Document/Exhibit Description Pages Size
1: 10-K Annual Report 108 697K
2: EX-10.56 Material Contract 48 191K
3: EX-10.57 Material Contract 27 117K
4: EX-10.58 Material Contract 33 112K
5: EX-10.59 Material Contract 83 292K
6: EX-10.60 Material Contract 77 257K
7: EX-10.61 Material Contract 87 294K
8: EX-10.62 Material Contract 53 170K
9: EX-10.63 Material Contract 103 338K
10: EX-10.64 Material Contract 56 202K
11: EX-10.65 Material Contract 90 318K
13: EX-10.66 Material Contract 43 153K
12: EX-10.67 Material Contract 80 350K
14: EX-12 Statement re: Computation of Ratios 1 9K
15: EX-23.1 Consent of Experts or Counsel 1 8K
16: EX-27 Financial Data Schedule 2± 11K
ASSET PURCHASE AGREEMENT
AMONG
ENTERTAINMENT COMMUNICATIONS, INC.,
TUSCALOOSA BROADCASTING, INC.,
SINCLAIR RADIO OF PORTLAND LICENSEE, INC.
AND
SINCLAIR RADIO OF ROCHESTER LICENSEE, INC.
DATED AS OF
JANUARY 26, 1998
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I. DEFINITIONS.................................................. 2
ARTICLE II. SALE AND PURCHASE............................................ 7
2.1. TRANSFER OF ASSETS........................................... 7
2.2. EXCLUDED ASSETS.............................................. 9
2.3. PURCHASE PRICE............................................... 11
2.4. ESCROW....................................................... 11
2.5. PAYMENT...................................................... 11
2.6. ALLOCATION OF PURCHASE PRICE................................. 11
ARTICLE III. LIABILITIES.................................................. 12
3.1. ASSUMPTION OF LIABILITIES BY ENTERCOM........................ 12
3.2. OTHER LIABILITIES............................................ 12
3.3. NON-ASSIGNABLE STATION CONTRACTS............................. 12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES............................... 13
4.1. SELLERS' REPRESENTATIONS..................................... 13
4.2. ENTERCOM'S REPRESENTATIONS................................... 22
ARTICLE V. CONDITIONS................................................... 24
5.1. MUTUAL CONDITIONS............................................ 24
5.2. ENTERCOM'S CONDITIONS........................................ 25
5.3. SELLERS' CONDITIONS.......................................... 25
ARTICLE VI. COVENANTS AND AGREEMENTS..................................... 26
6.1. AFFIRMATIVE COVENANTS OF SELLERS............................. 26
6.2. NEGATIVE COVENANTS OF SELLERS................................ 28
6.3. AFFIRMATIVE COVENANTS OF ENTERCOM............................ 28
6.4. MUTUAL COVENANTS OF SELLERS AND ENTERCOM..................... 29
6.5. NO CONTROL BY ENTERCOM....................................... 30
ARTICLE VII. PREPARATION FOR CLOSING...................................... 30
7.1. APPLICATION TO COMMISSION.................................... 30
7.2. INSPECTION BY ENTERCOM....................................... 30
7.3. HART-SCOTT-RODINO NOTIFICATION............................... 31
ARTICLE VIII. CLOSING...................................................... 31
8.1. CLOSING...................................................... 31
8.2. ADJUSTMENTS.................................................. 31
8.3. CLOSING DELIVERIES TO ENTERCOM............................... 33
8.4. CLOSING DELIVERIES TO SELLERS................................ 34
8.5. COVENANTS OF FURTHER ASSURANCE............................... 35
8.6. DAMAGE TO PROPERTY........................................... 35
8.7. TAXES ON TRANSACTION......................................... 35
i
ARTICLE IX. TERMINATION, DEFAULT AND INDEMNIFICATION..................... 36
9.1. TERMINATION BY REASON OTHER THAN DEFAULT..................... 36
9.2. EFFECT OF TERMINATION BY REASON OTHER THAN
DEFAULT................................................. 36
9.3. DEFAULT...................................................... 36
9.4. REMEDIES OF SELLERS.......................................... 37
9.5. ENTERCOM'S REMEDIES.......................................... 37
9.6. LIQUIDATED DAMAGES NOT A PENALTY............................. 37
9.7. INDEMNIFICATION.............................................. 38
ARTICLE X. GENERAL PROVISIONS........................................... 40
10.1. EXPENSES OF THE PARTIES...................................... 40
10.2. BROKERS...................................................... 40
10.3. SURVIVAL OF COVENANTS, REPRESENTATIONS AND
WARRANTIES................................................... 40
10.4. AMENDMENT AND WAIVER......................................... 41
10.5. ASSIGNMENT................................................... 41
10.6. EFFECT OF THIS AGREEMENT..................................... 41
10.7. HEADINGS..................................................... 41
10.8. COUNTERPARTS................................................. 41
10.9. GOVERNING LAW................................................ 41
10.10. NOTICES...................................................... 41
10.11. STATION EMPLOYEES............................................ 43
10.12. SECTION 1031 ASSET EXCHANGE.................................. 43
ii
EXHIBITS
A Form of Time Brokerage Agreement
B Form of Sinclair Communications, Inc. Guarantee
C Form of Escrow Agreement
D Form of Indemnification Escrow Agreement
E Forms of Bill of Sale and Assignment of Assets, Assignments of FCC
Licenses, Assignment of Contracts and Leases, and Assumption
Agreement
F Form of Sellers' Corporate Legal Opinion
G Form of Sellers' FCC Legal Opinion
H Form of Entercom's Legal Opinion
SCHEDULES
2.1.1 FCC Licenses
2.1.2 Real and Leased Property
2.1.3 Tangible Personal Property
2.1.5 Program Contracts
2.1.6 Trade-out Agreements
2.1.8 Operating Contracts
2.1.9 Vehicles
2.2.11 Miscellaneous Excluded Assets
4.1.6 Changes or Events
4.1.7 Litigation
4.1.8 Permitted Encumbrances
4.1.9 FCC Matters
4.1.14 Employee Benefit Plans
4.1.15 Labor Relations
4.1.16 Environmental Matters
4.1.17 Insurance
4.1.19 Matters Regarding the Heritage Agreement
4.2.3 Entercom's Qualifications as Assignee
iii
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT made and entered into this 26th day
of January, 1998 by and among, TUSCALOOSA BROADCASTING, INC., a Maryland
corporation (hereinafter "Tuscaloosa"), SINCLAIR RADIO OF PORTLAND LICENSEE,
INC., a Maryland corporation ("SRPLI"), SINCLAIR RADIO OF ROCHESTER LICENSEE,
INC., a Maryland corporation ("SRRLI"), (Tuscaloosa, SRPLI and SRRLI are
sometimes collectively referred to herein as "Sellers"), and ENTERTAINMENT
COMMUNICATIONS, INC., a Pennsylvania corporation (hereinafter "Entercom").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to authorizations duly granted and issued by the
Federal Communications Commission (the "Commission"), certain subsidiaries (the
"Operating Subsidiaries") of HMC Acquisition Corp., a Delaware corporation
("HMC" and collectively with the Operating Subsidiaries, "Heritage") presently
own and operate radio stations KKSN(AM), Vancouver, Washington, KKSN-FM,
Portland, Oregon, KKRH(FM), Salem, Oregon, WKLX(FM), WBEE(FM) and WBBF(AM),
Rochester, New York, and WQRV(FM), Avon, New York (each, a "Station" and
collectively, the "Stations"); and
WHEREAS, on August 20, 1997, Heritage Media Corporation, formerly
the parent of the Operating Subsidiaries, merged with and into HMC, a
wholly-owned subsidiary of The News Corporation, Limited ("News Corp."); and
WHEREAS, Sinclair Broadcast Group, Inc. ("Sinclair") has agreed,
pursuant to an Asset Purchase Agreement, among Sinclair and certain subsidiaries
of Heritage, dated as July 16, 1997 (as such agreement may be amended from time
to time, the "Heritage Agreement"), to acquire the assets owned, leased or used
by Heritage or such subsidiaries in connection with the business and operations
of the Stations and other radio and television stations; and
WHEREAS, Tuscaloosa, SRPLI and SRRLI are wholly-owned subsidiaries
of Sinclair and will acquire the Stations pursuant to one or more assignments of
Sinclair's rights and obligations under the Heritage Agreement from Sinclair to
Tuscaloosa, SRPLI and SRRLI; and
WHEREAS, Entercom and Sellers have agreed, subject to the prior
acquisition of the Stations by Sellers, prior approval by the Commission and
certain other conditions, to transfer and assign the assets, properties, rights,
privileges, licenses and all other authorizations used in connection with or
relating to the Stations from Sellers to Entercom as hereinafter set forth; and
WHEREAS, Entercom may elect to accomplish such transfer in whole or
part as the acquisition of replacement property in a deferred like-kind exchange
under Section 1031 of the Code; and
WHEREAS, concurrently with the execution of this Agreement, (i)
Entercom and Sellers are entering into a Time Brokerage Agreement substantially
in the form of Exhibit A hereto (the "TBA") providing for the programming and
sale by Entercom, upon the acquisition by Sellers of the Station, of
substantially all of the broadcast time available on the Stations and (ii)
Sinclair Communications, Inc., a Maryland corporation and wholly-owned
subsidiary of Sinclair ("SCI"), is delivering a guarantee substantially in the
form of Exhibit B hereto (the "Sinclair Guarantee") of certain of Sellers'
obligations under this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and of the representations and warranties hereinafter set forth and
for other good and valuable consideration, the parties, intending to be legally
bound hereby, agree as follows:
ARTICLE I.
----------
DEFINITIONS
-----------
As used herein, the following terms shall have the following
respective meanings:
"ADJUSTMENT TIME" shall mean 12:00:01 a.m. eastern standard time on
the Closing Date.
"AGREEMENT" shall mean this Asset Purchase Agreement.
"APPLICATIONS" shall have the meaning set forth in Section 7.1
hereof.
"BENEFIT ARRANGEMENT" means any benefit arrangement, obligation,
custom, or practice, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, agents, or independent contractors, other than any
obligation, arrangement, custom or practice that is a Plan, including, without
limitation, employment agreements, executive compensation arrangements,
incentive programs or arrangements, sick leave, vacation pay, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, perquisite, company cars, any
plans subject to Code Section 125 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.
"CLOSING" shall mean the event of consummation of the transactions
contemplated by this Agreement as more fully described in Article VIII of this
Agreement.
"CLOSING DATE" shall mean the date specified for Closing in Section
8.1 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
2
"COMMISSION" shall mean the Federal Communications Commission.
"DOJ" shall mean the Antitrust Division of the United States
Department of Justice.
"ENCUMBRANCES" shall mean any mortgages, pledges, liens, security
interests, defects in title, easements, rights-of-way, encumbrances,
restrictions and any other matter affecting title.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. ss.
9601 et seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.;
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 9601 et seq.;
the Clean Water Act ("CWA"), 33 U.S.C. ss. 1251 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. ss. 7401
et seq.; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. ss. 651 et
seq.; or any other applicable federal, state, or local laws relating to
Hazardous Materials generation, production, use, storage, treatment,
transportation or disposal, or the protection of the environment from Hazardous
Materials.
"ENTERCOM" shall mean the corporation identified as such in the
Preamble to this Agreement and any Qualified Intermediary to which Entercom may
elect to assign all or part of its rights hereunder pursuant to Section 10.12
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all laws promulgated pursuant thereto or in connection
therewith.
"ERISA AFFILIATE" shall mean any person that, together with any
other person, would be or was prior to March 17, 1997 treated as a single
employer under Section 414 of the Code or Section 4001 of ERISA.
"FINAL ORDER" shall mean an action by the Commission upon any
application including, without limitation, the Applications, for its consent,
approval or authorization, which action has not been reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action, no protest,
petition to deny, petition for rehearing or reconsideration, appeal or request
for stay is pending, and as to which action the time for filing of any such
protest, petition, appeal or request and any period during which the Commission
may reconsider or review such action on its own authority has expired.
"FTC" shall mean the United States Federal Trade Commission.
"HAZARDOUS MATERIALS" shall mean any wastes, substances, or
materials (whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined as
"hazardous waste," "hazardous substances," "toxic
3
substances," "radioactive materials," or other similar designations in, or
otherwise subject to regulation under, any Environmental Laws.
"HERITAGE" shall mean HMC and the Operating Subsidiaries.
"HERITAGE AGREEMENT CLOSING DATE" shall mean the latest date on
which all of the Stations are acquired by Sinclair under the Heritage Agreement,
whether or not all stations subject to the Heritage Agreement are acquired on
such date.
"HERITAGE AGREEMENT DATE" shall mean July 16, 1997.
"HMC" shall mean the corporation identified as such in the Preamble
to this Agreement.
"KNOWLEDGE" shall mean the actual knowledge of the party to whom
such knowledge is imputed or the knowledge that the party should have upon
reasonable investigation in light of the facts and circumstances available to
such party.
"LIABILITIES" shall mean, as to any Person, all debts, adverse
claims, liabilities and obligations, direct, indirect, absolute or contingent of
such Person, whether accrued, vested or otherwise, whether in contract, tort,
strict liability or otherwise and whether or not actually reflected, or required
by generally accepted accounting principles to be reflected, in such Person's
balance sheets or other books and records.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, assets or financial condition of the Stations taken as a whole,
except for any such material adverse effect resulting from (a) general economic
conditions applicable to the radio broadcast industry, (b) general conditions in
the markets in which the Stations operate or (c) circumstances that are not
likely to recur and either have been substantially remedied or can be
substantially remedied without substantial cost or delay.
"MULTIEMPLOYER PLAN" shall mean any Plan described in Section 3(37)
of ERISA.
"NEWS CORP." shall mean The News Corporation Limited, a South
Australian corporation.
"ORDINARY COURSE OF BUSINESS" shall mean, with respect to any
person, the ordinary course of business consistent with past practices of such
person both with respect to type and amount; any actions taken pursuant to the
requirements of law or contracts existing on the date hereof shall be deemed to
be action in the Ordinary Course of Business.
