
SBG under this Agreement (the "Employment Term") will begin on the Effective
Date and continue until his employment is terminated in accordance with Section
4. As used in this Agreement, an "employment year" is a twelve (12) month
period, beginning on January 1 and ending on the next following December 31;
provided, however, that the first "employment year" shall begin on the Effective
Date and shall end on December 31,1998.
2.2. AT WILL EMPLOYMENT. Notwithstanding anything else in this Agreement, including, without limitation, the provisions of Sections 2.1. and 3 regarding the employment term and compensation and benefits of Employee, respectively, the employment of Employee is not for a specified period of time, and SBG may terminate the employment of Employee with or without Cause (as defined below) at any time. There is not, nor will there be, unless in a writing signed by all of the parties to this Agreement, any express or implied agreement as to the continued employment of Employee.
3. COMPENSATION AND BENEFITS.
3.1 COMPENSATION. During each employment year, Employee shall be entitled to the compensation determined by the SBG Compensation Committee (the "Committee") after consulting with the CEO, which compensation may include the right to earn either discretionary cash or stock bonuses (the "Discretionary Bonuses") or incentive bonuses (the "Incentive Bonuses") (see Section 3.3 below with respect to Incentive Bonuses). Discretionary and Incentive Bonuses are sometimes collectively referred to herein as "Bonuses". All Bonuses shall be determined and payable after all financial data necessary for the determination of such is available to the Company. During the first year of employment pursuant to this Agreement, the Employee shall be paid based upon an annual base salary (the "Base Salary") of One Hundred Ninety Thousand Dollars ($190,000.00).
3.2 VACATION AND BENEFITS. During each twelve (12) month period during
the Employment Term, the Employee shall be entitled to a paid vacation of four
(4) weeks. The Employee shall schedule his vacation at such time or times as
shall be
approved by SBG, which approval shall not be unreasonably withheld.
3.3 INCENTIVE BONUSES.
3.3.1 INCENTIVE BONUS. In addition to the Base Salary and
Discretionary Bonus, if any, the Employee shall be entitled to receive with
respect to each calendar year (or portion thereof) during the Employment Term,
an Incentive Bonus in the event that the Broadcast Cash Flow (the "BCF"), as
defined below, of SBG for such year exceeds the BCF of SBG for the immediately
preceding year. The Incentive Bonus shall be paid by granting the Employee stock
options (the "Stock Options") to acquire a certain number of Class A Common
Shares of SBG (the "Option Shares") pursuant to the SBG Long Term Incentive Plan
currently in effect and in accordance with the FORM OF SINCLAIR BROADCAST GROUP,
INC. 1996 LONG-TERM INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AGREEMENT SPECIAL
PERFORMANCE OPTION (the "Stock Option Agreement") attached hereto as Schedule
3.3.1. BCF is defined below in Section 3.3.3. The percentage increase (the
"Percentage Increase") in BCF which is necessary for the Employee to earn an
Incentive Bonus, the number of Option Shares to be granted based upon the
Percentage Increase, and the exercise price (the "Exercise Price") of the Option
Shares appear in Exhibit A attached hereto.
3.3.2 AFTER ACQUIRED OR DISPOSED OF BROADCAST PROPERTIES.
If during any year after the Effective Date (including the year of during which the Effective Date occurs), SBG, or any of its direct or indirect subsidiaries or affiliates, shall acquire, program, or commence program services for, one or more television or radio stations [including pursuant to any Local Marketing Agreement Time Brokerage Agreement (as those terms are customarily used or defined by the FCC or in the broadcast industry in general) or any similar type services agreements], for the purposes of calculating the Incentive Bonus for the year in which the acquisition has occurred, the BCF for the immediately preceding year shall be increased to reflect such acquisition, or if in any year SBG, of any of it direct or indirect subsidiaries or affiliates, directly or indirectly disposes of, or shall cease to provide programming services with respect to one or more television or radio stations, for the purposes of calculating the Incentive Bonus with respect to the year in which such disposition has occurred, the BCF of the immediately preceding year shall be decreased to reflect such disposition, by an amount equal to the Average Broadcast Flow (the "ABCF"), calculated as of the date of the acquisition or disposition, of the television or radio station (or stations) so acquired or disposed of, multiplied by a fraction, (a) the numerator of which is the number of days remaining in such year following such acquisition or disposition and (b) the denominator
of which is 365. ABCF is defined in Section 3.3.3 below.
3.3.3 DEFINITION OF BCF AND ABCF. As used in this Section 3.3,
the term BCF shall mean, for any period, operating income (from the ownership
of, or the providing of program services to, television or radio stations) plus
(a) non-cash expenses, including depreciation and amortization expense,
programming amortization expense, barter expense and deferred compensation
expense, plus (b) corporate expense (including any special bonuses paid to other
executive officers of SBG), less (c) film contract payments, cash payments on
deferred compensation and non-cash broadcast revenue, in each case as such items
shall be determined in accordance with generally accepted accounting principals
("GAAP"); and ABCF shall mean the average annual BCF of a television or radio
station for the three (3) full calendar years of such station prior to its
acquisition by SBG or one of its direct or indirect subsidiaries or affiliates.
3.3.4 PAYMENT. The Incentive Bonus shall be paid to the Employee as soon as practicable, but in no event later than March 31 following the end of each calendar year. The amount of Option Shares due under the Incentive Bonus with respect to any period of less than an entire year shall be determined by multiplying the Option Shares that would have been payable with respect to the whole of such year (using actual results for such year and assuming that the Agreement had been in effect the entire year) by a fraction, the numerator of which is the number of days of such year and the denominator of which is 365.
4. EMPLOYMENT TERMINATION.
4.1. TERMINATION OF EMPLOYMENT.
(a) The Employment Term will end, and the parties will not have any rights or obligations under this Agreement (except for the rights and obligations under those Sections of this Agreement which are continuing and will survive the end of the Employment Term, as specified in Section 8.10 of this Agreement) on the earliest to occur of the following events (the "Termination Date"):
(1) the death of Employee;
(2) the Disability (as defined in Section 4.1(b) below) of Employee;
(3) the termination of Employee's employment by Employee;
(4) the termination of Employee's employment by SBG for Cause (as defined in Section 4.1(c) below); or
(5) the termination of Employee's employment by SBG without Cause.
(b) For the purposes of this Agreement, "Disability" means Employee's inability, whether mental or physical, to perform the normal duties of Employee's position for ninety (90) days (which need not be consecutive) during any twelve (12) consecutive month period, and the effective date of such Disability shall be the day next following such ninetieth (90th) day. If SBG and Employee are unable to agree as to whether Employee is disabled, the question will be decided by a physician to be paid by SBG and designated by SBG, subject to the approval of Employee (which approval may not be unreasonably withheld) whose determination will be final and binding on the parties.
(c) For the purposes of this Agreement, "Cause" means any of the following: (i) the wrongful appropriation for Employee's own use or benefit of property or money entrusted to Employee by SBG, (ii) the commission of any act involving moral turpitude, (iii) Employee's continued willful disregard of Employee's duties and responsibilities hereunder after written notice of such disregard and the reasonable opportunity to correct such disregard, (iv) Employee's continued violation of SBG policy after written notice of such violations (such policy may include policies as to drug or alcohol abuse) and the reasonable opportunity to cure such violations, (v) any action by Employee which is reasonably likely to jeopardize a Federal Communications Commission license of any broadcast station owned directly or indirectly by SBG or programmed by SBG, (vi) the continued insubordination of Employee and/or Employee's repeated failure to follow the reasonable directives of the CEO or the Board after written notice of such insubordination or the failure to follow such reasonable directives, or (vii) the repeated unsatisfactory performance by Employee of Employee's job or duties hereunder as determined by the CEO or the Board in his or their sole discretion after written notice thereof.
4.2. TERMINATION PAYMENTS.
(a) If Employee's employment with SBG terminates pursuant to Sections 4.1(a)(1), 4.1(a)(2), 4.1(a)(3), or 4.1(a)(5), Employee (or in the event of the death
of Employee, the person or persons designated by Employee in a written instrument delivered to SBG prior to Employee's death or, if no such written designation has been made, Employee's estate) will be entitled to receive, and SBG will pay to the same, all of the following:
(1) the salary payable to Employee through the Termination Date;
and
(2) the benefits, if any, set forth in the Long Term Incentive Plan, upon the terms and conditions set forth therein, but only to the extent that Employee is entitled to such benefits pursuant to the provisions of the Long Term Incentive Plan.
(b) If Employee's employment with SBG terminates pursuant to Section 4.1(a)(4), Employee will be entitled to receive, and SBG will pay to Employee, only the salary payable to Employee through the Termination Date (and Employee shall not be entitled to any benefits under the Long Term Incentive Plan); provided, however, that if Employee's employment terminates pursuant to Subsection (vii) of Section 4.1(c), Employee shall be entitled to the benefits, if any, set forth in the Long Term Incentive Plan in accordance with the terms of Subsection (3) of this Section 4.2.
(c) If the Employee's employment with SBG terminates pursuant to
Section 4.1(a)(5), the Employee, in addition to the benefits he is entitled to
receive pursuant to Section 4.2(a), shall be entitled to receive, and SBG shall
pay to the Employee, one (1) month's base salary in effect at the time of
termination (not including bonuses) for each full year of his continuous
employment with SBG or its predecessor regardless of whether the employment has
been pursuant to this Agreement or has been prior to this Agreement.
(d) The termination payments (the "Termination Payments") described in this Section 4 will be in lieu of any other termination or severance payments required by any other SBG policy (whether existing previously or currently or adopted in the future) or, to the fullest extent permissible thereunder, or under applicable law (including unemployment compensation) and the Termination Payments will constitute Employee's exclusive rights and remedies with respect to termination of Employee's employment.
5. CONFIDENTIALITY AND NON-COMPETITION.
5.1. CONFIDENTIAL INFORMATION.
(a) Employee will:
(1) keep all Confidential Information in trust for the use and benefit of SBG and any affiliate or subsidiary (collectively, the "Company Entities") and broadcast stations owned or operated directly or indirectly by any of the Company Entities;
(2) not, except as required by Employee's duties under this Agreement, authorized in writing by SBG or as required by law or any order, rule, or regulation of any court or governmental agency (but only after notice to SBG of such requirement), at any time during or after the termination of Employee's employment with SBG, directly or indirectly, use, publish, disseminate, distribute, or otherwise disclose any Confidential Information (as defined below);
(3) take all reasonable steps necessary, or reasonably requested by any of the Company Entities, to ensure that all Confidential Information is kept confidential for the use and benefit of the Company Entities; and
(4) upon termination of Employee's employment or at any other time any of the Company's Entities in writing so request, promptly deliver to such Company Entity all materials constituting Confidential Information relating to such Company Entity (including all copies) that are in Employee's possession or under Employee's control. If requested by any of the Company Entities to return any Confidential Information, Employee will not make or retain any copy of or extract from such materials.
(b) For purposes of this Section 5.1, Confidential Information means any proprietary or confidential information of or relating to any of the Company Entities that is not generally available to the public. Confidential Information includes all information developed by or for any of the Company Entities concerning marketing used by any of the Company Entities, suppliers, any customers (including advertisers) with which any of the Company Entities has dealt prior to the Termination Date, plans for development of new services and expansion into new areas or markets, internal operations, financial information, operations, budgets, and any trade secrets or proprietary information of any type owned by any of the Company Entities, together with all written, graphic, other materials relating to all or any of the same, and any trade secrets as defined in the Maryland
Uniform Trade Secrets Act, as amended from time to time.
5.2. NON-COMPETITION.
(a) During the Employment Term and for twelve (12) months thereafter, if Employee's employment is terminated for any reason other than pursuant to Section 4.1(a)(5), Employee will not, directly or indirectly, engage in the following conduct within any Designated Market Area (as defined below) or any Metro Survey Area (as defined below) in which any of the Company Entities owns or operates a broadcast station immediately prior to such termination:
(i) participate in any activity involved in the ownership or operation of a broadcast station (other than, during the term, broadcast stations owned or operated by any of the Company Entities);
(ii) hire, attempt to hire, or to assist any other person or entity in hiring or attempting to hire any employee of any of the Company Entities or any person who was an employee of any of the Company Entities within the prior one (1) year period; or
(iii) solicit, in competition with any of the Company Entities, the business of any customer of any of the Company Entities or any entity whose business any of the Company Entities solicited during the one (1) year period prior to Employee's termination.
(b) Notwithstanding anything else contained in this Section 5.2, Employee may own, for investment purposes only, up to five percent (5%) of the stock of any publicly-held corporation whose stock is either listed on a national stock exchange or on the NASDAQ National Market System if Employee is not otherwise affiliated with such corporation.
(c) As used herein, "participate" means lending one's name to, acting as consultant or advisor to, being employed by or acquiring any direct or indirect interest in any business or enterprise, whether as a stockholder, partner, officer, director, employee, consultant, or otherwise.
(d) In the event that (i) SBG places all or substantially all of its broadcast stations up for sale within one (1) year after termination of Employee's employment hereunder, or (ii) Employee's employment is terminated in connection with the
disposition of all or substantially all of such stations (whether by sale of assets, equity, or otherwise), Employee agrees to be bound by, and to execute such additional instruments as may be necessary or desirable to evidence Employee's agreement to be bound by, the terms and conditions of any non-competition provisions relating to the purchase and sale agreement for such stations, without any consideration beyond that expressed in this Agreement, provided that the purchase and sale agreement is negotiated in good faith with customary terms and provisions, and the transaction contemplated thereby is consummated. Notwithstanding the foregoing, in no event shall Employee be bound by, or obligated to enter into, any non-competition provisions referred to in this Section 5.2(d) which extend beyond Twelve (12) months (including in the case of terminations pursuant to Section 4.1(a)(5)), in each case from the date of termination of Employee's employment hereunder or whose scope extends the scope of the non-competition provisions set forth in Section 5.2(a) (as limited by Sections 5.2(b) and (c) above).
(e) The twelve (12) month time period referred to above shall be tolled on a day-for-day basis for each day during which Employee participates in any activity in violation of this Section 5.2 of this Agreement so that Employee is restricted from engaging in the conduct referred to in this Section 5.2 for a full twelve (12) months.
(f) For purposes of this Section 5.2, designated market area shall mean the Designated Market Area ("DMA") as defined by The A.C. Nielsen Company (or such other similar term as is used from time to time in the television broadcast community).
(g) For purposes of this Section 5.2, Metro Survey Area shall mean the Metro Survey Area ("MSA"), as defined from time to time by the Arbitron Company (or such other similar term as is used from time to time in the radio broadcast community).
5.3. ACKNOWLEDGMENT. Employee acknowledges and agrees that this Agreement (including, without limitation, the provisions of Sections 5 and 6) is a condition of Employee's continued employment by SBG, Employee's continued access to Confidential Information, Employee's continued eligibility to receive the items referred to in Sections 3 (including, without limitation, Employee's eligibility to participate in the Long Term Incentive Plan), Employee's continued advancement at SBG, and Employee being eligible to receive other special benefits at SBG; and further, that this Agreement is entered into, and is reasonably necessary, to protect the Company Entities' previous and future investment in Employee's training and development, and to protect the goodwill and other business interests of the Company Entities.
6. REMEDIES.
6.1. INJUNCTIVE RELIEF. The covenants and obligations contained in
Section 5 relate to matters which are of a special, unique, and extraordinary
character and a violation of any of the terms of such Section will cause
irreparable injury to the Company Entities, the amount of which will be
impossible to estimate or determine and which cannot be adequately compensated.
Therefore, the Company Entities will be entitled to an injunction, restraining
order or other equitable relief from any court of competent jurisdiction
(subject to such terms and conditions that the court determines appropriate),
restraining any violation or threatened violation of any of such terms by
Employee and such other persons as the court orders. The parties acknowledge and
agree that judicial action, rather than arbitration, is appropriate with respect
to the enforcement of the provisions of Section 5. The forum for any litigation
hereunder shall be the Circuit Court of Baltimore County or the United States
District Court (Northern Division) sitting in Baltimore, Maryland.
6.2. CUMULATIVE RIGHTS AND REMEDIES. Rights and remedies provided by Sections 5 and 6 are cumulative and are in addition to any other rights and remedies any of the Company Entities may have at law or equity.
7. ABSENCE OF RESTRICTIONS. Employee warrants and represents that Employee is not a party to or bound by any agreement, contract, or understanding, whether of employment or otherwise, with any third person or entity which would in any way restrict or prohibit Employee from undertaking or performing employment with SBG in accordance with the terms and conditions of this Agreement.
8. MISCELLANEOUS.
8.1. ATTORNEYS' FEES. In any action, litigation, or proceeding (collectively, "Action") between the parties arising out of or in relation to this Agreement, the prevailing party in the Action will be awarded, in addition to any damages, injunctions, or other relief, and without regard to whether such Action is prosecuted to final appeal, such party's costs and expenses, including reasonable attorneys' fees.
8.2. HEADINGS. The descriptive headings of the Sections of this Agreement are inserted for convenience only, and do not constitute a part of this Agreement.
8.3. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) oral or written confirmation of a receipt of a facsimile transmission, (b) confirmed delivery of a standard overnight courier or when delivered by hand, or (c) the expiration of five (5) business days after the date mailed, postage prepaid, to the parties at the following addresses:
If to SBG to: Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: Chief Executive Officer
Copy to: Thomas & Libowitz, P.A.
Suite 1100
100 Light Street
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas
If to Employee to: J. Duncan Smith
2000 W. 41st Street
Baltimore, Maryland 21211
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or to such other address as will be furnished in writing by any party. Any such notice or communication will be deemed to have been given as of the date so mailed.
8.4. ASSIGNMENT. SBG may assign this Agreement to any company which acquires all or substantially all of its assets or into which it merges regardless of whether it survives as the successor, and in such an event and so long as his employment continues hereunder, Employee hereby consents and agrees to be bound by any such assignment by SBG. Employee may not assign, transfer, or delegate Employee's rights or obligations under this Agreement and any attempt to do so is void. This Agreement is binding on and inures to the benefit of the parties, their permitted successors and assigns, and the executors, administrators, and other legal representatives of Employee. No other third parties, other than Company Entities, shall have, or are intended to have, any rights under this Agreement.
8.5. COUNTERPARTS. This Agreement may be signed in one or more counterparts.
8.6. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF MARYLAND (REGARDLESS OF THE LAWS THAT MIGHT BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS (INCLUDING VALIDITY, CONSTRUCTION, EFFECT, AND PERFORMANCE.)
8.7. SEVERABILITY. If the scope of any provision contained in this Agreement is too broad to permit enforcement of such provision to its full extent, then such provision shall be enforced to the maximum extent permitted by law, and Employee hereby consents that such scope may be reformed or modified accordingly, and enforced as reformed or modified, in any proceeding brought to enforce such provision. Subject to the immediately preceding sentence, whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision, to the extent of such prohibition or invalidity, shall not be deemed to be a part of this Agreement, and shall not invalidate the remainder of such provision or the remaining provisions of this Agreement.
8.8. ENTIRE AGREEMENT.This Agreement, the Non-Qualified Stock Option Agreement, and the Long Term Incentive Plan constitute the entire agreement, and supersede all prior agreements and understandings, written or oral, among the parties with respect to the subject matter of this Agreement and the Long Term Incentive Plan. This Agreement may not be amended or modified except by agreement in writing, signed by the party against whom enforcement of any waiver, amendment, modification, or discharge is sought.
8.9. INTERPRETATION. This Agreement is being entered into among competent and experienced business professionals (who have had an opportunity to consult with counsel), and any ambiguous language in this Agreement will not necessarily be construed against any particular party as the drafter of such language.
8.10. CONTINUING OBLIGATIONS. The following provisions of this Agreement will continue and survive the termination of this Agreement: 4.2, 5, 6, 7 and 8.
8.11. TAXES. SBG may withhold from any payments under this Agreement all applicable federal, state, city, or other taxes required by applicable law to be so withheld.
8.12. ARBITRATION AND EXTENSION OF TIME. Except as specifically provided in Section 6, any dispute or controversy arising out of or relating to this
Agreement shall be determined and settled by arbitration in Baltimore, Maryland in accordance with the Commercial Rules of the American Arbitration Association then in effect, the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq., and the Maryland Uniform Arbitration Act, and judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction. The expenses of the arbitration shall be borne by the non-prevailing party to the arbitration, including, but not limited to, the cost of experts, evidence, and legal counsel. Whenever any action is required to be taken under this Agreement within a specified period of time and the taking of such action is materially affected by a matter submitted to arbitration, such period shall automatically be extended by the number of days, plus ten (10) that are taken for the determination of that matter by the arbitrator(s). Notwithstanding the foregoing, the parties agree to use their best reasonable efforts to minimize the costs and frequency of arbitration hereunder.
THIS AGREEMENT CONTAINS A WAIVER OF YOUR RIGHT TO A TRIAL BY COURT OR JURY
IN EMPLOYMENT DISPUTES.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first written above.
SINCLAIR BROADCAST GROUP, INC.
BY:
EMPLOYEE:
Exhibit A
J. DUNCAN SMITH EMPLOYMENT AGREEMENT
OF
JUNE 12, 1998
The following Chart reflects the relationship of the increase in BCF to the number of shares for which Options will be granted:
Percentage Increase Shares for Which
in BCF Options are Granted
----------------- -------------------
1% to 3% None
4% 5,000
5% 7,500
6% 10,000
7% 12,500
8% 15,000
9% 17,000
10% 20,000
11% 22,500
12% and Above 25,000
|
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of this 12th day of June 1998 (the "Effective Date"), between Sinclair Broadcast Group, Inc., a Maryland corporation ("SBG"), and Frederick G. Smith ("Employee").
R E C I T A L S
A. SBG, through its wholly owned subsidiaries and affiliates, owns or operates television and radio broadcast stations.
B. Employee is currently employed as a Vice President of SBG.
C. SBG desires to continue to employ Employee as a Vice President of SBG, and Employee desires to accept such employment.
D. SBG and Employee desire to set forth the terms of employment of Employee with SBG as a Vice President.
NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants herein contained, the parties hereto agree as follows:
1. DUTIES.
1.1. DUTIES UPON EMPLOYMENT. Upon the terms and subject to the other provisions of this Agreement, commencing on the date hereof (the "Effective Date"), Employee will continue to be employed by SBG in Baltimore, Maryland as a Vice President. As a Vice President, Employee will:
(a) report to the SBG Board of Directors (the "Board"), and the Chief Executive Officer of SBG (the "CEO"); and
(b) have such responsibilities and perform such duties as may from time to time be established by the CEO, and/or the Board.
1.2 PERFORMANCE OF SERVICES. While an employee of SBG, Employee agrees to devote contribute his best efforts and time to the business of SBG and shall render the services to the best of his ability on behalf of SBG. The Employee shall comply with all laws, statutes, rules and regulations relating to his services.
2. TERM.
2.1. TERM. The term of Employee's employment as a Vice President of
SBG under this Agreement (the "Employment Term") will begin on the Effective
Date and continue until his employment is terminated in accordance with Section
4. As used in this Agreement, an "employment year" is a twelve (12) month
period, beginning on January 1 and ending on the next following December 31;
provided, however, that the first "employment year" shall begin on the Effective
Date and shall end on December 31,1998.
2.2. AT WILL EMPLOYMENT. Notwithstanding anything else in this Agreement, including, without limitation, the provisions of Sections 2.1. and 3 regarding the employment term and compensation and benefits of Employee, respectively, the employment of Employee is not for a specified period of time, and SBG may terminate the employment of Employee with or without Cause (as defined below) at any time. There is not, nor will there be, unless in a writing signed by all of the parties to this Agreement, any express or implied agreement as to the continued employment of Employee.
3. COMPENSATION AND BENEFITS.
3.1 COMPENSATION. During each employment year, Employee shall be entitled to the compensation determined by the SBG Compensation Committee (the "Committee") after consulting with the CEO, which compensation may include the right to earn either discretionary cash or stock bonuses (the "Discretionary Bonuses") or incentive bonuses (the "Incentive Bonuses") (see Section 3.3 below with respect to Incentive Bonuses). Discretionary and Incentive Bonuses are sometimes collectively referred to herein as "Bonuses". All Bonuses shall be determined and payable after all financial data necessary for the determination of such is available to the Company. During the first year of employment pursuant to this Agreement, the Employee shall be paid based upon an annual base salary (the "Base Salary") of One Hundred Ninety Thousand Dollars ($190,000.00).
3.2 VACATION AND BENEFITS. During each twelve (12) month period during
the Employment Term, the Employee shall be entitled to a paid vacation of four
(4) weeks. The Employee shall schedule his vacation at such time or times as
shall be
approved by SBG, which approval shall not be unreasonably withheld.
3.3 INCENTIVE BONUSES.
3.3.1 INCENTIVE BONUS. In addition to the Base Salary and
Discretionary Bonus, if any, the Employee shall be entitled to receive with
respect to each calendar year (or portion thereof) during the Employment Term,
an Incentive Bonus in the event that the Broadcast Cash Flow (the "BCF"), as
defined below, of SBG for such year exceeds the BCF of SBG for the immediately
preceding year. The Incentive Bonus shall be paid by granting the Employee stock
options (the "Stock Options") to acquire a certain number of Class A Common
Shares of SBG (the "Option Shares") pursuant to the SBG Long Term Incentive Plan
currently in effect and in accordance with the FORM OF SINCLAIR BROADCAST GROUP,
INC. 1996 LONG-TERM INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AGREEMENT SPECIAL
PERFORMANCE OPTION (the "Stock Option Agreement") attached hereto as Schedule
3.3.1. BCF is defined below in Section 3.3.3. The percentage increase (the
"Percentage Increase") in BCF which is necessary for the Employee to earn an
Incentive Bonus, the number of Option Shares to be granted based upon the
Percentage Increase, and the exercise price (the "Exercise Price") of the Option
Shares appear in Exhibit A attached hereto.
3.3.2 AFTER ACQUIRED OR DISPOSED OF BROADCAST PROPERTIES.
If during any year after the Effective Date (including the year of during which the Effective Date occurs), SBG, or any of its direct or indirect subsidiaries or affiliates, shall acquire, program, or commence program services for, one or more television or radio stations [including pursuant to any Local Marketing Agreement Time Brokerage Agreement (as those terms are customarily used or defined by the FCC or in the broadcast industry in general) or any similar type services agreements], for the purposes of calculating the Incentive Bonus for the year in which the acquisition has occurred, the BCF for the immediately preceding year shall be increased to reflect such acquisition, or if in any year SBG, of any of it direct or indirect subsidiaries or affiliates, directly or indirectly disposes of, or shall cease to provide programming services with respect to one or more television or radio stations, for the purposes of calculating the Incentive Bonus with respect to the year in which such disposition has occurred, the BCF of the immediately preceding year shall be decreased to reflect such disposition, by an amount equal to the Average Broadcast Flow (the "ABCF"), calculated as of the date of the acquisition or disposition, of the television or radio station (or stations) so acquired or disposed of, multiplied by a fraction, (a) the numerator of which is the number of days remaining in such year following such acquisition or disposition and (b) the denominator
of which is 365. ABCF is defined in Section 3.3.3 below.
3.3.3 DEFINITION OF BCF AND ABCF. As used in this Section 3.3, the term BCF shall mean, for any period, operating income (from the ownership of, or the providing of program services to, television or radio stations) plus (a) non-cash expenses, including depreciation and amortization expense, programming amortization expense, barter expense and deferred compensation expense, plus (b) corporate expense (including any special bonuses paid to other executive officers of SBG), less (c) film contract payments, cash payments on deferred compensation and non-cash broadcast revenue, in each case as such items shall be determined in accordance with generally accepted accounting principals ("GAAP"); and ABCF shall mean the average annual BCF of a television or radio station for the three (3) full calendar years of such station prior to its acquisition by SBG or one of its direct or indirect subsidiaries or affiliates.
3.3.4 PAYM ENT. The Incentive Bonus shall be paid to the Employee as soon as practicable, but in no event later than March 31 following the end of each calendar year. The amount of Option Shares due under the Incentive Bonus with respect to any period of less than an entire year shall be determined by multiplying the Option Shares that would have been payable with respect to the whole of such year (using actual results for such year and assuming that the Agreement had been in effect the entire year) by a fraction, the numerator of which is the number of days of such year and the denominator of which is 365.
4. EMPLOYMENT TERMINATION.
(a) The Employment Term will end, and the parties will not have any rights or obligations under this Agreement (except for the rights and obligations under those Sections of this Agreement which are continuing and will survive the end of the Employment Term, as specified in Section 8.10 of this Agreement) on the earliest to occur of the following events (the "Termination Date"):
(1) the death of Employee;
(2) the Disability (as defined in Section 4.1(b) below) of Employee;
(3) the termination of Employee's employment by Employee;
(4) the termination of Employee's employment by SBG for Cause (as defined in Section 4.1(c) below); or
(5) the termination of Employee's employment by SBG without Cause.
(b) For the purposes of this Agreement, "Disability" means Employee's inability, whether mental or physical, to perform the normal duties of Employee's position for ninety (90) days (which need not be consecutive) during any twelve (12) consecutive month period, and the effective date of such Disability shall be the day next following such ninetieth (90th) day. If SBG and Employee are unable to agree as to whether Employee is disabled, the question will be decided by a physician to be paid by SBG and designated by SBG, subject to the approval of Employee (which approval may not be unreasonably withheld) whose determination will be final and binding on the parties.
(c) For the purposes of this Agreement, "Cause" means any of the following: (i) the wrongful appropriation for Employee's own use or benefit of property or money entrusted to Employee by SBG, (ii) the commission of any act involving moral turpitude, (iii) Employee's continued willful disregard of Employee's duties and responsibilities hereunder after written notice of such disregard and the reasonable opportunity to correct such disregard, (iv) Employee's continued violation of SBG policy after written notice of such violations (such policy may include policies as to drug or alcohol abuse) and the reasonable opportunity to cure such violations, (v) any action by Employee which is reasonably likely to jeopardize a Federal Communications Commission license of any broadcast station owned directly or indirectly by SBG or programmed by SBG, (vi) the continued insubordination of Employee and/or Employee's repeated failure to follow the reasonable directives of the CEO or the Board after written notice of such insubordination or the failure to follow such reasonable directives, or (vii) the repeated unsatisfactory performance by Employee of Employee's job or duties hereunder as determined by the CEO or the Board in his or their sole discretion after written notice thereof.
4.2. TERMINATION PAYMENTS.
of Employee, the person or persons designated by Employee in a written instrument delivered to SBG prior to Employee's death or, if no such written designation has been made, Employee's estate) will be entitled to receive, and SBG will pay to the same, all of the following:
(1) the salary payable to Employee through the Termination Date; and
(2) the benefits, if any, set forth in the Long Term Incentive Plan, upon the terms and conditions set forth therein, but only to the extent that Employee is entitled to such benefits pursuant to the provisions of the Long Term Incentive Plan.
(b) If Employee's employment with SBG terminates pursuant to Section 4.1(a)(4), Employee will be entitled to receive, and SBG will pay to Employee, only the salary payable to Employee through the Termination Date (and Employee shall not be entitled to any benefits under the Long Term Incentive Plan); provided, however, that if Employee's employment terminates pursuant to Subsection (vii) of Section 4.1(c), Employee shall be entitled to the benefits, if any, set forth in the Long Term Incentive Plan in accordance with the terms of Subsection (3) of this Section 4.2.
(c) If the Employee's employment with SBG terminates pursuant to
Section 4.1(a)(5), the Employee, in addition to the benefits he is entitled
to receive pursuant to Section 4.2(a), shall be entitled to receive, and
SBG shall pay to the Employee, one (1) month's base salary in effect at the
time of termination (not including bonuses) for each full year of his
continuous employment with SBG or its predecessor regardless of whether the
employment has been pursuant to this Agreement or has been prior to this
Agreement.
(d) The termination payments (the "Termination Payments") described in this Section 4 will be in lieu of any other termination or severance payments required by any other SBG policy (whether existing previously or currently or adopted in the future) or, to the fullest extent permissible thereunder, or under applicable law (including unemployment compensation) and the Termination Payments will constitute Employee's exclusive rights and remedies with respect to termination of Employee's employment.
5. CONFIDENTIALITY AND NON-COMPETITION.
(1) keep all Confidential Information in trust for the use and benefit of SBG and any affiliate or subsidiary (collectively, the "Company Entities") and broadcast stations owned or operated directly or indirectly by any of the Company Entities;
(2) not, except as required by Employee's duties under this Agreement, authorized in writing by SBG or as required by law or any order, rule, or regulation of any court or governmental agency (but only after notice to SBG of such requirement), at any time during or after the termination of Employee's employment with SBG, directly or indirectly, use, publish, disseminate, distribute, or otherwise disclose any Confidential Information (as defined below);
(3) take all reasonable steps necessary, or reasonably requested by any of the Company Entities, to ensure that all Confidential Information is kept confidential for the use and benefit of the Company Entities; and
(4) upon termination of Employee's employment or at any other time any of the Company's Entities in writing so request, promptly deliver to such Company Entity all materials constituting Confidential Information relating to such Company Entity (including all copies) that are in Employee's possession or under Employee's control. If requested by any of the Company Entities to return any Confidential Information, Employee will not make or retain any copy of or extract from such materials.
(b) For purposes of this Section 5.1, Confidential Information means any proprietary or confidential information of or relating to any of the Company Entities that is not generally available to the public. Confidential Information includes all information developed by or for any of the Company Entities concerning marketing used by any of the Company Entities, suppliers, any customers (including advertisers) with which any of the Company Entities has dealt prior to the Termination Date, plans for development of new services and expansion into new areas or markets, internal operations, financial information, operations, budgets, and any trade secrets or proprietary information of any type owned by any of the Company Entities, together with all written, graphic, other materials relating to all or any of the same, and any trade secrets as defined in the Maryland
Uniform Trade Secrets Act, as amended from time to time.
5.2. NON-COMPETITION.
(a) During the Employment Term and for twelve (12) months thereafter, if Employee's employment is terminated for any reason other than pursuant to Section 4.1(a)(5), Employee will not, directly or indirectly, engage in the following conduct within any Designated Market Area (as defined below) or any Metro Survey Area (as defined below) in which any of the Company Entities owns or operates a broadcast station immediately prior to such termination:
(i) participate in any activity involved in the ownership or operation of a broadcast station (other than, during the term, broadcast stations owned or operated by any of the Company Entities);
(ii) hire, attempt to hire, or to assist any other person or entity in hiring or attempting to hire any employee of any of the Company Entities or any person who was an employee of any of the Company Entities within the prior one (1) year period; or
(iii) solicit, in competition with any of the Company Entities, the business of any customer of any of the Company Entities or any entity whose business any of the Company Entities solicited during the one (1) year period prior to Employee's termination.
(b) Notwithstanding anything else contained in this Section 5.2, Employee may own, for investment purposes only, up to five percent (5%) of the stock of any publicly-held corporation whose stock is either listed on a national stock exchange or on the NASDAQ National Market System if Employee is not otherwise affiliated with such corporation.
(c) As used herein, "participate" means lending one's name to, acting as consultant or advisor to, being employed by or acquiring any direct or indirect interest in any business or enterprise, whether as a stockholder, partner, officer, director, employee, consultant, or otherwise.
(d) In the event that (i) SBG places all or substantially all of its broadcast stations up for sale within one (1) year after termination of Employee's employment hereunder, or (ii) Employee's employment is terminated in connection with the
disposition of all or substantially all of such stations (whether by
sale of assets, equity, or otherwise), Employee agrees to be bound by,
and to execute such additional instruments as may be necessary or
desirable to evidence Employee's agreement to be bound by, the terms
and conditions of any non-competition provisions relating to the
purchase and sale agreement for such stations, without any
consideration beyond that expressed in this Agreement, provided that
the purchase and sale agreement is negotiated in good faith with
customary terms and provisions, and the transaction contemplated
thereby is consummated. Notwithstanding the foregoing, in no event
shall Employee be bound by, or obligated to enter into, any
non-competition provisions referred to in this Section 5.2(d) which
extend beyond Twelve (12) months (including in the case of
terminations pursuant to Section 4.1(a)(5)), in each case from the
date of termination of Employee's employment hereunder or whose scope
extends the scope of the non-competition provisions set forth in
Section 5.2(a) (as limited by Sections 5.2(b) and (c) above).
(e) The twelve (12) month time period referred to above shall be tolled on a day-for-day basis for each day during which Employee participates in any activity in violation of this Section 5.2 of this Agreement so that Employee is restricted from engaging in the conduct referred to in this Section 5.2 for a full twelve (12) months.
(f) For purposes of this Section 5.2, designated market area shall mean the Designated Market Area ("DMA") as defined by The A.C. Nielsen Company (or such other similar term as is used from time to time in the television broadcast community).
(g) For purposes of this Section 5.2, Metro Survey Area shall mean the Metro Survey Area ("MSA"), as defined from time to time by the Arbitron Company (or such other similar term as is used from time to time in the radio broadcast community).
5.3. ACKNOWLEDGMENT. Employee acknowledges and agrees that this Agreement (including, without limitation, the provisions of Sections 5 and 6) is a condition of Employee's continued employment by SBG, Employee's continued access to Confidential Information, Employee's continued eligibility to receive the items referred to in Sections 3 (including, without limitation, Employee's eligibility to participate in the Long Term Incentive Plan), Employee's continued advancement at SBG, and Employee being eligible to receive other special benefits at SBG; and further, that this Agreement is entered into, and is reasonably necessary, to protect the Company Entities' previous and future investment in Employee's training and development, and to protect the goodwill and other business interests of the Company Entities.
6. REMEDIES.
6.1. INJUNCTIVE RELIEF. The covenants and obligations contained in
Section 5 relate to matters which are of a special, unique, and extraordinary
character and a violation of any of the terms of such Section will cause
irreparable injury to the Company Entities, the amount of which will be
impossible to estimate or determine and which cannot be adequately compensated.
Therefore, the Company Entities will be entitled to an injunction, restraining
order or other equitable relief from any court of competent jurisdiction
(subject to such terms and conditions that the court determines appropriate),
restraining any violation or threatened violation of any of such terms by
Employee and such other persons as the court orders. The parties acknowledge and
agree that judicial action, rather than arbitration, is appropriate with respect
to the enforcement of the provisions of Section 5. The forum for any litigation
hereunder shall be the Circuit Court of Baltimore County or the United States
District Court (Northern Division) sitting in Baltimore, Maryland.
6.2. CUMULATIVE RIGHTS AND REMEDIES. Rights and remedies provided by Sections 5 and 6 are cumulative and are in addition to any other rights and remedies any of the Company Entities may have at law or equity.
7. ABSENCE OF RESTRICTIONS. Employee warrants and represents that Employee is not a party to or bound by any agreement, contract, or understanding, whether of employment or otherwise, with any third person or entity which would in any way restrict or prohibit Employee from undertaking or performing employment with SBG in accordance with the terms and conditions of this Agreement.
8. MISCELLANEOUS.
8.1. ATTORNEYS' FEES. In any action, litigation, or proceeding (collectively, "Action") between the parties arising out of or in relation to this Agreement, the prevailing party in the Action will be awarded, in addition to any damages, injunctions, or other relief, and without regard to whether such Action is prosecuted to final appeal, such party's costs and expenses, including reasonable attorneys' fees.
8.2. HEADINGS. The descriptive headings of the Sections of this Agreement are inserted for convenience only, and do not constitute a part of this Agreement.
8.3. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) oral or written confirmation of a receipt of a facsimile transmission, (b) confirmed delivery of a standard overnight courier or when delivered by hand, or (c) the expiration of five (5) business days after the date mailed, postage prepaid, to the parties at the following addresses:
If to SBG to: Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: Chief Executive Officer
Copy to:
Thomas & Libowitz, P.A.
Suite 1100
100 Light Street
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas
If to Employee to: Frederick G. Smith
2000 W. 41st Street
Baltimore, Maryland 21211
|
or to such other address as will be furnished in writing by any party. Any such notice or communication will be deemed to have been given as of the date so mailed.
8.4. ASSIGNMENT. SBG may assign this Agreement to any company which acquires all or substantially all of its assets or into which it merges regardless of whether it survives as the successor, and in such an event and so long as his employment continues hereunder, Employee hereby consents and agrees to be bound by any such assignment by SBG. Employee may not assign, transfer, or delegate Employee's rights or obligations under this Agreement and any attempt to do so is void. This Agreement is binding on and inures to the benefit of the parties, their permitted successors and assigns, and the executors, administrators, and other legal representatives of Employee. No other third parties, other than Company Entities, shall have, or are intended to have, any rights under this Agreement.
8.5. COUNTERPARTS. This Agreement may be signed in one or more counterparts.
8.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND (REGARDLESS OF THE LAWS THAT MIGHT BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS (INCLUDING VALIDITY, CONSTRUCTION, EFFECT, AND PERFORMANCE.)
8.7. SEVERABILITY. If the scope of any provision contained in this Agreement is too broad to permit enforcement of such provision to its full extent, then such provision shall be enforced to the maximum extent permitted by law, and Employee hereby consents that such scope may be reformed or modified accordingly, and enforced as reformed or modified, in any proceeding brought to enforce such provision. Subject to the immediately preceding sentence, whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision, to the extent of such prohibition or invalidity, shall not be deemed to be a part of this Agreement, and shall not invalidate the remainder of such provision or the remaining provisions of this Agreement.
8.8. ENTIRE AGREEMENT. This Agreement, the Non-Qualified Stock Option Agreement, and the Long Term Incentive Plan constitute the entire agreement, and supersede all prior agreements and understandings, written or oral, among the parties with respect to the subject matter of this Agreement and the Long Term Incentive Plan. This Agreement may not be amended or modified except by agreement in writing, signed by the party against whom enforcement of any waiver, amendment, modification, or discharge is sought.
8.9. INTERPRETATION. This Agreement is being entered into among competent and experienced business professionals (who have had an opportunity to consult with counsel), and any ambiguous language in this Agreement will not necessarily be construed against any particular party as the drafter of such language.
8.10. CONTINUING OBLIGATIONS. The following provisions of this Agreement will continue and survive the termination of this Agreement: 4.2, 5, 6, 7 and 8.
8.11. TAXES. SBG may withhold from any payments under this Agreement all applicable federal, state, city, or other taxes required by applicable law to be so withheld.
8.12. ARBITRATION AND EXTENSION OF TIME. Except as specifically provided in Section 6, any dispute or controversy arising out of or relating to this Agreement shall be determined and settled by arbitration in Baltimore, Maryland in accordance with the Commercial Rules of the American Arbitration Association then in effect, the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq., and the Maryland Uniform Arbitration Act, and judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction. The expenses of the arbitration shall be borne by the non-prevailing party to the arbitration, including, but not limited to, the cost of experts, evidence, and legal counsel. Whenever any action is required to be taken under this Agreement within a specified period of time and the taking of such action is materially affected by a matter submitted to arbitration, such period shall automatically be extended by the number of days, plus ten (10) that are taken for the determination of that matter by the arbitrator(s). Notwithstanding the foregoing, the parties agree to use their best reasonable efforts to minimize the costs and frequency of arbitration hereunder.
THIS AGREEMENT CONTAINS A WAIVER OF YOUR RIGHT TO A TRIAL BY COURT OR
JURY IN EMPLOYMENT DISPUTES.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first written above.
SINCLAIR BROADCAST GROUP, INC.
BY: ______________________________
DAVID D. SMITH, PRESIDENT
EMPLOYEE:
FREDERICK G. SMITH EMPLOYMENT AGREEMENT
OF
JUNE 12, 1998
The following Chart reflects the relationship of the increase in BCF to the number of shares for which Options will be granted:
Percentage Increase Shares for Which
in BCF Options are Granted
----------------- -------------------
1% to 3% None
4% 5,000
5% 7,500
6% 10,000
7% 12,500
8% 15,000
9% 17,000
10% 20,000
11% 22,500
12% and Above 25,000
|
EXHIBIT 10.3
AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT (this "Agreement") is effective as of this 15th day of September, 1998 (the "Effective Date"), between Sinclair Broadcast Group, Inc., a Maryland corporation ("SBG"), and David B. Amy ("Employee").
R E C I T A L S
A. SBG, through its wholly-owned subsidiaries, owns or operates television broadcast stations.
B. Through and including the Effective Date, the Employee was employed as the Chief Financial Officer and Treasurer (the "CFO") of SBG pursuant to an employment agreement (the "Previous Employment Agreement") effective on February 1, 1998.
C. It is the intent of the parties hereto that this Agreement shall supercede and replace the Previous Employment Agreement.
D. Upon the recommendation of the Employee, the Board of Directors (the "Board) of SBG elected Patrick J. Talamantes ("Talamantes") to the office of Treasurer of SBG, effective as of the Effective Date.
E. In order to facilitate the promotion of Talamantes, the Employee resigned as Treasurer of SBG, effective as of the Effective Date.
F. SBG, recognizing the significant contributions to SBG made by the Employee and wishing to continue to employ Employee as CFO of SBG, elected the Employee to the office of Vice President of SBG and reconfirmed the Employee's appointment to the position of CFO, both effective as of the Effective Date
G. SBG and Employee now desire to: (i) set forth the terms of Employee's current employment with SBG as Vice President and CFO, (ii) ratify the previous grant to Employee of certain stock options (the "Stock Options") made pursuant to the Previous Employment Agreement, and (iii) terminate, supercede and replace the Previous Employment Agreement by this Agreement in order to reflect Employee's replacement as Treasurer of SBG.
NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants herein contained, the parties hereto agree as follows:
1. DUTIES.
1.1. DUTIES UPON EMPLOYMENT. Upon the terms and subject to the other provisions of this Agreement, commencing on the Effective Date, Employee continues to be employed by SBG in Baltimore, Maryland as CFO and was also elected as Vice President of SBG. As the CFO and Vice President, Employee will:
(a) report to the Board and the Chief Executive Officer of SBG (the "CEO");
(b) have such responsibilities and perform such duties as may from time to time be established by the CEO and/or the Board; and
(c) set the performance goals for, and supervise the performance of, the financial and accounting departments of SBG, including those of the Treasurer.
1.2. FULL-TIME EMPLOYMENT. While an employee of SBG, Employee agrees to devote Employee's full working time, attention, and best efforts exclusively to the business of SBG.
2. TERM.
2.1. TERM. The term of Employee's employment as CFO and Vice President of SBG under this Agreement (the "Employment Term") began on the Effective Date and shall continue until employment is terminated in accordance with Section 4. As used in this Agreement, an "employment year" is a twelve (12) month period beginning on January 1 and ending on the next following December 31; provided, however, that the first "employment year" shall begin on the Effective Date and shall end on December 31, 1998.
2.2. AT WILL EMPLOYMENT. Notwithstanding anything else in this Agreement seemingly to the contrary (including, without limitation, the provisions of Sections 2.1. and 3 regarding the employment term and compensation and benefits of Employee), the employment of Employee is not for a specified period of time, and SBG may terminate the employment of Employee with or without Cause (as defined below) at any time. There is not, nor will there be, unless in a writing signed by all of the parties to
this Agreement, any express or implied agreement as to the continued employment of Employee.
3. COMPENSATION AND BENEFITS.
3.1 COMPENSATION. During each employment year, Employee shall be entitled to the compensation determined by the SBG Compensation Committee (the "Committee") after consulting with the CEO, which compensation may include a bonus based upon the performance of the Employee and/or the Company. Such bonus, if any, shall be determined in the sole discretion of the Compensation Committee and shall be declared, if at all, after all financial and/or ratings data necessary for the determination of such amount is available to the Compensation Committee for its review.
3.2 OPTIONS. Concurrent with the Employee's execution of the Previous Employment Agreement, Employee was granted (the "Grant") Stock Options to acquire Sixty Seven Thousand (67,000) shares of Class A Common stock (the "Stock") of SBG subject to the terms and conditions contained in the Long-Term Incentive Plan of SBG and pursuant to the Non-Qualified Stock Option Agreement, both of which have been previously provided to Employee. The terms and conditions of Section 3.2 of the Previous Employment Agreement relating to the grant of the Stock Options are incorporated herein and are hereby ratified. On May 28, 1998 (a date subsequent to the Grant of the Stock Options and prior to the date hereof), SBG declared a Stock split (the "Split") of two (2) shares of Stock for every one (1) share of Stock owned as of the date of the Split. As a result of the Split, the Stock Options held by the Employee pursuant to the Grant are currently for One Hundred Thirty-Four Thousand (134,000) shares of Stock and not for the original number of Sixty Seven Thousand (67,000) Shares of Stock. The Employee is not granted any stock options in addition to the Stock Options granted in the Previous Employment Agreement by as a result of, or pursuant to, his entrance into this Agreement.
4. EMPLOYMENT TERMINATION.
4.1. TERMINATION OF EMPLOYMENT.
(a) The Employment Term will end, and the parties will not have any rights or obligations under this Agreement (except for the rights and obligations under those Sections of this Agreement which are continuing and will survive the end of the Employment Term, as specified in Section 8.10 of this Agreement) on the earliest to occur of the following events (individually a "Termination Date"):
(1) the death of Employee;
(2) the Disability [as defined in Section 4.1(b) below] of Employee;
(3) the termination of Employee's employment by Employee;
(4) the termination of Employee's employment by SBG for Cause (as defined in Section 4.1(c) below); or
(5) the termination of Employee's employment by SBG without Cause.
(b) For the purposes of this Agreement, "Disability" means Employee's inability, whether mental or physical, to perform the normal duties of Employee's position for ninety (90) days (which need not be consecutive) during any twelve (12) consecutive month period, and the effective date of such Disability shall be the day next following such ninetieth (90th) day. If SBG and Employee are unable to agree as to whether Employee is disabled, the question will be decided by a physician to be paid by SBG and designated by SBG, subject to the approval of Employee (which approval may not be unreasonably withheld) whose determination will be final and binding on the parties.
(c) For the purposes of this Agreement, "Cause" means any of the following: (i) the wrongful appropriation for Employee's own use or benefit of property or money entrusted to Employee by SBG, (ii) the commission of any act involving moral turpitude, (iii) Employee's continued willful disregard of Employee's duties and responsibilities hereunder after written notice of such disregard and the reasonable opportunity to correct such disregard, (iv) Employee's continued violation of SBG policy after written notice of such violations (such policy may include policies as to drug or alcohol abuse) and the reasonable opportunity to cure such violations, (v) any action by Employee which is reasonably likely to jeopardize a Federal Communications Commission license of any broadcast station owned directly or indirectly by SBG or programmed by SBG, (vi) the continued insubordination of Employee and/or Employee's repeated failure to follow the reasonable directives of the CEO or the Board after written notice of such insubordination or the failure to follow such reasonable directives, or (vii) the repeated unsatisfactory performance by Employee of Employee's job or duties hereunder as determined by the CEO or the Board in his or their sole discretion after written notice thereof.
4.2. TERMINATION PAYMENTS.
(a) If Employee's employment with SBG terminates pursuant to Sections 4.1(a)(1), 4.1(a)(2), 4.1(a)(3), or 4.1(a)(5), Employee (or in the event of the death of Employee, the person or persons designated by Employee in a written instrument delivered to SBG prior to Employee's death or, if no such written designation has been made, Employee's estate) will be entitled to receive, and SBG will pay to the same, all of the following:
(1) the salary payable to Employee through the Termination Date;
(2) a payment in respect of unutilized vacation time that has accrued through the Termination Date (determined in accordance with corporate policies established by SBG); and
(3) the benefits, if any, set forth in the Long Term Incentive Plan, upon the terms and conditions set forth therein, but only to the extent that Employee is entitled to such benefits pursuant to the provisions of the Long Term Incentive Plan.
(b) If Employee's employment with SBG terminates pursuant to
Section 4.1(a)(4), Employee will be entitled to receive, and SBG will pay to
Employee, only the salary payable to Employee through the Termination Date (and
Employee shall not be entitled to any benefits under the Long Term Incentive
Plan); provided, however, that if Employee's employment terminates pursuant to
Subsection (vii) of Section 4.1(c), Employee shall be entitled to the benefits,
if any, set forth in the Long Term Incentive Plan in accordance with the terms
of Subsection (3) of this Section 4.2.
(c) If the Employee's employment with SBG terminates pursuant to
Section 4.1(a)(5), the Employee, in addition to the benefits he is entitled to
receive pursuant to Section 4.2(a), shall be entitled to receive, and SBG shall
pay to the Employee, one (1) month's base salary in effect at the time of
termination (not including bonuses) for each full year of his continuous
employment with SBG or its predecessor regardless of whether the employment has
been pursuant to this Agreement or has been prior to this Agreement.
(d) The termination payments (the "Termination Payments") described in this Section 4 will be in lieu of any other termination or severance payments
required by any other SBG policy (whether existing previously or currently or adopted in the future) or, to the fullest extent permissible thereunder, or under applicable law (including unemployment compensation) and the Termination Payments will constitute Employee's exclusive rights and remedies with respect to termination of Employee's employment.
5. CONFIDENTIALITY AND NON-COMPETITION.
5.1. CONFIDENTIAL INFORMATION.
(a) Employee will:
(1) keep all Confidential Information in trust for the use and benefit of SBG and its affiliates or subsidiaries (collectively the "Company Entities") and any broadcast stations owned or operated directly or indirectly by any of the Company Entities;
(2) not, except as required by Employee's duties under this Agreement, authorized in writing by SBG or as required by law or any order, rule, or regulation of any court or governmental agency (but only after notice to SBG of such requirement), at any time during or after the termination of Employee's employment with SBG, directly or indirectly, use, publish, disseminate, distribute, or otherwise disclose any Confidential Information (as defined below);
(3) take all reasonable steps necessary, or reasonably requested by any of the Company Entities, to ensure that all Confidential Information is kept confidential for the use and benefit of the Company Entities; and
(4) upon termination of Employee's employment or at any other time any of the Company's Entities in writing so request, promptly deliver to such Company Entity all materials constituting Confidential Information relating to such Company Entity (including all copies) that are in Employee's possession or under Employee's control. If requested by any of the Company Entities to return any Confidential Information, Employee will not make or retain any copy of or extract from such materials.
(b) For purposes of this Section 5.1, Confidential Information means any proprietary or confidential information of or relating to any of the Company Entities that is not generally available to the public. Confidential Information includes all information developed by or for any of the Company Entities concerning marketing used by
any of the Company Entities, suppliers, any customers (including advertisers) with which any of the Company Entities has dealt prior to the Termination Date, plans for development of new services and expansion into new areas or markets, internal operations, financial information, operations, budgets, and any trade secrets or proprietary information of any type owned by any of the Company Entities, together with all written, graphic, other materials relating to all or any of the same, and any trade secrets as defined in the Maryland Uniform Trade Secrets Act, as amended from time to time.
5.2. NON-COMPETITION.
(a) During the Employment Term and for twelve (12) months thereafter, if Employee's employment is terminated for any reason other than pursuant to Section 4.1(a)(5), Employee will not, directly or indirectly, engage in the following conduct within any Designated Market Area (as defined below) or any Metro Survey Area (as defined below) in which any of the Company Entities owns or operates a broadcast station or otherwise conducts business immediately prior to such termination:
(i) participate in any activity involved in the ownership or operation of a broadcast station (other than, during the Employment Term, broadcast stations owned or operated by any of the Company Entities);
(ii) hire, attempt to hire, or to assist any other person or entity in hiring or attempting to hire any employee of any of the Company Entities or any person who was an employee of any of the Company Entities within the prior one (1) year period; or
(iii) solicit, in competition with any of the Company Entities, the business of any customer of any of the Company Entities or any entity whose business any of the Company Entities solicited during the one (1) year period prior to Employee's termination.
(b) Notwithstanding anything else contained in this Section 5.2, Employee may own, for investment purposes only, up to five percent (5%) of the stock of any publicly-held corporation whose stock is either listed on a national stock exchange or on the NASDAQ National Market System if Employee is not otherwise affiliated with such corporation.
(c) As used herein, "participate" means lending one's name to, acting as consultant or advisor to, being employed by or acquiring any direct or indirect
interest in any business or enterprise, whether as a stockholder, partner, officer, director, employee, consultant, or otherwise.
(d) In the event that (i) SBG places all or substantially all of its broadcast stations up for sale within one (1) year after termination of Employee's employment hereunder, or (ii) Employee's employment is terminated in connection with the disposition of all or substantially all of such stations (whether by sale of assets, equity, or otherwise), Employee agrees to be bound by, and to execute such additional instruments as may be necessary or desirable to evidence Employee's agreement to be bound by, the terms and conditions of any non-competition provisions relating to the purchase and sale agreement for such stations, without any consideration beyond that expressed in this Agreement, provided that the purchase and sale agreement is negotiated in good faith with customary terms and provisions, and the transaction contemplated thereby is consummated. Notwithstanding the foregoing, in no event shall Employee be bound by, or obligated to enter into, any non-competition provisions referred to in this Section 5.2(d) which extend beyond twelve (12) months [including in the case of terminations pursuant to Section 4.1(a)(5)], in each case from the date of termination of Employee's employment hereunder or whose scope extends the scope of the non-competition provisions set forth in Section 5.2(a) (as limited by Sections 5.2(b) and (c) above).
(e) The twelve (12) month time period referred to above shall be tolled on a day-for-day basis for each day during which Employee participates in any activity in violation of this Section 5.2 of this Agreement so that Employee is restricted from engaging in the conduct referred to in this Section 5.2 for a full twelve (12) months.
(f) For purposes of this Section 5.2, designated market area shall mean the Designated Market Area ("DMA") as defined by The A.C. Nielsen Company (or such other similar term as is used from time to time in the television broadcast community).
(g) For purposes of this Section 5.2, Metro Survey Area shall mean the Metro Survey Area ("MSA"), as defined from time to time by the Arbitron Company (or such other similar term as is used from time to time in the radio broadcast community).
5.3. ACKNOWLEDGMENT. Employee acknowledges and agrees that this Agreement (including, without limitation, the provisions of Sections 5 and 6) is a condition of Employee's continued employment by SBG, Employee's continued access to Confidential Information, Employee's continued eligibility to receive the items referred to in Sections 3 (including, without limitation, Employee's eligibility to participate in the Long Term Incentive Plan), Employee's continued advancement at SBG, and Employee being eligible
to receive other special benefits at SBG; and further, that this Agreement is entered into, and is reasonably necessary, to protect the Company Entities' previous and future investment in Employee's training and development, and to protect the goodwill and other business interests of the Company Entities.
6. REMEDIES.
6.1. INJUNCTIVE RELIEF. The covenants and obligations contained in
Section 5 relate to matters which are of a special, unique, and extraordinary
character and a violation of any of the terms of such Section will cause
irreparable injury to the Company Entities, the amount of which will be
impossible to estimate or determine and which cannot be adequately compensated.
Therefore, the Company Entities will be entitled to an injunction, restraining
order or other equitable relief from any court of competent jurisdiction
(subject to such terms and conditions that the court determines appropriate),
restraining any violation or threatened violation of any of such terms by
Employee and such other persons as the court orders. The parties acknowledge and
agree that judicial action, rather than arbitration, is appropriate with respect
to the enforcement of the provisions of Section 5. The forum for any litigation
hereunder shall be the Circuit Court of Baltimore County or the United States
District Court (Northern Division) sitting in Baltimore, Maryland.
6.2. CUMULATIVE RIGHTS AND REMEDIES. Rights and remedies provided by Sections 5 and 6 are cumulative and are in addition to any other rights and remedies any of the Company Entities may have at law or equity.
7. ABSENCE OF RESTRICTIONS. Employee warrants and represents that Employee is not a party to or bound by any agreement, contract, or understanding, whether of employment or otherwise, with any third person or entity which would in any way restrict or prohibit Employee from undertaking or performing employment with SBG in accordance with the terms and conditions of this Agreement.
8. MISCELLANEOUS.
8.1. ATTORNEYS' FEES. In any action, litigation, or proceeding (collectively, "Action") between the parties arising out of or in relation to this Agreement, the prevailing party in the Action will be awarded, in addition to any damages, injunctions, or other relief, and without regard to whether such Action is prosecuted to final appeal, such party's costs and expenses, including reasonable attorneys' fees.
8.2. HEADINGS. The descriptive headings of the Sections of this Agreement are inserted for convenience only, and do not constitute a part of this Agreement.
8.3. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) oral or written confirmation of a receipt of a facsimile transmission, (b) confirmed delivery of a standard overnight courier or when delivered by hand, or (c) the expiration of five (5) business days after the date mailed, postage prepaid, to the parties at the following addresses:
If to SBG to: Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: Chief Executive Officer
Copy to: Thomas & Libowitz, P.A.
Suite 1100
100 Light Street
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas
If to Employee to: David B. Amy
2000 W. 41st Street
Baltimore, Maryland 21211
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or to such other address as will be furnished in writing by any party. Any such notice or communication will be deemed to have been given as of the date so mailed.
8.4. ASSIGNMENT. SBG may assign this Agreement to any company which acquires all or substantially all of its assets or into which it merges regardless of whether it survives as the successor, and in such an event and so long as his employment continues hereunder, Employee hereby consents and agrees to be bound by any such assignment by SBG. Employee may not assign, transfer, or delegate Employee's rights or obligations under this Agreement and any attempt to do so is void. This Agreement is binding on and inures to the benefit of the parties, their permitted successors and assigns, and the executors, administrators, and other legal representatives of Employee. No other third parties, other than Company Entities, shall have, or are intended to have, any rights under this Agreement.
8.5. COUNTERPARTS. This Agreement may be signed in one or more counterparts.
8.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND (REGARDLESS OF THE LAWS THAT MIGHT BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS (INCLUDING VALIDITY, CONSTRUCTION, EFFECT, AND PERFORMANCE.)
8.7. SEVERABILITY. If the scope of any provision contained in this Agreement is too broad to permit enforcement of such provision to its full extent, then such provision shall be enforced to the maximum extent permitted by law, and Employee hereby consents that such scope may be reformed or modified accordingly, and enforced as reformed or modified, in any proceeding brought to enforce such provision. Subject to the immediately preceding sentence, whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision, to the extent of such prohibition or invalidity, shall not be deemed to be a part of this Agreement, and shall not invalidate the remainder of such provision or the remaining provisions of this Agreement.
8.8. ENTIRE AGREEMENT.This Agreement, the Non-Qualified Stock Option Agreement, and the Long Term Incentive Plan constitute the entire agreement, and supersede all prior agreements and understandings, written or oral, among the parties with respect to the subject matter of this Agreement and the Long Term Incentive Plan. This Agreement may not be amended or modified except by agreement in writing, signed by the party against whom enforcement of any waiver, amendment, modification, or discharge is sought.
8.9. INTERPRETATION. This Agreement is being entered into among competent and experienced business professionals (who have had an opportunity to consult with counsel), and any ambiguous language in this Agreement will not necessarily be construed against any particular party as the drafter of such language.
8.10. CONTINUING OBLIGATIONS. The following provisions of this Agreement will continue and survive the termination of this Agreement: 4.2, 5, 6, 7 and 8.
8.11. TAXES. SBG may withhold from any payments under this
Agreement all applicable federal, state, city, or other taxes required by applicable law to be so withheld.
8.12. ARBITRATION AND EXTENSION OF TIME. Except as specifically provided in Section 6, any dispute or controversy arising out of or relating to this Agreement shall be determined and settled by arbitration in Baltimore, Maryland in accordance with the Commercial Rules of the American Arbitration Association then in effect, the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq., and the Maryland Uniform Arbitration Act, and judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction. The expenses of the arbitration shall be borne by the non-prevailing party to the arbitration, including, but not limited to, the cost of experts, evidence, and legal counsel. Whenever any action is required to be taken under this Agreement within a specified period of time and the taking of such action is materially affected by a matter submitted to arbitration, such period shall automatically be extended by the number of days, plus ten (10) that are taken for the determination of that matter by the arbitrator(s). Notwithstanding the foregoing, the parties agree to use their best reasonable efforts to minimize the costs and frequency of arbitration hereunder.
THIS AGREEMENT CONTAINS A WAIVER OF YOUR RIGHT TO A TRIAL BY COURT OR JURY
IN EMPLOYMENT DISPUTES.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
[REST OF PAGE LEFT INTENTIONALLY BLANK
SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the ____ date of ______________, 1998 intending same to be effective as of the Effective Date.
SINCLAIR BROADCAST GROUP, INC.
By:
-------------------------------
David D. Smith
Its: PRESIDENT
------------------------------
EMPLOYEE
------------------------------
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DAVID B. AMY
EXHIBIT 10.4
PURCHASE AGREEMENT
by and between
GUY GANNETT COMMUNICATIONS
and
SINCLAIR COMMUNICATIONS, INC.
Dated as of September 4, 1998
TABLE OF CONTENTS
Page
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Article 1. Sale of Assets; Assumption of Liabilities..........................1
1.1 Assets to Be Acquired.............................................1
1.2 Excluded Assets...................................................3
1.3 Assumption of Liabilities.........................................4
1.4 Retained Liabilities..............................................5
1.5 [Intentionally omitted............................................5
1.6 Closing and Closing Date..........................................5
1.7 Additional Closing Deliveries.....................................6
Article 2. Purchase Price.....................................................7
2.1 Purchase Price; Payment...........................................7
2.2 Post-Closing Adjustment...........................................8
2.3 Security Escrow..................................................11
2.4 Investment of Escrow Amounts.....................................11
2.5 Allocation of the Purchase Price.................................12
Article 3. Representations and Warranties Relating to the Company............12
3.1 Organization and Standing........................................12
3.2 Binding Agreement................................................12
3.3 Absence of Conflicting Agreements or Required Consents...........13
3.4 Equity Investments...............................................13
3.5 Financial Statements.............................................13
3.6 Title to Assets; Related Matters.................................14
3.7 Absence of Certain Changes, Events and Conditions................15
3.8 Litigation.......................................................16
3.9 Insurance........................................................16
3.10 Material Contracts..............................................16
3.11 Permits and Licenses; Compliance with Law.......................17
3.12 FCC Licenses....................................................17
3.13 Environmental Matters...........................................18
3.14 Employee Benefit Matters........................................18
3.15 Labor Relations.................................................19
3.16 Intellectual Property...........................................20
3.17 Taxes...........................................................20
3.18 Commissions.....................................................20
3.19 Affiliate Transactions..........................................21
Article 4. Representations and Warranties of Purchaser.......................21
4.1 Organization and Standing........................................21
4.2 Binding Agreement................................................21
4.3 Absence of Conflicting Agreements or Required Consents...........21
4.4 Litigation.......................................................22
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Page
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4.5 Commissions......................................................22
4.6 Financing........................................................22
4.7 Purchaser's Qualification........................................22
4.8 Accuracy and Completeness of Representations and Warranties......22
Article 5. Covenants and Agreements..........................................23
5.1 Conduct of the Business Prior to Closing; Access.................23
5.2 Post-Closing Covenants and Agreement, and Other Employee Benefit
Matters........................................................26
5.3 Cooperation......................................................32
5.4 Confidentiality..................................................35
5.5 Public Announcements.............................................35
5.6 No Solicitation..................................................35
5.7 No Additional Representations....................................35
5.8 Certain Payments.................................................36
5.9 Bulk Sales Laws..................................................36
5.10 Control of the Stations.........................................37
5.11 Use of Guy Gannett Name.........................................37
Article 6. Conditions to Obligations of Purchaser............................37
6.1 Representations and Warranties...................................37
6.2 Performance by the Company.......................................37
6.3 Certificate......................................................37
6.4 Consents; No Objections..........................................37
6.5 No Proceedings or Litigation.....................................38
6.6 [Intentionally omitted]..........................................38
6.7 FCC Consent......................................................38
6.8 No Material Adverse Change.......................................38
6.9 Opinions of Counsel..............................................38
6.10 Good Standing Certificate.......................................38
6.11 No Transmission Defects.........................................39
Article 7. Conditions to Obligations of the Company..........................39
7.1 Representations and Warranties...................................39
7.2 Performance by Purchaser.........................................39
7.3 Certificate......................................................39
7.4 Consents; No Objections..........................................39
7.5 No Proceedings or Litigation.....................................39
7.6 FCC Consent......................................................39
7.7 Opinion of Counsel...............................................40
7.8 Good Standing Certificate........................................40
Article 8. Indemnification...................................................40
8.1 Indemnification by the Company...................................40
8.2 Indemnification by Purchaser.....................................40
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Page
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8.3 Limitations on Indemnification Claims and Liability; Termination
of Indemnification.............................................40
8.4 Computation of Claims and Damages................................41
8.5 Notice of Claims.................................................42
8.6 Defense of Third Party Claims....................................42
8.7 Assignment of Indemnification and Other Rights...................43
Article 9. Definitions.......................................................44
Article 10. Miscellaneous Provisions.........................................57
10.1 Termination Rights..............................................57
10.2 Litigation Costs................................................58
10.3 Expenses........................................................58
10.4 Notices.........................................................58
10.5 Benefit and Assignment..........................................60
10.6 Waiver..........................................................60
10.7 Severability....................................................60
10.8 Amendment.......................................................61
10.9 Effect and Construction of this Agreement.......................61
10.10 Transfer and Conveyance Taxes..................................61
10.11 Specific Performance...........................................61
10.12 Survival of Representations, Warranties and Covenants..........62
Article 11. No Personal Liability for Representatives, Stockholders,
Directors or Officers..........................................62
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Exhibits
Exhibit A Bill of Sale, Assignment and Assumption Agreement
Exhibit B Adjustment Escrow Agreement
Exhibit C Security Escrow Agreement
Exhibit D-1 Opinion of Preti, Flaherty, Beliveau & Pachios
Exhibit D-2 Opinion of Simpson Thacher & Bartlett
Exhibit D-3 Opinion of Dow, Lohnes & Albertson
Exhibit E [Intentionally omitted]
Exhibit F-1 Sharing Agreement
Exhibit F-2 Sublease Agreement
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") made as of September 4, 1998 by and between GUY GANNETT COMMUNICATIONS, a Maine corporation (the "Company") and SINCLAIR COMMUNICATIONS, INC., a Maryland corporation (together with its successors and permitted assigns, "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company owns or leases the assets used in connection with the Company's broadcast television business and the operation of the Stations (as hereinafter defined);
WHEREAS, the Company desires to sell, assign and transfer to Purchaser the assets and business of the Business (as hereinafter defined) as described below, and Purchaser desires to purchase and acquire the assets and business of the Business as described below, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors and stockholders of the Company have approved the execution, delivery and performance of this Agreement by the Company and the Board of Directors of Purchaser has approved the execution, delivery and performance of this Agreement by Purchaser.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows:
[A list of defined terms is provided in Article 9 hereof]
Article 1. Sale of Assets; Assumption of Liabilities.
1.1 Assets to Be Acquired. Upon the terms and subject to the satisfaction of the conditions set forth herein, at the Closing, the Company shall sell, convey, assign, transfer and deliver to Purchaser, and Purchaser shall purchase, acquire, accept and pay for, all of the Company's right, title and interest in and to all of the real, personal and mixed properties, assets and other rights, both tangible and intangible, (other than the Excluded Assets) owned or leased by, or licensed to or used or useful by, the Company on the Closing Date in connection with the Business (collectively, the "Assets").
Without limiting the generality of the foregoing, the Assets shall include the following:
(a) the FCC Licenses;
(b) the Equipment;
(c) all translators, earth stations and other auxiliary facilities, and all applications therefor, owned, leased or otherwise used or useful by the Company in connection with the Business;
(d) the Real Property and Leased Property as set forth in Section 1.1(d) of the Disclosure Schedule;
(e) all orders and agreements for the sale of advertising time on the Stations for cash, and all trade, barter and similar agreements, excluding Program Contracts (which are provided for below), for the sale of advertising time on the Stations for any property or services in lieu of or in addition to cash, and any other orders and agreements entered into (other than in violation of this Agreement) between the date hereof and the Closing Date;
(f) all film and program licenses and contracts under which the Company has the right to broadcast film product or programs on the Stations ("Program Contracts"), including all cash and non-cash (barter) program contracts and including, without limitation, the Program Contracts set forth in Section 3.10 of the Disclosure Schedule and any other Program Contracts entered into (other than in violation of this Agreement) between the date hereof and the Closing Date;
(g) all other contracts and agreements related to the Business, including, without limitation, network affiliation agreements, all employment contracts entered into with television talent and other Business Employees, all collective bargaining agreements with respect to any Business Employees, any time brokerage agreements and all national or local advertising representation agreements for the Stations, without limitation, the contracts and agreements set forth in Section 3.10 of the Disclosure Schedule, and any other such contracts and agreements entered into (other than in violation of this Agreement) between the date hereof and the Closing Date;
(h) the Intellectual Property, including, without limitation, the Call Letters;
(i) all programs and programming materials owned by the Company and used in connection with the Business, whether recorded on tape or any other media or intended for live performance, and whether completed or in production, and all related common law and statutory copyrights owned by or licensed to the Company and used in connection with the Business;
(j) all FCC logs and other records that relate to the operation of the Stations;
(k) except as set forth in Section 1.2(a) hereof, all files, books and other records of the Company relating to the Business, including, without limitation, written technical information, data, specifications, research and development information, engineering, drawings, manuals, computer programs, tapes and software relating directly to the Business, other than duplicate copies of account books of original entry and duplicate copies of such files and records, if any, that are maintained at the corporate offices of the
Company for tax and accounting purposes;
(l) all of the Company's goodwill in, and "going concern" value of, the Business;
(m) all accounts, notes and accounts receivable of the Business relating to or arising out of the business and operations of the Stations immediately preceding the Closing;
(n) all deposits, reserves and prepaid expenses of the Business (other than those relating to Excluded Assets or Liabilities that are not Assumed Liabilities);
(o) to the extent transferable under applicable law, all franchises, approvals, permits, licenses, orders, registrations, certificates, exemptions, variances and similar rights obtained from Governmental Authorities (other than the FCC License) in any jurisdiction that had issued or granted such items to the Company, or that the Company otherwise owns or uses, in each case relating to the Business, and all pending applications therefor;
(p) the assets of the New Pension Plan and the Defined Contribution Plan to the extent set forth in Sections 5.2(i) and 5.2(j), respectively;
(q) except as set forth in Section 1.2(h) hereof, all insurance proceeds claims arising out of or related to damage, destruction or loss of any property or asset used or useful in connection with the Business to the extent of any damage or destruction that remains unrepaired, or to the extent any property or asset remains unreplaced, at the Closing Date; and
(r) the Company's rights under the Non-Competition and Non-Solicitation Agreements identified in Section 1.1(r) of the Disclosure Schedules and, to the extent assignable, the Company's rights to enforce any non-competition provisions relating to the Business, the Business Employees or the Stations contained in any other written agreement with a Corporate Office Employee.
1.2 Excluded Assets. Notwithstanding anything to the contrary herein, all of the Company's right, title and interest in all of the following properties, assets and other rights (collectively, the "Excluded Assets") shall be excluded from the Assets:
(a) the corporate books and records of the Company, including minute books and stock ledgers, and copies of business records included in the Assets acquired by Purchaser that are reasonably required by the Company or any Affiliate or stockholder of the Company in order to permit the Company or any of its Affiliates or stockholders to prepare any Tax return or other filing or report to be made after the Closing Date;
(b) the Excluded Names and any trademarks, service marks or trade names incorporating any of the Excluded Names;
(c) shares of stock in KOZ inc.;
(d) any of the properties, assets or other rights of the Maine Media Business;
(e) the Corporate Office Lease and all furniture, fixtures, equipment, office materials and supplies, vehicles and other assets located at the Corporate Office or exclusively used by or relating to the Corporate Office or Corporate Office Employees including, without limitation, all notes receivable of the Corporate Office (none of which arise from the sale of television advertising);
(f) all rights of the Company under this Agreement, the Bill of Sale, Assignment and Assumption Agreement, the Maine Media Purchase Agreement, the Contribution Agreement, the Adjustment Escrow Agreement and the Security Escrow Agreement;
(g) cash, bank accounts, cash equivalents and other similar types of investments, certificates of deposit, U.S. Treasury bills and other marketable securities;
(h) all insurance policies, programs, reserves and related bonds of any nature; any dividends payable in respect thereof; and any insurance proceeds or claims that are compensation for the loss of an Excluded Asset or for the loss of an asset that has been repaired or replaced (other than in violation of this Agreement) prior to the Closing Date;
(i) all properties, assets or other rights sold by the Company prior to the Closing Date as permitted by Section 5.1 hereof; and
(j) all claims, judgments and other rights of any nature to the extent related to (i) the items set forth in clauses (a) through (i) above or (ii) Retained Liabilities.
1.3 Assumption of Liabilities. (a) On and after the Closing Date, Purchaser will assume and agree to perform and fully discharge when due all Liabilities of the Company (i) solely related to or solely arising from or in connection with the Assets or the Business and (ii) in the case of any Liabilities related to or arising partly from or in connection with the Assets or the Business and partly from any other assets or business of the Company, to the extent such Liabilities relate to or arise from or in connection with the Assets or the Business (in each case including, without limitation, any Claims and Damages arising from the assignment to Purchaser of any contract or other agreement pursuant to the terms of this Agreement), whether such Liabilities specified in clause (i) or (ii) are incurred or arising prior to, on, or after the Closing Date, including, without limitation, those obligations of the Company to be assumed by Purchaser pursuant to Section 5.2 hereof, other than Retained Liabilities (collectively, the "Assumed Liabilities"). Except as set forth in this Section 1.3 and except as otherwise expressly provided in this Agreement, Purchaser will assume no other Liabilities of any kind of description of the Company.
(b) Without limiting the generality of Section 1.3(a) hereof, and notwithstanding any other provision hereof, each of the following is a "Retained Liability" (except to the extent that it is a Liability that decreases Net Financial Assets):
(i) any of the Company's obligations hereunder;
(ii) any Liability for federal, state or local income taxes of the Company, its stockholders and any other Person (other than payroll withholding taxes to the extent that they decrease Net Financial Assets, which shall constitute Assumed Liabilities);
(iii) Corporate Office expenses other than those liabilities for certain Corporate Office Employees set forth in Section 5.2 hereof (all of which shall constitute Assumed Liabilities);
(iv) any Liability of the Company arising from Indebtedness or any overdrafts on any bank accounts of the Company;
(v) any Liability assumed or to be assumed by Newco under the Contribution Agreement;
(vi) except for the Company's obligations under a sharing agreement and sublease agreement in the form set forth as Exhibits F-1 and F-2 hereto, any of the Company's obligations under the Contribution Agreement, the Maine Media Purchase Agreement, the Adjustment Escrow Agreement or the Security Escrow Agreement;
(vii) any Liability for dividends; and
(viii) any Liabilities relating to current, former or inactive Corporate Office Employees that are not to be assumed by Purchaser pursuant to Section 5.2 hereof.
1.4 Retained Liabilities. The Company shall retain, and shall continue to be responsible after the Closing Date for, all Retained Liabilities and all other Liabilities of the Company that are not Assumed Liabilities.
1.5 [Intentionally omitted.]
1.6 Closing and Closing Date. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been terminated pursuant to Section 10.1 hereof, the closing (the "Closing") of the transactions herein contemplated shall take place at 10:00 a.m., New York City time, on a date not later than ten days following the satisfaction or waiver of the conditions set forth in Articles 6 and 7 hereof, or at such other time and date as the Company and Purchaser shall agree (such time and date being referred to herein as the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such other place as the Company and Purchaser shall agree. At the Closing, each of the parties hereto shall take, or cause to be taken, all such actions and deliver, or cause to be delivered, all such documents, instruments, certificates and other items as may be required under this Agreement or otherwise, in order to perform or fulfill all covenants and agreements on its part to be performed at or prior to the Closing. The Closing shall be effective as of 12:01 a.m., New York City time, on the day of the Closing Date.
1.7 Additional Closing Deliveries. At the Closing:
(a) The Company shall deliver to Purchaser:
(i) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement substantially in the form set forth in Exhibit A hereto (the "Bill of Sale, Assignment and Assumption Agreement");
(ii) instruments of assignment with respect to all of the Company's rights and interests in real property leases and special warranty deeds (of a type equivalent to that known in New York as a "bargain and sale deed with covenants against grantor's actions") in recordable form sufficient to convey to Purchaser all of the Company's rights and interests in the Real Property;
(iii) a duly executed counterpart of the Adjustment Escrow Agreement and the Security Escrow Agreement;
(iv) all other instruments of conveyance and transfer sufficient to convey the Assets to Purchaser; and
(v) all other documents, instruments and writings consistent with the terms of this Agreement and required to be delivered by the Company at or prior to the Closing Date pursuant to this Agreement.
