-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ph2tIrkLFR3LhEwEJvLOM5H5L3aaDtVVSjYsiGniiehovYb3EfT/67rCldYRsN8z U1HrIq4iyz9efU1VpjjhsA== 0001005150-99-000995.txt : 19991115 0001005150-99-000995.hdr.sgml : 19991115 ACCESSION NUMBER: 0001005150-99-000995 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINCLAIR BROADCAST GROUP INC CENTRAL INDEX KEY: 0000912752 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 521494660 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26076 FILM NUMBER: 99748338 BUSINESS ADDRESS: STREET 1: 2000 WEST 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 BUSINESS PHONE: 4104675005 MAIL ADDRESS: STREET 1: 2000 W 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE One) [X] SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________. Commission File Number : 000-26076 SINCLAIR BROADCAST GROUP, INC. (Exact name of Registrant as specified in its charter) --------------------------- MARYLAND 52-1494660 (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or organization) 10706 BEAVER DAM ROAD COCKEYSVILLE, MARYLAND 21030 (Address of principal executive offices) (410) 568-1500 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year-if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] As of November 3, 1999 there were 48,882,013 shares of Class A Common Stock, $.01 par value, 48,103,647 shares of Class B Common Stock, $.01 par value; and 3,450,000 shares of Series D preferred stock, $.01 par value, convertible into 7,561,710 shares of Class A Common Stock of the Registrant issued and outstanding. In addition, 2,000,000 shares of $200 million aggregate liquidation value 11 5/8% High Yield Trust Offered Preferred Securities of Sinclair Capital, a subsidiary trust of Sinclair Broadcast Group, Inc. are issued and outstanding. 1 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended September 30, 1999 TABLE OF CONTENTS
Page ---- PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 1998 and September 30, 1999..................................................................... 3 Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 1998 and 1999...................................................... 4 Consolidated Statement of Stockholders' Equity for the Nine Months Ended September 30, 1999............................................................... 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1998 and 1999...................................................... 6 Notes to Unaudited Consolidated Financial Statements.......................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................. 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk............................... 20 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K......................................................... 21 Signature..................................................................................... 22
2 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 31, SEPTEMBER 30, ASSETS 1998 1999 --------------- ---------------- CURRENT ASSETS: Cash and cash equivalents .................................................................. $ 3,268 $ 8,362 Accounts receivable, net of allowance for doubtful accounts ................................ 196,880 183,689 Current portion of program contract costs .................................................. 60,795 86,248 Prepaid expenses and other current assets .................................................. 5,542 6,790 Deferred barter costs ...................................................................... 5,282 5,830 Broadcast assets related to discontinued operations ........................................ 499,786 516,212 Broadcast assets held for sale ............................................................. 33,747 223,938 Deferred tax asset ......................................................................... 19,209 11,933 ----------- ----------- Total current assets ................................................................ 824,509 1,043,002 PROGRAM CONTRACT COSTS, less current portion ................................................... 45,608 68,462 LOANS TO OFFICERS AND AFFILIATES ............................................................... 10,041 9,233 PROPERTY AND EQUIPMENT, net .................................................................... 243,684 250,434 OTHER ASSETS ................................................................................... 82,544 98,610 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ................................................... 2,646,366 2,515,261 ----------- ----------- Total Assets ............................................................................... $ 3,852,752 $ 3,985,002 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ........................................................................... $ 18,065 $ 9,583 Accrued liabilities ........................................................................ 96,350 82,941 Current portion of long-term liabilities- Notes payable and commercial bank financing ............................................ 50,007 68,758 Notes and capital leases payable to affiliates ......................................... 4,063 5,979 Program contracts payable .............................................................. 94,780 121,168 Deferred barter revenues ................................................................... 5,625 6,301 ----------- ----------- Total current liabilities ........................................................... 268,890 294,730 LONG-TERM LIABILITIES: Notes payable and commercial bank financing ................................................ 2,254,108 2,338,524 Notes and capital leases payable to affiliates ............................................. 19,043 35,368 Program contracts payable .................................................................. 74,152 99,170 Deferred tax liability ..................................................................... 184,736 184,736 Other long-term liabilities ................................................................ 32,181 25,154 ----------- ----------- Total liabilities ................................................................... 2,833,110 2,977,682 ----------- ----------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES ................................................. 3,599 3,575 ----------- ----------- COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUB- SIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ........................................ 200,000 200,000 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Series B Preferred stock, $.01 par value, 10,000,000 shares authorized and 39,581 and 14,774 shares issued and outstanding, respectively ................................. -- -- Series D Preferred stock, $.01 par value, 3,450,000 shares authorized, issued and outstanding ........................................................................ 35 35 Class A Common stock, $.01 par value, 100,000,000 and 500,000,000 shares authorized and 47,445,731 and 48,819,241 shares issued and outstanding, respectively .............. 474 488 Class B Common stock, $.01 par value, 35,000,000 and 140,000,000 shares authorized and 49,075,428 and 48,208,447 shares issued and outstanding ............................ 491 482 Additional paid-in capital ................................................................. 768,648 779,602 Additional paid-in capital - equity put options ............................................ 113,502 108,358 Additional paid-in capital - deferred compensation ......................................... (7,616) (6,314) Accumulated deficit (59,491) (78,906) ----------- ----------- Total stockholders' equity 816,043 803,745 ----------- ----------- Total Liabilities and Stockholders' Equity .......................................... $ 3,852,752 $ 3,985,002 =========== ===========
The accompanying notes are an integral part of these unaudited consolidated statements. 3 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1999 1998 1999 ---- ---- ---- ---- REVENUES: Station broadcast revenues, net of agency commissions ...................... $ 151,996 $ 160,880 $ 377,755 $ 484,235 Revenues realized from station barter arrangements ......................... 18,433 15,231 41,724 44,855 --------- --------- --------- --------- Total revenues ...................................................... 170,429 176,111 419,479 529,090 --------- --------- --------- --------- OPERATING EXPENSES: Program and production ..................................................... 30,512 35,874 75,067 103,628 Selling, general and administrative ........................................ 33,860 35,864 78,099 99,968 Expenses realized from station barter arrangements ......................... 17,005 14,101 37,967 41,098 Amortization of program contract costs and net realizable value adjustments ........................................... 18,958 20,120 49,501 60,091 Stock-based compensation ................................................... 850 668 2,064 2,342 Depreciation of property and equipment ..................................... 8,054 7,800 16,766 23,592 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets ................. 26,658 23,766 54,760 78,521 --------- --------- --------- --------- Total operating expenses ............................................ 135,897 138,193 314,224 409,240 --------- --------- --------- --------- Broadcast operating income .......................................... 34,532 37,918 105,255 119,850 --------- --------- --------- --------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ......................... (40,414) (45,344) (95,315) (132,622) Subsidiary trust minority interest expense ................................. (5,813) (5,813) (17,438) (17,438) Gain on sale of broadcast assets ........................................... 1,248 233 1,248 233 Unrealized gain (loss) on derivative instrument ............................ (10,150) 716 (10,150) 12,302 Interest income ............................................................ 896 840 4,113 2,443 Other income (expense) ..................................................... 558 (45) 668 286 --------- --------- --------- --------- Loss before income taxes ............................................ (19,143) (11,495) (11,619) (14,946) INCOME TAX BENEFIT (PROVISION) ................................................. 9,480 (5,403) 543 (8,893) --------- --------- --------- --------- NET LOSS FROM CONTINUING OPERATIONS ............................................ (9,663) (16,898) (11,076) (23,839) Net Income from discontinued operations, net of related income tax provision of $5,980, $2,914, $9,443, and $8,124, respectively .............. 7,489 5,557 15,810 12,187 EXTRAORDINARY ITEM: Loss on early extinguishment of debt net of income tax benefit of $7,370 ...................................................... -- -- (11,063) -- NET LOSS ....................................................................... $ (2,174) $ (11,341) $ (6,329) $ (11,652) ========= ========= ========= ========= Net loss available to common stockholders ...................................... $ (4,762) $ (13,929) $ (14,092) $ (19,415) ========= ========= ========= ========= Basic loss per share from continuing operations ................................ $ (0.13) $ (0.20) $ (0.20) $ (0.33) ========= ========= ========= ========= Basic earnings per share from discontinued operations .......................... $ 0.08 $ 0.06 $ 0.17 $ 0.13 ========= ========= ========= ========= Basic loss per share from extraordinary item ................................... $ -- $ -- $ (0.12) $ -- ========= ========= ========= ========= Basic loss per common share .................................................... $ (0.05) $ (0.14) $ (0.15) $ (0.20) ========= ========= ========= ========= Basic weighted average common shares outstanding ............................... 97,734 96,575 93,582 96,511 ========= ========= ========= ========= Diluted loss per share from continuing operations .............................. $ (0.13) $ (0.20) $ (0.20) $ (0.33) ========= ========= ========= ========= Diluted earnings per share from discontinued operations ........................ $ 0.08 $ 0.06 $ 0.17 $ 0.13 ========= ========= ========= ========= Diluted loss per share from extraordinary item ................................. $ -- $ -- $ (0.12) $ -- ========= ========= ========= ========= Diluted loss per common share .................................................. $ (0.05) $ (0.14) $ (0.15) $ (0.20) ========= ========= ========= ========= Diluted weighted average common and common equivalent shares Outstanding ................................................................ 99,339 96,949 95,540 96,718 ========= ========= ========= =========
The accompanying notes are an integral part of these unaudited consolidated statements. 4 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (IN THOUSANDS)
ADDITIONAL PAID-IN SERIES B SERIES D CLASS A CLASS B ADDITIONAL CAPITAL - PREFERRED PREFERRED COMMON COMMON PAID-IN EQUITY PUT STOCK STOCK STOCK STOCK CAPITAL OPTIONS ------------------------------------------------------------------------------------- BALANCE, December 31, 1998 ........... $ -- $ 35 $ 474 $ 491 $ 768,648 $ 113,502 Class B Common Stock converted ... into Class A Common Stock .... 9 (9) Series B Preferred Stock converted into Class A Common Stock .... (1) 8 (7) Class A common stock converted into Class B Preferred Stock . 1 (6) 5 Dividends payable on Series D Preferred Stock............... Stock option grants exercised .... 1 1,768 Class A Common Stock issued pursuant to employee benefit plans ................ 2 2,793 Equity Put Options ............... 5,144 (5,144) Net payments relating to equity put options ........... 1,251 Amortization of deferred compensation.................. Net loss ......................... ------------------------------------------------------------------------------------- BALANCE, September 30, 1999 .......... $ -- $ 35 $ 488 $ 482 $ 779,602 $ 108,358 =====================================================================================
ADDITIONAL PAID-IN CAPITAL - TOTAL DEFERRED ACCUMULATED STOCKHOLDERS' COMPENSATION DEFICIT EQUITY ---------------------------------------------- BALANCE, December 31, 1998 ........... $ (7,616) $ (59,491) $ 816,043 Class B Common Stock converted ... into Class A Common Stock .... Series B Preferred Stock converted into Class A Common Stock .... Class A common stock converted into Class B Preferred Stock . Dividends payable on Series D Preferred Stock............... (7,763) (7,763) Stock option grants exercised .... 1,769 Class A Common Stock issued pursuant to employee benefit plans ................ 2,795 Equity Put Options ............... Net payments relating to equity put options ........... 1,251 Amortization of deferred compensation.................. 1,302 1,302 Net loss ......................... (11,652) (11,652) ---------------------------------------------- BALANCE, September 30, 1999 .......... (6,314) $ (78,906) $ 803,745 ==============================================
The accompanying notes are an integral part of these unaudited consolidated statements. 5 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, 1998 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss .......................................................................... $ (6,329) $ (11,652) Adjustments to reconcile net loss to net cash flows from operating activities- Extraordinary loss on early extinguishment of debt ............................ 18,433 -- Gain on sale of broadcast assets .............................................. (12,036) (233) Loss (gain) on derivative instrument .......................................... 10,150 (12,302) Amortization of debt discount ................................................. 74 74 Depreciation and amortization of property and equipment ....................... 19,366 27,030 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets ..................... 66,180 91,982 Amortization of program contract costs and net realizable value adjustments ... 50,589 61,248 Amortization of deferred compensation ......................................... 1,226 1,302 Deferred tax (benefit) provision .............................................. (4,520) 7,276 Changes in assets and liabilities, net of effects of acquisitions and dispositions- Decrease in accounts receivable, net .......................................... 7,275 20,485 Increase in prepaid expenses and other current assets ......................... (1,011) (4) Increase (decrease) in accounts payable and accrued liabilities ............... 32,507 (17,701) Net effect of change in deferred barter revenues and deferred barter costs .................................................. (64) (725) Increase in other long-term liabilities ....................................... 678 4,978 Decrease in minority interest ................................................. (54) (24) Payments on program contracts payable ............................................. (43,810) (59,852) ----------- ----------- Net cash flows from operating activities ...................................... 138,654 111,882 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ............................................. (13,949) (19,048) Payments for acquisition of television and radio stations ......................... (2,072,368) (226,746) Costs related to future acquisitions and dispositions ............................. -- (6,114) Proceeds from sale of broadcasting assets ......................................... 273,298 61,771 Loans to officers and affiliates .................................................. (1,467) (673) Repayments of loans to officers and affiliates .................................... 2,313 1,481 Equity investments ................................................................ -- (11,842) Distributions from joint venture 655 -- ----------- ----------- Net cash flows used in investing activities ................................ (1,811,518) (201,171) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing and capital leases ......... 1,799,670 298,500 Repayments of notes payable, commercial bank financing and capital leases ........ (554,802) (195,399) Payments of costs relating to financing ........................................... (11,169) -- Proceeds from exercise of stock options ........................................... 1,064 1,769 Payment received upon execution of derivative instrument ........................ 9,450 -- Repurchases of the Company's Class A Company Stock ................................ (26,665) -- Net proceeds from issuance of Class A Common Stock .............................. 335,235 -- Dividends paid on Series D Convertible Preferred Stock ............................ (7,763) (7,763) Net payments (proceeds) related to equity put option contracts .................. (1,499) 1,251 Repayments of notes and capital leases to affiliates .............................. (2,576) (3,975) ----------- ----------- Net cash flows from financing activities ................................... 1,540,945 94,383 ----------- ----------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .................................. (131,919) 5,094 CASH AND CASH EQUIVALENTS, beginning of period ........................................ 139,327 3,268 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period .............................................. $ 7,408 $ 8,362 =========== ===========
The accompanying notes are an integral part of these unaudited consolidated statements. 6 SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other consolidated subsidiaries, which are collectively referred to hereafter as "the Company, Companies, Sinclair or SBG." The Company owns and operates television and radio stations throughout the United States. Additionally, included in the accompanying consolidated financial statements are the results of operations of certain television stations pursuant to local marketing agreements (LMAs) and radio stations pursuant to joint sales agreements (JSAs). INTERIM FINANCIAL STATEMENTS The consolidated financial statements for the nine months ended September 30, 1998 and 1999 are unaudited, but in the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial position and results of operations, and cash flows for these periods. As permitted under the applicable rules and regulations of the Securities and Exchange Commission, these financial statements do not include all disclosures normally included with audited consolidated financial statements, and, accordingly, should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 1997, and 1998 for the years then ended. The results of operations presented in the accompanying financial statements are not necessarily representative of operations for an entire year. RECLASSIFICATIONS Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation. DISCONTINUED OPERATIONS During the third quarter of 1999, the Company began to execute its strategy to divest of its radio broadcast segment. In July 1999, the Company entered into an agreement to sell 46 of its radio stations in nine markets to Entercom Communications Corporation ("Entercom") for $824.5 million in cash. In addition, the Company is currently engaged in formal negotiations with Emmis Communications Corporation ("Emmis") for the sale of its remaining radio stations serving the St. Louis market (see Note 5). Subject to the Company's strategy to divest of its radio broadcasting segment, "Discontinued Operations" accounting has been adopted for the periods presented in the accompanying financial statements and the notes thereto. As such, the results from operations of the radio broadcast segment, net of related income taxes, has been reclassified from income from operations and reflected as income from discontinued operations in the accompanying income statements for all periods presented. In addition, assets relating to the radio broadcast segment are reflected in "Broadcast assets related to discontinued operations" in the accompanying balance sheets for all periods presented. 7 2. CONTINGENCIES AND OTHER COMMITMENTS: Lawsuits and claims are filed against the Company from time to time in the ordinary course of business. These actions are in various preliminary stages, and no judgments or decisions have been rendered by hearing boards or courts. After reviewing these developments to date, it is Management's opinion that the outcome of such matters will not have a material adverse effect on the Company's financial position or results of operations. 3. SUPPLEMENTAL CASH FLOW INFORMATION (IN THOUSANDS): During the nine months ended September 30, 1998 and 1999, the Company's supplemental cash flow information is as follows:
NINE MONTHS ENDED SEPTEMBER 30, 1998 1999 ---- ---- Interest payments............................................................... $ 101,610 $ 144,419 =========== =========== Subsidiary trust minority interest payments..................................... $ 17,438 $ 17,438 =========== =========== Income tax payments............................................................. $ 1,930 $ 5,872 =========== =========== Capital lease obligations incurred.............................................. $ 3,807 $ 22,208 =========== ===========
4. EARNINGS PER SHARE: The basic and diluted earnings per share and related computations are as follows (in thousands, except per share data):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1999 1998 1999 ---- ---- ---- ---- Weighted-average number of common shares...................... 97,734 96,575 93,582 96,511 Diluted effect of outstanding stock options .................. 1,317 267 1,670 99 Diluted effect of conversion of preferred shares.............. 288 107 288 108 ------------ ------------ ----------- ----------- Diluted weighted-average number of common and common equivalent shares outstanding............................. 99,339 96,949 95,540 96,718 ============ ============ =========== =========== Net loss...................................................... $ (2,174) $ (11,341) $ (6,329) $ (11,652) Preferred stock dividends payable............................. (2,588) (2,588) (7,763) (7,763) ------------- ------------- ------------ ------------ Net loss available to common stockholders..................... $ (4,762) $ (13,929) $ (14,092) $ (19,415) ============= ============= ============ ============ Basic loss per share from continuing operations............... $ (0.13) $ (0.20) $ (0.20) $ (0.33) ============= ============ ============ ============ Basic earnings per share from discontinued operations......... $ 0.08 $ 0.06 $ 0.17 $ 0.13 ============= ============ ============ ============ Basic loss per share from extraordinary item.................. $ - $ - $ (0.12) $ - ============= ============ ============ ============ Basic loss per common share................................... $ (0.05) $ (0.14) $ (0.15) $ (0.20) ============= ============ ============ ============ Diluted loss per share from continuing operations .......... $ (0.13) $ (0.20) $ (0.20) $ (0.33) ============= ============ ============ ============ Diluted earnings per share from discontinued operations....... $ 0.08 $ 0.06 $ 0.17 $ 0.13 ============= ============ ============ ============ Diluted loss per share from extraordinary item................ $ - $ - $ (0.12) $ - ============= ============ ============ ============ Diluted loss per common share................................. $ (0.05) $ (0.14) $ (0.15) $ (0.20) ============= ============ ============ ============
8 5. ACQUISITIONS AND DISPOSITIONS: 1999 ACQUISITIONS AND DISPOSITIONS Guy Gannett Acquisition. In September 1998, the Company agreed to acquire from Guy Gannett Communications its television broadcasting assets for a purchase price of $317 million in cash (the "Guy Gannett Acquisition"). As a result of this transaction and after the completion of related dispositions, the Company acquired five television stations in five separate markets. In April 1999, the Company completed the purchase of WTWC-TV, WGME-TV and WGGB-TV for a purchase price of $111.0 million and in July 1999, the Company completed the purchase of WICS/WICD-TV, and KGAN-TV for a purchase price of $81.0 million. The Company financed the acquisitions by utilizing indebtedness under the 1998 Bank Credit Agreement. In September 1998, the Company agreed to sell the Guy Gannett television station WOKR-TV in Rochester, New York to the Ackerley Group, Inc. for a sales price of $125 million (the "Ackerley Disposition"). In April 1999, the Company closed on the purchase of WOKR-TV and simultaneously completed the sale of WOKR-TV to Ackerly. CCA Disposition. In April 1999, the Company completed the sale of the non-license assets of KETK-TV and KLSB-TV in Tyler-Longview, Texas to Communications Corporation of America ("CCA") for a sales price of $36 million (the "CCA Disposition"). In addition, CCA has an option to acquire the license assets of KETK-TV for an option purchase price of $2 million. St. Louis Acquisition. In August 1999, the Company completed the purchase of radio station KXOK-FM in St. Louis, Missouri for a purchase price of $14.1 million in cash. Barnstable Disposition. In August 1999, the Company completed the sale of the radio stations WFOG-FM and WGH-AM/FM serving the Norfolk, Virginia market to Barnstable Broadcasting, Inc. ("Barnstable") (the "Barnstable Disposition"). The stations were sold to Barnstable for a sales price of $23.7 million. PENDING DISPOSITIONS STC Disposition. In March 1999, the Company entered into an agreement to sell to STC the television stations WICS/WICD-TV in the Springfield, Illinois market and KGAN-TV in the Cedar Rapids, Iowa market (the "STC Disposition"). In addition, the Company agreed to sell the Non-License Assets and rights to program WICD in the Springfield, Illinois market. The stations are being sold to STC for a sales price of $81.0 million and were acquired by the Company in connection with the Guy Gannett Acquisition. In April 1999, the Justice Department requested additional information in response to STC's filing under the Hart-Scott-Rodino Antitrust Improvements Act. The sale of the stations to STC has been delayed pending resolution of the questions raised by the Justice Department. If STC is unable to complete the purchase of these stations, the Company would continue to own these stations. Either STC or the Company may terminate the agreement if the transaction is not closed by March 15, 2000. St. Louis Purchase Option. In connection with the acquisition of River City, the Company entered into a five year agreement (the "Baker Agreement") with Barry Baker (the Chief Executive Officer of River City) pursuant to which Mr. Baker served as a consultant to the Company until terminating such services effective March 8, 1999 (the "Termination Date"). As of February 8, 1999, the conditions to Mr. Baker becoming an officer of the Company had not been satisfied, and on that date Mr. Baker and the Company entered into a termination agreement effective March 8, 1999. Mr. Baker had certain rights as a consequence of the termination of the Baker Agreement. These rights included Mr. Baker's right to purchase at fair market value the television and radio stations owned by the Company serving the St. Louis, Missouri market. 9 In June 1999, the Company received a letter from Mr. Baker in which Mr. Baker elected to exercise his option to purchase the radio and television properties of Sinclair in the St. Louis market for their fair market value. In his letter, Mr. Baker names Emmis Communications Corporation ("Emmis") as his designee. Sinclair is evaluating the validity of Mr. Baker's designation of Emmis. In light of the foregoing, the fact that negotiations of a definitive purchase agreement are yet to commence, that a fair market value has not been determined, and that approvals would be required from both the Department of Justice and the Federal Communications Commission, there can be no assurance that the transactions contemplated by the option will be consummated. Entercom Disposition. In July 1999, the Company entered into an agreement to sell 46 radio stations in nine markets to Entercom Communications Corporation ("Entercom") for $824.5 million in cash. The transaction does not include the Company's radio stations in the St. Louis market which are subject to the St. Louis Purchase Option as previously noted. The completion of this transaction is subject to FCC and Department of Justice approval. 6. INTEREST RATE DERIVATIVE AGREEMENTS: As of September 30, 1999, the Company had several interest rate swap agreements which expire from July 23, 2000 to July 15, 2007. The swap agreements set rates in the range of 5.5% to 8.1%. Floating interest rates are based upon the three month London Interbank Offered Rate (LIBOR) rate, and the measurement and settlement is performed quarterly. Settlements of these agreements are recorded as adjustments to interest expense in the relevant periods. The notional amounts related to these agreements were $1.6 billion at September 30, 1999, and decrease to $200 million through the expiration dates. In addition, the Company has entered into floating rate swaps with notional amounts totaling $750 million. As of September 30, 1999, $1.7 billion or 70% of the Company's outstanding indebtedness was either partially or entirely hedged. The Company has no intentions of terminating these instruments prior to their expiration dates unless it were to prepay a portion of its bank debt. The counter parties to these agreements are international financial institutions. The Company estimates the fair value to retire these instruments at September 30, 1999 to be $5.1 million. The fair value of the interest rate hedging derivative instruments is estimated by obtaining quotations from the financial institutions which are a party to the Company's derivative contracts (the "Banks"). The fair value is an estimate of the net amount that the Company would pay at September 30, 1999 if the contracts were transferred to other parties or canceled by the Banks. 7. EQUITY PUT AND CALL OPTIONS: During September 1999, the Company entered into put and call option contracts related to the Company's common stock which mature on June 28, 2000 and March 28, 2000, respectively. These option contracts were entered into for the purpose of hedging the dilution of the Company's common stock upon the exercise of stock options granted and can either be physically settled in cash or net physically settled in shares, at the election of the Company. The Company entered into 1.0 million call options for common stock and 1.7 million put options for common stock, with a strike price of $10.45 and $9.45 per common share, respectively. 8. TREASURY OPTION DERIVATIVE INSTRUMENT: In August 1998, the Company entered into a treasury option derivative contract (the "Option Derivative"). The Option Derivative contract provides for 1) an option exercise date of September 30, 2000, 2) a notional amount of $300 million and 3) a five-year treasury strike rate of 6.14%. If the interest rate yield on five year treasury securities is less than the strike rate on the option exercise date, the Company would be obligated to pay five consecutive annual payments in an amount equal to the strike rate less the five year treasury rate multiplied by the notional amount beginning September 30, 2001 through September 30, 2006. If the interest rate yield on five year treasury securities is greater than the strike rate on the option exercise date, the Company would not be obligated to make any payments. 10 Upon the execution of the Option Derivative contract in 1998, the Company received a cash payment representing an option premium of $9.5 million which was recorded in "Other long-term liabilities" in the accompanying balance sheets. The Company is required to periodically adjust its liability to the present value of the future payments of the settlement amounts based on the forward five year treasury rate at the end of an accounting period. As of September 30,1999, the Company's Option Derivative liability recorded in "other long-term liabilities" in the accompanying consolidated balance sheet is $6.2 million. The fair market value adjustment for the nine months ended September 30,1999 resulted in an income statement benefit (unrealized gain) of $12.3 million. If the yield on five-year treasuries at September 30, 2000 were to equal the forward five-year treasury rate on September 30, 1999 (6.02%), Sinclair would be required to make five annual payments of approximately $360,000 each. If the yield on five-year treasuries declines in periods before September 30, 2000, Sinclair would be required to recognize losses. In any event, Sinclair will not be required to make any payments until September 30, 2000. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the audited financial statements and Management's Discussion and Analysis contained in the Company's Form 10-K, as amended, for the fiscal year ended December 31, 1998. The matters discussed in this report include forward-looking statements. When used in this report, the words "intends to," "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the impact of changes in national and regional economies, successful integration of acquired television and radio stations (including achievement of synergies and cost reductions), pricing fluctuations in local and national advertising, volatility in programming costs, the availability of suitable acquisitions on acceptable terms, the timely completion of dispositions on the terms agreed to and the other risk factors set forth in the Company's prospectus filed with the Securities and Exchange Commission on April 19, 1998, pursuant to rule 424(b)(5). The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. DISCONTINUED OPERATIONS During the third quarter of 1999, the Company began to execute its strategy to divest of its radio broadcast segment. In July 1999, the Company entered into an agreement to sell 46 of its radio stations in nine markets to Entercom Communications Corporation ("Entercom") for $824.5 million in cash. In addition, the Company is currently engaged in formal negotiations with Emmis Communications Corporation ("Emmis") for the sale of its remaining radio stations serving the St. Louis market. Subject to the Company's strategy to divest of its radio broadcasting segment, "Discontinued Operations" accounting has been adopted for the periods presented in the accompanying financial statements and the notes thereto. As such, the results from operations of the radio broadcast segment, net of related income taxes, has been reclassified from income from operations and reflected as income from discontinued operations in the accompanying income statements for all periods presented. In addition, assets relating to the radio broadcast segment are reflected in "Broadcast assets related to discontinued operations" in the accompanying balance sheets for all periods presented. 12 The following table sets forth certain operating data for the three months and nine months ended September 30, 1998 and 1999:
OPERATING DATA (dollars in thousands, except per share data): - --------------------------------------------------------------------------------------------------------------------- THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 1998 1999 1998 1999 ---- ---- ---- ---- Net broadcast revenues (a) ..................... $ 151,996 $ 160,880 $ 377,755 $ 484,235 Barter revenues ................................ 18,433 15,231 41,724 44,855 ----------- ----------- ----------- ----------- Total revenues ................................. 170,429 176,111 419,479 529,090 ----------- ----------- ----------- ----------- Operating costs (b) ............................ 64,372 71,738 153,166 203,596 Expenses from barter arrangements .............. 17,005 14,101 37,967 41,098 Depreciation, amortization and stock-based compensation (c) ............................ 54,520 52,354 123,091 164,546 ----------- ----------- ----------- ----------- Broadcast operating income ..................... 34,532 37,918 105,255 119,850 Interest expense ............................... (40,414) (45,344) (95,315) (132,622) Subsidiary trust minority interest expense (d) . (5,813) (5,813) (17,438) (17,438) Interest and other income ...................... 1,454 795 4,781 2,729 Unrealized gain (loss) on derivative instrument .................................. (10,150) 716 (10,150) 12,302 Gain on sale of broadcast assets ............... 1,248 233 1,248 233 ----------- ----------- ----------- ----------- Loss before income taxes ....................... (19,143) (11,495) (11,619) (14,946) Income tax benefit (provision) ................. 9,480 (5,403) 543 (8,893) ----------- ----------- ----------- ----------- Net loss from continuing operations ............ (9,663) (16,898) (11,076) (23,839) Net income from discontinued operations, net of income taxes ......................... 7,489 5,557 15,810 12,187 Extraordinary item, net of income taxes ........ -- -- (11,063) -- ----------- ----------- ----------- ----------- Net loss ....................................... $ (2,174) $ (11,341) $ (6,329) $ (11,652) =========== =========== =========== =========== Net loss available to common stockholders ...... $ (4,762) $ (13,929) $ (14,092) $ (19,415) =========== =========== =========== =========== OTHER DATA: Broadcast Cash Flow (e) ................. $ 78,886 $ 76,460 $ 196,552 $ 238,650 Broadcast Cash Flow margin (f) .......... 51.9% 47.5% 52.0% 49.3% Adjusted EBITDA (g) ..................... $ 74,847 $ 71,096 $ 184,536 $ 224,544 Adjusted EBITDA margin (f) .............. 49.2% 44.2% 48.9% 46.4% After tax cash flow (h) ................. $ 33,106 $ 27,970 $ 85,809 $ 97,040 Program contract payments ............... 14,205 19,176 43,810 59,852 Corporate expense ....................... 4,039 5,364 12,016 14,106 Capital expenditures .................... 5,650 7,478 13,949 19,048 Cash flows from operating activities .... 71,151 39,380 138,654 111,882 Cash flows from investing activities .... (1,163,190) (86,877) (1,811,518) (201,171) Cash flows from financing activities .... 779,314 46,260 1,540,945 94,383 - ---------------------------------------------------------------------------------------------------------------
13 a) "Net broadcast revenue" is defined as broadcast revenue net of agency commissions. b) "Operating costs" include program and production expenses and selling, general and administrative expenses. c) "Depreciation, amortization and stock-based compensation" includes amortization of program contract costs and net realizable value adjustments, depreciation and amortization of property and equipment, amortization of acquired intangible broadcasting assets and other assets and stock-based compensation related to the issuance of common stock pursuant to stock option and other employee benefit plans. d) Subsidiary trust minority interest expense represents distributions on the HYTOPS. e) "Broadcast cash flow" is defined as broadcast operating income plus corporate expenses, stock based compensation, depreciation and amortization (including film amortization and amortization of deferred compensation), less cash payments for program rights. Cash program payments represent cash payments made for current programs payable and do not necessarily correspond to program usage. The Company has presented broadcast cash flow data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies; however, there can be no assurance that it is comparable. However, broadcast cash flow does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flows, is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Management believes the presentation of broadcast cash flow (BCF) is relevant and useful because 1) BCF is a measurement utilized by lenders to measure the Company's ability to service its debt, 2) BCF is a measurement utilized by industry analysts to determine a private market value of the Company's television and radio stations and 3) BCF is a measurement industry analysts utilize when determining the operating performance of the Company. f) "BCF margin" is defined as broadcast cash flow divided by net broadcast revenues. "Adjust EBITDA margin" is defined as adjusted EBITDA divided by net broadcast revenues. g) "Adjusted EBITDA" is defined as broadcast cash flow less corporate overhead expenses and is a commonly used measure of performance for broadcast companies. The Company has presented Adjusted EBITDA data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies; however, there can be no assurances that it is comparable. Adjusted EBITDA does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flows, is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Management believes the presentation of Adjusted EBITDA is relevant and useful because 1) Adjusted EBITDA is a measurement utilized by lenders to measure the Company's ability to service its debt, 2) Adjusted EBITDA is a measurement utilized by industry analysts to determine a private market value of the Company's television and radio stations and 3) Adjusted EBITDA is a measurement industry analysts utilize when determining the operating performance of the Company. h) "After tax cash flow" is defined as net income (loss) available to common stockholders, plus depreciation and amortization (excluding film amortization), stock-based compensation, the deferred tax provision (or minus the deferred tax benefit) and minus the gain on sale of assets and unrealized gain on derivative instrument (or minus the unrealized loss on derivative instrument). The Company has presented after tax cash flow data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies; however, there can be no assurances that it is comparable. After tax cash flow is presented here not as a measure of operating results and does not purport to represent cash provided by operating activities. After tax cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Management believes the presentation of after tax cash flow is relevant and useful because 1) ATCF is a measurement utilized by lenders to measure the Company's ability to service its debt, 2) ATCF is a measurement utilized by industry analysts to determine a private market value of the Company's television and radio stations and 3) ATCF is a measurement analysts utilize when determining the operating performance of the Company. Net broadcast revenues increased to $160.9 million for the three months ended September 30, 1999 from $152.0 million for the three months ended September 30, 1998, or 5.9%. Net broadcast revenues increased to $484.2 million for the nine months ended September 30, 1999 from $377.8 million for the nine months ended September 30, 1998, or 28.2%. The increase in net broadcast revenues for the three months ended September 30, 1999 as compared to the three months ended September 30, 1998 comprised $5.1 million related to the acquisition and disposition of television stations and LMA transactions consummated by the Company in 1998 and 1999 (collectively the "1998 and 1999 Transactions") and $3.8 million related to an increase in net broadcast revenue on a same station basis, which increased by 2.6%. 14 The increase in net broadcast revenues for the nine months ended September 30, 1999 comprised $103.4 million related to the 1998 and 1999 Transactions and $3.0 million related to an increase in net broadcast revenues on a same station basis, which increased by 1.0%. The increase in net broadcast revenues on a same station basis for the three and nine months ended September 30, 1999 as compared to the three and nine months ended September 30, 1998 primarily resulted from an increase in market share and market revenue in certain of the Company's television markets. Operating costs increased to $71.7 million for the three months ended September 30, 1999 from $64.4 million for the three months ended September 30, 1998, or 11.3%. Operating costs increased to $203.6 million for the nine months ended September 30, 1999, from $153.2 million for the nine months ended September 30, 1998, or 32.9%. The increase in operating costs for the three months ended September 30, 1999 as compared to the three months ended September 30, 1998 comprised $4.0 million related to the 1998 and 1999 Transactions, $1.3 million related to an increase in corporate overhead expenses and $2.0 million related to an increase in operating costs on a same station basis, which increased 3.5%. The increase in operating costs for the nine months ended September 30, 1999 as compared to the nine months ended September 30, 1998 comprised $47.3 million related to the 1998 and 1999 Transactions, $2.1 million related to an increase in corporate overhead expenses and $1.0 million related to an increase in operating costs on a same station basis, which increased 0.8%. The increases in corporate overhead for the three and nine month periods ended September 30,1999 primarily resulted from an increase in expenses associated with managing a larger base of operations. Interest expense increased to $45.3 million for the three months ended September 30, 1999 from $40.4 million for the three months ended September 30, 1998, or 12.1%. Interest expense increased to $132.6 million for the nine months ended September 30, 1999 from $95.3 million for the nine months ended September 30, 1998, or 39.1%. The increase in interest expense for the three months and nine months ended September 30, 1999 primarily resulted from higher interest expense related to current year acquisitions and a higher applicable interest rate margin for borrowing under the Company's Bank Credit Agreement. Interest and other income decreased to $0.8 million for the three months ended September 30, 1999 from $1.5 million for the three months ended September 30, 1998. Interest and other income decreased to $2.7 million for the nine months ended September 30, 1999 from $4.8 million for the nine months ended September 30, 1998. These decreases were primarily due to a decrease in average cash balance, for the three months and nine months ended September 30, 1999 when compared to the same period in 1998. Income tax provision was $5.4 million for the three months ended September 30, 1999 as compared to an income tax benefit of $9.5 million for the three months ended September 30, 1998. For the nine months ended September 30, 1999, the Company recorded a tax provision of $8.9 million on pre-tax income, an effective tax rate of 315%. In accordance with FASB 109, "Accounting for Income Taxes", the Company applies its projected income tax rate for the year ended December 31,1999 to intraperiod financial statements. The Company's high projected tax rate for 1999 results from book income being projected to be less than permanent differences between book and taxable income. The net deferred tax liability increased to $172.8 million as of September 30, 1999 from $165.5 million as of December 31, 1998. The increase in the Company's net deferred tax liability as of September 30, 1999 as compared to December 31, 1998 primarily resulted from the Company recording a net deferred tax provision for the nine months ended September 30,1999. Net loss available to common stockholders for the three months ended September 30, 1999 was $13.9 million or $.14 per share compared to net loss of $4.8 million or $.05 per share for the three months ended September 30, 1998. Net loss available to common stockholders for the nine months ended September 30, 1999 was $19.4 million or $.20 per share compared to a net loss of $14.1 million or $.15 per share for the nine months ended September 30, 1998. Net loss available to common stockholders increased for the nine 15 months ended September 30, 1999 as compared to the nine months ended September 30, 1998 due to an increase in interest expense, a decrease in income from discontinued operations, a decrease in interest income, and an extraordinary loss incurred during 1998 offset by an increase in broadcast operating income and an unrealized gain on derivative instrument. The Company's 1998 extraordinary loss of $11.1 million net of a related tax benefit of $7.4 million resulted from the write-off of debt acquisition costs associated with indebtedness replaced by the 1998 Bank Credit Agreement. Net loss available to common stockholders increased for the three months ended September 30, 1999 as compared to the three months ended September 30, 1998 because of the same factors noted above with the exception of the extraordinary loss which was incurred during the second quarter of 1998. Net income from discontinued operations decreased to $5.6 million for the three months ended September 30, 1999 from $7.5 million for the three months ended September 30, 1998, or 25.3%. Net income from discontinued operations decreased to $12.2 million for the nine months ended September 30, 1999 from $15.8 million for the nine months ended September 30, 1998, or 22.8%. The decrease in net income from discontinued operations for the three and nine months ended September 30,1999 as compared to the same periods ended September 30, 1998 primarily resulted from dispositions consummated by the Company during the first six months of 1998 partially offset by the acquisitions consummated by the Company during the same period of 1998. Broadcast cash flow decreased to $76.5 million for the three months ended September 30, 1999 from $78.9 million for the three months ended September 30, 1998, or 3.0%. Broadcast cash flow increased to $238.7 million for the nine months ended September 30, 1999 from $196.6 million for the nine months ended September 30, 1998, or 21.4%. The decrease in broadcast cash flow for the three months ended September 30, 1999 primarily resulted from an increase in operating expenses as a percentage of net broadcast revenues and an increase in program contract payments resulting from increased cash payments for program contracts in the 1999 period that were not required in 1998 because sellers of stations we acquired had, in accordance with industry practice, previously made program contract payments relating to this period in advance of our acquisitions. The increase in broadcast cash flow for the nine months ended September 30, 1999 primarily related to the 1998 and 1999 Transactions as broadcast cash flow on a same station basis remained relatively consistent with the nine months ended September 30,1998. The Company's broadcast cash flow margin decreased to 47.5% for the three months ended September 30, 1999 from 51.9% for the three months ended September 30,1998. The Company's broadcast cash flow margin decreased to 49.3% for the nine months ended September 30, 1999 from 52.0% for the nine months ended September 30, 1998. The decrease in broadcast cash flow margins for the three and the nine months ended September 30, 1999 as compared to the three and the nine months ended September 30, 1998 primarily resulted from increased cash payments for program contracts in the 1999 periods that were not required in 1998 because sellers of stations we acquired had, in accordance with industry practice, previously paid approximately $4.3 million of program contract payments relating to these periods in advance of our acquisitions. When comparing broadcast cash flow margins on a same station basis for the three months ended September 30, 1998 and 1999 margins decreased from 50.1% to 49.1%. When comparing broadcast cash flow margins on a same station basis for the nine months ended September 30, 1998 and 1999, margins decreased from 51.2% to 50.7%. Adjusted EBITDA decreased to $71.1 million for the three months ended September 30, 1999 from $74.8 million for the three months ended September 30, 1998, or 5.0%. Adjusted EBITDA increased to $224.5 million for the nine months ended September 30, 1999 from $184.5 million for the nine months ended September 30, 1998, or 21.7%. The decrease in Adjusted EBITDA for the three months ended September 30, 1999 as compared to the three months ended September 30, 1998 primarily resulted from a decrease in broadcast cash flow as noted above combine with an increase in corporate overhead. The increases in Adjusted EBITDA for the nine months ended September 30, 1999 as compared to the nine months ended September 30, 1998 primarily resulted from the 1998 and 1999 Transactions. The Company's Adjusted 16 EBITDA margin decreased to 44.2% for the three months ended September 30, 1999 from 49.2% for the three months ended September 30, 1998. The Company's Adjusted EBITDA margin decreased to 46.4% for the nine months ended September 30, 1999 from 48.9% for the nine months ended September 30, 1998. Decreases in Adjusted EBITDA margins for the three and nine months ended September 30, 1999 as compared to the three and nine months ended September 30, 1998 primarily resulted from increased cash payments for program contracts in the 1999 periods that were not required in 1998 because sellers of stations we acquired had, in accordance with industry practice, previously paid approximately $4.3 million of program contract payments relating to these periods in advance of our acquisitions and from the increases in corporate overhead expenses required because of the Company's larger base of operations. After tax cash flow decreased to $28.0 million for the three months ended September 30, 1999 from $33.1 million for the three months ended September 30, 1998, or 15.4%. After tax cash flow increased to $97.0 million for the nine months ended September 30, 1999 from $85.8 million for the nine months ended September 30, 1998 or 13.1%. The decrease in after tax cash flow for the three months ended September 30,1999 as compared to the three months ended September 30,1998 primarily resulted from an increase in interest expense resulting from television assets acquired during 1999 and a slight increase in interest rates on the Company's floating rate debt. The increase in after tax cash flow for the nine months ended September 30, 1999 as compared to the nine months ended September 30, 1998 primarily resulted from an increase in broadcast operating income relating to the 1998 and 1999 Transactions offset by an increase in interest expense. 17 LIQUIDITY AND CAPITAL RESOURCES The Company's primary source of liquidity are cash provided by operations and availability under the 1998 Bank Credit Agreement. As of September 30, 1999, the Company had $8.4 million in cash balances and excluding the effect of assets held for sale and broadcast assets related to discontinued operations, working capital of approximately $8.1 million. As of November 4, 1999, the remaining balance available under the Revolving Credit Facility was $56.5 million. Based on pro forma trailing cash flow levels for the twelve months ended September 30, 1999, the Company had approximately $36.7 million available of current borrowing capacity under the Revolving Credit Facility. The 1998 Bank Credit Agreement also provides for an incremental term loan commitment in the amount of up to $400 million which can be utilized upon approval by the Agent bank and the raising of sufficient commitments from banks to fund the additional loans. In July 1999, the Company entered into an agreement to sell 46 radio stations in nine markets to Entercom Communications Corp. ("Entercom") for $824.5 million in cash. The transaction does not include Sinclair's radio stations in the St. Louis market, which are subject to the St. Louis Purchase Option (see Note 5). The transaction is subject to FCC and Department of Justice approval. The Company intends to use proceeds from the sale to reduce debt levels which is expected to give the Company additional borrowing capacity under the 1998 Bank Credit Agreement. The Company may also use a portion of the proceeds to make acquisitions or to repurchase shares of its Class A Common Stock. In April and July 1999, the Company closed the acquisitions of the Guy Gannett television stations. The Company has agreed to sell three of the stations to STC for approximately $81.0 million in the STC Disposition. In April 1999, the Justice Department requested additional information in response to STC's filing under the Hart-Scott-Rodino Antitrust Improvements Act. The sale of the stations to STC has been delayed pending resolution of the questions raised by the Justice Department. If STC is unable to complete the purchase of these stations, the Company would continue to own these stations. Either STC or the Company may terminate the agreement if the transaction is not closed by March 15, 2000. On April 19, 1999, the Company entered into an agreement (the "ATC Agreement") with American Tower Corporation, an independent owner, operator and developer of broadcast and wireless communication sites in the United States. Under the agreement, the Company would provide American Tower access to tower sites in a number of the Company's markets including Nashville, TN, Dayton, OH, Richmond, VA, Mobile, AL, Pensacola, FL, San Antonio, TX, and Syracuse, NY. American Tower would construct new towers in each of these markets and will lease space on the towers to the Company. This is expected to provide the Company the additional tower capacity required to develop its digital television transmission needs in these markets at an initial capital outlay lower than would be required if the Company constructed these towers itself. The form of the master lease has been completed and agreed to; however, each market is subject to individual negotiations on terms specific to that market, which are still being negotiated with American Tower Corporation. If the Company and American Tower cannot agree on the terms and conditions of the individual market leases, neither party will have any obligation to the other under the ATC Agreement, which will then become a nullity. Net cash flows from operating activities decreased to $111.9 million for the nine months ended September 30, 1999 from $138.7 million for the nine months ended September 30, 1998 primarily as a result of the increase in program contract payments. The Company made payments of interest on outstanding indebtedness and subsidiary trust minority interest expense totaling $161.9 million during the nine months ended September 30, 1999 as compared to $119.0 million for the nine months ended September 30, 1998. Program rights payments for the nine months ended September 30, 1999 increased $16.0 million or 36.6%. This increase in program rights payments was comprised of $13.7 million related to the 1998 and 18 1999 Transactions and $2.3 million related to an increase in programming costs on a same station basis which increased 5.2%. Net cash flows used in investing activities decreased to $201.2 million for the nine months ended September 30, 1999 from $1.8 billion for the nine months ended September 30, 1998. For the nine months ended September 30, 1999, the Company made cash payments of approximately $232.9 million related to the acquisition of television and radio broadcast assets primarily by utilizing available indebtedness under the 1998 Bank Credit Agreement. For the nine months ended September 30, 1999, the Company received approximately $61.8 million of cash proceeds related to the sale of certain television and radio broadcast assets which was primarily utilized to repay indebtedness under the 1998 Bank Credit Agreement. During the nine months ended September 30, 1999, the Company made equity interest investments of approximately $11.8 million. The Company made payments for property and equipment of $19.0 million for the nine months ended September 30, 1999. The Company anticipates that future requirements for capital expenditures will include other acquisitions if suitable acquisitions can be identified on acceptable terms. Net cash flows provided by financing activities decreased to $94.4 million for the nine months ended September 30, 1999 from $1.5 billion for the nine months ended September 30, 1998. During the nine months ended September 30, 1999, the Company repaid $156.0 million and $37.5 million under the 1998 Bank Credit Agreement Revolving Credit Facility and Term Loan Facility, respectively. In addition, the Company utilized borrowings under the Revolving Credit Facility of $298.5 million primarily to fund acquisition activity including the Guy Gannett Acquisition. SEASONALITY The Company's results usually are subject to seasonal fluctuations, which result in fourth quarter broadcast operating income being greater usually than first, second and third quarter broadcast operating income. This seasonality is primarily attributable to increased expenditures by advertisers in anticipation of holiday season spending and an increase in viewership during this period. In addition, revenues from political advertising tend to be higher in even numbered years. YEAR 2000 The Company has commenced a process to assure Year 2000 compliance of all hardware, software, broadcast equipment and ancillary equipment that are date dependent. The process involves four phases: Phase I - Inventory and Data Collection. This phase involves an identification of all items that are date dependent. Sinclair commenced this phase in the third quarter of 1998, and Management estimates it has completed approximately 90% of this phase as of the date hereof. The Company expects to complete this phase during of the fourth quarter of 1999. Phase II - Compliance Requests. This phase involves requests to information technology systems vendors for verification that the systems identified in Phase I are Year 2000 compliant. Sinclair has identified and begun to replace items that cannot be updated or certified as compliant. Sinclair has completed the compliance request phase of its plan as of the date hereof. In addition, Sinclair has verified that its accounting, traffic, payroll, and local and wide area network hardware and software systems are compliant. In addition, Sinclair has completed the process of ascertaining that all of its personal computers and PC applications are compliant. Sinclair is currently reviewing its news room systems, building control systems, security systems and other miscellaneous systems. The Company expects to complete this phase during of the fourth quarter of 1999. Phase III - Test, Fix and Verify. This phase involves testing all items that are date dependent and upgrading all non-compliant devices. Sinclair expects to complete aspects of this phase during the fourth quarter of 1999. 19 Phase IV - Final Testing, New Item Compliance. This phase involves review of all inventories for compliance and retesting as necessary. During this phase, all new equipment will be tested for compliance. Sinclair expects to complete this phase during the fourth quarter of 1999. Follow up and documentation for the implementation of each phase has been delayed from the originally scheduled completion dates due to turnover of MIS personnel. The Company believes that it is now on schedule to complete the documentation and remaining processes before the end of the year. The Company has developed a contingency/emergency plan to address Year 2000 worst case scenarios. The contingency plan includes, but is not limited to, addressing (i) regional power facilities, (ii) interruption of satellite delivered programming, (iii) replacement or repair of equipment not discovered or fixed during the year 2000 compliance process and (iv) local security measures that may become necessary relating to the Company's properties. The contingency plan involves obtaining alternative sources if existing sources of these goods and services are not available. Although the contingency plan is designed to reduce the impact of disruptions from these sources, there is no assurance that the plan will avoid material disruptions in the event one or more of these events occurs. To date, Sinclair believes that its major systems are Year 2000 compliant. This substantial compliance has been achieved without the need to acquire new hardware, software or systems other than in the ordinary course of replacing such systems. Sinclair is not aware of any non-compliance that would be material to repair or replace or that would have a material effect on Sinclair's business if compliance were not achieved. Sinclair does not believe that non-compliance in any systems that have not yet been reviewed would result in material costs or disruption. Neither is Sinclair aware of any non-compliance by its customers or suppliers that would have a material impact on Sinclair's business. Nevertheless, there can be no assurance that unanticipated non-compliance will not occur, and such non-compliance could require material costs to repair or could cause material disruptions if not repaired. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK CHANGE IN MARKET RISK As noted above, the Company's net loss for the nine months ended September 30, 1999 included recognition of a gain of $12.3 million on a treasury option derivative instrument. Upon execution of the treasury option derivative instrument during 1998, the Company received a cash payment of $9.5 million. The treasury option derivative instrument will require the Company to make five annual payments equal to the difference between 6.14% minus the interest rate yield on five-year treasury securities on September 30, 2000 times the $300 million notional amount of the instrument. If the yield on five-year treasuries is equal to or greater than 6.14% on September 30, 2000, the Company will not be required to make any payment under the terms of this instrument. If the rate is below 6.14% on that date, the Company will be required to make payments, as described above, and the size of the payment will increase as the rate goes down. For each accounting period, the Company recognizes unrealized gain on an expense equal to the change in the projected liability under this arrangement based on interest rates at the end of the period. The gain recognized in the nine months ended September 30, 1999 reflects an adjustment of the Company's liability under this instrument to the present value of future payments based on the two-year forward five-year treasury rate as of September 30, 1999 for five year treasury notes with a settlement date of September 30, 2000. If the yield on five-year treasuries at September 30, 2000 were to equal the forward five-year treasury rate on September 30, 1999 (6.02%), Sinclair would be required to make five annual payments of approximately $360,000 each. If the yield on five-year treasuries declines in periods before September 30, 2000, Sinclair would be required to recognize losses. In any event, Sinclair will not be required to make any payments until September 30, 2000. 20 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS EXHIBIT NUMBER DESCRIPTION 10.1 Second Modification Agreement dated April 30, 1999 by and between Guy Gannett Communications and Sinclair Communications, Inc., to modify the Purchase Agreement dated September 4, 1998 by and between Guy Gannett Communications and Sinclair Communications, Inc., as thereafter amended and modified. 10.2 Asset Purchase Agreement dated August 18, 1999 by and between Sinclair Communications, Inc. and certain of its affiliates named therein and Entercom Communications Corp. 10.3 Asset Purchase Agreement dated August 20, 1999 among Sinclair Communications, Inc., Sinclair Media III, Inc., Sinclair Radio of Kansas City Licensee, LLC and Entercom Communications Corp. 10.4 Amendment to Purchase Agreement, dated March 16, 1999, to amend Purchase Agreement dated as of September 4, 1998 by and between Guy Gannett Communications and Sinclair Communications, Inc. 10.5 Modification Agreement dated April 12, 1999 by and between Guy Gannett Communications and Sinclair Communications, Inc., to modify the Purchase Agreement dated September 4, 1998 by and between Guy Gannett Communications and Sinclair Communications, Inc., as thereafter amended. 10.6 Purchase Agreement dated March 16, 1999, by and between Sinclair Communications, Inc. and STC Broadcasting, Inc. 10.7 Amended and Restated Purchase Agreement dated August 20, 1999 among Sinclair Communications, Inc. and certain of its affiliates named therein and Entercom Communications Corp. 27 FDS B) REPORTS ON FORM 8-K None 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized in the city of Baltimore, Maryland on the 12th day of November, 1999. SINCLAIR BROADCAST GROUP, INC. by: /s/ Thomas E. Severson ----------------------- Thomas E. Severson Chief Accounting Officer Principal Accounting Officer 22 EX-10.1 2 EXHIBIT 10.1 SECOND MODIFICATION AGREEMENT This SECOND MODIFICATION AGREEMENT (this "Agreement") made as of April 30, 1999 by and between Guy Gannett Communications, a Maine corporation (the "Company"), and Sinclair Communications, Inc., a Maryland corporation (together with its successors and permitted assigns, "Purchaser") to modify the Purchase Agreement dated as of September 4, 1998 by and between the Company and Purchaser, as amended by the Amendment thereto dated as of March 16, 1999 and modified by the Modification Agreement dated as of April 12, 1999 (as so amended and modified, the "Purchase Agreement"). W I T N E S S E T H : WHEREAS, the Company and Purchaser are parties to the Purchase Agreement, pursuant to which the Company has agreed to sell to Purchaser the assets and business of the Company's broadcast television business, including all business, operations and activities of, among other broadcast television stations, Station WOKR-TV, Rochester, New York (the "Ackerley Station") and Stations KGAN-TV, Cedar Rapids, Iowa, WICD-TV, Champaign, Illinois, and WICS-TV, Springfield, Illinois (such three stations, collectively, the "STC Stations"), and Purchaser has agreed to purchase such assets and business and to assume certain liabilities related to or arising from or in connection with such assets or business; WHEREAS, as permitted by the Purchase Agreement and in accordance with that certain Purchase Agreement dated as of September 25, 1998 by and between Purchaser and The Ackerley Group, Inc., as amended by the Amendment thereto dated April 12, 1999, the closing of the purchase and sale of the assets and business of the Ackerley Station, and the assumption of certain liabilities related to or arising from or in connection therewith (the "First Closing") occurred on April 12, 1999; WHEREAS, Purchaser has also entered into that certain Purchase Agreement dated as of March 16, 1999 (the "STC Agreement") with STC Broadcasting, Inc. ("STC"), pursuant to which Purchaser has agreed to transfer to STC certain assets and business of the STC Stations, and STC has agreed to acquire such assets and business and to assume certain liabilities related to or arising from or in connection therewith; WHEREAS, pursuant to the Purchase Agreement, the closing of the purchase and sale of the assets and business of the Company's broadcast television stations other than the Ackerley Station, and the assumption of certain liabilities related to or arising from or in connection therewith (the "Second Closing") is to occur on April 30, 1999; WHEREAS, all conditions to the Second Closing under the Purchase Agreement have been satisfied or waived as of the date hereof, but all conditions to Purchaser's closing with STC under the STC Agreement have not yet been satisfied or waived as a result of the extension of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, relating to the transactions contemplated by the STC Agreement; and WHEREAS, as an accommodation to Purchaser to permit the resolution of the antitrust issues arising in connection with the transactions contemplated by the STC Agreement or to permit Purchaser to secure one or more alternative sources of financing necessary to effect the closing of the purchase and sale of the assets and business of the STC Stations, and the assumption of certain liabilities related to or arising from or in connection therewith, the Company and Purchaser desire to modify the Purchase Agreement in certain respects to permit at 2 least one separate, subsequent closing to be effected with respect to the transactions contemplated by the Purchase Agreement regarding the STC Stations; NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows: Section 1. Closings. There shall be two separate closings of the transactions contemplated by the Purchase Agreement to occur at the Second Closing. The first such closing (the "Principal Closing") of the transactions contemplated by the Purchase Agreement other than those in respect of the Ackerley Station (the closing of which occurred on April 12, 1999) or in respect of the STC Stations (the closing or closings of which are being deferred under this Agreement) shall take place at 10:00 a.m., New York City time, on April 30, 1999 (such time and date being referred to herein as the "Principal Closing Date"). The closing (the "Deferred Closing") of the transactions contemplated by the Purchase Agreement in respect of the STC Stations shall take place at 10:00 a.m., New York City time, on a date to be agreed upon by the parties hereto (such time and date being referred to herein as the "Deferred Closing Date"); provided, however, that the Deferred Closing Date shall not occur later than July 30, 1999 (or, if the parties hereto request FCC consent to extend its initial 90-day consummation period and the FCC has denied such request in writing, the Deferred Closing Date shall occur not later than July 5, 1999) (July 30, 1999 or July 5, 1999, as the case may be, being the "Outside Closing Date"). At the Principal Closing, the Company will convey, assign, transfer and deliver all of the Company's right, title and interest in and to all of the Assets and Business other than (i) the Assets and Business that were conveyed, assigned, transferred or delivered in connection with the First Closing (the "Ackerley Assets" and the "Ackerley Business," respectively) and (ii) the Assets owned or leased by, or licensed to or used or useful by, the Company exclusively in 3 connection with the STC Stations (the "STC Assets") and the business, operations and activities of the STC Stations (the "STC Business"), and Purchaser shall assume and agree to perform and fully discharge when due all of the Assumed Liabilities related to arising from or in connection with the Assets or the Business other than the Ackerley Assets, the Ackerley Business, the STC Assets or the STC Business. At the Deferred Closing, the Company will sell, convey, assign, transfer and deliver to Purchaser or STC, as the case may be pursuant to Section 8(b) hereof, all of the STC Assets and the STC Business, and Purchaser shall assume and agree to perform and fully discharge when due all of the Assumed Liabilities related to arising from or in connection with the STC Assets or the STC Business (the "STC Assumed Liabilities"). Section 2. Certain Payments. With respect to Business Employees of Stations other than the Ackerley Station and the STC Stations, the reimbursement of payments to be made pursuant to Section 5.8 of the Purchase Agreement shall apply only to Business Employees whose employment is terminated on or prior to 90 days after the Principal Closing Date. For the avoidance of doubt, it is agreed that any such payment will be subject to the terms and conditions of Section 5.8 (including, without limitation, the proviso to such Section). With respect to Business Employees of the STC Stations, Section 5.8 of the Purchase Agreement shall apply to Business Employees whose employment is terminated on or prior to 90 days after the Deferred Closing Date. Section 3. Bills of Sale, Assignments and Assumption Agreements. (a) Notwithstanding provisions in the Purchase Agreement to the contrary, at the Principal Closing bills of sale, assignments and assumption agreements substantially in the forms set forth in Exhibit A hereto conveying the Assets (with the exception of (i) the Ackerley Assets, (ii) the STC Assets, (iii) the FCC Licenses related to Stations other than the Ackerley Station and the 4 STC Stations, which shall be conveyed to WGGB Licensee, LLC, WGME Licensee, LLC or WTWC Licensee, LLC, as applicable, and (iv) the collective bargaining agreements described in Section 3.10.6 of the Disclosure Schedule and the employee benefit plans described in Section 3.14.3 of the Disclosure Schedule, in each case other than such agreements and plans relating to Stations other than the Ackerley Station and the STC Stations, which non-Ackerley Station and non-STC Stations related agreements and plans shall be conveyed to Sinclair Acquisition IV, Inc.) shall be delivered directly to Sinclair Acquisition IV, Inc. In addition, notwithstanding provisions of the Purchase Agreement to the contrary, at the Principal Closing an assumption agreement substantially in the form of Exhibit B hereto and providing for assumption by Purchaser of the Assumed Liabilities other than the Ackerley Assumed Liabilities and the STC Assumed Liabilities shall be executed and delivered by Purchaser to the Company. In addition, as an accommodation to Purchaser, the Company agrees that, subject to the immediately succeeding sentence, at the request of Purchaser at the Deferred Closing, (i) notwithstanding the provisions in the Purchase Agreement to the contrary, an assignment of assets substantially in the form of Exhibit C hereto (or, if such sale and assignment is to be made to Sinclair Acquisition IV, Inc. pursuant to Section 8(b) hereof instead of directly to STC, a bill of sale, assignment and assumption agreement substantially in the forms set forth in Exhibit A hereto) conveying the Assets relating to the STC Stations (with the exception of (x) the FCC Licenses, which shall be conveyed to WICD Licensee, LLC, WICS Licensee, LLC and KGAN Licensee, LLC, as applicable, and (y) the other License Assets (as defined in the STC Agreement) if such sale and assignment is to be made to STC, the collective bargaining agreements described in Section 3.10.6 of the Disclosure Schedule relating to the STC Stations and the employee benefit plans described in Section 3.14.3 of the Disclosure Schedule relating to the STC Stations, each of 5 which shall be conveyed to Sinclair Acquisition IV, Inc.), shall be delivered to Purchaser or directly to STC, as the case may be pursuant to Section 8(b) hereof, (ii) if the foregoing sale and assignment is being made to STC, Purchaser and the Company shall execute and deliver a bill of sale, assignment and assumption agreement substantially in the form of Exhibit D hereto conveying the License Assets (other than the FCC Licenses, which shall be conveyed to WICD Licensee, LLC, WICS Licensee, LLC and KGAN Licensee, LLC, as applicable) to Sinclair Acquisition IV, Inc. and (iii) notwithstanding the provisions of the Purchase Agreement to the contrary, Purchaser and the Company shall execute and deliver an assumption agreement substantially in the form of Exhibit E hereto and providing for the assumption by Purchaser of the STC Assumed Liabilities. Anything in the immediately succeeding sentence to the contrary notwithstanding, the Company's obligation to take the actions contemplated by the immediately preceding sentence are conditioned on the following actions taking place at the Deferred Closing (it being understood that, if such conditions are not satisfied all STC Assets and the STC Business will be transferred directly to Sinclair Acquisition IV, Inc.): (a) Purchaser, STC and the Company executing and delivering to the Company a letter agreement substantially in the form of Exhibit F hereto and (b) Purchaser executing and delivering an indemnity agreement substantially in the form of Exhibit G hereto. Section 4. Allocation of Purchase Price; Further Adjustments to Purchase Price. (a) As previously agreed by the parties hereto, the purchase price for the STC Assets and the STC Business shall be the aggregate amount of (x) $81,000,000 of the $310,000,000 specified in Section 2.1(a) of the Purchase Agreement as a portion of the Purchase Price plus (if greater than or equal to zero) or minus (if less than zero), as the case may be, (y) the amount of the Net Financial Assets based on the STC Assets and STC Assumed Liabilities as of 11:59 6 p.m., New York City time, on the day immediately preceding the Principal Closing Date, subject to adjustment pursuant to Sections 4(g) and 4(h) hereof, and further subject to adjustment pursuant to Section 2.2 of the Purchase Agreement (with the amount described in clause (y) being referred to as the "STC Net Financial Assets" and the aggregate amount described in clause (x) and (y) collectively the "STC Purchase Price"). (b) At the Principal Closing, the amounts to be delivered by Purchaser pursuant to Section 2.1(c) of the Purchase Agreement shall be the full Purchase Price under the Purchase Agreement minus the amounts delivered at the First Closing to the Company, the Security Escrow Agent and the Adjustment Escrow Agent pursuant to the Purchase Agreement and the amounts to be delivered to the Company, the Security Escrow Agent and the Adjustment Escrow Agent at the Deferred Closing pursuant to this Agreement (such portion of the Purchase Price being the "Principal Purchase Price"). The amount of the Net Financial Assets relating to the Stations other than the Ackerley Station and the STC Stations shall be separately calculated and shall also be determined as of 11:59 p.m., New York City time, on the day immediately preceding the Principal Closing Date (the "Principal Net Financial Assets"). For the avoidance of doubt, the Purchase Price payable at the Principal Closing shall be subject to the Proposed Earnings Adjustment in respect of 1998 BCF, which results in an increase to the Purchase Price of $7,000,000, subject in all respects to the procedures set forth in Section 2.2 of the Purchase Agreement. (c) On or before the Principal Closing, the Company shall deliver to Purchaser (i) a statement setting forth the amount estimated in good faith by the Company to be the amount of the Principal Net Financial Assets as of the Principal Closing Date (the "Estimated Principal Net 7 Financial Assets") and (ii) a notice designating the account or accounts to which the payment to or on behalf of the Company pursuant to Section 4(b) hereof is to be made. (d) At the Principal Closing, (i) $2,684,000 (the "Principal Closing Security Escrow") of the Principal Purchase Price shall be delivered to the Security Escrow Agent by wire transfer in immediately available funds pursuant to the Security Escrow Agreement , as such agreement shall be modified in accordance with this Agreement, (ii) $8,006,500 (the "Principal Closing Adjustment Escrow") of the Principal Purchase Price shall be delivered to the Adjustment Escrow Agent by wire transfer in immediately available funds pursuant to the Adjustment Escrow Agreement , as such agreement shall be modified in accordance with this Agreement, and (iii) the sum of $100,309,500 plus or minus, as the case may be, the Estimated Principal Net Financial Assets shall be paid by wire transfer in immediately available funds to the account or accounts designated by the Company in accordance with Section 4(c) hereof. (e) On or before the Deferred Closing, the Company shall deliver to Purchaser (i) a statement setting forth the amount estimated in good faith by the Company to be the amount of the STC Net Financial Assets as of 11:59 p.m., New York City time, on the day immediately preceding the Deferred Closing Date (the "Estimated STC Net Financial Assets") and (ii) a notice designating the account or accounts to which the payment to or on behalf of the Company pursuant to Section 4(a) hereof is to be made. (f) At the Deferred Closing, (i) $2,090,400 (the "Deferred Closing Security Escrow") of the STC Purchase Price shall be delivered to the Security Escrow Agent by wire transfer in immediately available funds pursuant to the Security Escrow Agreement, as such agreement shall be modified in accordance with this Agreement, (ii) $783,900 (the "Deferred Closing Adjustment Escrow") of the STC Purchase Price shall be delivered to the Adjustment 8 Escrow Agent by wire transfer in immediately available funds pursuant to the Adjustment Escrow Agreement, as such agreement shall be modified in accordance with this Agreement, and (iii) the sum of $78,125,700 plus or minus, as the case may be, the Estimated STC Net Financial Assets plus or minus, as the case may be, the estimated adjustment to the STC Purchase Price pursuant to Section 4(g) hereof and plus the adjustment to the STC Purchase Price, if any, pursuant to Section 4(h) hereof shall be paid by wire transfer in immediately available funds to the account or accounts designated by the Company in accordance with Section 4(e) hereof. If an Early KGAN-TV Closing shall occur, the parties hereby agree that $20,000,000 of the $81,000,000 specified in clause (x) of Section 4(a) hereof as part of the STC Purchase Price and the appropriate proportions of the STC Net Financial Assets and of the adjustments to the STC Purchase Price pursuant to Sections 4(g) and 4(h) hereof shall be allocated as the purchase price relating to the Early KGAN-TV Closing. (g) Notwithstanding anything in the Purchase Agreement to the contrary, the STC Purchase Price shall be decreased (if such net cash flow is greater than or equal to zero) or increased (if such net cash flow is less than zero), as the case may be, by the Net Cash Flow (as hereinafter defined) of the STC Stations for the period from and including April 30, 1999 through, but not including, the Deferred Closing Date, subject to adjustment as provided below. For purposes of this Section 4(g), "Net Cash Flow" means (i) the earnings before interest, income taxes, depreciation and amortization of the STC Stations for the relevant period, calculated in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for year ended, December 27, 1997 referred to in Section 3.5 of the Purchase Agreement, in each case after adding back corporate overhead expense (to the extent otherwise deducted in computing earnings) and film and program expenses and 9 subtracting actual cash payments on film and program contracts either made or due but not yet made (in each case adjusted to include one month's payment for each month in which any such payment is due) less (ii) all capital expenditures paid in respect of the STC Stations during the relevant period. The Company shall include the amount estimated in good faith by the Company to be the amount of the adjustment to the STC Purchase Price under this Section 4(g) in the statement delivered to Purchaser on or before five Business Days prior to the Deferred Closing pursuant to Section 2.1(b) (as modified by this Agreement) of the Purchase Agreement and such adjustment shall be subject to the procedures set forth in Section 2.2 of the Purchase Agreement; provided, however, that, whether or not the parties agree to submit the referenced statement relating to the Deferred Closing to certification or review by independent accountants (other than the submission of such statement for resolution by an independent accounting firm, the fees and expense of which the Company and Purchaser have agreed to bear equally) (in each case which would otherwise be required under the provisions of Section 2.2 of the Purchase Agreement), the Company shall not be obligated to pay any fees and expenses in connection with any certification or review relating to the determination of the STC Net Financial Assets. (h) Notwithstanding anything in the Purchase Agreement to the contrary, the STC Purchase Price shall be increased by the aggregate of (i) an amount equal to $22,191.78 for each day from and including April 30, 1999 through, but not including, May 30, 1999 that the Deferred Closing shall not have yet occurred and (ii) an amount equal to $26,630.14 for each day from and including May 30, 1999 through and including the Outside Closing Date that the Deferred Closing shall not have occurred; provided, however, if Purchaser shall have elected pursuant to Section 12 hereof to have an Early KGAN-TV Closing (as defined in Section 12(a) hereof) take place, the per diem amounts set forth in clauses (i) and (ii) above shall be reduced, 10 beginning as of the date of the Early KGAN-TV Closing (the "Early KGAN-TV Closing Date"), to (x) $16,712.33 for each day, if any, from and including the Early KGAN-TV Closing Date through, but not including, May 30, 1999 that the Final Closing (as defined in Section 12(a) hereof) shall not have yet occurred and (y) $20,054.79 for each day from and including the later of May 30, 1999 and the Early KGAN-TV Closing Date through and including the Outside Closing Date that the Final Closing shall not have occurred. Section 5. Adjustment Escrow Agreement. The form of Adjustment Escrow Agreement shall be modified to the reasonable satisfaction of the Company, Purchaser and the Adjustment Escrow Agent to permit (i) separate deliveries to be made in respect of the Principal Closing and the Deferred Closing, and (ii) payment to the Company of the aggregate of the Principal Closing Adjustment Escrow and the Deferred Closing Adjustment Escrow, less any amounts due to Purchaser in respect of the Principal Net Financial Assets or the STC Net Financial Assets, as the case may be, pursuant to the terms of Section 2.1(c) of the Purchase Agreement, as modified hereby. Section 6. Security Escrow Agreement. The form of Security Escrow Agreement shall be modified to the reasonable satisfaction of the Company, Purchaser and the Security Escrow Agent to permit (i) separate deliveries to be made in respect of the Principal Closing and the Deferred Closing, and (ii) payment to the Company of the aggregate of the Principal Closing Security Escrow and the Deferred Closing Security Escrow, less any amounts of Claims and Damages in respect of Stations other than the Ackerley Station on the one year anniversary of the Principal Closing Date. Section 7. Net Financial Asset Adjustment. The Remaining Net Financial Assets shall be comprised of (i) the Principal Net Financial Assets and (ii) the STC Net Financial 11 Assets. The calculation and release of the Principal Adjustment Escrow Account shall be made pursuant to the procedure set forth in Section 2.2 of the Purchase Agreement (treating the Principal Closing Date as the "Closing Date" for purposes of such Section 2.2) and the calculation and release of the Deferred Adjustment Escrow Account shall be made pursuant to the procedure set forth in Section 2.2 of the Purchase Agreement (treating the Deferred Closing Date as the "Closing Date" for purposes of such Section 2.2); provided that if the Deferred Closing does not occur, only the Principal Net Financial Assets shall be determined, but otherwise in accordance with the terms of Section 2.2 of the Purchase Agreement (treating as the "Closing Date" for purposes of such Section 2.2 the Principal Closing Date when determining the Principal Net Financial Assets). Section 8. Closing Conditions. (a) Purchaser and the Company each hereby acknowledges and agrees that all conditions to Closing set forth in Articles 6 and 7 of the Purchase Agreement have been satisfied or waived as of the date hereof for all purposes under the Purchase Agreement. (b) Purchaser and the Company each hereby acknowledges and agrees that following the Principal Closing the obligation of the Company to sell, convey, assign, transfer and deliver directly to STC (or, if the closing of all of the transactions contemplated by the STC Agreement has not occurred on or prior to the Outside Closing Date, to Purchaser or, other than with respect to the FCC Licenses which shall be assigned to the Person designated in the FCC Consent, one or more wholly owned subsidiaries of Purchaser) the STC Assets and the obligation of Purchaser to pay the STC Purchase Price in accordance with Section 4 hereof and to assume the STC Assumed Liabilities, in each case not later than the Outside Closing Date, shall each be irrevocable and unconditional; provided that the Company shall not be obligated to sell, convey, 12 assign, transfer or deliver to Purchaser or directly to STC, as the case may be, any of the STC Assets if Purchaser shall not have paid the STC Purchase Price in accordance with Section 4 hereof and assumed the STC Assumed Liabilities. For the avoidance of doubt, neither Purchaser nor the Company shall be relieved of its obligation under this Section 8(b) even if any condition to Closing set forth in Articles 6 or 7 of the Purchase Agreement would have ceased to have been satisfied following the Principal Closing if any such condition were to be considered in respect of the Deferred Closing. Section 9. Certificate. Purchaser acknowledges that the Company has delivered to Purchaser a certificate, dated as of the Principal Closing Date, executed on behalf of the Company by its duly authorized officers or representatives to the effect of Sections 6.1 and 6.2 of the Purchase Agreement with respect all Stations other than the Ackerley Station. For the avoidance of doubt, as previously agreed by the parties hereto, materiality (or "Material Adverse Effect") for purposes of such certificate and all other purposes under the Purchase Agreement has been, and shall be, determined on the basis of all Stations taken as a whole, including the Ackerley Station and the STC Stations; provided, however, that in determining materiality or Material Adverse Effect, any circumstance, change in, or effect relating to, the Ackerley Station after the First Closing Date has not been, and shall not be, taken into consideration. Section 10. Indemnification; Survival. The representations and warranties of the Company contained in the Purchase Agreement or in any certificate or special warranty deed delivered pursuant thereto and any and all covenants and agreements therein with respect to the Ackerley Station, the Ackerley Assets or the Ackerley Assumed Liabilities (other than those covenants and agreements required by the Purchase Agreement to be performed after the First Closing) shall expire with, and be terminated and extinguished upon, the one year anniversary of 13 the First Closing Date. Except as provided in the immediately proceeding sentence, all representations and warranties of the Company or Purchaser contained in the Purchase Agreement or in any certificate or special warranty deed pursuant thereto and any and all covenants and agreements in the Purchase Agreement shall expire in accordance with the terms of the Purchase Agreement (treating the Principal Closing Date as "the Closing Date"). For purposes of Section 8.1 and 8.2 of the Purchase Agreement, the term "Closing Date" shall be deemed to refer to (x) the First Closing Date in respect of the Ackerley Station, the Ackerley Assets and the Ackerley Assumed Liabilities, (y) the Principal Closing Date in respect of the Stations (other than the Ackerley Station and the STC Stations), Assets (other than the Ackerley Assets and the STC Assets) and Assumed Liabilities (other than the Ackerley Assumed Liabilities and the STC Assumed Liabilities) and (z) the date of the Final Closing (the "Final Closing Date") in respect of the STC Stations, the STC Assets and the STC Assumed Liabilities. Following the Principal Closing, all pre-Closing covenants and agreements in Article 5 of the Purchase Agreement shall no longer apply to any Station other than the STC Stations. Section 11. Termination Rights. (a) Neither the Company nor Purchaser shall have any right to terminate the Purchase Agreement; provided, however, that if the Deferred Closing shall not have occurred on or before the Outside Closing Date, the Company may terminate its obligations with respect to the Deferred Closing and be entitled to abandon the Deferred Closing in accordance with the procedures set forth in Section 10.1 of the Purchase Agreement relating to termination of the Purchase Agreement. If the Company abandons the Deferred Closing in accordance with this Section 11 then the obligations of the Company to effect the Deferred Closing shall terminate, all representations, warranties, convents, agreements, liabilities and obligations of the Company under the Purchase Agreement shall thereupon 14 become void and of no further effect whatsoever to the extent such representations, warranties, covenants, agreements, liabilities and obligations relate to the STC Stations, the STC Assets, the STC Assumed Liabilities or the Deferred Closing, except (i) to the extent of the Company's liability for willful material breaches of the Purchase Agreement prior to the time of such abandonment, (ii) as set forth in Section 5.4 of the Purchase Agreement, (iii) the obligations of the Company for its own expenses incurred in connection with the transactions contemplated by the Purchase Agreement and this Agreement as provided therein and modified hereby and (iv) if an Early KGAN-TV Closing shall have occurred, to the extent such representations, warranties, covenants, agreements, liabilities and obligations relate to Station KGAN-TV, the STC Assets acquired, or the STC Assumed Liabilities assumed, in connection with the Early KGAN-TV Closing, or the Early KGAN-TV Closing. For the avoidance of doubt, the representations, warranties, convents, agreements, liabilities and obligations of the Company under the Purchase Agreement relating to Station WOKR-TV, Station WGGB-TV, Station WGME-TV and WTWC- TV, the assets acquired, or the Assumed Liabilities assumed, in connection with the First Closing and the Principal Closing, and the First Closing and the Principal Closing shall not be affected by any abandonment pursuant to this Section 11(a), but shall expire, and be terminated and extinguished, at the time provided in the Purchase Agreement with respect thereto. (b) If the Deferred Closing shall not have occurred by July 1, 1999 (if an Early KGAN-TV Closing has not occurred as permitted by Section 12 hereof) or the Outside Closing Date (if an Early KGAN-TV Closing has occurred on or before July 1, 1999), other than as a result of a material breach by the Company of its obligation under Section 8(b) hereof to effect the Deferred Closing as described therein, Purchaser shall pay the Company, as liquidated damages, the aggregate of (i) 15% of the STC Purchase Price (or, if an Early KGAN-TV Closing 15 has occurred, that portion of the STC Purchase Price not paid in connection with the Early KGAN-TV Closing) calculated as if the Deferred Closing were to have occurred on the Outside Closing Date (which amount represents the parties' best estimate of the costs and expenses (including, without limitation, attorney's, accountant's and other professionals' fees) of the Company related to the negotiation and execution of this Agreement and the separate Deferred Closing, which costs and amounts the parties acknowledge and agree would be otherwise difficult to determine) and (ii) the amount of the excess, if any, of the STC Purchase Price (or, if an Early KGAN-TV Closing has occurred, that portion of the STC Purchase Price not paid in connection with the Early KGAN-TV Closing), calculated as if the Deferred Closing were to have occurred on the Outside Closing Date, over the purchase price received by the Company in respect of a sale or sales of STC Assets and STC Business to one or more third parties on substantially the same terms as those in the Purchase Agreement with respect to post-closing liabilities and obligations of the seller (each, an "Alternative Sale") (which amount the parties acknowledge and agree is not capable of estimation as of the date hereof). The Company shall undertake the negotiations relating to an agreement with respect to any Alternative Sale in good faith so as to mitigate to the extent reasonably practicable any damages under clause (ii) of the immediately preceding sentence; provided, however, that any breach by the Company shall not void Purchaser's obligation to pay an amount under such clause (ii), but, in the case of such breach, Purchaser's liability thereunder shall be limited to the excess, if any, of the STC Purchase Price (or the applicable portion of the STC Purchase Price, as the case may be) over the purchase price that would reasonably have been received by the Company in respect of one or more Alternative Sales if the Company were not to have so breached its obligation under this sentence. 16 The foregoing aggregate payment is intended by the parties to be liquidated damages and not a penalty. Section 12. Additional Separate Closing. (a) If Purchaser so elects, the closing of the transactions contemplated by the Purchase Agreement and this Agreement in respect of Station KGAN-TV (the "Early KGAN-TV Closing") may take place on a date separate and earlier than the closing of the transactions contemplated by the Purchase Agreement and this Agreement in respect of Station WICD-TV and Station WICS-TV (the "Final Closing"), and if Purchaser so elects, the parties hereto agree to make all appropriate changes to this Agreement, and interpretations of the Purchase Agreement, necessary to reflect such earlier closing; provided, however, that the parties hereby agree that, if an Early KGAN-TV Closing were to occur, the references to "Deferred Closing" or "Deferred Closing Date" in the proviso to the third sentence of Section 1 hereof and in Section 11 hereof shall refer to the Final Closing. (b) If Purchaser elects to have an Early KGAN-TV Closing take, then, notwithstanding the provisions of Section 10.3 of the Purchase Agreement or any other amounts required to be paid under the Purchase Agreement or this Agreement, Purchaser shall, not later than the Early KGAN-TV Closing Date, reimburse the Company for its reasonable costs and expenses (including, without limitation, attorney's, accountants and other professionals' fees and expenses) incurred in connection with effecting the Early KGAN-TV Closing. For the avoidance of doubt, Purchaser shall not be obligated hereunder to reimburse the Company for any costs and expenses incurred in connection with the Final Closing, except to the extent provided in Section 11(b) hereof if the Final Closing shall not have occurred on or before the Outside Closing Date. Section 13. Additional Agreements. (a) Purchaser agrees to use its best efforts to (i) assist STC in resolving the antitrust issues arising, whether on the date hereof or at time on 17 or before the Deferred Closing, in connection with the transactions contemplated by the STC Agreement and (ii) secure one or more alternative sources of financing, in each case such that the Deferred Closing (whether the STC Assets are to be conveyed directly to STC or to Purchaser, as the case may be under Section 8(b) hereof) shall occur not later than the Outside Closing Date. (b) Notwithstanding the foregoing Section 13(a), the Deferred Closing shall take place as soon as practicable following the satisfaction of the condition set forth in Sections 6.4(a) and 7.4(a) of the STC Agreement, but in no event later than ten days following the date on which such condition has been satisfied. (c) Notwithstanding the provisions of Section 10.3 of the Purchase Agreement or any other amounts required to be paid under the Purchase Agreement or this Agreement, Purchaser shall, not later than the earlier of the Deferred Closing and the Outside Closing Date, pay to the Company in cash an aggregate amount equal to $115,000 for each calendar month, and/or a pro-rated portion thereof for the part of a calendar month (if any), during the period from, but not including, May 31, 1999 through and including the Deferred Closing Date, which amount is intended to reimburse the Company for its costs and expenses incurred to maintain the Corporate Office (including, without limitation, the retention of Corporate Office Employees) during such period. (d) The parties hereby agree to each use their reasonable efforts, to cooperate fully with each other and STC, and otherwise to use their respective reasonable efforts to obtain the requisite clearances under the HSR Act with respect to the transactions contemplated by the STC Agreement in respect of the purchase and sale of the STC Stations. (e) The parties hereby also agree to each use their reasonable efforts, to cooperate fully with each other, and otherwise to use their respective reasonable efforts to obtain FCC 18 consent to extend its initial 90-day consummation period to the extent the Deferred Closing, the Early KGAN-TV Closing or the Final Closing, as the case may be, has not closed or is highly unlikely to close within the relevant period of time. (f) For the avoidance of doubt, the covenants and agreements set forth in Sections 5.1, 5.3, 5.4 and 5.10 of the Purchase Agreement shall remain in full force and effect with respect to the business, operations and activities of the STC Stations until such time as the Deferred Closing shall have taken place (or, if Purchaser shall have elected pursuant to Section 12 hereof to have an Early KGAN-TV Closing take place, such covenants and agreements shall remain in full force and effect with respect to the business, operations and activities of all the STC Stations until such time as the Early KGAN-TV Closing shall have taken place and, following the Early KGAN-TV Closing, with respect to the business, operations and activities of Station WICD-TV and WICS-TV until the earlier of the Final Closing or the Outside Closing Date. Section 14. Other Modifications to the Purchase Agreement. (a) With respect to the actions to be taken pursuant to Section 5.2(i) or Section 5.2(j) of the Purchase Agreement, the term "Business Employees" shall mean (i) Business Employees other than Business Employees of the Ackerley Station and the STC Stations in connection with the Principal Closing and (ii) Business Employees of the STC Stations in connection with the Deferred Closing. (b) With respect to the actions to be taken pursuant to Section 5.2(k) of the Purchase Agreement, the terms "Closing" and "Closing Date" shall mean the earlier of (i) the Deferred Closing and the Deferred Closing Date, respectively, and (ii) the Outside Closing Date. Section 15. No Third Party Rights. Nothing in this Agreement shall be deemed to provide any Person with any legal or equitable rights, benefits or remedies of any nature 19 whatsoever under or by reason of this Agreement, the Purchase Agreement or any certificate or instrument delivered hereto or thereto, except to the extent previously provided in the Purchase Agreement with respect to certain wholly owned subsidiaries of Purchaser. For the avoidance of doubt, neither STC nor any of its affiliates will be considered an assignee of Purchaser for purposes of the Purchase Agreement (and will not have any of Purchaser's rights or remedies under the Purchase Agreement). Section 16. References. All references to "this Agreement" in the Purchase Agreement shall mean the Purchase Agreement as modified hereby. Section 17. Definitions. All capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Purchase Agreement. Section 18. Headings. The headings of the sections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. Section 19. Counterparts. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Section 20. Governing Law. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York. Section 21. No Other Amendments or Modifications. This Agreement constitutes an amendment to the Purchase Agreement and in the event of any conflict between the terms of this Agreement and the Purchase Agreement the terms of this Agreement will 20 govern. Except as expressly contemplated to be modified hereby, the terms and conditions of the Purchase Agreement shall continue in full force and effect. 21 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. GUY GANNETT COMMUNICATIONS By: /s/ James Baker ------------------------------------- Its Vice-President-Finance SINCLAIR COMMUNICATIONS, INC. By: /s/ David B. Amy ------------------------------------- Name: David B. Amy Title: Secretary ACCEPTED AND AGREED as of the date first above written: WGME LICENSEE, LLC By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary WTWC LICENSEE, LLC By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary 22 WICS LICENSEE, LLC By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary WICD LICENSEE, LLC By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary WGGB LICENSEE, LLC By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary KGAN LICENSEE, LLC By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary WGME, INC. By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary 23 WTWC, INC. By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary SINCLAIR ACQUISITION IV, INC. By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary WGGB, INC. By: /s/ David B. Amy ----------------------------- Name: David B. Amy Title: Secretary 24 EX-10.2 3 EXHIBIT 10.2 ASSET PURCHASE AGREEMENT DATED AUGUST 18, 1999 AMONG SINCLAIR COMMUNICATIONS, INC. SINCLAIR MEDIA III, INC. SINCLAIR RADIO OF KANSAS CITY LICENSEE, LLC WCGV, INC. SINCLAIR RADIO OF MILWAUKEE LICENSEE, LLC SINCLAIR RADIO OF NEW ORLEANS, LLC SINCLAIR RADIO OF NEW ORLEANS LICENSEE, LLC SINCLAIR RADIO OF MEMPHIS, INC. SINCLAIR RADIO OF MEMPHIS LICENSEE, INC. SINCLAIR PROPERTIES, LLC SINCLAIR RADIO OF NORFOLK/GREENSBORO LICENSEE L.P. SINCLAIR RADIO OF NORFOLK LICENSEE, LLC SINCLAIR RADIO OF BUFFALO, INC. SINCLAIR RADIO OF BUFFALO LICENSEE, LLC WLFL, INC. SINCLAIR RADIO OF GREENVILLE LICENSEE, INC. SINCLAIR RADIO OF WILKES-BARRE, INC. SINCLAIR RADIO OF WILKES-BARRE LICENSEE, LLC. as SELLERS, AND ENTERCOM COMMUNICATIONS CORP. as BUYER TABLE OF CONTENTS