"PERMITTED ENCUMBRANCES" shall mean (a) Encumbrances of a landlord
or other statutory lien not yet due and payable, or a landlord's lien arising in
the Ordinary Course of Business, (b) Encumbrances arising in connection with
equipment or maintenance financing or leasing under the terms of the Station
Contracts set forth on the Schedules which have been made
4
available to Entercom, (c) Encumbrances arising pursuant to the terms of leases
on Real Property or Leased Property as set forth on Schedule 2.1.1 and Schedule
2.1.8 which are subject to any lease or sublease to a third party, (d)
Encumbrances for taxes not yet due and payable or which are being contested in
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained in accordance with generally accepted accounting
principles, (e) Encumbrances that do not materially detract from the value of
any of the Assets or materially interfere with the use thereof as currently
used, or (f) those Encumbrances on Schedule 4.1.8.
"PLAN" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as such term is defined in
Section 3(3) of ERISA and (a) which was or is established or maintained by
Heritage, Sellers or any ERISA Affiliate of such parties; (b) to which Heritage,
Sellers contributed or was obligated to contribute or to fund or provide
benefits or had any liability (whether actual or contingent) with respect to any
of its assets or otherwise; or (c) which provides or promises benefits to any
person who performs or who has performed services for Heritage, Sellers and
because of those services is or has been (i) as participant therein or (ii)
entitled to benefits thereunder.
"PORTLAND STATIONS" shall mean KKSN(AM), KKSN-FM and KKRH(FM).
"PRORATION ITEMS" shall mean any power and utility charges,
business and license fees (including retroactive adjustments thereof), sales and
service charges, commissions, special assessments, and rental payments and
personal and real estate taxes and assessments with respect to the Real
Property, taxes (except for taxes arising from the transfer of the Assets
hereunder), deposits, Trade-out Agreements, accrued vacation, unused sick leave
and other similar prepaid and deferred items and any other operating expenses
incurred in the Ordinary Course of Business. The parties acknowledge and agree
that there shall be excluded from Proration Items the following: (a) except as
otherwise provided in the TBA, severance pay relating to any employee of the
Stations who shall have been terminated prior to the Closing Date, and (b) any
Liabilities not being assumed by Entercom in accordance with Section 3.1.
"QUALIFIED INTERMEDIARY" shall mean a party described in U.S.
Treasury Regulations Section 1.1031(k)-1(g)(4).
"QUALIFIED PLAN" shall mean a Plan that satisfies, or is intended
to satisfy, the requirements for tax qualification described in Section 401 of
the Code including, without limitation, any Plan that was terminated on or after
July 1, 1989, as to which a person may have any actual or contingent liability.
"ROCHESTER STATIONS" shall mean WKLX(FM), WBEE(FM), WBBF(AM) and
WQRV(FM).
"SCI" shall mean the corporation identified as such in the Preamble
to this Agreement.
"SELLERS" shall mean Tuscaloosa, SRPLI and SRRLI.
5
"SELLERS' KNOWLEDGE" shall mean, except as otherwise expressly
provided in Section 4.1.16.1 of this Agreement, the knowledge of the Sellers,
Sinclair, SCI or any of their respective affiliates, officers, directors,
partners, agents, representatives or consultants.
"SINCLAIR" shall mean the corporation identified as such in the
Preamble to this Agreement.
"SINCLAIR GUARANTEE" shall mean the guarantee, substantially in the
form of Exhibit B hereto, dated of even date herewith, providing for the
guarantee by SCI of Sellers' obligations under this Agreement.
"STATIONS" shall mean (i) the frequency modulation (FM) radio
broadcast station licensed by the Commission to Portland, Oregon broadcasting on
97.1 MHz and currently assigned the call letters KKSN-FM, (ii) the amplitude
modulation (AM) radio broadcast station licensed by the Commission to Vancouver,
Washington broadcasting on 910 kHz and currently assigned the call letters
KKSN(AM), (iii) the frequency modulation (FM) radio broadcast station licensed
by the Commission to Salem, Oregon broadcasting on 105.1 MHz and currently
assigned the call letters KKRH(FM), (iv) the frequency modulation (FM) radio
broadcast station licensed by the Commission to Rochester, New York broadcasting
on 98.9 MHz and currently assigned the call letters WKLX(FM), (v) the frequency
modulation (FM) radio broadcast station licensed by the Commission to Rochester,
New York broadcasting on 92.5 MHz and currently assigned the call letters
WBEE(FM), (vi) the frequency modulation (FM) radio broadcast station licensed by
the Commission to Avon, New York broadcasting on 93.3 MHz and currently assigned
the call letters WQRV(FM) and (vii) the amplitude modulation (AM) radio
broadcast station licensed by the Commission to Rochester, New York broadcasting
on 950 kHz and currently assigned the call letters WBBF(AM).
"SRPLI" shall mean the corporation identified as such in the
Preamble to this Agreement.
"SRRLI" shall mean the corporation identified as such in the
Preamble to this Agreement.
"TBA" shall mean the Time Brokerage Agreement, substantially in the
form of Exhibit A hereto, dated of even date herewith, providing for the
programming by and sale to Entercom of substantially all of the broadcast time
available on the Stations upon acquisition thereof by Sellers.
"TUSCALOOSA" shall mean the corporation identified as such in the
Preamble to this Agreement.
"WELFARE PLAN" shall mean an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA.
6
ARTICLE II.
-----------
SALE AND PURCHASE
-----------------
2.1. TRANSFER OF ASSETS. Subject to the terms and conditions set
forth in this Agreement, at the Closing Sellers shall transfer, convey, grant,
assign and deliver to Entercom, free and clear of all Encumbrances (other than
Permitted Encumbrances) and Entercom shall buy, accept and receive from Sellers,
all right, title and interest in, to and under all real, personal and mixed
assets, rights, benefits and privileges, both tangible and intangible, owned,
leased, used or useful in connection with the business and operations of the
Stations (collectively, the "Assets"), but excluding the Excluded Assets
described in Section 2.2.
The Assets shall include, without limitation, all right, title and
interest in, to and under the following:
2.1.1. FCC LICENSES. All licenses, permits and other
authorizations issued by the Commission to Heritage, prior to the Heritage
Agreement Closing Date, or issued to Sellers or Sinclair after such date, for
the operation of the Stations (the "FCC Licenses"), including without limitation
those listed in Schedule 2.1.1. and all applications therefor, together with any
renewals, extensions or modifications thereof and additions thereto.
2.1.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property owned by Heritage, prior to
the Heritage Agreement Closing Date, or owned by Sellers or Sinclair, after such
date, and related to the business and operations of the Stations including,
without limitation, all land, fee interests, easements and other interests of
every kind and description in real property, buildings, structures, fixtures,
appurtenances, towers and antennae, and other improvements thereon owned by
Heritage, prior to the Heritage Agreement Closing Date, or owned by Sellers or
Sinclair, after such date, and used or useful in connection with the business
and operations of the Stations ("Real Property"), including, without limitation,
all of those items listed in Schedule 2.1.2.
(b) All the real property leasehold interests of
Heritage, prior to the Heritage Agreement Closing Date, or the real property
leasehold interests of Sellers or Sinclair, after such date, related to the
business and operations of the Stations, including, without limitation, leases
and subleases of any land, easements and other real property leasehold interests
of every kind and description in real property, buildings, structures, fixtures,
appurtenances, towers and antennae, and other improvements thereon leased by
Heritage, prior to the Heritage Agreement Closing Date, or leased by Sellers or
Sinclair, after such date, in connection with the business and operations of the
Stations ("Leased Property"), including, without limitation, all of those items
listed in Schedule 2.1.2.
2.1.3. TANGIBLE PERSONAL PROPERTY. All of the furniture,
fixtures, furnishings, machinery, computers, equipment, inventory, spare parts,
supplies, office materials and other tangible property of every kind and
description owned, leased or used by
7
Heritage, prior to the Heritage Agreement Closing Date, or owned, leased or used
by Sellers or Sinclair, after such date, in connection with the business and
operations of the Stations, together with any replacements thereof and additions
thereto made before the Closing, and less any retirements or dispositions
thereof made before the Closing in the Ordinary Course of Business, including,
without limitation, those items which have a book value in excess of Five
Thousand Dollars ($5,000), all of which as of the Heritage Agreement Date are
set forth and identified in Schedule 2.1.3.
2.1.4. INTELLECTUAL PROPERTY. All of the service marks,
copyrights, franchises, trademarks, trade names, jingles, slogans, logotypes and
other similar intangible assets maintained, owned, leased or used by Heritage,
prior to the Heritage Agreement Closing Date, or maintained, owned, leased or
used by Sellers or Sinclair, after such date, in connection with the business
and operations of the Stations (including any and all applications,
registrations extensions and renewals relating thereto) (the "Intellectual
Property"), and all of the rights, benefits and privileges associated therewith
including, without limitation, the right to use the call letters for the
Stations.
2.1.5. PROGRAM CONTRACTS. The program licenses and contracts
under which Heritage, prior to the Heritage Agreement Closing Date, or under
which Sellers or Sinclair, after such date, are authorized to broadcast programs
on the Stations (collectively the "Program Contracts") including, without
limitation, (a) all program (cash and non-cash) licenses and contracts listed on
Schedule 2.1.5, and (b) any other such program contracts that have been or will
be entered into between the date of the Heritage Agreement and the Closing Date
in accordance with the terms of the Heritage Agreement and this Agreement.
2.1.6. TRADE-OUT AGREEMENTS. All contracts and agreements
(excluding Program Contracts) pursuant to which commercial air time on the
Stations has been sold, traded or bartered in consideration for any property or
services in lieu of or in addition to cash (collectively, the "Trade-out
Agreements"), including, without limitation, those set forth and identified in
Schedule 2.1.6.
2.1.7. BROADCAST TIME SALES AGREEMENT. All contracts and
agreements pursuant to which commercial air time has been sold on the Stations
for cash (collectively the "Time Sales Agreements").
2.1.8. OPERATING CONTRACTS. All other operating contracts and
agreements relating to the business or operations of the Stations, all material
such contracts as of the Heritage Agreement Date being listed on Schedule 2.1.8.
(including, without limitation, all employment agreements and talent contracts,
all leases and subleases relating to the Leased Property, all agreements
relating to any motor vehicles, all network affiliation agreements and all
national and local advertising representation agreements for the Stations),
together with all contracts and agreements that have been or will be entered
into between the Heritage Agreement Date and the Closing Date in accordance with
the terms of the Heritage Agreement and this Agreement (collectively, the
"Operating Contracts" and together with the Program Contracts, Trade-out
Agreements and the Time Sales Agreements, the "Station Contracts").
8
2.1.9. VEHICLES. All automotive equipment and motor vehicles
maintained, owned, leased or otherwise used by Heritage, prior to the Heritage
Agreement Closing Date, or maintained, owned, leased or otherwise used by
Sellers or Sinclair, after such date, in connection with the business and
operations of the Stations, including, without limitation, those set forth and
described in Schedule 2.1.9.
2.1.10. FILES AND RECORDS. All engineering, business and other
books, papers, logs, files and records pertaining to the business and operations
of the Stations, but not the organizational documents and records described in
Section 2.2.7.
2.1.11. AUXILIARY FACILITIES. All translators, earth stations,
and other auxiliary facilities, and all applications therefor owned, leased or
otherwise used or useful by Heritage, prior to the Heritage Agreement Closing
Date, or used or useful by Sellers or Sinclair, after such date, in connection
with the business and operations of the Stations.
2.1.12. PERMITS AND LICENSES. All permits, approvals, orders,
authorizations, consents, licenses, certificates, franchises, exemptions of, or
filings or registrations with, any court or governmental authority (other than
the Commission) in any jurisdiction, which have been issued or granted to or are
owned or used or useful by Heritage, prior to the Heritage Agreement Closing
Date, or which have been issued or granted to or are owned or used or useful by
Sellers or Sinclair, after such date, in connection with the business and
operations of the Stations, and all pending applications therefor.
2.1.13. GOODWILL. The business of the Stations as a "going
concern," customer relationships and goodwill, if any.
2.2. EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, there shall be excluded from the Assets and retained by Sellers,
to the extent in existence as of the Closing Date for a particular Station, the
following assets (collectively, the "Excluded Assets").
2.2.1. CASH. All cash, cash equivalents or deposits held by
Sellers, all interest payable in connection with any such cash, cash equivalents
or deposits or short term investments, bank balances and rights in and to bank
accounts, marketable and other securities of Sellers.
2.2.2. ACCOUNTS RECEIVABLE. Except as otherwise provided in
the TBA, all Accounts Receivable arising out of the business and operations of
the Stations by Sellers prior to the Adjustment Time.
2.2.3. PERSONAL PROPERTY DISPOSED OF. All tangible personal
property disposed of or consumed in the Ordinary Course of Business by Heritage
or by Sellers as permitted by the Heritage Agreement or this Agreement.
9
2.2.4. INSURANCE. All contracts of insurance and all insurance
plans and the assets thereof.
2.2.5. EMPLOYEE PLANS AND ASSETS. All Plans, Benefit
Arrangements (except for any Station Contracts, Proration Items or other matters
which are specifically assumed by Entercom pursuant to the terms hereof),
Qualified Plans and Welfare Plans and the assets hereof.
2.2.6. RIGHT TO TAX REFUNDS. Any and all claims of Sellers
with respect to any tax refunds.
2.2.7. CERTAIN BOOKS AND RECORDS. All of (a) the Stations'
originals of account books of original entry, (b) duplicated copies of any
books, records, accounts, checks, payment records, tax records (including
payroll, unemployment, real estate and other tax records) and other similar
books, records and information relating to the operation of the business of the
Stations prior to the Closing, and (c) all records and documents relating to any
Excluded Assets maintained by or in the possession of Sellers; provided, in each
case, that (i) prior to the Heritage Agreement Closing Date, to the extent
permitted under the Heritage Agreement and (ii) at and after the Heritage
Agreement Closing Date, without such limitation, Entercom shall be permitted
full access to all such books and records and to make copies thereof upon
reasonable request.
2.2.8. THIRD-PARTY CLAIMS. All rights and claims of Sellers,
whether mature, contingent or otherwise, against third parties relating to the
Assets or the Stations, whether in tort, contract, or otherwise.
2.2.9. DEPOSIT AND PREPAID EXPENSES. All deposits and prepaid
expenses related to Sellers' ownership or operation of the Stations, provided,
however, any deposit and prepaid expenses shall be included in the Assets
conveyed pursuant hereto to the extent that Sellers receive a credit therefor in
the calculation of the Proration Amount pursuant to Section 8.2.