(b) Purchaser shall deliver to Company:
(i) the Purchase Price in accordance with Section 2.1 hereof;
(ii) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement;
(iii) a duly executed counterpart of the Adjustment Escrow Agreement and the Security Escrow Agreement; and
(iv) all other documents, instruments and writings required to be delivered by Purchaser at or prior to the Closing Date pursuant to this Agreement.
(c) Notwithstanding clauses (ii) and (iv) of Section 1.7(a) hereof, at the request of Purchaser, the Company shall deliver the instruments of assignment, conveyance and transfer described in such clauses sufficient to convey the Assets in respect of any Station or Stations to such other Person as is designated by Purchaser that has obtained the FCC's consent to the assignment of the FCC Licenses relating to such Station or Stations to such Person. Notwithstanding anything to the contrary contained in this Agreement, unless such Person is a wholly owned subsidiary of Purchaser, such other Person shall be deemed not to be a party to this Agreement and shall have no legal or equitable rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
Article 2. Purchase Price.
2.1 Purchase Price; Payment. (a) In consideration of the sale of the Assets
and the Business hereunder, Purchaser shall (i) pay the Company in cash the
aggregate amount of (x) $310,000,000, plus (y) if the earnings before interest,
taxes, depreciation and amortization of the Stations for the fiscal year ending
December 26, 1998, calculated in conformity with GAAP and on a basis consistent
with the basis used in preparing the Unaudited Financial Statements as of, and
for year ended, December 27, 1997 referred to in Section 3.5 hereof, in each
case after adding back corporate overhead expense (to the extent otherwise
deducted in computing earnings) and film and program expenses and subtracting
actual cash payments on film and program contracts either made or due but not
yet made (in each case adjusted to include one month's payment for each month in
which any such payment is due) and in each case excluding the results of
operations of WOKR-TV (Rochester, New York) (the "1998 BCF"), exceeds
$12,700,000, an amount equal to 14.57 times the difference between the 1998 BCF
and $12,700,000 (but in no event shall the amount of the addition pursuant to
this clause (y) be more than $7,000,000), (the "Earnings Adjustment") plus (if
greater than or equal to zero) or minus (if less than zero), as the case may be,
(z) the amount of the Net Financial Assets as of 11:59 p.m., New York City time,
on the day immediately preceding the Closing Date, subject to adjustment
pursuant to Section 2.2 hereof (the "Purchase Price") and (ii) assume the
Assumed Liabilities.
(b) On or before five Business Days prior to the Closing, the Company shall deliver to Purchaser (i) a statement setting forth the amount estimated in good faith by the Company to be the amount of the Earnings Adjustment (the "Proposed Earnings Adjustment") and the amount of the Net Financial Assets as of the Closing Date (the "Estimated Net Financial Assets") and (ii) a notice designating the accounts or accounts to which the payment to or on behalf of the Company pursuant to clause (i) of Section 2.1(c) is to be made.
(c) At the Closing, Purchaser shall deliver
(i) the sum of (x) $299,000,000 plus (if the Estimated Net Financial
Assets is greater than or equal to zero) or minus (if the Estimated Net
Financial Assets is less than zero), as the case may be, (y) the Estimated
Net Financial Assets, by wire transfer in immediately available funds to
the account or accounts designated by the Company in accordance with
Section 2.1(b);
(ii) the sum of (x) $3,000,000 plus (y) the Proposed Earnings Adjustment, if any, (collectively, the "Adjustment Escrow"); by wire transfer in immediately available funds to the Adjustment Escrow Agent pursuant to the Adjustment Escrow Agreement; and
(iii) $8,000,000 by wire transfer in immediately available funds to the Security Escrow Agent pursuant to the Security Escrow Agreement.
2.2 Post-Closing Adjustment.
(a) The parties agree that no later than 75 days after the Closing (or such later date on which such statement reasonably can be prepared and delivered in light of the compliance of Purchaser and the Company with their obligations set forth in next two succeeding sentences), the Company shall cause to be prepared and deliver to Purchaser (i) a statement of the actual Net Financial Assets as of 11:59 p.m., New York City time, of the day immediately preceding the Closing Date (the "Closing Statement") certified by PriceWaterhouseCoopers L.L.P., independent accountants for the Company, to be prepared (except as otherwise provided in Section 9 of the Disclosure Schedule) in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 27, 1997 referred to in Section 3.5 hereof and (ii) a determination (the "Proposed NFA Adjustment") of the amount by which the Net Financial Assets as then determined by the Company is less than or greater than the Estimated Net Financial Assets (the amount of such excess or shortfall, together with the adjustment, if any, for the amount of the Earnings Adjustment as described below, is referred to herein as the "Adjustment"). Purchaser shall provide the Company and its independent accountants access at all reasonable times to the relevant personnel, properties, books and records of the Business for such purposes and to assist the Company and its independent accountants in preparing the Closing Statement. Purchaser's assistance shall include, without limitation, the closing of the Business's books as of the Closing, the preparation of schedules supporting the amounts set forth in the general ledger and other books and records of the Business, and such other assistance as the Company or its independent accountants may reasonably request. During the 30-day period following the delivery by the Company of the Closing Statement and the Proposed NFA Adjustment referred to in the first sentence of this Section 2.2(a), Purchaser and its independent accountants will be permitted to review the working papers of the Company and its independent accountants relating to the preparation of the Closing Statement, the Proposed NFA Adjustment and the Proposed Earnings Adjustment. If, within 30 days after delivery by the Company of the Closing Statement and the Proposed NFA Adjustment, Purchaser notifies the Company that it disagrees with the Closing Statement and the Proposed NFA Adjustment and/or the Proposed Earnings Adjustment and the Company and Purchaser cannot agree with respect to the Closing Statement and the Proposed NFA Adjustment and/or the Proposed Earnings Adjustment, as the case may be, within five days of the notice of disagreement provided by Purchaser to the Company, then the determination shall be submitted for resolution (the "Resolution") promptly to an independent nationally recognized accounting firm jointly selected by the Company and Purchaser, whose determination (the "Accounting Firm Determination") shall be instructed by the parties to be made within 20 days and be binding upon all parties hereto, and the fees and expenses of which shall be borne equally by Purchaser and the Company. In the event that (whether expressly or by failure of Purchaser to provide notice of any disagreement within the applicable period) the Company and Purchaser agree as to the amount of the Adjustment (an "Adjustment Agreement") without submitting the matter for Resolution, the parties shall deliver a joint certificate to the Adjustment Escrow Agent setting forth the amount of the Adjustment Escrow to be paid to each of the Purchaser and the Company pursuant to this Section 2.2. In the event of an Accounting Firm Determination, the accounting firm shall deliver a certificate to each of Purchaser, the Company and the Adjustment Escrow Agent setting forth the amount of the Adjustment. The amount of Net Financial Assets as of 11:59 p.m., New York City time, on the day immediately preceding the Closing Date, as definitively determined pursuant to this Section 2.2(a) is referred to herein as the "Actual Net Financial Assets."
(b) At the Closing, the Company, Purchaser and such financial institution as shall have been agreed by the parties prior to the Closing Date (together with any successor jointly appointed by the Company and the Purchaser, the "Adjustment Escrow Agent") shall execute and deliver an escrow agreement substantially in the form set forth in Exhibit B hereto (the "Adjustment Escrow Agreement"). From and after the Closing, the Adjustment Escrow Agent shall act as escrow agent, pursuant to the Adjustment Escrow Agreement, in effecting the payment of the amounts held in the Adjustment Escrow as set forth herein.
(c) As soon as practicable after the earlier of an Adjustment Agreement or an Accounting Firm Determination (but in any event within two Business Days after the Adjustment Agreement or the Accounting Firm Determination):
(i) if the sum of the Actual Net Financial Assets and the Earnings Adjustment, if any, used to determine the Adjustment is equal to or greater than the sum of the Estimated Net Financial Assets and the Proposed Earnings Adjustment, then:
(A) the Adjustment Escrow Agent shall pay to the Company from the Adjustment Escrow the full amount of the Adjustment Escrow, and
(B) Purchaser shall pay to the Company the amount by which the sum of the Actual Net Financial Assets and the Earnings Adjustment used to determine the Adjustment exceeds the sum of the Estimated Net Financial Assets and the Proposed Earnings Adjustment;
(ii) if the sum of the Actual Net Financial Assets and the Earnings Adjustment, if any, used to determine the Adjustment is less than the sum of the Estimated Net Financial Assets and the Proposed Earnings Adjustment but the amount of such shortfall does not exceed the sum of $3 million plus the Proposed Earnings Adjustment; then
(A) The Adjustment Escrow Agent shall pay to Purchaser from the Adjustment Escrow an amount equal to the amount by which the sum of the Estimated Net Financial Assets and the Proposed Earnings Adjustment exceeded the sum of the Actual Net Financial Assets and the Earnings Adjustment used to determine the Adjustment, and
(B) the Adjustment Escrow Agent shall pay to the Company from the Adjustment Escrow the remaining amount of the Adjustment Escrow (after giving effect to clause (A) above); and
(iii) if the sum of the Actual Net Financial Assets and the Earnings Adjustment, if any, used to determine the Adjustment is less than the sum of the Estimated Net Financial Assets and the Proposed Earnings Adjustment and the amount of such shortfall exceeds the sum of $3 million plus the Proposed Earnings Adjustment, then
(A) the Adjustment Escrow Agent shall pay to Purchaser from the Adjustment Escrow the full amount of the Adjustment Escrow, and
(B) the Security Escrow Agent shall pay to the Purchaser from the Security Escrow an amount equal to the amount by which (x) the sum of the Estimated Net Financial Assets and the Proposed Earnings Adjustment exceeds (y) the sum of the Actual Net Financial Assets plus the Earnings Adjustment used to determine the Adjustment plus $3 million plus the Proposed Earnings Adjustment.
Each of Purchaser and the Company shall timely give all necessary instructions to the Adjustment Escrow Agent and the Security Agent so that the Adjustment Escrow and (if applicable) the Security Escrow are paid and distributed in accordance with this Section 2.2(c). All payments pursuant to this Section 2.2(c) shall be by wire transfer in immediately available funds to the account or accounts designated by the Company and/or Purchaser, as the case may be, no later than two Business Days prior to such payment.
(d) Any interest or other investment income earned for the period from the time that any portion of the Purchase Price is delivered to the Adjustment Escrow Agent pursuant to this Agreement until all amounts held in the Adjustment Escrow have been distributed in accordance with the Adjustment Escrow Agreement while held by the Adjustment Escrow Agent shall be paid to the Company in addition to, and at the same time as, payment of the Adjustment Escrow in accordance with the terms of this Agreement; provided, however, that, to the extent that any portion of the Adjustment Escrow is paid to Purchaser pursuant to of Section 2.2(c) hereof, a pro rata portion of such interest or other investment income (determined on the basis of the relative portions of the Adjustment Escrow to be paid to Purchaser and the Company, respectively, pursuant to Section 2.2(c) hereof) shall be instead paid to Purchaser. Any such interest or other investment income shall be deemed not to constitute Adjustment Escrow.
(e) The Company and Purchaser shall each be responsible for one-half of the fees and expenses of the Adjustment Escrow Agent.
2.3 Security Escrow. (a) At the Closing, the Company, Purchaser and such financial institution as shall have been agreed by the parties prior to the Closing Date (together with any successor jointly appointed by the Company and Purchaser, the "Security Escrow Agent") shall execute and deliver an escrow agreement substantially in the form set forth in Exhibit C hereto (the "Security Escrow Agreement"). From and after the Closing, the Security Escrow Agent shall act as escrow agent, pursuant to the Security Escrow Agreement, in effecting the payment of the amounts held in the escrow account (the "Security Escrow") under the Security Escrow Agreement.
(b) Any interest or other investment income earned for the period from the time that any portion of the Purchase Price is delivered to the Security Escrow Agent pursuant to this Agreement until all amounts held in the Security Escrow have been distributed in accordance with the Security Escrow Agreement while held by the Security Escrow Agent shall be paid monthly to the Company or the Fund Holder, as the case may be; provided that no such payments shall be made until (i) a determination of whether any payment out of the Security Escrow pursuant to Section 2.2(c)(iii)(B) is required and (ii) if so required, such payment has been made; and provided further, that to the extent that any portion of the Security Escrow is
paid to Purchaser pursuant to Section 2.2(c)(iii)(B) hereof, a pro rata portion of such interest or other investment income earned through the date of such payment (determined on the basis of the relative portions of the Security Escrow so paid and that not so paid) shall be instead paid to Purchaser at the time such portion of the Security Escrow is paid to Purchaser. Any interest or other investment income earned on amounts held in the Security Escrow shall be deemed not to constitute Security Escrow.
(c) The Company and Purchaser shall each be responsible for one-half of the fees and expenses of the Security Escrow Agent.
2.4 Investment of Escrow Amounts. The Adjustment Escrow Agent and the Security Escrow Agent shall each be authorized to invest the portion of the Purchase Price held by it, on receipt of instructions from the Company, in:
(i) Commercial paper of any corporation rated at least A-1 by S&P and P-1 by Moody's;
(ii) Negotiable certificates of deposit of United States banks having
(A) a long-term senior debt rating of at least A by S&P and Moody's, (B)
deposits in excess of $2,000,000,000 and (C) commercial paper rating
designations of at least A-1 by S&P and P-1 by Moody's;
(iii) Repurchase agreements with any United States bank which are fully collateralized by direct obligations of the United States or obligations of agencies or sponsored agencies of the United States government, excluding in all cases collateralized mortgage obligations of any kind; and
(iv) Money market instruments rated at least A-1 by S&P and P-1 by Moody's that are restricted to investments described in clause (iii);
provided that in no event shall any investment of the types described in clause
(i), (ii) or (iv) exceed ten percent of the net assets of the issuer thereof and
provided further that all investments shall have maturity dates on or before the
anticipated dates of the relevant payments hereunder.
The Adjustment Escrow Agent and the Security Escrow Agent shall each be authorized to register securities held by it in its name or in the name of a nominee or in bearer form and may deposit any securities or other property in a depository or a clearing corporation.
2.5 Allocation of the Purchase Price. No later than the Closing Date, Purchaser and the Company shall jointly determine the proper allocation of the Purchase Price among the Stations. No later than 90 days following the Closing Date, Purchaser shall engage a nationally recognized appraiser to determine the proper allocation of the Purchase Price allocated to, and the Assumed Liabilities relating to, each Station among the Assets of each Station, in each case in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the "Allocation"), provided that the parties hereto agree that no part of the Purchase Price shall be allocated to any of the agreements referred to in Section 1.1(r) hereof. The Allocation shall be binding upon Purchaser and the Company, and none of the parties hereto
shall file, or cause to be filed, any Tax Return, Internal Revenue Service Form 8594 or other form, or take a position with any Tax authority or jurisdiction, that is inconsistent with the Allocation without obtaining the prior written consent of the Company or Purchaser, as the case may be. The fees and disbursements of appraiser engaged in connection with the Allocation shall be paid by Purchaser.
Article 3. Representations and Warranties Relating to the Company.
The Company represents and warrants to Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Maine and has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state in which the operation of its business or ownership of its assets makes such qualification necessary, except where the failure to so qualify or be in good standing would not reasonably be expected to have a Material Adverse Effect.
The Company has previously made available to Purchaser a complete and correct copy of its articles of incorporation and by-laws, each as currently in effect.
3.2 Binding Agreement. The Company has all requisite corporate power and authority to enter into this Agreement, to execute and deliver this Agreement, the Bill of Sale, Assignment and Assumption Agreement, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the Bill of Sale, Assignment and Assumption Agreement by the Company and the consummation by the Company of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate and stockholder action on the part of the Company. This Agreement has been, and on the Closing Date the Bill of Sale, Assignment and Assumption Agreement will be, duly executed and delivered on behalf of the Company and, assuming the due authorization, execution and delivery by Purchaser, constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity).
3.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Section 3.3 of the Disclosure Schedule, the execution, delivery and performance by the Company of this Agreement, the Bill of Sale, Assignment and Assumption Agreement do not and will not (a) violate, conflict with or result in the breach or default of any provision of the articles of incorporation or by-laws of the Company, (b) conflict with or violate in any material respect any material Law or material Governmental Order applicable to the Company or any of its properties or assets, (c) except for (i) the notification requirements of the HSR Act and (ii) such filings with, and orders of, the FCC as may be required under the Communications Act and the FCC's rules and regulations in connection with this Agreement and the transactions contemplated hereby, require any material consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental
Authority, or (d) conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Assets, or result in the imposition or acceleration of any payment, time of payment, vesting or increase in the amount of compensation or benefit payable, pursuant to any Material Contract.
3.4 Equity Investments. The Assets do not include any capital stock of any corporation or any equity interest in any Person.
3.5 Financial Statements. (a) The Company has furnished to Purchaser audited balance sheets for the Company (including the Maine Media Business) as of December 28, 1996 and December 27, 1997, and audited statements of income and retained earnings, and cash flows for the years then ended, all certified by Coopers & Lybrand L.L.P., independent accountants, whose opinions thereon are included therein (collectively referred to herein as the "Audited Financial Statements"). Except as otherwise disclosed in Section 3.5 of the Disclosure Schedule, the Audited Financial Statements (including any notes thereto) present fairly, in all material respects, the financial position of the Company (including the Maine Media Business) as of December 28, 1996 and December 27, 1997, and the results of its operations and its cash flows for the years then ended and have been prepared in conformity with GAAP.
(b) The Company has furnished to Purchaser (i) the consolidated balance sheets for the Stations as of December 31, 1994, December 31, 1995, December 31, 1996 and December 31, 1997 and consolidated statements of operations for the years then ended, in each case as set forth on pages 114 and 115 of the Confidential Memorandum (excluding, without limitation, any estimated, budgeted or projected information set forth therein) and (ii) the consolidated balance sheets for the Stations as of June 30, 1998 and consolidated statements of operations for the Stations for the six month period then ended (the financial statements referred to in clauses (i) and (ii) are collectively referred to herein as the "Unaudited Financial Statements" and, together with the Audited Financial Statements, the "Financial Statements"). Except as otherwise disclosed in Section 3.5 of the Disclosure Schedule, the Unaudited Financial Statements (including any notes thereto) present fairly, in all material respects, the financial position of the Stations, as of the dates thereof and the results of operations for the Stations for the periods then ended and have been prepared in conformity with GAAP.
(c) Except as set forth in Section 3.5 of the Disclosure Schedule,
there are no liabilities or obligations, secured or unsecured (whether absolute,
accrued, contingent or otherwise, and whether due or to become due), of the
Company with respect to the Stations of a nature required by GAAP to be
reflected in a corporate balance sheet, except such liabilities and obligations
(i) that are adequately accrued or reserved against in the Financial Statements
or disclosed in the notes thereto (ii) that were incurred after June 30, 1998
either in the ordinary course of business consistent with past practice or in
connection with the transactions contemplated by this Agreement or (iii) that
are immaterial in amount.
3.6 Title to Assets; Related Matters. Except for Permitted Exceptions or as disclosed in Section 3.6 of the Disclosure Schedule (i) the Company has good, valid and marketable title (as measured in the context of their current uses) to, or, in the case of leased or
subleased assets, valid and subsisting leasehold interests (as measured in the
context of their current uses) in, or otherwise has the right to use, all of the
Assets, free and clear of all Encumbrances (except for any assets sold or
otherwise disposed of, or with respect to which the lease, sublease or other
right to use such Asset has expired or has been terminated, in each case after
the date hereof solely to the extent permitted under Section 5.1(a) hereof),
(ii) each lease or sublease pursuant to which any Leased Property is leased by
the Company is legal, valid and binding on the Company and, to the Company's
Knowledge, the other parties thereto and grants the leasehold interest it
purports to grant, including, without limitation, any rights to nondisturbance
and peaceful and quiet enjoyment that may be contained therein, and the Company,
and to the Company's Knowledge each other party thereto, is in compliance in all
material respects with the provisions of such leases and subleases, (iii) the
Assets, together with the Excluded Assets, constitute all the assets and rights
of the Company and its Affiliates used in or necessary for the operation of the
Business as currently conducted, (iv) except for Equipment scheduled to be
replaced by the Company's capital expenditure budget, the Real Property, Leased
Property and Equipment is, in all material respects, in good operating condition
and repair (ordinary wear and tear excepted) taking into account the age
thereof, (v) there are no contractual or legal restrictions to which the Company
is a party or by which the Real Property is otherwise bound that preclude or
restrict in any material respect the Company's ability to use the Real Property
for the purposes for which it is currently being used and (vi) no portion of the
Real Property or Leased Property is the subject of, or affected by, any
condemnation, eminent domain or inverse condemnation proceeding currently
instituted or, to the Company's Knowledge, threatened. On the Closing Date, the
Company shall sell, convey, assign, transfer and deliver to Purchaser all of the
Company's right, title and interest in and to all of the Assets, free and clear
of all Encumbrances other than Permitted Exceptions, Encumbrances disclosed in
Section 3.6 of the Disclosure Schedule and Encumbrances arising from Purchaser's
acts. Schedule 1.1(d) contains a true and correct list of all Real Property
owned by the Company used in the Business (other than the Excluded Assets).
3.7 Absence of Certain Changes, Events and Conditions. Since June 30, 1998, except as otherwise provided in or contemplated by this Agreement, as disclosed in Section 3.7 of the Disclosure Schedule:
(a) Other than in the ordinary course of business consistent with past practice, the Company has not sold, transferred, leased, subleased, licensed or otherwise disposed of any material assets used in the Business, other than the sale of obsolete Equipment;
(b) (i) the Company has not granted any increase, or announced any increase, in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable to any of the Business Employees, including, without limitation, any increase or change pursuant to any Employee Benefit Plan, or (ii) established, increased or accelerated the payment or vesting of any benefits under any Employee Benefit Plan with respect to Business Employees, in either case except (A) as required by Law, (B) that involve only increases consistent with the past practices of the Company or (C) as required under any existing agreement or arrangement;
(c) the Company has not made any material change in any method of accounting or accounting practice or policy used by the Company, other than changes required by
law or under GAAP;
(d) the Company has not suffered any extraordinary casualty loss or damage with respect to any material assets used in the Business, whether or not covered by insurance;
(e) there has not been any Material Adverse Effect;
(f) except in connection with the transactions contemplated hereby, the Business has been conducted in all material respects only in the ordinary and usual course consistent with past practice;
(g) the Company has not created, incurred, assumed or guaranteed any Indebtedness, except for net borrowings under existing lines of credit;
(h) other than in the ordinary course of business, the Company has not compromised, settled, granted any waiver or release relating to, or otherwise adjusted any Action, material Liabilities or any other material claims or material rights of the Business; and
(i) the Company has not entered into any agreement, contract, commitment or arrangement to do any of the foregoing.
3.8 Litigation. Except as disclosed in Section 3.8 of the Disclosure Schedule, as of the date hereof, (i) there are no Actions against the Company relating to the Business or the Assets pending, or, to the Company's Knowledge, threatened to be brought by or before any Governmental Authority, (ii) to the Company's Knowledge, the Company is not subject to any Governmental Orders (nor, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) relating to the Business or the Assets and (iii) there is no Action pending, or, to the Company's Knowledge, threatened to be brought before any Governmental Authority, that seeks to question, delay or prevent the consummation of the transactions contemplated hereby.
3.9 Insurance. Section 3.9 of the Disclosure Schedule lists all insurance policies of the Company as of the date hereof relating to the Assets or the Business (the "Insurance Policies"). Except as set forth in either Section 3.9 or Section 3.14 of the Disclosure Schedule, (i) all insurance policies relating to the Assets or Business to which the Company is a party or under which the Assets or the Business is covered (or replacement policies therefor) are in full force and effect, and the Company has paid all premiums due and is not in default, (ii) no notice of cancellation or non-renewal with respect to, or disallowance of any claim under, any such policy has been received by the Company and (iii) to the Company's Knowledge, the Company has not been refused insurance with respect to the Business or Assets, nor has coverage with respect to the Business or Assets been previously canceled or limited, by an insurer to which the Company has applied for such insurance, or with which the Company has held insurance, within the last three years.
3.10 Material Contracts. Section 3.10 of the Disclosure Schedule sets forth all Material Contracts, including, without limitation, all amendments thereof, as of the date hereof.
Complete and accurate copies of all written Material Contracts listed in Section 3.10 of the Disclosure Schedule and accurate summaries of the material terms of all oral Material Contracts have been delivered or made available to Purchaser (except as otherwise noted therein). Except as set forth in Section 3.10 of the Disclosure Schedule, (1) each Material Contract and each other contract or agreement that is material to the Business is legal, valid and binding on the Company and, to the Company's Knowledge, the other parties thereto, (2) the Company is not in default under any Material Contract or other contract or agreement that is material to the Business and no event has occurred or failed to occur that, with or without the giving of notice or the lapse of time or both, would result in such a default and (3) to the Company's Knowledge, no other party to any Material Contract or other contract or agreement that is material to the Business has breached or is in default thereunder.
3.11 Permits and Licenses; Compliance with Law. Except as disclosed in
Section 3.11 of the Disclosure Schedule, (i) the Company currently holds all the
material permits, licenses, authorizations, certificates, exemptions and
approvals of Governmental Authorities or other Persons including, without
limitation, Environmental Permits, necessary for the current operation and the
conduct (as it is being conducted prior to the Closing) of the Business, other
than the FCC Licenses (which are provided for in Section 3.12 hereof)
(collectively, "Permits"), and all material Permits are in full force and
effect, (ii) since November 1, 1996, the Company has not received any written
notice from any Governmental Authority revoking, canceling, rescinding,
modifying or refusing to renew any material Permit and (iii) the Company is in
material compliance with the requirements of all material Permits.
Except as disclosed in Section 3.11 of the Disclosure Schedule (i) the Company is in compliance in all material respects with all Laws and Governmental Orders, other than the FCC Licenses, the Communications Act and the rules and regulations of the FCC (which are provided for in Section 3.12 hereof), applicable to the conduct of the Business as it is being conducted prior to the Closing and (ii) the Company has not been charged since November 1, 1996 by any Governmental Authority with a violation of any Law or any Governmental Order relating to the conduct of its business, which charge has not been fully resolved and, to the extent required, accounted for.
3.12 FCC Licenses. Except as disclosed in Section 3.12 of the Disclosure Schedule, (i) the Company holds the FCC Licenses listed in Section 3.12 of the Disclosure Schedule, which FCC Licenses expire on the respective dates set forth in Section 3.12 of the Disclosure Schedule; (ii) Section 3.12 of the Disclosure Schedule sets forth a true and complete list of any and all pending applications filed with the FCC by the Company, true and complete copies of which have been delivered to Purchaser or made available for inspection by Purchaser; (iii) the FCC Licenses listed in Section 3.12 of the Disclosure Schedule constitute all of the licenses and authorizations required under the Communications Act and the current rules and regulations of the FCC in connection with the operation of the Stations as currently operated; (iv) the FCC Licenses are in full force and effect through the dates set forth in Section 3.12 of the Disclosure Schedule, and there is not pending or, to the Knowledge of the Company, threatened, any action by or before the FCC to revoke, suspend, cancel, rescind, modify, or refuse to renew in the ordinary course any of the FCC Licenses; (v) the Stations are operating in compliance with the FCC Licenses and in compliance in all material respects with the Communications Act and the current rules and regulations of the FCC and have been assigned digital television
frequencies; and (vi) to the Company's Knowledge, there exist no facts, conditions or events relating to the Company that would reasonably be expected to cause the revocation of an FCC License or denial by the FCC of the application for consent to the assignment of the FCC Licenses as provided in this Agreement. The Company has filed all reports, forms and statements, including, without limitation, construction permit applications for digital television channels, required to be filed by the Company with the FCC and maintained its public files in accordance with the rules and regulations of the FCC.
3.13 Environmental Matters. Except as disclosed in Section 3.13 of the Disclosure Schedule, to the Company's Knowledge, (i) Hazardous Materials have not been Released on any Real Property except in material compliance with applicable Law; (ii) there have been no events related to the Business or the Real Property that would reasonably be expected to give rise to any material liability under any Environmental Law; (iii) the Business, the Real Property and the Leased Property is now, and for the past five years has been, in material compliance with all applicable Environmental Laws and there are no extant conditions that would reasonably be expected to constitute an impediment to such compliance in the future; (iv) the Business has disposed of all wastes arising from or otherwise relating to its business, including those wastes containing Hazardous Materials, in material compliance with all applicable Environmental Laws (including the filing of any required reports with respect thereto) and Environmental Permits and (v) there are no pending or, to the Company's Knowledge, threatened Environmental Claims against the Company relating to the Real Property.
3.14 Employee Benefit Matters. The Company has made available to Purchaser copies of all material Employee Benefit Plans (including, without limitation, all plans governed by ERISA, providing pension benefits or providing health, life insurance or disability benefits), which plans are set forth in Section 3.14 of the Disclosure Schedule. Except as set forth in Section 3.14 of the Disclosure Schedule, all such Employee Benefit Plans are in compliance with the terms of the applicable plan and the requirements prescribed by applicable law currently in effect with respect thereto (including Sections 4980B and 5000 of the Code), and the Company has performed in all material respects all obligations required to be performed by it under, and is not in default under or in violation of, any of the terms of such Employee Benefit Plans where any such noncompliance, nonperformance, default or violation would, individually or in the aggregate, be reasonably expected to result in liability in excess of $25,000. The Company has no post-retirement welfare obligations with respect to the Business for other than Business Employees of WGME-TV and Corporate Office Employees. The Company has not incurred, and, to the Knowledge of the Company, no event, transaction or condition has occurred or exists which is reasonably expected to result in the occurrence of, any liability to the Pension Benefit Guaranty Corporation (other than contributions to the plan and premiums to the Pension Benefit Guaranty Corporation, which in either event are not in default) or any "withdrawal liability" within the meaning of Section 4201 of ERISA, or any other liability pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and several liability provisions of the Code relating to employee benefit plans, in any such case relating to any Employee Benefit Plan or any pension plan maintained by any company that during the last five years was or currently would be treated as a single employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA affiliate"), where individually or in the aggregate, in any of such events, any such liability would be in excess of $25,000. Except as set forth in Section 3.14 of the Disclosure Schedule and except for such matters that would not, individually or in the aggregate,
reasonably be expected to result in liability in excess of $25,000, each
Employee Benefit Plan intended to be "qualified" within the meaning of Section
401(a) of the Code has received a favorable determination letter that such plan
is so qualified and the trusts maintained thereunder are exempt from taxation
under Section 501(a) of the Code and, to the Company's Knowledge is so
qualified, and no such Employee Benefit Plan holds employer securities. Except
as set forth in Section 3.14 of the Disclosure Schedule, neither the Company nor
any ERISA Affiliate has ever made or been obligated to make, or reimbursed or
been obligated to reimburse another employer for, contributions to any
multiemployer plan (as defined in ERISA Section 3(37)). Except as set forth in
Section 3.14 of the Disclosure Schedule, the Employee Benefit Plans are not
presently under audit or examination (and have not received notice of a
potential audit or examination) by any governmental authority, and no matters
are pending with respect to the Qualified Plan under any governmental compliance
programs. With respect to each Employee Benefit Plan, there have been no
violations of Code Section 4975 or ERISA Sections 404 or 406 as to which
successful claims would, individually or in the aggregate, result in liability
in excess of $25,000 for the Company or any Person required to be indemnified by
it. Except as set forth in Section 3.14 of the Disclosure Schedule and except as
expressly provided in this Agreement, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or officer of the Company or any ERISA affiliate to severance pay,
unemployment compensation or other payment, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer. There are no pending, or, to the Company's Knowledge, threatened or
anticipated claims by or on behalf of any Employee Benefit Plan, by any employee
or beneficiary covered under any such plan, or otherwise involving any such plan
(other than routine claims for benefits) where any such pending, threatened or
anticipated claims would, individually or in the aggregate, reasonably be
expected to result in liability in excess of $25,000. The $25,000 liability
threshold in this Section 3.14 is intended to apply only to this Section 3.14,
and is in no way intended to be used in defining materiality anywhere in this
Agreement.
3.15 Labor Relations. Section 3.15 of the Disclosure Schedule sets forth a list of all labor organizations recognized as representing the employees of the Business. Complete and accurate copies of all collective bargaining agreements and other labor union contracts between the Company and any such labor organizations have been delivered or made available to Purchaser. Other than as set forth in Section 3.15 of the Disclosure Schedule, (i) the Company is not party to any collective bargaining agreement or other labor union contract applicable to employees of the Business, (ii) there are no strikes, slowdowns or work stoppages pending or, to the Company's Knowledge, threatened between the Company and any employees of the Business and the Company has not experienced any such strike, slowdown, or work stoppage within the past two years, in each case other than any such strike, slowdown or work stoppage after the date hereof arising out of or relating to the transactions contemplated hereby, (iii) there are no unfair labor practice complaints pending or, to the Company's Knowledge, threatened against the Business relating to employees of the Business before the National Labor Relations Board or any other Governmental Authority or, to the Company's Knowledge, any current union representation questions involving employees of the Business and (iv) the Company is in compliance in all material respects with its obligations under all Laws and Governmental Orders governing its employment practices with respect to employees of the Business, including, without limitation, provisions relating to wages, hours and equal opportunity, employment discrimination, workers' compensation, family and medical leave, the Immigration Reform and Control Act, and
occupational safety and health requirements, (v) to the Company's Knowledge, all Persons classified by the Company as independent contractors with respect to the Business do satisfy the requirements of law to be so classified, and the Company has fully and accurately reported their compensation on IRS Forms 1099 when required to do so, and (vi) there is no charge or compliance proceeding actually pending or, to the Company's Knowledge, threatened against the Company with respect to employees of the Business before the Equal Employment Opportunity Commission or any state, local, or foreign agency responsible for the prevention of unlawful employment practices.
3.16 Intellectual Property. Section 3.16 of the Disclosure Schedule includes a complete list of all call letters of the Stations (the "Call Letters"). Except as disclosed in Section 3.16 of the Disclosure Schedule, (i) the rights of the Company in or to the Call Letters and, to the Company's Knowledge, the other Intellectual Property do not conflict with or infringe on the rights of any other Person, (ii) the Company has not received any claim from any Person that the rights of the Company in or to the Intellectual Property conflict with or infringe on the rights of any other Person and, to the Company's Knowledge, no such claim is threatened, (iii) the Company owns (free and clear of any Encumbrances other than Permitted Exceptions), is licensed or otherwise has the right to use all Intellectual Property necessary for the conduct of the Business as currently conducted by the Company except where the failure to have such rights would not reasonably be expected to impair the operations of the Business in any material respect and (iv) to the Company's Knowledge, no other Person is infringing or diluting the rights of the Company with respect to the Intellectual Property.
3.17 Taxes. Except as disclosed in Section 3.17 of the Disclosure Schedule and except relating exclusively to the Maine Media Business, (a) all material Tax Returns required to be filed by the Company have been timely filed and all such Tax Returns are correct and complete in all material respects; (b) all Taxes required to be paid by the Company, whether or not shown as due on such Tax Returns, have been timely paid other than such Taxes, if any, as are described in Section 3.17 of the Disclosure Schedule and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Company's financial statements; (c) there is no action, suit, proceeding, investigation, audit or claim pending or, to the Company's Knowledge, threatened with respect to Taxes of the Company or for which the Company may be liable, and no adjustment relating to such Taxes of the Company has been proposed in writing by any Tax authority and remains unresolved; (d) there are, and immediately prior to the Closing there will be, no Tax liens on any of the assets of the Company (other than liens for Taxes that are not yet due and payable); and (e) all Taxes that the Company is required to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Tax authority.
3.18 Commissions. With the exception of any responsibility that the Company has to Lazard Freres & Co. LLC, whose fee will be paid by the Company, and the fees and incentive compensation set forth in Section 3.18 of the Disclosure Schedule, which fees and compensation will be paid by the Company, there is no broker or finder or other Person who has any valid claim against the Company, Purchaser, or any of their respective Affiliates or any of their respective assets for a commission, finders' fee, brokerage fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by on or behalf of the Company, its stockholders or the Company's officers,
employees or agents.
3.19 Affiliate Transactions. Except as set forth in Section 3.19 of the Disclosure Schedule or as expressly otherwise provided or permitted in this Agreement, since December 27, 1997 the Company has not engaged in any transaction with any Affiliate thereof that was material to the Business, and the Company is not a party to any material agreements or arrangements with any Affiliates that will continue in effect after the Closing for the Purchaser that are not immediately terminable by the Purchaser without payment of any penalty or premium.
3.20 Accuracy and Completeness of Representations and Warranties. No representation or warranty made by the Company in this Article 3 contains any untrue statement of a material fact or omits a material fact necessary in order to make the representation or warranty not misleading.
Article 4. Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Company as follows:
4.1 Organization and Standing. Purchaser is a corporation duly incorporated, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business.
4.2 Binding Agreement. Purchaser has all requisite corporate power and authority to enter into this Agreement, to execute and deliver this Agreement and the Bill of Sale, Assignment and Assumption Agreement, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Bill of Sale, Assignment and Assumption Agreement by Purchaser and the consummation by Purchaser of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate and stockholder action on the part of Purchaser. This Agreement has been and, on the Closing Date, the Bill of Sale, Assignment and Assumption Agreement will be duly executed and delivered on behalf of Purchaser and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity).
4.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Section 4.3 of the Disclosure Schedule, the execution, delivery and performance by Purchaser of this Agreement and the Bill of Sale, Assignment and Assumption Agreement do not and will not (a) violate, conflict with or result in the breach or default of any provision of the certificate or articles of incorporation or by-laws of Purchaser, (b) materially conflict with or materially violate any material Law or material Governmental Order applicable to Purchaser or any of its properties or assets, (c) except for (i) the notification requirements of the HSR Act, (ii) such filings with, and orders of, the FCC as may be required under the Communications Act and
the FCC's rules and regulations in connection with this Agreement and the transactions contemplated hereby and (iii) such matters that would not reasonably be expected to materially impair or delay the consummation of the transactions contemplated hereby, require any consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority or any other Person or (d) except for such matters that would not reasonably be expected to materially impair or delay the consummation of the transaction contemplated hereby, conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Purchaser's assets pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license or permit, or franchise to which Purchaser is a party or by which its assets are bound.
4.4 Litigation. Except as described in Section 4.4 of the Disclosure Schedule, there are no Actions pending or, to Purchaser's knowledge, any Action threatened to be brought by or before any Governmental Authority, against Purchaser or any of its Affiliates that (i) seeks to question, delay or prevent the consummation of the transactions contemplated hereby or (ii) would reasonably be expected to affect adversely the ability of Purchaser to fulfill its obligations hereunder, including without limitation, Purchaser's obligations under Articles 1 and 2 hereof.
4.5 Commissions. With the exception of any responsibility that Purchaser has to Salomon Smith Barney Inc. whose fees will be paid by Purchaser, there is no broker or finder or other Person who has any valid claim against the Company, Purchaser, any of their respective Affiliates or any of their respective assets for a commission, finders' fee, brokerage fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by on or behalf of Purchaser, or its officers, employees or agents.
4.6 Financing. Purchaser will at Closing have sufficient funds to pay the Purchase Price pursuant to this Agreement and otherwise to satisfy its obligations hereunder.
4.7 Purchaser's Qualification. Except as set forth in Section 4.7 of the Disclosure Schedule, (i) Purchaser does not know of any fact or circumstance that could reasonably be expected to result in a finding by the FCC that Purchaser is not qualified legally, financially or otherwise to be the licensee of the Stations as its operations are now being conducted and (ii) except as set forth in Section 4.7 of the Disclosure Schedule, Purchaser does not know of any policy, rule, regulation or ruling of the FCC that could reasonably be expected to be violated by the acquisition of the Stations by Purchaser.
4.8 Accuracy and Completeness of Representations and Warranties. No representation or warranty made by Purchaser in this Article 4 contains any untrue statement of a material fact or omits a material fact necessary in order to make the representation or warranty not misleading.
Article 5. Covenants and Agreements.
5.1 Conduct of the Business Prior to Closing; Access. The Company covenants as follows:
(a) Between the date hereof and the Closing, except as contemplated by this Agreement or as described in either Section 3.7 or Section 5.1 of the Disclosure Schedule, or except with the consent of Purchaser (which consent shall not be unreasonably withheld), the Company will operate the Business in the ordinary course of business consistent with past practice and shall use commercially reasonable efforts to (1) preserve intact the Business and preserve the Business's relationships with customers, suppliers, licensees, licensors, the networks with whom the Stations are affiliated and others having business dealings with the Stations, (2) maintain the Business's inventory of supplies, parts and other materials and keep its books of account, records and files, in each case in the ordinary course of business consistent with past practice, (3) maintain the material items of Real Property, Leased Property and Equipment substantially in their present condition, ordinary wear and tear excepted, (4) pay or discharge all cash and barter obligations in the ordinary course of business, (5) bring current as of the Closing Date all payments due and payable under Program Contracts in accordance with their terms as in effect on the date hereof (with respect to Program Contracts existing as of the date hereof) or on the date originally entered into (with respect to Program Contracts entered into after the date hereof) and (6) maintain its corporate existence. Without limiting the generality of the foregoing, between the date hereof and the Closing, except as contemplated by this Agreement or as described in either Section 3.7 or Section 5.1 of the Disclosure Schedule, or except with the consent of Purchaser (which consent shall not be unreasonably withheld, except in the case of any consent relating to the entering into of any Program Contract providing for payments in excess of $30,000 or having a term greater than one year (other than any Program Contract that will be fully satisfied, discharged and performed prior to the Closing), in which case Purchaser may grant or withhold its consent in its absolute discretion (and the parties hereto further agree that no such consent unreasonably withheld shall be taken into account in any determination of whether a Material Adverse Effect has occurred), and any consent shall be deemed given unless withheld in writing no later than four Business Days after Purchaser's receipt of a written request for such consent), the Company will not with respect to the Business:
(i) create, assume or subject any of the assets of the Business to any Encumbrance, other than Permitted Exceptions and Encumbrances that will be released at or prior to the Closing;
(ii) make any material changes in the operations of the Business;
(iii) other than, in each case, in the ordinary course of business consistent with past practice, sell, transfer, lease, sublease, license or otherwise dispose of any material assets of the Business, other than the sale of obsolete Equipment that has been or is replaced with Equipment of like kind;
(iv) (A) grant any increase, or announce any increase, in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable by the Company to any of the officers or key employees of the Business, including, without limitation, any increase or change pursuant to any Employee Benefit Plan, or (B) establish or increase or promise to increase or accelerate the payment or vesting of any benefits under any Employee Benefit Plan with respect to officers or employees of the Business, in the case of either (A) or (B) except (I) as required by Law, (II) that involve only increases consistent with the past practices of the Company but in no event more than 5%, (III) as required under any existing agreement or arrangement, (IV) that involve increases related to promotions to the extent such increases result in the compensation and benefits of the relevant employee being consistent with the compensation and benefits provided to the holder of such position in the past or (V) that relate to the supplemental executive retirement plans identified in Section 3.14 of the Disclosure Schedule;
(v) make any change in any method of accounting or accounting practice or policy used by the Company, other than as required by law or under GAAP;
(vi) fail to maintain in full force and effect all of its existing casualty, liability or other insurance through the Closing in amounts at least equal to those in effect on the date hereof;
(vii) make any capital expenditures in excess of $500,000 in the aggregate that are not contemplated in the capital improvements budgeted for 1998;
(viii) (A) amend the payment terms of any Program Contract to
provide that payments that would otherwise be made prior to the
Closing are made after the Closing or (B) acquire, enter into, modify,
change or extend the term of (x) any Program Contract providing for
payments in excess of $10,000 or with a term greater than one year or
(y) Program Contracts not subject to clause (x) that in the aggregate
provide for payments in excess of $200,000;
(ix) acquire, enter into, modify, change or extend the term of any Material Contract, provided that this clause (ix) will not apply to the acquisition or entering into of any new Material Contract not otherwise subject to clauses (i) to (viii) or clauses (x) to (xvi) hereof with respect to which all Liabilities of the Company thereunder will be fully satisfied, discharged and performed prior to the Closing with no adverse effect on Purchaser;
(x) compromise, settle, grant any waiver or release relating to, or otherwise adjust, any material Action, material Liabilities or any other material claims or material rights;
(xi) enter into any new agreement, contract, commitment or
arrangement with any Affiliate of the Company that will be binding upon Purchaser, the Assets or the Stations after the Closing;
(xii) apply to the FCC for any construction permit that would adversely affect the Stations' present operations, or make any material change in the Stations' buildings, leasehold improvements, or fixtures;
(xiii) except with respect to promotion during ratings sweep periods (which shall not be subject to this clause (xiii)), enter into any trade, barter or similar agreements (other than Program Contracts) for the sale of advertising time that would be binding on the Stations after the Closing for any property or services in lieu of or in addition to cash that requires the provision of broadcast time having a value that exceeds $10,000 in any individual agreement or $200,000 in the aggregate;
(xiv) take any action, or refrain from taking any action, that would constitute a material breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Material Contract;
(xv) enter into or renew any time sales agreement except in the ordinary course of business for a term not exceeding 12 months; or
(xvi) enter into any agreement, contract, commitment or arrangement to do any of the foregoing.
(b) Pending the Closing, the Company shall:
(1) Give to Purchaser and its representatives reasonable access during normal business hours to all of the employees, properties, books and records of the Company and furnish Purchaser and its representatives with such information concerning the Company as Purchaser may reasonably require, including such access and cooperation as may be necessary to allow Purchaser and its representatives to interview the employees, to examine the books and records of the Company, and to inspect the Real Property and Equipment (which right of access shall not be exercised in any way which would unreasonably interfere with the normal operations, business or activities of the Company);
(2) Furnish to Purchaser within 20 days after the end of each month ending between the date of this Agreement and the Closing an unaudited statement of income and expense and a balance sheet for each Station for the month just ended; and
(3) From time to time, furnish to Purchaser such additional information (financial or otherwise) concerning the Company as Purchaser may reasonably request (which right to request information shall not be exercised in any way
which would unreasonably interfere with the normal operations, business or activities of the Company).
(c) Pending the Closing, the Company will maintain the validity of the FCC Licenses and comply with all requirements and the rules and regulations of the FCC in the operation of the Stations and will prepare and timely file with the FCC and diligently prosecute any necessary applications for renewal of the FCC Licenses and for construction permit applications for digital television channels. The Company will deliver to Purchaser, within ten Business Days after delivery or receipt, copies of any reports, applications or communications to or from the FCC or its staff related to the Stations which are delivered or received between the date of this Agreement and the Closing Date.
(d) Pending the Closing, the Company will maintain the Business's promotional activities and expenditures in the aggregate in all material respects in accordance with the Company's budget and will use its reasonable best efforts to maintain all affiliation agreements with television networks for the Stations.
5.2 Post-Closing Covenants and Agreement, and Other Employee Benefit Matters. (a) Purchaser shall at all reasonable times after reasonable notice to Purchaser from and after the Closing, make available without cost, for inspection and/or copying by the Company and any Person that was a stockholder of the Company during any of the tax years (or portions thereof) immediately preceding the Closing for which the relevant statute of limitations (including any waiver thereof) has not expired, or their respective representatives, the books and records of the Business for such tax years (or portions thereof). Such books and records shall be preserved by Purchaser until the later of the closing by tax audit of, or the expiration of the relevant statute of limitations (including any waiver thereof) with respect to, all open tax periods of the Company and such stockholders prior to and including the time immediately prior to the Closing. After the period set forth above, Purchaser may destroy the books and records in its possession unless, before expiration of such notice period, a former stockholder objects in writing to the destruction of any or all of such books and records, in which case such books and records shall be delivered to the objecting Person at the expense of the objecting Person. Notwithstanding the foregoing, Purchaser shall continue to preserve and, at all reasonable times after the Closing, to make available without cost, for inspection and/or copying by any Person that was a trustee or other fiduciary under the Employee Benefit Plans identified in Section 5.2 of the Disclosure Schedule, the books and records of such Employee Benefit Plan and the books and records of the Business relating thereto.
(b) Effective as of the Closing, Purchaser shall offer employment to all then employees of the Business, on such terms and conditions as Purchaser shall establish (except that base cash compensation shall be comparable to their existing base cash compensation), subject to the terms of any collective bargaining agreement assumed by Purchaser under Section 5.2(e) and any employment agreements with specific Business Employees, and shall assume responsibility for all inactive employees of the Business, subject to the terms of this Section 5.2 and the collective bargaining agreements assumed by Purchaser under Section 5.2(e); provided, however, that any employee of the Business who is not actively employed on the day of the Closing shall be offered employment by Purchaser following the end of any inactive period (whether on
account of leave, layoff, injury or disability) but only to the extent that the
Company would have been obligated to offer active employment to such person upon
the end of such inactive period. Notwithstanding the foregoing, Purchaser shall
not have any obligation to offer employment to any employees of the Corporate
Office ("Corporate Office Employees"), as described in Section 5.2(b) of the
Disclosure Schedule, and its only obligations with respect to Corporate Office
Employees shall be to provide such benefits to Corporate Office Employees to
which they would be entitled under the benefit plans assumed by Purchaser under
Section 5.2(f), except under the New Pension Plan, and to provide COBRA benefits
to the extent set forth in Section 5.2(k). Nothing in this Section 5.2(b) is
intended to limit the ability of Purchaser to terminate the employment of any
employee after the Closing.
(c) Subject to applicable law and the terms of any collective bargaining agreement assumed pursuant to this Agreement, Purchaser shall establish and maintain for a period of one year after the Closing Date or the term of their employment by Purchaser, whichever is less, for employees of the Business as of the Closing Date, benefits that, in the aggregate, are no less favorable than the benefits maintained by the Purchaser for similarly situated employees of Purchaser, provided that the foregoing will not prohibit or in any manner restrict Purchaser from terminating or changing the individual terms of employment of any Business Employee or require Purchaser to maintain any specific benefits or Employee Benefit Plans. Purchaser shall give employees of the Business as of the Closing Date and former and inactive Business Employees credit for their service with the Company or any of its Subsidiaries prior to the Closing, to the same extent that such service would have been credited by Purchaser (if they had been employed by Purchaser for such period of service), for all purposes under all employee benefit plans or arrangements maintained by Purchaser for current, former and inactive Business Employees (including any waiting periods). In addition, Purchaser shall, if applicable, (i) cause any pre-existing condition limitation to be waived and (ii) give effect, in determining any deductible and maximum out-of-pocket limitations, to claims incurred and amounts paid by, and amounts reimbursed to current, former and inactive Business Employees with respect to similar plans maintained by the Company prior to the Closing.
(d) Purchaser will assume and indemnify and hold harmless the Company
Indemnified Parties against all Liabilities with respect to severance benefits
arising in connection with or following the Closing pursuant to the agreements
set forth in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule (subject to
the right of recovery set forth in Section 5.8(a)), or pursuant to any
collective bargaining agreement or other agreements with Business Employees
assumed either pursuant to this Agreement or by operation of law. With respect
to all current and inactive Business Employees immediately prior to the Closing
not covered by the agreements referenced in the immediately preceding sentence,
(x) for a period ending not less than one year after the Closing Purchaser will
provide such Business Employees with the same severance benefits as Purchaser
provides for similarly situated employees of Purchaser (which benefits, as of
the date hereof, are described in Section 5.2(d) of the Disclosure Schedule) and
(y) Purchaser will assume and indemnify and hold harmless the Company
Indemnified Parties against all Liabilities with respect to severance benefits
arising in connection with or following the Closing.
(e) From and after the Closing, Purchaser shall assume all of the collective bargaining agreements (including, without limitation, pursuant to the specified provisions of the
collective bargaining agreements set forth in Section 5.2 of the Disclosure Schedule) and other labor contracts with respect to any Business Employees existing immediately prior to the Closing.
(f) From and after the Closing, Purchaser shall assume sponsorship of
the WOKR-TV Partners 401(k) Plan, the New Pension Plan, and assume
responsibilities of all Employee Benefits Plans that provide post-retirement
life insurance or health, or short-term or long-term disability benefits and be
responsible for any benefits under such Employee Benefit Plans (i) to which any
current, former or inactive Business Employee or Corporate Office Employee, or a
beneficiary or dependent of any current, former or inactive Business Employee or
Corporate Office Employee (each a "Beneficiary"), has already become entitled,
(ii) which commenced or (iii) to which any current, former or inactive Business
Employee or Corporate Office Employee has already become qualified by reason of
age and years of service as of the Closing, to the extent such persons are
identified in Section 5.2(f) of the Disclosure Schedule (which section shall be
updated, if necessary, at Closing). From and after the Closing, Purchaser shall
also pay to the Business Employees and Corporate Office Employees listed in
Section 5.2(f) of the Disclosure Schedule the supplemental retirement benefits
provided under the applicable Guy Gannett supplemental retirement plan. The
Company shall cause such Employee Benefit Plans to be amended to the extent
necessary or appropriate to effect the foregoing.
(g) From and after the Closing, Purchaser shall assume and be responsible for any workers' compensation benefits payable to a Business Employee, Beneficiary or dependent of a Business Employee on or after the Closing, including any such benefits that are attributable to any injury or illness that occurred or existed prior to the Closing to the extent not covered by the Company's workers' compensation insurance policy.
(h) For a period of 90 days after the Closing, Purchaser shall not implement any employment terminations, layoffs or hours reductions or take any other action which could result in a "plant closing" or "mass layoff," as those terms are defined in the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") or similar events under applicable state law, affecting in whole or in part any facility, site of employment or operating unit, or any employee employed by the Business, or which could require either Purchaser to give notice or take any other action required by WARN or applicable state law.
(i) With respect to the Guy Gannett Retirement Plan (the "Seller Pension Plan"), the Company and the Purchaser agree as follows:
(A) Prior to the Closing Date, the Company shall establish a spin off defined benefit plan (the "New Pension Plan") and trust (the "Trust") for the post-Closing benefit of the Business Employees and Beneficiaries who participate in the Seller Pension Plan. With respect to the Seller Pension Plan, Business Employees shall cease to accrue benefits and service credits under such Plan as of the Closing. As soon as practicable following the Closing, the Company shall cause its actuary to calculate the amount of assets to be allocated to the New Pension Plan for the benefit of the Business Employees. Such allocation shall be calculated under Section 414(l)(2) of the Code, without regard to paragraph 2(d) thereof. The Company shall cause the amount of assets (the "Section 414 Amount") (determined as of the end of the month in which the Closing occurs) to be transferred to the Trust. The Company shall not amend the Seller
Pension Plan or the New Pension Plan to 100% vest Business Employees' benefits under such Plans. Contingent upon the transfer of the Initial Transfer Amount (as described in Section 5.2(i)(B) hereof) to the New Pension Plan, Purchaser shall assume all liabilities of the Company and its affiliates with respect to Business Employees and Beneficiaries under the Seller Pension Plan and Trust and shall become with respect to such Business Employees and Beneficiaries responsible for all acts, omissions and transactions under or in connection with such Seller Pension Plan and Trust, whether arising before, on or after the Closing, except (i) if the Company has obtained at or prior to the Closing a prepaid fiduciaries' insurance and indemnification policy substantially on the terms set forth in Section 5.2(i) of the Disclosure Schedule under which Purchaser is a named insured (a" Prepaid Fiduciary Insurance Policy"), except for liabilities arising out of willful misconduct or gross negligence of the trustees before the Closing and (ii) if the Company is unable to obtain such policy, except for liabilities arising out of willful misconduct, recklessness or negligence of the trustees before the Closing.
(B) All transfers to the New Pension Plan shall be made in accordance with the provisions of this Section 5.2(i). As soon as practicable, but in no event after the later of (i) 30 days after the Closing Date or (ii) 45 days after the filing of Form 5310A by each plan ("Initial Transfer Date"), the Company shall cause its trust to make an initial transfer of assets in cash (except as set forth in Section 5.1 of the Disclosure Schedule) equal to 80% of the amount estimated by the Company in good faith to be equal to X (as defined below) ("Initial Transfer Amount"). As soon as practicable after the final determination of the amounts to be transferred ("True-Up Date"), the Company shall, except as otherwise provided herein, cause a second transfer to be made in cash (except as set forth in Section 5.1 of the Disclosure Schedule) of the "True-Up Amount." The True-Up Amount shall be equal to the sum of the following amount with respect to the Seller Pension Plan:
(X minus Initial Transfer Amount), minus benefit payments and reasonable administration expenses attributable to Business Employees, adjusted for Earnings,
where X equals the Section 414 Amount, as of the last day of the month in which the Closing occurs. "Earnings" shall be calculated (i) from the last day of the month following the Closing until the Initial Transfer Date on the amount equal to the Initial Transfer Amount using the rate paid on a 90-day Treasury Bill on the auction date coincident with or immediately preceding the Closing, (ii) on an amount equal to X minus the sum of the Initial Transfer Amount plus benefit payments and reasonable administrative expenses attributable to Business Employees using (A) with respect to the period from the end of the month in which the Closing Date occurs to the last day of the month preceding the True-Up Date, the cumulative rate of return (considering both gain and loss) earned or lost on the assets of the trust from which the True-Up Amount is being transferred and (B) with respect to the period from the first day of the month in which the True-Up Date occurs to the True-Up Date the rate paid on a 90-Day Treasury Bill on the auction date coincident with or immediately preceding the first day of the month in which the True-Up Date occurs. If the Initial Transfer Amount increased by benefit payments and reasonable administrative expenses attributable to Business Employees exceeds X, as soon as practicable following such determination Purchaser shall cause a transfer to be made in cash (except as set forth in Section 5.1 of the Disclosure Schedule) to the Seller Pension Plan equal to the difference between (a) the Initial Transfer Amount increased by the benefit payments and reasonable
administrative expenses attributable to Business Employees and (b) X as (i) adjusted downward to reflect Earnings on X, minus benefits payments and reasonable administrative expenses, from the last day of the month in which the Closing occurs until the Initial Transfer Date using the rate paid on a 90-day Treasury Bill on the auction date coincident with or immediately preceding the Closing and (ii) adjusted upward to reflect Earnings on the Initial Transfer Amount increased by the benefit payments and reasonable administrative expenses attributable to Business Employees, and reduced by X from the Initial Transfer Date until the True-Up Date, such Earnings shall be calculated using (A) with respect to the period from that Initial Transfer Date to the last day of the month preceding such True-Up Amount transfer, the cumulative rate of return (considering both gain and loss) on the assets of the Seller Pension Plan and (B) with respect to the period from the first day of the month in which the True-Up Amount transfer occurs and the date of such True-Up Amount transfer, the rate paid on a 90-Day Treasury Bill on the auction date coincident with or immediately preceding the first day of the month in which the transfer occurs. The Initial Transfer Amount and True-Up Amount shall be transferred in cash (except as set forth in Section 5.1 of the Disclosure Schedule). Unless the parties agree otherwise, all transfers will occur on the last business day of a month. The amounts to be transferred pursuant to this Section 5.2(i) shall be adjusted to the extent necessary to satisfy Section 414(l) of the Code, and any regulations promulgated thereunder, ERISA Section 4044, and any regulations promulgated thereunder.
(C) For the purposes of this Section 5.2(i), the Section 414 Amount shall be determined by an enrolled actuary designated by the Company, using the same assumptions and methodologies used by the Company for valuation of the Seller Pension Plan for funding purposes under Sections 404 and 412 of the Code. The Company shall provide any actuary designated by Purchaser with all information reasonably necessary to review the calculation of the Section 414 Amount in all material respects and to verify that such calculations have been performed in a manner consistent with the terms of this Agreement. If there is a good faith dispute between the Company's actuary and the Purchaser's actuary as to the amount to be transferred to any plan, and such dispute remains unresolved for 15 days, the chief financial officers of the respective companies shall endeavor to resolve the issue. Should such dispute remain unresolved for 20 days, the Company and Purchaser shall select and appoint a third actuary who is mutually satisfactory to the parties hereto. Such third party actuary shall be instructed to render its decision within 20 days and such decision shall be conclusive as to any dispute for which the third party actuary was appointed. The cost of such third party actuary shall be divided equally between the Company and Purchaser. Each party shall be responsible for the cost of its own actuary.
(D) Purchaser shall take all action necessary to qualify the New Pension Plan under the applicable provisions of the Code and Purchaser and the Company shall cooperate to make any and all filings and submissions to the appropriate governmental agencies required to be made by Purchaser as are appropriate in effectuating the provisions hereof.
(j) With respect to the Guy Gannet Voluntary Investment Plan (the "Defined Contribution Plan"), the Company and Purchaser agree as follows:
(A) The Business Employees shall cease to accrue benefits and service credits under the Defined Contribution Plan as of the Closing Date and, effective as of the Closing Date,
Purchaser shall designate a savings plan (or plans) (in accordance with this
Section 5.2(j)) ("Purchaser Savings Plan") and associated trust (or trusts) to
hold the assets of the plan for the Business Employees, to be effective as of
the Closing Date, and shall provide to the Company evidence reasonably
satisfactory to the Company that the Purchaser Savings Plan and the associated
trust have been established and that the Purchaser Savings Plan qualifies under
the requirements of Section 401(a) of the Code, and that the trust is exempt
from tax under Section 501(a) of the Code. The Company shall provide to
Purchaser evidence reasonably satisfactory to Purchaser that the Defined
Contribution Plan remains qualified under the requirements of Section 401(a) of
the Code. Provided that the Company and Purchaser have received evidence
reasonably satisfactory to them in accordance with the preceding sentences, as
soon as is reasonably practicable following the Closing Date, the Company shall
take or cause to be taken all action required or appropriate to transfer the
account balances of all Business Employees and Beneficiaries to the trust
associated with the Purchaser Savings Plan. Such transfers may be made in two
installments (the first such installment being the aggregate amount of the
applicable account balances as of the end of the last calendar quarter ended on
the date of or prior to such transfer, and the second such installment being the
aggregate amount of the remaining balances of such accounts, including, without
limitation, the earnings on such accounts from the end of the calendar quarter
used to determine the amount of the first transfer) and shall be made in cash
(or, if the parties agree, in kind) in an amount equal to the value of the
account balances to be transferred, determined as of the close of business on
the last Business Day immediately preceding each such transfer, except that to
the extent a Business Employee's or Beneficiary's account balance in the
transferor plan includes one or more promissory notes evidencing a participant
loan or loans, such promissory notes shall be transferred in kind for the
Business Employee's or Beneficiary's credit under the transferee plan. For the
period from the Closing Date until the transfer, Purchaser shall collect by
payroll deduction and promptly pay over to the Defined Contribution Plan all
loan payments required on participant loans made by the Defined Contribution
Plan to any Business Employee and the Company shall cause the Defined
Contribution Plan to administer and pay all distributions, withdrawals and loans
payable under the terms of the Defined Contribution Plan to any Business
Employee or Beneficiary until the transfer. Contingent upon the transfer of the
account balances to each of the Purchaser Savings Plans, Purchaser shall assume,
and Parent shall cause Purchaser to assume, all liabilities of Company and its
affiliates with respect to Business Employees and Beneficiaries under the
Defined Contribution Plan and shall become with respect to such Business
Employees and Beneficiaries responsible for all acts, omissions and transactions
under or in connection with such Defined Contribution Plan, whether arising
before, on or after the Closing, except (i) if the Company has obtained at or
prior to the Closing a Prepaid Fiduciary Insurance Policy, except for
liabilities arising out of willful misconduct or gross negligence of the
trustees before the Closing and (ii) if the Company is unable to obtain such
policy, except for liabilities arising out of willful misconduct, recklessness
or negligence of the trustees before the Closing.
(k) From and after the Closing, Purchaser shall assume the Company's
obligations and liabilities with respect to COBRA continuation coverage under
Section 4980B of the Code and Section 601 of ERISA ("Continuation Coverage")
with respect to Business Employees and Corporate Office Employees and shall
provide Continuation Coverage to the Business Employees and Corporate Office
Employees under Purchaser's health and medical plans (x) with respect to any
Business Employees and Corporate Office Employees who remain employed with the
Company through the Closing Date, for a period of eighteen months after the
Closing or, if earlier, until becoming eligible for comparable coverage from another employer and (y) with respect to any Business Employees and Corporate Office Employees whose employment shall have terminated prior to the Closing, for remainder of the period with respect to which Continuation Coverage would otherwise have been available to them had the Company continued to maintain a group health plan. Purchaser shall also assume the Company's obligation and liability for reimbursement of COBRA premiums for six months to any Corporate Office Employee to whom the Company is so liable as of the Closing Date.
5.3 Cooperation. Following the execution of this Agreement, Purchaser and the Company agree as follows:
(a) The parties and their Affiliates shall each use their reasonable
efforts, and shall cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions with respect to, any filings
(other than filings with the FCC, which are provided for in clause (b)
below), applications, requests, or actions which are or may be necessary to
obtain the consents, approvals, authorizations or other orders of any
Governmental Authority which are or may be necessary in order to accomplish
the transactions contemplated by this Agreement; and, without limiting the
generality of the foregoing, the parties and their Affiliates shall use
their respective reasonable efforts to prepare and file as promptly as
practicable, but in any event no later than 15 Business Days after the date
hereof, all of the information called for in the Notification and Report
Form required under the HSR Act and to prepare and file any supplemental
information, also in a timely fashion, which may be required by the United
States Department of Justice or the Federal Trade Commission pursuant to
such Notification and Report Form Filings, and otherwise to use their
respective reasonable efforts to obtain the requisite clearances.
(b) The parties and their Affiliates shall cooperate fully with each other in preparing, filing, prosecuting, and taking any other actions with respect to filings with the FCC related to the transactions contemplated by this Agreement, including, without limitation, preparation of an application for the assignment of all of the FCC Licenses to Purchaser and any filings by Purchaser requesting temporary waivers for no more than nine months of the FCC's applicable ownership rules necessary to permit the parties to consummate the transactions contemplated by this Agreement. As promptly as practicable, but in any event not later than ten Business Days following the execution of this Agreement, the Company and Purchaser shall jointly file the application with the FCC requesting the FCC Consent. The Company and Purchaser shall use their respective reasonable best efforts, diligently take all necessary and proper actions and provide any additional information requested by the FCC in order to obtain promptly the FCC Consent, including, without limitation, requesting, consenting to, and taking and otherwise seeking any action in connection with, a temporary waiver of the FCC's applicable ownership rules or a divestiture order relating to WOKR-TV (Rochester, New York), WICS-TV (Springfield, Illinois) or any other Station where the ownership of such Station and any other television or radio station that Purchaser or its Affiliates acquires (or enters into an agreement to acquire) after the date hereof by Purchaser and its Affiliates would reasonably be expected to materially impede or materially delay the Closing (any such temporary waiver or divestiture order, an "Agreed Divestiture").
Notwithstanding the foregoing or any other provision of this Agreement,
neither Purchaser nor its officers, directors or Affiliates shall request a
permanent waiver of the FCC's applicable ownership rules or request,
consent to, take or otherwise seek or pursue any action that is
inconsistent with the transactions contemplated by this Agreement or that
reasonably could be expected to materially impede or materially delay the
FCC Consent or otherwise materially impede or materially delay the
consummation of the transactions contemplated by this Agreement; and the
receipt of any permanent waiver of the foregoing FCC rules shall not be a
condition to the obligation of Purchaser to consummate the transactions
contemplated hereby; provided further that, prior to obtaining the FCC
Consent, neither Purchaser nor any of its officers, directors, or
Affiliates shall publicly disclose the identity of any third party (other
than any wholly owned subsidiary of Purchaser) that is contemplated as the
future owner of any of the Stations other than WOKR-TV, Rochester, New
York. Neither Purchaser nor any of its officers, directors or Affiliates
will take any action that would result in any change in the matters set
forth in Section 4.7 hereof that would reasonably be expected to materially
delay or otherwise materially impair Purchaser's ability to consummate the
transactions contemplated hereby; and the Company will not take any action
that would result in any change in the matter set forth in clause (vi) of
Section 3.12 hereof that would reasonably be expected to materially delay
or otherwise materially impair the Company's ability to consummate the
transactions contemplated hereby. After the date hereof, Purchaser or its
Affiliates may enter into transactions that implicate the FCC multiple
ownership rules so long as such transactions would not reasonably be
expected to materially impede or materially delay the Closing.
Notwithstanding the foregoing and except for the Agreed Divestitures,
neither Purchaser nor the Company shall have any obligation to take any
actions that would reasonably be expected to require (i) the divestiture of
any station owned or operated by Purchaser or its Affiliates on the date
hereof or (ii) the termination or material modification of any local
marketing agreement pursuant to which Purchaser or its Affiliates provides
as of the date hereof all or substantially all of the programming for any
stations ((i) and (ii) collectively a "Material Non-Agreed Divestiture").
(c) (i) If Purchaser (or its Affiliates) or the Company receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any Governmental Authority, that could affect Purchaser's or the Company's ability to consummate the transactions contemplated hereby, or (ii) should Purchaser (or its Affiliates) become aware of any fact (including any change in law or regulations (or any interpretation thereof by the FCC)) relating to the qualifications of Purchaser (and its controlling persons) that reasonably could be expected to cause the FCC to withhold the FCC Consent, Purchaser (in the case of clauses (i) and (ii)) or the Company (in the case of clause (i)) shall promptly notify the other party or parties thereof and shall use its reasonable best efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement; and no such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder.
(d) The parties shall each use their reasonable best efforts to obtain as promptly as reasonably practical all consents that may be required in connection with the assignment to the Purchaser at Closing of all the Company's right, title and interest in and
to all Material Contracts and all other agreements of the Business to which the Company is a party, provided that neither the Company nor Purchaser shall be required to make any payment to any party to any such Material Contract or other agreement in order to obtain any such consent.
(e) To the extent that there are third-party insurance policies maintained by the Company covering any Claims or Damages relating to the assets, business, operations, conduct and employees (including, without limitation, former employees) of the Business arising out of or relating to occurrences prior to the Closing, the Company shall use all reasonable efforts to cause Purchaser to be named as an additional insured with respect to such policies.
(f) Subject to the terms and conditions of this Agreement, each of the parties agrees to use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Closing and the other transactions contemplated hereby as soon as practicable.
(g) The Company shall cooperate and cause its accountants, including,
but not limited to, PriceWaterhouseCoopers L.L.P., to cooperate in all
reasonable respects with Purchaser's request to conduct an audit of the
Company's financial information as Purchaser may reasonably determine is
necessary to satisfy Purchaser's public company reporting requirements
pursuant to the Securities Act of 1933 or the Securities Exchange Act of
1934, including, without limitation, (i) using commercially reasonable
efforts to obtain the consent of the Company's auditors to permit Purchaser
and Purchaser's auditors to have access to such auditor's work papers, and
(ii) consenting to such access by Purchaser. All costs and expenses
incurred in connection with the preparation (and assimilation of relevant
information for) any such financial statements shall be paid by Purchaser.
5.4 Confidentiality.
(a) Prior to the Closing. The terms of the Confidentiality Agreement are herewith incorporated by reference and shall continue in full force and effect until the Closing and shall remain in effect in accordance with its terms even if this Agreement is terminated.
(b) Financial and Tax Information. Before and after the Closing, each of the parties shall maintain the confidentiality of the financial and tax information of the Persons other than the Company in the possession of the Company under terms similar to those set forth in the Confidentiality Agreement with respect to "Evaluation Material" as though such terms continued after the Closing.
5.5 Public Announcements. Except as otherwise required by law or the rules of any stock exchange, the form and substance of the initial public announcement of this Agreement and the transactions contemplated hereby, and the time of such announcement, shall be approved in advance by the parties and the parties shall not issue any other report, statement or press release or otherwise make any public announcement with respect to this Agreement and the
transactions contemplated hereby without prior consultation in good faith with the other party hereto.
5.6 No Solicitation. The Company shall not, and shall cause its officers,
directors, representatives, affiliates and associates not to, (a) initiate
contact with, solicit, encourage or respond to any inquiries or proposals by, or
(b) enter into any discussions or negotiations with, or disclose, directly or
indirectly, any information concerning the Business to, or afford any access to
the Company's properties, books and records to, any Person in connection with
any possible proposal for the acquisition (directly or indirectly, whether by
purchase, merger, consolidation or otherwise) of all or substantially all of the
Business. The Company agrees to terminate immediately any such discussions or
negotiations.
5.7 No Additional Representations. Purchaser acknowledges that it and its representatives have been permitted access to books and records, facilities, equipment, tax returns, contracts and agreements, insurance policies (or summaries thereof), and other properties and assets of the Company and that they and their representatives have had an opportunity to meet with the officers and employees of the Company to discuss the Company and its business, properties and assets. PURCHASER ACKNOWLEDGES THAT NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE COMPANY FURNISHED OR MADE AVAILABLE TO PURCHASER AND ITS REPRESENTATIVES EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.
5.8 Certain Payments. (a) Subject to the terms of this Section 5.8(a), Purchaser shall (to the extent there are available funds in the Security Escrow) have the right to recover from the Security Escrow 50% of any amount paid by Purchaser to any Business Employee pursuant to the terms of the Severance Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule (as in effect on the date hereof) (the "Scheduled Severance Agreements") (except to the extent that any liability for such payment shall have decreased Net Financial Assets, in which event Purchaser shall not be entitled to any recovery under this Section 5.8 in respect of the portion of the payment for which there was a liability that decreased Net Financial Assets) in the event that such Business Employee's employment is terminated on or prior to 90 days after the Closing Date, provided that the maximum amount that Purchaser shall be entitled to recover pursuant to this Section 5.8(a) shall be $850,000 in the aggregate for all Business Employees. Following the 90th day after the Closing Date, Purchaser will deliver to the Company a certificate certifying as to the relevant employees who were terminated on or prior to 90 days after the Closing, the aggregate amount paid by Purchaser to all terminated employees pursuant to the Scheduled Severance Agreements and the amount Purchaser is entitled to recover pursuant to this Section 5.8(a). Promptly following the Company's receipt of the certificate required pursuant to the immediately preceding sentence, Purchaser and the Company shall provide joint written instructions to the Security Escrow Agent providing for the transfer to the Purchaser of the Security Escrow Funds required pursuant to this Section 5.8(a). Purchaser acknowledges and agrees that its sole and exclusive recourse, remedy and source of funds available to satisfy any recovery pursuant to this Section 5.8(a) will be the Security Escrow.
(b) It is contemplated that subsequent to the Closing, the Company
will cease operations and vacate the Corporate Offices. Purchaser agrees that it
will pay, indemnify, and hold harmless the Company Indemnified Parties from and
against 50% of all Claims and Damages (including, without limitation, all rent
or other payments made under the Corporate Office Lease arising out of or
relating to the Corporate Office Lease) to the extent such Claims and Damages
arise out of or relate to (x) the termination of the Corporate Office Lease or
(y) the post-closing period after the date in which the Corporate Office
Employees cease using the Corporate Office, provided that the maximum amount
that Purchaser shall be liable for under this Section 5.8(b) is $200,000. All
payments by Purchaser hereunder shall be made as the related Claims and Damages
are incurred. Purchaser acknowledges and agrees that the Company may terminate
the Corporate Office Lease on such terms as the Company shall determine and
otherwise take such action as the Company determines in connection with its
vacating the Corporate Office.
5.9 Bulk Sales Laws. The parties agree to waive compliance with the provisions of the bulk sales law of any jurisdiction. The Company will indemnify and hold harmless Purchaser from and against any and all Liabilities which may be asserted by third parties against Purchaser as a result of such noncompliance.
5.10 Control of the Stations. Prior to the Closing, control of the Stations (including, without limitation, control over their finances, personnel and programming) shall remain with the Company. The Company and Purchaser acknowledge and agree that neither Purchaser nor any of its employees, agents or representatives, directly or indirectly, shall, or shall have any right to, control, direct or otherwise supervise the Stations, it being understood that supervision of all programs, equipment, operations and other activities of the Stations shall be the sole responsibility of, and at all times prior to the Closing remain under the complete control and direction of, the Company.
5.11 Use of Guy Gannett Name. After the Closing, neither Purchaser nor any of its Affiliates shall use "Guy Gannett" or "Gannett" (collectively, the "Excluded Names") or any name or term confusingly similar to "Guy Gannett" or "Gannett" in any corporate name or in connection with the operation of any business.
Article 6. Conditions to Obligations of Purchaser.
The obligations of Purchaser to consummate the transactions contemplated by this Agreement to occur at the Closing are, at their option, subject to satisfaction of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct at and as of the Closing Date as though each such representation and warranty were made at and as of such time, other than such representations and warranties as are made as of a specific date, in each case except for changes that are expressly contemplated by this Agreement and except for such failures to be true and correct that would not reasonably be expected to have a Material Adverse Effect.
6.2 Performance by the Company. All of the covenants and agreements to be complied with and performed by the Company on or before the Closing Date shall have been complied with or performed, except for such failures to comply with or perform that would not reasonably be expected to have a Material Adverse Effect.
6.3 Certificate. The Company shall have delivered to Purchaser a certificate, dated as of the Closing Date, executed on behalf of the Company by its duly authorized officers or representatives to the effect of Sections 6.1 and 6.2.
6.4 Consents; No Objections. (i) The applicable waiting periods under the HSR Act shall have expired or been terminated; and
(ii) The parties shall have received all the authorizations, consents, orders and approvals from Governmental Authorities and consents from third parties, in each case listed or described in Section 6.4 of the Disclosure Schedule (which Section includes all of the Company's real estate leases for towers, transmitters and television broadcasting studios).
(iii) The parties shall have received all authorizations, consents, orders and approvals from Governmental Authorities necessary to transfer the material Permits relating to the operation of the Stations' towers, transmitters and television broadcasting studios as such facilities are operating on the date hereof, except in each case where the failure to receive such authorizations, consents, orders or approvals would not reasonably be expected to materially adversely affect the operations of such facilities, or where such authorizations, consents, orders or approvals are customarily obtained after the Closing of a transaction of this nature.
6.5 No Proceedings or Litigation. No preliminary or permanent injunction or other order or decree issued by any United States federal or state Governmental Authority, nor any Law promulgated or enacted by any United States federal or state Governmental Authority, that restrains, enjoins or otherwise prohibits the transactions contemplated hereby or limits the ability in any material respect of the rights of the Company to hold its assets (excluding the FCC Licenses) and conduct its business as it is being conducted as of the Closing Date, or imposes civil or criminal penalties on any stockholder, director or officer of Purchaser if such transactions are consummated, shall be in effect.
6.6 [Intentionally omitted]
6.7 FCC Consent. The FCC Consent shall have been issued with respect to the Stations without any conditions that are materially adverse to Purchaser notwithstanding that it may not have yet become a Final Order, provided that, if one or more pre-grant objections shall have been filed with respect to the applications required by Section 5.3(b) hereof, it shall be a condition precedent that the FCC Consent shall have become a Final Order. For purposes hereof, any conditions to the FCC Consent requiring an Agreed Divestiture will not be considered a condition materially adverse to Purchaser, and any such condition requiring a Material Non-Agreed Divestiture will be considered a condition materially adverse to Purchaser.
6.8 No Material Adverse Change. Since the date of this Agreement through the Closing Date, there shall not have occurred any Material Adverse Effect.
6.9 Opinions of Counsel. Purchaser shall have received (a) an opinion of Preti, Flaherty, Beliveau & Pachios, dated the Closing Date, substantially in the form of Exhibit D-1 hereto, (b) an opinion of Simpson Thacher & Bartlett, dated the Closing Date, substantially in the form of Exhibit D-2 hereto and (c) an opinion of Dow, Lohnes & Albertson, dated the Closing Date, substantially in the form of Exhibit D-3 hereto.
6.10 Good Standing Certificate. Purchaser shall have received a certificate as to the formation and good standing of the Company issued by the Secretary of State of Maine, dated not more than five days before the Closing Date.
6.11 No Transmission Defects. There shall not exist any loss or damage at any of the Stations which has resulted in the regular broadcast transmission of such Station (including its effective radiated power) to be diminished in any material respect; provided, that if any such loss or damage does exist, then either or both of the Company and Purchaser shall be entitled, by written notice to the other, to postpone the Closing Date for a period of up to 60 days to resume such Station's broadcast transmission.