1. CERTAIN DEFINITIONS........................................................................................3 1.1 Terms Defined in this Section.......................................................................3 1.2 Terms Defined Elsewhere in this Agreement...........................................................9 2. EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE..............................................................11 2.1 Agreement to Exchange and Transfer.................................................................11 2.2 Excluded Assets....................................................................................12 2.3 Purchase Price.....................................................................................13 Purchase Price Increase............................................................................13 2.4 Payment of Purchase Price..........................................................................16 Payment of Estimated Purchase Price At Closing.....................................................16 Payments to Reflect Adjustments....................................................................17 2.5 Assumption of Liabilities and Obligations..........................................................17 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.................................................................17 3.1 Organization and Authority of Sellers..............................................................18 3.2 Authorization and Binding Obligation...............................................................18 3.3 Absence of Conflicting Agreements; Consents........................................................18 3.4 Governmental Licenses..............................................................................18 3.5 Real Property......................................................................................19 3.6 Tangible Personal Property.........................................................................20 3.7 Contracts..........................................................................................20 3.8 Intangibles........................................................................................21 3.9 Title to Properties................................................................................21 3.10 Financial Statements...............................................................................21 3.11 Taxes..............................................................................................22 3.12 Insurance..........................................................................................22 3.13 Reports............................................................................................22 3.14 Personnel and Employee Benefits....................................................................22 Employees and Compensation.........................................................................22 Pension Plans......................................................................................23 Welfare Plans......................................................................................23 Benefit Arrangements...............................................................................23 Multiemployer Plans................................................................................23 Delivery of Copies of Relevant Documents and Other Information.....................................24 Labor Relations....................................................................................24 3.15 Claims and Legal Actions...........................................................................24 3.16 ENVIRONMENTAL COMPLIANCE...........................................................................24 3.17 Compliance with Laws...............................................................................25 3.18 Conduct of Business in Ordinary Course.............................................................25 3.19 Transactions with Affiliates.......................................................................25 3.20 Broker.............................................................................................25 3.21 Insolvency Proceedings.............................................................................26 3.22 Year 2000 Compatibility............................................................................26
i
4. REPRESENTATIONS AND WARRANTIES OF BUYER...................................................................26 4.1 Organization, Standing and Authority...............................................................26 4.2 Authorization and Binding Obligation...............................................................26 4.3 Absence of Conflicting Agreements and Required Consents............................................26 4.4 Brokers............................................................................................27 4.5 Availability of Funds..............................................................................27 4.6 Qualifications of Buyer............................................................................27 4.7 WARN Act...........................................................................................27 4.8 Buyer's Defined Contribution Plan..................................................................27 5. OPERATION OF THE STATIONS PRIOR TO CLOSING................................................................28 5.1 Contracts..........................................................................................28 5.2 Compensation.......................................................................................28 5.3 Encumbrances.......................................................................................28 5.4 Dispositions.......................................................................................28 5.5 Access to Information..............................................................................28 5.6 Insurance..........................................................................................29 5.7 Licenses...........................................................................................29 5.8 Obligations........................................................................................29 5.9 No Inconsistent Action.............................................................................29 5.10 Maintenance of Assets..............................................................................29 5.11 Consents...........................................................................................29 5.12 Books and Records..................................................................................30 5.13 Notification.......................................................................................30 5.14 Financial Information..............................................................................30 5.15 Compliance with Laws...............................................................................30 5.16 Programming........................................................................................31 5.17 Preservation of Business...........................................................................31 5.18 Normal Operations..................................................................................31 5.19 Buffalo Build-Out Property.........................................................................31 6. SPECIAL COVENANTS AND AGREEMENTS..........................................................................31 6.1 FCC Consent........................................................................................31 6.2 Hart-Scott-Rodino..................................................................................32 6.3 Risk of Loss.......................................................................................32 6.4 Confidentiality....................................................................................32 6.5 Cooperation........................................................................................32 6.6 Control of the Stations............................................................................32 6.7 Accounts Receivable................................................................................33 6.8 Allocation of Purchase Price.......................................................................33 6.9 Access to Books and Records........................................................................34 6.10 Employee Matters...................................................................................34 Certain Payments...................................................................................36 6.11 Lease..............................................................................................37 6.12 Public Announcements...............................................................................37 6.13 Disclosure Schedules...............................................................................37 6.14 Bulk Sales Law.....................................................................................37 6.15 Environmental Site Assessment......................................................................37
ii
6.16 Purchase of Advertising Time.......................................................................38 6.17 Adverse Developments...............................................................................38 6.18 Title Insurance....................................................................................39 6.19 Surveys............................................................................................39 6.20 Pending Transactions...............................................................................39 6.21 Assignment of Contracts for Pending Transactions...................................................39 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.............................................................39 7.1 Conditions to Obligations of Buyer.................................................................39 Representations and Warranties.....................................................................40 Covenants and Conditions...........................................................................40 FCC Consent........................................................................................40 Hart-Scott-Rodino..................................................................................40 Governmental Authorizations........................................................................40 Consents...........................................................................................40 Lease..............................................................................................40 Deliveries.........................................................................................40 Satisfactory Environmental Assessment..............................................................41 7.2 Conditions to Obligations of Sellers...............................................................41 Representations and Warranties.....................................................................41 Covenants and Conditions...........................................................................41 FCC Consent........................................................................................41 Hart-Scott-Rodino..................................................................................41 Deliveries.........................................................................................41 8. CLOSING AND CLOSING DELIVERIES............................................................................41 8.1 Closing............................................................................................41 Closing Date.......................................................................................41 Closing Place......................................................................................42 8.2 Deliveries by Sellers..............................................................................43 Conveyancing Documents.............................................................................43 Officer's Certificate..............................................................................43 Secretary's Certificate............................................................................43 Consents...........................................................................................43 Good Standing Certificates.........................................................................43 Opinions of Counsel................................................................................43 Lease..............................................................................................44 Other Documents....................................................................................44 8.3 Deliveries by Buyer................................................................................44 Closing Payment....................................................................................44 Officer's Certificate..............................................................................44 Secretary's Certificate............................................................................44 Assumption Agreements..............................................................................44 Good Standing Certificates.........................................................................44 Opinion of Counsel.................................................................................44 Lease..............................................................................................44 Other Documents....................................................................................44
iii
9. TERMINATION...............................................................................................45 9.1 Termination by Mutual Consent......................................................................45 9.2 Termination by Seller..............................................................................45 9.3 Termination by Buyer...............................................................................45 9.4 Rights on Termination..............................................................................46 9.5 Liquidated Damages Not a Penalty...................................................................46 9.6 Specific Performance...............................................................................46 9.7 Attorneys' Fees....................................................................................47 9.8 Survival...........................................................................................47 9.9 Limitations of Termination.........................................................................47 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES.............................47 10.1 Survival of Representations........................................................................47 10.2 Indemnification by Seller..........................................................................48 10.3 Indemnification by Buyer...........................................................................48 10.4 Procedure for Indemnification......................................................................49 10.5 Certain Limitations................................................................................50 11. MISCELLANEOUS.............................................................................................50 11.1 Fees and Expenses..................................................................................50 11.2 Notices............................................................................................51 11.3 Benefit and Binding Effect.........................................................................52 11.4 Further Assurances.................................................................................53 11.5 Governing Law......................................................................................53 11.6 Entire Agreement...................................................................................53 11.7 Waiver of Compliance; Consents.....................................................................53 11.8 Headings...........................................................................................53 11.9 Counterparts.......................................................................................53
LIST OF SCHEDULES 2.2 Excluded Real Property Interests 3.1 Seller's Organization 3.3 Other Disclosure Consents 3.4 FCC Licenses 3.5 Real Property Schedule 3.6 Tangible Personal Property 3.7 Contracts (general, programming, leases and employment) iv 3.8 Intangibles 3.11 Taxes 3.12 Insurance 3.14 List of Employees 3.14 (g) Labor Relations 3.15 Litigation 3.16 Environmental Compliance 3.18 Conduct of Business in Ordinary Course 3.19 Transactions with Affiliates 3.20 Broker's Schedule 4.3 Absence of Conflicting Agreements and Required Consents 4.6 Qualifications of Buyer 5.3 Encumbrances 6.8 Allocation of Purchase Price 6.10 Retention Agreements 6.10-A Excluded Employees (Retention Agreements) 6.10 (h) Employees excluded from Seller's Obligations to Reimburse Buyer as Scheduled on Schedule 6.10 - Retention Agreements 6.15 Environmental Site Assessments 7(g) WNVZ-FM Antenna Site Lease Renewal 10.2 FCC Applications 10.5 Indemnification v ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of ______________, 1999, by and among Sinclair Communications, Inc., a Maryland corporation ("SCI"), Sinclair Media III, Inc. a Maryland corporation ("MEDIA III"), Sinclair Radio of Kansas City Licensee, LLC, a Maryland limited liability company ("KANSAS CITY LICENSEE"), WCGV, Inc., a Maryland corporation ("WCGV"), Sinclair Radio of Milwaukee Licensee, LLC, a Maryland limited liability company ("MILWAUKEE LICENSEE"), Sinclair Radio of New Orleans, LLC, a Maryland limited liability company ("SINCLAIR NEW ORLEANS"), Sinclair Radio of New Orleans Licensee, LLC, a Maryland limited liability company ("NEW ORLEANS LICENSEE"), Sinclair Radio of Memphis, Inc., a Maryland corporation ("SINCLAIR MEMPHIS"), Sinclair Radio of Memphis Licensee, Inc., a Delaware corporation ("MEMPHIS LICENSEE"), Sinclair Properties, LLC, a Virginia limited liability company ("PROPERTIES"), Sinclair Radio of Norfolk/Greensboro Licensee L.P., a Virginia limited partnership ("NORFOLK/GREENSBORO LICENSEE"), Sinclair Radio of Norfolk Licensee, LLC, a Maryland limited liability company ("NORFOLK LICENSEE"), Sinclair Radio of Buffalo, Inc., a Maryland corporation ("SINCLAIR BUFFALO"), Sinclair Radio of Buffalo Licensee, LLC, a Maryland limited liability company ("BUFFALO LICENSEE"), WLFL, Inc., a Maryland corporation ("WLFL"), Sinclair Radio of Greenville Licensee, Inc., a Delaware corporation ("GREENVILLE LICENSEE"), Sinclair Radio of Wilkes-Barre, Inc., a Maryland corporation ("SINCLAIR WILKES-BARRE"), and Sinclair Radio of Wilkes-Barre Licensee, LLC, a Maryland limited liability company ("WILKES-BARRE LICENSEE") (each a "SELLER" and collectively, "SELLERS"), and Entercom Communications Corp., a Pennsylvania corporation ("BUYER"). R E C I T A L S: WHEREAS, Properties operates radio broadcast stations WPTE-FM, Virginia Beach, VA; WWDE-FM, Hampton, VA; and WNVZ-FM, Norfolk, VA (collectively, the "NORFOLK STATIONS") WVKL-FM, Norfolk VA ("WVKL") and WMQX-FM, Winston-Salem, NC; WQMG-FM, Greensboro, NC; WJMH-FM, Reidsville, NC; and WEAL-AM, Greensboro, NC (collectively, the "GREENSBORO STATIONS") and owns or leases certain assets used in connection with the Norfolk Stations, WVKL and the Greensboro Stations; WHEREAS, Media III operates radio broadcast stations KCFX-FM, Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM, Kansas City, MO (collectively, the "KANSAS CITY STATIONS") and owns or leases certain assets used in connection with the Kansas City Stations; WHEREAS, Kansas City Licensee is the licensee of each of the Kansas City Stations pursuant to certain authorizations issued by the FCC; WHEREAS, WCGV operates radio broadcast stations WEMP-AM, Milwaukee, WI; WMYX-FM, Milwaukee, WI; and WXSS-FM, Wauwatosa, WI (collectively, the "MILWAUKEE STATIONS") and owns or leases certain assets used in connection with the Milwaukee Stations; 1 WHEREAS, Milwaukee Licensee is the licensee of each of the Milwaukee Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Sinclair New Orleans operates radio broadcast stations WLMG-FM, New Orleans, LA; WWL-AM, New Orleans, LA; WSMB-AM, New Orleans, LA; and WEZB-FM, New Orleans, LA (collectively, the "NEW ORLEANS STATIONS") and owns or leases certain assets used in connection with the New Orleans Stations; WHEREAS, New Orleans Licensee is the licensee of each of the New Orleans Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Sinclair New Orleans operates radio broadcast stations WLTS-FM, Kenner, LA; and WTKL-FM, New Orleans, LA (collectively, the "PHASE II STATIONS"), pursuant to a time brokerage agreement (the "PHASE II TBA") with Phase II Broadcasting, Inc. ("PHASE II") and has entered into an agreement (the "PHASE II PURCHASE AGREEMENT") with Phase II to acquire substantially all the assets of the Phase II Stations from Phase II; WHEREAS, Sinclair Memphis operates radio broadcast stations WRVR-FM, Memphis, TN; WJCE-AM, Memphis, TN and WOGY-FM, Germantown, TN (collectively, the "MEMPHIS STATIONS") and owns or leases certain assets used in connection with the Memphis Stations; WHEREAS, Memphis Licensee is the licensee of each of the Memphis Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Norfolk/Greensboro Licensee is the licensee of each of the Norfolk Stations and each of the Greensboro Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Norfolk Licensee is the licensee of WVKL pursuant to certain authorizations issued by the FCC; WHEREAS, Sinclair Buffalo operates radio broadcast stations WMJQ-FM, Buffalo, NY, WKSE-FM, Niagara Falls, NY; WBEN-AM, Buffalo, NY; WWKB-AM, Buffalo, NY; WGR-AM, Buffalo, NY: and WWWS-AM, Buffalo, NY (collectively, the "BUFFALO STATIONS") and owns or leases certain assets used in connection with the Buffalo Stations; WHEREAS, Buffalo Licensee is the licensee of each of the Buffalo Stations pursuant to certain authorizations issued by the FCC; WHEREAS, WLFL operates radio broadcast stations WFBC-FM, Greenville, SC and WSPA-FM, Spartanburg, SC; WYRD-AM, Greenville, SC; WORD-AM, Spartanburg, SC; and WSPA-AM, Spartanburg, SC (collectively, the "GREENVILLE STATIONS") and owns or leases certain assets used in connection with the Greenville Stations; WHEREAS, Greenville Licensee is the licensee of each of the Greenville Stations pursuant to certain authorizations issued by the FCC; 2 WHEREAS, WLFL provides sales services to radio broadcast stations WOLI-FM, Easely, SC and WOLT-FM, Greer, SC (the "PALM STATIONS"), pursuant to joint sales agreement with Palm Broadcasting, Inc. (the "PALM JSA") and has exercised an option to purchase the Palm Stations pursuant to an option agreement with Palm Broadcasting, Inc. (the "PALM OPTION AGREEMENT"); WHEREAS, Sinclair Wilkes-Barre, operates radio broadcast stations WGGI-FM, Benton, PA; WKRZ-FM, Wilkes-Barre, PA; WGGY-FM, Scranton, PA; WILK-AM, Wilkes-Barre, PA: WGBI-AM, Scranton, PA; WSHG-FM, Pittston, PA; WILP-AM, West Hazelton, PA; WWFH-FM, Freeland, PA; and WKRF-FM, Tobyhanna, PA (collectively, the "WILKES-BARRE STATIONS") and owns or leases certain assets used in connection with the Wilkes-Barre Stations; WHEREAS, Wilkes-Barre Licensee is the licensee of each of the Wilkes-Barre Stations pursuant to certain authorizations issued by the FCC; WHEREAS, the parties hereto desire to enter into this Agreement to provide for the sale, assignment and transfer by Sellers to Buyer of certain of the assets owned, leased or used by Sellers in connection with the business and operations of the Palm Stations and the Phase II Stations (collectively, the "Non-Owned Stations") and the Kansas City Stations, the Milwaukee Stations, the New Orleans Stations, the Memphis Stations, the Norfolk Stations, WVKL, the Greensboro Stations, the Buffalo Stations, the Greenville Stations, and the Wilkes-Barre Stations (each [including the Non-Owned Stations) a "STATION" and collectively, the "STATIONS"); A G R E E M E N T S: In consideration of the above recitals and of the mutual agreements and covenants contained in this Agreement, the parties to this Agreement, intending to be bound legally, agree as follows: SECTION 1: CERTAIN DEFINITIONS 1.1 Terms Defined in this Section. The following terms, as used in this Agreement, have the meanings set forth in this Section: "ACCOUNTS RECEIVABLE" means the rights of Sellers as of the Closing Date to payment in cash for the sale of advertising time and other goods and services by the Stations prior to the Closing Date. "AFFILIATE" means, with respect to any Person, (a) any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, or (b) an officer or director of such Person or of an Affiliate of such Person within the meaning of clause (a) of this definition. For purposes of clause (a) of this definition, (i) a Person shall be deemed to control another Person if such Person (A) has sufficient power to enable such Person to elect a majority of the board of directors of such Person, or (B) owns a majority of the beneficial interests in income and capital of such Person; 3 and (ii) a Person shall be deemed to control any partnership of which such Person is a general partner. "ASSETS" means the assets to be transferred or otherwise conveyed by Sellers to Buyer under this Agreement, as specified in Section 2.1. "ASSUMED CONTRACTS" means (a) all Contracts set forth on Schedule 3.7, (b) Contracts entered into prior to the date of this Agreement with advertisers for the sale of advertising time or production services for cash at rates consistent with past practices, (c) Contracts entered into by any Seller prior to the date of this Agreement which are not required to be included on Schedule 3.7 hereto, (d) any Contracts entered into by Sellers between the date of this Agreement and the Closing Date that Buyer agrees in writing to assume, and (e) other contracts entered into by Sellers between the date of this Agreement and the Closing Date in compliance with Section 5. "BUFFALO BUILD-OUT PROPERTY" shall have the meaning set forth in Section 2.3(b)(iv). "CLOSING" means the consummation of the exchange and acquisition of the Assets pursuant to this Agreement on either one or more Closing Date in accordance with the provisions of Section 8.1. "CLOSING DATE" means the date on which a Closing occurs, as determined pursuant to Section 8.1. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMUNICATIONS ACT" means the Communications Act of 1934, as amended. "CONSENTS" means the consents, permits, or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transactions contemplated by this Agreement. "CONTAMINANT" shall mean and include any pollutant, contaminant, hazardous material (as defined in any of the Environmental Laws), toxic substances (as defined in any of the Environmental Laws), asbestos or asbestos containing material, urea formaldehyde, polychlorinated biphenyls, regulated substances and wastes, radioactive materials, and petroleum or petroleum by-products, including crude oil or any fraction thereof, except the term "Contaminant" shall not include small quantities of maintenance, cleaning and emergency generator fuel supplies customary for the operation of radio stations and maintained in compliance with all Environmental Laws in the ordinary course of business. "CONTRACTS" means all contracts, consulting agreements, leases, non-governmental licenses and other agreements (including leases for personal or real property and employment agreements), written or oral (including any amendments and other modifications thereto) to which Sinclair, SCI, or any Seller is a party or that are binding upon any Seller, that relate to or affect the Assets or the business or operations of the Stations, and that either (a) are in effect on 4 the date of this Agreement, including (without limitation) the Phase II TBA, the Phase II Purchase Agreement, the Palm JSA, the Palm Option Agreement, and those listed on Schedule 3.7 hereto, or (b) are entered into by any Seller between the date of this Agreement and the Closing Date. "DELAY AMOUNT" shall equal 0.75% of the amount which is the Initial Purchase Price, less any portion of the Initial Purchase Price which has been received by Sellers pursuant to any Closings which have occurred prior to the time such payment is due. "DEPOSIT RELEASE DATE" is the date on which a Closing has occurred for Radio Groups for which more than forty-five percent (45%) of the Initial Purchase Price has been paid to Sellers. "EFFECTIVE TIME" means 12:01 a.m., Eastern time, on each Closing Date. "ENVIRONMENTAL LAWS" shall mean and include, but not be limited to, any applicable federal, state or local law, statute, charter, ordinance, rule or regulation or any governmental agency interpretation, policy or guidance, including without limitation applicable safety/environmental/health laws such as but not limited to the Resource Conservation and Recovery Act of 1976, Comprehensive Environmental Response Compensation and Liability Act, Federal Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean Water Act, and the Toxic Substance Control Act, as any of the foregoing have been amended, and any permit, order, directive, court ruling or order or consent decree applicable to or affecting the Property or any other property (real or personal) used by or relating to the Station in question promulgated or issued pursuant to any Environmental Laws which pertains to, governs, or controls the generation, storage, remediation or removal of Contaminants or otherwise regulates the protection of health and the environment including, but not limited to, any of the following activities, whether on site or off site if such could materially affect the site: (i) the emission, discharge, release, spilling or dumping of any Contaminant into the air, surface water, ground water, soil or substrata; or (ii) the use, generation, processing, sale, recycling, treatment, handling, storage, disposal, transportation, labeling or any other management of any Contaminant. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ESCROW DEPOSIT" means the sum of Fifty Million Dollars ($50,000,000.00) or, at Buyer's option, a letter of credit in favor of Sellers in the face amount of Fifty Million Dollars ($50,000,000.00), which is being deposited by Buyer with First Union National Bank (the "ESCROW AGENT") on the date hereof to secure the obligations of Buyer to close under this Agreement, with (i) such deposit being held by the Escrow Agent in accordance with the Escrow Agreement executed among Buyer, Sellers and Escrow Agent on the date hereof, and (ii) the Escrow Deposit, and all earnings thereon, being returned to Buyer upon the consummation hereof. "EXCESS AMOUNT" has the meaning set forth in Section 10.5. 5 "EXCLUDED REAL PROPERTY INTERESTS" means all interests in Real Property listed on Schedule 2.2 hereto. "EXCLUDED TANGIBLE PERSONAL PROPERTY" means all tangible personal property owned or held by Sellers that is located at the Excluded Real Property other than such tangible personal property listed on Schedule 3.6 hereto, any assets used primarily in the operation of any television broadcast station owned, operated or programmed by Sellers or any Affiliate of Sellers, any assets used primarily in the operation of any radio broadcast station owned, operated or programmed by Sellers, but not included as a "Station" hereunder, and any tangible personal property located at Suite 220, Meadow Mill at Woodberry, 3600 Clipper Mill Road, Baltimore, Maryland 21211. "FCC" means the Federal Communications Commission. "FCC CONSENT" means action by the FCC granting its consent to the transfer of the FCC Licenses by Sellers to Buyer as contemplated by this Agreement. "FCC LICENSES" means those licenses, permits and authorizations issued by the FCC to Sellers in connection with the business and operations of the Stations. "FINAL CLOSING DATE" means the date on which all of the Assets for all of the Stations have been exchanged and acquired in accordance with Section 8.1. "FINAL ORDER" shall mean an action by the Commission upon any application for FCC Consent filed by the parties hereto for FCC consent, approval or authorization, which action has not been reversed, stayed, enjoined, set aside, annulled or suspended, and with respect to which action, no protest, petition to deny, petition for rehearing or reconsideration, appeal or request for stay is pending, and as to which action the time for filing of any such protest, petition, appeal or request and any period during which the Commission may reconsider or review such action on its own authority has expired. "HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended, and all Laws promulgated pursuant thereto or in connection therewith. "INTANGIBLES" means all copyrights, trademarks, trade names, service marks, service names, licenses, patents, permits, jingles, proprietary information, technical information and data, machinery and equipment warranties, and other similar intangible property rights and interests (and any goodwill associated with any of the foregoing) applied for, issued to, or owned by Sellers or under which Sellers are licensed or franchised and that are used in the business and operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date. "KNOWLEDGE" or any derivative thereof with respect to the Sellers means, exclusively, the actual Knowledge of the President and Chief Executive Officer or the Chief Financial Officer of Sinclair Broadcast Group, Inc. ("SINCLAIR"), the general managers of the Stations, and any 6 other employee of Sinclair or SCI designated as a "vice president" or any officer of any of the Sellers. "LEASED REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto leased or held by Sellers and used in the business or operation of the Stations. "LICENSES" means all licenses, permits, construction permits and other authorizations issued by the FCC, the Federal Aviation Administration, or any other federal, state, or local governmental authorities to Sellers, currently in effect and used in connection with the conduct of the business or operations of the Stations (other than the Non-Owned Stations), together with any additions thereto between the date of this Agreement and the Closing Date. "MATERIAL ADVERSE EFFECT" means 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. "MATERIAL CONTRACT" means those Assumed Contracts that are designated on Schedules 3.5 and 3.7 as "Material Contracts." "OWNED REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto owned by Sellers and used in the business or operations of the Stations. "PALM AMOUNT" shall equal either (a) $0 if the acquisition of the Palm Stations by WLFL shall have occurred prior to Closing applicable to the Palm Stations, or (b) the purchase price which Buyer would be required to pay to acquire the Palm Stations, including, after taking into account the application of any deposit made pursuant to the acquisition agreement without regard to prorations or similar adjustments. "PENDING TRANSACTION AMOUNT" means the sum of the Phase II Amount and the Palm Amount. "PERMITTED ENCUMBRANCES" means (a) encumbrances of a landlord, or other statutory lien not yet due and payable, or a landlord's liens arising in the ordinary course of business, (b) encumbrances arising in connection with equipment or maintenance financing or leasing under the terms of the Contracts set forth on the Schedules, which Contracts have been made available to Buyer, (c) encumbrances for Taxes not yet delinquent or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on Sellers' books in accordance with generally accepted accounting principles, or (d) encumbrances that do not materially detract from the value of any of the Assets or materially interfere with the use thereof as currently used. 7 "PERSON" means an individual, corporation, association, partnership, joint venture, trust, estate, limited liability company, limited liability partnership, or other entity or organization. "PHASE II AMOUNT" shall equal either (a) $0 if the acquisition of the Phase II Stations by Sinclair Radio of New Orleans, Inc. shall have occurred prior to Closing applicable to the Phase II Stations, or (b) the purchase price which Buyer would be required to pay to acquire the Phase II Stations, including, after taking into account the application of any deposit made pursuant to the acquisition agreement, without regard to prorations or similar adjustments. "RADIO GROUP" means the Stations located in the same Designated Market Area as determined by the Arbitron Company. "RADIO GROUP FCC CONSENT" means receipt of initial grant of the FCC Consents as to each of the Stations in any Radio Group. "RADIO GROUP MATERIAL ADVERSE EFFECT" means a material adverse effect on the business, assets, or financial condition of a Radio Group 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 comprising the Radio Group operate, or (c) circumstances that are not likely to recur and have either been substantially remedied or can be substantially remedied without substantial cost or delay. "REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto, whether or not owned, leased or held by Sellers used in the business or operations of the Stations. "REAL PROPERTY INTERESTS" means all interests in Owned Real Property and Leased Real Property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon and appurtenant thereto, owned or held by Sellers that are used in the business or operations of the Stations, together with any additions, substitutions and replacements thereof and thereto between the date of this Agreement and the Closing Date, but excluding the Excluded Real Property Interests. "TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, inventory, spare parts and other tangible personal property owned or held by Sellers that is used or useful in the conduct of the business or operations of the Stations, together with any additions, substitutions and replacements thereof and thereto between the date of this Agreement and the Closing Date, but excluding the Excluded Tangible Personal Property. "TAX" means any federal, state, local, or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, capital, transfer, employment, withholding, or other tax or similar governmental assessment, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties. 8 "TAX RETURN" means any tax return, declaration of estimated tax, tax report or other tax statement, or any other similar filing required to be submitted to any governmental authority with respect to any Tax. "THRESHOLD AMOUNT" has the meaning set forth in Section 10.5. "UNEXPENDED REMEDIATION AMOUNT" shall mean Three Million Dollars ($3,000,000.00) minus any amounts previously expended by Sellers to remediate any of the Real Property pursuant to Section 6.16. "USA DIGITAL SHARES" means the 300,000 shares of common stock of USA Digital Radio, Inc. of which Sellers are the record owner. 1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have the meanings set forth in the sections indicated: Term Section Balance Sheet Date Section 3.10 Benefit Arrangement Section 3.14 (a)(v) Benefit Plans Section Section 3.14(a)(ii) Buffalo Stations Recitals Buyer Preamble Buyer's Plan Section 4.8 Claimant Section 10.4 Collection Period Section 6.7(a) Confidentiality Agreement Section 6.4 Deferred Contract Section 5.11(b) Designee Section 11.3(b) Employees Section 3.14(a) Environmental Laws Section 3.16 Estimated Purchase Price Section 2.4(a) Excluded Real Property Interests Section 1.1 Excluded Tangible Personal Property Section 1.1 FCC Objection Section 7.1(c) FTC Section 4.6 Financial Statements Section 3.10 9 Greensboro Stations Recitals Greenville Stations Recitals Hart-Scott-Rodino Filing Section 6.2 Indemnity Cap Section 10.5 Indemnifying Party Section 10.4 Initial Employee Cap Section 6.10(g) Initial Purchase Price Section 2.3 Kansas City Stations Recitals Kansas City Delay Amount Section 2.3(a)(ii) Kansas City Delay Amount Date Section 2.3(a)(ii) Lease Section 6.12 Memphis Stations Recitals Milwaukee Stations Recitals Multiemployer Plan Section 3.14(a)(ii) New Orleans Stations Recitals Non-Owned Stations Recitals Operational Equipment Section 3.22 Norfolk Stations Recitals Palm Amount Section 1.1 Palm JSA Recitals Palm Option Agreement Recitals Palm Stations Recitals Pension Plan Section 3.14(a)(iii) Phase II Recitals Phase II Amount Section 1.1 Phase II Purchase Agreement Recitals Phase II Stations Recitals Phase II TBA Recitals Purchase Price Section 2.3 Radio Group Section 1.1 Reimbursement Period Section 6.10(g) Represented Employees Section 6.10(e) 10 Scheduled Employees Section 6.10(g) Scheduled Retention Agreements Section 6.10(g) SCI Preamble Section 6.9 Amount Section 6.9 Seller Preamble Seller Entities Section 6.10(i) Sellers' Employees Section 6.10(i) Sinclair Section 1.1 Stations Recitals Stations Delay Amount Section 2.3(a)(i) Stations Delay Amount Date Section 2.3(a)(i) Transferred Employees Section 6.10 WVKL Recitals Welfare Plan Section 3.14(a)(i) Wilkes-Barre Stations Recitals SECTION 2: EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE 2.1 Agreement to Exchange and Transfer. Subject to the terms and conditions set forth in this Agreement with respect to the Stations or any Radio Group, Sellers hereby agree to transfer, convey, assign and deliver to Buyer on one or more Closing Dates as applicable, and Buyer agrees to acquire, all of Sellers' right, title and interest in the tangible and intangible assets used in connection with the conduct of the business or operations of the Stations or any Radio Group, as the case may be, together with any additions thereto between the date of this Agreement and the applicable Closing Date, but excluding the assets described in Section 2.2, free and clear of any claims, liabilities, security interests, mortgages, liens, pledges, charges, or encumbrances of any nature whatsoever (except for Permitted Encumbrances), including the following: (a) The Tangible Personal Property; (b) The Real Property Interests; (c) The Licenses; (d) The Assumed Contracts; (e) The Intangibles, including the goodwill of the Stations, if any; (f) The USA Digital Shares. 11 (g) All of Sellers' proprietary information, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints and schematics, including filings with the FCC, in each case to the extent relating to the business and operation of the Stations; (h) All choses in action of Sellers relating to the Stations to the extent they relate to the period after the Effective Time; and (i) All books and records relating to the business or operations of the Stations, including executed copies of the Assumed Contracts, and all records required by the FCC to be kept by the Stations. 2.2 Excluded Assets. The Assets shall exclude the following: (a) Sellers' cash, cash equivalents and deposits, all interest payable in connection with any such items and rights in and to bank accounts, marketable and other securities and similar investments of Sellers; (b) Any insurance policies, promissory notes, amounts due to Sellers from employees, bonds, letters of credit, certificates of deposit, or other similar items, and any cash surrender value in regard thereto; provided, that in the event Seller is obligated to assign to Buyer the proceeds of any such insurance policy at the time a Closing occurs under Section 6.3, such proceeds shall be included in the Assets; (c) Any pension, profit-sharing, or employee benefit plans, including all of Sellers' interest in any Welfare Plan, Pension Plan or Benefit Arrangement (each as defined in Section 3.14(a); (d) All Tangible Personal Property disposed of or consumed in the ordinary course of business as permitted by this Agreement; (e) All Tax Returns and supporting materials, all original financial statements and supporting materials, all books and records that Sellers are required by law to retain, all of Sellers' organizational documents, corporate books and records (including minute books and stock ledgers) and originals of account books of original entry, all records of Sellers relating to the sale of the Assets and all records and documents related to any assets excluded pursuant to this Section 2.2; (f) Any interest in and to any refunds of federal, state, or local franchise, income, or other taxes for periods (or portions thereof) ending on or prior to the Closing Date; (g) All Accounts Receivable; (h) All rights and claims of Sellers whether mature, contingent or otherwise, against third parties relating to the Assets of the Stations, whether in tort, contract or otherwise, other than 12 rights and claims against third parties relating to the Assets which have as their basis loss, damage or impairment of or to any of the Assets and which loss, damage or impairment has not been restored or repaired prior to any Closing in which any of the Assets which has been so damaged or impaired is being acquired by Buyer (or in the case of a lost asset, that would have been acquired but for such loss); (i) Any Contracts which are not Assumed Contracts; (j) All of each Sellers' deposits and prepaid expenses; provided, any deposits and prepaid expenses shall be included in the Assets to the extent that Sellers receive a credit therefor in the proration of the Purchase Price pursuant to Section 2.3(b); (k) All rights of Sellers under or pursuant to this Agreement (or any other agreements contemplated hereby); (l) All rights to the names Sinclair Broadcast Group, "Sinclair Communications," Sinclair and any logo or variation thereof and goodwill associated therewith; (m) The Excluded Real Property Interests; (n) The Excluded Tangible Personal Property; (o) All assets owned by the Sellers and used in connection with any television or radio broadcast stations owned and/or programmed by any of the Sellers or Sellers have the right to acquire other than the Stations, including (without limitation) all assets related to Sellers' operation and ownership of the Interstate Road Network and the Road Gang Coast to Coast Network; KPNT-FM, St. Genevieve, MO; WVRV-FM, East St. Louis, IL; WIL-FM, St. Louis, MO; WRTH-AM, St. Louis, MO; KIHT-FM, St. Louis, MO; KXOK-FM, St. Louis, MO; KUPN-AM, Mission, KS; (p) All shares of capital stock, partnership interests, interests in limited liability companies or other equity interest, including, but not limited to, any options, warrants or voting trusts relating thereto which are owned by Sellers and not expressly specified in Section 2.1. 2.3 Purchase Price. The purchase price of the Assets (the "PURCHASE PRICE") shall be the excess of (i) Eight Hundred Twenty Four Million Five Hundred Thousand U.S. Dollars ($824,500,000), plus the Section 6.9 Amount over (ii) the "Pending Transaction Amount," adjusted as provided below. (a) Purchase Price Increase. Except as otherwise provided in this Agreement, the Initial Purchase Price shall be increased by the Delay Amount upon the occurrence of any of the following events: (i) one hundred thirty five (135) days following public notice by the FCC that applications for FCC Consent have been accepted for filing (the "Stations Delay Amount Date") if Closing has not occurred with respect to all Stations other than the Kansas City Stations due to the failure to receive any necessary regulatory consent, including, but not limited to, the FCC 13 Consent, any Radio Group FCC Consent, or expiration or termination under Hart-Scott-Rodino, as a result of facts relating to Buyer or its Affiliates, including, without limitation, such facts as are disclosed on Schedule 4.6 hereto, provided, that such Delay Amount shall be applied to the Initial Purchase Price only for those Stations for which a Closing has not occurred prior to the Stations Delay Amount Date, other than the Kansas City Stations, as allocated on Schedule 6.8 (the "Stations Delay Amount"); and (ii) one hundred fifty (150) days following public notice by the FCC that applications for FCC Consent have been accepted for filing (the "Kansas City Delay Amount Date") if Closing has not occurred with respect to the Kansas City Stations due to the failure to receive any necessary consent, including, but not limited to, the FCC Consent, any Radio Group FCC Consent, or expiration or termination under Hart-Scott-Rodino as a result of facts relating to Buyer or its Affiliates, provided, that such Delay Amount shall be applied to the Initial Purchase Price for the Kansas City Stations as allocated on Schedule 6.8 (the "Kansas City Station Delay Amount"); and (iii) each thirty (30) day period subsequent to the occurrence of the Stations Delay Amount Date as to the Station Delay Amount and the Kansas City Delay Amount Date as to the Kansas City Delay Amount until the later to occur of (x) the Closing, or (y) termination of this Agreement in accordance with its terms. The Purchase Price and any increase due pursuant to this Section 2.3(a) shall be paid at Closing or pro rata (based on the allocation of the Initial Purchase Price among the Radio Groups) at a Radio Group Closing. (b) Prorations. The Purchase Price shall be increased or decreased as required to effectuate the proration of revenues and expenses, as set forth below. All revenues and all expenses arising from the operation of the Stations or Radio Group which are the subject of any Closing, including tower rental, business and license fees, utility charges, real property and personal property and other similar Taxes and assessments levied against or with respect to the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, payments due under film or programming license agreements, and employee compensation, including wages (including bonuses which constitute wages), salaries, accrued sick leave, severance pay and related Taxes shall be prorated between Buyer and Sellers as to those Stations for which a Closing is to be held in accordance with the principle that Sellers shall receive all revenues and shall be responsible for all expenses, costs and liabilities allocable to the operations of the Stations or Radio Group, as the case may be, for the period prior to the Effective Time of such Closing, and Buyer shall receive all revenues and shall be responsible for all expenses, costs and obligations allocable to the operations of the Stations for the period after the Effective Time of such Closing, subject to the following: (i) There shall be no adjustment for, and Sellers shall remain solely liable with respect to, any Contracts not included in the Assumed Contracts and any other obligation or liability not being assumed by Buyer in accordance with Section 2.2. An adjustment and proration shall be made in favor of Buyer to the extent that Buyer assumes any liability under any Assumed Contract to refund (or to credit against payments otherwise due) any security 14 deposit or similar prepayment paid to Sellers by any lessee or other third party. An adjustment and proration shall be made in favor of Sellers to the extent Buyer receives the right to receive a refund (or to a credit against payments otherwise due) under any Assumed Contract to any security deposit or similar pre-payment paid by or on behalf of Sellers. (ii) An adjustment and proration shall be made in favor of Sellers for the amount, if any, by which the fair market value of the goods or services to be received by any Radio Group under its trade or barter agreements as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars ($250,000) the fair market value of any advertising time remaining to be run by such Radio Group as of the Effective Time. An adjustment and proration shall be made in favor of Buyer to the extent that the amount of any advertising time remaining to be run by any Radio Group under its trade or barter agreements as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars ($250,000) the fair market value of the goods or services to be received by such Radio Group as of the Effective Time. (iii) There shall be no proration for program barter. (iv) An adjustment and proration shall be made in favor of Sellers for the prorata portion of the capital expenditures incurred by Sellers in connection with the build-out of the studio/office space located at 500 Corporate Parkway, Amherst, NY 14226 (the "Buffalo Build-Out Property"), based on the remaining potion of the initial term of the Lease relating to such property, dated May 15, 1999, between Sinclair Radio of Buffalo, Inc. and the Uniland Partnership of Delaware, L.P.; provided, that the adjustment and proration to be made pursuant to this Section 2.3(b)(iv) shall not exceed the lesser of (i) fifty percent (50%) of the capital expenditures (i.e., out-of-pocket construction and equipment expenses, architecture fees and building rent prior to occupancy) paid by Sellers with respect to the Buffalo Build-Out Property prior to Closing, and (ii) Two Million Dollars ($2,000,000). (v) An adjustment and proration shall be made in favor of Sellers for the amount, if any, of prepaid expense, the benefit of which accrues to Buyer hereunder, and other current assets acquired by Buyer hereunder which are paid by Sellers to the extent such prepaid expenses and other current assets relate to the period after the Effective Time. (vi) There shall be no proration for any payment(s) made by Interep to any of the Sellers in connection with obtaining the right to serve as the national sales representative of any of the Stations. (c) Manner of Determining Adjustments. The Purchase Price, taking into account the adjustments and prorations pursuant to Section 2.3(b), will be determined in accordance with the following procedures: (i) Sellers shall prepare and deliver to Buyer not later than five (5) days before any Closing Date a preliminary settlement statement which shall set forth Sellers' good faith estimate of the adjustments to the Purchase Price under Section 2.3(b) with respect to those Stations for which Closing is to occur. The preliminary settlement statement shall (A) contain all information reasonably necessary to determine the adjustments to the Purchase Price under 15 Section 2.3(b) as to such Station, to the extent such adjustments can be determined or estimated as of the date of the preliminary settlement statement, and such other information as may be reasonably requested by Buyer, and (B) be certified by Sellers to be true and complete to Sellers' Knowledge as of the date thereof. (ii) Not later than ninety (90) days after each Closing Date, Buyer will deliver to Sellers a statement setting forth Buyer's determination of the Purchase Price and the calculation thereof pursuant to Section 2.3(b) as to the Stations for which such Closing has occurred. Buyer's statement (A) shall contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(b) relating to the applicable Closing, and such other information as may be reasonably requested by Sellers relating to the applicable Closing, and (B) shall be certified by Buyer to be true and complete to Buyer's knowledge as of the date thereof. If Sellers dispute the amount of such Purchase Price determined by Buyer, they shall deliver to Buyer within thirty (30) days after receipt of Buyer's statement a statement setting forth their determination of the amount of such Purchase Price. If Sellers notify Buyer of its acceptance of Buyer's statement, or if Sellers fail to deliver their statement within the thirty (30)-day period specified in the preceding sentence, Buyer's determination of the Purchase Price shall be conclusive and binding on the parties as of the last day of the thirty (30)-day period. (iii) Buyer and Sellers shall use good faith efforts to resolve any dispute involving the determination of the Purchase Price paid by Buyer at any Closing. If the parties are unable to resolve the dispute within forty-five (45) days following the delivery of all of Buyer's statements to be provided pursuant to Section 2.3(c)(ii) after the Final Closing (or in the event this Agreement is terminated prior to the Final Closing) forty five (45) days following such termination, Buyer and Sellers shall jointly designate an independent certified public accounting firm of national standing which has not regularly provided services to either the Buyer or Sellers in the last three (3) years, who shall be knowledgeable and experienced in the operation of radio broadcasting stations, to resolve the dispute. If the parties are unable to agree on the designation of an independent certified public accounting firm, the selection of the accounting firm to resolve the dispute shall be submitted to arbitration to be held in Baltimore, Maryland, in accordance with the commercial arbitration rules of the American Arbitration Association. The accounting firm's resolution of the dispute shall be final and binding on the parties, and a judgment may be entered thereon in any court of competent jurisdiction. Any fees of this accounting firm, and, if necessary, for arbitration to select such accountant, shall be divided equally between the parties. 2.4 Payment of Purchase Price. The Purchase Price shall be paid by Buyer to Sellers as follows: (a) Payment of Estimated Purchase Price At Closing. The Purchase Price, adjusted by the estimated adjustments pursuant to Section 2.3(b) as set forth in Sellers' preliminary settlement statement pursuant to Section 2.3(c)(i), is referred to as the "ESTIMATED PURCHASE PRICE." At the Closing, Buyer shall pay or cause to be paid to Sellers the Estimated Purchase Price for the Stations or any Radio Group subject to the Closing, as the case may be, including, if applicable, any Delay Amount, by federal wire transfer of same-day funds pursuant to wire transfer instructions, which instructions shall be delivered to Buyer by Sellers at least two (2) business days prior to such Closing Date. 16 (b) Buyer and Sellers shall cause the Escrow Deposit or such pro rata portion allocable to a Radio Group Closing to be released to Sellers as partial payment of the Estimated Purchase Price by delivering wiring instructions to the Escrow Agent two (2) days prior to the Closing Date; provided, however, that none of the Escrow Deposit shall be released by the parties at any Closing until the Deposit Release Date. Once the Deposit Release Date has occurred, the Sellers agree immediately to deliver to the Escrow Agent their consent to the release of that pro rata portion of the Escrow Deposit attributable to Radio Group Closings consummated prior to the Deposit Release Date. Until the Deposit Release Date, Buyer shall deliver the entire Estimated Purchase Price at the Closing on any Station. (c) Payments to Reflect Adjustments. The Purchase Price as finally determined pursuant to Section 2.3(c) shall be paid as follows: (i) If the Purchase Price as finally determined pursuant to Section 2.3(c) exceeds the Estimated Purchase Price, Buyer shall pay to Sellers, in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(c), the difference between the Purchase Price and the Estimated Purchase Price. (ii) If the Purchase Price as finally determined pursuant to Section 2.3(c) is less than the Estimated Purchase Price, Sellers shall pay to Buyer, in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(c), the difference between the Purchase Price and the Estimated Purchase Price. 2.5 Assumption of Liabilities and Obligations. As of the Closing Date and any Radio Group Closing Date as applicable, Buyer shall assume and undertake to pay, discharge and perform all obligations and liabilities of Sellers under the Licenses, the Assumed Contracts or as otherwise specifically provided for herein to the extent that either (i) the obligations and liabilities relate to the time after the Effective Time of such Closing with respect to the Stations for which Closing has occurred, or (ii) the Purchase Price was reduced pursuant to Section 2.3(b) as a result of the proration of such obligations and liabilities. Buyer shall not assume any other obligations or liabilities of Sellers, including (1) any obligations or liabilities under any Contract not included in the Assumed Contracts, (2) any obligations or liabilities under the Assumed Contracts relating to the period prior to the Effective Time of any Closing to which such Assumed Contracts relate, except insofar as an adjustment therefor is made in favor of Buyer under Section 2.3(b), (3) any claims or pending litigation or proceedings relating to the operation of the Stations prior to such Closing or (4) any obligations or liabilities of Sellers under any employee pension, retirement, or other benefit plans. SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller represents and warrants to Buyer as of the date hereof and as of any Closing Date (except for representations and warranties that speak as of a specific date or time, in which case, such representations and warranties shall be true and complete as of such date or time) as follows: 17 3.1 Organization and Authority of Sellers. Each Seller is a corporation, limited liability company or limited partnership (as applicable), duly organized, validly existing and in good standing under the laws of the State listed on Schedule 3.1 next to each such Seller's name. Each Seller has the requisite corporate power and authority (or other appropriate power and authority based on the structure of such Seller) to own, lease and operate its properties, to carry on its business in the places where such properties are now owned, leased, or operated and such business is now conducted, and to execute, deliver and perform this Agreement and the documents contemplated hereby according to their respective terms. Each Seller is duly qualified and in good standing in each jurisdiction listed on Schedule 3.1 next to each such Seller's name, which are all jurisdictions in which such qualification is required. Except as set forth on Schedule 3.1, no Seller is a participant in any joint venture or partnership with any other Person with respect to any part of the operations of the Stations or any of the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement by each Seller have been duly authorized by all necessary corporate or other required action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 3.3 Absence of Conflicting Agreements; Consents. Subject to obtaining the Consents listed on Schedules 3.3 and 3.7, the execution, delivery and performance by each Seller of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not require the consent of any third party; (b) will not conflict with any provision of the Articles of Incorporation, Bylaws or other organizational documents of Sellers; (c) will not conflict with, result in a breach of, or constitute a default under any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, license, or permit to which any Seller is a party or by which any Seller may be bound legally; and (e) will not create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon any of the Assets. Except for the FCC Consent provided for in Section 6.1, the filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described in Schedules 3.3 and 3.7, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Sellers to transfer and convey the Assets to Buyer. 3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list of the FCC Licenses. Sellers have made available to Buyer true and complete copies of the main Licenses (including any amendments and other modifications thereto). The Licenses have been validly issued, and each Seller is the authorized legal holder of the Licenses and those FCC Licenses listed on Schedule 3.4. The Licenses and the FCC Licenses listed on Schedule 3.4 comprise all of the material licenses, permits, and other authorizations required from any governmental or 18 regulatory authority for the lawful conduct in all material respects of the business and operations of the Stations in the manner and to the full extent they are now conducted, and, except as otherwise disclosed on Schedule 3.4, none of the Licenses is subject to any unusual or special restriction or condition that could reasonably be expected to limit materially the full operation of the Stations as now operated. The FCC Licenses are in full force and effect, are valid for the balance of the current license term applicable generally to radio stations licensed to the same communities as the Stations, are unimpaired by any acts or omissions of any Seller or any of its Affiliates, or the employees, agents, officers, directors, or shareholder of any Seller or any of its Affiliates, and are free and clear of any restrictions which might limit the full operation of the Stations in the manner and to the full extent as they are now operated (other than restrictions under the terms of the licenses themselves or applicable to the radio broadcast industry generally). Except as listed on Schedule 3.4 hereto, there are no applications, proceedings or complaints pending or, to the knowledge of any Seller, threatened which may have an adverse effect on the business or operation of the Stations (other than rulemaking proceedings that apply to the radio broadcasting industry generally). Except as disclosed on Schedule 3.4 hereto, no Seller is aware of any reason why any of the FCC Licenses might not be renewed in the ordinary course for a full term without material qualifications or of any reason why any of the FCC Licenses might be revoked. The Stations are in compliance with the Commission's policy on exposure to radio frequency radiation. No renewal of any FCC License would constitute a major environmental action under the rules of the Commission. To the knowledge of Sellers, there are no facts relating to Sellers which, under the Communications Act of 1934, as amended, or the existing rules of the Commission, would (a) disqualify any Seller from assigning any of its FCC Licenses to Buyer, (b) cause the filing of any objection to the assignment of the FCC Licenses to Buyer, (c) lead to a delay in the processing by the FCC of the applications of the FCC Licenses to Buyer, (d) lead to a delay in the termination of the waiting period required by Hart-Scott-Rodino, or (e) disqualify any Seller from consummating the transactions contemplated herein within the times contemplated herein. An appropriate public inspection file for each Station is maintained at the Station's studio in accordance with Commission rules. Access to the Stations' transmission facilities are restricted in accordance with the policies of the Commission. 3.5 Real Property. Schedule 3.5 contains a complete description of all Real Property Interests (including street address, owner, and Sellers' use thereof) other than the Excluded Real Property Interests. The Real Property Interests listed on Schedule 3.5, together with the Real Property Interests which will be created by the execution of the Lease by Buyer and the appropriate Sellers, comprises all interests in real property necessary to conduct the business and operations of the Stations as now conducted. Except as described on Schedule 3.5, Sellers have good fee simple title to all fee estates included in the Real Property Interests and good title to all other Real Property Interests, in each case free and clear of all liens, mortgages, pledges, covenants, easements, restrictions, encroachments, leases, charges, and other claims and encumbrances, except for Permitted Encumbrances. Each leasehold or subleasehold interest included as a Material Contract on Schedule 3.5 is legal, valid, binding, enforceable and in full force and effect. To Sellers' Knowledge, each leasehold or subleasehold designated in the Real Property Interests, but not designated as Material Contracts on Schedule 3.5 is legal, binding and enforceable and in full force and effect. Neither the Seller party thereto or to Sellers' Knowledge any other party thereto, is in default, violation or breach under any lease or sublease and no event has occurred and is continuing that constitutes (with notice or passage of time or both) a default, violation or breach thereunder. Sellers have not received any notice of a default, offset or 19 counterclaim under any lease or sublease with respect to any of the Real Property Interests. As of the date hereof and as of the applicable Closing Date, Sellers enjoy peaceful and undisturbed possession of the leased Real Property Interests; and so long as Sellers fulfill their obligations under the lease therefor, Sellers have enforceable rights to nondisturbance and quiet enjoyment against its lessor or sublessor, and, to the Knowledge of Sellers, except as set forth in Schedule 3.5, no third party holds any interest in the leased premises with the right to foreclose upon Sellers' leasehold or subleasehold interest. Sellers have legal and practical access to all of the Owned Real Property and Leased Real Property, as applicable. Except as otherwise disclosed in Schedule 3.5, all towers, guy anchors, ground radials, and buildings and other improvements included in the Assets are located entirely on the Owned Real Property or the Leased Real Property, as applicable, listed in Schedule 3.5. All Owned Real Property and Leased Real Property (including the improvements thereon) (a) is in good condition and repair consistent with its current use, (b) is available for immediate use in the conduct of the business and operations of the Stations, and (c) complies in all material respects with all applicable material building or zoning codes and the regulations of any governmental authority having jurisdiction, except to the extent that the current use by Sellers, while permitted, constitutes or would constitute a "nonconforming use" under current zoning or land use regulations. No eminent domain or condemnation proceedings are pending or, to the knowledge of Sellers, threatened with respect to any Real Property Interests. 3.6 Tangible Personal Property. The lists of Tangible Personal Property comprising all material items of tangible personal property, other than the Excluded Tangible Personal Property, necessary to conduct the business and operations of the Stations as now conducted has been provided to Buyer previously. Except as described in Schedule 3.6, Sellers own and have good title to each item of Tangible Personal Property and none of the Tangible Personal Property owned by Sellers is subject to any security interest, mortgage, pledge, conditional sales agreement, or other lien or encumbrance, except for Permitted Encumbrances. With allowance for normal repairs, maintenance, wear and obsolescence, each material item of Tangible Personal Property is in good operation condition and repair and is available for immediate use in the business and operations of the Stations. All material items of transmitting and studio equipment included in the Tangible Personal Property (a) have been maintained in a manner consistent with generally accepted standards of good engineering practice, and (b) will permit the Stations and any unit auxiliaries thereto to operate in accordance with the terms of the FCC Licenses and the rules and regulations of the FCC and in all material respects with all other applicable federal, state and local statutes, ordinances, rules and regulations. 3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts which either (a) have a remaining term (after taking into account any cancellation rights of Sellers) of more than one year after the date hereof or (b) require expenditures in excess of Twenty Five Thousand Dollars ($25,000) in any calendar year after the date hereof, except contracts with advertisers for production or the sale of advertising time on the Stations for cash that may be canceled by Sellers without penalty on not more than ninety days' notice. Sellers have delivered or made available to Buyer true and complete copies of all written Assumed Contracts, and true and complete descriptions of all oral Assumed Contracts (including any amendments and other modifications to such Contracts). Other than the Contracts listed on Schedule 3.7, Schedule 3.5, and the Lease, Sellers require no material contract, lease, or other agreement to enable them to carry on their business in all material respects as now conducted. All of the Contracts are in full 20 force and effect and are valid, binding and enforceable in accordance with their terms except as the enforceability of such Contracts may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. Neither the Seller party thereto or, to the knowledge of Sellers, any other party thereto, is in default, violation or breach in any material respect under any Contract and no event has occurred and is continuing that constitutes (with notice or passage of time or both) a default, violation, or breach in any material respect thereunder. Except as disclosed on Schedule 3.7, other than in the ordinary course of business, Sellers do not have Knowledge of any intention by any party to any Contract (a) to terminate such Contract or amend the terms thereof, (b) to refuse to renew the Contract upon expiration of its term, or (c) to renew the Contract upon expiration only on terms and conditions that are more onerous than those now existing. Except for the need to obtain the Consents listed on Schedule 3.7, the exchange and transfer of the Assets in accordance with this Agreement will not affect the validity, enforceability, or continuation of any of the Contracts. 3.8 Intangibles. Schedule 3.8 is a true and complete list of all Intangibles (exclusive of Licenses listed in Schedule 3.4) that are required to conduct the business and operations of the Stations as now conducted, all of which are valid and in good standing and uncontested. Sellers have provided or made available to Buyer copies of all documents establishing or evidencing the Intangibles listed on Schedule 3.8. Sellers own or have a valid license to use all of the Intangibles listed on Schedule 3.8. Other than with respect to matters generally affecting the radio broadcasting industry and not particular to Sellers and except as set forth on Schedule 3.8, Sellers have not received any notice or demand alleging that Sellers are infringing upon or otherwise acting adversely to any trademarks, trade names, service marks, service names, copyrights, patents, patent applications, know-how, methods, or processes owned by any other Person, and there is no claim or action pending, or to the Knowledge of Sellers threatened, with respect thereto. To the knowledge of Sellers, except as set forth on Schedule 3.8, no other Person is infringing upon Sellers rights or ownership interest in the Intangibles. 3.9 Title to Properties. Except as disclosed in Schedule 3.5 or 3.6, Sellers have good and marketable title to the Assets subject to no mortgages, pledges, liens, security interests, encumbrances, or other charges or rights of others of any kind or nature except for Permitted Encumbrances. 3.10 Financial Statements. Sellers have furnished Buyer with true and complete copies of unaudited financial statements of the Stations containing a balance sheet and statement of income, as at and for the fiscal year ended December 31, 1998, and an unaudited balance sheet and statement of income as at and for the seven (7) months ended July 31, 1999 (the "BALANCE SHEET DATE") (collectively, the "FINANCIAL STATEMENTS"). To the extent the Financial Statements relate to the period of time during which the Stations were owned by the Sellers (or any Affiliate thereof) the Financial Statements have been prepared from the books and records of Sellers and have been prepared in a manner consistent with the audited Financial Statements of Sinclair, except for the absence of footnotes and certain year-end adjustments. The Financial Statements accurately reflect the books, records and accounts of Sellers, present fairly and accurately the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended and none of the Financial Statements understates in any material respect the 21 normal and customary costs and expenses of conducting the business or operations of the Stations in any material respect as currently conducted by Sellers or otherwise materially inaccurately reflects the operations of the Stations; provided, that the foregoing representations are given only to the Sellers' Knowledge to the extent the Financial Statements relate to a period of time during which the Stations were not owned by Sellers (or an Affiliate thereof). 3.11 Taxes. Except as set forth in Schedule 3.11, Sellers have filed or caused to be filed all Tax Returns that are required to be filed with respect to their ownership and operation of the Stations, and have paid or caused to be paid all Taxes shown on those returns or on any Tax assessment received by them to the extent that such Taxes have become due, or have set aside on their books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. There are no legal, administrative, or other Tax proceedings presently pending, and there are no grounds existing pursuant to which Sellers are or could be made liable for any Taxes, the liability for which could extend to Buyer as transferee of the business of the Stations. 3.12 Insurance. Schedule 3.12 is a true and complete list of all insurance policies of or covering Sellers. All policies of insurance listed in Schedule 3.12 are in full force and effect as of the date hereof. During the past three years, no insurance policy of Sellers or the Stations has been canceled by the insurer and, except as set forth on Schedule 3.12, no application of Sellers for insurance has been rejected by any insurer. 3.13 Reports. All material returns, reports and statements that the Stations is currently required to file with the FCC or Federal Aviation Administration have been filed, and all reporting requirements of the FCC and Federal Aviation Administration have been complied with in all material respects. All of such returns, reports and statements, as filed, satisfy all applicable legal requirements. 3.14 Personnel and Employee Benefits. (a) Employees and Compensation. Schedule 3.14 contains a true and complete list of all employees of Sellers employed at the Stations as of June 30, 1999 who earned in excess of $20,000 in 1998 or whose present rate of pay would cause them to earn more than that amount in 1999, and indicates the salary and bonus, if any, to which each such Employee is currently entitled (limited in the case of Employees who are compensated on a commission basis to a general description of the manner in which such commissions are determined). As of the date of this Agreement, Sellers have no knowledge that any General Manager, Sales Manager, or Program Director employed at the Stations currently plans to terminate employment, whether by reason of the transactions contemplated by this Agreement or otherwise. Schedule 3.14 also contains a true and complete list of all employee benefit plans or arrangements covering the employees employed at the Stations (the "EMPLOYEES"), including, with respect to the Employees any: (i) "Employee welfare benefit plan," as defined in Section 3(1) of ERISA, that is maintained or administered by Sellers or to which Sellers contribute or are required to contribute (a "WELFARE PLAN"); 22 (ii) "Multiemployer pension plan," as defined in Section 3(37) of ERISA, that is maintained or administered by Sellers or to which Sellers contribute or are required to contribute (a "MULTIEMPLOYER PLAN" and, together with the Welfare Plans, the "BENEFIT PLANS"); (iii) "Employee pension benefit plan," as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), to which Sellers contribute or are required to contribute (a "PENSION PLAN"); (iv) Employee plan that is maintained in connection with any trust described in Section 501(c)(9) of the Internal Revenue Code of 1986, as amended; and (v) Employment, severance, or other similar contract, arrangement, or policy and each plan or arrangement (written or oral) providing for insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, or retirement benefits or arrangement for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights, stock purchases, or other forms of incentive compensation or post-retirement insurance, compensation, or benefits that (A) is not a Welfare Plan, Pension Plan, or Multiemployer Plan, and (B) is entered into, maintained, contributed to, or required to be contributed to by any Seller or under which any Seller has any liability relating to Employees, (collectively, "BENEFIT ARRANGEMENTS"). (b) Pension Plans. Sellers do not sponsor, maintain, or contribute to any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing Plan. Each Pension Plan complies currently and has been maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all material statutes, orders, rules and regulations that are applicable to such plans, including ERISA and the Code, except where the failure to do so will not have a Material Adverse Effect. (c) Welfare Plans. Each Welfare Plan complies currently and has been maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all material statutes, orders, rules and regulations that are applicable to such plans, including ERISA and the Code, except where the failure to do so will not have a Material Adverse Effect. Sellers do not sponsor, maintain, or contribute to any Welfare Plan that provides health or death benefits to former employees of the Stations other than as required by Section 4980B of the Code or other applicable laws. (d) Benefit Arrangements. Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the material requirements prescribed by all statutes, orders, rules and regulations that are applicable to such Benefit Arrangement, except where the failure to do so will not have a Material Adverse Effect. Except for those employment agreements listed on Schedule 3.7, Sellers have no written contract prohibiting the termination of any Employee. (e) Multiemployer Plans. Except as disclosed in Schedule 3.14, Sellers have not at any time been a participant in any Multiemployer Plan. 23 (f) Delivery of Copies of Relevant Documents and Other Information. Sellers have delivered or made available to Buyer true and complete copies of each of the following documents: (i) Each Welfare Plan and Pension Plan (and, if applicable, related trust agreements) and all amendments thereto, and written descriptions thereof that have been distributed to Employees, all annuity contracts or other funding instruments; and (ii) Each Benefit Arrangement and written descriptions thereof that have been distributed to Employees and complete descriptions of any Benefit Arrangement that is not in writing. (g) Labor Relations. Except as set forth in Schedule 3.14(g), no Seller is a party to or subject to any collective bargaining agreement or written or oral employment agreement with any Employee. With respect to the Employees Sellers have complied in all material respects with all laws, rules and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and have not received any notice alleging that any Seller has failed to comply materially with any such laws, rules, or regulations. Except as set forth on Schedule 3.14(g), no proceedings are pending or, to the Knowledge of Sellers, threatened, between any Seller and any Employee (singly or collectively) that relate to the Stations. Except as set forth on Schedule 3.14(g), no labor union or other collective bargaining unit represents or claims to represent any of the Employees. Except as set forth in Schedule 3.14, to the Knowledge of Sellers, there is no union campaign being conducted to solicit cards from any Employees to authorize a union to represent any of the employees of any Seller or to request a National Labor Relations Board certification election with respect to any Employees. 3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15 and except for any FCC rulemaking proceedings generally affecting the radio broadcasting industry and not particular to any of Sellers, there is no claim, legal action, counterclaim, suit, arbitration, or other legal, administrative, or tax proceeding, nor any order, decree, or judgment, in progress or pending, or to the Knowledge of Sellers threatened, against or relating to the Assets, or the business or operations of any of the Stations, nor does any Seller know of any basis for the same. 3.16 ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed on Schedule 3.16, (x) none of the Owned Real Property and none of the Tangible Personal Property and, to Sellers' Knowledge (provided such knowledge qualifer shall not apply to the extent caused by the Tangible Personal Property), none of the Leased Real Property contains (i) any asbestos, polychlorinated biphenyls or any PCB contaminated oil; (ii) any Contaminants; or (iii) any underground storage tanks; (y) no underground storage tank disclosed on Schedule 3.16 has leaked and has not been remediated or leaks and such tank is in substantial compliance with all applicable Environmental Laws; and (z) all of the Owned Real Property and, to Sellers' Knowledge, all of the Leased Real Property is in substantial compliance with all applicable Environmental Laws. 24 (b) Sellers have obtained all material permits, licenses and other authorizations that are required under all Environmental Laws. 3.17 Compliance with Laws. Sellers have complied in all material respects with the Licenses and all material federal, state and local laws, rules, regulations and ordinances applicable or relating to the ownership and operation of the Assets and Stations, and Sellers have not received any notice of any material violation of federal, state and local laws, regulations and ordinances applicable or relating to the ownership or operation of the Assets and the Stations nor, to Sellers' Knowledge, have Sellers received any notice of any immaterial violation of federal, state and local laws, regulations, and ordinances applicable or relating to the ownership or operation of the Assets or the Stations. 3.18 Conduct of Business in Ordinary Course. Since the Balance Sheet Date and through the date hereof, Sellers have conducted their business and operations in the ordinary course and, except as disclosed in Schedule 3.18, have not: (a) made any material increase in compensation payable or to become payable to any of its employees other than those in the normal and usual course of business or in connection with any change in an employee's responsibilities, or any bonus payment made or promised to any of its Employees, or any material change in personnel policies, employee benefits, or other compensation arrangements affecting its employees; (b) made any sale, assignment, lease, or other transfer of assets other than in the normal and usual course of business with suitable replacements being obtained therefor; (c) canceled any debts owed to or claims held by Sellers, except in the normal and usual course of business; (d) made any changes in Sellers' accounting practices; (e) suffered any material write-down of the value of any Assets or any material write-off as uncorrectable of any Accounts Receivable; or (f) transferred or granted any right under, or entered into any settlement regarding the breach or infringement of, any license, patent, copyright, trademark, trade name, franchise, or similar right, or modified any existing right. 3.19 Transactions with Affiliates. Except as disclosed in Schedule 3.19 or with respect to the Excluded Real Property Interests and the Excluded Tangible Personal Property, no Seller has been involved in any business arrangement or relationship with any Affiliate of Seller, and no Affiliate of any Seller owns any property or right, tangible or intangible, that is material to the operations of the business of the Stations. 3.20 Broker. Except as disclosed on Schedule 3.20, no Seller nor any Person acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement, and Buyer shall have no liability for any 25 finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement for any broker listed on Schedule 3.20. 3.21 Insolvency Proceedings. None of the Sellers nor any of the Assets are the subject of any pending or threatened insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary. No Seller has made an assignment for the benefit of creditors or taken any action in contemplation of or which would constitute a valid basis for the institution of any such insolvency proceedings. No Seller is insolvent nor will it become insolvent as a result of entering into or performing this Agreement. 3.22 Year 2000 Compatibility. Sellers believe that the Stations' hardware, software, broadcast and ancillary equipment (the "Operational Equipment") that are date dependent and are material to the operation of the Stations are year 2000 compliant. To Sellers' Knowledge, there are no facts or circumstances that would result in material costs or disruption to the operation of the Stations due to the failure of Sellers' customers or suppliers to be year 2000 compliant. For the purposes of this section, "Year 2000 Compliant" shall mean that the Operational Equipment will correctly process, provide and receive date data before, during and after December 31, 1999. SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers as of the date hereof and as of any Closing Date (except for representations and warranties that speak as of a specific date or time, in which case, such representations and warranties shall be true and complete as of such date and time) as follows: 4.1 Organization, Standing and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has the requisite corporate power and authority to execute, deliver and perform this Agreement and the documents contemplated hereby according to their respective terms and to own the Assets. Prior to the Closing Date, Buyer will be qualified to do business in each of the States in which any of the Stations are located. 4.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement by Buyer have been duly authorized by all necessary action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 4.3 Absence of Conflicting Agreements and Required Consents. Subject to the receipt of the Consents, the execution, delivery and performance by Buyer of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not require the consent of any third party; (b) will not conflict with the Articles of Incorporation or Bylaws of Buyer; (c) will not conflict with, result in a breach of, or constitute a default under, any applicable law, judgment, order, ordinance, injunction, decree, rule, 26 regulation, or ruling of any court or governmental instrumentality; and (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, instrument, license or permit to which Buyer is a party or by which Buyer may be bound. Except for the FCC Consent provided for in Section 6.1. the filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described in Schedule 4.3, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Buyer to acquire the Assets from Sellers or to assume certain liabilities and obligations of Sellers in accordance with Section 2.5. 4.4 Brokers. Neither Buyer nor any person or entity acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement. 4.5 Availability of Funds. Buyer will have available on the Closing Date sufficient funds to enable it to consummate the transactions contemplated hereby. 4.6 Qualifications of Buyer. Except as disclosed in Schedule 4.6, Buyer is, and pending Closing will remain legally, financially and otherwise qualified under the Communications Act, Hart-Scott-Rodino and all rules, regulations and policies of the FCC, the Department of Justice, the Federal Trade Commission (the "FTC") and any other governmental agency, to acquire and operate the Stations. Except as disclosed in Schedule 4.6, there are no facts or proceedings which would reasonably be expected to disqualify Buyer under the Communications Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations or would cause the FCC not to approve the assignment of the FCC Licenses to Buyer or the Department of Justice and the FTC not to allow the waiting period under Hart-Scott-Rodino to terminate within 30 days of the filing provided for in Section 6.2. Except as disclosed in Schedule 4.6, Buyer has no knowledge of any fact or circumstance relating to Buyer or any of Buyer's Affiliates that would reasonably be expected to (a) cause the filing of any objection to the assignment of the FCC Licenses to Buyer, (b) lead to a delay in the processing by the FCC of the applications for such assignment or (c) lead to a delay in the termination of the waiting period required by Hart-Scott-Rodino. Except as disclosed in Schedule 4.6, no waiver of any FCC rule or policy is necessary to be obtained for the grant of the applications for the assignment of the FCC Licenses to Buyer, nor will processing pursuant to any exception or rule of general applicability be requested or required in connection with the consummation of the transactions herein. 4.7 WARN Act. Buyer 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 Notification Act of 1988, as amended, or any similar state law. 4.8 Buyer's Defined Contribution Plan. Schedule 4.8 completely and accurately lists all Buyer's defined contribution plan or plans (the "Buyer's Plan") intended to be qualified under Section 401(a) and 401(k) of the Code in which the Transferred Employees will be eligible to 27 participate. Buyer has a currently applicable determination letter from the Internal Revenue Service. SECTION 5: OPERATION OF THE STATIONS PRIOR TO CLOSING Sellers covenants and agrees that between the date hereof and the Final Closing Date, Sellers will operate the Stations in the ordinary course in accordance with Sellers' past practices (except where such conduct would conflict with the following covenants or with other obligations of Sellers under this Agreement), and, except as contemplated by this Agreement or with the prior written consent of Buyer (such consent not to be unreasonably withheld), Sellers will act in accordance with the following insofar as such actions relate to the Stations: 5.1 Contracts. Seller will not renew, extend, amend or terminate, or waive any material right under, any Material Contract, or enter into any contract or commitment or incur any obligation (including obligations relating to the borrowing of money or the guaranteeing of indebtedness and obligations arising from the amendment of any existing Contract, regardless of whether such Contract is a Material Contract) that will be assumed by or be otherwise binding on Buyer after Closing, except for (a) cash time sales agreements and production agreements made in the ordinary course of business consistent with Seller's past practices, (b) the renewal or extension of any existing Contract (other than network affiliation agreements) on its existing terms in the ordinary course of business, and (c) other contracts (other than network affiliation agreements, or time brokerage or local marketing arrangements) entered into in the ordinary course of business consistent with Sellers' past practices that do not, with respect to any Radio Group, involve consideration, in the aggregate, in excess of Fifty Thousand Dollars ($50,000) measured at Closing. Prior to the Closing Date, Sellers shall deliver to Buyer a list of all material Contracts entered into between the date of this Agreement and the Closing Date and shall make available to Buyer copies of such Contracts. 5.2 Compensation. Sellers shall not materially increase the compensation, bonuses, or other benefits payable or to be payable to any person employed in connection with the conduct of the business or operations of the Stations, except in accordance with past practices, as required by an employment agreement or consulting agreement or in connection and commensurate with the change in responsibility of any employee. 5.3 Encumbrances. Sellers will not create, assume, or permit to exist any mortgage, pledge, lien, or other charge or encumbrance affecting any of the Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens that will be removed prior to the Closing Date, and (c) Permitted Encumbrances. 5.4 Dispositions. Sellers will not sell, assign, lease, or otherwise transfer or dispose of any of the Assets except (a) Assets that are no longer used in the operations of the Stations, (b) Assets that are replaced with Assets of equivalent kind and value that are acquired after the date of this Agreement, and (c) any intercompany accounts receivable. 5.5 Access to Information. Upon prior reasonable notice by Buyer, Sellers will give to Buyer and its investors, lenders, counsel, accountants, engineers and other authorized representatives 28 reasonable access to the Stations and all books, records and documents of Sellers which are material to the business and operation of the Stations, and will furnish or cause to be furnished to Buyer and its authorized representatives all information relating to Sellers and the Stations that they reasonably request (including any financial reports and operations reports produced with respect to the Stations). 5.6 Insurance. Sellers or their Affiliates shall maintain in full force and effect policies of insurance of the same type, character and coverage as the policies currently carried with respect to the business, operations and assets of the Stations. 5.7 Licenses. Sellers shall not cause or permit, by any act or failure to act, any of the Licenses listed on Schedule 3.4 to expire or to be revoked, suspended or modified, or take any action that could reasonably be expected to cause the FCC or any other governmental authority to institute proceedings for the suspension, revocation or material adverse modification of any of the Licenses. Sellers shall prosecute with due diligence any applications to any governmental authority necessary for the operation of the Stations. 5.8 Obligations. Sellers shall pay all its obligations insofar as they relate to the Stations as they become due, consistent with past practices. 5.9 No Inconsistent Action. Sellers shall not take any action that is inconsistent with its obligations under this Agreement in any material respect or that could reasonably be expected to hinder or delay the consummation of the transactions contemplated by this Agreement. Neither Seller nor any of its respective representatives or agents shall, directly or indirectly, solicit, initiate, or participate in any way in discussions or negotiations with, or provide any confidential information to, any Person (other than Buyer or any Affiliate or associate of Buyer and their respective representatives and agents) concerning any possible disposition of the Stations, the sale of any material assets of the Stations, or any similar transaction. 5.10 Maintenance of Assets. Sellers shall maintain all of the Assets in good condition (ordinary wear, tear and casualty excepted), consistent with their overall condition on the date of this Agreement, and use, operate and maintain all of the Assets in a reasonable manner. Sellers shall maintain inventories of spare parts and expendable supplies at levels consistent with past practices. If any insured or indemnified loss, damage, impairment, confiscation, or condemnation of or to any of the Assets occurs, Sellers shall repair, replace, or restore the Assets to their prior condition as represented in this Agreement as soon thereafter as possible, and Sellers shall use the proceeds of any claim under any property damage insurance policy or other recovery solely to repair, replace, or restore any of the Assets that are lost, damaged, impaired, or destroyed. 5.11 Consents. (a) Subject to Section 6.5 hereof, Sellers shall use their reasonable efforts to obtain all Consents described in Section 3.3, without any adverse change in the terms or conditions of any Assumed Contract or License. Sellers shall promptly advise Buyer of any difficulties 29 experienced in obtaining any of the Consents and of any conditions proposed, considered or requested for any of the Consents. (b) Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer any Contract or any claim, right or benefit arising thereunder or resulting therefrom, if an attempted assignment or transfer thereof, without the consent of a third party thereto would constitute a breach thereof or in any way adversely affect the rights of the Buyer thereunder. If such consent (a "Deferred Consent") is not obtained, or if an attempted assignment or transfer thereof would be ineffective or would affect the rights thereunder so that the Buyer would not receive all such rights, then (i) the Seller and the Buyer will cooperate, in all reasonable respects, to obtain such Deferred Consents as soon as practicable; provided that Sellers shall have no obligation (y) to expend funds to obtain any Deferred Consent, other than ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining any Deferred Consent, or (z) to agree to any adverse change in any License or Assumed Contract in order to obtain a Deferred Consent, and (ii) until such Deferred Consent is obtained, the Seller and the Buyer will cooperate in all reasonable respects, to provide to the Buyer the benefits under the Contract, to which such Deferred Consent relates (with the Buyer responsible for all the liabilities and obligations thereunder). In particular, in the event that any such Deferred Consent is not obtained prior to Closing, then the Buyer and the Seller shall enter into such arrangements (including subleasing or subcontracting if permitted) to provide to the parties the economic and operational equivalent of obtaining such Deferred Consent and assigning or transferring such Contract, including enforcement for the benefit of the Buyer of all claims or rights arising thereunder, and the performance by the Buyer of the obligations thereunder on a prompt and punctual basis. 5.12 Books and Records. Sellers shall maintain their books and records in accordance with past practices. 5.13 Notification. Sellers shall promptly notify Buyer in writing of any or material developments with respect to the business or operations of the Stations and of any material change in any of the information contained in the representations and warranties contained in Section 3 of this Agreement. 5.14 Financial Information. Sellers shall furnish Buyer with sales pacing reports for the Stations on a weekly basis and shall furnish to Buyer within thirty (30) days after the end of each month ending between the date of this Agreement and the Closing Date a statement of income and expense for the month just ended and such other financial information (including information on payables and receivables) as Buyer may reasonably request. All financial information delivered by Sellers to Buyer pursuant to this Section 5.14 shall be prepared from the books and records of Sellers in accordance with generally accepted accounting principles, consistently applied, shall accurately reflect the books, records and accounts of the Stations, shall be complete and correct in all material respects, and shall present fairly the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended. 5.15 Compliance with Laws. Sellers shall comply in all material respects with all material laws, rules and regulations. 30 5.16 Programming. Sellers shall not make any material changes in the Stations' formats, except such changes as in the good faith judgment of Seller are required by the public interest. 5.17 Preservation of Business. Sellers shall use commercially reasonable efforts consistent with past practices to preserve the business and organization of the Stations and to keep available to the Stations its present employees and to preserve the audience of the Stations and the Stations' present relationships with suppliers, advertisers, and others having business relations with it. 5.18 Normal Operations. Subject to the terms and conditions of this Agreement (including, without limitation, Section 5.1), prior to either the Final Closing or a Radio Closing Date, as applicable, Sellers shall carry on the business and activities of the Stations, including, without limitation, promotional activities, the sale of advertising time, entering into other contracts and agreements, purchasing and scheduling programming, performing research, and operating in all material respects in accordance with existing budgets and past practice and will not enter into trade and barter obligations except in the ordinary course of business consistent with past practice. 