2.2.10. NAMES. Any and all rights to use the names "Heritage
Broadcasting," "Heritage Media," "Tuscaloosa," "Tuscaloosa Broadcasting,"
"Sinclair," or "Sinclair Communications" and any logo or variation thereof and
the goodwill associated therewith.
2.2.11. MISCELLANEOUS EXCLUDED ASSETS. The assets listed and
identified on Schedule 2.2.11.
2.3. PURCHASE PRICE. The Purchase Price for the Assets is the sum
of ONE HUNDRED TWENTY SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($126,500,000).
10
2.4. ESCROW. For and in partial consideration of the execution and
delivery of this Agreement, simultaneously with the execution and delivery of
this Agreement, Entercom is depositing in escrow with an escrow agent (the
"Escrow Agent") an irrevocable standby letter of credit (in form satisfactory to
Sellers and for the benefit of Sellers ) in the amount of NINE MILLION FOUR
HUNDRED EIGHTY SEVEN THOUSAND FIVE HUNDRED DOLLARS ($9,487,500) (the "Letter of
Credit"), to secure Entercom's obligations described herein, in accordance with
the terms and conditions of an escrow agreement substantially in the form
attached as Exhibit C hereto (the "Escrow Agreement"). The Escrow Agent shall be
a bank or financial institution with a combined capital and surplus of at least
$100,000,000.00.
2.5. PAYMENT. The Purchase Price to be paid by Entercom shall be
payable in cash delivered at the Closing by wire transfer of immediately
available federal funds to the account of Sellers at such financial institution
as Sellers shall specify in writing.
2.6. ALLOCATION OF PURCHASE PRICE. Entercom and Sellers agree that
the aggregate fair market value of the Assets (the "Aggregate Fair Market
Value") will be appraised by the appraisal firm of BIA Consulting, Inc. ("BIA")
(the "Appraisal"). All costs and expenses of BIA in preparing the Appraisal
shall be borne one-half by Entercom and one-half by Sellers. The parties
acknowledge that a draft Appraisal has been prepared by BIA prior to the date of
this Agreement, and that Sellers and Entercom will cooperate to finalize such
Appraisal. Entercom shall prepare IRS Form 8594 reflecting the Aggregate Fair
Market Value as found by BIA and such other information as required by the form,
and shall forward it within 30 days after Closing to Sellers for their approval,
which approval shall not be withheld unreasonably. Entercom and Sellers shall
each file with their respective federal income tax return for the tax year in
which the Closing occurs, IRS Form 8594 containing the information agreed upon
by the parties pursuant to the this Section 2.6. Entercom agrees to report the
purchase of the Assets and each of Sellers agrees to report the sale of such
assets for income tax purposes in a manner consistent with the information
agreed upon by the parties pursuant to this Section 2.6 and contained in its IRS
Form 8594. In the event either or both of the parties elects to treat all or a
portion of the Assets transferred as part of a deferred like-kind exchange under
Section 1031 of the Code, each party shall, in completing any IRS Forms 8824
that the party might be required to file with the IRS, reflect the values for
the Assets as determined pursuant to this Section 2.6. The parties expressly
agree that Seventy Six Million Dollars ($76,000,000) of the Purchase Price shall
be allocated to the Portland Stations, and Fifty Million Five Hundred Thousand
Dollars ($50,500,000) of the Purchase Price shall be allocated to the Rochester
Stations. Notwithstanding any other provision of this Agreement, the provisions
of this Section 2.6 shall survive the Closing without limitation.
ARTICLE III.
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LIABILITIES
-----------
3.1. ASSUMPTION OF LIABILITIES BY ENTERCOM. From and after the
Closing Date, Entercom shall assume, pay, perform, and discharge the following
Liabilities (collectively, the "Assumed Liabilities") of Sellers:
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3.1.1. The Liabilities arising out of events occurring on or
after the Closing Date related to the businesses or operations of the Stations
or Entercom's ownership of the Assets;
3.1.2. All Liabilities arising out of events occurring on or
after the Closing Date with respect to the FCC Licenses;
3.1.3. All Liabilities arising on or after the Closing Date
under the Station Contracts (including, without limitation, Trade-out
Agreements) pursuant to their terms (except for Liabilities for any breaches
thereunder by Sellers or Heritage occurring prior to the Closing Date); and
3.1.4. All those Liabilities for which, and only to the
extent, that Entercom receives the benefit of a Proration Item in accordance
with Section 8.2 hereof.
3.2. OTHER LIABILITIES. Except for the Assumed Liabilities or as
otherwise expressly provided in the TBA, Entercom does not and shall not assume
any other Liabilities of any kind or description.
3.3. NON-ASSIGNABLE STATION CONTRACTS.
3.3.1. Sellers shall, beginning immediately upon execution of
this Agreement, take all reasonable action required to obtain all consents,
approvals and agreements of any third parties necessary to authorize, approve or
permit the consummation of the transactions contemplated by this Agreement,
including, without limitation, any consent of the parties to the Station
Contracts designated as necessary in Schedule 2.1.8 in order to consummate the
transactions contemplated hereby (collectively, the "Restricted Contracts").
Notwithstanding anything to the contrary set forth in this Agreement or
otherwise, to the extent that the consent or approval of any third party is
required under any Restricted Contract, Sellers shall only be required to use
reasonable efforts (not involving the payment by Sellers of any money to any
party to any such Restricted Contract, except to the extent required by Section
3.3.2) to obtain such consents and approvals, and in the event that Sellers fail
to obtain any such consent or approval, Entercom shall have no right to
terminate this Agreement.
3.3.2. Notwithstanding anything to the contrary in Section
3.3.1, Sellers shall retain, until such time as any required consents shall have
been obtained by Sellers, all rights to and obligations under any Station
Contract which requires the consent of any other party thereto for assignment to
Entercom if such consent has not been obtained on the Closing Date (the
"Deferred Contract"). Until the assignment of the Deferred Contract, (i) Sellers
shall continue to use all commercially reasonable efforts and Entercom shall
cooperate with Sellers to obtain the consent and/or to remove any other
impediments to such assignment, and (ii) Sellers and Entercom agree to cooperate
in any lawful arrangement to provide (to the extent permitted without breach of
the Deferred Contract) that Entercom shall receive the benefits of such interest
after the Closing Date to the same extent as if it were Sellers; provided,
however, (y) if Entercom shall fail to receive such benefits after the Closing
Date for any leased property that is a main
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transmitter tower site or a studio site for any Station (the "Designated
Properties"), Sellers agree to make such payments as are necessary for Entercom
to receive such benefits and/or necessary to receive such consents for
assignment as long as the aggregate amount of all such payments does not exceed
Seventy Five Thousand Dollars ($75,000) for all such Designated Properties under
this Agreement and (z) Entercom shall, at its sole discretion, not be obligated
to perform the obligations under any Deferred Contract if it is not also
receiving all of the benefits thereunder. If, subsequent to the Closing, Sellers
shall obtain any consent required to assign any Deferred Contract, the Deferred
Contract for which consent to assign has been obtained shall at that time be
deemed to be conveyed, granted, bargained, sold, transferred, setover, assigned,
released, delivered and confirmed to Entercom, without need of further action by
Sellers or of future documentation.
ARTICLE IV.
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REPRESENTATIONS AND WARRANTIES
------------------------------
4.1. SELLERS' REPRESENTATIONS. Sellers hereby represent and warrant
to Entercom that:
4.1.1. CORPORATE STANDING. Tuscaloosa, SRPLI and SRRLI are
corporations, duly organized, validly existing and in good standing under the
laws of the states of their respective organizations, and are duly qualified to
do business and are in good standing in any jurisdiction where it owns or
operates a radio station and in each other jurisdiction where such qualification
is necessary, except for those jurisdictions where the failure to be so
qualified could not, individually or in the aggregate, have a material adverse
effect.
4.1.2. AUTHORIZATION OF AGREEMENT; NO BREACH. Tuscaloosa,
SRPLI and SRRLI have the corporate power and authority to execute, deliver and
perform this Agreement and such other agreements as are necessary to consummate
the transactions contemplated hereby. Subject to the receipt of the consents and
approvals required elsewhere herein, this Agreement constitutes the valid and
binding obligation of each of Tuscaloosa, SRPLI and SRRLI, enforceable against
each in accordance with its terms, except as such enforceability may be limited
by bankruptcy and laws affecting the enforcement of creditors' rights generally
or equitable principles. Assuming the said consents and approvals are obtained,
neither such execution, delivery and performance nor compliance by each Seller
with the terms and provisions hereof will conflict with or result in a breach of
any of the terms, conditions or provisions of the organizational documents of
such entities or any judgment, order, injunction, decree, regulation or ruling
of any court or any other governmental authority to which each is subject or any
material agreement or contract to which each is a party or to which each is
subject, or constitute a material default thereunder.
4.1.3. QUALIFICATIONS AS ASSIGNOR. Sellers know of no facts
which, under the Communications Act of 1934, as amended, or the existing rules
and regulations of the Commission, would disqualify Heritage or Sellers as an
assignor of the FCC Licenses to be assigned by each under the Heritage Agreement
or hereunder, as applicable.
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4.1.4. ABSENCE OF CONFLICTING ORDERS. Neither Seller is
subject to any judgment, award, order, writ, injunction, arbitration decision or
decree which prohibits or prevents the performance of this Agreement or the
consummation of any transaction contemplated under this Agreement, and there is
no litigation, administrative action, arbitration, proceeding or investigation
pending, or to Sellers' Knowledge, threatened, against any Seller or affecting
any Seller in any federal, state or local court or before any administrative
agency or arbitrator that would adversely affect Sellers' ability to perform
their obligations under this Agreement or would hinder the consummation of the
transactions contemplated hereunder.
4.1.5. FINANCIAL STATEMENTS: UNDISCLOSED LIABILITIES.
4.1.5.1. Sellers have provided to Entercom an unaudited
balance sheet of the Stations as of November 30, 1997 (the "Balance Sheet") and
an unaudited statement of income and operating cash flows for the ten month
period ending November 30, 1997, in each case, provided to Sellers by Heritage.
To Sellers' Knowledge, the financial statements referred to in this Section
4.1.5.1 (a) present fairly in all material respects the financial condition of
its Stations as of the date and the results of operations and operating cash
flows for the period indicated and (b) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
that the financial statements referred to in this Section 4.1.5.1 do not contain
all footnotes and cash flow information from investing and financing activities
required under generally accepted accounting principles and are subject to
customary year-end adjustments).
4.1.5.2. To Sellers' Knowledge, there exist no
Liabilities of the Stations relating to, or arising out of, the business or
operations of such Stations, contingent or absolute, matured or unmatured, known
or unknown, except (a) as reflected on the Balance Sheet and (b) for Liabilities
that (i) were incurred after November 30, 1997 (the "Current Balance Sheet
Date") in the Ordinary Course of Business, or (ii) were not required to be
reflected on the Balance Sheet in accordance with generally accepted accounting
principles applied on a consistent basis.
4.1.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth and described in Schedule 4.1.6, (i) to Sellers' Knowledge, after the
Current Balance Sheet Date through the date hereof there has been no, (ii) to
Sellers' Knowledge, from the date hereof through the Heritage Agreement there
will be no, and (iii) except as may be caused by Entercom pursuant to the TBA,
after the Heritage Agreement Closing Date there will be no, Material Adverse
Effect. Since the Current Balance Sheet Date, the business of the Stations has
been conducted in the Ordinary Course of Business. After the Heritage Agreement
Closing Date, Sellers will not have, and to Sellers' Knowledge, Heritage has not
(a) incurred any extraordinary loss of, or injury to, any of its Assets as the
result of any fire, explosion, flood, windstorm, earthquake, labor trouble,
riot, accident, act of God or public enemy or armed forces, or other casualty;
(b) incurred, or become subject to, any Liability, except current Liabilities
incurred in the Ordinary Course of Business; (c) discharged or satisfied any
Encumbrance or paid any
14
Liability other than current Liabilities shown in the Balance Sheet, current
Liabilities incurred since the Current Balance Sheet Date in the Ordinary Course
of Business and Liabilities (including, without limitation, partial and complete
prepayments) arising under any credit or loan agreement between such parties and
their lenders; (d) mortgaged, pledged or subjected to any Encumbrance any of the
Assets (except for Permitted Encumbrances); (e) made any material change in any
method of accounting or accounting practice; (f) sold, leased, assigned or
otherwise transferred any of the material Assets other than obsolete Assets
which have been replaced by suitable replacements; (g) made any material
increase in compensation or benefits payable to any employee other than in the
Ordinary Course of Business; or (h) made any agreement to do any of the
foregoing.
4.1.7. ABSENCE OF LITIGATION. Except as set forth on Schedule
4.1.7, as of the date hereof, there is no material or, to Sellers' Knowledge,
immaterial, action, suit, investigation, claim, arbitration, litigation or
similar proceeding, nor any order, decree or judgment pending or, to Sellers'
Knowledge, threatened, against Sinclair, Sellers, the Assets or the Stations
before any governmental authority.
4.1.8. ASSETS. Except for the Excluded Assets, the Assets
include all of the assets or property used or useful in the businesses of the
Stations as presently operated. Except for leased or licensed Assets, at and
after the Heritage Agreement Closing Date, Sellers or one of them will be the
owners of, and will have good title to, the Assets free and clear of any
Encumbrances, except for Permitted Encumbrances (including, without limitation,
those items set forth on Schedule 4.1.8). At the Closing, Entercom shall acquire
good title to, and all right, title and interest in and to the Assets, free and
clear of all Encumbrances, except for the Permitted Encumbrances.
4.1.9. FCC MATTERS. At and after the Heritage Agreement
Closing Date, Sellers or one of them will hold the FCC Licenses listed as held
on Schedule 2.1.1. Such FCC Licenses constitute all of the licenses, permits and
authorizations from the Commission which have been issued to Heritage that are
required for the business and operations of the Stations. Except as set forth on
Schedule 4.1.9, such FCC Licenses are valid and in full force and effect through
the dates set forth on Schedule 2.1.1, unimpaired by any condition, other than
as set forth in the FCC Licenses. Except as set forth on Schedule 4.1.9, no
application, action or proceeding is pending for the renewal or modification of
any of the FCC Licenses and, except for actions or proceedings affecting radio
broadcast stations or the radio industry generally, no application, complaint,
action or proceeding is pending or, to Sellers' Knowledge, threatened, that may
result in (a) the revocation, modification, non-renewal or suspension of any of
such FCC Licenses, or (b) the issuance of a cease-and-desist order. To Sellers'
Knowledge, except as set forth in Schedule 4.1.9, no facts, conditions or events
exist relating to Heritage, Sellers, or the Stations that would reasonably be
expected to cause the Commission to revoke any FCC License or not to grant any
pending applications for renewal of the FCC Licenses or to deny the assignment
of the FCC Licenses to Entercom as provided for in this Agreement.