Article 7. Conditions to Obligations of the Company.
The obligations of the Company to consummate the transactions contemplated by this Agreement to occur at the Closing are, at its option, subject to satisfaction of each of the following conditions:
7.1 Representations and Warranties. The representations and warranties of Purchaser contained herein shall be true and correct in all material respects at and as of the Closing Date as though each such representation and warranty were made at and as of such time, other than such representations and warranties as are made as of a specific date, in each case except for changes that are expressly contemplated by this Agreement.
7.2 Performance by Purchaser. All of the covenants and agreements to be complied with and performed by Purchaser on or prior to the Closing Date shall have been complied with or performed, in all material respects, except for such failures to comply with or perform that would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Company.
7.3 Certificate. Purchaser shall have delivered to the Company a certificate, dated as of the Closing Date, executed on behalf of Purchaser by its duly authorized officers or representatives to the effect of Sections 7.1 and 7.2.
7.4 Consents; No Objections. (i) The applicable waiting periods under the HSR Act shall have expired or been terminated; and
(ii) The parties shall have received all the authorizations, consents, orders and approvals from Governmental Authorities and consents from third parties, in each case listed or described on Section 7.4 to the Disclosure Schedule.
7.5 No Proceedings or Litigation. No preliminary or permanent injunction or other order or decree issued by any United States federal or state Governmental Authority, nor any Law promulgated or enacted by any United States federal or state Governmental Authority, that restrains, enjoins or otherwise prohibits the transactions contemplated hereby, or imposes civil or criminal penalties on any stockholder, director or officer of the Company if such transactions are consummated, shall be in effect.
7.6 FCC Consent. The FCC Consent shall have been issued with respect to the Stations, notwithstanding that it may not have yet become a Final Order, provided that, if one or more pre-grant objections shall have been filed with respect to the applications required by Section 5.3(b) hereof, it shall be a condition precedent that the FCC Consent shall have become a Final Order.
7.7 Opinion of Counsel. The Company shall have received an opinion of Thomas & Libowitz, P.A. dated the Closing Date, covering the same matters covered by the opinions referred to in Section 6.9 hereof and in form and substance reasonably satisfactory to the Company.
7.8 Good Standing Certificate. The Company shall have received a certificate as to the formation and good standing of Purchaser issued by the Secretary of State of Maryland, dated not more than five days before the Closing Date.
Article 8. Indemnification
8.1 Indemnification by the Company. Subject in all respects to the provisions of this Article 8, the Company hereby agrees to indemnify and hold harmless on and after the Closing Date, Purchaser and its stockholders and Affiliates and their respective officers, directors, employees and agents, and their respective and successors and permitted assigns (the "Purchaser Indemnified Parties") from and against any Claims and Damages asserted against or incurred by them, directly or indirectly, in connection with, arising out of or relating to (i) any breach on the part of the Company of any representation or warranty made by the Company in Article 3 hereof or in any certificate delivered pursuant to Section 6.3 of this Agreement, (ii) any breach on the part of the Company of any covenant or agreement made by the Company in this Agreement, (iii) any breach on the part of the Company of any representation or warranty made by the Company in any special warranty deed delivered to Purchaser pursuant to clause (ii) of Section 1.7(a) hereof and (iv) any Retained Liabilities.
8.2 Indemnification by Purchaser. Subject in all respects to the provisions of this Article 8, Purchaser hereby agrees to indemnify and hold harmless on and after the Closing Date the Company and its stockholders and Affiliates and their respective officers, directors, employees and agents, and their respective successors and permitted assign (collectively the "Company Indemnified Parties"), from and against any Claims and Damages asserted against or incurred by them, directly or indirectly, in connection with, arising out of or relating to (i) any breach on the part of Purchaser of any representation or warranty made by Purchaser in Article 4 hereof or in any certificate delivered pursuant to Section 7.3 of this Agreement, (ii) any breach
on the part of Purchaser of any covenant or agreement made by the Purchaser in this Agreement or (iii) any Assumed Liabilities.
8.3 Limitations on Indemnification Claims and Liability; Termination of Indemnification. (a) The obligations to indemnify and hold harmless a Person (i) pursuant to Sections 8.1(i), 8.1(ii), 8.1 (iii), 8.2(i) or 8.2(ii) shall terminate when the applicable representation, warranty, covenant or agreement terminates pursuant to Section 10.12 and (ii) pursuant to Section 8.1(iv) or 8.2(iii) shall not terminate; provided, however, that as to clause (i) above the obligation to indemnify and hold harmless shall not terminate with respect to any claim as to which the Person to be indemnified shall have, before the termination of the applicable representation, warranty, covenant or agreement, previously made a claim for indemnification by delivering a notice to the indemnifying party in accordance with Section 8.5.
(b) The Company shall not be obligated to indemnify or hold harmless any Purchaser Indemnified Party under Sections 8.1(i), 8.1(ii) or 8.1(iii) unless and until all Claims or Damages in respect of the indemnification obligations of the Company under Sections 8.1(i), 8.1(ii) and 8.1(iii) exceed in the aggregate $550,000, in which case the Company will (subject to the other provisions of this Article 8) only be obligated to indemnify and hold harmless the Purchaser Indemnified Parties for all of such Claims or Damages under Sections 8.1(i), 8.1(ii) and 8.1(iii) in the aggregate in excess of $275,000, provided that the provisions of this Section 8.3(b) will not apply to any breach of any Post-Closing Agreements.
(c) Notwithstanding anything to the contrary in this Agreement and except for fraud, the sole and exclusive recourse, remedy and source of funds available to satisfy any claims for indemnification by the Purchaser Indemnified Parties pursuant to Sections 8.1(i), 8.1(ii) and 8.1(iii) shall be the amount of the Security Escrow then held on deposit with the Security Escrow Agent subject to the terms and conditions of the Security Escrow Agreement, and the Purchaser Indemnified Parties will have no recourse against the assets of the Company (other than the Security Escrow then held on deposit with the Security Escrow Agent) in respect of any such claim. Without limiting the foregoing, the maximum aggregate liability of the Company with respect to all claims for indemnification under Sections 8.1(i), 8.1(ii) and 8.1(iii) will be limited to the amount of the Security Escrow held on deposit from time to time with the Security Escrow Agent.
(d) Notwithstanding anything to the contrary in this Agreement, the indemnifications in Sections 8.1 and 8.2 hereof will be the sole and exclusive remedies available to Purchaser and the Company and their respective stockholders and Affiliates and all of their respective officers, directors, employees, agents, successors and assigns, after the Closing for any claims arising out of or relating to any breaches of any representations or warranties or any covenants or agreements contained in this Agreement, or any certificate delivered pursuant to this Agreement or otherwise in connection with this Agreement. Any claim for indemnification must be made as provided in Sections 8.5 and 8.6 hereof.
8.4 Computation of Claims and Damages. Whenever the Indemnitor is required to indemnify and hold harmless the Indemnitee from and against and hold the Indemnitee harmless from, or to reimburse the Indemnitee for, any item of Claim or Damage, the Indemnitor will, subject to the provisions of this Article 8, pay the Indemnitee the amount of the Claim or
Damage (i) reduced by any amounts to which the Indemnitee is entitled from third parties in connection with such Claim or Damage ("Reimbursements"), (ii) reduced by the Net Proceeds of any insurance policy payable to the Indemnitee with respect to such Claim or Damage and (iii) reduced appropriately to take into account any Tax Benefit to the Indemnitee with respect to such Claim or Damage through and including the tax year in which the indemnification payment is made, net of all income Taxes resulting or that will result from the indemnification payment. For purposes of this Section 8.4, (x) "Net Proceeds" shall mean the insurance proceeds payable, less any deductibles, co-payments, premium increases, retroactive premiums or other payment obligations (including attorneys' fees and other costs of collection) that relates to or arises from the making of the claim for indemnification and (y) "Tax Benefit" shall mean any benefit to be recognized by the Indemnitee in connection with the Claim or Damage based upon the highest blended (federal, state, local and foreign) marginal income Tax rate applicable to the Indemnitee during the taxable year for which a return was most recently filed with the Internal Revenue Service (based on the date of the claim for indemnification). The Indemnitor shall use commercially reasonable efforts (the expenses of which shall be considered Claims and Damages for purposes of the relevant indemnity claim) to pursue Reimbursements or Net Proceeds that may reduce or eliminate Claims and Damages. If any Indemnitee receives any Reimbursement, Tax Benefit or Net Proceeds after an indemnification payment is made which relates thereto or if any Indemnitee receives a Tax Benefit arising after the tax year in which an indemnification payment is made which relates thereto, the Indemnitee shall promptly repay to the Indemnitor (or to the Security Escrow if such repayment is made by a Purchaser Indemnified Party prior to the termination of the Security Escrow) such amount of the indemnification payment as would not have been paid had the Reimbursement, Tax Benefit or Net Proceeds reduced the original payment (any such repayment shall be a credit against any applicable indemnification threshold or limitation set forth in Section 8.3(b) hereof) at such time or times as and to the extent that such Reimbursement, Tax Benefit or Net Proceeds is actually received.
8.5 Notice of Claims. Upon obtaining knowledge of any Claim or Damage which has given rise to, or could reasonably give rise to, a claim for indemnification hereunder, the Person seeking indemnification (the "Indemnitee") shall, as promptly as reasonably practicable (but in no event later than 30 days) following the date the Indemnitee has obtained such knowledge, give written notice (a "Notice of Claim") of such claim to the other party (the "Indemnitor"). The Indemnitee shall furnish to the Indemnitor in good faith and in reasonable detail such information as the Indemnitee may have with respect to such indemnification claim (including copies of any summons, complaint or other pleading which may have been served on it and any written claim, demand, invoice, billing or other document evidencing or asserting the same). No failure or delay by the Indemnitee in the performance of the foregoing shall reduce or otherwise affect the obligation of the Indemnitor to indemnify and hold the Indemnitee harmless, except to the extent that such failure or delay shall have adversely affected the Indemnitor's ability to defend against, settle or satisfy any liability, damage, loss, claim or demand for which such Indemnitee is entitled to indemnification hereunder. For purposes of this Section 8.5, a Notice of Claim given in good faith must include a good faith estimate of the amount of the claim to the extent it is reasonably practicable to determine such estimate (and, if it is not practicable to determine such estimate and the claim is made by a Purchaser Indemnified Party, the amount of the Security Escrow proposed in good faith to be reserved with respect to such claim).
8.6 Defense of Third Party Claims. If any claim set forth in the Notice of Claim given by an Indemnitee pursuant to Section 8.5 hereof is a claim asserted by a third party, the Indemnitor shall have 30 days after the date that the Notice of Claim is given by the Indemnitee to notify the Indemnitee in writing of the Indemnitor's election to defend such third party claim on behalf of the Indemnitee. If the Indemnitor elects to defend such third party claim, the Indemnitee shall make available to the Indemnitor and its agents and representatives all witnesses, pertinent records, materials and information in the Indemnitee's possession or under the Indemnitee's control as is reasonably required by the Indemnitor and shall otherwise cooperate with and assist the Indemnitor in the defense of such third party claim, and so long as the Indemnitor is defending such third party claim in good faith, the Indemnitee shall not pay, settle or compromise such third party claim. If the Indemnitor elects to defend such third party claim, the Indemnitee shall have the right to participate in the defense of such third party claim, at the Indemnitee's own expense. In the event, however, that the Indemnitee reasonably determines that representation by counsel to the Indemnitor of both the Indemnitor and the Indemnitee may present such counsel with a conflict of interest, then such Indemnitee may employ separate counsel to represent or defend it in any such action or proceeding and the Indemnitor will, subject to the provisions of this Article 8, pay the reasonable fees and disbursements of such counsel. If the Indemnitor does not elect to defend such third party claim or does not defend such third party claim in good faith, the Indemnitee shall have the right, in addition to any other right or remedy it may have hereunder, at the Indemnitor's expense, to defend such third party claim; provided, however, that such Indemnitee's defense of or its participation in the defense of any such third party claim shall not in any way diminish or lessen the indemnification obligations of the Indemnitor under this Article 8. If the Indemnitor shall assume the defense of a third party claim, it shall not settle such claim without the prior written consent of the Indemnitee (i) unless such settlement includes as an unconditional term thereof the giving by the claimant of a release of the Indemnitee from all Liability with respect to such claim or (ii) if such settlement involves the imposition of equitable remedies or the imposition of any obligations on such Indemnitee other than financial obligations for which such Indemnitee will be indemnified hereunder. If the Indemnitee is defending a third party claim it will not settle such claim without prior written consent of the Indemnitor, which will not be unreasonably withheld or delayed.
8.7 Assignment of Indemnification and Other Rights. (a) The parties hereto acknowledge that the Company may at any time after the Closing assign (by contract, dividend, distribution or otherwise) to its stockholders, or to any other Person or Persons acting directly or indirectly on behalf of the Company or such stockholders for such purpose, any or all of the Company's rights in and to the Security Escrow, the Adjustment Escrow and/or any or all of the Company's contractual rights to indemnification by the Purchaser under this Agreement.
(b) If all of the Company's rights to and in the Security Escrow shall have been so assigned to the stockholders and/or such other Person or Persons (the stockholders in such capacity or such other Person or Persons being referred to herein as the "Fund Holder"), then the Fund Holder may exercise all rights of the Company under this Article 8. For the avoidance of doubt, the Fund Holder will not assume or have any obligation or liability under Section 8.1.
(c) Notwithstanding anything to the contrary in this Agreement, Purchaser hereby agrees that any action, suit or proceeding brought with respect to any indemnification obligation
under Section 8.2 hereof may be brought against Purchaser by the Company, the Representatives or the Fund Holder.
(d) Each of the Purchaser Indemnified Parties and the Company Indemnified Parties shall be third party beneficiaries, and entitled to enforce the provisions of, this Article 8.
Article 9. Definitions.
Unless otherwise stated in this Agreement, the following capitalized terms have the following meanings:
Accounting Firm Determination has the meaning set forth in Section 2.2 hereof.
Action means any action, suit, claim, arbitration, or proceeding or investigation (of which the Company has knowledge) commenced by or pending before any Governmental Authority.
Actual Net Financial Assets has the meaning set forth in Section 2.2.
Adjustment has the meaning set forth in Section 2.2 hereof.
Adjustment Escrow has the meaning set forth in Section 2.1 hereof.
Adjustment Escrow Agent has the meaning set forth in Section 2.2 hereof.
Adjustment Escrow Agreement has the meaning set forth in Section 2.2 hereof.
Adjustment Agreement has the meaning set forth in Section 2.2 hereof.
Affiliate means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person.
Agreed Divestiture has the meaning set forth in Section 5.3 hereof.
Agreement or this Agreement means this Purchase Agreement dated as of the date first above written (including the Exhibits hereto and the Disclosure Schedule) and all amendments hereto made in accordance with the provisions of Section 10.8 hereof.
Allocation has the meaning set forth in Section 2.5 hereof.
Assets has the meaning set forth in Section 1.1 hereof.
Assumed Liabilities has the meaning set forth in Section 1.3 hereof.
Audited Financial Statements has the meaning set forth in Section 3.5 hereof.
Beneficiary has the meaning set forth in Section 5.2 hereof.
Bill of Sale, Assignment and Assumption Agreement has the meaning set forth in Section 1.7 hereof.
Business means the Company's broadcast television business, including all business, operations and activities of the Stations.
Business Employees means all current, former and inactive employees of the Business. For the avoidance of doubt, Corporate Office Employees will not be considered Business Employees.
Business Day means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.
Call Letters has the meaning set forth in Section 3.16 hereof.
CERCLA means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
Claims and Damages means any and all losses, claims, demands, liabilities, obligations, actions, suits, orders, statutory or regulatory compliance requirements, or proceedings asserted by any Person (including, without limitation, Governmental Authorities), and all damages, costs, expenses, assessments, judgments, recoveries and deficiencies, including interest, penalties, investigatory expenses, consultants' fees, and reasonable attorneys' fees and costs (including, without limitation, costs incurred in enforcing the applicable indemnity), of every kind and description, contingent or otherwise, incurred by or awarded against a party, provided that "Claims and Damages" shall not include any indirect, consequential, incidental, exemplary or punitive damages or other special damages or lost profits (except to the extent payable to a third party as a result of a third party claim).
Closing has the meaning set forth in Section 1.6 hereof.
Closing Date has the meaning set forth in Section 1.6 hereof.
Closing Statement has the meaning set forth in Section 2.2 hereof.
Code means the Internal Revenue Code of 1986, as amended.
Communications Act means the Communications Act of 1934, as amended.
Company has the meaning specified in the introductory paragraph to this Agreement.
Company Indemnified Parties shall have the meaning set forth in
Section 8.2.
Confidential Memorandum means the confidential information memorandum relating to the Company's television broadcasting properties dated May 1998 distributed by Lazard Freres & Co. LLC on behalf of the Company.
Confidentiality Agreement means the confidentiality agreement dated May 1998 between Purchaser and Lazard Freres & Co. LLC on behalf of the Company.
Continuation Coverage has the meaning set forth in Section 5.2 hereof.
Contribution Agreement means the Amended and Restated Contribution Agreement dated as of August 14, 1998 by and between Newco and the Company as such agreement may be amended or modified.
Control (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or to cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
Corporate Office means the corporate office of the Company located at One City Center, Portland, Maine, that provides certain support to the Business and the Maine Media Business.
Corporate Office Employees has the meaning set forth in Section 5.2.
Corporate Office Lease means the Lease dated as of February 16, 1989 between the Company and One City Center Associates, and all addenda and amendments thereto and memoranda relating thereto.
Defined Contribution Plan has the meaning set forth in Section 5.2 hereof.
Disclosure Schedule means the Disclosure Schedule, dated as of the date hereof, delivered to Purchaser by the Company in connection with this Agreement.
Employee Benefit Plans means all "employee benefit plans" within the meaning of Section 3(3) of ERISA, all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other employee benefit plans, programs, policies or arrangements, employment agreements, severance agreements, severance pay policies, plant closing benefits, executive compensation arrangements, sick leave, vacation pay, salary continuation for disability, consulting, or other compensation arrangements, worker's compensation, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, employee discounts, employee loans, employee banking privileges, any plans subject to Section 125 of the Code, and any plans providing benefits or payments in the event of a change of control, change in ownership,
or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof, in each case with respect to any present or former employees, directors, or agents and without regard to whether the plan or arrangement was previously terminated (if potential liabilities remain) or compensation agreements, in each case for the benefit of, or relating to, any current employee or former employee of the Business.
Encumbrance means any security interest, pledge, mortgage, lien (including, without limitation, tax liens), charge, encumbrance, easement, adverse claim, preferential arrangement, restriction or defect in title.
Environmental Claims means any and all actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Law, any Environmental Permit, Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation (a) by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any Person for damages, contributions, indemnification, cost recovery, compensation or injunctive relief.
Environmental Law means any Law relating to the environment, health, safety or Hazardous Materials, in force and effect on the date hereof or, in the case of the Company's certificate to be delivered in accordance with the provisions of Section 6.3 hereof, on the Closing Date (exclusive of any amendments or changes to such Law or any regulations promulgated thereunder or orders, decrees or judgments issued pursuant thereto which are enacted, promulgated or issued after the date hereof, or in the case of such certificate, on or after the Closing Date), including but not limited to CERCLA; the Resource Conservation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss.ss.6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss.6901 et seq.; the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss.2601 et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. ss.ss.7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss.ss.300f et seq.; the Atomic Energy Act, 42 U.S.C. ss.ss.2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss.136 et seq.; and the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. ss.ss.1101 et seq.
Environmental Permits means all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Law.
Equipment means all of the tangible personal property, machinery, equipment, vehicles, rolling stock, furniture, and fixtures of every kind and description in which the Company has an interest, by ownership or lease, and used or useful in connection with the Business together with any replacements thereof, or additions thereto made in the ordinary course of business between the date hereof and the Closing Date.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Excluded Assets has the meaning set forth in Section 1.2 hereof.
Excluded Names has the meaning set forth in Section 5.11 hereof.
FCC means the Federal Communications Commission.
FCC Consent means a public notice of the FCC, or of the Chief, Mass Media Bureau or Video Services Division, acting under delegated authority, consenting to the assignment of the FCC Licenses to Purchaser.
FCC Licenses means all licenses, permits and other authorizations issued by the FCC to the Company used for or in connection with the Stations, and all applications therefor, together with any renewals, extensions or modifications thereof and additions thereto between the date hereof and the Closing.
Final Order means the FCC Consent as to which the time for filing a request for administrative or judicial review, or for instituting administrative review sua sponte, shall have expired without any such filing having been made or notice of such review having been issued; or, in the event of such filing or review sua sponte, as to which such filing or review shall have been disposed of favorably to the grantee and the time for seeking further relief with respect thereto shall have expired without any request for such further relief having been filed.
Financial Statements has the meaning set forth in Section 3.5 hereof.
Fund Holder has the meaning set forth in Section 8.7 hereof.
GAAP means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved.
Guy Gannett Trust means the trust created under the last will and testament of Guy P. Gannett.
Governmental Authority means any United States federal, state or local government or any foreign government, any governmental, regulatory, legislative, executive or administrative authority, agency or commission or any court, tribunal, or judicial body.
Governmental Order means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. Governmental Orders shall not include Permits.
Hazardous Materials means wastes, substances, materials (whether solids, liquids or gases), petroleum and petroleum products, byproducts or breakdown products, radioactive materials, and any other chemicals that are deemed hazardous, toxic, pollutants or contaminants, or substances designated, classified or regulated as being
"hazardous" or "toxic," or words of similar import, under any Environmental Law.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Indebtedness means obligations with regard to borrowed money and shall expressly not include either accounts payable or accrued liabilities that are incurred in the ordinary course of business or obligations under operating leases regardless of how such leases may be classified or accounted for on financial statements.
Indemnitee has the meaning set forth in Section 8.5 hereof.
Indemnitor has the meaning set forth in Section 8.5 hereof.
Initial Transfer Amount has the meaning set forth in Section 5.2 hereof.
Initial Transfer Date has the meaning set forth in Section 5.2 hereof.
Intellectual Property means all patents, trademarks, trade names, service marks, copyrights and other similar intangible assets, and applications, registrations, extensions and renewals for any of the foregoing, and other intellectual property owned, leased or used by the Company in the Business, including, without limitation, Call Letters, computer software and programs, of the Company used in the Business, whether owned or used by, or licensed to, the Company.
Knowledge with respect to the Company means, exclusively, information of which the President and Chief Executive Officer or the Chief Financial Officer of the Company, or any other employee of the Company designated as a "vice president" or having primary responsibility for environmental, employee benefits or labor matters has knowledge after conduct of reasonable inquiry of the appropriate Company employees having supervisory responsibility for the matter concerned, including, without limitation, the general managers of the Stations.
Law means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law including, without limitation zoning laws and housing, building, safety or fire ordinances or codes.
Leased Property means all real property of every kind and description leased by the Company and used in connection with the Business, together (to the extent leased by the Company) with all buildings and other structures, towers, antennae, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Company attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing, including, without limitation, the leased property referred to in Section 1.1(c) of the Disclosure Schedule.
Liabilities means as to any Person all debts, adverse claims, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured,
determined or determinable, known or unknown, including, without limitation, those arising under any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, writ, stipulation or other governmental requirement (including, without limitation, any environmental law), action, suit, arbitration, proceeding or investigation or governmental permit, license, authorization, certificate or approval and those arising under any contract, agreement, arrangement, commitment or undertaking.
Maine Media Business means the newspaper publishing business which publishes the Portland Press Herald and Maine Sunday Telegram, the Kennebec Journal and the Central Maine Morning Sentinel, and certain related businesses in Maine (including, without limitation, the "New Media Development Group," an Internet-based media business; "Voice Information Services," a telephone information and marketing service; "Guy Gannett Direct," a direct marketing operation; a telephone directory business; an integrated marketing group; and the Coastal Journal, a controlled circulation weekly), and all assets, liabilities, operations and activities of, and all rights of, the Company in the operations of such businesses that are to be contributed to, or assumed by, Newco, all as more particularly described in the Contribution Agreement. Notwithstanding anything to the contrary in this Agreement, the Maine Media Business does not include the WGME-TV television broadcasting station licensed to Portland, Maine ("WGME") or rights to WGME's news and information content provided via online or audiotext applications of the New Media Development Group or Voice Information Services.
Maine Media Purchase Agreement means the Purchase Agreement dated as of August 14, 1998 by and among the Company, Newco, Seattle Times Company and Times Communications Co.
Material Adverse Effect means any circumstance, change in, or effect on the Company that has a material adverse effect on the business, results of operations or financial condition of the Business; provided, however, that Material Adverse Effect shall not include adverse effects resulting from (or, in the case of effects that have not yet occurred, reasonably likely to result from) (i) general economic or industry conditions that have a similar effect on other participants in the industry, (ii) regional economic or industry conditions that have a similar effect on other participants in the industry in such region, (iii) the failure of Purchaser to give any requested consent pursuant to Section 5.1(a) or (iv) any act of Purchaser.
Material Contracts means the written agreements (including, without limitation, amendments thereto), contracts, policies, plans, mortgages, understandings, arrangements or commitments relating to the Business, to which the Company is a party or by which its assets are bound as described below:
(i) any agreement or contract providing for payments to any Person in excess of $50,000 per year or $250,000 in the aggregate over the five-year period commencing on the date hereof;
(ii) all time brokerage agreements and affiliation agreements with television networks;
(iii) any license or contract pursuant to which the Company is authorized to broadcast film or taped programming supplied by others in excess of $10,000 or having a term of more than one year;
(iv) any employment agreement, consulting agreement or similar contract providing for payments to any individual in excess of $50,000 per year or $100,000 in the aggregate over the five-year period commencing on the date hereof;
(v) any retention or severance agreement or contract with respect to any Person who is to be employed by Purchaser following the Closing;
(vi) all collective bargaining agreements or other union contracts;
(vii) (A) any lease of Real Property or (B) any lease of Equipment or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company from another Person providing for payments to another Person in excess of $25,000 per year or $75,000 in the aggregate over the five-year period commencing on the date hereof;
(viii) any lease of Equipment or Real Property or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company to another Person providing for payments to the Company in excess of $20,000 per year or $50,000 in the aggregate over the five-year period commencing on the date hereof;
(ix) any joint venture, partnership or similar agreement or contract;
(x) any agreement or contract under which the Company has loaned any money in excess of $1,000,000 or issued or received any note, bond, indenture or other evidence of indebtedness in excess of $1,000,000 or directly or indirectly guaranteed indebtedness, liabilities or obligations of others in an amount in excess of $1,000,000;
(xi) any covenant not to compete or contract or agreement, understanding, arrangement or any restriction whatsoever limiting in any respect the ability of the Company to compete in any line of business or with any Person or in any area; and
(xii) any agreement or contract between the Company and any officer, director, stockholder or employee of the Business or any of their family members providing for payments in excess of $5,000 (other than agreements covered in clause (iv) (or that would have been covered in clause (iv) but for the
monetary limits thereunder) or agreements or contracts containing terms substantially similar to terms available to employees generally).
Material Contracts shall not include any and all (w) contracts, purchase orders, purchase commitments, leases and agreements entered into in the ordinary course of business and relating to the Company (other than those described in clauses (v), (vii), (viii) or (ix) above) that (A) are terminable at will without payment of premium or penalty by the Company or (B) are terminable on not more than 60 days' written notice without payment of premium or penalty and do not involve the obligation of the Company to make payments in excess of $10,000 during the 60-day period commencing on the Closing; (x) contracts with respect to time sales (or other promotion or sponsorship sales) to advertisers or advertising agencies (including, without limitation, "trade" or "barter" agreements), sales agency or advertising representation contracts, and barter obligations or commitments to suppliers of programming; and (y) contracts with respect to the sale of production time and/or production services relating to advertising or with respect to other services.
Material Non-Agreed Divestiture has the meaning set forth in Section 5.3 hereof.
Net Financial Assets means the result of (i) the aggregate amount of
current assets of the Business to be assigned to Purchaser under this
Agreement, excluding for purposes of this calculation, the current portion
of program rights, less (ii) the aggregate amount of current liabilities of
the Business to be assumed by Purchaser under this Agreement, excluding for
purposes of this calculation the current portion of program obligations,
less (iii) the aggregate amount of the Company's liability for supplemental
retirement and deferred compensation under the Employee Benefit Plans set
forth in Section 9 of the Disclosure Schedule and for Continuation Coverage
with respect to Corporate Office Employees, in each case to the extent not
paid by the Company prior to the Closing and excluding the current portion
of such liability, if any, to the extent such portion is included as a
current liability in clause (ii), in each case as of the relevant date of
calculation and calculated (except as otherwise provided in Section 9 of
the Disclosure Schedule) in conformity with GAAP and on a basis consistent
with the basis used in preparing the Unaudited Financial Statements as of,
and for the year ended, December 27, 1997 referred to in Section 3.5
hereof. Net Financial Assets expressly shall not include television program
and film contract rights of the Business as either assets or liabilities;
provided, however, that notwithstanding any prior practice or lack thereof
relating thereto, the programming downpayments related to certain
television programs made prior to the date hereof in advance of customary
payment terms under television program rights contracts shall be expressly
included in prepaid assets to the extent not amortized as of the relevant
date of calculation as more fully described in the example set forth in
Section 9 of the Disclosure Schedule. Without limiting the generality of
the foregoing and subject to the immediately preceding sentence, for
purposes of determining the amount of Net Financial Assets, all revenues
and all expenses arising from the operation of any Station, including,
without limitation, tower rental, business and license fees, utility
charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other
fees, sales and service charges, Taxes (except for taxes arising from the
transfer of the Assets under this
Agreement and income taxes that constitute a Retained Liability under this Agreement), employee compensation, including wages, salaries, commissions, music license fees and similar prepaid and deferred items, shall be prorated as of the relevant date of calculation in accordance with GAAP.
Net Proceeds has the meaning set forth in Section 8.4 hereof.
New Pension Plan has the meaning set forth in Section 5.2 hereof.
Newco means Media Properties of Maine, LLC, a Delaware limited liability company, formed at the direction of the Company in connection with the sale of the Maine Media Business.
Notice of Claim has the meaning set forth in Section 8.5 hereof.
Permits has the meaning set forth in Section 3.11 hereof.
Permitted Exceptions means each of the following:
(i) mortgages, security interests or other Encumbrances described in Section 4.10 of the Disclosure Schedule;
(ii) liens for taxes, assessments and governmental charges or levies not yet due and payable or the validity of which is being contested in good faith by appropriate proceedings;
(iii) Encumbrances imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar liens, arising in the ordinary course of business;
(iv) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations;
(v) survey exceptions, rights of way, easements, reciprocal
easement agreements and other Encumbrances on title to real property
shown in the title insurance commitments April 28, 1998 (for the
property referred to as parcels 2-A, 15-L, 17, 18, 19-A and 19-B in
Section 1.1(d) of the Disclosure Schedule), April 24, 1998 (for the
property referred to as parcel 29 in Section 1.1(d) of the Disclosure
Schedule) and May 4, 1998 (for the property referred to as parcel 34-A
in Section 1.1(d) of the Disclosure Schedule) or that do not,
individually or in the aggregate, materially adversely affect the use
of such property in the conduct of the Company's business as it is
being conducted prior to the Closing;
(vi) zoning laws and other land use restrictions that do not in any material respect (a) detract from or impair the value or the use of the property
subject thereto, or (b) impair the operation of the Company's business as it is being conducted prior to the Closing;
(vii) security interests in favor of suppliers of goods for which payment has not been made in the ordinary course of business consistent with past practice;
(viii) Encumbrances on the interests of the lessors of properties in which the Company holds a leasehold interest; and
(ix) any and all other Encumbrances that do not materially detract from or materially impair the value or the use of the property subject thereto for the purposes currently utilized in the Business.
Person means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
Post-Closing Agreements means those covenants and agreements required by this Agreement to be performed after the Closing.
Prepaid Fiduciary Insurance Policy has the meaning set forth in
Section 5.2 hereof.
Program Contracts has the meaning set forth in Section 1.1 hereof.
Proposed NFA Adjustment has the meaning set forth in Section 2.2 hereof.
Purchaser has the meaning specified in the introductory paragraph to this Agreement.
Purchaser Indemnified Parties has the meaning set forth in Section 8.1 hereof.
Purchaser Savings Plan has the meaning set forth in Section 5.2 hereof.
Real Property means all real property of every kind and description and related mineral rights owned by the Company and used in connection with the Business, together with all buildings and other structures, towers, antennae, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Company attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing, including, without limitation, the owned property set forth in Section 1.1(c) of the Disclosure Schedule.
Regulations means the Treasury Regulations (including Temporary Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
Reimbursements has the meaning set forth in Section 8.4 hereof.
Release means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water or air or otherwise entering into the environment.
Representatives means Madeleine G. Corson and John H. Gannett, not individually, but solely in their capacity as the representatives of the stockholders of the Company with respect to certain provisions of this Agreement by virtue of being trustees of the Guy Gannett Trust and attorneys-in-fact for the other stockholders of the Company.
Resolution has the meaning set forth in Section 2.2 hereof.
Retained Liability has the meaning set forth in Section 1.3(b) hereof.
Section 414 Amount has the meaning set forth in Section 5.2 hereof.
Security Escrow has the meaning set forth in Section 2.3 hereof.
Security Escrow Agent has the meaning set forth in Section 2.3 hereof.
Security Escrow Agreement has the meaning set forth in Section 2.3 hereof.
Seller Pension Plan has the meaning set forth in Section 5.2 hereof.
Stations means the following television broadcasting station properties of the Company: WOKR-TV, Rochester, New York; WICS-TV, Springfield, Illinois; WICD-TV, Champaign, Illinois; WGGB-TV, Springfield, Massachusetts; WGME-TV, Portland, Maine; KGAN-TV, Cedar Rapids, Iowa; and WTWC-TV, Tallahassee, Florida.
Subsidiary of any Person means (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation is owned by such Person directly or indirectly, through Subsidiaries and (ii) any partnership, limited partnership, limited liability company, associates, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than a 50% equity interest.
Tax or Taxes means any and all taxes, fees, withholdings, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth, taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes, license, registration and documentation fees, and customs duties, tariffs and similar charges.
Tax Benefit has the meaning set forth in Section 8.4 hereof.
Tax Return means any report, return, document, declaration or other information or filing required to be supplied to any Tax authority or jurisdiction (foreign or domestic) with respect to Taxes, including, without limitation, information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.
Termination Date has the meaning set forth in Section 10.1 hereof.
True-Up Amount has the meaning set forth in Section 5.2 hereof.
True-Up Date has the meaning set forth in Section 5.2 hereof.
Trust has the meaning set forth in Section 5.2 hereof.
Unaudited Financial Statements has the meaning set forth in Section 3.5 hereof.
Article 10. Miscellaneous Provisions.
10.1 Termination Rights. (a) Grounds for Termination. This Agreement may be terminated:
(i) by mutual consent of the parties;
(ii) by either the Company or Purchaser, provided such party is not then in material default hereunder, upon written notice to the other party, if the Closing hereunder has not occurred on or before September 4, 1999 (the "Termination Date"), provided that if the FCC Consent is obtained during the 15 days prior to September 4, 1999, the Termination Date will not occur until the 15th day after receipt of the FCC Consent, provided further that if either or both of the Company and Purchaser shall have postponed the Closing Date pursuant to Section 6.11 hereof, the Termination Date will occur no earlier than the end of the period of such postponement, and provided further that if the Closing hereunder has not occurred on or before September 4, 1999 due to a publicly announced federal governmental shutdown affecting, or any other publicly announced freeze on the processing of applications to transfer station licenses by, the FCC (collectively, a "FCC Shutdown"), the Termination Date will be extended by a period of time equal to the duration of the FCC Shutdown, but in no event shall the Termination Date be extended to a date any later than the earlier of (x) 60 days after the end of the FCC Shutdown or (y) December 4, 1999.
(iii) by either the Company or Purchaser, upon written notice to the other party, if any Governmental Authority shall have issued a statute, rule, regulation, order, decree or injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Closing and such statute, rule, regulation, order, decree or injunction or other action shall have become final and nonappealable, provided that this clause (iii) will not be applicable to actions of the FCC subject to clause (iv) below;
(iv) by either the Company or Purchaser, upon written notice to the other party, if (i) the FCC, or the Chief, Mass Media Bureau of the FCC, acting under delegated authority, shall have denied the application for assignment of the FCC Licenses to Purchaser, (ii) the parties' request for administrative or judicial review, or the FCC's administrative review sua sponte, shall not have been disposed of favorably to the parties and (iii) the parties have no further relief available to them;
(v) by Purchaser, by written notice to the Company, if there has been a material breach by the Company of any representation, warranty, covenant or agreement set forth in this Agreement such that the condition precedent set forth in Section 6.1 or 6.2 hereof would not be satisfied, which breach has not been cured within 20 Business Days following receipt by the breaching party of written notice of such breach; or
(vi) by the Company by written notice to Purchaser if there has been a material breach by Purchaser of any representation, warranty, covenant or agreement set forth in this Agreement such that the condition precedent set forth in Section 7.1 or 7.2 hereof would not be satisfied, which breach has not been cured within 20 Business Days following receipt by the breaching party of written notice of such breach; or
(vii) by Purchaser by written notice to the Company, if the FCC has revoked the Company's FCC License for any Station.
(b) Post-Termination Liability. If this Agreement is terminated pursuant to Subsection 10.1(a) hereof, this Agreement shall thereupon become void and of no further effect whatsoever, and the parties shall be released and discharged of all obligations under this Agreement, except (i) to the extent of a party's liability for willful material breaches of this Agreement prior to the time of such termination, (ii) as set forth in Section 5.4 hereof and (iii) the obligations of each party for its own expenses incurred in connection with the transactions contemplated by this Agreement as provided herein.
10.2 Litigation Costs. If any litigation with respect to the obligations of the parties under this Agreement results in a final nonappealable order of a court of competent jurisdiction that results in a final disposition of such litigation, the prevailing party, as determined by the court ordering such disposition, shall be entitled to reasonable attorneys' fees as shall be determined by such court. Contingent or other percentage compensation arrangements shall not be considered reasonable attorneys' fees.
10.3 Expenses. Except as otherwise specifically provided in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred, provided that the Company and Purchaser shall each be responsible and pay 50% of the HSR Act filing fee and the filing fees payable to the FCC in
connection with the filing of the application for assignment of the FCC Licenses. It is understood and agreed that all costs and expenses incurred in connection herewith and the transactions contemplated hereby by or on behalf of the Company, its existing stockholders and the Representatives, including, without limitation, the fees and disbursements of Lazard Freres & Co. LLC; Preti, Flaherty, Beliveau & Pachios, LLC; Simpson Thacher & Bartlett; Seyfarth, Shaw, Fairweather & Geraldson; Wakelin, Hallock & O'Donovan; Dow, Lohnes & Albertson, PLLC; PriceWaterhouseCoopers L.L.P.; and Watson Wyatt & Company, shall be paid by the Company.
10.4 Notices. Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section 10.4.
If to the Company:
Guy Gannett Communications
One City Center
P.O. Box 15277
Portland, Maine 04112-5277
Attention: James E. Baker
Chief Financial Officer
Facsimile No.: (207) 828-8160
with a copy to:
Eric P. Stauffer, Esq.
Preti, Flaherty, Beliveau & Pachios, LLC
P.O. Box 9546
One City Center
Portland, Maine 04112-9546
Facsimile No.: (207) 791-3111
and
Robert E. Spatt, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Facsimile No.: (212) 455-2502
If to Purchaser:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attention: President
Facsimile No.: (410)
with copy to:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attention: General Counsel
Facsimile No.: (410) 662-4767
and
Steven A. Thomas, Esq.
Thomas & Libowitz, P.A.
100 Light Street
Suite 1100
Baltimore, Maryland 21202-1053
Facsimile No.: (410) 752-2046
Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable.
10.5 Benefit and Assignment. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as provided in Section 8.7, there shall be no assignment of any interest under this Agreement by any party except that Purchaser may assign its rights hereunder to any wholly owned subsidiary of Purchaser and except that after the Closing the Company may assign its rights hereunder to the Fund Holder; provided, however, that no such assignment shall relieve the assignor of its obligations under this Agreement. Except as expressly otherwise provided in Article 8 hereof, nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
10.6 Waiver. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements or conditions of any other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any such rights.
10.7 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
10.8 Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Company and Purchaser or (b) by a waiver in accordance with Section 10.6 hereof.
10.9 Effect and Construction of this Agreement. This Agreement embodies the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, arrangements and understandings, whether written or oral, relating to matters provided for herein; provided, however, that the Confidentiality Agreement shall remain in effect until the Closing. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual agreement, and this Agreement shall not be deemed to have been prepared by any single party hereto. Disclosure of any fact or item in the Disclosure Schedule referenced by a particular paragraph or section in this Agreement shall, should the existence of the fact or item or its contents be relevant to any other paragraph or section, be deemed to be disclosed with respect to that other paragraph or section whether or not a specific cross reference appears, if the disclosure in respect of the one paragraph or section is reasonably sufficient to inform the reader of the information required to be disclosed in respect such other paragraph or section. Disclosure of any fact or item in the Disclosure Schedule shall not necessarily mean that such item or fact, individually or in the aggregate, is material to the business, results of operations or financial condition of the Company. Time shall be of the essence in enforcing and applying the covenants and conditions set forth in this Agreement. The headings of the sections and subsections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
10.10 Transfer and Conveyance Taxes. Purchaser and the Company shall each be liable for and shall pay one-half of all applicable sales, transfer, recording, deed, stamp and other
similar non-income taxes, imposed in connection with transfers and conveyances of the Assets, including, without limitation, any real property transfer or gains taxes (if any), resulting from the consummation of the transactions contemplated by this Agreement.
10.11 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (i) waive, in any action for specific performance, the defense of adequacy of a remedy at law and (ii) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in any state or federal court having jurisdiction thereover.
10.12 Survival of Representations, Warranties and Covenants. The respective representations and warranties of the Company and Purchaser contained herein or in any certificate or special warranty deed delivered pursuant hereto and any and all covenants and agreements herein or therein (other than those covenants and agreements required by this Agreement to be performed after the Closing) shall expire with, and be terminated and extinguished upon, the one year anniversary of the Closing Date.
Article 11. No Personal Liability for Representatives, Stockholders, Directors or Officers. Purchaser understands, acknowledges and agrees that the directors and officers and consultants of the Company, the trustees under the Employee Benefit Plans and the Representatives have performed, or may perform, certain acts required or permitted under this Agreement on behalf of the Company to facilitate the transactions among the parties to this Agreement contemplated herein. Notwithstanding anything to the contrary contained herein, no stockholder, director or officer of the Company, any such consultant, any such trustee or any Representative (nor any Affiliate of the foregoing) shall, under any circumstances, have, and the Purchaser hereby absolves all such Persons from, any personal liability to the Purchaser (and each of their its Affiliates) for such acts to the extent deemed to be actions by or on behalf of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
GUY GANNETT COMMUNICATIONS
By:
Name:
Title:
SINCLAIR COMMUNICATIONS, INC.
By:
Name:
Title:
Exhibit A to Purchase Agreement
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") made as of __________________, 1998, by and between GUY GANNETT COMMUNICATIONS, a Maine corporation ("the Company"), and SINCLAIR COMMUNICATIONS, INC., a Maryland corporation ("Purchaser").
WHEREAS, the Company and Purchaser are parties to a Purchase Agreement, dated as of September 4, 1998 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to sell, assign, transfer and deliver to Purchaser all of the Company's right, title and interest in and to all of the real, personal or mixed properties, assets and other rights, both tangible and intangible (other than the Excluded Assets as defined in the Purchase Agreement), owned or leased by, or licensed to or used or useful by, the Company on the Closing Date (as defined in the Purchase Agreement) in connection with the Company's broadcast television business, including all business, operations and activities of the Station (as defined in the Purchase Agreement) (collectively, the "Assets" and the "Business," respectively), and Purchaser has agreed to purchase, acquire, accept and pay for the Assets and assume and agree to perform and fully discharge when due all Liabilities (as defined in the Purchase Agreement) and obligations of the Company related to or arising from or in connection with the Assets or the Business, other than Retained Liabilities (as defined in the Purchase Agreement) (collectively, the "Assumed Liabilities");
WHEREAS, the parties wish to effect the sale, assignment, transfer and delivery of the Assets, and assumption of the Assumed Liabilities by entering into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, the parties hereto agree as follows:
Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement.
1. Assignment of Assets. The Company hereby sells, conveys, assigns, transfers and delivers to Purchaser, its successors and assigns, forever, all of the Company's right, title and interest in and to all of the Assets. Without limiting the generality of the foregoing, the Company is not selling, conveying, assigning, transferring or delivering any of the Excluded Assets.
2. Acceptance of Assignment; Assumption of Liabilities. (a) Purchaser hereby purchases, acquires, accepts and agrees to pay for all of the Assets, and assumes and agrees to perform and fully discharge when due all Assumed Liabilities.
(b) Purchaser is not assuming, nor shall Purchaser be deemed to have assumed, the Retained Liabilities or any Liability or obligation whatsoever, except as expressly provided for in this Agreement and the Purchase Agreement.
3. Purchase Agreement. The provisions of this Agreement are subject to the provisions of the Purchase Agreement. To the extent that such provisions and the provisions of this Agreement are inconsistent with one another or in conflict, the provisions of the Purchase Agreement shall take precedence. This Agreement shall in no event enlarge, reduce or otherwise affect the rights, warranties or covenants of the parties as set forth in the Purchase Agreement. The Purchase Agreement shall survive the execution and delivery of this Agreement.
4. Cooperation. The parties shall, from time to time, execute, acknowledge, deliver and perform, or cause to be executed, acknowledged, delivered and performed, all such further instruments, acts, assignments, transfers, conveyances, powers of attorney and assurances as Purchaser may reasonably request to more effectively convey, transfer and vest in Purchaser, and to put Purchaser in possession and operating control of the Assets and the Business in accordance with the Purchase Agreement.
5. Benefit and Assignment. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
6. Construction of this Agreement. The headings of the sections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
7. Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, the Company and Purchaser.
[REST OF PAGE LEFT INTENTIONALLY BLANK,
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
GUY GANNETT COMMUNICATIONS
By:
Title:
SINCLAIR COMMUNICATIONS, INC.
By:
Title:
Exhibit B to Purchase Agreement
ADJUSTMENT ESCROW AGREEMENT
This ADJUSTMENT ESCROW AGREEMENT (this "Agreement") made as of ____________________, 1998, by and among GUY GANNETT COMMUNICATIONS, a Maine corporation (the "Company"), SINCLAIR COMMUNICATIONS, INC., a Maryland corporation ("Purchaser"), and [__________] Bank, a [________ Bank], as Adjustment Escrow Agent (the "Adjustment Escrow Agent").
WHEREAS, the Company and Purchaser are parties to a Purchase Agreement dated as of September 4, 1998 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company shall sell, assign, transfer and deliver to Purchaser the assets and business of the Business (as defined in the Purchase Agreement), and Purchaser shall purchase and acquire such assets and business;
WHEREAS, pursuant to Section 2.1(c)(ii) of the Purchase Agreement, Purchaser shall deliver to the Adjustment Escrow Agent on the Closing Date (as defined in the Purchase Agreement), the sum of (x) $3,000,000 plus (y) the Proposed Earnings Adjustment (as defined in the Purchase Agreement), if any, (the "Adjustment Escrow Amount");
WHEREAS, as contemplated by the Purchase Agreement, the Adjustment Escrow Agent shall hold the Adjustment Escrow Amount in escrow until the Actual Net Financial Assets and the Earnings Adjustment (in each case as defined in the Purchase Agreement) are determined, following which the Adjustment Escrow Amount is to be distributed in accordance with the Section 2.2(c) of the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, the parties hereto agree as follows:
Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement.
1. Appointment of Adjustment Escrow Agent. The Company and Purchaser hereby
appoint [_____________ Bank] to act as Adjustment Escrow Agent hereunder, and
[____________ Bank] hereby accepts such appointment and agrees to act as
Adjustment Escrow Agent on the terms and conditions set forth hereinafter.
2. Adjustment Escrow Amount. (a) On the Closing Date, Purchaser shall deliver to the Adjustment Escrow Agent by wire transfer of immediately available funds (to account number [______________] of the Adjustment Escrow Agent (the "Adjustment Escrow Account")) the Adjustment Escrow Amount, accompanied by written notice from Purchaser identifying such amount as an amount being delivered for deposit into the Adjustment Escrow Account. The Adjustment Escrow Agent shall acknowledge to Purchaser the Adjustment Escrow
Agent's receipt of said amount.
(b) The Adjustment Escrow Amount, not including the interest and other investment income earned thereon, shall only serve to pay the amounts set forth in Section 4 hereof.
(c) The Adjustment Escrow Agent shall hold the balance of the Adjustment Escrow Amount (the "Adjustment Escrowed Funds") in escrow and shall not withdraw the Adjustment Escrowed Funds from the Adjustment Escrow Account or use the Adjustment Escrowed Funds for any other purpose, except as provided in this Agreement.
3. Investments of Adjustment Escrowed Funds. (a) The Adjustment Escrow Agent shall invest and reinvest the Adjustment Escrowed Funds from time to time, upon receipt of the written instructions thereto issued by the Company or the Fund Holder (as defined in Section 6 hereof), as the case may be, in:
(i) Commercial paper of any corporation rated at least A-1 by S&P and P-1 by Moody's;
(ii) Negotiable certificates of deposit of United States banks having (A) a long-term senior debt rating of at least A by S&P and Moody's, (B) deposits in excess of $2,000,000,000 and (C) commercial paper rating designations of at least A-1 by S&P and P-1 by Moody's;
(iii)Repurchase agreements with any United States bank which are fully collateralized by direct obligations of the United States or obligations of agencies or sponsored agencies of the United States government, excluding in all cases collateralized mortgage obligations of any kind; and
(iv) Money market instruments rated at least A-1 by S&P and P-1 by Moody's that are restricted to investments described in clause (iii);
provided that in no event shall any investment of the types described in clause
(i), (ii) or (iv) exceed ten percent of the net assets of the issuer thereof and
provided further that all investments shall have maturity dates on or before the
anticipated dates of the relevant payments hereunder.
(b) To the extent the Adjustment Escrow Agent invests any funds in the manner provided for in this Section 3 and in accordance with the written instructions from the Company or the Fund Holder, as the case may be, no party hereto shall be liable for any loss which may be incurred by reason of any such investment. No investment shall exceed the term of this Agreement.
(c) The Adjustment Escrow Agent shall have the power to reduce, sell or liquidate the foregoing investments whenever it shall be required to release all or any portion of the Adjustment Escrowed Funds pursuant to Section 4 hereof.
(d) The Adjustment Escrow Agent is authorized to register securities held by it in its name or in the name of a nominee or in bearer form and may deposit any securities or other property in a depository or a clearing corporation.
(e) Any interest or other investment income earned for the period from the time that any portion of the Purchase Price is delivered to the Adjustment Escrow Agent pursuant to the Purchase Agreement until all amounts held in the Adjustment Escrow Account have been distributed in accordance with Section 4 hereof shall be paid to the Company or the Fund Holder, as the case may be, in addition to, and at the same time as, payment of the Adjustment Escrowed Funds; provided, however, that, to the extent that any portion of the Adjustment Escrowed Funds is paid to Purchaser pursuant to of Section 4 hereof, a pro rata portion of such interest or other investment income (determined on the basis of the relative portions of the Adjustment Escrowed Funds to be paid to Purchaser and the Company or the Fund Holder, as the case may be, respectively) shall be instead paid to Purchaser. Any such interest or other investment income shall be deemed not to constitute Adjustment Escrowed Funds.
4. Adjustment Escrowed Funds. (a) As soon as practicable after the earlier of an Adjustment Agreement or an Accounting Firm Determination (but in any event within two Business Days after the Adjustment Agreement or the Accounting Firm Determination), (x) Purchaser and (y) the Company or the Fund Holder, as the case may be, shall give the Adjustment Escrow Agent joint written instructions (an "Instruction") to distribute amounts from the Adjustment Escrowed Funds and the interest and other investment income earned to the Company or the Fund Holder, as the case may be, and (if applicable) Purchaser respectively, in accordance with Sections 2.2(c) and 2.2(d) of the Purchase Agreement.
(b) Each Instruction given by Purchaser and the Company or the Fund Holder, as the case may be, to the Adjustment Escrow Agent shall be signed by an authorized representative of Purchaser and the Company or the Fund Holder, as the case may be.
(c) Promptly upon receipt of the Instruction from (x) Purchaser and
(y) the Company or the Fund Holder, as the case may be, the Adjustment Escrow
Agent shall distribute the Adjustment Escrowed Funds and the interest and other
investment income earned in accordance with the Instruction.
(d) The Adjustment Escrow Agent shall make no payment or delivery to Purchaser and/or the Company or the Fund Holder, as the case may be, except pursuant to (i) an Instruction signed by the authorized representatives of both Purchaser and the Company or the Fund Holder, as the case may be or (ii) a final nonappealable order, judgment, writ, decree of any Federal or State court of competent jurisdiction.
(e) All payments to be made pursuant to this Section 4 shall be made by wire transfer in immediately available funds to the Person or Persons entitled thereto.
5. Purchase Agreement. The provisions of this Agreement are subject to the provisions of the Purchase Agreement, including, without limitation, Article 2 thereof. To the extent that such provisions and the provisions of this Agreement are inconsistent with one
another or in conflict, the provisions of the Purchase Agreement shall take precedence.
6. Fund Holder. The parties hereto expressly acknowledge that the Company may assign all of its rights and obligations under this Agreement and to and in the Adjustment Escrowed Funds to the stockholders of the Company or to any person or entity or any persons or entities acting directly or indirectly on behalf of the Company or such stockholders. Upon such assignment and upon the Company's delivery to the parties hereto of a notice thereof, the Company shall be released from all of its obligations under this Agreement. As used herein, the term "Fund Holder" means the person, persons, entity and/or entities to whom the Company's rights and obligations hereunder have been assigned.
7. Settlement of Disputes. Any dispute which may arise under this Agreement with respect to the delivery and/or ownership or right of possession of the Adjustment Escrowed Funds (or other funds held by the Adjustment Escrow Agent pursuant hereto) or any part thereof, or the duties of the Adjustment Escrow Agent hereunder, shall be settled either by mutual agreement of the Company or the Fund Holder, as the case may be, and Purchaser (evidenced by appropriate instructions in writing to the Adjustment Escrow Agent, signed by such parties) or, failing such agreement, either the Company or the Fund Holder, as the case may be, or Purchaser shall have the right to submit the dispute to any federal or state court located in Portland, Maine. Each party waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the jurisdiction of such courts in any such suit, action or proceeding. The Adjustment Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. Prior to the settlement of any such dispute, the Adjustment Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, that portion of the Adjustment Escrowed Funds and the interest and other investment income earned thereon which is the subject of such dispute.
8. Concerning the Adjustment Escrow Agent. (a) The Adjustment Escrow Agent shall have no duties or responsibilities except those expressly set forth herein. The Adjustment Escrow Agent may consult with counsel and shall have no liability hereunder except for its own bad faith, gross negligence or willful misconduct. It may rely on any notice, instruction, certificate, statement, request, consent, confirmation, agreement or other instrument which it reasonably believes to be genuine and to have been signed or presented by a proper Person or Persons.
(b) The Adjustment Escrow Agent shall have no duties with respect to any agreement or agreements with respect to any or all of the Adjustment Escrowed Funds and the interest and other investment income earned thereon other than as provided in this Agreement. In the event that any of the terms and provisions of any other agreement between any of the parties hereto (other than the Purchase Agreement) conflict or is inconsistent with any of the terms and provisions of this Agreement, the terms and provisions of this Agreement shall govern and control in all respects. Notwithstanding any provision to the contrary contained in any other agreement (including without limitation, the Purchase Agreement), the Adjustment Escrow Agent shall have no interest in the Adjustment Escrowed Funds or the interest and other investment income earned thereon except as provided in this Agreement.
(c) So long as the Adjustment Escrow Agent shall have any obligation to pay any amount to the Company or the Fund Holder, as the case may be, and/or Purchaser from the Adjustment Escrowed Funds hereunder, the Adjustment Escrow Agent shall keep proper books of record and account, in which full and correct entries shall be made of all receipts, disbursements and investment activity in the Adjustment Escrow Account.
(d) The Adjustment Escrow Agent shall furnish to the Company or the Fund Holder, as the case may be, and Purchaser monthly statements of account with respect to the Adjustment Escrowed Funds showing the dates and amounts of all deposits, disbursements, interest and other investment income and the balance remaining on deposit.
(e) The Adjustment Escrow Agent shall not be bound by any modification of this Agreement affecting the rights, duties and obligations of the Adjustment Escrow Agent, unless such modification shall be in writing and signed by the other parties hereto, and the Adjustment Escrow Agent shall have given its prior or contemporaneous written consent thereto. The Adjustment Escrow Agent shall not be bound by any other modification of this Agreement unless the Adjustment Escrow Agent shall have received written notice thereof.
(f) The Adjustment Escrow Agent may resign as escrow agent at any time by giving 60 days written notice by registered or certified mail to the Company or the Fund Holder, as the case may be, and Purchaser, and such resignation shall take effect at the end of such 60 days or upon earlier appointment of a successor Adjustment Escrow Agent. The Company or the Fund Holder, as the case may be, and Purchaser may remove the Adjustment Escrow Agent at any time upon written notice by the Company and Purchaser jointly to the Adjustment Escrow Agent with immediate effect. The resignation or removal shall not be effective unless and until a successor Adjustment Escrow Agent is appointed by the Company or the Fund Holder, as the case may be, and Purchaser. The Company or the Fund Holder, as the case may be, and Purchaser shall undertake to utilize their best efforts to arrange for the appointment of a successor Adjustment Escrow Agent. If any instrument of acceptance by a successor Adjustment Escrow Agent shall not have been delivered to the Adjustment Escrow Agent within 60 days after the delivery of its notice of resignation by the Adjustment Escrow Agent or its receipt of the notice of removal, the resigning or removed Adjustment Escrow Agent may, at the expense of the Company or the Fund Holder, as the case may be, and Purchaser, petition any court of competent jurisdiction for the appointment of a successor Adjustment Escrow Agent.
(g) If at any time hereafter the Adjustment Escrow Agent shall be dissolved or otherwise become incapable of acting, or the bank or trust company acting as the Adjustment Escrow Agent shall be taken over by any government official, agency, department or board, or the position of the Adjustment Escrow Agent shall become vacant for any of the foregoing reasons or for any other reason, the Company or the Fund Holder, as the case may be, and Purchaser shall jointly appoint a successor Adjustment Escrow Agent to fill such vacancy.
(h) Every successor Adjustment Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor, and also to the Company or the Fund Holder, as the case may be, and Purchaser an instrument in writing accepting such appointment hereunder, and thereupon such successor Adjustment Escrow Agent, without any further act,
shall become fully vested with all the rights, immunities and powers and shall be subject to all of the duties and obligations, of its predecessor Adjustment Escrow Agent as if originally named herein; and every predecessor Adjustment Escrow Agent shall deliver to its successor, all property and moneys held by it hereunder and all information required to properly perform the obligations of the Adjustment Escrow Agent set forth in this Agreement.
(i) The Adjustment Escrow Agent's fees shall be in the amounts set forth on Exhibit A hereto. In addition, the Adjustment Escrow Agent shall be reimbursed for its reasonable out of pocket costs incurred in performing its obligations under this Agreement upon presentation of any invoices thereof.
(j) The Company and Purchaser shall each be responsible for one-half of the fees and expenses of the Adjustment Escrow Agent.
(k) The Company or the Fund Holder, as the case may be, and Purchaser shall jointly but not severally indemnify and hold the Adjustment Escrow Agent harmless from and against any and all expenses (including reasonable attorneys' fees), liabilities, claims, damages, actions, suits or other charges incurred by or assessed against the Adjustment Escrow Agent for anything done or omitted by the Adjustment Escrow Agent in the performance of the Adjustment Escrow Agent's duties hereunder, except such which result from the Adjustment Escrow Agent's bad faith, gross negligence or willful misconduct.
(1) Insofar as required by any Governmental Authority, the Adjustment Escrow Agent shall provide all information and file all forms or returns and withhold all Taxes required to be withheld with regard to the payments made pursuant to this Agreement, including, without limitation, information and forms and returns relating to income Taxes.
9. Termination of the Adjustment Escrow Agreement. This Agreement shall terminate upon the distribution of all of the Adjustment Escrowed Funds and the interest and other investment income earned thereon by the Adjustment Escrow Agent, or its successor, if any.
10. Miscellaneous. (a) This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
(b) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
(c) This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
(d) Section headings contained herein have been inserted for reference purposes only and shall not be construed as part of this Agreement.
(e) This Agreement may be modified or amended only by a written instrument duly executed by all parties hereto or their respective successors or assigns.
(f) Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section l0(f):
If to the Company:
Guy Gannett Communications
One City Center
P. O. Box 15277
Portland, Maine 04112-5277
Attention: James E. Baker
Chief Financial Officer
Facsimile No.: (207) 828-8160
with copy to:
Eric P. Stauffer, Esq.
Preti, Flaherty, Beliveau & Pachios, LLC
P. O. Box 9546
One City Center
Portland, Maine 04112-9546
Facsimile No.: (207) 791-3111
and
Robert E. Spatt, Esq.
Simpson, Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Facsimile No.: (212) 455-2502
If to Purchaser:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attention: President
Facsimile No.: (410) 467-5043
with a copy to:
Sinclair Communications, Inc. 2000 West 41st Street Baltimore, Maryland 21211-1420 Attention: General Counsel Facsimile No.: (410) 662-4707
and
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202-1053
Attention: Steven A. Thomas, Esquire
Facsimile No.: (410) 752-2046
Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable.
(g) The Adjustment Escrow Agent shall not be liable to pay any Tax, if any, on any interest or other investment income earned on the Adjustment Escrowed Funds, it being the understanding of the parties that any such Tax shall be the responsibility of the party or parties entitled to receive the Adjustment Escrowed Funds and any such interest or other investment income, allocated between parties on the basis of the relative portions of the Adjustment Escrow Account to be paid to Purchaser and the Company or the Fund Holder, as the case may be, respectively, pursuant to Section 4(a) hereof
(h) If any party hereto refuses to comply with, or at any time violates or attempts to violate, any term, covenant or agreement contained in this Agreement, any other party hereto may, by injunctive action, compel the defaulting party to comply with, or refrain from violating, such term, covenant or agreement, and may, by injunctive action, compel specific performance of the obligations of the defaulting party.
(i) Except as provided herein, the rights and obligations of the parties under this Agreement shall not be assigned to any Person, without the written consent of the other parties. This Agreement shall not confer any benefits on any Persons other than the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered on the date first above written.
[____________]BANK, as Adjustment Escrow Agent
By:
GUY GANNETT COMMUNICATIONS
By:
SINCLAIR COMMUNICATIONS, INC.
By:
Exhibit B to Adjustment Escrow Agreement
ADJUSTMENT ESCROW AGENT'S FEES
Exhibit C to Purchase Agreement
SECURITY ESCROW AGREEMENT
This SECURITY ESCROW AGREEMENT (this "Agreement") made as of
[_____________], 1998, by and among GUY GANNETT COMMUNICATIONS, a Maine
corporation (the "Company"), SINCLAIR COMMUNICATIONS, INC., a Maryland
Corporation (the "Purchaser"), and [_____________] Bank, a [_____________Bank],
as Security Escrow Agent (the "Security Escrow Agent").
WHEREAS, the Company and Purchaser are parties to a Purchase Agreement dated as of September 4, 1998 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company shall sell, assign, transfer and deliver to Purchaser the assets and business of the Business (as defined in the Purchase Agreement), and Purchaser shall purchase and acquire such assets and business;
WHEREAS, pursuant to Section 2.1(c)(iii) of the Purchase Agreement,
Purchaser shall deliver on the Closing Date (as defined in the Purchase
Agreement) an amount of $8,000,000 of the Purchase Price (as defined in the
Purchase Agreement) to the Security Escrow Agent as security for the payment of
certain amounts (i) as to which Purchaser may become entitled to indemnification
pursuant to Article 8 of the Purchase Agreement, (ii) as to which Purchaser may
become entitled to pursuant to Section 5.8(a) of the Purchase Agreement and
(iii) that may be payable to Purchaser pursuant to Section 2.2(c)(iii)(B) of the
Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, the parties hereto agree as follows:
Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement.
1. Appointment of Security Escrow Agent. The Company and Purchaser hereby
appoint [___________ Bank] to act as Security Escrow Agent hereunder, and
[______________ Bank] hereby accepts such appointment and agrees to act as
Security Escrow Agent on the terms and conditions set forth hereinafter.
2. Security Escrow Amount. (a) On the Closing Date, Purchaser shall deliver to the Security Escrow Agent by wire transfer of immediately available funds (to account number [__________] of the Security Escrow Agent (the "Security Escrow Account")) the amount of $8,000,000 (the "Security Escrow Amount"), accompanied by written notice from Purchaser identifying such amount as an amount being delivered for deposit into the Security Escrow Account. The Security Escrow Agent shall acknowledge to Purchaser the Security Escrow Agent's receipt of said amount.
(b) The Security Escrow Amount, not including the interest and other investment
income earned thereon, shall only serve to secure the performance of (i) the indemnification obligations of the Company as set forth in Article 8 of the Purchase Agreement, (ii) the obligations of the Company as set forth in Section 5.8(a) of the Purchase Agreement and (iii) certain of the obligations set forth in Section 2.2(c)(iii)(B) of the Purchase Agreement.
(c) The Security Escrow Agent shall hold the balance of the Security Escrow Amount (the "Security Escrowed Funds") in escrow and shall not withdraw the Security Escrowed Funds from the Security Escrow Account or use the Security Escrowed Funds for any other purpose, except as provided in this Agreement.
3. Investments of Security Escrowed Funds. (a) The Security Escrow Agent shall invest and reinvest the Security Escrowed Funds from time to time, upon receipt of the written instructions thereto issued by the Company or the Fund Holder (as defined in Section 7 hereof), in:
(i) Commercial paper of any corporation rated at least A-1 by S&P and P-1 by Moody's;
(ii) Negotiable certificates of deposit of United States banks having (A) a long-term senior debt rating of at least A by S&P and Moody's, (B) deposits in excess of $2,000,000,000 and (C) commercial paper rating designations of at least A-1 by S&P and P-1 by Moody's;
(iii)Repurchase agreements with any United States bank which are fully collateralized by direct obligations of the United States or obligations of agencies or sponsored agencies of the United States government, excluding in all cases collateralized mortgage obligations of any kind; and
(iv) Money market instruments rated at least A-1 by S&P and P-1 by Moody's that are restricted to investments described in clause (iii);
provided that in no event shall any investment of the types described in clause
(i), (ii) or (iv) exceed ten percent of the net assets of the issuer thereof and
provided further that all investments shall have maturity dates on or before the
anticipated dates of the relevant payments hereunder.
(b) To the extent the Security Escrow Agent invests any funds in the manner provided for in this Section 3 and in accordance with the written instructions from the Company or the Fund Holder, as the case may be, no party hereto shall be liable for any loss which may be incurred by reason of any such investment. No investment shall exceed the term of this Agreement.
(c) The Security Escrow Agent shall have the power to reduce, sell or liquidate the foregoing investments whenever it shall be required to release all or any portion of the Security Escrowed Funds pursuant to Section 4 or 5 hereof.
(d) The Security Escrow Agent is authorized to register securities held by it in its
name or in the name of a nominee or in bearer form and may deposit any securities or other property in a depository or a clearing corporation.
(e) Any interest or other investment income earned for the period from
the time that the Security Escrow Amount is delivered to the Security Escrow
Agent until all the Security Escrowed Funds have been distributed in accordance
with Section 5 hereof, shall be paid monthly to the Company or the Fund Holder,
as the case may be, provided that no such payments shall be made until (i) a
determination of whether any payment out of the Security Escrow Account pursuant
to Section 2.2(c)(iii)(B) of the Purchase Agreement is required and (ii) if so
required, such payment has been made; provided further, that to the extent that
any portion of the Security Escrowed Funds is paid to Purchaser pursuant to
Section 2.2(c)(iii)(B) of the Purchase Agreement, a pro rata portion of such
interest or other investment income earned through the date of such payment
(determined on the basis of the relative portions of the Security Escrowed Funds
so paid and that not so paid) shall be instead paid to Purchaser at the time
such portion of the Security Escrowed Funds is paid to Purchaser; and provided
further that the Security Escrow Agent shall retain interest or investment
income to the extent necessary to replenish previous losses incurred by reason
of any investment under Section 3(a) that resulted in a reduction in the
principal amount of the Security Escrow Amount. Any such interest or other
investment income shall be deemed not to constitute Security Escrowed Funds.
4. Claim Notices. (a) During the period from the Closing Date until the Scheduled Escrow Expiration Date (as defined in Section 10 hereof), Purchaser acting on its own or, in the event set forth under (i) hereof, on behalf of any other Purchaser Indemnified Party (together for the purposes of this Section 4, "Purchaser") shall be entitled to give the Security Escrow Agent written notice (a "Claim Notice") of (i) any Claims and Damages incurred by it or a Purchaser Indemnified Party for which Purchaser claims that the Company is obligated to indemnify Purchaser pursuant to Article 8 of the Purchase Agreement, (ii) 50% of any payment made by Purchaser to any Business Employee pursuant to the terms of the Severance Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule to the Purchase Agreement, which Purchaser is entitled to recover pursuant to Section 5.8(a) of the Purchase Agreement or (iii) the amount that is to be delivered to Purchaser pursuant to Section 2.2(c)(iii)(B) of the Purchase Agreement.
(b) Each Claim Notice given by Purchaser to the Security Escrow Agent shall be signed by an authorized representative of Purchaser and (i) shall include the information required under Section 8.5 of the Purchase Agreement, including, for as far as its concerns a Claim Notice for Claims and Damages, the nature and details of such Claims and Damages, the section of the Purchase Agreement pursuant to which the Claim Notice is made, the amount of Claims and Damages, if reasonably ascertainable by Purchaser (or a statement that the amount thereof is not then reasonably ascertainable by Purchaser and the basis for such statement) and whether or not such Claims and Damages arise from the assertion of liability by a third party or (ii) set forth Purchaser's claim pursuant to Section 5.8(a) or 2.2(c)(iii)(B) of the Purchase Agreement.
(c) Promptly upon receipt of the Claim Notice, the Security Escrow Agent shall give notice thereof to the Company or the Fund Holder, as the case may be, by transmitting a copy of such Claim Notice to the Company or the Fund Holder, as the case may be, in the
manner and to the address specified in Section 1l(f) hereof.
(d) The Security Escrow Agent shall make no payment or delivery to Purchaser or any Purchaser Indemnified Party for which a Claim Notice has been given to the Security Escrow Agent pursuant to this Section 4, or for the first payment of interest or other investment income pursuant to Section 3(e), except pursuant to (i) written instructions to the Security Escrow Agent signed by the authorized representatives of Purchaser and of the Company or the Fund Holder, as the case may be (the "Joint Order"), or (ii) a final nonappealable order, judgment, writ, decree of any Federal or State court of competent jurisdiction (the "Court Order"). Claims and Damages, or such portion of Claims and Damages, that have not been paid to Purchaser or otherwise resolved by a Joint Order or a Court Order, together with all unresolved claims with respect to Sections 5.8(a) and 2.2(c)(iii)(B), are herein referred to collectively as "Pending Claims".
5. Distribution of the Security Escrowed Funds. All cash held in the Security Escrow Account on the Scheduled Escrow Expiration Date shall be distributed as follows:
(a) The Security Escrow Agent shall deliver to the Company or the Fund Holder, as the case may be, by wire transfer to a bank account designated by the Company or the Fund Holder, as the case may be, the amount by which the balance in the Security Escrow Account as of the Scheduled Escrow Expiration Date exceeds the aggregate amount for all indemnification or other payments claimed under Pending Claims described in all Claim Notices with respect thereto (the "Reserves") as of the Scheduled Escrow Expiration Date.
(b) An amount equal to the aggregate amount of the Reserves shall continue to be held by the Security Escrow Agent as Security Escrowed Funds as long as, and to the extent that, such Pending Claims have not been resolved by a Joint Order or a Court Order.
(c) Whenever any Pending Claim is resolved by a Joint Order or a Court Order, the amount of such Pending Claim shall be disposed of in accordance with such Joint Order or Court Order.
(d) Upon a Joint Order or a Court Order, money may be distributed at any time to Purchaser and the Company or the Fund Holder, as the case may be, or both of them.
6. Purchase Agreement. The provisions of this Agreement are subject to the provisions of the Purchase Agreement, including, without limitation, Sections 2.2(c), 2.3, 2.4 and 5.8(a) and Article 8 thereof. To the extent that such provisions and the provisions of this Agreement are inconsistent with one another or in conflict, the provisions of the Purchase Agreement shall take precedence.
7. Fund Holder. The parties hereto expressly acknowledge that the Company may assign all of its rights and obligations under this Agreement and to and in the Security Escrowed Funds to the stockholders of the Company or to any person or entity or any persons or entities acting directly or indirectly on behalf of the Company or such stockholders. Upon such assignment and upon the Company's delivery to the parties hereto of a notice thereof, the
Company shall be released from all of its obligations under this Agreement. As used herein, the term "Fund Holder" means the person, persons, entity and/or entities to whom the Company's rights and obligations hereunder have been assigned.
8. Settlement of Disputes. Any dispute which may arise under this Agreement with respect to the delivery and/or ownership or right of possession of the Security Escrowed Funds or any part thereof, or the duties of the Security Escrow Agent hereunder, shall be settled either by mutual agreement of the Company or the Fund Holder, as the case may be, and Purchaser (evidenced by appropriate instructions in writing to the Security Escrow Agent, signed by such parties) or, failing such agreement, either the Company or the Fund Holder, as the case may be, or Purchaser shall have the right to submit the dispute to any federal or state court located in Portland, Maine. Each party waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the jurisdiction of such courts in any such suit, action or proceeding. The Security Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. Prior to the settlement of any such dispute, the Security Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, that portion of the Security Escrowed Funds and the interest and other investment income earned thereon which is the subject of such dispute.
9. Concerning the Security Escrow Agent. (a) The Security Escrow Agent shall have no duties or responsibilities except those expressly set forth herein. The Security Escrow Agent may consult with counsel and shall have no liability hereunder except for its own bad faith, gross negligence or willful misconduct. It may rely on any notice, instruction, certificate, statement, request, consent, confirmation, agreement or other instrument which it reasonably believes to be genuine and to have been signed or presented by a proper Person or Persons.
(b) The Security Escrow Agent shall have no duties with respect to any agreement or agreements with respect to any or all of the Security Escrowed Funds and the interest and investment income earned thereon other than as provided in this Agreement. In the event that any of the terms and provisions of any other agreement between any of the parties hereto (other than the Purchase Agreement) conflict or is inconsistent with any of the terms and provisions of this Agreement, the terms and provisions of this Agreement shall govern and control in all respects. Notwithstanding any provision to the contrary contained in any other agreement (including, without limitation, the Purchase Agreement), the Security Escrow Agent shall have no interest in the Security Escrowed Funds or the interest and other investment income earned thereon except as provided in this Agreement.
(c) So long as the Security Escrow Agent shall have any obligation to pay any amount to the Company or the Fund Holder, as the case may be, and/or Purchaser from the Security Escrowed Funds hereunder, the Security Escrow Agent shall keep proper books of record and account, in which full and correct entries shall be made of all receipts, disbursements and investment activity in the Security Escrow Account.
(d) The Security Escrow Agent shall furnish to the Company or the Fund Holder, as the case may be, and Purchaser monthly statements of account with respect to the Security Escrowed Funds showing the dates and amounts of all deposits, disbursements, interest and other
investment income and the balance remaining on deposit.
(e) The Security Escrow Agent shall not be bound by any modification of this Agreement affecting the rights, duties and obligations of the Security Escrow Agent, unless such modification shall be in writing and signed by the other parties hereto, and the Security Escrow Agent shall have given its prior or contemporaneous written consent thereto. The Security Escrow Agent shall not be bound by any other modification of this Agreement unless the Security Escrow Agent shall have received written notice thereof.
(I) The Security Escrow Agent may resign as escrow agent at any time by giving 60 days written notice by registered or certified mail to the Company or the Fund Holder, as the case may be, and Purchaser, and such resignation shall take effect at the end of such 60 days or upon earlier appointment of a successor Security Escrow Agent. The Company or the Fund Holder, as the case may be, and Purchaser may remove the Security Escrow Agent at any time upon written notice by the Company or the Fund Holder, as the case may be, and Purchaser jointly to the Security Escrow Agent with immediate effect. The resignation or removal shall not be effective unless and until a successor Security Escrow Agent is appointed by the Company or the Fund Holder, as the case may be, and Purchaser. The Company or the Fund Holder, as the case may be, and Purchaser shall undertake to utilize their best efforts to arrange for the appointment of a successor Security Escrow Agent. If any instrument of acceptance by a successor Security Escrow Agent shall not have been delivered to the Security Escrow Agent within 60 days after the delivery of its notice of resignation by the Security Escrow Agent or its receipt of the notice of removal, the resigning or removed Security Escrow Agent may, at the expense of the Company or the Fund Holder, as the case may be, and Purchaser, petition any court of competent jurisdiction for the appointment of a successor Security Escrow Agent.
(g) If at any time hereafter the Security Escrow Agent shall be dissolved or otherwise become incapable of acting, or the bank or trust company acting as the Security Escrow Agent shall be taken over by any government official, agency, department or board, or the position of the Security Escrow Agent shall become vacant for any of the foregoing reasons or for any other reason, the Company or the Fund Holder, as the case may be, and Purchaser shall jointly appoint a successor Security Escrow Agent to fill such vacancy.
(h) Every successor Security Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor, and also to the Company or the Fund Holder, as the case may be, and Purchaser an instrument in writing accepting such appointment hereunder, and thereupon such successor Security Escrow Agent, without any further act, shall become fully vested with all the rights, immunities and powers and shall be subject to all of the duties and obligations, of its predecessor Security Escrow Agent as if originally named herein; and every predecessor Security Escrow Agent shall deliver to its successor, all property and moneys held by it hereunder and all information required to properly perform the obligations of the Security Escrow Agent set forth in this Agreement.
(i) The Security Escrow Agent's fees shall be in the amounts set forth on Exhibit A hereto. In addition, the Security Escrow Agent shall be reimbursed on demand for its reasonable out of pocket costs incurred in performing its obligations under this Agreement upon
its presentation of any invoices thereof.
(j) The Company and Purchaser shall each be responsible for payment of one half of the fees and expenses of the Security Escrow Agent, including the expenses set forth in Section 9(i) hereof.
(k) The Company or the Fund Holder, as the case may be, and Purchaser shall indemnify and hold the Security Escrow Agent harmless from and against any and all expenses (including reasonable attorneys' fees), liabilities, claims, damages, actions, suits or other charges incurred by or assessed against the Security Escrow Agent for anything done or omitted by the Security Escrow Agent in the performance of the Security Escrow Agent's duties hereunder, except such which result from the Security Escrow Agent's bad faith, gross negligence or willful misconduct.
(1) Insofar as required by any governmental agency or authority, the Security Escrow Agent shall provide all information and file all forms or returns and withhold all Taxes required to be withheld with regard to the payments made pursuant to this Agreement, including, without limitation, information and forms and returns relating to income Taxes.
10. Termination of the Security Escrow Agreement. This Agreement shall terminate upon the earlier to occur of: (i) the first anniversary of the Closing Date (the "Scheduled Escrow Expiration Date") and (ii) the distribution of all of the Security Escrowed Funds and the interest and other investment income earned thereon by the Security Escrow Agent pursuant to this Agreement; provided, however, that if there are any unresolved or unsettled Claims and Damages outstanding on the Scheduled Escrow Expiration Date, this Agreement will not terminate until the resolution of all such Claims and Damages and the distribution of all of the Security Escrowed Funds pursuant to Section 5 hereof.
11. Miscellaneous. (a) This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
(b) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their representative successors and assigns.
(c) This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
(d) Section headings contained herein have been inserted for reference purposes only and shall not be construed as part of this Agreement.