5.19 Buffalo Build-Out Property. Sellers shall keep Buyer fully informed of the status of the construction and build-out of the Buffalo Build-Out Property and shall make available to Buyer for its review and approval, which approval shall not be unreasonably withheld, notice of any material changes to the capital expenditure budget provided to Buyer prior to the date hereof. SECTION 6: SPECIAL COVENANTS AND AGREEMENTS 6.1 FCC Consent (a) The exchange and transfer of the Assets as contemplated by this Agreement is subject to the prior consent and approval of the FCC. (b) Sellers and Buyer shall prepare and within seven (7) business days after the date of this Agreement shall file with the FCC an appropriate application for FCC Consent. The parties shall thereafter prosecute the application with all reasonable diligence and otherwise use their respective best efforts to obtain a grant of the application as expeditiously as practicable. Each party agrees to comply with any condition imposed on it by the FCC Consent, except that no party shall be required to comply with a condition if (i) the condition was imposed on it as the result of a circumstance the existence of which does not constitute a breach by that party of any of its representations, warranties or covenants hereunder, and (ii) compliance with the condition would have a material adverse effect upon it. Buyer and Sellers shall oppose any petitions to deny or other objections filed with respect to the application for the FCC Consent and any requests for reconsideration or judicial review of the FCC Consent. (c) If any Closing shall not have occurred for any reason within the original effective period of the FCC Consent or Radio Group FCC Consent, and neither party shall have terminated this Agreement under Section 9, the parties shall jointly request an extension of the effective period of the FCC Consent or Radio Group FCC Consent, as the case may be. No 31 extension of the effective period of the FCC Consent or Radio Group FCC Consent shall limit the exercise by either party of its right to terminate the Agreement under Section 9. 6.2 Hart-Scott-Rodino. Within ten (10) days following the execution of this Agreement, Sellers and Buyer shall complete any filing that may be required pursuant to Hart-Scott-Rodino (each an "HRS Filing"). Sellers and Buyer shall diligently take, or fully cooperate in the taking of, all necessary and proper steps, and provide any additional information reasonably requested in order to comply with, the requirements of Hart-Scott-Rodino. 6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Assets of Sellers for any cause whatsoever shall be borne by Sellers at all times prior to the Final Closing or Radio Group Closing, as the case may be. In the event of loss or damage prior to the Final Closing Date or a Radio Group Closing Date, Sellers shall use commercially reasonable efforts to fix, restore, or replace such loss, damage, impairment, confiscation, or condemnation to its former operational condition. If Sellers have adequate replacement cost insurance, Buyer may elect to have Sellers assign such insurance proceeds to Buyer, in which case, Buyer shall proceed with the Final Closing or Radio Group Closing, as the case may be, and receive at such Closing the insurance proceeds or an assignment of the right to receive such insurance proceeds, as applicable, to which Sellers otherwise would be entitled, whereupon Sellers shall have no further liability to Buyer for such loss or damage. 6.4 Confidentiality. Except as necessary for the consummation of the transaction contemplated by this Agreement, including Buyer's obtaining of financing related hereto, and except as and to the extent required by law, each party will keep confidential any information obtained from the other party in connection with the transactions specifically contemplated by this Agreement. If this Agreement is terminated, each party will return to the other party all information obtained by the such party from the other party in connection with the transactions contemplated by this Agreement. Buyer shall continue to be bound by the terms and conditions of the Confidentiality Agreement dated June 30, 1999 between the parties hereto (the "CONFIDENTIALITY AGREEMENT"). 6.5 Cooperation. Buyer and Sellers shall reasonably cooperate with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement, and in connection with any litigation after any Closing Date which relate to the Stations for periods prior to the applicable Effective Time, Buyer and Sellers shall execute such other documents as may be reasonably necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their commercially reasonable efforts to consummate the transaction contemplated hereby and to fulfill their obligations under this Agreement. Notwithstanding the foregoing, Sellers shall have no obligation (a) to expend funds to obtain any of the Consents, other than ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining such consents, or (b) to agree to any adverse change in any License or Assumed Contract in order to obtain a Consent required with respect thereto. 6.6 Control of the Stations. Prior to any Closing, Buyer shall not, directly or indirectly, control, supervise or direct, or attempt to control, supervise or direct, the operations of the 32 Stations; those operations, including complete control and supervision of all of each Stations' programs, employees and policies, shall be the sole responsibility of Seller. 6.7 Accounts Receivable. (a) As soon as practicable after the Closing Date or any Radio Group Closing Date, as the case may be, Sellers shall deliver to Buyer a complete and detailed list of all the Accounts Receivable. During the period beginning on the Closing Date or Radio Group Closing Date, as applicable, and ending on the last day of the sixth full calendar month beginning after the Closing Date or Radio Group Closing Date, as applicable (the "COLLECTION PERIOD"), Buyer shall use commercially reasonable efforts, as Sellers' agent, to collect the Accounts Receivable in the usual and ordinary course of business, using the Stations' credit, sales and other appropriate personnel in accordance with customary practices, which may include referral to a collection agency. Notwithstanding the foregoing, Buyer shall not be required to institute legal proceedings on Sellers' behalf to enforce the collection of any Accounts Receivable. Buyer shall not adjust any Accounts Receivable or grant credit without Sellers' written consent, and Buyer shall not pledge, secure or otherwise encumber such Accounts Receivable or the proceeds therefrom. On or before the twelfth business day after the end of each calendar month during the Collection Period, Buyer shall remit to Sellers collections received by Buyer with respect to the Accounts Receivable, together with a report of all amounts collected with respect to the Accounts Receivable during, as the case may be, the period from any Closing or the beginning of such month through the end of such month, less any sales commissions or collection costs paid by Buyer during the respective periods with respect to those Accounts Receivable. (b) Any payments received by Buyer during the Collection Period from any Person that is an account debtor with respect to any account disclosed in the list of Accounts Receivable delivered by Sellers to Buyer shall be applied first to the invoice designated by the account debtor and, if none, such payment shall be applied to the oldest account which is not disputed. Buyer shall incur no liability to Sellers for any uncollected account, other than as a result of Buyer's breach of its obligations under this Section 6.7. Prior to the end of the third full calendar month after any Closing, neither Sellers nor any agent of Sellers shall make any direct solicitation of the account debtors for payment. After the end of the third full calendar month after any Closing, Sellers shall have the right, at their expense, to assist and participate with Buyer in the collection of unpaid Accounts Receivable, provided, however, Seller's collection efforts shall be commercially reasonable and consistent with its past practices. (c) At the end of the Collection Period, Buyer shall return to Sellers all files concerning the collection or attempts to collect the Accounts Receivable, and Buyer's responsibility for the collection of the Accounts Receivable shall cease. 6.8 Allocation of Purchase Price. Buyer and Sellers agree to allocate the Purchase Price among the Stations for all purposes (including financial accounting and Tax purposes) as set forth on Schedule 6.8 hereto. Buyer and Sellers agree that the fair market value of the Assets of the Stations (the "Fair Market Value of the Assets") will be appraised by the appraisal firm of BIA, whose expenses will be borne one-half (1/2) by Buyer and one-half (1/2) by Sellers. Buyer and Sellers shall collaborate in good faith in the preparation of mutually satisfactory Form(s) 33 8594 reflecting the Fair Market Value of the Assets as found by BIA and such other information as is required by the form. Buyer and Sellers shall each file with their respective federal income tax return for the tax year in which any Closing occurs, IRS Form(s) 8594 containing the information agreed upon by the parties pursuant to the immediately preceding sentence. Buyer agrees to report the purchase of the Assets of the Stations, and Sellers agree to report the sale of such assets for income tax purposes on their respective income tax returns in a manner consistent with the information agreed upon by the parties pursuant to this section and contained in the IRS Form(s) 8594. 6.9 Access to Books and Records. To the extent reasonably requested by Buyer, Sellers shall provide Buyer access and the right to copy from and after any Closing Date any books and records relating to the Assets but not included in the Assets. To the extent reasonably requested by Sellers, Buyer shall provide Sellers access and the right to copy from and after the applicable Closing Date any books and records relating to the Assets that are included in the Assets. Buyer and Sellers shall each retain any such books and records, for a period of three years (or such longer period as may be required by law or good business practice) following the Final Closing Date. Subject to and in accordance with the terms of this Section 6.9, Sellers shall cause its accountants regularly servicing Sellers to conduct audits and reviews of Sellers' financial information as Buyer may reasonably determine is necessary to satisfy Buyer's due diligence, including, without limitation, (a) causing Sellers' auditors to permit Buyer's auditors to have access to Sellers' auditor's work papers, and (b) causing Sellers' auditors to consent to such access by Buyer. Under no circumstance shall the preparation of any financial statements pursuant to such audits and reviews (i) require any Seller to change or modify any accounting policy, (ii) cause any unreasonable disruption in the business or operations of any Station, or (iii) cause any delay that is more than de minimis in any internal reporting requirements of any Seller. All costs and expenses incurred in connection with the preparation of (and assimilation of relevant information for) the audits and reviews of financial information shall be paid by Sellers; provided, Buyer shall promptly pay upon presentation of any invoice, as a non-refundable prepayment of the Purchase Price, for all charges incurred in connection with such audit to the extent relating to work performed on or after July 26, 1999 (such charges, the "Section 6.9 Amount") (it being understood that the hourly charges of Sellers' accountants for the period of time for which Buyer is responsible may be greater than the hourly charges incurred by Sellers). In addition, Buyer shall be responsible for any costs and expenses (a) associated with the inclusion of such audited financial statements in Buyer's publicly filed documents, including, without limitation, any fees for consents to such inclusion and a "comfort letter," and (b) incurred in connection with any review of financial statements for the periods ended June 30, 1998 or June 30, 1999, or for any other periods other than the financial statements for calendar year 1998. 6.10 Employee Matters. (a) Upon consummation of the Closing or a Radio Group Closing hereunder, Buyer shall offer employment to each of the Employees of the Stations included in such Radio Group (including those on leave of absence, whether short-term, long-term, family, maternity, disability, paid, unpaid or other, and those hired after the date hereof in the ordinary course of business) at a comparable salary, position and place of employment as held by each such 34 employee immediately prior to the Closing Date (such employees who are given such offers of employment are referred to herein as the "TRANSFERRED EMPLOYEES") (b) Except as provided otherwise in this Section 6.10, Sellers shall pay, discharge and be responsible for (a) all salary and wages arising out of or relating to the employment of the Employees prior to the Closing Date or a Radio Group Closing Date, as the case may be, and (b) any employee benefits arising under the Benefit Plans or Benefit Arrangements of Sellers and their Affiliates during the period prior to such Closing Date. From and after each Closing Date, Buyer shall pay, discharge and be responsible for all salary, wages and benefits arising out of or relating to the employment of the Transferred Employees by Buyer on and after the Closing Date or Radio Group Closing Date, as applicable. Buyer shall be responsible for all severance liabilities, and all COBRA liabilities for any Transferred Employees of the Stations terminated on or after any Closing Date, including, without limitation, any related to any deemed termination by Sellers of the Transferred Employees as a result of the consummation of the transaction contemplated hereby and any required pursuant to those retention/severance agreements listed on Schedule 6.10 hereto, but excluding any severance due as a result of those agreements listed on Schedule 6.10-A. (c) Buyer shall cause all Transferred Employees as of any Closing Date to be eligible to participate in its "employee welfare benefit plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA, respectively) of Buyer in which similarly situated employees of Buyer are generally eligible to participate; provided, however, that all Transferred Employees and their spouses and dependents shall be eligible for coverage immediately after such Closing Date (and shall not be excluded from coverage on account of any pre-existing condition) to the extent provided under such plans with respect to Transferred Employees. (d) For purposes of any length of service requirements, waiting period, vesting periods or differential benefits based on length of service in any such plan for which a Transferred Employee may be eligible after any Closing, Buyer shall ensure that, to the extent permitted by law, and except as limited by Buyer's Employment Termination/Severance policy service by such Transferred Employee with Sellers, any Affiliate of Sellers or any prior owner of the Stations shall be deemed to have been service with the Buyer. In addition, Buyer shall ensure that each Transferred Employee receives credit under any welfare benefit plan of Buyer for any deductibles or co-payments paid by such Transferred Employee and his or her dependents for the current plan year under a plan maintained by Sellers or any Affiliate of Sellers to the extent allowable under any such plan. Buyer shall grant credit to each Transferred Employee for all sick leave in accordance with the policies of Buyer applicable generally to its employees after giving effect to service for Sellers, any Affiliate of Sellers or any prior owner of the Stations, as service for Buyer. To the extent taken into account in determining prorations pursuant to Section 2.3 hereof, Buyer shall assume and discharge Sellers' liabilities for the payment of all unused vacation leave accrued by Transferred Employees as of the Closing Date or a Radio Group Closing Date, as the case may be. To the extent any claim with respect to such accrued vacation leave is lodged against Sellers with respect to any Transferred Employee for which Buyer has received a proration credit, Buyer shall, to the extent of such credit, indemnify, defend and hold harmless Sellers from and against any and all losses, directly or indirectly, as a result of, or based upon or arising from the same. 35 (e) As soon as practicable following any Closing Date, Buyer shall make available to the Transferred Employees Buyer's 401(k) Plan. To the extent requested by a Transferred Employee, Sellers shall cause to be transferred to Buyer's 401(k) Plan, in cash and in kind, all of the individual account balances of Transferred Employees under the Sellers' Plan, including any outstanding plan participant loan receivables allocated to such accounts. (f) Buyer acknowledges and agrees that Buyer's obligations pursuant to this Section 6.10 are in addition to, and not in limitation of, Buyer's obligation to assume the employment contracts included in the Assumed Contracts. Nothing in this Agreement shall be construed to provide employees of Sellers with any rights under this Agreement, and no Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall only be enforceable by, the parties hereto and their respective successors and assigns as permitted hereunder. (g) Certain Payments. Subject to the terms of this Section 6.10(g) and Section 6.10(h), in the event Buyer terminates any of the Transferred Employees during the six (6) calendar month period after the Closing Date or a Radio Group Closing Date, as the case may be (a "Reimbursement Period"), which relates to the Station at which such employee is employed, as applicable, Sellers shall promptly reimburse Buyer for the amount paid by Buyer to such Terminated Employee pursuant to the terms of the Retention Agreements listed on Schedules 6.10 (as in effect on the date hereof) (the "Scheduled Retention Agreements") as follows: (y) the full amount of such payments in an amount not to exceed $1,000,000 (the "Initial Employee Cap"); and (z) 50% of such payments above the Initial Employee Cap in an amount not to exceed $500,000. The payments made pursuant to this Section 6.10(g) shall not be counted against the Threshold Amount. In no event shall Sellers be obligated to reimburse Buyer (i) for any payments made by Buyer pursuant to the Scheduled Retention Agreements to Transferred Employees terminated after the expiration of a Reimbursement Period, or (ii) for any amount in excess of $1,500,000. (h) Notwithstanding any provisions of Section 6.10(g) of the Asset Purchase Agreement to the contrary, Sellers shall have no obligation to reimburse Buyer for any severance amount (whether or not pursuant to the Scheduled Retention Agreements), which obligations shall be the sole obligation of Buyer regardless of when such termination occurs paid to (i) any Transferred Employee who is terminated (a) at the request of a third party who subsequently enters into a memorandum of understanding, letter of intent, or agreement to acquire any of the Stations, or (b) as a result of Buyer entering into a memorandum of understanding, letter of intent, or an agreement to sell, assign, swap, or otherwise dispose of or convey any Station to a third party, and/or (ii) the employees listed on Schedule 6.10(h), including, but not limited to, any employees of the Kansas City Stations listed thereon. (i) For twelve (12) calendar months after the Closing Date or any Radio Group Closing Date, as applicable, (a) none of Sellers or any of their Affiliates shall hire any of the Transferred Employees of any Radio Group for which such Closing has occurred; provided that the provisions of this Section 6.10(i)(a) shall not apply to any Transferred Employee terminated 36 by Buyer; and provided further that this Section 6.10(i)(a) does not apply to any employees (other than the Transferred Employees) hired by the Seller Entities (as defined below) after the Closing Date or any Radio Group Closing Date, as applicable, and (b) other than the Transferred Employees, Buyer shall not hire any employees of Sellers or any Affiliate or parent of Sellers (the "Seller Entities") who are employees, as of the Closing Date or any Radio Group Closing Date, of any of the television broadcast stations owned, operated, or programmed by any of the Seller Entities in any market in which the Stations broadcast ("Sellers' Employees"); provided that the provisions of this Section 6.10(i)(b) do not apply to Sellers' Employees whose employment is terminated by the Seller Entities; and provided further that the provisions of this Section 6.10(i)(b) do not apply to any employees (other than Sellers' Employees) hired by Buyer after the Closing Date or any Radio Group Closing Date, as applicable. 6.11 Lease. Buyer and the Sellers specified in the Lease attached hereto as Exhibit 1 (the "LEASE") shall execute and deliver the Lease on the Closing Date applicable to the Station to which the Lease applies. 6.12 Public Announcements. Sellers and Buyer shall consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement or the transactions contemplated herein and shall not issue any such press release or make any such public statement without the prior written consent of the other party, which shall not be unreasonably withheld; provided, however, that a party may, without the prior written consent of the other party, issue such press release or make such public statement as may be required by Law or any listing agreement with a national securities exchange to which Sinclair or Buyer is a party if it has used all reasonable efforts to consult with the other party and to obtain such party's consent but has been unable to do so in a timely manner. 6.13 Disclosure Schedules. Sellers and Buyer acknowledge and agree that Sellers shall not be liable for the failure of the Schedules to be accurate as a result of the operation of the Stations prior to a Closing in accordance with Section 5 of this Agreement. The inclusion of any fact or item on a Schedule referenced by a particular section in this Agreement shall, should the existence of the fact or item or its contents be relevant to any other section, be deemed to be disclosed with respect to such other section whether or not an explicit cross-reference appears in the Schedules if such relevance is readily apparent from examination of such Schedules. 6.14 Bulk Sales Law. Buyer hereby waives compliance by Sellers, in connection with the transactions contemplated hereby, with the provisions of any applicable bulk transfer laws. 6.15 Environmental Site Assessment. 6.15.1 Within sixty (60) days of the execution of this Agreement, Buyer may obtain Phase I Environmental Assessments at Buyer's expense for any or all of the parcels of the Owned or Leased Real Property set forth on Schedule 6.15 (the "Environmental Assessments"). In the event any Environmental Assessment discloses any conditions contrary to any representations and warranties (determined without regard to any Knowledge qualifier therein) or any potential that such conditions may exist, the Buyer may conduct or have conducted at its expense additional testing to confirm or negate the existence of any such conditions. If any such Environmental Assessment or additional testing reflects the existence of any such conditions at 37 any Owned Real Property or, to the extent caused by any of the Assets, at any of the Leased Real Property, and if, and only if, the cost of remediation exceeds One Hundred Thousand Dollars ($100,000.00), in the aggregate for all parcels of the Real Property, Sellers shall cause the conditions to be remedied as quickly as possible (and in all events prior to Closing for any Radio Group for which such property is used in the operation of any Station in such Radio Group) such that no conditions contrary to the representations and warranties (determined with regard to any knowledge qualifier contained therein) of this Agreement exist; provided, however, that Sellers shall not be obligated to expend in the aggregate in excess of Three Million Dollars ($3,000,000.00) to effect such remediation for all Real Property to be conveyed hereunder. In the event that such remedial action(s) does cost in the aggregate in excess of Three Million Dollars ($3,000,000.00), Sellers may elect not to take such remedial action. In such event, Buyer may require Sellers to proceed to the Closing of the Stations or of one or more Radio Groups, as the case may be, and at any such Closing, the purchase price for any of the Stations acquired at such Closing shall be reduced by the estimated cost of remediation for that portion of the Owned Real Property to be acquired at such Closing, not to exceed in the aggregate for all Closings the Unexpended Remediation Amount. Alternatively, Buyer may terminate this Agreement, and Sellers shall have no liability to Buyer as a result of such termination. Such Environmental Assessments shall not relieve Sellers of any obligation with respect to any representation, warranty, or covenant of Sellers in this Agreement or waive any condition to Buyer's obligations under this Agreement. The cost of completing the Environmental Assessments shall be paid by Buyer. 6.15.2 Nothing in this Section 6.15 shall be deemed to extend the date on which any Closing would otherwise occur under this Agreement. 6.16 Purchase of Advertising Time. After the Closing, Buyer agrees to purchase for cash from Sellers over the five (5) year period subsequent to the Closing Date, Five Million Dollars ($5,000,000) of advertising time on television broadcast stations owned and/or programmed by Sellers or their Affiliates at prevailing rates (taking into account the aggregate amount of the advertising purchase), and Buyer shall use reasonable efforts to purchase such advertising time pro rata over the five (5) year period. In the event that Sellers (and their Affiliates) cease to own and/or program a material percentage of television broadcast stations located in the same designated market areas as radio broadcast stations owned and/or programmed by Buyer (or its Affiliates), Sellers and Buyer shall negotiate in good faith to permit Buyer to expend an appropriate amount of the advertising buy required by this Section 6.16 on television broadcast stations previously owned and/or programmed by Sellers (and its Affiliates), which expenditure on such television stations shall be counted for purposes of Buyer's satisfaction of its obligation to purchase the $5,000,000 aggregate amount of advertising time. 6.17 Adverse Developments. Sellers shall promptly notify Buyer of any unusual or materially adverse developments that occur prior to any Closing with respect to the Assets or the operation of the Stations; provided, however, that Sellers' compliance with the disclosure requirements of this Section 6.17 shall not relieve Sellers of any obligation with respect to any representation, warranty or covenant of Sellers in this Agreement or relieve Buyer of any obligation or duty hereunder, waive any condition to Buyer's obligations under this Agreement, or expand or enhance any right of Buyer hereunder. 38 6.18 Title Insurance. Within ten (10) days of the date of this Agreement, each Seller shall deliver to Buyer its current title insurance policies. Sellers shall cooperate with Buyer in obtaining the commitment of a title insurance company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard rates, ALTA [1992] Form extended coverage title insurance policies, insuring Buyer's interest in the Real Property (the "Title Commitment"). The costs of the Title Commitment and the policy to be issued pursuant to the Title Commitment shall be paid by Buyer. 6.19 Surveys. Within sixty (60) days of the date of this Agreement, each Seller of Real Property shall deliver to Buyer, at Buyer's expense, surveys of the Real Property performed by surveyors reasonably acceptable to Buyer sufficient to remove any "survey exception" from the title insurance policies to be issued pursuant to the Title Commitments. 6.20 Pending Transactions. Nothing in this Agreement shall preclude Sellers from completing any pending transactions, including, but not limited to, the acquisition of the Palm Stations and the Phase II Stations in accordance with the terms and conditions thereof. 6.21 Assignment of Contracts for Pending Transactions. In the event the closing for the acquisition by Sellers of the Palm Stations and/or the Phase II Stations has not occurred on or before the Final Closing Date, Sellers shall deliver to Buyer on the Final Closing Date such documentation reasonably requested by Buyer's counsel, allowing for the assignment to Buyer from Sellers of Sellers' rights, duties and obligations under the Phase II Purchase Agreement and the Palm Asset Purchase Agreement. 6.22 Cooperation on Tax Matters. The parties intend to allow for the election by Sellers ("Election") to have the sale of all or a portion of the Assets contemplated by this Agreement become part of a "Tax Deferred Exchange" in accordance with the provisions of Section 1031 of the Internal Revenue Code of 1986 (the "Code"). Buyer covenants and agrees to participate and fully cooperate with Sellers (and any qualified intermediary (as that term is defined in the Code) involved in the Tax Deferred Exchange), in the event of an Election, so long as such participation and cooperation does not have an adverse effect on Buyer. To the extent that any provision in this Section 6.22 or in this Agreement shall be found inconsistent with or in violation of any of the terms of Section 1031 of the Code, such provision shall be null and void, all other provisions of this Agreement shall remain in full force and effect, and the parties shall endeavor to agree upon alternative provisions that affect a "Tax Deferred Exchange" of property in such manner as will comply with Section 1031 of the Code. If no such agreement is reached within a reasonable period, then this Agreement shall be performed without an exchange of properties. SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER 7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the Closing hereunder with respect to the Stations or any Radio Group are subject at Buyer's option to the fulfillment prior to or at the Closing Date or a Radio Group Closing Date of each of the following conditions: 39 (a) Representations and Warranties. All representations and warranties of Sellers contained in this Agreement shall be true and complete at and as of the Closing Date as though made at and as of that time, (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time), except where the failure to be true and complete (determined without regard to any materiality qualifications therein) does not have a Material Adverse Effect. (b) Covenants and Conditions. Sellers shall have performed and complied with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date, except where the failure to have performed and complied (determined without regard to any materiality qualifications therein) does not have a Radio Group Material Adverse Effect. (c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall have been granted, notwithstanding that it may not have yet become a "Final Order," unless any filing is made with the FCC that pertains to or becomes associated with any request for consent to the assignment of any of the FCC Licenses (an "FCC Objection"), in which case, Buyer shall not be obligated to close on a Radio Group which includes such Station to which such FCC Objection is applicable until the FCC Consent shall have become a "Final Order," unless in the reasonable judgment of Buyer's counsel such objection would not reasonably be expected to result in a denial of the FCC Consent, or a Radio Group FCC Consent, as the case may be, or the designation for hearing for the applications for FCC Consent or a Radio Group FCC Consent, as the case may be. (d) Hart-Scott-Rodino. All applicable waiting periods under Hart-Scott-Rodino shall have expired or terminated. (e) Governmental Authorizations. Sellers shall be the holder of all FCC Licenses (other than the FCC Licenses for the Palm Stations and Phase II Stations if Sellers have not closed on the Palm Stations and the Phase II Stations), and there shall not have been any modification, revocation, or non-renewal of any License that has had a Radio Group Material Adverse Effect. No proceeding shall be pending the effect of which could be to revoke, cancel, fail to renew, suspend, or modify materially and adversely any FCC License. (f) Consents. All consents of third parties that are required for the valid and binding assignment from Sellers to Buyer of all Material Contracts marked by an asterisk on Schedules 3.5 and 3.7 with respect to a Radio Group shall have been obtained (or available upon consummation of the Closing). (g) Lease. Sellers shall have entered into the lease described on Schedule 7.1(g) and (to the extent required by such lease) shall have obtained a valid and binding assignment of such lease from Sellers to Buyer. (h) Deliveries. Sellers shall have made or stand willing to make all the deliveries to Buyer described in Section 8.2. 40 (h) Satisfactory Environmental Assessment. To the extent that any Environmental Assessment or additional testing conducting pursuant to Section 6.15 hereof reflects the existence of conditions contrary to any representation or warranty in this Agreement, either (i) Sellers shall have completed the remediation of such conditions in accordance with Section 6.15 hereof, or (ii) Buyer shall have provided notice to Sellers of Buyer's election to proceed to Closing with the proration to the Purchase Price specified in Section 6.15 hereof. 7.2 Conditions to Obligations of Sellers. All obligations of Sellers at the Closing hereunder with respect to the Stations or any Radio Group are subject at Sellers' option to the fulfillment prior to or at the Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the Closing Date as though made at and as of that time. (b) Covenants and Conditions. Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. (c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall have been granted. (d) Hart-Scott-Rodino. All applicable waiting periods under Hart-Scott-Rodino shall have expired or terminated. (e) Deliveries. Buyer shall have made or stand willing to make all the deliveries described in Section 8.3. SECTION 8: CLOSING AND CLOSING DELIVERIES 8.1 Closing. (a) Closing Date. (i) Except as provided below in this Section 8.1 or as otherwise agreed to by Buyer and Sellers, the Closing hereunder shall be held for all of the Stations on a date specified by Buyer on at least five (5) days written notice that is not earlier than the first business day after or later than ten (10) business days after the later of the date on which all of the conditions to Closing have been satisfied or waived; provided, that the parties acknowledge and agree that there may be multiple Closings hereunder as follows: (w) If a Radio Group FCC Consent for any Radio Group is issued prior to the issuance of the FCC Consent, and the Hart-Scott-Rodino waiting period has expired or has been terminated for such Radio Group (whether or not the Hart-Scott-Rodino waiting period has expired or has been terminated in respect of any other Radio Group), Closing on such Radio Group shall be set by Buyer on at least five (5) days' written notice to Sellers, which shall be not earlier than the first business day after such Radio Group FCC Consent is granted and not later 41 than ten (10) business days after the date on which all conditions to such Closing have been satisfied or waived; provided that, in no event, shall a Closing occur for less than an entire Radio Group; (x) Notwithstanding 8.1(a)(i)(w) above, Sellers may elect to postpone such Closing for thirty (30) days if, based on advice of Sellers' counsel, there is a reasonable likelihood that the FCC Consent or an additional Radio Group FCC Consent will be received during such period; provided that in the event Sellers elect to postpone any Closing under this Section 8.1(a)(i)(x), the Stations Delay Amount Date and/or the Kansas City Stations Delay Amount Date, as applicable, shall be extended through the Closing Date as postponed by Sellers and no Delay Amount shall accrue during such period with respect to the Stations or Radio Group for which any Closing has been postponed by Seller pursuant to this Section 8.1(a)(i)(x); (y) For purposes of this Agreement, if there shall be multiple Closings for the Stations, then the terms "Closing" and "Closing Date" shall only be deemed to refer to the Stations for which the sale by Sellers, and the purchase by Buyers, shall have occurred on such date. If a Closing Date hereunder shall fall on a date that is not a business day, then such Closing Date shall be the next business day. (ii) If any event occurs that prevents signal transmission by any of the Stations in the normal and usual manner and Sellers cannot restore the normal and usual transmission before the date on which any Closing as to any Radio Group to which the Station so affected belongs would otherwise occur pursuant to this Section 8.1(a), and this Agreement has not been terminated under Section 9, Sellers shall diligently take such action as reasonably necessary to restore such transmission, and the Closing shall be postponed only with respect to the Radio Group to which the Station so affected belongs until a date within the effective period of the FCC Consent or a Radio Group FCC Consent (as it may be extended pursuant to Section 6.1(c)) to allow Sellers to restore the normal and usual transmission for such Station. If any Closing is postponed pursuant to this paragraph, the date of such Closing shall be ten (10) days after notice by Sellers to Buyer that transmission has been restored. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be obligated to close on any Radio Group which includes any Station the transmission of which is not operating in the normal and usual manner, unless and until the Sellers have restored the transmission of such Station to its normal and usual level. (iii) If there is in effect on the date on which any Closing would otherwise occur pursuant to this Section 8.1(a) any judgment, decree or order that would prevent or make unlawful such Closing on that date, such Closing shall be postponed until a date within the effective period of the FCC Consent or the Radio Group FCC Consent, as the case may be (as it may be extended pursuant to Section 6.1(c)), to be agreed upon by Buyer and Sellers, when such judgment, decree, or order no longer prevents or makes unlawful such Closing. If any Closing is postponed pursuant to this paragraph, the date of such Closing shall be mutually agreed to by Seller and Buyer. (b) Closing Place. All Closings hereunder shall be held at the offices of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, MD, 21201, or any other place that is mutually agreed upon by Buyer and Sellers. 42 8.2 Deliveries by Sellers. Prior to or on any Closing Date, Sellers shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: (a) Conveyancing Documents. Duly executed deeds in form and quality equivalent to the deeds by which Sellers obtained title, bills of sale, motor vehicle titles, assignments, and other transfer documents that are sufficient to vest good and marketable title to the Assets being transferred at such Closing in the name of Buyer, free and clear of all mortgages, liens, restrictions, encumbrances, claims and obligations except for Permitted Encumbrances; (b) Officer's Certificate. A certificate, dated as of such Closing Date, executed by an officer of Sellers, certifying: (i) that the representations and warranties of Sellers contained in this Agreement as to the Radio Group for which a Closing is occurring are true and complete as of such Closing Date as though made on and as of that date (except for representations and warranties that speak as of a specific date or time, which need only be true and complete as of such date or time), except to the extent that the failure of such representations and warranties (in each case determined without regard to any materiality qualifications contained therein) shall not have had a Material Adverse Effect, and (ii) that Sellers, as to the Radio Group for which a Closing is occurring, have in all respects performed and complied with all of its obligations, covenants and agreements in this Agreement to be performed and complied with on or prior to such Closing Date, except to the extent that the failure to perform such covenants (in each case determined without regard to any materiality qualifications contained therein) shall not have had a Radio Group Material Adverse Effect. (c) Secretary's Certificate. A certificate, dated as of such Closing Date, executed by each of the Seller's Secretary, members, partners or designees, as the case may be: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller's Board of Directors and shareholders (if required) (or by the general partner in the case of a partnership or by the members in the case of a limited liability company), authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as attachments thereto, the Articles of Incorporation and Bylaws (or other organizational documents) of such Seller; (d) Consents. A manually executed copy of any instrument evidencing receipt of any Consent which has been received by Sellers which relate to the Stations or, in the case of a Radio Group Closing, such Radio Group, the Assets of which are being transferred at such Closing; (e) Good Standing Certificates. To the extent available from the applicable jurisdictions and to the extent applicable to the Stations or Radio Group which are the subject of the Closing, certificates as to the formation and/or good standing of each Seller issued by the appropriate governmental authorities in the states of organization and each jurisdiction in which such Sellers are qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the applicable Closing Date; (f) Opinions of Counsel. Opinions of Sellers' counsel and communications counsel dated as of the Closing Date, substantially in the form of Exhibits 2 and 3 hereto; 43 (g) Lease. Duly executed copy of the Lease; and (h) Other Documents. Such other documents reasonably requested by Buyer or its counsel for complete implementation of this Agreement and consummation of the transaction contemplated hereby, including the assignments referred to in Section 6.21, if applicable. 8.3 Deliveries by Buyer. Prior to or on any Closing Date, Buyer shall deliver to Sellers the following, in form and substance reasonably satisfactory to Sellers and their counsel: (a) Closing Payment. The payment of the Estimated Purchase Price described in Section 2.4(a) for the Stations or Radio Groups as applicable; (b) Officer's Certificate. A certificate, dated as of such Closing Date, executed on behalf of an officer of the Buyer, certifying (i) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of such Closing Date as though made on and as of that date, and (ii) that Buyer has in all material respects performed and complied with all of its obligations, covenants and agreements in this Agreement to be performed and complied with on or prior to such Closing Date; (c) Secretary's Certificate. A certificate, dated as of such Closing Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as an attachment thereto, Buyer's Certificate of Incorporation and Bylaws; (d) Assumption Agreements. Appropriate assumption agreements pursuant to which Buyer shall assume and undertake to perform Sellers' obligations and liabilities to the extent provided under this Agreement for the Stations or Radio Group for which a Closing occurs, including (without limitation) under the Licenses and the Assumed Contracts; (e) Good Standing Certificates. To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of Buyer issued by the appropriate governmental authorities in the state of organization and each jurisdiction in which Buyer is qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to such applicable Closing Date; (f) Opinion of Counsel. An opinion of Buyer's counsel dated as of the Closing Date, substantially in the form of Exhibit 4 hereto; (g) Lease. Duly executed copy of the Lease; and (h) Other Documents. Such other documents reasonably requested by Sellers or their counsel for complete implementation of this Agreement and consummation of the transactions contemplated hereby. 44 SECTION 9: TERMINATION 9.1 Termination by Mutual Consent. This Agreement may be terminated at any time prior to Closing by the mutual consent of the parties. 9.2 Termination by Seller. This Agreement may be terminated by Sellers and the sale and transfer of the Stations or any Radio Group for which a Closing has not occurred abandoned, if: (a) Sellers are not then in material default hereunder, upon written notice to Buyer if on the date that would otherwise be the Final Closing Date any of the conditions precedent to the obligations of Sellers set forth in Sections 7.2(a), 7.2(b) and 7.2(e) of this Agreement has not been satisfied or waived in writing by Sellers (whether or not occurring as the result of Buyer's material breach of any provision of this Agreement); (b) Buyer shall default in the performance of its obligations under this Agreement in any material respect and such default is not cured within thirty (30) days after notice thereof; (c) Sellers are not then in material default hereunder and Final Closing has not occurred within one (1) calendar year from the date hereof and failure of Final Closing to have occurred is due to the failure to receive any regulatory approval required for Final Closing, including, but not limited to, expiration or termination of the Hart-Scott-Rodino waiting period, any FCC Consents (including, without limitation, such facts as are disclosed on Schedule 4.6 hereto), and the failure of such consent, expiration or termination to be granted is the result of facts relating to Buyer or any Affiliate of Buyer; or (d) Sellers are not then in material default hereunder if Closing as to the Stations or any Radio Group has not occurred within twenty four (24) months from the date hereof due to the failure to receive any regulatory approval required for Final Closing, including, but not limited to, the expiration or termination of the Hart-Scott-Rodino waiting period of any FCC Consent, and the failure of such consent, expiration, or termination to be granted is the result of facts relating to Sellers. (e) Final Closing has not occurred with respect to all of the Stations or any Radio Group within eighteen (18) months from the date hereof, if Sellers are not then in material default hereunder, and such Closing has not occurred for any reason other than as provided in Section 9.2(d). 9.3 Termination by Buyer. This Agreement may be terminated by Buyer and the exchange and transfer of the Stations or any Radio Group for which a Closing has not occurred abandoned, if: (a) Buyer is not then in material default, upon written notice to Sellers if on the date that would otherwise be the Final Closing Date any of the conditions precedent to the obligations of Buyer set forth in Sections 7.1(a), 7.1(b), 7.1(e), 7.1(f), 7.1(g), and 7(h) of this Agreement (and 45 only such Sections) has not been satisfied or waived in writing by Buyer (whether or not occurring as the result of Sellers' material breach of any provision of this Agreement); (b) Sellers shall have defaulted in the performance of Sellers' obligations under this Agreement, and such default is not cured within thirty (30) days after notice thereof and such default has had either a Radio Group Material Adverse Effect in the case of a Radio Group Closing or a Material Adverse Effect in the case of a Closing with respect to all of the Stations; or (c) Buyer is not then in material default hereunder and Final Closing has not occurred within fifteen (15) months from the date hereof and failure to close is due to the failure to receive any regulatory approval required for Closing, including, but not limited to, expiration or termination of the Hart-Scott-Rodino waiting period and any FCC Consents and the failure to receive such consent is due to facts relating to Sellers or any Affiliate of Sellers. (d) Final Closing has not occurred with respect to all of the Stations or any Radio Group within eighteen (18) months from the date hereof, if the terminating party is not then in material default hereunder and such Closing has not occurred for any reason other than as provided in Section 9.2(c). 9.4 Rights on Termination. If this Agreement is terminated by Buyer pursuant to Section 9.3 as a result of Sellers' material breach of any provision of this Agreement, Buyer shall be entitled to the immediate return of the Escrow Deposit, and Buyer shall have all rights and remedies available at law or equity, including the remedy of specific performance described in Section 9.6 below. If this Agreement is terminated by Sellers pursuant to Section 9.2, Sellers, as their sole remedy, shall be entitled to receive the Escrow Deposit, less any amount thereof released in accord with the provisions of this Agreement prior to such termination, together with all interest or other proceeds from the investment thereof, but less any compensation due Escrow Agent, as liquidated damages in full and final settlement of all claims of Sellers under this Agreement, and there shall be no other or further obligations or remedies of Sellers hereunder. 9.5 Liquidated Damages Not a Penalty. With respect to the liquidated damages as described and provided for in Section 9.4 hereof, Sellers and Buyer hereby acknowledge and agree that the damage that may be suffered by Sellers in the event of a default by Buyer hereunder is not readily ascertainable and that such liquidated damages as of the date hereof are a reasonable estimate of such damages and are intended to compensate Sellers for any such damage and are not to be construed as a penalty. 9.6 Specific Performance. The parties recognize that if Sellers breach this Agreement and refuse to perform under the provisions of this Agreement, monetary damages alone would not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled, in addition to any other remedies that may be available, to obtain specific performance of the terms of this Agreement. If any action is brought by Buyer to enforce this Agreement, Sellers shall waive the defense that there is an adequate remedy at law. 46 9.7 Attorneys' Fees. In the event of a default by either party that results in a lawsuit or other proceeding for any remedy available under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its reasonable legal fees and expenses (whether incurred in arbitration, at trial, or on appeal). 9.8 Survival. Notwithstanding the termination of this Agreement pursuant to this Section 9, the obligations of Buyer and Sellers set forth in Sections 6.2, 6.4, 9, 10 (with respect to all Radio Groups for which any Closing has occurred), and 11 shall survive such termination and the parties hereto shall have any and all rights and remedies to enforce such obligations provided at law or in equity or otherwise (including without limitations, specific performance). 9.9 Limitations of Termination. Any termination of this Agreement pursuant to this Section 9 shall be only in respect of those Stations or Radio Group for which a Closing has not occurred as of the date of such termination. SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES 10.1 Survival of Representations. All representations and warranties, covenants and agreements of Sellers and Buyer contained in or made pursuant to this Agreement or in any certificate furnished pursuant hereto shall survive the Closing Date for any of the Stations acquired hereunder and shall remain in full force and effect to the following extent: (a) representations and warranties (other than the representations and warranties set forth in Section 3.16) shall survive for a period of twelve (12) months after the Closing Date for such Station or Radio Group, (b) except as otherwise provided herein, the covenants and agreements which, by their terms, survive the Closing for such Station or Radio Group shall continue in full force and effect until fully discharged (but not beyond the expiration of twelve (12) months after the Closing Date for such Station or Radio Group), and (c) any representation, warranty, covenant or agreement that is the subject of a claim which is asserted in a reasonably detailed writing prior to the expiration of the survival period set forth in this Section 10.1 shall survive with respect to such claim or dispute until the final resolution thereof; provided that notwithstanding the foregoing, representations and warranties set forth in Section 3.16 and the covenant in Section 6.15 shall survive for the lesser of eighteen (18) months after the Closing Date for any Radio Group to which such representations and warranties relate, and (ii) the expiration of the applicable statute of limitations, but, in no event, shall the survival period in this proviso be less than one (1) year after the Closing Date for any Radio Group to which such representations and warranties relate; provided further that the covenants and agreements set forth in Section 6.4 Confidentiality, Section 6.5 Cooperation, Section 6.9 Books and Records, Section 11.1 Fees and Expenses, Section 11.2 Notices, and Section 11.3 Benefit and Binding Effect shall survive any applicable Closing for the period provided therein or, if no period is specified, in perpetuity; and provided finally that anything to the contrary in this Section 10.1 notwithstanding any claim for indemnification under Section 10 hereof which is asserted in a reasonably detailed writing prior to the expiration of the survival periods provided in this Section 10.1 shall survive with respect to such claim or dispute until final resolution thereof. 47 10.2 Indemnification by Seller. After the Closing or a Radio Group Closing, as applicable,, but subject to Sections 10.1 and 10.5, with respect to those Stations for which a Closing has occurred, Sellers hereby agree to indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities, or damages arising out of or resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant by Sellers contained in this Agreement or in any certificate, document, or instrument delivered to Buyer under this Agreement; (b) Any and all obligations of Sellers not assumed by Buyer pursuant to this Agreement, including any liabilities arising at any time under any Contract not included in the Assumed Contracts; (c) Any loss, liability, obligation, or cost arising out of or resulting from the failure of the parties to comply with the provisions of any bulk sales law applicable to the transfer of the Assets; (d) Any and all obligations, losses, liabilities, or damages arising out of or resulting from the operation or ownership of the Stations prior to the Closing (except any losses, liabilities or damages for which Buyer has received a proration in its favor or a reduction in Purchase Price under Section 6.15), including any liabilities arising under the Licenses or the Assumed Contracts to the extent that they relate to events occurring prior to the Closing Date; (e) Any and all out-of-pocket costs and expenses, including reasonable legal fees and expenses, incident to any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity; and (f) Any and all loss, liabilities or damages arising out of or resulting from the loss or revocation of any of the FCC Licenses as a result of actions taken by the FCC (or, to the extent applicable, by any reviewing court) solely in connection with the specific applications listed on Schedule 10.2. 10.3 Indemnification by Buyer. Notwithstanding any Closing, but subject to Section 10.5, Buyer hereby agrees to indemnify and hold Sellers harmless against and with respect to, and shall reimburse Sellers for: (a) Any and all losses, liabilities, or damages arising out of or resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant by Buyer contained in this Agreement or in any certificate, document, or instrument delivered to Sellers under this Agreement; (b) Any and all obligations of Sellers assumed by Buyer pursuant to this Agreement; 48 (c) Any and all obligations, losses, liabilities, or damages arising out of or resulting from the operation or ownership of the Stations after the Closing (including, without limitation, any obligations of Sinclair, SCI, or any Affiliate thereof pursuant to any agreements by which the obligations of any of the Stations have been guaranteed), except any losses, liabilities or damages for which Sellers have received a proration in their favor; and (d) Any and all out-of-pocket costs and expenses, including reasonable legal fees and expenses, incident to any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 10.4 Procedure for Indemnification. The procedure for indemnification shall be as follows: (a) The party claiming indemnification (the "CLAIMANT") shall promptly give notice to the party from which indemnification is claimed (the "INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a third party, specifying in reasonable detail the factual basis for the claim. If the claim relates to an action, suit, or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five business days after written notice of such action, suit, or proceeding was given to Claimant. (b) With respect to claims solely between the parties, following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of the thirty-day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying Party do not agree within the thirty-day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate remedy at law or equity. (c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification under this Agreement, the Indemnifying Party shall have the right at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifying Party, provided, however, that Indemnifier may not assume control of the defense unless it affirms in writing its obligation to indemnify Claimant for any damages incurred by Claimant with respect to such third-party claim. If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third-party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim. 49 (d) If a claim, whether between the parties or by a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible. (e) The indemnification rights provided in Section 10.2 and Section 10.3 shall extend to the members, partners, shareholders, officers, directors, employees, representatives and affiliated entities of any Claimant although for the purpose of the procedures set forth in this Section 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 10.5 Certain Limitations. (a) Notwithstanding anything in this Agreement to the contrary, neither party shall indemnify or otherwise be liable to the other party with respect to any claim for any breach of a representation or warranty, or for the breach of any covenant contained in this Agreement, unless notice of the claim is given within the relevant survival period specified in Section 10.1. (b) Notwithstanding anything in this Agreement to the contrary, but except as otherwise provided in this subsection (b) and Schedule 10.5, Sellers shall not be liable to Buyer in respect of any indemnification hereunder except to the extent that (i) the aggregate amount of losses of Buyer exceeds One Million Dollars ($1,000,000) (the "Threshold Amount") (and then only to the extent such losses exceed the excess of Five Hundred Thousand Dollars ($500,000)) over an amount (not in excess of $100,000) which Sellers are not required to expend in environmental remediation as a result of the Environmental Threshold Amount (such excess being the "Excess Amount") and (ii) the aggregate amount of losses of Buyer is less than the excess of Fifty Million Dollars) ($50,000,000) over any amounts expended by Buyer pursuant to Section 6.15, or with respect to which Buyer receives a proration in its favor under Section 6.15 (such excess being the "Indemnity Cap"); provided, the foregoing shall not be applicable to any amounts owed in connection with the Purchase Price or the proration adjustment thereof. In determining whether Sellers shall be obligated to indemnify Buyer under this Section 10, once the Threshold Amount has been satisfied, each representation and warranty and each covenant contained in this Agreement for which indemnity may be sought hereunder shall be read solely for purposes of determining whether a breach of such representation, warranty or covenant has occurred without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. (c) Notwithstanding any other provision of this Agreement to the contrary, in no event shall a party be entitled to indemnification for such party's consequential or punitive damages, regardless of the theory of recovery. Each party hereto agrees to use reasonable efforts to mitigate any losses which form the basis for any claim for indemnification hereunder. SECTION 11: MISCELLANEOUS 11.1 Fees and Expenses. (a) Buyer and Sellers shall each pay one-half of (i) any fees charged by the FCC in connection with obtaining the FCC Consent, and (ii) any filing fees incurred in connection with any Hart-Scott-Rodino Filings. 50 (b) Buyer and Sellers shall each pay one-half (1/2) of any filing fees, transfer taxes, document stamps, or other charges levied by any governmental entity (other than income Taxes, which shall be the responsibility of Sellers) on account of the transfer of the Assets from Sellers to Buyer. (c) Except as otherwise provided in this Agreement, each party shall pay its own expenses incurred in connection with the authorization, preparation, execution and performance of this Agreement, including all fees and expenses of counsel, accountants, agents and representatives, and each party shall be responsible for all fees or commissions payable to any finder, broker, advisor, or similar Person retained by or on behalf of such party. 11.2 Notices. All notices, demands and requests required or permitted to be given under the provisions of this Agreement shall be (a) in writing, (b) sent by telecopy (with receipt personally confirmed by telephone), delivered by personal delivery, or sent by commercial delivery service or certified mail, return receipt requested, (c) deemed to have been given on the date telecopied with receipt confirmed, the date of personal delivery, or the date set forth in the records of the delivery service or on the return receipt, and (d) addressed as follows: To Buyer: Entercom Communications Corp. 401 City Avenue, Suite 409 Bala Cynwyd, Pennsylvania 19004 Attn: David J. Field Telecopy: (610) 660-5620 Telephone: (610) 660-5610 with a copy Latham & Watkins (which shall 1001 Pennsylvania Avenue, Suite 1300 not constitute Washington, D.C. 20004-2505 Attn: Joseph Sullivan, Esquire notice) to: Telecopy: (202) 637-2201 Telephone: (202) 637-2200 To Sellers: c/o Sinclair Broadcast Group, Inc. 10706 Beaver Dam Road Cockeysville, MD 21030 Attn: President Telecopy: (410) 568-1533 Telephone: (410) 568-1506 with a copy Sinclair Communications, Inc. (which shall 10706 Beaver Dam Road not constitute Cockeysville, MD 21030 notice) to: Attn: General Counsel Telecopy: (410) 568-1537 Telephone: (410) 568-1522 51 with a copy Steven A. Thomas, Esquire (which shall Thomas & Libowitz, P.A. not constitute 100 Light Street, Suite 1100 notice) to: Baltimore, MD 21202-1053 Telecopy: (410) 752-2046 Telephone: (410) 752-2468 or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in accordance with this Section 11.2. 11.3 Benefit and Binding Effect. (a) Buyer shall have the right to assign all or any portion of its rights under this Agreement to (i) any entity under common control with Buyer, (ii) a Qualified Intermediary under Section 1031 of the Code, or (iii) any lender or any agent for such lender(s) for collateral purposes only; provided, that no such assignment shall relieve Buyer of its obligations hereunder. Sellers may assign, combine, merge, or consolidate among themselves and any Affiliate of Sellers so long as Sellers or their successors and assigns are bound by the terms and conditions of this Agreement in all respects as if such successors and assigns were original parties hereto, and such assignment, combination, merger, or consolidation does not have an adverse affect on Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder. Other than as expressly set forth in this Section 11.3(a), no party may assign or transfer all or any portion of its rights under this Agreement without the prior written consent of the parties hereto. (b) Sellers acknowledge and agree that at the Closing, Buyer may require that Sellers transfer the Assets and liabilities of any Station to a third party designated in writing by Buyer (a "DESIGNEE") at least ten (10) days prior to the Closing; provided, however, that (a) such Designee shall on or prior to the Closing Date assume all assumed liabilities with respect to the particular Station so transferred; (b) an FCC Order shall have been issued on or prior to the Closing Date authorizing such transfer; (c) the transfer to such Designee would not violate any laws, (d) the transfer to such Designee would not delay in any respect the date for the Closing as required by the terms of this Agreement; (e) such transfer to a Designee shall not relieve Buyer from any of its obligations hereunder; (f) there shall be no assignment or transfer (actual or implied) of this Agreement to the Designee; (g) Sellers shall have no liabilities to any such Designee under this Agreement or otherwise; and (h) such Designee shall deliver to the Sellers a written certificate, pursuant to which the Designee acknowledges and agrees for the benefit of Sellers to the terms and conditions of the designation as described herein. The parties shall cooperate in all reasonable respects in making any modifications to the closing documents and deliveries that may be necessary or appropriate in connection with the transfer of Assets and liabilities of any Station to any Designee pursuant to this Section 11.3(b). 52 11.4 Further Assurances. The parties shall take any actions and execute any other documents that may be necessary or desirable to the implementation and consummation of this Agreement. 11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF). In addition, each of the parties hereto submits to local jurisdiction in the State of Maryland and agrees that any action by any party hereunder shall be instituted in the State of Maryland. 11.6 Entire Agreement. This Agreement, the Schedules hereto, and all documents, certificates and other documents to be delivered by the parties pursuant hereto, collectively, represent the entire understanding and agreement between Buyer and Sellers with respect to the subject matter of this Agreement. This Agreement supersedes all prior negotiations between the parties and cannot be amended, supplemented, or changed except by an agreement in writing duly executed by each of the parties hereto and by Sinclair. 11.7 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement, or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.7. 11.8 Headings. The headings of the sections and subsections contained in this Agreement are inserted for convenience only and do not form a part or affect the meaning, construction or scope thereof. 11.9 Counterparts. This Agreement may be signed in two or more counterparts with the same effect as if the signature on each counterpart were upon the same instrument. [SIGNATURES BEGIN ON FOLLOWING PAGE] 53 IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized officers of Buyer and Sellers as of the date first written above. Buyer: Sellers: Entercom Communication Corp. - ---------------------------- SINCLAIR COMMUNICATIONS, INC. By: /s/ John C. Donlevie By: /s/ David B. Amy ------------------------- -------------------------------- Name: John C. Donlevie Name: David B. Amy --------------------------- Title: Executive Vice President Title: Secretary -------------------------- SINCLAIR MEDIA III, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF KANSAS CITY LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- WCGV, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF MILWAUKEE LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF NEW ORLEANS, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- 54 SINCLAIR RADIO OF NEW ORLEANS LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF MEMPHIS, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF MEMPHIS LICENSEE, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR PROPERTIES, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF NORFOLK/ GREENSBORO LICENSEE L.P. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF NORFOLK LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF BUFFALO, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- 55 SINCLAIR RADIO OF BUFFALO LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- WLFL, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF GREENVILLE LICENSEE, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF WILKES-BARRE, INC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- SINCLAIR RADIO OF WILKES-BARRE LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy --------------------------- Title: Secretary -------------------------- 56 EX-10.3 4 EXHIBIT 10.3 ASSET PURCHASE AGREEMENT DATED AUGUST 20, 1999 AMONG SINCLAIR COMMUNICATIONS, INC. SINCLAIR MEDIA III, INC. SINCLAIR RADIO OF KANSAS CITY LICENSEE, LLC AS SELLERS, AND ENTERCOM COMMUNICATIONS CORP. AS BUYER
TABLE OF CONTENTS 1. CERTAIN DEFINITIONS............................................................................................1 1.1 Terms Defined in this Section...........................................................................1 1.2 Terms Defined Elsewhere in this Agreement...............................................................7 2. EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE...................................................................9 2.1 Agreement to Exchange and Transfer......................................................................9 2.2 Excluded Assets.........................................................................................9 2.3 Purchase Price.........................................................................................11 Purchase Price Increase................................................................................11 Prorations.............................................................................................11 Manner of Determining Adjustments......................................................................12 2.4 Payment of Purchase Price..............................................................................13 Payment of Estimated Purchase Price At Closing.........................................................13 Payments to Reflect Adjustments........................................................................14 2.5 Assumption of Liabilities and Obligations..............................................................14 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................................14 3.1 Organization and Authority of Sellers..................................................................15 3.2 Authorization and Binding Obligation...................................................................15 3.3 Absence of Conflicting Agreements; Consents............................................................15 3.4 Governmental Licenses..................................................................................15 3.5 Real Property..........................................................................................16 3.6 Tangible Personal Property.............................................................................17 3.7 Contracts..............................................................................................17 3.8 Intangibles............................................................................................18 3.9 Title to Properties....................................................................................18 3.10 Financial Statements...................................................................................18 3.11 Taxes..................................................................................................19 3.12 Insurance..............................................................................................19 3.13 Reports................................................................................................19 3.14 Personnel and Employee Benefits........................................................................19 Employees and Compensation.............................................................................19 Pension Plans..........................................................................................20 Welfare Plans..........................................................................................20 Benefit Arrangements...................................................................................20 Multiemployer Plans....................................................................................21 Delivery of Copies of Relevant Documents and Other Information.........................................21 Labor Relations........................................................................................21 3.15 Claims and Legal Actions...............................................................................21 3.16 Environmental Compliance...............................................................................21 3.17 Compliance with Laws...................................................................................22 3.18 Conduct of Business in Ordinary Course.................................................................22 3.19 Transactions with Affiliates...........................................................................22 3.20 Broker.................................................................................................23 3.21 Insolvency Proceedings.................................................................................23 3.22 Year 2000 Compatibility................................................................................23 4. REPRESENTATIONS AND WARRANTIES OF BUYER......................................................................23 4.1 Organization, Standing and Authority...................................................................23 4.2 Authorization and Binding Obligation...................................................................23 4.3 Absence of Conflicting Agreements and Required Consents................................................23 4.4 Brokers................................................................................................24 4.5 Availability of Funds..................................................................................24 4.6 Qualifications of Buyer................................................................................24 4.7 WARN Act...............................................................................................24
i
4.8 Buyer's Defined Contribution Plan......................................................................25 5. OPERATION OF THE STATIONS PRIOR TO CLOSING....................................................................25 5.1 Contracts..............................................................................................25 5.2 Compensation...........................................................................................25 5.3 Encumbrances...........................................................................................25 5.4 Dispositions...........................................................................................25 5.5 Access to Information..................................................................................26 5.6 Insurance..............................................................................................26 5.7 Licenses...............................................................................................26 5.8 Obligations............................................................................................26 5.9 No Inconsistent Action.................................................................................26 5.10 Maintenance of Assets..................................................................................26 5.11 Consents...............................................................................................26 5.12 Books and Records......................................................................................27 5.13 Notification...........................................................................................27 5.14 Financial Information..................................................................................27 5.15 Compliance with Laws...................................................................................28 5.16 Programming............................................................................................28 5.17 Preservation of Business...............................................................................28 5.18 Normal Operations......................................................................................28 5.19 Reserved...............................................................................................28 6. SPECIAL COVENANTS AND AGREEMENTS..............................................................................28 6.1 FCC Consent............................................................................................28 6.2 Hart-Scott-Rodino......................................................................................29 6.3 Risk of Loss...........................................................................................29 6.4 Confidentiality........................................................................................29 6.5 Cooperation............................................................................................29 6.6 Control of the Stations................................................................................29 6.7 Accounts Receivable....................................................................................30 6.8 Allocation of Purchase Price...........................................................................30 6.9 Access to Books and Records............................................................................31 6.10 Employee Matters.......................................................................................31 Certain Payments.......................................................................................33 6.11 Reserved...............................................................................................34 6.12 Public Announcements...................................................................................34 6.13 Disclosure Schedules...................................................................................34 6.14 Bulk Sales Law.........................................................................................34 6.15 Environmental Site Assessment..........................................................................34 6.16 Reserved...............................................................................................35 6.17 Adverse Developments...................................................................................35 6.18 Title Insurance........................................................................................35 6.19 Surveys................................................................................................35 6.20 Reserved...............................................................................................35 6.21 Reserved...............................................................................................35 6.22 Cooperation on Tax Matters.............................................................................36 6.23 Reference to Original Agreement........................................................................36 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER................................................................36 7.1 Conditions to Obligations of Buyer.....................................................................36 Representations and Warranties.........................................................................36 Covenants and Conditions...............................................................................36 FCC Consent............................................................................................36 Hart-Scott-Rodino......................................................................................37 Governmental Authorizations............................................................................37 Consents...............................................................................................37 Deliveries.............................................................................................37 Satisfactory Environmental Assessment..................................................................37
ii
7.2 Conditions to Obligations of Sellers...................................................................37 Representations and Warranties.........................................................................37 Covenants and Conditions...............................................................................37 FCC Consent............................................................................................37 Hart-Scott-Rodino......................................................................................37 Deliveries.............................................................................................37 8. CLOSING AND CLOSING DELIVERIES...............................................................................38 8.1 Closing................................................................................................38 Closing Date...........................................................................................38 Closing Place..........................................................................................38 8.2 Deliveries by Sellers..................................................................................38 Conveyancing Documents.................................................................................39 Officer's Certificate..................................................................................39 Secretary's Certificate................................................................................39 Consents...............................................................................................39 Good Standing Certificates.............................................................................39 Opinions of Counsel....................................................................................39 Other Documents........................................................................................40 8.3 Deliveries by Buyer....................................................................................40 Closing Payment........................................................................................40 Officer's Certificate..................................................................................40 Secretary's Certificate................................................................................40 Assumption Agreements..................................................................................40 Good Standing Certificates.............................................................................40 Opinion of Counsel.....................................................................................40 Other Documents........................................................................................40 9. TERMINATION...................................................................................................41 9.1 Termination by Mutual Consent..........................................................................41 9.2 Termination by Seller..................................................................................41 9.3 Termination by Buyer...................................................................................41 9.4 Rights on Termination..................................................................................42 9.5 Liquidated Damages Not a Penalty.......................................................................42 9.6 Specific Performance...................................................................................42 9.7 Attorneys' Fees........................................................................................42 9.8 Survival...............................................................................................43 9.9 Reserved...............................................................................................43 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES.................................................................................................43 10.1 Survival of Representations............................................................................43 10.2 Indemnification by Seller..............................................................................43 10.3 Indemnification by Buyer...............................................................................44 10.4 Procedure for Indemnification..........................................................................45 10.5 Certain Limitations....................................................................................45 11. MISCELLANEOUS................................................................................................46 11.1 Fees and Expenses......................................................................................46 11.2 Notices................................................................................................47 11.3 Benefit and Binding Effect.............................................................................48 11.4 Further Assurances.....................................................................................48 11.5 GOVERNING LAW..........................................................................................48 11.6 Entire Agreement.......................................................................................49 11.7 Waiver of Compliance; Consents.........................................................................49 11.8 Headings...............................................................................................49 11.9 Counterparts...........................................................................................49
iii ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into on August 20, 1999 but is effective as of August 18, 1999, by and among Sinclair Communications, Inc., a Maryland corporation ("SCI"), Sinclair Media III, Inc. a Maryland corporation ("MEDIA III"), Sinclair Radio of Kansas City Licensee, LLC, a Maryland limited liability company ("KANSAS CITY LICENSEE"), (each a "SELLER" and collectively, "SELLERS"), and Entercom Communications Corp., a Pennsylvania corporation ("BUYER"). All references herein to the "date hereof" and the "date of this Agreement" shall mean August 18, 1999, and all representations and warranties herein shall be deemed to have been made as of August 18, 1999. R E C I T A L S: WHEREAS, Media III operates radio broadcast stations KCFX-FM, Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM, Kansas City, MO (collectively, the "STATIONS") and owns or leases certain assets used in connection with the Stations; WHEREAS, Kansas City Licensee is the licensee of each of the Kansas City Stations pursuant to certain authorizations issued by the FCC; WHEREAS, the Buyer and Sellers and certain other sellers entered into the Original Agreement and, pursuant to Section 2 of the accompanying Letter Agreement dated August 18, 1999, the parties thereto agreed to amend and restate the Original Agreement and to enter into this Agreement with respect to the Stations solely for the purpose of providing separate processing of the Stations for Hart-Scott-Rodino purposes. WHEREAS, the parties hereto desire to enter into this Agreement to provide for the sale, assignment and transfer by Sellers to Buyer of certain of the assets owned, leased or used by Sellers in connection with the business and operations of the Stations. A G R E E M E N T S: In consideration of the above recitals and of the mutual agreements and covenants contained in this Agreement, the parties to this Agreement, intending to be bound legally, agree as follows: SECTION 1: CERTAIN DEFINITIONS 1.1 Terms Defined in this Section. The following terms, as used in this Agreement, have the meanings set forth in this Section: 1 "ACCOUNTS RECEIVABLE" means the rights of Sellers as of the Closing Date to payment in cash for the sale of advertising time and other goods and services by the Stations prior to the Closing Date. "AFFILIATE" means, with respect to any Person, (a) any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, or (b) an officer or director of such Person or of an Affiliate of such Person within the meaning of clause (a) of this definition. For purposes of clause (a) of this definition, (i) a Person shall be deemed to control another Person if such Person (A) has sufficient power to enable such Person to elect a majority of the board of directors of such Person, or (B) owns a majority of the beneficial interests in income and capital of such Person; and (ii) a Person shall be deemed to control any partnership of which such Person is a general partner. "AGGREGATED INITIAL PURCHASE PRICE" means the amount of $824,500,000. "ALLOCABLE ESCROW DEPOSIT" means that portion of the Escrow Deposit equaling $7,398,425.00. "ASSETS" means the assets to be transferred or otherwise conveyed by Sellers to Buyer under this Agreement, as specified in Section 2.1. "ASSUMED CONTRACTS" means (a) all Contracts set forth on Schedule 3.7, (b) Contracts entered into prior to the date of this Agreement with advertisers for the sale of advertising time or production services for cash at rates consistent with past practices, (c) Contracts entered into by any Seller prior to the date of this Agreement which are not required to be included on Schedule 3.7 hereto, (d) any Contracts entered into by Sellers between the date of this Agreement and the Closing Date that Buyer agrees in writing to assume, and (e) other contracts entered into by Sellers between the date of this Agreement and the Closing Date in compliance with Section 5. "CLOSING" means the consummation of the exchange and acquisition of the Assets pursuant to this Agreement on the Closing Date in accordance with the provisions of Section 8.1. "CLOSING DATE" means the date on which the Closing occurs, as determined pursuant to Section 8.1. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMUNICATIONS ACT" means the Communications Act of 1934, as amended. "CONSENTS" means the consents, permits, or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transactions contemplated by this Agreement. "CONTAMINANT" shall mean and include any pollutant, contaminant, hazardous material 2 (as defined in any of the Environmental Laws), toxic substances (as defined in any of the Environmental Laws), asbestos or asbestos containing material, urea formaldehyde, polychlorinated biphenyls, regulated substances and wastes, radioactive materials, and petroleum or petroleum by-products, including crude oil or any fraction thereof, except the term "Contaminant" shall not include small quantities of maintenance, cleaning and emergency generator fuel supplies customary for the operation of radio stations and maintained in compliance with all Environmental Laws in the ordinary course of business. "CONTRACTS" means all contracts, consulting agreements, leases, non-governmental licenses and other agreements (including leases for personal or real property and employment agreements), written or oral (including any amendments and other modifications thereto) to which Sinclair, SCI, or any Seller is a party or that are binding upon any Seller, that relate to or affect the Assets or the business or operations of the Stations, and that either (a) are in effect on the date of this Agreement, including those listed on Schedule 3.7 hereto, or (b) are entered into by any Seller between the date of this Agreement and the Closing Date. "DELAY AMOUNT" shall equal 0.75% of the Initial Purchase Price. "DEPOSIT RELEASE DATE" is the date on which a Closing under this Agreement and the Multi-Stations Agreement has occurred for which more than forty-five percent (45%) of the Aggregated Initial Purchase Price has been paid to Sellers. "EFFECTIVE TIME" means 12:01 a.m., Eastern time, on the Closing Date. "ENVIRONMENTAL LAWS" shall mean and include, but not be limited to, any applicable federal, state or local law, statute, charter, ordinance, rule or regulation or any governmental agency interpretation, policy or guidance, including without limitation applicable safety/environmental/health laws such as but not limited to the Resource Conservation and Recovery Act of 1976, Comprehensive Environmental Response Compensation and Liability Act, Federal Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean Water Act, and the Toxic Substance Control Act, as any of the foregoing have been amended, and any permit, order, directive, court ruling or order or consent decree applicable to or affecting the Property or any other property (real or personal) used by or relating to the Station in question promulgated or issued pursuant to any Environmental Laws which pertains to, governs, or controls the generation, storage, remediation or removal of Contaminants or otherwise regulates the protection of health and the environment including, but not limited to, any of the following activities, whether on site or off site if such could materially affect the site: (i) the emission, discharge, release, spilling or dumping of any Contaminant into the air, surface water, ground water, soil or substrata; or (ii) the use, generation, processing, sale, recycling, treatment, handling, storage, disposal, transportation, labeling or any other management of any Contaminant. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ESCROW DEPOSIT" means the sum of Fifty Million Dollars ($50,000,000.00) or, at Buyer's option, a letter of credit in favor of Sellers in the face amount of Fifty Million Dollars ($50,000,000.00), which was deposited by Buyer with First Union National Bank (the "ESCROW 3 AGENT") on August 18, 1999, pursuant to the Multi-Stations Agreement to secure the obligations of Buyer to close under this Agreement and the Multi-Stations Agreement, with (i) such deposit being held by the Escrow Agent in accordance with the Escrow Agreement executed among Buyer, Sellers and Escrow Agent on August 18, 1999 pursuant to the Multi-Stations Agreement, and (ii) the Escrow Deposit, and all earnings thereon, being returned to Buyer upon the consummation of this Agreement and the Multi-Stations Agreement or as otherwise provided under the Multi-Stations Agreement. "EXCESS AMOUNT" has the meaning set forth in Section 10.5. "EXCLUDED REAL PROPERTY INTERESTS" means all interests in Real Property listed on Schedule 2.2 hereto. "EXCLUDED TANGIBLE PERSONAL PROPERTY" means all tangible personal property owned or held by Sellers that is located at the Excluded Real Property other than such tangible personal property listed on Schedule 3.6 hereto, any assets used primarily in the operation of any television broadcast station owned, operated or programmed by Sellers or any Affiliate of Sellers, any assets used primarily in the operation of any radio broadcast station owned, operated or programmed by Sellers, but not included as a "Station" hereunder, and any tangible personal property located at Suite 220, Meadow Mill at Woodberry, 3600 Clipper Mill Road, Baltimore, Maryland 21211. "FCC" means the Federal Communications Commission. "FCC CONSENT" means action by the FCC granting its consent to the transfer of the FCC Licenses by Sellers to Buyer as contemplated by this Agreement. "FCC LICENSES" means those licenses, permits and authorizations issued by the FCC to Sellers in connection with the business and operations of the Stations. "FINAL ORDER" shall mean an action by the Commission upon any application for FCC Consent filed by the parties hereto for FCC consent, approval or authorization, which action has not been reversed, stayed, enjoined, set aside, annulled or suspended, and with respect to which action, no protest, petition to deny, petition for rehearing or reconsideration, appeal or request for stay is pending, and as to which action the time for filing of any such protest, petition, appeal or request and any period during which the Commission may reconsider or review such action on its own authority has expired. "HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended, and all Laws promulgated pursuant thereto or in connection therewith. "INTANGIBLES" means all copyrights, trademarks, trade names, service marks, service names, licenses, patents, permits, jingles, proprietary information, technical information and data, machinery and equipment warranties, and other similar intangible property rights and interests (and any goodwill associated with any of the foregoing) applied for, issued to, or owned by Sellers or under which Sellers are licensed or franchised and that are used in the business and 4 operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date. "KNOWLEDGE" or any derivative thereof with respect to the Sellers means, exclusively, the actual Knowledge of the President and Chief Executive Officer or the Chief Financial Officer of Sinclair Broadcast Group, Inc. ("SINCLAIR"), the general managers of the Stations, and any other employee of Sinclair or SCI designated as a "vice president" or any officer of any of the Sellers. "LEASED REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto leased or held by Sellers and used in the business or operation of the Stations. "LICENSES" means all licenses, permits, construction permits and other authorizations issued by the FCC, the Federal Aviation Administration, or any other federal, state, or local governmental authorities to Sellers, currently in effect and used in connection with the conduct of the business or operations of the Stations (other than the Non-Owned Stations), together with any additions thereto between the date of this Agreement and the Closing Date. "MATERIAL ADVERSE EFFECT" means 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. "MATERIAL CONTRACT" means those Assumed Contracts that are designated on Schedules 3.5 and 3.7 as "Material Contracts." "MULTI-STATIONS AGREEMENT" means that certain Amended and Restated Asset Purchase Agreement dated as of August 20, 1999 but effective August 18, 1999, by and between the Multi-Stations Sellers of the Multi-Stations and the USA Digital Shares (as defined in the Multi-Stations Agreement) and Buyer pursuant to which the Multi-Stations Sellers have agreed to sell, and Buyer has agreed to purchase, the Multi-Stations and the USA Digital Shares. "MULTI-STATIONS SELLERS" means Sinclair Communications, Inc., WCGV, Inc., a Maryland corporation, Sinclair Radio of Milwaukee Licensee, LLC, a Maryland limited liability company, Sinclair Radio of New Orleans, LLC, a Maryland limited liability company, Sinclair Radio of New Orleans Licensee, LLC, a Maryland limited liability company, Sinclair Radio of Memphis, Inc., a Maryland corporation, Sinclair Radio of Memphis Licensee, Inc., a Delaware corporation, Sinclair Properties, LLC, a Virginia limited liability company, Sinclair Radio of Norfolk/Greensboro Licensee L.P., a Virginia limited partnership, Sinclair Radio of Norfolk Licensee, LLC, a Maryland limited liability company, Sinclair Radio of Buffalo, Inc., a Maryland corporation, Sinclair Radio of Buffalo Licensee, LLC, a Maryland limited liability company, WLFL, Inc., a Maryland corporation, Sinclair Radio of Greenville Licensee, Inc., a Delaware corporation, Sinclair 5 Radio of Wilkes-Barre, Inc., a Maryland corporation, and Sinclair Radio of Wilkes-Barre Licnesee, LLC, a Maryland limited liability company. "MULTI-STATIONS" means the following radio broadcast stations: WPTE-FM, Virginia Beach, VA; WWDE-FM, Hampton, VA; WNVZ-FM, Norfolk, VA; WVKL-FM, Norfolk, VA, WMQX-FM, Winston-Salem, NC; WQMG-FM, Greensboro, NC; WJMH-FM, Reidsville, NC; WEAL-AM, Greensboro, NC; WEMP-AM, Milwaukee, WI; WMYX-FM, Milwaukee, WI; WXSS-FM, Wauwatosa, WI; WLMG-FM, New Orleans, LA; WWL-AM, New Orleans, LA; WSMB-AM, New Orleans, LA; WEZB-FM, New Orleans, LA; WLTS-FM, Kenner, LA; WTKL-FM, New Orleans, LA; WRVR-FM, Memphis, TN; WJCE-AM, Memphis, TN; WOGY-FM, Germantown, TN; WMJQ-FM, Buffalo, NY; WKSE-FM, Niagara Falls, NY; WBEN-AM, Buffalo, NY; WWKB-AM, Buffalo, NY; WGR-AM, Buffalo, NY; and WWWS-AM, Buffalo, NY; WGGI-FM, Benton, PA; WKRZ-FM; Wilkes-Barre, PA: WGGY-FM, Scranton, PA; WILK-AM, Wilkes-Barre, PA; WGBI-AM, Scranton, PA; WSHG-FM, Pittston, PA; WILP-AM, West Hazelton, PA; WWFH-FM, Freeland, PA; WKRF-FM, Tobyhanna, PA; WOLI-FM, Easely, SC; and WOLI-FM, Greer, SC. "ORIGINAL AGREEMENT" means that certain Asset Purchase Agreement dated August 18, 1999, by and among the Multi-Station Sellers, Sellers hereunder, and Buyer relating to the sale by the Multi-Stations Sellers of the Multi-Stations, the Stations, and the USA Digital Shares to Buyer. "OWNED REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto owned by Sellers and used in the business or operations of the Stations. "PERMITTED ENCUMBRANCES" means (a) encumbrances of a landlord, or other statutory lien not yet due and payable, or a landlord's liens arising in the ordinary course of business, (b) encumbrances arising in connection with equipment or maintenance financing or leasing under the terms of the Contracts set forth on the Schedules, which Contracts have been made available to Buyer, (c) encumbrances for Taxes not yet delinquent or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on Sellers' books in accordance with generally accepted accounting principles, or (d) encumbrances that do not materially detract from the value of any of the Assets or materially interfere with the use thereof as currently used. "PERSON" means an individual, corporation, association, partnership, joint venture, trust, estate, limited liability company, limited liability partnership, or other entity or organization. "REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto, whether or not owned, leased or held by Sellers used in the business or operations of the Stations. "REAL PROPERTY INTERESTS" means all interests in Owned Real Property and Leased Real Property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon and appurtenant thereto, owned or held by Sellers that are used in the business or operations of 6 the Stations, together with any additions, substitutions and replacements thereof and thereto between the date of this Agreement and the Closing Date, but excluding the Excluded Real Property Interests. "TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, inventory, spare parts and other tangible personal property owned or held by Sellers that is used or useful in the conduct of the business or operations of the Stations, together with any additions, substitutions and replacements thereof and thereto between the date of this Agreement and the Closing Date, but excluding the Excluded Tangible Personal Property. "TAX" means any federal, state, local, or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, capital, transfer, employment, withholding, or other tax or similar governmental assessment, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties. "TAX RETURN" means any tax return, declaration of estimated tax, tax report or other tax statement, or any other similar filing required to be submitted to any governmental authority with respect to any Tax. "THRESHOLD AMOUNT" has the meaning set forth in Section 10.5. "UNEXPENDED REMEDIATION AMOUNT" shall mean Three Million Dollars ($3,000,000.00) as aggregated with the Unexpended Remediation Amount under the Multi-Stations Agreement, minus any amounts previously expended by Sellers to remediate any of the Real Property pursuant to Section 6.16. "USA DIGITAL SHARES" means the 300,000 shares of common stock of USA Digital Radio, Inc. which are to be sold to Buyer under the Multi-Station Agreement. 1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have the meanings set forth in the sections indicated: Term Section - ---- ------- Balance Sheet Date Section 3.10 Benefit Arrangement Section 3.14 (a)(v) Benefit Plans Section Section 3.14(a)(ii) Buyer Preamble Buyer's Plan Section 4.8 Claimant Section 10.4 Collection Period Section 6.7(a) Confidentiality Agreement Section 6.4 7 Deferred Contract Section 5.11(b) Designee Section 11.3(b) Employees Section 3.14(a) Environmental Laws Section 3.16 Estimated Purchase Price Section 2.4(a) Excluded Real Property Interests Section 1.1 Excluded Tangible Personal Property Section 1.1 FCC Objection Section 7.1(c) FTC Section 4.6 Financial Statements Section 3.10 Hart-Scott-Rodino Filing Section 6.2 Indemnity Cap Section 10.5 Indemnifying Party Section 10.4 Initial Employee Cap Section 6.10(g) Initial Purchase Price Section 2.3 Lease Section 6.12 Multiemployer Plan Section 3.14(a)(ii) Operational Equipment Section 3.22 Pension Plan Section 3.14(a)(iii) Purchase Price Section 2.3 Reimbursement Period Section 6.10(g) Represented Employees Section 6.10(e) Scheduled Employees Section 6.10(g) Scheduled Retention Agreements Section 6.10(g) SCI Preamble Section 6.9 Amount Section 6.9 Seller Preamble Seller Entities Section 6.10(i) Sellers' Employees Section 6.10(i) Sinclair Section 1.1 Stations Recitals Stations Delay Amount Date Section 2.3(a)(i) 8 Transferred Employees Section 6.10 Welfare Plan Section 3.14(a)(i) SECTION 2: EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE 2.1 Agreement to Exchange and Transfer. Subject to the terms and conditions set forth in this Agreement with respect to the Stations, Sellers hereby agree to transfer, convey, assign and deliver to Buyer on the Closing Date, and Buyer agrees to acquire, all of Sellers' right, title and interest in the tangible and intangible assets used in connection with the conduct of the business or operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date, but excluding the assets described in Section 2.2, free and clear of any claims, liabilities, security interests, mortgages, liens, pledges, charges, or encumbrances of any nature whatsoever (except for Permitted Encumbrances), including the following: (a) The Tangible Personal Property; (b) The Real Property Interests; (c) The Licenses; (d) The Assumed Contracts; (e) The Intangibles, including the goodwill of the Stations, if any; (f) Reserved. (g) All of Sellers' proprietary information, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints and schematics, including filings with the FCC, in each case to the extent relating to the business and operation of the Stations; (h) All choses in action of Sellers relating to the Stations to the extent they relate to the period after the Effective Time; and (i) All books and records relating to the business or operations of the Stations, including executed copies of the Assumed Contracts, and all records required by the FCC to be kept by the Stations. 