15
4.1.10. REAL PROPERTY.
4.1.10.1. At and after the Heritage Agreement Closing
Date, Sellers or one of them will have good and marketable fee simple title to
all fee estates included in the Real Property and good title to all other owned
Real Property, in each case free and clear of all Encumbrances, except for
Permitted Encumbrances.
4.1.10.2. At and after the Heritage Agreement Closing
Date, Sellers or one of them will have a valid leasehold interest in all Leased
Property listed as leased in Schedule 2.1.2. Schedule 2.1.2 lists all leases and
subleases pursuant to which any of the Leased Property is leased. At and after
the Heritage Agreement Closing Date, Sellers or one of them will be the owner
and holder of all the Leased Property purported to be granted by such leases and
subleases. At and after the Heritage Agreement Closing Date, each such lease and
sublease will be valid as to Sellers or one of them and, to Sellers' Knowledge,
will constitute a legal and binding obligation of, and will be legally
enforceable against, each party thereto and grants the leasehold interest it
purports to grant, including any rights to nondisturbance and peaceful and quiet
enjoyment that may be contained therein. At and after the Heritage Agreement
Closing Date, Sellers or one of them will be, and to Sellers' Knowledge, all
other parties will be, in compliance in all material respects with the
provisions of such leases and subleases.
4.1.10.3. The Real Property and the Leased Property
listed in Schedule 2.1.2 constitute all of the real property owned, leased or
used in the business and operations of the Stations which is material to the
business and operations of the Stations.
4.1.10.4. To Sellers' Knowledge, no portion of the Real
Property or any building, structure, fixture or improvement thereon is the
subject of, or affected by, any condemnation, eminent domain or inverse
condemnation proceeding currently instituted or pending or threatened. To
Sellers' Knowledge and to the extent that such documents are in Sellers'
possession, Sellers have delivered to Entercom true, correct and complete copies
of the following documents with respect to the Real Property and Leased
Property: (i) deeds, by which a fee interest in any of the Real Property and
Leased Property has been received; (ii) leases, by which any of the Real
Property is leased; (iii) title insurance policies or commitments; (iv) surveys;
and (v) inspection reports or other instruments or reports, including, without
limitation, any phase I or phase II environmental reports or other similar
environmental reports, surveys or assessments (including any and all amendments
and other modifications of such instruments).
4.1.11. INTELLECTUAL PROPERTY. At and after the Heritage
Agreement Closing Date, Sellers or one of them will possess adequate rights,
licenses and authority to use all Intellectual Property necessary to conduct the
business of the Stations as presently conducted. At and after the Heritage
Agreement Closing Date, Sellers or one of them will have good title to all
Intellectual Property that each owns, free and clear of any Encumbrances, except
for Permitted Encumbrances. At and after the Heritage Agreement Closing Date, no
Seller will be obligated to pay any royalty or other fees to anyone with respect
to the Intellectual Property. No Seller has, and to Sellers' Knowledge, Heritage
has not, received
16
any written notice to the effect that any service rendered or to be rendered by
Heritage or any of Sellers relating to the business of the Stations may
infringe, or that such parties are otherwise infringing, on any Intellectual
Property right or other legally protectable right of another. No director,
officer or employee of Heritage or Sellers has any interest in any Intellectual
Property.
4.1.12. STATION CONTRACTS. Complete and correct copies of the
Station Contracts set forth in Schedules 2.1.5, 2.1.6 and 2.1.8 (which schedules
are true and correct in all material respects) have been made available to
Entercom and (a) at and after the Heritage Agreement Closing Date, each such
material Station Contract and, to Sellers' Knowledge, each such immaterial
Station Contract, will be in full force and effect and will constitute a legal,
valid and binding obligation of the parties thereto; (b) at and after the
Heritage Agreement Closing Date, each Seller which has become subject to a
Station Contract will not be in breach or default in any material respect of the
terms thereto; (c) at and after the Heritage Agreement Closing Date, none of the
material rights under any such Station Contract of each Seller which has become
subject thereto will be subject to termination, nor will a default occur, as a
result of the consummation of the transactions contemplated hereby, except to
the extent that failure to obtain the prior consent to assignment thereof of any
party thereto shall or could be interpreted to constitute a termination or
modification of or a default under any such Station Contract; and (d) to
Sellers' Knowledge, no other party to any such Station Contract is in breach or
default in any material respect of the terms thereunder.
4.1.13. TAXES. Each Seller has (or, in the case of returns
becoming due after the date hereof and on or before the Closing Date, will have
prior to the Closing Date) duly filed all material tax returns required to be
filed on or before the Closing Date with respect to all material taxes
applicable to the ownership or operation of the Stations by Sellers. In the case
of any tax returns which receive an extension for their date of filing, such tax
returns will be considered due on, and not considered required to be filed
before, the extended due date. To Sellers' Knowledge, all tax returns are (or,
in the case of returns becoming due after the date hereof and on or before the
Closing Date, will be) true and complete in all material respects. Sellers: (a)
have paid all taxes due to any governmental authority as indicated on the tax
returns applicable to the ownership or operation of the Stations by Sellers; or
(b) have established (or, in the case of amounts becoming due after the date
hereof but prior to the Closing Date will have established) adequate reserves
(in conformity with generally accepted accounting principles consistently
applied) for the payment of taxes applicable to the ownership or operation of
the Stations by Sellers.
4.1.14. EMPLOYEE BENEFIT PLANS.
4.1.14.1. Schedule 4.1.14 lists all Plans and Benefit
Arrangements (exclusive of severance arrangements and retention agreements)
maintained or contributed to for the benefit of the employees of the Stations
(collectively, the "Benefit Plans"). Each Benefit Plan maintained or contributed
to by Sellers, and, to Sellers' Knowledge, each Benefit Plan maintained or
contributed to by Heritage, has been maintained in material compliance with its
terms and with ERISA, the Code and other applicable laws.
17
4.1.14.2. Schedule 4.1.14 sets forth a list of all
Qualified Plans maintained or contributed to by Sellers, and to Sellers'
Knowledge, all Qualified Plans maintained or contributed to by Heritage, in each
case, for the benefit of the employees of the Stations. All such Qualified Plans
and any related trust agreements or annuity agreements (or any other funding
document) have been maintained in material compliance with ERISA and the Code
(including, without limitation, the requirements for tax qualification described
in Section 401 thereof), other than any Multiemployer Plan. To Sellers'
Knowledge, any trusts established under such Plans are exempt from federal
income taxes under Section 501(a) of the Code.
4.1.14.3. Schedule 4.1.14 sets forth a list of all
funded Welfare Plans maintained or contributed to by Sellers, and to Sellers'
Knowledge, all funded Welfare Plans maintained or contributed to by Heritage, in
each case, that provide benefits to current or former employees of the Stations
or their beneficiaries. To Sellers' Knowledge, the funding under each Welfare
Plan does not exceed and has not exceeded the limitations under Sections 419A(b)
and 419A(c) of the Code. At and after the Heritage Agreement Closing Date,
Sellers will not be, and to Sellers' Knowledge, Heritage is not, subject to
taxation on the income of any Welfare Plan's welfare benefit fund (as such term
is defined in Section 419(e) of the Code) under Section 419A(g) of the Code,
which Welfare Plan has been maintained or contributed to by any such party.
4.1.14.4. Sellers have no, and to Sellers' Knowledge,
Heritage has no, post-retirement medical life insurance or other benefits
promised, provided or otherwise due now or in the future to current, former or
retired employees of the Stations.
4.1.14.5. Except as set forth in Schedule 4.1.14, at
and after the Heritage Agreement Closing Date, Sellers will have, and to
Sellers' Knowledge, Heritage has (a) filed or caused to be filed all returns and
reports on the Plans that each such party is required to file and (b) paid or
made adequate provision for all fees, interest, penalties, assessments or
deficiencies that have become due pursuant to those returns or reports or
pursuant to any assessment or adjustment that has been made relating to those
returns or reports. All other fees, interest, penalties and assessments that are
payable by or for Heritage and Sellers have been or will be timely reported,
fully paid and discharged. There will be no unpaid fees, penalties, interest or
assessments due from Sellers, and to Sellers' Knowledge, there are no unpaid
fees, penalties, interest or assessments due from Heritage or from any other
person, in each case, that are or could become an Encumbrance on any of its
Assets or could otherwise adversely affect the businesses or operations of the
Stations or the Assets. At and after the Heritage Agreement Closing Date,
Sellers or one of them will have, and to Sellers' Knowledge, Heritage has,
collected or withheld all amounts that are required to be collected or withheld
by each such party to discharge its obligations, and all of those amounts have
been paid to the appropriate governmental authority or set aside in appropriate
accounts for future payment when due. Sellers have furnished to Entercom true
and complete copies of all documents setting forth the terms and funding of each
Plan.
4.1.14.6. Except as set forth in Schedule 4.1.14, at
and after the Heritage Agreement Closing Date, none of Sellers or any ERISA
Affiliate of such parties will
18
have, and none of Heritage or any ERISA Affiliate of Heritage has ever,
sponsored or maintained, had any obligation to sponsor or maintain, or had any
liability (whether actual or contingent, with respect to any of its assets or
otherwise) with respect to any Plan subject to Section 302 of ERISA or Section
412 of the Code or Title IV of ERISA (including any Multiemployer Plan). At and
after the Heritage Agreement Closing Date, none of Sellers or any ERISA
Affiliate of such parties will have, and none of Heritage or any ERISA Affiliate
of Heritage (since January 1, 1989) has, terminated or withdrawn from or sought
a funding waiver with respect to any plan subject to Title IV of ERISA, and no
facts exist that could reasonably be expected to cause such actions in the
future; no accumulated funding deficiency (as defined in Code Section 412),
whether or not waived, exists with respect to any such plan; no reportable event
(as defined in ERISA Section 4043) has occurred with respect to any such plan
(other than events for which reporting is waived); all costs of any such plans
have been provided for on the basis of consistent methods in accordance with
sound actuarial assumptions and practices, and the assets of each such plan, as
of its last valuation date, exceeded its "Benefits Liabilities" (as defined in
ERISA Section 4001(a)(16)); and, since the last valuation date for each such
plan, no such plan has been amended or changed to increase the amounts of
benefits thereunder and, to Sellers' Knowledge, there has been no event that
would reduce the excess of assets over benefit liabilities; and except as set
forth in Schedule 4.1.14, at and after the Heritage Agreement Closing Date, none
of Sellers or any ERISA Affiliate of such parties will have, and none of
Heritage or any ERISA Affiliate of Heritage has ever, made or been obligated to
make, or reimbursed or been obligated to reimburse another employer for,
contributions to any Multiemployer Plan.
4.1.14.7. No claims or lawsuits are pending or, to
Sellers' Knowledge, threatened, by, against, or relating to any Benefit Plan. To
Sellers' Knowledge, the Benefit Plans are not presently under audit or
examination (nor has notice been received of a potential audit or examination)
by the Internal Revenue Service, the Department of Labor, or any other
governmental agency or entity and no matters are pending with respect to any
Qualified Plan under the Internal Revenue Service's Voluntary Compliance
Resolution program, its Closing Agreement Program, or other similar programs.
4.1.14.8. To Sellers' Knowledge, with respect to each
Plan, there has occurred no non-exempt "prohibited transaction" (within the
meaning of Section 4975 of the Code) or transaction prohibited by Section 406 of
ERISA or breach of any fiduciary duty described in Section 404 of ERISA that
would, if successful, result in any liability for Sellers. Sellers will take no
action that would result in such a liability between the date hereof and the
Closing Date.
4.1.14.9. At and after the Heritage Agreement Closing
Date, Sellers will have no liability, and to Sellers' Knowledge, Heritage has no
liability (whether actual, contingent, with respect to any of the Assets or
otherwise) with respect to any employee benefit plan that is not a Benefit Plan
(exclusive of severance arrangements and retention agreements) or with respect
to any employee benefit plan sponsored or maintained (or which has been or
should have been sponsored or maintained) by any ERISA Affiliate of such
parties.
19
4.1.14.10. At and after the Heritage Agreement Closing
Date, all group health plans of Sellers and their ERISA Affiliates will have
been, and all group health plans of Heritage and its ERISA Affiliates have been,
operated in material compliance with the requirements of Sections 4980B (and its
predecessor) and 5000 of the Code, and Sellers have provided or will have
provided before the Closing Date, to individuals entitled thereto, all required
notices and coverage pursuant to Section 4980B with respect to any "qualifying
event" (as defined therein) occurring before or on the Closing Date.
4.1.15. LABOR RELATIONS. Sellers have made available to
Entercom a true and complete list of all employees engaged in the business or
operations of the Stations as of the date set forth on the list, together with
such employee's position, salary and date of hire. Schedule 4.1.15 lists all
written employment contracts of Heritage and Sellers related to employees of the
Stations and all written agreements, plans, arrangements, commitments and
understandings pursuant to which Heritage has, or at and after the Heritage
Agreement Closing Date, pursuant to which Sellers will have, severance
obligations related to employees at the Stations. Except as set forth on
Schedule 4.1.15, no labor union or other collective bargaining unit represents
or, to Sellers' Knowledge, claims to represent, any of the employees of the
Station. Except as set forth in Schedule 4.1.15, there are no strikes, work
stoppages, grievance proceedings, union organization efforts, or other
controversies pending between Heritage or Sellers, and any union or collective
bargaining unit representing (or, to Sellers' Knowledge, claiming to represent)
the employees at the Stations. At and after the Heritage Agreement Closing Date,
Sellers will be, and Heritage is, in compliance with all laws relating to the
employment or the workplace, including, without limitation, provisions relating
to wages, hours, collective bargaining, safety and health, work authorization,
equal employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions, except for any noncompliance which would
not have a Material Adverse Effect. Except as set forth herein, there are no
collective bargaining agreements relating to the Stations or the business and
operations thereof.