(e) This Agreement may be modified or amended only by a written instrument duly executed by all parties hereto or their respective successors or assigns.
(f) Any notice, demand, claim, notice of claim, request or communication
required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section l1(f):
If to the Company:
Guy Gannett Communications
One City Center
P. O. Box 15277
Portland, Maine 04112-5277
Attention: James E. Baker
Chief Financial Officer
Facsimile No.: (207) 828-8160
with copy to:
Eric P. Stauffer, Esq.
Preti, Flaherty, Beliveau & Pachios, LLC
P. O. Box 9546
One City Center
Portland, Maine 04112-9546
Facsimile No.: (207) 791-3111
and
Robert E. Spatt, Esq.
Simpson, Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Facsimile No.: (212) 455-2502
If to Purchaser:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attention: President
Facsimile No.: (410) 467-5043
|
with a copy to:
Sinclair Communications, Inc. 2000 West 41st Street Baltimore, Maryland 21211-1420 Attention: General Counsel Facsimile No.: (410) 662-4707
and
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202-1053
Attention: Steven A. Thomas, Esquire
Facsimile No.: (410) 752-2046
Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable.
(g) The Security Escrow Agent shall not be liable to pay any Tax, if any, on any interest or other investment income earned on the Security Escrowed Funds, it being the understanding of the parties that any such Tax shall be the responsibility of the Company or the Fund Holder, as the case may be.
(h) If any party hereto refuses to comply with, or at any time violates or attempts to violate, any term, covenant or agreement contained in this Agreement, any other party hereto may, by injunctive action, compel the defaulting party to comply with, or refrain from violating, such term, covenant or agreement, and may, by injunctive action, compel specific performance of the obligations of the defaulting party.
(i) Except as provided herein, the rights and obligations of the parties under this Agreement shall not be assigned to any Person, without the written consent of the other parties. This Agreement shall not confer any benefits on any Persons other than the parties hereto and the Fund Holder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered on the date first above written.
[____________]BANK, as Adjustment Escrow Agent
By:
GUY GANNETT COMMUNICATIONS
By:
SINCLAIR COMMUNICATIONS, INC.
By:
Exhibit A to Security Escrow Agreement
SECURITY ESCROW AGENT'S FEES
EXHIBIT D-1 TO
PURCHASE AGREEMENT
FORM OF PRETI, FLAHERTY, BELIVEAU & PACHIOS LEGAL OPINION
---------------------------, ------
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Gentlemen:
We have acted as counsel to Guy Gannett Communications (the "Company") in connection with the transactions contemplated by the Purchase Agreement dated September 4, 1998 (the "Purchase Agreement") by the Company and Sinclair Communications, Inc. (the "Buyer").
We have examined the originals or copies of such documents, certificates and records as we have deemed relevant or necessary as the basis for the opinions hereinafter expressed. We have assumed the genuineness of all signatures, the authenticity of documents, certificates and records submitted to us as originals, the conformity to the originals of all documents, certificates and records submitted to us as certified or reproduction copies, the legal capacity of all natural persons executing documents, certificates and records, and the completeness and accuracy as of the date of this opinion letter of the information contained in such documents, certificates and records.
The law, covered by the opinions expressed herein, is limited to the laws of the State of Maine.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under the laws of the State of Maine. The Company has the corporate power and authority to enter into and perform the Purchase Agreement.
2. The execution, delivery and performance of the Purchase Agreement have been duly authorized by all necessary corporate action on the part of the Company.
This opinion letter is delivered as of its date and without any undertaking to advise you of any changes of law or fact that occur after the date of this opinion letter even though the changes may affect a legal analysis or conclusion or an information confirmation in this opinion letter.
Sinclair Communications, Inc.
_________________, 1998
This opinion letter may be relied upon by you only in connection with the transaction described in the initial paragraph of this opinion letter and may not be used or relied upon by you for any other purpose or by any other person for any purpose whatsoever without, in each instance, our prior written consent.
Very truly yours,
Exhibit D-2 to Purchase Agreement
[Date of Closing]
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Ladies and Gentlemen:
We have acted as special New York counsel to Guy Gannett Communications, a Maine corporation (the "Company"), in connection with the negotiation and execution of the Purchase Agreement dated as of September 4, 1998 (the "Purchase Agreement") by and between the Company and Sinclair Communications, Inc., a Maryland corporation ("Sinclair").
This opinion is delivered pursuant to Section 6.9 of the Purchase Agreement. All capitalized terms not otherwise defined herein have the meanings specified in the Purchase Agreement.
We have examined a copy of the Purchase Agreement and originals or copies, certified or otherwise identified to our satisfaction, of such other documents, instruments or certificates as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth.
As to questions of fact we have relied upon the documents examined by us or upon certificates and statements of officers of the Company. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as certified or photocopies and the authenticity of the originals of such latter documents.
Sinclair Communications, Inc. [________________,] 1998
In rendering the opinion set forth below, we have assumed, without any
independent investigation or verification of any kind, that (i) the Purchase
Agreement is a valid, legally binding enforceable agreement of Sinclair, (ii)
the Company is validly existing and in good standing under the laws of the State
of Maine and has duly authorized, executed and delivered the Purchase Agreement,
(iii) execution, delivery and performance by the Company does not violate the
laws of Maine or any other applicable laws (other than the laws of the State of
New York) and (iv) execution, delivery and performance by the company of the
Purchase Agreement does not constitute a breach or violation of any agreement or
instrument which is binding upon the Company.
Based upon the foregoing, and subject to the qualifications and limitation stated herein, we are of the opinion that the Purchase Agreement constitutes a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting rights or creditors generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
We express no opinion with respect to the enforceability of (A) Section
10.11 (Specific Performance) of the Purchase Agreement, (B) any provision of the
Purchase Agreement that time shall be of the essence in enforcing and applying
the covenants and conditions set forth in the Purchase Agreement, (C) any
provision of the Purchase Agreement which is intended to permit modification of
the Purchase Agreement only by means of an agreement signed in wiring by the
parties thereto or (D) any provision of the Purchase Agreement relating to
indemnification or exculpation in connection with violation of any securities
laws or relating to indemnification, contribution or exculpation in connection
with willful, reckless or criminal acts or gross negligence of the indemnified
or exculpated Person or the Person receiving contribution.
We are members of the Bar of the State of New York, and we do not express any opinion herein concerning any law other than the law of the State of New York.
Sinclair Communications, Inc. [________________,] 1998
This opinion letter is rendered to you in connection with the above-described transaction. This opinion letter may not be relied upon by you for any other purpose or relied upon by or furnished to any other person, firm or corporation for any purpose without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
EXHIBIT D-3
FORM OF FCC OPINION
1. The FCC has issued to the Company the licenses, permits and authorizations specified on Attachment I hereto (the "FCC Licenses"). The FCC Licenses are in full force and effect in that they are held by the Company and are in effect in accordance with their terms.
2. The FCC Consent has been granted to permit the assignment of the FCC Licenses by the Company to Purchaser and has not been reversed, stayed, enjoined, set aside, annulled or suspended; [provided, however, that the time under applicable FCC rules within which any formal request for reconsideration, review or other regulatory or judicial action has not lapsed, but, to our knowledge, no action or petition for such reconsideration or review has been filed or is pending.]
3. There is no FCC order, judgment, decree, notice of apparent liability or order of forfeiture outstanding, and to our knowledge, no action, suit of apparent liability, order of forfeiture, investigation or other proceeding pending by or before the FCC against the Company that might result in a revocation, cancellation, suspension, non-renewal, short-term renewal or materially adverse modification of the FCC Licenses, except FCC proceedings generally affecting the television industry (including but not limited to the proceedings which will require modification of all television licenses to accommodate the transition to digital television).
Exhibit F-1 to Purchase Agreement
AGREEMENT
THIS AGREEMENT is made as of this ___ day of _____, 1998 by and between Guy Gannett Communications, a Maine corporation ("Gannett") and Media Properties of Maine, LLC, a Delaware limited liability company ("Maine Media").
WITNESSETH
WHEREAS, Gannett owns and operates The Portland Newspapers, which includes the Portland Press Herald, serving Cumberland County, Maine and parts of York County, Maine and the Maine Sunday Telegram, a regional Sunday newspaper, both published in Portland, Maine (collectively "The Portland Newspapers"); and
WHEREAS, Gannett owns and operates the Central Maine Newspapers, which includes the daily Morning Sentinel, serving Waterville, Maine and environs, and the Kennebec Journal, serving Augusta, Maine and environs, both published in Augusta, Maine (collectively the "Central Maine Newspapers"); and
WHEREAS, Gannett owns and operates the Coastal Journal, a weekly newspaper serving the mid-coast areas of Bath and Brunswick, Maine and environs (the "Coastal Journal"); and
WHEREAS, Gannett owns and operates the New Media Development Group, a Portland, Maine-based division that provides a variety of new media services, including but not limited to web site development, on-line advertising, sponsorships, directly sales, publication of Maine Today and related businesses (collectively the "New Media"); and
WHEREAS, Gannett owns and operates Guy Gannett Voice Information Services, a Portland, Maine-based telephone information and marketing medium providing pre-recorded and customized information to callers under the name of PhoneME (the "Voice Information Services"); and
WHEREAS, Gannett owns and operates Guy Gannett Direct, a Portland, Maine-based division that provides direct mail marketing services to clients both inside and outside of Maine (the "Guy Gannett Direct"); and
WHEREAS, Gannett owns and operates Integrated Marketing Group, a Portland, Maine-based division that provides bundled sales and services of advertising (the "Integrated Marketing"); and
WHEREAS, the businesses conducted by The Portland Newspapers, Central Maine Newspapers, Coastal Journal, New Media, Voice Information Services, Guy Gannett Direct and Integrated Marketing, and all assets, liabilities, operations and
activities of, and all rights of, Gannett in the operations of such businesses, are collectively referred to herein as the "Maine Media Businesses"; and
WHEREAS, in addition to the Maine Media Businesses, Gannett owns and operates a number of television broadcast divisions located both in and outside of Maine, including WGME-TV, Portland, Maine ("WGME-TV"); and
WHEREAS, Gannett maintains a corporate office located at One City Center, Portland, Maine that provides certain support and other services to all Gannett divisions and businesses (the "Corporate Office"); and
WHEREAS, Maine Media has been formed at the direction of Gannett for the purpose of receiving the transfer by Gannett of the Maine Media Businesses in anticipation of the sale of Maine Media to a third party (the "Sale of Maine Media"); and
WHEREAS, Gannett also anticipates the sale of its broadcast and other properties, including WGME-TV (the "Sale of Gannett"); and
WHEREAS, Maine Media and Gannett are parties to a certain Contribution Agreement dated July __, 1998 (the "Contribution Agreement") in which Gannett has agreed to transfer to Maine Media all of its assets primarily related to the Maine Media Businesses, subject to Maine Media's assumption of the liabilities primarily related thereto (the "Contribution"); and
WHEREAS, certain relationships between WGME-TV and the Maine Media Businesses presently exist that Maine Media and Gannett wish to continue on the same terms and conditions for an interim period after the Contribution and the Sale of Maine Media; and
WHEREAS, Gannett has entered into agreements with certain customers making commitments with respect to volume discounts on advertising in one or more of the Maine Media Businesses and WGME-TV as listed in Schedule A hereto (the "Joint Advertising Commitments"), and Gannett and Maine Media each wish to obligate the other to comply with the terms of such agreements after the Contribution and Sale of Maine Media;
NOW, THEREFORE, in consideration of the premises and mutual agreements and covenants set forth herein, Gannett and Maine Media agree as follows:
1. Interim Agreements. Until the later of (i) March 31, 1999 or (ii) sixty
(60) days after the date of the Sale of Gannett, but in no event later than
December 31, 1999, Gannett and Maine Media agree that the following services
shall continue to be provided by and between them, without further consideration
other than the services to be provided, each to the other, and any payments
expressly provided for herein:
(a) Shared Facilities.
(i) Maine Media shall permit WGME-TV to continue to locate the existing camera and transmission equipment (or similar replacement equipment) at its present location on the roof of The Portland Newspapers office building located at 390 Congress Street, Portland, Maine.
(ii) WGME-TV shall permit The Portland Newspapers to continue to locate the existing radio equipment (or similar replacement equipment) on its tower located at Blackstrap Mountain, Falmouth, Maine at a fee of $91.00 per month.
(b) Editorial Collaboration. WGME-TV and the Maine Media Businesses shall continue (1) their collaborative efforts between WGME-TV and The Portland Newspapers/Central Maine Newspapers relating to the Maine Citizens Campaign as outlined in the Pew Grant received by The Portland Newspapers, with WGME-TV's specific responsibility being to provide video production (at an estimated cost of $2,500 to be reimbursed by The Portland Newspapers); (2) sharing resources and their joint coverage efforts of the 1998 elections between WGME-TV and The Portland Newspapers/Central Maine Newspapers; (3) daily sharing of stories between WGME-TV and The Portland Newspapers/Central Maine Newspapers with an editor from The Portland Newspapers sitting in on WGME-TV news meetings; (4) the practice of having the WGME-TV branded weather page appearing daily in The Portland Newspapers and Central Maine Newspapers publications, including the WGME-TV Weather Eye column written by a WGME-TV meteorologist at WGME's expense; (5) the practice of the occasional mention of stories appearing in the next day's publication of The Portland Newspapers or the Central Maine Newspapers on WGME-TV's 11:00 p.m. news as part of the "Tomorrow's Headlines Tonight" feature; and (6) any other existing collaborative efforts between the parties.
(c) Cross-Promotion. WGME-TV and the Maine Media Businesses shall continue
their practice of (1) providing advertising coverage in The Portland
Newspapers/Central Maine Newspapers publications for WGME-TV, which is
estimated (i) during February, May, July and November, to consist of
an average of approximately 2,600 column inches in The Portland
Newspapers and 1,300 column inches in The Central Maine Newspapers;
and (ii) during other months, to consist of an average of
approximately 400 column inches in The Portland Newspapers, and 200
column inches in The Central Maine Newspapers; (2) providing sale of
advertising on the WGME-TV web site by the New Media Division, with
50% of the revenue therefrom paid to each of the parties hereto, and
(3) providing (v) airing of promotional sports for all Maine Media
Businesses
by WGME-TV, to consist of approximately 115 30-second spots per month;
(w) cross-promotion of, and links between, WGME-TV's web site and
those Maine Media Businesses sites identified under the name Maine
Today; and (x) distribution of WGME-TV's NewsChannel 13 Hotline on the
PhoneME service, including news, weather updates and viewer
information.
(d) Servicemarks and Trademarks. Each of the parties may continue to use servicemarks and trademarks of the other, provided that such use shall be strictly in accordance with past practices or such other use as the party owning the mark (the "Holder") may approve in writing. The Holder retains the right to approve new operational and promotional materials. At the request of the Holder, the party using such mark pursuant to the rights granted under this Agreement shall promptly do such acts and execute, acknowledge and deliver all those papers that may be necessary or desirable to maintain, protect and/or vest in the Holder the entire right, title and interest in and to such mark.
(e) Other Services. New Media shall continue its practices of (1) providing consulting services relating to WGME-TV's web site and (2) hosting WGME-TV's web site on the New Media server.
2. Combined Advertising Commitments. Gannett and Maine Media shall continue to abide by the Joint Advertising Commitments for the balance of the term of such contracts, and (subject to any limitations contained therein) without regard to the percentage of advertising that is required by the customer to be provided by either party. For purposes only of determining whether the customers who are party to the Joint Advertising Commitments have complied with their minimum advertising commitment, (a) Maine Media and Gannett shall assess the same as though the Maine Media businesses existing as of the date hereof which continue to be properties of Gannett, and (b) the parties shall share information concerning the aggregate sales to such customers during the term of the applicable Joint Advertising Commitment. Notwithstanding anything to the contrary, there shall be no obligation between the parties hereto with respect to the pricing of such services, except to the extent expressly set forth in the applicable Joint Advertising Commitment.
3. Services Agreement. Maine Media, through The Portland Newspapers, shall continue to provide to Gannett the following services:
(a) Telephone Support. For so long as such service is required by Gannett, but in no event later than May 31, 2001, provided only that Maine Media continues to provide similar services for itself or for any of its properties or divisions, Maine Media shall provide Gannett, for use by personnel at its Corporation Office
telephone equipment of a type and quantity used by the Corporate Offices as of the date hereof, (2) telephone support services, including voice mail, and all necessary technical support thereafter and service thereof and (3) local and long distance service. For so long as such services are being provided to Gannett, Gannett shall pay to Maine Media a flat monthly fee of $3,500 for the services described in Section 3(a)(1) and (2) hereof, and shall reimburse Maine Media, at its direct cost, for those services provided pursuant to Section 3(a)(3) hereof.
(b) Computer Support.For so long as such service is required by
Gannett, but in no event after the late of (i) one hundred twenty
(120) days after the date of the Sale of Gannett or December 31,
1998, provided only that Maine Media continues to provide similar
service for itself or for any of its properties or divisions, at
Gannett's request, Maine media shall provide network support for
Gannett's computer systems for use by its personnel at its
Corporate Office at a rate of Thirty Dollars ($30) per hour.
4. People of the Kennebec Campaign. Gannett and Maine Media shall continue their participation in the "People of the Kennebec" sponsored promotional campaign that extends into the fall of 1999.
5. Quality, Scope and Character of Services. Except as otherwise expressly provided above, in all cases, the services to be provided under this Agreement shall be of a character, scope and quality that are consistent with Gannett's past practices, unless otherwise agreed by the parties hereto.
6. Contribution Agreement. This Agreement shall in no event enlarge, reduce or otherwise affect the rights, warranties or covenants of the parties as set forth in the Contribution Agreement. The Contribution Agreement shall survive the execution and delivery of this Agreement.
7. Benefit and Assignment. This Agreement will be binding upon and inure to the parties hereto and their respective successors and assigns.
8. Construction of this Agreement. The headings of the sections and subsections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Maine, applicable to contracts executed in and to be performed entirely within that State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective duly authorized officers.
GUY GANNETT COMMUNICATIONS
By:
MEDIA PROPERTIES OF MAINE, LLC
By: Guy Gannett Communications, Its Sole
Member
By:
EXHIBIT F-2 TO
PURCHASE AGREEMENT
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (the "Sublease") is entered into as of the ______ day of _________________, 1998, by and between GUY GANNETT COMMUNICATIONS ("Gannett") and MEDIA PROPERTIEESOF MAINE, LLC, a Delaware limited company ("Maine Media").
R E C I T A L S:
A. Gannett and Fleet Bank of Maine ("Landlord") are parties to a certain lease dated June 20, 1995 (the "Lease") for certain office space and other facilities in or near the building at 8 Washington Avenue, Sanford, ME ("Building").
B. Maine Media desires to sublease a portion of the Building from Gannett;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maine Media and Gannett hereby agree as follows:
ARTICLE 1
DEMISE, DESCRIPTION, USE, TERM AND RENT
Gannett hereby subleases to Maine Media, and Maine Media hereby subleases from Gannett, approximately 340 square feet of the Building, as more fully described in Exhibit A attached hereto and made a part hereof (the "Premises"), for use as office space and for no other use whatsoever, together with the rights of ingress and egress to the Building and the right of use of the parking area adjacent to the Building in common with Gannett (as that term is defined in the Lease), for a term commencing on the date hereof and ending on April 30, 1999; provided, further, that Maine Media may renew this Sublease for an additional one (1) year term by written notice given to Gannett on or before February 28, 1999.
ARTICLE 2
RENT
Maine Media shall pay to Gannett the amount of Two Hundred Dollars ($200.00) per month as rent for the Premises during the term hereof. The rent is due and payable in advance on the first day of each and every calendar month during such term at the address specified in Article 10 hereof. If this Sublease commences on other than the first day of a month, rent shall be prorated for such partial month. A late fee of five percent (5%) of the overdue amount shall be charged for rent received after the tenth day of the month for rent. All payments shall be without set off or deduction, except as otherwise expressly provided herein.
ARTICLE 3
THE LEASE
All of the terms and provisions of the Lease are incorporated by reference as if fully rewritten herein. Maine Media shall conform to and shall use the Premises in accordance with all the terms, covenants and conditions contained in the Lease and will do no act which will result in a violation of such terms, covenants and conditions. Maine Media shall perform all the terms, covenants and conditions of the Lease on the part of tenant therein named to be performed (except for payment of rent provided for in the Lease) insofar as such terms, covenants and conditions relate to the Premises. This Sublease is expressly subject to all the terms, covenants, conditions and provisions of the Lease, a copy of which has been delivered to Maine Media.
ARTICLE 4
INSURANCE
Maine Media shall maintain comprehensive general liability insurance as required under the Lease, naming Landlord as well as Gannett as additional named insureds, which policy shall provide at least thirty (30) days cancellation notice to Landlord and Gannett. Upon written demand therefor, Maine Media shall provide Landlord and Gannett with a copy of such policy or a certificate evidencing such insurance.
ARTICLE 5
ASSIGNMENT-SUBLEASING
Maine Media may not assign the Sublease or sublet any part of the Premises.
ARTICLE 6
DEFAULT AND BANKRUPTCY
In the event that Maine Media shall (a) default in the payment of any installment of rent or other sums herein specified and such default shall continue for ten (10) days after; (b) default in the observance or performance of any other of the Maine Media covenants, agreements, or obligations hereunder and such default shall not be corrected with thirty (30) days after written notice thereof; or (c) be declared bankrupt or insolvent according to law, or, if any assignment shall be made of Maine Media's property for the benefit of creditors, then Gannett shall have the right thereafter, while such default continues, to re-enter and take complete possession of the Premises, to declare the term of this Sublease ended, and remove Maine Media's effects, without prejudice to any remedies which might be otherwise used for arrears of rent or other default. If Maine Media shall default, after reasonable notice thereof, in the observance or performance of any conditions or covenants on Maine Media's part to be observed or performed under or by virtue of any of the provisions in any paragraph of this Sublease, Gannett, without being under any obligation to do so and without thereby waiving such default, may remedy such default for the account and at the expense of Maine Media. If Gannett makes any expenditures or incurs any obligations for the payment of money in connection therewith, including but not limited to, reasonable attorney's fees in the institution, prosecuting or defending any action or proceeding,
such sums paid or obligations insured, with interest at the rate of ten (10) percent par annum and costs, shall be paid to Gannett by Maine Media as additional rent.
ARTICLE 7
SHORT FORM LEASE
Maine Media agrees not to record this Sublease or any memorandum thereof.
ARTICLE 8
INDEMNIFICATION
Maine Media shall hold Gannett and Landlord harmless and defend Gannett and Landlord against any and all claims or liabilities for any injury or damage to any person or property whatsoever: (a) occurring in, on or about the premises in which the Building is located; or (b) occurring in, on or about the Building in each case if such injury or damage is caused in part or in whole by the act, neglect, fault, or omission of, and duty with respect to the same, by Maine Media, its agents, employees or invitees.
ARTICLE 9
ENTIRE AGREEMENT
This instrument contains the entire and only agreement between the parties and no oral statements or representations or prior written matter not contained in this instrument shall have any force or affect. This Sublease shall not be modified in any way except by a writing executed by both parties. It is expressly agreed upon by the parties hereto, that the terms and provisions of this Sublease are intended to apply only with respect to the sub-leasehold estate created hereby.
ARTICLE 10
NOTICE
Any notices from Maine Media to Gannett shall be deemed duly served upon receipt by Gannett at the following address: WGME-TV, P.O. Box 1731, Portland, ME 04104, or such other address as Gannett may from time to time advise in writing. Any notice from Gannett to Maine Media shall be deemed duly served upon receipt by Maine Media at the following address: The Portland Newspapers, P.O.
Box 1460, Portland, ME 04104.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be duly executed and delivered as of the day and year first written above.
MEDIA PROPERTIES OF MAINE, LLC
By: GUY GANNETT COMMUNICATIONS,
its sole member
By:
---------------------------------- ----------------------------------
Witness James E. Baker
Vice President - Finance
GUY GANNETT COMMUNICATIONS
By:
---------------------------------- ----------------------------------
Witness James E. Baker
Vice President - Finance
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
Section 1.1(d) - (Real Property)
See attached Section 1.1 (d) of the Disclosure Schedule.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 1.1(R) (NON-COMPETITION AGREEMENTS)
James B. Shaffer
Michael L. Bock
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
3.3(a): None.
3.3(b): None.
3.3(c): None.
3.3(d):
1. See Section 3.3.1 of the Disclosure Schedule for list of contracts
that require consent to the transactions.
2. The Company's Revolving Loan Agreement with BankBoston and others
and Note Purchase Agreement with its noteholders prohibit the
transfer of the Assets without the lenders' consent. The Company
expects to repay these obligations at or prior to Closing.
3. See Section 3.14 of the Disclosure Schedule concerning certain
retention and severance agreements with various employees
requiring certain payments to be accelerated at Closing.
4. See Section 3.14 of the Disclosure Schedule concerning certain
agreements with various retired employees that may be accelerated
upon Closing.
5. The annual management bonuses for WOKR-TV will be accelerated at
Closing. If the Closing is before the end of 1998, the portion of
the
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SECTION 3.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
payment relating to the period from the Closing Date through year end will be accounted for as a prepaid expense.
6. Pursuant to the terms of the Company's Directors' Deferred Compensation Plan, deferred directors fees are payable upon the sale of substantially all of the assets of the Company, and will be due upon Closing.
7. Most, if not all, of the Company's insurance policies are not assignable.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.5 (FINANCIAL STATEMENTS)
3.5(a): None.
3.5(b) & (c):
1. The Unaudited Financial Statements do not include all financial
statements (e.g., cash flow), financial elements (e.g., income
taxes and net income) or footnotes required under GAAP. Net
Financial Assets will not include any accruals for any severance
for employees terminated after the Closing. The Unaudited
Financial Statements were prepared on a pro forma basis to reflect
the Company's expectations as to how certain accounting matters
related to the sales of the Company and the Maine Media Business
would be handled, including without limitation: estimates of how
post-retirement liabilities would be allocated between Newco (as
defined in Section 3.7 of the Disclosure Schedule) and the
Company; none of the prepaid pension cost included in "other
assets" in the corporate balance sheet was allocated to Newco;
certain long-term incentive plans and supplemental retirement
benefits were not reflected on the balance sheet because it is
anticipated that they will be paid prior to Closing. Some monthly
financial statements may not include all accrued vacation
benefits. The treatment of downpayments on program rights as
described in Section 9.1 is not consistent with prior periods or
in accordance with GAAP. The consolidated statement of operations
is intended to display EBITDA and EBIT rather than net income. The
Guy Gannett Broadcast Group balance sheet shows no allocation or
apportionment of the post-retirement liability or of the prepaid
pension (except that the June 30, 1998 balance sheet does show the
post-retirement liability). As described above, the Unaudited
Financial Statements are not in conformance with GAAP nor are they
consistent with prior periods.
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.5 (FINANCIAL STATEMENTS)
2. The Unaudited Financial Statements do not include any assets or liabilities that may result from a settlement in the future with ASCAP regarding the dispute with the TV Music License Committee on new fees and the license agreement.
3. Downpayments relating to certain program rights contracts set forth in Section 9.1 of the Disclosure Schedule will be recorded as prepaid expenses, while in the past some of these liabilities have been recorded as reductions in the "film contract liability" account.
4. The Company has an arrangement to pay a former WGME employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan. The Company accounts for this liability on a cash basis.
3.5(c):
5. There are certain liabilities related to the sale of the Company and its properties that are not recorded and have not been incurred in the ordinary course including but not limited to (a) fees for: attorneys, investment bankers, accountants, consultants, etc.; (b) certain agreements with key employees for severance, retention and closing benefits, and former employees for supplemental retirement and deferred compensation benefits.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
3.6(i):
1. The Company has possession of various assets owned by others, including but not limited to personal items of employees and officers. The Company also has possession of records, but does not have any ownership interest in, the following groups or organizations: Guy P. Gannett Foundation, The Portland Newspapers Bruce Roberts Fund; Guy Gannett Employees Credit Union; the Anne M. Gannett Trust and the Gannett Family Forum.
2. WTWC entered into a conservation easement with Leon County, Florida, dated June 16, 1998.
3. There is a possible encroachment onto abutting property of the WICD satellite dishes at the station studio in Champaign, Illinois.
4. The New York State Department of Transportation ("NYSDOT") has taken, by eminent domain,: (1) a fee simple interest in a 0.136 acre parcel located at 4225 West Henrietta Road, Rochester, New York, along the property fronting West Henrietta Road and crossing the driveway accessing that property, and (2) a permanent easement for traffic control devices on the driveway where the driveway meets West Henrietta Road. In return, NYSDOT has paid the Company $12,400.
5. See Section 3.16 of the Disclosure Schedule for Intellectual Property matters.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
3.6(i) and (iii):
6. See Section 3.7 of the Disclosure Schedule for detail with respect
to sharing of certain assets between the broadcast and Maine Media
Business divisions pursuant to the terms of an Amended and
Restated Contribution Agreement dated August 14, 1998. In
addition, upon consummation of the sale of the Maine Media
Business, the Company will lose access to certain expertise in
areas such as marketing and research provided by personnel of the
Maine Media Business, and other relationships with these divisions
will be terminated.
3.6(ii) The Company has a lease with Elden Moss for an Iowa City
translator site lease. Title work reveals that title to the leased
property is held by Moss Farms, Inc. The Company is in the process
of amending this lease to obtain a right of first refusal and
plans to correct this error at the same time.
3.6(iv):
7. The elevator on the WGME tower requires repair due to damage by
the Winter, 1998 ice storm. Kline Towers has estimated the costs
of repairs at approximately $34,000. This loss is insured and the
repairs will be conducted shortly.
8. WGME purchased a software system including a street level mapping
system. The vendor went out of business before a proper interface
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
between the street level mapping system and the WSI weather reporting system was provided. WGME is working with WSI for a substitution of software.
3.6(v): None. 3.6(vi): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3.7(a):
1. An Amended and Restated Contribution Agreement dated August 14, 1998 (the "Contribution Agreement") between the Company and Newco provides for transfer to Media Properties of Maine, LLC ("Newco"), on or before the date of sale of the Maine Media Business, of all assets and liabilities used or usable primarily in connection with the Maine Media Business. The Company has also agreed to enter into a services contract between the Company and Newco containing certain agreements with respect to certain assets presently shared by the broadcast divisions and Maine Media Business divisions, including: a) continuation of certain relationships between the Maine Media Business and WGME for an interim period; b) continued joint sales of advertising until expiration of existing commitments to customers; and c) continued occupancy by Newco of the portion of the Sanford, Maine office space currently shared by The Portland Newspapers and WGME. The Company expects to enter into this service contract prior to the Closing. (See Section 5.1 of the Disclosure Schedule.) The services contract also provides for the Corporate Office to obtain certain services from Newco. Either the service contract will be rewritten to eliminate this requirement therefrom, or the Company shall continue to be entitled to these benefits (and liable for the related obligations) after the Closing.
2. The Contribution Agreement also provides that the Company will allocate the pension plan assets in its defined benefit plan between the Company and Newco as further described in the Contribution Agreement. The assets and liabilities of the Guy Gannett Retirement Plan that relate to
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
employees of the Maine Media Business shall be transferred, post-closing, to a trust that will be established to hold assets of a new plan to be established for the Maine Media Business
The Contribution Agreement also provides that the Company will use reasonable efforts to cause the following contracts in which vendors provide goods or services to both the broadcast and Maine Media Business divisions to be amended to reflect the split of the operating divisions into two companies: KOZ, inc dated March 4, 1998, as amended; U.S. Fleet Leasing dated July 19, 1991; R.E. Harington dated 6/28/94, as amended; KMS Solutions dated 4/25/97; and Time/Warner Cable (undated). The replacement contracts relating to the broadcast division will be assigned to, and the obligations thereunder assumed by, Purchaser.
3.7(b): None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3. The Company has entered into a new employment agreement with Don Alhart. See Section 3.10.4 for date of agreement.
4. The Company has agreed to accelerate at Closing WOKR-TV annual management bonuses. If the Closing is before year end, the portion of the payment relating to the period from the Closing Date through the end of 1998 will be accounted for as a prepaid expense.
5. The Company has increased its Directors and Officers insurance coverage (other than the employment practices coverage) to $5 million, and has increased its fiduciary insurance coverage to $25 million prior to Closing.
6. The Company has entered into settlement agreements with Allan Eggers and Carl Lehne concerning their alleged rights to retiree medical benefits. Settlement payments are expected to be made shortly.
3.7(c): None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3.7(d):
7. The elevator on the WGME tower requires repair due to damage in the Winter, 1998 ice storm. Kline Towers has estimated the costs of repairs at approximately $34,000. This loss is insured and the repairs will be conducted shortly.
3.7(e): The Company may be below budget for 1998 by as much as $1,469,000 for all of the television stations other than WOKR-TV. Assuming a cash flow reduction of $1,469,000, EBITDA for fiscal year 1998 would be $12,700,000.
3.7(f):
8. WGME and TPN have discontinued sponsorship of 3 on 3 basketball.
9. WGME and the Maine Media Business have discontinued certain joint sales and promotional efforts in anticipation of the sale of the Maine Media Business .
3.7(g): None. 3.7(h): None. 3.7(i): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.8 (LITIGATION)
3.8(i):
1. The Company has four pending, and several threatened, defamation and libel Actions. All are covered by insurance. In addition, there are several insured automobile liability cases and various workers' compensation claims currently pending.
2. There is a pending gender discrimination case against WGGB. This matter is insured.
3. An employee stole services from the Station (see Section 5.1(a)(ix) of the Disclosure Schedule and was terminated as a result. NABET has filed a grievance over the termination.
4. An on-air reporter has threatened to sue WOKR in connection with her recent discharge for reasons relating to work performance, insubordination and violations of station policy. No suit has been filed to date. This matter is insured.
3.8(ii):
5. WICD has agreed, pursuant to a settlement set forth in an Order of the Champaign Human Rights Commission, to participate in the Illinois Broadcasters Intern Program.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.8 (LITIGATION)
3.8:
6.
WGGB has filed a motion in support of WWLP's Petition before the FCC contesting the exercise by Hartford Station WVIT of an exclusivity provision in its syndicated programming agreements and requesting that relief be made market-wide.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.9 (INSURANCE)
See Section 3.9.1 of the Disclosure Schedule for a list of insurance policies relating to the Business.
3.9(i): None. 3.9(ii): None. 3.9(iii): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
1. See Section 3.10.1 of the Disclosure Schedule for agreements or contracts providing for payments in excess of $50,000 per year or $250,000 over the five-year period commencing on the date hereof.
Please note that detail on various insurance policies and employee benefit plans insurance coverage has not been provided.
2. See Section 3.10.2 of the Disclosure Schedule for all time brokerage agreements and affiliation agreements with television networks.
3. See Section 3.10.3 of the Disclosure Schedule for any license or contract pursuant to which the Company is authorized to broadcast film or taped programming supplied by others in excess of $10,000 per year or having a term of more than one year .
4. See Section 3.10.4 of the Disclosure Schedule for any employment agreement, consulting agreement or similar contract providing for payments to any Person in excess of $50,000 per year or $100,000 in the aggregate over the five-year period commencing on the date hereof.
5. See Section 3.14 of the Disclosure Schedule for any retention or severance agreement or contract with respect to any Person who is to be employed post-sale.
6. See Section 3.10.6 of the Disclosure Schedule for all collective bargaining agreements or other union contracts.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
7. See Section 3.10.7 of the Disclosure Schedule for (a) any lease of real property or (b) any lease of equipment or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company to another party providing for payments to any Person in excess of $25,000 per year or $75,000 in the aggregate over the five-year period commencing on the date hereof.
8. See Section 3.10.8 of the Disclosure Schedule for any lease of equipment or real property or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company to another party providing for payments to the Company in excess of $20,000 per year or $50,000 in the aggregate over the five-year period commencing on the date hereof.
9. Any joint venture, partnership or similar agreement or contract. NONE.
10. See Section 3.10.10 for any agreement or contract under which the Company has borrowed or loaned any money in excess of $1,000,000 or issued or received any note, bond, indenture or other evidence of indebtedness in excess of $1,000,000 or directly or indirectly guaranteed indebtedness, liabilities or obligations of others in an amount in excess of $1,000,000.
11. Any covenant not to compete or contract or agreement, understanding, arrangement or any restriction whatsoever limiting in any respect the ability of the Company to compete in any line of business or with any Person in any area. NONE.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
12. See Section 3.10.12 of the Disclosure Schedule for any agreement or contract between the Company and with any officer, director, stockholder or employee of the Business or any of their family members (other than employment agreements covered above or agreements or contracts containing terms substantially similar to terms available to employees generally).
13. Amended and Restated Contribution Agreement by and between the Company and Media Properties of Maine, LLC dated August 14, 1998, relating to the transfer of assets and liabilities primarily related to the Maine Media Business. This contract will not be assigned to Purchaser.
*Executed copies of certain contracts may not be available.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.11 (PERMITS)
PERMITS:
(i): None.
(ii): None.
(iii): None.
COMPLIANCE WITH LAW:
(i):
1. KGAN recently removed a 1,000 gallon underground diesel oil storage tank at a tower site at a rural location in Walker, Iowa. This previously unregistered tank has now been registered with the Iowa Department of Natural Resources ("IDNR"). Soil testing has indicated very low levels of hydrocarbons, which is determined to be "clean" under IDNR Regulations. A confirmatory ground water monitoring well has been installed. The borings showed no sign of soil contamination.
2. See Section 3.13 of the Disclosure Schedule concerning environmental matters.
(ii): See Section 3.8 of the Disclosure Schedule concerning the Champaign Human Rights Commission.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
3.12(i):
CALL SIGN TYPE EXPIRATION DATE
--------- ---- ---------------
DATE
----
WOKR-TV, Rochester, NY 06/0l/99
----------------------
KR-9992 TV Pickup 06/0l/99
KR-7729 TV Pickup 06/01/99
KN-2237 TV Pickup 06/01/99
KP-2134 TV Pickup 06/01/99
WGI-226 TV Intercity Relay 06/01/99
WEF-58 TV STL 06/01/99
KGO-958 R/P Base Mobile System 06/01/99
KRG-613 R/P Base Mobile System 06/01/99
BLP-00293 Low Power Broadcast Auxiliary 06/01/99
E6537 Receive Only Earth Station 12/09/03
E860485 Receive Only Earth Station 05/16/06
KNBL-873 Weather Radar 02/13/01
KGAN-TV, Cedar Rapids, IA 02/01/06
-------------------------
K13MN VHF TV Translator 02/01/06
KAP-35 TV STL 02/01/06
WGR-817 TV Intercity Relay 02/01/06
KR-7773 TV Pickup 02/01/06
KR-9931 TV Pickup 02/01/06
KZ-2447 TV Pickup 02/01/06
KZ-2448 TV Pickup 02/01/06
KAP-318 R/P Base Mobile System 02/01/06
BLQ-780906MG Low Power Broadcast Auxiliary 02/01/06
E970014 Transmit/Receive Earth Station 12/06/06
WNAE-244 Weather Radar 01/02/00
WTWC-TV, Tallahassee, FL 02/01/05
------------------------
KB-55264 TV Pickup 02/01/05
WGGB-TV, Springfield, MA 04/01/99
------------------------
KPK-385 R/P Base Mobile System 04/01/99
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
KPJ-841 R/P Automatic Relay 04/01/99
WGV-791 TV Intercity Relay 04/01/99
KCK-48 TV STL 04/01/99
KCI-582 R/P Base Mobile System 04/01/99
KB-98007 TV Pickup 04/01/99
KB-55388* R/P Base Mobil System 04/01/99
E860424 Receive Only Earth Station 05/02/06
WNTX-565 Private Operational Fixed Microwave 01/31/00
WICD(TV), Champaign, IL 12/01/05
-----------------------
KC-26142 TV Pickup 12/01/05
KVM-77** TV STL 12/01/05
KTX-71 TV Intercity Relay 12/01/05
WMV-569 TV Intercity Relay 12/01/05
BLP-01160 Low Power Broadcast Auxiliary 12/01/05
WPHI-929 Business Radio 06/01/00
WICS(TV), Springfield, IL 12/01/05
-------------------------
WKZ-31 TV Intercity Relay 12/01/05
KSK-95 TV STL 12/01/05
WME-674 TV STL 12/01/05
KTZ-93 TV Intercity Relay 12/01/05
WLF-755 TV Intercity Relay 12/01/05
WAQ-265 TV Intercity Relay 12/01/05
KB-55668 TV Pickup 12/01/05
BLP-01105 Low Power Broadcast Auxiliary 12/01/05
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
WMV-573 TV Intercity Relay 12/01/05
WMV-570 TV Intercity Relay 12/01/05
WNQE-817 Business Radio 09/12/99
WGME-TV, Portland, ME 04/01/99
---------------------
WGME-TV Auxiliary Transmitter 04/01/99
WLG-289 TV Intercity Relay 04/01/99
WLF-619 TV Intercity Relay 04/01/99
WHY-291 TV Intercity Relay 04/01/99
WHY-292 TV Intercity Relay 04/01/99
WCO-23 TV Intercity Relay 04/01/99
WMF-737 TV Intercity Relay 04/01/99
KRV-46 TV STL 04/01/99
WLJ-643 TV Intercity Relay 04/01/99
WLF-620 TV Intercity Relay 04/01/99
KB-55395 TV Pickup 04/01/99
KB-97128 TV Pickup 04/01/99
KA-88998 TV Pickup 04/01/99
KPM-487 Remote Pickup 04/01/99
KPM-468 Remote Pickup 04/01/99
KPF-914 R/P Automatic Relay 04/01/99
KPF-913 R/P Automatic Relay 04/01/99
WPNB-978 TV Intercity Relay 04/01/99
WLG-347 TV Intercity Relay 04/01/99
WPJB-245 TV Intercity Relay 04/01/99
E950350 Transmit/Receive Earth Station 07/14/05
WPJB-738 Private Operational Fixed Microwave 01/16/01
|
*Copy of license not available.
**Construction Permit Only.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
ANTENNA STRUCTURE REGISTRATIONS
-------------------------- ---------------------- ---------------------------------------- ----------------------
MAIN STATION LOCATION TOWER OWNER REGISTRATION NO.
-------------------------- ---------------------- ---------------------------------------- ----------------------
WOKR-TV Rochester, NY Guy Gannett Communications 1011757
-------------------------- ---------------------- ---------------------------------------- ----------------------
KGAN-TV Cedar Rapids, IA Guy Gannett Communications 1012927
Iowa City, IA Guy Gannett Communications 1012925
Walker City, IA Guy Gannett Communications 1012926
-------------------------- ---------------------- ---------------------------------------- ----------------------
WTWC-TV Tallahassee, FL Guy Gannett Communications 1019324
-------------------------- ---------------------- ---------------------------------------- ----------------------
WGGB-TV Holyoke, MA Guy Gannett Communications 1018460
Holyoke, MA Guy Gannett Communications 1018461
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
WHYN-FM1 Holyoke, MA Guy Gannett Communications 1018462
-------------------------- ---------------------- ---------------------------------------- ----------------------
WICD(TV)2 Champaign, IL Guy Gannett Communications 1036562
Maroa, IL Guy Gannett Communications 1016052
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
WICS (TV)3 Springfield, IL Guy Gannett Communications 1008823
-------------------------- ---------------------- ---------------------------------------- ----------------------
WGME-TV4 Portland, ME Guy Gannett Communications 1024383
Raymond, ME Guy Gannett Communications 1014068
Portland, ME Guy Gannett Communications 1024384
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
3.12(ii): None. 3.12(iii): None. 3.12(iv): None. 3.12(v): None. 3.12(vi): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.13 (ENVIRONMENTAL MATTERS)
WGME-TV 1. 1335 Washington Avenue, Portland, Maine. Various potential
------- environmental matters as described in the entire "Phase I
Environmental Site Assessment - WGME-TV Studios -- 1335 Washington
Avenue" (Dames & Moore, 5/28/98).
2. Transmitter Site, Brownhill Road, Raymond, Maine. Various
potential environmental matters as described in the entire "Phase
I Environmental Site Assessment - WGME-TV Transmitter Site --
Brownhill Road (Dames & Moore, 5/28/98).
WGME-TV 3. Blackstrap Road, Falmouth, Maine. Various potential environmental
------- matters as described in the entire Phase I Environmental Site
Assessment-WGME-TV Transmitter Building and Towers-325 Blackstrap
Road, Falmouth, Maine (Dames & Moore, 5/28/98-ESA No. 6).
4. Mount Agamenticus, Town of York, Maine (easement parcel and tower
space). Various potential environmental matters as described in
the entire Phase I Environmental Site Assessment-WGME-TV Microwave
Receiver/Transmitter-115 Mountain Road, York, Maine (Dames &
Moore, 5/28/98-ESA No. 7).
5. North Belfast Road, Augusta, Maine. Various potential
environmental matters as described in the entire Phase I
Environmental Site Assessment-WGME-TV-Pilot Communications-North
Belfast Road, Augusta, Maine (Dames & Moore, 5/28/98-ESA No. 9).
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
WGGB-TV
6. 1300 Liberty Street, Springfield, Mass. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WGGB-TV Studio- 1302 & 1306 Liberty Street, Springfield, Mass. (Dames & Moore, 5/28/98-ESA No. 10).
7. Mt. Tom, Holyoke, Mass. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WGGB-TV Transmitter-29 Mount Tom, Holyoke, Mass. (Dames & Moore , 5/28/98-ESA No. 11).
KGAN-TV
8. Studio-600 Old Marion Road, Cedar Rapids, IA. Various potential environmental matters as described in the entire "Phase I Environmental Site Assessment - KGAN-TV Transmission Tower" (Dames
& Moore, 5/28/98).
9. Transmission Tower, 5012 31st Avenue, Walker, IA. Various potential environmental matters as described in the entire "Phase I Environmental Site Assessment - KGAN-TV Transmission Tower -- 5012 31st Avenue, Walker, IA" (Dames & Moore, 5/28/98).
10. 1837 Dubuque Road, Iowa City, Iowa. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-KGAN-TV Iowa City Repeater Tower- 1837 Dubuque Road, Iowa City, Iowa (Dames & Moore, 5/28/98-ESA No.
14).
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
11. 1704 North 4th. Street, Washington, Iowa. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-KGAN-TV Television Translator Site, 1704 North 4th. Street, Washington, Iowa (Dames & Moore, 5/28/98-ESA No. 15).
WICS-TV
13. Route 1, Village of Dawson, Springfield, Ill. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WICS-TV Transmitter Building -Route 1, Village of Dawson, Springfield, Ill. (Dames & Moore,
5/28/98-ESA No. 17).
WICD-TV
14. 250 South County Fair Drive, Champaign, Ill. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WICD-TV Station-250 South County Fair Drive, Champaign, Ill. (Dames & Moore, 5/28/98-ESA No. 18).
15. Route 130 East, Homer, Ill. Various potential environmental
matters as described in the entire Phase I Environmental Site
Assessment-WICD-TV Transmitter Building -Route 130 East, Homer,
Ill. (Dames & Moore, 5/28/98-ESA No. 19).
16. Route 51, Maroa, Ill. Various potential environmental matters as described in the entire Phase I Environmental Property Audit by Hanson Engineers, dated March/1993.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
WOKR-TV
17. 4225 West Henrietta Road, Rochester, New York. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WOKR-TV Studio-4225 West Henrietta Road, Rochester, New York (Dames & Moore, 5/28/98-ESA No. 20).
18. Pinnacle Hill-State Route 31), Brighton, New York. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment- WOKR-TV Transmitter Site-Pinnacle
Hill ( Dames & Moore, 5/28/98-ESA No. 21.
WTWC-TV
19. 8440 West Deerlake Road, Tallahassee, Florida. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WTWC-TV Channel 40-TV station and Tower, 8440 West Deerlake Road, Tallahassee, Florida (Dames & Moore, 2/16/96)
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.14 (EMPLOYEE BENEFITS)
1. The Company has entered into certain agreements with key employees for severance, retention and other closing benefits which include new benefits, as well as acceleration of certain existing benefits. Pursuant to these agreements, employees will be paid agreed amounts in lieu of existing obligations under short-term incentive plans, individual TV managers' long-term incentive plans, and the Company's 1997-2000 Long-Term Incentive Plan, thereby fixing and accelerating existing obligations. The agreements also require payment of certain base retention bonuses and severance payments for selected employees. See Section 3.14.1 of the Disclosure Schedule for a list of division agreements (other than division heads) and Section 3.14.2 of the Disclosure Schedule for a list of division head agreements.
2. Certain agreements with various retired employees may be accelerated upon Closing: John DiMatteo, John Hooper, Robert
Morehead and Gilbert Lefkovich.
3. The Company has entered into several severance agreements in the normal course of business which include periodic severance payments and payment of medical and dental COBRA premiums.
4. The Company has an arrangement to pay a former employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.14 (EMPLOYEE BENEFITS)
5. The Company is in the process of amending certain summary plan descriptions for its qualified plans and welfare benefit plans. Amendments to qualified plans need to be written and filed prior to 12/31/99 to comply with Tax Reform Act of 1997 and the Small Business Job Protection Act of 1996.
6. The Guy Gannett Voluntary Investment Plan (401(k)) has recently had several small operational matters which have been corrected and documented according to the provisions of the IRS self-correction program referred to as "APRSC."
7. The Guy Gannett Voluntary Investment Plan is currently involved in a random 5500 audit by the IRS for the 1995 plan year. The results of that audit cannot be predicted at this time.
8. The Company has agreed, under the terms of a severance agreement with one former employee, to pay to him 75% of an individual medical insurance premium until March 2003.
9. KGAN entered into a severance agreement with an employee. Subsequently, there have been several letters of correspondence with the former employee's attorney over a number of issues including a modification that had to be made to the agreement in order to comply with medical plan and COBRA eligibility. The matter has not risen to the level of threatened litigation.
10. See Section 3.14.5 for list of employee benefit plans, Section 3.10.4 for list of material employment, consulting and similar agreements, Section 3.10.6 for collective bargaining agreements and Section 3.14.1, 3.14.2 and 3.3 for agreements providing for payments upon a change of control.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.15 (LABOR RELATIONS)
See Section 3.10.6 for list of labor organizations representing employees.
3.15(i): None. 3.15(ii): None. 3.15(iii): None. 3.15(iv): None. 3.15(v) None. 3.15(vi) None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.16 (INTELLECTUAL PROPERTY)
See Section 3.16.1 for a list of call letters for the Stations.
3.16(i): None.
3.16(ii):
1. The tradename for "Newssource 13" used by WOKR has not yet
been transferred of record in the U.S. Patent & Trademark
Office.
2. The Company is investigating whether KGAN's "Weathereye"
website has all necessary copyrights for some of the
material published on its site.
3.16(iii): None.
3.16(iv): None.
|
Guy Gannett Communications
Purchase Agreement - Broadcasting
Section 3.16.1 - Call Letters
WGME-TV PORTLAND, MAINE WGGB-TV SPRINGFIELD, MASSACHUSETTS KGAN-TV CEDAR RAPIDS, IOWA WICS-TV SPRINGFIELD, ILLINOIS WICD-TV CHAMPAIGN, ILLINOIS WOKR-TV ROCHESTER, NEW YORK WTWC-TV TALLAHASSEE, FLORIDA |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.17 (TAXES)
None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.18 (COMMISSIONS)
Certain of the Company executives have agreements for contingent compensation tied to the sales price for the Company.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.19 (AFFILIATE TRANSACTIONS)
See Section 3.7 of the Disclosure Schedule concerning the Contribution Agreement with respect to the Company's transfer of the Maine Media Business to Newco.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
4.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
4.7 (PURCHASER'S QUALIFICATIONS)
The following television stations overlap with Sinclair stations and would require waivers of FCC ownership rules before they could be acquired by Sinclair:
1. WOKR-TV Rochester, NY, has Grade A overlap with WUHF(TV), Rochester, NY
2. WICS-TV Springfield, IL, has Grade A overlap with WYZZ(TV), Bloomington, IL, and Grade B overlap with KDNL(TV), St. Louis, MO.
3. WICD-TV Champaign, IL, has Grade B overlap with WYZZ(TV), Bloomington, IL.
4. KGAN-TV Cedar Rapids, IA, has Grade B overlap with KDSM(TV), Des Moines,
IA.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5.1(a)(i): None.
5.1(a)(ii):
1. The Company has the right, under a contract with KOZ inc,
to provide on-line community publishing services in all
of its TV markets. The Company (as part of Maine Media
Business) presently provides this service only in Maine.
2. Some combined activities between and among the Company
and Newco may be suspended at or after the date of the
sale of the Maine Media Business.
3. KGAN plans to enter into a lease for a remote studio at a
mall.
4. The Company will modify the Guy Gannett Group Life and
Health Plan (#501) to vest those Business Employees and
Corporate Office Employees (1) who are currently retired
and covered by the plan ("Current Retirees") and (2) who
are currently employed and who meet the age and service
requirements for post-retirement coverage as of the
Closing Date ("Qualified Employees", with the Current
Retirees and Qualified Employees sometimes collectively
referred to as "Retirees") in post-retirement benefits
substantially equivalent to those offered by the plan as
of the Closing Date. The Coorporate Office Employees
eligible or deemed to be eligible for these
post-retirement benefits are listed on Schedule 5.1.1 and
the Business Employees eligible for these post-retirement
benefits are listed on Schedule 5.1.2.
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
The percentage of premium paid by Current Retirees will remain the same as the percentage that they pay as of the Closing Date. Current Retirees and Qualified Employees shall pay 100% of the premium for post-retirement medical coverage and the Company shall pay 100% of the life insurance premium for such Current Retirees and Qualified Employees.
Subject to the provisions of the existing plans concerning premium sharing, the cost of such insurance coverages will be deemed to be the same as the cost for active employees for so long as the same benefit options are available to both active employees and Retirees. At any time that active employees and Retirees are not covered by the same health plan options, the cost to Retirees will be deemed to be the community rate for the same or similar coverage as determined by the insurance provider covering the largest number of lives in the State of Maine. The Group Companion Plan coverage will at all times be based upon the current coverage option and at rates determined from time to time by Blue Cross Blue Shield of Maine or its successor and approved by the State of Maine, although the actual insurance carrier may change.
See Section 3.7 of the Disclosure Schedule concerning allocation of pension plan assets in the Company's defined benefit plan between the Company and Newco, and the transfer of certain plan assets related to the Maine Media Business to Newco's plan.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5. Under a contract with Cigna (G-R200), Cigna provides guaranteed payments to retirees under the Guy Gannett Retirement Plan with respect to benefits accrued until January, 1970. The Company plans to cause the Cigna contract to be modified to provide for the transfer to the New Pension Plan that portion of the guaranteed payments that relate to current and former Business Employees.
6. WGME may move either Frazier or Entertainment Tonight to an after-midnight time slot before Tom Snyder.
5.1(a)(iii): None.
5. The Company plans to enter into a lease amendment with respect to the property located at the Northport Business Park to address sub-letting of tower space.
6. The Company plans to donate certain items relating to the Gannett family to non-profit organizations.
7. See Section 3.7 of the Disclosure Schedule for a description of the contribution of the Maine Media Business to Newco, and the related agreement concerning certain shared assets, which the Company expects to enter into prior to Closing.
5.1(a)(iv):
8. Trustees under the Guy Gannett Retirement Plan and the Voluntary Investment Plan and Trusts will resign and will be replaced by an institutional trustee.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
9. The Company expects to grant a premium holiday, and/or
provide employees a lump sum refund relating to prior
year overpayment of health care premiums.
5.1(a)(v): None.
5.1(a)(vi): None.
5.1(a)(vii): None.
5.1(a)(viii): No consent of the Purchaser will be required for
modification, change, renewal or extension of the
following Material Contracts, on terms consistent with
past practices of the Business:
o Modification of Lease with Elden Moss (KGAN) to
obtain a right of first refusal in favor of the
Company and correct the landlord
o Entry into a new office lease in Waterloo, Iowa
(KGAN).
o Extension or renewal of Columbine Systems, Inc.
agreement (WICS), provided that the Company will use
reasonable efforts to extend this contract on a
month-to-month basis or to renew the same terminable
on 30 days' notice, but the obtaining of such an
extension or renewal on such terms shall not be a
condition of Closing. In no event shall this contract
be extended beyond December 31, 2000 without
Purchaser's consent, which consent shall not be
unreasonably withheld.
o Extension or renewal of Incentive Management, Inc.
agreement (WICS)
o New Personal Service Contract with Beth Carroll
(WGGB)
o New Personal Service Contract with Karen Hoskins
(KGAN)
o New Personal Service Contract with Greg Kerr (WICS)
o New Personal Service Contract with Chad Mahoney
(WICS)
o New Personal Service Contract with Pat Bilone (WOKR)
o A new Personal Services Contract may be entered into
with Doug Cook.
o U.S. Fleet Lease will be amended to add a budgeted
news vehicle.
o See Section 5.1(a)(iii), No. 5, concerning Northport
Business Park lease amendment.
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5.1(a)(ix):
10. An employee of WGGB stole certain services from the
Station. The employee has been terminated. WGGB may
enter into a settlement agreement and a release with
regard to the services stolen.
5.1(a)(x):
11. The Company may enter into an agreement with CBS
reducing KGAN and WGME's network affiliation
compensation as a result of CBS's new NFL football
programming.
5.1(a)(xi): None.
5.1(a)(xii): None.
5.1(a)(xiii): None.
5.1(a)(xiv): None.
5.1(a)(xv): None.
5.1(a)(xvi): None.
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 5.2 (POST-CLOSING COVENANTS AND AGREEMENTS)
5.2(a): Employee Benefit Plans, books and records to be available
for inspection without limit as to time relate to:
o Guy Gannett Retirement Plan and Trust
o WOKR-TV 401(k) Profit Sharing and Savings Plan
5.2(b): Corporate Office Employees are those individuals listed on
Section 5.2.1 of the Disclosure Schedule or any persons who,
at or prior to Closing, have replaced any of the listed
individuals in their positions.
5.2(d): Purchasers current severance policy is to provide severance
of one-half day's pay for each full month of continuous
service to those employees whose employment is terminated,
after six months of service, due to the elimination of the
employee's duties for reasons such as lack of work,
organizational changes or general reduction of force.
5.2(e):
1. Pursuant to Section 7 of the presently effective bargaining
agreement between "WGME-TV, a division of Guy Gannett
Communications Co. (Employer) and the American Federation of
Television and Radio Artists, Boston Local, AFL-CIO
(Union)".
2. Pursuant to Section C of the presently effective bargaining
agreement between "Guy Gannett Communications d/b/a WGME-TV
of Portland, Maine and Local Union No. 1837 of the
International Brotherhood of Electrical Workers [AFL-CIO]."
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.2 (POST-CLOSING COVENANTS AND AGREEMENTS)
---------------------------------------------------
3. Pursuant to Article V, Section 12 of the presently effective
bargaining agreement between "Guy Gannett Communications
d/b/a WICS-TV of Portland, Maine and Local Union No. 51 of
the International Brotherhood of Electrical Workers
[AFL-CIO]."
5.2(f): Robert Gilbertson (retired), Don Alhart (WOKR) and Frank
Fixaris (retired) have supplemental retirement plans. The
accrued liability therefor will be included in the Net
Financial Assets calculation.
5.2(i) See Section 5.2.2 of the Disclosure Schedule.
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
Section 6.4 (Material Consents Required As A Condition
1. The Affiliation Agreements listed on Section 3.10.1 of the Disclosure Schedule.
2. Lease with Michigan Ave. National Bank of Chicago dated 4/19/77 for studio space and tower lease.
3. Obtaining of the following consents will not be a condition of Closing if the Company has obtained, prior to Closing, alternatives reasonably acceptable to Purchaser and on terms not materially adverse to Purchaser as reasonably determined by Purchaser:
A. Lease with Eldon Moss dated 2/25/98 for Iowa City translator tower site.
B. Lease with Dale and Candace Schiebe dated 7/27/98 for Washington, Iowa site.
C. Lease with Maine Public Broadcasting dated 10/23/95 for Litchfield, Maine tower space.
D. Lease with Maine Bureau of Forestry dated 1/7/88 for microwave tower site.
E. Lease with Fleet Bank dated 1/1/94 for Lewiston, Maine space.
F. Lease with Fleet Bank dated 6/20/95 for Sanford, Maine office space.
G. Excelltron Tower, Inc. lease dated 7/1/95 for tower located in Sanford, Maine.
H. Intermedia (EMI Communications) dated 3/26/98 for video service/tower lease for WOKR.
None of the leases described in this Section 3 are for main studio, main tower or main transmission sites.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
*Northport Realty Trust for WGME office and studio lease (consent to assignment not required).
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 7.4 (MATERIAL CONSENTS REQUIRED AS A CONDITION
None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 9
1. The accounting method used to amortize downpayment of certain program costs will be made in accordance with the example shown in Section 9.1 of the Disclosure Schedule.
2. The Closing Statement may not include any assets or liabilities that may result from a settlement in the future with ASCAP regarding the dispute with the TV Music License Committee on new fees and the license agreement.
3. The Closing Statement will not be in accordance with GAAP and/or be consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 27, 1997 in the following ways.
(a) The Closing Statement will not include any financial statements or footnotes required under GAAP.
(b) The Closing Statement will not include any accruals for severance for employees terminated after the Closing.
(c) See Section 3.5 of the Disclosure Schedule for other non-conformities with GAAP and inconsistencies with prior practices.
4. The Company has an arrangement to pay a former WGME employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan. The Company accounts for this liability on a cash basis.
5. A liability for vacation benefits for corporate employees may exist at Closing. This will be recorded as a Net Financial Asset, but is not in accordance with past practices for interim financial statements.
6. Retirement and deferred compensation plans for the following former executives will be included in the definition of Net Financial Assets, unless such liabilities are satisfied prior to Closing: Robert Gilbertson; John Hooper; Robert Morehead; Gilbert Lefkovich and John DiMatteo.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT - BROADCASTING
SECTION 1.1(D) - REAL PROPERTY
------------------ -------------------------------------- --------------------------------------------------------------------------
IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- --------------------------------------------------------------------------
MAINE FOR INFORMATION AND TITLE INFORMATION REGARDING
EASEMENTS, RIGHTS AND APPURTENANCES,
OUTCONVEYANCES AND OTHER ENCUMBRANCES, PLEASE
SEE THE TITLE INSURANCE COMMITMENT FOR EACH
PARCEL. FOR INCOME LEASES AFFECTING OWNED REAL
PROPERTY, SEE SECTION 3.10.8 OF THE DISCLOSURE
SCHEDULE
------------------ -------------------------------------- --------------------------------------------------------------------------
CUMBERLAND
COUNTY
------------------ -------------------------------------- --------------------------------------------------------------------------
LICENSE 390 Congress Street Short-term license (to be created pursuant to WGME-TV
Portland (2-(A)) terms of Contribution Agreement)
Transmitter, antennae and sky camera
on roof of building
------------------ -------------------------------------- --------------------------------------------------------------------------
TENANCY AGREEMENT Cumberland County Civic Ctr (14(A)) Oral agreement for tower on roof WGME-TV
------------------ -------------------------------------- --------------------------------------------------------------------------
LEASED Northport Plaza Lease between Trustees of Northport Realty Trust WGME-TV
Portland (15L) and Guy Gannett Communications dated January 1, 1996;
WGME-TV
Studio, office, satellite antennae
and microwave dishes
------------------ -------------------------------------- --------------------------------------------------------------------------
OWNED Brownhill Road QUITCLAIM DEED from Guy Gannett Broadcasting Services WGME-TV
Raymond to Guy Gannett Publishing Co., dated 12/19/86,
WGME-TV (P17, 18) Cumberland Registry at Book 7720, Page 244;
Tower, sky camera and transmission
Building
(69 acre parcel)
------------------ -------------------------------------- --------------------------------------------------------------------------
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IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
OWNED Blackstrap Road WARRANTY DEED from Guy Gannett Broadcasting Services WGME-TV
Falmouth to Guy Gannett Publishing Co., dated 12/19/86,
WGME-TV (P 19) Cumberland Registry at Book 7679, Page 99;
2 parcels (one is raw land);
transmission building, tower and sky
camera
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
ORAL Maine Medical Center Sky cam lease WGME-TV
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
YORK COUNTY
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED Eight Washington Street, Stes. Lease Agreement between Fleet Bank of Maine as Landlord WGME-TV
209-212, 2nd Fl, Sanford and Guy Gannett Communications, dated 6/20/95, expires
WGME-TV 4/20/2000.
(23-L, 27-L)
Office, remote broadcast
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED Mt. Hope Road Tower Site Agreement between Excelltron Tower, Inc. WGME-TV
Sanford (York, Cty) and Guy Gannett Communications, dated 7/1/95, expires
WGME-TV (28-L) 4/30/2000, with option to renew for another 5 yrs.
Leased space on tower for 2
antennae microwave site
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED Mt. Agamenticus Lease Agreement between Maine Bureau of Forestry and WGME-TV
WGME-TV, dated 1/7/88
Leased tower space
WGME-TV (29-A)
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
OWNED Town of York, WARRANTY DEED from Guy Gannett Broadcasting Services WGME-TV
Agamenticus Mountain: to Guy Gannett Publishing Co., dated 12/19/86, York
WGME-TV (29-E) registry at Book 4220, Page 210.
Easement to maintain a 4' x 8' cinder block building with
relay antenna on Forestry tower(microwave site)
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
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IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ----------------------------------------------------------- --------------
KENNEBEC COUNTY
------------------ -------------------------------------- ----------------------------------------------------------- --------------
OWNED North Belfast Road Myron J. Moody to Gannett Publishing Co., Inc., WGME-TV
Augusta (34(A)) 6/12/44, at 804/4991;
Land only owned; tower space GGPC to Guy Gannett Broadcasting Services, 11/22/65,
leased to Pilot Communications at 1403/461;
Leased to Augusta-Waterville Broadcasters: Lease dated
3/1/85 (now Pilot Communications)
------------------ -------------------------------------- ----------------------------------------------------------- --------------
TENANCY AGREEMENT State House Building, Unwritten agreement: WGME-TV
Augusta (36-L)
------------------ -------------------------------------- ----------------------------------------------------------- --------------
TENANCY AGREEMENT 6 E. Chestnut Street, Informal, unwritten agreement for skycam site WGME-TV
Augusta (Kennebec Valley
Medical Center) (40-L)
------------------ -------------------------------------- ----------------------------------------------------------- --------------
TENANCY AGREEMENT Quaker Hill No written agreement-use of tower space with WABI WGME-TV
Sidney, Maine (40(A))
Agreement for WABI for antenna
space; WABI provides backup power
use of their receiver antenna
------------------ -------------------------------------- ----------------------------------------------------------- --------------
ANDROSCOG. COUNTY
------------------ -------------------------------------- ----------------------------------------------------------- --------------
LEASED 35 Ash Street, Lease between Fleet Bank of Maine and Guy Gannett WGME-TV
Lewiston (32-L) Communications, d/b/a WGME-TV, dated 1/1/94,
ending 12/31/99
Leased studio, office for news
bureau; transmitter and tower
with 2 antennae on top of
building
------------------ -------------------------------------- ----------------------------------------------------------- --------------
|
------------------ -------------------------------------- ----------------------------------------------------------- --------------
IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ----------------------------------------------------------- --------------
LEASED Oak Hill Road Lease Agreement between Maine Public WGME-TV
Litchfield (39-L) Broadcasting Corporation and Guy Gannett Communications,
WGME-TV, dated 10/23/95, expires 10/23/99
Small leased building and tower
space microwave site (WCBB Tower)
------------------ -------------------------------------- ----------------------------------------------------------- --------------
PENOBSCOT
COUNTY
------------------ -------------------------------------- ----------------------------------------------------------- --------------
ORAL WABI Tower ORAL agreement regarding use of WABI tower space WGME-TV
Dixmont, ME (40(B))
Transmitter located in WABI bldg.
------------------ -------------------------------------- ----------------------------------------------------------- --------------
ORAL Hildreth Street ORAL agreement with WABI regarding use of WGME transmitter WGME-TV
Bangor, ME (40(C))
Transmitter
------------------ -------------------------------------- ----------------------------------------------------------- --------------
MASS.
------------------ -------------------------------------- ----------------------------------------------------------- --------------
OWNED 1300 Liberty Street, QUITCLAIM DEED from The WHYN Stations Corporation to WGGB-TV
Springfield, MA Guy Gannett Publishing Co., dated 12/19/86
(Hampden Cty.) and recorded in the Hampden County Registry
(60, 61) of Deeds at Book 6662, Page 407.
Studio, office
------------------ -------------------------------------- ----------------------------------------------------------- --------------
|
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
IDENTIFIER/TITLE COMMITMENT PARCEL
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED Chestnut Park Associates - Leased Tower space for WGGB WGGB-TV
radio equipment, effective date - 8/1/85; with Amendment
to extend term and rate (dated 5/1/93)
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
OWNED Mt. Tom QUITCLAIM DEED from The WHYN Stations Corporation to WGGB-TV
Holyoke, MA (64) Guy Gannett Publishing Co., dated 12/19/86 and recorded
in the Hampden County Registry of Deeds at Book 6662,
Transmitter building and parcel of Page 407 (rec. on 10/23/87) parcel #4
land
-Easement from Mountain Park Amusement Co., Inc. to The
WHYN Stations Corporation, dated 10/14/68, recorded in
Hampden Cty. at 3373/381;
-Lease Agreement between The WHYN stations Broadcasting
Corp. & Affiliated Broadcasting, Inc. dated 6/13/80
(space in transmitter building on Mt. Tom)
- Assumption between New England Radio Corp. (successor
Tenant) who wishes to assign said Lease to Radio Equity
Partners, and Guy Gannett Publishing Co. as Landlord,
dated 10/13/93 (Consent to Assignment of Lease, Estoppel
Certificate and Lease Assumption, dated October 13, 1993)
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
IOWA
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
OWNED KGAN-TV WARRANTY DEED from WHYN Stations Corporation to Guy KGAN-TV
Cedar Rapids, Iowa Gannett Publishing Co., dated 12/19/86, recorded Linn
600 Old Marion Road County at Book 1907, Page 272
Linn County (2 parcels)
(70, 71) STUDIO LEASE AGREEMENT between KGAN-TV and WMT, Inc.,
dated October 16, 1981 (6,579 SF);
Own 6.95 acres and lease studio
space; studio and office, TOWER LEASE AGREEMENT between KGAN-TV and WMT, Inc. dated
and 700' tower KGAN-TV October 16, 1981
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
|
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
OWNED Highway 150, West of Walker, Benton WARRANTY DEED from The WHYN Stations Corporation to Guy KGAN-TV
County, Iowa Gannett Publishing Co. dated 12/19/86, recorded Benton
(72, 72-L, 73) County Recorder at Book 216, Page 458;
156.5 acres
ASSIGNMENT OF LEASE: Lease between WMT, Inc. and
Transmitter building, 1335' tower Charlotte Dolph Johnson and WMT, Inc. dated Sept. 15,
and 40 x 60 metal garage 1975 assigned KGAN-TV
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED Iowa City LEASE between Eldon Moss and Guy Gannett Communications KGAN-TV
Johnson County d/b/a KGAN-TV, dated 2/25/98;
(74, 74-L)
[Own building and lease land; KGAN in process of
Leased land by KGAN; repeater attempting to obtain Right of First Refusal on land
building co-owned with ILLOWA on correction of land correction of Landlord to Moss
Communications Co. Farms, Inc.
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED 1704 6th Street LEASE between Dale L. Schiebe and Candace Talbot Schiebe KGAN-TV
Washington County, Iowa as landlords and Guy Gannett Communications d/b/a
(75, 75-L) KGAN-TV, dated July 27, 1998 (automatic renewal feature)
Translator building
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
LEASED 501 Sycamore Street, LEASE between Midtown Development Partnership and KGAN-TV
Suite 706, KGAN, dated 11/1/96
Waterloo, IA
[228 Waterloo Building] Lease expires 10/98
(76-L)
Space no longer in use
-- bureau office
------------------ -------------------------------------- ---------------------------------------------------------- ---------------
|
------------------ -------------------------------------- --------------------------------------------------------- ----------------
IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- --------------------------------------------------------- ----------------
LEASED 860 22nd Avenue LEASE between Zorah Asadzadehfard d/b/a Afsie Dental KGAN-TV
Unit #3 (77-L) Clinic and KGAN TV Co., dated 1/30/96 as amended
Coralville, IA
Bureau office
------------------ -------------------------------------- --------------------------------------------------------- ----------------
RENTAL AGREEMENT 308 29th Street This is storage space on an
"As-needed" basis for large KGAN-TV Cedar Rapids (78-L)
equipment short term agreements only
Warehouse space
------------------ -------------------------------------- --------------------------------------------------------- ----------------
ILLINOIS:
------------------ -------------------------------------- --------------------------------------------------------- ----------------
OWNED WICS-TV WARRANTY DEED from Guy Gannett Broadcasting Services WICS-TV
2680 E. Cook Street Co. to Guy Gannett Publishing Co., dated 12/19/86,
Springfield, Ill. recorded SANGAMON County, IL Instrument #59708
(2 parcels) Studio, office (80) [Source: Warranty Deed from WICS-RV, Inc. to Guy
Gannett Broadcasting
Services (Co.), dated
3/12/85 and recorded
in the Sangamon County
Records at Instrument
#980885
------------------ -------------------------------------- --------------------------------------------------------- ----------------
OWNED Route 1 WARRANTY DEED from Guy Gannett Broadcasting Services WICS-TV
Village of Dawson, IL (81) Co. to Guy Gannett Publishing Co., dated 12/19/86,
recorded SANGAMON County, IL Instrument #59708
Transmitter building [Source: Warranty Deed from WICS-RV, Inc. to Guy
(WICS-TV) Gannett Broadcasting Services (Co.), dated 3/12/85 and
recorded in the Sangamon County Records at Instrument
#980885
------------------ -------------------------------------- --------------------------------------------------------- ----------------
LEASED 250 So. County Fair Drive LEASE Agreement between Michigan Avenue National Bank of WICD-TV
Champaign (82-L) Chicago, (as Trustee) and Plains Television Partnership,
dated 4/19/77;
Plains Television Partnership Memorandum of Lease recorded
3/30/78 as document 78 R WICD-TV; 6323 (landlord-according to
insurance list, now Mgmt.
Co. of Illinois, Inc.)
studio, office/tower lease
------------------ -------------------------------------- --------------------------------------------------------- ----------------
|
------------------ -------------------------------------- ----------------------------------------------------------- -------------
IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ----------------------------------------------------------- -------------
OWNED Route 51 TRUSTEES DEED from LaSalle National Trust to GGC, for WICD-TV
Maroa, IL (Macon Cty.) Macon Cty., IL parcel, dated 9/25/94 and recorded at
microwave site Book 2565, Page 92
(WICD-TV) (84)
------------------ -------------------------------------- ----------------------------------------------------------- -------------
TENANCY AGREEMENT Springfield, IL Oral agreement for office space; no documentation available WICD-TV
------------------ -------------------------------------- ----------------------------------------------------------- -------------
LEASED Eight Ridgeview Road, LEASE between First Appraisal Co. and Guy Gannett WICD-TV
Danville, IL (85-L) Communications, dated 1/19/98, expires 1/31/2000
Bureau office (WICD-TV)
----------------- -------------------------------------- --------------------------------------------------------------------------
NEW YORK:
------------------ -------------------------------------- ----------------------------------------------------------- -------------
OWNED 4225 W. Henrietta Road BARGAIN AND SALE DEED from WOKR-TV Partners, G.P. to WOKR-TV
Rochester, NY (90, 91) Guy Gannett Communications, dated July 10, 1998 and
recorded in the Monroe County Clerk's Office at Book
9036, Page 71.
WOKR-TV
Channel 13
studio and office, inc., and
Pinnacle Hill, State Route 31
(Brighton) transmitter and
tower site
------------------ -------------------------------------- ----------------------------------------------------------- -------------
LEASED One Chase Square, LEASE between Lincoln First Bank, NA and WOKR-Inc., WOKR-TV
Chase Manhattan Bank dated 1/10/80; also: Extension Agreement between Chase
Rochester, NY Lincoln First Bank, NA and WOKR Partners, dated
(92-L) 9/12/89;
and:
Second Extension Agreement between The Chase Manhattan
Bank and WOKR
Tower and receiver site Partners, dated 11/14/94, through 12/31/99;
NOTE: Collier ABT, Inc. is now responsible for this lease
administration for billing and collections
------------------ -------------------------------------- ----------------------------------------------------------- -------------
|
------------------ -------------------------------------- ------------------------------------------------------------------------
IDENTIFIER/TITLE COMMITMENT
OWNED/LEASED PARCEL NUMBER DOCUMENTATION OF OWNERSHIP ENTITY ID
------------------ -------------------------------------- ------------------------------------------------------------------------
FLORIDA:
------------------ -------------------------------------- ------------------------------------------------------------------------
OWNED 8440 Deer Lake Road, STATUTORY WARRANTY DEED from T.O.N. Realty Partnership WTWC-TV
Tallahassee, Florida to Guy Gannett Communications, dated 4/10/96 and
WTWC-TV recorded in the Public Records of Leon County, FL at
Studio and office (100) OR 1896, Pg. 956;
MODIFICATION OF GRANT OF EASEMENT between Killearn
Lakes Plantation Home Owners Assn., Inc. and T.O.N.
Realty Partnership
------------------ -------------------------------------- ------------------------------------------------------------------------
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT
MATERIAL CONTRACTS - BROADCASTING
SECTION 3.10.1
DIVISION DOC. # COMPANY NAME PURPOSE
Corp 100400.00 BMI Group Television Blanket License
Corp 100500.00 KATZ & SELTEL Master Representation Agreement
Corp 100500.01 KATZ & SELTEL Interpretive letter
Corp 100500.02 KATZ & SELTEL Amendment to Master Rep Agt.