2.2 Excluded Assets. The Assets shall exclude the following: (a) Sellers' cash, cash equivalents and deposits, all interest payable in connection with any such items and rights in and to bank accounts, marketable and other securities and similar investments of Sellers; 9 (b) Any insurance policies, promissory notes, amounts due to Sellers from employees, bonds, letters of credit, certificates of deposit, or other similar items, and any cash surrender value in regard thereto; provided, that in the event Sellers are obligated to assign to Buyer the proceeds of any such insurance policy at the time a Closing occurs under Section 6.3, such proceeds shall be included in the Assets; (c) Any pension, profit-sharing, or employee benefit plans, including all of Sellers' interest in any Welfare Plan, Pension Plan or Benefit Arrangement (each as defined in Section 3.14(a); (d) All Tangible Personal Property disposed of or consumed in the ordinary course of business as permitted by this Agreement; (e) All Tax Returns and supporting materials, all original financial statements and supporting materials, all books and records that Sellers are required by law to retain, all of Sellers' organizational documents, corporate books and records (including minute books and stock ledgers) and originals of account books of original entry, all records of Sellers relating to the sale of the Assets and all records and documents related to any assets excluded pursuant to this Section 2.2; (f) Any interest in and to any refunds of federal, state, or local franchise, income, or other taxes for periods (or portions thereof) ending on or prior to the Closing Date; (g) All Accounts Receivable; (h) All rights and claims of Sellers whether mature, contingent or otherwise, against third parties relating to the Assets of the Stations, whether in tort, contract or otherwise, other than rights and claims against third parties relating to the Assets which have as their basis loss, damage or impairment of or to any of the Assets and which loss, damage or impairment has not been restored or repaired prior to the Closing in which any of the Assets which has been so damaged or impaired is being acquired by Buyer (or in the case of a lost asset, that would have been acquired but for such loss); (i) Any Contracts which are not Assumed Contracts; (j) All of each Sellers' deposits and prepaid expenses; provided, any deposits and prepaid expenses shall be included in the Assets to the extent that Sellers receive a credit therefor in the proration of the Purchase Price pursuant to Section 2.3(b); (k) All rights of Sellers under or pursuant to this Agreement (or any other agreements contemplated hereby); (l) All rights to the names Sinclair Broadcast Group, "Sinclair Communications," Sinclair and any logo or variation thereof and goodwill associated therewith; (m) The Excluded Real Property Interests; 10 (n) The Excluded Tangible Personal Property; (o) All assets owned by the Sellers and used in connection with any television or radio broadcast stations owned and/or programmed by any of the Sellers or Sellers have the right to acquire other than the Stations, including (without limitation) all assets related to Sellers' operation and ownership of the Interstate Road Network and the Road Gang Coast to Coast Network; KPNT-FM, St. Genevieve, MO; WVRV-FM, East St. Louis, IL; WIL-FM, St. Louis, MO; WRTH-AM, St. Louis, MO; KIHT-FM, St. Louis, MO; KXOK-FM, St. Louis, MO; KUPN-AM, Mission, KS, the assets of the Multi-Stations, and all assets of the Multi-Stations Sellers which are subject to the provisions of or specifically excluded from the Multi-Stations Agreement and the USA Digital Shares; (p) All shares of capital stock, partnership interests, interests in limited liability companies or other equity interest, including, but not limited to, any options, warrants or voting trusts relating thereto which are owned by Sellers and not expressly specified in Section 2.1. 2.3 Purchase Price. The purchase price of the Assets shall be One Hundred Twenty Two Million U.S. Dollars ($122,000,000) (the "Initial Purchase Price"), plus the Section 6.9 Amount adjusted as provided below (the "Purchase Price"). (a) Purchase Price Increase. Except as otherwise provided in this Agreement, the Initial Purchase Price shall be increased by the Delay Amount upon the occurrence of any of the following events: (i) Reserved; and (ii) one hundred fifty (150) days following public notice by the FCC that applications for FCC Consent have been accepted for filing (the "Stations Delay Amount Date") if Closing has not occurred with respect to the Stations due to the failure to receive any necessary consent, including, but not limited to, the FCC Consent, or expiration or termination under Hart-Scott-Rodino as a result of facts relating to Buyer or its Affiliates, including without limitation such facts as are disclosed on Schedule 4.6; and (iii) each thirty (30) day period subsequent to the occurrence of the Stations Delay Amount Date until the later to occur of (x) the Closing, or (y) termination of this Agreement in accordance with its terms. The Purchase Price and any increase due pursuant to this Section 2.3(a) shall be paid at Closing. (b) Prorations. The Purchase Price shall be increased or decreased as required to effectuate the proration of revenues and expenses, as set forth below. All revenues and all expenses arising from the operation of the Stations, including tower rental, business and license fees, utility charges, real property and personal property and other similar Taxes and assessments levied against or with respect to the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, payments due under film or programming license 11 agreements, and employee compensation, including wages (including bonuses which constitute wages), salaries, accrued sick leave, severance pay and related Taxes shall be prorated between Buyer and Sellers as to the Stations at Closing in accordance with the principle that Sellers shall receive all revenues and shall be responsible for all expenses, costs and liabilities allocable to the operations of the Stations for the period prior to the Effective Time of Closing, and Buyer shall receive all revenues and shall be responsible for all expenses, costs and obligations allocable to the operations of the Stations for the period after the Effective Time of Closing, subject to the following: (i) There shall be no adjustment for, and Sellers shall remain solely liable with respect to, any Contracts not included in the Assumed Contracts and any other obligation or liability not being assumed by Buyer in accordance with Section 2.2. An adjustment and proration shall be made in favor of Buyer to the extent that Buyer assumes any liability under any Assumed Contract to refund (or to credit against payments otherwise due) any security deposit or similar prepayment paid to Sellers by any lessee or other third party. An adjustment and proration shall be made in favor of Sellers to the extent Buyer receives the right to receive a refund (or to a credit against payments otherwise due) under any Assumed Contract to any security deposit or similar pre-payment paid by or on behalf of Sellers. (ii) An adjustment and proration shall be made in favor of Sellers for the amount, if any, by which the fair market value of the goods or services to be received by the Stations under its trade or barter agreements as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars ($250,000) the fair market value of any advertising time remaining to be run by the Stations as of the Effective Time. An adjustment and proration shall be made in favor of Buyer to the extent that the amount of any advertising time remaining to be run by the Stations under its trade or barter agreements as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars ($250,000) the fair market value of the goods or services to be received by the Stations as of the Effective Time. (iii) There shall be no proration for program barter. (iv) Reserved. (v) An adjustment and proration shall be made in favor of Sellers for the amount, if any, of prepaid expense, the benefit of which accrues to Buyer hereunder, and other current assets acquired by Buyer hereunder which are paid by Sellers to the extent such prepaid expenses and other current assets relate to the period after the Effective Time. (vi) There shall be no proration for any payment(s) made by Interep to any of the Sellers in connection with obtaining the right to serve as the national sales representative of any of the Stations. (c) Manner of Determining Adjustments. The Purchase Price, taking into account the adjustments and prorations pursuant to Section 2.3(b), will be determined in accordance with the following procedures: 12 (i) Sellers shall prepare and deliver to Buyer not later than five (5) days before the Closing Date a preliminary settlement statement which shall set forth Sellers' good faith estimate of the adjustments to the Purchase Price under Section 2.3(b). The preliminary settlement statement shall (A) contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(b) as to the Stations, to the extent such adjustments can be determined or estimated as of the date of the preliminary settlement statement, and such other information as may be reasonably requested by Buyer, and (B) be certified by Sellers to be true and complete to Sellers' Knowledge as of the date thereof. (ii) Not later than ninety (90) days after the Closing Date, Buyer will deliver to Sellers a statement setting forth Buyer's determination of the Purchase Price and the calculation thereof pursuant to Section 2.3(b) as to the Stations. Buyer's statement (A) shall contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(b), and such other information as may be reasonably requested by Sellers, and (B) shall be certified by Buyer to be true and complete to Buyer's knowledge as of the date thereof. If Sellers dispute the amount of such Purchase Price determined by Buyer, they shall deliver to Buyer within thirty (30) days after receipt of Buyer's statement a statement setting forth their determination of the amount of such Purchase Price. If Sellers notify Buyer of its acceptance of Buyer's statement, or if Sellers fail to deliver their statement within the thirty (30)-day period specified in the preceding sentence, Buyer's determination of the Purchase Price shall be conclusive and binding on the parties as of the last day of the thirty (30)-day period. (iii) Buyer and Sellers shall use good faith efforts to resolve any dispute involving the determination of the Purchase Price paid by Buyer at the Closing. If the parties are unable to resolve the dispute within forty-five (45) days following the delivery of all of Buyer's statements to be provided pursuant to Section 2.3(c)(ii) after the Closing, Buyer and Sellers shall jointly designate an independent certified public accounting firm of national standing which has not regularly provided services to either the Buyer or Sellers in the last three (3) years, who shall be knowledgeable and experienced in the operation of radio broadcasting stations, to resolve the dispute. If the parties are unable to agree on the designation of an independent certified public accounting firm, the selection of the accounting firm to resolve the dispute shall be submitted to arbitration to be held in Baltimore, Maryland, in accordance with the commercial arbitration rules of the American Arbitration Association. The accounting firm's resolution of the dispute shall be final and binding on the parties, and a judgment may be entered thereon in any court of competent jurisdiction. Any fees of this accounting firm, and, if necessary, for arbitration to select such accountant, shall be divided equally between the parties. 2.4 Payment of Purchase Price. The Initial Purchase Price shall be paid by Buyer to Sellers as follows: (a) Payment of Estimated Purchase Price At Closing. The Initial Purchase Price, adjusted by the estimated adjustments pursuant to Section 2.3(b) as set forth in Sellers' preliminary settlement statement pursuant to Section 2.3(c)(i), is referred to as the "ESTIMATED PURCHASE PRICE." At the Closing, Buyer shall pay or cause to be paid to Sellers the Estimated Purchase Price for the Stations, including, if applicable, any Delay Amount, by federal wire 13 transfer of same-day funds pursuant to wire transfer instructions, which instructions shall be delivered to Buyer by Sellers at least two (2) business days prior to the Closing Date. (b) Buyer and Sellers shall cause the Escrow Deposit to be released to Sellers as partial payment of the Estimated Purchase Price by delivering wiring instructions to the Escrow Agent two (2) days prior to the Closing Date; provided, however, that none of the Escrow Deposit shall be released by the parties at the Closing until the Deposit Release Date. Once the Deposit Release Date has occurred, the Sellers agree immediately to deliver to the Escrow Agent their consent to the release of that pro rata portion of the Escrow Deposit attributable to a Closing hereunder or under the Multi-Stations Agreement consummated prior to the Deposit Release Date. Until the Deposit Release Date, Buyer shall deliver the entire Estimated Purchase Price at the Closing for the Stations. (c) Payments to Reflect Adjustments. The Purchase Price as finally determined pursuant to Section 2.3(c) shall be paid as follows: (i) If the Purchase Price as finally determined pursuant to Section 2.3(c) exceeds the Estimated Purchase Price, Buyer shall pay to Sellers, in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(c), the difference between the Purchase Price and the Estimated Purchase Price. (ii) If the Purchase Price as finally determined pursuant to Section 2.3(c) is less than the Estimated Purchase Price, Sellers shall pay to Buyer, in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(c), the difference between the Purchase Price and the Estimated Purchase Price. 2.5 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer shall assume and undertake to pay, discharge and perform all obligations and liabilities of Sellers under the Licenses, the Assumed Contracts or as otherwise specifically provided for herein to the extent that either (i) the obligations and liabilities relate to the time after the Effective Time of the Closing, or (ii) the Purchase Price was reduced pursuant to Section 2.3(b) as a result of the proration of such obligations and liabilities. Buyer shall not assume any other obligations or liabilities of Sellers, including (1) any obligations or liabilities under any Contract not included in the Assumed Contracts, (2) any obligations or liabilities under the Assumed Contracts relating to the period prior to the Effective Time of the Closing to which such Assumed Contracts relate, except insofar as an adjustment therefor is made in favor of Buyer under Section 2.3(b), (3) any claims or pending litigation or proceedings relating to the operation of the Stations prior to the Closing or (4) any obligations or liabilities of Sellers under any employee pension, retirement, or other benefit plans. SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date or time, in which case, such representations and warranties shall be true and complete as of such date or time) as follows: 14 3.1 Organization and Authority of Sellers. Each Seller is a corporation, limited liability company or limited partnership (as applicable), duly organized, validly existing and in good standing under the laws of the State listed on Schedule 3.1 next to each such Seller's name. Each Seller has the requisite corporate power and authority (or other appropriate power and authority based on the structure of such Seller) to own, lease and operate its properties, to carry on its business in the places where such properties are now owned, leased, or operated and such business is now conducted, and to execute, deliver and perform this Agreement and the documents contemplated hereby according to their respective terms. Each Seller is duly qualified and in good standing in each jurisdiction listed on Schedule 3.1 next to each such Seller's name, which are all jurisdictions in which such qualification is required. Except as set forth on Schedule 3.1, no Seller is a participant in any joint venture or partnership with any other Person with respect to any part of the operations of the Stations or any of the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement by each Seller have been duly authorized by all necessary corporate or other required action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 3.3 Absence of Conflicting Agreements; Consents. Subject to obtaining the Consents listed on Schedules 3.3 and 3.7, the execution, delivery and performance by each Seller of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not require the consent of any third party; (b) will not conflict with any provision of the Articles of Incorporation, Bylaws or other organizational documents of Sellers; (c) will not conflict with, result in a breach of, or constitute a default under any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, license, or permit to which any Seller is a party or by which any Seller may be bound legally; and (e) will not create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon any of the Assets. Except for the FCC Consent provided for in Section 6.1, the filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described in Schedules 3.3 and 3.7, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Sellers to transfer and convey the Assets to Buyer. 3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list of the FCC Licenses. Sellers have made available to Buyer true and complete copies of the main Licenses (including any amendments and other modifications thereto). The Licenses have been validly issued, and each Seller is the authorized legal holder of the Licenses and those FCC Licenses listed on Schedule 3.4. The Licenses and the FCC Licenses listed on Schedule 3.4 comprise all 15 of the material licenses, permits, and other authorizations required from any governmental or regulatory authority for the lawful conduct in all material respects of the business and operations of the Stations in the manner and to the full extent they are now conducted, and, except as otherwise disclosed on Schedule 3.4, none of the Licenses is subject to any unusual or special restriction or condition that could reasonably be expected to limit materially the full operation of the Stations as now operated. The FCC Licenses are in full force and effect, are valid for the balance of the current license term applicable generally to radio stations licensed to the same communities as the Stations, are unimpaired by any acts or omissions of any Seller or any of its Affiliates, or the employees, agents, officers, directors, or shareholder of any Seller or any of its Affiliates, and are free and clear of any restrictions which might limit the full operation of the Stations in the manner and to the full extent as they are now operated (other than restrictions under the terms of the licenses themselves or applicable to the radio broadcast industry generally). Except as listed on Schedule 3.4 hereto, there are no applications, proceedings or complaints pending or, to the knowledge of any Seller, threatened which may have an adverse effect on the business or operation of the Stations (other than rulemaking proceedings that apply to the radio broadcasting industry generally). Except as disclosed on Schedule 3.4 hereto, no Seller is aware of any reason why any of the FCC Licenses might not be renewed in the ordinary course for a full term without material qualifications or of any reason why any of the FCC Licenses might be revoked. The Stations are in compliance with the Commission's policy on exposure to radio frequency radiation. No renewal of any FCC License would constitute a major environmental action under the rules of the Commission. To the knowledge of Sellers, there are no facts relating to Sellers which, under the Communications Act of 1934, as amended, or the existing rules of the Commission, would (a) disqualify any Seller from assigning any of its FCC Licenses to Buyer, (b) cause the filing of any objection to the assignment of the FCC Licenses to Buyer, (c) lead to a delay in the processing by the FCC of the applications of the FCC Licenses to Buyer, (d) lead to a delay in the termination of the waiting period required by Hart-Scott-Rodino, or (e) disqualify any Seller from consummating the transactions contemplated herein within the times contemplated herein. An appropriate public inspection file for each Station is maintained at the Station's studio in accordance with Commission rules. Access to the Stations' transmission facilities are restricted in accordance with the policies of the Commission. 3.5 Real Property. Schedule 3.5 contains a complete description of all Real Property Interests (including street address, owner, and Sellers' use thereof) other than the Excluded Real Property Interests. The Real Property Interests listed on Schedule 3.5, together with the Real Property Interests which will be created by the execution of the Lease by Buyer and the appropriate Sellers, comprises all interests in real property necessary to conduct the business and operations of the Stations as now conducted. Except as described on Schedule 3.5, Sellers have good fee simple title to all fee estates included in the Real Property Interests and good title to all other Real Property Interests, in each case free and clear of all liens, mortgages, pledges, covenants, easements, restrictions, encroachments, leases, charges, and other claims and encumbrances, except for Permitted Encumbrances. Each leasehold or subleasehold interest included as a Material Contract on Schedule 3.5 is legal, valid, binding, enforceable and in full force and effect. To Sellers' Knowledge, each leasehold or subleasehold designated in the Real Property Interests, but not designated as Material Contracts on Schedule 3.5 is legal, binding and enforceable and in full force and effect. Neither the Seller party thereto or to Sellers' Knowledge any other party thereto, is in default, violation or breach under any lease or sublease and no event has occurred and is continuing that constitutes (with notice or passage of time or both) a default, 16 violation or breach thereunder. Sellers have not received any notice of a default, offset or counterclaim under any lease or sublease with respect to any of the Real Property Interests. As of the date hereof and as of the applicable Closing Date, Sellers enjoy peaceful and undisturbed possession of the leased Real Property Interests; and so long as Sellers fulfill their obligations under the lease therefor, Sellers have enforceable rights to nondisturbance and quiet enjoyment against its lessor or sublessor, and, to the Knowledge of Sellers, except as set forth in Schedule 3.5, no third party holds any interest in the leased premises with the right to foreclose upon Sellers' leasehold or subleasehold interest. Sellers have legal and practical access to all of the Owned Real Property and Leased Real Property, as applicable. Except as otherwise disclosed in Schedule 3.5, all towers, guy anchors, ground radials, and buildings and other improvements included in the Assets are located entirely on the Owned Real Property or the Leased Real Property, as applicable, listed in Schedule 3.5. All Owned Real Property and Leased Real Property (including the improvements thereon) (a) is in good condition and repair consistent with its current use, (b) is available for immediate use in the conduct of the business and operations of the Stations, and (c) complies in all material respects with all applicable material building or zoning codes and the regulations of any governmental authority having jurisdiction, except to the extent that the current use by Sellers, while permitted, constitutes or would constitute a "nonconforming use" under current zoning or land use regulations. No eminent domain or condemnation proceedings are pending or, to the knowledge of Sellers, threatened with respect to any Real Property Interests. 3.6 Tangible Personal Property. The lists of Tangible Personal Property comprising all material items of tangible personal property, other than the Excluded Tangible Personal Property, necessary to conduct the business and operations of the Stations as now conducted has been provided to Buyer previously. Except as described in Schedule 3.6, Sellers own and have good title to each item of Tangible Personal Property and none of the Tangible Personal Property owned by Sellers is subject to any security interest, mortgage, pledge, conditional sales agreement, or other lien or encumbrance, except for Permitted Encumbrances. With allowance for normal repairs, maintenance, wear and obsolescence, each material item of Tangible Personal Property is in good operation condition and repair and is available for immediate use in the business and operations of the Stations. All material items of transmitting and studio equipment included in the Tangible Personal Property (a) have been maintained in a manner consistent with generally accepted standards of good engineering practice, and (b) will permit the Stations and any unit auxiliaries thereto to operate in accordance with the terms of the FCC Licenses and the rules and regulations of the FCC and in all material respects with all other applicable federal, state and local statutes, ordinances, rules and regulations. 3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts which either (a) have a remaining term (after taking into account any cancellation rights of Sellers) of more than one year after the date hereof or (b) require expenditures in excess of Twenty Five Thousand Dollars ($25,000) in any calendar year after the date hereof, except contracts with advertisers for production or the sale of advertising time on the Stations for cash that may be canceled by Sellers without penalty on not more than ninety days' notice. Sellers have delivered or made available to Buyer true and complete copies of all written Assumed Contracts, and true and complete descriptions of all oral Assumed Contracts (including any amendments and other modifications to such Contracts). Other than the Contracts listed on Schedule 3.7, Schedule 3.5, and the Lease, Sellers require no material contract, lease, or other agreement to enable them to 17 carry on their business in all material respects as now conducted. All of the Contracts are in full force and effect and are valid, binding and enforceable in accordance with their terms except as the enforceability of such Contracts may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. Neither the Seller party thereto or, to the knowledge of Sellers, any other party thereto, is in default, violation or breach in any material respect under any Contract and no event has occurred and is continuing that constitutes (with notice or passage of time or both) a default, violation, or breach in any material respect thereunder. Except as disclosed on Schedule 3.7, other than in the ordinary course of business, Sellers do not have Knowledge of any intention by any party to any Contract (a) to terminate such Contract or amend the terms thereof, (b) to refuse to renew the Contract upon expiration of its term, or (c) to renew the Contract upon expiration only on terms and conditions that are more onerous than those now existing. Except for the need to obtain the Consents listed on Schedule 3.7, the exchange and transfer of the Assets in accordance with this Agreement will not affect the validity, enforceability, or continuation of any of the Contracts. 3.8 Intangibles. Schedule 3.8 is a true and complete list of all Intangibles (exclusive of Licenses listed in Schedule 3.4) that are required to conduct the business and operations of the Stations as now conducted, all of which are valid and in good standing and uncontested. Sellers have provided or made available to Buyer copies of all documents establishing or evidencing the Intangibles listed on Schedule 3.8. Sellers own or have a valid license to use all of the Intangibles listed on Schedule 3.8. Other than with respect to matters generally affecting the radio broadcasting industry and not particular to Sellers and except as set forth on Schedule 3.8, Sellers have not received any notice or demand alleging that Sellers are infringing upon or otherwise acting adversely to any trademarks, trade names, service marks, service names, copyrights, patents, patent applications, know-how, methods, or processes owned by any other Person, and there is no claim or action pending, or to the Knowledge of Sellers threatened, with respect thereto. To the knowledge of Sellers, except as set forth on Schedule 3.8, no other Person is infringing upon Sellers rights or ownership interest in the Intangibles. 3.9 Title to Properties. Except as disclosed in Schedule 3.5 or 3.6, Sellers have good and marketable title to the Assets subject to no mortgages, pledges, liens, security interests, encumbrances, or other charges or rights of others of any kind or nature except for Permitted Encumbrances. 3.10 Financial Statements. Sellers have furnished Buyer with true and complete copies of unaudited financial statements of the Stations containing a balance sheet and statement of income, as at and for the fiscal year ended December 31, 1998, and an unaudited balance sheet and statement of income as at and for the seven (7) months ended July 31, 1999 (the "BALANCE SHEET DATE") (collectively, the "FINANCIAL STATEMENTS"). To the extent the Financial Statements relate to the period of time during which the Stations were owned by the Sellers (or any Affiliate thereof) the Financial Statements have been prepared from the books and records of Sellers and have been prepared in a manner consistent with the audited Financial Statements of Sinclair, except for the absence of footnotes and certain year-end adjustments. The Financial Statements accurately reflect the books, records and accounts of Sellers, present fairly and accurately the financial condition of the Stations as at their respective dates and the results of operations for the 18 periods then ended and none of the Financial Statements understates in any material respect the normal and customary costs and expenses of conducting the business or operations of the Stations in any material respect as currently conducted by Sellers or otherwise materially inaccurately reflects the operations of the Stations; provided, that the foregoing representations are given only to the Sellers' Knowledge to the extent the Financial Statements relate to a period of time during which the Stations were not owned by Sellers (or an Affiliate thereof). 3.11 Taxes. Except as set forth in Schedule 3.11, Sellers have filed or caused to be filed all Tax Returns that are required to be filed with respect to their ownership and operation of the Stations, and have paid or caused to be paid all Taxes shown on those returns or on any Tax assessment received by them to the extent that such Taxes have become due, or have set aside on their books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. There are no legal, administrative, or other Tax proceedings presently pending, and there are no grounds existing pursuant to which Sellers are or could be made liable for any Taxes, the liability for which could extend to Buyer as transferee of the business of the Stations. 3.12 Insurance. Schedule 3.12 is a true and complete list of all insurance policies of or covering Sellers. All policies of insurance listed in Schedule 3.12 are in full force and effect as of the date hereof. During the past three years, no insurance policy of Sellers or the Stations has been canceled by the insurer and, except as set forth on Schedule 3.12, no application of Sellers for insurance has been rejected by any insurer. 3.13 Reports. All material returns, reports and statements that the Stations is currently required to file with the FCC or Federal Aviation Administration have been filed, and all reporting requirements of the FCC and Federal Aviation Administration have been complied with in all material respects. All of such returns, reports and statements, as filed, satisfy all applicable legal requirements. 3.14 Personnel and Employee Benefits. (a) Employees and Compensation. Schedule 3.14 contains a true and complete list of all employees of Sellers employed at the Stations as of June 30, 1999 who earned in excess of $20,000 in 1998 or whose present rate of pay would cause them to earn more than that amount in 1999, and indicates the salary and bonus, if any, to which each such Employee is currently entitled (limited in the case of Employees who are compensated on a commission basis to a general description of the manner in which such commissions are determined). As of the date of this Agreement, Sellers have no knowledge that any General Manager, Sales Manager, or Program Director employed at the Stations currently plans to terminate employment, whether by reason of the transactions contemplated by this Agreement or otherwise. Schedule 3.14 also contains a true and complete list of all employee benefit plans or arrangements covering the employees employed at the Stations (the "EMPLOYEES"), including, with respect to the Employees any: 19 (i) "Employee welfare benefit plan," as defined in Section 3(1) of ERISA, that is maintained or administered by Sellers or to which Sellers contribute or are required to contribute (a "WELFARE PLAN"); (ii) "Multiemployer pension plan," as defined in Section 3(37) of ERISA, that is maintained or administered by Sellers or to which Sellers contribute or are required to contribute (a "MULTIEMPLOYER PLAN" and, together with the Welfare Plans, the "BENEFIT PLANS"); (iii) "Employee pension benefit plan," as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), to which Sellers contribute or are required to contribute (a "PENSION PLAN"); (iv) Employee plan that is maintained in connection with any trust described in Section 501(c)(9) of the Internal Revenue Code of 1986, as amended; and (v) Employment, severance, or other similar contract, arrangement, or policy and each plan or arrangement (written or oral) providing for insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, or retirement benefits or arrangement for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights, stock purchases, or other forms of incentive compensation or post-retirement insurance, compensation, or benefits that (A) is not a Welfare Plan, Pension Plan, or Multiemployer Plan, and (B) is entered into, maintained, contributed to, or required to be contributed to by any Seller or under which any Seller has any liability relating to Employees, (collectively, "BENEFIT ARRANGEMENTS"). (b) Pension Plans. Sellers do not sponsor, maintain, or contribute to any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing Plan. Each Pension Plan complies currently and has been maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all material statutes, orders, rules and regulations that are applicable to such plans, including ERISA and the Code, except where the failure to do so will not have a Material Adverse Effect. (c) Welfare Plans. Each Welfare Plan complies currently and has been maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all material statutes, orders, rules and regulations that are applicable to such plans, including ERISA and the Code, except where the failure to do so will not have a Material Adverse Effect. Sellers do not sponsor, maintain, or contribute to any Welfare Plan that provides health or death benefits to former employees of the Stations other than as required by Section 4980B of the Code or other applicable laws. (d) Benefit Arrangements. Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the material requirements prescribed by all statutes, orders, rules and regulations that are applicable to such Benefit Arrangement, except where the failure to do so will not have a Material Adverse Effect. Except for those employment agreements listed on Schedule 3.7, Sellers have no written contract prohibiting the termination of any Employee. 20 (e) Multiemployer Plans. Except as disclosed in Schedule 3.14, Sellers have not at any time been a participant in any Multiemployer Plan. (f) Delivery of Copies of Relevant Documents and Other Information. Sellers have delivered or made available to Buyer true and complete copies of each of the following documents: (i) Each Welfare Plan and Pension Plan (and, if applicable, related trust agreements) and all amendments thereto, and written descriptions thereof that have been distributed to Employees, all annuity contracts or other funding instruments; and (ii) Each Benefit Arrangement and written descriptions thereof that have been distributed to Employees and complete descriptions of any Benefit Arrangement that is not in writing. (g) Labor Relations. Except as set forth in Schedule 3.14(g), no Seller is a party to or subject to any collective bargaining agreement or written or oral employment agreement with any Employee. With respect to the Employees Sellers have complied in all material respects with all laws, rules and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and have not received any notice alleging that any Seller has failed to comply materially with any such laws, rules, or regulations. Except as set forth on Schedule 3.14(g), no proceedings are pending or, to the Knowledge of Sellers, threatened, between any Seller and any Employee (singly or collectively) that relate to the Stations. Except as set forth on Schedule 3.14(g), no labor union or other collective bargaining unit represents or claims to represent any of the Employees. Except as set forth in Schedule 3.14, to the Knowledge of Sellers, there is no union campaign being conducted to solicit cards from any Employees to authorize a union to represent any of the employees of any Seller or to request a National Labor Relations Board certification election with respect to any Employees. 3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15 and except for any FCC rulemaking proceedings generally affecting the radio broadcasting industry and not particular to any of Sellers, there is no claim, legal action, counterclaim, suit, arbitration, or other legal, administrative, or tax proceeding, nor any order, decree, or judgment, in progress or pending, or to the Knowledge of Sellers threatened, against or relating to the Assets, or the business or operations of any of the Stations, nor does any Seller know of any basis for the same. 3.16 ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed on Schedule 3.16, (x) none of the Owned Real Property and none of the Tangible Personal Property and, to Sellers' Knowledge (provided such knowledge qualifer shall not apply to the extent caused by the Tangible Personal Property), none of the Leased Real Property contains (i) any asbestos, polychlorinated biphenyls or any PCB contaminated oil; (ii) any Contaminants; or (iii) any underground storage tanks; (y) no underground storage tank disclosed on Schedule 3.16 has leaked and has not been remediated or leaks and such tank is in substantial compliance with all applicable Environmental Laws; and (z) all of the Owned Real 21 Property and, to Sellers' Knowledge, all of the Leased Real Property is in substantial compliance with all applicable Environmental Laws. (b) Sellers have obtained all material permits, licenses and other authorizations that are required under all Environmental Laws. 3.17 Compliance with Laws. Sellers have complied in all material respects with the Licenses and all material federal, state and local laws, rules, regulations and ordinances applicable or relating to the ownership and operation of the Assets and Stations, and Sellers have not received any notice of any material violation of federal, state and local laws, regulations and ordinances applicable or relating to the ownership or operation of the Assets and the Stations nor, to Sellers' Knowledge, have Sellers received any notice of any immaterial violation of federal, state and local laws, regulations, and ordinances applicable or relating to the ownership or operation of the Assets or the Stations. 3.18 Conduct of Business in Ordinary Course. Since the Balance Sheet Date and through the date hereof, Sellers have conducted their business and operations in the ordinary course and, except as disclosed in Schedule 3.18, have not: (a) made any material increase in compensation payable or to become payable to any of its employees other than those in the normal and usual course of business or in connection with any change in an employee's responsibilities, or any bonus payment made or promised to any of its Employees, or any material change in personnel policies, employee benefits, or other compensation arrangements affecting its employees; (b) made any sale, assignment, lease, or other transfer of assets other than in the normal and usual course of business with suitable replacements being obtained therefor; (c) canceled any debts owed to or claims held by Sellers, except in the normal and usual course of business; (d) made any changes in Sellers' accounting practices; (e) suffered any material write-down of the value of any Assets or any material write-off as uncorrectable of any Accounts Receivable; or (f) transferred or granted any right under, or entered into any settlement regarding the breach or infringement of, any license, patent, copyright, trademark, trade name, franchise, or similar right, or modified any existing right. 3.19 Transactions with Affiliates. Except as disclosed in Schedule 3.19 or with respect to the Excluded Real Property Interests and the Excluded Tangible Personal Property, no Seller has been involved in any business arrangement or relationship with any Affiliate of Seller, and no Affiliate of any Seller owns any property or right, tangible or intangible, that is material to the operations of the business of the Stations. 22 3.20 Broker. Except as disclosed on Schedule 3.20, no Seller nor any Person acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement, and Buyer shall have no liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement for any broker listed on Schedule 3.20. 3.21 Insolvency Proceedings. None of the Sellers nor any of the Assets are the subject of any pending or threatened insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary. No Seller has made an assignment for the benefit of creditors or taken any action in contemplation of or which would constitute a valid basis for the institution of any such insolvency proceedings. No Seller is insolvent nor will it become insolvent as a result of entering into or performing this Agreement. 3.22 Year 2000 Compatibility. Sellers believe that the Stations' hardware, software, broadcast and ancillary equipment (the "Operational Equipment") that are date dependent and are material to the operation of the Stations are year 2000 compliant. To Sellers' Knowledge, there are no facts or circumstances that would result in material costs or disruption to the operation of the Stations due to the failure of Sellers' customers or suppliers to be year 2000 compliant. For the purposes of this section, "Year 2000 Compliant" shall mean that the Operational Equipment will correctly process, provide and receive date data before, during and after December 31, 1999. SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers as of the date hereof and as of the Closing Date (except for representations and warranties that speak as of a specific date or time, in which case, such representations and warranties shall be true and complete as of such date and time) as follows: 4.1 Organization, Standing and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has the requisite corporate power and authority to execute, deliver and perform this Agreement and the documents contemplated hereby according to their respective terms and to own the Assets. Prior to the Closing Date, Buyer will be qualified to do business in each of the States in which any of the Stations are located. 4.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement by Buyer have been duly authorized by all necessary action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 4.3 Absence of Conflicting Agreements and Required Consents. Subject to the receipt of the Consents, the execution, delivery and performance by Buyer of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): 23 (a) do not require the consent of any third party; (b) will not conflict with the Articles of Incorporation or Bylaws of Buyer; (c) will not conflict with, result in a breach of, or constitute a default under, any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; and (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, instrument, license or permit to which Buyer is a party or by which Buyer may be bound. Except for the FCC Consent provided for in Section 6.1. the filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described in Schedule 4.3, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Buyer to acquire the Assets from Sellers or to assume certain liabilities and obligations of Sellers in accordance with Section 2.5. 4.4 Brokers. Neither Buyer nor any person or entity acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement. 4.5 Availability of Funds. Buyer will have available on the Closing Date sufficient funds to enable it to consummate the transactions contemplated hereby. 4.6 Qualifications of Buyer. Except as disclosed in Schedule 4.6, Buyer is, and pending Closing will remain legally, financially and otherwise qualified under the Communications Act, Hart-Scott-Rodino and all rules, regulations and policies of the FCC, the Department of Justice, the Federal Trade Commission (the "FTC") and any other governmental agency, to acquire and operate the Stations. Except as disclosed in Schedule 4.6, there are no facts or proceedings which would reasonably be expected to disqualify Buyer under the Communications Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations or would cause the FCC not to approve the assignment of the FCC Licenses to Buyer or the Department of Justice and the FTC not to allow the waiting period under Hart-Scott-Rodino to terminate within 30 days of the filing provided for in Section 6.2. Except as disclosed in Schedule 4.6, Buyer has no knowledge of any fact or circumstance relating to Buyer or any of Buyer's Affiliates that would reasonably be expected to (a) cause the filing of any objection to the assignment of the FCC Licenses to Buyer, (b) lead to a delay in the processing by the FCC of the applications for such assignment or (c) lead to a delay in the termination of the waiting period required by Hart-Scott-Rodino. Except as disclosed in Schedule 4.6, no waiver of any FCC rule or policy is necessary to be obtained for the grant of the applications for the assignment of the FCC Licenses to Buyer, nor will processing pursuant to any exception or rule of general applicability be requested or required in connection with the consummation of the transactions herein. 4.7 WARN Act. Buyer 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 Notification Act of 1988, as amended, or any similar state law. 24 4.8 Buyer's Defined Contribution Plan. Schedule 4.8 completely and accurately lists all Buyer's defined contribution plan or plans (the "Buyer's Plan") intended to be qualified under Section 401(a) and 401(k) of the Code in which the Transferred Employees will be eligible to participate. Buyer has a currently applicable determination letter from the Internal Revenue Service. SECTION 5: OPERATION OF THE STATIONS PRIOR TO CLOSING Sellers covenant and agree that between the date hereof and the Closing Date, Sellers will operate the Stations in the ordinary course in accordance with Sellers' past practices (except where such conduct would conflict with the following covenants or with other obligations of Sellers under this Agreement), and, except as contemplated by this Agreement or with the prior written consent of Buyer (such consent not to be unreasonably withheld), Sellers will act in accordance with the following insofar as such actions relate to the Stations: 5.1 Contracts. Seller will not renew, extend, amend or terminate, or waive any material right under, any Material Contract, or enter into any contract or commitment or incur any obligation (including obligations relating to the borrowing of money or the guaranteeing of indebtedness and obligations arising from the amendment of any existing Contract, regardless of whether such Contract is a Material Contract) that will be assumed by or be otherwise binding on Buyer after Closing, except for (a) cash time sales agreements and production agreements made in the ordinary course of business consistent with Seller's past practices, (b) the renewal or extension of any existing Contract (other than network affiliation agreements) on its existing terms in the ordinary course of business, and (c) other contracts (other than network affiliation agreements, or time brokerage or local marketing arrangements) entered into in the ordinary course of business consistent with Sellers' past practices that do not involve consideration, in the aggregate, in excess of Fifty Thousand Dollars ($50,000) measured at Closing. Prior to the Closing Date, Sellers shall deliver to Buyer a list of all material Contracts entered into between the date of this Agreement and the Closing Date and shall make available to Buyer copies of such Contracts. 5.2 Compensation. Sellers shall not materially increase the compensation, bonuses, or other benefits payable or to be payable to any person employed in connection with the conduct of the business or operations of the Stations, except in accordance with past practices, as required by an employment agreement or consulting agreement or in connection and commensurate with the change in responsibility of any employee. 5.3 Encumbrances. Sellers will not create, assume, or permit to exist any mortgage, pledge, lien, or other charge or encumbrance affecting any of the Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens that will be removed prior to the Closing Date, and (c) Permitted Encumbrances. 5.4 Dispositions. Sellers will not sell, assign, lease, or otherwise transfer or dispose of any of the Assets except (a) Assets that are no longer used in the operations of the Stations, (b) Assets that are replaced with Assets of equivalent kind and value that are acquired after the date of this Agreement, and (c) any intercompany accounts receivable. 25 5.5 Access to Information. Upon prior reasonable notice by Buyer, Sellers will give to Buyer and its investors, lenders, counsel, accountants, engineers and other authorized representatives reasonable access to the Stations and all books, records and documents of Sellers which are material to the business and operation of the Stations, and will furnish or cause to be furnished to Buyer and its authorized representatives all information relating to Sellers and the Stations that they reasonably request (including any financial reports and operations reports produced with respect to the Stations). 5.6 Insurance. Sellers or their Affiliates shall maintain in full force and effect policies of insurance of the same type, character and coverage as the policies currently carried with respect to the business, operations and assets of the Stations. 5.7 Licenses. Sellers shall not cause or permit, by any act or failure to act, any of the Licenses listed on Schedule 3.4 to expire or to be revoked, suspended or modified, or take any action that could reasonably be expected to cause the FCC or any other governmental authority to institute proceedings for the suspension, revocation or material adverse modification of any of the Licenses. Sellers shall prosecute with due diligence any applications to any governmental authority necessary for the operation of the Stations. 5.8 Obligations. Sellers shall pay all its obligations insofar as they relate to the Stations as they become due, consistent with past practices. 5.9 No Inconsistent Action. Sellers shall not take any action that is inconsistent with its obligations under this Agreement in any material respect or that could reasonably be expected to hinder or delay the consummation of the transactions contemplated by this Agreement. Neither Seller nor any of its respective representatives or agents shall, directly or indirectly, solicit, initiate, or participate in any way in discussions or negotiations with, or provide any confidential information to, any Person (other than Buyer or any Affiliate or associate of Buyer and their respective representatives and agents) concerning any possible disposition of the Stations, the sale of any material assets of the Stations, or any similar transaction. 5.10 Maintenance of Assets. Sellers shall maintain all of the Assets in good condition (ordinary wear, tear and casualty excepted), consistent with their overall condition on the date of this Agreement, and use, operate and maintain all of the Assets in a reasonable manner. Sellers shall maintain inventories of spare parts and expendable supplies at levels consistent with past practices. If any insured or indemnified loss, damage, impairment, confiscation, or condemnation of or to any of the Assets occurs, Sellers shall repair, replace, or restore the Assets to their prior condition as represented in this Agreement as soon thereafter as possible, and Sellers shall use the proceeds of any claim under any property damage insurance policy or other recovery solely to repair, replace, or restore any of the Assets that are lost, damaged, impaired, or destroyed. 5.11 Consents. (a) Subject to Section 6.5 hereof, Sellers shall use their reasonable efforts to obtain all Consents described in Section 3.3, without any adverse change in the terms or conditions of 26 any Assumed Contract or License. Sellers shall promptly advise Buyer of any difficulties experienced in obtaining any of the Consents and of any conditions proposed, considered or requested for any of the Consents. (b) Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer any Contract or any claim, right or benefit arising thereunder or resulting therefrom, if an attempted assignment or transfer thereof, without the consent of a third party thereto would constitute a breach thereof or in any way adversely affect the rights of the Buyer thereunder. If such consent (a "Deferred Consent") is not obtained, or if an attempted assignment or transfer thereof would be ineffective or would affect the rights thereunder so that the Buyer would not receive all such rights, then (i) the Seller and the Buyer will cooperate, in all reasonable respects, to obtain such Deferred Consents as soon as practicable; provided that Sellers shall have no obligation (y) to expend funds to obtain any Deferred Consent, other than ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining any Deferred Consent, or (z) to agree to any adverse change in any License or Assumed Contract in order to obtain a Deferred Consent, and (ii) until such Deferred Consent is obtained, the Seller and the Buyer will cooperate in all reasonable respects, to provide to the Buyer the benefits under the Contract, to which such Deferred Consent relates (with the Buyer responsible for all the liabilities and obligations thereunder). In particular, in the event that any such Deferred Consent is not obtained prior to Closing, then the Buyer and the Seller shall enter into such arrangements (including subleasing or subcontracting if permitted) to provide to the parties the economic and operational equivalent of obtaining such Deferred Consent and assigning or transferring such Contract, including enforcement for the benefit of the Buyer of all claims or rights arising thereunder, and the performance by the Buyer of the obligations thereunder on a prompt and punctual basis. 5.12 Books and Records. Sellers shall maintain their books and records in accordance with past practices. 5.13 Notification. Sellers shall promptly notify Buyer in writing of any or material developments with respect to the business or operations of the Stations and of any material change in any of the information contained in the representations and warranties contained in Section 3 of this Agreement. 5.14 Financial Information. Sellers shall furnish Buyer with sales pacing reports for the Stations on a weekly basis and shall furnish to Buyer within thirty (30) days after the end of each month ending between the date of this Agreement and the Closing Date a statement of income and expense for the month just ended and such other financial information (including information on payables and receivables) as Buyer may reasonably request. All financial information delivered by Sellers to Buyer pursuant to this Section 5.14 shall be prepared from the books and records of Sellers in accordance with generally accepted accounting principles, consistently applied, shall accurately reflect the books, records and accounts of the Stations, shall be complete and correct in all material respects, and shall present fairly the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended. 27 5.15 Compliance with Laws. Sellers shall comply in all material respects with all material laws, rules and regulations. 5.16 Programming. Sellers shall not make any material changes in the Stations' formats, except such changes as in the good faith judgment of Seller are required by the public interest. 5.17 Preservation of Business. Sellers shall use commercially reasonable efforts consistent with past practices to preserve the business and organization of the Stations and to keep available to the Stations its present employees and to preserve the audience of the Stations and the Stations' present relationships with suppliers, advertisers, and others having business relations with it. 5.18 Normal Operations. Subject to the terms and conditions of this Agreement (including, without limitation, Section 5.1), prior to the Closing, Sellers shall carry on the business and activities of the Stations, including, without limitation, promotional activities, the sale of advertising time, entering into other contracts and agreements, purchasing and scheduling programming, performing research, and operating in all material respects in accordance with existing budgets and past practice and will not enter into trade and barter obligations except in the ordinary course of business consistent with past practice. 5.19 Reserved SECTION 6: SPECIAL COVENANTS AND AGREEMENTS 6.1 FCC Consent (a) The exchange and transfer of the Assets as contemplated by this Agreement is subject to the prior consent and approval of the FCC. (b) Sellers and Buyer shall prepare and within seven (7) business days after the date of this Agreement shall file with the FCC an appropriate application for FCC Consent. The parties shall thereafter prosecute the application with all reasonable diligence and otherwise use their respective best efforts to obtain a grant of the application as expeditiously as practicable. Each party agrees to comply with any condition imposed on it by the FCC Consent, except that no party shall be required to comply with a condition if (i) the condition was imposed on it as the result of a circumstance the existence of which does not constitute a breach by that party of any of its representations, warranties or covenants hereunder, and (ii) compliance with the condition would have a material adverse effect upon it. Buyer and Sellers shall oppose any petitions to deny or other objections filed with respect to the application for the FCC Consent and any requests for reconsideration or judicial review of the FCC Consent. (c) If the Closing shall not have occurred for any reason within the original effective period of the FCC Consent, and neither party shall have terminated this Agreement under Section 9, the parties shall jointly request an extension of the effective period of the FCC Consent, as the case may be. No extension of the effective period of the FCC Consent shall limit the exercise by either party of its right to terminate the Agreement under Section 9. 28 6.2 Hart-Scott-Rodino. Within ten (10) days following the execution of this Agreement, Sellers and Buyer shall complete any filing that may be required pursuant to Hart-Scott-Rodino (each an "HRS Filing"). Sellers and Buyer shall diligently take, or fully cooperate in the taking of, all necessary and proper steps, and provide any additional information reasonably requested in order to comply with, the requirements of Hart-Scott-Rodino. 6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Assets of Sellers for any cause whatsoever shall be borne by Sellers at all times prior to the Closing. In the event of loss or damage prior to the Closing Date, Sellers shall use commercially reasonable efforts to fix, restore, or replace such loss, damage, impairment, confiscation, or condemnation to its former operational condition. If Sellers have adequate replacement cost insurance, Buyer may elect to have Sellers assign such insurance proceeds to Buyer, in which case, Buyer shall proceed with the Closing , and receive at the Closing the insurance proceeds or an assignment of the right to receive such insurance proceeds, as applicable, to which Sellers otherwise would be entitled, whereupon Sellers shall have no further liability to Buyer for such loss or damage. 6.4 Confidentiality. Except as necessary for the consummation of the transaction contemplated by this Agreement, including Buyer's obtaining of financing related hereto, and except as and to the extent required by law, each party will keep confidential any information obtained from the other party in connection with the transactions specifically contemplated by this Agreement. If this Agreement is terminated, each party will return to the other party all information obtained by the such party from the other party in connection with the transactions contemplated by this Agreement. Buyer shall continue to be bound by the terms and conditions of the Confidentiality Agreement dated June 30, 1999 between the parties hereto (the "CONFIDENTIALITY AGREEMENT"). 6.5 Cooperation. Buyer and Sellers shall reasonably cooperate with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement, and in connection with any litigation after the Closing Date which relate to the Stations for periods prior to the applicable Effective Time, Buyer and Sellers shall execute such other documents as may be reasonably necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their commercially reasonable efforts to consummate the transaction contemplated hereby and to fulfill their obligations under this Agreement. Notwithstanding the foregoing, Sellers shall have no obligation (a) to expend funds to obtain any of the Consents, other than ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining such consents, or (b) to agree to any adverse change in any License or Assumed Contract in order to obtain a Consent required with respect thereto. 6.6 Control of the Stations. Prior to the Closing, Buyer shall not, directly or indirectly, control, supervise or direct, or attempt to control, supervise or direct, the operations of the Stations; those operations, including complete control and supervision of all of each Stations' programs, employees and policies, shall be the sole responsibility of Seller. 29 6.7 Accounts Receivable. (a) As soon as practicable after the Closing Date, Sellers shall deliver to Buyer a complete and detailed list of all the Accounts Receivable for the Stations. During the period beginning on the Closing Date and ending on the last day of the sixth full calendar month beginning after the Closing Date (the "COLLECTION PERIOD"), Buyer shall use commercially reasonable efforts, as Sellers' agent, to collect the Accounts Receivable in the usual and ordinary course of business, using the Stations' credit, sales and other appropriate personnel in accordance with customary practices, which may include referral to a collection agency. Notwithstanding the foregoing, Buyer shall not be required to institute legal proceedings on Sellers' behalf to enforce the collection of any Accounts Receivable. Buyer shall not adjust any Accounts Receivable or grant credit without Sellers' written consent, and Buyer shall not pledge, secure or otherwise encumber such Accounts Receivable or the proceeds therefrom. On or before the twelfth business day after the end of each calendar month during the Collection Period, Buyer shall remit to Sellers collections received by Buyer with respect to the Accounts Receivable, together with a report of all amounts collected with respect to the Accounts Receivable during, as the case may be, the period from the Closing or the beginning of such month through the end of such month, less any sales commissions or collection costs paid by Buyer during the respective periods with respect to those Accounts Receivable. (b) Any payments received by Buyer during the Collection Period from any Person that is an account debtor with respect to any account disclosed in the list of Accounts Receivable delivered by Sellers to Buyer shall be applied first to the invoice designated by the account debtor and, if none, such payment shall be applied to the oldest account which is not disputed. Buyer shall incur no liability to Sellers for any uncollected account, other than as a result of Buyer's breach of its obligations under this Section 6.7. Prior to the end of the third full calendar month after the Closing, neither Sellers nor any agent of Sellers shall make any direct solicitation of the account debtors for payment. After the end of the third full calendar month after the Closing, Sellers shall have the right, at their expense, to assist and participate with Buyer in the collection of unpaid Accounts Receivable, provided, however, Seller's collection efforts shall be commercially reasonable and consistent with its past practices. (c) At the end of the Collection Period, Buyer shall return to Sellers all files concerning the collection or attempts to collect the Accounts Receivable, and Buyer's responsibility for the collection of the Accounts Receivable shall cease. 6.8 Allocation of Purchase Price. Buyer and Sellers agree that the fair market value of the Assets of the Stations (the "Fair Market Value of the Assets") will be appraised by the appraisal firm of BIA, whose expenses will be borne one-half (1/2) by Buyer and one-half (1/2) by Sellers. Buyer and Sellers shall collaborate in good faith in the preparation of mutually satisfactory Form(s) 8594 (and Form 8824 to the extent applicable) reflecting the Fair Market Value of the Assets as found by BIA and such other information as is required by the form. Buyer and Sellers shall each file with their respective federal income tax return for the tax year in which the Closing occurs, IRS Form(s) 8594 (and Form 8824 to the extent applicable) containing the information agreed upon by the parties pursuant to the immediately preceding sentence. Buyer agrees to report the purchase of the Assets of the Stations, and Sellers agree to report the sale of 30 such assets for income tax purposes on their respective income tax returns in a manner consistent with the information agreed upon by the parties pursuant to this section and contained in the IRS Form(s) 8594 (and Form 8824 to the extent applicable). 6.9 Access to Books and Records. To the extent reasonably requested by Buyer, Sellers shall provide Buyer access and the right to copy from and after any Closing Date any books and records relating to the Assets but not included in the Assets. To the extent reasonably requested by Sellers, Buyer shall provide Sellers access and the right to copy from and after the applicable Closing Date any books and records relating to the Assets that are included in the Assets. Buyer and Sellers shall each retain any such books and records, for a period of three years (or such longer period as may be required by law or good business practice) following the Final Closing Date. Subject to and in accordance with the terms of this Section 6.9, Sellers shall cause its accountants regularly servicing Sellers to conduct audits and reviews of Sellers' financial information as Buyer may reasonably determine is necessary to satisfy Buyer's due diligence, including, without limitation, (a) causing Sellers' auditors to permit Buyer's auditors to have access to Sellers' auditor's work papers, and (b) causing Sellers' auditors to consent to such access by Buyer. Under no circumstance shall the preparation of any financial statements pursuant to such audits and reviews (i) require any Seller to change or modify any accounting policy, (ii) cause any unreasonable disruption in the business or operations of any Station, or (iii) cause any delay that is more than de minimis in any internal reporting requirements of any Seller. All costs and expenses incurred in connection with the preparation of (and assimilation of relevant information for) the audits and reviews of financial information shall be paid by Sellers; provided, Buyer shall promptly pay upon presentation of any invoice, as a non-refundable prepayment of the Purchase Price, for all charges incurred in connection with such audit to the extent relating to work performed on or after July 26, 1999 (such charges, the "Section 6.9 Amount") (it being understood that the hourly charges of Sellers' accountants for the period of time for which Buyer is responsible may be greater than the hourly charges incurred by Sellers). In addition, Buyer shall be responsible for any costs and expenses (a) associated with the inclusion of such audited financial statements in Buyer's publicly filed documents, including, without limitation, any fees for consents to such inclusion and a "comfort letter," and (b) incurred in connection with any review of financial statements for the periods ended June 30, 1998 or June 30, 1999, or for any other periods other than the financial statements for calendar year 1998. 6.10 Employee Matters. (a) Upon consummation of the Closing, Buyer shall offer employment to each of the Employees of the Stations (including those on leave of absence, whether short-term, long-term, family, maternity, disability, paid, unpaid or other, and those hired after the date hereof in the ordinary course of business) at a comparable salary, position and place of employment as held by each such employee immediately prior to the Closing Date (such employees who are given such offers of employment are referred to herein as the "TRANSFERRED EMPLOYEES") (b) Except as provided otherwise in this Section 6.10, Sellers shall pay, discharge and be responsible for (a) all salary and wages arising out of or relating to the employment of the Employees prior to the Closing Date and (b) any employee benefits arising under the Benefit 31 Plans or Benefit Arrangements of Sellers and their Affiliates during the period prior to the Closing Date. From and after the Closing Date, Buyer shall pay, discharge and be responsible for all salary, wages and benefits arising out of or relating to the employment of the Transferred Employees by Buyer on and after the Closing Date. Buyer shall be responsible for all severance liabilities, and all COBRA liabilities for any Transferred Employees of the Stations terminated on or after the Closing Date, including, without limitation, any related to any deemed termination by Sellers of the Transferred Employees as a result of the consummation of the transaction contemplated hereby and any required pursuant to those retention/severance agreements listed on Schedule 6.10 hereto, but excluding any severance due as a result of those agreements listed on Schedule 6.10-A. (c) Buyer shall cause all Transferred Employees as of the Closing Date to be eligible to participate in its "employee welfare benefit plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA, respectively) of Buyer in which similarly situated employees of Buyer are generally eligible to participate; provided, however, that all Transferred Employees and their spouses and dependents shall be eligible for coverage immediately after the Closing Date (and shall not be excluded from coverage on account of any pre-existing condition) to the extent provided under such plans with respect to Transferred Employees. (d) For purposes of any length of service requirements, waiting period, vesting periods or differential benefits based on length of service in any such plan for which a Transferred Employee may be eligible after the Closing, Buyer shall ensure that, to the extent permitted by law, and except as limited by Buyer's Employment Termination Severance policy service by such Transferred Employee with Sellers, any Affiliate of Sellers or any prior owner of the Stations shall be deemed to have been service with the Buyer. In addition, Buyer shall ensure that each Transferred Employee receives credit under any welfare benefit plan of Buyer for any deductibles or co-payments paid by such Transferred Employee and his or her dependents for the current plan year under a plan maintained by Sellers or any Affiliate of Sellers to the extent allowable under any such plan. Buyer shall grant credit to each Transferred Employee for all sick leave in accordance with the policies of Buyer applicable generally to its employees after giving effect to service for Sellers, any Affiliate of Sellers or any prior owner of the Stations, as service for Buyer. To the extent taken into account in determining prorations pursuant to Section 2.3 hereof, Buyer shall assume and discharge Sellers' liabilities for the payment of all unused vacation leave accrued by Transferred Employees as of the Closing Date. To the extent any claim with respect to such accrued vacation leave is lodged against Sellers with respect to any Transferred Employee for which Buyer has received a proration credit, Buyer shall, to the extent of such credit, indemnify, defend and hold harmless Sellers from and against any and all losses, directly or indirectly, as a result of, or based upon or arising from the same. (e) As soon as practicable following the Closing Date, Buyer shall make available to the Transferred Employees Buyer's 401(k) Plan. To the extent requested by a Transferred Employee, Sellers shall cause to be transferred to Buyer's 401(k) Plan, in cash and in kind, all of the individual account balances of Transferred Employees under the Sellers' Plan, including any outstanding plan participant loan receivables allocated to such accounts. 32 (f) Buyer acknowledges and agrees that Buyer's obligations pursuant to this Section 6.10 are in addition to, and not in limitation of, Buyer's obligation to assume the employment contracts included in the Assumed Contracts. Nothing in this Agreement shall be construed to provide employees of Sellers with any rights under this Agreement, and no Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall only be enforceable by, the parties hereto and their respective successors and assigns as permitted hereunder. (g) Certain Payments. Subject to the terms of this Section 6.10(g) and Section 6.10(h), in the event Buyer terminates any of the Transferred Employees during the six (6) calendar month period after the Closing Date (the "Reimbursement Period"), which relates to the Station at which such employee is employed, as applicable, Sellers shall promptly reimburse Buyer for the amount paid by Buyer to such Terminated Employee pursuant to the terms of the Retention Agreements listed on Schedules 6.10 (as in effect on the date hereof) (the "Scheduled Retention Agreements") as follows: (y) the full amount of such payments in an amount, when aggregated with any payments made by the Multi-Stations Sellers under 6.10(g) of the Multi-Stations Agreement that does not exceed $1,000,000 (the "Initial Employee Cap"); and (z) 50% of such payments above the Initial Employee Cap in an amount, when aggregated with any payments made by the Multi-Stations Sellers under 6.10(g) of the Multi-Stations Agreement does not exceed $500,000. The payments made pursuant to this Section 6.10(g) shall not be counted against the Threshold Amount. In no event shall Sellers be obligated to reimburse Buyer (i) for any payments made by Buyer pursuant to the Scheduled Retention Agreements to Transferred Employees terminated after the expiration of the Reimbursement Period, or (ii) for any amount, when aggregated with any payments made by the Multi-Stations Sellers under Section 6.10(g) under the Multi-Stations Agreement in excess of $1,500,000. (h) Notwithstanding any provisions of Section 6.10(g) of the Asset Purchase Agreement to the contrary, Sellers shall have no obligation to reimburse Buyer for any severance amount (whether or not pursuant to the Scheduled Retention Agreements), which obligations shall be the sole obligation of Buyer regardless of when such termination occurs paid to (i) any Transferred Employee who is terminated (a) at the request of a third party who subsequently enters into a memorandum of understanding, letter of intent, or agreement to acquire any of the Stations, or (b) as a result of Buyer entering into a memorandum of understanding, letter of intent, or an agreement to sell, assign, swap, or otherwise dispose of or convey any Station to a third party, and/or (ii) the employees listed on Schedule 6.10(h), including, but not limited to, any employees of the Stations listed thereon. (i) For twelve (12) calendar months after the Closing Date (a) none of Sellers or any of their Affiliates shall hire any of the Transferred Employees; provided that the provisions of this Section 6.10(i)(a) shall not apply to any Transferred Employee terminated by Buyer; and provided further that this Section 6.10(i)(a) does not apply to any employees (other than the Transferred Employees) hired by the Seller Entities (as defined below) after the Closing Date, and (b) other than the Transferred Employees, Buyer shall not hire any employees of Sellers or any Affiliate or parent of Sellers (the "Seller Entities") who are employees, as of the Closing Date of any of the television broadcast stations owned, operated, or programmed by any of the 33 Seller Entities in any market in which the Stations broadcast ("Sellers' Employees"); provided that the provisions of this Section 6.10(i)(b) do not apply to Sellers' Employees whose employment is terminated by the Seller Entities; and provided further that the provisions of this Section 6.10(i)(b) do not apply to any employees (other than Sellers' Employees) hired by Buyer after the Closing Date. 6.11 Reserved 6.12 Public Announcements. Sellers and Buyer shall consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement or the transactions contemplated herein and shall not issue any such press release or make any such public statement without the prior written consent of the other party, which shall not be unreasonably withheld; provided, however, that a party may, without the prior written consent of the other party, issue such press release or make such public statement as may be required by Law or any listing agreement with a national securities exchange to which Sinclair or Buyer is a party if it has used all reasonable efforts to consult with the other party and to obtain such party's consent but has been unable to do so in a timely manner. 6.13 Disclosure Schedules. Sellers and Buyer acknowledge and agree that Sellers shall not be liable for the failure of the Schedules to be accurate as a result of the operation of the Stations prior to the Closing in accordance with Section 5 of this Agreement. The inclusion of any fact or item on a Schedule referenced by a particular section in this Agreement shall, should the existence of the fact or item or its contents be relevant to any other section, be deemed to be disclosed with respect to such other section whether or not an explicit cross-reference appears in the Schedules if such relevance is readily apparent from examination of such Schedules. 6.14 Bulk Sales Law. Buyer hereby waives compliance by Sellers, in connection with the transactions contemplated hereby, with the provisions of any applicable bulk transfer laws. 6.15 Environmental Site Assessment. 6.15.1 Within sixty (60) days of the execution of this Agreement, Buyer may obtain Phase I Environmental Assessments at Buyer's expense for any or all of the parcels of the Owned or Leased Real Property set forth on Schedule 6.15 (the "Environmental Assessments"). In the event any Environmental Assessment discloses any conditions contrary to any representations and warranties (determined without regard to any Knowledge qualifier therein) or any potential that such conditions may exist, the Buyer may conduct or have conducted at its expense additional testing to confirm or negate the existence of any such conditions. If any such Environmental Assessment or additional testing reflects the existence of any such conditions at any Owned Real Property or, to the extent caused by any of the Assets, at any of the Leased Real Property, and if, and only if, the cost of remediation, when aggregated with costs of remediation as to the Multi-Stations, exceeds One Hundred Thousand Dollars ($100,000.00), in the aggregate for all parcels of the Real Property to be conveyed by Sellers hereunder and by the Multi-Stations Sellers pursuant to the Multi-Stations Agreement, Sellers shall cause the conditions to be remedied as quickly as possible (and in all events prior to Closing for which such property is used in the operation of the Stations) such that no conditions contrary to the representations and warranties (determined with regard to any knowledge qualifier contained therein) of this 34 Agreement exist; provided, however, that Sellers shall not be obligated to expend in the aggregate for the Stations and the Multi-Stations in excess of Three Million Dollars ($3,000,000.00) to effect such remediation for all Real Property to be conveyed hereunder and pursuant to the Multi-Stations Agreement. In the event that such remedial action(s) does cost in the aggregate in excess of Three Million Dollars ($3,000,000.00), Sellers may elect not to take such remedial action. In such event, Buyer may require Sellers to proceed to the Closing of the Stations, and at the Closing, the purchase price for any of the Stations acquired at the Closing shall be reduced by the estimated cost of remediation for that portion of the Owned Real Property to be acquired at the Closing, not to exceed in the aggregate for the Closing the Unexpended Remediation Amount. Alternatively, Buyer may terminate this Agreement, and Sellers shall have no liability to Buyer as a result of such termination. Such Environmental Assessments shall not relieve Sellers of any obligation with respect to any representation, warranty, or covenant of Sellers in this Agreement or waive any condition to Buyer's obligations under this Agreement. The cost of completing the Environmental Assessments shall be paid by Buyer. 6.15.2 Nothing in this Section 6.15 shall be deemed to extend the date on which the Closing would otherwise occur under this Agreement. 6.16 Reserved 6.17 Adverse Developments. Sellers shall promptly notify Buyer of any unusual or materially adverse developments that occur prior to the Closing with respect to the Assets or the operation of the Stations; provided, however, that Sellers' compliance with the disclosure requirements of this Section 6.17 shall not relieve Sellers of any obligation with respect to any representation, warranty or covenant of Sellers in this Agreement or relieve Buyer of any obligation or duty hereunder, waive any condition to Buyer's obligations under this Agreement, or expand or enhance any right of Buyer hereunder. 6.18 Title Insurance. Within ten (10) days of the date of this Agreement, each Seller shall deliver to Buyer its current title insurance policies. Sellers shall cooperate with Buyer in obtaining the commitment of a title insurance company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard rates, ALTA [1992] Form extended coverage title insurance policies, insuring Buyer's interest in the Real Property (the "Title Commitment"). The costs of the Title Commitment and the policy to be issued pursuant to the Title Commitment shall be paid by Buyer. 6.19 Surveys. Within sixty (60) days of the date of this Agreement, each Seller of Real Property shall deliver to Buyer, at Buyer's expense, surveys of the Real Property performed by surveyors reasonably acceptable to Buyer sufficient to remove any "survey exception" from the title insurance policies to be issued pursuant to the Title Commitments. 6.20 Reserved 6.21 Reserved 35 6.22 Cooperation on Tax Matters. The parties intend to allow for the election by Sellers ("Election") to have the sale of all or a portion of the Assets contemplated by this Agreement become part of a "Tax Deferred Exchange" in accordance with the provisions of Section 1031 of the Internal Revenue Code of 1986 (the "Code"). Buyer covenants and agrees to participate and fully cooperate with Sellers (and any qualified intermediary (as that term is defined in the Code) involved in the Tax Deferred Exchange), in the event of an Election, so long as such participation and cooperation does not have an adverse effect on Buyer. To the extent that any provision in this Section 6.22 or in this Agreement shall be found inconsistent with or in violation of any of the terms of Section 1031 of the Code, such provision shall be null and void, all other provisions of this Agreement shall remain in full force and effect, and the parties shall endeavor to agree upon alternative provisions that affect a "Tax Deferred Exchange" of property in such manner as will comply with Section 1031 of the Code. If no such agreement is reached within a reasonable period, then this Agreement shall be performed without an exchange of properties. 6.23 Reference to Original Agreement. Buyer and Sellers agree that reference shall be made to the Original Agreement and the accompanying Letter Agreement dated August 18, 1999, and the Escrow Agreement dated August 18, 1999, to resolve any ambiguity in this Agreement or any inconsistency between this Agreement and the Multi-Station Agreement. SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER 7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the Closing hereunder with respect to the Stations are subject at Buyer's option to the fulfillment prior to or at the Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Sellers contained in this Agreement shall be true and complete at and as of the Closing Date as though made at and as of that time, (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time), except where the failure to be true and complete (determined without regard to any materiality qualifications therein) does not have a Material Adverse Effect. (b) Covenants and Conditions. Sellers shall have performed and complied with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date, except where the failure to have performed and complied (determined without regard to any materiality qualifications therein) does not have a Material Adverse Effect. (c) FCC Consent. The FCC Consent shall have been granted, notwithstanding that it may not have yet become a "Final Order," unless any filing is made with the FCC that pertains to or becomes associated with any request for consent to the assignment of any of the FCC Licenses (an "FCC Objection"), in which case, Buyer shall not be obligated to close until the FCC Consent shall have become a "Final Order," unless in the reasonable judgment of Buyer's counsel such objection would not reasonably be expected to result in a denial of the FCC Consent, or the designation for hearing for the applications for FCC Consent. 36 (d) Hart-Scott-Rodino. All applicable waiting periods under Hart-Scott-Rodino shall have expired or terminated. (e) Governmental Authorizations. Sellers shall be the holder of all FCC Licenses, and there shall not have been any modification, revocation, or non-renewal of any License that has had a Material Adverse Effect. No proceeding shall be pending the effect of which could be to revoke, cancel, fail to renew, suspend, or modify materially and adversely any FCC License. (f) Consents. All consents of third parties that are required for the valid and binding assignment from Sellers to Buyer of all Material Contracts marked by an asterisk on Schedules 3.5 and 3.7 shall have been obtained (or available upon consummation of the Closing). (g) Reserved (h) Deliveries. Sellers shall have made or stand willing to make all the deliveries to Buyer described in Section 8.2. (i) Satisfactory Environmental Assessment. To the extent that any Environmental Assessment or additional testing conducting pursuant to Section 6.15 hereof reflects the existence of conditions contrary to any representation or warranty in this Agreement, either (i) Sellers shall have completed the remediation of such conditions in accordance with Section 6.15 hereof, or (ii) Buyer shall have provided notice to Sellers of Buyer's election to proceed to Closing with the proration to the Purchase Price specified in Section 6.15 hereof. 7.2 Conditions to Obligations of Sellers. All obligations of Sellers at the Closing hereunder are subject at Sellers' option to the fulfillment prior to or at the Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the Closing Date as though made at and as of that time. (b) Covenants and Conditions. Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. (c) FCC Consent. The FCC Consent shall have been granted. (d) Hart-Scott-Rodino. All applicable waiting periods under Hart-Scott-Rodino shall have expired or terminated. (e) Deliveries. Buyer shall have made or stand willing to make all the deliveries described in Section 8.3. 37 SECTION 8: CLOSING AND CLOSING DELIVERIES 8.1 Closing. (a) Closing Date. (i) Except as provided below in this Section 8.1 or as otherwise agreed to by Buyer and Sellers, the Closing hereunder shall be held for all of the Stations on a date specified by Buyer on at least five (5) days written notice that is not earlier than the first business day after or later than ten (10) business days after the date on which all of the conditions to Closing have been satisfied or waived; (w) Reserved; (x) Reserved; (y) Reserved (ii) If any event occurs that prevents signal transmission by any of the Stations in the normal and usual manner and Sellers cannot restore the normal and usual transmission before the date on which the Closing would otherwise occur pursuant to this Section 8.1(a), and this Agreement has not been terminated under Section 9, Sellers shall diligently take such action as reasonably necessary to restore such transmission, and the Closing shall be postponed until a date within the effective period of the FCC Consent (as it may be extended pursuant to Section 6.1(c)) to allow Sellers to restore the normal and usual transmission for such Station. If the Closing is postponed pursuant to this paragraph, the date of the Closing shall be ten (10) days after notice by Sellers to Buyer that transmission has been restored. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be obligated to close if the transmission of any Station is not operating in the normal and usual manner, unless and until the Sellers have restored the transmission of such Station to its normal and usual level. (iii) If there is in effect on the date on which the Closing would otherwise occur pursuant to this Section 8.1(a) any judgment, decree or order that would prevent or make unlawful the Closing on that date, the Closing shall be postponed until a date within the effective period of the FCC Consent (as it may be extended pursuant to Section 6.1(c)), to be agreed upon by Buyer and Sellers, when such judgment, decree, or order no longer prevents or makes unlawful the Closing. If the Closing is postponed pursuant to this paragraph, the date of the Closing shall be mutually agreed to by Seller and Buyer. (b) Closing Place. The Closing hereunder shall be held at the offices of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, MD, 21201, or any other place that is mutually agreed upon by Buyer and Sellers. 8.2 Deliveries by Sellers. Prior to or on Closing Date, Sellers shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: 38 (a) Conveyancing Documents. Duly executed deeds in form and quality equivalent to the deeds by which Sellers obtained title, bills of sale, motor vehicle titles, assignments, and other transfer documents that are sufficient to vest good and marketable title to the Assets being transferred at the Closing in the name of Buyer, free and clear of all mortgages, liens, restrictions, encumbrances, claims and obligations except for Permitted Encumbrances; (b) Officer's Certificate. A certificate, dated as of the Closing Date, executed by an officer of Sellers, certifying: (i) that the representations and warranties of Sellers contained in this Agreement are true and complete as of the Closing Date as though made on and as of that date (except for representations and warranties that speak as of a specific date or time, which need only be true and complete as of such date or time), except to the extent that the failure of such representations and warranties (in each case determined without regard to any materiality qualifications contained therein) shall not have had a Material Adverse Effect, and (ii) that Sellers have in all respects performed and complied with all of its obligations, covenants and agreements in this Agreement to be performed and complied with on or prior to the Closing Date, except to the extent that the failure to perform such covenants (in each case determined without regard to any materiality qualifications contained therein) shall not have had a Material Adverse Effect. (c) Secretary's Certificate. A certificate, dated as of the Closing Date, executed by each of the Seller's Secretary, members, partners or designees, as the case may be: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller's Board of Directors and shareholders (if required) (or by the general partner in the case of a partnership or by the members in the case of a limited liability company), authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as attachments thereto, the Articles of Incorporation and Bylaws (or other organizational documents) of such Seller; (d) Consents. A manually executed copy of any instrument evidencing receipt of any Consent which has been received by Sellers which relate to the Stations or, the Assets of which are being transferred at the Closing; (e) Good Standing Certificates. To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of each Seller issued by the appropriate governmental authorities in the states of organization and each jurisdiction in which such Sellers are qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the Closing Date; (f) Opinions of Counsel. Opinions of Sellers' counsel and communications counsel dated as of the Closing Date, substantially in the form of Exhibits 2 and 3 hereto; and (g) Reserved 39 (h) Other Documents. Such other documents reasonably requested by Buyer or its counsel for complete implementation of this Agreement and consummation of the transaction contemplated hereby. 8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall deliver to Sellers the following, in form and substance reasonably satisfactory to Sellers and their counsel: (a) Closing Payment. The payment of the Estimated Purchase Price described in Section 2.4(a); (b) Officer's Certificate. A certificate, dated as of the Closing Date, executed on behalf of an officer of the Buyer, certifying (i) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of the Closing Date as though made on and as of that date, and (ii) that Buyer has in all material respects performed and complied with all of its obligations, covenants and agreements in this Agreement to be performed and complied with on or prior to the Closing Date; (c) Secretary's Certificate. A certificate, dated as of the Closing Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as an attachment thereto, Buyer's Certificate of Incorporation and Bylaws; (d) Assumption Agreements. Appropriate assumption agreements pursuant to which Buyer shall assume and undertake to perform Sellers' obligations and liabilities to the extent provided under this Agreement for the Stations, including (without limitation) under the Licenses and the Assumed Contracts; (e) Good Standing Certificates. To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of Buyer issued by the appropriate governmental authorities in the state of organization and each jurisdiction in which Buyer is qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the Closing Date; (f) Opinion of Counsel. An opinion of Buyer's counsel dated as of the Closing Date, substantially in the form of Exhibit 4 hereto; and (g) Reserved (h) Other Documents. Such other documents reasonably requested by Sellers or their counsel for complete implementation of this Agreement and consummation of the transactions contemplated hereby. 40 SECTION 9: TERMINATION 9.1 Termination by Mutual Consent. This Agreement may be terminated at any time prior to Closing by the mutual consent of the parties. 9.2 Termination by Seller. This Agreement may be terminated by Sellers and the sale and transfer of the Stations abandoned, if: (a) Sellers are not then in material default hereunder, upon written notice to Buyer if on the date that would otherwise be the Closing Date any of the conditions precedent to the obligations of Sellers set forth in Sections 7.2(a), 7.2(b) and 7.2(e) of this Agreement has not been satisfied or waived in writing by Sellers (whether or not occurring as the result of Buyer's material breach of any provision of this Agreement); (b) Buyer shall default in the performance of its obligations under this Agreement in any material respect and such default is not cured within thirty (30) days after notice thereof; (c) Sellers are not then in material default hereunder and Closing has not occurred within one (1) calendar year from the date hereof and failure of Closing to have occurred is due to the failure to receive any regulatory approval required for Closing, including, but not limited to, expiration or termination of the Hart-Scott-Rodino waiting period, any FCC Consents (including, without limitation, such facts as are disclosed on Schedule 4.6 hereto), and the failure of such consent, expiration or termination to be granted is the result of facts relating to Buyer or any Affiliate of Buyer; or (d) Sellers are not then in material default hereunder if the Closing has not occurred within twenty four (24) months from the date hereof due to the failure to receive any regulatory approval required for Closing, including, but not limited to, the expiration or termination of the Hart-Scott-Rodino waiting period of any FCC Consent, and the failure of such consent, expiration, or termination to be granted is the result of facts relating to Sellers. (e) Closing has not occurred with respect to the Stations within eighteen (18) months from the date hereof, if Sellers are not then in material default hereunder, and Closing has not occurred for any reason other than as provided in Section 9.2(d). 9.3 Termination by Buyer. This Agreement may be terminated by Buyer and the exchange and transfer of the Stations abandoned, if: (a) Buyer is not then in material default, upon written notice to Sellers if on the date that would otherwise be the Closing Date any of the conditions precedent to the obligations of Buyer set forth in Sections 7.1(a), 7.1(b), 7.1(e), 7.1(f), 7.1(g), and 7(h) of this Agreement (and only such Sections) has not been satisfied or waived in writing by Buyer (whether or not occurring as the result of Sellers' material breach of any provision of this Agreement); 41 (b) Sellers shall have defaulted in the performance of Sellers' obligations under this Agreement, and such default is not cured within thirty (30) days after notice thereof and such default has had a Material Adverse Effect; or (c) Buyer is not then in material default hereunder and Closing has not occurred within fifteen (15) months from the date hereof and failure to close is due to the failure to receive any regulatory approval required for Closing, including, but not limited to, expiration or termination of the Hart-Scott-Rodino waiting period and any FCC Consents and the failure to receive such consent is due to facts relating to Sellers or any Affiliate of Sellers. (d) Closing has not occurred with respect to the Stations within eighteen (18) months from the date hereof, if the terminating party is not then in material default hereunder and the Closing has not occurred for any reason other than as provided in Section 9.2(c). 9.4 Rights on Termination. If this Agreement is terminated by Buyer pursuant to Section 9.3 as a result of Sellers' material breach of any provision of this Agreement, Buyer shall be entitled to the immediate return of the amount of the Allocable Escrow Deposit, and Buyer shall have all rights and remedies available at law or equity, including the remedy of specific performance described in Section 9.6 below. If this Agreement is terminated by Sellers pursuant to Section 9.2, Sellers, as their sole remedy, shall be entitled to receive the amount of the Allocable Escrow Deposit, less any amount thereof released in accord with the provisions of this Agreement prior to such termination, together with all interest or other proceeds from the investment thereof, but less any compensation due Escrow Agent, as liquidated damages in full and final settlement of all claims of Sellers under this Agreement, and there shall be no other or further obligations or remedies of Sellers hereunder. 9.5 Liquidated Damages Not a Penalty. With respect to the liquidated damages as described and provided for in Section 9.4 hereof, Sellers and Buyer hereby acknowledge and agree that the damage that may be suffered by Sellers in the event of a default by Buyer hereunder is not readily ascertainable and that such liquidated damages as of the date hereof are a reasonable estimate of such damages and are intended to compensate Sellers for any such damage and are not to be construed as a penalty. 9.6 Specific Performance. The parties recognize that if Sellers breach this Agreement and refuse to perform under the provisions of this Agreement, monetary damages alone would not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled, in addition to any other remedies that may be available, to obtain specific performance of the terms of this Agreement. If any action is brought by Buyer to enforce this Agreement, Sellers shall waive the defense that there is an adequate remedy at law. 9.7 Attorneys' Fees. In the event of a default by either party that results in a lawsuit or other proceeding for any remedy available under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its reasonable legal fees and expenses (whether incurred in arbitration, at trial, or on appeal). 42 9.8 Survival. Notwithstanding the termination of this Agreement pursuant to this Section 9, the obligations of Buyer and Sellers set forth in Sections 6.2, 6.4, 9, 10, and 11 shall survive such termination and the parties hereto shall have any and all rights and remedies to enforce such obligations provided at law or in equity or otherwise (including without limitations, specific performance). 9.9 Reserved SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES 10.1 Survival of Representations. All representations and warranties, covenants and agreements of Sellers and Buyer contained in or made pursuant to this Agreement or in any certificate furnished pursuant hereto shall survive the Closing Date and shall remain in full force and effect to the following extent: (a) representations and warranties (other than the representations and warranties set forth in Section 3.16) shall survive for a period of twelve (12) months after the Closing Date, (b) except as otherwise provided herein, the covenants and agreements which, by their terms, survive the Closing shall continue in full force and effect until fully discharged (but not beyond the expiration of twelve (12) months after the Closing Date), and (c) any representation, warranty, covenant or agreement that is the subject of a claim which is asserted in a reasonably detailed writing prior to the expiration of the survival period set forth in this Section 10.1 shall survive with respect to such claim or dispute until the final resolution thereof; provided that notwithstanding the foregoing, representations and warranties set forth in Section 3.16 and the covenant in Section 6.15 shall survive for the lesser of eighteen (18) months after the Closing Date, and (ii) the expiration of the applicable statute of limitations, but, in no event, shall the survival period in this proviso be less than one (1) year after the Closing Date; provided further that the covenants and agreements set forth in Section 6.4 Confidentiality, Section 6.5 Cooperation, Section 6.9 Books and Records, Section 11.1 Fees and Expenses, Section 11.2 Notices, and Section 11.3 Benefit and Binding Effect shall survive the Closing for the period provided therein or, if no period is specified, in perpetuity; and provided finally that anything to the contrary in this Section 10.1 notwithstanding any claim for indemnification under Section 10 hereof which is asserted in a reasonably detailed writing prior to the expiration of the survival periods provided in this Section 10.1 shall survive with respect to such claim or dispute until final resolution thereof. 10.2 Indemnification by Seller. After the Closing but subject to Sections 10.1 and 10.5, , Sellers hereby agree to indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities, or damages arising out of or resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant by Sellers contained in this Agreement or in any certificate, document, or instrument delivered to Buyer under this Agreement; 43 (b) Any and all obligations of Sellers not assumed by Buyer pursuant to this Agreement, including any liabilities arising at any time under any Contract not included in the Assumed Contracts; (c) Any loss, liability, obligation, or cost arising out of or resulting from the failure of the parties to comply with the provisions of any bulk sales law applicable to the transfer of the Assets; (d) Any and all obligations, losses, liabilities, or damages arising out of or resulting from the operation or ownership of the Stations prior to the Closing (except any losses, liabilities or damages for which Buyer has received a proration in its favor or a reduction in Purchase Price under Section 6.15), including any liabilities arising under the Licenses or the Assumed Contracts to the extent that they relate to events occurring prior to the Closing Date; (e) Any and all out-of-pocket costs and expenses, including reasonable legal fees and expenses, incident to any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity; and (f) Any and all loss, liabilities or damages arising out of or resulting from the loss or revocation of any of the FCC Licenses as a result of actions taken by the FCC (or, to the extent applicable, by any reviewing court) solely in connection with the specific applications relating to the Stations and listed on Schedule 10.2. 