4.1.16. ENVIRONMENTAL MATTERS.
4.1.16.1. Except as set forth in Schedule 4.1.16, to
Sellers' Knowledge (which knowledge is based on the items set forth on Schedule
4.1.16), Heritage is, and at and after the Heritage Agreement Closing Date,
Sellers will be, in material compliance with, and the Real Property and all
improvements thereon are in material compliance with, all Environmental Laws.
4.1.16.2. Except as set forth in Schedule 4.1.16, there
are no pending or, to Sellers' Knowledge, threatened, actions, suits, claims, or
other legal proceedings based on (and none of Sellers have received any written
notice of any complaint, order, directive, citation, notice of responsibility,
notice of potential responsibility, or information request from any governmental
authority arising out of or attributable to): (a) the current or past presence
at any part of the Real Property of Hazardous Materials; (b) the current or past
release or threatened
20
release into the environment from the Real Property (including, without
limitation, into any storm drain, sewer, septic system or publicly owned
treatment works) of any Hazardous Materials; (c) the off-site disposal of
Hazardous Materials originating on or from the Real Property or the businesses
or Assets of the Stations; (d) any facility operations or procedures of the
Stations since Heritage's ownership thereof which do not conform to requirements
of the Environmental Laws; or (e) any violation of Environmental Laws at any
part of the Real Property arising from activities of the Stations since
Heritage's ownership thereof involving Hazardous Materials. At and after the
Heritage Agreement Closing Date, Sellers will have been, and to Sellers'
Knowledge, Heritage has been, duly issued all material permits, licenses,
certificates and approvals required under any Environmental Law.
4.1.17. INSURANCE. Schedule 4.1.17 contains a true and
complete list and brief summary of all policies of title, property, fire,
casualty, liability, life, workmen's compensation, libel and slander, and other
forms of insurance of any kind relating to the Assets or the business and
operations of the Stations. To Sellers' Knowledge, all such policies: (a) are in
full force and effect; (b) are sufficient for compliance in all material
respects by Heritage with all requirements of law and of all material agreements
to which Heritage is a party; and (c) are valid, outstanding, and enforceable
policies and Heritage is not in default in any material respect thereunder.
Between the Heritage Agreement Closing Date and the Closing Date of this
Agreement, Sellers will carry insurance relating to the Assets or the business
and operations of the Stations such that this Section 4.1.17 would be true after
substituting "Sellers" for "Heritage" in each instance. All such insurance of
Sellers shall provide for full replacement cost coverage of any tangible
property that is lost or damaged due to an insured event or cause.
4.1.18. REPORTS. All material returns, reports and statements
that the Station will be required to file with the Commission or any
governmental agency after the date of this Agreement, and to Sellers' Knowledge,
all material returns, reports and statements that the Stations have been
required to file with the Commission or any governmental agency through the date
of this Agreement, have been or will be timely filed, and all reporting
requirements of the Commission and other governmental authorities having
jurisdiction thereof have been or will be complied with by Sellers and, to
Sellers' Knowledge, by Heritage, in each case, in all material respects. All
such reports, returns and statements to be filed after the date hereof will be
complete and correct in all material respects as filed and, to Sellers'
Knowledge, all such reports, returns and statements that have been filed through
the date of this Agreement, are complete and correct in all material reports as
filed. At and after the Heritage Agreement Closing Date all documents required
by the Commission to be deposited by Sellers. and, to Sellers' Knowledge, all
documents required by the Commission to be deposited by Heritage since the
period of operation of the Stations by Heritage, in each case, in the public
file of the Stations (as defined in the rules and regulations of the Commission)
have been or will be deposited therein.
4.1.19. HERITAGE AGREEMENT. Except as set forth on Schedule
4.1.19, Sinclair and its affiliates have not waived any of their rights under
the Heritage Agreement related to the Stations. Sinclair is unaware of any
material breach or misrepresentation by Heritage or News Corp. under the
Heritage Agreement. Sinclair is not in material breach of, and has not defaulted
under, any of the terms of the Heritage Agreement
21
(unless waived or consented to in writing by Heritage and described on Schedule
4.1.19). The Heritage Agreement constitutes the valid and binding obligation of
Sinclair, enforceable against Sinclair and, by assignments, against Sellers, in
accordance with its terms, except as such enforceability may be limited by
bankruptcy and laws affecting the enforcement of creditors' rights generally or
equitable principles. Sinclair is not, and, to Seller's Knowledge, Heritage and
News Corp. are not, subject to any judgment, award, order, writ, injunction,
arbitration decision or decree which prohibits the performance of the Heritage
Agreement or the consummation of any transaction contemplated under the Heritage
Agreement, and, except as disclosed on Schedule 4.1.19, there is no litigation,
administrative action, arbitration, proceeding or investigation pending or, to
Sellers' Knowledge, threatened, against Heritage, News Corp., Sinclair or
Sellers or affecting such parties in any federal, state or local court, or
before any administrative agency or arbitrator that would adversely affect the
ability of Sinclair, Sellers, Heritage or News Corp. to consummate, or that
would prohibit, the transactions contemplated under the Heritage Agreement
related to the Stations.
4.1.20. INTERPRETATION OF CERTAIN PROVISIONS. Sellers have not
relied and are not relying on the specification of any dollar amount in any
representation or warranty made in this Agreement or any Schedule hereto to
indicate that such amounts, or higher or lower amounts, are or are not material,
and agree not to assert in any dispute or controversy between the parties hereto
that specification of such amounts indicates or is evidence as to whether or not
any obligation, item or matter is or is not material for purposes of this
Agreement and the transactions contemplated hereby.
4.2. ENTERCOM'S REPRESENTATIONS. Entercom represents and warrants
to Sellers that:
4.2.1. CORPORATE STANDING. Entercom is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and at the Closing Date will have the corporate
power and authority to conduct its business as proposed to be conducted and upon
the acquisition of the Assets will be duly qualified to do business in any
jurisdiction where it owns and operates a radio station and in each other
jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified could not, individually or in
the aggregate, have a material adverse effect.
4.2.2. AUTHORIZATION OF AGREEMENT: NO BREACH. Entercom has the
corporate power and authority to execute, deliver and perform this Agreement and
such other agreements as are necessary to consummate the transactions
contemplated hereby. Subject to the receipt of the consents and approvals
required elsewhere herein, this Agreement constitutes the valid and binding
obligation of Entercom, enforceable against Entercom in accordance with its
terms, except as such enforceability may be limited by bankruptcy and laws
affecting the enforcement of creditors' rights generally or equitable
principles. Assuming the said consents and approvals are obtained, neither such
execution, delivery and performance nor compliance by Entercom with the terms
and provisions hereof will conflict with or result in a breach of any of the
terms, conditions or provisions of the organizational documents of Entercom
22
or any judgment, order, injunction, decree, regulation or ruling of any court or
any other governmental authority to which Entercom is subject or any material
agreement or contract to which Entercom is a party or to which it is subject, or
constitute a material default thereunder.
4.2.3. QUALIFICATION AS ASSIGNEE. Except as disclosed in
Schedule 4.2.3, Entercom is, and pending Closing will remain, legally,
financially and otherwise qualified under the Communications Act of 1934, as
amended (the "Communications Act") and all rules, regulations and policies of
the Commission to acquire and operate the Stations. Except as disclosed in
Schedule 4.2.3, there are no facts or proceedings which would reasonably be
expected to disqualify Entercom under the Communications Act or otherwise from
acquiring or operating any of the Stations or would cause the Commission not to
approve the assignment of the FCC Licenses to Entercom. Except as disclosed in
Schedule 4.2.3, Entercom has no knowledge of any fact or circumstance relating
to Entercom or any of Entercom's Affiliates that would reasonably be expected to
(a) cause the filing of any objection to the assignment of the FCC Licenses to
Entercom, (b) lead to a delay in the processing by the Commission of the
applications for such assignment or (c) lead to a material delay in the
processing by the Commission of the renewals of the FCC Licenses for the
Portland Stations or the Rochester Stations. Except as disclosed in Schedule
4.2.3, no waiver of any Commission rule or policy is necessary to be obtained
for the grant of the applications for the assignment of the FCC Licenses to
Entercom, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein.
4.2.4. ABSENCE OF CONFLICTING ORDERS. Entercom is not subject
to any judgment, award, order, writ, injunction, arbitration decision or decree
which prohibits the performance of this Agreement or the consummation of any
transaction contemplated under this Agreement, and there is no litigation,
administrative action, arbitration, proceeding or investigating pending, or to
the knowledge of Entercom, threatened, against Entercom or affecting Entercom in
any federal, state or local court, or before any administrative agency or
arbitrator that would adversely affect Entercom's ability to perform its
obligations under this Agreement or would hinder the consummation of the
transactions contemplated hereunder.
4.2.5. AVAILABILITY OF FUNDS. Entercom will have available on
the Closing Date sufficient funds to enable it to consummate the transactions
contemplated hereby.
4.2.6. WARN ACT. Entercom is not planning or contemplating,
and has not made or taken, any decisions or actions concerning the employees of
the Stations after the Closing Date that would require the service of notice
under the Worker Adjustment and Retraining Act of 1988, as amended.
4.2.7. NO OUTSIDE RELIANCE. Entercom has not relied and is not
relying on any statement, representation or warranty not made in this Agreement,
any Schedule hereto or any certificate to be delivered to Entercom at the
Closing pursuant to this Agreement. Entercom is not relying on any projections
or other predictions contained or referred to in
23
materials (other than the Schedules) that have been or may hereafter be provided
to Entercom or any of its Affiliates, agents or representatives, and Sellers
make no representations or warranties with respect to any such projections or
other predictions.
4.2.8. INTERPRETATION OF CONCERN PROVISIONS. Entercom has not
relied and is not relying on the specifications of any dollar amount in any
representation or warranty made in this Agreement or any Schedule hereto to
indicate that such amounts, or higher or lower amounts, are or are not material,
and agrees not to assert in any dispute or controversy between the parties
hereto that specification of such amounts indicates or is evidence as to whether
or not any obligation, item or matter is or is not material for purposes of this
Agreement and the transactions contemplated hereby.
ARTICLE V.
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CONDITIONS
----------
5.1. MUTUAL CONDITIONS. Performance of the obligations of the
parties under this Agreement and the Closing of the transaction provided for
herein are and shall be subject to the occurrence and concurrence of the express
conditions precedent that:
5.1.1. The Stations shall have been acquired by Sellers from
Heritage pursuant to the Heritage Agreement; and
5.1.2. The Commission has granted its consent and approval in
writing to the assignment to Entercom of the FCC Licenses as contemplated
hereby, such consent to be free of any material adverse condition, and the
Commission's consent shall have become a Final Order, provided, that if no
objection or petition to deny has been filed against the Applications and if
Entercom's lenders consent to Closing upon FCC consent prior to such consent
becoming a Final Order, then the condition set forth in this Section 5.1.2 will
be deemed to be satisfied upon the consent and approval of the Commission; and
5.1.3. The waiting period (as it may be extended) applicable
to the transfer of the Assets under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") shall have expired or been earlier
terminated.
5.1.4. No statute, rule or regulation, or order of any court
or administrative agency, shall be in effect which restrains or prohibits
Entercom or Sellers, or any one of them, from consummating the transactions
contemplated hereby.
5.2. ENTERCOM'S CONDITIONS. Performance of the obligations of
Entercom under this Agreement and the Closing of the transactions provided for
herein also are and shall be subject to the occurrence of each of the following
express conditions precedent, each of which may be waived by Entercom, that:
24
5.2.1. The applications for the renewal of the FCC Licenses of
each of the Portland Stations and the Rochester Stations shall have been granted
without any material adverse condition, and such grants shall have become Final
Orders; and
5.2.2. The representations and warranties contained in Section
4.1 hereof shall be true and correct at and as of the Closing Date as if made on
and as of such date except to the extent that they speak as of a particular date
or time other then the Closing Date (in which case such representations and
warranties shall be true and correct as of such date or time); provided, that
the failure of such representations and warranties to be true and correct at and
as of the Closing Date shall only be a condition to Entercom's obligations
hereunder if such failures involve costs, damages and/or expenditures in excess
of $1,265,000 (as determined by a qualified independent third party), provided,
further, that if such amount is less than $1,265,000 but more than $150,000,
such amount shall be placed in escrow on the Closing Date pursuant to an
indemnification escrow agreement, the form of which is attached hereto as
Exhibit D hereto, to secure Sellers' indemnification obligations under Section
9.7.1 hereunder; and
5.2.3. All of the terms, covenants and conditions to be
complied with and performed by each Seller on or prior to the Closing Date shall
have been complied with or performed in all material respects; and
5.2.4. There shall have been no material adverse change
relating to the material FCC Licenses of any of the Stations (other than
WBBF(AM)).
5.3. SELLERS' CONDITIONS. Performance of the obligations of Sellers
under this Agreement and the Closing of the transactions provided for herein
also are and shall be subject to the occurrence of each of the following express
conditions precedent, each of which may be waived by any Seller, that:
5.3.1. The representations and warranties contained in Section
4.2 hereof shall be true and correct at and as of the Closing Date in all
material respects as if made on and as of such date except to the extent they
speak as of a particular date or time other than the Closing Date (in which case
such representations and warranties shall be true and correct in all material
respects as of such date or time); and
5.3.2. All of the terms, covenants and conditions to be
complied with and performed by Entercom on or prior to the Closing Date
(including delivery of the Purchase Price) shall have been complied with or
performed in all material respects.
5.3.3. Entercom shall have complied in all material respects
with its obligations to pay Monthly Payments (as defined in the TBA) and to
reimburse Sellers for capital expenditures for the Stations under Section 1.2
and Schedule 1.2 of the TBA.
25
ARTICLE VI.
-----------
COVENANTS AND AGREEMENTS.
-------------------------
6.1. AFFIRMATIVE COVENANTS OF SELLERS. During the period from the
date of this Agreement to the Closing Date, Sellers shall:
6.1.1. Should Sellers acquire any Station or operate any
Station prior to the sale of such Station to Entercom pursuant to this
Agreement, Sellers shall conduct the business and operations of such Station at
least in accordance with the provisions of Sections 6.1.1 through and including
6.1.12 and Sections 6.2.1 through and including 6.2.12 under the Heritage
Agreement.