Corp 109999.99 Employee Benefit Plans (See Section 3.14.3)
KGAN 1471010.00 ASCAP Music License
KGAN 1471170.00 McLeod TMO phone service agmt
WGGB 1270020.00 A. C. Nielsen Company Station Index Service Agreement
WGGB 1271640.00 ASCAP Music license
WGME 1171560.00 Nielsen Media Research, Inc. Station Index Service
WGME 1171700.00 ASCAP Music License
WICS 1370290.00 Incentive Management Inc Caribbean Escape Incentive Program
WICS 1373341.00 A. C. Nielsen Company Nielsen Station Index Service Agreement
WICS 1373343.00 A. C. Nielsen Company Ratings Service
WICS 1373950.00 ASCAP music license
WOKR 1670080.00 A. C. Nielsen Company Index Service
WOKR 1670140.00 Audience Research & Development news consulting/audience research
Corporation
WOKR 1670260.00 ASCAP music license
WOKR 1670770.00 Lee Curtis & Assoc. Inc. customized newspaper production
WOKR 1671000.00 Frontier Communications long Distance/T-1/cellular
DIVISION DOC. # COMPANY NAME CONTRACT EFFECTIVE COPY IMPERFECTIONS
DATE DATE
Corp 100400.00 BMI 4/17/97 4/3/97
Corp 100500.00 KATZ & SELTEL 4/27/98 1/1/98 original
Corp 100500.01 KATZ & SELTEL 8/17/98
Corp 100500.02 KATZ & SELTEL 8/28/98
Corp 109999.99 Employee Benefit Plans
KGAN 1471010.00 ASCAP 4/1/98 under negotiation
KGAN 1471170.00 McLeod TMO 5/24/96
WGGB 1270020.00 A. C. Nielsen Company 5/3/91 5/1/91
WGGB 1271640.00 ASCAP 4/1/98 under negotiation
WGME 1171560.00 Nielsen Media Research, Inc. 8/23/82 1/19/97
WGME 1171700.00 ASCAP 10/1/95 4/1/98 under negotiation
WICS 1370290.00 Incentive Management Inc 11/25/97
WICS 1373341.00 A. C. Nielsen Company 4/25/91 10/1/91 not fully executed
WICS 1373343.00 A. C. Nielsen Company 3/7/97 10/1/96
WICS 1373950.00 ASCAP 10/1/95 10/1/95 under negotiation
WOKR 1670080.00 A. C. Nielsen Company 4/4/98 6/1/98 not fully executed
WOKR 1670140.00 Audience Research & Development 1/1/98
Corporation
WOKR 1670260.00 ASCAP 4/1/98 under negotiation
WOKR 1670770.00 Lee Curtis & Assoc. Inc. 4/17/96
WOKR 1671000.00 Frontier Communications 8/6/97 10/31/97
|
GUY GANNETT
PURCHASE AGREEMENT - BROADCASTING
MATERIAL CONTRACTS
SECTION 3.10.4 - EMPLOYMENT AGREEMENTS
CONTRACT EFFECTIVE
DIV. EMPLOYEE NAME TITLE DATE DATE MATERIAL CONF SUCC
--------------------------------------------------------------------------------------------------------------------------------
KGAN HALL, MICHELLE ANCHOR/REP/WEATHER 11/1/98 11/1/98 Y N N
KGAN HALL, SCOTT METEOROLOGIST/MANAGER 4/1/97 4/1/97 Y N N
KGAN JOHNSON-BOYLE, AMY ANCHOR/REPORTER 1/1/98 1/1/98 Y N N
KGAN MACKEY, ROD SPORTS DIRECTOR 8/21/97 8/21/97 Y N N
KGAN RIESGRAF, SANDRA REPORTER/ANCHOR 6/1/97 6/1/97 Y N N
KGAN ROCHE, BRIAN FRANCIS ANCHOR/REPORTER 8/14/98 9/1/98 Y N N
KGAN TOWNE, DAVE METEOROLOGIST 4/14/97 4/14/97 Y N N
KGAN VACHALEK, ROGER CHIEF METEOROLOGIST 6/1/97 6/1/97 Y N N
KGAN WAGNER, WADE REPORTER/ANCHOR 4/20/98 6/1/98 Y N N
WGGB BEVACQUA, TOM NEWSPERSON N/A 9/8/96 Y N N
WGGB CARROLL, BETH NEWSPERSON 10/31/95 11/1/98 Y N N
WGGB COEN, SCOTT NEWSPERSON 4/22/98 4/27/98 Y N N
WGGB MADSEN, DAVE NEWSPERSON N/A 7/11/96 Y N N
WGME BLOCK, KIMBERLY SENIOR ANCHOR 6/18/96 6/1/96 Y N SEC 14.3
WGME COUSINS, PAUL WEATHER ANCHOR/REPORTER 4/4/94 4/4/94 Y N SEC 14.3
WGME EID, DAVID SPORTS DIRECTOR 9/4/97 4/1/97 Y N SEC 14.3
WGME FLETCHER-SIMONS, ANCHOR/SPEC SERIES REP 9/4/97 1/1/97 Y N SEC 14.3
WGME LAGERQUIST, GREGG ANCHOR/REPORTER 2/19/98 2/23/98 Y N SEC 14.3
WGME RAFFERTY, DOUGLAS NEWS ANCHOR/REPORTER 9/3/97 4/1/97 Y N SEC 14.3
WGME SANTORO, DAVID NEWS WEATHER ANCHOR/REP. 1/1/98 Y N SEC 14.3
WGME VENUTI, JOE WEATHER ANCHOR/REPORTER 6/1/96 8/1/96 Y N SEC 14.3
WGME WIGGINS, PATRICIA NEWS ANCHOR 2/6/98 2/23/98 Y N SEC 14.3
WICD DONOHUE PAUL ASST NEW DIR/ANCHOR/REP N/A 12/13/97 Y N N
WICS FINZEN-BAUMGARTEN ANCHOR/REPORTER 9/18/95 Y N N
WICS GORDON, WILLIAM WEATHER ANCHOR 2/1/98 Y N N
WICS LAMBERT, JERRY STAFF REPORTER 9/11/95 Y N N
WOKR ALHART, DONALD W ANCHOR/ASSOC NEWS DIR 8/1/92 8/1/92 Y N SEC 13
WOKR CATALANA, MICHAEL SPORTS DIRECTOR 8/25/95 6/19/95 Y N SEC 13
WOKR CURRAN, ANCHOR/REPORTER 6/1/94 6/1/94 Y N SEC 13
WOKR EMBLIDGE, DOUGLAS N ANCHOR/REPORTER 10/27/94 1/1/95 Y N SEC 13
WOKR JOHNSON, GLENN STAFF METEROLOGIST 6/26/95 7/1/95 Y N SEC 13
WOKR PETERSON, WILLIAM WEATHERCASTER/CHIEF METEOROLOGIST 12/22/94 1/1/95 Y N SEC 13
WOKR SAMUELS, CHUCK NEWS DIRECTOR 12/17/96 10/14/96 Y N SEC 13
WTWC CHRISTOPHER, KEVIN ANCHOR 2/3/97 2/17/97 Y N SEC 15.3
WTWC RUCKER, MIKE METEOROLGIST/ANCHOR 1/15/96 1/6/97 Y N SEC 15.3
CORP SHAFFER, JAMES CORPORATE EXECUTIVE 3/28/96 Y
CORP SEXTON, MICHAEL CORPORATE EXECUTIVE 7/7/97 Y
CORP GENSMER, BRUCE CORPORATE EXECUTIVE 7/7/97 Y
CORP NIELSEN, GARY CORPORATE EXECUTIVE 3/31/95 Y
|
GUY GANNETT
PURCHASE AGREEMENT - BROADCASTING
MATERIAL CONTRACTS
SECTION 3.10.4 - EMPLOYMENT AGREEMENTS
DIV. EMPLOYEE NAME TITLE CONT DATE EST EFF DATE NOTES:
-----------------------------------------------------------------------------------------------------------------------------------
KGAN HALL, MICHELLE ANCHOR/REP/WEATHER
KGAN HALL, SCOTT METEOROLOGIST/MANAGER
KGAN JOHNSON-BOYLE, AMY ANCHOR/REPORTER
KGAN MACKEY, ROD SPORTS DIRECTOR
KGAN RIESGRAF, SANDRA REPORTER/ANCHOR
KGAN ROCHE, BRIAN FRANCIS ANCHOR/REPORTER
KGAN TOWNE, DAVE METEOROLOGIST
KGAN VACHALEK, ROGER CHIEF METEOROLOGIST
KGAN WAGNER, WADE REPORTER/ANCHOR
WGGB BEVACQUA, TOM NEWSPERSON
WGGB CARROLL, BETH NEWSPERSON
WGGB COEN, SCOTT NEWSPERSON
WGGB MADSEN, DAVE NEWSPERSON
WGME BLOCK, KIMBERLY SENIOR ANCHOR
WGME COUSINS, PAUL WEATHER ANCHOR/REPORTER
WGME EID, DAVID SPORTS DIRECTOR
WGME FLETCHER-SIMONS, ANCHOR/SPEC SERIES REP
WGME LAGERQUIST, GREGG ANCHOR/REPORTER
WGME RAFFERTY, DOUGLAS NEWS ANCHOR/REPORTER
WGME SANTORO, DAVID NEWS WEATHER ANCHOR/REP.
WGME VENUTI, JOE WEATHER ANCHOR/REPORTER
WGME WIGGINS, PATRICIA NEWS ANCHOR
WICD DONOHUE PAUL ASST NEW DIR/ANCHOR/REP
WICS FINZEN-BAUMGARTEN ANCHOR/REPORTER
WICS GORDON, WILLIAM WEATHER ANCHOR
WICS LAMBERT, JERRY STAFF REPORTER
WOKR ALHART, DONALD W ANCHOR/ASSOC NEWS DIR
WOKR CATALANA, MICHAEL SPORTS DIRECTOR
WOKR CURRAN, ANCHOR/REPORTER 12/28/95 1/1/96
WOKR EMBLIDGE, DOUGLAS N ANCHOR/REPORTER
WOKR JOHNSON, GLENN STAFF METEROLOGIST 4/2/97 7/1/97
WOKR PETERSON, WILLIAM WEATHERCASTER/CHIEF METEOROLOGIST
WOKR SAMUELS, CHUCK NEWS DIRECTOR
WTWC CHRISTOPHER, KEVIN ANCHOR
WTWC RUCKER, MIKE METEOROLGIST/ANCHOR
CORP SHAFFER, JAMES CORPORATE EXECUTIVE
CORP SEXTON, MICHAEL CORPORATE EXECUTIVE
CORP GENSMER, BRUCE CORPORATE EXECUTIVE
CORP NIELSEN, GARY CORPORATE EXECUTIVE
|
GUY GANNETT
PURCHASE AGREEMENT - BROADCASTING
MATERIAL CONTRACTS
SECTION 3.10.4 - EMPLOYMENT AGREEMENTS
PERSONAL SERVICE AGREEMENTS CONTRACT DATE EFFECTIVE DATE
-----------------------------
full listing including not material - TV only
KGAN HALL, MICHELLE ANCHOR/REP/WEATHER 11/1/98 11/1/98
KGAN HALL, SCOTT METEOROLOGIST/MANAGER 4/1/97 4/1/97
KGAN JOHNSON-BOYLE, AMY ANCHOR/REPORTER 1/1/98 1/1/98
KGAN MACKEY, ROD SPORTS DIRECTOR 8/21/97 8/21/97
KGAN RIESGRAF, SANDRA REPORTER/ANCHOR 6/1/97 6/1/97
KGAN ROCHE, BRIAN FRANCIS ANCHOR/REPORTER 8/14/98 9/1/98
KGAN TOWNE, DAVE METEOROLOGIST 4/14/97 4/14/97
KGAN VACHALEK, ROGER CHIEF METEOROLOGIST 6/1/97 6/1/97
KGAN WAGNER, WADE REPORTER/ANCHOR 4/20/98 6/1/98
WGGB BEVACQUA, TOM NEWSPERSON N/A 9/8/96
WGGB CARROLL, BETH NEWSPERSON 10/31/95 11/1/98
WGGB COEN, SCOTT NEWSPERSON 4/22/98 4/27/98
WGGB HERSHEL, RAY NEWSPERSON 5/14/98 5/16/98
WGGB MADSEN, DAVE NEWSPERSON N/A 7/11/96
WGME BARR, BARBARA REPORTER 6/1/96 10/3/96
WGME BLOCK, KIMBERLY SENIOR ANCHOR 6/18/96 6/1/96
WGME COUSINS, PAUL WEATHER ANCHOR/REPORTER 4/4/94 4/4/94
WGME EID, DAVID SPORTS DIRECTOR 9/4/97 4/1/97
WGME FLETCHER-SIMONS, ANCHOR/SPEC SERIES REP 9/4/97 1/1/97
WGME LAGERQUIST, GREGG ANCHOR/REPORTER 2/19/98 2/23/98
WGME MACLEAN, MARNIE NEWS ANCHOR/REPORTER 1/21/96 1/21/96
WGME MILLER, JENNIFER REPORTER/ANCHOR 8/25/96 8/26/96
WGME RAFFERTY, DOUGLAS NEWS ANCHOR/REPORTER 9/3/97 4/1/97
WGME SANTORO, DAVID NEWS WEATHER ANCHOR/REP. 1/1/98
WGME VENUTI, JOE WEATHER ANCHOR/REPORTER 6/1/96 8/1/96
WGME WIGGINS, PATRICIA NEWS ANCHOR 2/6/98 2/23/98
WICD ABRAMS, STEPHANIE ANCHOR/PRODUCER/REP N/A 3/25/98
WICD CASE, STACY NEWS BROADCASTER N/A 8/14/95
WICD MUSGRAVE, SCOTT NEWS BROADCASTER N/A 1/1/97
WICD RINDERLE, ERIC ANCHOR/REPORTER/PRODUN/A 8/21/98
WICD RITCHEY, JEROME WEATHER ANCHOR N/A 8/4/97
WICS FINZEN-BAUMGARTEN ANCHOR/REPORTER 9/18/95
WICS GORDON, WILLIAM WEATHER ANCHOR 2/1/98
WICS KERR, GREG SPORTS DIRECTOR 10/30/95
WICS LAMBERT, JERRY STAFF REPORTER 9/11/95
WOKR ALHART, DONALD W ANCHOR/ASSOC NEWS DIR 8/1/98 8/1/98
WOKR CATALANA, MICHAEL SPORTS DIRECTOR 6/29/98 7/1/98
WOKR CURRAN, VIRGINIA ANCHOR/REPORTER 6/1/94 6/1/94
WOKR EMBLIDGE, DOUGLAS N ANCHOR/REPORTER 10/27/94 1/1/95
WOKR JOHNSON, GLENN STAFF METEROLOGIST 6/26/95 7/1/95
WOKR PETERSON, WILLIAM WEATHERCASTER/CHIEF METEOROLOGIST 12/22/94 1/1/95
WOKR SAMUELS, CHUCK NEWS DIRECTOR 12/17/96 10/14/96
WTWC CHRISTOPHER, KEVIN ANCHOR 2/3/97 2/17/97
WTWC RUCKER, MIKE METEOROLGIST/ANCHOR 1/15/96 1/6/97
|
GUY GANNETT
PURCHASE AGREEMENT - BROADCASTING
MATERIAL CONTRACTS
SECTION 3.10.4 - EMPLOYMENT AGREEMENTS
PERSONAL SERVICE AGREEMENTS MATERIAL CONF SUCC NOTES:
---------------------------------------------------------
full listing including not material - TV only
KGAN HALL, MICHELLE ANCHOR/REP/WEATHER Y Y N
KGAN HALL, SCOTT METEOROLOGIST/MANAGER Y Y N
KGAN JOHNSON-BOYLE, AMY ANCHOR/REPORTER Y Y N
KGAN MACKEY, ROD SPORTS DIRECTOR Y Y N
KGAN RIESGRAF, SANDRA REPORTER/ANCHOR Y Y N
KGAN ROCHE, BRIAN FRANCIS ANCHOR/REPORTER Y Y N
KGAN TOWNE, DAVE METEOROLOGIST Y Y N
KGAN VACHALEK, ROGER CHIEF METEOROLOGIST Y Y N
KGAN WAGNER, WADE REPORTER/ANCHOR Y Y N
WGGB BEVACQUA, TOM NEWSPERSON Y Y N
WGGB CARROLL, BETH NEWSPERSON Y Y N
WGGB COEN, SCOTT NEWSPERSON Y Y N
WGGB HERSHEL, RAY NEWSPERSON Y N
WGGB MADSEN, DAVE NEWSPERSON Y Y N
WGME BARR, BARBARA REPORTER Y 14.3
WGME BLOCK, KIMBERLY SENIOR ANCHOR Y Y 14.3
WGME COUSINS, PAUL WEATHER ANCHOR/REPORTER Y Y 14.3
WGME EID, DAVID SPORTS DIRECTOR Y Y 14.3
WGME FLETCHER-SIMONS, ANCHOR/SPEC SERIES REP Y Y 14.3
WGME LAGERQUIST, GREGG ANCHOR/REPORTER Y Y 14.3
WGME MACLEAN, MARNIE NEWS ANCHOR/REPORTER Y 14.3
WGME MILLER, JENNIFER REPORTER/ANCHOR Y 14.3
WGME RAFFERTY, DOUGLAS NEWS ANCHOR/REPORTER Y Y 14.3
WGME SANTORO, DAVID NEWS WEATHER ANCHOR/REP. Y Y 14.3
WGME VENUTI, JOE WEATHER ANCHOR/REPORTER Y Y 14.3
WGME WIGGINS, PATRICIA NEWS ANCHOR Y Y 14.3
WICD ABRAMS, STEPHANIE ANCHOR/PRODUCER/REP Y N
WICD CASE, STACY NEWS BROADCASTER Y N
WICD MUSGRAVE, SCOTT NEWS BROADCASTER Y N
WICD RINDERLE, ERIC ANCHOR/REPORTER/PRODUN/A Y N
WICD RITCHEY, JEROME WEATHER ANCHOR Y N
WICS FINZEN-BAUMGARTEN ANCHOR/REPORTER Y Y N
WICS GORDON, WILLIAM WEATHER ANCHOR Y Y N
WICS KERR, GREG SPORTS DIRECTOR Y N
WICS LAMBERT, JERRY STAFF REPORTER Y Y N
WOKR ALHART, DONALD W ANCHOR/ASSOC NEWS DIR Y Y 13
WOKR CATALANA, MICHAEL SPORTS DIRECTOR Y Y 13
WOKR CURRAN, VIRGINIA ANCHOR/REPORTER Y Y 13 Written Assumption by
Assignee required
WOKR EMBLIDGE, DOUGLAS N ANCHOR/REPORTER Y Y 13
WOKR JOHNSON, GLENN STAFF METEROLOGIST Y Y 13
WOKR PETERSON, WILLIAM WEATHERCASTER/CHIEF METEOROLOGIST Y Y 12
WOKR SAMUELS, CHUCK NEWS DIRECTOR Y Y 13
WTWC CHRISTOPHER, KEVIN ANCHOR Y Y 15.3 Co. remains liable
WTWC RUCKER, MIKE METEOROLGIST/ANCHOR Y Y 15.3
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT - BROADCASTING
SECTION 3.3.1 CONSENTS REQUIRED
DIVISION COMPANY NAME DOC. # PURPOSE CONTRACT EFFECTIVE
DATE DATE
Corp U.S. Fleet Leasing 100090.00 Master Lease vehicle leases 7/19/91
Corp various credit card providers 100900.00 Divisions' credit card agreements
Corp Panasonic 170080.00 group pricing discount 5/11/98
KGAN Midtown Development Partnership 1483340.00 Waterloo office 11/1/96
KGAN Zoreh Asadzadehfard 1483400.00 Coralville office lease 1/30/96 2/1/96
KGAN ADT Company 1470525.00 Protective signaling system 6/10/87 6/10/87
KGAN Crawford Johnson & Northcott, Inc. 1470740.00 market research consulting 6/1/98 6/1/98
KGAN Knight-Ridder 1471130.00 financial information 11/30/95
KGAN McLeod TMO 1471170.00 phone service agmt 5/24/96
KGAN Crawford Johnson & Northcott, Inc. 1471740.00 market research consulting 6/1/98 6/1/98
KGAN Pravden & Company 1471760.00 promotion license 2/24/97 1/1/98
KGAN Associated Press 1473130.00 AP Newsdesk Software 12/27/89 1/22/90
KGAN Associated Press 1473170.00 News service 5/20/87 6/15/87
KGAN Associated Press 1473180.00 member agreement 5/20/87 6/15/87
KGAN Associated Press 1473181.00 Membership Agreement 5/1/93
KGAN Associated Press 1473190.00 Audiotex services - Iowa City 4/3/91 3/25/91
KGAN Associated Press 1473191.00 Audiotex services - Dubuque 4/3/91 3/25/91
KGAN Associated Press 1473192.00 Audiotex services - Waterloo 4/3/91 3/25/91
KGAN Associated Press 1473193.00 Audiotex services - Cedar Rapids 4/3/91 3/25/91
KGAN Columbine Systems, Inc. 1470590.00 License Agreement 3/22/95 1/1/95
KGAN IBM Corp. 1470620.00 Agreement for IBM Licensed Programs 1/15/82 1/25/82
|
DIVISION COMPANY NAME DOC. # PURPOSE CONTRACT EFFECTIVE
DATE DATE
KGAN Marketing Resources Plus 1470640.00 BMP software license and Data Services 11/1/91
Agreement
KGAN Nielsen Media Research 1471121.00 Special Target Area Reporter 3/18/94 2/1/94
KGAN Data Center Mgmt., Inc. (DCM) 1471180.00 Software License & Support 7/15/96
KGAN CBS Television Network 1470510.00 Television Affiliation Agreement 1/1/95
KGAN Jacor Broadcasting of Iowa 1480570.00 WMT Tower Lease Agreement 10/16/81 10/17/81
WGGB PageNet 1283010.00 Pagers lease & service 2/13/97 2/13/97
WGGB Associated Press 1271550.00 AP news service 10/1/81
WGGB Associated Press 1271551.00 AP On-Line 5/28/97 5/1/97
WGGB Fox Broadcasting Company 1271560.00 Program Carriage agmt 2/5/96 8/1/96
WGGB Conus Communications 1271570.00 Sports World Attack Team License 2/23/96 1/25/96
WGGB Killer Tracks 1271590.00 library license 5/18/98 4/14/98
WGGB Republican Company 1271620.00 Tomorrow's headlines Tonight 5/1/98 5/12/98
WGGB Columbine Systems, Inc. 1271430.00 License, HW support + supplement 3/7/88 1/1/95
WGGB Data Center Management (DCM) 1271580.00 Software License & Support 9/19/96
WGGB The Weather Underground 1271720.00 weather info SWL & service 10/22/97 11/15/97
WGGB ABC Television Network 1270010.00 Network Affiliation Agreement 1/6/95 1/1/95
WGGB ABC American Broadcasting Companies 1270011.00 ABC NewsOne Service Agreement 4/2/92 1/1/93
WGGB Home Shopping Network 1271760.00 affiliation agreement 8/27/91 9/9/91
WGME Fleet Bank 1181530.00 35 Ash St. Lewiston Lease 1/1/94 1/1/94
WGME Maine Public Broadcasting 1181550.00 Tower space Litchfield, ME 10/23/95 10/23/95
WGME Fleet Bank of Maine 1181800.00 Sanford office lease 6/20/95 6/21/95
WGME Excelltron Tower, Inc. 1181810.00 Sanford Tower lease 7/1/95
WGME Maine Bureau of Forestry 1181860.00 Moicrowave Site lease 1/7/88 1/1/88
WGME WSI Corp. 1181590.00 Weather Graphics equip lease/service 3/14/88 4/1/88
|
DIVISION COMPANY NAME DOC. # PURPOSE CONTRACT EFFECTIVE
DATE DATE
WGME Danka Industries, Inc.dba KEMCO 1181730.00 Equipment maint & supply 2/26/97 2/26/97
WGME Tapscan, Inc. 1170780.00 Ratings Analysis License 3/18/96 4/1/96
WGME Nielsen Media Research, Inc. 1171560.00 Station Index Service 8/23/82 1/19/97
WGME Associated Press 1171610.00 AP news service 8/26/93 5/1/93
WGME Firstcom Music 1171620.00 Library license 12/27/96 1/1/97
WGME Columbine Systems, Inc. 1170670.00 License Agreement-Data Processing System 1/1/95
Service Contract
WGME Columbine Systems, Inc. 1170670.01 Addendum to data processing license 1/1/95
WGME CBS Television Network 1170010.00 Affiliate Agreement 1/31/94 1/1/95
WGME Hilite, Inc. 1181770.00 VBI lease 4/25/95
WICD Minolta Leasing Service 1580070.00 copier lease & service 3/25/97
WICD Associated Press 1570140.00 AP membership 8/16/95
WICD Associated Press 1570140.01 Supplemental Agreement 3/26/92 8/16/95
WICD Consolidated Communications 1570150.00 Long Distance phone carrier 4/29/96
WICD Weather Central Inc. 1570170.00 Software-Hardware maint. 12/1/95
WICD Data Center Mgmt, Inc. (DCM) 1574000.00 Software License 12/20/96 2/1/97
WICD NBC TV Network 1500010.00 Affiliation Agreement 1/16/96 7/1/95
WICD NBC TV Network 1500010.01 Incentive payments 1/16/96
WICS AT&T Capital Leasing 1380010.00 Inacom Equip Lease 3/15/96 3/15/96
WICS G.E. Capital 1380020.00 copier lease 1/16/98
WICS IOS Capital (IKON) 1380030.00 Canon copier lease 11/26/97
WICS Vyvx 1380050.00 equipment lease 6/11/98 6/11/98
WICS The Mediacenter 1370280.00 Mediacenter On-line subscription 1/1/98
WICS Incentive Management Inc 1370290.00 Caribbean Escape Incentive Program 11/25/97
WICS IBM 1370300.00 AS 400 support 3/26/98
|
DIVISION COMPANY NAME DOC. # PURPOSE CONTRACT EFFECTIVE
DATE DATE
WICS IBM 1370310.00 6400 support 4/2/98
WICS George Alarm Co., Inc. 1371560.00 burglar electrical protection apparatus 11/18/87 11/18/87
WICS SESAC, Inc. 1371630.00 Broadcasting Performance License For TV 3/14/88 12/1/87
Stations
WICS The Electronic Media Machine 1371650.00 voice over agreement 7/20/98 8/3/98
WICS A. C. Nielsen Company 1373342.00 Special Target Area Reporter (S.T.A.R) 10/1/96
WICS A.C. Nielsen Company 1373344.00 Station Index includes WICD 9/8/93 2/1/94
WICS Cellular One 1373800.00 cellular phone service J.V.C. 7/13/90 7/31/90
WICS Cellular One 1373801.00 cellular phone service-various
WICS Associated Press 1373830.00 Agreements for news wire 7/22/85 12/1/87
WICS Associated Press 1373831.00 On-Line Service 5/15/98
WICS FirstCom Music 1373870.00 Music Library License WICS/CD 11/13/97 11/15/97
WICS Columbine Systems, Inc. 1373360.00 D P Systems 2/1/94 2/1/94
WICS Columbine Systems, Inc. 1373361.00 Addendum for Closed Loop 6/1/94 6/1/94
WICS Columbine Systems, Inc. 1373362.00 Adden. purchase of Broadcast Mgmt Plus 10/1/95
WICS Columbine Systems, Inc. 1373363.00 software license 11/1/91
WICS Data Center Mgmt, Inc. (DCM) 1374000.00 Software License & Support 11/14/96 2/1/97
WICS Griffin Radio Research 1374030.00 The Griffin reports license 11/1/97
WICS Enterprise Systems Group, Inc. 1374040.00 Software license-Traffic 4/23/98 4/27/98
WICS NBC TV Network 1370010.00 Affiliation Agreement 1/1/81 7/1/95
WICS NBC News Channel 1370060.00 News Channel Participation Agreement 1/1/91 1/1/91
WICS NBC, Inc. 1370070.00 News Excerpt License Agreement 1/1/91
WOKR Collier ABR, Inc. 1681100.00 Roof lease 11/14/94 1/1/95
WOKR GMAC d/b/a/ The Valley Cadillac Corp 1680600.00 97 Cadillac Lease (Alhart) 1/1/97
WOKR GMAC d/b/a Vincent Buick, Inc. 1681010.00 Buick Park Ave lease - 97 8/1/94 1/14/97
|
DIVISION COMPANY NAME DOC. # PURPOSE CONTRACT EFFECTIVE
DATE DATE
WOKR Volvo Car Finance (Best Motors) 1681020.00 96 volvo lease - Neilsen 4/18/96
WOKR Toshiba/Rochester Copier 1681050.00 office equip lease 2/19/98
WOKR SportsTicker 1670110.00 sports info service 5/15/98 5/15/98
WOKR Associated Press 1670120.00 NewsPower & GraphicsBank services 7/27/94 7/1/94
WOKR FirstCom/Music House 1670290.00 music library license 11/30/97
WOKR Rochester Copier 1670690.00 main office office fax maint 12/23/97 1/15/98
WOKR Rochester Copier Inc. 1670693.00 GM fax maint 1/28/98 2/1/98
WOKR Dun & Bradstreet 1670760.00 business information services 5/6/98 6/30/98
WOKR Associated Press 1670830.00 Radio simulcast services 9/15/97
WOKR Weatherline Inc. 1670970.00 Weather Service 5/11/95
WOKR Frontier Communications 1671000.00 long Distance/T-1/cellular 8/6/97 10/31/97
WOKR WSI Corp. 1670130.00 Weather Services SWL & subscription 4/1/94
WOKR Peter Storer & Assoc., Inc. 1670250.00 S.W.L. Program & Accounting Manager Software 6/9/94 7/1/97
WOKR Data Center Management Inc 1670750.00 Software License & Support 1/1/98
WOKR Columbine JDS Systems, Inc. 1670800.00 License - DP system 11/13/97 11/13/97
WOKR ABC Inc. Capital Cities 1670010.00 Affiliation Agreement 1/24/91 1/2/95
WOKR ABC, Inc. Capital Cities 1670020.00 NewOne Service 7/8/88 9/14/88
WOKR ABC Television Network 1670030.00 Satelite earth Station 7/31/87
WTWC Pitney Bowes 1780100.00 Postage meter rental 11/1/96
WTWC Associated Press 1700230.00 News Wire & Graphics 3/20/97
WTWC First Com Music 1700250.00 Music License 2/1/97
WTWC Danka 1700340.00 copier supplies & maint 7/14/97 7/3/97
WTWC ADT Security systems Inc. 1700360.00 security services 12/22/97 1/1/98
WTWC PageNet 1700450.00 pager lease & services 1/22/97 1/22/97
|
DIVISION COMPANY NAME DOC. # PURPOSE CONTRACT EFFECTIVE
DATE DATE
WTWC Sprint Centel-Florida 1700460.00 LD phone services 7/25/96 7/25/96
WTWC Talquin Electric Cooperative 1700490.00 power services agreement 7/31/96 8/1/96
WTWC AT&T/North Florida Branch 1701000.00 Long Distance Discount 7/10/97
WTWC Columbine JDS 1700100.00 License Agreement 11/3/95 12/1/95
WTWC Data Center Mgmt (DCM) 1700200.00 Software License & Support 1/15/97
WTWC Baron Services 1700380.00 software license 1/21/97 1/21/97
WTWC NBC TV Network 1700010.00 Network Affiliation 2/1/97 1/1/97
WTWC WMLO FM (now WFLY) 1780200.00 Tower lease 11/6/89 10/2/90
WTWC WSNI FM 1780210.00 Tower lease 3/27/91 3/27/91
WTWC Paxson Communications of Tallahassee, Inc. 1780210.01 Assignment of lease 9/30/97
WTWC FL Dept. LE 1780220.00 Tower lease 1/10/94
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT - BROADCASTING
SECTION 3.3.1. CONSENTS REQUIRED - BARTER PROGRAMMING
WOKR - TV
Written
Contract Term Consent
------------------ Req'd to
Distributor Package Start End Assign
---------------------- ----------------------- ----- ---- ------
Buena Vista Television Bill Nye the Science Guy Sep-97 Sep-00 YES
Hearst Entertainment, Inc. Popular Mechanics: For Kids Sep-97 Sep-99 YES
New World / Genesis Access: Hollywood Sep-96 Sep-98 YES
Paramount Hard Copy 98 Sep-98 Sep-99 YES
Maury Povich Sep-98 Sep-98 YES
Wild Things Sep-97 Sep-98 YES
Worldvision Enterprises Pictionary Sep-97 Sep-98 YES
New York State Lottery Lottery Drawings May-98 Apr-01 YES
Dr. Bob Lanier 60 Second Housecall- News Insert Open
WRMM DJs Family Weekend - News Insert Open NL
Triple Seven Concepts Inc., a Assorted 1/2 hour programs Jun-98 Jun-99 YES
subsidiary of Grey Advertising
|
NL - No specific assignment language in agreement.
THE ACKERLEY GROUP
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SCHEDULE 3.9.1
----------------------------------------------- ----------------------------------------------------- ----------------------
TYPE INSURER LIABILITY LIMIT POLICY PERIOD
----------------------------------------------- ----------------------------------------------------- ----------------------
Package Commercial Union 19,491,552 05/01/98 - 05/01/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Comm'l. Gen'l. Liability Commercial Union 2,000,000 05/01/98 - 05/01/99
[incl. w/Package Policy]
----------------------------------------------- ----------------------------------------------------- ----------------------
Communication Eqpt Commercial Union 58,615,300 05/01/98 - 05/01/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Broadcasting Loss of Income Commercial Union 13,487,696 05/01/98 - 05/01/99
[incl. w/Comm. Eqpt. Policy]
----------------------------------------------- ----------------------------------------------------- ----------------------
Automobile Commercial Union 1,000,000 05/01/98 - 05/01/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Energy Systems Federal Insurance Co. 25,000,000 05/01/98 - 05/01/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Libel/Slander Employers Reinsurance 15,000,000 10/09/97 - 10/09/98
----------------------------------------------- ----------------------------------------------------- ----------------------
Umbrella Federal Insurance Co. 25,000,000 05/01/98 - 05/01/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Non-Owned Aircraft National Union Fire 20,000,000 10/24/97 - 10/24/98
----------------------------------------------- ----------------------------------------------------- ----------------------
Crime Bond Federal Insurance Co. 1,000,000 05/01/98 - 05/01/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Fiduciary Responsibility Federal Insurance Co. 25,000,000 11/10/97 - 11/10/98
----------------------------------------------- ----------------------------------------------------- ----------------------
Directors & Officers Federal Insurance Co. 5,000,000 02/06/98 - 02/06/99
Includes:
Outside Directors 5,000,000 02/06/98 - 02/06/99
Employment Practices 5,000,000 02/06/98 - 02/06/99
Liability
----------------------------------------------- ----------------------------------------------------- ----------------------
Workers Compensation 100,000 12/31/97 - 12/31/98
Maine MEMIC
Illinois Iowa Commercial Union
Florida Commercial Union
Massachusetts Commercial Union
New York Commercial Union
----------------------------------------------- ----------------------------------------------------- ----------------------
Travel/Accident Reliance Standard Life 10,000 10/01/97 - 10/01/98
----------------------------------------------- ----------------------------------------------------- ----------------------
Foreign Policy CIGNA Ins. Co. 1,000,000 05/20/98 - 05/20/99
----------------------------------------------- ----------------------------------------------------- ----------------------
Special (K&R) Aetna Life & Casualty 3,000,000 09/12/95 - 09/12/98
----------------------------------------------- ----------------------------------------------------- ----------------------
Maine Turnpike Bond Travelers Casualty & Surety 5,000 09/16/97 - 09/16/98
----------------------------------------------- ----------------------------------------------------- ----------------------
|
GUY GANNETT COMMUNICATIONS
EXAMPLES OF "PREPAID" PROGRAMMING COSTS AT DEC. 1998 FOR PROGRAMS FOR WHICH DOWNPAYMENTS WERE MADE
WGME
"FRIENDS"
Start Date Sept. 98
License Fee 169 wks. @ $6,950/wk. $1,174,550
(587,275) 50 % downpayment - Sept. 1996
------------
587,275 balance payable over 39 months beginning Sept.98 (587,275 /39 =15,058)
Total
Thru Thru
Dec-97 Jan-Aug 98 Sep-98 Oct-98 Nov-98 Dec-98 Dec-98
---------
Actual payments 587,275 0 15,058 15,058 15,058 15,058 647,508
Payments without downpayment 0 0 30,117 30,117 30,117 30,117 120,467
(1,174,550 / 39 = 30,117) --------
"Prepayment" @ 12/31/98 527,042
========
|
Note - the prepayment is reduced by $ 15,058 per month beginning Sept. 1998.
"FRASIER"
Start Date Sept. 97
License Fee 169 wks. @ $5,750/wk. $ 971,750
(97,175) 10% downpayment - Jan. 1997
------------
874,575 balance payable over 39 months beginning Sept.97 (874,575 / 39 = 22,425)
Total
Thru Thru
Jan-97 Jan-Aug 97 Sep-97 Oct-97 Nov-97 Dec-97 Jan-Dec 98 Dec-98
--------
Actual payments 97,175 0 22,425 22,425 22,425 22,425 269,100 455,975
Payments without downpayment 0 0 24,917 24,917 24,917 24,917 299,004 398,671
-------
(874,575 / 39 = 24,917)
"Prepayment" @ 12/31/98 57,304
=======
|
Note - the prepayment is reduced by $ 2,492 per month beginning Sept. 1997.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
Section 1.1(d) - (Real Property)
See attached Section 1.1 (d) of the Disclosure Schedule.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 1.1(R) (NON-COMPETITION AGREEMENTS)
James B. Shaffer
Michael L. Bock
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
3.3(a): None.
3.3(b): None.
3.3(c): None.
3.3(d):
1. See Section 3.3.1 of the Disclosure Schedule for list of contracts
that require consent to the transactions.
2. The Company's Revolving Loan Agreement with BankBoston and others
and Note Purchase Agreement with its noteholders prohibit the
transfer of the Assets without the lenders' consent. The Company
expects to repay these obligations at or prior to Closing.
3. See Section 3.14 of the Disclosure Schedule concerning certain
retention and severance agreements with various employees
requiring certain payments to be accelerated at Closing.
4. See Section 3.14 of the Disclosure Schedule concerning certain
agreements with various retired employees that may be accelerated
upon Closing.
5. The annual management bonuses for WOKR-TV will be accelerated at
Closing. If the Closing is before the end of 1998, the portion of
the
|
SECTION 3.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
payment relating to the period from the Closing Date through year end will be accounted for as a prepaid expense.
6. Pursuant to the terms of the Company's Directors' Deferred Compensation Plan, deferred directors fees are payable upon the sale of substantially all of the assets of the Company, and will be due upon Closing.
7. Most, if not all, of the Company's insurance policies are not assignable.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.5 (FINANCIAL STATEMENTS)
3.5(a): None.
3.5(b) & (c):
1. The Unaudited Financial Statements do not include all financial
statements (e.g., cash flow), financial elements (e.g., income
taxes and net income) or footnotes required under GAAP. Net
Financial Assets will not include any accruals for any severance
for employees terminated after the Closing. The Unaudited
Financial Statements were prepared on a pro forma basis to reflect
the Company's expectations as to how certain accounting matters
related to the sales of the Company and the Maine Media Business
would be handled, including without limitation: estimates of how
post-retirement liabilities would be allocated between Newco (as
defined in Section 3.7 of the Disclosure Schedule) and the
Company; none of the prepaid pension cost included in "other
assets" in the corporate balance sheet was allocated to Newco;
certain long-term incentive plans and supplemental retirement
benefits were not reflected on the balance sheet because it is
anticipated that they will be paid prior to Closing. Some monthly
financial statements may not include all accrued vacation
benefits. The treatment of downpayments on program rights as
described in Section 9.1 is not consistent with prior periods or
in accordance with GAAP. The consolidated statement of operations
is intended to display EBITDA and EBIT rather than net income. The
Guy Gannett Broadcast Group balance sheet shows no allocation or
apportionment of the post-retirement liability or of the prepaid
pension (except that the June 30, 1998 balance sheet does show the
post-retirement liability). As described above, the Unaudited
Financial Statements are not in conformance with GAAP nor are they
consistent with prior periods.
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.5 (FINANCIAL STATEMENTS)
2. The Unaudited Financial Statements do not include any assets or liabilities that may result from a settlement in the future with ASCAP regarding the dispute with the TV Music License Committee on new fees and the license agreement.
3. Downpayments relating to certain program rights contracts set forth in Section 9.1 of the Disclosure Schedule will be recorded as prepaid expenses, while in the past some of these liabilities have been recorded as reductions in the "film contract liability" account.
4. The Company has an arrangement to pay a former WGME employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan. The Company accounts for this liability on a cash basis.
3.5(c):
5. There are certain liabilities related to the sale of the Company and its properties that are not recorded and have not been incurred in the ordinary course including but not limited to (a) fees for: attorneys, investment bankers, accountants, consultants, etc.; (b) certain agreements with key employees for severance, retention and closing benefits, and former employees for supplemental retirement and deferred compensation benefits.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
3.6(i):
1. The Company has possession of various assets owned by others, including but not limited to personal items of employees and officers. The Company also has possession of records, but does not have any ownership interest in, the following groups or organizations: Guy P. Gannett Foundation, The Portland Newspapers Bruce Roberts Fund; Guy Gannett Employees Credit Union; the Anne M. Gannett Trust and the Gannett Family Forum.
2. WTWC entered into a conservation easement with Leon County, Florida, dated June 16, 1998.
3. There is a possible encroachment onto abutting property of the WICD satellite dishes at the station studio in Champaign, Illinois.
4. The New York State Department of Transportation ("NYSDOT") has taken, by eminent domain,: (1) a fee simple interest in a 0.136 acre parcel located at 4225 West Henrietta Road, Rochester, New York, along the property fronting West Henrietta Road and crossing the driveway accessing that property, and (2) a permanent easement for traffic control devices on the driveway where the driveway meets West Henrietta Road. In return, NYSDOT has paid the Company $12,400.
5. See Section 3.16 of the Disclosure Schedule for Intellectual Property matters.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
3.6(i) and (iii):
6. See Section 3.7 of the Disclosure Schedule for detail with respect
to sharing of certain assets between the broadcast and Maine Media
Business divisions pursuant to the terms of an Amended and
Restated Contribution Agreement dated August 14, 1998. In
addition, upon consummation of the sale of the Maine Media
Business, the Company will lose access to certain expertise in
areas such as marketing and research provided by personnel of the
Maine Media Business, and other relationships with these divisions
will be terminated.
3.6(ii) The Company has a lease with Elden Moss for an Iowa City
translator site lease. Title work reveals that title to the leased
property is held by Moss Farms, Inc. The Company is in the process
of amending this lease to obtain a right of first refusal and
plans to correct this error at the same time.
3.6(iv):
7. The elevator on the WGME tower requires repair due to damage by
the Winter, 1998 ice storm. Kline Towers has estimated the costs
of repairs at approximately $34,000. This loss is insured and the
repairs will be conducted shortly.
8. WGME purchased a software system including a street level mapping
system. The vendor went out of business before a proper interface
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
between the street level mapping system and the WSI weather reporting system was provided. WGME is working with WSI for a substitution of software.
3.6(v): None. 3.6(vi): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3.7(a):
1. An Amended and Restated Contribution Agreement dated August 14, 1998 (the "Contribution Agreement") between the Company and Newco provides for transfer to Media Properties of Maine, LLC ("Newco"), on or before the date of sale of the Maine Media Business, of all assets and liabilities used or usable primarily in connection with the Maine Media Business. The Company has also agreed to enter into a services contract between the Company and Newco containing certain agreements with respect to certain assets presently shared by the broadcast divisions and Maine Media Business divisions, including: a) continuation of certain relationships between the Maine Media Business and WGME for an interim period; b) continued joint sales of advertising until expiration of existing commitments to customers; and c) continued occupancy by Newco of the portion of the Sanford, Maine office space currently shared by The Portland Newspapers and WGME. The Company expects to enter into this service contract prior to the Closing. (See Section 5.1 of the Disclosure Schedule.) The services contract also provides for the Corporate Office to obtain certain services from Newco. Either the service contract will be rewritten to eliminate this requirement therefrom, or the Company shall continue to be entitled to these benefits (and liable for the related obligations) after the Closing.
2. The Contribution Agreement also provides that the Company will allocate the pension plan assets in its defined benefit plan between the Company and Newco as further described in the Contribution Agreement. The assets and liabilities of the Guy Gannett Retirement Plan that relate to
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
employees of the Maine Media Business shall be transferred, post-closing, to a trust that will be established to hold assets of a new plan to be established for the Maine Media Business
The Contribution Agreement also provides that the Company will use reasonable efforts to cause the following contracts in which vendors provide goods or services to both the broadcast and Maine Media Business divisions to be amended to reflect the split of the operating divisions into two companies: KOZ, inc dated March 4, 1998, as amended; U.S. Fleet Leasing dated July 19, 1991; R.E. Harington dated 6/28/94, as amended; KMS Solutions dated 4/25/97; and Time/Warner Cable (undated). The replacement contracts relating to the broadcast division will be assigned to, and the obligations thereunder assumed by, Purchaser.
3.7(b): None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3. The Company has entered into a new employment agreement with Don Alhart. See Section 3.10.4 for date of agreement.
4. The Company has agreed to accelerate at Closing WOKR-TV annual management bonuses. If the Closing is before year end, the portion of the payment relating to the period from the Closing Date through the end of 1998 will be accounted for as a prepaid expense.
5. The Company has increased its Directors and Officers insurance coverage (other than the employment practices coverage) to $5 million, and has increased its fiduciary insurance coverage to $25 million prior to Closing.
6. The Company has entered into settlement agreements with Allan Eggers and Carl Lehne concerning their alleged rights to retiree medical benefits. Settlement payments are expected to be made shortly.
3.7(c): None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3.7(d):
7. The elevator on the WGME tower requires repair due to damage in the Winter, 1998 ice storm. Kline Towers has estimated the costs of repairs at approximately $34,000. This loss is insured and the repairs will be conducted shortly.
3.7(e): The Company may be below budget for 1998 by as much as $1,469,000 for all of the television stations other than WOKR-TV. Assuming a cash flow reduction of $1,469,000, EBITDA for fiscal year 1998 would be $12,700,000.
3.7(f):
8. WGME and TPN have discontinued sponsorship of 3 on 3 basketball.
9. WGME and the Maine Media Business have discontinued certain joint sales and promotional efforts in anticipation of the sale of the Maine Media Business .
3.7(g): None. 3.7(h): None. 3.7(i): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.8 (LITIGATION)
3.8(i):
1. The Company has four pending, and several threatened, defamation and libel Actions. All are covered by insurance. In addition, there are several insured automobile liability cases and various workers' compensation claims currently pending.
2. There is a pending gender discrimination case against WGGB. This matter is insured.
3. An employee stole services from the Station (see Section 5.1(a)(ix) of the Disclosure Schedule and was terminated as a result. NABET has filed a grievance over the termination.
4. An on-air reporter has threatened to sue WOKR in connection with her recent discharge for reasons relating to work performance, insubordination and violations of station policy. No suit has been filed to date. This matter is insured.
3.8(ii):
5. WICD has agreed, pursuant to a settlement set forth in an Order of the Champaign Human Rights Commission, to participate in the Illinois Broadcasters Intern Program.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.8 (LITIGATION)
3.8:
6.
WGGB has filed a motion in support of WWLP's Petition before the FCC contesting the exercise by Hartford Station WVIT of an exclusivity provision in its syndicated programming agreements and requesting that relief be made market-wide.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.9 (INSURANCE)
See Section 3.9.1 of the Disclosure Schedule for a list of insurance policies relating to the Business.
3.9(i): None. 3.9(ii): None. 3.9(iii): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
1. See Section 3.10.1 of the Disclosure Schedule for agreements or contracts providing for payments in excess of $50,000 per year or $250,000 over the five-year period commencing on the date hereof.
Please note that detail on various insurance policies and employee benefit plans insurance coverage has not been provided.
2. See Section 3.10.2 of the Disclosure Schedule for all time brokerage agreements and affiliation agreements with television networks.
3. See Section 3.10.3 of the Disclosure Schedule for any license or contract pursuant to which the Company is authorized to broadcast film or taped programming supplied by others in excess of $10,000 per year or having a term of more than one year .
4. See Section 3.10.4 of the Disclosure Schedule for any employment agreement, consulting agreement or similar contract providing for payments to any Person in excess of $50,000 per year or $100,000 in the aggregate over the five-year period commencing on the date hereof.
5. See Section 3.14 of the Disclosure Schedule for any retention or severance agreement or contract with respect to any Person who is to be employed post-sale.
6. See Section 3.10.6 of the Disclosure Schedule for all collective bargaining agreements or other union contracts.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
7. See Section 3.10.7 of the Disclosure Schedule for (a) any lease of real property or (b) any lease of equipment or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company to another party providing for payments to any Person in excess of $25,000 per year or $75,000 in the aggregate over the five-year period commencing on the date hereof.
8. See Section 3.10.8 of the Disclosure Schedule for any lease of equipment or real property or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company to another party providing for payments to the Company in excess of $20,000 per year or $50,000 in the aggregate over the five-year period commencing on the date hereof.
9. Any joint venture, partnership or similar agreement or contract. NONE.
10. See Section 3.10.10 for any agreement or contract under which the Company has borrowed or loaned any money in excess of $1,000,000 or issued or received any note, bond, indenture or other evidence of indebtedness in excess of $1,000,000 or directly or indirectly guaranteed indebtedness, liabilities or obligations of others in an amount in excess of $1,000,000.
11. Any covenant not to compete or contract or agreement, understanding, arrangement or any restriction whatsoever limiting in any respect the ability of the Company to compete in any line of business or with any Person in any area. NONE.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
12. See Section 3.10.12 of the Disclosure Schedule for any agreement or contract between the Company and with any officer, director, stockholder or employee of the Business or any of their family members (other than employment agreements covered above or agreements or contracts containing terms substantially similar to terms available to employees generally).
13. Amended and Restated Contribution Agreement by and between the Company and Media Properties of Maine, LLC dated August 14, 1998, relating to the transfer of assets and liabilities primarily related to the Maine Media Business. This contract will not be assigned to Purchaser.
*Executed copies of certain contracts may not be available.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.11 (PERMITS)
PERMITS:
(i): None.
(ii): None.
(iii): None.
COMPLIANCE WITH LAW:
(i):
1. KGAN recently removed a 1,000 gallon underground diesel oil storage tank at a tower site at a rural location in Walker, Iowa. This previously unregistered tank has now been registered with the Iowa Department of Natural Resources ("IDNR"). Soil testing has indicated very low levels of hydrocarbons, which is determined to be "clean" under IDNR Regulations. A confirmatory ground water monitoring well has been installed. The borings showed no sign of soil contamination.
2. See Section 3.13 of the Disclosure Schedule concerning environmental matters.
(ii): See Section 3.8 of the Disclosure Schedule concerning the Champaign Human Rights Commission.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
3.12(i):
CALL SIGN TYPE EXPIRATION DATE
--------- ---- ---------------
DATE
----
WOKR-TV, Rochester, NY 06/0l/99
----------------------
KR-9992 TV Pickup 06/0l/99
KR-7729 TV Pickup 06/01/99
KN-2237 TV Pickup 06/01/99
KP-2134 TV Pickup 06/01/99
WGI-226 TV Intercity Relay 06/01/99
WEF-58 TV STL 06/01/99
KGO-958 R/P Base Mobile System 06/01/99
KRG-613 R/P Base Mobile System 06/01/99
BLP-00293 Low Power Broadcast Auxiliary 06/01/99
E6537 Receive Only Earth Station 12/09/03
E860485 Receive Only Earth Station 05/16/06
KNBL-873 Weather Radar 02/13/01
KGAN-TV, Cedar Rapids, IA 02/01/06
-------------------------
K13MN VHF TV Translator 02/01/06
KAP-35 TV STL 02/01/06
WGR-817 TV Intercity Relay 02/01/06
KR-7773 TV Pickup 02/01/06
KR-9931 TV Pickup 02/01/06
KZ-2447 TV Pickup 02/01/06
KZ-2448 TV Pickup 02/01/06
KAP-318 R/P Base Mobile System 02/01/06
BLQ-780906MG Low Power Broadcast Auxiliary 02/01/06
E970014 Transmit/Receive Earth Station 12/06/06
WNAE-244 Weather Radar 01/02/00
WTWC-TV, Tallahassee, FL 02/01/05
------------------------
KB-55264 TV Pickup 02/01/05
WGGB-TV, Springfield, MA 04/01/99
------------------------
KPK-385 R/P Base Mobile System 04/01/99
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
KPJ-841 R/P Automatic Relay 04/01/99
WGV-791 TV Intercity Relay 04/01/99
KCK-48 TV STL 04/01/99
KCI-582 R/P Base Mobile System 04/01/99
KB-98007 TV Pickup 04/01/99
KB-55388* R/P Base Mobil System 04/01/99
E860424 Receive Only Earth Station 05/02/06
WNTX-565 Private Operational Fixed Microwave 01/31/00
WICD(TV), Champaign, IL 12/01/05
-----------------------
KC-26142 TV Pickup 12/01/05
KVM-77** TV STL 12/01/05
KTX-71 TV Intercity Relay 12/01/05
WMV-569 TV Intercity Relay 12/01/05
BLP-01160 Low Power Broadcast Auxiliary 12/01/05
WPHI-929 Business Radio 06/01/00
WICS(TV), Springfield, IL 12/01/05
-------------------------
WKZ-31 TV Intercity Relay 12/01/05
KSK-95 TV STL 12/01/05
WME-674 TV STL 12/01/05
KTZ-93 TV Intercity Relay 12/01/05
WLF-755 TV Intercity Relay 12/01/05
WAQ-265 TV Intercity Relay 12/01/05
KB-55668 TV Pickup 12/01/05
BLP-01105 Low Power Broadcast Auxiliary 12/01/05
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
WMV-573 TV Intercity Relay 12/01/05
WMV-570 TV Intercity Relay 12/01/05
WNQE-817 Business Radio 09/12/99
WGME-TV, Portland, ME 04/01/99
---------------------
WGME-TV Auxiliary Transmitter 04/01/99
WLG-289 TV Intercity Relay 04/01/99
WLF-619 TV Intercity Relay 04/01/99
WHY-291 TV Intercity Relay 04/01/99
WHY-292 TV Intercity Relay 04/01/99
WCO-23 TV Intercity Relay 04/01/99
WMF-737 TV Intercity Relay 04/01/99
KRV-46 TV STL 04/01/99
WLJ-643 TV Intercity Relay 04/01/99
WLF-620 TV Intercity Relay 04/01/99
KB-55395 TV Pickup 04/01/99
KB-97128 TV Pickup 04/01/99
KA-88998 TV Pickup 04/01/99
KPM-487 Remote Pickup 04/01/99
KPM-468 Remote Pickup 04/01/99
KPF-914 R/P Automatic Relay 04/01/99
KPF-913 R/P Automatic Relay 04/01/99
WPNB-978 TV Intercity Relay 04/01/99
WLG-347 TV Intercity Relay 04/01/99
WPJB-245 TV Intercity Relay 04/01/99
E950350 Transmit/Receive Earth Station 07/14/05
WPJB-738 Private Operational Fixed Microwave 01/16/01
|
*Copy of license not available.
**Construction Permit Only.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
ANTENNA STRUCTURE REGISTRATIONS
-------------------------- ---------------------- ---------------------------------------- ----------------------
MAIN STATION LOCATION TOWER OWNER REGISTRATION NO.
-------------------------- ---------------------- ---------------------------------------- ----------------------
WOKR-TV Rochester, NY Guy Gannett Communications 1011757
-------------------------- ---------------------- ---------------------------------------- ----------------------
KGAN-TV Cedar Rapids, IA Guy Gannett Communications 1012927
Iowa City, IA Guy Gannett Communications 1012925
Walker City, IA Guy Gannett Communications 1012926
-------------------------- ---------------------- ---------------------------------------- ----------------------
WTWC-TV Tallahassee, FL Guy Gannett Communications 1019324
-------------------------- ---------------------- ---------------------------------------- ----------------------
WGGB-TV Holyoke, MA Guy Gannett Communications 1018460
Holyoke, MA Guy Gannett Communications 1018461
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
WHYN-FM1 Holyoke, MA Guy Gannett Communications 1018462
-------------------------- ---------------------- ---------------------------------------- ----------------------
WICD(TV)2 Champaign, IL Guy Gannett Communications 1036562
Maroa, IL Guy Gannett Communications 1016052
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
WICS (TV)3 Springfield, IL Guy Gannett Communications 1008823
-------------------------- ---------------------- ---------------------------------------- ----------------------
WGME-TV4 Portland, ME Guy Gannett Communications 1024383
Raymond, ME Guy Gannett Communications 1014068
Portland, ME Guy Gannett Communications 1024384
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
-------------------------- ---------------------- ---------------------------------------- ----------------------
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GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
3.12(ii): None. 3.12(iii): None. 3.12(iv): None. 3.12(v): None. 3.12(vi): None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.13 (ENVIRONMENTAL MATTERS)
WGME-TV 1. 1335 Washington Avenue, Portland, Maine. Various potential
------- environmental matters as described in the entire "Phase I
Environmental Site Assessment - WGME-TV Studios -- 1335 Washington
Avenue" (Dames & Moore, 5/28/98).
2. Transmitter Site, Brownhill Road, Raymond, Maine. Various
potential environmental matters as described in the entire "Phase
I Environmental Site Assessment - WGME-TV Transmitter Site --
Brownhill Road (Dames & Moore, 5/28/98).
WGME-TV 3. Blackstrap Road, Falmouth, Maine. Various potential environmental
------- matters as described in the entire Phase I Environmental Site
Assessment-WGME-TV Transmitter Building and Towers-325 Blackstrap
Road, Falmouth, Maine (Dames & Moore, 5/28/98-ESA No. 6).
4. Mount Agamenticus, Town of York, Maine (easement parcel and tower
space). Various potential environmental matters as described in
the entire Phase I Environmental Site Assessment-WGME-TV Microwave
Receiver/Transmitter-115 Mountain Road, York, Maine (Dames &
Moore, 5/28/98-ESA No. 7).
5. North Belfast Road, Augusta, Maine. Various potential
environmental matters as described in the entire Phase I
Environmental Site Assessment-WGME-TV-Pilot Communications-North
Belfast Road, Augusta, Maine (Dames & Moore, 5/28/98-ESA No. 9).
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
WGGB-TV
6. 1300 Liberty Street, Springfield, Mass. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WGGB-TV Studio- 1302 & 1306 Liberty Street, Springfield, Mass. (Dames & Moore, 5/28/98-ESA No. 10).
7. Mt. Tom, Holyoke, Mass. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WGGB-TV Transmitter-29 Mount Tom, Holyoke, Mass. (Dames & Moore , 5/28/98-ESA No. 11).
KGAN-TV
8. Studio-600 Old Marion Road, Cedar Rapids, IA. Various potential environmental matters as described in the entire "Phase I Environmental Site Assessment - KGAN-TV Transmission Tower" (Dames
& Moore, 5/28/98).
9. Transmission Tower, 5012 31st Avenue, Walker, IA. Various potential environmental matters as described in the entire "Phase I Environmental Site Assessment - KGAN-TV Transmission Tower -- 5012 31st Avenue, Walker, IA" (Dames & Moore, 5/28/98).
10. 1837 Dubuque Road, Iowa City, Iowa. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-KGAN-TV Iowa City Repeater Tower- 1837 Dubuque Road, Iowa City, Iowa (Dames & Moore, 5/28/98-ESA No.
14).
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
11. 1704 North 4th. Street, Washington, Iowa. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-KGAN-TV Television Translator Site, 1704 North 4th. Street, Washington, Iowa (Dames & Moore, 5/28/98-ESA No. 15).
WICS-TV
13. Route 1, Village of Dawson, Springfield, Ill. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WICS-TV Transmitter Building -Route 1, Village of Dawson, Springfield, Ill. (Dames & Moore,
5/28/98-ESA No. 17).
WICD-TV
14. 250 South County Fair Drive, Champaign, Ill. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WICD-TV Station-250 South County Fair Drive, Champaign, Ill. (Dames & Moore, 5/28/98-ESA No. 18).
15. Route 130 East, Homer, Ill. Various potential environmental
matters as described in the entire Phase I Environmental Site
Assessment-WICD-TV Transmitter Building -Route 130 East, Homer,
Ill. (Dames & Moore, 5/28/98-ESA No. 19).
16. Route 51, Maroa, Ill. Various potential environmental matters as described in the entire Phase I Environmental Property Audit by Hanson Engineers, dated March/1993.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
WOKR-TV
17. 4225 West Henrietta Road, Rochester, New York. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WOKR-TV Studio-4225 West Henrietta Road, Rochester, New York (Dames & Moore, 5/28/98-ESA No. 20).
18. Pinnacle Hill-State Route 31), Brighton, New York. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment- WOKR-TV Transmitter Site-Pinnacle
Hill ( Dames & Moore, 5/28/98-ESA No. 21.
WTWC-TV
19. 8440 West Deerlake Road, Tallahassee, Florida. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WTWC-TV Channel 40-TV station and Tower, 8440 West Deerlake Road, Tallahassee, Florida (Dames & Moore, 2/16/96)
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.14 (EMPLOYEE BENEFITS)
1. The Company has entered into certain agreements with key employees for severance, retention and other closing benefits which include new benefits, as well as acceleration of certain existing benefits. Pursuant to these agreements, employees will be paid agreed amounts in lieu of existing obligations under short-term incentive plans, individual TV managers' long-term incentive plans, and the Company's 1997-2000 Long-Term Incentive Plan, thereby fixing and accelerating existing obligations. The agreements also require payment of certain base retention bonuses and severance payments for selected employees. See Section 3.14.1 of the Disclosure Schedule for a list of division agreements (other than division heads) and Section 3.14.2 of the Disclosure Schedule for a list of division head agreements.
2. Certain agreements with various retired employees may be accelerated upon Closing: John DiMatteo, John Hooper, Robert
Morehead and Gilbert Lefkovich.
3. The Company has entered into several severance agreements in the normal course of business which include periodic severance payments and payment of medical and dental COBRA premiums.
4. The Company has an arrangement to pay a former employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.14 (EMPLOYEE BENEFITS)
5. The Company is in the process of amending certain summary plan descriptions for its qualified plans and welfare benefit plans. Amendments to qualified plans need to be written and filed prior to 12/31/99 to comply with Tax Reform Act of 1997 and the Small Business Job Protection Act of 1996.
6. The Guy Gannett Voluntary Investment Plan (401(k)) has recently had several small operational matters which have been corrected and documented according to the provisions of the IRS self-correction program referred to as "APRSC."
7. The Guy Gannett Voluntary Investment Plan is currently involved in a random 5500 audit by the IRS for the 1995 plan year. The results of that audit cannot be predicted at this time.
8. The Company has agreed, under the terms of a severance agreement with one former employee, to pay to him 75% of an individual medical insurance premium until March 2003.
9. KGAN entered into a severance agreement with an employee. Subsequently, there have been several letters of correspondence with the former employee's attorney over a number of issues including a modification that had to be made to the agreement in order to comply with medical plan and COBRA eligibility. The matter has not risen to the level of threatened litigation.
10. See Section 3.14.5 for list of employee benefit plans, Section 3.10.4 for list of material employment, consulting and similar agreements, Section 3.10.6 for collective bargaining agreements and Section 3.14.1, 3.14.2 and 3.3 for agreements providing for payments upon a change of control.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.15 (LABOR RELATIONS)
See Section 3.10.6 for list of labor organizations representing employees.
3.15(i): None. 3.15(ii): None. 3.15(iii): None. 3.15(iv): None. 3.15(v) None. 3.15(vi) None. |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
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DISCLOSURE SCHEDULE
SECTION 3.16 (INTELLECTUAL PROPERTY)
See Section 3.16.1 for a list of call letters for the Stations.
3.16(i): None.
3.16(ii):
1. The tradename for "Newssource 13" used by WOKR has not yet
been transferred of record in the U.S. Patent & Trademark
Office.
2. The Company is investigating whether KGAN's "Weathereye"
website has all necessary copyrights for some of the
material published on its site.
3.16(iii): None.
3.16(iv): None.
|
Guy Gannett Communications
Purchase Agreement - Broadcasting
Section 3.16.1 - Call Letters
WGME-TV PORTLAND, MAINE WGGB-TV SPRINGFIELD, MASSACHUSETTS KGAN-TV CEDAR RAPIDS, IOWA WICS-TV SPRINGFIELD, ILLINOIS WICD-TV CHAMPAIGN, ILLINOIS WOKR-TV ROCHESTER, NEW YORK WTWC-TV TALLAHASSEE, FLORIDA |
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 3.17 (TAXES)
None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.18 (COMMISSIONS)
Certain of the Company executives have agreements for contingent compensation tied to the sales price for the Company.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.19 (AFFILIATE TRANSACTIONS)
See Section 3.7 of the Disclosure Schedule concerning the Contribution Agreement with respect to the Company's transfer of the Maine Media Business to Newco.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
4.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
4.7 (PURCHASER'S QUALIFICATIONS)
The following television stations overlap with Sinclair stations and would require waivers of FCC ownership rules before they could be acquired by Sinclair:
1. WOKR-TV Rochester, NY, has Grade A overlap with WUHF(TV), Rochester, NY
2. WICS-TV Springfield, IL, has Grade A overlap with WYZZ(TV), Bloomington, IL, and Grade B overlap with KDNL(TV), St. Louis, MO.
3. WICD-TV Champaign, IL, has Grade B overlap with WYZZ(TV), Bloomington, IL.
4. KGAN-TV Cedar Rapids, IA, has Grade B overlap with KDSM(TV), Des Moines,
IA.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5.1(a)(i): None.
5.1(a)(ii):
1. The Company has the right, under a contract with KOZ inc,
to provide on-line community publishing services in all
of its TV markets. The Company (as part of Maine Media
Business) presently provides this service only in Maine.
2. Some combined activities between and among the Company
and Newco may be suspended at or after the date of the
sale of the Maine Media Business.
3. KGAN plans to enter into a lease for a remote studio at a
mall.
4. The Company will modify the Guy Gannett Group Life and
Health Plan (#501) to vest those Business Employees and
Corporate Office Employees (1) who are currently retired
and covered by the plan ("Current Retirees") and (2) who
are currently employed and who meet the age and service
requirements for post-retirement coverage as of the
Closing Date ("Qualified Employees", with the Current
Retirees and Qualified Employees sometimes collectively
referred to as "Retirees") in post-retirement benefits
substantially equivalent to those offered by the plan as
of the Closing Date. The Coorporate Office Employees
eligible or deemed to be eligible for these
post-retirement benefits are listed on Schedule 5.1.1 and
the Business Employees eligible for these post-retirement
benefits are listed on Schedule 5.1.2.
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
The percentage of premium paid by Current Retirees will remain the same as the percentage that they pay as of the Closing Date. Current Retirees and Qualified Employees shall pay 100% of the premium for post-retirement medical coverage and the Company shall pay 100% of the life insurance premium for such Current Retirees and Qualified Employees.
Subject to the provisions of the existing plans concerning premium sharing, the cost of such insurance coverages will be deemed to be the same as the cost for active employees for so long as the same benefit options are available to both active employees and Retirees. At any time that active employees and Retirees are not covered by the same health plan options, the cost to Retirees will be deemed to be the community rate for the same or similar coverage as determined by the insurance provider covering the largest number of lives in the State of Maine. The Group Companion Plan coverage will at all times be based upon the current coverage option and at rates determined from time to time by Blue Cross Blue Shield of Maine or its successor and approved by the State of Maine, although the actual insurance carrier may change.
See Section 3.7 of the Disclosure Schedule concerning allocation of pension plan assets in the Company's defined benefit plan between the Company and Newco, and the transfer of certain plan assets related to the Maine Media Business to Newco's plan.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5. Under a contract with Cigna (G-R200), Cigna provides guaranteed payments to retirees under the Guy Gannett Retirement Plan with respect to benefits accrued until January, 1970. The Company plans to cause the Cigna contract to be modified to provide for the transfer to the New Pension Plan that portion of the guaranteed payments that relate to current and former Business Employees.
6. WGME may move either Frazier or Entertainment Tonight to an after-midnight time slot before Tom Snyder.
5.1(a)(iii): None.
5. The Company plans to enter into a lease amendment with respect to the property located at the Northport Business Park to address sub-letting of tower space.
6. The Company plans to donate certain items relating to the Gannett family to non-profit organizations.
7. See Section 3.7 of the Disclosure Schedule for a description of the contribution of the Maine Media Business to Newco, and the related agreement concerning certain shared assets, which the Company expects to enter into prior to Closing.
5.1(a)(iv):
8. Trustees under the Guy Gannett Retirement Plan and the Voluntary Investment Plan and Trusts will resign and will be replaced by an institutional trustee.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
9. The Company expects to grant a premium holiday, and/or
provide employees a lump sum refund relating to prior
year overpayment of health care premiums.
5.1(a)(v): None.
5.1(a)(vi): None.
5.1(a)(vii): None.
5.1(a)(viii): No consent of the Purchaser will be required for
modification, change, renewal or extension of the
following Material Contracts, on terms consistent with
past practices of the Business:
o Modification of Lease with Elden Moss (KGAN) to
obtain a right of first refusal in favor of the
Company and correct the landlord
o Entry into a new office lease in Waterloo, Iowa
(KGAN).
o Extension or renewal of Columbine Systems, Inc.
agreement (WICS), provided that the Company will use
reasonable efforts to extend this contract on a
month-to-month basis or to renew the same terminable
on 30 days' notice, but the obtaining of such an
extension or renewal on such terms shall not be a
condition of Closing. In no event shall this contract
be extended beyond December 31, 2000 without
Purchaser's consent, which consent shall not be
unreasonably withheld.
o Extension or renewal of Incentive Management, Inc.
agreement (WICS)
o New Personal Service Contract with Beth Carroll
(WGGB)
o New Personal Service Contract with Karen Hoskins
(KGAN)
o New Personal Service Contract with Greg Kerr (WICS)
o New Personal Service Contract with Chad Mahoney
(WICS)
o New Personal Service Contract with Pat Bilone (WOKR)
o A new Personal Services Contract may be entered into
with Doug Cook.
o U.S. Fleet Lease will be amended to add a budgeted
news vehicle.
o See Section 5.1(a)(iii), No. 5, concerning Northport
Business Park lease amendment.
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5.1(a)(ix):
10. An employee of WGGB stole certain services from the
Station. The employee has been terminated. WGGB may
enter into a settlement agreement and a release with
regard to the services stolen.
5.1(a)(x):
11. The Company may enter into an agreement with CBS
reducing KGAN and WGME's network affiliation
compensation as a result of CBS's new NFL football
programming.
5.1(a)(xi): None.
5.1(a)(xii): None.
5.1(a)(xiii): None.
5.1(a)(xiv): None.
5.1(a)(xv): None.
5.1(a)(xvi): None.
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
SECTION 5.2 (POST-CLOSING COVENANTS AND AGREEMENTS)
5.2(a): Employee Benefit Plans, books and records to be available
for inspection without limit as to time relate to:
o Guy Gannett Retirement Plan and Trust
o WOKR-TV 401(k) Profit Sharing and Savings Plan
5.2(b): Corporate Office Employees are those individuals listed on
Section 5.2.1 of the Disclosure Schedule or any persons who,
at or prior to Closing, have replaced any of the listed
individuals in their positions.
5.2(d): Purchasers current severance policy is to provide severance
of one-half day's pay for each full month of continuous
service to those employees whose employment is terminated,
after six months of service, due to the elimination of the
employee's duties for reasons such as lack of work,
organizational changes or general reduction of force.
5.2(e):
1. Pursuant to Section 7 of the presently effective bargaining
agreement between "WGME-TV, a division of Guy Gannett
Communications Co. (Employer) and the American Federation of
Television and Radio Artists, Boston Local, AFL-CIO
(Union)".
2. Pursuant to Section C of the presently effective bargaining
agreement between "Guy Gannett Communications d/b/a WGME-TV
of Portland, Maine and Local Union No. 1837 of the
International Brotherhood of Electrical Workers [AFL-CIO]."
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 5.2 (POST-CLOSING COVENANTS AND AGREEMENTS)
---------------------------------------------------
3. Pursuant to Article V, Section 12 of the presently effective
bargaining agreement between "Guy Gannett Communications
d/b/a WICS-TV of Portland, Maine and Local Union No. 51 of
the International Brotherhood of Electrical Workers
[AFL-CIO]."
5.2(f): Robert Gilbertson (retired), Don Alhart (WOKR) and Frank
Fixaris (retired) have supplemental retirement plans. The
accrued liability therefor will be included in the Net
Financial Assets calculation.
5.2(i) See Section 5.2.2 of the Disclosure Schedule.
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
|
DISCLOSURE SCHEDULE
Section 6.4 (Material Consents Required As A Condition
1. The Affiliation Agreements listed on Section 3.10.1 of the Disclosure Schedule.
2. Lease with Michigan Ave. National Bank of Chicago dated 4/19/77 for studio space and tower lease.
3. Obtaining of the following consents will not be a condition of Closing if the Company has obtained, prior to Closing, alternatives reasonably acceptable to Purchaser and on terms not materially adverse to Purchaser as reasonably determined by Purchaser:
A. Lease with Eldon Moss dated 2/25/98 for Iowa City translator tower site.
B. Lease with Dale and Candace Schiebe dated 7/27/98 for Washington, Iowa site.
C. Lease with Maine Public Broadcasting dated 10/23/95 for Litchfield, Maine tower space.
D. Lease with Maine Bureau of Forestry dated 1/7/88 for microwave tower site.
E. Lease with Fleet Bank dated 1/1/94 for Lewiston, Maine space.
F. Lease with Fleet Bank dated 6/20/95 for Sanford, Maine office space.
G. Excelltron Tower, Inc. lease dated 7/1/95 for tower located in Sanford, Maine.
H. Intermedia (EMI Communications) dated 3/26/98 for video service/tower lease for WOKR.
None of the leases described in this Section 3 are for main studio, main tower or main transmission sites.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
*Northport Realty Trust for WGME office and studio lease (consent to assignment not required).
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 7.4 (MATERIAL CONSENTS REQUIRED AS A CONDITION
None.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 9
1. The accounting method used to amortize downpayment of certain program costs will be made in accordance with the example shown in Section 9.1 of the Disclosure Schedule.
2. The Closing Statement may not include any assets or liabilities that may result from a settlement in the future with ASCAP regarding the dispute with the TV Music License Committee on new fees and the license agreement.
3. The Closing Statement will not be in accordance with GAAP and/or be consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 27, 1997 in the following ways.
(a) The Closing Statement will not include any financial statements or footnotes required under GAAP.
(b) The Closing Statement will not include any accruals for severance for employees terminated after the Closing.
(c) See Section 3.5 of the Disclosure Schedule for other non-conformities with GAAP and inconsistencies with prior practices.
4. The Company has an arrangement to pay a former WGME employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan. The Company accounts for this liability on a cash basis.
5. A liability for vacation benefits for corporate employees may exist at Closing. This will be recorded as a Net Financial Asset, but is not in accordance with past practices for interim financial statements.
6. Retirement and deferred compensation plans for the following former executives will be included in the definition of Net Financial Assets, unless such liabilities are satisfied prior to Closing: Robert Gilbertson; John Hooper; Robert Morehead; Gilbert Lefkovich and John DiMatteo.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10.10 (LOAN AGREEMENTS)
---------- ------------------- ----------------------------------------------------------- -----------------------------------------
DIVISION DOCUMENT NUMBER COMPANY NAME PURPOSE CONTRACT EFFECTIVE COPY
DATE DATE IMPERFECTIONS
---------- ------------------- ----------------------------------------------------------- -----------------------------------------
---------- ------------------- ----------------------------------------------------------- -----------------------------------------
Corp. 100020.00 Northwestern Mutual Life Insurance Senior Notes N/A N/A N/A
---------- ------------------- ----------------------------------------------------------- -------------------------------------
Corp. 100021.00 UNUM Life Insurance Company Senior Notes N/A N/A N/A
---------- ------------------- ----------------------------------------------------------- -------------------------------------
Corp. 100022.00 Massachusetts Mutual Life Ins. Co. Senior Notes N/A N/A N/A
---------- ------------------- ----------------------------------------------------------- -------------------------------------
Corp. 100025.00 First National Bank of Boston (primary) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
---------- ------------------- ----------------------------------------------------------- -------------------------------------
Corp. 100026.00 Bank of New York (participating) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
---------- ------------------- ----------------------------------------------------------- -------------------------------------
Corp. 100027.00 Fleet Bank (participating) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
---------- ------------------- ----------------------------------------------------------- -------------------------------------
Corp. 100028.00 Key Bank (participating) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
---------- ------------------- ----------------------------------------------------------- -------------------------------------
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10.2 (AFFILIATION AGREEMENT)
-----------------------------------------------------------------------------------------------------------------------------------
DOCUMENT CONTRACT EFFECTIVE COPY
DIVISION NUMBER COMPANY NAME PURPOSE DATE DATE IMPERFECTIONS
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
KGAN 1470510.00 CBS Television Network Television Affiliation Agreement 1/1/95
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WGGB 1270010.00 ABC Television Network Network Affiliation Agreement 1/6/95 1/1/95
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WGME 1170010.00 CBS Television Network Affiliate Agreement 1/31/94 1/1/95
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WICD 1500010.00 NBC TV Network Affiliation Agreement 1/16/96 7/1/95
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WICD 1500010.01 NBC TV Network Incentive payments 1/16/96
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WICS 1370010.00 NBC TV Network Affiliation Agreement 1/1/81 7/1/95
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WOKR 1670010.00 ABC Inc. Capital Cities Affiliation Agreement 1/24/91 1/2/95
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WOKR 1670010.00 ABC Inc. Capital Cities consent to assignment to GGC 4/20/98 4/26/98
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WOKR 1670020.00 ABC Inc. Capital Cities NewOne Service 7/8/88 9/14/88
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
WTWC 1700010.00 NBC TV Network Network Affiliation 2/1/97 1/1/97
---------------------------- ------------------------- ----------------------------------- ------------- --------------------------
---------------------------- -------------------------------- ---------------------------------------------------------------------
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10.7.A (REAL PROPERTY LEASES)
--------------------------- -------------------------------- --------------------------------------------
DOCUMENT
DIVISION NUMBER COMPANY NAME PURPOSE
--------------------------- -------------------------------- --------------------------------------------
KGAN 1480010.00 Eldon Moss Iowa City Translator Tower Site Lease*
--------------------------- -------------------------------- --------------------------------------------
KGAN 1480010.01 Eldon Moss Amdt to lease - right of 1st refusal
--------------------------- -------------------------------- --------------------------------------------
KGAN 1483330.00 Dale & Candace Schiebe Washington Iowa site lease
--------------------------- -------------------------------- --------------------------------------------
KGAN 1483340.00 Midtown Development Waterloo office
Partnership
--------------------------- -------------------------------- --------------------------------------------
KGAN 1483400.00 Zoreh Asadzadehfard Coralville office lease
--------------------------- -------------------------------- --------------------------------------------
WGGB 1282000.00 Chestnut Park Assoc. Tower space for WGGB radio equipment
--------------------------- -------------------------------- --------------------------------------------
WGGB 1282000.01 Chestnut Park Assoc. Amendment to lease to extend term & rais
--------------------------- -------------------------------- --------------------------------------------
WGME 1181490.00 Northport Realty Trust Northport Office/Studio Lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181491.00 Northport Realty Trust Memorandum of Lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181492.00 UNUM Life Insurance Company Subordination, Non-Disturbance & Attorn
--------------------------- -------------------------------- --------------------------------------------
WGME 1181530.00 Fleet Bank 35 Ash St. Lewiston Lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181550.00 Maine Public Broadcasting Tower space Litchfield, ME
--------------------------- -------------------------------- --------------------------------------------
WGME 1181800.00 Fleet Bank of Maine Sanford office lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181810.00 Excelltron Tower, Inc. Sanford Tower lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181860.00 Maine Bureau of Forestry Microwave Site lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181870.00 State of Maine Office lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181880.00 Kennebec Valley med. Ctr. Sky cam site lease
--------------------------- -------------------------------- --------------------------------------------
WGME 1181900.00 Maine Medial Center sky cam lease
--------------------------- -------------------------------- --------------------------------------------
WICD 1580000.00 Michigan Ave. National Bank of Studio Space and Tower Lease
Chic
--------------------------- -------------------------------- --------------------------------------------
WICD 1580090.00 First Appraisal Co. Danville office lease
--------------------------- -------------------------------- --------------------------------------------
WOKR 1681100.00 Collier ABR, Inc. Roof lease
--------------------------- -------------------------------- --------------------------------------------
WOKR 1681130.00 Intermedia (EMI Communications) Video Service/Tower Lease
--------------------------- -------------------------------- --------------------------------------------
|
--------------------------- -------------------------------- ------------- ------------- --------------------
DOCUMENT CONTRACT EFFECTIVE COPY
DIVISION NUMBER COMPANY NAME DATE DATE IMPERFECTIONS
--------------------------- -------------------------------- ------------- ------------- --------------------
KGAN 1480010.00 Eldon Moss 2/25/98 1/1/98
--------------------------- -------------------------------- ------------- ------------- --------------------
KGAN 1480010.01 Eldon Moss not signed
--------------------------- -------------------------------- ------------- ------------- --------------------
KGAN 1483330.00 Dale & Candace Schiebe 7/27/98 6/1/98
--------------------------- -------------------------------- ------------- ------------- --------------------
KGAN 1483340.00 Midtown Development 11/1/96
Partnership
--------------------------- -------------------------------- ------------- ------------- --------------------
KGAN 1483400.00 Zoreh Asadzadehfard 1/30/96 2/1/96
--------------------------- -------------------------------- ------------- ------------- --------------------
WGGB 1282000.00 Chestnut Park Assoc. 8/1/85
--------------------------- -------------------------------- ------------- ------------- --------------------
WGGB 1282000.01 Chestnut Park Assoc. 5/1/93
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181490.00 Northport Realty Trust 1/1/96 1/1/96
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181491.00 Northport Realty Trust 3/20/96
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181492.00 UNUM Life Insurance Company 3/20/96 1/1/96
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181530.00 Fleet Bank 1/1/94 1/1/94
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181550.00 Maine Public Broadcasting 10/23/95 10/23/95
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181800.00 Fleet Bank of Maine 6/20/95 6/21/95
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181810.00 Excelltron Tower, Inc. 7/1/95 not fully executed
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181860.00 Maine Bureau of Forestry 1/7/88 1/1/88
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181870.00 State of Maine oral
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181880.00 Kennebec Valley med. Ctr. 8/12/96
--------------------------- -------------------------------- ------------- ------------- --------------------
WGME 1181900.00 Maine Medial Center oral
--------------------------- -------------------------------- ------------- ------------- --------------------
WICD 1580000.00 Michigan Ave. National Bank of 4/19/77 11/15/77
Chic
--------------------------- -------------------------------- ------------- ------------- --------------------
WICD 1580090.00 First Appraisal Co. 1/19/98 2/1/98
--------------------------- -------------------------------- ------------- ------------- --------------------
WOKR 1681100.00 Collier ABR, Inc. 11/14/94 1/1/95
--------------------------- -------------------------------- ------------- ------------- --------------------
WOKR 1681130.00 Intermedia (EMI Communications) 3/26/98 3/26/98
--------------------------- -------------------------------- ------------- ------------- --------------------
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT [BROADCAST]
DISCLOSURE SCHEDULE
SECTION 3.10.8 (INCOME LEASES)
---------------------------- -------------------------------- --------------------------------------------
DOCUMENT
DIVISION NUMBER COMPANY NAME PURPOSE
---------------------------- -------------------------------- --------------------------------------------
KGAN 1480580.00 Jacor Broadcasting of Iowa, WMT Studio Space Lease Agreement
Inc.