10.3 Indemnification by Buyer. Notwithstanding the Closing, but subject to Section 10.5, Buyer hereby agrees to indemnify and hold Sellers harmless against and with respect to, and shall reimburse Sellers for: (a) Any and all losses, liabilities, or damages arising out of or resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant by Buyer contained in this Agreement or in any certificate, document, or instrument delivered to Sellers under this Agreement; (b) Any and all obligations of Sellers assumed by Buyer pursuant to this Agreement; (c) Any and all obligations, losses, liabilities, or damages arising out of or resulting from the operation or ownership of the Stations after the Closing (including, without limitation, any obligations of Sinclair, SCI, or any Affiliate thereof pursuant to any agreements by which the obligations of any of the Stations have been guaranteed), except any losses, liabilities or damages for which Sellers have received a proration in their favor; and (d) Any and all out-of-pocket costs and expenses, including reasonable legal fees and expenses, incident to any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 44 10.4 Procedure for Indemnification. The procedure for indemnification shall be as follows: (a) The party claiming indemnification (the "CLAIMANT") shall promptly give notice to the party from which indemnification is claimed (the "INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a third party, specifying in reasonable detail the factual basis for the claim. If the claim relates to an action, suit, or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five business days after written notice of such action, suit, or proceeding was given to Claimant. (b) With respect to claims solely between the parties, following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of the thirty-day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying Party do not agree within the thirty-day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate remedy at law or equity. (c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification under this Agreement, the Indemnifying Party shall have the right at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifying Party, provided, however, that Indemnifier may not assume control of the defense unless it affirms in writing its obligation to indemnify Claimant for any damages incurred by Claimant with respect to such third-party claim. If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third-party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim. (d) If a claim, whether between the parties or by a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible. (e) The indemnification rights provided in Section 10.2 and Section 10.3 shall extend to the members, partners, shareholders, officers, directors, employees, representatives and affiliated entities of any Claimant although for the purpose of the procedures set forth in this Section 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 10.5 Certain Limitations. (a) Notwithstanding anything in this Agreement to the contrary, neither party shall indemnify or otherwise be liable to the other party with respect to any claim for any breach of a 45 representation or warranty, or for the breach of any covenant contained in this Agreement, unless notice of the claim is given within the relevant survival period specified in Section 10.1. (b) Notwithstanding anything in this Agreement to the contrary, but except as otherwise provided in this subsection (b) and Schedule 10.5, Sellers shall not be liable to Buyer in respect of any indemnification hereunder except to the extent that (i) the aggregate amount of losses of Buyer, when aggregated with the amount of losses with respect to the Multi-Stations pursuant to the Multi-Stations Agreement, if any, exceeds One Million Dollars ($1,000,000) (the "Threshold Amount") (and then only to the extent such losses, when aggregated with the amount of losses with respect to the Multi-Stations pursuant to the Multi-Stations Agreement, if any, exceed the excess of Five Hundred Thousand Dollars ($500,000)) over an amount (not in excess of $100,000) which Sellers are not required to expend in environmental remediation as a result of the Environmental Threshold Amount (such excess being the "Excess Amount") and (ii) the aggregate amount of losses of Buyer, when aggregated with the amount of losses with respect to the Multi-Stations pursuant to the Multi-Stations Agreement, if any, is less than the excess of Fifty Million Dollars) ($50,000,000) over any amounts expended by Buyer pursuant to Section 6.15 (as aggregated with the Multi-Stations as set forth therein), or with respect to which Buyer receives a proration in its favor under Section 6.15 (such excess being the "Indemnity Cap"); provided, the foregoing shall not be applicable to any amounts owed in connection with the Purchase Price or the proration adjustment thereof. In determining whether Sellers shall be obligated to indemnify Buyer under this Section 10, once the Threshold Amount has been satisfied, each representation and warranty and each covenant contained in this Agreement for which indemnity may be sought hereunder shall be read solely for purposes of determining whether a breach of such representation, warranty or covenant has occurred without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. (c) Notwithstanding any other provision of this Agreement to the contrary, in no event shall a party be entitled to indemnification for such party's consequential or punitive damages, regardless of the theory of recovery. Each party hereto agrees to use reasonable efforts to mitigate any losses which form the basis for any claim for indemnification hereunder. SECTION 11: MISCELLANEOUS 11.1 Fees and Expenses. (a) Buyer and Sellers shall each pay one-half of (i) any fees charged by the FCC in connection with obtaining the FCC Consent, and (ii) any filing fees incurred in connection with any Hart-Scott-Rodino Filings. (b) Buyer and Sellers shall each pay one-half (1/2) of any filing fees, transfer taxes, document stamps, or other charges levied by any governmental entity (other than income Taxes, which shall be the responsibility of Sellers) on account of the transfer of the Assets from Sellers to Buyer. (c) Except as otherwise provided in this Agreement, each party shall pay its own expenses incurred in connection with the authorization, preparation, execution and performance of this Agreement, including all fees and expenses of counsel, accountants, agents and 46 representatives, and each party shall be responsible for all fees or commissions payable to any finder, broker, advisor, or similar Person retained by or on behalf of such party. 11.2 Notices. All notices, demands and requests required or permitted to be given under the provisions of this Agreement shall be (a) in writing, (b) sent by telecopy (with receipt personally confirmed by telephone), delivered by personal delivery, or sent by commercial delivery service or certified mail, return receipt requested, (c) deemed to have been given on the date telecopied with receipt confirmed, the date of personal delivery, or the date set forth in the records of the delivery service or on the return receipt, and (d) addressed as follows: To Buyer: Entercom Communications Corp. 401 City Avenue, Suite 409 Bala Cynwyd, Pennsylvania 19004 Attn: David J. Field Telecopy: (610) 660-5620 Telephone: (610) 660-5610 with a copy Latham & Watkins (which shall 1001 Pennsylvania Avenue, Suite 1300 not constitute Washington, D.C. 20004-2505 Attn: Joseph Sullivan, Esquire notice) to: Telecopy: (202) 637-2201 Telephone: (202) 637-2200 To Sellers: c/o Sinclair Broadcast Group, Inc. 10706 Beaver Dam Road Cockeysville, MD 21030 Attn: President Telecopy: (410) 568-1533 Telephone: (410) 568-1506 with a copy Sinclair Communications, Inc. (which shall 10706 Beaver Dam Road not constitute Cockeysville, MD 21030 notice) to: Attn: General Counsel Telecopy: (410) 568-1537 Telephone: (410) 568-1522 with a copy Steven A. Thomas, Esquire (which shall Thomas & Libowitz, P.A. not constitute 100 Light Street, Suite 1100 notice) to: Baltimore, MD 21202-1053 Telecopy: (410) 752-2046 Telephone: (410) 752-2468 47 or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in accordance with this Section 11.2. 11.3 Benefit and Binding Effect. (a) Buyer shall have the right to assign all or any portion of its rights under this Agreement to (i) any entity under common control with Buyer, (ii) a Qualified Intermediary under Section 1031 of the Code, or (iii) any lender or any agent for such lender(s) for collateral purposes only; provided, that no such assignment shall relieve Buyer of its obligations hereunder. Sellers may assign, combine, merge, or consolidate among themselves and any Affiliate of Sellers so long as Sellers or their successors and assigns are bound by the terms and conditions of this Agreement in all respects as if such successors and assigns were original parties hereto, and such assignment, combination, merger, or consolidation does not have an adverse affect on Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder. Other than as expressly set forth in this Section 11.3(a), no party may assign or transfer all or any portion of its rights under this Agreement without the prior written consent of the parties hereto. (b) Sellers acknowledge and agree that at the Closing, Buyer may require that Sellers transfer the Assets and liabilities of any Station to a third party designated in writing by Buyer (a "DESIGNEE") at least ten (10) days prior to the Closing; provided, however, that (a) such Designee shall on or prior to the Closing Date assume all assumed liabilities with respect to the particular Station so transferred; (b) an FCC Order shall have been issued on or prior to the Closing Date authorizing such transfer; (c) the transfer to such Designee would not violate any laws, (d) the transfer to such Designee would not delay in any respect the date for the Closing as required by the terms of this Agreement; (e) such transfer to a Designee shall not relieve Buyer from any of its obligations hereunder; (f) there shall be no assignment or transfer (actual or implied) of this Agreement to the Designee; (g) Sellers shall have no liabilities to any such Designee under this Agreement or otherwise; and (h) such Designee shall deliver to the Sellers a written certificate, pursuant to which the Designee acknowledges and agrees for the benefit of Sellers to the terms and conditions of the designation as described herein. The parties shall cooperate in all reasonable respects in making any modifications to the closing documents and deliveries that may be necessary or appropriate in connection with the transfer of Assets and liabilities of any Station to any Designee pursuant to this Section 11.3(b). 11.4 Further Assurances. The parties shall take any actions and execute any other documents that may be necessary or desirable to the implementation and consummation of this Agreement. 11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF). IN ADDITION, EACH OF THE PARTIES HERETO SUBMITS TO LOCAL JURISDICTION IN 48 THE STATE OF MARYLAND AND AGREES THAT ANY ACTION BY ANY PARTY HEREUNDER SHALL BE INSTITUTED IN THE STATE OF MARYLAND. 11.6 Entire Agreement. This Agreement, the Schedules hereto, and all documents, certificates and other documents to be delivered by the parties pursuant hereto, collectively, represent the entire understanding and agreement between Buyer and Sellers with respect to the subject matter of this Agreement. This Agreement supersedes all prior negotiations between the parties and cannot be amended, supplemented, or changed except by an agreement in writing duly executed by each of the parties hereto and by Sinclair. 11.7 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement, or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.7. 11.8 Headings. The headings of the sections and subsections contained in this Agreement are inserted for convenience only and do not form a part or affect the meaning, construction or scope thereof. 11.9 Counterparts. This Agreement may be signed in two or more counterparts with the same effect as if the signature on each counterpart were upon the same instrument. [SIGNATURES BEGIN ON FOLLOWING PAGE] 49 IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized officers of Buyer and Sellers as of the date first written above. Buyer: Sellers: Entercom - ---------------------------- SINCLAIR COMMUNICATIONS, INC. By: /s/ John C. Donlevie By: /s/ David B. Amy ------------------------- -------------------------- Name: John C. Donlevie Name: David B. Amy Title: Executive Vice President Title: Secretary SINCLAIR MEDIA III, INC. By: /s/ David B. Amy -------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF KANSAS CITY LICENSEE, LLC By: /s/ David B. Amy -------------------------- Name: David B. Amy Title: Secretary 50 EX-10.4 5 EXHIBIT 10.4 AMENDMENT TO PURCHASE AGREEMENT This AMENDMENT (this "Amendment") made as of March 16, 1999 to the Purchase Agreement dated as of September 4, 1998 (the "Purchase Agreement") by and between Guy Gannett Communications, a Maine corporation (the "Company"), and Sinclair Communications, Inc., a Maryland corporation (together with its successors and permitted assigns, "Purchaser"). W I T N E S S E T H : WHEREAS, the Company and Purchaser are parties to the Purchase Agreement; WHEREAS, the Company and Purchaser desire to amend the Purchase Agreement in certain respects. NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows: Section 1. Real Estate. Section 1.1(d) of the Disclosure Schedule is hereby amended and restated in its entirety to be the exhibit to this Agreement designated as "Section 1.1(d)." Section 2. Closing Date. The first sentence of Section 1.6 of the Purchase Agreement is hereby amended and restated to read as follows: "Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been terminated pursuant to Section 10.1 hereof, the closing (the "Closing") of the transactions herein contemplated shall take place at 10:00 a.m., New York City time, on April 30, 1999, or as soon thereafter as the conditions set forth in Articles 6 and 7 hereof have each been satisfied or waived (such time and date being referred to herein as the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such other place as the Company and Purchaser shall agree." Section 3. Purchase Price. Section 2.1(a) of the Purchase Agreement is hereby amended and restated in its entirety to read as follows: "In consideration of the sale of the Assets and the Business hereunder, Purchaser shall (i) pay the Company in cash the aggregate amount of (x) $310,000,000, plus (y) if the earnings before interest, taxes, depreciation and amortization of the Stations for the fiscal year ending December 26, 1998, calculated in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for year ended, December 31, 1997 referred to in Section 3.5 hereof, in each case after adding back corporate overhead expense (to the extent otherwise deducted in computing earnings) and film and program expenses and subtracting cash payments on film and program contracts, whether or not actually made, that would have been due pursuant to the payment terms of such contracts during the relevant period in the ordinary course and without regard to prepayments or other extraordinary payments not contractually required and in each case excluding the results of operations of WOKR-TV (Rochester, New York) (the "1998 BCF"), exceeds $12,700,000, an amount equal to 14.57 times the difference between the 1998 BCF and $12,700,000 (but in no event shall the amount of the addition pursuant to this clause (y) be more than $7,000,000), (the "Earnings Adjustment") plus (if greater than or equal to zero) or minus (if less than zero), as the case may be, (z) the amount of the Net Financial Assets as of 11:59 p.m., New York City time, on the day immediately preceding the Closing Date, subject to adjustment pursuant to Section 2.2 hereof (the "Purchase Price") and (ii) assume the Assumed Liabilities." Section 4. Allocation of the Purchase Price. (a) The first two sentences of Section 2.5 of the Purchase Agreement are hereby amended and restated to read as follows: "No later than the Closing Date, Purchaser and the Company shall jointly determine the proper allocation of the Purchase Price among the Stations, provided that the parties hereto agree that the proper allocation of the Purchase Price to WOKR-TV (Rochester, New York), and the proper allocation of such allocated Purchase Price among specified categories of assets, are as set forth in Section 2.5 of the Disclosure Schedule. No later than 90 days following the Closing Date, Purchaser shall have engaged a nationally recognized appraiser to determine, and such appraiser shall have so determined, the proper allocation of the Purchase Price allocated to, and the Assumed Liabilities relating to, each Station among the Assets of each Station, in each case in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the "Allocation"), provided that the parties hereto agree that no part of the Purchase Price shall be allocated to any of the agreements referred to in Section 1.1(r) hereof." (b) The Purchase Agreement is hereby amended to incorporate, as Section 2.5 of the Disclosure Schedule, the exhibit to this Agreement designated as "Section 2.5." Section 5. Conduct of the Business Prior to Closing. The first sentence of Section 5.1(a) of the Purchase Agreement is hereby amended and restated to read as follows: "Between the date hereof and the Closing, except as contemplated by this Agreement or as described in either Section 3.7 or Section 5.1 of the Disclosure Schedule, or except with the consent of Purchaser (which consent shall not be unreasonably withheld), the Company will operate the Business in the ordinary course of business consistent with past practice and shall use commercially reasonable efforts to (1) preserve intact the Business and preserve the Business's relationships with customers, suppliers, licensees, licensors, the networks with whom the Stations are affiliated and others having business dealings with the Stations, (2) maintain the Business's inventory of supplies, parts and other materials and keep its books of account, records and files, in each case in the ordinary course of business consistent with past practice, (3) maintain the material items of Real Property, Leased Property and Equipment substantially in their present condition, ordinary wear and tear excepted, (4) pay or discharge all cash and barter obligations in the ordinary course of business, (5) bring current as of the day immediately preceding the day of the Closing Date all payments due and payable under Program Contracts in accordance with their terms as in effect on the date hereof (with respect to Program Contracts existing as of the date hereof) or on the date originally entered into (with respect to Program Contracts entered into after the date hereof) and (6) maintain its corporate existence." Section 6. Employee Benefit Matters. (a) The first sentence of Section 5.2(f) of the Purchase Agreement is hereby amended and restated to read as follows: "From and after the Closing, Purchaser shall assume sponsorship of the WOKR-TV Partners 401(k) Plan, the TV Employees Pension Plan, and assume responsibilities of all Employee Benefits Plans that provide post-retirement life insurance or health, or short-term or long-term disability benefits and be responsible for any benefits under such Employee Benefit Plans (i) to which any current, former or inactive Business Employee or Corporate Office Employee, or a beneficiary or dependent of any current, former or inactive Business Employee or Corporate Office Employee (each a "Beneficiary"), has already become entitled, (ii) which commenced or (iii) to which any current, former or inactive Business Employee or Corporate Office Employee has already become qualified by reason of age and years of service as of the Closing, to the extent such persons are identified in Section 5.1.1 or Section 5.1.2 of the Disclosure Schedule (which sections shall be updated, if necessary, at Closing." (b) Sections 5.2(i) and 5.2(j) of the Purchaser Agreement are hereby amended and restated in their entirety to read as follows: "(i) With respect to the Guy Gannett Retirement Plan (the "Seller Pension Plan"), the Company and the Purchaser agree as follows: (A) Prior to the Closing Date, the Company shall establish a spin off defined benefit plan (the "TV Employees Pension Plan") and trust (the "Trust") for the post-Closing benefit of the Business Employees and Beneficiaries who participate in the Seller Pension Plan. With respect to the Seller Pension Plan, Business Employees shall cease to accrue benefits and service credits under such Plan as of the Closing. As soon as practicable following the Closing, the Company shall cause its actuary to calculate the amount of assets to be allocated to the TV Employees Pension Plan for the benefit of the Business Employees and Beneficiaries. Such allocation shall be calculated under Section 414(l)(2) of the Code, without regard to paragraph 2(d) thereof. The Company shall cause the amount of assets (the "Section 414 Amount") (determined as of the end of the month in which the Closing occurs) to be transferred to the Trust. The Company shall not amend the Seller Pension Plan or the TV Employees Pension Plan to 100% vest Business Employees' benefits under such Plans. Contingent upon the transfer of the Initial Transfer Amount (as described in Section 5.2(i)(B) hereof) to the TV Employees Pension Plan, Purchaser shall assume all liabilities of the Company and its affiliates with respect to Business Employees and Beneficiaries under the Seller Pension Plan and Trust and shall become with respect to such Business Employees and Beneficiaries responsible for all acts, omissions and transactions under or in connection with such Seller Pension Plan and Trust, whether arising before, on or after the Closing, except for (i) if the Company has obtained at or prior to the Closing a prepaid fiduciaries' insurance and indemnification policy substantially on the terms set forth in Section 5.2(i) of the Disclosure Schedule under which Purchaser is a named insured (a" Prepaid Fiduciary Insurance Policy"), liabilities arising out of willful misconduct or gross negligence of the trustees before the Closing and (ii) if the Company is unable to obtain such policy, liabilities arising out of willful misconduct, recklessness or negligence of the trustees before the Closing. (B) All transfers to the TV Employees Pension Plan shall be made in accordance with the provisions of this Section 5.2(i). As soon as practicable, but in no event after the later of (i) 30 days after the Closing Date or (ii) 45 days after the filing of Form 5310A by the Seller Pension Plan ("Initial Transfer Date"), the Company shall cause its trust to make an initial transfer of assets in cash equal to at least 80% of the amount estimated by the Company in good faith to be equal to X (as defined below) ("Initial Transfer Amount"). As soon as practicable after the final determination of the amounts to be transferred ("True-Up Date"), the Company shall, except as otherwise provided herein, cause a second transfer to be made in cash of the "True-Up Amount." The True-Up Amount shall be equal to the sum of the following amount with respect to the Seller Pension Plan: (X minus Initial Transfer Amount), minus benefit payments and reasonable administration expenses attributable to Business Employees and Beneficiaries, adjusted for Earnings, where X equals the Section 414 Amount. "Earnings" shall be calculated (i) from the date as of which the Section 414 Amount is determined until the Initial Transfer Date on the amount equal to the Initial Transfer Amount using the rate paid on a 90-day Treasury Bill on the auction date coincident with or immediately preceding the Closing, (ii) on an amount equal to X minus the sum of the Initial Transfer Amount plus benefit payments and reasonable administrative expenses attributable to Business Employees and Beneficiaries using (A) with respect to the period from the Initial Transfer to the last day of the month preceding the True-Up Date, the cumulative rate of return (considering both gain and loss) earned or lost on the assets of the trust from which the True-Up Amount is being transferred and (B) with respect to the period from the first day of the month in which the True-Up Date occurs to the True-Up Date the rate paid on a 90-Day Treasury Bill on the auction date coincident with or immediately preceding the first day of the month in which the True-Up Date occurs. If the Initial Transfer Amount increased by benefit payments and reasonable administrative expenses attributable to Business Employees and Beneficiaries exceeds X, as soon as practicable following such determination Purchaser shall cause a transfer to be made in cash to the Seller Pension Plan equal to the difference between (a) the Initial Transfer Amount increased by the benefit payments and reasonable administrative expenses attributable to Business Employees and Beneficiaries and (b) X as (i) adjusted downward to reflect Earnings on X, minus benefits payments and reasonable administrative expenses, from the date as of which the Section 414 Amount is determined until the Initial Transfer Date using the rate paid on a 90-day Treasury Bill on the auction date coincident with or immediately preceding the Closing and (ii) adjusted upward to reflect Earnings on the Initial Transfer Amount increased by the benefit payments and reasonable administrative expenses attributable to Business Employees and Beneficiaries, and reduced by X from the Initial Transfer Date until the True-Up Date, such Earnings shall be calculated using (A) with respect to the period from that Initial Transfer Date to the last day of the month preceding such True-Up Amount transfer, the cumulative rate of return (considering both gain and loss) on the assets of the Seller Pension Plan and (B) with respect to the period from the first day of the month in which the True-Up Amount transfer occurs and the date of such True-Up Amount transfer, the rate paid on a 90-Day Treasury Bill on the auction date coincident with or immediately preceding the first day of the month in which the transfer occurs. The Initial Transfer Amount and True-Up Amount shall be transferred in cash. The amounts to be transferred pursuant to this Section 5.2(i) shall be adjusted to the extent necessary to satisfy Section 414(l) of the Code, and any regulations promulgated thereunder. (C) For the purposes of this Section 5.2(i), the Section 414 Amount shall be determined by an enrolled actuary designated by the Company, using the same assumptions and methodologies used by the Company for valuation of the Seller Pension Plan for funding purposes under Sections 404 and 412 of the Code. The Company shall provide any actuary designated by Purchaser with all information reasonably necessary to review the calculation of the Section 414 Amount in all material respects and to verify that such calculations have been performed in a manner consistent with the terms of this Agreement. If there is a good faith dispute between the Company's actuary and the Purchaser's actuary as to the amount to be transferred to any plan, and such dispute remains unresolved for 15 days, the chief financial officers of the respective companies shall endeavor to resolve the issue. Should such dispute remain unresolved for 20 days, the Company and Purchaser shall select and appoint a third actuary who is mutually satisfactory to the parties hereto. Such third party actuary shall be instructed to render its decision within 20 days and such decision shall be conclusive as to any dispute for which the third party actuary was appointed. The cost of such third party actuary shall be divided equally between the Company and Purchaser. Each party shall be responsible for the cost of its own actuary. (D) Purchaser shall take all action necessary to qualify the TV Employees Pension Plan under the applicable provisions of the Code and Purchaser and the Company shall cooperate to make any and all filings and submissions to the appropriate governmental agencies required to be made by Purchaser as are appropriate in effectuating the provisions hereof. (E) In anticipation of making the Initial Transfer in cash, the Company may liquidate, at any time, any or all the investments of the Seller's Pension Plan. (F) Notwithstanding Section 5.2(i)(B) and (E) hereof, the parties may agree to a transfer of assets from the Seller Pension Plan to the TV Employees Pension Plan in kind. The parties shall arrange the manner of any transfer and allocation of the assets in kind as of the date as of which the Section 414 Amount is determined, making appropriate adjustments for benefits and reasonable administration expenses attributable to Business Employees and Beneficiaries. Such transfer may be made in one or more installments. (G) Notwithstanding Section 5.1(i)(A),(B) and (F) hereof, (x) if the Closing occurs on or before May 1, 1999, the determination of the Section 414 Amount will be as of the close of business on April 30, 1999 and the parties anticipate that the Initial Transfer Date will be June 1, 1999 or (y) if the Closing occurs between May 2 and May 15, 1999, the determination of the Section 414 Amount will be as of May 31, 1999 and the parties anticipate that the Initial Transfer Date will be June 1, 1999. (j) With respect to the Guy Gannet Voluntary Investment Plan (the "Defined Contribution Plan"), the Company and Purchaser agree as follows: (A) The Business Employees shall cease to accrue benefits and service credits under the Defined Contribution Plan as of the Closing and, effective as of the Closing, Purchaser shall designate a savings plan (or plans) (in accordance with this Section 5.2(j)) ("Purchaser Savings Plan") and associated trust (or trusts) to hold the assets of the plan for the Business Employees, to be effective as of the Closing, and shall provide to the Company evidence reasonably satisfactory to the Company that the Purchaser Savings Plan and the associated trust have been established and that the Purchaser Savings Plan qualifies under the requirements of Section 401(a) of the Code, and that the trust is exempt from tax under Section 501(a) of the Code. The Company shall provide to Purchaser evidence reasonably satisfactory to Purchaser that the Defined Contribution Plan remains qualified under the requirements of Section 401(a) of the Code. Provided that the Company and Purchaser have received evidence reasonably satisfactory to them in accordance with the preceding sentences, as soon as is reasonably practicable following the Closing, the Company shall take or cause to be taken all action required or appropriate to transfer the account balances of all Business Employees and Beneficiaries to the trust associated with the Purchaser Savings Plan in a trustee to trustee transfer. The transfer will be done in cash with account balances as of the Closing transferred to the Purchaser Savings Plan as soon as practicable after the Closing. The transfer may be made in one or more installments, with the amounts of the transfers reflecting all account activity and those fees and expenses reasonably estimated through the Closing. The actual mechanics of the transfer(s) shall be accomplished in a manner mutually agreed upon by the Company and the Purchaser guided by practices reasonable consistent with the operation of the Defined Contribution Plan. If however the parties agree that the transfer shall be made in kind, such transfers may be made in two or more installments, the first such installment being the aggregate amount of the applicable account balances as of April 1, 1999, reflecting all account transfers, loan payments and other appropriate distributions requested by participants as of April 1, 1999, and those fees and expenses known or reasonably estimated through the Closing. The subsequent transfer(s) shall constitute the remainder of the assets in the participant accounts adjusted for plan expenses, loan payments and other appropriate distributions, charges and credits including earnings on such accounts if not included in prior installments. The actual mechanics of the transfers (including any return payments to reflect excess transfers due to market fluctuations or otherwise, if any) shall be accomplished in a manner mutually agreed upon by the Company and the Purchaser. All transfers shall be made in an amount equal to the value of the account balances to be transferred, determined as of the close of business on the last Business Day immediately preceding each such transfer, except that to the extent a Business Employee's or Beneficiary's account balance in the Defined Contribution Plan includes one or more promissory notes evidencing a participant loan or loans, such promissory notes shall be transferred in kind for the Business Employee's or Beneficiary's credit under the Purchaser Savings Plan. The Purchaser shall collect by payroll deduction from payrolls paid by the Purchaser after the Closing and promptly pay over to the applicable trustee of the Purchaser Savings Plan all loan payments required on participant loans made by the Defined Contribution Plan to any Business Employee and the Purchaser shall cause the appropriate plan administrator to apply the payments to the appropriate promissory notes. Contingent upon the transfer of the account balances to each of the Purchaser Savings Plans, Purchaser shall assume, and Parent shall cause Purchaser to assume, all liabilities of Company and its affiliates with respect to Business Employees and Beneficiaries under the Defined Contribution Plan and shall become with respect to such Business Employees and Beneficiaries responsible for all acts, omissions and transactions under or in connection with such Defined Contribution Plan, whether arising before, on or after the Closing, except for (i) if the Company has obtained at or prior to the Closing a Prepaid Fiduciary Insurance Policy, liabilities arising out of willful misconduct or gross negligence of the trustees before the Closing and (ii) if the Company is unable to obtain such policy, liabilities arising out of willful misconduct, recklessness or gross negligence of the trustees before the Closing." (c) Section 5.1.1 of the Disclosure Schedule is hereby amended and restated in its entirety to be the exhibit to this Agreement designated as "Section 5.1.1." (d) The Purchase Agreement is hereby amended to incorporate, as Section 5.1.2 of the Disclosure Schedule, the exhibit to this Agreement designated as "Section 5.1.2." (e) The Purchase Agreement is hereby amended to add to the portion of Section 5.2 of the Disclosure Schedule designated as "5.2(a)," the Employee Benefit Plans, books and records relating to the Guy Gannett Voluntary Investment Plan (401(k)). Section 7. Definitions. (a) The definition of "Maine Media Purchase Agreement" provided in Article 9 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows: "Maine Media Purchase Agreement means the Purchase Agreement dated as of August 14, 1998 by and among the Company, Newco, Seattle Times Company and Times Communications Co., as amended." (b) The definition of "Material Adverse Effect" provided in Article 9 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows: "Material Adverse Effect means any circumstance, change in, or effect on the Company that has a material adverse effect on the business, results of operations or financial condition of the Business; provided, however, that Material Adverse Effect (A) shall not include adverse effects resulting from (or, in the case of effects that have not yet occurred, reasonably likely to result from) (i) general economic or industry conditions that have a similar effect on other participants in the industry, (ii) regional economic or industry conditions that have a similar effect on other participants in the industry in such region, (iii) the failure of Purchaser to give any requested consent pursuant to Section 5.1(a) or (iv) any act of Purchaser and (B) shall not include adverse circumstances, changes in or effects on the financial, business or operational performance, results of operations, financial condition or employees (whether as to any individual or in the aggregate) of the Business (excluding any such performance, financial condition or employees of Station WOKR-TV (Rochester, New York) only) occurring on or after April 1, 1999." (c) The first two sentences of the definition of "Net Financial Assets" provided in Article 9 of the Purchase Agreement are hereby amended and restated to read as follows: "Net Financial Assets means the result of (i) the aggregate amount of current assets of the Business to be assigned to Purchaser under this Agreement, excluding for purposes of this calculation, the current portion of rights under Program Contracts (except as provided otherwise herein), less (ii) the aggregate amount of current liabilities of the Business to be assumed by Purchaser under this Agreement, excluding for purposes of this calculation the current portion of obligations under Program Contracts (except as provided otherwise herein), less (iii) the aggregate amount of the Company's liability for supplemental retirement and deferred compensation under the Employee Benefit Plans set forth in Section 9 of the Disclosure Schedule and for Continuation Coverage with respect to Corporate Office Employees, in each case to the extent not paid by the Company prior to the Closing and excluding the current portion of such liability, if any, to the extent such portion is included as a current liability in clause (ii), in each case as of the relevant date of calculation and calculated (except as otherwise provided in Section 9 of the Disclosure Schedule) in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 31, 1997 referred to in Section 3.5 hereof. Net Financial Assets expressly shall not include, as either assets or liabilities, the rights and obligations under Program Contracts; provided, however, that notwithstanding any prior practice or lack thereof relating thereto, (x) any programming downpayments made prior to the date hereof under Program Contracts in advance of customary payment terms, to the extent not amortized as of the relevant date of calculation as more fully described in the example set forth in Section 9 of the Disclosure Schedule, shall be expressly included in the current assets, (y) any regularly scheduled payments due and unpaid as of the day immediately preceding the day of the Closing Date under Program Contracts in accordance with their terms as in effect on the date hereof (with respect to Program Contracts existing as of the date hereof) or on the date originally entered into (with respect to Program Contracts entered into after the date hereof)) shall be expressly included in the current liabilities and (z) any prepayments of regularly scheduled amounts due on or after the Closing Date, but made prior to the Closing Date under Program Contracts shall be expressly included in the current assets." (d) The definition of "New Pension Plan" provided in Article 9 of the Purchase Agreement is hereby deleted in its entirety. (e) Clause (v) of the definition of "Permitted Exceptions" provided in Article 9 of the Purchase Agreement is hereby amended and restated to read as follows: "(v) survey exceptions, rights of way, easements, reciprocal easement agreements and other Encumbrances on title to real property shown in the title insurance commitments April 28, 1998 (for the property referred to as parcels 2- A, 15-L, 17, 18, 19-A and 19-B, 70 and 71 in Section 1.1(d) of the Disclosure Schedule), April 24, 1998 (for the property referred to as parcel 29 in Section 1.1(d) of the Disclosure Schedule) and May 1, 1998 (for the property referred to as parcel 84 in Section 1.1(d) of the Disclosure Schedule), May 4, 1998 (for the property referred to as parcels 34-A, 75 and 75-L in Section 1.1(d) of the Disclosure Schedule), May 5, 1998 (for the property referred to as parcels 72, 72- L and 83 in Section 1.1.(d) of the Disclosure Schedule), May 6, 1998 (for the property referred to as parcel 77-L in Section 1.1.(d) of the Disclosure Schedule), May 7, 1998 (for the property referred to as parcels 80 and 81 in Section 1.1.(d) of the Disclosure Schedule), May 10, 1998 (for the property referred to as parcel 82- L in Section 1.1.(d) of the Disclosure Schedule), May 15, 1998 (for the property referred to as parcels 60, 61 and 64 in Section 1.1.(d) of the Disclosure Schedule), May 18, 1998 (for the property referred to as parcel 74 in Section 1.1.(d) of the Disclosure Schedule), May 21, 1998 (for the property referred to as parcels 90 and 91 in Section 1.1.(d) of the Disclosure Schedule) and June 12, 1998 (for the property referred to as parcel 100 in Section 1.1.(d) of the Disclosure Schedule), or that do not, individually or in the aggregate, materially adversely affect the use of such property in the conduct of the Company's business as it is being conducted prior to the Closing;" (f) The following new definition of "TV Employees Pension Plan" shall be inserted in alphabetical order in Article 9 of the Purchase Agreement: "TV Employees Pension Plan has the meaning set forth in Section 5.2 hereof." Section 8. References. All references to "this Agreement" in the Purchase Agreement shall mean the Purchase Agreement as amended hereby. Section 9. Definitions. All capitalized terms not otherwise defined in this Amendment shall have the meanings set forth in the Purchase Agreement. Section 10. Headings. The headings of the sections of this Amendment are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Amendment or the intent of any section or subsection. Section 11. Counterparts. This Amendment may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Section 12. Governing Law. This Amendment and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York. Section 13. No Other Amendments. Except as expressly amended hereby, the terms and conditions of the Purchase Agreement shall continue in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. GUY GANNETT COMMUNICATIONS By: /s/ James Baker ------------------------------------ Name: James Baker Title: Vice President Finance SINCLAIR COMMUNICATIONS, INC. By: /s/ David B. Amy ------------------------------------ Name: David B. Amy Title: Secretary ACCEPTED AND AGREED as of the date first above written: WGME LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WTWC LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WICS LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WICD LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WGGB LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary KGAN LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WOKR LICENSEE, LLC By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WGME, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WTWC, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary SINCLAIR ACQUISITION IV, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary WGGB, INC. By: /s/ David B. Amy -------------------------------- Name: David B. Amy Title: Secretary EX-10.5 6 EXHIBIT 10.5 MODIFICATION AGREEMENT This MODIFICATION AGREEMENT (this "Agreement") made as of April 12, 1999 by and between Guy Gannett Communications, a Maine corporation (the "Company"), and Sinclair Communications, Inc., a Maryland corporation (together with its successors and permitted assigns, "Purchaser") to modify the Purchase Agreement dated as of September 4, 1998 by and between the Company and Purchaser, as amended by the Amendment thereto dated as of March 16, 1999 (as so amended, the "Purchase Agreement"). W I T N E S S E T H : WHEREAS, the Company and Purchaser are parties to the Purchase Agreement, pursuant to which the Company has agreed to sell to Purchaser the assets and business of the Company's broadcast television business, including all business, operations and activities of, among other broadcast television stations, Station WOKR-TV, Rochester, New York ("Station WOKR-TV"), and Purchaser has agreed to purchase such assets and business and to assume certain liabilities related to or arising from or in connection with such assets or business; WHEREAS, pursuant to that certain Purchase Agreement dated as of September 25, 1998 as amended by the Amendment dated April 12, 1999 (as so amended, the "Ackerley Agreement") by and between Purchaser and The Ackerley Group, Inc. ("Ackerley"), Purchaser has agreed to transfer to Ackerley, or directly to an affiliate of Ackerley, the assets and business of Station WOKR-TV, and Ackerley has agreed to acquire, or to cause such affiliate to acquire, such assets and business and to assume certain liabilities related to or arising from or in connection with such assets or business; WHEREAS, Ackerley's rights under the Ackerley Agreement have been assigned to its wholly owned subsidiary Central NY News, Inc. ("CNYN"), which assignment, however, did not relieve Ackerley from its duties and obligations of performance under the Ackerley Agreement; WHEREAS, pursuant to a letter agreement dated March 16, 1999, the Company and Purchaser agreed, among other things, to negotiate in good faith, at the request of Purchaser, with respect to causing a separate, earlier closing to be effected for the sale to Purchaser or its wholly owned subsidiary of the assets relating to Station WOKR-TV, and the assumption by Purchaser or such subsidiary of the pertinent liabilities relating thereto; WHEREAS, as a result of such negotiations, the Company and Purchaser desire to modify the Purchase Agreement in certain respects to permit such separate, earlier closing to be effected; and NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows: Section 1. Closings. There shall be two separate closings of the transactions contemplated by the Purchase Agreement. The first such closing (the "First Closing") of the transactions contemplated in the Purchase Agreement with respect to Station WOKR-TV shall take place at 10:00 a.m., New York City time, on the date hereof (such time and date being referred to herein as the "First Closing Date"). The closing (the "Second Closing") of the other transactions contemplated in the Purchase Agreement shall take place at 10:00 a.m., New York City time, on April 30, 1999 (such time and date being referred to herein as the "Second Closing Date"), or, if the conditions to Closing set forth in Articles 6 and 7 of the Purchase Agreement have not been satisfied or waived by April 30, 1999 (after giving effect to any modifications thereto contained in this Modification Agreement), as soon (but not less than two Business Days) thereafter as the conditions set forth in Article 6 and 7 of the Purchase Agreement have been 2 satisfied or waived (after giving effect to any modifications thereto contained in this Modification Agreement). At the First Closing, the Company will convey, assign, transfer and deliver certain of the Assets (as defined in the Purchase Agreement) relating to Station WOKR-TV to CNYN and the Purchaser (the "WOKR Assets") and the Purchaser and CNYN shall assume and agree to perform and fully discharge when due all of the Assumed Liabilities (as defined in the Purchase Agreement) arising out of or relating to Station WOKR-TV (the "WOKR Assumed Liabilities"). At the Second Closing, the Company will sell, convey, assign, transfer and deliver all of the Assets other than the WOKR Assets (the "Non-WOKR Assets") and the Purchaser shall assume and agree to perform and fully discharge when due all of the Assumed Liabilities other than the WOKR Assumed Liabilities. Section 2. Certain Payments. With respect to Business Employees of Station WOKR-TV, the reimbursement of payments to be made pursuant to Section 5.8 of the Purchase Agreement shall apply only to Business Employees whose employment is terminated on or prior to 90 days after the First Closing Date. For the avoidance of doubt, it is agreed that any such payment will be subject to the terms and conditions of Section 5.8 (including, without limitation, the proviso to such Section). With respect to Business Employees of Stations other than Station WOKR-TV, Section 5.8 of the Purchase Agreement shall apply to Business Employees whose employment is terminated on or prior to 90 days after the Second Closing Date. Section 3. Sales Tax. The Company shall pay one-half of all applicable sales tax relating to the sale of the Assets, provided that for purposes of calculation of such tax, it shall be assumed that there shall be (x) only one taxable transaction relating to the WOKR Assets and (y) only one taxable transaction relating to the Non-WOKR Assets (provided that in no event will the Company pay more than it would have paid had there been a single transfer of all Assets to 3 the Purchaser pursuant to the Purchase Agreement). Such obligation shall be in lieu of any other obligation to pay sales tax on account of the sale of the Assets as set forth in Section 10.10 of the Purchase Agreement. Purchaser shall cause the sum of $204,200 to be delivered to the Company at the First Closing and the Company shall submit the sum of $408,400 to the State of New York Department of Taxation and Finance. Section 4. Bill of Sale. Notwithstanding provisions in the Purchase Agreement to the contrary, at the First Closing a bill of sale, assignment and assumption agreement substantially in the form of Exhibit A hereto conveying the WOKR Assets (with the exception of the FCC Licenses related to Station WOKR-TV, which shall be conveyed to WOKR Licensee, LLC, and the collective bargaining agreement described in Section 3.10.6 of the Disclosure Schedule relating to Station WOKR-TV and the employee benefit plans described in Section 3.14.3 of the Disclosure Schedule, both of which shall be conveyed to Sinclair Acquisition IV, Inc.) shall be delivered directly to CNYN. In addition, notwithstanding provisions of the Purchase Agreement to the contrary, at the First Closing an assumption agreement substantially in the form of Exhibit B hereto but providing for assumption by Purchaser of the WOKR Assumed Liabilities shall be executed and delivered by Purchaser to the Company and a side letter substantially in the form set forth in Exhibit C hereto shall be executed and delivered by and to the Purchaser, the Company and CNYN. In addition, as an accommodation to Purchaser, the Company agrees that, subject to the immediately succeeding sentence, at the request of Purchaser at the Second Closing, (i) notwithstanding the provisions in the Purchase Agreement to the contrary, a bill of sale and assignment substantially in the form of Exhibit A, but conveying the Assets relating to Station WICS-TV, Springfield, Illinois, Station WICD-TV, Champaign, Illinois and KGAN-TV, Cedar Rapids, Iowa (with the exception of (x) 4 the FCC Licenses and certain related assets related to such stations, which shall be conveyed to WICS Licensee, LLC, WICD Licensee, LLC and KGAN Licensee, LLC, respectively, and (y) the collective bargaining agreements described in Section 3.10.6 of the Disclosure Schedule relating to such Stations and the employee benefit plans described in Section 3.14.3 of the Disclosure Schedule relating to such Stations, which shall be conveyed to Sinclair Acquisition IV, Inc.) (collectively, the "STC Assets") shall be delivered directly to STC Broadcasting, Inc., (ii) the Purchaser and the Company shall execute and deliver a Bill of Sale, Assignment and Assumption Agreement in accordance with Section 1.7(a) of the Purchase Agreement (provided that the WOKR Assets, the STC Assets and the WOKR Assumed Liabilities shall be excluded from such Bill of Sale, Assignment and Assumption Agreement) and (iii) notwithstanding the provisions of the Purchase Agreement to the contrary, the Purchaser and the Company shall execute and deliver an assumption agreement substantially in the form as Exhibit B hereto, but providing for assumption by Purchaser of the Assumed Liabilities relating to Station WICS-TV, Springfield, Illinois, Station WICD-TV, Champaign, Illinois and KGAN-TV, Cedar Rapids, Iowa, it being understood that the actions contemplated by this sentence shall not amend, modify or otherwise affect any of the conditions precedent set forth in Articles 6 and 7 of the Purchase Agreement (which shall be construed as if all of the Non-WOKR Assets were being transferred directly to Purchaser). Anything in the immediately succeeding sentence to the contrary notwithstanding, the Company's obligation to take the actions contemplated by the immediately preceding sentence are conditioned on the following actions taking place at the Second Closing (it being understood that, if such conditions are not satisfied all Non-WOKR Assets will be transferred directly to Purchaser) either (I) (a) Purchaser, STC Broadcasting, Inc. and the Company executing and delivering to the Company a letter agreement substantially in the form of Exhibit 5 C (but substituting STC for CNYN and making other conforming modifications) and (b) Purchaser executing and delivering an indemnity agreement substantially in the form of Exhibit B (but substituting the Assumed Liabilities relating to Station KGAN-TV, Station WICS-TV and Station WICD-TV for the WOKR-TV Assumed Liabilities and other conforming modifications) or (II) the matters addressed in Exhibits C and D shall have otherwise been addressed to the reasonable satisfaction of the parties. Section 5. Allocation of Purchase Price. (a) As previously agreed by the parties hereto, the purchase price for the WOKR Assets shall be the aggregate amount of (x) $125,000,000 of the $310,000,000 specified in Section 2.1(a) of the Purchase Agreement as a portion of the Purchase Price plus (if greater than or equal to zero) or minus (if less than zero), as the case may be, (y) the amount of the Net Financial Assets based on the WOKR-TV Assets and WOKR Assumed Liabilities as of 11:59 p.m., New York City time, on the day immediately preceding the First Closing Date, subject to adjustment pursuant to Section 2.2 of the Purchase Agreement (with the amount described in clause (y) being referred to as the "WOKR Net Financial Assets" and the aggregate amount described in clause (x) and (y) collectively the "Station WOKR-TV Purchase Price"). (b) On or before the First Closing, the Company shall deliver to Purchaser (i) a statement setting forth the amount estimated in good faith by the Company to be the amount of the WOKR Net Financial Assets as of the First Closing Date (the "Estimated WOKR Net Financial Assets") and (ii) a notice designating the account or accounts to which the payment to or on behalf of the Company pursuant to Section 2(a) hereof is to be made. (c) At the First Closing, (i) $3,225,600 (the "First Closing Security Escrow") of the Station WOKR-TV Purchase Price shall be delivered to the Security Escrow Agent by wire 6 transfer in immediately available funds pursuant to the Security Escrow Agreement, as such agreement shall be modified in accordance with this Agreement, (ii) $1,209,600 (the "First Closing Adjustment Escrow") of the Station WOKR-TV Purchase Price shall be delivered to the Adjustment Escrow Agent by wire transfer in immediately available funds pursuant to the Adjustment Escrow Agreement, as such agreement shall be modified in accordance with this Agreement, and (iii) the sum of $120,564,800 plus the Estimated WOKR Net Financial Assets shall be paid by wire transfer in immediately available funds to the account or accounts designated by the Company in accordance with Section 2(b) hereof. (d) At the Second Closing, the amounts to be delivered by Purchaser pursuant to Section 2.1(c) of the Purchase Agreement shall be the full Purchase Price under the purchase Agreement minus the amounts delivered at the First Closing to the Company, the Security Escrow Agent and the Adjustment Escrow Agent pursuant to Section 2(c) hereof; provided, however, that the amount of the Net Financial Assets relating to the Stations other than Station WOKR-TV shall be separately calculated and shall be determined as of 11:59 p.m., New York City time, on the day immediately preceding the Second Closing Date (the "Remaining Net Financial Assets"). For the avoidance of doubt, the Purchase Price payable at the Second Closing shall be subject to the Earnings Adjustment in respect of 1998 BCF (if any). (e) The first sentence of Section 4 of that certain Amendment to the Purchase Agreement dated March 16, 1999 shall be and hereby is amended and restated to read in its entirety as follows: No later than the Second Closing Date, Purchaser and the Company shall jointly determine the proper allocation of the Purchase Price among the Stations other than Station WOKR-TV. The parties agree that the proper allocation of the $125,000,000 base Purchase Price for Station WOKR-TV among specified categories of assets shall be as set forth in Section 2.5 of the Disclosure Schedule. 7 Section 2.5 of the Disclosure Schedule is hereby amended and restated in its entirety to be the exhibit to this Agreement designated as Section 2.5. Section 6. Adjustment Escrow Agreement. The form of Adjustment Escrow Agreement shall be modified to the reasonable satisfaction of the Company, Purchaser and the Adjustment Escrow Agent to permit (i) separate deliveries to be made in respect of the First Closing and the Second Closing, and (ii) payment to the Company of the First Closing Adjustment Escrow, less any amounts of Claims and Damages in respect of Station WOKR-TV, pursuant to the terms of Section 2.1(c) of the Purchase Agreement, as modified hereby. Section 7. Security Escrow Agreement. The form of Security Escrow Agreement shall be modified to the reasonable satisfaction of the Company, Purchaser and the Security Escrow Agent to permit (i) separate deliveries to be made in respect of the First Closing and the Second Closing, and (ii) payment to the Company of the First Closing Security Escrow, less any amounts of Claims and Damages in respect of Station WOKR-TV, on the one year anniversary of the First Closing Date. Section 8. Net Financial Asset Adjustment. The Net Financial Assets shall be comprised of (i) the WOKR Net Financial Assets and (ii) the Remaining Net Financial Assets. If the Second Closing occurs within 30 days of the First Closing, there shall be a single Net Financial Assets calculation and release of the Adjustment Escrow Account pursuant to the procedure set forth in Section 2.2 of the Purchase Agreement (treating the Second Closing Date as the "Closing Date" for purposes of such Section 2.2). If the Second Closing is delayed more than 30 days after the First Closing or does not occur, the WOKR Net Financial Assets and the Remaining Net Financial Assets shall be determined separately, but otherwise in accordance with the terms of Section 2.2 of the Purchase Agreement (treating as the "Closing Date" for purposes 8 of such Section 2.2 (x) the First Closing Date when determining the WOKR Net Financial Assets and (y) the Second Closing Date when determining the Remaining Net Financial Assets). Section 9. Consents. Purchaser acknowledges that it has received and, to the extent contemplated by the relevant consent, signed each of the consents attached as Exhibit C to that certain letter agreement dated March 16, 1999, copies of which are attached hereto. Purchaser hereby agrees that if any consent contemplated by Section 6.4(ii) of the Purchase Agreement has been or is obtained (a "Received Consent") but such Received Consent is subsequently superceded or otherwise rendered ineffective in connection with a consent having been obtained to allow the transfer of the asset contemplated therein directly to STC Broadcasting, Inc., (which consent to transfer to STC Broadcasting has not been rendered ineffective as of the Second Closing Date, provided that this parenthetical shall not apply if such consent to transfer to STC Broadcasting is rendered ineffective due to the failure of the Sinclair/STC Broadcasting transaction to close or the termination of the Sinclair/STC Broadcasting purchase agreement) the Company shall be deemed to have satisfied the condition set forth in Article 6 of the Purchase Agreement with respect to such Received Consent for all purposes of Article 6 of the Purchase Agreement. Section 10. Certificates; Certain Conditions. (a) As a condition to the obligations of Purchaser to consummate the transactions contemplated by the Purchase Agreement to occur at the First Closing, the Company shall deliver to Purchaser a certificate, dated as of the First Closing Date, executed on behalf of the Company by its duly authorized officers or representatives to the effect of Sections 6.1 and 6.2 of the Purchase Agreement with respect only to Station WOKR-TV. 9 (b) As a condition to the obligations of Purchaser to consummate the transactions contemplated by the Purchase Agreement to occur at the Second Closing, in satisfaction of the conditions set forth in Section 6.3 of the Purchase Agreement the Company shall deliver to Purchaser a certificate, dated as of the Second Closing Date, executed on behalf of the Company by its duly authorized officers or representatives to the effect of Sections 6.1 and 6.2 of the Purchase Agreement with respect to all Stations (other than Station WOKR-TV) taken as a whole. The conditions precedent set forth in Sections 6.1 and 6.2 shall be limited to the truth and correctness of the representations, warranties, covenants and agreements as they apply only to the Stations other than Station WOKR-TV. The condition precedent set forth in Section 6.11 shall be limited to the Stations other than Station WOKR-TV. (c) For the avoidance of doubt, for purposes of clauses (a) and (b) above, materiality (or "Material Adverse Effect") for all purposes under the Purchase Agreement shall be determined on the basis of all Stations taken as a whole, including Station WOKR-TV (and the certificates delivered pursuant to clauses (a) and (b) above may reflect such treatment), provided, however that in determining materiality or Material Adverse Effect, any circumstance, change in, or effect relating to Station WOKR-TV after the First Closing Date shall not be taken into consideration. Section 11. Indemnification; Survival. The representations and warranties of the Company contained in the Purchase Agreement or in any certificate or special warranty deed delivered pursuant thereto and any and all covenants and agreements therein with respect to Station WOKR-TV, the WOKR Assets or the WOKR Assumed Liabilities (other than those covenants and agreements required by the Purchase Agreement to be performed after the First Closing) shall expire with, and be terminated and extinguished upon, the one year anniversary of 10 the First Closing Date. Except as provided in the immediately proceeding sentence, all representations and warranties of the Company or Sinclair contained in the Purchase Agreement or in any certificate or special warranty deed pursuant thereto and any and all covenants and agreements in the Purchase Agreement shall expire in accordance with the terms of the Purchase Agreement (treating the Second Closing as "the Closing"). For purposes of Section 8.1(a) and 8.1(b) of the Purchase Agreement, the term "Closing Date" shall be deemed to refer to (x) the First Closing Date in respect of Station WOKR-TV, the WOKR Assets and the WOKR Assumed Liabilities and (y) the Second Closing Date in respect of the Stations (other than Station WOKR-TV), Assets (other than the WOKR Assets) and Assumed Liabilities (other than the WOKR Assumed Liabilities). Following the First Closing, all pre-Closing covenants and agreements in Article 5 of the Purchase Agreement shall no longer apply to Station WOKR-TV. Section 12. Termination Rights. On and after the occurrence of the First Closing, neither the Company nor the Purchaser shall have any right to terminate the Purchase Agreement. After the occurrence of the First Closing, if any event occurs that would allow the Purchaser or the Company to terminate the Purchase Agreement pursuant to Section 10.1 of the Purchase Agreement (without giving effect to the immediately preceding sentence and substituting the words "Second Closing" for the term "Closing" each place it appears in Section 10.1), then at such time as such party would otherwise be entitled to terminate the Purchase Agreement such party shall be entitled to abandon the Second Closing in accordance with the procedures set forth in Section 10.1 of the Purchase Agreement relating to termination of the Purchase Agreement. If a party abandons the Second Closing in accordance with this Section then the obligations of the Purchaser and the Company to effect the Second Closing shall terminate, all representations, warranties, convents, agreements, liabilities and obligations of the Purchaser and the Company 11 under the Purchase Agreement shall thereupon become void and of no further effect whatsoever other than to the extent such representations, warranties, covenants, agreements, liabilities and obligations relate to the WOKR Station, the WOKR Assets, the WOKR Assumed Liabilities or the First Closing (in which case they shall remain in full force and effect subject to the terms and conditions of the Purchase Agreement and this Agreement), in each case except (i) to the extent of a party's liability for willful material breaches of the Purchase Agreement prior to the time of such abandonment, (ii) as set forth in Section 5.4 of the Purchase Agreement and (iii) the obligations of each party for its own expenses incurred in connection with the transactions contemplated by the Purchase Agreement and this Agreement as provided therein and herein. Section 13. No Third Party Rights. Nothing in this Agreement shall be deemed to provide any Person with any legal or equitable rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, the Purchase Agreement or any certificate or instrument delivered hereto or thereto, except to the extent previously provided in the Purchase Agreement with respect to certain wholly owned subsidiaries of Purchaser. For the avoidance of doubt, neither Ackerley nor any of its affiliates will be considered an assignee of the Purchaser for purposes of the Purchase Agreement (and will not have any of the Purchaser's rights or remedies under the Purchase Agreement). Section 14. References. All references to "this Agreement" in the Purchase Agreement shall mean the Purchase Agreement as modified hereby. Section 15. Definitions. All capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Purchase Agreement. 12 Section 16. Headings. The headings of the sections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. Section 17. Counterparts. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Section 18. Governing Law. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York. Section 19. No Other Amendments or Modifications. This Agreement constitutes an amendment to the Purchase Agreement and in the event of any conflict between the terms of this Agreement and the Purchase Agreement the terms of this Agreement will govern. Except as expressly contemplated to be modified hereby, the terms and conditions of the Purchase Agreement shall continue in full force and effect. 13 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. GUY GANNETT COMMUNICATIONS By: /s/ James Baker ---------------------------------- Its Vice-President-Finance SINCLAIR COMMUNICATIONS, INC. By: /s/ David B. Amy ---------------------------------- Name: David B. Amy Title: Secretary ACCEPTED AND AGREED as of the date first above written: WGME LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary WTWC LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary 14 WICS LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary WICD LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary WGGB LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary KGAN LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary WOKR LICENSEE, LLC By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary 15 WGME, INC. By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary WTWC, INC. By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary SINCLAIR ACQUISITION IV, INC. By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary WGGB, INC. By: /s/ David B. Amy --------------------------------- Name: David B. Amy Title: Secretary 16 EX-10.6 7 EXHIBIT 10.6 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of this 16th day of March, 1999, by and between SINCLAIR COMMUNICATIONS, INC., a Maryland corporation (the "COMPANY"), and STC BROADCASTING, INC., a Delaware corporation ("PURCHASER"). WHEREAS, the Company and Guy Gannett Communications ("GANNETT") entered into that certain Purchase Agreement dated September 4, 1998, as amended on March 16, 1999 (the "GANNETT PURCHASE AGREEMENT"), pursuant to which the Company agreed to purchase substantially all of the assets of the Gannett Television Stations, including television broadcast stations WICS-TV, Channel 20, Springfield, Illinois; WICD-TV, Channel 15, Champaign, Illinois; and KGAN-TV, Channel 2, Cedar Rapids, Iowa (each a "STATION" and collectively, the "Stations"); and WHEREAS, the Company desires to sell, assign and transfer to Purchaser the assets and business of the Stations as described below, and Purchaser desires to purchase and acquire the assets and business of the Stations as described below, on the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties, intending legally to be bound, agree as follows: [A LIST OF DEFINED TERMS IS PROVIDED IN ARTICLE 9 HEREOF.] ARTICLE 1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES. 1.1 ASSETS TO BE ACQUIRED. Upon the terms and subject to the satisfaction of the conditions set forth herein, the Company shall sell, convey, assign, transfer and deliver to Purchaser, and Purchaser shall purchase, acquire, accept and pay for, all right, title and interest of the Company and Gannett in and to all of the real, personal and mixed properties, assets and other rights, both tangible and intangible (other than the Excluded Assets), owned or leased by, or licensed to or used or useful by, the Company and Gannett in connection with the Business and the Stations (collectively, the "ASSETS"), which Assets shall consist of all of the Assets relating to the Stations that the Company (and its successors and assigns) have acquired or have the right to acquire, pursuant to the Gannett Purchase Agreement. Without limiting the generality of the foregoing, the Assets shall include the following: (a) the FCC Licenses; (b) the Equipment; (c) all translators, earth stations and other auxiliary facilities, and all applications therefor; (d) the Real Property and Leased Property as set forth in Section 1.1(d) of the Disclosure Schedule; (e) all orders and agreements for the sale of advertising time on the Stations for cash, and all trade, barter and similar agreements, excluding Program Contracts (which are provided for below), for the sale of advertising time on the Stations for any property or services in lieu of or in addition to cash, and any other orders and agreements relating to the Stations and entered into (other than in violation of this Agreement or the Gannett Purchase Agreement) between the date of the Gannett Purchase Agreement and the Transfer Date; (f) all film and program licenses and contracts under which the Company or Gannett has the right to broadcast film product or programs on the Stations ("PROGRAM CONTRACTS"), including all cash and non-cash (barter) program contracts and including, without limitation, the Program Contracts set forth in Section 3.10 of the Disclosure Schedule and any other Program Contracts relating to the Stations and entered into (other than in violation of this Agreement or the Gannett Purchase Agreement) between the date of the Gannett Purchase Agreement and the Transfer Date; (g) all other contracts and agreements related to the Business, including, without limitation, network affiliation agreements, all employment contracts entered into with television talent and other Business Employees, all collective bargaining agreements with respect to any Business Employees, any time brokerage agreements and all national or local advertising representation agreements for the Stations, including, without limitation, the contracts and agreements set forth in Section 3.10 of the Disclosure Schedule, and any other such contracts and agreements relating to the Stations and entered into (other than in violation of this Agreement or the Gannett Purchase Agreement) between the date of the Gannett Purchase Agreement and the Transfer Date; (h) the Intellectual Property, including, without limitation, the Call Letters; - 2 - (i) all programs and programming materials used in connection with the Business, whether recorded on tape or any other media or intended for live performance, and whether completed or in production, and all related common law and statutory copyrights owned by or licensed to the Company or Gannett and used or useful in connection with the Business; (j) all FCC logs and other records that relate to the operation of the Stations; (k) except as set forth in Section 1.2 hereof, all files, books and other records relating to the Business, including, without limitation, written technical information, data, specifications, research and development information, engineering, drawings, manuals, computer programs, tapes and software relating directly to the Business, other than duplicate copies of account books of original entry and duplicate copies of such files and records, if any, that are maintained at the corporate offices of the Company or Gannett for tax and accounting purposes; (l) all of the goodwill in, and "going concern" value of, the Business; (m) all accounts, notes and accounts receivable of the Business and the Stations relating to or arising out of the business and operations of the Stations and the Business during the period prior to the Transfer Date; (n) all deposits, reserves and prepaid expenses of the Business (other than those relating to Excluded Assets or Liabilities that are not Assumed Liabilities); (o) to the extent transferable under applicable law, all franchises, approvals, permits, licenses, orders, registrations, certificates, exemptions, variances and similar rights obtained from Governmental Authorities (other than the FCC Licenses) in any jurisdiction that had issued or granted such items to the Company or Gannett, or that the Company or Gannett otherwise owns or uses, in each case relating to the Business, and all pending applications therefor; and (p) except as set forth in Section 1.2 hereof, all insurance proceeds and claims therefor arising out of or related to (i) damage, destruction or loss of any property or asset used or useful in connection with the Business to the extent of any damage or destruction that remains unrepaired, or to the extent any property or asset remains unreplaced, at the Non-License Transfer Date or the Closing Date, as applicable, and (ii) any other matters related to, or involving the Business, including, without limitation, employment practices. - 3 - 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary herein, all of the assets listed on Section 1.2 of the Disclosure Schedule or defined in the Gannett Purchase Agreement as Excluded Assets (collectively, the "Excluded Assets") shall be excluded from the Assets. 1.3 ASSUMPTION OF LIABILITIES. (a) On and after the Non-License Transfer Date, Purchaser will assume and agree to perform and fully discharge when due, except to the extent that such Liabilities constitute Retained Liabilities, the following Liabilities of the Company or Gannett: (i) those solely related to or solely arising from or in connection with the Assets or the Business (other than the License Assets); and (ii) those partly related to any contract or agreement for the Stations that are also related to other Gannett Television Stations, but not related to any other assets or business of Gannett or the Company (any such contract or agreement being a "GROUP CONTRACT"), but only to the extent the Liabilities under any such Group Contract relate to or arise from or are in connection with the Assets or the Business, whether such Liabilities specified in clause (i) or (ii) are incurred or arise prior to, on or after the Non-License Transfer Date, including, without limitation, those obligations of the Company relating to the Business to be assumed by Purchaser pursuant to Section 5.2 hereof. (b) On and after the Closing Date, to the extent not assumed by Purchaser at the Non-License Transfer, Purchaser will assume and agree to perform and fully discharge when due, except to the extent that any Liabilities constitute Retained Liabilities, the following Liabilities of the Company or Gannett: (i) those solely related to or solely arising from or in connection with the Assets or the Business; (ii) those partly related to any Group Contract, but only to the extent the Liabilities under any such Group Contract relate to or arise from or are in connection with the Assets or the Business, and (iii) those solely related to or solely arising from or in connection with the License Assets listed in Section 1.4 of the Disclosure Schedule, whether such Liabilities specified in clause (i), (ii) or (iii) are incurred or arise prior to, on or after the Closing Date, including, without limitation, those obligations of the Company relating to the Business to be assumed by Purchaser pursuant to Section 5.2 hereof (the Liabilities assumed by Purchaser pursuant to Sections 1.3(a) and (b) hereof shall be collectively be referred to herein as the "ASSUMED LIABILITIES"). (c) Except for the Assumed Liabilities and except as otherwise expressly provided in this Agreement, Purchaser will assume no other Liabilities or - 4 - any kind of description (collectively, the "RETAINED LIABILITIES"). The Retained Liabilities include, without limitation, any of the following Liabilities: (i) any of the Liabilities defined in the Gannett Purchase Agreement as "Retained Liabilities"; (ii) any of the Company's obligations hereunder; (iii) any Liability for federal, state or local income taxes of Gannett or the Company, their respective stockholders or any other Person; (iv) any Liabilities relating to the Corporate Office except for the Purchaser's reimbursement obligation pursuant to Section 5.9(b) hereof; (v) any Liabilities relating to current, former or inactive Corporate Office Employees; (vi) any Liabilities under any Employee Benefit Plans of Gannett or the Company except to the extent assumed by Purchaser pursuant to Section 5.2 and Section 5.9 hereof; (vii) any Liability of Gannett or the Company arising from Indebtedness or any overdrafts on any bank accounts of Gannett or the Company; (viii) any Liability for dividends; and (ix) any Liability with respect to the Gannett Television Stations (other than the Stations) under any Group Contract or otherwise. (d) The Company shall retain, and shall continue to be responsible after the Transfer Date for, all Retained Liabilities and all other Liabilities of the Company and Gannett that are not Assumed Liabilities. 1.4 NON-LICENSE TRANSFER; CLOSING. (a) Unless this Agreement shall have been terminated and the transactions herein shall have been terminated pursuant to Section 10.1 hereof, provided that the conditions set forth in Article 6 (except for Section 6.6) and Article 7 (except for Section 7.6) shall have been satisfied and the Closing shall not have occurred, there shall be a closing (the "NON-LICENSE TRANSFER") for the - 5 - purchase and sale of all of the Assets (other than the Assets which are listed in Section 1.4 of the Disclosure Schedule (the "LICENSE ASSETS"), at 10:00 a.m. New York City time on a date specified by Purchaser that is within the later of (i) ten (10) days after the date on which all applicable waiting periods under the HSR Act shall have expired or terminated, or (ii) the date, time and place of the closing under the Gannett Purchase Agreement as long as Purchaser shall have received at least ten (10) days prior written notice from the Company of the date of the Gannett closing (the date on which the Non-License Transfer shall occur pursuant to this Section 1.4(a) is referred to herein as the "NON-LICENSE TRANSFER DATE"); provided, however, that the Company and Purchaser shall take such reasonable actions as may be necessary to hold the Non-License Transfer simultaneously with the closing of the Gannett Purchase Agreement. If the Non-License Transfer shall occur simultaneously with the closing under the Gannett Purchase Agreement, then the Non-License Transfer shall occur at the place of the closing under the Gannett Purchase Agreement, or at such other place as the parties shall agree in writing. Otherwise, the Non-License Transfer shall occur at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite 1100, McLean, Virginia 22102, or at such other place as the Company and Purchaser shall agree in writing. At the Non-License Transfer, each of the parties hereto shall take, or cause to be taken, all such actions and deliver, or cause to be delivered, all such documents, instruments, certificates and other items as may be required under this Agreement or otherwise, in order to perform or fulfill all covenants and agreements on its part to be performed at or prior to the Non-License Transfer. The Non-License Transfer shall be effective as of 12:01 a.m., New York City time, on the day of the Non-License Transfer Date. (b) Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been terminated pursuant to Section 10.1 hereof, the closing (the "CLOSING") of the transactions herein contemplated shall take place at 10:00 a.m., New York City time, on a date specified by Purchaser that is within ten (10) days following the satisfaction or waiver of the conditions set forth in Articles 6 and 7 hereof, or at such other time and date as the Company and Purchaser shall agree in writing (such time and date of the Closing being referred to herein as the "CLOSING DATE"), at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite 1100, McLean, Virginia 22102, or at such other place as the Company and Purchaser shall agree in writing. At the Closing, each of the parties hereto shall take, or cause to be taken, all such actions and deliver, or cause to be delivered, all such documents, instruments, certificates and other items as may be required under this Agreement or otherwise, in order to perform or fulfill all covenants and agreements on its part to be performed at or prior to the Closing. The Closing shall be effective as of 12:01 a.m., New York City time, on the day of the Closing Date. - 6 - (c) In the event that the closing of the Company's acquisition of the Stations pursuant to the Gannett Purchase Agreement does not occur simultaneously with the Transfer Date hereunder, the Company and Purchaser acknowledge and agree that (i) the representations, warranties, covenants and agreements made by Gannett under the Gannett Purchase Agreement which relate to the Stations shall be deemed (A) incorporated by reference into the terms hereof, and (B) restated by the Company for the benefit of Purchaser as of the Transfer Date as though the Company was Gannett under the Gannett Purchase Agreement; provided, that, without limiting the Company's representations, warranties, covenants and agreements hereunder, such additional representations, warranties, covenants and agreements from the Gannett Purchase Agreement shall apply only with respect to the period of ownership of the Stations and the Assets by the Company and the Company's successors and assigns; (ii) on or prior to the fifth (5th) Business Day prior to the Transfer Date, the Disclosure Schedule hereto shall be updated and amended by the Company to reflect the updates and amendments to the Disclosure Schedule that are necessary in order for the Company to restate such representations and warranties hereunder as of the Transfer Date; provided, however, no such updates or amendments shall be made which would constitute a violation of this Agreement or the Gannett Purchase Agreement; and (iii) in addition to the Assets described in Section 1.1 hereof, the "Assets" shall include the Assets of the Business and the Stations with respect to which the Company and the Company's successors and assigns shall have acquired from and after the closing under the Gannett Purchase Agreement. (d) If the Closing shall not have occurred on or prior to such date which is four (4) years after the date of this Agreement, the Company and Purchaser acknowledge and agree to cooperate and use commercially reasonable efforts to consummate the sale to a third party of both the License Assets and the Non-License Assets in an orderly and mutually satisfactory manner (the "THIRD PARTY SALE"). At the closing of the Third Party Sale pursuant to this Section 1.4(d), the proceeds therefrom shall be paid as follows: (i) any amounts of the Purchase Price hereunder not previously paid to the Company shall be paid directly to the Company, and (2) any other amounts shall be paid directly to the Purchaser. Any such payments shall be by wire transfer of immediately available funds to an account identified by the recipient party in writing. 1.5 ADDITIONAL CLOSING DELIVERIES. (a) At the Non-License Transfer and the Closing, as applicable, the Company shall deliver to Purchaser: - 7 - (i) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement substantially in the form set forth in Exhibit A hereto (the "BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT"); (ii) at the Closing only, a duly executed counterpart of the Assignment of FCC Licenses, substantially in the form set forth in Exhibit B hereto (the "ASSIGNMENT OF FCC LICENSES"); (iii) instruments of assignment with respect to all of the Company's rights and interests in the Leased Property and special warranty deeds (of a type equivalent to that known in New York as a "bargain and sale deed with covenants against grantor's actions") with respect to all of the Company's rights and interests in the Real Property, in recordable form sufficient to convey to Purchaser all of the Company's rights and interests or rights and interest in the Leased Property and the Real Property acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement; (iv) an owner's affidavit, gap indemnity and such other customary documents and certificates as may be reasonably required by Purchaser's title insurance company with respect to Purchaser's title insurance of the Real Property and any Leased Property; (v) evidence reasonably satisfactory to Purchaser that the third-party insurance policies listed in Section 3.9 of the Disclosure Schedule are in full force and effect with respect to the period prior to the Transfer Date (together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements, as reasonably requested by Purchaser, in favor of Purchaser); (vi) a certificate, dated as of the Transfer Date, executed on behalf of the Company by the Company's duly authorized officers that, except as disclosed in Section 3.8 of the Disclosure Schedule (or otherwise disclosed pursuant to such certificate) (a) there are no Actions against the Company or, to the Company's knowledge, Gannett relating to the Business or the Assets pending, or, to the Company's Knowledge, threatened to be brought by or before any Governmental Authority, and (b) neither the Company nor, to the Company's Knowledge, Gannett is subject to any Governmental Orders (nor, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) relating to the Business or the Assets; (vii) domain name transfer agreements in form and substance reasonably satisfactory to Purchaser to perfect the transfer to Purchaser of all of the domain names of the Stations; - 8 - (viii) all other instruments of conveyance and transfer sufficient to convey the Assets to Purchaser; (ix) at the Non-License Transfer only, a duly executed counterpart of the Time Brokerage Agreement, substantially in the form set forth in Exhibit C hereto (the "TIME BROKERAGE AGREEMENT"); and (x) all other documents, instruments and writings required to be delivered by the Company at or prior to the Closing Date or the Non-License Transfer Date, as applicable, pursuant to this Agreement. (b) At the Non-License Transfer and the Closing, as applicable, Purchaser shall deliver to Company: (i) the Purchase Price in accordance with Section 2.3 hereof; (ii) a duly executed counterpart of the Bill of Sale, Assignment and Assumption Agreement; (iii) at the Closing only, a duly executed counterpart of the Assignment of FCC Licenses; (iv) at the Non-License Transfer only, a duly executed counterpart of the Time Brokerage Agreement; and (v) all other documents, instruments and writings required to be delivered by Purchaser at or prior to the Closing Date or the Non-License Transfer Date, as applicable, pursuant to this Agreement. (c) Purchaser shall, at any time prior to, at or after the Transfer Date, take or cause to be taken such further actions, and execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, as may be reasonably requested by the Company in connection with the consummation of the transactions contemplated by this Agreement. The Company shall, at any time prior to, at or after the Transfer Date, take or cause to be taken such further actions, and execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, as may be reasonably requested by Purchaser in connection with the consummation of the transactions contemplated by this Agreement. - 9 - 1.6 DUE DILIGENCE, DELIVERY OF DISCLOSURE SCHEDULE AND PURCHASER TERMINATION RIGHT. The Company hereby acknowledges and agrees that neither the Company nor Gannett has delivered all due diligence materials or the Disclosure Schedule with respect to the Stations to Purchaser prior to the date hereof. Subject to the receipt of any required prior approvals from Gannett, the parties, therefore, acknowledge and agree that (a) Purchaser shall be permitted to conduct a due diligence review of the Business and Assets upon, and at all times after the execution and delivery of this Agreement pursuant to the terms and conditions of this Agreement, and (b) the Company shall deliver to Purchaser and to Purchaser's counsel a complete set of the Disclosure Schedule for the Stations (and copies of all materials identified on the Disclosure Schedule, as reasonably required to support such Disclosure Schedule or as otherwise reasonably requested by Purchaser) as soon as possible after the execution and delivery of this Agreement. Purchaser shall have the right, in its sole and absolute discretion and for any reason, to terminate this Agreement at any time prior to 5:00 p.m. (New York City time) on the date which is the tenth (10th) Business Day after the date hereof (the "Diligence Termination Deadline") pursuant to Section 10.1(a)(ii) hereof. Such termination right of Purchaser is in addition to, and shall not limit or diminish, any other termination rights or other remedies available to Purchaser hereunder or at law or in equity. ARTICLE 2. PURCHASE PRICE. 2.1 ESCROW DEPOSIT. For and in partial consideration of the execution and delivery of this Agreement, provided, that this Agreement shall not have been terminated and the transactions herein contemplated shall not have been terminated pursuant to Sections 10.1(a)(ii) or 10.1(a)(iii) hereof, Purchaser shall deposit within twelve (12) Business Days after the execution and delivery of this Agreement with the Deposit Escrow Agent an original, irrevocable letter of credit in a form reasonably acceptable to the Company (the "LETTER OF CREDIT"), issued for the benefit of the Company and the Deposit Escrow Agent by The Chase Manhattan Bank for an amount equal to Eight Million One Hundred Thousand Dollars ($8,100,000) (the "ESCROW DEPOSIT"), such Letter of Credit to be dealt with in accordance with the terms and provisions of the Deposit Escrow Agreement, dated as of the date of the delivery of the Letter of Credit to the Deposit Escrow Agent, among the Company, Purchaser and the Deposit Escrow Agent, in the form attached hereto as Exhibit D (the "DEPOSIT ESCROW AGREEMENT"). Purchaser and the Company shall cause the Letter of Credit to be returned to Purchaser on the Transfer Date. - 10 - 2.2 PURCHASE PRICE. (a) In consideration of the sale of the Assets and the Business hereunder, Purchaser shall (i) pay the Company in cash the aggregate amount of Eighty One Million Dollars ($81,000,000) (the "BASE PURCHASE PRICE"), plus (if the Estimated Net Financial Assets are greater than zero) or minus (if the Estimated Net Financial Assets are less than zero), as the case may be, the Estimated Net Financial Assets (the Base Purchase Price, as adjusted by the Net Financial Assets, the "PURCHASE PRICE") and (ii) assume the Assumed Liabilities. (b) As promptly as possible but no later than three (3) Business Days prior to the Transfer Date, the Company shall deliver to Purchaser a statement setting forth the amount estimated in good faith by the Company to be the amount of the Net Financial Assets as of the Transfer Date (the "ESTIMATED NET FINANCIAL ASSETS"). 2.3 PAYMENT OF PURCHASE PRICE. (a) At the Non-License Transfer, Purchaser shall pay to the Company the sum of Seventy-Six Million Dollars ($76,000,000) of the Base Purchase Price plus (if the Estimated Net Financial Assets are greater than zero) or minus (if the Estimated Net Financial Assets are less than zero), as the case may be, the Estimated Net Financial Assets, by wire transfer in immediately available funds to an account or accounts which shall be designated by the Company not less than three (3) Business Days prior to the Transfer Date. (b) One (1) year after the date hereof (the "FIRST YEAR ANNIVERSARY DATE"), Purchaser shall pay the Company the sum of Two Million Dollars ($2,000,000) of the Purchase Price, by wire transfer in immediately available funds to an account or accounts which shall be designated by the Company not less than three (3) Business Days prior to the First Year Anniversary Date. (c) If the Closing shall not have occured on or prior to the date which is two (2) years after the date hereof (the "SECOND YEAR ANNIVERSARY DATE"), Purchaser shall pay the Company the sum of Three Million Dollars ($3,000,000) of the Purchase Price, by wire transfer in immediately available funds to an account or accounts which shall be designated by the Company not less than three (3) Business Days prior to the Second Year Anniversary Date. (d) The Purchase Price (less any amounts of the Purchase Price paid to the Company at the Non-License Transfer, on the First Year Anniversary Date and on the Second Year Anniversary Date) shall be paid by Purchaser to the - 11 - Company at the Closing by wire transfer of immediately available funds to an account or accounts which shall be designated by the Company not less than three (3) Business Days prior to the Closing Date. (e) To the extent that any payments described in Section 2.3(a) or Section 2.3(b) are not paid when due in accordance with the terms hereof, any unpaid payments shall accrue interest at a rate per annum of twelve percent (12%) until paid in full. 2.4 POST-CLOSING ADJUSTMENT. (a) The parties agree that no later than seventy-five (75) days after the Transfer Date (or such later date on which such statement reasonably can be prepared and delivered in light of the compliance of Purchaser and the Company with their obligations set forth in next two succeeding sentences), the Company shall deliver to Purchaser, in the form received by the Company from Gannett (i) a statement of the actual Net Financial Assets as of 11:59 p.m., New York City time, on the day immediately preceding the Transfer Date (the "CLOSING STATEMENT") certified by PriceWaterhouseCoopers L.L.P., independent accountants for Gannett, to be prepared (except as otherwise provided in Section 9 of the Disclosure Schedule to the Gannett Purchase Agreement) in conformity with GAAP and on a basis consistent with the basis used in preparing the Unaudited Financial Statements as of, and for the year ended, December 27, 1997, referred to in Section 3.5 of the Gannett Purchase Agreement, except to the extent of any position taken as the result of such statements being prepared on a consolidated basis, and (ii) a determination of the amount by which the actual Net Financial Assets are less than or greater than the Estimated Net Financial Assets. Purchaser shall provide the Company and Gannett, and Gannett's independent accountants, access at all reasonable times to the relevant personnel, properties, books and records of the Business for such purposes and to assist the Company and Gannett, and Gannett's independent accountants, in preparing the Closing Statement. Purchaser's assistance shall include, without limitation, the closing of the books of the Business as of the Transfer Date, the preparation of schedules supporting the amounts set forth in the general ledger and other books and records of the Business, and such other assistance as the Company, Gannett or Gannett's independent accountants may reasonably request. During the twenty-five (25) day period following the delivery by the Company of the Closing Statement referred to in the first sentence of this Section 2.4(a), Purchaser and its independent accountants will be permitted to review the working papers of the Company and of Gannett and its independent accountants relating to the preparation of the Closing Statement to the same extent as such working papers have been made available to the Company by Gannett pursuant to the Gannett Purchase Agreement. If, within twenty-five (25) days after - 12 - delivery by the Company of the Closing Statement, Purchaser notifies the Company that it disagrees with the Closing Statement, the Company shall attempt to resolve the disagreement with Gannett. In the event the Company and Purchaser cannot agree with respect to the Closing Statement within five (5) days of the notice of disagreement provided by Purchaser to the Company, then the determination shall be submitted for resolution promptly to an independent nationally recognized accounting firm (the "ACCOUNTING FIRM"), jointly selected by the Company and Purchaser, whose determination (the "ACCOUNTING FIRM DETERMINATION") shall be instructed by the parties to be made within twenty (20) days and be binding upon all parties hereto, and the fees and expenses of which shall be borne equally by Purchaser and the Company to the extent that such fees and expenses are allocable to the transactions contemplated by this Agreement. The Purchaser agrees that the accounting firm selected by Gannett and the Company pursuant to Section 2.3(a) of the Gannett Purchase Agreement shall be the Accounting Firm hereunder as long as such firm has not been engaged by Gannett or the Company during the three (3) year period prior to the date hereof. In the event that (whether expressly or by failure of Purchaser to provide notice of any disagreement within the applicable period) Purchaser agrees with the determination of the final Net Financial Assets set forth in the Closing Statement without submitting the matter for an Accounting Firm Determination, the Net Financial Assets set forth in the Closing Statement shall be the final determination of the Net Financial Assets. The amount of Net Financial Assets as of 11:59 p.m., New York City time, on the day immediately preceding the Closing Date, as definitively determined pursuant to this Section 2.4(a) is referred to herein as the "ACTUAL NET FINANCIAL ASSETS". (b) If the Actual Net Financial Assets are greater than the Estimated Net Financial Assets, then Purchaser shall pay the Company in cash, within two (2) Business Days following the determination of the Actual Net Financial Assets, an amount equal to such difference, plus interest on the amount of such difference at the rate of eight percent (8%) per annum from the Transfer Date to the date of such payment to the Company. If the Actual Net Financial Assets are less than the Estimated Net Financial Assets, then the Company shall pay the Purchaser in cash within two (2) Business Days following the determination of the Actual Net Financial Assets, an amount equal to such difference, plus interest on the amount of such difference at the rate of eight percent (8%) per annum from the Transfer Date to the date of such payment to Purchaser. The amounts paid pursuant to this Section 2.4(b) shall be by wire transfer of immediately available funds for credit to the recipient at a bank account identified by such recipient in writing. - 13 - 2.5 ALLOCATION OF THE BASE PURCHASE PRICE. The Company and Purchaser agree to allocate the Base Purchase Price among the Stations for all purposes (including financial, accounting and tax purposes) in accordance with Section 2.5 of the Disclosure Schedule. The Company and Purchaser agree to engage Bond & Pecaro, a nationally recognized appraisal firm, to appraise the classes of Assets of each Station in accordance with the allocation for the Stations set forth in Section 2.5 of the Disclosure Schedule and in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the "ALLOCATION"). The Allocation shall be binding upon Purchaser and the Company, and none of the parties hereto shall file, or cause to be filed, any Tax Return, Internal Revenue Service Form 8594 or other form, or take a position with any Tax authority or jurisdiction, that is inconsistent with the Allocation without obtaining the prior written consent of the Company or Purchaser, as the case may be. The fees and disbursements of the appraiser engaged in connection with the Allocation as to the Assets of the Stations shall be paid one-half (1/2) by Purchaser and one-half (1/2) by the Company. ARTICLE 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY. The Company represents and warrants to Purchaser as follows: 3.1 ORGANIZATION AND STANDING. The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Maryland. The Company and, to the Company's Knowledge, Gannett have all requisite corporate power and authority to own, lease and operate their respective properties and assets and to conduct their business as it is now being conducted. The Company is and, to the Company's Knowledge, Gannett is, duly qualified to do business as a foreign corporation and is in good standing under the laws of each state in which the operation of its business or ownership of its assets makes such qualification necessary, except where the failure to so qualify or be in good standing would not reasonably be expected to have a Material Adverse Effect. 3.2 BINDING AGREEMENT. The Company has all requisite corporate power and authority to enter into this Agreement, to execute and deliver this Agreement and the other Transaction Documents, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution - 14 - and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate and stockholder action on the part of the Company. This Agreement has been, and on the Non-License Transfer Date and on the Closing Date the other Transaction Documents will be, duly executed and delivered on behalf of the Company and, assuming the due authorization, execution and delivery by Purchaser, constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity). 3.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set forth in Section 3.3 of the Disclosure Schedule, the execution, delivery and performance by the Company of this Agreement and the other Transaction Documents (and to the extent that the Assets are transferred directly from Gannett to the Purchaser, to the Company's Knowledge, Gannett) do not and will not (a) violate, conflict with or result in the breach or default of any provision of the articles of incorporation or bylaws of the Company, (b) conflict with or violate in any material respect any material Law or material Governmental Order applicable to the Company or any of its properties or assets or to the Assets or the Business, (c) except for (i) the notification requirements of the HSR Act and (ii) such filings with, and orders of, the FCC as may be required under the Communications Act and the FCC's rules and regulations in connection with this Agreement and the transactions contemplated hereby, require any material consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority, or (d) conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Assets, or result in the imposition or acceleration of any payment, time of payment, vesting or increase in the amount of compensation or benefit payable, pursuant to any Material Contract. 3.4 EQUITY INVESTMENTS. The Assets do not include any capital stock of any corporation or any equity interest in any Person. - 15 - 3.5 FINANCIAL STATEMENTS. (a) The Company has furnished, or prior to the Diligence Termination Deadline will furnish, to Purchaser the balance sheets for each of the Stations as of December 31, 1994, December 31, 1995, December 31, 1996, December 31, 1997, and December 31, 1998, and statements of operations for each of the Stations for the years then ended (such financial statements are collectively referred to herein as the "UNAUDITED FINANCIAL STATEMENTS"). Except as otherwise disclosed in Section 3.5 of the Disclosure Schedule, to the Company's Knowledge, the Unaudited Financial Statements (including any notes thereto) present fairly, in all material respects, the financial position of the Stations, as of the dates thereof and the results of operations for the Stations for the periods then ended and have been prepared in conformity with GAAP. (b) Except as set forth in Section 3.5 of the Disclosure Schedule, to the Company's Knowledge, there are no liabilities or obligations, secured or unsecured (whether absolute, accrued, contingent or otherwise, and whether due or to become due), of any Station of a nature required by GAAP to be reflected in a corporate balance sheet, except such liabilities and obligations (i) that are adequately accrued or reserved against in the Unaudited Financial Statements or disclosed in the notes thereto, (ii) that were incurred after December 31, 1998, either in the ordinary course of business consistent with past practice or in connection with the transactions contemplated by this Agreement, or (iii) that are immaterial in amount. 3.6 TITLE TO ASSETS; RELATED MATTERS. To the Company's Knowledge, except for Permitted Exceptions or as disclosed in Section 3.6 of the Disclosure Schedule (a) Gannett has good, valid and marketable title (as measured in the context of their current uses) to, or, in the case of leased or subleased assets, valid and subsisting leasehold interests (as measured in the context of their current uses) in, or otherwise has the right to use, all of the Assets, free and clear of all Encumbrances (except for any assets sold or otherwise disposed of, or with respect to which the lease, sublease or other right to use such Asset has expired or has been terminated, in each case after the date hereof solely to the extent permitted under Section 5.1(a) hereof), (b) each lease or sublease pursuant to which any Leased Property is leased by Gannett is, to the Company's Knowledge, legal, valid and binding on Gannett and the Company (as the case may be) and, to the Company's Knowledge, the other parties thereto and grants the leasehold interest it purports to grant, including, without limitation, any rights to nondisturbance and peaceful and quiet enjoyment that may be contained therein and, to the Company's Knowledge, Gannett and each other party thereto is in compliance in all material respects with the provisions of such leases and subleases, - 16 - (c) to the Company's Knowledge, the Assets, together with the Excluded Assets, constitute all the assets and rights of Gannett and its Affiliates used in or necessary for the operation of the Business as currently conducted, (d) to the Company's Knowledge, except for Equipment scheduled to be replaced by Gannett's capital expenditure budget, the Real Property, Leased Property and Equipment is, in all material respects, in good operating condition and repair (ordinary wear and tear excepted) taking into account the age thereof, (e) to the Company's Knowledge, there are no contractual or legal restrictions to which Gannett or the Company is a party or by which the Real Property is otherwise bound that preclude or restrict in any material respect Gannett's ability to use the Real Property for the purposes for which it is currently being used and (f) no portion of the Real Property or Leased Property is the subject of, or affected by, any condemnation, eminent domain or inverse condemnation proceeding currently instituted or, to the Company's Knowledge, threatened. At each of the Non-License Transfer and the Closing, as applicable, the Company (or Gannett) shall sell, convey, assign, transfer and deliver to Purchaser all of the Company's (or Gannett's) right, title and interest in and to all of the Assets, free and clear of all Encumbrances other than Permitted Exceptions and Encumbrances arising from Purchaser's acts. Section 1.1(d) of the Disclosure Schedule contains a true and correct list of all Real Property owned by Gannett used in the Business (other than the Excluded Assets). 