6.1.2. Subject to the provisions of the TBA, cooperate with
Entercom in connection with its review, analysis and monitoring of the Assets
and the operations of the Stations to the end that an efficient transfer of the
Assets may be made at Closing and the business of the Stations may continue on
an uninterrupted basis. Sellers or one of them shall obtain Entercom's consent,
such consent not to be unreasonably withheld, prior to the exercise of Sellers'
or any of their rights under the Heritage Agreement as such rights pertain to
the Stations (other than the right to consummate the acquisition of the Stations
upon satisfaction of all conditions thereto). In addition to providing
information required hereunder or reasonably requested by the other parties
hereto, Sellers agree promptly to notify Entercom of any material problems or
developments of which any Seller becomes aware with respect to any of the Assets
or the business of any of the Stations.
6.1.3. Use their reasonable best efforts to cause Heritage to
prosecute, or to prosecute with the Commission, the applications for renewal of
the FCC Licenses for the Portland Stations and the Rochester Stations, such that
the applications are granted without any material adverse condition and, to the
extent reasonably possible, on or prior to the date for expiration of such FCC
Licenses.
6.1.4. Use reasonable best efforts to enforce all of its
rights under the Heritage Agreement as such rights pertain to the Stations,
including, without limitation, causing Heritage to act in conformity with the
Heritage Agreement and requiring Heritage to conduct the business of the
Stations in the Ordinary Course of Business in accordance with the terms of the
Heritage Agreement, except where such would not have a material adverse effect
on the business and operations of any Station, and, to the extent consistent
with the foregoing, in the same manner in which the same have heretofore been
conducted with the intent of preserving the ongoing operations and business of
the Stations.
6.1.5. Use their reasonable best efforts to close the
transactions contemplated by the Heritage Agreement as they pertain to the
Stations in a timely fashion consistent with the terms of such agreement.
Sellers shall enforce their rights to the fullest extent possible under the
Heritage Agreement as they pertain to the Stations, unless otherwise directed by
Entercom.
26
6.1.6. To the extent that Sinclair or Sellers receive
notifications from Heritage with respect to the Stations under the Heritage
Agreement or otherwise becomes aware of any breach of any representation,
warranty, covenant or agreement in the Heritage Agreement or the failure to
satisfy any condition in such agreement, in each case with respect to the
Stations, Sellers shall promptly notify Entercom, and thereafter use reasonable
best efforts to enforce, perform or waive any provision of the Heritage
Agreement pertaining to the Stations as may be reasonably requested by Entercom,
provided, that Sellers shall not be obligated to take any action at Entercom's
request inconsistent with their rights and obligations under the Heritage
Agreement.
6.1.7. To the extent permitted under the Heritage Agreement,
at Closing Sellers will assign any and all rights with respect to the Stations
that it may have against Heritage, News Corp., and their respective subsidiaries
to Entercom. Entercom acknowledges that the assignment of such rights by Sellers
requires the prior written consent of Heritage, which consent Heritage may
withhold in its sole discretion. In this regard, Sellers will use their
reasonable efforts (without obligation to spend any amount of money) to obtain
any consent of Heritage or News Corp. required to assign such rights to Entercom
prior to the Closing Date. The failure of Sellers to obtain such consent shall
not limit Entercom's obligation to close if all other conditions precedent to
Entercom's obligations have been satisfied or waived; however, in such case,
Sellers shall fully enforce their rights which relate to the Stations against
Heritage and News Corp. under the Heritage Agreement at Entercom's request, and
this covenant shall survive the Closing for the period that Sinclair has any
rights under the Heritage Agreement. Any proceeds received by Sellers from the
exercise of their rights which relate to the Stations against Heritage and News
Corp. and their respective subsidiaries shall be paid over to Entercom within
five (5) business days of receipt by Sellers, less any reasonable costs and
expenses of enforcement incurred by Sellers in such exercise.
6.1.8. At all times, maintain strict confidentiality with
respect to all documents and information furnished to Sellers by or on behalf of
Entercom. Nothing shall be deemed to be confidential information that: (a) is
known to Sellers at the time of its disclosure to Sellers; (b) becomes publicly
known or available other than through disclosure by Sellers; (c) is received by
Sellers from a third party not actually known by Sellers to be bound by a
confidentiality agreement with or obligation to Entercom; or (d) is
independently developed by Sellers. Notwithstanding the foregoing provisions of
this Section 6.1.8, Sellers may disclose such confidential information (a) to
the extent required or deemed advisable to comply with applicable laws; (b) to
its officers, directors, employees, representatives, financial advisors,
attorneys, accountants, and agents with respect to the transactions contemplated
hereby (so long as such parties agree to maintain the confidentiality of such
information); and (c) to any governmental authority in connection with the
transactions contemplated hereby. In the event this Agreement is terminated,
Sellers will return to Entercom all documents and other material prepared or
furnished by Entercom relating to the transactions contemplated hereunder,
whether obtained before or after the execution of this Agreement.
27
6.2. NEGATIVE COVENANTS OF SELLERS. Unless Entercom has given its
prior consent in writing, which consent shall not be unreasonably withheld or
delayed, Sellers shall not, directly or indirectly, during the period from the
date of this Agreement to the Closing Date:
6.2.1. Except as set forth on Schedule 4.1.19 hereto, fail to
comply with the terms of, waive any of Sellers' rights under or consent to any
actions requiring Sinclair's or Sellers' consent under the Heritage Agreement
related to the Stations.
6.2.2. Fail to consummate the acquisition of the Stations upon
the occurrence or waiver of all conditions precedent thereto under the Heritage
Agreement.
6.3. AFFIRMATIVE COVENANTS OF ENTERCOM. During the period from the
date of this Agreement to the Closing Date (or solely in the case of Section
6.3.4, from and after the Closing Date), Entercom shall:
6.3.1. Use reasonable efforts to obtain its lenders' consent
to Closing of this Agreement upon the consent and approval of the Commission of
the Applications but prior to such consent and approval becoming a Final Order.
6.3.2. At all times prior to the Closing, maintain strict
confidentiality with respect to all documents and information furnished to
Entercom by or on behalf of Sellers. Nothing shall be deemed to be confidential
information that: (a) is known to Entercom at the time of its disclosure to
Entercom; (b) becomes publicly known or available other than through disclosure
by Entercom; (c) is received by Entercom from a third party not actually known
by Entercom to be bound by a confidentiality agreement with or obligation to
Sellers; or (d) is independently developed by Entercom. Notwithstanding the
foregoing provisions of this Section 6.3.2, Entercom may disclose such
confidential information (a) to the extent required or deemed advisable to
comply with applicable laws; (b) to its officers, directors, partners,
employees, representatives, financial advisors, attorneys, accountants, agents,
underwriters, lenders, investors and any other potential sources of financing
with respect to the transactions contemplated hereby (so long as such parties
agree to maintain the confidentiality of such information); and (c) to any
governmental authority in connection with the transactions contemplated hereby.
In the event this Agreement is terminated, Entercom will return to Sellers all
documents and other material prepared or furnished by Sellers relating to the
transactions contemplated by this Agreement, whether obtained before or after
the execution of this Agreement.
6.3.3. Take all corporate action (including, without
limitation, all shareholder action), under the laws of any state having
jurisdiction over Entercom necessary to effectuate the transactions contemplated
by this Agreement.
6.3.4. From and after the Closing Date, cause to be afforded
to representatives of Sellers reasonable access during normal business hours to
the offices, books and records, contracts and reports of the Stations, as
Sellers shall from time to time reasonably request; provided, however, that (a)
such investigation shall only be upon reasonable notice and
28
shall not unreasonably disrupt the personnel or operations of Entercom or the
Stations, and (b) under no circumstances shall Entercom be required to provide
access to Sellers or any representatives of Sellers (i) any information or
materials subject to confidentiality agreements with third parties required to
be kept confidential by applicable laws, or (ii) any privileged attorney-client
communications or attorney work product. All requests for access to the offices,
books and records, contracts and reports of the Stations shall be made to such
representatives as Entercom shall designate in writing, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. Entercom agrees not to dispose of any books and records, contracts
and reports of the Stations which relate to the operations of the Stations
during the period during which the Stations were owned by Sellers without
consulting with Sellers prior to disposal thereof and taking any reasonable
action requested by Sellers with respect to retention and transfer to Sellers
thereof.
6.4. MUTUAL COVENANTS OF SELLERS AND ENTERCOM.
6.4.1. DISCLOSURE SCHEDULES. Sellers and Entercom acknowledge
and agree that Sellers shall have the right from time to time after the date
hereof to update or correct solely Schedules 2.1.5, 2.1.6, 2.1.8, 2.1.9 and
4.1.17 attached hereto solely to reflect actions by Sellers after the date
hereof which are not prohibited by Section 6.1 hereof. The inclusion of any fact
or item on a Schedule referenced by a particular section in this Agreement
shall, should the existence of the fact or item or its contents, be relevant to
any other section, be deemed to be disclosed with respect to such other section
whether or not an explicit cross-reference appears in the Schedules.
6.4.2. BULK SALES LAWS.Entercom hereby waives compliance by
Sellers, in connection with the transactions contemplated hereby, with the
provisions of any applicable bulk transfer laws.
6.4.3. TAX MATTERS.Sellers and Entercom each represent,
warrant, covenant and agree with each other that for tax purposes the sale of
Assets described herein is not effective until the Closing Date. Sellers and
Entercom agree that all Tax returns and reports shall be filed consistent with
the sale of assets taking place on the Closing Date.
6.4.4. PRESERVATION OF BOOKS AND RECORDS. For a period of
three (3) years after the Closing Date, Sellers agree not to dispose of, and
agree to provide Entercom reasonable access to, any material books or records in
Sellers' possession immediately after the Closing Date that relate to the
business or operation of the Stations prior to the Closing Date.
6.5. NO CONTROL BY ENTERCOM. Subject to the provisions of the TBA,
nothing contained in this Agreement shall give to Entercom any right to control
the operations of the Stations prior to the Closing Date. Any advice, counsel or
consent given to Sellers by Entercom under this Article VI will not mitigate,
detract from or otherwise affect Sellers' representations, warranties or
obligations under this Agreement. Any advice, counsel or
29
consent given to Entercom by Sellers under this Article VI will not mitigate,
detract from or otherwise affect Entercom's representations, warranties or
obligations under this Agreement.
ARTICLE VII.
------------
PREPARATION FOR CLOSING
-----------------------
7.1. APPLICATION TO COMMISSION. The parties hereto bind themselves
to use all reasonable efforts, and to cooperate with each other, in seeking the
consent and approval of the Commission to the assignment of all FCC Licenses, as
herein provided; and Sellers and Entercom agree that each shall diligently and
promptly prepare, sign and file with the Commission within five (5) business
days from the date of this Agreement any and all applications requisite or
desirable to procure such consent and approval (the "Applications"); and
diligently and promptly to prepare and submit to the Commission all information,
data, exhibits, amendments, resolutions, statements and other material necessary
or proper in connection with the Applications; and diligently to pursue the
grant of a Final Order approving such Applications by the Commission. With
respect to the foregoing, Sellers hereby agree, commit and bind themselves to
prepare and deliver to Entercom on or before five (5) days from the date of this
Agreement Sellers' portions of all applications and documents necessary for
filing with the Commission to obtain the consent and approval of the Commission
as required to permit the consummation of the transactions contemplated by this
Agreement.
7.2. INSPECTION BY ENTERCOM. To the extent permitted under the
Heritage Agreement, during the period from the date of this Agreement to the
Heritage Agreement Closing Date, and between the period from the Heritage
Agreement Closing Date and the Closing Date, Sellers shall afford engineers,
attorneys, accountants and other consultants and/or representatives of Entercom
free access during normal business hours to the employees, offices, studios,
transmitter site, equipment, records and other documents pertaining to the
Stations and furnish Entercom with all information concerning said Stations as
Entercom may reasonably request, including but not limited to applications,
responses to the Commission inquiries, and other documents filed by Sellers with
the Commission. Without limiting the foregoing, Entercom shall have the right,
subject to the limitations set forth above and at its sole expense, to perform
such phase I and phase II environmental site assessments of any real property
for the Stations included within the Assets, and upon receipt of such
assessments agrees to deliver a copy of each to Sellers. No right of termination
for Entercom shall arise as a result of any issue identified in such
environmental site assessments (unless a separate cause for termination under
other provisions of this Agreement may provide such a right); however, following
the Closing Date, if Entercom performs remediation for any issues specifically
identified in such environmental site assessments requiring remediation under
any Environmental Law, Sellers shall reimburse Entercom for the costs and
expenses of such remediation, up to a maximum aggregate amount of $250,000,
subject to the limitations on indemnification set forth in Section 9.7.4.
7.3. HART-SCOTT-RODINO NOTIFICATION. As promptly as practicable and
no later than five (5) business days after the date hereof, the parties hereto
shall
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take all steps reasonably necessary to file and shall participate in the filing
of all requisite documents and notifications required to be filed pursuant to
the HSR Act. The parties will jointly request early termination of any required
waiting period under the HSR Act unless mutually agreed otherwise. The parties
agree diligently to take and fully cooperate in the taking of, all necessary and
proper steps, and provide any additional information reasonably requested in
order to obtain promptly the expiration of the waiting period under the HSR Act.
ARTICLE VIII.
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CLOSING
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8.1. CLOSING. Closing shall take place at the time and place agreed
to by the parties hereto. It is expressly contemplated hereunder that Entercom
shall have no right to close on the acquisition of less than all the Stations
without the consent of Sellers. In the absence of agreement thereon and except
as modified elsewhere herein, the Closing shall take place by mail at 10:00
a.m., Eastern Time, at the offices of Latham & Watkins, 1001 Pennsylvania
Avenue, N.W., Suite 1300, Washington, D.C. 2004, on a date selected by Entercom
within ten (10) business days after the later of: (a) the satisfaction or waiver
of each condition to closing contained herein (other than such conditions as can
only be satisfied at the Closing); and (b) the expiration of any period of
extension for Closing provided elsewhere in this Agreement. If such date falls
on a Saturday, Sunday or legal holiday in the State of New York, then such
Closing shall take place as provided herein on the next business day.