---------------------------- -------------------------------- --------------------------------------------
KGAN 1480581.00 Palmer Broadcasting Limited consent to assignment
Partners
---------------------------- -------------------------------- --------------------------------------------
KGAN 1480582.00 Palmer Broadcasting Limited Memorandum of Lease
Partners
---------------------------- -------------------------------- --------------------------------------------
KGAN 1480583.00 Norwest Bank Iowa N.A. collateral assignment
---------------------------- -------------------------------- --------------------------------------------
KGAN 1480590.00 Jacor Broadcasting of Iowa, Assumption &
renewal of leases Inc.
---------------------------- -------------------------------- --------------------------------------------
WGGB 1281240.00 Motorola Communications and Mt. Tom Tower lease; bldg. space
Elect.
---------------------------- -------------------------------- --------------------------------------------
WGGB 1281290.01 WGBY-TV (WGBH Educational Fou Mt. Tom Tower lease; bldg. space and land
---------------------------- -------------------------------- --------------------------------------------
WGGB 1281390.00 Northeast Utilities Mt. Tom Lease
---------------------------- -------------------------------- --------------------------------------------
WGME 1181460.00 WTHT-Taylor Communications Sublease office space - Northport
---------------------------- -------------------------------- --------------------------------------------
WGME 1181461.00 Beacon Broadcasting Consent to Assignment
---------------------------- -------------------------------- --------------------------------------------
WGME 1181462.00 Beacon Broadcasting Consent and Acknowledgement
---------------------------- -------------------------------- --------------------------------------------
WGME 1181463.00 Beacon Broadcasting Assignment of Leases, contracts & agreem
---------------------------- -------------------------------- --------------------------------------------
WGME 1181464.00 Great Casco Bay Wireless Assignment of Beacon sublease
Talking M
---------------------------- -------------------------------- --------------------------------------------
WGME 1181465.00 Great Casco Bay Wireless acknowledgement of new Prime Lease
---------------------------- -------------------------------- --------------------------------------------
WGME 1181470.00 WBLM-Taylor Communications Raymond Tower Space Lease
---------------------------- -------------------------------- --------------------------------------------
WGME 1181471.00 General Broadcasting of assignment of leases, contracts & agreeme
Florida, Inc.
---------------------------- -------------------------------- --------------------------------------------
WGME 1181472.00 Fuller-Jeffrey Broadcasting Assignment of Leases
---------------------------- -------------------------------- --------------------------------------------
WGME 1181473.00 Fuller-Jeffrey Broadcasting consent to assignment and amendment of
---------------------------- -------------------------------- --------------------------------------------
WGME 1181474.00 Fuller-Jeffrey Broadcasting Lessor consent and Estoppel
---------------------------- -------------------------------- --------------------------------------------
WGME 1181475.00 Fuller-Jeffrey Broadcasting Amendment to Lease
Corp.
---------------------------- -------------------------------- --------------------------------------------
WOKR 1681090.00 WXXI-Rochester Area Ed. TV Brighton land lease
Assoc.
---------------------------- -------------------------------- --------------------------------------------
WOKR 1681090.01 WXXI-Rochester Area Ed. TV First Amendment of lease
Assoc.
---------------------------- -------------------------------- --------------------------------------------
WTWC 1780200.00 WMLO FM (now WFLY) Tower lease
---------------------------- -------------------------------- --------------------------------------------
WTWC 1780210.00 WSNI FM Tower lease
---------------------------- -------------------------------- --------------------------------------------
|
---------------------------- -------------------------------- ------------- ------------- --------------
DOCUMENT CONTRACT EFFECTIVE COPY
DIVISION NUMBER COMPANY NAME DATE DATE IMPERFECTIONS
---------------------------- -------------------------------- ------------- ------------- --------------
KGAN 1480580.00 Jacor Broadcasting of Iowa, 10/16/81 10/17/81
Inc.
---------------------------- -------------------------------- ------------- ------------- --------------
KGAN 1480581.00 Palmer Broadcasting Limited 1/5/96
Partners
---------------------------- -------------------------------- ------------- ------------- --------------
KGAN 1480582.00 Palmer Broadcasting Limited 1/5/96
Partners
---------------------------- -------------------------------- ------------- ------------- --------------
KGAN 1480583.00 Norwest Bank Iowa N.A. 1/4/96
---------------------------- -------------------------------- ------------- ------------- --------------
KGAN 1480590.00 Jacor Broadcasting of Iowa, 3/18/97
Inc.
---------------------------- -------------------------------- ------------- ------------- --------------
WGGB 1281240.00 Motorola Communications and 4/1/89 4/1/89 Tenant at Will
Elect.
---------------------------- -------------------------------- ------------- ------------- --------------
WGGB 1281290.01 WGBY-TV (WGBH Educational Fou 1/1/79 1/1/89
---------------------------- -------------------------------- ------------- ------------- --------------
WGGB 1281390.00 Northeast Utilities 1/1/95
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181460.00 WTHT-Taylor Communications 10/25/83 10/25/83
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181461.00 Beacon Broadcasting 11/30/89
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181462.00 Beacon Broadcasting 12/1/89
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181463.00 Beacon Broadcasting 12/6/89
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181464.00 Great Casco Bay Wireless 11/17/94 no copy
Talking M
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181465.00 Great Casco Bay Wireless 3/15/96
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181470.00 WBLM-Taylor Communications 10/25/83 10/25/83
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181471.00 General Broadcasting of 12/6/89
Florida, Inc.
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181472.00 Fuller-Jeffrey Broadcasting 12/6/89
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181473.00 Fuller-Jeffrey Broadcasting 12/1/89
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181474.00 Fuller-Jeffrey Broadcasting 5/14/92
---------------------------- -------------------------------- ------------- ------------- --------------
WGME 1181475.00 Fuller-Jeffrey Broadcasting 8/31/98
Corp.
---------------------------- -------------------------------- ------------- ------------- --------------
WOKR 1681090.00 WXXI-Rochester Area Ed. TV 10/23/79 10/24/79
Assoc.
---------------------------- -------------------------------- ------------- ------------- --------------
WOKR 1681090.01 WXXI-Rochester Area Ed. TV 4/14/89
Assoc.
---------------------------- -------------------------------- ------------- ------------- --------------
WTWC 1780200.00 WMLO FM (now WFLY) 11/6/89 10/2/90
---------------------------- -------------------------------- ------------- ------------- --------------
WTWC 1780210.00 WSNI FM 3/27/91 3/27/91
---------------------------- -------------------------------- ------------- ------------- --------------
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SCHEDULE 3.9.1
-------------------------------------------------------------------------------------------- -------------------------------------
TYPE INSURER IABILITY LIMIT POLICY PERIOD
-------------------------------------------------------------------------------------------- -------------------------------------
Package Commercial Union 19,491,552 05/01/98 - 05/01/99
-------------------------------------------------------------------------------------------- -------------------------------------
Comm'l. Gen'l. Liability Commercial Union 2,000,000 05/01/98 - 05/01/99
[incl. w/Package Policy]
-------------------------------------------------------------------------------------------- -------------------------------------
Communication Eqpt. Commercial Union 58,615,300 05/01/98 - 05/01/99
-------------------------------------------------------------------------------------------- -------------------------------------
Broadcasting Loss of Income Commercial Union 13,487,696 05/01/98 - 05/01/99
[incl. w/Comm. Eqpt. Policy]
-------------------------------------------------------------------------------------------- -------------------------------------
Automobile Commercial Union 1,000,000 05/01/98 - 05/01/99
-------------------------------------------------------------------------------------------- -------------------------------------
Energy Systems Federal Insurance Co. 25,000,000 05/01/98 - 05/01/99
-------------------------------------------------------------------------------------------- -------------------------------------
Libel/Slander Employers Reinsurance 15,000,000 10/09/97 - 10/09/98
-------------------------------------------------------------------------------------------- -------------------------------------
Umbrella Federal Insurance Co. 25,000,000 05/01/98 - 05/01/99
-------------------------------------------------------------------------------------------- -------------------------------------
Non-Owned Aircraft National Union Fire 20,000,000 10/24/97 - 10/24/98
-------------------------------------------------------------------------------------------- -------------------------------------
Crime Bond Federal Insurance Co. 1,000,000 05/01/98 - 05/01/99
-------------------------------------------------------------------------------------------- -------------------------------------
Fiduciary Responsibility Federal Insurance Co. 25,000,000 11/10/97 - 11/10/98
-------------------------------------------------------------------------------------------- -------------------------------------
Directors & Officers Federal Insurance Co. 5,000,000 02/06/98 - 02/06/99
Includes:
Outside Directors 5,000,000 02/06/98 - 02/06/99
Employment Practices 5,000,000 02/06/98 - 02/06/99
Liability
-------------------------------------------------------------------------------------------- -------------------------------------
Workers Compensation 100,000 12/31/97 - 12/31/98
Maine MEMIC
Illinois Iowa Commercial Union
Florida Commercial Union
Massachusetts Commercial Union
New York Commercial Union
-------------------------------------------------------------------------------------------- -------------------------------------
Travel/Accident Reliance Standard Life 10,000 10/01/97 - 10/01/98
-------------------------------------------------------------------------------------------- -------------------------------------
Foreign Policy CIGNA Ins. Co. 1,000,000 05/20/98 - 05/20/99
-------------------------------------------------------------------------------------------- -------------------------------------
Special (K&R) Aetna Life & Casualty 3,000,000 09/12/95 - 09/12/98
-------------------------------------------------------------------------------------------- -------------------------------------
Maine Turnpike Bond Travelers Casualty & Surety 5,000 09/16/97 - 09/16/98
-------------------------------------------------------------------------------------------- -------------------------------------
|
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT - BROADCASTING
SECTION 3.10.3 - BARTER PROGRAMMING
KGAN - TV
Written
Contract Term Consent
------------------- Req'd to
Distributor Package Start End Assign
----------- ------- ------ --- ------
Paramount Nick news (96-99 Seasons) Sep-96 Sep-99 YES
Wild Things Sep-97 Sep-98 YES
Hearst Entertainment Popular Mechanics for Kids Sep-97 Sep-98 NL
Popular Mechanics for Kids (Year 2) Sep-98 Sep-99 YES
Secrets of the Animal Sep-98 Sep-99 YES
Kingdom
Hallmark Entertainment Jan-98 Dec-99 YES
Presents
Universal Team Knight Rider Oct-97 Oct-98 YES
Columbia Tristar Party of Five Sep-98 Sep-00 NL
Eyemark PSI Factor Sep-97 Sep-99 YES
Litton Syndications Jack Hanna Animal Sep-97 Sep-98 NL
Adventures
Buena Vista Disney's Sing Me A Story With Belle Sep-97 Sep-98 YES
T.J.Sports Television Golf 2000 Jun-98 Sep-99 NL
Muller Media, Inc. Prime Targets IV Movies Sep-98 Feb-00 NL
ITC Distribution, Inc. Movie of the Month Network Feb-98 Feb-99 YES
VII
Telepictures Warner Bros. Vol. 34 (movie Aug-98 Nov-04 YES
Distribution package)
Turner Legends IV (movies) Oct-97 Dec-98 YES
Qualitron Media, Inc. AG Day Sep-97 Sep-98 YES
Warner Bros. People's Court Jan-98 Sep-99 YES
CNN Newsource Sales, CNN Headline News Sep-98 Aug-00 YES
Inc.
|
NL - No specific assignment language in Agreement. NLF - Have not received signed long-form contract.
GUY GANNETT COMMUNICATIONS
PURCHASE AGREEMENT - BROADCASTING
MATERIAL CONTRACTS
SECTION 3.10.3 - Program Licenses
WGME
Written
Contract Term Consent
----------------------------- Req'd to
Distributor Package Start End Assign ?
----------- -------------------------------------------- ------------ ----------------- ----------
Paramount Frasier Sep-97 Dec-00 Yes
Frasier - 97/98 extention - estimate Sep-01
Entertainment Tonight Sep-96 Sep-99 Yes
Entertainment TonightAddendum dated 02/16/96
Hard Copy Sep-96 Sep-99 Yes
Hard Copy - Amendment Letter dated 3/18/96
Maury Povich Sep-96 Sep-98 Yes
Maury Povich addendum dated 02/16/96
Star Trek: Deep Space Nine Jan-93 Sep-99 Yes
Star Trek: Deep Space Nine - Syndex Amendment Letter
Howie Mandel Jul-98 Sep-99 Yes
King World Oprah Sep-95 Sep-00 Yes
Inside Edition Sep-96 Sep-98 Yes
Inside Edition Addendum dated 10/24/97
Warner Bros. Friends Sep-98 Dec-01 Yes
Friends - 97/98 extention - estimate Sep-02
Columbia / Tristar The Nanny Sep-98 Dec-01 Yes
The Nanny - 97/98 extention - estimate Sep-02
MCA / Universal Maury Povich Sep-98 Sep-00 Yes
|
PURCHASE AGREEMENT
by and between
SINCLAIR COMMUNICATIONS, INC.
and
THE ACKERLEY GROUP, INC.
Dated as of September 25, 1998
TABLE OF CONTENTS
Page
----
Article 1. Sale of Assets; Assumption of Liabilities...........................................................1
1.1 Assets to Be Acquired...............................................................................1
1.2 Excluded Assets.....................................................................................3
1.3 Assumption of Liabilities...........................................................................3
1.4 Closing and Closing Date............................................................................4
1.5 Additional Closing Deliveries.......................................................................4
Article 2. Purchase Price......................................................................................5
2.1 Escrow Deposit......................................................................................5
2.2. Purchase Price; Payment.............................................................................5
2.3 Post-Closing Adjustment.............................................................................5
2.4 Security Escrow.....................................................................................8
2.6 Investment of Escrow Amounts........................................................................8
2.7 Allocation of the Purchase Price....................................................................9
Article 3. Representations and Warranties Relating to the Company..............................................9
3.1 Organization and Standing..........................................................................10
3.2 Binding Agreement..................................................................................10
3.3 Absence of Conflicting Agreements or Required Consents.............................................10
3.4 Equity Investments.................................................................................10
3.5 Financial Statements...............................................................................11
3.6 Title to Assets; Related Matters...................................................................11
3.7 Absence of Certain Changes, Events and Conditions..................................................11
3.8 Litigation.........................................................................................12
3.9 Insurance..........................................................................................12
3.10 Material Contracts.................................................................................13
3.11 Permits and Licenses; Compliance with Law..........................................................13
3.12 FCC Licenses.......................................................................................13
3.13 Environmental Matters..............................................................................14
3.14 Employee Benefit Matters...........................................................................14
3.15 Labor Relations....................................................................................15
3.16 Intellectual Property..............................................................................16
3.17 Taxes..............................................................................................16
3.18 Commissions........................................................................................17
3.19 Affiliate Transactions.............................................................................17
3.20 Accuracy and Completeness of Representations and Warranties........................................17
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Article 4. Representations and Warranties of Purchaser........................................................17
4.1 Organization and Standing..........................................................................17
4.2 Binding Agreement..................................................................................17
4.3 Absence of Conflicting Agreements or Required Consents.............................................18
4.4 Litigation.........................................................................................18
4.5 Commissions........................................................................................18
4.6 Financing..........................................................................................18
4.7 Purchaser's Qualification..........................................................................19
4.8 Accuracy and Completeness of Representations and Warranties........................................19
Article 5. Covenants and Agreements...........................................................................19
5.1 Conduct of the Business Prior to Closing; Access...................................................19
5.2 Post-Closing Covenants and Agreement, and Other Employee Benefit Matters...........................22
5.3 Cooperation........................................................................................24
5.4 Confidentiality....................................................................................26
5.5 Public Announcements...............................................................................26
5.6 No Solicitation....................................................................................26
5.7 No Additional Representations......................................................................26
5.8. Certain Payments...................................................................................27
5.9 Bulk Sales Laws....................................................................................27
5.10 Control of the Stations............................................................................27
5.11 Use of Certain Names...............................................................................28
Article 6. Conditions to Obligations of Purchaser.............................................................28
6.1 Representations and Warranties.....................................................................28
6.2 Performance by the Company.........................................................................28
6.3 Certificate........................................................................................28
6.4 Consents; No Objections............................................................................28
6.5 No Proceedings or Litigation.......................................................................29
6.6 [Intentionally omitted]............................................................................29
6.7 FCC Consent........................................................................................29
6.8 No Material Adverse Change.........................................................................29
6.9 Opinions of Counsel................................................................................29
6.10 Good Standing Certificate..........................................................................29
6.11 No Transmission Defects............................................................................29
6.12 Closing on the Gannett Purchase Agreement..........................................................29
Article 7. Conditions to Obligations of the Company...........................................................29
7.1 Representations and Warranties.....................................................................30
7.2 Performance by Purchaser...........................................................................30
7.3 Certificate........................................................................................30
7.4 Consents; No Objections............................................................................30
7.5 No Proceedings or Litigation.......................................................................30
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7.6 FCC Consent........................................................................................30
7.7 Opinion of Counsel.................................................................................30
7.8 Good Standing Certificate..........................................................................30
7.9. Closing on Gannett Purchase Agreement..............................................................31
Article 8. Indemnification....................................................................................31
8.1 Indemnification by the Company.....................................................................31
8.2 Indemnification by Purchaser.......................................................................31
8.3 Limitations on Indemnification Claims and Liability; Termination of Indemnification................31
8.4 Computation of Claims and Damages..................................................................32
8.5 Notice of Claims...................................................................................33
8.6 Defense of Third Party Claims......................................................................33
8.7 Third Party Beneficiaries..........................................................................34
Article 9. Definitions........................................................................................34
Article 10. Miscellaneous Provisions..........................................................................46
10.1 Termination Rights................................................................................46
10.2 Litigation Costs..................................................................................47
10.3 Expenses..........................................................................................47
10.4 Notices...........................................................................................48
10.5 Benefit and Assignment............................................................................49
10.6 Waiver............................................................................................49
10.7 Severability......................................................................................49
10.8 Amendment.........................................................................................49
10.9 Effect and Construction of this Agreement.........................................................49
10.10 Transfer and Conveyance Taxes.....................................................................50
10.11 Specific Performance..............................................................................50
10.12 Survival of Representations, Warranties and Covenants.............................................50
Article 11. No Personal Liability for Representatives, Stockholders, Directors or Officers.....................50
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Exhibits
Exhibit A Bill of Sale, Assignment and Assumption Agreement
Exhibit B Deposit Escrow Agreement
Exhibit C Adjustment Escrow Agreement
Exhibit D Security Escrow Agreement
Exhibit E-1 Opinion of Thomas & Libowitz, P.A.
Exhibit E-2 Opinion of Fisher, Wayland, Cooper, Leader & Zaragoza L.L.P.
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Schedules
Section 1.1(d) Real Property
Section 1.2. Excluded Assets
Section 3.3. Absence of Conflicting Agreements or Required Consents
Section 3.3.1. Consents Required
Consents Required - Employment Agreement Consents Required - Barter Programming
Section 3.5. Financial Statements
Section 3.6. Title to Assets; Related Matters
Section 3.7. Absence of Certain Changes, Events and Conditions
Section 3.8. Litigation
Section 3.9. Insurance
Section 3.9.1. Insurance Policies
Section 3.10. Material Contracts
Section 3.10.1. Material Contracts - Broadcasting
Section 3.10.2. Affiliation Agreement
Section 3.10.3. Program Licenses
Section 3.10.4. Employment Agreements
Section 3.10.6. Collective Bargaining Agreement
Section 3.10.7.A. Real Property Leases
Section 3.10.7.B. Equipment Leases and Intellectual Property
Section 3.10.8. Income Leases
Section 3.10.10. Loan Agreement
Section 3.11 Permits
Section 3.12 FCC
Section 3.13 Environmental Matters
Section 3.14 Employee Benefits
Section 3.14.1 Non-Corporate Employees (other than division heads)
Section 3.14.2 Severance and Retention Agreements - Division Heads
Section 3.14.3 Employee Benefit Plans/Contracts
Section 3.15 Labor Relations
Section 3.16 Intellectual Property
Section 3.16.1 Call Letters
Section 3.17 Taxes
Section 3.19 Affiliate Transactions
Section 4.3 Absence of Conflicting Agreements or Required Consents
Section 4.4 Litigation
Section 5.1 Covenants and Agreements
Section 5.2 Post-Closing Covenants and Agreements
Section 5.2.1 List of Names of Current Corporate Office Employees
Section 5.2.2 Fiduciary Liability Coverage Summary
Section 6.4 Material Consents Required as a Condition of the Purchaser's Obligation to Close
Section 7.4 Material Consents Required as a Condition of Seller's
Obligation to Close
Section 9 Closing Statement Differences and Inconsistencies
with GAAP
PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of this ___ day of September, 1998, by and among SINCLAIR COMMUNICATIONS, INC., a Maryland corporation (the "Company"), THE ACKERLEY GROUP, INC., a Delaware corporation ("Purchaser").
WHEREAS, the Company and Guy Gannett Communications ("Gannett") entered into that certain Asset Purchase Agreement dated September 4, 1998 (the "Gannett Purchase Agreement"), pursuant to which the Company agreed to purchase substantially all of the assets of the Gannett Television Stations, one of which is WOKR-TV, Channel 13, Rochester, New York (the "Station"); and
WHEREAS, the Company desires to sell, assign and transfer to Purchaser the assets and business of the Station as described below, and Purchaser desires to purchase and acquire the assets and business of the Business as described below, on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows:
[A list of defined terms is provided in Article 9 hereof]
Article 1. Sale of Assets; Assumption of Liabilities.
1.1 Assets to Be Acquired. Upon the terms and subject to the satisfaction of the conditions set forth herein, at the Closing, the Company shall sell, convey, assign, transfer and deliver to Purchaser, and Purchaser shall purchase, acquire, accept and pay for, all of the Company's right, title and interest in and to all of the real, personal and mixed properties, assets and other rights, both tangible and intangible (other than the Excluded Assets), owned or leased by, or licensed to or used or useful by, the Company on the Closing Date in connection with the Business (collectively, the "Assets") consisting of all of the Assets relating to the Station acquired by the Company pursuant to the Gannett Purchase Agreement.
Without limiting the generality of the foregoing, the Assets shall include the following:
(a) the FCC Licenses;
(b) the Equipment;
(c) all translators, earth stations and other auxiliary facilities, and all applications therefor, acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement and useful in connection with the Business;
(d) the Real Property and Leased Property as set forth in Section 1.1(d) of the Disclosure Schedule;
(e) all orders and agreements for the sale of advertising time on the Station for cash, and all trade, barter and similar agreements, excluding Program Contracts (which are provided for below), for the sale of advertising time on the Station for any property or services in lieu of or in addition to cash, and any other orders and agreements relating to the Station and entered into (other than in violation of this Agreement) between the date of the Gannett Purchase Agreement and the Closing Date;
(f) all film and program licenses and contracts under which the Company or Gannett has the right to broadcast film product or programs on the Station ("Program Contracts"), including all cash and non-cash (barter) program contracts and including, without limitation, the Program Contracts set forth in Section 3.10 of the Disclosure Schedule and any other Program Contracts relating to the Station and entered into (other than in violation of this Agreement) between the date of the Gannett Purchase Agreement and the Closing Date;
(g) all other contracts and agreements related to the Business, including, without limitation, network affiliation agreements, all employment contracts entered into with television talent and other Business Employees, all collective bargaining agreements with respect to any Business Employees, any time brokerage agreements and all national or local advertising representation agreements for the Station, without limitation, the contracts and agreements set forth in Section 3.10 of the Disclosure Schedule, and any other such contracts and agreements relating to the Station and entered into (other than in violation of this Agreement) between the date of the Gannett Purchase Agreement and the Closing Date;
(h) the Intellectual Property, including, without limitation, the Call Letters;
(i) all programs and programming materials acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement and used in connection with the Business, whether recorded on tape or any other media or intended for live performance, and whether completed or in production, and all related common law and statutory copyrights owned by or licensed to the Company or acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement and used in connection with the Business;
(j) all FCC logs and other records that relate to the operation of the Station as acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement;
(k) except as set forth in Section 1.2(a) hereof, all files, books and other records acquired by the Company pursuant to the Gannett Purchase Agreement relating to the Business, including, without limitation, written technical information, data, specifications, research and development information, engineering, drawings, manuals, computer programs, tapes and software relating directly to the Business, other than duplicate copies of account books of original entry and duplicate copies of such files and records, if any, that are maintained at the corporate offices of the Company or Gannett for tax and
accounting purposes;
(l) all of the Company's goodwill in, and "going concern" value of, the Business;
(m) all accounts, notes and accounts receivable of the Business relating to or arising out of the business and operations of the Station immediately preceding the Closing;
(n) all deposits, reserves and prepaid expenses of the Business (other than those relating to Excluded Assets or Liabilities that are not Assumed Liabilities);
(o) to the extent transferable under applicable law, all franchises, approvals, permits, licenses, orders, registrations, certificates, exemptions, variances and similar rights obtained from Governmental Authorities (other than the FCC License) in any jurisdiction that had issued or granted such items to the Company or the Company has acquired from Gannett pursuant to the Gannett Purchase Agreement, or that the Company otherwise owns or uses or the Company has acquired from Gannett pursuant to the Gannett Purchase Agreement, in each case relating to the Business, and all pending applications therefor;
(p) except as set forth in Section 1.2(h) hereof, all insurance proceeds claims arising out of or related to damage, destruction or loss of any property or asset used or useful in connection with the Business to the extent of any damage or destruction that remains unrepaired, or to the extent any property or asset remains unreplaced, at the Closing Date; and
(q) to the extent assignable, the Company's rights to enforce any non-competition provisions relating to the Business, the Business Employees or the Station contained in any other written agreement with a Corporate Office Employee, but only to the extent the Company acquires such rights from Gannett pursuant to the Gannett Purchase Agreement.
1.2 Excluded Assets. Notwithstanding anything to the contrary herein, all of the assets listed on Schedule 1.2 or defined in the Gannett Purchase Agreement as Excluded Assets (collectively, the "Excluded Assets") shall be excluded from the Assets.
1.3 Assumption of Liabilities. On and after the Closing Date, Purchaser
will assume and agree to perform and fully discharge when due all Liabilities of
the Company or Gannett (i) solely related to or solely arising from or in
connection with the Assets or the Business and (ii) in the case of any
Liabilities related to or arising partly from or in connection with the Assets
or the Business and partly from any other assets or business of the Company, to
the extent such Liabilities relate to or arise from or in connection with the
Assets or the Business (in each case including, without limitation, any Claims
and Damages arising from the assignment to Purchaser of any contract or other
agreement pursuant to the terms of this Agreement), whether such Liabilities
specified in clause (i) or (ii) are incurred or arise prior to, on, or after the
Closing Date, including, without limitation, those obligations of the Company
relating to the Business to be assumed by Purchaser pursuant to Section 5.2
hereof (collectively, the "Assumed Liabilities"). Except as set forth in this
Section 1.3 and except as otherwise expressly provided
in this Agreement, Purchaser will assume no other Liabilities of any kind of description of the Company or any of the liabilities defined in the Gannett Purchase Agreement as Retained Liabilities.
1.4 Closing and Closing Date. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been terminated pursuant to Section 10.1 hereof, the closing (the "Closing") of the transactions herein contemplated shall take place at 10:00 a.m., New York City time, on a date not later than ten days following the satisfaction or waiver of the conditions set forth in Articles 6 and 7 hereof, or at such other time and date as the Company and Purchaser shall agree; provided, however, that the Company and Purchaser shall take such reasonable actions as may be necessary to hold the Closing simultaneously with the Closing of the Gannett Purchase Agreement (such time and date being referred to herein as the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such other place as the Company and Purchaser shall agree. At the Closing, each of the parties hereto shall take, or cause to be taken, all such actions and deliver, or cause to be delivered, all such documents, instruments, certificates and other items as may be required under this Agreement or otherwise, in order to perform or fulfill all covenants and agreements on its part to be performed at or prior to the Closing. The Closing shall be effective as of 12:01 a.m., New York City time, on the day of the Closing Date.
1.5 Additional Closing Deliveries. At the Closing:
(a) The Company shall deliver to Purchaser:
(i) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement substantially in the form set forth in Exhibit A hereto (the "Bill of Sale, Assignment and Assumption Agreement");
(ii) instruments of assignment with respect to all of the Company's rights and interests in real property leases and special warranty deeds (of a type equivalent to that known in New York as a "bargain and sale deed with covenants against grantor's actions") in recordable form sufficient to convey to Purchaser all of the Company's rights and interests or rights and interest in the Real Property acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement;
(iii) a duly executed counterpart of the Adjustment Escrow Agreement and the Security Escrow Agreement;
(iv) all other instruments of conveyance and transfer sufficient to convey the Assets to Purchaser; and
(v) all other documents, instruments and writings consistent with the terms of this Agreement and required to be delivered by the Company at or prior to the Closing Date pursuant to this Agreement.
(b) Purchaser shall deliver to Company:
(i) the Purchase Price in accordance with Section 2.1 hereof;
(ii) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement; and
(iii) all other documents, instruments and writings required to be delivered by Purchaser at or prior to the Closing Date pursuant to this Agreement.
Article 2. Purchase Price.
2.1 Escrow Deposit. For and in partial consideration of the execution and delivery of this Agreement and simultaneously with the execution hereof, Buyers shall deposit with an escrow agent ("Escrow Agent") by wire transfer in immediately available funds TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($12,500,000.00) (the "Escrow Deposit"), such Escrow Deposit to be dealt with in accordance with the terms and provisions of the Deposit Escrow Agreement attached hereto as Exhibit B.
2.2. Purchase Price; Payment. (a) In consideration of the sale of the
Assets and the Business hereunder, Purchaser shall (i) pay the Company in cash
the aggregate amount of (x) $125,000,000, plus (if greater than or equal to
zero) or minus (if less than zero), as the case may be, (y) the amount of the
Net Financial Assets as of 11:59 p.m., New York City time, on the day
immediately preceding the Closing Date, subject to adjustment pursuant to
Section 2.3 hereof (the "Purchase Price") and (ii) assume the Assumed
Liabilities.
(b) On or before three Business Days prior to the Closing, the Company shall deliver to Purchaser (i) a statement setting forth the amount estimated in good faith by the Company to be the amount of the Net Financial Assets as of the Closing Date (the "Estimated Net Financial Assets") and (ii) a notice designating the accounts or accounts to which the payment to or on behalf of the Company pursuant to clause (i) of Section 2.2(c) is to be made.
(c) At the Closing, Purchaser shall deliver
(i) the sum of (x) $120,564,800 plus (if the Estimated Net Financial
Assets is greater than or equal to zero) or minus (if the Estimated Net
Financial Assets is less than zero), as the case may be, (y) the Estimated
Net Financial Assets, by wire transfer in immediately available funds to
the account or accounts designated by the Company in accordance with
Section 2.2(b);
(ii) $1,209,600 (the "Adjustment Escrow") by wire transfer in immediately available funds to the Adjustment Escrow Agent pursuant to the Adjustment Escrow Agreement; and
(iii) $3,225,600 by wire transfer in immediately available funds to the Security Escrow Agent pursuant to the Security Escrow Agreement.
2.3 Post-Closing Adjustment.
(a) The parties agree that no later than 75 days after the Closing (or such later date on which such statement reasonably can be prepared and delivered in light of the compliance of Purchaser and the Company with their obligations set forth in next two succeeding sentences), the Company shall deliver to Purchaser, in the form received by the Company from Gannett (i) a statement of the actual Net Financial Assets as of 11:59 p.m., New York City time, of the day immediately preceding the Closing Date (the "Closing Statement") certified by PriceWaterhouseCoopers L.L.P., independent accountants for Gannett, to be prepared (except as otherwise provided in Section 9 of the Disclosure Schedule to the Gannett Purchase Agreement) in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 27, 1997 referred to in Section 3.5 of the Gannett Purchase Agreement and (ii) a determination (the "Proposed Adjustment") of the amount by which the actual Net Financial Assets is less than or greater than the Estimated Net Financial Assets (the amount of such excess or shortfall is referred to herein as the "Adjustment"). Purchaser shall provide the Company and Gannett, and Gannett's independent accountants, access at all reasonable times to the relevant personnel, properties, books and records of the Business for such purposes and to assist the Company and Gannett, and Gannett's independent accountants, in preparing the Closing Statement. Purchaser's assistance shall include, without limitation, the closing of the Business's books as of the Closing, the preparation of schedules supporting the amounts set forth in the general ledger and other books and records of the Business, and such other assistance as the Company, Gannett or Gannett's independent accountants may reasonably request. During the 25-day period following the delivery by the Company of the Closing Statement and the Proposed Adjustment referred to in the first sentence of this Section 2.3(a), Purchaser and its independent accountants will be permitted to review the working papers of Gannett and its independent accountants relating to the preparation of the Closing Statement and the Proposed Adjustment to the same extent as such working papers have been made available to the Company by Gannett pursuant to the Gannett Purchase Agreement. If, within 25 days after delivery by the Company of the Closing Statement and the Proposed Adjustment, Purchaser notifies the Company that it disagrees with the Closing Statement and the Proposed Adjustment, the Company shall attempt to resolve the disagreement with Gannett. In the event the Company, Gannett and Purchaser cannot agree with respect to the Closing Statement and the Proposed Adjustment within five days of the notice of disagreement provided by Purchaser to the Company (a "WOKR Dispute"), then the Company shall seek an Accounting Firm Determination as defined in the Gannett Purchase Agreement. In the event that (whether expressly or by failure of Purchaser to provide notice of any disagreement within the applicable period) the Purchaser agrees to the amount of the Adjustment without submitting the matter for an Accounting Firm Determination (an "Adjustment Agreement"), the parties shall deliver a joint certificate to the Adjustment Escrow Agent setting forth the amount of the Adjustment Escrow to be paid to each of the Purchaser and the Company pursuant to this Section 2.3. In the event of an Accounting Firm Determination of a WOKR Dispute, the parties shall deliver a certificate to the Adjustment Escrow Agent setting forth the amount (if any) by which the Actual Net Financial Assets (as defined below) exceeds or is less than the Estimated Net Financial Assets. The amount of Net Financial Assets as of 11:59 p.m., New York City time, on the day immediately preceding the Closing Date, as definitively determined pursuant to this Section 2.3(a) is referred to herein as the "Actual Net Financial Assets."
(b) At the Closing, the Company, Purchaser and such financial institution as shall have been agreed by the parties prior to the Closing Date (together with any successor jointly appointed by the Company and the Purchaser, the "Adjustment Escrow Agent")
shall execute and deliver an escrow agreement substantially in the form set forth in Exhibit C to the Gannett Purchase Agreement, with such adjustments and revisions necessary to reflect the provisions of this Agreement (the "Adjustment Escrow Agreement'). From and after the Closing, the Adjustment Escrow Agent shall act as escrow agent, pursuant to the Adjustment Escrow Agreement, in effecting the payment of the amounts held in the Adjustment Escrow as set forth herein.
(c) As soon as practicable after the earlier of an Adjustment Agreement or an Accounting Firm Determination (but in any event within two Business Days after the Adjustment Agreement or the Accounting Firm Determination):
(i) if the Actual Net Financial Assets is equal to or greater than the Estimated Net Financial Assets, then:
(A) the Adjustment Escrow Agent shall pay to the Company from the Adjustment Escrow the full amount of the Adjustment Escrow, and
(B) Purchaser shall pay to the Company the amount by which the Actual Net Financial Assets exceeds the Estimated Net Financial
Assets;
(ii) if the Actual Net Financial Assets is less than the Estimated Net Financial Assets but the amount of such shortfall does not exceed $3 million, when aggregated with any such shortfall under the Gannett Purchase Agreement, then
(A) the Adjustment Escrow Agent shall pay to Purchaser from the Adjustment Escrow an amount equal to the amount by which the Estimated Net Financial Assets exceeded the Actual Net Financial Assets, and
(B) the Adjustment Escrow Agent shall pay to the Company from the Adjustment Escrow the remaining amount of the Adjustment Escrow (after giving effect to clause (A) above); and
(iii) if the Actual Net Financial Assets is less than the Estimated Net Financial Assets and the amount of such shortfall exceeds $3 million, when aggregated with any such shortfall under the Gannett Purchase Agreement, then
(A) the Adjustment Escrow Agent shall pay to Purchaser from the Adjustment Escrow the full amount of the Adjustment Escrow, and
(B) the Security Escrow Agent shall pay to the Purchaser from the Security Escrow an amount equal to the amount by which (x) the Estimated Net Financial Assets exceeds (y) the Actual Net Financial
Assets plus $1,209,600.
Each of Purchaser and the Company shall timely give all necessary instructions to the Adjustment Escrow Agent and the Security Agent so that the Adjustment Escrow and (if applicable) the Security Escrow are paid and distributed in accordance with this
Section 2.3(c). All payments pursuant to this Section 2.3(c) shall be by wire transfer in immediately available funds to the account or accounts designated by the Company and/or Purchaser, as the case may be, no later than two Business Days prior to such payment.
(d) Any interest or other investment income earned for the period from the time that any portion of the Purchaser Price is delivered to the Adjustment Escrow Agent pursuant to this Agreement until all amounts held in the Adjustment Escrow have been distributed in accordance with the Adjustment Escrow Agreement while held by the Adjustment Escrow Agent shall be paid to the Company in addition to, and at the same time as, payment of the Adjustment Escrow in accordance with the terms of this Agreement; provided, however, that, to the extent that any portion of the Adjustment Escrow is paid to Purchaser pursuant to Section 2.3(c) hereof, a pro rata portion of such interest or other investment income (determined on the basis of the relative portions of the Adjustment Escrow to be paid to Purchaser and the Company, respectively, pursuant to Section 2.3(c) hereof) shall be instead paid to Purchaser. Any such interest or other investment income shall be deemed not to constitute Adjustment Escrow.
(e) The Company and Purchaser shall each be responsible for one-half of the fees and expenses of the Adjustment Escrow Agent.
2.4 Security Escrow.
(a) At the Closing, the Company, Purchaser and such financial institution as shall have been agreed by the parties prior to the Closing Date (together with any successor jointly appointed by the Company and Purchaser, the "Security Escrow Agent") shall execute and deliver an escrow agreement substantially in the form set forth in Exhibit D to the Gannett Purchase Agreement, with such adjustments and revisions necessary to reflect the provision of this Agreement (the "Security Escrow Agreement"). From and after the Closing, the Security Escrow Agent shall act as escrow agent, pursuant to the Security Escrow Agreement, in effecting the payment of the amounts held in the escrow account (the "Security Escrow") under the Security Escrow Agreement.
(b) Any interest or other investment income earned for the period from the
time that any portion of the Purchase Price is delivered to the Security Escrow
Agent pursuant to this Agreement until all amounts held in the Security Escrow
have been distributed in accordance with the Security Escrow Agreement while
held by the Security Escrow Agent shall be paid (beginning after the payment of
any amount required to be paid out of the Security Escrow pursuant to Section
2.3(c)(iii)(B) hereof) monthly to the Company; provided, however, that the
extent that any portion of the Security Escrow is paid to Purchaser pursuant to
Section 2.3(c)(iii)(B) hereof, a pro rata portion of such interest or other
investment income earned through the date of such payment (determined on the
basis of the relative portions of the Security Escrow so paid and that not so
paid) shall be instead paid to Purchaser. Any interest or other investment
income earned on amounts held in the Security Escrow shall be deemed not to
constitute Security Escrow.
(c) The Company and Purchaser shall each be responsible for one-half of the fees and expenses of the Security Escrow Agent.
2.5 Investment of Escrow Amounts. The Adjustment Escrow Agent and the
Security Escrow Agent shall each be authorized to invest the portion of the Purchase Price held by it, on receipt of instructions from the Company, in:
(i) Commercial paper of any corporation rated at least A-1 by S&P and P-1 by Moody's;
(ii) Negotiable certificates of deposit of United States banks having
(A) a long-term senior debt rating of at least A by S&P and Moody's, (B)
deposits in excess of $2,000,000,000 and (C) commercial paper rating
designations of at least A-1 by S&P and P-1 by Moody's;
(iii) Repurchase agreements with any United States bank which are fully collateralized by direct obligations of the United States or obligations of agencies or sponsored agencies of the United States government, excluding in all cases collateralized mortgage obligations of any kind; and
(iv) Money market instruments rated at least A-1 by S&P and P-1 by Moody's that are restricted to investments described in clause (iii);
provided that in no event shall any investment of the types described in clause
(i), (ii) or (iv) exceed ten percent of the net assets of the issuer thereof and
provided further that all investments shall have maturity dates on or before the
anticipated dates of the relevant payments hereunder.
The Adjustment Escrow Agent and the Security Escrow Agent shall each be authorized to register securities held by it in its name or in the name of a nominee or in bearer form and may deposit any securities or other property in a depository or a clearing corporation.
2.7 Allocation of the Purchase Price. Pursuant to the Gannett Purchase Agreement, the Company shall engage a nationally recognized appraiser to determine the proper allocation of the Purchase Price allocated to, and the Assumed Liabilities relating to the Assets of the Station, in each case in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the "Allocation"). The Allocation shall be binding upon Purchaser and the Company, and none of the parties hereto shall file, or cause to be filed, any Tax Return, Internal Revenue Service Form 8594 or other form, or take a position with any Tax authority or jurisdiction, that is inconsistent with the Allocation without obtaining the prior written consent of the Company or Purchaser, as the case may be. The fees and disbursements of appraiser engaged in connection with the Allocation as to the Assets of the Station shall be paid by Purchaser.
Article 3. Representations and Warranties Relating to the Company.
The Company represents and warrants to Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Maryland. The Company and, to the Company's Knowledge, Gannett has all requisite corporate power and authority to own, lease and operate their respective properties and assets and to conduct its business as it is now being conducted. The Company is and, to the Company's Knowledge, Gannett is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state in which the operation of its business or ownership of its assets makes such qualification necessary, except where the failure to so qualify or be in good standing would not reasonably be expected to have a Material Adverse Effect.
3.2 Binding Agreement. The Company has all requisite corporate power and authority to enter into this Agreement, to execute and deliver this Agreement, the Bill of Sale, Assignment and Assumption Agreement, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the Bill of Sale, Assignment and Assumption Agreement by the Company and the consummation by the Company of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate and stockholder action on the part of the Company. This Agreement has been, and on the Closing Date the Bill of Sale, Assignment and Assumption Agreement will be, duly executed and delivered on behalf of the Company and, assuming the due authorization, execution and delivery by Purchaser, constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity).
3.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Section 3.3 of the Disclosure Schedule, the execution, delivery and performance by the Company of this Agreement, the Bill of Sale, Assignment and Assumption Agreement do not and will not (a) violate, conflict with or result in the breach or default of any provision of the articles of incorporation or by-laws of the Company, (b) conflict with or violate in any material respect any material Law or material Governmental Order applicable to the Company or any of its properties or assets, (c) except for (i) the notification requirements of the HSR Act and (ii) such filings with, and orders of, the FCC as may be required under the Communications Act and the FCC's rules and regulations in connection with this Agreement and the transactions contemplated hereby, require any material consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority, or (d) conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Assets, or result in the imposition or acceleration of any payment, time of payment, vesting or increase in the amount of compensation or benefit payable, pursuant to any Material Contract.
3.4 Equity Investments. The Assets do not include any capital stock of any corporation or any equity interest in any Person.
3.5 Financial Statements. The Company has furnished to Purchaser statements of operations for the Station for the year ended December 31, 1997, the six (6) months ended June 30, 1998, the seven (7) months ended July 1, 1998, and August 31, 1998, which were supplied to the Company by Gannett.
3.6 Title to Assets; Related Matters. To the Company's Knowledge, except for Permitted Exceptions or as disclosed in Section 3.6 of the Disclosure Schedule (i) Gannett has good, valid and marketable title (as measured in the context of their current uses) to, or, in the case of leased or subleased assets, valid and subsisting leasehold interests (as measured in the context of their current uses) in, or otherwise has the right to use, all of the Assets, free and clear of all Encumbrances (except for any assets sold or otherwise disposed of, or with respect to which the lease, sublease or other right to use such Asset has expired or has been terminated, in each case after the date hereof solely to the extent permitted under Section 5.1(a) hereof), (ii) each lease or sublease pursuant to which any Leased Property is leased by Gannett is, to the Company's Knowledge, legal, valid and binding on Gannett and the Company (as the case may be) and, to the Company's Knowledge, the other parties thereto and grants the leasehold interest it purports to grant, including, without limitation, any rights to nondisturbance and peaceful and quiet enjoyment that may be contained therein and, to the Company's Knowledge, Gannett and each other party thereto is in compliance in all material respects with the provisions of such leases and subleases, (iii) to the Company's Knowledge, the Assets, together with the Excluded Assets, constitute all the assets and rights of Gannett and its Affiliates used in or necessary for the operation of the Business as currently conducted, (iv) to the Company's Knowledge, except for Equipment scheduled to be replaced by Gannett's capital expenditure budget, the Real Property, Leased Property and Equipment is, in all material respects, in good operating condition and repair (ordinary wear and tear excepted) taking into account the age thereof, (v) to the Company's Knowledge, there are no contractual or legal restrictions to which Gannett or the Company is a party or by which the Real Property is otherwise bound that preclude or restrict in any material respect Gannett's ability to use the Real Property for the purposes for which it is currently being used and (vi) no portion of the Real Property or Leased Property is the subject of, or affected by, any condemnation, eminent domain or inverse condemnation proceeding currently instituted or, to the Company's Knowledge, threatened. On the Closing Date, the Company shall sell, convey, assign, transfer and deliver to Purchaser all of the Company's right, title and interest in and to all of the Assets, free and clear of all Encumbrances other than Permitted Exceptions, Encumbrances disclosed in Section 3.6 of the Disclosure Schedule and Encumbrances arising from Purchaser's acts. Schedule 1.1(d) contains a true and correct list of all Real Property owned by Gannett used in the Business (other than the Excluded Assets), which is to be acquired by the Company pursuant to the Gannett Purchase Agreement.
3.7 Absence of Certain Changes, Events and Conditions. To the Company's Knowledge, since June 30, 1998, except as otherwise provided in or contemplated by this Agreement or as disclosed in Section 3.7 of the Disclosure Schedule:
(a) other than in the ordinary course of business consistent with past practice neither the Company nor Gannett has sold, transferred, leased, subleased, licensed or otherwise disposed of any material assets used in the Business, other than the sale of obsolete Equipment;
(b) (i) neither the Company nor Gannett have granted any increase, or announced
any increase, in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable to any of the Business Employees, including, without limitation, any increase or change pursuant to any Employee Benefit Plan, or (ii) established, increased or accelerated the payment or vesting of any benefits under any Employee Benefit Plan with respect to Business Employees, in either case except (A) as required by Law, (B) that involve only increases consistent with the past practices of Gannett or (C) as required under any existing agreement or arrangement;
(c) neither the Company nor Gannett have made any material change in any method of accounting or accounting practice or policy used by Gannett or the Company with respect to the Station, other than changes required by law or under GAAP;
(d) neither the Company nor Gannett have suffered any extraordinary casualty loss or damage with respect to any material assets used in the Business, whether or not covered by insurance;
(e) there has not been any Material Adverse Effect;
(f) except in connection with the transactions contemplated hereby, the Business has been conducted in all material respects only in the ordinary and usual course consistent with past practice;
(g) neither the Company nor Gannett have created, incurred, assumed or guaranteed any Indebtedness, except for net borrowings under existing lines of credit;
(h) other than in the ordinary course of business, neither the Company nor Gannett have compromised, settled, granted any waiver or release relating to, or otherwise adjusted any Action, material Liabilities or any other material claims or material rights of the Business; and
(i) neither the Company nor Gannett have entered into any agreement, contract, commitment or arrangement to do any of the foregoing.
3.8 Litigation. Except as disclosed in Section 3.8 of the Disclosure Schedule, as of the date hereof, (i) there are no Actions against the Company or, to the Company's Knowledge, Gannett relating to the Business or the Assets pending, or, to the Company's Knowledge, threatened to be brought by or before any Governmental Authority, (ii) neither the Company nor, to the Company's Knowledge, Gannett is subject to any Governmental Orders (nor, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) relating to the Business or the Assets and (iii) there is no Action pending or, to the Company's Knowledge, threatened to be brought before any Governmental Authority, that seeks to question, delay or prevent the consummation of the transactions contemplated hereby.
3.9 Insurance. Section 3.9 of the Disclosure Schedule lists all insurance policies as of the date hereof relating to the Assets or the Business (the "Insurance Policies"). Except as set forth in either Section 3.9 or Section 3.14 of the Disclosure Schedule, (i) to the Company's Knowledge, all insurance policies relating to the Assets or Business to which the Company or Gannett is a party or under which the Assets or the Business is covered (or replacement policies
therefor) are in full force and effect and, to the Company's Knowledge, all premiums due have been paid and are not in default, (ii) to the Company's Knowledge, no notice of cancellation or non-renewal with respect to, or disallowance of any claim under, any such policy has been received by either the Company or Gannett and (iii) to the Company's Knowledge, neither the Company nor Gannett have been refused insurance with respect to the Business or Assets, nor, to the Company's Knowledge, has coverage with respect to the Business or Assets been previously canceled or limited by an insurer to which Gannett or the Company has applied for such insurance or with which the Company or, to the Company's Knowledge, Gannett has held insurance within the last three years.
3.10 Material Contracts. Section 3.10 of the Disclosure Schedule sets forth all Material Contracts relating to the Station, including, without limitation, all amendments thereof, as of the date hereof. To the extent received by the Company from Gannett, complete and accurate copies of all written Material Contracts listed in Section 3.10 of the Disclosure Schedule and accurate summaries of the material terms of all oral Material Contracts have been delivered or made available to Purchaser (except as otherwise noted therein). Except as set forth in Section 3.10 of the Disclosure Schedule, to the Company's Knowledge, (1) each Material Contract and each other contract or agreement that is material to the Business is legal, valid and binding on Gannett and, to the Company's Knowledge, the other parties thereto, (2) to the Company's Knowledge, neither the Company nor Gannett is in default under any Material Contract or other contract or agreement that is material to the Business and no event has occurred or failed to occur that, with or without the giving of notice or the lapse of time or both, would result in such a default and (3) to the Company's Knowledge, no other party to any Material Contract or other contract or agreement that is material to the Business has breached or is in default thereunder.
3.11 Permits and Licenses; Compliance with Law. Except as disclosed in
Section 3.11 of the Disclosure Schedule, (i) to the Company's Knowledge, Gannett
currently holds all the material permits, licenses, authorizations,
certificates, exemptions and approvals of Governmental Authorities or other
Persons including, without limitation, Environmental Permits, necessary for the
current operation and the conduct (as it is being conducted prior to the
Closing) of the Business, other than the FCC Licenses (which are provided for in
Section 3.12 hereof) (collectively, "Permits"), and all material Permits are in
full force and effect, (ii) to the Company's Knowledge, since November 1, 1996,
Gannett has not received any written notice from any Governmental Authority
revoking, canceling, rescinding, modifying or refusing to renew any material
Permit and, (iii) to the Company's Knowledge, Gannett is in material compliance
with the requirements of all material Permits.
Except as disclosed in Section 3.11 of the Disclosure Schedule, to the Company's Knowledge, (i) Gannett is in compliance in all material respects with all Laws and Governmental Orders, other than the FCC Licenses, the Communications Act and the rules and regulations of the FCC (which are provided for in Section 3.12 hereof), applicable to the conduct of the Business as it is being conducted prior to the Closing, and (ii) Gannett has not been charged, since November 1, 1996, by any Governmental Authority with a violation of any Law or any Governmental Order relating to the Station, which charge has not been fully resolved and, to the extent required, accounted for.
3.12 FCC Licenses. Except as disclosed in Section 3.12 of the Disclosure Schedule, (i) to the Company's Knowledge, Gannett holds, and immediately prior to the Closing
the Company will hold, the FCC Licenses listed in Section 3.12 of the Disclosure Schedule, which FCC Licenses expire on the respective dates set forth in Section 3.12 of the Disclosure Schedule; (ii) to the Company's Knowledge, Section 3.12 of the Disclosure Schedule sets forth a true and complete list of any and all pending applications filed with the FCC by Gannett, true and complete copies of which (to the extent received from Gannett by the Company) have been delivered to Purchaser or made available for inspection by Purchaser; (iii) to the Company's Knowledge, the FCC Licenses listed in Section 3.12 of the Disclosure Schedule constitute all of the licenses and authorizations required under the Communications Act and the current rules and regulations of the FCC in connection with the operation of the Station as currently operated; (iv) to the Company's Knowledge, the FCC Licenses are in full force and effect through the dates set forth in Section 3.12 of the Disclosure Schedule, and there is not pending or, to the Company's Knowledge, threatened any action by or before the FCC to revoke, suspend, cancel, rescind, modify, or refuse to renew in the ordinary course any of the FCC Licenses; (v) to the Company's Knowledge, the Station is operating in compliance with the FCC Licenses and in compliance in all material respects with the Communications Act and the current rules and regulations of the FCC and have been assigned digital television frequencies; and (vi) to the Company's Knowledge, there exist no facts, conditions or events relating to Gannett or the Company that would reasonably be expected to cause the revocation of FCC Licenses or denial by the FCC of the application for consent to the assignment of the FCC Licenses as provided in this Agreement or the Gannett Purchase Agreement. To the Company's Knowledge, Gannett has filed all reports, forms and statements, including, without limitation, construction permit applications for digital television channels required to be filed by Gannett with the FCC and maintained in its public files in accordance with the rules and regulations of the FCC.
3.13 Environmental Matters. Except as disclosed in Section 3.13 of the Disclosure Schedule, to the Company's Knowledge, (i) Hazardous Materials have not been Released on any Real Property except in material compliance with applicable Law; (ii) there have been no events related to the Business or the Real Property that would reasonably be expected to give rise to any material liability under any Environmental Law; (iii) the Business, the Real Property and the Leased Property is now, and for the past five years has been, in material compliance with all applicable Environmental Laws and there are no extant conditions that would reasonably be expected to constitute an impediment to such compliance in the future; (iv) the Business has disposed of all wastes arising from or otherwise relating to its business, including those wastes containing Hazardous Materials, in material compliance with all applicable Environmental Laws (including the filing of any required reports with respect thereto) and Environmental Permits and (v) there are no pending or, to the Company's Knowledge, threatened Environmental Claims against Gannett relating to the Real Property.
3.14 Employee Benefit Matters. The Company has made available to Purchaser copies of all material Employee Benefit Plans (including, without limitation, all plans governed by ERISA, providing pension benefits or providing health, life insurance or disability benefits) relating to the Station), which plans are set forth in Section 3.14 of the Disclosure Schedule. To the Company's Knowledge and except as set forth in Section 3.14 of the Disclosure Schedule, all such Employee Benefit Plans are in compliance with the terms of the applicable plan and the requirements prescribed by applicable law currently in effect with respect thereto (including Sections 4980B and 5000 of the Code) and, to the Company's Knowledge, Gannett has performed in all material respects all obligations required to be performed by it under, and is not in default under or in violation of, any of the terms of such Employee Benefit Plans where any
such noncompliance, nonperformance, default or violation would, individually or
in the aggregate, be reasonably expected to result in liability in excess of
$25,000. To the Company's Knowledge, Gannett has no post-retirement welfare
obligations with respect to the Business. To the Company's Knowledge, Gannett
has not incurred, and, to the Company's Knowledge, no event, transaction or
condition has occurred or exists which is reasonably expected to result in the
occurrence of any liability to the Pension Benefit Guaranty Corporation (other
than contributions to the plan and premiums to the Pension Benefit Guaranty
Corporation which, in either event, are not in default) or any "withdrawal
liability" within the meaning of Section 4201 of ERISA, or any other liability
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans, in
any such case relating to any Employee Benefit Plan or any pension plan
maintained by any company that during the last five years was or currently would
be treated as a single employer with the Company or Gannett, as the case may be,
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA affiliate"),
where individually or in the aggregate, in any of such events, any such
liability would be in excess of $25,000. To the Company's Knowledge, except as
set forth in Section 3.14 of the Disclosure Schedule and except for such matters
that would not, individually or in the aggregate, reasonably be expected to
result in liability in excess of $25,000, each Employee Benefit Plan relating to
the Station intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a favorable determination letter that such plan is so
qualified and the trusts maintained thereunder are exempt from taxation under
Section 501(a) of the Code and, to the Company's Knowledge, is so qualified, and
no such Employee Benefit Plan holds employer securities. To the Company's
Knowledge and except as set forth in Section 3.14 of the Disclosure Schedule,
neither Gannett nor any ERISA Affiliate has ever made or been obligated to make,
or reimbursed or been obligated to reimburse another employer for, contributions
to any multiemployer plan (as defined in ERISA Section 3(37)). To the Company's
Knowledge and except as set forth in Section 3.14 of the Disclosure Schedule,
the Employee Benefit Plans are not presently under audit or examination (and
have not received notice of a potential audit or examination) by any
governmental authority, and no matters are pending with respect to the Qualified
Plan under any governmental compliance programs. To the Company's Knowledge,
with respect to each Employee Benefit Plan of the Station, there have been no
violations of Code Section 4975 or ERISA Sections 404 or 406 as to which
successful claims would, individually or in the aggregate, result in liability
in excess of $25,000 for Gannett, the Company or any Person required to be
indemnified by either of them. To the Company's Knowledge, except as set forth
in Section 3.14 of the Disclosure Schedule, and except as expressly provided in
this Agreement, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of the
Business to severance pay, unemployment compensation or other payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer. To the Company's Knowledge, there
are no pending or threatened or anticipated claims by or on behalf of any
Employee Benefit Plan relating to the Station, by any employee or beneficiary
covered under any such plan, or otherwise involving any such plan (other than
routine claims for benefits) where any such pending, threatened or anticipated
claims would, individually or in the aggregate, reasonably be expected to result
in liability in excess of $25,000. The $25,000 liability threshold in this
Section 3.14 is intended to apply only to this Section 3.14, and is in no way
intended to be used in defining materiality anywhere in this Agreement.
3.15 Labor Relations. To the Company's Knowledge, Section 3.15 of the Disclosure Schedule sets forth a list of all labor organizations recognized as representing the
employees of the Business. Complete and accurate copies of all collective bargaining agreements and other labor union contracts relating to employees of the Station and any such labor organizations (to the extent provided to the Company by Gannett) have been delivered or made available to Purchaser. Except as disclosed in Section 3.15 of the Disclosure Schedule, (i) the Company is not and, to the Company's Knowledge, Gannett is not party to any collective bargaining agreement or other labor union contract applicable to employees of the Business, (ii) to the Company's Knowledge, there are no strikes, slowdowns or work stoppages pending or, to the Company's Knowledge, threatened between Gannett and any employees of the Business, and Gannett has not experienced any such strike, slowdown, or work stoppage within the past two years, in each case, as of the date of the Gannett Purchase Agreement, (iii) to the Company's Knowledge, there are no unfair labor practice complaints pending or, to the Company's Knowledge, threatened against the Business relating to employees of the Business before the National Labor Relations Board or any other Governmental Authority or, to the Company's Knowledge, any current union representation questions involving employees of the Business and (iv) to the Company's Knowledge, Gannett is in compliance in all material respects with its obligations under all Laws and Governmental Orders governing its employment practices with respect to employees of the Business, including, without limitation, provisions relating to wages, hours and equal opportunity, employment discrimination, workers' compensation, family and medical leave, the Immigration Reform and Control Act, and occupational safety and health requirements, (v) to the Company's Knowledge, all Persons classified by Gannett as independent contractors with respect to the Business do satisfy the requirements of law to be so classified, and, to the Company's Knowledge, Gannett has fully and accurately reported their compensation on IRS Forms 1099 when required to do so, and (vi) to the Company's Knowledge, there is no charge or compliance proceeding actually pending or, to the Company's Knowledge, threatened against the Company or Gannett with respect to employees of the Business before the Equal Employment Opportunity Commission or any state, local, or foreign agency responsible for the prevention of unlawful employment practices.
3.16 Intellectual Property. To the Company's Knowledge, Section 3.16 of the Disclosure Schedule includes a complete list of all call letters of the Station (the "Call Letters"). Except as disclosed in Section 3.16 of the Disclosure Schedule, to the Company's Knowledge, (i) the rights of Gannett, and immediately prior to the Closing, the Company, in or to the Call Letters and, to the Company's Knowledge, the other Intellectual Property do not conflict with or infringe on the rights of any other Person, (ii) the Company has not and, to the Company's Knowledge, Gannett has not received any claim from any Person that the rights of Gannett or the Company in or to the Intellectual Property conflict with or infringe on the rights of any other Person and, to the Company's Knowledge, no such claim is threatened, (iii) to the Company's Knowledge, Gannett owns (free and clear of any Encumbrances other than Permitted Exceptions), is licensed or otherwise has the right to use all Intellectual Property necessary for the conduct of the Business as currently conducted by Gannett (free and clear of any Encumbrances other than Permitted Exceptions), except where the failure to have such rights would not reasonably be expected to impair the operations of the Business in any material respect and (iv) to the Company's Knowledge, no other Person is infringing or diluting the rights of Gannett with respect to the Intellectual Property.
3.17 Taxes. Except as disclosed in Section 3.17 of the Disclosure Schedule and except relating exclusively to the Gannett Maine Media Business, to the Company's Knowledge (a) all material Tax Returns required to be filed by Gannett (or to the extent required to be filed
by the Company) relating to the Business have been timely filed and all such Tax Returns are correct and complete in all material respects; (b) all Taxes required to be paid by Gannett (or to the extent required to be paid by the Company) relating to the Business, whether or not shown as due on such Tax Returns, have been timely paid other than such Taxes, if any, as are described in Section 3.17 of the Disclosure Schedule and are being contested in good faith; (c) there is no action, suit, proceeding, investigation, audit or claim pending or, to the Company's Knowledge, threatened with respect to Taxes of Gannett or the Company relating to the Station or for which Gannett or the Company may be liable, and no adjustment relating to such Taxes of Gannett or the Company relating to the Station has been proposed in writing by any Tax authority and remains unresolved; (d) there are, and immediately prior to the Closing there will be, no Tax liens on any of the assets of the Business (other than liens for Taxes that are not yet due and payable); and (e) all Taxes that the Business is required to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Tax authority.
3.18 Commissions. There is no broker or finder or other Person who has any valid claim against the Company, Purchaser, or any of their respective Affiliates or any of their respective assets for a commission, finders' fee, brokerage fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by on or behalf of the Company, its stockholders or the Company's officers, employees or agents.
3.19 Affiliate Transactions. Except as set forth in Section 3.19 of the Disclosure Schedule or as expressly otherwise provided or permitted in this Agreement, to the Company's Knowledge, since December 27, 1997, Gannett has not engaged in any transaction with any Affiliate thereof that was material to the Business, and, to the Company's Knowledge, Gannett is not a party to any material agreements or arrangements relating to the Station with any Affiliates that will continue in effect after the Closing for the Purchaser that are not immediately terminable by the Purchaser without payment of any penalty or premium.
3.20 Accuracy and Completeness of Representations and Warranties. No representation or warranty made by the Company in this Article 3, to the Company's Knowledge, contains any untrue statement of a material fact or omits a material fact necessary in order to make the representation or warranty not misleading.
Article 4. Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Company as follows:
4.1 Organization and Standing. Purchaser is a corporation duly incorporated, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business.
4.2 Binding Agreement. Purchaser has all requisite corporate power and authority to enter into this Agreement, to execute and deliver this Agreement and the Bill of Sale, Assignment and Assumption Agreement, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Bill of Sale, Assignment and Assumption Agreement by
Purchaser and the consummation by Purchaser of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate and stockholder action on the part of Purchaser. This Agreement has been and, on the Closing Date, the Bill of Sale, Assignment and Assumption Agreement will be duly executed and delivered on behalf of Purchaser and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity).
4.3 Absence of Conflicting Agreements or Required Consents. Except as set forth in Section 4.3 of the Disclosure Schedule, the execution, delivery and performance by Purchaser of this Agreement and the Bill of Sale, Assignment and Assumption Agreement do not and will not (a) violate, conflict with or result in the breach or default of any provision of the certificate or articles of incorporation or by-laws of Purchaser, (b) materially conflict with or materially violate any material Law or material Governmental Order applicable to Purchaser or any of its properties or assets, (c) except for (i) the notification requirements of the HSR Act, (ii) such filings with, and orders of, the FCC as may be required under the Communications Act and the FCC's rules and regulations in connection with this Agreement and the transactions contemplated hereby and (iii) such matters that would not reasonably be expected to materially impair or delay the consummation of the transactions contemplated hereby, require any consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority or any other Person or (d) except for such matters that would not reasonably be expected to materially impair or delay the consummation of the transaction contemplated hereby, conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Purchaser's assets pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license or permit, or franchise to which Purchaser is a party or by which its assets are bound.
4.4 Litigation. Except as described in Section 4.4 of the Disclosure Schedule, there are no Actions pending or, to Purchaser's knowledge, any Action threatened to be brought by or before any Governmental Authority, against Purchaser or any of its Affiliates that (i) seeks to question, delay or prevent the consummation of the transactions contemplated hereby or (ii) would reasonably be expected to affect adversely the ability of Purchaser to fulfill its obligations hereunder, including without limitation, Purchaser's obligations under Articles 1 and 2 hereof.
4.5 Commissions. There is no broker or finder or other Person who has any valid claim against the Company, Purchaser, any of their respective Affiliates or any of their respective assets for a commission, finders' fee, brokerage fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by on or behalf of Purchaser, or its officers, employees or agents.
4.6 Financing. Purchaser will at Closing have sufficient funds to pay the Purchase Price pursuant to this Agreement and otherwise to satisfy its obligations hereunder.
4.7 Purchaser's Qualification. Except as set forth in Section 4.7 of the Disclosure Schedule, (i) Purchaser does not know of any fact or circumstance that could reasonably be expected to result in a finding by the FCC that Purchaser is not qualified legally, financially or otherwise to be the licensee of the Stations as its operations are now being conducted and (ii) except for the FCC's Duopoly Rule, a waiver of which will be requested by Purchaser, Purchaser does not know of any policy, rule, regulation or ruling of the FCC that could reasonably be expected to be violated by the acquisition of the Stations by Purchaser.
4.8 Accuracy and Completeness of Representations and Warranties. No representation or warranty made by Purchaser in this Article 4 contains any untrue statement of a material fact or omits a material fact necessary in order to make the representation or warranty not misleading.
Article 5. Covenants and Agreements.
5.1 Conduct of the Business Prior to Closing; Access. The Company covenants as follows:
(a) Prior to Closing, the Company will not with respect to the Business:
(i) create, assume or subject any of the assets of the Business to any Encumbrance, other than Permitted Exceptions and Encumbrances that will be released at or prior to the Closing;
(ii) make any material changes in the operations of the Business;
(iii) other than, in each case, in the ordinary course of business consistent with past practice, sell, transfer, lease, sublease, license or otherwise dispose of any material assets of the Business, other than the sale of obsolete Equipment that has been or is replaced with Equipment of like kind;
(iv) (A) grant any increase, or announce any increase, in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable by the Company to any of the officers or key employees of the Business, including, without limitation, any increase or change pursuant to any Employee Benefit Plan, or (B) establish or increase or promise to increase or accelerate the payment or vesting of any benefits under any Employee Benefit Plan with respect to officers or employees of the Business, in the case of either (A) or (B) except (I) as required by Law, (II) that involve only increases consistent with the past practices of the Company or Gannett (or as otherwise required or allowed under the Gannett Purchase Agreement, as the case may be, but in no event more than 5%, (III) as required under any existing agreement or arrangement, (IV) that involve increases related to promotions to the extent such increases result in the compensation and benefits of the relevant employee being consistent with the compensation and benefits provided to the holder of such position in the past or
(V) that relate to the supplemental executive retirement plans identified in Section 3.14 of the Disclosure Schedule;
(v) make any change in any method of accounting or accounting practice or policy used by the Company or Gannett in respect of the Business, other than as required by law or under GAAP;
(vi) fail to maintain in full force and effect all of its existing casualty, liability or other insurance relating to the Station through the Closing in amounts at least equal to those in effect on the date hereof;
(vii) make any capital expenditures relating to the Station in excess of $500,000 in the aggregate that are not contemplated in the capital improvements budgeted for 1998;
(viii) (A) amend the payment terms of any Program Contract to
provide that payments that would otherwise be made prior to the
Closing are made after the Closing or (B) acquire, enter into, modify,
change or extend the term of (x) any Program Contract providing for
payments in excess of $10,000 or with a term greater than one year or
(y) Program Contracts not subject to clause (x) that in the aggregate
provide for payments in excess of $200,000;
(ix) acquire, enter into, modify, change or extend the term of any Material Contract, provided that this clause (ix) will not apply to the acquisition or entering into of any new Material Contract not otherwise subject to clauses (i) to (viii) or clauses (x) to (xvi) hereof with respect to which all Liabilities of the Company thereunder relating to the Station will be fully satisfied, discharged and performed prior to the Closing with no adverse effect on Purchaser;
(x) compromise, settle, grant any waiver or release relating to, or otherwise adjust, any material Action, material Liabilities or any other material claims or material rights relating to the Station;
(xi) enter into any new agreement, contract, commitment or arrangement with any Affiliate of the Company that will be binding upon Purchaser, the Assets or the Station after the Closing;
(xii) apply to the FCC for any construction permit that would adversely affect the Station's present operations, or make any material change in the Station's buildings, leasehold improvements, or fixtures;
(xiii) except with respect to promotion during ratings sweep periods (which shall not be subject to this clause (xiii)), enter into any trade, barter or similar agreements (other than Program Contracts) for the sale of advertising time that would be binding on the Station after the Closing for any property or services in lieu of or in addition to cash that requires the provision of broadcast time having a value that exceeds $10,000 in any individual agreement or
$200,000 in the aggregate;
(xiv) take any action, or refrain from taking any action, that would constitute a material breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Material Contract;
(xv) enter into or renew any time sales agreement except in the ordinary course of business for a term not exceeding 12 months; or
(xvi) enter into any agreement, contract, commitment or arrangement to do any of the foregoing.
(b) Pending the Closing, the Company shall:
(1) To the extent allowed by Gannett under the Gannett Purchase Agreement, give to Purchaser and its representatives reasonable access during normal business hours to all of the employees, properties, books and records of Gannett or the Company that relate to the Station and, to the extent available from, or allowed by, Gannett pursuant to the Gannett Purchase Agreement, furnish Purchaser and its representatives with such information concerning the Station as Purchaser may reasonably require, including such access and cooperation as may be necessary to allow Purchaser and its representatives to interview the employees, to examine the books and records of the Station, and to inspect the Real Property and Equipment (which right of access shall not be exercised in any way which would unreasonably interfere with the normal operations, business or activities of the Station);
(2) To the extent provided by Gannett pursuant to the Gannett Purchase Agreement, furnish to Purchaser within 20 days after the end of each month ending between the date of this Agreement and the Closing an unaudited statement of income and expense and a balance sheet for the Station for the month just ended; and
(3) To the extent provided by Gannett pursuant to the Gannett Purchase Agreement, from time to time, furnish to Purchaser such additional information (financial or otherwise) concerning the Station as Purchaser may reasonably request (which right to request information shall not be exercised in any way which would unreasonably interfere with the normal operations, business or activities of the Station).
(c) The Company will deliver to Purchaser, within ten Business Days after delivery or receipt, copies of any reports, applications or communications to or from the FCC or its staff related to the Station which are delivered or received between the date of the Gannett Purchase Agreement and the Closing Date.
5.2 Post-Closing Covenants and Agreement, and Other Employee Benefit
Matters. (a) Purchaser shall at all reasonable times after reasonable notice to Purchaser from and after the Closing, make available without cost, for inspection and/or copying by the Company and any Person that was a stockholder of Gannett during any of the tax years (or portions thereof) immediately preceding the closing under the Gannett Purchase Agreement for which the relevant statute of limitations (including any waiver thereof) has not expired, or their respective representatives, the books and records of the Business). Such books and records shall be preserved by Purchaser until the later of the closing by tax audit of, or the expiration of the relevant statute of limitations (including any waiver thereof) with respect to, all open tax periods of Gannett and such stockholders prior to and including the time immediately prior to the Closing. After the period set forth above, Purchaser may destroy the books and records in its possession unless, before expiration of such notice period the Company objects in writing to the destruction of any or all of such books and records, in which case, such books and records shall be delivered to the Company. Notwithstanding the foregoing, Purchaser shall continue to preserve and, at all reasonable times after the Closing, to make available without cost, for inspection and/or copying by any Person that was a trustee or other fiduciary under the Employee Benefit Plans identified in Section 5.2 of the Disclosure Schedule, the books and records of such Employee Benefit Plan and the books and records of the Business relating thereto.
(b) Effective as of the Closing, Purchaser shall offer employment to all then employees of the Business, on such terms and conditions as Purchaser shall establish (except that base cash compensation shall be comparable to their existing base cash compensation), subject to the terms of any collective bargaining agreement assumed by Purchaser under Section 5.2(e) and any employment agreements with specific Business Employees, and shall assume responsibility for all inactive employees of the Business, subject to the terms of this Section 5.2 and the collective bargaining agreements assumed by Purchaser under Section 5.2(e); provided, however, that any employee of the Business who is not actively employed on the day of the Closing shall be offered employment by Purchaser following the end of any inactive period (whether on account of leave, layoff, injury or disability) but only to the extent that the Company would have been obligated to offer active employment to such person upon the end of such inactive period under the Gannett Purchase Agreement. Notwithstanding the foregoing, Purchaser shall not have any obligation to offer employment to any employees of the Corporate Office ("Corporate Office Employees"), as described in Section 5.2(b) of the Disclosure Schedule. Nothing in this Section 5.2(b) is intended to limit the ability of Purchaser to terminate the employment of any employee after the Closing.
(c) Subject to applicable law and the terms of any collective bargaining agreement assumed pursuant to this Agreement, if any, Purchaser shall establish and maintain for a period of one year after the Closing Date or the term of their employment by Purchaser, whichever is less, for employees of the Business as of the Closing Date, benefits that, in the aggregate, are no less favorable than the benefits maintained by the Purchaser for similarly situated employees of Purchaser, provided that the foregoing will not prohibit or in any manner restrict Purchaser from terminating or changing the individual terms of employment of any Business Employee or require Purchaser to maintain any specific benefits or Employee Benefit Plans. Purchaser shall give employees of the Business as of the Closing Date and former and inactive Business Employees credit for their service with the Company and Gannett or any of their Subsidiaries prior to the Closing, to the same extent that such service would have been credited by Purchaser (if they had been employed by Purchaser for such period of service), for all
purposes under all employee benefit plans or arrangements maintained by Purchaser for current, former and inactive Business Employees (including any waiting periods). In addition, Purchaser shall, if applicable, (i) cause any pre-existing condition limitation to be waived and (ii) give effect, in determining any deductible and maximum out-of-pocket limitations, to claims incurred and amounts paid by, and amounts reimbursed to current, former and inactive Business Employees with respect to similar plans maintained by the Company or Gannett prior to the Closing.
(d) Purchaser will assume and indemnify and hold harmless the Company
Indemnified Parties against all Liabilities with respect to severance benefits
arising in connection with or following the Closing pursuant to the agreements
set forth in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule (subject to
the right of recovery set forth in Section 5.8(a)), or pursuant to any
collective bargaining agreement or other agreements with Business Employees
assumed either pursuant to this Agreement or by operation of law. With respect
to all current and inactive Business Employees immediately prior to the Closing
not covered by the agreements referenced in the immediately preceding sentence,
(x) for a period ending not less than one year after the Closing, Purchaser will
provide such Business Employees with the same severance benefits as Purchaser
provides for similarly situated employees of Purchaser (which benefits, as of
the date hereof, are described in Section 5.2(d) of the Disclosure Schedule) and
(y) Purchaser will assume and indemnify and hold harmless the Company
Indemnified Parties against all Liabilities with respect to severance benefits
arising in connection with or following the Closing.
(e) From and after the Closing, Purchaser shall assume all of the
collective bargaining agreements (including, without limitation, pursuant to the
specified provisions of the collective bargaining agreements set forth in
Section 5.2 of the Disclosure Schedule) and other labor contracts with respect
to any Business Employees existing immediately prior to the Closing.
(f) From and after the Closing, Purchaser shall assume sponsorship of the WOKR-TV Partners 401(k) Plan, and assume responsibilities of all Employee Benefits Plans that provide post-retirement life insurance or health, or short-term or long-term disability benefits and be responsible for any benefits under such Employee Benefit Plans (i) to which any current, former or inactive Business Employee, or a beneficiary or dependent of any current, former or inactive Business Employee ("Beneficiary"), has already become entitled, (ii) which commenced or (iii) to which any current, former or inactive Business Employee has already become qualified by reason of age and years of service as of the Closing, to the extent such persons are identified in Section 5.2(f) of the Disclosure Schedule (which section shall be updated, if necessary, at Closing). From and after the Closing, Purchaser shall also pay to the Business Employees and Corporate Office Employees listed in Section 5.2(f) of the Disclosure Schedule the supplemental retirement benefits provided under the applicable Gannett supplemental retirement plan.
(g) From and after the Closing, Purchaser shall assume and be responsible for any workers' compensation benefits payable to a Business Employee, Beneficiary or dependent of a Business Employee on or after the Closing, including any such benefits that are attributable to any injury or illness that occurred or existed prior to the Closing to the extent not covered by the Company's workers' compensation insurance policy.
(h) For a period of 90 days after the Closing, Purchaser shall not implement any employment terminations, layoffs or hours reductions or take any other action which could result in a "plant closing" or "mass layoff," as those terms are defined in the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") or similar events under applicable state law, affecting in whole or in part any facility, site of employment or operating unit, or any employee employed by the Business, or which could require either Purchaser or the Company to give notice or take any other action required by WARN or applicable state law.
(i) From and after the Closing, Purchaser shall assume the Company's and
Gannett's obligations and liabilities with respect to COBRA continuation
coverage under Section 4980B of the Code and Section 601 of ERISA ("Continuation
Coverage") with respect to Business Employees and shall provide Continuation
Coverage to the Business Employees under Purchaser's health and medical plans
(x) with respect to any Business Employees who remain employed with either the
Company or Gannett through the Closing Date, for a period of eighteen months
after the Closing or, if earlier, until becoming eligible for comparable
coverage from another employer and (y) with respect to any Business Employees
whose employment shall have terminated prior to the Closing, for remainder of
the period with respect to which Continuation Coverage would otherwise have been
available to them had the Company or Gannett, as the case may be, continued to
maintain a group health plan.