3.7 ABSENCE OF CERTAIN CHANGES, EVENTS AND CONDITIONS. To the Company's Knowledge, since June 30, 1998, except as otherwise provided in or contemplated by this Agreement or as disclosed in Section 3.7 of the Disclosure Schedule: (a) other than in the ordinary course of business consistent with past practice neither the Company nor Gannett has sold, transferred, leased, subleased, licensed or otherwise disposed of any material assets used in the Business, other than the sale of obsolete Equipment; (b) (i) neither the Company nor Gannett has granted any increase, or announced any increase, in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable to any of the Business Employees, including, without limitation, any increase or change pursuant to any Employee Benefit Plan, or (ii) established, increased or accelerated the payment or vesting of any benefits under any Employee Benefit Plan with respect to Business Employees, in either case except (A) as required by Law, (B) that involve only increases consistent with the past practices of Gannett or (C) as required under any existing agreement or arrangement; - 17 - (c) neither the Company nor Gannett has made any material change in any method of accounting or accounting practice or policy used by Gannett or the Company with respect to the Stations, other than changes required by Law or under GAAP; (d) neither the Company nor Gannett has suffered any extraordinary casualty loss or damage with respect to any material assets used in the Business, whether or not covered by insurance; (e) there has not been any Material Adverse Effect; (f) except in connection with the transactions contemplated hereby, the Business has been conducted in all material respects only in the ordinary and usual course consistent with past practice; (g) neither the Company nor Gannett has created, incurred, assumed or guaranteed any Indebtedness, except for net borrowings under existing lines of credit; (h) other than in the ordinary course of business, neither the Company nor Gannett has compromised, settled, granted any waiver or release relating to, or otherwise adjusted any Action, material Liabilities or any other material claims or material rights of the Business; and (i) neither the Company nor Gannett has entered into any agreement, contract, commitment or arrangement to do any of the foregoing. 3.8 LITIGATION. Except as disclosed in Section 3.8 of the Disclosure Schedule, as of the date hereof, (a) there are no Actions against the Company or, to the Company's Knowledge, Gannett relating to the Business or the Assets pending, or, to the Company's Knowledge, threatened to be brought by or before any Governmental Authority, (b) neither the Company nor, to the Company's Knowledge, Gannett is subject to any Governmental Orders (nor, are there any such Governmental Orders threatened to be imposed by any Governmental Authority) relating to the Business or the Assets, and (c) there is no Action pending or, to the Company's Knowledge, threatened to be brought before any Governmental Authority, that seeks to question, delay or prevent the consummation of the transactions contemplated hereby. - 18 - 3.9 INSURANCE. Section 3.9 of the Disclosure Schedule lists all insurance policies as of the date hereof relating to the Assets or the Business (the "INSURANCE POLICIES"). Except as set forth in either Section 3.9 or Section 3.14 of the Disclosure Schedule, (a) to the Company's Knowledge, all insurance policies relating to the Assets or Business to which the Company or Gannett is a party or under which the Assets or the Business is covered (or replacement policies therefor) are in full force and effect and, to the Company's Knowledge, all premiums due have been paid and are not in default, (b) to the Company's Knowledge, no notice of cancellation or non-renewal with respect to, or disallowance of any claim under, any such policy has been received by either the Company or Gannett, and (c) to the Company's Knowledge, neither the Company nor Gannett has been refused insurance with respect to the Business or Assets, nor, to the Company's Knowledge, has coverage with respect to the Business or Assets been previously canceled or limited by an insurer to which Gannett or the Company has applied for such insurance or with which the Company or, to the Company's Knowledge, Gannett has held insurance within the last three years. 3.10 MATERIAL CONTRACTS. Section 3.10 of the Disclosure Schedule sets forth all Material Contracts relating to the Stations, including, without limitation, all amendments thereof, as of the date hereof. To the extent received by the Company from Gannett, complete and accurate copies of all written Material Contracts listed in Section 3.10 of the Disclosure Schedule and accurate summaries of the material terms of all oral contracts and agreements (which would be Material Contracts if in writing) have been delivered or made available to Purchaser (except as otherwise noted therein). Except as set forth in Section 3.10 of the Disclosure Schedule, to the Company's Knowledge, (a) each Material Contract and each other contract or agreement that is material to the Business is legal, valid and binding on Gannett and, to the Company's Knowledge, the other parties thereto, (b) to the Company's Knowledge, neither the Company nor Gannett is in default under any Material Contract or other contract or agreement that is material to the Business and no event has occurred or failed to occur that, with or without the giving of notice or the lapse of time or both, would result in such a default and (c) to the Company's Knowledge, no other party to any Material Contract or other contract or agreement that is material to the Business has breached or is in default thereunder. 3.11 PERMITS AND LICENSES; COMPLIANCE WITH LAW. (a) Except as disclosed in Section 3.11 of the Disclosure Schedule, (i) to the Company's Knowledge, Gannett currently holds all the material permits, - 19 - licenses, authorizations, certificates, exemptions and approvals of Governmental Authorities or other Persons including, without limitation, Environmental Permits, necessary for the current operation and the conduct (as it is being conducted prior to the Transfer Date) of the Business, other than the FCC Licenses (which are provided for in Section 3.12 hereof) (collectively, "PERMITS"), and all material Permits are in full force and effect, (ii) to the Company's Knowledge, since November 1, 1996, Gannett has not received any written notice from any Governmental Authority revoking, canceling, rescinding, modifying or refusing to renew any material Permit and, (iii) to the Company's Knowledge, Gannett is in material compliance with the requirements of all material Permits. (b) Except as disclosed in Section 3.11 of the Disclosure Schedule, to the Company's Knowledge, (i) Gannett is in compliance in all material respects with all Laws and Governmental Orders, other than the FCC Licenses, the Communications Act and the rules and regulations of the FCC (which are provided for in Section 3.12 hereof), applicable to the conduct of the Business as it is being conducted prior to the Transfer Date, and (ii) Gannett has not been charged, since November 1, 1996, by any Governmental Authority with a violation of any Law or any Governmental Order relating to the Stations, which charge has not been fully resolved and, to the extent required, accounted for. 3.12 FCC LICENSES. Except as disclosed in Section 3.12 of the Disclosure Schedule, (a) to the Company's Knowledge, Gannett holds, and immediately prior to the Closing the Company will hold, the FCC Licenses listed in Section 3.12 of the Disclosure Schedule, which FCC Licenses expire on the respective dates set forth in Section 3.12 of the Disclosure Schedule; (b) to the Company's Knowledge, Section 3.12 of the Disclosure Schedule sets forth a true and complete list of any and all pending applications filed with the FCC by Gannett, true and complete copies of which (to the extent received from Gannett by the Company) have been delivered to Purchaser or made available for inspection by Purchaser; (c) to the Company's Knowledge, the FCC Licenses listed in Section 3.12 of the Disclosure Schedule constitute all of the licenses and authorizations required under the Communications Act and the current rules and regulations of the FCC in connection with the operation of the Stations as currently operated; (d) to the Company's Knowledge, the FCC Licenses are in full force and effect through the dates set forth in Section 3.12 of the Disclosure Schedule, and there is not pending or, to the Company's Knowledge, threatened any action by or before the FCC to revoke, suspend, cancel, rescind, modify, or refuse to renew in the ordinary course any of the FCC Licenses; (e) to the Company's Knowledge, the Stations are operating in compliance with the FCC Licenses and in compliance in all material - 20 - respects with the Communications Act and the current rules and regulations of the FCC and have been assigned digital television frequencies; and (f) to the Company's Knowledge, there exist no facts, conditions or events relating to Gannett or the Company that would reasonably be expected to cause the revocation of FCC Licenses or denial by the FCC of the application for consent to the assignment of the FCC Licenses as provided in this Agreement or the Gannett Purchase Agreement. To the Company's Knowledge, Gannett has filed all reports, forms and statements, including, without limitation, construction permit applications for digital television channels required to be filed by Gannett with the FCC and maintained in its public files in accordance with the rules and regulations of the FCC. 3.13 ENVIRONMENTAL MATTERS. Except as disclosed in Section 3.13 of the Disclosure Schedule, to the Company's Knowledge, (a) Hazardous Materials have not been Released on any Real Property except in material compliance with applicable Law; (b) there have been no events related to the Business or the Real Property that would reasonably be expected to give rise to any material liability under any Environmental Law; (c) the Business, the Real Property and the Leased Property is now, and for the past five (5) years has been, in material compliance with all applicable Environmental Laws and there are no extant conditions that would reasonably be expected to constitute an impediment to such compliance in the future; (d) the Business has disposed of all wastes arising from or otherwise relating to its business, including those wastes containing Hazardous Materials, in material compliance with all applicable Environmental Laws (including the filing of any required reports with respect thereto) and Environmental Permits and (e) there are no pending or, to the Company's Knowledge, threatened Environmental Claims against Gannett relating to the Real Property. 3.14 EMPLOYEE BENEFIT MATTERS. The Company has made available to Purchaser copies of all material Employee Benefit Plans (including, without limitation, all plans governed by ERISA, providing pension benefits or providing health, life insurance or disability benefits) relating to the Stations), which plans are set forth in Section 3.14 of the Disclosure Schedule. To the Company's Knowledge and except as set forth in Section 3.14 of the Disclosure Schedule, all such Employee Benefit Plans are in compliance with the terms of the applicable plan and the requirements prescribed by applicable law currently in effect with respect thereto (including Sections 4980B and 5000 of the Code) and, to the Company's Knowledge, Gannett has performed in all material respects all obligations required to be performed by it under, and is not in default under or in violation of, any of the terms of such Employee Benefit Plans - 21 - where any such noncompliance, nonperformance, default or violation would, individually or in the aggregate, be reasonably expected to result in liability in excess of Twenty-Five Thousand Dollars ($25,000). To the Company's Knowledge, Gannett has no post-retirement welfare obligations with respect to the Business. To the Company's Knowledge, Gannett has not incurred, and, to the Company's Knowledge, no event, transaction or condition has occurred or exists which is reasonably expected to result in the occurrence of any liability to the Pension Benefit Guaranty Corporation (other than contributions to the plan and premiums to the Pension Benefit Guaranty Corporation which, in either event, are not in default) or any "withdrawal liability" within the meaning of Section 4201 of ERISA, or any other liability pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and several liability provisions of the Code relating to employee benefit plans, in any such case relating to any Employee Benefit Plan or any pension plan maintained by any company that during the last five years was or currently would be treated as a single employer with the Company or Gannett, as the case may be, under Section 4001 of ERISA or Section 414 of the Code (an "ERISA AFFILIATE"), where individually or in the aggregate, in any of such events, any such liability would be in excess of Twenty-Five Thousand Dollars ($25,000). To the Company's Knowledge, except as set forth in Section 3.14 of the Disclosure Schedule and except for such matters that would not, individually or in the aggregate, reasonably be expected to result in liability in excess of Twenty-Five Thousand Dollars ($25,000), each Employee Benefit Plan relating to the Stations intended to be "qualified" within the meaning of Section 401(a) of the Code has received a favorable determination letter that such plan is so qualified and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code and, to the Company's Knowledge, is so qualified, and no such Employee Benefit Plan holds employer securities. To the Company's Knowledge and except as set forth in Section 3.14 of the Disclosure Schedule, neither Gannett nor any ERISA Affiliate has ever made or been obligated to make, or reimbursed or been obligated to reimburse another employer for, contributions to any multiemployer plan (as defined in ERISA Section 3(37)). To the Company's Knowledge and except as set forth in Section 3.14 of the Disclosure Schedule, the Employee Benefit Plans are not presently under audit or examination (and have not received notice of a potential audit or examination) by any governmental authority, and no matters are pending with respect to the Qualified Plan under any governmental compliance programs. To the Company's Knowledge, with respect to each Employee Benefit Plan of the Stations, there have been no violations of Code Section 4975 or ERISA Sections 404 or 406 as to which successful claims would, individually or in the aggregate, result in liability in excess of Twenty-Five Thousand Dollars ($25,000) for Gannett, the Company or any Person required to be indemnified by either of them. To the Company's Knowledge, except as set forth in Section 3.14 of the Disclosure Schedule, and except as expressly provided in this Agreement, the consummation of - 22 - the transactions contemplated by this Agreement will not (i) entitle any current or former employee or officer of the Business to severance pay, unemployment compensation or other payment, or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer. To the Company's Knowledge, there are no pending or threatened or anticipated claims by or on behalf of any Employee Benefit Plan relating to the Stations, by any employee or beneficiary covered under any such plan, or otherwise involving any such plan (other than routine claims for benefits) where any such pending, threatened or anticipated claims would, individually or in the aggregate, reasonably be expected to result in liability in excess of Twenty-Five Thousand Dollars ($25,000). The Twenty-Five Thousand Dollars ($25,000) liability threshold in this Section 3.14 is intended to apply only to this Section 3.14, and is in no way intended to be used in defining materiality anywhere in this Agreement. 3.15 LABOR RELATIONS. To the Company's Knowledge, Section 3.15 of the Disclosure Schedule sets forth a list of all labor organizations recognized as representing the employees of the Business. Complete and accurate copies of all collective bargaining agreements and other labor union contracts relating to employees of the Stations and any such labor organizations have been delivered or made available to Purchaser. Except as disclosed in Section 3.8 or Section 3.15 of the Disclosure Schedule, (a) to the Company's Knowledge, there are no collective bargaining agreements or other labor union contracts applicable to employees of the Business, (b) to the Company's Knowledge, there are no strikes, slowdowns or work stoppages pending or, to the Company's Knowledge, threatened between Gannett and any employees of the Business, and Gannett has not experienced any such strike, slowdown, or work stoppage within the past two (2) years, in each case, as of the date of the Gannett Purchase Agreement, (c) to the Company's Knowledge, there are no pending or threatened grievance or arbitration proceedings arising under any collective bargaining agreements or labor contracts affecting any employees of the Business, (d) to the Company's Knowledge, there are no unfair labor practice complaints pending or, to the Company's Knowledge, threatened against the Business relating to employees of the Business before the National Labor Relations Board or any other Governmental Authority or, to the Company's Knowledge, any current union representation questions involving employees of the Business, (e) to the Company's Knowledge, Gannett is in compliance in all material respects with its obligations under all Laws and Governmental Orders governing its employment practices with respect to employees of the Business, including, without limitation, provisions relating to wages, hours and equal opportunity, employment discrimination, workers' compensation, family and medical leave, the Immigration Reform and Control Act, and occupational safety and health requirements, (f) to the - 23 - Company's Knowledge, all Persons classified by Gannett as independent contractors with respect to the Business do satisfy the requirements of law to be so classified, and, to the Company's Knowledge, Gannett has fully and accurately reported their compensation on IRS Forms 1099 when required to do so, and (g) to the Company's Knowledge, there is no charge or compliance proceeding actually pending or, to the Company's Knowledge, threatened against the Company or Gannett with respect to employees of the Business before the Equal Employment Opportunity Commission or any state, local, or foreign agency responsible for the prevention of unlawful employment practices. 3.16 INTELLECTUAL PROPERTY. To the Company's Knowledge, Section 3.16 of the Disclosure Schedule includes a complete list of all call letters of the Stations (the "CALL LETTERS"). Except as disclosed in Section 3.16 of the Disclosure Schedule, to the Company's Knowledge, (a) the rights of Gannett, and immediately prior to the Transfer Date, the Company, in or to the Call Letters and, to the Company's Knowledge, the other Intellectual Property do not conflict with or infringe on the rights of any other Person, (b) the Company has not and, to the Company's Knowledge, Gannett has not, received any claim from any Person that the rights of Gannett or the Company in or to the Intellectual Property conflict with or infringe on the rights of any other Person and, to the Company's Knowledge, no such claim is threatened, (c) to the Company's Knowledge, Gannett owns (free and clear of any Encumbrances other than Permitted Exceptions), is licensed or otherwise has the right to use all Intellectual Property necessary for the conduct of the Business as currently conducted by Gannett (free and clear of any Encumbrances other than Permitted Exceptions), except where the failure to have such rights would not reasonably be expected to impair the operations of the Business in any material respect and (d) to the Company's Knowledge, no other Person is infringing or diluting the rights of Gannett with respect to the Intellectual Property. 3.17 TAXES. Except as disclosed in Section 3.17 of the Disclosure Schedule and except relating exclusively to the Gannett Maine Media Business, to the Company's Knowledge (a) all material Tax Returns required to be filed by Gannett (or to the extent required to be filed by the Company) relating to the Business have been timely filed and all such Tax Returns are correct and complete in all material respects; (b) all Taxes required to be paid by Gannett (or to the extent required to be paid by the Company) relating to the Business, whether or not shown as due on such Tax Returns, have been timely paid other than such Taxes, if any, as are described in Section 3.17 of the Disclosure Schedule and are being contested in good faith; (c) there is no action, suit, proceeding, investigation, audit or claim pending - 24 - or, to the Company's Knowledge, threatened with respect to Taxes of Gannett or the Company relating to the Stations or for which Gannett or the Company may be liable, and no adjustment relating to such Taxes of Gannett or the Company relating to the Stations has been proposed in writing by any Tax authority and remains unresolved; (d) there are, and immediately prior to the Transfer Date there will be, no Tax liens on any of the assets of the Business (other than liens for Taxes that are not yet due and payable); and (e) all Taxes that the Business is required to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Tax authority. 3.18 COMMISSIONS. There is no broker or finder or other Person who has any valid claim against the Company, Purchaser, or any of their respective Affiliates or any of their respective assets for a commission, finders' fee, brokerage fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by on or behalf of the Company, its stockholders or the Company's officers, employees or agents. 3.19 AFFILIATE TRANSACTIONS. Except as set forth in Section 3.19 of the Disclosure Schedule or as expressly otherwise provided or permitted in this Agreement, to the Company's Knowledge, since December 27, 1997, Gannett has not engaged in any transaction with any Affiliate thereof that was material to the Business, and, to the Company's Knowledge, Gannett is not a party to any material agreements or arrangements relating to the Stations with any Affiliates that will continue in effect after the Transfer Date for the Purchaser that are not immediately terminable by the Purchaser without payment of any penalty or premium. 3.20 GANNETT PURCHASE AGREEMENT. The Company and its Affiliates have not waived any of their rights or conditions under the Gannett Purchase Agreement related to the Stations. Neither the Company nor Gannett is in material breach of, and has not defaulted under, any of the terms of the Gannett Purchase Agreement. The Gannett Purchase Agreement constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity). The Company is not and, to Company's Knowledge, Gannett is not, subject to any judgment, award, order, writ, injunction, arbitration decision or decree which prohibits the performance of the Gannett Purchase Agreement or the consummation of any transaction contemplated under - 25 - the Gannett Purchase Agreement. There is no Action (a) pending or, to the Company's Knowledge, threatened against or affecting the Company or (b) to the Company's Knowledge, pending or threatened against or affecting Gannett in any federal, state or local court, or before any Governmental Authority or arbitrator that would adversely affect the ability of the Company or Gannett to consummate, or that would prohibit, the transactions contemplated under the Gannett Purchase Agreement related to the Stations. 3.21 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES. No representation or warranty made by the Company in this Article 3, to the Company's Knowledge, contains any untrue statement of a material fact or omits a material fact necessary in order to make the representation or warranty not misleading. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to the Company as follows: 4.1 ORGANIZATION AND STANDING. Purchaser is a corporation duly incorporated, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business. 4.2 BINDING AGREEMENT. Purchaser has all requisite corporate power and authority to enter into this Agreement, to execute and deliver this Agreement and the other Transaction Documents, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by Purchaser and the consummation by Purchaser of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate and stockholder action on the part of Purchaser. This Agreement has been and, on the Non-License Transfer Date and the Closing Date, the other Transaction Documents will be, duly executed and delivered on behalf of Purchaser and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding - 26 - obligation of Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy and similar laws affecting the rights of creditors generally and to general principles of equity (whether applied at law or equity). 4.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. The execution, delivery and performance by Purchaser of this Agreement and the other Transaction Documents do not and will not (a) violate, conflict with or result in the breach or default of any provision of the certificate or articles of incorporation or by-laws of Purchaser, (b) materially conflict with or materially violate any material Law or material Governmental Order applicable to Purchaser or any of its properties or assets, (c) except for (i) the notification requirements of the HSR Act, (ii) such filings with, and orders of, the FCC as may be required under the Communications Act and the FCC's rules and regulations in connection with this Agreement and the transactions contemplated hereby as provided for in Section 4.7 hereof (including Section 4.7 of the Disclosure Schedule) or otherwise hereunder, and (iii) such matters that would not reasonably be expected to materially impair or delay the consummation of the transactions contemplated hereby, require any consent, approval, authorization or other order of, action by, registration or filing with or declaration or notification to any Governmental Authority or any other Person or (d) except for such matters that would not reasonably be expected to materially impair or delay the consummation of the transaction contemplated hereby, conflict with, result in any violation or breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Purchaser's assets pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license or permit, or franchise to which Purchaser is a party or by which its assets are bound. 4.4 LITIGATION. Except as described in Section 4.4 of the Disclosure Schedule, there are no Actions pending or, to Purchaser's knowledge, threatened to be brought by or before any Governmental Authority, against Purchaser or any of its Affiliates that (a) seek to question, delay or prevent the consummation of the transactions contemplated hereby or (b) would reasonably be expected to affect adversely the ability of Purchaser to fulfill its obligations hereunder, including without limitation, Purchaser's obligations under Articles 1 and 2 hereof. - 27 - 4.5 COMMISSIONS. There is no broker or finder or other Person who has any valid claim against the Company, Purchaser, any of their respective Affiliates or any of their respective assets for a commission, finders' fee, brokerage fee or other similar fee in connection with this Agreement, or the transactions contemplated hereby, by virtue of any actions taken by on or behalf of Purchaser, or its officers, employees or agents. 4.6 FINANCING. Purchaser will at the Non-License Transfer and the Closing have sufficient funds to pay the amounts of the Purchase Price payable at the Non-License Transfer and the Closing pursuant to this Agreement and otherwise to satisfy its obligations hereunder. 4.7 PURCHASER'S QUALIFICATION. Except as set forth in Section 4.7 of the Disclosure Schedule, (a) Purchaser does not know of any fact or circumstance that could reasonably be expected to result in a finding by the FCC that Purchaser is not qualified legally, financially or otherwise to be the licensee of the Stations as its operations are now being conducted and (b) except for the FCC's Duopoly Rule, a waiver of which will be requested by Purchaser (or Purchaser shall be restructured to comply with), Purchaser does not know of any policy, rule, regulation or ruling of the FCC that could reasonably be expected to be violated by the acquisition of the Stations by Purchaser. 4.8 ACCURACY AND COMPLETENESS OF REPRESENTATIONS AND WARRANTIES. No representation or warranty made by Purchaser in this Article 4, to the Purchaser's Knowledge, contains any untrue statement of a material fact or omits a material fact necessary in order to make the representation or warranty not misleading. ARTICLE 5. COVENANTS AND AGREEMENTS. 5.1 CONDUCT OF THE BUSINESS PRIOR TO CLOSING; ACCESS. The Company covenants as follows: - 28 - (a) Between the date hereof and the Closing, except as contemplated by this Agreement or as described in Section 5.1 of the Disclosure Schedule, or except with the written consent of Purchaser (which consent shall not be unreasonably withheld), the Company will (or will cause Gannett to the extent possible under the Gannett Purchase Agreement) operate the Business in the ordinary course of business consistent with past practice and shall use commercially reasonable efforts to (i) preserve intact the Business and preserve the Business's relationships with customers, suppliers, licensees, licensors, the networks with whom the Stations are affiliated and others having business dealings with the Stations; (ii) maintain the Business's inventory of supplies, parts and other materials and keep its books of account, records and files, in each case in the ordinary course of business consistent with past practice; (iii) maintain the material items of Real Property, Leased Property and Equipment substantially in their present condition, ordinary wear and tear excepted; (iv) pay or discharge all cash and barter obligations in the ordinary course of business; (v) bring current as of the day immediately preceding the Transfer Date all payments due and payable under Program Contracts in accordance with their terms as in effect on the date hereof (with respect to Program Contracts existing as of the date hereof) or on the date originally entered into (with respect to Program Contracts entered into after the date hereof); and (vi) maintain its corporate existence. (b) Without limiting the generality of Section 5.1(a), between the date hereof and the Closing, except as contemplated by this Agreement or as described in Section 5.1 of the Disclosure Schedule, or except with the written consent of Purchaser (which consent shall not be unreasonably withheld, except in the case of any consent relating to the entering into of any Program Contract providing for payments in excess of Thirty Thousand Dollars ($30,000) or having a term greater than one (1) year (other than any Program Contract that will be fully satisfied, discharged and performed prior to the Closing), in which case Purchaser may grant or withhold its consent in Purchaser's absolute discretion (and the parties hereto further agree that no such consent unreasonably withheld shall be taken into account in any determination of whether a Material Adverse Effect has occurred), and any consent shall be deemed given unless withheld in writing no later than three (3) Business Days after Purchaser's receipt of a written request for such consent), the Company will not (and, to the extent provided for in the Gannett Purchase Agreement, will cause Gannett not to, to the extent possible under the Gannett Purchase Agreement) with respect to the Business: (i) create, assume or subject any of the assets of the Business to any Encumbrance, other than Permitted Exceptions and Encumbrances that will be released at or prior to the Non-License Transfer and the Closing; - 29 - (ii) make any material changes in the operations of the Business; (iii) other than, in each case, in the ordinary course of business consistent with past practice, sell, transfer, lease, sublease, license or otherwise dispose of any material assets of the Business, other than the sale of obsolete Equipment that has been or is replaced with Equipment of like kind; (iv) (A) grant any increase, or announce any increase, in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable to any of the officers or key employees of the Business, including, without limitation, any increase or change pursuant to any Employee Benefit Plan, or (B) establish or increase or promise to increase or accelerate the payment or vesting of any benefits under any Employee Benefit Plan with respect to officers or employees of the Business, in the case of either (A) or (B) except (I) as required by Law, (II) that involve only increases consistent with the past practices of the Company or Gannett (or as otherwise required or allowed under the Gannett Purchase Agreement, as the case may be, but in no event more than five percent (5%), (III) as required under any existing agreement or arrangement, (IV) that involve increases related to promotions to the extent such increases result in the compensation and benefits of the relevant employee being consistent with the compensation and benefits provided to the holder of such position in the past or (V) that relate to the supplemental executive retirement plans identified in Section 3.14 of the Disclosure Schedule; (v) make any change in any method of accounting or accounting practice or policy used by the Company or Gannett in respect of the Business, other than as required by law or under GAAP; (vi) fail to maintain in full force and effect all of its existing casualty, liability or other insurance relating to the Stations through the Non-License Transfer and the Closing in amounts at least equal to those in effect on the date hereof; (vii) (A) amend the payment terms of any Program Contract to provide that payments that would otherwise be made prior to the Non-License Transfer or the Closing are made after the Non-License Transfer or the Closing or (B) acquire, enter into, modify, change or extend the term of (x) any Program Contract providing for payments in excess of Ten Thousand Dollars ($10,000) or with a term greater than one year or (y) Program Contracts not subject to clause (x) that in the aggregate provide for payments in excess of Two Hundred Thousand Dollars ($200,000); - 30 - (viii) acquire, enter into, modify, change or extend the term of any Material Contract, provided that this clause (viii) will not apply to the acquisition or entering into of any new Material Contract not otherwise subject to clauses (i) to (vii) or clauses (ix) to (xv) of this Section 5.1(b) with respect to which all Liabilities of the Company thereunder relating to the Stations will be fully satisfied, discharged and performed prior to the Transfer Date with no adverse effect on Purchaser; (ix) compromise, settle, grant any waiver or release relating to, or otherwise adjust, any material Action, material Liabilities or any other material claims or material rights relating to the Stations; (x) enter into any new agreement, contract, commitment or arrangement with any Affiliate of the Company that will be binding upon Purchaser, the Assets or the Stations after the Non-License Transfer or the Closing Date; (xi) apply to the FCC for any construction permit that would adversely affect the Stations present operations, or make any material change in the Stations buildings, leasehold improvements, or fixtures; (xii) except with respect to promotion during ratings sweep periods (which shall not be subject to this clause (xii)), enter into any trade, barter or similar agreements (other than Program Contracts) for the sale of advertising time that would be binding on the Stations or Purchaser after the Non-License Transfer or the Closing for any property or services in lieu of or in addition to cash that requires the provision of broadcast time having a value that exceeds Ten Thousand Dollars ($10,000) in any individual agreement or Two Hundred Thousand Dollars ($200,000) in the aggregate; (xiii) take any action, or refrain from taking any action, that would constitute a material breach of, constitute a default (or event which with the giving of notice, or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Material Contract; (xiv) enter into or renew any time sales agreement except in the ordinary course of business for a term not exceeding twelve (12) months; or (xv) enter into any agreement, contract, commitment or arrangement to do any of the foregoing. - 31 - (c) Pending the Non-License Transfer and the Closing, the Company shall: (i) to the extent allowed by Gannett under the Gannett Purchase Agreement or otherwise, give to Purchaser and its representatives reasonable access during normal business hours to all of the employees, properties, books and records of Gannett or the Company that relate to the Stations and, to the extent available from, or allowed by, Gannett pursuant to the Gannett Purchase Agreement or otherwise, furnish Purchaser and its representatives with such information concerning the Stations as Purchaser may reasonably require, including such access and cooperation as may be necessary to allow Purchaser and its representatives to interview the employees, to examine the books and records of the Stations, and to inspect the Real Property and Equipment (which right of access shall not be exercised in any way which would unreasonably interfere with the normal operations, business or activities of the Stations); (ii) to the extent allowed by Gannett under the Gannett Purchase Agreement or otherwise, cooperate in all reasonable respects with Purchaser's request to conduct an audit of the financial information of the Stations as Purchaser may reasonably determine is necessary to satisfy Purchaser's senior lenders and Purchaser's public company reporting requirements pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 including, without limitation, (A) using commercially reasonable efforts to obtain the consent of the auditors of Gannett and/or the Company to permit Purchaser and Purchaser's auditors to have access to such auditors' work papers, (B) consenting to such access by Purchaser and (C) using commercially reasonable efforts to cause Gannett to execute and deliver to Purchaser's independent auditors such customary management representation letters as the auditors may require as a condition to such auditors ability to deliver an unqualified report upon the audited financial statements of the Stations; (iii) to the extent provided by Gannett pursuant to the Gannett Purchase Agreement or otherwise, furnish to Purchaser within twenty (20) days after the end of each month ending between the date of this Agreement and the Transfer Date an unaudited statement of income and expense and a balance sheet for the Stations for the month just ended; and (iv) to the extent provided by Gannett pursuant to the Gannett Purchase Agreement or otherwise, from time to time, furnish to Purchaser such additional information (financial or otherwise) concerning the Stations as Purchaser may reasonably request (which right to request information shall not be exercised in any way which would unreasonably interfere with the normal operations, business or activities of the Stations). - 32 - (d) The Company will deliver to Purchaser, within ten (10) Business Days after delivery or receipt, copies of any reports, applications or communications to or from the FCC or its staff related to the Stations which are delivered or received between the date of the Gannett Purchase Agreement and the Transfer Date. 5.2 POST-CLOSING COVENANTS AND AGREEMENTS, AND OTHER EMPLOYEE BENEFIT MATTERS. (a) Purchaser shall at all reasonable times after reasonable notice to Purchaser from and after the Transfer Date, make available without cost, for inspection and/or copying by the Company and any Person that was a stockholder of Gannett during any of the tax years (or portions thereof) immediately preceding the closing under the Gannett Purchase Agreement for which the relevant statute of limitations (including any waiver thereof) has not expired, or their respective representatives, the books and records of the Business transferred to Purchaser from the Company at the Non-License Transfer or the Closing, as the case may be. Such books and records shall be preserved by Purchaser until the later of the closing by tax audit of, or the expiration of the relevant statute of limitations (including any waiver thereof) with respect to, all open tax periods of Gannett and such stockholders prior to and including the time immediately prior to the Transfer Date. After the period set forth above, Purchaser may destroy the books and records in its possession unless, before expiration of such notice period the Company objects in writing to the destruction of any or all of such books and records, in which case, such books and records shall be delivered to the Company. Notwithstanding the foregoing, Purchaser shall continue to preserve and, at all reasonable times after the Transfer Date, to make available without cost, for inspection and/or copying by any Person that was a trustee or other fiduciary under the Employee Benefit Plans identified in Section 5.2(a) of the Disclosure Schedule, the books and records of such Employee Benefit Plan transferred to Purchaser from the Company at the Non-License Transfer or the Closing, as the case may be, and the books and records of the Business relating thereto. (b) At least five (5) Business Days prior to the Transfer Date, the Company shall provide to Purchaser a true and complete list of the names, titles and annual compensation of each of the employees (including inactive employees) of the Stations. Effective as of the Transfer Date, except for such employees of the Stations which are retained by the Company pursuant to the terms of the Time Brokerage Agreement who shall be offered employment by Purchaser as of the Closing Date, and the employees identified in Section 5.2(b) of the Disclosure Schedule (the "EXCLUDED EMPLOYEES"), Purchaser shall offer employment to all then employees of the Stations, on such terms and conditions as Purchaser shall - 33 - establish (except that base cash compensation shall be comparable to their existing base cash compensation), subject to the terms of any collective bargaining agreement assumed by Purchaser under Section 5.2(e) and any employment agreements with specific Business Employees, and shall assume responsibility for all inactive employees of the Stations, subject to the terms of this Section 5.2 and the collective bargaining agreements assumed by Purchaser under Section 5.2(e); provided, however, that any employee of the Stations who is not actively employed on the Transfer Date shall be offered employment by Purchaser following the end of any inactive period (whether on account of leave, layoff, injury or disability) but only to the extent that the Company would have been obligated to offer active employment to such person upon the end of such inactive period under the Gannett Purchase Agreement. Notwithstanding the foregoing, Purchaser shall not have any obligation to offer employment to any employees of the Corporate Office ("CORPORATE OFFICE EMPLOYEES"), as described in Section 5.2(b) of the Disclosure Schedule. Nothing in this Section 5.2(b) is intended to limit the ability of Purchaser to terminate the employment of any employee after the Transfer Date. (c) Subject to applicable law and the terms of any collective bargaining agreement assumed pursuant to this Agreement, if any, Purchaser shall establish and maintain for a period of one (1) year after the Transfer Date or the term of their employment by Purchaser, whichever is less, for employees of the Stations as of the Transfer Date, benefits that, in the aggregate, are no less favorable than the benefits maintained by the Purchaser for similarly situated employees of Purchaser, provided that the foregoing will not prohibit or in any manner restrict Purchaser from terminating or changing the individual terms of employment of any Business Employee or require Purchaser to maintain any specific benefits or Employee Benefit Plans. Purchaser shall give employees of the Stations as of the Transfer Date and former and inactive Business Employees credit for their service with the Company and Gannett or any of their Subsidiaries prior to the Transfer Date, to the same extent that such service would have been credited by Purchaser (if they had been employed by Purchaser for such period of service), for all purposes under all employee benefit plans or arrangements maintained by Purchaser for current, former and inactive Business Employees (including any waiting periods). In addition, Purchaser shall, if applicable, (i) cause any pre-existing condition limitation to be waived and (ii) give effect, in determining any deductible and maximum out-of-pocket limitations, to claims incurred and amounts paid by, and amounts reimbursed to current, former and inactive Business Employees with respect to similar plans maintained by the Company or Gannett prior to the Transfer Date. (d) Purchaser will assume and indemnify and hold harmless the Company Indemnified Parties against all Liabilities with respect to severance - 34 - benefits arising in connection with or following the Transfer Date pursuant to the agreements set forth in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule (subject to the right of recovery set forth in Section 5.9), or pursuant to any collective bargaining agreement or other agreements with Business Employees assumed either pursuant to this Agreement or by operation of law. With respect to all current and inactive Business Employees immediately prior to the Transfer Date not covered by the agreements referenced in the immediately preceding sentence, (i) for a period ending not less than one year after the Transfer Date, Purchaser will provide such Business Employees with the same severance benefits as Purchaser provides for similarly situated employees of Purchaser (which benefits, as of the date hereof, are described in Section 5.2(d) of the Disclosure Schedule) and (ii) Purchaser will assume and indemnify and hold harmless the Company Indemnified Parties against all Liabilities with respect to severance benefits of Purchaser arising in connection with or following the Transfer Date. (e) From and after the Transfer Date, Purchaser shall assume all of the collective bargaining agreements and labor union contracts described in Section 5.2(e) of the Disclosure Schedule (including, without limitation, pursuant to the specified provisions of the collective bargaining agreements set forth in Section 5.2(e) of the Disclosure Schedule) with respect to any Business Employees existing immediately prior to the Transfer Date. (f) From and after the Transfer Date, Purchaser shall assume responsibilities of all Employee Benefits Plans described in Section 5.2(f) of the Disclosure Schedule that provide post-retirement life insurance or health, or short-term or long-term disability benefits and be responsible for any benefits under such Employee Benefit Plans (i) to which any current, former or inactive Business Employee, or a beneficiary or dependent of any current, former or inactive Business Employee ("BENEFICIARY"), has already become entitled, or (ii) to which any current, former or inactive Business Employee has already become qualified by reason of age and years of service as of the Transfer Date, to the extent such persons are identified in Section 5.2(f) of the Disclosure Schedule (which section shall be updated, if necessary, at the Non-License Transfer or the Closing, as applicable). From and after the Transfer Date, Purchaser shall also pay to the Business Employees listed in Section 5.2(f) of the Disclosure Schedule the supplemental retirement benefits provided under the applicable Gannett supplemental retirement plan. (g) From and after the Transfer Date, Purchaser shall assume and be responsible for any workers' compensation benefits payable to a Business Employee, Beneficiary or dependent of a Business Employee on or after the Transfer Date, including any such benefits that are attributable to any injury or - 35 - illness that occurred or existed prior to the Transfer Date to the extent not covered by the Company's workers' compensation insurance policy. (h) For a period of ninety (90) days after the Transfer Date, Purchaser shall not implement any employment terminations, layoffs or hours reductions or take any other action which could result in a "plant closing" or "mass layoff", as those terms are defined in the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") or similar events under applicable state law, affecting in whole or in part any facility, site of employment or operating unit, or any employee employed by the Stations, or which could require either Purchaser or the Company to give notice or take any other action required by WARN or applicable state law. (i) From and after the Transfer Date, Purchaser shall assume the Company's and Gannett's obligations and liabilities with respect to COBRA continuation coverage under Section 4980B of the Code and Section 601 of ERISA ("CONTINUATION COVERAGE") with respect to Business Employees and shall provide Continuation Coverage to the Business Employees under Purchaser's health and medical plans (A) with respect to any Business Employees who remain employed with either the Company or Gannett through the Transfer Date, for a period of eighteen (18) months after the Transfer Date or, if earlier, until becoming eligible for comparable coverage from another employer and (B) with respect to any Business Employees whose employment shall have terminated prior to the Transfer Date, for remainder of the period with respect to which Continuation Coverage would otherwise have been available to them had the Company or Gannett, as the case may be, continued to maintain a group health plan; provided, that consistent with the Continuation Coverage, Purchaser shall have the right to charge each Business Employee for such Business Employee's portion of any Continuation Coverage. 5.3 COOPERATION. Following the execution of this Agreement, Purchaser and the Company agree as follows: (a) The parties and their Affiliates shall each use their reasonable efforts, and shall cooperate fully with each other in preparing, filing, prosecuting, and taking any other actions with respect to, any filings (other than filings with the FCC, which are provided for in clause (b) below), applications, requests, or actions which are or may be necessary to obtain the consents, approvals, authorizations or other orders of any Governmental Authority which are or may be necessary in order to accomplish the transactions contemplated by this Agreement; and, without limiting the generality of the foregoing, the parties and their Affiliates shall use - 36 - their respective reasonable efforts to prepare and file as promptly as practicable, but in any event no later than five (5) Business Days after the date hereof (unless the Company designates in writing that the filing shall be delayed to a date no later than the first (1st) Business Day after the Diligence Termination Deadline), all of the information called for in the Notification and Report Form required under the HSR Act and to prepare and file any supplemental information, also in a timely fashion, which may be required by the United States Department of Justice or the Federal Trade Commission pursuant to such Notification and Report Form Filings, and otherwise to use their respective reasonable efforts to obtain the requisite clearances. (b) The parties and their Affiliates shall cooperate fully with each other in preparing, filing, prosecuting, and taking any other actions with respect to filings with the FCC related to the transactions contemplated by this Agreement, including, without limitation, preparation of an application for the assignment of all of the FCC Licenses to Purchaser and any filings by Purchaser requesting temporary waivers for no more than nine (9) months of the FCC's applicable ownership rules necessary to permit the parties to consummate the transactions contemplated by this Agreement. As promptly as practicable, but in any event not later than ten (10) Business Days after the Diligence Termination Deadline, the Company and Purchaser shall jointly file the application with the FCC requesting the FCC Consent, including, without limitation, requesting, consenting to, and taking and otherwise seeking any action in connection with a conditional waiver of the FCC's Duopoly Rule. The Company and Purchaser shall use their respective reasonable best efforts, diligently take all necessary and proper actions and provide any additional information requested by the FCC in order to obtain promptly the FCC Consent. Notwithstanding the foregoing or any other provision of this Agreement, neither Purchaser nor its officers, directors or Affiliates shall request a permanent waiver of the FCC's applicable ownership rules or request, consent to, take or otherwise seek or pursue any action that is inconsistent with the transactions contemplated by this Agreement or that reasonably could be expected to materially impede or materially delay the FCC Consent or otherwise materially impede or materially delay the consummation of the transactions contemplated by this Agreement; and the receipt of any permanent waiver of the foregoing FCC rules shall not be a condition to the obligation of Purchaser to consummate the transactions contemplated hereby. Neither Purchaser nor any of its officers, directors or Affiliates will take any action that would result in any change in the matters set forth in Section 4.7 hereof that would reasonably be expected to materially delay or otherwise materially impair Purchaser's ability to consummate the transactions contemplated hereby. After the date hereof, Purchaser or its Affiliates may enter into transactions that implicate the FCC multiple ownership - 37 - rules so long as such transactions would not reasonably be expected to materially impede or materially delay the Closing (c) (i) If Purchaser (or its Affiliates) or the Company receives an administrative or other order or notification relating to any violation or claimed violation of the rules and regulations of the FCC, or of any Governmental Authority, that could affect Purchaser's or the Company's ability to consummate the transactions contemplated hereby, or (ii) should Purchaser (or its Affiliates) become aware of any fact (including any change in law or regulations (or any interpretation thereof by the FCC)) relating to the qualifications of Purchaser (and its controlling persons) that reasonably could be expected to cause the FCC to withhold the FCC Consent, Purchaser (in the case of clauses (i) and (ii)) or the Company (in the case of clause (i)) shall promptly notify the other party or parties thereof and shall use its reasonable best efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement; and no such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder. (d) The parties shall each use their reasonable best efforts to obtain as promptly as reasonably practical all consents that may be required in connection with the assignment to the Purchaser at the Non-License Transfer and the Closing, as applicable, of all the Company's right, title and interest in and to all Material Contracts as such are acquired by the Company pursuant to the Gannett Purchase Agreement and all other agreements of the Business to which the Company or Gannett is a party, provided that (i) neither the Company nor Purchaser shall be required to make any payment to any party to any such Material Contract or other agreement in order to obtain any such consent (except the Company agrees to pay any amounts outstanding as of the Transfer Date under any such Material Program Contracts as provided for in Section 5.1(a)(v). (e) To the extent that there are third-party insurance policies maintained by Gannett covering any Claims or Damages relating to the assets, business, operations, conduct and employees (including, without limitation, former employees) of the Business arising out of or relating to occurrences prior to the Transfer Date, the Company shall use all reasonable efforts to cause Purchaser to be named as an additional insured with respect to such policies. (f) Subject to the terms and conditions of this Agreement, each of the parties agrees to use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Non-License Transfer and the Closing and the other transactions contemplated hereby as soon as practicable. - 38 - 5.4 CONFIDENTIALITY. (a) The terms of the Confidentiality Agreement by and between Purchaser and the Company are herewith incorporated by reference and shall continue in full force and effect as between Purchaser and the Company at all times prior to the Transfer Date, and shall remain in effect as between Purchaser and the Company in accordance with its terms even if this Agreement is terminated. (b) Before and after the Transfer Date, each of the parties shall maintain the confidentiality of the financial and tax information of the Persons other than the Company in the possession of the Company under terms similar to those set forth in the Confidentiality Agreement by and between Purchaser and the Company with respect to "Evaluation Material" as though such terms continued after the Transfer Date. 5.5 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law or the rules of any stock exchange, the form and substance of the initial public announcement of this Agreement and the transactions contemplated hereby, and the time of such announcement, shall be approved in advance by the parties and the parties shall not issue any other report, statement or press release or otherwise make any public announcement with respect to this Agreement and the transactions contemplated hereby without prior consultation in good faith with the other party hereto. 5.6 NO SOLICITATION. The Company shall not, and shall cause its officers, directors, representatives, affiliates and associates not to, (a) initiate contact with, solicit, encourage or respond to any inquiries or proposals by, or (b) enter into any discussions or negotiations with, or disclose, directly or indirectly, any information concerning, the Business, the Assets or the Stations, or afford any access to the Company's or Gannett's properties, books and records to any Person in connection with any possible proposal for the acquisition (directly or indirectly, whether by purchase, merger, consolidation or otherwise) of all or substantially all of the Business, the Assets or the Stations. The Company agrees to terminate immediately any such discussions or negotiations. 5.7 EMPLOYEES. From and after the date hereof to the first anniversary of the Transfer Date, neither the Company, nor any of its Affiliates shall solicit or offer employment to or hire or employ or otherwise compensate any employee or former employee - 39 - (who is an employee of a Station as of the date hereof) of the Stations (including any individual who may become employed during the one (1) year period following the Transfer Date) at any other location; provided, however, that the foregoing shall not apply to the Excluded Employees, or to any employee of a Station who is terminated by Purchaser without cause after the Transfer Date. 5.8 NO ADDITIONAL REPRESENTATIONS. Purchaser acknowledges that it and its representatives have been permitted access to books and records, facilities, equipment, tax returns, contracts and agreements, insurance policies (or summaries thereof), and other properties and assets of the Stations and that they and their representatives have had an opportunity to meet with the officers and employees of the Company to discuss the Stations and the Business, properties and assets. PURCHASER ACKNOWLEDGES THAT NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE STATION OR THE BUSINESS FURNISHED OR MADE AVAILABLE TO PURCHASER AND ITS REPRESENTATIVES EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. 5.9 CERTAIN PAYMENTS. (a) Pursuant to the terms of the Gannett Purchase Agreement, the Company has certain rights and obligations with respect to the Severance Agreements listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule of the Gannett Purchase Agreement, which Severance Agreements include those listed in Sections 3.14.1 and 3.14.2 of the Disclosure Schedule hereto (the "STC SCHEDULED SEVERANCE AGREEMENTS"). Promptly, but in no event later than five (5) Business Days prior to any payment due under the STC Scheduled Severance Agreements to any employee of the Stations terminated by Purchaser prior to ninety (90) days after the closing date under the Gannett Purchase Agreement, Purchaser shall notify the Company of the amount to be paid to such employee, and the Company shall make the payment to such terminated employee as provided by the STC Scheduled Severance Agreements (a "STC SEVERANCE PAYMENT"); provided that the maximum amount that the Company shall be required to pay for all Business Employees as defined hereunder pursuant to this Section 5.9, after reimbursement from the Purchaser in the succeeding sentence, shall be the greater of (i) Two Hundred Twenty Two Thousand Ninety-Seven Dollars ($222,097.00), or (ii) Eight Hundred Fifty Thousand Dollars ($850,000.00) minus all amounts reimbursed by Gannett to the Company pursuant to Section 5.8(a) of the Gannett Purchase Agreement for all the Gannett Television Stations other than the Stations. Within five (5) Business Days after the Company makes an STC Severance Payment, - 40 - Purchaser shall reimburse the Company for fifty percent (50%) of the amount of such payment. In addition to any reimbursement by Purchaser under this Section 5.9, to the extent provided by Section 5.8(a) of the Gannett Purchase Agreement, the Company will be entitled to reimbursement as provided by the Gannett Purchase Agreement, and nothing in this Agreement or the Gannett Purchase Agreement shall be construed to give Purchaser any right of recovery to Purchaser pursuant to Section 5.8(a) of the Gannett Purchase Agreement. (b) Pursuant to Section 5.8(b) of the Gannett Purchase Agreement, Gannett will cease operations and vacate the Gannett Corporate Offices, and the Company has agreed that it will pay, indemnify, and hold harmless Gannett from and against fifty percent (50%) of all Claims and Damages (including, without limitation, all rent or other payments made under the Corporate Office Lease arising out of or relating to the Corporate Office Lease) to the extent such Claims and Damages arise out of or relate to (x) the termination of the Corporate Office Lease or (y) the post-closing period after the date in which the Corporate Office Employees cease using the Corporate Office. Such payments by the Company thereunder are required under the Gannett Purchase Agreement to be made by the Company as the related Claims and Damages are incurred. To the extent the Company is required to make any such payments, Purchaser shall reimburse and pay over to the Company 26.13% of all such payments made by the Company (up to the maximum amount of $52,258). Purchaser acknowledges and agrees that Gannett may terminate the Corporate Office Lease on such terms as Gannett shall determine and otherwise take such action as Gannett determines in connection with Gannett vacating the Corporate Office. 5.10 BULK SALES LAWS. The parties agree to waive compliance with the provisions of the bulk sales law of any jurisdiction. The Company will indemnify and hold harmless Purchaser from and against any and all Liabilities which may be asserted by third parties against Purchaser as a result of such noncompliance. 5.11 CONTROL OF THE STATIONS. Prior to the Closing Date, control of the Stations (including, without limitation, control over their finances, personnel and programming) shall remain with the Company or Gannett, as the case may be. The Company and Purchaser acknowledge and agree that neither Purchaser nor any of its employees, agents or representatives, directly or indirectly, shall, or shall have any right to, control, direct or otherwise supervise the Stations, it being understood that supervision of all programs, equipment, operations and other activities of the Stations shall be the sole responsibility of, and at all times prior to the Closing Date remain under the - 41 - complete control and direction of, the Company or, if prior to the closing under the Gannett Purchase Agreement, Gannett. 5.12 USE OF CERTAIN NAMES. After the Transfer Date, neither Purchaser nor any of its Affiliates shall use "Sinclair", "Sinclair Broadcast", "Sinclair Television", "Sinclair Communications", "Guy Gannett", "Gannett", or any name or term confusingly similar to the "Sinclair" names in any corporate name or in connection with the operation of any business. 5.13 NEWS SHARING ARRANGEMENTS. (a) The Company and Purchaser shall use commercially reasonable and good faith efforts to enter into a news sharing agreement with Purchaser for sharing of news operations between television station WEYI-TV, Flint, Michigan, and WSMH-TV, Flint, Michigan in a form of agreement to be mutually agreed upon by Purchaser and the Company prior to the Diligence Termination Deadline and consistent with Section 5.13 of the Disclosure Schedule. If prior to the Diligence Termination Deadline the parties cannot agree on a form of a mutually acceptable news share agreement for WSMH-TV, (i) the Company shall be entitled, in the Company's sole and absolute discretion, to terminate this Agreement pursuant to Section 10.1(a)(iii), and (ii) the Purchaser shall be entitled, in the Purchaser's sole and absolute discretion, to terminate, upon written notice to the Company, the Purchaser's obligations under this Section 5.13 (a) or otherwise to provide news sharing arrangements for WSMH-TV as provided herein. (b) The Company and Purchaser shall use commercially reasonable and good faith efforts to enter into a mutually acceptable news sharing agreement for sharing of news operations between WUHF-TV, Rochester, New York, and WROC-TV, Rochester, New York, in a form of agreement to be mutually agreed upon by Purchaser and the Company prior to the Diligence Termination Deadline and consistent with Section 5.13 of the Disclosure Schedule. If prior to the Diligence Termination Deadline the parties cannot agree on a form of a mutually acceptable news share agreement for WUHF-TV, (i) the Company shall be entitled, in the Company's sole and absolute discretion, to terminate this Agreement pursuant to Section 10.1(a)(iii), and (ii) the Purchaser shall be entitled, in the Purchaser's sole and absolute discretion, to terminate, upon written notice to the Company, the Purchaser's obligations under this Section 5.13 (b) or otherwise to provide news sharing arrangements for WUHF-TV as provided herein. - 42 - 5.14 RIGHTS UNDER THE GANNETT PURCHASE AGREEMENT. The Company covenants and agrees with Purchaser as follows with respect to the Company's rights and obligations under the Gannett Purchase Agreement: (a) The Company shall enforce all of the Company's rights under the Gannett Purchase Agreement or any opinions of counsel delivered pursuant thereto at Purchaser's request as such rights pertain to the Stations and the Assets, including, without limitation, causing Gannett to act in conformity with the Gannett Purchase Agreement and requiring Gannett to conduct the business of the Stations in the ordinary course of business in accordance with the terms of the Gannett Purchase Agreement (including, without limitation, the provisions of Section 5.1 of the Gannett Purchase Agreement), 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. This covenant shall survive the Non-License Transfer and the Closing for the period that the Company has any rights under the Gannett Purchase Agreement or any opinions of counsel delivered pursuant thereto. (b) The Company shall use the Company's reasonable best efforts to close the transactions contemplated by the Gannett Purchase Agreement as they pertain to the Stations in a timely fashion consistent with the terms of such agreement and shall notify Purchaser in writing of the date, time and place of the closing under the Gannett Purchase Agreement at least ten (10) days prior to the date of such closing; provided, however, that the Company shall not waive any of its rights or conditions under the Gannett Purchase Agreement as they pertain to any of the Stations (including, without limitation, any conditions to the obligations of the Company to consummate the transactions under the Gannett Purchase Agreement), or enter into any amendment or modification to any provisions of the Gannett Purchase Agreement that affects the Company's rights or conditions thereunder with respect to any of the Stations. The Company shall enforce the Company's rights to the fullest extent possible under the Gannett Purchase Agreement as such rights pertain to the Stations, unless otherwise directed by Purchaser. (c) To the extent that the Company receives notifications or information from Gannett with respect to the Stations under the Gannett Purchase Agreement or otherwise becomes aware of any breach of any representation, warranty, covenant or agreement in the Gannett Purchase Agreement, in each case with respect to the Stations, the Company shall promptly notify Purchaser and provide such information to Purchaser, and thereafter use reasonable best efforts to enforce, perform or waive any provision of the Gannett Purchase Agreement - 43 - pertaining to the Stations as may reasonably be requested by Purchaser; provided, that the Company shall not be obligated to take any action at Purchaser's request inconsistent with its rights and obligations under the Gannett Purchase Agreement. (d) Any proceeds received by the Company from the exercise of the Company's rights which relate to the Stations against Gannett and its respective Affiliates shall be paid over to Purchaser within five (5) Business Days of receipt by the Company, less any reasonable costs and expenses of enforcement incurred by the Company in such exercise. (e) Subject to the provisions of the Time Brokerage Agreement, the Company shall cooperate with Purchaser in connection with the Company's review, analysis and monitoring of the Assets, the Business and the operations of the Stations to the end that an efficient transfer of the Assets and the Business may be made at the Non-License Transfer and the Closing and the operations and the business of the Stations may continue on an uninterrupted basis. The Company shall obtain Purchaser's consent prior to the exercise of the Company's rights under the Gannett Purchase 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, the Company agrees to promptly notify Purchaser of any material problems or developments of which the Company becomes aware with respect to any Assets or the Business. ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser to consummate the transactions contemplated by this Agreement to occur at the Non-License Transfer and the Closing are, at its option, subject to satisfaction of each of the following conditions: 6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company contained herein shall be true and correct at and as of the Non-License Transfer Date or the Closing Date, as applicable, as though each such representation and warranty were made at and as of such time, other than such representations and warranties as are made as of a specific date, in each case except for changes that are expressly contemplated by this Agreement and except for such failures to be true and correct that would not reasonably be expected to have a Material Adverse Effect. - 44 - 6.2 PERFORMANCE BY THE COMPANY. All of the covenants and agreements to be complied with and performed by the Company on or before the Non-License Transfer Date or the Closing Date, as applicable, shall have been complied with or performed, except for such failures to comply with or perform that would not reasonably be expected to have a Material Adverse Effect. 6.3 CERTIFICATES. The Company shall have delivered to Purchaser (a) a certificate, dated as of the Non-License Transfer Date or the Closing Date, as applicable, executed on behalf of the Company by its duly authorized officers to the effect of Sections 6.1, 6.2 and 6.12; and (b) a certificate, dated as of the Non-License Transfer Date or the Closing Date, as applicable, executed on behalf of the Company by its duly authorized officers that (i) the Company has not waived any of the Company's rights or any conditions under the Gannett Purchase Agreement, (ii) the Company has not breached the Gannett Purchase Agreement in any material respect and, to the Company's knowledge, Gannett has not breached the Gannett Purchase Agreement in any material respect, and (iii) the acquisition of the Stations by the Company from Gannett has been consummated in accordance with the terms and conditions of the Gannett Purchase Agreement. 6.4 CONSENTS; NO OBJECTIONS. (a) The applicable waiting periods under the HSR Act shall have expired or been terminated; (b) The parties shall have received all the authorizations, consents, orders and approvals from Governmental Authorities and consents from third parties, in each case listed or described in Section 6.4 of the Disclosure Schedule (which Section includes all of the real estate leases for the towers, transmitters and television broadcasting studios of the Stations and all of the network affiliation agreements of the Stations); and (c) The parties shall have received all authorizations, consents, orders and approvals from Governmental Authorities necessary to transfer the material Permits relating to the operation of the towers, transmitters and television broadcasting studios of the Stations, as such facilities are operating on the date hereof, except in each case where the failure to receive such authorizations, consents, orders or approvals would not reasonably be expected to materially adversely affect the operations of such facilities, or where such authorizations, - 45 - consents, orders or approvals are customarily obtained after the closing of a transaction of this nature. 6.5 NO PROCEEDINGS OR LITIGATION. No preliminary or permanent injunction or other order or decree issued by any United States federal or state Governmental Authority, nor any Law promulgated or enacted by any United States federal or state Governmental Authority, that restrains, enjoins or otherwise prohibits the transactions contemplated hereby or limits the ability in any material respect of the rights of the Company or Purchaser to hold the Assets (excluding the FCC Licenses) and conduct the Business as it is being conducted as of the Non-License Transfer Date or the Closing Date, as applicable, or imposes civil or criminal penalties on any stockholder, director or officer of Purchaser if such transactions are consummated, shall be in effect. 6.6 FCC CONSENT. The FCC Consent shall have been issued with respect to the Stations without any conditions that are materially adverse to Purchaser and such FCC Consent shall have become a Final Order; provided, however, that there shall be no requirement that the FCC Order shall have been issued as of the Non-License Transfer Date. 6.7 NO MATERIAL ADVERSE CHANGE. Since the date of the Gannett Purchase Agreement through the Non-License Transfer Date or the Closing Date, as applicable, there shall not have occurred any Material Adverse Effect. 6.8 OPINIONS OF COUNSEL. Purchaser shall have received an opinion of Fisher, Wayland, Cooper, Leader & Zaragoza L.L.P., dated the Non-License Transfer Date or the Closing Date, as applicable, substantially in the form of Exhibit E hereto. 6.9 CERTAIN CERTIFIED MATTERS. Purchaser shall have received a copy of (i) the resolutions of the board of directors of the Company, certified as being correct and complete and then in full force and effect, authorizing the execution, delivery and performance of this Agreement and the other the documents, instruments and writings to be delivered by the Company at or prior to Closing Date or the Non-License Transfer Date, as applicable, and the consummation of the transactions contemplated hereby - 46 - and thereby and (ii) a copy of the Certificate of Incorporation and Bylaws of the Company, certified by a duly authorized officer of the Company as being true, correct and complete as of the Closing Date. 6.10 GOOD STANDING CERTIFICATE. Purchaser shall have received a certificate as to the formation and good standing of the Company issued by the Secretary of State of Maryland, dated not more than five (5) days before the Non-License Transfer Date or the Closing Date, as applicable, and for the states of Illinois and Iowa, a certificate as to the good standing of the Person transferring the Stations to Purchaser as of such date, issued by the Secretary of State of such jurisdiction, dated not more than five (5) days before the Non-License Transfer Date or the Closing Date, as applicable. 6.11 NO TRANSMISSION DEFECTS. There shall not exist any loss or damage at any Station which has resulted in the regular broadcast transmission of such Station (including such Station's effective radiated power) to be diminished in any material respect; provided, that if any such loss or damage does exist, then either or both of the Company and Purchaser shall be entitled, by written notice to the other, to postpone the Non-License Transfer Date or the Closing Date, as applicable, for a period of up to sixty (60) days to resume such Station's broadcast transmission. 6.12 CLOSING ON THE GANNETT PURCHASE AGREEMENT. The closing, as defined in the Gannett Purchase Agreement, with respect to all of the Gannett Television Stations shall have occurred or occur simultaneously with the Non-License Transfer, in accordance with the terms and conditions of the Gannett Purchase Agreement; and the representations and warranties of the Company set forth in Section 3.20 hereof shall be true and correct in all respects at and as of the Non-License Transfer Date or the Closing Date, as applicable, as though each such representation and warranty were made at and as of such time (except for representations and warranties that speak of a specific date or time other than the Non-License Transfer Date or the Closing Date, as applicable, which need only be true and correct in all material respects as of such date or time). 6.13 DELIVERIES. The Company (or Gannett, if applicable) shall have delivered to the Purchaser all contracts, agreements, instruments and documents required to be delivered by the Company to Purchaser pursuant to Section 1.5. - 47 - ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the Company to consummate the transactions contemplated by this Agreement to occur at the Non-License Transfer or the Closing are, at its option, subject to satisfaction of each of the following conditions: 7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Purchaser contained herein shall be true and correct in all material respects at and as of the Non-License Transfer Date or the Closing Date, as applicable, as though each such representation and warranty were made at and as of such time, other than such representations and warranties as are made as of a specific date, in each case except for changes that are expressly contemplated by this Agreement. 7.2 PERFORMANCE BY PURCHASER. All of the covenants and agreements to be complied with and performed by Purchaser on or prior to the Non-License Transfer Date or the Closing Date, as applicable, shall have been complied with or performed, in all material respects, except for such failures to comply with or perform that would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Company. 7.3 CERTIFICATE. Purchaser shall have delivered to the Company a certificate, dated as of the Non-License Transfer Date or the Closing Date, as applicable, executed on behalf of Purchaser by its duly authorized officers or representatives to the effect of Sections 7.1 and 7.2. 7.4 CONSENTS; NO OBJECTIONS. (a) The applicable waiting periods under the HSR Act shall have expired or been terminated; and (b) The parties shall have received all the authorizations, consents, orders and approvals from Governmental Authorities and consents from third parties, in each case listed or described on Section 7.4 to the Disclosure Schedule. 7.5 NO PROCEEDINGS OR LITIGATION. No preliminary or permanent injunction or other order or decree issued by any United States federal or state Governmental Authority, nor any Law - 48 - promulgated or enacted by any United States federal or state Governmental Authority, that restrains, enjoins or otherwise prohibits the transactions contemplated hereby, or imposes civil or criminal penalties on any stockholder, director or officer of the Company if such transactions are consummated, shall be in effect. 7.6 FCC CONSENT. The FCC Consent shall have been issued with respect to the Stations, notwithstanding that it may not have yet become a Final Order; provided, however, that there shall be no requirement that the FCC Order shall have been issued as of the Non-License Transfer Date.. 7.7 CERTAIN CERTIFIED MATTERS. The Company shall have received a copy of (i) the resolutions of the board of directors of Purchaser, certified as being correct and complete and then in full force and effect, authorizing the execution, delivery and performance of this Agreement and the other the documents, instruments and writings to be delivered by Purchaser at or prior to Closing Date or the Non-License Transfer Date, as applicable, and the consummation of the transactions contemplated hereby and thereby and (ii) a copy of the Certificate of Incorporation and Bylaws of Purchaser, certified by a duly authorized officer of Purchaser as being true, correct and complete as of the Closing Date. 7.8 GOOD STANDING CERTIFICATE. The Company shall have received a certificate as to the formation and good standing of Purchaser issued by the Secretary of State of Delaware, dated not more than five (5) days before the Non-License Transfer Date or the Closing Date, as applicable, and for the states of Illinois and Iowa as to the good standing of Purchaser issued by the Secretary of State of such jurisdiction, dated not more than five (5) days before the Non-License Transfer Date or the Closing Date, as applicable. 7.9. CLOSING ON GANNETT PURCHASE AGREEMENT. The closing, as defined in the Gannett Purchase Agreement, shall have occurred or occur simultaneously with the Non-License Transfer or the Closing, as applicable, hereunder. - 49 - 7.10 DELIVERIES. The Purchaser shall have delivered to the Company all contracts, agreements, instruments and documents required to be delivered by the Purchaser to the Company pursuant to Section 1.5. ARTICLE 8. INDEMNIFICATION. 8.1 INDEMNIFICATION BY THE COMPANY. Subject in all respects to the provisions of this Article 8, the Company hereby agrees to indemnify and hold harmless on and after the Transfer Date, Purchaser and its stockholders and Affiliates and their respective officers, directors, employees and agents, and their respective and successors and permitted assigns (the "PURCHASER INDEMNIFIED PARTIES") from and against any Claims and Damages asserted against or incurred by them, directly or indirectly, in connection with, arising out of or relating to (a) any breach on the part of the Company of any representation or warranty made by the Company in this Agreement or any Transaction Document or in any certificate delivered pursuant to this Agreement, (b) any breach on the part of Gannett of any representation or warranty made by Gannett in the Gannett Purchase Agreement with respect to the Stations or the Assets, (c) any breach on the part of the Company of any covenant or agreement made by the Company in this Agreement or any Transaction Document, (d) any breach on the part of Gannett of any covenant or agreement made by Gannett in the Gannett Purchase Agreement with respect to the Stations or the Assets, or (e) any Retained Liabilities. 8.2 INDEMNIFICATION BY PURCHASER. Subject in all respects to the provisions of this Article 8, Purchaser hereby agrees to indemnify and hold harmless on and after the Transfer Date, the Company and its stockholders and Affiliates and their respective officers, directors, employees and agents, and their respective successors and permitted assigns (collectively the "COMPANY INDEMNIFIED PARTIES"), from and against any Claims and Damages asserted against or incurred by them, directly or indirectly, in connection with, arising out of or relating to (a) any breach on the part of Purchaser of any representation or warranty made by Purchaser in this Agreement or any Transaction Document or in any certificate delivered pursuant to this Agreement, (b) any breach on the part of Purchaser of any covenant or agreement made by the Purchaser in this Agreement or any Transaction Document, or (c) any Assumed Liabilities. The parties acknowledge and agree that none of Gannett, any of its stockholders or Affiliates, or any of their respective officers, directors, employees, - 50 - agents, successors or assigns shall be "Company Indemnified Parties" or "Beneficiaries" for any purposes of this Agreement or any other Transaction Document. 8.3 LIMITATIONS ON INDEMNIFICATION CLAIMS AND LIABILITY; TERMINATION OF INDEMNIFICATION. (a) The obligations to indemnify and hold harmless a Person pursuant to Sections 8.1(a), (b), (c) and (d) and Sections 8.2(a) and 8.2(b) shall terminate when the applicable representation, warranty, covenant or agreement terminates pursuant to Section 10.12; provided, however, that the obligation to indemnify and hold harmless under such Sections shall not terminate with respect to any claim as to which the Person to be indemnified shall have, before the termination of the applicable representation, warranty, covenant or agreement, previously made a claim for indemnification by delivering a notice to the indemnifying party in accordance with Section 8.5. The obligations to indemnify and hold harmless a Person pursuant to Section 8.1(e) and Section 8.2(c) shall not terminate. (b) The Company shall not be obligated to indemnify or hold harmless any Purchaser Indemnified Party under Section 8.1(a), (b), (c) and (d), unless and until all Claims and Damages exceed in the aggregate Two Hundred Thousand Dollars ($200,000) (the "BASKET AMOUNT"), in which case the Company will (subject to the other provisions of this Article 8) only be obligated to indemnify and hold harmless the Purchaser Indemnified Parties for all of such Claims or Damages under Section 8.1(a), (b), (c) or (d) in the aggregate in excess of One Hundred Thousand Dollars ($100,000); provided that the provisions of this Section 8.3(b) will not apply to any breach of any Post-Closing Agreements; provided further that the Basket Amount shall not be applicable to any amounts owed in connection with the determination of the Actual Net Financial Assets pursuant to Section 2.4, to the payment and reimbursement obligations set forth in Section 5.9 or to the indemnities set forth in Section 8.1(e). (c) The maximum aggregate liability of the Company with respect to all claims for indemnification under Section 8.1(a), (b), (c) or (d) will be limited to the amount of Three Million Dollars ($3,000,000). (d) Notwithstanding anything to the contrary in this Agreement and except for fraud, the indemnifications in Sections 8.1 and 8.2 hereof will be the sole and exclusive remedies available to Purchaser and the Company and their respective stockholders and Affiliates and all of their respective officers, directors, employees, agents, successors and assigns, after the Transfer Date for any claims arising out of or relating to any breaches of any representations or warranties or - 51 - any covenants or agreements contained in this Agreement, or any certificate delivered pursuant to this Agreement or otherwise in connection with this Agreement. Any claim for indemnification must be made as provided in Sections 8.5 and 8.6 hereof. 8.4 COMPUTATION OF CLAIMS AND DAMAGES. Whenever the Indemnitor is required to indemnify and hold harmless the Indemnitee from and against and hold the Indemnitee harmless from, or to reimburse the Indemnitee for, any item of Claim or Damage, the Indemnitor will, subject to the provisions of this Article 8, pay the Indemnitee the amount of the Claim or Damage (a) reduced by any amounts to which the Indemnitee is entitled from third parties in connection with such Claim or Damage ("REIMBURSEMENTS"), (b) reduced by the Net Proceeds of any insurance policy payable to the Indemnitee with respect to such Claim or Damage and (c) reduced appropriately to take into account any Tax Benefit to the Indemnitee with respect to such Claim or Damage through and including the tax year in which the indemnification payment is made, net of all income Taxes resulting or that will result from the indemnification payment. For purposes of this Section 8.4, (i) "NET PROCEEDS" shall mean the insurance proceeds payable, less any deductibles, co-payments, premium increases, retroactive premiums or other payment obligations (including attorneys' fees and other costs of collection) that relates to or arises from the making of the claim for indemnification and (ii) "TAX BENEFIT" shall mean any benefit to be recognized by the Indemnitee in connection with the Claim or Damage based upon the highest blended (federal, state, local and foreign) marginal income Tax rate applicable to the Indemnitee during the taxable year for which a return was most recently filed with the Internal Revenue Service (based on the date of the claim for indemnification). The Indemnitor shall use commercially reasonable efforts (the expenses of which shall be considered Claims and Damages for purposes of the relevant indemnity claim) to pursue Reimbursements or Net Proceeds that may reduce or eliminate Claims and Damages. If any Indemnitee receives any Reimbursement, Tax Benefit or Net Proceeds after an indemnification payment is made which relates thereto or if any Indemnitee receives a Tax Benefit arising after the tax year in which an indemnification payment is made which relates thereto, the Indemnitee shall promptly repay to the Indemnitor such amount of the indemnification payment as would not have been paid had the Reimbursement, Tax Benefit or Net Proceeds reduced the original payment (any such repayment shall be a credit against any applicable indemnification threshold or limitation set forth in Section 8.3(b) hereof) at such time or times as and to the extent that such Reimbursement, Tax Benefit or Net Proceeds is actually received. - 52 - 8.5 NOTICE OF CLAIMS. Upon obtaining knowledge of any Claim or Damage which has given rise to, or could reasonably give rise to, a claim for indemnification hereunder, the Person seeking indemnification (the "Indemnitee") shall, as promptly as reasonably practicable (but in no event later than thirty (30) days) following the date the Indemnitee has obtained such knowledge, give written notice (a "NOTICE OF CLAIM") of such claim to the other party (the "INDEMNITOR"). The Indemnitee shall furnish to the Indemnitor in good faith and in reasonable detail such information as the Indemnitee may have with respect to such indemnification claim (including copies of any summons, complaint or other pleading which may have been served on it and any written claim, demand, invoice, billing or other document evidencing or asserting the same). No failure or delay by the Indemnitee in the performance of the foregoing shall reduce or otherwise affect the obligation of the Indemnitor to indemnify and hold the Indemnitee harmless, except to the extent that such failure or delay shall have adversely affected the Indemnitor's ability to defend against, settle or satisfy any liability, damage, loss, claim or demand for which such Indemnitee is entitled to indemnification hereunder. For purposes of this Section 8.5, a Notice of Claim given in good faith must include a good faith estimate of the amount of the claim to the extent it is reasonably practicable to determine such estimate. 8.6 DEFENSE OF THIRD PARTY CLAIMS. If any claim set forth in the Notice of Claim given by an Indemnitee pursuant to Section 8.5 hereof is a claim asserted by a third party, the Indemnitor shall have thirty (30) days after the date that the Notice of Claim is given by the Indemnitee to notify the Indemnitee in writing of the Indemnitor's election to defend such third party claim on behalf of the Indemnitee. If the Indemnitor elects to defend such third party claim, the Indemnitee shall make available to the Indemnitor and its agents and representatives all witnesses, pertinent records, materials and information in the Indemnitee's possession or under the Indemnitee's control as is reasonably required by the Indemnitor and shall otherwise cooperate with and assist the Indemnitor in the defense of such third party claim, and so long as the Indemnitor is defending such third party claim in good faith, the Indemnitee shall not pay, settle or compromise such third party claim. If the Indemnitor elects to defend such third party claim, the Indemnitee shall have the right to participate in the defense of such third party claim, at the Indemnitee's own expense. In the event, however, that the Indemnitee reasonably determines that representation by counsel to the Indemnitor of both the Indemnitor and the Indemnitee may present such counsel with a conflict of interest, then such Indemnitee may employ separate counsel to represent or defend it in any such action or proceeding and the - 53 - Indemnitor will, subject to the provisions of this Article 8, pay the reasonable fees and disbursements of such counsel. If the Indemnitor does not elect to defend such third party claim or does not defend such third party claim in good faith, the Indemnitee shall have the right, in addition to any other right or remedy it may have hereunder, at the Indemnitor's expense, to defend such third party claim; provided, however, that such Indemnitee's defense of or its participation in the defense of any such third party claim shall not in any way diminish or lessen the indemnification obligations of the Indemnitor under this Article 8. If the Indemnitor shall assume the defense of a third party claim, it shall not settle such claim without the prior written consent of the Indemnitee (a) unless such settlement includes as an unconditional term thereof the giving by the claimant of a release of the Indemnitee from all Liability with respect to such claim or (b) if such settlement involves the imposition of equitable remedies or the imposition of any obligations on such Indemnitee other than financial obligations for which such Indemnitee will be indemnified hereunder. If the Indemnitee is defending a third party claim it will not settle such claim without prior written consent of the Indemnitor, which will not be unreasonably withheld or delayed. 