8.2. ADJUSTMENTS.
8.2.1. Except as otherwise provided in the TBA, and subject
to the terms and conditions of Section 8.2.2, at least five (5) days prior to
the Closing Date, Sellers shall make a good faith estimate of the adjustment to
the Purchase Price customary in radio broadcast station transactions for
Proration Items (the "Proration Amount") to reflect that all Proration Items of
all Stations shall be apportioned between Entercom and Sellers in accordance
with the principle that Sellers shall receive the benefit of all revenues,
refunds, deposits (other than deposits for Program Contracts which shall be
prorated based on the percentage of the term that the program was aired on such
Stations before the Closing Date and the percentage available to be aired on and
after the Closing Date) and prepaid expenses, and shall be responsible for all
expenses, costs and liabilities allocable to the conduct of the businesses or
operations of such Stations for the period prior to the Closing Date, and
Entercom shall receive the benefit of all revenues, refunds, deposits and
prepaid expenses, and shall be responsible for all expenses, costs and
liabilities allocable to the conduct of the businesses or operations of such
Stations from and after the Closing Date; provided, however, that there shall be
no adjustment or proration for any negative or positive net trade balance except
to the extent that the negative net trade balance for the Stations exceeds
$50,000. Determinations pursuant to this Section 8.2.1, shall be made in
accordance with generally accepted accounting principles consistently applied
for the period prior to the Closing Date.
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8.2.2. Within ninety (90) days after the Closing Date,
Entercom shall deliver to Sellers in writing and in reasonable detail a good
faith final determination of the Proration Amount determined as of the Closing
Date under Section 8.2.1 (the "Final Proration Amount"). Sellers shall assist
Entercom in making such determination, and Entercom shall provide Sellers with
reasonable access to the properties, books and records relating to the Stations
for the purpose of determining the Final Proration Amount. Sellers shall have
the right to review the computations and workpapers used in connection with
Entercom's preparation of the Final Proration Amount. If Sellers disagree with
the amount of the Final Proration Amount determined by Entercom, Sellers shall
so notify Entercom in writing within thirty (30) days after the date of receipt
of Entercom's Final Proration Amount, specifying in detail any point of
disagreement; provided however, that if Sellers fail to notify Entercom in
writing of Sellers' disagreement within such thirty (30) day period, Entercom's
determination of the Final Proration Amount shall be final, conclusive and
binding on Sellers and Entercom. After the receipt of any notice of
disagreement, Entercom and Sellers shall negotiate in good faith to resolve any
disagreements regarding the Final Proration Amount. If any such disagreement
cannot be resolved by Sellers and Entercom within thirty (30) days after
Entercom has received notice from Sellers of the existence of such disagreement,
Entercom and Sellers shall jointly select a nationally recognized independent
public accounting firm (which has not performed any service for either Entercom
or Sellers or any of their respective subsidiaries at anytime during the two (2)
year period prior to the date such firm is selected (the "Accounting Firm")), to
review Entercom's determination of the Final Proration Amount and to resolve as
soon as possible all points of disagreement raised by Sellers. All
determinations made by the Accounting Firm with respect to the Final Proration
Amount shall be final, conclusive and binding on Entercom and Sellers. The fees
and expenses of the Accounting Firm incurred in connection with any such
determination shall be shared one-half by Entercom and one-half by Sellers.
Upon determination of the Final Proration Amount, the
appropriate party owing any prorations shall pay such amounts in cash, within
two (2) business days following the final determination of the Final Proration
Amount. Any amounts paid pursuant to this Section 8.2.2 shall be by wire
transfer of immediately available funds for credit to the recipient at a bank
account identified by such recipient in writing.
Entercom and Sellers agree that prior to the date of
the final determination of the Final Proration Amount pursuant to this Section
8.2.2 (by the Accounting Firm or otherwise), neither party will destroy any
records pertaining to, or necessary for, the final determination of the Final
Proration Amount.
8.3. CLOSING DELIVERIES TO ENTERCOM. At or before the Closing,
Sellers or one of them, as the case may be, shall deliver to Entercom the
following items and documents in form satisfactory to counsel for Entercom and
properly executed, unless Entercom shall waive in whole or in part in writing
such delivery and then only to the extent of such waiver:
8.3.1. One or more Bills of Sale and assignments and other
instruments of transfer and conveyance, substantially in the form attached
hereto as Exhibit E, transferring to
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Entercom the Assets to be sold, transferred or assigned hereunder and the rights
and interests under the Station Contracts being assigned to Entercom hereunder,
copies of all consents from third parties to the assignment of Station Contracts
received prior to the Closing Date (if any), and estoppel certifications
received prior to the Closing Date (if any) by the other parties to such Station
Contracts that Sellers are not then in default under the terms of the Station
Contract to which such other party is a party.
8.3.2. An assignment of all right, title and interest of
Sellers in and to the FCC Licenses and all pending applications relating to the
Stations before the Commission, substantially in the form attached hereto as
Exhibit E.
8.3.3. All keys to and actual possession of all of the Assets,
in the same condition as the same now is, except for ordinary wear and tear
thereof, unless disposed of or otherwise altered as permitted by this Agreement.
8.3.4. Certified copies of resolutions of the Board of
Directors and shareholders (if required by law) of each of Sellers, duly
authorizing the execution, delivery and performance of this Agreement and all
documents to be executed and delivered by each Seller at the Closing and
thereafter, and certified copies of resolutions of the Board of Directors of
Sinclair, duly authorizing the execution, delivery and performance of the SCI
Guarantee.
8.3.5. Certificates signed by authorized officers of each
Seller (each certificate being applicable to each Seller only), to the effect
that no act or omission by each Seller, or state of facts contrary to the
agreements, representations and warranties made herein by each Seller has been
taken or has occurred and that, subject to Section 5.2.2 of this Agreement, said
representations and warranties are true and correct at and as of the Closing
Date as if made on and as of the time of Closing Date, except to the extent that
said representations and warranties speak as of a particular date or time other
than the Closing Date (in which case such representations and warranties shall
be true and correct as of such date or time).
8.3.6. The consents of any public authorities or third persons
that may be required in connection with the performance of this Agreement.
8.3.7. All books, records, public files, contracts, leases,
Commission filings, correspondence, files and other documents in Sellers'
possession relating to and necessary or appropriate to the operation of the
Stations, excluding however, accounting records relating to Sellers' period of
ownership (provided Entercom is given copies thereof).
8.3.8. A special warranty deed in recordable form transferring
to Entercom a fee simple interest in any owned real property included within the
Assets and a commitment to issue extended coverage policies of title insurance
(ATLA owners and Mortgagee's policy-Form 1970, if available or Form 1984 or 1990
with 1970 endorsements), for the benefit of insuring good and marketable title
to such real property free and clear of all liens and encumbrances issued by a
title insurance company reasonably acceptable to Entercom and in the amount
allocated to such real property hereunder, subject to standard title exceptions
and
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survey exceptions, none of which will impair or interfere with the continued use
of such real property as such is currently used. All fees and expenses for the
issuance of such title insurance policies shall be paid for by Entercom.
8.3.9. To the extent Sellers have obtained such consent, the
consent of Heritage and/or News Corp., as necessary, to the assignment of the
rights related to the Stations under the Heritage Agreement to Entercom.
8.3.10. Instructions to the Escrow Agent to deliver the
original Letter of Credit to Entercom promptly after the Closing.
8.3.11. Opinions of Thomas & Libowitz, P.A., counsel to
Sellers, and of Fisher, Wayland, Cooper, Leader & Zaragoza, regulatory counsel
to Sellers, substantially in the forms attached hereto as Exhibits F and G.
8.4. CLOSING DELIVERIES TO SELLERS. At the Closing, Entercom shall
deliver to Sellers the Purchase Price as set forth in Section 2.5 allocated
between Sellers as Sellers shall direct and deliver the following items and
documents in form satisfactory to counsel for Sellers and properly executed
unless each Seller waives in whole or part in writing a delivery and then only
to the extent of such waiver:
8.4.1. One or more Agreements whereby Entercom assumes and
agrees to pay when due any Liabilities of each Seller specifically required to
be assumed by Entercom hereunder, substantially in the form attached hereto as
Exhibit E.
8.4.2. Certified copies of the resolutions of the Board of
Directors of Entercom approving and ratifying this Agreement and all
transactions contemplated by this Agreement.
8.4.3. A certificate signed by the President or any Vice
President of Entercom to the effect that with respect to any matter which would
prevent Entercom from consummating the Closing, no act or omission of Entercom
or state of facts contrary to the agreements, representations and warranties
made herein by Entercom has been taken or has occurred and that said
representations and warranties are true and correct at and as of the Closing
Date in all material respects as if made on and as of Closing Date, except to
the extent that said representations and warranties speak as of a particular
date or time other than the Closing Date (in which case such representations and
warranties shall be true and correct in all material respects as of such date or
time).
8.4.4. An opinion of John C. Donlevie, General Counsel to
Entercom, substantially in the form attached hereto as Exhibit H.
8.5. COVENANTS OF FURTHER ASSURANCE. At and after the time of
Closing, upon request of Entercom or Sellers, as the case may be, the parties
shall take such reasonable action and deliver to the party so requesting such
further instruments of assignment,
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conveyance or transfer or other documents of further assurance as in the opinion
of counsel for either Sellers or Entercom may be reasonably necessary to
evidence the full and effective transfer, conveyance and assignment of the
Assets and possession thereof to Entercom.
8.6. DAMAGE TO PROPERTY. If, at the time of Closing, any of the
real or tangible personal property included in the Assets shall have suffered
loss or damage for which Entercom is not responsible under the term of the TBA,
Sellers shall use their reasonable efforts to repair, replace or restore the
same prior to Closing. In the event that such repair, replacement or restoration
cannot be completed prior to the date scheduled for Closing, then, except as
provided immediately below, Closing shall occur and Sellers shall assign to
Entercom their rights to all insurance proceeds relating to such loss or damage.
In the event such loss or damage is uninsured or so material as to prevent one
of the Stations (other than WBBF(AM)) from using its studios or any of its
transmitter facilities in the normal course, consistent with past practices,
Closing shall be deferred until the completion of such repair, replacement or
restoration by Sellers to the extent that the Station's or Stations' studios and
transmitter facilities are again useable in the normal course, consistent with
past practices, and such delay shall not give rise to a right to terminate this
Agreement as provided in Section 9.1.4 hereof.
8.7. TAXES ON TRANSACTION. All sales, purchase, transfer, use or
documentary taxes, if any, payable by reason of this Agreement or any of the
transactions contemplated hereby or the sale, transfer or delivery of any of the
Assets to Entercom, whether or not imposed on Entercom or Sellers, shall be paid
one-half by Entercom and one-half by Sellers promptly when due.
ARTICLE IX.
TERMINATION, DEFAULT AND INDEMNIFICATION
9.1. TERMINATION BY REASON OTHER THAN DEFAULT. This Agreement may
be terminated by any party hereto not then in default hereunder at the time of
such termination upon written notice to the other party if:
9.1.1. The Commission denies or designates for hearing any of
the Applications or any portion thereof by Final Order; or
9.1.2. Events occur which give rise to a specific right
hereunder to terminate this Agreement by the party seeking to terminate; or
9.1.3. Other than as a result of a default by the party
seeking to terminate, any material condition set forth herein to the obligation
of the party seeking to terminate this Agreement to complete the transaction has
not been satisfied or complied with by the Closing Date and has not been waived
by the party seeking to terminate; or
9.1.4. By either party, subject to Section 8.6 hereof, if the
Commission does not grant its consent and approval to the Applications and the
waiting period required under
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the HSR Act has not expired or been terminated by the date that is six months
after the date of this Agreement and the TBA has not commenced by such six-month
anniversary, provided, that if an issue has been raised before the Commission,
the DOJ or the FTC concerning either Sellers, or any of their predecessors, on
the one hand, or Entercom, on the other hand, and such issue has delayed the
consent and approval of the Commission or the expiration or termination of the
waiting period contemplated by the foregoing clause, then the party to which
such issue relates shall not be permitted to terminate the Agreement pursuant to
this provision on such six-month anniversary date. If the TBA has commenced
within the six-month period set forth above, the period for termination by
either party pursuant to this Section 9.1.4 shall be one (1) year, provided,
that on such one-year anniversary date, either party may, subject to Section 8.6
hereof, terminate this Agreement even if an issue has been raised before the
Commission concerning such party and such issue has delayed the consent and
approval of the Commission.
9.2. EFFECT OF TERMINATION BY REASON OTHER THAN DEFAULT. If this
Agreement is duly terminated by either party as provided in Section 9.1, then
the Letter of Credit shall be returned to Entercom and all obligations of either
party to the other shall cease and both parties shall be fully and finally
released herefrom.
9.3. DEFAULT. The following shall constitute a default hereunder:
9.3.1. If any of the representations or warranties of a party
contained herein is inaccurate or breached in any material respect; or
9.3.2. If any of the obligations to be performed hereunder by
a party hereto is not performed during the period or at or before the time
specified herein for such performance.
9.4. REMEDIES OF SELLERS.
In the event of a default by Entercom, which is not waived by
Sellers, Sellers shall have the following remedies:
9.4.1. Prior to Closing, Sellers may, as their sole remedy, by
written notice to Entercom terminate this Agreement in which event Seller shall
be entitled to receive the proceeds of the Letter of Credit as liquidated
damages in full and final settlement of all claims under this Agreement, and
there shall be no other or further obligations, liabilities or remedies of the
parties hereunder.
9.4.2. In the event Closing occurs hereunder, Sellers' remedy
for any default by Entercom shall be indemnification pursuant to Section 9.7
hereof.
9.5. ENTERCOM'S REMEDIES. In the event of a default by either
Seller hereunder, which is not waived by Entercom, Entercom shall have the
following remedies:
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9.5.1. Prior to Closing, subject to the provisions regarding
failures of representations and warranties contained in Section 5.2.2 hereof,
Entercom may by written notice to Sellers terminate this Agreement in which
event Entercom shall be entitled to recover from Sellers, jointly and severally,
any damages Entercom sustained as a result of the default by such breaching
Seller hereunder.
9.5.2. Prior to Closing, Entercom may seek specific
performance by Sellers of Sellers' obligations hereunder and shall also be
entitled to any other remedy available at law or in equity, including without
limitation the recovery of any damages (including attorneys fees and costs)
incurred by Entercom as a result of the default by Sellers hereunder. Each
Seller covenants that under such circumstances it shall not assert in defense of
an action seeking specific performance of this Agreement in favor of Entercom
that Entercom has available adequate remedies at Law.