5.3 Cooperation. Following the execution of this Agreement, Purchaser and the Company agree as follows:
(a) The parties and their Affiliates shall each use their reasonable
efforts, and shall cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions with respect to, any filings
(other than filings with the FCC, which are provided for in clause (b)
below), applications, requests, or actions which are or may be necessary to
obtain the consents, approvals, authorizations or other orders of any
Governmental Authority which are or may be necessary in order to accomplish
the transactions contemplated by this Agreement; and, without limiting the
generality of the foregoing, the parties and their Affiliates shall use
their respective reasonable efforts to prepare and file as promptly as
practicable, but in any event no later than 15 Business Days after the date
hereof, all of the information called for in the Notification and Report
Form required under the HSR Act and to prepare and file any supplemental
information, also in a timely fashion, which may be required by the United
States Department of Justice or the Federal Trade Commission pursuant to
such Notification and Report Form Filings, and otherwise to use their
respective reasonable efforts to obtain the requisite clearances.
(b) The parties and their Affiliates shall cooperate fully with each other in preparing, filing, prosecuting, and taking any other actions with respect to filings with the FCC related to the transactions contemplated by this Agreement, including, without limitation, preparation of an application for the assignment of all of the FCC Licenses to Purchaser and any filings by Purchaser requesting temporary waivers for no more than nine months of the FCC's applicable ownership rules necessary to permit the parties to consummate the transactions contemplated by this Agreement. As promptly as practicable, but in any event not later than September 25, 1998, the Company and Purchaser shall jointly file the application with the FCC requesting the FCC Consent,
including, without limitation, requesting, consenting to, and taking and otherwise seeking any action in connection with a conditional waiver of the FCC's Duopoly Rule. The Company and Purchaser shall use their respective reasonable best efforts, diligently take all necessary and proper actions and provide any additional information requested by the FCC in order to obtain promptly the FCC Consent. Notwithstanding the foregoing or any other provision of this Agreement, neither Purchaser nor its officers, directors or Affiliates shall request a permanent waiver of the FCC's applicable ownership rules or request, consent to, take or otherwise seek or pursue any action that is inconsistent with the transactions contemplated by this Agreement or that reasonably could be expected to materially impede or materially delay the FCC Consent or otherwise materially impede or materially delay the consummation of the transactions contemplated by this Agreement; and the receipt of any permanent waiver of the foregoing FCC rules shall not be a condition to the obligation of Purchaser to consummate the transactions contemplated hereby. Neither Purchaser nor any of its officers, directors or Affiliates will take any action that would result in any change in the matters set forth in Section 4.7 hereof that would reasonably be expected to materially delay or otherwise materially impair Purchaser's ability to consummate the transactions contemplated hereby. After the date hereof, Purchaser or its Affiliates may enter into transactions that implicate the FCC multiple ownership rules so long as such transactions would not reasonably be expected to materially impede or materially delay the Closing
(c) (i) If Purchaser (or its Affiliates) or the Company receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any Governmental Authority, that could affect Purchaser's or the Company's ability to consummate the transactions contemplated hereby, or (ii) should Purchaser (or its Affiliates) become aware of any fact (including any change in law or regulations (or any interpretation thereof by the FCC)) relating to the qualifications of Purchaser (and its controlling persons) that reasonably could be expected to cause the FCC to withhold the FCC Consent, Purchaser (in the case of clauses (i) and (ii)) or the Company (in the case of clause (i)) shall promptly notify the other party or parties thereof and shall use its reasonable best efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement; and no such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder.
(d) The parties shall each use their reasonable best efforts to obtain as promptly as reasonably practical all consents that may be required in connection with the assignment to the Purchaser at Closing of all the Company's right, title and interest in and to all Material Contracts as such are acquired by the Company pursuant to the Gannett Purchase Agreement and all other agreements of the Business to which the Company is a party, provided that neither the Company nor Purchaser shall be required to make any payment to any party to any such Material Contract or other agreement in order to obtain any such consent.
(e) To the extent that there are third-party insurance policies maintained by the Company covering any Claims or Damages relating to the assets, business, operations, conduct and employees (including, without limitation, former employees) of the Business arising out of or relating to occurrences prior to the Closing, the Company shall use all
reasonable efforts to cause Purchaser to be named as an additional insured with respect to such policies.
(f) Subject to the terms and conditions of this Agreement, each of the parties agrees to use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Closing and the other transactions contemplated hereby as soon as practicable.
5.4 Confidentiality.
(a) Prior to the Closing. The terms of the Confidentiality Agreement by and between Purchaser and Gannett are herewith incorporated by reference and shall continue in full force and effect as between Purchaser and Gannett until the Closing and shall remain in effect as between Purchaser and Gannett in accordance with its terms even if this Agreement is terminated.
(b) Financial and Tax Information. Before and after the Closing, each of the parties shall maintain the confidentiality of the financial and tax information of the Persons other than the Company in the possession of the Company under terms similar to those set forth in the Confidentiality Agreement by and between Purchaser and Gannett with respect to "Evaluation Material" as though such terms continued after the Closing.
5.5 Public Announcements. Except as otherwise required by law or the rules of any stock exchange, the form and substance of the initial public announcement of this Agreement and the transactions contemplated hereby, and the time of such announcement, shall be approved in advance by the parties and the parties shall not issue any other report, statement or press release or otherwise make any public announcement with respect to this Agreement and the transactions contemplated hereby without prior consultation in good faith with the other party hereto.
5.6 No Solicitation. The Company shall not, and shall cause its officers,
directors, representatives, affiliates and associates not to, (a) initiate
contact with, solicit, encourage or respond to any inquiries or proposals by, or
(b) enter into any discussions or negotiations with, or disclose, directly or
indirectly, any information concerning the Business to, or afford any access to
the Company's properties, books and records to, any Person in connection with
any possible proposal for the acquisition (directly or indirectly, whether by
purchase, merger, consolidation or otherwise) of all or substantially all of the
Business. The Company agrees to terminate immediately any such discussions or
negotiations.
5.7 No Additional Representations. Purchaser acknowledges that it and its representatives have been permitted access to books and records, facilities, equipment, tax returns, contracts and agreements, insurance policies (or summaries thereof), and other properties and assets of the Station and that they and their representatives have had an opportunity to meet with the officers and employees of the Company and Gannett to discuss the Station and the Business, properties and assets. PURCHASER ACKNOWLEDGES THAT NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS
OF ANY INFORMATION REGARDING THE STATION OR THE BUSINESS FURNISHED OR MADE AVAILABLE TO PURCHASER AND ITS REPRESENTATIVES EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT.
5.8. Certain Payments. (a) Pursuant to the terms of the Gannett Purchase Agreement, the Company has certain rights and obligations with respect to the Severance Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule of the Gannett Purchase Agreement, which Severance Agreements include those listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule hereto (the "WOKR Scheduled Severance Agreements"). Promptly, but in no event later than five Business Days prior to any payment due under the WOKR Scheduled Severance Agreements to any employee of the Station terminated by Purchaser prior to 90 days after the Closing Date under the Gannett Purchase Agreement, Purchaser shall notify the Company of the amount to be paid to such employee, and the Company shall make the payment to such terminated employee as provided by the WOKR Scheduled Severance Agreements (a "WOKR Severance Payment"); provided that the maximum amount that the Company shall be required to pay pursuant to this Section 5.8(a) shall be $342,720, in the aggregate, for all Business Employees as defined hereunder. Within five (5) Business Days after the Company makes a WOKR Severance Payment, Purchaser shall reimburse the Company for 50% of the amount of such payment. In addition to any reimbursement by Purchaser under this Section 5.8(a), to the extent provided by Section 5.8(a) of the Gannett Purchase Agreement, the Company will be entitled to reimbursement as provided by the Gannett Purchase Agreement, and nothing in this Agreement or the Gannett Purchase Agreement shall be construed to give Purchaser any right of recovery to Purchaser pursuant to Section 5.8(a) of the Gannett Purchase Agreement.
(a) Pursuant to Section 5.8(b) of the Gannett Purchase Agreement, Gannett will cease operations and vacate the Gannett Corporate Offices, and the Company has agreed that it will pay, indemnify, and hold harmless the Company Indemnified Parties from and against 50% of all Claims and Damages (including, without limitation, all rent or other payments made under the Corporate Office Lease arising out of or relating to the Corporate Office Lease) to the extent such Claims and Damages arise out of or relate to (x) the termination of the Corporate Office Lease or (y) the post-closing period after the date in which the Corporate Office Employees cease using the Corporate Office, provided that the maximum amount that Purchaser shall be liable for under this Section 5.8(b) is $80,640. Such payments by the Company thereunder shall be made as the related Claims and Damages are incurred. To the extent the Company is required to make such payment, Purchaser shall reimburse and pay over to the Company 40.32% of all such payments made by the Company. Purchaser acknowledges and agrees that the Company may terminate the Corporate Office Lease on such terms as the Company shall determine and otherwise take such action as the Company determines in connection with its vacating the Corporate Office.
5.9 Bulk Sales Laws. The parties agree to waive compliance with the provisions of the bulk sales law of any jurisdiction. The Company will indemnify and hold harmless Purchaser from and against any and all Liabilities which may be asserted by third parties against Purchaser as a result of such noncompliance.
5.10 Control of the Stations. Prior to the Closing, control of the Station (including, without limitation, control over their finances, personnel and programming) shall
remain with the Company or Gannett, as the case may be. The Company and Purchaser acknowledge and agree that neither Purchaser nor any of its employees, agents or representatives, directly or indirectly, shall, or shall have any right to, control, direct or otherwise supervise the Station, it being understood that supervision of all programs, equipment, operations and other activities of the Station shall be the sole responsibility of, and at all times prior to the Closing remain under the complete control and direction of, the Company or, if prior to the Closing under the Gannett Purchase Agreement, Gannett.
5.11 Use of Certain Names. After the Closing, neither Purchaser nor any of its Affiliates shall use "Sinclair," "Sinclair Broadcast," "Sinclair Television," "Sinclair Communications," "Guy Gannett," "Gannett," or any name or term confusingly similar to the "Sinclair" names in any corporate name or in connection with the operation of any business.
Article 6. Conditions to Obligations of Purchaser.
The obligations of Purchaser to consummate the transactions contemplated by this Agreement to occur at the Closing are, at their option, subject to satisfaction of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct at and as of the Closing Date as though each such representation and warranty were made at and as of such time, other than such representations and warranties as are made as of a specific date, in each case except for changes that are expressly contemplated by this Agreement and except for such failures to be true and correct that would not reasonably be expected to have a Material Adverse Effect.
6.2 Performance by the Company. All of the covenants and agreements to be complied with and performed by the Company on or before the Closing Date shall have been complied with or performed, except for such failures to comply with or perform that would not reasonably be expected to have a Material Adverse Effect.
6.3 Certificate. The Company shall have delivered to Purchaser a certificate, dated as of the Closing Date, executed on behalf of the Company by its duly authorized officers or representatives to the effect of Sections 6.1 and 6.2.
6.4 Consents; No Objections. (i) The applicable waiting periods under the HSR Act shall have expired or been terminated; and
(ii) The parties shall have received all the authorizations, consents, orders and approvals from Governmental Authorities and consents from third parties, in each case listed or described in Section 6.4 of the Disclosure Schedule.
(iii) The parties shall have received all authorizations, consents, orders and approvals from Governmental Authorities necessary to transfer the material Permits relating to the operation of the Station's tower, transmitter and television broadcasting studio as such facilities are operating on the date hereof, except in each case where the failure to receive such authorizations, consents, orders or approvals would not reasonably be expected to materially
adversely affect the operations of such facilities, or where such authorizations, consents, orders or approvals are customarily obtained after the Closing of a transaction of this nature.
6.5 No Proceedings or Litigation. No preliminary or permanent injunction or other order or decree issued by any United States federal or state Governmental Authority, nor any Law promulgated or enacted by any United States federal or state Governmental Authority, that restrains, enjoins or otherwise prohibits the transactions contemplated hereby or limits the ability in any material respect of the rights of the Company to hold the Assets (excluding the FCC Licenses) and conduct the Business as it is being conducted as of the Closing Date, or imposes civil or criminal penalties on any stockholder, director or officer of Purchaser if such transactions are consummated, shall be in effect.
6.6 [Intentionally omitted]
6.7 FCC Consent. The FCC Consent shall have been issued with respect to the Station without any conditions that are materially adverse to Purchaser notwithstanding that it may not have yet become a Final Order, provided that, if one or more pre-grant objections shall have been filed with respect to the applications required by Section 5.3(b) hereof, it shall be a condition precedent that the FCC Consent shall have become a Final Order.
6.8 No Material Adverse Change. Since the date of this Agreement through the Closing Date, there shall not have occurred any Material Adverse Effect.
6.9 Opinions of Counsel. Purchaser shall have received (a) an opinion of Thomas & Libowitz, P.A., dated the Closing Date, substantially in the form of Exhibit E-1 hereto, and (b) an opinion of Fisher, Wayland, Cooper, Leader & Zaragoza L.L.P., dated the Closing Date, substantially in the form of Exhibit E-2 hereto.
6.10 Good Standing Certificate. Purchaser shall have received a certificate as to the formation and good standing of the Company issued by the Secretary of State of Maryland, dated not more than five days before the Closing Date.
6.11 No Transmission Defects. There shall not exist any loss or damage at the Station which has resulted in the regular broadcast transmission of the Station (including its effective radiated power) to be diminished in any material respect; provided, that if any such loss or damage does exist, then either or both of the Company and Purchaser shall be entitled, by written notice to the other, to postpone the Closing Date for a period of up to 60 days to resume the Station's broadcast transmission.
6.12 Closing on the Gannett Purchase Agreement. The closing, as defined in the Gannett Purchase Agreement, shall have occurred or occur simultaneously with the Closing hereunder.
Article 7. Conditions to Obligations of the Company.
The obligations of the Company to consummate the transactions contemplated by this Agreement to occur at the Closing are, at its option, subject to satisfaction of each of the following conditions:
7.1 Representations and Warranties. The representations and warranties of Purchaser contained herein shall be true and correct in all material respects at and as of the Closing Date as though each such representation and warranty were made at and as of such time, other than such representations and warranties as are made as of a specific date, in each case except for changes that are expressly contemplated by this Agreement.
7.2 Performance by Purchaser. All of the covenants and agreements to be complied with and performed by Purchaser on or prior to the Closing Date shall have been complied with or performed, in all material respects, except for such failures to comply with or perform that would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Company.
7.3 Certificate. Purchaser shall have delivered to the Company a certificate, dated as of the Closing Date, executed on behalf of Purchaser by its duly authorized officers or representatives to the effect of Sections 7.1 and 7.2.
7.4 Consents; No Objections. (i) The applicable waiting periods under the HSR Act shall have expired or been terminated; and
(ii) The parties shall have received all the authorizations, consents, orders and approvals from Governmental Authorities and consents from third parties, in each case listed or described on Section 7.4 to the Disclosure Schedule.
7.5 No Proceedings or Litigation. No preliminary or permanent injunction or other order or decree issued by any United States federal or state Governmental Authority, nor any Law promulgated or enacted by any United States federal or state Governmental Authority, that restrains, enjoins or otherwise prohibits the transactions contemplated hereby, or imposes civil or criminal penalties on any stockholder, director or officer of the Company if such transactions are consummated, shall be in effect.
7.6 FCC Consent. The FCC Consent shall have been issued with respect to the Stations, notwithstanding that it may not have yet become a Final Order, provided that, if one or more pre-grant objections shall have been filed with respect to the applications required by Section 5.3(b) hereof, it shall be a condition precedent that the FCC Consent shall have become a Final Order.
7.7 Opinion of Counsel. The Company shall have received an opinion of Rubin, Winston, Diercks, Harris & Cooke, L.L.P., dated the Closing Date, covering the same matters covered by the opinions delivered by the Company to Gannett under the Gannett Purchase Agreement and in form and substance reasonably satisfactory to the Company.
7.8 Good Standing Certificate. The Company shall have received a certificate as to the formation and good standing of Purchaser issued by the Secretary of State of Delaware,
dated not more than five days before the Closing Date.
7.9. Closing on Gannett Purchase Agreement. The closing, as defined in the Gannett Purchase Agreement, shall have occurred or occur simultaneously with the Closing hereunder.
Article 8. Indemnification.
8.1 Indemnification by the Company. Subject in all respects to the provisions of this Article 8, the Company hereby agrees to indemnify and hold harmless on and after the Closing Date, Purchaser and its stockholders and Affiliates and their respective officers, directors, employees and agents, and their respective and successors and permitted assigns (the "Purchaser Indemnified Parties") from and against any Claims and Damages asserted against or incurred by them, directly or indirectly, in connection with, arising out of or relating to (i) any breach on the part of the Company of any representation or warranty made by the Company in Article 3 hereof or in any certificate delivered pursuant to Section 6.3 of this Agreement, and (ii) any breach on the part of the Company of any covenant or agreement made by the Company in this Agreement.
8.2 Indemnification by Purchaser. Subject in all respects to the provisions of this Article 8, Purchaser hereby agrees to indemnify and hold harmless on and after the Closing Date the Company and its stockholders and Affiliates and their respective officers, directors, employees and agents, and their respective successors and permitted assigns (collectively the "Company Indemnified Parties"), from and against any Claims and Damages asserted against or incurred by them, directly or indirectly, in connection with, arising out of or relating to (i) any breach on the part of Purchaser of any representation or warranty made by Purchaser in Article 4 hereof or in any certificate delivered pursuant to Section 7.3 of this Agreement, (ii) any breach on the part of Purchaser of any covenant or agreement made by the Purchaser in this Agreement or (iii) any Assumed Liabilities.
8.3 Limitations on Indemnification Claims and Liability; Termination of
Indemnification. (a) The obligations to indemnify and hold harmless a Person
pursuant to Sections 8.1(i) or 8.1(ii) shall terminate when the applicable
representation, warranty, covenant or agreement terminates pursuant to Section
10.12, and the obligations to indemnify and hold harmless a Person pursuant to
Section 8.2(iii) shall not terminate; provided, however, that as to clause (i)
above the obligation to indemnify and hold harmless shall not terminate with
respect to any claim as to which the Person to be indemnified shall have, before
the termination of the applicable representation, warranty, covenant or
agreement, previously made a claim for indemnification by delivering a notice to
the indemnifying party in accordance with Section 8.5.
(b) The Company shall not be obligated to indemnify or hold harmless any Purchaser Indemnified Party under Sections 8.1(i) or 8.1(ii), unless and until all Claims and Damages when aggregated with the Claims and Damages under the Gannet Purchase Agreement, exceed in the aggregate $550,000, in which case the Company will (subject to the other provisions of this Article 8) only be obligated to indemnify and hold harmless the Purchaser Indemnified Parties for all of such Claims or Damages under Sections 8.1(i) or 8.1(ii) in the aggregate in excess of $275,000 (or such pro rata portion of $275,000 as is applicable when the
Claims and Damages of the Company under the Gannett Purchase Agreement are taken into account), provided that the provisions of this Section 8.3(b) will not apply to any breach of any Post-Closing Agreements.
(c) Notwithstanding anything to the contrary in this Agreement and except for fraud, the sole and exclusive recourse, remedy and source of funds available to satisfy any claims for indemnification by the Purchaser Indemnified Parties pursuant to Sections 8.1(i) or 8.1(ii) shall be the amount of the Security Escrow then held on deposit with the Security Escrow Agent subject to the terms and conditions of the Security Escrow Agreement, and the Purchaser Indemnified Parties will have no recourse against the assets of the Company (other than the Security Escrow then held on deposit with the Security Escrow Agent) in respect of any such claim. Without limiting the foregoing, the maximum aggregate liability of the Company with respect to all claims for indemnification under Sections 8.1(i) or 8.1(ii) will be limited to the amount of the Security Escrow held on deposit from time to time with the Security Escrow Agent.
(d) Notwithstanding anything to the contrary in this Agreement, the indemnifications in Sections 8.1 and 8.2 hereof will be the sole and exclusive remedies available to Purchaser and the Company and their respective stockholders and Affiliates and all of their respective officers, directors, employees, agents, successors and assigns, after the Closing for any claims arising out of or relating to any breaches of any representations or warranties or any covenants or agreements contained in this Agreement, or any certificate delivered pursuant to this Agreement or otherwise in connection with this Agreement. Any claim for indemnification must be made as provided in Sections 8.5 and 8.6 hereof.
8.4 Computation of Claims and Damages. Whenever the Indemnitor is required to indemnify and hold harmless the Indemnitee from and against and hold the Indemnitee harmless from, or to reimburse the Indemnitee for, any item of Claim or Damage, the Indemnitor will, subject to the provisions of this Article 8, pay the Indemnitee the amount of the Claim or Damage (i) reduced by any amounts to which the Indemnitee is entitled from third parties in connection with such Claim or Damage ("Reimbursements"), (ii) reduced by the Net Proceeds of any insurance policy payable to the Indemnitee with respect to such Claim or Damage and (iii) reduced appropriately to take into account any Tax Benefit to the Indemnitee with respect to such Claim or Damage through and including the tax year in which the indemnification payment is made, net of all income Taxes resulting or that will result from the indemnification payment. For purposes of this Section 8.4, (x) "Net Proceeds" shall mean the insurance proceeds payable, less any deductibles, co-payments, premium increases, retroactive premiums or other payment obligations (including attorneys' fees and other costs of collection) that relates to or arises from the making of the claim for indemnification and (y) "Tax Benefit" shall mean any benefit to be recognized by the Indemnitee in connection with the Claim or Damage based upon the highest blended (federal, state, local and foreign) marginal income Tax rate applicable to the Indemnitee during the taxable year for which a return was most recently filed with the Internal Revenue Service (based on the date of the claim for indemnification). The Indemnitor shall use commercially reasonable efforts (the expenses of which shall be considered Claims and Damages for purposes of the relevant indemnity claim) to pursue Reimbursements or Net Proceeds that may reduce or eliminate Claims and Damages. If any Indemnitee receives any Reimbursement, Tax Benefit or Net Proceeds after an indemnification payment is made which relates thereto or if any Indemnitee receives a Tax Benefit arising after the tax year in which an indemnification
payment is made which relates thereto, the Indemnitee shall promptly repay to the Indemnitor (or to the Security Escrow if such repayment is made by a Purchaser Indemnified Party prior to the termination of the Security Escrow) such amount of the indemnification payment as would not have been paid had the Reimbursement, Tax Benefit or Net Proceeds reduced the original payment (any such repayment shall be a credit against any applicable indemnification threshold or limitation set forth in Section 8.3(b) hereof) at such time or times as and to the extent that such Reimbursement, Tax Benefit or Net Proceeds is actually received.
8.5 Notice of Claims. Upon obtaining knowledge of any Claim or Damage which has given rise to, or could reasonably give rise to, a claim for indemnification hereunder, the Person seeking indemnification (the "Indemnitee") shall, as promptly as reasonably practicable (but in no event later than 30 days) following the date the Indemnitee has obtained such knowledge, give written notice (a "Notice of Claim") of such claim to the other party (the "Indemnitor"). The Indemnitee shall furnish to the Indemnitor in good faith and in reasonable detail such information as the Indemnitee may have with respect to such indemnification claim (including copies of any summons, complaint or other pleading which may have been served on it and any written claim, demand, invoice, billing or other document evidencing or asserting the same). No failure or delay by the Indemnitee in the performance of the foregoing shall reduce or otherwise affect the obligation of the Indemnitor to indemnify and hold the Indemnitee harmless, except to the extent that such failure or delay shall have adversely affected the Indemnitor's ability to defend against, settle or satisfy any liability, damage, loss, claim or demand for which such Indemnitee is entitled to indemnification hereunder. For purposes of this Section 8.5, a Notice of Claim given in good faith must include a good faith estimate of the amount of the claim to the extent it is reasonably practicable to determine such estimate (and, if it is not practicable to determine such estimate and the claim is made by a Purchaser Indemnified Party, the amount of the Security Escrow proposed in good faith to be reserved with respect to such claim).
8.6 Defense of Third Party Claims. If any claim set forth in the Notice of Claim given by an Indemnitee pursuant to Section 8.5 hereof is a claim asserted by a third party, the Indemnitor shall have 30 days after the date that the Notice of Claim is given by the Indemnitee to notify the Indemnitee in writing of the Indemnitor's election to defend such third party claim on behalf of the Indemnitee. If the Indemnitor elects to defend such third party claim, the Indemnitee shall make available to the Indemnitor and its agents and representatives all witnesses, pertinent records, materials and information in the Indemnitee's possession or under the Indemnitee's control as is reasonably required by the Indemnitor and shall otherwise cooperate with and assist the Indemnitor in the defense of such third party claim, and so long as the Indemnitor is defending such third party claim in good faith, the Indemnitee shall not pay, settle or compromise such third party claim. If the Indemnitor elects to defend such third party claim, the Indemnitee shall have the right to participate in the defense of such third party claim, at the Indemnitee's own expense. In the event, however, that the Indemnitee reasonably determines that representation by counsel to the Indemnitor of both the Indemnitor and the Indemnitee may present such counsel with a conflict of interest, then such Indemnitee may employ separate counsel to represent or defend it in any such action or proceeding and the Indemnitor will, subject to the provisions of this Article 8, pay the reasonable fees and disbursements of such counsel. If the Indemnitor does not elect to defend such third party claim or does not defend such third party claim in good faith, the Indemnitee shall have the right, in addition to any other right or remedy it may have hereunder, at the Indemnitor's expense, to
defend such third party claim; provided, however, that such Indemnitee's defense of or its participation in the defense of any such third party claim shall not in any way diminish or lessen the indemnification obligations of the Indemnitor under this Article 8. If the Indemnitor shall assume the defense of a third party claim, it shall not settle such claim without the prior written consent of the Indemnitee (i) unless such settlement includes as an unconditional term thereof the giving by the claimant of a release of the Indemnitee from all Liability with respect to such claim or (ii) if such settlement involves the imposition of equitable remedies or the imposition of any obligations on such Indemnitee other than financial obligations for which such Indemnitee will be indemnified hereunder. If the Indemnitee is defending a third party claim it will not settle such claim without prior written consent of the Indemnitor, which will not be unreasonably withheld or delayed.
8.7 Third Party Beneficiaries.
(a) Each of the Purchaser Indemnified Parties and the Company Indemnified Parties shall be third party beneficiaries, and entitled to enforce the provisions of, this Article 8.
Article 9. Definitions.
Unless otherwise stated in this Agreement, the following capitalized terms have the following meanings:
Accounting Firm Determination has the meaning set forth in Section 2.2 of the Gannett Purchase Agreement.
Action means any action, suit, claim, arbitration, or proceeding or investigation (of which the Company has knowledge) commenced by or pending before any Governmental Authority.
Actual Net Financial Assets has the meaning set forth in Section 2.3.
Adjustment has the meaning set forth in Section 2.3 hereof.
Adjustment Escrow has the meaning set forth in Section 2.2(ii) hereof.
Adjustment Escrow Agent has the meaning set forth in Section 2.3 hereof.
Adjustment Escrow Agreement has the meaning set forth in Section 2.3 hereof.
Adjustment Agreement has the meaning set forth in Section 2.3 hereof.
Affiliate means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person.
Agreement or this Agreement means this Purchase Agreement dated as of the date first above written (including the Exhibits hereto and the Disclosure Schedule) and all
amendments hereto made in accordance with the provisions of Section 10.8 hereof.
Allocation has the meaning set forth in Section 2.5 hereof.
Assets has the meaning set forth in Section 1.1 hereof.
Assumed Liabilities has the meaning set forth in Section 1.3 hereof.
Audited Financial Statements has the meaning set forth in Section 3.5 hereof.
Beneficiary has the meaning set forth in Section 5.2 hereof.
Bill of Sale, Assignment and Assumption Agreement has the meaning set forth in Section 1.7 hereof.
Business means all of the Company's business, operations and activities of television broadcast station WOKR-TV, Channel 13, Rochester, New York, acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement.
Business Employees means all current, former and inactive employees of the Business. For the avoidance of doubt, Corporate Office Employees will not be considered Business Employees.
Business Day means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.
Call Letters has the meaning set forth in Section 3.16 hereof.
CERCLA means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
Claims and Damages means any and all losses, claims, demands, liabilities, obligations, actions, suits, orders, statutory or regulatory compliance requirements, or proceedings asserted by any Person (including, without limitation, Governmental Authorities), and all damages, costs, expenses, assessments, judgments, recoveries and deficiencies, including interest, penalties, investigatory expenses, consultants' fees, and reasonable attorneys' fees and costs (including, without limitation, costs incurred in enforcing the applicable indemnity), of every kind and description, contingent or otherwise, incurred by or awarded against a party, provided that "Claims and Damages" shall not include any indirect, consequential, incidental, exemplary or punitive damages or other special damages or lost profits (except to the extent payable to a third party as a result of a third party claim).
Closing has the meaning set forth in Section 1.6 hereof.
Closing Date has the meaning set forth in Section 1.6 hereof.
Closing Statement has the meaning set forth in Section 2.2 hereof.
Code means the Internal Revenue Code of 1986, as amended.
Communications Act means the Communications Act of 1934, as amended.
Company has the meaning specified in the introductory paragraph to this Agreement.
Company Indemnified Parties shall have the meaning set forth in
Section 8.2.
Continuation Coverage has the meaning set forth in Section 5.2 hereof.
Control (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or to cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
Corporate Office Employees has the meaning set forth in Section 5.2.
Corporate Office Lease means the Lease dated as of February 16, 1989 between the Company and One City Center Associates, and all addenda and amendments thereto and memoranda relating thereto.
Defined Contribution Plan has the meaning set forth in Section 5.2 hereof.
Disclosure Schedule means the Disclosure Schedule, dated as of the date hereof, delivered to Purchaser by the Company in connection with this Agreement.
Employee Benefit Plans means all "employee benefit plans" within the meaning of Section 3(3) of ERISA, all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other employee benefit plans, programs, policies or arrangements, employment agreements, severance agreements, severance pay policies, plant closing benefits, executive compensation arrangements, sick leave, vacation pay, salary continuation for disability, consulting, or other compensation arrangements, worker's compensation, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, employee discounts, employee loans, employee banking privileges, any plans subject to Section 125 of the Code, and any plans providing benefits or payments in the event of a change of control, change in ownership, or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof, in each case with respect to any present or former employees, directors, or agents and without regard to whether the plan or arrangement was previously terminated (if potential liabilities remain) or compensation agreements, in each case for the benefit of, or relating to, any current employee or former employee of the Business.
Encumbrance means any security interest, pledge, mortgage, lien (including,
without limitation, tax liens), charge, encumbrance, easement, adverse claim, preferential arrangement, restriction or defect in title.
Environmental Claims means any and all actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Law, any Environmental Permit, Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation (a) by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any Person for damages, contributions, indemnification, cost recovery, compensation or injunctive relief.
Environmental Law means any Law relating to the environment, health, safety or Hazardous Materials, in force and effect on the date hereof or, in the case of the Company's certificate to be delivered in accordance with the provisions of Section 6.3 hereof, on the Closing Date (exclusive of any amendments or changes to such Law or any regulations promulgated thereunder or orders, decrees or judgments issued pursuant thereto which are enacted, promulgated or issued after the date hereof, or in the case of such certificate, on or after the Closing Date), including but not limited to CERCLA; the Resource Conservation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss.ss.6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss.6901 et seq.; the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss.2601 et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. ss.ss.7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss.ss.300f et seq.; the Atomic Energy Act, 42 U.S.C. ss.ss.2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss.136 et seq.; and the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. ss.ss.1101 et seq.
Environmental Permits means all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Law.
Equipment means all of the tangible personal property, machinery, equipment, vehicles, rolling stock, furniture, and fixtures of every kind and description in which the Company has an interest or which the Company acquires from Gannett pursuant to the Gannett Purchase Agreement by ownership or lease, and used or useful in connection with the Business, together with any replacements thereof or additions thereto, made in the ordinary course of business between the date of the Gannett Purchase Agreement and the Closing Date.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Estimated Net Financial Assets has the meaning set forth in Section 2.2(b).
Excluded Assets has the meaning set forth in Section 1.2 hereof.
Excluded Names has the meaning set forth in Section 5.11 hereof.
FCC means the Federal Communications Commission.
FCC Consent means a public notice of the FCC, or of the Chief, Mass Media Bureau or Video Services Division, acting under delegated authority, consenting to the assignment of the FCC Licenses to Purchaser.
FCC Licenses means all licenses, permits and other authorizations issued by the FCC to the Company used for or in connection with the Station, and all applications therefor, together with any renewals, extensions or modifications thereof and additions thereto between the date of the Gannett Purchase Agreement and the Closing.
Final Order means the FCC Consent as to which the time for filing a request for administrative or judicial review, or for instituting administrative review sua sponte, shall have expired without any such filing having been made or notice of such review having been issued; or, in the event of such filing or review sua sponte, as to which such filing or review shall have been disposed of favorably to the grantee and the time for seeking further relief with respect thereto shall have expired without any request for such further relief having been filed.
Financial Statements has the meaning set forth in Section 3.5 hereof.
GAAP means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved.
Gannett Corporate Office means the corporate office of Gannett located at One City Center, Portland, Maine, that provides certain support to Gannett and its business.
Gannett FCC Licenses means all licenses, permits and other authorizations issued by the FCC to Gannett used for or in connection with the Gannett Television Stations and all applications therefor, together with any renewals, extensions, or modifications thereof and additions thereto between the date of the Gannett Purchase Agreement and the Closing.
Gannett Maine Media Business means the newspaper publishing business which publishes the Portland Press Herald and Maine Sunday Telegram, the Kennebec Journal and the Central Maine Morning Sentinel, and certain related businesses in Maine (including, without limitation, the "New Media Development Group," an Internet-based media business; "Voice Information Services," a telephone information and marketing service; "Guy Gannett Direct," a direct marketing operation; a telephone directory business; an integrated marketing group; and the Coastal Journal, a controlled circulation weekly), and all assets, liabilities, operations and activities of, and all rights of, the Company in the operations of such businesses that are to be contributed to, or assumed by, Newco, all as more particularly described in the Contribution Agreement. Notwithstanding anything to the contrary in this Agreement, the Maine Media Business does not include the WGME-TV television broadcasting station licensed to Portland, Maine ("WGME") or rights to WGME's news and information content provided via online or audiotext applications of the New Media Development Group or Voice
Information Services.
Gannett Purchase Agreement shall have the meaning set forth in the Recitals.
Gannett Television Stations means the following television broadcasting station properties of the Company: WOKR TV, Rochester, New York; WICS TV, Springfield, Illinois; WICD TV, Champaign, Illinois; WGGB TV, Springfield, Massachusetts; WGME TV, Portland, Maine, KGAN TV, Cedar Rapids, Iowa; and WTWC TV, Portland, Maine; KGAN TV, Cedar Rapids, Iowa; and WTWC TV, Tallahassee, Florida.
Governmental Authority means any United States federal, state or local government or any foreign government, any governmental, regulatory, legislative, executive or administrative authority, agency or commission or any court, tribunal, or judicial body.
Governmental Order means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. Governmental Orders shall not include Permits.
Hazardous Materials means wastes, substances, materials (whether solids, liquids or gases), petroleum and petroleum products, byproducts or breakdown products, radioactive materials, and any other chemicals that are deemed hazardous, toxic, pollutants or contaminants, or substances designated, classified or regulated as being "hazardous" or "toxic," or words of similar import, under any Environmental Law.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Indebtedness means obligations with regard to borrowed money and shall expressly not include either accounts payable or accrued liabilities that are incurred in the ordinary course of business or obligations under operating leases regardless of how such leases may be classified or accounted for on financial statements.
Indemnitee has the meaning set forth in Section 8.5 hereof.
Indemnitor has the meaning set forth in Section 8.5 hereof.
Initial Transfer Amount has the meaning set forth in Section 5.2 hereof.
Initial Transfer Date has the meaning set forth in Section 5.2 hereof.
Intellectual Property means all patents, trademarks, trade names, service marks, copyrights and other similar intangible assets, and applications, registrations, extensions and renewals for any of the foregoing, and other intellectual property owned, leased or used by the Company in the operation of the Station or acquired by the Company from Gannett under the Gannett Purchase Agreement and used in the Business, including, without limitation, Call Letters, computer software and programs, of the Company used in the Business or acquired by the Company from Gannett under the Gannett Purchase
Agreement and used in the Business, whether owned or used by, or licensed to, the Company or acquired by the Company from Gannett under the Gannett Purchase Agreement.
Knowledge with respect to the Company means the actual knowledge of the officers and employees of the Company regarding information relating to the Station disclosed by Gannett to the Company in the Gannett Purchase Agreement or any Schedule, Exhibit or documents delivered to the Company in connection therewith.
Law means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law including, without limitation zoning laws and housing, building, safety or fire ordinances or codes.
Leased Property means all real property of every kind and description leased by the Company or rights to such leases or leased property acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement and used in connection with the Business, together (to the extent leased by the Company or obtained from Gannett pursuant to the Gannett Purchase Agreement) with all buildings and other structures, towers, antennae, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Company or acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing, including, without limitation, the leased property referred to in Section 1.1(c) of the Disclosure Schedule.
Liabilities means as to any Person all debts, adverse claims, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, known or unknown, including, without limitation, those arising under any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, writ, stipulation or other governmental requirement (including, without limitation, any environmental law), action, suit, arbitration, proceeding or investigation or governmental permit, license, authorization, certificate or approval and those arising under any contract, agreement, arrangement, commitment or undertaking.
Material Adverse Effect means any circumstance, change in, or effect on the Company that has a material adverse effect on the business, results of operations or financial condition of the Station; provided, however, that Material Adverse Effect shall not include adverse effects resulting from (or, in the case of effects that have not yet occurred, reasonably likely to result from) (i) general economic or industry conditions that have a similar effect on other participants in the industry, (ii) regional economic or industry conditions that have a similar effect on other participants in the industry in such region, (iii) the failure of Purchaser to give any requested consent pursuant to Section 5.1(a) or (iv) any act of Purchaser.
Material Contracts means the written agreements (including, without limitation, amendments thereto), contracts, policies, plans, mortgages, understandings, arrangements or commitments relating to the Business, to which Gannett is a party or by which its assets are bound as described below:
(i) any agreement or contract providing for payments to any Person in excess of $50,000 per year or $250,000 in the aggregate over the five-year period commencing on the date hereof;
(ii) all time brokerage agreements and affiliation agreements with television networks;
(iii) any license or contract pursuant to which Gannett is authorized to broadcast film or taped programming supplied by others in excess of $10,000 or having a term of more than one year;
(iv) any employment agreement, consulting agreement or similar contract providing for payments to any individual in excess of $50,000 per year or $100,000 in the aggregate over the five-year period commencing on the date hereof;
(v) any retention or severance agreement or contract with respect to any Person who is to be employed by Purchaser following the Closing;
(vi) all collective bargaining agreements or other union contracts;
(vii) (A) any lease of Real Property or (B) any lease of Equipment or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by the Company from another Person providing for payments to another Person in excess of $25,000 per year or $75,000 in the aggregate over the five-year period commencing on the date hereof;
(viii) any lease of Equipment or Real Property or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by Gannett to another Person providing for payments to Gannett in excess of $20,000 per year or $50,000 in the aggregate over the five-year period commencing on the date hereof;
(ix) any joint venture, partnership or similar agreement or contract;
(x) any agreement or contract under which Gannett has loaned any money in excess of $1,000,000 or issued or received any note, bond, indenture or other evidence of indebtedness in excess of $1,000,000 or directly or indirectly guaranteed indebtedness, liabilities or obligations of others in an amount in excess of $1,000,000;
(xi) any covenant not to compete or contract or agreement, understanding, arrangement or any restriction whatsoever limiting in any respect the ability of the Company to compete in any line of business or with any Person
or in any area; and
(xii) any agreement or contract between the Company and any officer, director, stockholder or employee of the Business or any of their family members providing for payments in excess of $5,000 (other than agreements covered in clause (iv) (or that would have been covered in clause (iv) but for the monetary limits thereunder) or agreements or contracts containing terms substantially similar to terms available to employees generally).
Material Contracts shall not include any and all (w) contracts, purchase orders, purchase commitments, leases and agreements entered into in the ordinary course of business and relating to the Company (other than those described in clauses (v), (vii), (viii) or (ix) above) that (A) are terminable at will without payment of premium or penalty by the Company or (B) are terminable on not more than 60 days' written notice without payment of premium or penalty and do not involve the obligation of the Company to make payments in excess of $10,000 during the 60-day period commencing on the Closing; (x) contracts with respect to time sales (or other promotion or sponsorship sales) to advertisers or advertising agencies (including, without limitation, "trade" or "barter" agreements), sales agency or advertising representation contracts, and barter obligations or commitments to suppliers of programming; and (y) contracts with respect to the sale of production time and/or production services relating to advertising or with respect to other services.
Net Financial Assets means the result of (i) the aggregate amount of current assets of the Business to be assigned to Purchaser under this Agreement, excluding for purposes of this calculation, the current portion of program rights, less (ii) the aggregate amount of current liabilities of the Business to be assumed by Purchaser under this Agreement, excluding for purposes of this calculation the current portion of program obligations, less (iii) the aggregate amount of the Company's liability for supplemental retirement and deferred compensation under the Employee Benefit Plans relating to the Business Employees set forth in Section 9 of the Disclosure Schedule to the extent not paid by Gannett prior to the Closing and excluding the current portion of such liability, if any, to the extent such portion is included as a current liability in clause (ii), in each case as of the relevant date of calculation and calculated (except as otherwise provided in Section 9 of the Disclosure Schedule) in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 27, 1997 referred to in Section 3.5 of the Gannett Purchase Agreement. Net Financial Assets expressly shall not include television program and film contract rights of the Business as either assets or liabilities; provided, however, that notwithstanding any prior practice or lack thereof relating thereto, the programming downpayments related to certain television programs made in advance of customary payment terms under television program rights contracts shall be expressly included in prepaid assets to the extent not amortized as of the relevant date of calculation as more fully described in the example set forth in Section 9 of the Disclosure Schedule of the Gannett Purchase Agreement. Without limiting the generality of the foregoing and subject to the immediately preceding sentence, for purposes of determining the amount of Net Financial Assets, all revenues and all expenses arising from the operation of the Station, including, without limitation, tower rental, business and license fees, utility charges, real
and
personal property taxes and assessments levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, Taxes (except for taxes arising from the transfer of the Assets under this Agreement), employee compensation, including wages, salaries, commissions, music license fees and similar prepaid and deferred items, shall be prorated as of the relevant date of calculation in accordance with GAAP.
Net Proceeds has the meaning set forth in Section 8.4 hereof.
Notice of Claim has the meaning set forth in Section 8.5 hereof.
Permits has the meaning set forth in Section 3.11 hereof.
Permitted Exceptions means each of the following:
(i) mortgages, security interests or other Encumbrances described in Section 4.10 of the Disclosure Schedule;
(ii) liens for taxes, assessments and governmental charges or levies not yet due and payable or the validity of which is being contested in good faith by appropriate proceedings;
(iii) Encumbrances imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar liens, arising in the ordinary course of business;
(iv) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations;
(v) survey exceptions, rights of way, easements, reciprocal easement agreements and other Encumbrances on title to real property shown in the title insurance commitment dated May 21, 1998 (for the property referred to as parcels 90 and 91 in Section 1.1(d) of the Disclosure Schedule) or that do not, individually or in the aggregate, materially adversely affect the use of such property in the conduct of the Company's business as it is being conducted prior to the Closing;
(vi) zoning laws and other land use restrictions that do not in any material respect (a) detract from or impair the value or the use of the property subject thereto, or (b) impair the operation of the Station as it is being conducted prior to the Closing in accordance with the provisions of the Gannett Purchase Agreement;
(vii) security interests in favor of suppliers of goods for which payment has not been made in the ordinary course of business consistent with past practice;
(viii) Encumbrances on the interests of the lessors of properties used by the Station in which the Company or Gannett holds a leasehold interest; and
(ix) any and all other Encumbrances that do not materially detract from or materially impair the value or the use of the property subject thereto for the purposes currently utilized in the operation of the Station.
Person means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
Post-Closing Agreements means those covenants and agreements required by this Agreement to be performed after the Closing.
Program Contracts has the meaning set forth in Section 1.1 hereof.
Proposed NFA Adjustment has the meaning set forth in Section 2.2 hereof.
Purchaser has the meaning specified in the introductory paragraph to this Agreement.
Purchaser Indemnified Parties has the meaning set forth in Section 8.1 hereof.
Purchase Price has the meaning set forth in Section 2.2.
Purchaser Savings Plan has the meaning set forth in Section 5.2 hereof.
Real Property means all real property of every kind and description
and related mineral rights owned by the Company or acquired by the Company
from Gannett pursuant to the Gannett Purchase Agreement and used in
connection with the Business, together with all buildings and other
structures, towers, antennae, facilities or improvements currently or
hereafter located thereon, all fixtures, systems, equipment and items of
personal property of the Company or acquired by the Company from Gannett
pursuant to the Gannett Purchase Agreement attached or appurtenant thereto
and all easements, licenses, rights and appurtenances relating to the
foregoing, including, without limitation, the owned property set forth in
Section 1.1(d) of the Disclosure Schedule.
Regulations means the Treasury Regulations (including Temporary Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
Reimbursements has the meaning set forth in Section 8.4 hereof.
Release means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water or air or otherwise entering into the environment.
Resolution has the meaning set forth in Section 2.3(a) hereof.
Security Escrow has the meaning set forth in Section 2.4 hereof.
Security Escrow Agent has the meaning set forth in Section 2.4 hereof.
Security Escrow Agreement has the meaning set forth in Section 2.4 hereof.
Station shall have the meaning set forth in the Recitals.
Subsidiary of any Person means (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation is owned by such Person directly or indirectly, through Subsidiaries and (ii) any partnership, limited partnership, limited liability company, associates, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than a 50% equity interest.
Survival Date shall have the meaning set forth in Section 10.12.
Tax or Taxes means any and all taxes, fees, withholdings, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth, taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes, license, registration and documentation fees, and customs duties, tariffs and similar charges.
Tax Benefit has the meaning set forth in Section 8.4 hereof.
Tax Return means any report, return, document, declaration or other information or filing required to be supplied to any Tax authority or jurisdiction (foreign or domestic) with respect to Taxes, including, without limitation, information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.
Termination Date has the meaning set forth in Section 10.1 hereof.
True-Up Amount has the meaning set forth in Section 5.2 hereof.
True-Up Date has the meaning set forth in Section 5.2 hereof.
Trust has the meaning set forth in Section 5.2 hereof.
Unaudited Financial Statements has the meaning set forth in Section 3.5 hereof.
WOKR Dispute has the meaning set forth in Section 2.3(a).
WOKR Severance Payment has the meaning set forth in Section 5.8(a).
WOKR Scheduled Severance Agreement has the meaning set forth in
Section 5.8(a).
Article 10. Miscellaneous Provisions.
10.1 Termination Rights. (a) Grounds for Termination. This Agreement may be terminated:
(i) by mutual consent of the parties;
(ii) by either the Company or Purchaser, provided such party is not then in material default hereunder, upon written notice to the other party, if the Closing hereunder has not occurred on or before September 4, 1999 (the "Termination Date"), provided that if the FCC Consent is obtained during the 15 days prior to September 4, 1999, the Termination Date will not occur until the 15th day after receipt of the FCC Consent, provided further that if either or both of the Company and Purchaser shall have postponed the Closing Date pursuant to Section 6.11 hereof, the Termination Date will occur no earlier than the end of the period of such postponement, and provided further that if the Closing hereunder has not occurred on or before September 4, 1999 due to a publicly announced federal governmental shutdown affecting, or any other publicly announced freeze on the processing of applications to transfer station licenses by, the FCC (collectively, a "FCC Shutdown"), the Termination Date will be extended by a period of time equal to the duration of the FCC Shutdown, but in no event shall the Termination Date be extended to a date any later than the earlier of (x) 60 days after the end of the FCC Shutdown or (y) December 4, 1999.
(iii) by either the Company or Purchaser, upon written notice to the other party, if any Governmental Authority shall have issued a statute, rule, regulation, order, decree or injunction or taken any other action permanently restraining, enjoining or otherwise prohibiting the Closing hereunder or the closing under the Gannett Purchase Agreement and such statute, rule, regulation, order, decree or injunction or other action shall have become final and nonappealable, provided that this clause (iii) will not be applicable to actions of the FCC subject to clause (iv) below;
(iv) by either the Company or Purchaser, upon written notice to
the other party, if (i) the FCC, or the Chief, Mass Media Bureau of
the FCC, acting under delegated authority, shall have denied the
application for assignment of the Gannett FCC Licenses to the Company,
(ii) the FCC, or the Chief, Mass Media Bureau of the FCC, acting under
delegated authority, shall have denied the application for assignment
of the FCC Licenses to Purchaser, (iii) the parties' request for
administrative or judicial review, or the FCC's administrative review
sua sponte, shall not have been disposed of favorably
to the parties and (iv) the parties have no further relief available to them;
(v) by Purchaser, by written notice to the Company, if there has been a material breach by the Company of any representation, warranty, covenant or agreement set forth in this Agreement such that the condition precedent set forth in Section 6.1 or 6.2 hereof would not be satisfied, which breach has not been cured within 20 Business Days following receipt by the breaching party of written notice of such breach; or
(vi) by the Company by written notice to Purchaser if there has been a material breach by Purchaser of any representation, warranty, covenant or agreement set forth in this Agreement such that the condition precedent set forth in Section 7.1 or 7.2 hereof would not be satisfied, which breach has not been cured within 20 Business Days following receipt by the breaching party of written notice of such breach;
(vii) by Purchaser by written notice to the Company, if the FCC has revoked the Company's or Gannett's FCC License for the Station; or
(viii) automatically without further action by the parties upon the termination of the Gannett Purchase Agreement in accordance with its terms.
(b) Post-Termination Liability. If this Agreement is terminated pursuant to
Subsection 10.1(a)(i), (ii), (iii), (iv), (v), (vii) or (viii) hereof, Purchaser
shall receive the immediate return of the Escrow Deposit, and this Agreement
shall thereupon become void and of no further effect whatsoever, and the parties
shall be released and discharged of all obligations under this Agreement, except
(i) to the extent of a party's liability for willful material breaches of this
Agreement prior to the time of such termination, and (ii) the obligations of
each party for its own expenses incurred in connection with the transactions
contemplated by this Agreement as provided herein.
(c) If this Agreement is terminated pursuant to Subsection 10.1(a)(vi) hereof, the Company's sole and exclusive remedy under this Agreement shall be to receive, and the Purchaser shall pay to the Company, the Escrow Deposit (without setoff deduction or counterclaim) as liquidated damages, and upon such payment, Purchaser shall be discharged from all further liability under this Agreement.
10.2 Litigation Costs. If any litigation with respect to the obligations of the parties under this Agreement results in a final nonappealable order of a court of competent jurisdiction that results in a final disposition of such litigation, the prevailing party, as determined by the court ordering such disposition, shall be entitled to reasonable attorneys' fees as shall be determined by such court. Contingent or other percentage compensation arrangements shall not be considered reasonable attorneys' fees.
10.3 Expenses. Except as otherwise specifically provided in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred, provided that the Company and Purchaser shall each be responsible and pay 50% of the HSR Act filing fee and the filing fees payable to the FCC in
connection with the filing of the application for assignment of the FCC Licenses.
10.4 Notices. Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section 10.4.
If to Purchaser:
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Attn: Denis M. Curley,
Co-President and CFO Fax: (206) 623-7853
with a copy to:
Rubin, Winston, Diercks, Harris & Cooke, L.L.P. 1333 New Hampshire Avenue, N.W., 10th Floor
Washington, D.C. 20036
Attn: Eric M. Rubin, Esquire
Fax: (202) 429-0657
If to Company:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: President
Fax: (410) 467-5043
with copy to:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: General Counsel
Fax: (410) 662-4707
and
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas, Esquire Fax: (410) 752-2046
Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable.
10.5 Benefit and Assignment. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as provided in Section 8.7, there shall be no assignment of any interest under this Agreement by any party except that Purchaser may assign its rights hereunder to any wholly owned subsidiary of Purchaser; provided, however, that no such assignment shall relieve the assignor of its obligations under this Agreement. Except as expressly otherwise provided in Article 8 hereof, nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
10.6 Waiver. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements or conditions of any other party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any such rights.
10.7 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
10.8 Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Company and Purchaser or (b) by a waiver in accordance with Section 10.6 hereof.
10.9 Effect and Construction of this Agreement. This Agreement embodies the entire agreement and understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, arrangements and understandings, whether written or oral, relating to matters provided for herein. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual agreement, and this Agreement shall not be deemed to have been prepared by any single party hereto. Disclosure of any fact or item in the Disclosure Schedule referenced by a particular paragraph or section in this Agreement shall, should the existence of the fact or item or its contents be relevant to any other paragraph or section, be deemed to be disclosed with respect to that other paragraph or section whether or not a specific cross reference appears, if the disclosure in respect of the one paragraph or section is reasonably sufficient to inform the reader of the information required to be disclosed in respect such other paragraph or section. Disclosure of any fact or item in the Disclosure Schedule shall not necessarily mean that such item or fact, individually or in the aggregate, is material to the business, results of operations or financial condition of the Station. Time shall be of the essence in enforcing and applying the covenants and conditions set forth in this Agreement. The headings of the sections and subsections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
10.10 Transfer and Conveyance Taxes. Purchaser and the Company shall each be liable for and shall pay one-half of all applicable sales, transfer, recording, deed, stamp and other similar non-income taxes, imposed in connection with transfers and conveyances of the Assets, including, without limitation, any real property transfer or gains taxes (if any), resulting from the consummation of the transactions contemplated by this Agreement.
10.11 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (i) waive, in any action for specific performance, the defense of adequacy of a remedy at law and (ii) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in any state or federal court having jurisdiction thereover.
10.12 Survival of Representations, Warranties and Covenants. The respective representations and warranties of the Company and Purchaser contained herein or in any certificate and any and all covenants and agreements herein or therein (other than those covenants and agreements required by this Agreement to be performed after the Closing) shall expire with, and be terminated and extinguished one (1) calendar year after the Closing Date (the "Survival Date"); ; provided, however, that unless Purchaser shall notify the Company of any Claim or Damages ten (10) days prior to the Survival Date, the Company shall have no obligation to indemnify Purchaser hereunder.
Article 11. No Personal Liability for Representatives, Stockholders, Directors or Officers. Purchaser understands, acknowledges and agrees that the directors and officers and
consultants of the Company and Gannett and the trustees under the Employee Benefit Plans have performed, or may perform, certain acts required or permitted under this Agreement on behalf of the Company or Gannett to facilitate the transactions among the parties to this Agreement contemplated herein. Notwithstanding anything to the contrary contained herein, no stockholder, director or officer of the Company, any such consultant, or any such trustee (or any Affiliate of the foregoing) shall, under any circumstances, have, and the Purchaser hereby absolves all such Persons from, any personal liability to the Purchaser (and each of their its Affiliates) for such acts to the extent deemed to be actions by or on behalf of the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
SINCLAIR COMMUNICATIONS, INC.
By:_______________________________
Name:__________________________
Title:_________________________
THE ACKERLEY GROUP, INC.
By:_______________________________
Name:__________________________
Title:_________________________
Exhibit A to Purchase Agreement
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") made as of _______________, 1998, by and between THE ACKERLEY GROUP, INC., a Delaware corporation (the "Purchaser"), and SINCLAIR COMMUNICATIONS, INC., a Maryland corporation ("the Company").
WHEREAS, the Company and Purchaser are parties to an Asset Purchase Agreement, dated as of September 25, 1998 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to sell, assign, transfer and deliver to Purchaser all of the Company's right, title and interest in and to all of the real, personal or mixed properties, assets and other rights, both tangible and intangible (other than the Excluded Assets as defined in the Purchase Agreement), owned or leased by, or licensed to or used or useful by, the Company on the Closing Date (as defined in the Purchase Agreement) in connection with the Company's broadcast television station WOKR-TV, Channel 13, Rochester, New York (the "Station"), including all business, operations and activities of the Station (as defined in the Purchase Agreement) (collectively, the "Assets" and the "Business," respectively), and Purchaser has agreed to purchase, acquire, accept and pay for the Assets and assume and agree to perform and fully discharge when due all Liabilities (as defined in the Purchase Agreement) and obligations of the Company related to or arising from or in connection with the Assets or the Business, other than Retained Liabilities (as defined in the Purchase Agreement) (collectively, the "Assumed Liabilities");
WHEREAS, the parties wish to effect the sale, assignment, transfer and delivery of the Assets and assumption of the Assumed Liabilities by entering into this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF the premises and of the mutual covenants contained herein, the parties hereto agree as follows:
Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement.
1. ASSIGNMENT OF ASSETS. The Company hereby sells, conveys, assigns, transfers and delivers to Purchaser, its successors and assigns, forever, all of the Company's right, title and interest in and to all of the Assets. Without limiting the generality of the foregoing, the Company is not selling, conveying, assigning, transferring or delivering any of the Excluded Assets.
2. ACCEPTANCE OF ASSIGNMENT; ASSUMPTION OF LIABILITIES.
(a) Purchaser hereby purchases, acquires, accepts and agrees to pay for all of the Assets, and assumes and agrees to perform and fully discharge when due all Assumed Liabilities.
(b) Purchaser is not assuming, nor shall Purchaser be deemed to have assumed, any Liability or obligation whatsoever, except as expressly provided for in this Agreement and the Purchase Agreement.
3. PURCHASE AGREEMENT. The provisions of this Agreement are subject to the provisions of the Purchase Agreement. To the extent that such provisions and the provisions of this Agreement are inconsistent with one another or in conflict, the provisions of the Purchase Agreement shall take precedence. This Agreement shall in no event enlarge, reduce or otherwise affect the rights, warranties or covenants of the parties as set forth in the Purchase Agreement. The Purchase Agreement shall survive the execution and delivery of this Agreement.
4. COOPERATION. The parties shall, from time to time, execute, acknowledge, deliver and perform, or cause to be executed, acknowledged, delivered and performed, all such further instruments, acts, assignments, transfers, conveyances, powers of attorney and assurances as Purchaser may reasonably request to more effectively convey, transfer and vest in Purchaser, and to put Purchaser in possession and operating control of the Assets and the Business in accordance with the Purchase Agreement.
5. BENEFIT AND ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
6. CONSTRUCTION OF THIS AGREEMENT. The headings of the sections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of Maryland.
7. AMENDMENT. This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, the Company and Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
THE ACKERLY GROUP, INC.
By: ___________________________________ Name:
Title:
SINCLAIR COMMUNICATIONS, INC.
By: ___________________________________ Name:
Title:
Exhibit B to Purchase Agreement
DEPOSIT ESCROW AGREEMENT
This Deposit Escrow Agreement (this "Deposit Agreement") is dated September 25, 1998, by and between Sinclair Communications, Inc., a Maryland corporation ("Seller"), The Ackerley Group, Inc., a Delaware corporation ("Purchaser"), and First Union National Bank, a national banking association ("Escrow Agent").
RECITALS:
WHEREAS, Purchaser has entered into an Asset Purchase Agreement (the "Purchase Agreement") dated as of September 25, 1998 with the Seller to purchase substantially all of the Assets (as defined in the Purchase Agreement) of television broadcast station WOKR-TV, Channel 13, Rochester, New York; and
WHEREAS, pursuant to Section 2.4 of the Purchase Agreement, Seller and Purchaser wish to establish an escrow account with a portion of the Purchase Price to secure the obligations of the Purchaser under the Purchase Agreement; and
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. TERMS. Unless otherwise defined herein, capitalized terms used in this Deposit Agreement have the definitions set forth in the Purchase Agreement.
ARTICLE II
THE FUND
2.1. DELIVERY. Simultaneously with the execution hereof, the Purchaser is depositing by wire transfer of immediately available funds Twelve Million Five Hundred Thousand Dollars ($12,500,000.00) with the Escrow Agent which represents the deposit in accordance with Section 2.4 of the Agreement. The said $12,500,000.00 is to be held by the Escrow Agent pursuant to the terms of this Deposit Agreement.
2.2. RECEIPT. The Escrow Agent hereby acknowledges receipt of $12,500,000.00 from the Purchaser and agrees to hold and disburse said amount (the "Fund") and any interest and other income thereon (collectively with the Fund, the "Escrowed Funds") in accordance with the terms and conditions of this Deposit Agreement and for the uses and purposes stated herein. If the Escrow Agent does not receive a Purchaser's Notice pursuant to Section 3.2(b) hereof, or a Seller's Notice pursuant to Section 3.2(a) hereof, it shall deliver the Escrowed Funds at the Closing to be dealt with in accordance with Section 3.1 of this Agreement.
2.3. INVESTMENT. Escrow Agent shall, pending the disbursement of the Escrowed Funds pursuant to this Deposit Agreement, invest the Escrowed Funds in accordance with the Purchaser's instructions from time to time in:
(a) certificates of deposit or interest bearing savings accounts (the terms of which have no restrictions as to the date of withdrawal) in a federally insured banking or thrift institution (including, without limitation, Escrow Agent or any affiliate), but only if, at the time of Escrow Agent's investment therein, either (i) the commercial paper of such institution is rated A-1
or A-1+ by Standard & Poor's or P-1 by Moody's; or (ii) such deposits are fully insured by the FDIC;
(b) commercial paper having, at the time of Escrow Agent's investment, a rating of A-1 or A-1+ by Standard & Poor's or P-1 by Moody's;
(c) any money market fund which is both (i) issued by an investment company registered under the Investment Company Act of 1940, and (ii) rated not lower than the highest rating category by Standard & Poor's or Moody's; and/or
(d) securities issued or insured by the United States Government or an agency or instrumentality thereof with a remaining term to maturity of no more than one year.
ARTICLE III
PROCEDURES FOR DISBURSEMENT OF THE FUND
The following procedures shall govern the distribution of the Escrowed Funds by the Escrow Agent, and Escrow Agent shall release the Escrowed Funds only in accordance with this Article III.
3.1. PAYMENT OF ESCROWED FUNDS TO SELLERS AT CLOSING. At the Closing, and simultaneously with the performance of Purchaser and Seller of their respective obligations under the Purchase Agreement, Purchaser and Seller shall send to the Escrow Agent telecopied joint written instructions executed by Purchaser and Seller authorizing the Escrow Agent to deliver the Escrowed Funds, or any part thereof, to Seller as a credit against the Purchase Price payable under the Purchase Agreement by Purchaser in accordance with Section 2.5 thereof. The Escrow Agent shall promptly comply with such joint instructions.
3.2. FAILURE TO CLOSE. At any time prior to the Closing, the following procedure shall apply:
(a) Seller may deliver written notice to the Purchaser and the Escrow
Agent that the Seller is entitled to the Fund (the "Seller's Notice")
pursuant to the terms and conditions of the Agreement. The Seller's Notice
shall specify the basis upon which the Seller claims entitlement to the
Fund. If the Purchaser does not deliver to Seller and the Escrow Agent a
written objection to the Seller's claim to entitlement to the Fund
specifying the basis upon which it objects to the Seller's entitlement to
the Fund within five (5) Business Days after delivery of the Seller's
Notice, then the Escrow Agent shall deliver the Fund to Seller on the sixth
Business Day after delivery of the Seller's Notice as liquidated damages as
a consequence of Purchaser's default (which liquidated damages shall not
constitute a penalty). If the Purchaser delivers to Seller and the Escrow
Agent a written objection to Seller's claim to entitlement to the Fund
within five (5) Business Days after delivery of the Seller's Notice, then
the matter shall be resolved as provided in Section 3.3 hereof, and the
Escrow Agent shall continue to hold the Escrowed Funds until it receives
(i) a nonappealable court order from a court of competent jurisdiction
directing disposition of such property, (ii) a signed arbitration award in
accordance with Section 3.3(c), or (iii) appropriate written instructions
signed by both Seller and Purchaser.
(b) The Purchaser may deliver written notice to Seller and the Escrow Agent that the Purchaser is entitled to the Escrowed Funds or any portion thereof pursuant to the terms and conditions of the Purchase Agreement (the "Purchaser's Notice"). The Purchaser's Notice shall specify the basis upon which the Purchaser claims entitlement to the Escrowed Funds. If Seller does not deliver to the Purchaser and the Escrow Agent a written objection to the
Purchaser's claim to entitlement to the Escrowed Funds specifying the basis
upon which the Seller objects to the Purchaser's entitlement to the
Escrowed Funds within five (5) Business Days after delivery of the
Purchaser's Notice, then the Escrow Agent shall deliver the Escrowed Funds
to the Purchaser on the sixth Business Day after delivery of the
Purchaser's Notice. If Seller delivers to the Purchaser and the Escrow
Agent a written objection to the Purchaser's claim to entitlement to the
Escrowed Funds within five (5) Business Days after delivery of the
Purchaser's Notice, then the matter shall be resolved as provided in
Section 3.3 hereof, and the Escrow Agent shall continue to hold the
Escrowed Funds until it receives (i) a nonappealable court order from a
court of competent jurisdiction directing disposition of such property,
(ii) a signed arbitration award in accordance with Section 3.3(c), or (iii)
appropriate written instructions signed by both Seller and Purchaser.
(c) In the event that the Escrow Agent receives both a Seller's Notice and a Purchaser's Notice prior to the first date that the Escrow Agent is obligated hereunder to deliver the Escrowed Funds to the Purchaser or the Fund to Seller pursuant to Section 3.2(a) or 3.2(b) hereof, then the Escrow Agent shall continue to hold the Escrowed Funds until it receives (i) a nonappealable court order from a court of competent jurisdiction directing disposition of such property, (ii) a signed arbitration award in accordance with Section 3.3(c), or, (iii) appropriate written instructions signed by both Seller and Purchaser.
3.3. ARBITRATION OF DISPUTES.
(a) Any dispute between the parties relating hereto shall first be negotiated by the parties, and if a mutually acceptable resolution does not result, shall be resolved by means of an arbitration to be held in Baltimore, Maryland, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect (the "Arbitration Rules"). In order to commence an arbitration, Purchaser or the Seller's Agents shall deliver to the Seller's Agents or Purchaser, as the case may be, a request for arbitration. Any such request shall include a reasonably detailed description of the facts forming the basis of such request and shall list the provisions of the Purchase Agreements that the party sending such request reasonably believes are implicated by such facts and the relief or remedy sought.
(b) Any such arbitration shall be held before a panel of three arbitrators who shall be chosen by the American Arbitration Association in accordance with the Arbitration Rules.
(c) The arbitrators shall make their award (which in all cases shall include a statement of the bases and reasons for such award) with respect to any particular request for arbitration within thirty (30) days from the date of closing of the oral hearings or, if oral hearings have been waived, within thirty (30) days from the date the final statements and proofs are transmitted to the arbitrators with respect to such request. Any such award shall be final and binding upon the parties and the Escrow Agent shall rely thereon.
(d) The party or parties against whom the arbitration award is made shall bear all fees and expenses of the arbitrators. If the award does not favor one party in its entirety, the arbitrators shall have the authority to charge such costs against the parties in such proportions as they may determine. If no such determination is made, such costs shall be borne one-half by Purchaser and one-half by the Seller. All other expenses incurred by any party shall be borne by such party.
3.4. TIME OF ESSENCE. The parties agree that time is of the essence with respect to all deliveries referred to in this Article III.
ARTICLE IV
ESCROW AGENT
4.1. APPOINTMENT. The Purchaser and Seller hereby appoint Escrow Agent to serve hereunder and the Escrow Agent hereby accepts such appointment and agrees to perform all duties which are expressly set forth in this Deposit Agreement.
4.2. COMPENSATION. Escrow Agent shall be entitled to compensation for its services hereunder in accordance with Schedule A attached hereto, the payment of which shall be split equally by Seller and Purchaser.
4.3. RESIGNATION. The Escrow Agent may resign at any time upon giving the other parties hereto thirty (30) days' prior written notice. In such event, the Escrow Agent shall deliver the Escrowed Funds and any and all documents relating thereto then in its possession to a successor Escrow Agent; the successor Escrow Agent shall be such person, firm or corporation as shall be mutually agreed upon by the Purchaser and Seller. Such resignation shall not be effective until a successor agrees to act hereunder; provided, however, that if no successor is appointed and acting hereunder within thirty (30) days after such notice is given, Escrow Agent may pay and deliver the Escrowed Funds into a court of competent jurisdiction and shall have no further responsibility hereunder.
ARTICLE V
LIABILITIES AND INDEMNIFICATION OF ESCROW AGENT
5.1. LIMITATIONS. Escrow Agent shall not be liable for any damages, or have any obligations other than the duties prescribed herein in carrying out or executing the purposes and intent of this Escrow Agreement; provided, however, that nothing herein contained shall relieve
Escrow Agent from liability arising out of its own willful misconduct or gross negligence. Escrow Agent's duties and obligations under this Escrow Agreement shall be entirely administrative and not discretionary. Escrow Agent shall not be liable to any party hereto or to any third party as a result of any action or omission taken or made by Escrow Agent in good faith. The parties to this Escrow Agreement shall at their joint expense (one-half by Purchaser and one-half by Seller) indemnify Escrow Agent, hold Escrow Agent harmless, and reimburse Escrow Agent from, against and for, any and all liabilities, costs, fees and expenses (including reasonable attorneys' fees) Escrow Agent may suffer or incur by reason of its execution and performance of this Escrow Agreement. In the event any legal questions arise concerning Escrow Agent's duties and obligations hereunder, Escrow Agent may consult its counsel and rely without liability upon written opinions given to it by such counsel.
Escrow Agent shall be protected in acting upon any written notice, request, waiver, consent, authorizations, or other paper or document which Escrow Agent, in good faith, believes to be genuine and what it purports to be.
5.2. COLLATERAL AGREEMENTS. The Escrow Agent shall not be bound in any way by any contract or agreement between the other parties hereto, whether or not it has knowledge of any such contract or agreement or of its terms or conditions.
ARTICLE VI
TERMINATION
6.1. This Deposit Agreement shall be terminated (i) upon disbursement or release of the Escrowed Funds by the Escrow Agent in accordance with the terms hereof, (ii) by written mutual consent signed by Purchaser and Seller, or (iii) payment of the Escrowed Funds into a court of
competent jurisdiction in accordance with Section 4.3 hereof. This Deposit Agreement shall not be otherwise terminated.
ARTICLE VII
OTHER PROVISIONS
7.1. NOTICES. All notices, requests, consents, payments, demands, and other communications required or contemplated under this Deposit Agreement shall be in writing and (a) personally delivered or sent via telecopy (receipt confirmed and followed promptly by delivery of the original), or (b) sent by Federal Express or other reputable overnight delivery service (for next Business Day delivery), shipping prepaid, as follows:
(a) If to Seller to:
Mr. David D. Smith President Sinclair Communications, Inc. 2000 W. 41st Street Baltimore, Maryland 21211-1420 Fax: (410) 467-5043 Telephone: (410) 467-4545 |
with a copy to:
Sinclair Communications, Inc. 2000 W. 41st Street Baltimore, Maryland 21211-1420 Attn: General Counsel Fax: (410) 662-4707 Telephone: (410) 467-4545 |
and to:
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202
Attn: Steven A. Thomas, Esquire
Fax: (410) 752-2046
Telephone: (410) 752-4545
(b) If to Purchaser:
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Attn: Denis Curley
Fax: (206) 623-7853
Telephone: (206) 624-2888
|
with a copy to:
Rubin, Winston, Diercks, Harris & Cooke
1333 New Hampshire Avenue, N.W., 10th Floor
Washington, D.C. 20036
Attn: Eric Rubin, Esquire
Fax: (202) 429-0657
Telephone: (202) 861-0870
(c) If to Escrow Agent:
First Union National Bank
800 East Main Street, Lower Mezzanine
Richmond, Virginia 23219
Attn: Gregory N. Jordan
Fax: (804) 343-6699
|
Telephone: (804) 343-6058
To be effective hereunder, all notices to Escrow Agent from Purchaser must be accompanied by evidence that such notice has been delivered to Seller and all notices to Escrow Agent from Seller
must be accompanied by evidence that such notice has been delivered to Purchaser and its counsel.
7.2. BENEFIT AND ASSIGNMENT. The rights and obligations of each party under this Deposit Agreement may not be assigned without the prior written consent of all parties, except to the same extent assignment of the rights and obligations of the parties under the Purchase Agreement are permitted without consent of the other parties. This Deposit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
7.3. ENTIRE AGREEMENT; AMENDMENT. This Deposit Agreement contains all the terms agreed upon by the parties with respect to the subject matter hereof. This Deposit Agreement may be amended or modified only by written agreement, executed by the Seller and the Purchaser and, if the amendment in any way affects the compensation, duties and/or responsibilities of the Escrow Agent, by a duly authorized representative of the Escrow Agent. No waiver of any provision hereof or rights hereunder shall be binding upon a party unless evidenced by a writing signed by such party.
7.4. HEADINGS. The headings of the sections and subsections of this Deposit Agreement are for ease of reference only and do not evidence the intentions of the parties.
7.5. GOVERNING LAW. This Deposit Agreement shall be governed by, and construed according to, the laws of the State of Maryland.
7.6. COUNTERPARTS. This Deposit Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall be deemed to be one and the same instrument.
7.7. EARNINGS. All income and earnings upon the Fund or the Escrowed Funds shall be paid to the Purchaser. All income and earnings upon the Fund or the Escrowed Funds not distributed as of the end of any taxable period shall be deemed for tax reporting purposes to have accrued for the account of Purchaser.
[SIGNATURES ON NEXT PAGE--
REST OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of _______________, 1998.
WITNESS/ATTEST: SELLER
SINCLAIR COMMUNICATIONS, INC.
_____________________________ By:_________________________________
Title: ___________________________
PURCHASER
THE ACKERLEY GROUP, INC.
_____________________________ By: ___________________________
Title: ___________________________
ESCROW AGENT
FIRST UNION NATIONAL BANK
_____________________________ By: ___________________________
Title: ___________________________
|
Exhibit C to Purchase Agreement
ADJUSTMENT ESCROW AGREEMENT
This ADJUSTMENT ESCROW AGREEMENT (this "Agreement") made as of ____________________, 1998, by and among SINCLAIR COMMUNICATIONS, INC., a Maryland corporation (the "Company"), THE ACKERLEY GROUP, INC., a Delaware corporation ("Purchaser"), and ____________________, a __________________ bank, as Adjustment Escrow Agent (the "Adjustment Escrow Agent").
WHEREAS, the Company and Purchaser are parties to a Purchase Agreement dated as of September 25, 1998 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company shall sell, assign, transfer and deliver to Purchaser the assets and business of the Business (as defined in the Purchase Agreement), and Purchaser shall purchase and acquire such assets and business;
WHEREAS, pursuant to Section 2.2(c)(ii) of the Purchase Agreement, Purchaser shall deliver to the Adjustment Escrow Agent on the Closing Date (as defined in the Purchase Agreement), the sum of (x) $1,209,600 plus (y) the Proposed Earnings Adjustment (as defined in the Purchase Agreement), if any, (the "Adjustment Escrow Amount");
WHEREAS, as contemplated by the Purchase Agreement, the Adjustment Escrow Agent shall hold the Adjustment Escrow Amount in escrow until the Actual Net Financial Assets and the Earnings Adjustment (in each case as defined in the Purchase Agreement) are determined, following which the Adjustment Escrow Amount is to be distributed in accordance with the Section 2.3(c) of the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, the parties hereto agree as follows:
Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement.
1. Appointment of Adjustment Escrow Agent. The Company and Purchaser hereby appoint ___________________ [Bank] to act as Adjustment Escrow Agent hereunder, and ___________________ [Bank] hereby accepts such appointment and agrees to act as Adjustment Escrow Agent on the terms and conditions set forth hereinafter.
2. Adjustment Escrow Amount. (a) On the Closing Date, Purchaser shall deliver to the Adjustment Escrow Agent by wire transfer of immediately available funds (to account number [______________] of the Adjustment Escrow Agent (the "Adjustment Escrow Account")) the Adjustment Escrow Amount, accompanied by written notice from Purchaser identifying such amount as an amount being delivered for deposit into the Adjustment Escrow Account. The Adjustment Escrow Agent shall acknowledge to Purchaser the Adjustment Escrow
Agent's receipt of said amount.
(b) The Adjustment Escrow Amount, not including the interest and other investment income earned thereon, shall only serve to pay the amounts set forth in Section 4 hereof.
(c) The Adjustment Escrow Agent shall hold the balance of the Adjustment Escrow Amount (the "Adjustment Escrowed Funds") in escrow and shall not withdraw the Adjustment Escrowed Funds from the Adjustment Escrow Account or use the Adjustment Escrowed Funds for any other purpose, except as provided in this Agreement.
3. Investments of Adjustment Escrowed Funds. (a) The Adjustment Escrow Agent shall invest and reinvest the Adjustment Escrowed Funds from time to time, upon receipt of the written instructions thereto issued by the Company or the Fund Holder (as defined in Section 6 hereof), as the case may be, in:
(i) Commercial paper of any corporation rated at least A-1 by S&P and P-1 by Moody's;
(ii) Negotiable certificates of deposit of United States banks having
(A) a long-term senior debt rating of at least A by S&P and Moody's, (B)
deposits in excess of $2,000,000,000 and (C) commercial paper rating
designations of at least A-1 by S&P and P-1 by Moody's;
(iii) Repurchase agreements with any United States bank which are fully collateralized by direct obligations of the United States or obligations of agencies or sponsored agencies of the United States government, excluding in all cases collateralized mortgage obligations of any kind; and
(iv) Money market instruments rated at least A-1 by S&P and P-1 by Moody's that are restricted to investments described in clause (iii);
provided that in no event shall any investment of the types described in clause
(i), (ii) or (iv) exceed ten percent of the net assets of the issuer thereof and
provided further that all investments shall have maturity dates on or before the
anticipated dates of the relevant payments hereunder.
(b) To the extent the Adjustment Escrow Agent invests any funds in the manner provided for in this Section 3 and in accordance with the written instructions from the Company or the Fund Holder, as the case may be, no party hereto shall be liable for any loss which may be incurred by reason of any such investment. No investment shall exceed the term of this Agreement.
(c) The Adjustment Escrow Agent shall have the power to reduce, sell or liquidate the foregoing investments whenever it shall be required to release all or any portion of the Adjustment Escrowed Funds pursuant to Section 4 hereof.
(d) The Adjustment Escrow Agent is authorized to register securities held by it in its name or in the name of a nominee or in bearer form and may deposit any securities or other property in a depository or a clearing corporation.
(e) Any interest or other investment income earned for the period from the time that any portion of the Purchase Price is delivered to the Adjustment Escrow Agent pursuant to the Purchase Agreement until all amounts held in the Adjustment Escrow Account have been distributed in accordance with Section 4 hereof shall be paid to the Company or the Fund Holder, as the case may be, in addition to, and at the same time as, payment of the Adjustment Escrowed Funds; provided, however, that, to the extent that any portion of the Adjustment Escrowed Funds is paid to Purchaser pursuant to of Section 4 hereof, a pro rata portion of such interest or other investment income (determined on the basis of the relative portions of the Adjustment Escrowed Funds to be paid to Purchaser and the Company or the Fund Holder, as the case may be, respectively) shall be instead paid to Purchaser. Any such interest or other investment income shall be deemed not to constitute Adjustment Escrowed Funds.
4. Adjustment Escrowed Funds. (a) As soon as practicable after the earlier of an Adjustment Agreement or an Accounting Firm Determination (but in any event within two Business Days after the Adjustment Agreement or the Accounting Firm Determination), (x) Purchaser and (y) the Company or the Fund Holder, as the case may be, shall give the Adjustment Escrow Agent joint written instructions (an "Instruction") to distribute amounts from the Adjustment Escrowed Funds and the interest and other investment income earned to the Company or the Fund Holder, as the case may be, and (if applicable) Purchaser respectively, in accordance with Sections 2.3(c) and 2.3(d) of the Purchase Agreement.
(b) Each Instruction given by Purchaser and the Company or the Fund Holder, as the case may be, to the Adjustment Escrow Agent shall be signed by an authorized representative of Purchaser and the Company or the Fund Holder, as the case may be.
(c) Promptly upon receipt of the Instruction from (x) Purchaser and (y) the Company or the Fund Holder, as the case may be, the Adjustment Escrow Agent shall distribute the Adjustment Escrowed Funds and the interest and other investment income earned in accordance with the Instruction.