8.7 THIRD PARTY BENEFICIARIES. Each of the Purchaser Indemnified Parties and the Company Indemnified Parties shall be third party beneficiaries and entitled to enforce the provisions of this Article 8; provided, however, that none of the Business Employees shall be third party beneficiaries of any provision of this Agreement or any other Transaction Document, including, without limitation, the provisions of Section 5.2 of this Agreement. ARTICLE 9. DEFINITIONS. Unless otherwise stated in this Agreement, the following capitalized terms have the following meanings: Accounting Firm has the meaning set forth in Section 2.4(a). Accounting Firm Determination has the meaning set forth in Section 2.4(a). Action means any action, suit, claim, arbitration, or proceeding or investigation (of which the Company has knowledge) commenced by or pending before any Governmental Authority. Actual Net Financial Assets has the meaning set forth in Section 2.4(a) hereof. - 54 - Affiliate means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person. Agreement or this Agreement means this Purchase Agreement dated as of the date first above written (including the Exhibits hereto and the Disclosure Schedule) and all amendments hereto made in accordance with the provisions of Section 10.8 hereof. Allocation has the meaning set forth in Section 2.5 hereof. Assets has the meaning set forth in Section 1.1 hereof. Assignment of FCC Licenses has the meaning set forth in Section 1.5(a)(ii) hereof. Assumed Liabilities means the Liabilities assumed by Purchaser pursuant to Sections 1.3(a) and (b) hereof. Base Purchase Price has the meaning set forth in Section 2.2(a). Basket Amount has the meaning set forth in Section 8.3(b). Beneficiary has the meaning set forth in Section 5.2(f) hereof. Bill of Sale, Assignment and Assumption Agreement has the meaning set forth in Section 1.5(a)(i) hereof. Business means all of the Company's business, operations and activities of the Stations acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement or otherwise used by the Company in the business, operations and activities of the Stations. Business Day means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York. Business Employees means all current, former and inactive employees of the Stations. For the avoidance of doubt, Corporate Office Employees will not be considered Business Employees. Call Letters has the meaning set forth in Section 3.16 hereof. - 55 - CERCLA means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. Claims and Damages means, after taking into account amounts received by Purchaser under Section 5.14(d) hereof, any and all losses, claims, demands, liabilities, obligations, actions, suits, orders, statutory or regulatory compliance requirements, or proceedings asserted by any Person (including, without limitation, Governmental Authorities), and all damages, costs, expenses, assessments, judgments, recoveries and deficiencies, including interest, penalties, investigatory expenses, consultants' fees, and reasonable attorneys' fees and costs (including, without limitation, costs incurred in enforcing the applicable indemnity), of every kind and description, contingent or otherwise, incurred by or awarded against a party, provided that "Claims and Damages" shall not include any indirect, consequential, incidental, exemplary or punitive damages or other special damages or lost profits (except to the extent payable to a third party as a result of a third party claim). Closing has the meaning set forth in Section 1.4(b) hereof. Closing Date has the meaning set forth in Section 1.4(b) hereof. Closing Statement has the meaning set forth in Section 2.4(a) hereof. Code means the Internal Revenue Code of 1986, as amended. Communications Act means the Communications Act of 1934, as amended. Company has the meaning specified in the introductory paragraph to this Agreement. Company Indemnified Parties shall have the meaning set forth in Section 8.2. Company Permitted Assignee has the meaning set forth in Section 10.5(a) hereof. Continuation Coverage has the meaning set forth in Section 5.2(i) hereof. Control (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or to cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, including, without limitation, the - 56 - ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person. Corporate Office means the corporate office of Gannett located at One City Center, Portland, Maine, that provides certain support to the Business and the Maine Media Business. Corporate Office Employees has the meaning set forth in Section 5.2(b). Corporate Office Lease means the Lease dated as of February 16, 1989, between Gannett and One City Center Associates, and all addenda and amendments thereto and memoranda relating thereto. Deposit Escrow Agent means United Bank, 1667 K Street, N.W., Washington, D.C. 20006. Deposit Escrow Agreement has the meaning set forth in Section 2.1 Diligence Termination Deadline has the meaning set forth in Section 1.6. Disclosure Schedule means the Disclosure Schedule, dated as of the date hereof, delivered to Purchaser by the Company in connection with this Agreement. Employee Benefit Plans means all "employee benefit plans" within the meaning of Section 3(3) of ERISA, all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other employee benefit plans, programs, policies or arrangements, employment agreements, severance agreements, severance pay policies, plant closing benefits, executive compensation arrangements, sick leave, vacation pay, salary continuation for disability, consulting, or other compensation arrangements, worker's compensation, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, employee discounts, employee loans, employee banking privileges, any plans subject to Section 125 of the Code, and any plans providing benefits or payments in the event of a change of control, change in ownership, or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof, in each case with respect to any present or former employees, directors, or agents and without regard to whether the plan or arrangement was previously terminated (if potential liabilities remain) or compensation agreements, in each case for the benefit of, or relating to, any current employee or former employee of the Business. - 57 - Encumbrance means any security interest, pledge, mortgage, lien (including, without limitation, tax liens), charge, encumbrance, easement, adverse claim, preferential arrangement, restriction or defect in title. Environmental Claims means any and all actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Law, any Environmental Permit, Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation (a) by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any Person for damages, contributions, indemnification, cost recovery, compensation or injunctive relief. Environmental Law means any Law relating to the environment, health, safety or Hazardous Materials, in force and effect on the date hereof or, in the case of the Company's certificate to be delivered in accordance with the provisions of Section 6.3 hereof, on the Closing Date (exclusive of any amendments or changes to such Law or any regulations promulgated thereunder or orders, decrees or judgments issued pursuant thereto which are enacted, promulgated or issued after the date hereof, or in the case of such certificate, on or after the Closing Date), including but not limited to CERCLA; the Resource Conservation and Recovery Act of 1986 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 6901 et seq.; the Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. Sections 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq.; the Atomic Energy Act, 42 U.S.C. Sections 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et seq.; and the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 1101 et seq. Environmental Permits means all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Law. Equipment means all of the tangible personal property, machinery, equipment, vehicles, rolling stock, furniture, and fixtures of every kind and description in which the Company has an interest or which the Company acquires from Gannett pursuant to the Gannett Purchase Agreement by ownership or lease, and used or useful in connection with the Business, together with any replacements thereof or additions thereto, made in the ordinary course of business between the date of the Gannett Purchase Agreement and the Transfer Date. - 58 - ERISA means the Employee Retirement Income Security Act of 1974, as amended. ERISA affiliate has the meaning set forth in Section 3.14. Escrow Deposit has the meaning set forth in Section 2.1. Estimated Net Financial Assets has the meaning set forth in Section 2.2(b) hereof. Excluded Assets has the meaning set forth in Section 1.2 hereof. FCC means the Federal Communications Commission. FCC Consent means a public notice of the FCC, or of the Chief, Mass Media Bureau or Video Services Division, acting under delegated authority, consenting to the assignment of the FCC Licenses to Purchaser. FCC Licenses means all licenses, permits and other authorizations issued by the FCC to the Company used for or in connection with the Stations, and all applications therefor, together with any renewals, extensions or modifications thereof and additions thereto between the date of the Gannett Purchase Agreement and the Closing. Final Order means the FCC Consent as to which the time for filing a request for administrative or judicial review, or for instituting administrative review sua sponte, shall have expired without any such filing having been made or notice of such review having been issued; or, in the event of such filing or review sua sponte, as to which such filing or review shall have been disposed of favorably to the grantee and the time for seeking further relief with respect thereto shall have expired without any request for such further relief having been filed. First Year Anniversary Date has the meaning set forth in Section 2.3(b) GAAP means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved. Gannett has the meaning set forth in the recitals to this Agreement. Gannett Corporate Office means the corporate office of Gannett located at One City Center, Portland, Maine, that provides certain support to Gannett and its business. - 59 - Gannett FCC Licenses means all licenses, permits and other authorizations issued by the FCC to Gannett used for or in connection with the Gannett Television Stations and all applications therefor, together with any renewals, extensions, or modifications thereof and additions thereto between the date of the Gannett Purchase Agreement and the Closing. Gannett Maine Media Business means the newspaper publishing business which publishes the Portland Press Herald and Maine Sunday Telegram, the Kennebec Journal and the Central Maine Morning Sentinel, and certain related businesses in Maine (including, without limitation, the "New Media Development Group", an Internet-based media business; "Voice Information Services", a telephone information and marketing service; "Guy Gannett Direct", a direct marketing operation; a telephone directory business; an integrated marketing group; and the Coastal Journal, a controlled circulation weekly), and all assets, liabilities, operations and activities of, and all rights of, Gannett in the operations of such businesses. Gannett Purchase Agreement shall have the meaning set forth in the Recitals. Gannett Television Stations means the following television broadcasting station properties: WOKR-TV, Rochester, New York; WICS-TV, Springfield, Illinois; WICD-TV, Champaign, Illinois; WGGB-TV, Springfield, Massachusetts; WGME-TV, Portland, Maine; KGAN-TV, Cedar Rapids, Iowa; WTWC-TV, Portland, Maine; and WTWC-TV, Tallahassee, Florida. Governmental Authority means any United States federal, state or local government or any foreign government, any governmental, regulatory, legislative, executive or administrative authority, agency or commission or any court, tribunal, or judicial body. Governmental Order means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. Governmental Orders shall not include Permits. Group Contract has the meaning set forth in Section 1.3(a) hereof. Hazardous Materials means wastes, substances, materials (whether solids, liquids or gases), petroleum and petroleum products, byproducts or breakdown products, radioactive materials, and any other chemicals that are deemed hazardous, toxic, pollutants or contaminants, or substances designated, classified or regulated as being "hazardous" or "toxic", or words of similar import, under any Environmental Law. - 60 - HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. Indebtedness means obligations with regard to borrowed money and shall expressly not include either accounts payable or accrued liabilities that are incurred in the ordinary course of business or obligations under operating leases regardless of how such leases may be classified or accounted for on financial statements. Indemnitee has the meaning set forth in Section 8.5 hereof. Indemnitor has the meaning set forth in Section 8.5 hereof. Intellectual Property means all patents, trademarks, trade names, domain names, service marks, copyrights and other similar intangible assets, and applications, registrations, extensions and renewals for any of the foregoing, and other intellectual property owned, leased or used by the Company in the operation of the Stations or acquired by the Company from Gannett under the Gannett Purchase Agreement and used in the Business, including, without limitation, Call Letters, computer software and programs, of the Company used in the Business or acquired by the Company from Gannett under the Gannett Purchase Agreement and used in the Business, whether owned or used by, or licensed to, the Company or acquired by the Company from Gannett under the Gannett Purchase Agreement. Knowledge with respect to the Company means the actual knowledge of the officers and employees of the Company regarding (a) information relating to the Stations disclosed by Gannett to the Company in the Gannett Purchase Agreement or any Schedule, Exhibit or documents delivered to the Company in connection therewith, and (b) information relating to the Stations that the Company has been made aware of since September 4, 1998. Law means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law including, without limitation zoning laws and housing, building, safety or fire ordinances or codes. Leased Property means all real property of every kind and description leased by the Company or rights to such leases or leased property acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement and used in connection with the Business, together (to the extent leased by the Company or obtained from Gannett pursuant to the Gannett Purchase Agreement) with all buildings and other structures, towers, antennae, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Company or acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement attached or appurtenant thereto and - 61 - all easements, licenses, rights and appurtenances relating to the foregoing, including, without limitation, the leased property referred to in Section 1.1(d) of the Disclosure Schedule. Letter of Credit has the meaning set forth in Section 2.1. Liabilities means as to any Person all debts, adverse claims, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, known or unknown, including, without limitation, those arising under any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, writ, stipulation or other governmental requirement (including, without limitation, any environmental law), action, suit, arbitration, proceeding or investigation or governmental permit, license, authorization, certificate or approval and those arising under any contract, agreement, arrangement, commitment or undertaking. License Assets has the meaning set forth in Section 1.4 hereof. Material Adverse Effect means any circumstance, change in, or effect on the Company or the Stations that has a material adverse effect on the business, results of operations or financial condition of the Stations, taken as a whole; provided, however, that Material Adverse Effect shall not include adverse effects resulting from (or, in the case of effects that have not yet occurred, reasonably likely to result from) (i) general economic or industry conditions that have a similar effect on other participants in the industry, (ii) regional economic or industry conditions that have a similar effect on other participants in the industry in such region, (iii) the fact that the Purchaser unreasonably withheld Purchaser's consent with respect to any Program Contract pursuant to Section 5.1 of the Agreement, or (iv) any act of Purchaser. Material Contracts means the written agreements (including, without limitation, amendments thereto), contracts, policies, plans, mortgages, understandings, arrangements or commitments relating to the Business, to which Gannett or the Company is a party or by which its assets are bound as described below: (i) any agreement or contract providing for payments to any Person in excess of Fifty Thousand Dollars ($50,000) per year or Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate over the five (5) year period commencing on the date hereof; (ii) all time brokerage agreements and affiliation agreements with television networks; - 62 - (iii) any license or contract pursuant to which Gannett or the Company is authorized to broadcast film or taped programming supplied by others in excess of Ten Thousand Dollars ($10,000) or having a term of more than one (1) year; (iv) any employment agreement, consulting agreement or similar contract providing for payments to any individual in excess of Fifty Thousand Dollars ($50,000) per year or One Hundred Thousand Dollars ($100,000) in the aggregate over the five (5) year period commencing on the date hereof; (v) any retention or severance agreement or contract with respect to any Person who is to be employed by Purchaser following the Closing; (vi) all collective bargaining agreements or other union contracts; (vii) (A) any lease of Equipment or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by Gannett or the Company from another Person providing for payments to another Person in excess of Twenty-Five Thousand Dollars ($25,000) per year or Seventy-Five Thousand Dollars ($75,000) in the aggregate over the five (5) year period commencing on the date hereof; or (B) any lease of Real Property by Gannett or the Company from another Person; (viii) any lease of Equipment or Real Property or license with respect to Intellectual Property (other than licenses granted in connection with the purchase of equipment or other assets) by Gannett or the Company to another Person providing for payments to Gannett or the Company in excess of Twenty Thousand Dollars ($20,000) per year or Fifty Thousand Dollars ($50,000) in the aggregate over the five (5) year period commencing on the date hereof; (ix) any joint venture, partnership or similar agreement or contract; (x) any agreement or contract under which Gannett or the Company has loaned any money in excess of One Million Dollars ($1,000,000) or issued or received any note, bond, indenture or other evidence of indebtedness in excess of One Million Dollars ($1,000,000); (xi) any agreement or contract under which Gannett or the Company has directly or indirectly guaranteed Indebtedness in an amount in excess of One Million Dollars ($1,000,000); (xii) any agreement or contract under which Gannett or the Company has directly or indirectly guaranteed liabilities or obligations of others which do not constitute Indebtedness; - 63 - (xiii) any covenant not to compete or contract or agreement, understanding, arrangement or any restriction whatsoever limiting in any respect the ability of the Company to compete in any line of business or with any Person or in any area; and (xiv) any agreement or contract between Gannett or the Company and any officer, director, stockholder or employee of the Business or any of their family members providing for payments in excess of Five Thousand Dollars ($5,000) (other than agreements covered in clause iv) (or that would have been covered in clause (iv) but for the monetary limits thereunder) or agreements or contracts containing terms substantially similar to terms available to employees generally). Material Contracts shall not include any and all (w) contracts, purchase orders, purchase commitments, leases and agreements entered into in the ordinary course of business and relating to the Company (other than those described in clauses (v), (vii), (viii) or (ix) above) that (A) are terminable at will without payment of premium or penalty by the Company or (B) are terminable on not more than sixty (60) days' written notice without payment of premium or penalty and do not involve the obligation of the Company to make payments in excess of Ten Thousand Dollars ($10,000) during the sixty (60) day period commencing on the Closing; (x) contracts with respect to time sales (or other promotion or sponsorship sales) to advertisers or advertising agencies (including, without limitation, "trade" or "barter" agreements), sales agency or advertising representation contracts, and barter obligations or commitments to suppliers of programming; and (y) contracts with respect to the sale of production time and/or production services relating to advertising or with respect to other services. Net Financial Assets means the result of (i) the aggregate amount of current assets of the Business to be assigned to Purchaser under this Agreement, excluding for purposes of this calculation, the current portion of rights under Program Contracts (except as provided otherwise herein), less (ii) the aggregate amount of current liabilities of the Business to be assumed by Purchaser under this Agreement, excluding for purposes of this calculation the current portion of obligations under Program Contracts (except as provided otherwise herein), less (iii) the aggregate amount of the Company's liability for supplemental retirement and deferred compensation under the Employee Benefit Plans relating to the Business Employees set forth in Section 9 of the Disclosure Schedule to the extent not paid by Gannett prior to the Transfer Date and excluding the current portion of such liability, if any, to the extent such portion is included as a current liability in clause (ii), in each case as of the relevant date of calculation and calculated (except as otherwise provided in Section 9 of the Disclosure Schedule) in conformity with GAAP. Net Financial Assets expressly shall not include, as either assets or liabilities, the rights and obligations under Program Contracts; provided, however, - 64 - that notwithstanding any prior practice or lack thereof relating thereto, (x) any programming downpayments made in advance of customary payment terms, to the extent not amortized as of the relevant date of calculation as more fully described in the example set forth in Section 9 of the Disclosure Schedule, shall be expressly included in the current assets, (y) any regularly scheduled payments due and unpaid as of the day immediately preceding the Transfer Date under Program Contracts in accordance with their terms as in effect on the date hereof (with respect to Program Contracts existing on the date hereof) or on the date originally entered into (with respect to Program Contracts entered into after the date hereof) shall be expressly included in the current liabilities and (z) any prepayments of regularly scheduled amounts due on or after the Transfer Date, but made prior to the Transfer Date under Program Contracts shall be expressly included in the current assets. Without limiting the generality of the foregoing and subject to the immediately preceding sentence, for purposes of determining the amount of Net Financial Assets, all revenues and all expenses arising from the operation of the Stations, including, without limitation, tower rental, business and license fees, utility charges, real and personal property taxes and assessments levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, Taxes (except for Taxes arising from the transfer of the Assets under this Agreement which shall be apportioned between Purchaser and the Company pursuant to Section 10.10 hereof), employee compensation, including wages, salaries, commissions, music license fees and similar prepaid and deferred items, shall be prorated as of the relevant date of calculation in accordance with GAAP. Net Proceeds has the meaning set forth in Section 8.4 hereof. Non-License Assets means the Assets, other than the License Assets. Non-License Transfer has the meaning set forth in Section 1.4(a). Non-License Transfer Date has the meaning set forth in Section 1.4(a). Notice of Claim has the meaning set forth in Section 8.5 hereof. Permits has the meaning set forth in Section 3.11(a) hereof. Permitted Exceptions means each of the following: (i) liens for taxes, assessments and governmental charges or levies not yet due and payable or the validity of which is being contested in good faith by appropriate proceedings; - 65 - (ii) Encumbrances imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar liens, arising in the ordinary course of business; (iii) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; (iv) survey exceptions, rights of way, easements, reciprocal easement agreements and other Encumbrances on title to real property set forth in Section 1.1(d) of the Disclosure Schedule or that do not, individually or in the aggregate, materially adversely affect the use of such property in the conduct of the Company's business as it is being conducted prior to the Transfer Date; (v) zoning laws and other land use restrictions that do not in any material respect (a) detract from or impair the value or the use of the property subject thereto, or (b) impair the operation of the Stations as it is being conducted prior to the Closing in accordance with the provisions of the Gannett Purchase Agreement; (vi) security interests in favor of suppliers of goods for which payment has not been made in the ordinary course of business consistent with past practice; (vii) Encumbrances on the interests of the lessors of properties used by the Stations in which the Company or Gannett holds a leasehold interest; and (viii) any and all other Encumbrances that do not materially detract from or materially impair the value or the use of the property subject thereto for the purposes currently utilized in the operation of the Stations. Person means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. Post-Closing Agreements means those covenants and agreements required by this Agreement to be performed after the Non-License Transfer or the Closing, as applicable. Program Contracts has the meaning set forth in Section 1.1(f) hereof. Purchase Price has the meaning set forth in Section 2.2(a). Purchaser has the meaning specified in the introductory paragraph to this Agreement. - 66 - Purchaser Indemnified Parties has the meaning set forth in Section 8.1 hereof. Purchaser Permitted Assignee has the meaning set forth in Section 10.5(b) hereof. Real Property means all real property of every kind and description and related mineral rights owned by the Company or acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement and used in connection with the Business, together with all buildings and other structures, towers, antennae, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Company or acquired by the Company from Gannett pursuant to the Gannett Purchase Agreement attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing, including, without limitation, the owned property set forth in Section 1.1(d) of the Disclosure Schedule. Reimbursements has the meaning set forth in Section 8.4 hereof. Release means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water or air or otherwise entering into the environment. Second Year Anniversary Date has the meaning set forth in Section 2.3(c). Stations shall have the meaning set forth in the Recitals. STC Scheduled Severance Agreements has the meaning set forth in Section 5.9(a). STC Severance Payment has the meaning set forth in Section 5.9(a). Subsidiary of any Person means (i) any corporation more than fifty percent (50%) of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation is owned by such Person directly or indirectly, through Subsidiaries and (ii) any partnership, limited partnership, limited liability company, associates, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than a fifty percent (50%) equity interest. Tax or Taxes means any and all taxes, fees, withholdings, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including, without limitation, - 67 - taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth, taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added or gains taxes, license, registration and documentation fees, and customs duties, tariffs and similar charges. Tax Benefit has the meaning set forth in Section 8.4 hereof. Tax Return means any report, return, document, declaration or other information or filing required to be supplied to any Tax authority or jurisdiction (foreign or domestic) with respect to Taxes, including, without limitation, information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information. Termination Date has the meaning set forth in Section 10.1(a)(iv) hereof. Third Party Sale has the meaning set forth in Section 1.4(d). Time Brokerage Agreement has the meaning set forth in Section 1.5(a)(ix). Transaction Documents mean this Agreement; the Bill of Sale, Assignment and Assumption Agreement; the Assignment of FCC Licenses; the Time Brokerage Agreement; and the Deposit Escrow Agreement. Transfer Date means the earlier of the Non-License Transfer and the Closing Date. Unaudited Financial Statements has the meaning set forth in Section 3.5(a) hereof. WARN has the meaning set forth in Section 5.2(h). ARTICLE 10. MISCELLANEOUS PROVISIONS. 10.1 TERMINATION RIGHTS. (a) This Agreement may be terminated: (i) by mutual consent of the parties; - 68 - (ii) by Purchaser by written notice of termination delivered to the Company pursuant to Section 1.6 prior to the Diligence Termination Deadline; (iii) by the Company by written notice of termination delivered to Purchaser prior to the Diligence Termination Deadline, if the parties hereto cannot agree on the forms of news share agreement as provided for in Section 5.13. (iv) by either the Company or Purchaser, provided such party is not then in material default hereunder, upon written notice to the other party, if the Transfer Date has not occurred on or before the date that is one (1) year after the date of this Agreement (the "TERMINATION DATE"); (v) by (A) the Company prior to the Transfer Date, or (B) Purchaser at any time, upon written notice to the other party, if any Governmental Authority shall have issued a statute, rule, regulation, order, decree or injunction or taken any other action permanently restraining, enjoining or otherwise prohibiting the Closing hereunder or the closing under the Gannett Purchase Agreement and such statute, rule, regulation, order, decree or injunction or other action shall have become final and nonappealable, provided that this clause (v) will not be applicable to actions of the FCC subject to clause (vi) below; (vi) by (A) the Company prior to the Transfer Date, or (B) Purchaser at any time, upon written notice to the other party, if (i) the FCC, or the Chief, Mass Media Bureau of the FCC, acting under delegated authority, shall have denied the application for assignment of the Gannett FCC Licenses to the Company, (ii) the FCC, or the Chief, Mass Media Bureau of the FCC, acting under delegated authority, shall have denied the application for assignment of the FCC Licenses to Purchaser, (iii) the parties' request for administrative or judicial review, or the FCC's administrative review sua sponte, shall not have been disposed of favorably to the parties and (iv) the parties have no further relief available to them; (vii) by Purchaser, by written notice to the Company, if there has been a material breach by the Company of any representation, warranty, covenant or agreement set forth in this Agreement such that the conditions precedent set forth in Section 6.1 or 6.2 hereof would not be satisfied, which breach has not been cured within twenty (20) Business Days following receipt by the Company of written notice of such breach from Purchaser; (viii) prior to the Transfer Date, by the Company, by written notice to Purchaser if there has been a material breach by Purchaser of any representation, warranty, covenant or agreement set forth in this Agreement such that the conditions precedent set forth in Section 7.1 or 7.2 hereof would not be - 69 - satisfied, which breach has not been cured within twenty (20) Business Days following receipt by Purchaser of written notice of such breach from the Company; (ix) by Purchaser by written notice to the Company, if the FCC has revoked the Company's or Gannett's FCC License for the Stations; or (x) automatically prior to the Transfer Date without further action by the parties upon the termination of the Gannett Purchase Agreement in accordance with its terms. (b) If this Agreement is terminated pursuant to Section 10.1(a)(i), (iv), (v), (vi), (vii), (ix) or (x) hereof, Purchaser shall receive the immediate return of the Letter of Credit. (c) If this Agreement is terminated pursuant to Section 10.1(a)(i), (ii), (iii), (iv), (v), (vi), (vii), (ix) or (x) hereof this Agreement shall thereupon become void and of no further effect whatsoever, and the parties shall be released and discharged of all obligations under this Agreement, except (i) to the extent of a party's liability for willful material breaches of this Agreement prior to the time of such termination, and (ii) the obligations of each party for its own expenses incurred in connection with the transactions contemplated by this Agreement as provided herein. (d) If this Agreement is terminated pursuant to Section 10.1(a)(viii) hereof, the Company's sole and exclusive remedy under this Agreement shall be to receive the Escrow Deposit by drawing down on the Letter of Credit (without setoff deduction or counterclaim) as liquidated damages, and upon such payment, Purchaser shall be discharged from all further liability under this Agreement. 10.2 LITIGATION COSTS. If any litigation with respect to the obligations of the parties under this Agreement results in a final nonappealable order of a court of competent jurisdiction that results in a final disposition of such litigation, the prevailing party, as determined by the court ordering such disposition, shall be entitled to reasonable attorneys' fees as shall be determined by such court. Contingent or other percentage compensation arrangements shall not be considered reasonable attorneys' fees. 10.3 EXPENSES. Except as otherwise specifically provided in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel, - 70 - financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Non-License Transfer or the Closing shall have occurred, provided that the Company and Purchaser shall each be responsible and pay fifty percent (50%) of the HSR Act filing fee (unless this Agreement is terminated by Purchaser prior to the Diligence Termination Deadline whereupon the Company shall be responsible for the entire HSR Act filing fee) and the filing fees payable to the FCC in connection with the filing of the application for assignment of the FCC Licenses. 10.4 NOTICES. Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provisions of this Agreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the next Business Day after the date of mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, (iii) on the next Business Day after the date of delivery to a national overnight courier service, or (iv) upon transmission by facsimile (if such transmission is confirmed by the answerback of the facsimile machine of the addressee) if delivered through such services to the following addresses, or to such other address as any party may request by notifying in writing all of the other parties to this Agreement in accordance with this Section 10.4. If to Purchaser: STC Broadcasting, Inc. 3839 4th Street North Suite 420 St. Petersburg, Florida 33703 Attn: David Fitz Fax: (727) 821-8092 with copies to: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court Suite 1600 Dallas, Texas 75201 Attn: Lawrence D. Stuart, Jr., Esq. Fax: (214) 740-7355 - 71 - and Hogan & Hartson L.L.P. 8300 Greensboro Drive Suite 1100 McLean, Virginia 22102 Attn: Richard T. Horan, Jr., Esq. Fax: (703) 610-6200 If to Company: Sinclair Communications, Inc. 2000 West 41st Street Baltimore, Maryland 21211-1420 Attn: President Fax: (410) 467-5043 with copy to: Sinclair Communications, Inc. 2000 West 41st Street Baltimore, Maryland 21211-1420 Attn: General Counsel Fax: (410) 662-4707 and Thomas & Libowitz, P.A. 100 Light Street Suite 1100 Baltimore, Maryland 21202-1053 Attn: Steven A. Thomas, Esq. Fax: (410) 752-2046 Any such notice shall be deemed to have been received on the date of personal delivery, the date set forth on the Postal Service return receipt, or the date of delivery shown on the records of the overnight courier, as applicable. 10.5 BENEFIT AND ASSIGNMENT. (a) The Company shall not assign this Agreement, in whole or in part, whether by operation of law or otherwise, without the prior written consent of - 72 - Purchaser and any purported assignment contrary to the terms hereof shall be null, void and of no force and effect; provided, however, the Company shall be entitled, without the consent of Purchaser, to assign the Company's rights hereunder to any direct or indirect wholly-owned subsidiaries of the Company to which the Company shall have assigned the rights of the Company to the Assets of the Stations under the Gannett Purchase Agreement in accordance with the terms of the Gannett Purchase Agreement (each a "COMPANY PERMITTED ASSIGNEE"); provided, that the Company gives Purchaser written notice thereof and any such Company Permitted Assignee shall be responsible for all representations, covenants and agreements of the Company hereunder as if such Company Permitted Assignee was a party hereto, and any such assignment shall not relieve the Company of any of its Liabilities hereunder (including, without limitation, any obligation pursuant to Article 8 hereof). (b) Purchaser shall not assign this Agreement, in whole or in part, whether by operation of law or otherwise, without the prior written consent of the Company and any purported assignment contrary to the terms hereof shall be null, void and of no force and effect; provided, however, Purchaser shall be entitled, without the consent of the Company, to assign Purchaser's rights and interests hereunder (in whole or in part as to any Station) (i) prior to the Transfer Date, to any Affiliate of Purchaser (each a "PURCHASER PERMITTED ASSIGNEE"); provided, that Purchaser gives the Company written notice thereof and such Purchaser Permitted Assignee shall be responsible for all representations, covenants and agreements of Purchaser hereunder as if such assignee was a party hereto, and any such assignment shall not relieve Purchaser of any of its Liabilities hereunder (including, without limitation, any obligation pursuant to Article 8 hereof), and (ii) from and after the Transfer Date, to any Person. (c) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns as permitted hereunder. Except as set forth in Section 8.7, no Person, other than the parties hereto and their respective successors and assigns as permitted hereunder, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto. Except as set forth in Section 8.7, the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder. 10.6 WAIVER. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained - 73 - herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements or conditions of any other party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any such rights. 10.7 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. 10.8 AMENDMENT. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Company and Purchaser or (b) by a waiver in accordance with Section 10.6 hereof. 10.9 EFFECT AND CONSTRUCTION OF THIS AGREEMENT. This Agreement embodies the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, arrangements and understandings, whether written or oral, relating to matters provided for herein. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual agreement, and this Agreement shall not be deemed to have been prepared by any single party hereto. Disclosure of any fact or item in the Disclosure Schedule referenced by a particular paragraph or section in this Agreement shall, should the existence of the fact or item or its contents be relevant to any other paragraph or section, be deemed to be disclosed with respect to that other paragraph or section whether or not a specific cross reference appears, if the disclosure in respect of the one paragraph or section is reasonably sufficient to inform the reader of the information required to be disclosed in respect such other paragraph or section. - 74 - Disclosure of any fact or item in the Disclosure Schedule shall not necessarily mean that such item or fact, individually or in the aggregate, is material to the business, results of operations or financial condition of the Stations. Time shall be of the essence in enforcing and applying the covenants and conditions set forth in this Agreement. The headings of the sections and subsections of this Agreement are inserted as a matter of convenience and for reference purposes only and in no respect define, limit or describe the scope of this Agreement or the intent of any section or subsection. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflicts of law principles thereof (other than Section 5-1401 of the New York General Obligations Law). 10.10 TRANSFER AND CONVEYANCE TAXES. Purchaser and the Company shall each be liable for and shall pay one-half of all applicable sales, transfer, recording, deed, stamp and other similar non-income taxes, imposed in connection with transfers and conveyances of the Assets, including, without limitation, any real property transfer or gains taxes (if any), resulting from the consummation of the transactions contemplated by this Agreement. 10.11 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (a) waive, in any action for specific performance, the defense of adequacy of a remedy at law and (b) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in any state or federal court having jurisdiction thereover. 10.12 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The respective representations, warranties, covenants and agreements of the Company and Purchaser contained herein or in any certificate and any and all covenants and agreements herein or therein shall survive the Non-License Transfer Date or the Closing Date, as applicable, and shall remain in full force and effect to the following extent: (a) representations and warranties with respect to - 75 - the Non-License Assets shall survive for a period of twelve (12) months after the Non-License Transfer Date; (b) representations and warranties with respect to the License Assets shall survive for a period of twelve (12) months after the Closing Date; (c) the covenants and agreements with respect to the Non-License Assets which by their terms survive the Non-License Transfer Date shall continue in full force and effect until fully discharged; (d) the covenants and agreements with respect to the License Assets which by their terms survive the Closing Date shall continue in full force and effect until fully discharged; (e) the Company's obligations with respect to all obligations and liabilities not assumed by Purchaser shall survive until such obligations and liabilities have been paid, performed or discharged in full; (f) Purchaser's obligations with respect to all obligations and liabilities assumed by Purchaser hereunder shall survive until such obligations and liabilities have been paid, performed or discharged in full; (g) the covenants and agreements in Article 8 shall continue in full force and effect until fully discharged; and (h) any representation, warranty, covenant or agreement that is the subject of a claim which is asserted prior to the expiration of the survival period set forth in this Section 10.12, shall survive with respect to such claim or dispute until the final resolution thereof; provided, however, that unless Purchaser shall notify the Company of any Claim or Damages at least ten (10) days prior to the expiration of the survival period set forth in clause (a) or (b) above, the Company shall have no obligation to indemnify Purchaser under Section 8.1(a) with respect to such Claim or Damages. ARTICLE 11. NO PERSONAL LIABILITY FOR REPRESENTATIVES, STOCKHOLDERS, DIRECTORS OR OFFICERS. (a) Purchaser understands, acknowledges and agrees that the directors and officers and consultants of the Company and Gannett and the trustees under the Employee Benefit Plans have performed, or may perform, certain acts required or permitted under this Agreement on behalf of the Company or Gannett to facilitate the transactions among the parties to this Agreement contemplated herein. Notwithstanding anything to the contrary contained herein, no stockholder, director or officer of the Company or Gannett, any such consultant, or any such trustee (or any Affiliate of the foregoing) shall, under any circumstances, have, and the Purchaser hereby absolves all such Persons from, any personal liability to the Purchaser (and each of their Affiliates) for such acts to the extent deemed to be actions by or on behalf of the Company or Gannett. (b) The Company understands, acknowledges and agrees that the directors and officers and consultants of Purchaser have performed, or may perform, certain acts required or permitted under this Agreement on behalf of Purchaser to facilitate the transactions among the parties to this Agreement contemplated - 76 - herein. Notwithstanding anything to the contrary contained herein, no stockholder, director or officer of Purchaser or any such consultant (or any Affiliate of the foregoing) shall, under any circumstances, have, and the Company hereby absolves all such Persons from, any personal liability to the Company (and each of their Affiliates) for such acts to the extent deemed to be actions by or on behalf of Purchaser. [REST OF PAGE INTENTIONALLY LEFT BLANK] - 77 - IN WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement as of the day and year first above written. SINCLAIR COMMUNICATIONS, INC. By: /s/ David B. Amy --------------------------------- Name: David B. Amy ------------------------------- Title: Secretary ------------------------------ STC BROADCASTING, INC. By: /s/ David A. Fitz --------------------------------- Name: David A. Fitz ------------------------------- Title: Chief Financial Officer ------------------------------ PURCHASE AGREEMENT BY AND BETWEEN SINCLAIR COMMUNICATIONS, INC. AND STC BROADCASTING, INC. DATED AS OF MARCH 16, 1999 TABLE OF CONTENTS
Page ---- ARTICLE 1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES..............................................................1 1.1 Assets to Be Acquired................................................................................1 1.2 Excluded Assets......................................................................................4 1.3 Assumption of Liabilities............................................................................4 1.4 Non-License Transfer; Closing........................................................................5 1.5 Additional Closing Deliveries........................................................................7 1.6 Due Diligence, Delivery of Disclosure Schedule and Purchaser Termination Right......................10 ARTICLE 2. PURCHASE PRICE........................................................................................10 2.1 Escrow Deposit......................................................................................10 2.2 Purchase Price......................................................................................11 2.3 Payment of Purchase Price...........................................................................11 2.4 Post-Closing Adjustment.............................................................................12 2.5 Allocation of the Base Purchase Price...............................................................14 ARTICLE 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY................................................14 3.1 Organization and Standing...........................................................................14 3.2 Binding Agreement...................................................................................14 3.3 Absence of Conflicting Agreements or Required Consents..............................................15 3.4 Equity Investments..................................................................................15 3.5 Financial Statements................................................................................16 3.6 Title to Assets; Related Matters....................................................................16 3.7 Absence of Certain Changes, Events and Conditions...................................................17 3.8 Litigation..........................................................................................18 3.9 Insurance...........................................................................................19 3.10 Material Contracts.................................................................................19 3.11 Permits and Licenses; Compliance with Law..........................................................19 3.12 FCC Licenses.......................................................................................20 3.13 Environmental Matters..............................................................................21 3.14 Employee Benefit Matters...........................................................................21 3.15 Labor Relations....................................................................................23 3.16 Intellectual Property..............................................................................24 3.17 Taxes..............................................................................................24 3.18 Commissions........................................................................................25 3.19 Affiliate Transactions.............................................................................25 3.20 Gannett Purchase Agreement.........................................................................25 3.21 Accuracy and Completeness of Representations and Warranties........................................26 ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................26 4.1 Organization and Standing...........................................................................26
4.2 Binding Agreement...................................................................................26 4.3 Absence of Conflicting Agreements or Required Consents..............................................27 4.4 Litigation..........................................................................................27 4.5 Commissions.........................................................................................28 4.6 Financing...........................................................................................28 4.7 Purchaser's Qualification...........................................................................28 4.8 Accuracy and Completeness of Representations and Warranties.........................................28 ARTICLE 5. COVENANTS AND AGREEMENTS..............................................................................28 5.1 Conduct of the Business Prior to Closing; Access....................................................28 5.2 Post-Closing Covenants and Agreements, and Other Employee Benefit Matters...........................33 5.3 Cooperation.........................................................................................36 5.4 Confidentiality.....................................................................................39 5.5 Public Announcements................................................................................39 5.6 No Solicitation.....................................................................................39 5.7 Employees...........................................................................................39 5.8 No Additional Representations.......................................................................40 5.9 Certain Payments....................................................................................40 5.10 Bulk Sales Laws....................................................................................41 5.11 Control of the Stations............................................................................41 5.12 Use of Certain Names...............................................................................42 5.13 News Sharing Arrangements..........................................................................42 5.14 Rights Under the Gannett Purchase Agreement........................................................43 ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER................................................................44 6.1 Representations and Warranties......................................................................44 6.2 Performance by the Company..........................................................................45 6.3 Certificates........................................................................................45 6.4 Consents; No Objections.............................................................................45 6.5 No Proceedings or Litigation........................................................................46 6.6 FCC Consent.........................................................................................46 6.7 No Material Adverse Change..........................................................................46 6.8 Opinions of Counsel.................................................................................46 6.9 Certain Certified Matters...........................................................................46 6.10 Good Standing Certificate..........................................................................47 6.11 No Transmission Defects............................................................................47 6.12 Closing on the Gannett Purchase Agreement..........................................................47 6.13 Deliveries.........................................................................................47 ARTICLE 7. CONDITIONS TO OBLIGATIONS OF THE COMPANY..............................................................48 7.1 Representations and Warranties......................................................................48 7.2 Performance by Purchaser............................................................................48 7.3 Certificate.........................................................................................48 7.4 Consents; No Objections.............................................................................48 7.5 No Proceedings or Litigation........................................................................48
- ii -
7.6 FCC Consent.........................................................................................49 7.7 Certain Certified Matters...........................................................................49 7.8 Good Standing Certificate...........................................................................49 7.9. Closing on Gannett Purchase Agreement..............................................................49 7.10 Deliveries.........................................................................................50 ARTICLE 8. INDEMNIFICATION.......................................................................................50 8.1 Indemnification by the Company......................................................................50 8.2 Indemnification by Purchaser........................................................................50 8.3 Limitations on Indemnification Claims and Liability; Termination of Indemnification.................51 8.4 Computation of Claims and Damages...................................................................52 8.5 Notice of Claims....................................................................................53 8.6 Defense of Third Party Claims.......................................................................53 8.7 Third Party Beneficiaries...........................................................................54 ARTICLE 9. DEFINITIONS...........................................................................................54 ARTICLE 10. MISCELLANEOUS PROVISIONS.............................................................................68 10.1 Termination Rights.................................................................................68 10.2 Litigation Costs...................................................................................70 10.3 Expenses...........................................................................................70 10.4 Notices............................................................................................71 10.5 Benefit and Assignment.............................................................................72 10.6 Waiver.............................................................................................73 10.7 Severability.......................................................................................74 10.8 Amendment..........................................................................................74 10.9 Effect and Construction of this Agreement..........................................................74 10.10 Transfer and Conveyance Taxes.....................................................................75 10.11 Specific Performance..............................................................................75 10.12 Survival of Representations, Warranties and Covenants.............................................75 ARTICLE 11. NO PERSONAL LIABILITY FOR REPRESENTATIVES, STOCKHOLDERS, DIRECTORS OR OFFICERS.......................76
- iii - EXHIBITS Exhibit A Bill of Sale, Assignment and Assumption Agreement Exhibit B Assignment of FCC Licenses Exhibit C Time Brokerage Agreement Exhibit D Deposit Escrow Agreement Exhibit E FCC Opinion DISCLOSURE SCHEDULE Section 1.1(d) Real Property Section 1.2 Excluded Assets Section 1.4 License Assets Section 2.5 Allocation of Base Purchase Price Section 3.3. Absence of Conflicting Agreements or Required Consents Section 3.5. Financial Statements Section 3.6. Title to Assets; Related Matters Section 3.7. Absence of Certain Changes, Events and Conditions Section 3.8. Litigation Section 3.9. Insurance Section 3.10. Material Contracts Section 3.11 Permits Section 3.12 FCC Licenses Section 3.13 Environmental Matters Section 3.14 Employee Benefits Section 3.14.1 Non-Corporate Employees (other than division heads) Section 3.14.2 Severance and Retention Agreements - Division Heads Section 3.15 Labor Relations Section 3.16 Intellectual Property Section 3.17 Taxes Section 3.19 Affiliate Transactions Section 4.4 Purchaser Litigation Section 4.7 Purchaser's Qualification Section 5.1 Conduct of Business Prior to Closing Section 5.2 Post-Closing Covenants and Agreements Section 5.13 News Share Arrangements Section 6.4 Material Consents Required as a Condition of the Purchaser's Obligation to Close Section 7.4 Material Consents Required as a Condition of the Company's Obligation to Close Section 9 Closing Statement Differences EX-10.7 8 EXHIBIT 10.7 AMENDED AND RESTATED ASSET PURCHASE AGREEMENT DATED AUGUST 20, 1999 AMONG SINCLAIR COMMUNICATIONS, INC. WCGV, INC. SINCLAIR RADIO OF MILWAUKEE LICENSEE, LLC SINCLAIR RADIO OF NEW ORLEANS, LLC SINCLAIR RADIO OF NEW ORLEANS LICENSEE, LLC SINCLAIR RADIO OF MEMPHIS, INC. SINCLAIR RADIO OF MEMPHIS LICENSEE, INC. SINCLAIR PROPERTIES, LLC SINCLAIR RADIO OF NORFOLK/GREENSBORO LICENSEE L.P. SINCLAIR RADIO OF NORFOLK LICENSEE, LLC SINCLAIR RADIO OF BUFFALO, INC. SINCLAIR RADIO OF BUFFALO LICENSEE, LLC WLFL, INC. SINCLAIR RADIO OF GREENVILLE LICENSEE, INC. SINCLAIR RADIO OF WILKES-BARRE, INC. SINCLAIR RADIO OF WILKES-BARRE LICENSEE, LLC. as SELLERS, AND ENTERCOM COMMUNICATIONS CORP. as BUYER TABLE OF CONTENTS
1. CERTAIN DEFINITIONS............................................................................................3 1.1 Terms Defined in this Section...........................................................................3 1.2 Terms Defined Elsewhere in this Agreement...............................................................9 Greenville Stations....................................................................................10 2. EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE..................................................................11 2.1 Agreement to Exchange and Transfer.....................................................................11 2.2 Excluded Assets........................................................................................12 2.3 Purchase Price.........................................................................................14 Purchase Price Increase................................................................................14 Prorations.............................................................................................14 Manner of Determining Adjustments......................................................................16 2.4 Payment of Purchase Price..............................................................................16 Payment of Estimated Purchase Price At Closing.........................................................17 Payments to Reflect Adjustments........................................................................17 2.5 Assumption of Liabilities and Obligations..............................................................17 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................................................18 3.1 Organization and Authority of Sellers..................................................................18 3.2 Authorization and Binding Obligation...................................................................18 3.3 Absence of Conflicting Agreements; Consents............................................................18 3.4 Governmental Licenses..................................................................................19 3.5 Real Property..........................................................................................19 3.6 Tangible Personal Property.............................................................................20 3.7 Contracts..............................................................................................21 3.8 Intangibles............................................................................................21 3.9 Title to Properties....................................................................................21 3.10 Financial Statements...................................................................................22 3.11 Taxes..................................................................................................22 3.12 Insurance..............................................................................................22 3.13 Reports................................................................................................22 3.14 Personnel and Employee Benefits........................................................................22 Employees and Compensation.............................................................................22 Pension Plans..........................................................................................23 Welfare Plans..........................................................................................23 Benefit Arrangements...................................................................................24 Multiemployer Plans....................................................................................24 Delivery of Copies of Relevant Documents and Other Information.........................................24 Labor Relations........................................................................................24 3.15 Claims and Legal Actions...............................................................................24 3.16 Environmental Compliance...............................................................................25 3.17 Compliance with Laws...................................................................................25 3.18 Conduct of Business in Ordinary Course.................................................................25 3.19 Transactions with Affiliates...........................................................................26 3.20 Broker.................................................................................................26 3.21 Insolvency Proceedings.................................................................................26 3.22 Year 2000 Compatibility................................................................................26 4. REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................26 4.1 Organization, Standing and Authority...................................................................26 4.2 Authorization and Binding Obligation...................................................................27 4.3 Absence of Conflicting Agreements and Required Consents................................................27 4.4 Brokers................................................................................................27 4.5 Availability of Funds..................................................................................27 4.6 Qualifications of Buyer................................................................................27
i 4.7 WARN Act...............................................................................................28 4.8 Buyer's Defined Contribution Plan......................................................................28 5. OPERATION OF THE STATIONS PRIOR TO CLOSING....................................................................28 5.1 Contracts..............................................................................................28 5.2 Compensation...........................................................................................28 5.3 Encumbrances...........................................................................................29 5.4 Dispositions...........................................................................................29 5.5 Access to Information..................................................................................29 5.6 Insurance..............................................................................................29 5.7 Licenses...............................................................................................29 5.8 Obligations............................................................................................29 5.9 No Inconsistent Action.................................................................................29 5.10 Maintenance of Assets..................................................................................29 5.11 Consents...............................................................................................30 5.12 Books and Records......................................................................................30 5.13 Notification...........................................................................................30 5.14 Financial Information..................................................................................31 5.15 Compliance with Laws...................................................................................31 5.16 Programming............................................................................................31 5.17 Preservation of Business...............................................................................31 5.18 Normal Operations......................................................................................31 5.19 Buffalo Build-Out Property.............................................................................31 6. SPECIAL COVENANTS AND AGREEMENTS..............................................................................31 6.1 FCC Consent............................................................................................31 6.2 Hart-Scott-Rodino......................................................................................32 6.3 Risk of Loss...........................................................................................32 6.4 Confidentiality........................................................................................32 6.5 Cooperation............................................................................................32 6.6 Control of the Stations................................................................................33 6.7 Accounts Receivable....................................................................................33 6.8 Allocation of Purchase Price...........................................................................34 6.9 Access to Books and Records............................................................................34 6.10 Employee Matters.......................................................................................35 Certain Payments.......................................................................................36 6.11 Lease..................................................................................................37 6.12 Public Announcements...................................................................................37 6.13 Disclosure Schedules...................................................................................37 6.14 Bulk Sales Law.........................................................................................38 6.15 Environmental Site Assessment..........................................................................38 6.16 Purchase of Advertising Time...........................................................................39 6.17 Adverse Developments...................................................................................39 6.18 Title Insurance........................................................................................39 6.19 Surveys................................................................................................39 6.20 Pending Transactions...................................................................................39 6.21 Assignment of Contracts for Pending Transactions.......................................................39 6.22 Cooperation on Tax Matters...................................................ERROR! BOOKMARK NOT DEFINED. 6.23 Reference to Original Agreement........................................................................40 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.................................................................40 7.1 Conditions to Obligations of Buyer.....................................................................40 Representations and Warranties.........................................................................40 Covenants and Conditions...............................................................................40 FCC Consent............................................................................................40 Hart-Scott-Rodino......................................................................................41 Governmental Authorizations............................................................................41 Consents...............................................................................................41 Lease..................................................................................................41
ii Deliveries.............................................................................................41 Satisfactory Environmental Assessment..................................................................41 7.2 Conditions to Obligations of Sellers...................................................................41 Representations and Warranties.........................................................................41 Covenants and Conditions...............................................................................41 FCC Consent............................................................................................42 Hart-Scott-Rodino......................................................................................42 Deliveries.............................................................................................42 8. CLOSING AND CLOSING DELIVERIES................................................................................42 8.1 Closing................................................................................................42 Closing Date...........................................................................................42 Closing Place..........................................................................................43 8.2 Deliveries by Sellers..................................................................................43 Conveyancing Documents.................................................................................43 Officer's Certificate..................................................................................43 Secretary's Certificate................................................................................44 Consents...............................................................................................44 Good Standing Certificates.............................................................................44 Opinions of Counsel....................................................................................44 Lease..................................................................................................44 Other Documents........................................................................................44 8.3 Deliveries by Buyer....................................................................................44 Closing Payment........................................................................................44 Officer's Certificate..................................................................................44 Secretary's Certificate................................................................................45 Assumption Agreements..................................................................................45 Good Standing Certificates.............................................................................45 Oinion of Counsel......................................................................................45 Lease..................................................................................................45 Other Documents........................................................................................45 9. TERMINATION..................................................................................................45 9.1 Termination by Mutual Consent..........................................................................45 9.2 Termination by Seller..................................................................................45 9.3 Termination by Buyer...................................................................................46 9.4 Rights on Termination..................................................................................47 9.5 Liquidated Damages Not a Penalty.......................................................................47 9.6 Specific Performance...................................................................................47 9.7 Attorneys' Fees........................................................................................47 9.8 Survival...............................................................................................47 9.9 Limitations of Termination.............................................................................47 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES.............................................................................................48 10.1 Survival of Representations............................................................................48 10.2 Indemnification by Seller..............................................................................48 10.3 Indemnification by Buyer...............................................................................49 10.4 Procedure for Indemnification..........................................................................49 10.5 Certain Limitations....................................................................................50 11. MISCELLANEOUS...............................................................................................51 11.1 Fees and Expenses......................................................................................51 11.2 Notices................................................................................................52 11.3 Benefit and Binding Effect.............................................................................53 11.4 Further Assurances.....................................................................................53 11.4 GOVERNING LAW..........................................................................................53 11.6 Entire Agreement.......................................................................................54 11.7 Waiver of Compliance; Consents.........................................................................54 11.8 Headings...............................................................................................54 11.9 Counterparts...........................................................................................54
iii AMENDED AND RESTATED ASSET PURCHASE AGREEMENT THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this "Agreement") is entered into on August 20, 1999, but is effective as of August 18, 1999, by and among Sinclair Communications, Inc., a Maryland corporation ("SCI"), WCGV, Inc., a Maryland corporation ("WCGV"), Sinclair Radio of Milwaukee Licensee, LLC, a Maryland limited liability company ("MILWAUKEE LICENSEE"), Sinclair Radio of New Orleans, LLC, a Maryland limited liability company ("SINCLAIR NEW ORLEANS"), Sinclair Radio of New Orleans Licensee, LLC, a Maryland limited liability company ("NEW ORLEANS LICENSEE"), Sinclair Radio of Memphis, Inc., a Maryland corporation ("SINCLAIR MEMPHIS"), Sinclair Radio of Memphis Licensee, Inc., a Delaware corporation ("MEMPHIS LICENSEE"), Sinclair Properties, LLC, a Virginia limited liability company ("PROPERTIES"), Sinclair Radio of Norfolk/Greensboro Licensee L.P., a Virginia limited partnership ("NORFOLK/GREENSBORO LICENSEE"), Sinclair Radio of Norfolk Licensee, LLC, a Maryland limited liability company ("NORFOLK LICENSEE"), Sinclair Radio of Buffalo, Inc., a Maryland corporation ("SINCLAIR BUFFALO"), Sinclair Radio of Buffalo Licensee, LLC, a Maryland limited liability company ("BUFFALO LICENSEE"), WLFL, Inc., a Maryland corporation ("WLFL"), Sinclair Radio of Greenville Licensee, Inc., a Delaware corporation ("GREENVILLE LICENSEE"), Sinclair Radio of Wilkes-Barre, Inc., a Maryland corporation ("SINCLAIR WILKES-BARRE"), and Sinclair Radio of Wilkes-Barre Licensee, LLC, a Maryland limited liability company ("WILKES-BARRE LICENSEE") (each a "SELLER" and collectively, "SELLERS"), and Entercom Communications Corp., a Pennsylvania corporation ("BUYER"). This Agreement amends and restates in its entirety the Asset Purchase Agreement dated as of August 18, 1999 by and between Sellers, the Kansas City Sellers and Buyer (the "Original Purchase Agreement"). All references herein to "date hereof" and "date of this Agreement" shall mean August 18, 1999, and all representations and warranties made herein shall be deemed to have been made as of August 18, 1999. The Exhibits and Schedules attached to the Original Purchase Agreement are hereby superceded by the Exhibits and Schedules attached hereto. R E C I T A L S: WHEREAS, Properties operates radio broadcast stations WPTE-FM, Virginia Beach, VA; WWDE-FM, Hampton, VA; and WNVZ-FM, Norfolk, VA (collectively, the "NORFOLK STATIONS") WVKL-FM, Norfolk VA ("WVKL") and WMQX-FM, Winston-Salem, NC; WQMG-FM, Greensboro, NC; WJMH-FM, Reidsville, NC; and WEAL-AM, Greensboro, NC (collectively, the "GREENSBORO STATIONS") and owns or leases certain assets used in connection with the Norfolk Stations, WVKL and the Greensboro Stations; 1 WHEREAS, WCGV operates radio broadcast stations WEMP-AM, Milwaukee, WI; WMYX-FM, Milwaukee, WI; and WXSS-FM, Wauwatosa, WI (collectively, the "MILWAUKEE STATIONS") and owns or leases certain assets used in connection with the Milwaukee Stations; WHEREAS, Milwaukee Licensee is the licensee of each of the Milwaukee Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Sinclair New Orleans operates radio broadcast stations WLMG-FM, New Orleans, LA; WWL-AM, New Orleans, LA; WSMB-AM, New Orleans, LA; and WEZB-FM, New Orleans, LA (collectively, the "NEW ORLEANS STATIONS") and owns or leases certain assets used in connection with the New Orleans Stations; WHEREAS, New Orleans Licensee is the licensee of each of the New Orleans Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Sinclair New Orleans operates radio broadcast stations WLTS-FM, Kenner, LA; and WTKL-FM, New Orleans, LA (collectively, the "PHASE II STATIONS"), pursuant to a time brokerage agreement (the "PHASE II TBA") with Phase II Broadcasting, Inc. ("PHASE II") and has entered into an agreement (the "PHASE II PURCHASE AGREEMENT") with Phase II to acquire substantially all the assets of the Phase II Stations from Phase II; WHEREAS, Sinclair Memphis operates radio broadcast stations WRVR-FM, Memphis, TN; WJCE-AM, Memphis, TN and WOGY-FM, Germantown, TN (collectively, the "MEMPHIS Stations") and owns or leases certain assets used in connection with the Memphis Stations; WHEREAS, Memphis Licensee is the licensee of each of the Memphis Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Norfolk/Greensboro Licensee is the licensee of each of the Norfolk Stations and each of the Greensboro Stations pursuant to certain authorizations issued by the FCC; WHEREAS, Norfolk Licensee is the licensee of WVKL pursuant to certain authorizations issued by the FCC; WHEREAS, Sinclair Buffalo operates radio broadcast stations WMJQ-FM, Buffalo, NY, WKSE-FM, Niagara Falls, NY; WBEN-AM, Buffalo, NY; WWKB-AM, Buffalo, NY; WGR-AM, Buffalo, NY: and WWWS-AM, Buffalo, NY (collectively, the "BUFFALO STATIONS") and owns or leases certain assets used in connection with the Buffalo Stations; WHEREAS, Buffalo Licensee is the licensee of each of the Buffalo Stations pursuant to certain authorizations issued by the FCC; WHEREAS, WLFL operates radio broadcast stations WFBC-FM, Greenville, SC and WSPA-FM, Spartanburg, SC; WYRD-AM, Greenville, SC; WORD-AM, Spartanburg, SC; and WSPA-AM, Spartanburg, SC (collectively, the "GREENVILLE STATIONS") and owns or leases certain assets used in connection with the Greenville Stations; 2 WHEREAS, Greenville Licensee is the licensee of each of the Greenville Stations pursuant to certain authorizations issued by the FCC; WHEREAS, WLFL provides sales services to radio broadcast stations WOLI-FM, Easely, SC and WOLT-FM, Greer, SC (the "PALM STATIONS"), pursuant to joint sales agreement with Palm Broadcasting, Inc. (the "PALM JSA") and has exercised an option to purchase the Palm Stations pursuant to an option agreement with Palm Broadcasting, Inc. (the "PALM OPTION AGREEMENT"); WHEREAS, Sinclair Wilkes-Barre, operates radio broadcast stations WGGI-FM, Benton, PA; WKRZ-FM, Wilkes-Barre, PA; WGGY-FM, Scranton, PA; WILK-AM, Wilkes-Barre, PA: WGBI-AM, Scranton, PA; WSHG-FM, Pittston, PA; WILP-AM, West Hazelton, PA; WWFH-FM, Freeland, PA; and WKRF-FM, Tobyhanna, PA (collectively, the "WILKES-BARRE STATIONS") and owns or leases certain assets used in connection with the Wilkes-Barre Stations; WHEREAS, Wilkes-Barre Licensee is the licensee of each of the Wilkes-Barre Stations pursuant to certain authorizations issued by the FCC; WHEREAS, the parties hereto desire to enter into this Agreement to provide for the sale, assignment and transfer by Sellers to Buyer of certain of the assets owned, leased or used by Sellers in connection with the business and operations of the Palm Stations and the Phase II Stations (collectively, the "Non-Owned Stations") and the Milwaukee Stations, the New Orleans Stations, the Memphis Stations, the Norfolk Stations, WVKL, the Greensboro Stations, the Buffalo Stations, the Greenville Stations, and the Wilkes-Barre Stations (each [including the Non-Owned Stations) a "STATION" and collectively, the "STATIONS"); A G R E E M E N T S: In consideration of the above recitals and of the mutual agreements and covenants contained in this Agreement, the parties to this Agreement, intending to be bound legally, agree as follows: SECTION 1: CERTAIN DEFINITIONS 1.1 Terms Defined in this Section. The following terms, as used in this Agreement, have the meanings set forth in this Section: "ACCOUNTS RECEIVABLE" means the rights of Sellers as of any Closing Date to payment in cash for the sale of advertising time and other goods and services by the Stations prior to any Closing Date. "AFFILIATE" means, with respect to any Person, (a) any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, or (b) an officer or director of such Person or of an Affiliate of such Person within the meaning of clause (a) of this 3 definition. For purposes of clause (a) of this definition, (i) a Person shall be deemed to control another Person if such Person (A) has sufficient power to enable such Person to elect a majority of the board of directors of such Person, or (B) owns a majority of the beneficial interests in income and capital of such Person; and (ii) a Person shall be deemed to control any partnership of which such Person is a general partner. "ALLOCABLE ESCROW DEPOSIT" means that portion of the Escrow Deposit equaling $42,601,575.00. "ASSETS" means the assets to be transferred or otherwise conveyed by Sellers to Buyer under this Agreement, as specified in Section 2.1. "ASSUMED CONTRACTS" means (a) all Contracts set forth on Schedule 3.7, (b) Contracts entered into prior to the date of this Agreement with advertisers for the sale of advertising time or production services for cash at rates consistent with past practices, (c) Contracts entered into by any Seller prior to the date of this Agreement which are not required to be included on Schedule 3.7 hereto, (d) any Contracts entered into by Sellers between the date of this Agreement and the Closing Date that Buyer agrees in writing to assume, and (e) other contracts entered into by Sellers between the date of this Agreement and the Closing Date in compliance with Section 5. "BUFFALO BUILD-OUT PROPERTY" shall have the meaning set forth in Section 2.3(b)(iv). "CLOSING" means the consummation of the exchange and acquisition of the Assets pursuant to this Agreement on either one or more Closing Date in accordance with the provisions of Section 8.1. "CLOSING DATE" means the date on which a Closing occurs, as determined pursuant to Section 8.1. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMUNICATIONS ACT" means the Communications Act of 1934, as amended. "CONSENTS" means the consents, permits, or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transactions contemplated by this Agreement. "CONTAMINANT" shall mean and include any pollutant, contaminant, hazardous material (as defined in any of the Environmental Laws), toxic substances (as defined in any of the Environmental Laws), asbestos or asbestos containing material, urea formaldehyde, polychlorinated biphenyls, regulated substances and wastes, radioactive materials, and petroleum or petroleum by-products, including crude oil or any fraction thereof, except the term "Contaminant" shall not include small quantities of maintenance, cleaning and emergency generator fuel supplies customary for the operation of radio stations and maintained in compliance with all Environmental Laws in the ordinary course of business. 4 "CONTRACTS" means all contracts, consulting agreements, leases, non-governmental licenses and other agreements (including leases for personal or real property and employment agreements), written or oral (including any amendments and other modifications thereto) to which Sinclair, SCI, or any Seller is a party or that are binding upon any Seller, that relate to or affect the Assets or the business or operations of the Stations, and that either (a) are in effect on the date of this Agreement, including (without limitation) the Phase II TBA, the Phase II Purchase Agreement, the Palm JSA, the Palm Option Agreement, and those listed on Schedule 3.7 hereto, or (b) are entered into by any Seller between the date of this Agreement and the Closing Date. "DELAY AMOUNT" shall equal 0.75% of the amount which is the Initial Purchase Price, less any portion of the Initial Purchase Price which has been received by Sellers pursuant to any Closings which have occurred prior to the time such payment is due. "DEPOSIT RELEASE DATE" is the date on which a Closing has occurred for Radio Groups for which more than forty-five percent (45%) of the Initial Purchase Price has been paid to Sellers. "EFFECTIVE TIME" means 12:01 a.m., Eastern time, on each Closing Date and the Closing Date for the Kansas City Stations. "ENVIRONMENTAL LAWS" shall mean and include, but not be limited to, any applicable federal, state or local law, statute, charter, ordinance, rule or regulation or any governmental agency interpretation, policy or guidance, including without limitation applicable safety/environmental/health laws such as but not limited to the Resource Conservation and Recovery Act of 1976, Comprehensive Environmental Response Compensation and Liability Act, Federal Emergency Planning and Community Right-to-Know Law, the Clean Air Act, the Clean Water Act, and the Toxic Substance Control Act, as any of the foregoing have been amended, and any permit, order, directive, court ruling or order or consent decree applicable to or affecting the Property or any other property (real or personal) used by or relating to the Station in question promulgated or issued pursuant to any Environmental Laws which pertains to, governs, or controls the generation, storage, remediation or removal of Contaminants or otherwise regulates the protection of health and the environment including, but not limited to, any of the following activities, whether on site or off site if such could materially affect the site: (i) the emission, discharge, release, spilling or dumping of any Contaminant into the air, surface water, ground water, soil or substrata; or (ii) the use, generation, processing, sale, recycling, treatment, handling, storage, disposal, transportation, labeling or any other management of any Contaminant. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ESCROW DEPOSIT" means the sum of Fifty Million Dollars ($50,000,000.00) or, at Buyer's option, a letter of credit in favor of Sellers in the face amount of Fifty Million Dollars ($50,000,000.00), which was deposited by Buyer with First Union National Bank (the "ESCROW AGENT") on August 18, 1999 to secure the obligations of Buyer to close under this Agreement and the Kansas City Agreement, with (i) such deposit being held by the Escrow Agent in 5 accordance with the Escrow Agreement executed among Buyer, Sellers and Escrow Agent on August 18, 1999, and (ii) the Escrow Deposit, and all earnings thereon, being returned to Buyer upon the consummation of this Agreement and the Kansas City Agreement or as otherwise provided herein. "EXCESS AMOUNT" has the meaning set forth in Section 10.5. "EXCLUDED REAL PROPERTY INTERESTS" means all interests in Real Property listed on Schedule 2.2 hereto. "EXCLUDED TANGIBLE PERSONAL PROPERTY" means all tangible personal property owned or held by Sellers that is located at the Excluded Real Property other than such tangible personal property listed on Schedule 3.6 hereto, any assets used primarily in the operation of any television broadcast station owned, operated or programmed by Sellers or any Affiliate of Sellers, any assets used primarily in the operation of any radio broadcast station owned, operated or programmed by Sellers, but not included as a "Station" hereunder, and any tangible personal property located at Suite 220, Meadow Mill at Woodberry, 3600 Clipper Mill Road, Baltimore, Maryland 21211. "FCC" means the Federal Communications Commission. "FCC CONSENT" means action by the FCC granting its consent to the transfer of the FCC Licenses by Sellers to Buyer as contemplated by this Agreement. "FCC LICENSES" means those licenses, permits and authorizations issued by the FCC to Sellers in connection with the business and operations of the Stations. "FINAL CLOSING DATE" means the date on which all of the Assets for all of the Stations have been exchanged and acquired in accordance with Section 8.1. "FINAL ORDER" shall mean an action by the Commission upon any application for FCC Consent filed by the parties hereto for FCC consent, approval or authorization, which action has not been reversed, stayed, enjoined, set aside, annulled or suspended, and with respect to which action, no protest, petition to deny, petition for rehearing or reconsideration, appeal or request for stay is pending, and as to which action the time for filing of any such protest, petition, appeal or request and any period during which the Commission may reconsider or review such action on its own authority has expired. "HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended, and all Laws promulgated pursuant thereto or in connection therewith. "INTANGIBLES" means all copyrights, trademarks, trade names, service marks, service names, licenses, patents, permits, jingles, proprietary information, technical information and data, machinery and equipment warranties, and other similar intangible property rights and interests (and any goodwill associated with any of the foregoing) applied for, issued to, or owned by Sellers or under which Sellers are licensed or franchised and that are used in the business and 6 operations of the Stations, together with any additions thereto between the date of this Agreement and the Closing Date. "KANSAS CITY AGREEMENT" means that certain Asset Purchase Agreement dated as of the date hereof (but effective August 18, 1999) by and between the Kansas City Sellers and Buyer pursuant to which the Kansas City Sellers have agreed to sell, and Buyer has agreed to purchase, the Kansas City Stations. "KANSAS CITY SELLERS" means Sinclair Media III, Inc. and Sinclair Radio of Kansas City Licensee, LLC. "KANSAS CITY STATIONS" means KCFX-FM, Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM, Kansas City, MO. "KNOWLEDGE" or any derivative thereof with respect to the Sellers means, exclusively, the actual Knowledge of the President and Chief Executive Officer or the Chief Financial Officer of Sinclair Broadcast Group, Inc. ("SINCLAIR"), the general managers of the Stations, and any other employee of Sinclair or SCI designated as a "vice president" or any officer of any of the Sellers. "LEASED REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto leased or held by Sellers and used in the business or operation of the Stations. "LICENSES" means all licenses, permits, construction permits and other authorizations issued by the FCC, the Federal Aviation Administration, or any other federal, state, or local governmental authorities to Sellers, currently in effect and used in connection with the conduct of the business or operations of the Stations (other than the Non-Owned Stations), together with any additions thereto between the date of this Agreement and the Closing Date. "MATERIAL ADVERSE EFFECT" means 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. "MATERIAL CONTRACT" means those Assumed Contracts that are designated on Schedules 3.5 and 3.7 as "Material Contracts." "OWNED REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto owned by Sellers and used in the business or operations of the Stations. "PALM AMOUNT" shall equal either (a) $0 if the acquisition of the Palm Stations by WLFL shall have occurred prior to Closing applicable to the Palm Stations, or (b) the purchase 7 price which Buyer would be required to pay to acquire the Palm Stations, including, after taking into account the application of any deposit made pursuant to the acquisition agreement without regard to prorations or similar adjustments. "PENDING TRANSACTION AMOUNT" means the sum of the Phase II Amount and the Palm Amount. "PERMITTED ENCUMBRANCES" means (a) encumbrances of a landlord, or other statutory lien not yet due and payable, or a landlord's liens arising in the ordinary course of business, (b) encumbrances arising in connection with equipment or maintenance financing or leasing under the terms of the Contracts set forth on the Schedules, which Contracts have been made available to Buyer, (c) encumbrances for Taxes not yet delinquent or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on Sellers' books in accordance with generally accepted accounting principles, or (d) encumbrances that do not materially detract from the value of any of the Assets or materially interfere with the use thereof as currently used. "PERSON" means an individual, corporation, association, partnership, joint venture, trust, estate, limited liability company, limited liability partnership, or other entity or organization. "PHASE II AMOUNT" shall equal either (a) $0 if the acquisition of the Phase II Stations by Sinclair Radio of New Orleans, Inc. shall have occurred prior to Closing applicable to the Phase II Stations, or (b) the purchase price which Buyer would be required to pay to acquire the Phase II Stations, including, after taking into account the application of any deposit made pursuant to the acquisition agreement, without regard to prorations or similar adjustments. "RADIO GROUP" means the Stations located in the same Designated Market Area as determined by the Arbitron Company. "RADIO GROUP FCC CONSENT" means receipt of initial grant of the FCC Consents as to each of the Stations in any Radio Group. "RADIO GROUP MATERIAL ADVERSE EFFECT" means a material adverse effect on the business, assets, or financial condition of a Radio Group 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 comprising the Radio Group operate, or (c) circumstances that are not likely to recur and have either been substantially remedied or can be substantially remedied without substantial cost or delay. "REAL PROPERTY" means all real property and all buildings and other improvements thereon and appurtenant thereto, whether or not owned, leased or held by Sellers used in the business or operations of the Stations. "REAL PROPERTY INTERESTS" means all interests in Owned Real Property and Leased Real Property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access, and rights of way, and all buildings and other improvements thereon 8 and appurtenant thereto, owned or held by Sellers that are used in the business or operations of the Stations, together with any additions, substitutions and replacements thereof and thereto between the date of this Agreement and the Closing Date, but excluding the Excluded Real Property Interests. "TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, inventory, spare parts and other tangible personal property owned or held by Sellers that is used or useful in the conduct of the business or operations of the Stations, together with any additions, substitutions and replacements thereof and thereto between the date of this Agreement and the Closing Date, but excluding the Excluded Tangible Personal Property. "TAX" means any federal, state, local, or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, capital, transfer, employment, withholding, or other tax or similar governmental assessment, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties. "TAX RETURN" means any tax return, declaration of estimated tax, tax report or other tax statement, or any other similar filing required to be submitted to any governmental authority with respect to any Tax. "THRESHOLD AMOUNT" has the meaning set forth in Section 10.5. "UNEXPENDED REMEDIATION AMOUNT" shall mean Three Million Dollars ($3,000,000.00) as aggregated with the Unexpended Remediation Amount under the Kansas City Agreement, minus any amounts previously expended by Sellers to remediate any of the Real Property pursuant to Section 6.16. "USA DIGITAL SHARES" means the 300,000 shares of common stock of USA Digital Radio, Inc. of which Sellers are the record owner. 1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have the meanings set forth in the sections indicated:
Term Section - ---- ------- Balance Sheet Date Section 3.10 Benefit Arrangement Section 3.14 (a)(v) Benefit Plans Section Section 3.14(a)(ii) Buffalo Stations Recitals Buyer Preamble Buyer's Plan Section 4.8 Claimant Section 10.4
9 Collection Period Section 6.7(a) Confidentiality Agreement Section 6.4 Deferred Contract Section 5.11(b) Designee Section 11.3(b) Employees Section 3.14(a) Environmental Laws Section 3.16 Estimated Purchase Price Section 2.4(a) Excluded Real Property Interests Section 1.1 Excluded Tangible Personal Property Section 1.1 FCC Objection Section 7.1(c) FTC Section 4.6 Financial Statements Section 3.10 Greensboro Stations Recitals Greenville Stations Recitals Hart-Scott-Rodino Filing Section 6.2 Indemnity Cap Section 10.5 Indemnifying Party Section 10.4 Initial Employee Cap Section 6.10(g) Initial Purchase Price Section 2.3 Lease Section 6.12 Memphis Stations Recitals Milwaukee Stations Recitals Multiemployer Plan Section 3.14(a)(ii) New Orleans Stations Recitals Non-Owned Stations Recitals Operational Equipment Section 3.22 Original Agreement Recitals Norfolk Stations Recitals Palm Amount Section 1.1 Palm JSA Recitals Palm Option Agreement Recitals Palm Stations Recitals
10 Pension Plan Section 3.14(a)(iii) Phase II Recitals Phase II Amount Section 1.1 Phase II Purchase Agreement Recitals Phase II Stations Recitals Phase II TBA Recitals Purchase Price Section 2.3 Radio Group Section 1.1 Reimbursement Period Section 6.10(g) Represented Employees Section 6.10(e) Scheduled Employees Section 6.10(g) Scheduled Retention Agreements Section 6.10(g) SCI Preamble Section 6.9 Amount Section 6.19 Seller Preamble Seller Entities Section 6.10(i) Sellers' Employees Section 6.10(i) Sinclair Section 1.1 Stations Recitals Stations Delay Amount Section 2.3(a)(i) Stations Delay Amount Date Section 2.3(a)(i) Transferred Employees Section 6.10 WVKL Recitals Welfare Plan Section 3.14(a)(i) Wilkes-Barre Stations Recitals