9.5.3. In the event Closing occurs hereunder, Entercom's
remedy for any default by Sellers shall be indemnification pursuant to Section
9.7 hereof.
9.6. LIQUIDATED DAMAGES NOT A PENALTY. With respect to the
liquidated damages as described and provided for in Section 9.4.1 hereof,
Sellers and Entercom hereby acknowledge and agree that the damage that may be
suffered by Sellers in the event of a default by Entercom hereunder is not
readily ascertainable and that such liquidated damages as of the date hereof are
a reasonable estimate of such damages and are intended to compensate Sellers for
any such damage and are not to be construed as a penalty.
9.7. INDEMNIFICATION.
9.7.1. BY SELLERS. Subject to Sections 9.7.4 and 10.3, from
and after the Closing Date, Sellers shall, jointly and severally, indemnify,
defend and hold Entercom and its officers, directors, employees and affiliates
harmless from, against and with respect to any and all loss, damage, claim,
obligation, assessment, cost, liability, and reasonable expense (including,
without limitation, reasonable attorney's fees and reasonable costs and expenses
incurred in investigating, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand) of any kind or
character (a "Loss") incurred, suffered, sustained or required to be paid by any
of them and resulting from, related to or arising out of:
(a) any breach of any of the covenants, representations
or warranties made by Sellers in or pursuant to this Agreement, or in
any agreement, document or instrument executed and delivered pursuant
hereto or in connection with the Closing hereunder;
(b) any failure by Sellers to perform or observe, or to
have performed or observed, in full, any covenant, agreement or
condition to be performed or observed by them pursuant to this Agreement
or in any agreement, document or instrument executed and delivered by or
on behalf of them in connection with the Closing hereunder;
37
(c) any and all Liabilities of Sellers, except for
Liabilities to be assumed or retained by Entercom under the terms of
this Agreement; or
(d) Sellers' operation or ownership of the Assets prior
to the Adjustment Time, including any and all obligations and
liabilities arising under the FCC Licenses or the Station Contracts
which accrue or relate to a period of time prior to the Adjustment Time;
or
9.7.2. BY ENTERCOM. If Closing does not occur due to a default
by Entercom in its obligation to complete such Closing hereunder, Sellers'
remedy shall be liquidated damages pursuant to Section 9.4 hereof. Provided
Closing occurs hereunder, subject to Section 10.3, Entercom shall indemnify,
defend and hold Sellers and their respective officers, directors, employees and
affiliates harmless from, against and with respect to any Loss (as defined in
Section 9.7.1) incurred, suffered, sustained or required to be paid by any of
them and resulting from, related to or arising out of:
(e) any breach of any of the covenants, representations
or warranties made by Entercom in or pursuant to this Agreement or in
any agreement, document or instrument executed and delivered pursuant
hereto or in connection with the Closing hereunder;
(f) any failure by Entercom to perform or observe, or
to have performed or observed, in full, any covenant, agreement or
condition to be performed or observed by it pursuant to this Agreement
or in any agreement, document or instrument executed and delivered by or
on behalf of it in connection with the Closing hereunder; or
(g) any and all Liabilities of Entercom except for
Liabilities to be assumed or retained by Sellers under the terms of this
Agreement; or
(h) Entercom's operation or ownership of the Assets
after the Adjustment Time, including any and all Liabilities arising
under the FCC Licenses or the Station Contracts assumed by Entercom
which accrue after the Adjustment Time or which relate to or arise out
of events occurring after the Adjustment Time.
9.7.3. PROCEDURES. Any party seeking indemnification under
this Agreement (the "Indemnified Party") shall promptly give the party from whom
indemnification is sought (the "Indemnifying Party") written notice of any claim
or the commencement of any action or proceeding for which the Indemnified Party
may seek indemnification, and the Indemnified Party shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting from such claim, unless injunctive relief is sought against the
Indemnified Party in which case the Indemnified Party shall have the right to
join in any defense. The Indemnified Party's failure to give the Indemnifying
Party notice under this clause shall not preclude the Indemnified Party from
seeking indemnification from the Indemnifying Party except to the extent that
the Indemnified Party's failure has materially prejudiced the Indemnifying
Party's ability to defend the claim or litigation. The Indemnifying Party shall
not settle any claim
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for which the Indemnified Party seeks indemnification or consent to entry of any
judgment in litigation arising from such a claim without obtaining a written
release of the Indemnified Party from all liability in respect of such claim or
litigation. If the Indemnifying Party shall not assume the defense of any such
claim or litigation resulting therefrom, or if injunctive relief is sought
against the Indemnified Party, the Indemnified Party may defend against or
settle such claim or litigation in such manner as it may deem appropriate, and
in such cases, upon a written demand therefore, the Indemnifying Party shall
promptly reimburse the Indemnified Party for the amount of all reasonable
expenses, legal or otherwise, incurred by the Indemnified Party in connection
with the defense against or settlement of such claim or litigation. In addition,
if the Indemnifying Party shall not assume the defense of any such claim or
litigation resulting therefrom, or if injunctive relief is sought against the
Indemnified Party, and if no settlement of the claim or litigation is made, upon
written demand therefor, the Indemnifying Party shall promptly reimburse the
Indemnified Party for the amount of any judgment rendered with respect to such
claim or in such litigation and for all reasonable expenses, legal or otherwise,
incurred by the Indemnified Party in the defense against such claim or
litigation.
9.7.4. LIMITS ON INDEMNIFICATION. Notwithstanding any other
provision hereof, Entercom shall not be entitled to make a claim against Sellers
for indemnification under this Agreement until the aggregate amount of such
claims by Entercom exceeds One Hundred Fifty Thousand Dollars ($150,000) (the
"Threshold"), provided, that once the Threshold has been exceeded, Entercom
shall be entitled to seek from Sellers, jointly and severally, the full amount
of such claims. The amount of the Threshold shall have no bearing on any
determination as to what constitutes "material" for purposes of this Agreement.
In addition, notwithstanding any other provision of this Agreement to the
contrary, in no event shall a Loss include a party's incidental, consequential
or punitive damages, regardless of the theory of recovery.
ARTICLE X.
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GENERAL PROVISIONS
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10.1. EXPENSES OF THE PARTIES. Except as otherwise expressly
provided herein, all expenses involved in the preparation, authorization and
consummation of this Agreement, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants in connection
therewith and in connection with applications to the Commission hereunder, shall
be borne solely by the party who shall have incurred the same, and the other
party shall have no liability in respect thereof. The foregoing notwithstanding,
the parties agree to pay in equal shares (i) any filing fees of the Commission
relating to the filing of the Applications, (ii) fees related to notifications
under the HSR Act or to any other governmental agency and (iii) fees and
expenses of the Escrow Agent under the Escrow Agreement and the Indemnification
Escrow Agreement. In addition, (y) assuming Sellers obtain the consent of
Geraghty & Miller to allow Entercom and its lenders to rely upon the phase I
environmental site assessment performed for the Real Property and identified on
Schedule 4.1.16, Entercom agrees to pay one-half of the total cost of such phase
I environmental site assessment performed by Geraghty & Miller and (z) Entercom
shall pay all of the cost involved
39
in the update by Geraghty & Miller of such phase I environmental site assessment
(as contemplated by Section 4.1.16.1), provided that Entercom shall receive a
dollar-for-dollar credit against any amount paid by Entercom pursuant to clause
(y) above.
10.2. BROKERS. Each party hereto represents and warrants to the
other party hereto that it has not incurred any Liability, contingent or
otherwise, for brokerage or finders' fees or agents commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby for which the other party will have any Liability, and each party hereto
agrees to indemnify and hold the other party hereto harmless against and in
respect to any such Liability based in any way on any agreement, arrangement or
understanding claimed to have been made by such party with any third party.
10.3. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. The
provisions hereof which by their terms are to be performed and observed after
the Closing Date and the several representations, warranties, indemnities and
agreements of Entercom and Sellers herein contained shall survive the Closing
Date hereunder for one (1) year following the Closing Date. No claim for
indemnification may be made pursuant to Article IX after the survival period set
forth in this Section 10.3 (except that all claims which are properly asserted
prior to the expiration of the survival period set forth in this Section 10.3
shall survive with respect to such claims until the final resolution thereof).
10.4. AMENDMENT AND WAIVER. This Agreement cannot be changed or
terminated orally. Any amendment of modification hereof must be in writing
signed by the party against whom enforcement is sought. No waiver of compliance
with any provision or condition hereof, and no consent provided for herein,
shall be effective unless evidenced by an instrument in writing duly executed by
the party sought to be charged with such waiver or consent.
10.5. ASSIGNMENT. Entercom shall have the right to assign all or
any portion of its rights under this Agreement to any entity under common
control with Entercom or a Qualified Intermediary under Section 1031 of the
Code, provided, that no such assignment shall relieve Entercom of its
obligations hereunder. Other than as expressly set forth above, no party may
assign all or any portion of its rights under the Agreement without the prior
written consent of the other parties hereto.
10.6. EFFECT OF THIS AGREEMENT. This Agreement, together with the
exhibits and schedules hereto and a letter agreement, among Entercom and SCI,
dated of even date herewith, sets forth the entire understanding of the parties
and supersedes any and all prior written or oral agreements, arrangements or
understandings relating to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by either party
which is not embodied in this Agreement or the letter agreement referred to
above, and neither party shall be bound by, or be liable for, any alleged
representation, promise, inducement or statement of intention not embodied
herein unless same shall have been made subsequent hereto, shall be in writing
and shall be signed by the party to be charged therewith. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns.
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10.7. HEADINGS. The article or section headings of this Agreement
are for convenience of reference only and do not form a part of and do not in
any way modify, interpret or construe the intention of the parties.
10.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and all such counterparts shall be construed as one and the same
instrument.
10.9. GOVERNING LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of New York, excluding
choice of law provisions thereunder.
10.10. NOTICES. Any notice, report, demand, waiver or consent
required or permitted hereunder shall be in writing and shall be given by hand
delivery, by prepaid registered or certified mail, with return receipt
requested, by an established national overnight courier providing proof of
delivery for next business day delivery or by telecopy addressed as follows:
If to Sellers: David D. Smith, President
------------- Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, MD 21211-1420
Telecopy Number: (410) 467-5043
with copies to: Robert Quicksilver, General Counsel
Sinclair Communications, Inc.
2000 West 41st Street
Baltimore, MD 21211-1420
Telecopy Number: (410) 662-4707
Steven A. Thomas, Esq.
Thomas & Libowitz, P.A.
100 Light Street, Suite 1100
Baltimore, MD 21202
Telecopy Number: (410) 752-2046
If to Entercom: Joseph M. Field, President
-------------- Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Telecopy Number: (610) 660-5620
41
with copies to: John C. Donlevie, General Counsel
Entertainment Communications, Inc.
401 City Avenue, Suite 409
Bala Cynwyd, PA 19004
Telecopy Number: (610) 660-5620
Joseph D. Sullivan, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W., Suite 1300
Washington, D.C. 20004
Telecopy Number: (202) 637-2201
The date of any such notice and service thereof shall be deemed to be: (i) the
day of delivery if hand delivered or delivered by overnight courier; (ii) the
day of delivery as indicated on the return receipt if dispatched by mail, or
(iii) the date of telecopy transmission as indicated on the telecopier
transmission report provided that any telecopy transmission shall not be
effective unless a paper copy is sent by overnight courier on the date of the
telecopy transmission. Either party may change its address for the purpose of
notice by giving notice of such change in accordance with the provisions of this
section.
10.11. STATION EMPLOYEES. Subject to the terms of the TBA, Sellers
agree that for a period of one year after the Commencement Date of the TBA,
neither they nor any of their affiliates, successors or assignees will employ or
solicit for employment, or counsel others to solicit for employment, any current
employee of the Stations that Entercom employs after the Closing; provided, that
if Entercom terminates any employee of the Stations, such restrictions shall not
apply to any such terminated employees.
10.12. SECTION 1031 ASSET EXCHANGE. Entercom may elect to effect
the acquisition of all or part of the Assets as part of a deferred like-kind
exchange under Section 1031 of the Code, in lieu of buying such assets
hereunder; provided, that the consummation of this Agreement is not predicated
or conditioned on such exchange. If Entercom so elects, it shall provide notice
to Sellers of its election, and thereafter (i) may at any time at or prior to
Closing assign its rights under this Agreement to a "qualified intermediary" as
defined in Treas. Reg. ss. 1.1031(k)-1(g)(4), subject to all of Sellers' rights
and obligations hereunder and (ii) shall promptly provide written notice of such
assignment to all parties hereto; provided, that no such assignment shall
relieve Entercom of its obligations hereunder. Notwithstanding the assignment of
Entercom's rights hereunder, the parties acknowledge and agree that the
representations, warranties and covenants of Sellers hereunder are for the
benefit of Entercom and shall remain enforceable by Entercom against Sellers in
accordance with the terms hereof. Sellers shall cooperate with all reasonable
requests of Entercom and the "qualified intermediary" in arranging and effecting
the exchange as one which qualifies under Section 1031 of the Code; provided,
that Sellers shall incur no additional costs, expenses, delays or liabilities in
connection with this transaction as a result of or in connection with the
exchange. Without limiting the generality of the foregoing, if Entercom has
given notice of its intention to effect the acquisition of all or part
42
of the Assets as part of a tax-deferred exchange, Sellers shall (i) promptly
provide Entercom with written acknowledgment of such notice and (ii) at Closing,
accept payment for all or that portion of the Assets for which like-kind
exchange treatment is sought by Entercom from the "qualified intermediary"
rather than from Entercom (which payment shall discharge the obligation of
Entercom hereunder to make payment for such assets) and transfer, assign and
convey such assets to Entercom.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their duly authorized corporate officers on the date first
written above.
TUSCALOOSA:
TUSCALOOSA BROADCASTING, INC.
By:
----------------------------------------
Title:
-------------------------------------
SRPLI:
SINCLAIR RADIO OF PORTLAND LICENSEE, INC.
By:
----------------------------------------
Title:
-------------------------------------
SRRLI:
SINCLAIR RADIO OF ROCHESTER LICENSEE, INC.
By:
----------------------------------------
Title:
-------------------------------------
ENTERCOM
ENTERTAINMENT COMMUNICATIONS, INC.
By:
----------------------------------------
Title:
-------------------------------------
Dates Referenced Herein and Documents Incorporated by Reference
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