(d) The Adjustment Escrow Agent shall make no payment or delivery to Purchaser and/or the Company or the Fund Holder, as the case may be, except pursuant to (i) an Instruction signed by the authorized representatives of both Purchaser and the Company or the Fund Holder, as the case may be or (ii) a final nonappealable order, judgment, writ, decree of any Federal or State court of competent jurisdiction.
(e) All payments to be made pursuant to this Section 4 shall be made by wire transfer in immediately available funds to the Person or Persons entitled thereto.
5. Purchase Agreement. The provisions of this Agreement are subject to the provisions of the Purchase Agreement, including, without limitation, Article 2 thereof. To the extent that such provisions and the provisions of this Agreement are inconsistent with one
another or in conflict, the provisions of the Purchase Agreement shall take precedence.
6. Fund Holder. The parties hereto expressly acknowledge that the Company may assign all of its rights and obligations under this Agreement and to and in the Adjustment Escrowed Funds to the stockholders of the Company or to any person or entity or any persons or entities acting directly or indirectly on behalf of the Company or such stockholders. Upon such assignment and upon the Company's delivery to the parties hereto of a notice thereof, the Company shall be released from all of its obligations under this Agreement. As used herein, the term "Fund Holder" means the person, persons, entity and/or entities to whom the Company's rights and obligations hereunder have been assigned.
7. Settlement of Disputes. Any dispute which may arise under this Agreement with respect to the delivery and/or ownership or right of possession of the Adjustment Escrowed Funds (or other funds held by the Adjustment Escrow Agent pursuant hereto) or any part thereof, or the duties of the Adjustment Escrow Agent hereunder, shall be settled either by mutual agreement of the Company or the Fund Holder, as the case may be, and Purchaser (evidenced by appropriate instructions in writing to the Adjustment Escrow Agent, signed by such parties) or, failing such agreement, either the Company or the Fund Holder, as the case may be, or Purchaser shall have the right to submit the dispute to any federal or state court located in Portland, Maine. Each party waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the jurisdiction of such courts in any such suit, action or proceeding. The Adjustment Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. Prior to the settlement of any such dispute, the Adjustment Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, that portion of the Adjustment Escrowed Funds and the interest and other investment income earned thereon which is the subject of such dispute.
8. Concerning the Adjustment Escrow Agent. (a) The Adjustment Escrow Agent shall have no duties or responsibilities except those expressly set forth herein. The Adjustment Escrow Agent may consult with counsel and shall have no liability hereunder except for its own bad faith, gross negligence or willful misconduct. It may rely on any notice, instruction, certificate, statement, request, consent, confirmation, agreement or other instrument which it reasonably believes to be genuine and to have been signed or presented by a proper Person or Persons.
(b) The Adjustment Escrow Agent shall have no duties with respect to any agreement or agreements with respect to any or all of the Adjustment Escrowed Funds and the interest and other investment income earned thereon other than as provided in this Agreement. In the event that any of the terms and provisions of any other agreement between any of the parties hereto (other than the Purchase Agreement) conflict or is inconsistent with any of the terms and provisions of this Agreement, the terms and provisions of this Agreement shall govern and control in all respects. Notwithstanding any provision to the contrary contained in any other agreement (including without limitation, the Purchase Agreement), the Adjustment Escrow Agent shall have no interest in the Adjustment Escrowed Funds or the interest and other investment income earned thereon except as provided in this Agreement.
(c) So long as the Adjustment Escrow Agent shall have any obligation to pay any amount to the Company or the Fund Holder, as the case may be, and/or Purchaser from the Adjustment Escrowed Funds hereunder, the Adjustment Escrow Agent shall keep proper books of record and account, in which full and correct entries shall be made of all receipts, disbursements and investment activity in the Adjustment Escrow Account.
(d) The Adjustment Escrow Agent shall furnish to the Company or the Fund Holder, as the case may be, and Purchaser monthly statements of account with respect to the Adjustment Escrowed Funds showing the dates and amounts of all deposits, disbursements, interest and other investment income and the balance remaining on deposit.
(e) The Adjustment Escrow Agent shall not be bound by any modification of this Agreement affecting the rights, duties and obligations of the Adjustment Escrow Agent, unless such modification shall be in writing and signed by the other parties hereto, and the Adjustment Escrow Agent shall have given its prior or contemporaneous written consent thereto. The Adjustment Escrow Agent shall not be bound by any other modification of this Agreement unless the Adjustment Escrow Agent shall have received written notice thereof.
(f) The Adjustment Escrow Agent may resign as escrow agent at any time by giving 60 days written notice by registered or certified mail to the Company or the Fund Holder, as the case may be, and Purchaser, and such resignation shall take effect at the end of such 60 days or upon earlier appointment of a successor Adjustment Escrow Agent. The Company or the Fund Holder, as the case may be, and Purchaser may remove the Adjustment Escrow Agent at any time upon written notice by the Company and Purchaser jointly to the Adjustment Escrow Agent with immediate effect. The resignation or removal shall not be effective unless and until a successor Adjustment Escrow Agent is appointed by the Company or the Fund Holder, as the case may be, and Purchaser. The Company or the Fund Holder, as the case may be, and Purchaser shall undertake to utilize their best efforts to arrange for the appointment of a successor Adjustment Escrow Agent. If any instrument of acceptance by a successor Adjustment Escrow Agent shall not have been delivered to the Adjustment Escrow Agent within 60 days after the delivery of its notice of resignation by the Adjustment Escrow Agent or its receipt of the notice of removal, the resigning or removed Adjustment Escrow Agent may, at the expense of the Company or the Fund Holder, as the case may be, and Purchaser, petition any court of competent jurisdiction for the appointment of a successor Adjustment Escrow Agent.
(g) If at any time hereafter the Adjustment Escrow Agent shall be dissolved or otherwise become incapable of acting, or the bank or trust company acting as the Adjustment Escrow Agent shall be taken over by any government official, agency, department or board, or the position of the Adjustment Escrow Agent shall become vacant for any of the foregoing reasons or for any other reason, the Company or the Fund Holder, as the case may be, and Purchaser shall jointly appoint a successor Adjustment Escrow Agent to fill such vacancy.
(h) Every successor Adjustment Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor, and also to the Company or the Fund Holder, as the case may be, and Purchaser an instrument in writing accepting such appointment hereunder, and thereupon such successor Adjustment Escrow Agent, without any further act,
shall become fully vested with all the rights, immunities and powers and shall be subject to all of the duties and obligations, of its predecessor Adjustment Escrow Agent as if originally named herein; and every predecessor Adjustment Escrow Agent shall deliver to its successor, all property and moneys held by it hereunder and all information required to properly perform the obligations of the Adjustment Escrow Agent set forth in this Agreement.
(i) The Adjustment Escrow Agent's fees shall be in the amounts set forth on Exhibit A hereto. In addition, the Adjustment Escrow Agent shall be reimbursed for its reasonable out of pocket costs incurred in performing its obligations under this Agreement upon presentation of any invoices thereof.
(j) The Company and Purchaser shall each be responsible for one-half of the fees and expenses of the Adjustment Escrow Agent.
(k) The Company or the Fund Holder, as the case may be, and Purchaser shall jointly but not severally indemnify and hold the Adjustment Escrow Agent harmless from and against any and all expenses (including reasonable attorneys' fees), liabilities, claims, damages, actions, suits or other charges incurred by or assessed against the Adjustment Escrow Agent for anything done or omitted by the Adjustment Escrow Agent in the performance of the Adjustment Escrow Agent's duties hereunder, except such which result from the Adjustment Escrow Agent's bad faith, gross negligence or willful misconduct.
(1) Insofar as required by any Governmental Authority, the Adjustment Escrow Agent shall provide all information and file all forms or returns and withhold all Taxes required to be withheld with regard to the payments made pursuant to this Agreement, including, without limitation, information and forms and returns relating to income Taxes.
9. Termination of the Adjustment Escrow Agreement. This Agreement shall terminate upon the distribution of all of the Adjustment Escrowed Funds and the interest and other investment income earned thereon by the Adjustment Escrow Agent, or its successor, if any.
10. Miscellaneous. (a) This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
(b) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
(c) This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
(d) Section headings contained herein have been inserted for reference purposes only and shall not be construed as part of this Agreement.
(e) This Agreement may be modified or amended only by a written instrument duly executed by all parties hereto or their respective successors or assigns.
(f) Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section l0(f):
If to the Company:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: President
Fax: (410) 467-5043
with copy to:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: General Counsel
Fax: (410) 662-4707
and
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas, Esquire
Fax: (410) 752-2046
If to Purchaser:
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Attn: Denis M. Curley,
Co-President and CFO
Fax: (206) 623-7853
with a copy to:
Rubin, Winston, Diercks, Harris & Cooke,
L.L.P.
10th Floor
1333 New Hampshire Avenue, NW
Washington, DC 20036
Attn: Eric M. Rubin, Esquire
Fax: (202) 429-0657
Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable.
(g) The Adjustment Escrow Agent shall not be liable to pay any Tax, if any, on any interest or other investment income earned on the Adjustment Escrowed Funds, it being the understanding of the parties that any such Tax shall be the responsibility of the party or parties entitled to receive the Adjustment Escrowed Funds and any such interest or other investment income, allocated between parties on the basis of the relative portions of the Adjustment Escrow Account to be paid to Purchaser and the Company or the Fund Holder, as the case may be, respectively, pursuant to Section 4(a) hereof
(h) If any party hereto refuses to comply with, or at any time violates or attempts to violate, any term, covenant or agreement contained in this Agreement, any other party hereto may, by injunctive action, compel the defaulting party to comply with, or refrain from violating, such term, covenant or agreement, and may, by injunctive action, compel specific performance of the obligations of the defaulting party.
(i) Except as provided herein, the rights and obligations of the parties under this Agreement shall not be assigned to any Person, without the written consent of the other parties. This Agreement shall not confer any benefits on any Persons other than the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered on the date first above written.
as Adjustment Escrow Agent
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SINCLAIR COMMUNICATIONS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
THE ACKERLEY GROUP, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Exhibit A to Adjustment Escrow Agreement
ADJUSTMENT ESCROW AGENT'S FEES
Exhibit D to Purchase Agreement
SECURITY ESCROW AGREEMENT
This SECURITY ESCROW AGREEMENT (this "Agreement") made as of
______________________, 1998, by and among SINCLAIR COMMUNICATIONS, INC., a
Maryland corporation (the "Company"), THE ACKERLEY GROUP, INC., a Delaware
Corporation (the "Purchaser"), and _____________________, a _________________
[Bank], as Security Escrow Agent (the "Security Escrow Agent").
WHEREAS, the Company and Purchaser are parties to a Purchase Agreement dated as of September 25, 1998 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Company shall sell, assign, transfer and deliver to Purchaser the assets and business of the Business (as defined in the Purchase Agreement), and Purchaser shall purchase and acquire such assets and business;
WHEREAS, pursuant to Section 2.2(c)(iii) of the Purchase Agreement,
Purchaser shall deliver on the Closing Date (as defined in the Purchase
Agreement) an amount of $3,225,600 of the Purchase Price (as defined in the
Purchase Agreement) to the Security Escrow Agent as security for the payment of
certain amounts (i) as to which Purchaser may become entitled to indemnification
pursuant to Article 8 of the Purchase Agreement, (ii) as to which Purchaser may
become entitled to pursuant to Section 5.8(a) of the Purchase Agreement and
(iii) that may be payable to Purchaser pursuant to Section 2.3(c)(iii)(B) of the
Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, the parties hereto agree as follows:
Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement.
1. Appointment of Security Escrow Agent. The Company and Purchaser hereby appoint _________________ [Bank] to act as Security Escrow Agent hereunder, and ____________________ [Bank] hereby accepts such appointment and agrees to act as Security Escrow Agent on the terms and conditions set forth hereinafter.
2. Security Escrow Amount. (a) On the Closing Date, Purchaser shall deliver to the Security Escrow Agent by wire transfer of immediately available funds (to account number ____________________ of the Security Escrow Agent (the "Security Escrow Account")) the amount of $3,225,600 (the "Security Escrow Amount"), accompanied by written notice from Purchaser identifying such amount as an amount being delivered for deposit into the Security Escrow Account. The Security Escrow Agent shall acknowledge to Purchaser the Security Escrow Agent's receipt of said amount.
(b) The Security Escrow Amount, not including the interest and other investment
income earned thereon, shall only serve to secure the performance of (i) the indemnification obligations of the Company as set forth in Article 8 of the Purchase Agreement, (ii) the obligations of the Company as set forth in Section 5.8(a) of the Purchase Agreement and (iii) certain of the obligations set forth in Section 2.3(c)(iii)(B) of the Purchase Agreement.
(c) The Security Escrow Agent shall hold the balance of the Security Escrow Amount (the "Security Escrowed Funds") in escrow and shall not withdraw the Security Escrowed Funds from the Security Escrow Account or use the Security Escrowed Funds for any other purpose, except as provided in this Agreement.
3. Investments of Security Escrowed Funds. (a) The Security Escrow Agent shall invest and reinvest the Security Escrowed Funds from time to time, upon receipt of the written instructions thereto issued by the Company or the Fund Holder (as defined in Section 7 hereof), in:
(i) Commercial paper of any corporation rated at least A-1 by S&P and P-1 by Moody's;
(ii) Negotiable certificates of deposit of United States banks having
(A) a long-term senior debt rating of at least A by S&P and Moody's, (B)
deposits in excess of $2,000,000,000 and (C) commercial paper rating
designations of at least A-1 by S&P and P-1 by Moody's;
(iii) Repurchase agreements with any United States bank which are fully collateralized by direct obligations of the United States or obligations of agencies or sponsored agencies of the United States government, excluding in all cases collateralized mortgage obligations of any kind; and
(iv) Money market instruments rated at least A-1 by S&P and P-1 by Moody's that are restricted to investments described in clause (iii);
provided that in no event shall any investment of the types described in clause
(i), (ii) or (iv) exceed ten percent of the net assets of the issuer thereof and
provided further that all investments shall have maturity dates on or before the
anticipated dates of the relevant payments hereunder.
(b) To the extent the Security Escrow Agent invests any funds in the manner provided for in this Section 3 and in accordance with the written instructions from the Company or the Fund Holder, as the case may be, no party hereto shall be liable for any loss which may be incurred by reason of any such investment.
No investment shall exceed the term of this Agreement.
(c) The Security Escrow Agent shall have the power to reduce, sell or liquidate the foregoing investments whenever it shall be required to release all or any portion of the Security Escrowed Funds pursuant to Section 4 or 5 hereof.
(d) The Security Escrow Agent is authorized to register securities held by it in its
name or in the name of a nominee or in bearer form and may deposit any securities or other property in a depository or a clearing corporation.
(e) Any interest or other investment income earned for the period from the
time that the Security Escrow Amount is delivered to the Security Escrow Agent
until all the Security Escrowed Funds have been distributed in accordance with
Section 5 hereof, shall be paid monthly to the Company or the Fund Holder, as
the case may be, provided that no such payments shall be made until (i) a
determination of whether any payment out of the Security Escrow Account pursuant
to Section 2.3(c)(iii)(B) of the Purchase Agreement is required and (ii) if so
required, such payment has been made; provided further, that to the extent that
any portion of the Security Escrowed Funds is paid to Purchaser pursuant to
Section 2.3(c)(iii)(B) of the Purchase Agreement, a pro rata portion of such
interest or other investment income earned through the date of such payment
(determined on the basis of the relative portions of the Security Escrowed Funds
so paid and that not so paid) shall be instead paid to Purchaser at the time
such portion of the Security Escrowed Funds is paid to Purchaser; and provided
further that the Security Escrow Agent shall retain interest or investment
income to the extent necessary to replenish previous losses incurred by reason
of any investment under Section 3(a) that resulted in a reduction in the
principal amount of the Security Escrow Amount. Any such interest or other
investment income shall be deemed not to constitute Security Escrowed Funds.
4. Claim Notices. (a) During the period from the Closing Date until the Scheduled Escrow Expiration Date (as defined in Section 10 hereof), Purchaser acting on its own or, in the event set forth under (i) hereof, on behalf of any other Purchaser Indemnified Party (together for the purposes of this Section 4, "Purchaser") shall be entitled to give the Security Escrow Agent written notice (a "Claim Notice") of (i) any Claims and Damages incurred by it or a Purchaser Indemnified Party for which Purchaser claims that the Company is obligated to indemnify Purchaser pursuant to Article 8 of the Purchase Agreement, (ii) 50% of any payment made by Purchaser to any Business Employee pursuant to the terms of the Severance Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule to the Purchase Agreement, which Purchaser is entitled to recover pursuant to Section 5.8(a) of the Purchase Agreement or (iii) the amount that is to be delivered to Purchaser pursuant to Section 2.3(c)(iii)(B) of the Purchase Agreement.
(b) Each Claim Notice given by Purchaser to the Security Escrow Agent shall be signed by an authorized representative of Purchaser and (i) shall include the information required under Section 8.5 of the Purchase Agreement, including, for as far as its concerns a Claim Notice for Claims and Damages, the nature and details of such Claims and Damages, the section of the Purchase Agreement pursuant to which the Claim Notice is made, the amount of Claims and Damages, if reasonably ascertainable by Purchaser (or a statement that the amount thereof is not then reasonably ascertainable by Purchaser and the basis for such statement) and whether or not such Claims and Damages arise from the assertion of liability by a third party or (ii) set forth Purchaser's claim pursuant to Section 5.8(a) or 2.3(c)(iii)(B) of the Purchase Agreement.
(c) Promptly upon receipt of the Claim Notice, the Security Escrow Agent shall give notice thereof to the Company or the Fund Holder, as the case may be, by transmitting a copy of such Claim Notice to the Company or the Fund Holder, as the case may be, in the
manner and to the address specified in Section 1l(f) hereof.
(d) The Security Escrow Agent shall make no payment or delivery to Purchaser or any Purchaser Indemnified Party for which a Claim Notice has been given to the Security Escrow Agent pursuant to this Section 4, or for the first payment of interest or other investment income pursuant to Section 3(e), except pursuant to (i) written instructions to the Security Escrow Agent signed by the authorized representatives of Purchaser and of the Company or the Fund Holder, as the case may be (the "Joint Order"), or (ii) a final nonappealable order, judgment, writ, decree of any Federal or State court of competent jurisdiction (the "Court Order"). Claims and Damages, or such portion of Claims and Damages, that have not been paid to Purchaser or otherwise resolved by a Joint Order or a Court Order, together with all unresolved claims with respect to Sections 5.8(a) and 2.3(c)(iii)(B), are herein referred to collectively as "Pending Claims".
5. Distribution of the Security Escrowed Funds. All cash held in the Security Escrow Account on the Scheduled Escrow Expiration Date shall be distributed as follows:
(a) The Security Escrow Agent shall deliver to the Company or the Fund Holder, as the case may be, by wire transfer to a bank account designated by the Company or the Fund Holder, as the case may be, the amount by which the balance in the Security Escrow Account as of the Scheduled Escrow Expiration Date exceeds the aggregate amount for all indemnification or other payments claimed under Pending Claims described in all Claim Notices with respect thereto (the "Reserves") as of the Scheduled Escrow Expiration Date.
(b) An amount equal to the aggregate amount of the Reserves shall continue to be held by the Security Escrow Agent as Security Escrowed Funds as long as, and to the extent that, such Pending Claims have not been resolved by a Joint Order or a Court Order.
(c) Whenever any Pending Claim is resolved by a Joint Order or a Court Order, the amount of such Pending Claim shall be disposed of in accordance with such Joint Order or Court Order.
(d) Upon a Joint Order or a Court Order, money may be distributed at any time to Purchaser and the Company or the Fund Holder, as the case may be, or both of them.
6. Purchase Agreement. The provisions of this Agreement are subject to the provisions of the Purchase Agreement, including, without limitation, Sections 2.3(c), 2.4, 2.5 and 5.8(a) and Article 8 thereof. To the extent that such provisions and the provisions of this Agreement are inconsistent with one another or in conflict, the provisions of the Purchase Agreement shall take precedence.
7. Fund Holder. The parties hereto expressly acknowledge that the Company may assign all of its rights and obligations under this Agreement and to and in the Security Escrowed Funds to the stockholders of the Company or to any person or entity or any persons or entities acting directly or indirectly on behalf of the Company or such stockholders. Upon such assignment and upon the Company's delivery to the parties hereto of a notice thereof, the
Company shall be released from all of its obligations under this Agreement. As used herein, the term "Fund Holder" means the person, persons, entity and/or entities to whom the Company's rights and obligations hereunder have been assigned.
8. Settlement of Disputes. Any dispute which may arise under this Agreement with respect to the delivery and/or ownership or right of possession of the Security Escrowed Funds or any part thereof, or the duties of the Security Escrow Agent hereunder, shall be settled either by mutual agreement of the Company or the Fund Holder, as the case may be, and Purchaser (evidenced by appropriate instructions in writing to the Security Escrow Agent, signed by such parties) or, failing such agreement, either the Company or the Fund Holder, as the case may be, or Purchaser shall have the right to submit the dispute to any federal or state court located in Portland, Maine. Each party waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the jurisdiction of such courts in any such suit, action or proceeding. The Security Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. Prior to the settlement of any such dispute, the Security Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, that portion of the Security Escrowed Funds and the interest and other investment income earned thereon which is the subject of such dispute.
9. Concerning the Security Escrow Agent. (a) The Security Escrow Agent shall have no duties or responsibilities except those expressly set forth herein. The Security Escrow Agent may consult with counsel and shall have no liability hereunder except for its own bad faith, gross negligence or willful misconduct. It may rely on any notice, instruction, certificate, statement, request, consent, confirmation, agreement or other instrument which it reasonably believes to be genuine and to have been signed or presented by a proper Person or Persons.
(b) The Security Escrow Agent shall have no duties with respect to any agreement or agreements with respect to any or all of the Security Escrowed Funds and the interest and investment income earned thereon other than as provided in this Agreement. In the event that any of the terms and provisions of any other agreement between any of the parties hereto (other than the Purchase Agreement) conflict or is inconsistent with any of the terms and provisions of this Agreement, the terms and provisions of this Agreement shall govern and control in all respects. Notwithstanding any provision to the contrary contained in any other agreement (including, without limitation, the Purchase Agreement), the Security Escrow Agent shall have no interest in the Security Escrowed Funds or the interest and other investment income earned thereon except as provided in this Agreement.
(c) So long as the Security Escrow Agent shall have any obligation to pay any amount to the Company or the Fund Holder, as the case may be, and/or Purchaser from the Security Escrowed Funds hereunder, the Security Escrow Agent shall keep proper books of record and account, in which full and correct entries shall be made of all receipts, disbursements and investment activity in the Security Escrow Account.
(d) The Security Escrow Agent shall finish to the Company or the Fund Holder, as the case may be, and Purchaser monthly statements of account with respect to the Security Escrowed Funds showing the dates and amounts of all deposits, disbursements, interest and other
investment income and the balance remaining on deposit.
(e) The Security Escrow Agent shall not be bound by any modification of this Agreement affecting the rights, duties and obligations of the Security Escrow Agent, unless such modification shall be in writing and signed by the other parties hereto, and the Security Escrow Agent shall have given its prior or contemporaneous written consent thereto. The Security Escrow Agent shall not be bound by any other modification of this Agreement unless the Security Escrow Agent shall have received written notice thereof.
(f) The Security Escrow Agent may resign as escrow agent at any time by giving 60 days written notice by registered or certified mail to the Company or the Fund Holder, as the case may be, and Purchaser, and such resignation shall take effect at the end of such 60 days or upon earlier appointment of a successor Security Escrow Agent. The Company or the Fund Holder, as the case may be, and Purchaser may remove the Security Escrow Agent at any time upon written notice by the Company or the Fund Holder, as the case may be, and Purchaser jointly to the Security Escrow Agent with immediate effect. The resignation or removal shall not be effective unless and until a successor Security Escrow Agent is appointed by the Company or the Fund Holder, as the case may be, and Purchaser. The Company or the Fund Holder, as the case may be, and Purchaser shall undertake to utilize their best efforts to arrange for the appointment of a successor Security Escrow Agent. If any instrument of acceptance by a successor Security Escrow Agent shall not have been delivered to the Security Escrow Agent within 60 days after the delivery of its notice of resignation by the Security Escrow Agent or its receipt of the notice of removal, the resigning or removed Security Escrow Agent may, at the expense of the Company or the Fund Holder, as the case may be, and Purchaser, petition any court of competent jurisdiction for the appointment of a successor Security Escrow Agent.
(g) If at any time hereafter the Security Escrow Agent shall be dissolved or otherwise become incapable of acting, or the bank or trust company acting as the Security Escrow Agent shall be taken over by any government official, agency, department or board, or the position of the Security Escrow Agent shall become vacant for any of the foregoing reasons or for any other reason, the Company or the Fund Holder, as the case may be, and Purchaser shall jointly appoint a successor Security Escrow Agent to fill such vacancy.
(h) Every successor Security Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor, and also to the Company or the Fund Holder, as the case may be, and Purchaser an instrument in writing accepting such appointment hereunder, and thereupon such successor Security Escrow Agent, without any further act, shall become fully vested with all the rights, immunities and powers and shall be subject to all of the duties and obligations, of its predecessor Security Escrow Agent as if originally named herein; and every predecessor Security Escrow Agent shall deliver to its successor, all property and moneys held by it hereunder and all information required to properly perform the obligations of the Security Escrow Agent set forth in this Agreement.
(i) The Security Escrow Agent's fees shall be in the amounts set forth on Exhibit A hereto. In addition, the Security Escrow Agent shall be reimbursed on demand for its reasonable out of pocket costs incurred in performing its obligations under this Agreement upon
its presentation of any invoices thereof.
(j) The Company and Purchaser shall each be responsible for payment of one half of the fees and expenses of the Security Escrow Agent, including the expenses set forth in Section 9(i) hereof
(k) The Company or the Fund Holder, as the case may be, and Purchaser shall indemnify and hold the Security Escrow Agent harmless from and against any and all expenses (including reasonable attorneys' fees), liabilities, claims, damages, actions, suits or other charges incurred by or assessed against the Security Escrow Agent for anything done or omitted by the Security Escrow Agent in the performance of the Security Escrow Agent's duties hereunder, except such which result from the Security Escrow Agent's bad faith, gross negligence or willful misconduct.
(1) Insofar as required by any governmental agency or authority, the Security Escrow Agent shall provide all information and file all forms or returns and withhold all Taxes required to be withheld with regard to the payments made pursuant to this Agreement, including, without limitation, information and forms and returns relating to income Taxes.
10. Termination of the Security Escrow Agreement. This Agreement shall terminate upon the earlier to occur of: (i) the first anniversary of the Closing Date (the "Scheduled Escrow Expiration Date") and (ii) the distribution of all of the Security Escrowed Funds and the interest and other investment income earned thereon by the Security Escrow Agent pursuant to this Agreement; provided, however, that if there are any unresolved or unsettled Claims and Damages outstanding on the Scheduled Escrow Expiration Date, this Agreement will not terminate until the resolution of all such Claims and Damages and the distribution of all of the Security Escrowed Funds pursuant to Section 5 hereof.
11. Miscellaneous. (a) This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.
(b) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their representative successors and assigns.
(c) This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
(d) Section headings contained herein have been inserted for reference purposes only and shall not be construed as part of this Agreement.
(e) This Agreement may be modified or amended only by a written instrument duly executed by all parties hereto or their respective successors or assigns.
(f) Any notice, demand, claim, notice of claim, request or communication
required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section l1(f):
If to the Company:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: President
Fax: (410) 467-5043
with copy to:
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, Maryland 21211-1420
Attn: General Counsel
Fax: (410) 662-4707
and
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, Maryland 21202-1053
Attn: Steven A. Thomas, Esquire
Fax: (410) 752-2046
If to Purchaser:
The Ackerley Group, Inc.
1301 Fifth Avenue, Suite 4000
Seattle, Washington 98101
Attn: Denis M. Curley,
Co-President and CFO
Fax: (206) 623-7853
with a copy to:
Rubin, Winston, Diercks, Harris & Cooke,
L.L.P.
10th Floor
1333 New Hampshire Avenue, NW
Washington, DC 20036
Attn: Eric M. Rubin, Esquire
Fax: (202) 429-0657
Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable.
(g) The Security Escrow Agent shall not be liable to pay any Tax, if any, on any interest or other investment income earned on the Security Escrowed Funds, it being the understanding of the parties that any such Tax shall be the responsibility of the Company or the Fund Holder, as the case may be.
(h) If any party hereto refuses to comply with, or at any time violates or attempts to violate, any term, covenant or agreement contained in this Agreement, any other party hereto may, by injunctive action, compel the defaulting party to comply with, or refrain from violating, such term, covenant or agreement, and may, by injunctive action, compel specific performance of the obligations of the defaulting party.
(i) Except as provided herein, the rights and obligations of the parties under this Agreement shall not be assigned to any Person, without the written consent of the other parties. This Agreement shall not confer any benefits on any Persons other than the parties hereto and the Fund Holder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered on the date first above written.
__________________________________ [BANK],
as Adjustment Escrow Agent
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SINCLAIR COMMUNICATIONS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
THE ACKERLEY GROUP, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Exhibit A to Security Escrow Agreement
SECURITY ESCROW AGENT'S FEES
Exhibit E-1 to Purchase Agreement
[Date of Closing]
The Ackerley Group
Suite 4000
1301 Fifth Avenue
Seattle, Washington 98101
Attention: Denis Curley
RE: ASSET PURCHASE AGREEMENT, ENTERED INTO ON SEPTEMBER ____, 1998
BY AND BETWEEN THE ACKERLEY GROUP ("ACKERLEY")
AND SINCLAIR COMMUNICATIONS, INC. (THE "PURCHASE AGREEMENT")
Ladies and Gentlemen:
We have acted as counsel to Sinclair Communications, Inc., a Maryland corporation ("SCI") in connection with the transactions contemplated by the Purchase Agreement. This opinion is being delivered to you pursuant to Section 10.2.6 of the Purchase Agreement. All capitalized terms used herein but not otherwise defined in this opinion shall have the meanings ascribed thereto in the Purchase Agreement.
We have reviewed the Purchase Agreement and such other corporate records of SCI, certificates of public officials, certificates of officers of SCI 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, that all documents executed by a party other than officers and agents of SCI, 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 Purchase Agreement, (b) written and oral representations of officers of SCI, 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 Ackerley Group
______________ ___, 1998
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 SCI 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 SCI 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 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 Purchase Agreement. We note that the Purchase Agreement is governed by the laws of the State of New York. We are not admitted to practice in the State of New York, and we have assumed with your consent, without independent investigation, that the relevant laws of the State of New York are identical in all respects to the laws of the State of Maryland. 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 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 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) federal or state securities or "Blue Sky" laws, (iv) bulk transfer or sales laws, (v) matters arising under the Communications Act of 1934, as amended, or the laws, rules, regulations or policies of the Federal Communications Commission, or (vi) antitrust laws.
Based upon the foregoing, subject to the assumptions, limitations and exceptions contained herein, we are of the opinion that:
1. SCI is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland.
The Ackerley Group
______________ ___, 1998
2. SCI has the requisite corporate power and authority to execute, deliver and perform its obligations under the Purchase Agreement and the Amendment.
3. The Purchase Agreement has been duly executed and delivered by SCI and constitutes the valid and binding obligation of SCI, enforceable against SCI in accordance with its respective terms.
4. The execution, delivery and performance by SCI of the Purchase Agreement and the consummation by SCI of the transactions contemplated thereby do not and will not conflict with or result in a breach of SCI's certificate or articles of incorporation or its bylaws, each as in effect immediately prior to the Closing.
We express no opinion as to the effect of the violation of any law or regulation that may be applicable to SCI as a result of the involvement of parties other than SCI in the transactions contemplated by the 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 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.
Exhibit E-2
FORM OF FCC OPINION
1. The FCC has issued to the Company the licenses, permits and authorizations specified on Attachment I hereto (the "FCC Licenses"). The FCC Licenses are in full force and effect in that they are held by the Company and are in effect in accordance with their terms.
2. The FCC Consent has been granted to permit the assignment of the FCC Licenses by the Company to Purchaser and has not been reversed, stayed, enjoined, set aside, annulled or suspended; [provided, however, that the time under applicable FCC rules within which any formal request for reconsideration, review or other regulatory or judicial action has not lapsed, but, to our knowledge, no action or petition for such reconsideration or review has been filed or is pending.]
3. There is no FCC order, judgment, decree, notice of apparent liability or order of forfeiture outstanding, and to our knowledge, no action, suit of apparent liability, order of forfeiture, investigation or other proceeding pending, by or before the FCC against the Company that might result in a revocation, cancellation, suspension, non-renewal, short-term renewal or materially adverse modification of the FCC Licenses, except FCC proceedings generally affecting the television industry (including but not limited to the proceedings which will require modification of all television licenses to accommodate the transition to digital television).
THE ACKERLEY GROUP, INC.
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 1.1(D) (REAL PROPERTY)
See attached Section 1.1(d) of the Disclosure Schedule.
THE ACKERLEY GROUP, INC.
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 1.1(D) (REAL PROPERTY)
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IDENTIFIER/
TITLE COMMITMENT DOCUMENTATION OF
OWNED/LEASED PARCEL # OWNERSHIP ENTITY ID
------------------------------------------------------------------------------------------------------------------------------------
OWNED 4225 W. Henrietta Road BARGAIN AND SALE DEED from WOKR-TV Partners, WOKR-TV
Rochester, NY G.P. to Guy Gannett Communications, dated July
(90, 91) 10, 1998 and recorded in the Monroe County
Clerk's Office at Book 9036, page 71
WOKR-TV Channel 13 studio and office, Inc., and Pinnacle
Hill, State Route 31 (Brighton) transmitter and tower site
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LEASED One Chase Square LEASE between Lincoln First Bank, NA and
Chase Manhattan Bank WOKR-Inc., dated 01/10/80; also;
Rochester, NY
(92-L) Extension Agreement between Chase
Lincoln First Bank, NA and WOKR
Tower and receiver site Partners, dated 09/12/89;
and;
Second Extension Agreement between The Chase
Manhattan Bank and WOKR Partners, dated
11/14/94, through 12/31/99;
NOTE: Collier ABT, Inc. is now responsible for
this lease administration for billing and
collections
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THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 1.2 - EXCLUDED ASSETS
The Excluded Assets include all of the Excluded Assets as listed in Section 1.2(a)-(j) of the Asset Purchase Agreement dated September 4, 1998 by and between Guy Gannett Communications and Sinclair Communications, Inc.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
3.3(a): None. 3.3(b): None. 3.3(c): None. 3.3(d): 1. See Section 3.3.1 of the Disclosure Schedule for list of |
contracts that require consent to the transactions.
2. Gannett's Revolving Loan Agreement with BankBoston and others and Note Purchase Agreement with its noteholders prohibit the transfer of the Assets without the lenders' consent. Gannett expects to repay these obligations at or prior to Closing.
3. See Section 3.14 of the Disclosure Schedule concerning certain retention and severance agreements with various employees requiring certain payments to be accelerated at Closing.
4. See Section 3.14 of the Disclosure Schedule concerning certain agreements with various retired employees that may be accelerated upon Closing.
5. The annual management bonuses for WOKR-TV will be accelerated at Closing. If the Closing is before the end of 1998, the portion of the
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
payment relating to the period from the Closing Date through year end will be accounted for as a prepaid expense.
6. Pursuant to the terms of Gannett's Directors' Deferred Compensation Plan, deferred directors fees are payable upon the sale of substantially all of the assets of Gannett, and will be due upon Closing.
7. Most, if not all, of Gannett's insurance policies are not assignable.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.3.1 (CONSENTS REQUIRED)
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DIVISION COMPANY NAME DOCUMENT PURPOSE CONTRACT EFFECTIVE
NUMBER DATE DATE
------------------------------------------------------------------------------------------------------------------------------------
Corp. U.S. Fleet Leasing 100090.00 Master Lease Vehicle Leases 07/19/91
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Corp. various credit card providers 100900.00 Divisions' Credit Card Agreements
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WOKR-TV Collier ABR, Inc. 1681100.00 Roof Lease 11/14/94 01/01/95
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WOKR-TV GMAC 1680600.00 1997 Cadillac Lease (Alhart) 01/01/97
d/b/a The Valley Cadillac Corp.
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WOKR-TV GMAC 1681010.00 Buick Park Avenue Lease 1997 08/01/94 01/14/97
d/b/a Vincent Buick, Inc.
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Volvo Car Finance (Best Motors) 1681020.00 1996 Volvo Lease 04/18/96
(Neilsen)
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WOKR-TV Toshiba/Rochester Copier 1681050.00 Office Equipment Lease 02/19/98
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WOKR-TV SportsTicker 1670110.00 Sports Information Service 05/15/98 05/15/98
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Associated Press 1670120.00 NewsPower & GraphicsBank Services 07/27/94 07/01/94
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV FirstCom/Music House 1670290.00 Music Library License 11/30/97
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Rochester Copier 1670690.00 Main Office Fax Maintenance 12/23/97 01/15/98
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Rochester Copier, Inc. 1670693.00 GM Fax Maintenance 01/28/98 02/01/98
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Dun & Bradstreet 1670760.00 Business Information Services 05/06/98
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Associated Press 1670830.00 Radio Simulcast Services 09/15/97
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Weatherline Inc. 1670970.00 Weather Service 05/11/95
------------------------------------------------------------------------------------------------------------------------------------
WOKR-TV Frontier Communications 1671000.00 Long Distance/T-1/Cellular 08/06/97 10/31/97
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WOKR-TV WSI Corp. 1670130.00 Weather Services SWL & Subscription 04/01/94
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WOKR-TV Peter Storer & Assoc., Inc. 1670250.00 S.W.L. Program & Accounting Manager 06/09/94 07/01/97
Software
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WOKR-TV Data Center Management, Inc. 1670750.00 Software License & Support 01/01/98
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WOKR-TV Columbine JDS Systems, Inc. 1670800.00 License - DP System 11/13/97 11/13/97
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WOKR-TV ABC Inc. Capital Cities 1670010.00 Affiliation Agreement 01/24/91 01/02/95
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WOKR-TV ABC Inc. Capital Cities 1670020.00 NewOne Service 07/08/88 09/14/88
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WOKR-TV ABC Television Network 1670030.00 Satellite Earth Station 07/31/87
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THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.3.1 (CONSENTS REQUIRED
---------------------------------------------------------------------------------------------------------------------------
DIVISION EMPLOYEE NAME TITLE CONTRACT EFFECTIVE EXPIRATION
DATE DATE DATE
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Alhart, Donald W. Anchor/Assoc. News Director 08/01/98 08/01/98 07/31/01
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Armentrout, Reporter/Anchor 12/30/96 01/01/97 12/31/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Becker, Richard Sports Anchor/Reporter 12/30/96 01/01/97 12/31/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Bilone, Patrick J. Staff Meteorologist 12/11/96 08/26/96 11/30/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Catalana, Michael Sports Director 06/29/98 07/01/98 06/30/01
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Curran, Virginia Anchor/Reporter 06/01/94 06/01/94 12/31/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Emblidge, Douglas N. Anchor/Reporter 10/27/94 01/01/95 12/31/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Johnson, Glenn Staff Meteorologist 06/26/95 07/01/95 06/30/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Lepkowski, Kathy Anchor/Reporter 09/15/95 09/15/95 10/05/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV McCombs, Mary Anchor/Reporter 12/08/94 12/08/94 08/31/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV O'Connor, Meaghan News Producer 10/31/96 09/15/96 04/26/00
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Peterson, William Weathercaster/Chief Meteorologist 12/22/94 01/01/95 12/31/00
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Reed, Jennifer Lee Producer 11/03/97 12/01/97 11/30/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Samuels, Chuck News Director 12/17/96 10/14/96 10/13/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Simentkosky-Rocktasch Producer 10/21/97 10/27/97 10/26/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Smith, Pamela Producer 07/11/97 07/08/97 07/07/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Synesael, Steven Sports Producer 03/22/94 03/22/94 12/31/98
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Tachco, Bradley Producer 11/13/97 01/01/98 12/31/99
---------------------------------------------------------------------------------------------------------------------------
WOKR-TV Washington, Brian Reporter 11/06/97 12/10/97 12/09/99
---------------------------------------------------------------------------------------------------------------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.3.1 (CONSENTS REQUIRED
------------------------------------------ --------------------------------------- -------------------------------------------------
CONTRACT TERM
DISTRIBUTOR PACKAGE START END
------------------------------------------ --------------------------------------- -------------------------------------------------
Buena Vista Television Bill Nye the Science Guy Sept. 1997 Sept. 2000
------------------------------------------ --------------------------------------- -------------------------------------------------
Hearst Entertainment, Inc. Popular Mechanics: For Kids Sept. 1997 Sept. 1999
------------------------------------------ --------------------------------------- -------------------------------------------------
New World/Genesis Access: Hollywood Sept. 1996 Sept. 1998
------------------------------------------ --------------------------------------- -------------------------------------------------
Paramount Hard Copy 98 Sept. 1998 Sept. 1999
------------------------------------------ --------------------------------------- -------------------------------------------------
Paramount Maury Povich Sept. 1997 Sept. 1998
------------------------------------------ --------------------------------------- -------------------------------------------------
Paramount Wild Things Sept. 1997 Sept. 1998
------------------------------------------ --------------------------------------- -------------------------------------------------
Worldvision Enterprises Pictionary Sept. 1997 Sept. 1998
------------------------------------------ --------------------------------------- -------------------------------------------------
New York State Lottery Lottery Drawings May 1998 April 2001
------------------------------------------ --------------------------------------- -------------------------------------------------
Dr. Bob Lanier 60 Second Housecall - OPEN
News Insert
------------------------------------------ --------------------------------------- -------------------------------------------------
WRMM DJs Family Weekend - OPEN
News Insert
------------------------------------------ --------------------------------------- -------------------------------------------------
Triple Seven Concepts, Inc. Assorted 1/2 hour programs June 1998 June 1999
a subsidiary of Grey Advertising
------------------------------------------ --------------------------------------- -------------------------------------------------
------------------------------------------- -----------------------------
WRITTEN
CONSENT
DISTRIBUTOR REQUIRED TO
ASSOGM
------------------------------------------ -----------------------------
Buena Vista Television YES
------------------------------------------ -----------------------------
Hearst Entertainment, Inc. YES
------------------------------------------ -----------------------------
New World/Genesis YES
------------------------------------------ -----------------------------
Paramount YES
------------------------------------------ -----------------------------
Paramount YES
------------------------------------------ -----------------------------
Paramount YES
------------------------------------------ -----------------------------
Worldvision Enterprises YES
------------------------------------------ -----------------------------
New York State Lottery YES
------------------------------------------ -----------------------------
Dr. Bob Lanier
------------------------------------------ -----------------------------
WRMM DJs NL
------------------------------------------ -----------------------------
Triple Seven Concepts, Inc. YES
a subsidiary of Grey Advertising
------------------------------------------ -----------------------------
|
NL - No specific assignment language in agreement.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.5 (FINANCIAL STATEMENTS)
3.5(a): None.
3.5(b) & (c):
1. The Unaudited Financial Statements as defined in the Gannett
Purchase Agreement (the "Gannett Unaudited Financial
Statements") do not include all financial statements (e.g.,
cash flow), financial elements (e.g., income taxes and net
income) or footnotes required under GAAP. Net Financial
Assets will not include any accruals for any severance for
employees terminated after the Closing. The Gannett
Unaudited Financial Statements were prepared on a pro forma
basis to reflect Gannett's expectations as to how certain
accounting matters related to the sales of Gannett and the
Maine Media Business would be handled, including without
limitation: estimates of how post-retirement liabilities
would be allocated between Newco (as defined in Section 3.7
of the Disclosure Schedule to the Gannett Purchase
Agreement) and Gannett; none of the prepaid pension cost
included in "other assets" in the corporate balance sheet
was allocated to Newco; certain long-term incentive plans
and supplemental retirement benefits were not reflected on
the balance sheet because it is anticipated that they will
be paid prior to Closing. Some monthly financial statements
may not include all accrued vacation benefits. The treatment
of downpayments on program rights as described in Section
9.1 is not consistent with prior periods or in accordance
with GAAP. The consolidated statement of operations is
intended to display EBITDA and EBIT rather than net income.
The Guy Gannett Broadcast Group balance sheet shows no
allocation or apportionment of the post-retirement liability
or of the prepaid pension (except that the June 30, 1998
balance sheet does show the post-retirement liability). As
described above, the Gannett Unaudited Financial Statements
are not in conformance with GAAP nor are they consistent
with prior periods.
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.5 (FINANCIAL STATEMENTS)
2. The Gannett Unaudited Financial Statements do not include any assets or liabilities that may result from a settlement in the future with ASCAP regarding the dispute with the TV Music License Committee on new fees and the license agreement.
3.5(c):
3. There are certain liabilities related to the sale of Gannett
and its properties that are not recorded and have not been
incurred in the ordinary course including but not limited to
(a) fees for: attorneys, investment bankers, accountants,
consultants, etc.; (b) certain agreements with key employees
for severance, retention and closing benefits, and former
employees for supplemental retirement and deferred
compensation benefits.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
3.6(i):
1. Gannett has possession of various assets owned by others, including but not limited to personal items of employees and officers. Gannett also has possession of records, but does not have any ownership interest in, the following groups or organizations: Guy P. Gannett Foundation, The Portland Newspapers Bruce Roberts Fund; Guy Gannett Employees Credit Union; the Anne M. Gannett Trust and the Gannett Family Forum.
2. The New York State Department of Transportation ("NYSDOT") has taken, by eminent domain,: (1) a fee simple interest in a 0.136 acre parcel located at 4225 West Henrietta Road, Rochester, New York, along the property fronting West Henrietta Road and crossing the driveway accessing that property, and (2) a permanent easement for traffic control devices on the driveway where the driveway meets West Henrietta Road. In return, NYSDOT has paid Gannett $12,400.
3. See Section 3.16 of the Disclosure Schedule for Intellectual Property matters.
3.6(i) and (iii):
4. See Section 3.7 of the Disclosure Schedule for detail with respect to sharing of certain assets between the broadcast and Maine Media Business divisions pursuant to the terms of an Amended and Restated Contribution Agreement dated August 14, 1998. In addition, upon consummation of the sale of the Maine Media Business, Gannett will lose access to certain expertise in areas such as marketing and research provided by personnel of the Maine Media Business, and other relationships with these divisions will be terminated.
3.6(iv): None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.6 (TITLE TO ASSETS; RELATED MATTERS)
3.6(v): None. 3.6(vi): None. |
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
|
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3.7(a):
1. The Contribution Agreement also provides that Gannett will
allocate the pension plan assets in its defined benefit plan
between Gannett and Newco as further described in the
Contribution Agreement. The assets and liabilities of the
Guy Gannett Retirement Plan that relate to employees of the
Maine Media Business shall be transferred, post-closing, to
a trust that will be established to hold assets of a new
plan to be established for the Maine Media Business
3.7(b): None.
2. Gannett has entered into a new employment agreement with Don
Alhart. See Section 3.10.4 for date of agreement.
3. Gannett has agreed to accelerate at Closing WOKR-TV annual
management bonuses. If the Closing is before year end, the
portion of the payment relating to the period from the Closing
Date through the end of 1998 will be accounted for as a
prepaid expense.
4. Gannett has increased its Directors and Officers insurance
coverage (other than the employment practices coverage) to $5
million, and has increased its fiduciary insurance coverage to
$25 million prior to Closing.
3.7(c): None.
3.7(d): None
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
|
DISCLOSURE SCHEDULE
SECTION 3.7 (ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS)
3.7(e): Gannett may be below budget for 1998 by as much as $1,469,000 for all of the television stations other than WOKR-TV. Assuming a cash flow reduction of $1,469,000, EBITDA for fiscal year 1998 would be $12,700,000.
3.7(f): None. 3.7(g): None. 3.7(h): None. 3.7(i): None. |
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
|
DISCLOSURE SCHEDULE
SECTION 3.8 (LITIGATION)
3.8(i):
1. An on-air reporter has threatened to sue WOKR in connection with her recent discharge for reasons relating to work performance, insubordination and violations of station policy. No suit has been filed to date. This matter is insured.
3.8(ii): None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.9 (INSURANCE)
See Section 3.9.1 of the Disclosure Schedule for a list of insurance policies relating to Gannett as a whole.
3.9(i): None. 3.9(ii): None. 3.9(iii): None. |
THE ACKERLEY GROUP, INC.
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SCHEDULE 3.9.1 (INSURANCE POLICIES)
-----------------------------------
|
--------------------------------- ---------------------------------- ---------------------- ----------------------
TYPE INSURER LIABILITY LIMIT POLICY PERIOD
--------------------------------- ---------------------------------- ---------------------- ----------------------
Package Commercial Union 19,491,552 05/01/98 - 05/01/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Comm'l. Gen'l. Liability Commercial Union 2,000,000 05/01/98 - 05/01/99
[incl. w/Package Policy]
--------------------------------- ---------------------------------- ---------------------- ----------------------
Communication Eqpt. Commercial Union 58,615,300 05/01/98 - 05/01/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Broadcasting Loss of Income Commercial Union 13,487,696 05/01/98 - 05/01/99
[incl. w/Comm. Eqpt. Policy]
--------------------------------- ---------------------------------- ---------------------- ----------------------
Automobile Commercial Union 1,000,000 05/01/98 - 05/01/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Energy Systems Federal Insurance Co. 25,000,000 05/01/98 - 05/01/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Libel/Slander Employers Reinsurance 15,000,000 10/09/97 - 10/09/98
--------------------------------- ---------------------------------- ---------------------- ----------------------
Umbrella Federal Insurance Co. 25,000,000 05/01/98 - 05/01/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Non-Owned Aircraft National Union Fire 20,000,000 10/24/97 - 10/24/98
--------------------------------- ---------------------------------- ---------------------- ----------------------
Crime Bond Federal Insurance Co. 1,000,000 05/01/98 - 05/01/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Fiduciary Responsibility Federal Insurance Co. 25,000,000 11/10/97 - 11/10/98
--------------------------------- ---------------------------------- ---------------------- ----------------------
Directors & Officers Federal Insurance Co. 5,000,000 02/06/98 - 02/06/99
Includes:
Outside Directors 5,000,000 02/06/98 - 02/06/99
Employment Practices 5,000,000 02/06/98 - 02/06/99
Liability
--------------------------------- ---------------------------------- ---------------------- ----------------------
Workers Compensation 100,000 12/31/97 - 12/31/98
Maine MEMIC
Illinois Iowa Commercial Union
Florida Commercial Union
Massachusetts Commercial Union
New York Commercial Union
--------------------------------- ---------------------------------- ---------------------- ----------------------
Travel/Accident Reliance Standard Life 10,000 10/01/97 - 10/01/98
--------------------------------- ---------------------------------- ---------------------- ----------------------
Foreign Policy CIGNA Ins. Co. 1,000,000 05/20/98 - 05/20/99
--------------------------------- ---------------------------------- ---------------------- ----------------------
Special (K&R) Aetna Life & Casualty 3,000,000 09/12/95 - 09/12/98
--------------------------------- ---------------------------------- ---------------------- ----------------------
Maine Turnpike Bond Travelers Casualty & Surety 5,000 09/16/97 - 09/16/98
--------------------------------- ---------------------------------- ---------------------- ----------------------
|
THE ACKERLEY GROUP, INC.
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
1. See Section 3.10.1 of the Disclosure Schedule for agreements or contracts relating to the Station and providing for payments in excess of $50,000 per year or $250,000 over the five-year period commencing on the date hereof.
Please note that detail on various insurance policies and employee benefit plans insurance coverage has not been provided.
2. See Section 3.10.2 of the Disclosure Schedule for all time brokerage agreements and affiliation agreements with television networks which relate to the Station.
3. See Section 3.10.3 of the Disclosure Schedule for any license or contract pursuant to which Gannett is authorized to broadcast film or taped programming on the Station supplied by others in excess of $10,000 per year or having a term of more than one year .
4. See Section 3.10.4 of the Disclosure Schedule for any employment agreement, consulting agreement or similar contract relating to the Station and providing for payments to any Person in excess of $50,000 per year or $100,000 in the aggregate over the five-year period commencing on the date hereof.
5. See Section 3.14 of the Disclosure Schedule for any retention or severance agreement or contract relating to the Station and with respect to any Person who is to be employed post-sale.
6. See Section 3.10.6 of the Disclosure Schedule for all collective bargaining agreements or other union contracts relating to the Station.
THE ACKERLEY GROUP, INC.
PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10 (MATERIAL CONTRACTS)
7. See Section 3.10.7 of the Disclosure Schedule for (a) any lease of real property or (b) any lease of equipment or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by Gannett to another party providing for payments to any Person in excess of $25,000 per year or $75,000 in the aggregate over the five-year period commencing on the date hereof and relating to the Station.
8. See Section 3.10.8 of the Disclosure Schedule for any lease of equipment or real property or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by Gannett to another party providing for payments to Gannett in excess of $20,000 per year or $50,000 in the aggregate over the five-year period commencing on the date hereof and which relate to the Station.
9. Any joint venture, partnership or similar agreement or contract. NONE.
10. See Section 3.10.10 for any agreement or contract under, with respect to the Station, which Gannett has borrowed or loaned any money in excess of $1,000,000 or issued or received any note, bond, indenture or other evidence of indebtedness in excess of $1,000,000 or directly or indirectly guaranteed indebtedness, liabilities or obligations of others in an amount in excess of $1,000,000.
11. Any covenant not to compete or contract or agreement, understanding, arrangement or any restriction whatsoever limiting in any respect the ability of Gannett to compete in any line of business or with any Person in the Station's DMA. NONE.
*Executed copies of certain contracts may not be available.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.1 (MATERIAL CONTRACTS - BROADCASTING)
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
DIVISION DOCUMENT COMPANY NAME PURPOSE CONTRACT EFFECTIVE COPY
NUMBER DATE DATE IMPERFECTIONS
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
Corp. 100400.00 BMI Group Television Blanket 04/17/97 04/03/97
License
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
Corp. 100500.00 Katz & Seltel Master Representation Agreement 04/27/98 01/01/98 original
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
Corp. 100500.01 Katz & Seltel Interpretive Letter 08/17/98
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
Corp. 100500.02 Katz & Seltel Amendment to Master 08/28/98
Representation Letter
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
Corp. 109999.99 Employee Benefit Plans (See Section 3.14.3)
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
WOKR 1670080.00 A.C. Nielsen Company Index Service 04/04/91 06/01/98 not fully executed
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
WOKR 1670140.00 Audience Research & News Consulting/Audience 01/01/98
Development C. Research
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
WOKR 1670260.00 ASCAP Music License 04/01/98 under negotiation
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
WOKR 1670770.00 Lee Curtis & Assoc. Inc. Customized Newspaper Production 04/17/96
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
WOKR 1671000.00 Frontier Communications Long Distance/T-1/Cellular 08/06/97 10/31/97
----------- -------------- -------------------------- -------------------------------- ---------- -------------- -------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.2 (AFFILIATION AGREEMENT)
--------- ------------ ------------------------ ----------------------------- ---------- ---------------- -----------------------
DIVISION DOCUMENT COMPANY NAME PURPOSE CONTRACT EFFECTIVE COPY
NUMBER DATE DATE IMPERFECTIONS
--------- ------------ ------------------------ ----------------------------- ---------- ---------------- -----------------------
WOKR 1670010.00 ABC Inc. Capital Cities Affiliation Agreement 01/24/91 01/02/95
--------- ------------ ------------------------ ----------------------------- ---------- ----------------- -----------------------
WOKR 1670010.01 ABC Inc. Capital Cities Consent to Assignment to GGC 04/20/98 04/26/98
--------- ------------ ------------------------ ----------------------------- ---------- ----------------- -----------------------
WOKR 1670020.00 ABC Inc. Capital Cities NewOne Service 07/08/88 09/14/88
--------- ------------ ------------------------ ----------------------------- ---------- ----------------- -----------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.4 (EMPLOYMENT AGREEMENTS)
---------- ------------------ ---------------------------------------- -------------- ----------------- DIVISION EMPLOYEE NAME TITLE CONTRACT DATE EFFECTIVE DATE ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Alhart, Donald W. Anchor/Assoc. News Director 08/01/98 08/01/98 ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Catalana, Michael Sports Director 06/29/98 07/01/98 ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Curran, Virginia Anchor/Reporter 06/01/94 06/01/94 ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Emblidge, Douglas Anchor/Reporter 10/27/94 01/01/95 ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Johnson, Glenn Staff Meteorologist/Weathercaster/Chief 06/26/95 07/01/95 ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Peterson, William Meteorologist 12/22/94 01/01/95 ---------- ------------------ ---------------------------------------- -------------- ----------------- WOKR Samuels, Chuck News Director 12/17/96 10/14/96 ---------- ------------------ ---------------------------------------- -------------- ----------------- |
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.6 (COLLECTIVE BARGAINING AGREEMENT)
DIVISION COLLECTIVE BARGAINING UNIT EFFECTIVE DATES -------- -------------------------- --------------- WOKR International Brotherhood of Teamsters Local #791 06/15/97 - 06/14/00 |
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.7.A. (REAL PROPERTY LEASES)
--------- ---------------- --------------------- --------------------------- -------------- -------------- -----------------------
DIVISION DOCUMENT NUMBER COMPANY NAME PURPOSE CONTRACT DATE EFFECTIVE DATE COPY IMPERFECTIONS
--------- ---------------- --------------------- --------------------------- -------------- -------------- -----------------------
--------- ---------------- --------------------- --------------------------- -------------- -------------- -----------------------
--------- ---------------- --------------------- --------------------------- -------------- -------------- -----------------------
WOKR 1681100.00 Collier ABR, Inc. Roof Lease 11/14/94 01/01/95
--------- ---------------- --------------------- --------------------------- -------------- -------------- -----------------------
WOKR 1681130.00 Intermedia Video Service/Tower Lease 03/26/98 03/26/98
(EMI Communications)
--------- ---------------- --------------------- --------------------------- -------------- -------------- -----------------------
|
See also Section 1.1(d) of the Disclosure Schedules.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.7.B. (EQUIPMENT LEASES AND INTELLECTUAL PROPERTY)
--------- ---------------- ---------------------------- ---------------------------- ------------- -------------- ------------------ DIVISION DOCUMENT NUMBER COMPANY NAME PURPOSE CONTRACT DATE EFFECTIVE DATE COPY IMPERFECTIONS --------- ---------------- ---------------------------- ---------------------------- ------------- -------------- ------------------ --------- ---------------- ---------------------------- ---------------------------- ------------- -------------- ------------------ --------- ---------------- ---------------------------- ---------------------------- ------------- -------------- ------------------ Corp. 100090.00 U.S. Fleet Leasing Master Lease Vehicle Leases 07/19/91 --------- ---------------- ---------------------------- ---------------------------- ------------- -------------- ------------------ WORK 1670800.00 Columbine JDS Systems, Inc. License - DP System 11/13/97 11/13/97 --------- ---------------- ---------------------------- ---------------------------- ------------- -------------- ------------------ |
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.8 (INCOME LEASES)
-------- --------------- ------------------------------- ------------------------ ---------------- -------------- ------------------
DIVISION DOCUMENT NUMBER COMPANY NAME PURPOSE CONTRACT DATE EFFECTIVE DATE COPY IMPERFECTIONS
-------- --------------- ------------------------------- ------------------------ ---------------- -------------- ------------------
-------- --------------- ------------------------------- ------------------------ ---------------- -------------- ------------------
-------- --------------- ------------------------------- ------------------------ ---------------- -------------- ------------------
WOKR 1681090.00 WXXI - Rochester Area Ed. TV Brighton Lane Lease 10/23/79 10/24/79
Assoc.
-------- --------------- ------------------------------- ------------------------ ---------------- -------------- ------------------
WOKR 1681090.01 WXXI - Rochester Area Ed. TV First Amendment of Lease 04/14/89
Assoc.
-------- --------------- ------------------------------- ------------------------ ---------------- -------------- ------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.10 (LOAN AGREEMENT)
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
DIVISION DOCUMENT NUMBER COMPANY NAME PURPOSE CONTRACT DATE EFFECTIVE DATE COPY IMPERFECTIONS
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100020.00 Northwestern Mutual Life Insurance Senior Notes N/A N/A N/A
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100021.00 UNUM Life Insurance Company Senior Notes N/A N/A N/A
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100022.00 Massachusetts Mutual Life Ins. Co. Senior Notes N/A N/A N/A
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100025.00 First National Bank of Boston (primary) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100026.00 Bank of New York (participating) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100027.00 Fleet Bank (participating) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
Corp. 100028.00 Key Bank (participating) Revolving Credit 08/18/81 08/18/81 N/A
Agreement
-------- --------------- --------------------------------------- ------------------ ------------- -------------- -------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.10.3 (PROGRAM LICENSES)
------------------ --------------------------------- ------------------------- --------------------------
DISTRIBUTOR PACKAGE CONTRACT TERM WRITTEN CONSENT
START END REQUIRED TO ASSIGN
------------------ --------------------------------- ------------------------- --------------------------
Paramount Entertainment Tonight Sept. 1997 Aug. 1999 YES
Entertainment Tonight Amendment
letter dated 05/07/97
------------------ --------------------------------- ------------------------- --------------------------
Paramount Hard Copy Sept. 1997 Aug. 1998 YES
Hard Copy Amendment letter dated
08/06/96
------------------ --------------------------------- ------------------------- --------------------------
Paramount Montel Williams Sept. 1997 Aug. 1999 YES
Montel Williams Amendment letter
dated 10/15/97
------------------ --------------------------------- ------------------------- --------------------------
Warner Bros. Family Matters Sept. 1994 Feb. 1998 YES
------------------ --------------------------------- ------------------------- --------------------------
Warner Bros. Murphy Brown Sept. 1992 Feb. 1999 YES
Murphy Brown Extension(s)
------------------ --------------------------------- ------------------------- --------------------------
Warner Bros. Step By Step Sept. 1995 Feb. 2001 YES
------------------ --------------------------------- ------------------------- --------------------------
Warner Bros. Friends Sept. 1998 Feb. 2004 YES
------------------ --------------------------------- ------------------------- --------------------------
Warner Bros. Jenny Jones Sept. 1997 Sept. 1998 YES
------------------ --------------------------------- ------------------------ ---------------------------
Studios USA Maury Povich Sept. 1998 Sept. 2000 YES
------------------ --------------------------------- ------------------------- --------------------------
Columbia/Tristar Mad About You Jan. 1997 Sept. 2002 YES
Mad About You Extension(s)
------------------ --------------------------------- ------------------------- --------------------------
King World Roseanne (talk) Sept. 1998 Aug. 2000 YES
Roseanne (talk) - Extension(s)
------------------ --------------------------------- ------------------------- --------------------------
Viacom Roseanne Sept. 1993 Aug. 1998 YES
------------------ --------------------------------- ------------------------- --------------------------
WKBW-TV Buffalo Bills - Pre-season games Aug. 1998 Aug. 1998 NO
------------------ --------------------------------- ------------------------- --------------------------
CNN Newsource Headline News Schedule Feb. 1998 Jan. 2000 YES
------------------ --------------------------------- ------------------------- --------------------------
Columbia Movie Package July 1992 Aug. 2003 YES
------------------ --------------------------------- ------------------------- --------------------------
Columbia Movie Package July 1992 Dec. 2001 YES
------------------ --------------------------------- ------------------------- --------------------------
20th Television Movie Package Mar. 1994 Feb. 2004 YES
------------------ --------------------------------- ------------------------- --------------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.11 (PERMITS)
PERMITS:
(i): None.
(ii): None.
(iii): None.
COMPLIANCE WITH LAW:
(i):
1. See Section 3.13 of the Disclosure Schedule concerning environmental matters.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.12 (FCC)
3.12(i):
EXPIRATION
CALL SIGN TYPE -----------
--------- ---- DATE
----
WOKR-TV, Rochester, NY
---------------------- 06/0l/99
KR-9992 TV Pickup 06/0l/99
KR-7729 TV Pickup 06/01/99
KN-2237 TV Pickup 06/01/99
KP-2134 TV Pickup 06/01/99
WGI-226 TV Intercity Relay 06/01/99
WEF-58 TV STL 06/01/99
KGO-958 R/P Base Mobile System 06/01/99
KRG-613 R/P Base Mobile System 06/01/99
BLP-00293 Low Power Broadcast Auxiliary 06/01/99
E6537 Receive Only Earth Station 12/09/03
E860485 Receive Only Earth Station 05/16/06
KNBL-873 Weather Radar 02/13/01
|
ANTENNA STRUCTURE REGISTRATIONS
-------------------------- ---------------------- ---------------------------------------- ---------------------- MAIN STATION LOCATION TOWER OWNER REGISTRATION NO. -------------------------- ---------------------- ---------------------------------------- ---------------------- -------------------------- ---------------------- ---------------------------------------- ---------------------- -------------------------- ---------------------- ---------------------------------------- ---------------------- WOKR-TV Rochester, NY Guy Gannett Communications 1011757 -------------------------- ---------------------- ---------------------------------------- ---------------------- |
3.12(ii): None. 3.12(iii): None. 3.12(iv): None. 3.12(v): None. 3.12(vi): None. |
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
|
DISCLOSURE SCHEDULE
SECTION 3.13 (ENVIRONMENTAL MATTERS)
WOKR-TV
1. 4225 West Henrietta Road, Rochester, New York. Various potential environmental matters as described in the entire Phase I Environmental Site Assessment-WOKR-TV Studio-4225 West Henrietta Road, Rochester, New York (Dames & Moore, 5/28/98-ESA No. 20).
2. Pinnacle Hill-State Route 31), Brighton, New York. Various
potential environmental matters as described in the entire Phase
I Environmental Site Assessment- WOKR-TV Transmitter
Site-Pinnacle Hill ( Dames & Moore, 5/28/98-ESA No. 21.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.14 (EMPLOYEE BENEFITS)
1. Gannett has entered into certain agreements with key employees of the Station for severance, retention and other closing benefits which include new benefits, as well as acceleration of certain existing benefits. Pursuant to these agreements, employees will be paid agreed amounts in lieu of existing obligations under short-term incentive plans, individual TV managers' long-term incentive plans, and Gannett's 1997-2000 Long-Term Incentive Plan, thereby fixing and accelerating existing obligations. The agreements also require payment of certain base retention bonuses and severance payments for selected employees. See Section 3.14.1 of the Disclosure Schedule for a list of division agreements (other than division heads) and Section 3.14.2 of the Disclosure Schedule for a list of division head agreements relating to employees of the Station.
2. Certain agreements with various retired employees may be accelerated upon Closing: John DiMatteo, John Hooper, Robert Morehead and Gilbert Lefkovich.
3. Gannett has entered into several severance agreements in the normal course of business which include periodic severance payments and payment of medical and dental COBRA premiums.
4. Gannett has an arrangement to pay a former employee a monthly sum, until May 1999, outside the terms of any supplemental retirement plan.
5. Gannett is in the process of amending certain summary plan descriptions for its qualified plans and welfare benefit plans. Amendments to qualified plans need to be written and filed prior to 12/31/99 to comply with Tax Reform Act of 1997 and the Small Business Job Protection Act of 1996.
6. The Guy Gannett Voluntary Investment Plan (401(k)) has recently had several small operational matters which have been corrected and documented according to the provisions of the IRS self-correction program referred to as "APRSC."
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.14 (EMPLOYEE BENEFITS)
7. The Guy Gannett Voluntary Investment Plan is currently involved in a random 5500 audit by the IRS for the 1995 plan year. The results of that audit cannot be predicted at this time.
8. Gannett has agreed, under the terms of a severance agreement with one former employee, to pay to him 75% of an individual medical insurance premium until March 2003.
9. See Section 3.14.3 for list of employee benefit plans, Section 3.10.4 for list of material employment, consulting and similar agreements, Section 3.10.6 for collective bargaining agreements and Section 3.14.1, 3.14.2 and 3.3 for agreements providing for payments upon a change of control.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.14.1 (NON-CORPORATE EMPLOYEES (OTHER THAN DIVISION HEADS))
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DATE OF
DIVISION PERSON AGREEMENT RETENTION SEVERANCE COMMENTS
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WOKR Vince Trippi 04/28/98 X X
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WOKR Kent Beckwith 04/28/98 X X
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WOKR Carol Nolan 04/28/98 X X
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WOKR Shelli Black 05/18/98 X X
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WOKR Chuck Samuels 04/28/98 X X
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WOKR John Gubiotti 04/29/98 X
-----------------------------------------------------------------------------------------------------------------------------------
WOKR Don Loy 04/29/98 X
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WOKR Chris Potwin 04/29/98 X
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WOKR Karen Feigel 04/29/98 X
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WOKR Craig Heslor 04/29/98 X
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WOKR Charlotte Clark 04/29/98 X
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|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.14.2 (SEVERANCE AND RETENTION AGREEMENTS - DIVISION HEADS)
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DATE OF
DIVISION PERSON AGREEMENT RETENTION SEVERANCE COMMENTS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
WOKR Gary Neilsen 06/19/98 X X
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|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.14.3 (EMPLOYEE BENEFIT PLANS/CONTRACTS)
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PLAN TYPE FUNDING CONTRACT TYPE ERISA PLAN YEAR RENEWAL DATE
-----------------------------------------------------------------------------------------------------------------------------------
WOKR - TV Partners 401(k) Profit Sharing 401(k) trust Jan. 1 - Dec. 31
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and Savings Plan - Plan #
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Chase Bank full service plan
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administration
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WOKR - TV Benefits Plan (#502) welfare Jan. 1 - Dec. 31
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Fingerlakes BlueCross BlueShield insurance medical and dental Jan. 1
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Preferred Care insurance medical Jan. 1
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Sun Life insurance life/ad&d and LTD Jul. 1
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Zurich insurance STD (New York DBL) Jan. 1
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-----------------------------------------------------------------------------------------------------------------------------------
WOKR - TV Pretax Premium Plan (#504) Section 125 Plan Jan. 1 - Dec. 31
-----------------------------------------------------------------------------------------------------------------------------------
Empire Professional Services TPA FSA administration Jan. 1
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------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
WORKERS COMPENSATION - WOKR
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------------------------------------------------------------------------------------------------------------------------------------
CARRIER FUNDING COVERED
PROPERTIES
------------------------------------------------------------------------------------------------------------------------------------
Commercial Union Insured KGAN (IA)
------------------------------------------------------------------------------------------------------------------------------------
WICS, WICD (IL)
-----------------------------------------------------------------------------------------------------------------------------------
WGGB (MA)
------------------------------------------------------------------------------------------------------------------------------------
WTWC (FL)
------------------------------------------------------------------------------------------------------------------------------------
WOKR (NY)
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------------------------------------------------------------------------------------------------------------------------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.15 (LABOR RELATIONS)
See Section 3.10.6 for list of labor organizations representing employees.
3.15(i): None.
3.15(ii): None.
3.15(iii): None.
3.15(iv): None.
3.15(v) None.
3.15(vi) None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.16 (INTELLECTUAL PROPERTY)
See Section 3.16.1 for a list of call letters for the Station.
3.16(i): None.
3.16(ii):
1. The tradename for "Newssource 13" used by WOKR has not yet been transferred of record in the U.S. Patent & Trademark Office.
3.16(iii): None.
3.16(iv): None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.16.1 (CALL LETTERS)
WOKR - TV Rochester, New York
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.17 (TAXES)
None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 3.19 (AFFILIATE TRANSACTIONS)
See Section 3.7 of the Disclosure Schedule concerning the Contribution Agreement with respect to Gannett's transfer of the Maine Media Business to Newco.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 4.3 (ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS)
None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 4.4 (LITIGATION)
None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
5.1(a)(i): None.
5.1(a)(ii):
1. Gannett has the right, under a contract with KOZ inc, to provide on-line community publishing services in all of its TV markets. Gannett (as part of Maine Media Business) presently provides this service only in Maine.
2. Some combined activities between and among Gannett and Newco may be suspended at or after the date of the sale of the Maine Media Business.
3. Gannett will modify the Guy Gannett Group Life and Health Plan (#501) to vest those Business Employees and Corporate Office Employees (1) who are currently retired and covered by the plan ("Current Retirees") and (2) who are currently employed and who meet the age and service requirements for post-retirement coverage as of the Closing Date ("Qualified Employees", with the Current Retirees and Qualified Employees sometimes collectively referred to as "Retirees") in post-retirement benefits substantially equivalent to those offered by the plan as of the Closing Date. The Corporate Office Employees eligible or deemed to be eligible for these post-retirement benefits are listed on Schedule 5.1.1 and the Business Employees eligible for these post-retirement benefits are listed on Schedule 5.1.2.
The percentage of premium paid by Current Retirees will remain the same as the percentage that they pay as of the Closing Date. Current Retirees and Qualified Employees shall pay 100% of the premium for post-retirement medical coverage and Gannett shall pay 100% of the life insurance premium for such Current Retirees and Qualified Employees.
Subject to the provisions of the existing plans concerning premium sharing, the cost of such insurance coverages will be deemed to be the same as the cost for active employees for so long as the same benefit options are available to both active employees and Retirees. At any time
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
that active employees and Retirees are not covered by the same health plan options, the cost to Retirees will be deemed to be the community rate for the same or similar coverage as determined by the insurance provider covering the largest number of lives in the State of Maine. The Group Companion Plan coverage will at all times be based upon the current coverage option and at rates determined from time to time by Blue Cross Blue Shield of Maine or its successor and approved by the State of Maine, although the actual insurance carrier may change.
See Section 3.7 of the Disclosure Schedule concerning allocation of pension plan assets in Gannett's defined benefit plan between Gannett and Newco, and the transfer of certain plan assets related to the Maine Media Business to Newco's plan.
4. Under a contract with Cigna (G-R200), Cigna provides guaranteed payments to retirees under the Guy Gannett Retirement Plan with respect to benefits accrued until January, 1970. Gannett plans to cause the Cigna contract to be modified to provide for the transfer to the New Pension Plan that portion of the guaranteed payments that relate to current and former Business Employees.
5.1(a)(iii): None.
5. Gannett plans to donate certain items relating to the Gannett family to non-profit organizations.
6. See Section 3.7 of the Disclosure Schedule for a description of the contribution of the Maine Media Business to Newco, and the related agreement concerning certain shared assets, which Gannett expects to enter into prior to Closing.
5.1(a)(iv):
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 5.1 (COVENANTS AND AGREEMENTS)
7. Trustees under the Guy Gannett Retirement Plan and the Voluntary Investment Plan and Trusts will resign and will be replaced by an institutional trustee.
8. Gannett expects to grant a premium holiday, and/or provide employees a lump sum refund relating to prior year overpayment of health care premiums.
5.1(a)(v): None.
5.1(a)(vi): None.
5.1(a)(vii): None.
5.1(a)(viii):No consent of the Purchaser will be required for modification, change, renewal or extension of the following Material Contracts, on terms consistent with past practices of the Business:
o New Personal Service Contract with Pat Bilone (WOKR)
5.1(a)(ix): None.
5.1(a)(x): None.
5.1(a)(xi): None.
5.1(a)(xii): None.
5.1(a)(xiii): None.
5.1(a)(xiv): None.
5.1(a)(xv): None.
5.1(a)(xvi): None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 5.2 (POST-CLOSING COVENANTS AND AGREEMENTS)
5.2(a): Employee Benefit Plans, books and records to be available for
inspection without limit as to time relate to:
o Guy Gannett Retirement Plan and Trust
o WOKR-TV 401(k) Profit Sharing and Savings Plan
5.2(b): Corporate Office Employees are those individuals listed on
Section 5.2.1 of the Disclosure Schedule or any persons who,
at or prior to Closing, have replaced any of the listed
individuals in their positions.
5.2(d): See Section 5.2.3 of the Disclosure Schedule.
5.2(e): Bargaining agreement between Guy Gannett Communications (the
"Company") and the Teamsters Local Union #791, affiliated with
the International Brotherhood of Teamsters (the "Union").
5.2(f): Don Alhart (WOKR) has a supplemental retirement plan. The
accrued liability therefor will be included in the Net
Financial Assets calculation.
5.2(i) See Section 5.2.2 of the Disclosure Schedule.
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
|
DISCLOSURE SCHEDULE
SECTION 5.2.1 - LIST OF NAMES OF CURRENT CORPORATE OFFICE EMPLOYEES
--------------------------------------------------------------------------------------
NAME TITLE
--------------------------------------------------------------------------------------
Agler, Nancy Assistant to the CEO
--------------------------------------------------------------------------------------
Andrews, Tina Corporate Accounting Manager
--------------------------------------------------------------------------------------
Arnold, LuAnn Accounting Assistant (Corporate Payroll)
--------------------------------------------------------------------------------------
Baker, James CFO
--------------------------------------------------------------------------------------
Begert, Jane VP Human Resources
--------------------------------------------------------------------------------------
Bock, Michael VP Television
--------------------------------------------------------------------------------------
Bois, Suzette Corporate Accounting Manager
--------------------------------------------------------------------------------------
Buckley, Barbara Receptionist
--------------------------------------------------------------------------------------
Burfeind, David VP Planning and Development
--------------------------------------------------------------------------------------
Clark, Carolyn Benefits Director
--------------------------------------------------------------------------------------
Corson, Madeleine Chairman of the Board
--------------------------------------------------------------------------------------
Foster, Karen Benefits Assistant
--------------------------------------------------------------------------------------
Flaherty, Patricia Assistant to CFO
--------------------------------------------------------------------------------------
Gannett, John Vice President
--------------------------------------------------------------------------------------
Gray, Andrea Assistant to VP Television/VP Planning and Development
--------------------------------------------------------------------------------------
Jabine, William Corporate Accountant
--------------------------------------------------------------------------------------
Kelly, Maryann Director of Labor Relations
--------------------------------------------------------------------------------------
Logan, Joyce Assistant to VP Human Resources/Director of Labor
Relations/Communications Director
--------------------------------------------------------------------------------------
Lee, Janet Assistant to CTO (resigned 09/04/98)
--------------------------------------------------------------------------------------
Mahoney, Deborah Benefits Manager
--------------------------------------------------------------------------------------
Normantas, Vitas Directors of Health and Safety
--------------------------------------------------------------------------------------
O'Meara, Edward Communications Director
--------------------------------------------------------------------------------------
Rand, Cynthia Benefits Assistant
--------------------------------------------------------------------------------------
Reardon, Gene Corporate Controller
--------------------------------------------------------------------------------------
Reighley, Bridget Assistant to Heath and Safety Director
--------------------------------------------------------------------------------------
Shaffer, James CEO
--------------------------------------------------------------------------------------
|
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 6.4 (MATERIAL CONSENTS REQUIRED AS A CONDITION
1. The Affiliation Agreements listed on Section 3.10.1 of the Disclosure Schedule.
2. Obtaining of the following consent will not be a condition of Closing if Gannett has obtained, prior to Closing, alternatives reasonably acceptable to Purchaser and on terms not materially adverse to Purchaser as reasonably determined by Purchaser:
A. Intermedia (EMI Communications) dated 03/26/98 for video service/tower lease for WOKR.
None of the leases described in this Section 3 are for main studio, main tower or main transmission sites.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 7.4 (MATERIAL CONSENTS REQUIRED AS A CONDITION
None.
THE ACKERLEY GROUP, INC.
ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 9
1. The Closing Statement may not include any assets or liabilities that may result from a settlement in the future with ASCAP regarding the dispute with the TV Music License Committee on new fees and the license agreement.
2. The Closing Statement will not be in accordance with GAAP and/or be consistent with the basis used in preparing the Gannett Unaudited Financial Statements as of, and for the year ended, December 27, 1997 in the following ways.
(a) The Closing Statement will not include any financial statements or footnotes required under GAAP.
(b) The Closing Statement will not include any accruals for severance for employees terminated after the Closing.
(c) See Section 3.5 of the Disclosure Schedule of the Gannett Purchase Agreement for other non-conformities with GAAP and inconsistencies with prior practices.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 5 |
| CIK: 0000912752 |
| NAME: Sinclair Broadcast Group, Inc. |
| MULTIPLIER: 1,000 |
| CURRENCY: US DOLLAR |
| a) This information has been prepared in accordance with SFAS No 128, Earnings per Share. The basic and diluted EPS calculations have been entered in place of primary and diluted, respectively. |