SECTION 2: EXCHANGE AND TRANSFER OF ASSETS; ASSET VALUE 2.1 Agreement to Exchange and Transfer. Subject to the terms and conditions set forth in this Agreement with respect to the Stations or any Radio Group, Sellers hereby agree to transfer, convey, assign and deliver to Buyer on one or more Closing Dates as applicable, and Buyer agrees to acquire, all of Sellers' right, title and interest in the tangible and intangible assets used in connection with the conduct of the business or operations of the Stations or any Radio Group, as the case may be, together with any additions thereto between the date of this Agreement and the applicable Closing Date, but excluding the assets described in Section 2.2, free and clear of any claims, liabilities, security interests, mortgages, liens, pledges, charges, or 11 encumbrances of any nature whatsoever (except for Permitted Encumbrances), including the following: (a) The Tangible Personal Property; (b) The Real Property Interests; (c) The Licenses; (d) The Assumed Contracts; (e) The Intangibles, including the goodwill of the Stations, if any; (f) The USA Digital Shares. (g) All of Sellers' proprietary information, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints and schematics, including filings with the FCC, in each case to the extent relating to the business and operation of the Stations; (h) All choses in action of Sellers relating to the Stations to the extent they relate to the period after the Effective Time; and (i) All books and records relating to the business or operations of the Stations, including executed copies of the Assumed Contracts, and all records required by the FCC to be kept by the Stations. 2.2 Excluded Assets. The Assets shall exclude the following: (a) Sellers' cash, cash equivalents and deposits, all interest payable in connection with any such items and rights in and to bank accounts, marketable and other securities and similar investments of Sellers; (b) Any insurance policies, promissory notes, amounts due to Sellers from employees, bonds, letters of credit, certificates of deposit, or other similar items, and any cash surrender value in regard thereto; provided, that in the event Seller is obligated to assign to Buyer the proceeds of any such insurance policy at the time a Closing occurs under Section 6.3, such proceeds shall be included in the Assets; (c) Any pension, profit-sharing, or employee benefit plans, including all of Sellers' interest in any Welfare Plan, Pension Plan or Benefit Arrangement (each as defined in Section 3.14(a); (d) All Tangible Personal Property disposed of or consumed in the ordinary course of business as permitted by this Agreement; 12 (e) All Tax Returns and supporting materials, all original financial statements and supporting materials, all books and records that Sellers are required by law to retain, all of Sellers' organizational documents, corporate books and records (including minute books and stock ledgers) and originals of account books of original entry, all records of Sellers relating to the sale of the Assets and all records and documents related to any assets excluded pursuant to this Section 2.2; (f) Any interest in and to any refunds of federal, state, or local franchise, income, or other taxes for periods (or portions thereof) ending on or prior to the Closing Date; (g) All Accounts Receivable; (h) All rights and claims of Sellers whether mature, contingent or otherwise, against third parties relating to the Assets of the Stations, whether in tort, contract or otherwise, other than rights and claims against third parties relating to the Assets which have as their basis loss, damage or impairment of or to any of the Assets and which loss, damage or impairment has not been restored or repaired prior to any Closing in which any of the Assets which has been so damaged or impaired is being acquired by Buyer (or in the case of a lost asset, that would have been acquired but for such loss); (i) Any Contracts which are not Assumed Contracts; (j) All of each Sellers' deposits and prepaid expenses; provided, any deposits and prepaid expenses shall be included in the Assets to the extent that Sellers receive a credit therefor in the proration of the Purchase Price pursuant to Section 2.3(b); (k) All rights of Sellers under or pursuant to this Agreement (or any other agreements contemplated hereby); (l) All rights to the names Sinclair Broadcast Group, "Sinclair Communications," Sinclair and any logo or variation thereof and goodwill associated therewith; (m) The Excluded Real Property Interests; (n) The Excluded Tangible Personal Property; (o) All assets owned by the Sellers and used in connection with any television or radio broadcast stations owned and/or programmed by any of the Sellers or Sellers have the right to acquire other than the Stations, including (without limitation) all assets related to Sellers' operation and ownership of the Interstate Road Network and the Road Gang Coast to Coast Network; KPNT-FM, St. Genevieve, MO; WVRV-FM, East St. Louis, IL; WIL-FM, St. Louis, MO; WRTH-AM, St. Louis, MO; KIHT-FM, St. Louis, MO; KXOK-FM, St. Louis, MO; KUPN-AM, Mission, KS; KCFX-FM, Harrisonville, MO; KQRC-FM, Leavenworth, KS; KCIY-FM, Liberty, MO; and KXTR-FM, Kansas City, MO; 13 (p) All shares of capital stock, partnership interests, interests in limited liability companies or other equity interest, including, but not limited to, any options, warrants or voting trusts relating thereto which are owned by Sellers and not expressly specified in Section 2.1. 2.3 Purchase Price. The purchase price of the Assets shall be the excess of the sum of (i) Seven Hundred Two Million Five Hundred Thousand Dollars ($702,500,000) (the "Initial Purchase Price"), plus the Section 6.9 Amount over (ii) the "Pending Transaction Amount," adjusted as provided below (the "PURCHASE PRICE"). (a) Purchase Price Increase. Except as otherwise provided in this Agreement, the Initial Purchase Price shall be increased by the Delay Amount upon the occurrence of any of the following events: (i) one hundred thirty five (135) days following public notice by the FCC that applications for FCC Consent have been accepted for filing (the "Stations Delay Amount Date") if Closing has not occurred with respect to all Stations other than the Kansas City Stations due to the failure to receive any necessary regulatory consent, including, but not limited to, the FCC Consent, any Radio Group FCC Consent, or expiration or termination under Hart-Scott-Rodino, as a result of facts relating to Buyer or its Affiliates, including, without limitation, such facts as are disclosed on Schedule 4.6 hereto, provided, that such Delay Amount shall be applied to the Initial Purchase Price only for those Stations for which a Closing has not occurred prior to the Stations Delay Amount Date, as allocated on Schedule 6.8 (the "Stations Delay Amount"); and (ii) [RESERVED] (iii) each thirty (30) day period subsequent to the occurrence of the Stations Delay Amount Date as to the Station Delay Amount until the later to occur of (x) the Closing, or (y) termination of this Agreement in accordance with its terms. The Purchase Price and any increase due pursuant to this Section 2.3(a) shall be paid at Closing or pro rata (based on the allocation of the Initial Purchase Price among the Radio Groups) at a Radio Group Closing. (b) Prorations. The Purchase Price shall be increased or decreased as required to effectuate the proration of revenues and expenses, as set forth below. All revenues and all expenses arising from the operation of the Stations or Radio Group which are the subject of any Closing, including tower rental, business and license fees, utility charges, real property and personal property and other similar Taxes and assessments levied against or with respect to the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, payments due under film or programming license agreements, and employee compensation, including wages (including bonuses which constitute wages), salaries, accrued sick leave, severance pay and related Taxes shall be prorated between Buyer and Sellers as to those Stations for which a Closing is to be held in accordance with the principle that Sellers shall receive all revenues and shall be responsible for all expenses, costs and liabilities allocable to the operations of the Stations or Radio Group, as the case may be, for the period prior to the Effective Time of such Closing, and Buyer shall receive all revenues and shall be responsible for 14 all expenses, costs and obligations allocable to the operations of the Stations for the period after the Effective Time of such Closing, subject to the following: (i) There shall be no adjustment for, and Sellers shall remain solely liable with respect to, any Contracts not included in the Assumed Contracts and any other obligation or liability not being assumed by Buyer in accordance with Section 2.2. An adjustment and proration shall be made in favor of Buyer to the extent that Buyer assumes any liability under any Assumed Contract to refund (or to credit against payments otherwise due) any security deposit or similar prepayment paid to Sellers by any lessee or other third party. An adjustment and proration shall be made in favor of Sellers to the extent Buyer receives the right to receive a refund (or to a credit against payments otherwise due) under any Assumed Contract to any security deposit or similar pre-payment paid by or on behalf of Sellers. (ii) An adjustment and proration shall be made in favor of Sellers for the amount, if any, by which the fair market value of the goods or services to be received by any Radio Group under its trade or barter agreements as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars ($250,000) the fair market value of any advertising time remaining to be run by such Radio Group as of the Effective Time. An adjustment and proration shall be made in favor of Buyer to the extent that the amount of any advertising time remaining to be run by any Radio Group and the Kansas City Stations under its trade or barter agreements as of the Effective Time exceeds by more than Two Hundred Fifty Thousand Dollars ($250,000) the fair market value of the goods or services to be received by such Radio Group as of the Effective Time. (iii) There shall be no proration for program barter. (iv) An adjustment and proration shall be made in favor of Sellers for the prorata portion of the capital expenditures incurred by Sellers in connection with the build-out of the studio/office space located at 500 Corporate Parkway, Amherst, NY 14226 (the "Buffalo Build-Out Property"), based on the remaining potion of the initial term of the Lease relating to such property, dated May 15, 1999, between Sinclair Radio of Buffalo, Inc. and the Uniland Partnership of Delaware, L.P.; provided, that the adjustment and proration to be made pursuant to this Section 2.3(b)(iv) shall not exceed the lesser of (i) fifty percent (50%) of the capital expenditures (i.e., out-of-pocket construction and equipment expenses, architecture fees and building rent prior to occupancy) paid by Sellers with respect to the Buffalo Build-Out Property prior to Closing, and (ii) Two Million Dollars ($2,000,000). (v) An adjustment and proration shall be made in favor of Sellers for the amount, if any, of prepaid expense, the benefit of which accrues to Buyer hereunder, and other current assets acquired by Buyer hereunder which are paid by Sellers to the extent such prepaid expenses and other current assets relate to the period after the Effective Time. (vi) There shall be no proration for any payment(s) made by Interep to any of the Sellers in connection with obtaining the right to serve as the national sales representative of any of the Stations. 15 (c) Manner of Determining Adjustments. The Purchase Price, taking into account the adjustments and prorations pursuant to Section 2.3(b), will be determined in accordance with the following procedures: (i) Sellers shall prepare and deliver to Buyer not later than five (5) days before any Closing Date a preliminary settlement statement which shall set forth Sellers' good faith estimate of the adjustments to the Purchase Price under Section 2.3(b) with respect to those Stations for which Closing is to occur. The preliminary settlement statement shall (A) contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(b) as to such Stations, to the extent such adjustments can be determined or estimated as of the date of the preliminary settlement statement, and such other information as may be reasonably requested by Buyer, and (B) be certified by Sellers to be true and complete to Sellers' Knowledge as of the date thereof. (ii) Not later than ninety (90) days after each Closing Date, Buyer will deliver to Sellers a statement setting forth Buyer's determination of the Purchase Price and the calculation thereof pursuant to Section 2.3(b) as to the Stations for which such Closing has occurred. Buyer's statement (A) shall contain all information reasonably necessary to determine the adjustments to the Purchase Price under Section 2.3(b) relating to the applicable Closing, and such other information as may be reasonably requested by Sellers relating to the applicable Closing, and (B) shall be certified by Buyer to be true and complete to Buyer's knowledge as of the date thereof. If Sellers dispute the amount of such Purchase Price determined by Buyer, they shall deliver to Buyer within thirty (30) days after receipt of Buyer's statement a statement setting forth their determination of the amount of such Purchase Price. If Sellers notify Buyer of its acceptance of Buyer's statement, or if Sellers fail to deliver their statement within the thirty (30)-day period specified in the preceding sentence, Buyer's determination of the Purchase Price shall be conclusive and binding on the parties as of the last day of the thirty (30)-day period. (iii) Buyer and Sellers shall use good faith efforts to resolve any dispute involving the determination of the Purchase Price paid by Buyer at any Closing. If the parties are unable to resolve the dispute within forty-five (45) days following the delivery of all of Buyer's statements to be provided pursuant to Section 2.3(c)(ii) after the Final Closing (or in the event this Agreement is terminated prior to the Final Closing) forty five (45) days following such termination, Buyer and Sellers shall jointly designate an independent certified public accounting firm of national standing which has not regularly provided services to either the Buyer or Sellers in the last three (3) years, who shall be knowledgeable and experienced in the operation of radio broadcasting stations, to resolve the dispute. If the parties are unable to agree on the designation of an independent certified public accounting firm, the selection of the accounting firm to resolve the dispute shall be submitted to arbitration to be held in Baltimore, Maryland, in accordance with the commercial arbitration rules of the American Arbitration Association. The accounting firm's resolution of the dispute shall be final and binding on the parties, and a judgment may be entered thereon in any court of competent jurisdiction. Any fees of this accounting firm, and, if necessary, for arbitration to select such accountant, shall be divided equally between the parties. 2.4 Payment of Purchase Price. The Purchase Price shall be paid by Buyer to Sellers as follows: 16 (a) Payment of Estimated Purchase Price At Closing. The Purchase Price, adjusted by the estimated adjustments pursuant to Section 2.3(b) as set forth in Sellers' preliminary settlement statement pursuant to Section 2.3(c)(i), is referred to as the "ESTIMATED PURCHASE PRICE." At the Closing, Buyer shall pay or cause to be paid to Sellers the Estimated Purchase Price for the Stations or any Radio Group subject to the Closing, as the case may be, including, if applicable, any Delay Amount, by federal wire transfer of same-day funds pursuant to wire transfer instructions, which instructions shall be delivered to Buyer by Sellers at least two (2) business days prior to such Closing Date. (b) Buyer and Sellers shall cause the Escrow Deposit or such pro rata portion allocable to a Radio Group Closing to be released to Sellers as partial payment of the Estimated Purchase Price by delivering wiring instructions to the Escrow Agent two (2) days prior to the Closing Date; provided, however, that none of the Escrow Deposit shall be released by the parties at any Closing until the Deposit Release Date. Once the Deposit Release Date has occurred, the Sellers agree immediately to deliver to the Escrow Agent their consent to the release of that pro rata portion of the Escrow Deposit attributable to Radio Group Closings consummated prior to the Deposit Release Date. Until the Deposit Release Date, Buyer shall deliver the entire Estimated Purchase Price at the Closing on any Station. (c) Payments to Reflect Adjustments. The Purchase Price as finally determined pursuant to Section 2.3(c) shall be paid as follows: (i) If the Purchase Price as finally determined pursuant to Section 2.3(c) exceeds the Estimated Purchase Price, Buyer shall pay to Sellers, in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(c), the difference between the Purchase Price and the Estimated Purchase Price. (ii) If the Purchase Price as finally determined pursuant to Section 2.3(c) is less than the Estimated Purchase Price, Sellers shall pay to Buyer, in immediately available funds within five (5) business days after the date on which the Purchase Price is determined pursuant to Section 2.3(c), the difference between the Purchase Price and the Estimated Purchase Price. 2.5 Assumption of Liabilities and Obligations. As of the Closing Date and any Radio Group Closing Date as applicable, Buyer shall assume and undertake to pay, discharge and perform all obligations and liabilities of Sellers under the Licenses, the Assumed Contracts or as otherwise specifically provided for herein to the extent that either (i) the obligations and liabilities relate to the time after the Effective Time of such Closing with respect to the Stations for which Closing has occurred, or (ii) the Purchase Price was reduced pursuant to Section 2.3(b) as a result of the proration of such obligations and liabilities. Buyer shall not assume any other obligations or liabilities of Sellers, including (1) any obligations or liabilities under any Contract not included in the Assumed Contracts, (2) any obligations or liabilities under the Assumed Contracts relating to the period prior to the Effective Time of any Closing to which such Assumed Contracts relate, except insofar as an adjustment therefor is made in favor of Buyer under Section 2.3(b), (3) any claims or pending litigation or proceedings relating to the operation of the Stations prior to such 17 Closing or (4) any obligations or liabilities of Sellers under any employee pension, retirement, or other benefit plans. SECTION 3: REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller represents and warrants to Buyer as of the date hereof and as of any Closing Date (except for representations and warranties that speak as of a specific date or time, in which case, such representations and warranties shall be true and complete as of such date or time) as follows: 3.1 Organization and Authority of Sellers. Each Seller is a corporation, limited liability company or limited partnership (as applicable), duly organized, validly existing and in good standing under the laws of the State listed on Schedule 3.1 next to each such Seller's name. Each Seller has the requisite corporate power and authority (or other appropriate power and authority based on the structure of such Seller) to own, lease and operate its properties, to carry on its business in the places where such properties are now owned, leased, or operated and such business is now conducted, and to execute, deliver and perform this Agreement and the documents contemplated hereby according to their respective terms. Each Seller is duly qualified and in good standing in each jurisdiction listed on Schedule 3.1 next to each such Seller's name, which are all jurisdictions in which such qualification is required. Except as set forth on Schedule 3.1, no Seller is a participant in any joint venture or partnership with any other Person with respect to any part of the operations of the Stations or any of the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement by each Seller have been duly authorized by all necessary corporate or other required action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 3.3 Absence of Conflicting Agreements; Consents. Subject to obtaining the Consents listed on Schedules 3.3 and 3.7, the execution, delivery and performance by each Seller of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not require the consent of any third party; (b) will not conflict with any provision of the Articles of Incorporation, Bylaws or other organizational documents of Sellers; (c) will not conflict with, result in a breach of, or constitute a default under any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, license, or permit to which any Seller is a party or by which any Seller may be bound legally; and (e) will not create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon any of the Assets. Except for the FCC Consent provided for in Section 6.1, the filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described in Schedules 3.3 and 3.7, no consent, approval, permit, or 18 authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Sellers to transfer and convey the Assets to Buyer. 3.4 Governmental Licenses. Schedule 3.4 includes a true and complete list of the FCC Licenses. Sellers have made available to Buyer true and complete copies of the main Licenses (including any amendments and other modifications thereto). The Licenses have been validly issued, and each Seller is the authorized legal holder of the Licenses and those FCC Licenses listed on Schedule 3.4. The Licenses and the FCC Licenses listed on Schedule 3.4 comprise all of the material licenses, permits, and other authorizations required from any governmental or regulatory authority for the lawful conduct in all material respects of the business and operations of the Stations in the manner and to the full extent they are now conducted, and, except as otherwise disclosed on Schedule 3.4, none of the Licenses is subject to any unusual or special restriction or condition that could reasonably be expected to limit materially the full operation of the Stations as now operated. The FCC Licenses are in full force and effect, are valid for the balance of the current license term applicable generally to radio stations licensed to the same communities as the Stations, are unimpaired by any acts or omissions of any Seller or any of its Affiliates, or the employees, agents, officers, directors, or shareholder of any Seller or any of its Affiliates, and are free and clear of any restrictions which might limit the full operation of the Stations in the manner and to the full extent as they are now operated (other than restrictions under the terms of the licenses themselves or applicable to the radio broadcast industry generally). Except as listed on Schedule 3.4 hereto, there are no applications, proceedings or complaints pending or, to the knowledge of any Seller, threatened which may have an adverse effect on the business or operation of the Stations (other than rulemaking proceedings that apply to the radio broadcasting industry generally). Except as disclosed on Schedule 3.4 hereto, no Seller is aware of any reason why any of the FCC Licenses might not be renewed in the ordinary course for a full term without material qualifications or of any reason why any of the FCC Licenses might be revoked. The Stations are in compliance with the Commission's policy on exposure to radio frequency radiation. No renewal of any FCC License would constitute a major environmental action under the rules of the Commission. To the knowledge of Sellers, there are no facts relating to Sellers which, under the Communications Act of 1934, as amended, or the existing rules of the Commission, would (a) disqualify any Seller from assigning any of its FCC Licenses to Buyer, (b) cause the filing of any objection to the assignment of the FCC Licenses to Buyer, (c) lead to a delay in the processing by the FCC of the applications of the FCC Licenses to Buyer, (d) lead to a delay in the termination of the waiting period required by Hart-Scott-Rodino, or (e) disqualify any Seller from consummating the transactions contemplated herein within the times contemplated herein. An appropriate public inspection file for each Station is maintained at the Station's studio in accordance with Commission rules. Access to the Stations' transmission facilities are restricted in accordance with the policies of the Commission. 3.5 Real Property. Schedule 3.5 contains a complete description of all Real Property Interests (including street address, owner, and Sellers' use thereof) other than the Excluded Real Property Interests. The Real Property Interests listed on Schedule 3.5, together with the Real Property Interests which will be created by the execution of the Lease by Buyer and the appropriate Sellers, comprises all interests in real property necessary to conduct the business and operations of the Stations as now conducted. Except as described on Schedule 3.5, Sellers have good fee simple title to all fee estates included in the Real Property Interests and good title to all 19 other Real Property Interests, in each case free and clear of all liens, mortgages, pledges, covenants, easements, restrictions, encroachments, leases, charges, and other claims and encumbrances, except for Permitted Encumbrances. Each leasehold or subleasehold interest included as a Material Contract on Schedule 3.5 is legal, valid, binding, enforceable and in full force and effect. To Sellers' Knowledge, each leasehold or subleasehold designated in the Real Property Interests, but not designated as Material Contracts on Schedule 3.5 is legal, binding and enforceable and in full force and effect. Neither the Seller party thereto or to Sellers' Knowledge any other party thereto, is in default, violation or breach under any lease or sublease and no event has occurred and is continuing that constitutes (with notice or passage of time or both) a default, violation or breach thereunder. Sellers have not received any notice of a default, offset or counterclaim under any lease or sublease with respect to any of the Real Property Interests. As of the date hereof and as of the applicable Closing Date, Sellers enjoy peaceful and undisturbed possession of the leased Real Property Interests; and so long as Sellers fulfill their obligations under the lease therefor, Sellers have enforceable rights to nondisturbance and quiet enjoyment against its lessor or sublessor, and, to the Knowledge of Sellers, except as set forth in Schedule 3.5, no third party holds any interest in the leased premises with the right to foreclose upon Sellers' leasehold or subleasehold interest. Sellers have legal and practical access to all of the Owned Real Property and Leased Real Property, as applicable. Except as otherwise disclosed in Schedule 3.5, all towers, guy anchors, ground radials, and buildings and other improvements included in the Assets are located entirely on the Owned Real Property or the Leased Real Property, as applicable, listed in Schedule 3.5. All Owned Real Property and Leased Real Property (including the improvements thereon) (a) is in good condition and repair consistent with its current use, (b) is available for immediate use in the conduct of the business and operations of the Stations, and (c) complies in all material respects with all applicable material building or zoning codes and the regulations of any governmental authority having jurisdiction, except to the extent that the current use by Sellers, while permitted, constitutes or would constitute a "nonconforming use" under current zoning or land use regulations. No eminent domain or condemnation proceedings are pending or, to the knowledge of Sellers, threatened with respect to any Real Property Interests. 3.6 Tangible Personal Property. The lists of Tangible Personal Property comprising all material items of tangible personal property, other than the Excluded Tangible Personal Property, necessary to conduct the business and operations of the Stations as now conducted has been provided to Buyer previously. Except as described in Schedule 3.6, Sellers own and have good title to each item of Tangible Personal Property and none of the Tangible Personal Property owned by Sellers is subject to any security interest, mortgage, pledge, conditional sales agreement, or other lien or encumbrance, except for Permitted Encumbrances. With allowance for normal repairs, maintenance, wear and obsolescence, each material item of Tangible Personal Property is in good operation condition and repair and is available for immediate use in the business and operations of the Stations. All material items of transmitting and studio equipment included in the Tangible Personal Property (a) have been maintained in a manner consistent with generally accepted standards of good engineering practice, and (b) will permit the Stations and any unit auxiliaries thereto to operate in accordance with the terms of the FCC Licenses and the rules and regulations of the FCC and in all material respects with all other applicable federal, state and local statutes, ordinances, rules and regulations. 20 3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts which either (a) have a remaining term (after taking into account any cancellation rights of Sellers) of more than one year after the date hereof or (b) require expenditures in excess of Twenty Five Thousand Dollars ($25,000) in any calendar year after the date hereof, except contracts with advertisers for production or the sale of advertising time on the Stations for cash that may be canceled by Sellers without penalty on not more than ninety days' notice. Sellers have delivered or made available to Buyer true and complete copies of all written Assumed Contracts, and true and complete descriptions of all oral Assumed Contracts (including any amendments and other modifications to such Contracts). Other than the Contracts listed on Schedule 3.7, Schedule 3.5, and the Lease, Sellers require no material contract, lease, or other agreement to enable them to carry on their business in all material respects as now conducted. All of the Contracts are in full force and effect and are valid, binding and enforceable in accordance with their terms except as the enforceability of such Contracts may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. Neither the Seller party thereto or, to the knowledge of Sellers, any other party thereto, is in default, violation or breach in any material respect under any Contract and no event has occurred and is continuing that constitutes (with notice or passage of time or both) a default, violation, or breach in any material respect thereunder. Except as disclosed on Schedule 3.7, other than in the ordinary course of business, Sellers do not have Knowledge of any intention by any party to any Contract (a) to terminate such Contract or amend the terms thereof, (b) to refuse to renew the Contract upon expiration of its term, or (c) to renew the Contract upon expiration only on terms and conditions that are more onerous than those now existing. Except for the need to obtain the Consents listed on Schedule 3.7, the exchange and transfer of the Assets in accordance with this Agreement will not affect the validity, enforceability, or continuation of any of the Contracts. 3.8 Intangibles. Schedule 3.8 is a true and complete list of all Intangibles (exclusive of Licenses listed in Schedule 3.4) that are required to conduct the business and operations of the Stations as now conducted, all of which are valid and in good standing and uncontested. Sellers have provided or made available to Buyer copies of all documents establishing or evidencing the Intangibles listed on Schedule 3.8. Sellers own or have a valid license to use all of the Intangibles listed on Schedule 3.8. Other than with respect to matters generally affecting the radio broadcasting industry and not particular to Sellers and except as set forth on Schedule 3.8, Sellers have not received any notice or demand alleging that Sellers are infringing upon or otherwise acting adversely to any trademarks, trade names, service marks, service names, copyrights, patents, patent applications, know-how, methods, or processes owned by any other Person, and there is no claim or action pending, or to the Knowledge of Sellers threatened, with respect thereto. To the knowledge of Sellers, except as set forth on Schedule 3.8, no other Person is infringing upon Sellers rights or ownership interest in the Intangibles. 3.9 Title to Properties. Except as disclosed in Schedule 3.5 or 3.6, Sellers have good and marketable title to the Assets subject to no mortgages, pledges, liens, security interests, encumbrances, or other charges or rights of others of any kind or nature except for Permitted Encumbrances. 21 3.10 Financial Statements. Sellers have furnished Buyer with true and complete copies of unaudited financial statements of the Stations containing a balance sheet and statement of income, as at and for the fiscal year ended December 31, 1998, and an unaudited balance sheet and statement of income as at and for the seven (7) months ended July 31, 1999 (the "BALANCE SHEET DATE") (collectively, the "FINANCIAL STATEMENTS"). To the extent the Financial Statements relate to the period of time during which the Stations were owned by the Sellers (or any Affiliate thereof) the Financial Statements have been prepared from the books and records of Sellers and have been prepared in a manner consistent with the audited Financial Statements of Sinclair, except for the absence of footnotes and certain year-end adjustments. The Financial Statements accurately reflect the books, records and accounts of Sellers, present fairly and accurately the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended and none of the Financial Statements understates in any material respect the normal and customary costs and expenses of conducting the business or operations of the Stations in any material respect as currently conducted by Sellers or otherwise materially inaccurately reflects the operations of the Stations; provided, that the foregoing representations are given only to the Sellers' Knowledge to the extent the Financial Statements relate to a period of time during which the Stations were not owned by Sellers (or an Affiliate thereof). 3.11 Taxes. Except as set forth in Schedule 3.11, Sellers have filed or caused to be filed all Tax Returns that are required to be filed with respect to their ownership and operation of the Stations, and have paid or caused to be paid all Taxes shown on those returns or on any Tax assessment received by them to the extent that such Taxes have become due, or have set aside on their books adequate reserves (segregated to the extent required by generally accepted accounting principles) with respect thereto. There are no legal, administrative, or other Tax proceedings presently pending, and there are no grounds existing pursuant to which Sellers are or could be made liable for any Taxes, the liability for which could extend to Buyer as transferee of the business of the Stations. 3.12 Insurance. Schedule 3.12 is a true and complete list of all insurance policies of or covering Sellers. All policies of insurance listed in Schedule 3.12 are in full force and effect as of the date hereof. During the past three years, no insurance policy of Sellers or the Stations has been canceled by the insurer and, except as set forth on Schedule 3.12, no application of Sellers for insurance has been rejected by any insurer. 3.13 Reports. All material returns, reports and statements that the Stations is currently required to file with the FCC or Federal Aviation Administration have been filed, and all reporting requirements of the FCC and Federal Aviation Administration have been complied with in all material respects. All of such returns, reports and statements, as filed, satisfy all applicable legal requirements. 3.14 Personnel and Employee Benefits. (a) Employees and Compensation. Schedule 3.14 contains a true and complete list of all employees of Sellers employed at the Stations as of June 30, 1999 who earned in excess of $20,000 in 1998 or whose present rate of pay would cause them to earn more than that amount in 1999, and indicates the salary and bonus, if any, to which each such Employee is currently 22 entitled (limited in the case of Employees who are compensated on a commission basis to a general description of the manner in which such commissions are determined). As of the date of this Agreement, Sellers have no knowledge that any General Manager, Sales Manager, or Program Director employed at the Stations currently plans to terminate employment, whether by reason of the transactions contemplated by this Agreement or otherwise. Schedule 3.14 also contains a true and complete list of all employee benefit plans or arrangements covering the employees employed at the Stations (the "EMPLOYEES"), including, with respect to the Employees any: (i) "Employee welfare benefit plan," as defined in Section 3(1) of ERISA, that is maintained or administered by Sellers or to which Sellers contribute or are required to contribute (a "WELFARE PLAN"); (ii) "Multiemployer pension plan," as defined in Section 3(37) of ERISA, that is maintained or administered by Sellers or to which Sellers contribute or are required to contribute (a "MULTIEMPLOYER PLAN" and, together with the Welfare Plans, the "BENEFIT PLANS"); (iii) "Employee pension benefit plan," as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), to which Sellers contribute or are required to contribute (a "PENSION PLAN"); (iv) Employee plan that is maintained in connection with any trust described in Section 501(c)(9) of the Internal Revenue Code of 1986, as amended; and (v) Employment, severance, or other similar contract, arrangement, or policy and each plan or arrangement (written or oral) providing for insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, or retirement benefits or arrangement for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights, stock purchases, or other forms of incentive compensation or post-retirement insurance, compensation, or benefits that (A) is not a Welfare Plan, Pension Plan, or Multiemployer Plan, and (B) is entered into, maintained, contributed to, or required to be contributed to by any Seller or under which any Seller has any liability relating to Employees, (collectively, "BENEFIT ARRANGEMENTS"). (b) Pension Plans. Sellers do not sponsor, maintain, or contribute to any Pension Plan other than the Sinclair Broadcast Group 401(k) Profit Sharing Plan. Each Pension Plan complies currently and has been maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all material statutes, orders, rules and regulations that are applicable to such plans, including ERISA and the Code, except where the failure to do so will not have a Material Adverse Effect. (c) Welfare Plans. Each Welfare Plan complies currently and has been maintained in substantial compliance with its terms and, both as to form and in operation, with all material requirements prescribed by any and all material statutes, orders, rules and regulations that are applicable to such plans, including ERISA and the Code, except where the failure to do so will not have a Material Adverse Effect. Sellers do not sponsor, maintain, or contribute to any 23 Welfare Plan that provides health or death benefits to former employees of the Stations other than as required by Section 4980B of the Code or other applicable laws. (d) Benefit Arrangements. Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the material requirements prescribed by all statutes, orders, rules and regulations that are applicable to such Benefit Arrangement, except where the failure to do so will not have a Material Adverse Effect. Except for those employment agreements listed on Schedule 3.7, Sellers have no written contract prohibiting the termination of any Employee. (e) Multiemployer Plans. Except as disclosed in Schedule 3.14, Sellers have not at any time been a participant in any Multiemployer Plan. (f) Delivery of Copies of Relevant Documents and Other Information. Sellers have delivered or made available to Buyer true and complete copies of each of the following documents: (i) Each Welfare Plan and Pension Plan (and, if applicable, related trust agreements) and all amendments thereto, and written descriptions thereof that have been distributed to Employees, all annuity contracts or other funding instruments; and (ii) Each Benefit Arrangement and written descriptions thereof that have been distributed to Employees and complete descriptions of any Benefit Arrangement that is not in writing. (g) Labor Relations. Except as set forth in Schedule 3.14(g), no Seller is a party to or subject to any collective bargaining agreement or written or oral employment agreement with any Employee. With respect to the Employees Sellers have complied in all material respects with all laws, rules and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and have not received any notice alleging that any Seller has failed to comply materially with any such laws, rules, or regulations. Except as set forth on Schedule 3.14(g), no proceedings are pending or, to the Knowledge of Sellers, threatened, between any Seller and any Employee (singly or collectively) that relate to the Stations. Except as set forth on Schedule 3.14(g), no labor union or other collective bargaining unit represents or claims to represent any of the Employees. Except as set forth in Schedule 3.14, to the Knowledge of Sellers, there is no union campaign being conducted to solicit cards from any Employees to authorize a union to represent any of the employees of any Seller or to request a National Labor Relations Board certification election with respect to any Employees. 3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15 and except for any FCC rulemaking proceedings generally affecting the radio broadcasting industry and not particular to any of Sellers, there is no claim, legal action, counterclaim, suit, arbitration, or other legal, administrative, or tax proceeding, nor any order, decree, or judgment, in progress or pending, or to the Knowledge of Sellers threatened, against or relating to the Assets, or the business or operations of any of the Stations, nor does any Seller know of any basis for the same. 24 3.16 ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed on Schedule 3.16, (x) none of the Owned Real Property and none of the Tangible Personal Property and, to Sellers' Knowledge (provided such knowledge qualifer shall not apply to the extent caused by the Tangible Personal Property), none of the Leased Real Property contains (i) any asbestos, polychlorinated biphenyls or any PCB contaminated oil; (ii) any Contaminants; or (iii) any underground storage tanks; (y) no underground storage tank disclosed on Schedule 3.16 has leaked and has not been remediated or leaks and such tank is in substantial compliance with all applicable Environmental Laws; and (z) all of the Owned Real Property and, to Sellers' Knowledge, all of the Leased Real Property is in substantial compliance with all applicable Environmental Laws. (b) Sellers have obtained all material permits, licenses and other authorizations that are required under all Environmental Laws. 3.17 Compliance with Laws. Sellers have complied in all material respects with the Licenses and all material federal, state and local laws, rules, regulations and ordinances applicable or relating to the ownership and operation of the Assets and Stations, and Sellers have not received any notice of any material violation of federal, state and local laws, regulations and ordinances applicable or relating to the ownership or operation of the Assets and the Stations nor, to Sellers' Knowledge, have Sellers received any notice of any immaterial violation of federal, state and local laws, regulations, and ordinances applicable or relating to the ownership or operation of the Assets or the Stations. 3.18 Conduct of Business in Ordinary Course. Since the Balance Sheet Date and through the date hereof, Sellers have conducted their business and operations in the ordinary course and, except as disclosed in Schedule 3.18, have not: (a) made any material increase in compensation payable or to become payable to any of its employees other than those in the normal and usual course of business or in connection with any change in an employee's responsibilities, or any bonus payment made or promised to any of its Employees, or any material change in personnel policies, employee benefits, or other compensation arrangements affecting its employees; (b) made any sale, assignment, lease, or other transfer of assets other than in the normal and usual course of business with suitable replacements being obtained therefor; (c) canceled any debts owed to or claims held by Sellers, except in the normal and usual course of business; (d) made any changes in Sellers' accounting practices; (e) suffered any material write-down of the value of any Assets or any material write-off as uncorrectable of any Accounts Receivable; or 25 (f) transferred or granted any right under, or entered into any settlement regarding the breach or infringement of, any license, patent, copyright, trademark, trade name, franchise, or similar right, or modified any existing right. 3.19 Transactions with Affiliates. Except as disclosed in Schedule 3.19 or with respect to the Excluded Real Property Interests and the Excluded Tangible Personal Property, no Seller has been involved in any business arrangement or relationship with any Affiliate of Seller, and no Affiliate of any Seller owns any property or right, tangible or intangible, that is material to the operations of the business of the Stations. 3.20 Broker. Except as disclosed on Schedule 3.20, no Seller nor any Person acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement, and Buyer shall have no liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement for any broker listed on Schedule 3.20. 3.21 Insolvency Proceedings. None of the Sellers nor any of the Assets are the subject of any pending or threatened insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary. No Seller has made an assignment for the benefit of creditors or taken any action in contemplation of or which would constitute a valid basis for the institution of any such insolvency proceedings. No Seller is insolvent nor will it become insolvent as a result of entering into or performing this Agreement. 3.22 Year 2000 Compatibility. Sellers believe that the Stations' hardware, software, broadcast and ancillary equipment (the "Operational Equipment") that are date dependent and are material to the operation of the Stations are year 2000 compliant. To Sellers' Knowledge, there are no facts or circumstances that would result in material costs or disruption to the operation of the Stations due to the failure of Sellers' customers or suppliers to be year 2000 compliant. For the purposes of this section, "Year 2000 Compliant" shall mean that the Operational Equipment will correctly process, provide and receive date data before, during and after December 31, 1999. SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers as of the date hereof and as of any Closing Date (except for representations and warranties that speak as of a specific date or time, in which case, such representations and warranties shall be true and complete as of such date and time) as follows: 4.1 Organization, Standing and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has the requisite corporate power and authority to execute, deliver and perform this Agreement and the documents contemplated hereby according to their respective terms and to own the Assets. Prior to the Closing Date, Buyer will be qualified to do business in each of the States in which any of the Stations are located. 26 4.2 Authorization and Binding Obligation. The execution, delivery and performance of this Agreement by Buyer have been duly authorized by all necessary action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability of this Agreement may be affected by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by judicial discretion in the enforcement of equitable remedies. 4.3 Absence of Conflicting Agreements and Required Consents. Subject to the receipt of the Consents, the execution, delivery and performance by Buyer of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (a) do not require the consent of any third party; (b) will not conflict with the Articles of Incorporation or Bylaws of Buyer; (c) will not conflict with, result in a breach of, or constitute a default under, any applicable law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of any court or governmental instrumentality; and (d) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any agreement, instrument, license or permit to which Buyer is a party or by which Buyer may be bound. Except for the FCC Consent provided for in Section 6.1. the filings required by Hart-Scott-Rodino provided for in Section 6.2 and the other Consents described in Schedule 4.3, no consent, approval, permit, or authorization of, or declaration to, or filing with any governmental or regulatory authority or any other third party is required (a) to consummate this Agreement and the transactions contemplated hereby, or (b) to permit Buyer to acquire the Assets from Sellers or to assume certain liabilities and obligations of Sellers in accordance with Section 2.5. 4.4 Brokers. Neither Buyer nor any person or entity acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transactions contemplated by this Agreement. 4.5 Availability of Funds. Buyer will have available on the Closing Date sufficient funds to enable it to consummate the transactions contemplated hereby. 4.6 Qualifications of Buyer. Except as disclosed in Schedule 4.6, Buyer is, and pending Closing will remain legally, financially and otherwise qualified under the Communications Act, Hart-Scott-Rodino and all rules, regulations and policies of the FCC, the Department of Justice, the Federal Trade Commission (the "FTC") and any other governmental agency, to acquire and operate the Stations. Except as disclosed in Schedule 4.6, there are no facts or proceedings which would reasonably be expected to disqualify Buyer under the Communications Act or Hart-Scott-Rodino or otherwise from acquiring or operating the Stations or would cause the FCC not to approve the assignment of the FCC Licenses to Buyer or the Department of Justice and the FTC not to allow the waiting period under Hart-Scott-Rodino to terminate within 30 days of the filing provided for in Section 6.2. Except as disclosed in Schedule 4.6, Buyer has no knowledge of any fact or circumstance relating to Buyer or any of Buyer's Affiliates that would reasonably be expected to (a) cause the filing of any objection to the assignment of the FCC Licenses to Buyer, (b) lead to a delay in the processing by the FCC of the applications for such assignment or (c) lead to a delay in the termination of the waiting period required by Hart-Scott-Rodino. 27 Except as disclosed in Schedule 4.6, no waiver of any FCC rule or policy is necessary to be obtained for the grant of the applications for the assignment of the FCC Licenses to Buyer, nor will processing pursuant to any exception or rule of general applicability be requested or required in connection with the consummation of the transactions herein. 4.7 WARN Act. Buyer 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 Notification Act of 1988, as amended, or any similar state law. 4.8 Buyer's Defined Contribution Plan. Schedule 4.8 completely and accurately lists all Buyer's defined contribution plan or plans (the "Buyer's Plan") intended to be qualified under Section 401(a) and 401(k) of the Code in which the Transferred Employees will be eligible to participate. Buyer has a currently applicable determination letter from the Internal Revenue Service. SECTION 5: OPERATION OF THE STATIONS PRIOR TO CLOSING Sellers covenants and agrees that between the date hereof and Final Closing Date, Sellers will operate the Stations in the ordinary course in accordance with Sellers' past practices (except where such conduct would conflict with the following covenants or with other obligations of Sellers under this Agreement), and, except as contemplated by this Agreement or with the prior written consent of Buyer (such consent not to be unreasonably withheld), Sellers will act in accordance with the following insofar as such actions relate to the Stations: 5.1 Contracts. Seller will not renew, extend, amend or terminate, or waive any material right under, any Material Contract, or enter into any contract or commitment or incur any obligation (including obligations relating to the borrowing of money or the guaranteeing of indebtedness and obligations arising from the amendment of any existing Contract, regardless of whether such Contract is a Material Contract) that will be assumed by or be otherwise binding on Buyer after Closing, except for (a) cash time sales agreements and production agreements made in the ordinary course of business consistent with Seller's past practices, (b) the renewal or extension of any existing Contract (other than network affiliation agreements) on its existing terms in the ordinary course of business, and (c) other contracts (other than network affiliation agreements, or time brokerage or local marketing arrangements) entered into in the ordinary course of business consistent with Sellers' past practices that do not, with respect to any Radio Group, involve consideration, in the aggregate, in excess of Fifty Thousand Dollars ($50,000) measured at Closing. Prior to the applicable Closing Date, Sellers shall deliver to Buyer a list of all material Contracts entered into between the date of this Agreement and the applicable Closing Date and shall make available to Buyer copies of such Contracts. 5.2 Compensation. Sellers shall not materially increase the compensation, bonuses, or other benefits payable or to be payable to any person employed in connection with the conduct of the business or operations of the Stations, except in accordance with past practices, as required by an employment agreement or consulting agreement or in connection and commensurate with the change in responsibility of any employee. 28 5.3 Encumbrances. Sellers will not create, assume, or permit to exist any mortgage, pledge, lien, or other charge or encumbrance affecting any of the Assets, except for (a) liens disclosed in Schedule 5.3, (b) liens that will be removed prior to the applicable Closing Date, and (c) Permitted Encumbrances. 5.4 Dispositions. Sellers will not sell, assign, lease, or otherwise transfer or dispose of any of the Assets except (a) Assets that are no longer used in the operations of the Stations, (b) Assets that are replaced with Assets of equivalent kind and value that are acquired after the date of this Agreement, and (c) any intercompany accounts receivable. 5.5 Access to Information. Upon prior reasonable notice by Buyer, Sellers will give to Buyer and its investors, lenders, counsel, accountants, engineers and other authorized representatives reasonable access to the Stations and all books, records and documents of Sellers which are material to the business and operation of the Stations, and will furnish or cause to be furnished to Buyer and its authorized representatives all information relating to Sellers and the Stations that they reasonably request (including any financial reports and operations reports produced with respect to the Stations). 5.6 Insurance. Sellers or their Affiliates shall maintain in full force and effect policies of insurance of the same type, character and coverage as the policies currently carried with respect to the business, operations and assets of the Stations. 5.7 Licenses. Sellers shall not cause or permit, by any act or failure to act, any of the Licenses listed on Schedule 3.4 to expire or to be revoked, suspended or modified, or take any action that could reasonably be expected to cause the FCC or any other governmental authority to institute proceedings for the suspension, revocation or material adverse modification of any of the Licenses. Sellers shall prosecute with due diligence any applications to any governmental authority necessary for the operation of the Stations. 5.8 Obligations. Sellers shall pay all its obligations insofar as they relate to the Stations as they become due, consistent with past practices. 5.9 No Inconsistent Action. Sellers shall not take any action that is inconsistent with its obligations under this Agreement in any material respect or that could reasonably be expected to hinder or delay the consummation of the transactions contemplated by this Agreement. Neither Seller nor any of its respective representatives or agents shall, directly or indirectly, solicit, initiate, or participate in any way in discussions or negotiations with, or provide any confidential information to, any Person (other than Buyer or any Affiliate or associate of Buyer and their respective representatives and agents) concerning any possible disposition of the Stations, the sale of any material assets of the Stations, or any similar transaction. 5.10 Maintenance of Assets. Sellers shall maintain all of the Assets in good condition (ordinary wear, tear and casualty excepted), consistent with their overall condition on the date of this Agreement, and use, operate and maintain all of the Assets in a reasonable manner. Sellers shall maintain inventories of spare parts and expendable supplies at levels consistent with past 29 practices. If any insured or indemnified loss, damage, impairment, confiscation, or condemnation of or to any of the Assets occurs, Sellers shall repair, replace, or restore the Assets to their prior condition as represented in this Agreement as soon thereafter as possible, and Sellers shall use the proceeds of any claim under any property damage insurance policy or other recovery solely to repair, replace, or restore any of the Assets that are lost, damaged, impaired, or destroyed. 5.11 Consents. (a) Subject to Section 6.5 hereof, Sellers shall use their reasonable efforts to obtain all Consents described in Section 3.3, without any adverse change in the terms or conditions of any Assumed Contract or License. Sellers shall promptly advise Buyer of any difficulties experienced in obtaining any of the Consents and of any conditions proposed, considered or requested for any of the Consents. (b) Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer any Contract or any claim, right or benefit arising thereunder or resulting therefrom, if an attempted assignment or transfer thereof, without the consent of a third party thereto would constitute a breach thereof or in any way adversely affect the rights of the Buyer thereunder. If such consent (a "Deferred Consent") is not obtained, or if an attempted assignment or transfer thereof would be ineffective or would affect the rights thereunder so that the Buyer would not receive all such rights, then (i) the Seller and the Buyer will cooperate, in all reasonable respects, to obtain such Deferred Consents as soon as practicable; provided that Sellers shall have no obligation (y) to expend funds to obtain any Deferred Consent, other than ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining any Deferred Consent, or (z) to agree to any adverse change in any License or Assumed Contract in order to obtain a Deferred Consent, and (ii) until such Deferred Consent is obtained, the Seller and the Buyer will cooperate in all reasonable respects, to provide to the Buyer the benefits under the Contract, to which such Deferred Consent relates (with the Buyer responsible for all the liabilities and obligations thereunder). In particular, in the event that any such Deferred Consent is not obtained prior to Closing, then the Buyer and the Seller shall enter into such arrangements (including subleasing or subcontracting if permitted) to provide to the parties the economic and operational equivalent of obtaining such Deferred Consent and assigning or transferring such Contract, including enforcement for the benefit of the Buyer of all claims or rights arising thereunder, and the performance by the Buyer of the obligations thereunder on a prompt and punctual basis. 5.12 Books and Records. Sellers shall maintain their books and records in accordance with past practices. 5.13 Notification. Sellers shall promptly notify Buyer in writing of any or material developments with respect to the business or operations of the Stations and of any material change in any of the information contained in the representations and warranties contained in Section 3 of this Agreement. 30 5.14 Financial Information. Sellers shall furnish Buyer with sales pacing reports for the Stations on a weekly basis and shall furnish to Buyer within thirty (30) days after the end of each month ending between the date of this Agreement and the Final Closing Date a statement of income and expense for the month just ended and such other financial information (including information on payables and receivables) as Buyer may reasonably request. All financial information delivered by Sellers to Buyer pursuant to this Section 5.14 shall be prepared from the books and records of Sellers in accordance with generally accepted accounting principles, consistently applied, shall accurately reflect the books, records and accounts of the Stations, shall be complete and correct in all material respects, and shall present fairly the financial condition of the Stations as at their respective dates and the results of operations for the periods then ended. 5.15 Compliance with Laws. Sellers shall comply in all material respects with all material laws, rules and regulations. 5.16 Programming. Sellers shall not make any material changes in the Stations' formats, except such changes as in the good faith judgment of Seller are required by the public interest. 5.17 Preservation of Business. Sellers shall use commercially reasonable efforts consistent with past practices to preserve the business and organization of the Stations and to keep available to the Stations its present employees and to preserve the audience of the Stations and the Stations' present relationships with suppliers, advertisers, and others having business relations with it. 5.18 Normal Operations. Subject to the terms and conditions of this Agreement (including, without limitation, Section 5.1), prior to either the Final Closing or a Radio Closing Date, as applicable, Sellers shall carry on the business and activities of the Stations, including, without limitation, promotional activities, the sale of advertising time, entering into other contracts and agreements, purchasing and scheduling programming, performing research, and operating in all material respects in accordance with existing budgets and past practice and will not enter into trade and barter obligations except in the ordinary course of business consistent with past practice. 5.19 Buffalo Build-Out Property. Sellers shall keep Buyer fully informed of the status of the construction and build-out of the Buffalo Build-Out Property and shall make available to Buyer for its review and approval, which approval shall not be unreasonably withheld, notice of any material changes to the capital expenditure budget provided to Buyer prior to the date hereof. SECTION 6: SPECIAL COVENANTS AND AGREEMENTS 6.1 FCC Consent (a) The exchange and transfer of the Assets as contemplated by this Agreement is subject to the prior consent and approval of the FCC. (b) Sellers and Buyer shall prepare and within seven (7) business days after the date of this Agreement shall file with the FCC an appropriate application for FCC Consent. The parties shall thereafter prosecute the application with all reasonable diligence and otherwise use their 31 respective best efforts to obtain a grant of the application as expeditiously as practicable. Each party agrees to comply with any condition imposed on it by the FCC Consent, except that no party shall be required to comply with a condition if (i) the condition was imposed on it as the result of a circumstance the existence of which does not constitute a breach by that party of any of its representations, warranties or covenants hereunder, and (ii) compliance with the condition would have a material adverse effect upon it. Buyer and Sellers shall oppose any petitions to deny or other objections filed with respect to the application for the FCC Consent and any requests for reconsideration or judicial review of the FCC Consent. (c) If any Closing shall not have occurred for any reason within the original effective period of the FCC Consent or Radio Group FCC Consent, and neither party shall have terminated this Agreement under Section 9, the parties shall jointly request an extension of the effective period of the FCC Consent or Radio Group FCC Consent, as the case may be. No extension of the effective period of the FCC Consent or Radio Group FCC Consent shall limit the exercise by either party of its right to terminate the Agreement under Section 9. 6.2 Hart-Scott-Rodino. Within ten (10) days following the execution of this Agreement, Sellers and Buyer shall complete any filing that may be required pursuant to Hart-Scott-Rodino (each an "HRS Filing"). Sellers and Buyer shall diligently take, or fully cooperate in the taking of, all necessary and proper steps, and provide any additional information reasonably requested in order to comply with, the requirements of Hart-Scott-Rodino. 6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the Assets of Sellers for any cause whatsoever shall be borne by Sellers at all times prior to the Final Closing or Radio Group Closing, as the case may be. In the event of loss or damage prior to the Final Closing Date or a Radio Group Closing Date, Sellers shall use commercially reasonable efforts to fix, restore, or replace such loss, damage, impairment, confiscation, or condemnation to its former operational condition. If Sellers have adequate replacement cost insurance, Buyer may elect to have Sellers assign such insurance proceeds to Buyer, in which case, Buyer shall proceed with the Final Closing or Radio Group Closing, as the case may be, and receive at such Closing the insurance proceeds or an assignment of the right to receive such insurance proceeds, as applicable, to which Sellers otherwise would be entitled, whereupon Sellers shall have no further liability to Buyer for such loss or damage. 6.4 Confidentiality. Except as necessary for the consummation of the transaction contemplated by this Agreement, including Buyer's obtaining of financing related hereto, and except as and to the extent required by law, each party will keep confidential any information obtained from the other party in connection with the transactions specifically contemplated by this Agreement. If this Agreement is terminated, each party will return to the other party all information obtained by the such party from the other party in connection with the transactions contemplated by this Agreement. Buyer shall continue to be bound by the terms and conditions of the Confidentiality Agreement dated June 30, 1999 between the parties hereto (the "CONFIDENTIALITY AGREEMENT"). 6.5 Cooperation. Buyer and Sellers shall reasonably cooperate with each other and their respective counsel and accountants in connection with any actions required to be taken as part of 32 their respective obligations under this Agreement, and in connection with any litigation after any Closing Date which relate to the Stations for periods prior to the applicable Effective Time, Buyer and Sellers shall execute such other documents as may be reasonably necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their commercially reasonable efforts to consummate the transaction contemplated hereby and to fulfill their obligations under this Agreement. Notwithstanding the foregoing, Sellers shall have no obligation (a) to expend funds to obtain any of the Consents, other than ministerial processing fees, and Sellers' out-of-pocket expenses to its attorney or other agents incurred in connection with obtaining such consents, or (b) to agree to any adverse change in any License or Assumed Contract in order to obtain a Consent required with respect thereto. 6.6 Control of the Stations. Prior to any Closing, Buyer shall not, directly or indirectly, control, supervise or direct, or attempt to control, supervise or direct, the operations of the Stations; those operations, including complete control and supervision of all of each Stations' programs, employees and policies, shall be the sole responsibility of Seller. 6.7 Accounts Receivable. (a) As soon as practicable after the Closing Date or any Radio Group Closing Date, as the case may be, Sellers shall deliver to Buyer a complete and detailed list of all the Accounts Receivable. During the period beginning on the Closing Date or Radio Group Closing Date, as applicable, and ending on the last day of the sixth full calendar month beginning after the Closing Date or Radio Group Closing Date, as applicable (the "COLLECTION PERIOD"), Buyer shall use commercially reasonable efforts, as Sellers' agent, to collect the Accounts Receivable in the usual and ordinary course of business, using the Stations' credit, sales and other appropriate personnel in accordance with customary practices, which may include referral to a collection agency. Notwithstanding the foregoing, Buyer shall not be required to institute legal proceedings on Sellers' behalf to enforce the collection of any Accounts Receivable. Buyer shall not adjust any Accounts Receivable or grant credit without Sellers' written consent, and Buyer shall not pledge, secure or otherwise encumber such Accounts Receivable or the proceeds therefrom. On or before the twelfth business day after the end of each calendar month during the Collection Period, Buyer shall remit to Sellers collections received by Buyer with respect to the Accounts Receivable, together with a report of all amounts collected with respect to the Accounts Receivable during, as the case may be, the period from any Closing or the beginning of such month through the end of such month, less any sales commissions or collection costs paid by Buyer during the respective periods with respect to those Accounts Receivable. (b) Any payments received by Buyer during the Collection Period from any Person that is an account debtor with respect to any account disclosed in the list of Accounts Receivable delivered by Sellers to Buyer shall be applied first to the invoice designated by the account debtor and, if none, such payment shall be applied to the oldest account which is not disputed. Buyer shall incur no liability to Sellers for any uncollected account, other than as a result of Buyer's breach of its obligations under this Section 6.7. Prior to the end of the third full calendar month after any Closing, neither Sellers nor any agent of Sellers shall make any direct solicitation of the account debtors for payment. After the end of the third full calendar month after any Closing, Sellers shall have the right, at their expense, to assist and participate with 33 Buyer in the collection of unpaid Accounts Receivable, provided, however, Seller's collection efforts shall be commercially reasonable and consistent with its past practices. (c) At the end of the Collection Period, Buyer shall return to Sellers all files concerning the collection or attempts to collect the Accounts Receivable, and Buyer's responsibility for the collection of the Accounts Receivable shall cease. 6.8 Allocation of Purchase Price. Buyer and Sellers agree to allocate the Purchase Price among the Stations for all purposes (including financial accounting and Tax purposes) as set forth on Schedule 6.8 hereto. Buyer and Sellers agree that the fair market value of the Assets of the Stations (the "Fair Market Value of the Assets") will be appraised by the appraisal firm of BIA, whose expenses will be borne one-half (1/2) by Buyer and one-half (1/2) by Sellers. Buyer and Sellers shall collaborate in good faith in the preparation of mutually satisfactory Form(s) 8594 (and Form 8824 to the extent applicable) reflecting the Fair Market Value of the Assets as found by BIA and such other information as is required by the form. Buyer and Sellers shall each file with their respective federal income tax return for the tax year in which any Closing occurs, IRS Form(s) 8594 (and Form 8824 to the extent applicable) containing the information agreed upon by the parties pursuant to the immediately preceding sentence. Buyer agrees to report the purchase of the Assets of the Stations, and Sellers agree to report the sale of such assets for income tax purposes on their respective income tax returns in a manner consistent with the information agreed upon by the parties pursuant to this section and contained in the IRS Form(s) 8594 (and Form 8824 to the extent applicable). 6.9 Access to Books and Records. To the extent reasonably requested by Buyer, Sellers shall provide Buyer access and the right to copy from and after any Closing Date any books and records relating to the Assets but not included in the Assets. To the extent reasonably requested by Sellers, Buyer shall provide Sellers access and the right to copy from and after the applicable Closing Date any books and records relating to the Assets that are included in the Assets. Buyer and Sellers shall each retain any such books and records, for a period of three years (or such longer period as may be required by law or good business practice) following the Final Closing Date. Subject to and in accordance with the terms of this Section 6.9, Sellers shall cause its accountants regularly servicing Sellers to conduct audits and reviews of Sellers' financial information as Buyer may reasonably determine is necessary to satisfy Buyer's due diligence, including, without limitation, (a) causing Sellers' auditors to permit Buyer's auditors to have access to Sellers' auditor's work papers, and (b) causing Sellers' auditors to consent to such access by Buyer. Under no circumstance shall the preparation of any financial statements pursuant to such audits and reviews (i) require any Seller to change or modify any accounting policy, (ii) cause any unreasonable disruption in the business or operations of any Station, or (iii) cause any delay that is more than de minimis in any internal reporting requirements of any Seller. All costs and expenses incurred in connection with the preparation of (and assimilation of relevant information for) the audits and reviews of financial information shall be paid by Sellers; provided, Buyer shall promptly pay upon presentation of any invoice, as a non-refundable prepayment of the Purchase Price, for all charges incurred in connection with such audit to the extent relating to work performed on or after July 26, 1999 (such charges, the "Section 6.9 Amount") (it being understood that the hourly charges of Sellers' accountants for the period of time for which Buyer is responsible may be greater than the hourly charges incurred by Sellers). 34 In addition, Buyer shall be responsible for any costs and expenses (a) associated with the inclusion of such audited financial statements in Buyer's publicly filed documents, including, without limitation, any fees for consents to such inclusion and a "comfort letter," and (b) incurred in connection with any review of financial statements for the periods ended June 30, 1998 or June 30, 1999, or for any other periods other than the financial statements for calendar year 1998. 6.10 Employee Matters. (a) Upon consummation of the Closing or a Radio Group Closing hereunder, Buyer shall offer employment to each of the Employees of the Stations included in such Radio Group (including those on leave of absence, whether short-term, long-term, family, maternity, disability, paid, unpaid or other, and those hired after the date hereof in the ordinary course of business) at a comparable salary, position and place of employment as held by each such employee immediately prior to the Closing Date (such employees who are given such offers of employment are referred to herein as the "TRANSFERRED EMPLOYEES") (b) Except as provided otherwise in this Section 6.10, Sellers shall pay, discharge and be responsible for (a) all salary and wages arising out of or relating to the employment of the Employees prior to the Closing Date or a Radio Group Closing Date, as the case may be, and (b) any employee benefits arising under the Benefit Plans or Benefit Arrangements of Sellers and their Affiliates during the period prior to such Closing Date. From and after each Closing Date, Buyer shall pay, discharge and be responsible for all salary, wages and benefits arising out of or relating to the employment of the Transferred Employees by Buyer on and after the Closing Date or Radio Group Closing Date, as applicable. Buyer shall be responsible for all severance liabilities, and all COBRA liabilities for any Transferred Employees of the Stations terminated on or after any Closing Date, including, without limitation, any related to any deemed termination by Sellers of the Transferred Employees as a result of the consummation of the transaction contemplated hereby and any required pursuant to those retention/severance agreements listed on Schedule 6.10 hereto, but excluding any severance due as a result of those agreements listed on Schedule 6.10-A. (c) Buyer shall cause all Transferred Employees as of any Closing Date to be eligible to participate in its "employee welfare benefit plans" and "employee pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA, respectively) of Buyer in which similarly situated employees of Buyer are generally eligible to participate; provided, however, that all Transferred Employees and their spouses and dependents shall be eligible for coverage immediately after such Closing Date (and shall not be excluded from coverage on account of any pre-existing condition) to the extent provided under such plans with respect to Transferred Employees. (d) For purposes of any length of service requirements, waiting period, vesting periods or differential benefits based on length of service in any such plan for which a Transferred Employee may be eligible after any Closing, Buyer shall ensure that, to the extent permitted by law, and except as limited by Buyer's Employment Termination/Severance policy service by such Transferred Employee with Sellers, any Affiliate of Sellers or any prior owner of the Stations shall be deemed to have been service with the Buyer. In addition, Buyer shall ensure 35 that each Transferred Employee receives credit under any welfare benefit plan of Buyer for any deductibles or co-payments paid by such Transferred Employee and his or her dependents for the current plan year under a plan maintained by Sellers or any Affiliate of Sellers to the extent allowable under any such plan. Buyer shall grant credit to each Transferred Employee for all sick leave in accordance with the policies of Buyer applicable generally to its employees after giving effect to service for Sellers, any Affiliate of Sellers or any prior owner of the Stations, as service for Buyer. To the extent taken into account in determining prorations pursuant to Section 2.3 hereof, Buyer shall assume and discharge Sellers' liabilities for the payment of all unused vacation leave accrued by Transferred Employees as of the Closing Date or a Radio Group Closing Date, as the case may be. To the extent any claim with respect to such accrued vacation leave is lodged against Sellers with respect to any Transferred Employee for which Buyer has received a proration credit, Buyer shall, to the extent of such credit, indemnify, defend and hold harmless Sellers from and against any and all losses, directly or indirectly, as a result of, or based upon or arising from the same. (e) As soon as practicable following any Closing Date, Buyer shall make available to the Transferred Employees Buyer's 401(k) Plan. To the extent requested by a Transferred Employee, Sellers shall cause to be transferred to Buyer's 401(k) Plan, in cash and in kind, all of the individual account balances of Transferred Employees under the Sellers' Plan, including any outstanding plan participant loan receivables allocated to such accounts. (f) Buyer acknowledges and agrees that Buyer's obligations pursuant to this Section 6.10 are in addition to, and not in limitation of, Buyer's obligation to assume the employment contracts included in the Assumed Contracts. Nothing in this Agreement shall be construed to provide employees of Sellers with any rights under this Agreement, and no Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall only be enforceable by, the parties hereto and their respective successors and assigns as permitted hereunder. (g) Certain Payments. Subject to the terms of this Section 6.10(g) and Section 6.10(h), in the event Buyer terminates any of the Transferred Employees during the six (6) calendar month period after the Closing Date or a Radio Group Closing Date, as the case may be (a "Reimbursement Period"), which relates to the Station at which such employee is employed, as applicable, Sellers shall promptly reimburse Buyer for the amount paid by Buyer to such Terminated Employee pursuant to the terms of the Retention Agreements listed on Schedules 6.10 (as in effect on the date hereof) (the "Scheduled Retention Agreements") as follows: (y) the full amount of such payments in an amount, when aggregated with the payments made by the Kansas City Sellers under 6.10(g) of the Kansas City Agreement, that does not to exceed $1,000,000 (the "Initial Employee Cap"); and (z) 50% of such payments above the Initial Employee Cap in an amount, when aggregated with payments made by the Kansas City Sellers under 6.10(g) of the Kansas City Agreement, that does not to exceed $500,000. The payments made pursuant to this Section 6.10(g) shall not be counted against the Threshold Amount. In no event shall Sellers be obligated to reimburse Buyer (i) for any payments made by Buyer pursuant to the Scheduled Retention Agreements to Transferred Employees terminated after the expiration of a Reimbursement Period, or (ii) for any amount, when aggregated with any payments made by 36 the Kansas City Sellers under 6.10(g) of the Kansas City Agreement, in excess of $1,500,000. (h) Notwithstanding any provisions of Section 6.10(g) of the Asset Purchase Agreement to the contrary, Sellers shall have no obligation to reimburse Buyer for any severance amount (whether or not pursuant to the Scheduled Retention Agreements), which obligations shall be the sole obligation of Buyer regardless of when such termination occurs paid to (i) any Transferred Employee who is terminated (a) at the request of a third party who subsequently enters into a memorandum of understanding, letter of intent, or agreement to acquire any of the Stations, or (b) as a result of Buyer entering into a memorandum of understanding, letter of intent, or an agreement to sell, assign, swap, or otherwise dispose of or convey any Station to a third party, and/or (ii) the employees listed on Schedule 6.10(h), including, but not limited to, any employees of the Kansas City Stations listed thereon. (i) For twelve (12) calendar months after the Closing Date or any Radio Group Closing Date, as applicable, (a) none of Sellers or any of their Affiliates shall hire any of the Transferred Employees of any Radio Group for which such Closing has occurred; provided that the provisions of this Section 6.10(i)(a) shall not apply to any Transferred Employee terminated by Buyer; and provided further that this Section 6.10(i)(a) does not apply to any employees (other than the Transferred Employees) hired by the Seller Entities (as defined below) after the Closing Date or any Radio Group Closing Date, as applicable, and (b) other than the Transferred Employees, Buyer shall not hire any employees of Sellers or any Affiliate or parent of Sellers (the "Seller Entities") who are employees, as of the Closing Date or any Radio Group Closing Date, of any of the television broadcast stations owned, operated, or programmed by any of the Seller Entities in any market in which the Stations broadcast ("Sellers' Employees"); provided that the provisions of this Section 6.10(i)(b) do not apply to Sellers' Employees whose employment is terminated by the Seller Entities; and provided further that the provisions of this Section 6.10(i)(b) do not apply to any employees (other than Sellers' Employees) hired by Buyer after the Closing Date or any Radio Group Closing Date, as applicable. 6.11 Lease. Buyer and the Sellers specified in the Lease attached hereto as Exhibit 1 (the "LEASE") shall execute and deliver the Lease on the Closing Date applicable to the Station to which the Lease applies. 6.12 Public Announcements. Sellers and Buyer shall consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement or the transactions contemplated herein and shall not issue any such press release or make any such public statement without the prior written consent of the other party, which shall not be unreasonably withheld; provided, however, that a party may, without the prior written consent of the other party, issue such press release or make such public statement as may be required by Law or any listing agreement with a national securities exchange to which Sinclair or Buyer is a party if it has used all reasonable efforts to consult with the other party and to obtain such party's consent but has been unable to do so in a timely manner. 6.13 Disclosure Schedules. Sellers and Buyer acknowledge and agree that Sellers shall not be liable for the failure of the Schedules to be accurate as a result of the operation of the Stations prior to a Closing in accordance with Section 5 of this Agreement. The inclusion of any fact or item on a Schedule referenced by a particular section in this Agreement shall, should the 37 existence of the fact or item or its contents be relevant to any other section, be deemed to be disclosed with respect to such other section whether or not an explicit cross-reference appears in the Schedules if such relevance is readily apparent from examination of such Schedules. 6.14 Bulk Sales Law. Buyer hereby waives compliance by Sellers, in connection with the transactions contemplated hereby, with the provisions of any applicable bulk transfer laws. 6.15 Environmental Site Assessment. 6.15.1 Within sixty (60) days of the execution of this Agreement, Buyer may obtain Phase I Environmental Assessments at Buyer's expense for any or all of the parcels of the Owned or Leased Real Property set forth on Schedule 6.15 (the "Environmental Assessments"). In the event any Environmental Assessment discloses any conditions contrary to any representations and warranties (determined without regard to any Knowledge qualifier therein) or any potential that such conditions may exist, the Buyer may conduct or have conducted at its expense additional testing to confirm or negate the existence of any such conditions. If any such Environmental Assessment or additional testing reflects the existence of any such conditions at any Owned Real Property or, to the extent caused by any of the Assets, at any of the Leased Real Property, and if, and only if, the cost of remediation, when aggregated with costs or remediation as to the Kansas City Stations, exceeds One Hundred Thousand Dollars ($100,000.00), in the aggregate for all parcels of the Real Property to be conveyed by Sellers hereunder and the Kansas City Sellers pursuant to the Kansas City Agreement shall cause the conditions to be remedied as quickly as possible (and in all events prior to Closing for any Radio Group for which such property is used in the operation of any Station in such Radio Group) such that no conditions contrary to the representations and warranties (determined with regard to any knowledge qualifier contained therein) of this Agreement exist; provided, however, that Sellers shall not be obligated to expend in the aggregate for all parcels of the Real Property of Stations and the Kansas City Stations in excess of Three Million Dollars ($3,000,000.00) to effect such remediation for all Real Property to be conveyed hereunder and under the Kansas City Agreement. In the event that such remedial action(s) does cost in the aggregate in excess of Three Million Dollars ($3,000,000.00), Sellers may elect not to take such remedial action. In such event, Buyer may require Sellers to proceed to the Closing of the Stations or of one or more Radio Groups, as the case may be, and at any such Closing, the purchase price for any of the Stations acquired at such Closing shall be reduced by the estimated cost of remediation for that portion of the Owned Real Property to be acquired at such Closing, not to exceed in the aggregate for all Closings the Unexpended Remediation Amount. Alternatively, Buyer may terminate this Agreement, and Sellers shall have no liability to Buyer as a result of such termination. Such Environmental Assessments shall not relieve Sellers of any obligation with respect to any representation, warranty, or covenant of Sellers in this Agreement or waive any condition to Buyer's obligations under this Agreement. The cost of completing the Environmental Assessments shall be paid by Buyer. 6.15.2 Nothing in this Section 6.15 shall be deemed to extend the date on which any Closing would otherwise occur under this Agreement. 38 6.16 Purchase of Advertising Time. After the Closing, Buyer agrees to purchase for cash from Sellers over the five (5) year period subsequent to the Closing Date, Five Million Dollars ($5,000,000) of advertising time on television broadcast stations owned and/or programmed by Sellers or their Affiliates at prevailing rates (taking into account the aggregate amount of the advertising purchase), and Buyer shall use reasonable efforts to purchase such advertising time pro rata over the five (5) year period. In the event that Sellers (and their Affiliates) cease to own and/or program a material percentage of television broadcast stations located in the same designated market areas as radio broadcast stations owned and/or programmed by Buyer (or its Affiliates), Sellers and Buyer shall negotiate in good faith to permit Buyer to expend an appropriate amount of the advertising buy required by this Section 6.16 on television broadcast stations previously owned and/or programmed by Sellers (and its Affiliates), which expenditure on such television stations shall be counted for purposes of Buyer's satisfaction of its obligation to purchase the $5,000,000 aggregate amount of advertising time. 6.17 Adverse Developments. Sellers shall promptly notify Buyer of any unusual or materially adverse developments that occur prior to any Closing with respect to the Assets or the operation of the Stations; provided, however, that Sellers' compliance with the disclosure requirements of this Section 6.17 shall not relieve Sellers of any obligation with respect to any representation, warranty or covenant of Sellers in this Agreement or relieve Buyer of any obligation or duty hereunder, waive any condition to Buyer's obligations under this Agreement, or expand or enhance any right of Buyer hereunder. 6.18 Title Insurance. Within ten (10) days of the date of this Agreement, each Seller shall deliver to Buyer its current title insurance policies. Sellers shall cooperate with Buyer in obtaining the commitment of a title insurance company reasonably satisfactory to Buyer agreeing to issue to Buyer, at standard rates, ALTA [1992] Form extended coverage title insurance policies, insuring Buyer's interest in the Real Property (the "Title Commitment"). The costs of the Title Commitment and the policy to be issued pursuant to the Title Commitment shall be paid by Buyer. 6.19 Surveys. Within sixty (60) days of the date of this Agreement, each Seller of Real Property shall deliver to Buyer, at Buyer's expense, surveys of the Real Property performed by surveyors reasonably acceptable to Buyer sufficient to remove any "survey exception" from the title insurance policies to be issued pursuant to the Title Commitments. 6.20 Pending Transactions. Nothing in this Agreement shall preclude Sellers from completing any pending transactions, including, but not limited to, the acquisition of the Palm Stations and the Phase II Stations in accordance with the terms and conditions thereof. 6.21 Assignment of Contracts for Pending Transactions. In the event the closing for the acquisition by Sellers of the Palm Stations and/or the Phase II Stations has not occurred on or before the Final Closing Date, Sellers shall deliver to Buyer on the Final Closing Date such documentation reasonably requested by Buyer's counsel, allowing for the assignment to Buyer from Sellers of Sellers' rights, duties and obligations under the Phase II Purchase Agreement and the Palm Asset Purchase Agreement. 39 6.22 Cooperation on Tax Matters. The parties intend to allow for the election by Sellers ("Election") to have the sale of all or a portion of the Assets contemplated by this Agreement become part of a "Tax Deferred Exchange" in accordance with the provisions of Section 1031 of the Internal Revenue Code of 1986 (the "Code"). Buyer covenants and agrees to participate and fully cooperate with Sellers (and any qualified intermediary (as that term is defined in the Code) involved in the Tax Deferred Exchange), in the event of an Election, so long as such participation and cooperation does not have an adverse effect on Buyer. To the extent that any provision in this Section 6.22 or in this Agreement shall be found inconsistent with or in violation of any of the terms of Section 1031 of the Code, such provision shall be null and void, all other provisions of this Agreement shall remain in full force and effect, and the parties shall endeavor to agree upon alternative provisions that affect a "Tax Deferred Exchange" of property in such manner as will comply with Section 1031 of the Code. If no such agreement is reached within a reasonable period, then this Agreement shall be performed without an exchange of properties. 6.23 Reference to Original Agreement. Buyer and Sellers agree that reference shall be made to the Original Agreement and the accompanying Letter Agreement dated August 18, 1999, and the Escrow Agreement dated August 18, 1999, to resolve any ambiguity in this Agreement or any inconsistency between this Agreement and the Kansas City Agreement. SECTION 7: CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER 7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the Closing hereunder with respect to the Stations or any Radio Group are subject at Buyer's option to the fulfillment prior to or at the Closing Date or a Radio Group Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Sellers contained in this Agreement shall be true and complete at and as of the Closing Date as though made at and as of that time, (except for representations and warranties that speak as of a specific date or time which need only be true and complete as of such date or time), except where the failure to be true and complete (determined without regard to any materiality qualifications therein) does not have a Material Adverse Effect. (b) Covenants and Conditions. Sellers shall have performed and complied with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date, except where the failure to have performed and complied (determined without regard to any materiality qualifications therein) does not have a Radio Group Material Adverse Effect. (c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall have been granted, notwithstanding that it may not have yet become a "Final Order," unless any filing is made with the FCC that pertains to or becomes associated with any request for consent to the assignment of any of the FCC Licenses (an "FCC Objection"), in which case, Buyer shall not be obligated to close on a Radio Group which includes such Station to which such FCC Objection is applicable until the FCC Consent shall have become a "Final Order," unless in the reasonable judgment of Buyer's counsel such objection would not reasonably be expected to result in a 40 denial of the FCC Consent, or a Radio Group FCC Consent, as the case may be, or the designation for hearing for the applications for FCC Consent or a Radio Group FCC Consent, as the case may be. (d) Hart-Scott-Rodino. All applicable waiting periods under Hart-Scott-Rodino shall have expired or terminated. (e) Governmental Authorizations. Sellers shall be the holder of all FCC Licenses (other than the FCC Licenses for the Palm Stations and Phase II Stations if Sellers have not closed on the Palm Stations and the Phase II Stations), and there shall not have been any modification, revocation, or non-renewal of any License that has had a Radio Group Material Adverse Effect. No proceeding shall be pending the effect of which could be to revoke, cancel, fail to renew, suspend, or modify materially and adversely any FCC License. (f) Consents. All consents of third parties that are required for the valid and binding assignment from Sellers to Buyer of all Material Contracts marked by an asterisk on Schedules 3.5 and 3.7 with respect to a Radio Group shall have been obtained (or available upon consummation of the Closing) . (g) Lease. Seller shall have entered into the lease described on Schedule 7.1(g) and (to the extent required by such lease) shall have obtained a valid and binding assignment of such lease from Sellers to Buyer. (h) Deliveries. Sellers shall have made or stand willing to make all the deliveries to Buyer described in Section 8.2. (i) Satisfactory Environmental Assessment. To the extent that any Environmental Assessment or additional testing conducting pursuant to Section 6.15 hereof reflects the existence of conditions contrary to any representation or warranty in this Agreement, either (i) Sellers shall have completed the remediation of such conditions in accordance with Section 6.15 hereof, or (ii) Buyer shall have provided notice to Sellers of Buyer's election to proceed to Closing with the proration to the Purchase Price specified in Section 6.15 hereof. 7.2 Conditions to Obligations of Sellers. All obligations of Sellers at the Closing hereunder with respect to the Stations or any Radio Group are subject at Sellers' option to the fulfillment prior to or at the Closing Date of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the Closing Date as though made at and as of that time. (b) Covenants and Conditions. Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. 41 (c) FCC Consent. The FCC Consent or a Radio Group FCC Consent shall have been granted. (d) Hart-Scott-Rodino. All applicable waiting periods under Hart-Scott-Rodino shall have expired or terminated. (e) Deliveries. Buyer shall have made or stand willing to make all the deliveries described in Section 8.3. SECTION 8: CLOSING AND CLOSING DELIVERIES 8.1 Closing. (a) Closing Date. (i) Except as provided below in this Section 8.1 or as otherwise agreed to by Buyer and Sellers, the Closing hereunder shall be held for all of the Stations on a date specified by Buyer on at least five (5) days written notice that is not earlier than the first business day after or later than ten (10) business days after the date on which all of the conditions to Closing have been satisfied or waived; provided, that the parties acknowledge and agree that there may be multiple Closings hereunder as follows: (w) If a Radio Group FCC Consent for any Radio Group is issued prior to the issuance of the FCC Consent, and the Hart-Scott-Rodino waiting period has expired or has been terminated for such Radio Group (whether or not the Hart-Scott-Rodino waiting period has expired or has been terminated in respect of any other Radio Group), Closing on such Radio Group shall be set by Buyer on at least five (5) days' written notice to Sellers, which shall be not earlier than the first business day after such Radio Group FCC Consent is granted and not later than ten (10) business days after the date on which all conditions to such Closing have been satisfied or waived; provided that, in no event, shall a Closing occur for less than an entire Radio Group; (x) Notwithstanding 8.1(a)(i)(w) above, Sellers may elect to postpone such Closing for thirty (30) days if, based on advice of Sellers' counsel, there is a reasonable likelihood that the FCC Consent or an additional Radio Group FCC Consent will be received during such period; provided that in the event Sellers elect to postpone any Closing under this Section 8.1(a)(i)(x), the Stations Delay Amount Date and/or the Kansas City Stations Delay Amount Date, as applicable, shall be extended through the Closing Date as postponed by Sellers and no Delay Amount shall accrue during such period with respect to the Stations or Radio Group for which any Closing has been postponed by Seller pursuant to this Section 8.1(a)(i)(x); (y) For purposes of this Agreement, if there shall be multiple Closings for the Stations, then the terms "Closing" and "Closing Date" shall only be deemed to refer to the Stations for which the sale by Sellers, and the purchase by Buyers, shall have occurred on such date. If a Closing Date hereunder shall fall on a date that is not a business day, then such Closing Date shall be the next business day. 42 (ii) If any event occurs that prevents signal transmission by any of the Stations in the normal and usual manner and Sellers cannot restore the normal and usual transmission before the date on which any Closing as to any Radio Group to which the Station so affected belongs would otherwise occur pursuant to this Section 8.1(a), and this Agreement has not been terminated under Section 9, Sellers shall diligently take such action as reasonably necessary to restore such transmission, and the Closing shall be postponed only with respect to the Radio Group to which the Station so affected belongs until a date within the effective period of the FCC Consent or a Radio Group FCC Consent (as it may be extended pursuant to Section 6.1(c)) to allow Sellers to restore the normal and usual transmission for such Station. If any Closing is postponed pursuant to this paragraph, the date of such Closing shall be ten (10) days after notice by Sellers to Buyer that transmission has been restored. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be obligated to close on any Radio Group which includes any Station the transmission of which is not operating in the normal and usual manner, unless and until the Sellers have restored the transmission of such Station to its normal and usual level. (iii) If there is in effect on the date on which any Closing would otherwise occur pursuant to this Section 8.1(a) any judgment, decree or order that would prevent or make unlawful such Closing on that date, such Closing shall be postponed until a date within the effective period of the FCC Consent or the Radio Group FCC Consent, as the case may be (as it may be extended pursuant to Section 6.1(c)), to be agreed upon by Buyer and Sellers, when such judgment, decree, or order no longer prevents or makes unlawful such Closing. If any Closing is postponed pursuant to this paragraph, the date of such Closing shall be mutually agreed to by Seller and Buyer. (b) Closing Place. All Closings hereunder shall be held at the offices of Thomas & Libowitz, 100 Light Street, Suite 1100, Baltimore, MD, 21201, or any other place that is mutually agreed upon by Buyer and Sellers. 8.2 Deliveries by Sellers. Prior to or on any Closing Date, Sellers shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: (a) Conveyancing Documents. Duly executed deeds in form and quality equivalent to the deeds by which Sellers obtained title, bills of sale, motor vehicle titles, assignments, and other transfer documents that are sufficient to vest good and marketable title to the Assets being transferred at such Closing in the name of Buyer, free and clear of all mortgages, liens, restrictions, encumbrances, claims and obligations except for Permitted Encumbrances; (b) Officer's Certificate. A certificate, dated as of such Closing Date, executed by an officer of Sellers, certifying: (i) that the representations and warranties of Sellers contained in this Agreement as to the Radio Group for which a Closing is occurring are true and complete as of such Closing Date as though made on and as of that date (except for representations and warranties that speak as of a specific date or time, which need only be true and complete as of such date or time), except to the extent that the failure of such representations and warranties (in each case determined without regard to any materiality qualifications contained therein) shall not have had a Material Adverse Effect, and (ii) that Sellers, as to the Radio Group for which a Closing is occurring, have in all respects performed and complied with all of its obligations, 43 covenants and agreements in this Agreement to be performed and complied with on or prior to such Closing Date, except to the extent that the failure to perform such covenants (in each case determined without regard to any materiality qualifications contained therein) shall not have had a Radio Group Material Adverse Effect. (c) Secretary's Certificate. A certificate, dated as of such Closing Date, executed by each of the Seller's Secretary, members, partners or designees, as the case may be: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller's Board of Directors and shareholders (if required) (or by the general partner in the case of a partnership or by the members in the case of a limited liability company), authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as attachments thereto, the Articles of Incorporation and Bylaws (or other organizational documents) of such Seller; (d) Consents. A manually executed copy of any instrument evidencing receipt of any Consent which has been received by Sellers which relate to the Stations or, in the case of a Radio Group Closing, such Radio Group, the Assets of which are being transferred at such Closing; (e) Good Standing Certificates. To the extent available from the applicable jurisdictions and to the extent applicable to the Stations or Radio Group which are the subject of the Closing, certificates as to the formation and/or good standing of each Seller issued by the appropriate governmental authorities in the states of organization and each jurisdiction in which such Sellers are qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to the applicable Closing Date; (f) Opinions of Counsel. Opinions of Sellers' counsel and communications counsel dated as of the Closing Date, substantially in the form of Exhibits 2 and 3 hereto; (g) Lease. Duly executed copy of the Lease; and (h) Other Documents. Such other documents reasonably requested by Buyer or its counsel for complete implementation of this Agreement and consummation of the transaction contemplated hereby, including the assignments referred to in Section 6.21, if applicable. 8.3 Deliveries by Buyer. Prior to or on any Closing Date, Buyer shall deliver to Sellers the following, in form and substance reasonably satisfactory to Sellers and their counsel: (a) Closing Payment. The payment of the Estimated Purchase Price described in Section 2.4(a) for the Stations or Radio Groups as applicable; (b) Officer's Certificate. A certificate, dated as of such Closing Date, executed on behalf of an officer of the Buyer, certifying (i) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of such Closing Date as though made on and as of that date, and (ii) that Buyer has in all material respects performed and complied with all of its obligations, covenants and agreements in this Agreement to be performed and complied with on or prior to such Closing Date; 44 (c) Secretary's Certificate. A certificate, dated as of such Closing Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) providing, as an attachment thereto, Buyer's Certificate of Incorporation and Bylaws; (d) Assumption Agreements. Appropriate assumption agreements pursuant to which Buyer shall assume and undertake to perform Sellers' obligations and liabilities to the extent provided under this Agreement for the Stations or Radio Group for which a Closing occurs, including (without limitation) under the Licenses and the Assumed Contracts; (e) Good Standing Certificates. To the extent available from the applicable jurisdictions, certificates as to the formation and/or good standing of Buyer issued by the appropriate governmental authorities in the state of organization and each jurisdiction in which Buyer is qualified to do business, each such certificate (if available) to be dated a date not more than a reasonable number of days prior to such applicable Closing Date; (f) Opinion of Counsel. An opinion of Buyer's counsel dated as of the Closing Date, substantially in the form of Exhibit 4 hereto; (g) Lease. Duly executed copy of the Lease; and (h) Other Documents. Such other documents reasonably requested by Sellers or their counsel for complete implementation of this Agreement and consummation of the transactions contemplated hereby. SECTION 9: TERMINATION 9.1 Termination by Mutual Consent. This Agreement may be terminated at any time prior to Closing by the mutual consent of the parties. 9.2 Termination by Seller. This Agreement may be terminated by Sellers and the sale and transfer of the Stations or any Radio Group for which a Closing has not occurred abandoned, if: (a) Sellers are not then in material default hereunder, upon written notice to Buyer if on the date that would otherwise be the Final Closing Date any of the conditions precedent to the obligations of Sellers set forth in Sections 7.2(a), 7.2(b) and 7.2(e) of this Agreement has not been satisfied or waived in writing by Sellers (whether or not occurring as the result of Buyer's material breach of any provision of this Agreement); (b) Buyer shall default in the performance of its obligations under this Agreement in any material respect and such default is not cured within thirty (30) days after notice thereof; 45 (c) Sellers are not then in material default hereunder and Final Closing has not occurred within one (1) calendar year from the date hereof and failure of Final Closing to have occurred is due to the failure to receive any regulatory approval required for Final Closing, including, but not limited to, expiration or termination of the Hart-Scott-Rodino waiting period, any FCC Consents (including, without limitation, such facts as are disclosed on Schedule 4.6 hereto), and the failure of such consent, expiration or termination to be granted is the result of facts relating to Buyer or any Affiliate of Buyer; or (d) Sellers are not then in material default hereunder if Closing as to the Stations or any Radio Group has not occurred within twenty four (24) months from the date hereof due to the failure to receive any regulatory approval required for Final Closing, including, but not limited to, the expiration or termination of the Hart-Scott-Rodino waiting period of any FCC Consent, and the failure of such consent, expiration, or termination to be granted is the result of facts relating to Sellers. (e) Final Closing has not occurred with respect to all of the Stations or any Radio Group within eighteen (18) months from the date hereof, if Sellers are not then in material default hereunder, and such Closing has not occurred for any reason other than as provided in Section 9.2(d). 9.3 Termination by Buyer. This Agreement may be terminated by Buyer and the exchange and transfer of the Stations or any Radio Group for which a Closing has not occurred abandoned, if: (a) Buyer is not then in material default, upon written notice to Sellers if on the date that would otherwise be the Final Closing Date any of the conditions precedent to the obligations of Buyer set forth in Sections 7.1(a), 7.1(b), 7.1(e), 7.1(f), 7.1(g), and 7(h) of this Agreement (and only such Sections) has not been satisfied or waived in writing by Buyer (whether or not occurring as the result of Sellers' material breach of any provision of this Agreement); (b) Sellers shall have defaulted in the performance of Sellers' obligations under this Agreement, and such default is not cured within thirty (30) days after notice thereof and such default has had either a Radio Group Material Adverse Effect in the case of a Radio Group Closing or a Material Adverse Effect in the case of a Closing with respect to all of the Stations; or (c) Buyer is not then in material default hereunder and Final Closing has not occurred within fifteen (15) months from the date hereof and failure to close is due to the failure to receive any regulatory approval required for Closing, including, but not limited to, expiration or termination of the Hart-Scott-Rodino waiting period and any FCC Consents and the failure to receive such consent is due to facts relating to Sellers or any Affiliate of Sellers. (d) Final Closing has not occurred with respect to all of the Stations or any Radio Group within eighteen (18) months from the date hereof, if the terminating party is not then in material default hereunder and such Closing has not occurred for any reason other than as provided in Section 9.2(c). 46 9.4 Rights on Termination. If this Agreement is terminated by Buyer pursuant to Section 9.3 as a result of Sellers' material breach of any provision of this Agreement, Buyer shall be entitled to the immediate return of the Allocable Escrow Deposit, and Buyer shall have all rights and remedies available at law or equity, including the remedy of specific performance described in Section 9.6 below. If this Agreement is terminated by Sellers pursuant to Section 9.2, Sellers, as their sole remedy, shall be entitled to receive the Allocable Escrow Deposit, less any amount thereof released in accord with the provisions of this Agreement prior to such termination, together with all interest or other proceeds from the investment thereof, but less any compensation due Escrow Agent, as liquidated damages in full and final settlement of all claims of Sellers under this Agreement, and there shall be no other or further obligations or remedies of Sellers hereunder. 9.5 Liquidated Damages Not a Penalty. With respect to the liquidated damages as described and provided for in Section 9.4 hereof, Sellers and Buyer hereby acknowledge and agree that the damage that may be suffered by Sellers in the event of a default by Buyer hereunder is not readily ascertainable and that such liquidated damages as of the date hereof are a reasonable estimate of such damages and are intended to compensate Sellers for any such damage and are not to be construed as a penalty. 9.6 Specific Performance. The parties recognize that if Sellers breach this Agreement and refuse to perform under the provisions of this Agreement, monetary damages alone would not be adequate to compensate Buyer for its injury. Buyer shall therefore be entitled, in addition to any other remedies that may be available, to obtain specific performance of the terms of this Agreement. If any action is brought by Buyer to enforce this Agreement, Sellers shall waive the defense that there is an adequate remedy at law. 9.7 Attorneys' Fees. In the event of a default by either party that results in a lawsuit or other proceeding for any remedy available under this Agreement, the prevailing party shall be entitled to reimbursement from the other party of its reasonable legal fees and expenses (whether incurred in arbitration, at trial, or on appeal). 9.8 Survival. Notwithstanding the termination of this Agreement pursuant to this Section 9, the obligations of Buyer and Sellers set forth in Sections 6.2, 6.4, 9, 10 (with respect to all Radio Groups for which any Closing has occurred), and 11 shall survive such termination and the parties hereto shall have any and all rights and remedies to enforce such obligations provided at law or in equity or otherwise (including without limitations, specific performance). 9.9 Limitations of Termination. Any termination of this Agreement pursuant to this Section 9 shall be only in respect of those Stations or Radio Group for which a Closing has not occurred as of the date of such termination. 47 SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES 10.1 Survival of Representations. All representations and warranties, covenants and agreements of Sellers and Buyer contained in or made pursuant to this Agreement or in any certificate furnished pursuant hereto shall survive the Closing Date for any of the Stations acquired hereunder and shall remain in full force and effect to the following extent: (a) representations and warranties (other than the representations and warranties set forth in Section 3.16) shall survive for a period of twelve (12) months after the Closing Date for such Station or Radio Group, (b) except as otherwise provided herein, the covenants and agreements which, by their terms, survive the Closing for such Station or Radio Group shall continue in full force and effect until fully discharged (but not beyond the expiration of twelve (12) months after the Closing Date for such Station or Radio Group), and (c) any representation, warranty, covenant or agreement that is the subject of a claim which is asserted in a reasonably detailed writing prior to the expiration of the survival period set forth in this Section 10.1 shall survive with respect to such claim or dispute until the final resolution thereof; provided that notwithstanding the foregoing, representations and warranties set forth in Section 3.16 and the covenant in Section 6.15 shall survive for the lesser of eighteen (18) months after the Closing Date for any Radio Group to which such representations and warranties relate, and (ii) the expiration of the applicable statute of limitations, but, in no event, shall the survival period in this proviso be less than one (1) year after the Closing Date for any Radio Group to which such representations and warranties relate; provided further that the covenants and agreements set forth in Section 6.4 Confidentiality, Section 6.5 Cooperation, Section 6.9 Books and Records, Section 11.1 Fees and Expenses, Section 11.2 Notices, and Section 11.3 Benefit and Binding Effect shall survive any applicable Closing for the period provided therein or, if no period is specified, in perpetuity; and provided finally that anything to the contrary in this Section 10.1 notwithstanding any claim for indemnification under Section 10 hereof which is asserted in a reasonably detailed writing prior to the expiration of the survival periods provided in this Section 10.1 shall survive with respect to such claim or dispute until final resolution thereof. 10.2 Indemnification by Seller. After the Closing or a Radio Group Closing, as applicable,, but subject to Sections 10.1 and 10.5, with respect to those Stations for which a Closing has occurred, Sellers hereby agree to indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities, or damages arising out of or resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant by Sellers contained in this Agreement or in any certificate, document, or instrument delivered to Buyer under this Agreement; (b) Any and all obligations of Sellers not assumed by Buyer pursuant to this Agreement, including any liabilities arising at any time under any Contract not included in the Assumed Contracts; 48 (c) Any loss, liability, obligation, or cost arising out of or resulting from the failure of the parties to comply with the provisions of any bulk sales law applicable to the transfer of the Assets; (d) Any and all obligations, losses, liabilities, or damages arising out of or resulting from the operation or ownership of the Stations prior to the Closing (except any losses, liabilities or damages for which Buyer has received a proration in its favor or a reduction in Purchase Price under Section 6.15), including any liabilities arising under the Licenses or the Assumed Contracts to the extent that they relate to events occurring prior to the Closing Date; (e) Any and all out-of-pocket costs and expenses, including reasonable legal fees and expenses, incident to any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity; and (f) Any and all loss, liabilities or damages arising out of or resulting from the loss or revocation of any of the FCC Licenses as a result of actions taken by the FCC (or, to the extent applicable, by any reviewing court) solely in connection with the specific applications relating to the Stations and listed on Schedule 10.2. 10.3 Indemnification by Buyer. Notwithstanding any Closing, but subject to Section 10.5, Buyer hereby agrees to indemnify and hold Sellers harmless against and with respect to, and shall reimburse Sellers for: (a) Any and all losses, liabilities, or damages arising out of or resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant by Buyer contained in this Agreement or in any certificate, document, or instrument delivered to Sellers under this Agreement; (b) Any and all obligations of Sellers assumed by Buyer pursuant to this Agreement; (c) Any and all obligations, losses, liabilities, or damages arising out of or resulting from the operation or ownership of the Stations after the Closing (including, without limitation, any obligations of Sinclair, SCI, or any Affiliate thereof pursuant to any agreements by which the obligations of any of the Stations have been guaranteed), except any losses, liabilities or damages for which Sellers have received a proration in their favor; and (d) Any and all out-of-pocket costs and expenses, including reasonable legal fees and expenses, incident to any action, suit, proceeding, claim, demand, assessment, or judgment incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 10.4 Procedure for Indemnification. The procedure for indemnification shall be as follows: (a) The party claiming indemnification (the "CLAIMANT") shall promptly give notice to the party from which indemnification is claimed (the "INDEMNIFYING PARTY") of any claim, 49 whether between the parties or brought by a third party, specifying in reasonable detail the factual basis for the claim. If the claim relates to an action, suit, or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five business days after written notice of such action, suit, or proceeding was given to Claimant. (b) With respect to claims solely between the parties, following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of the thirty-day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying Party do not agree within the thirty-day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate remedy at law or equity. (c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification under this Agreement, the Indemnifying Party shall have the right at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifying Party, provided, however, that Indemnifier may not assume control of the defense unless it affirms in writing its obligation to indemnify Claimant for any damages incurred by Claimant with respect to such third-party claim. If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third-party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim. (d) If a claim, whether between the parties or by a third party, requires immediate action, the parties will make every effort to reach a decision with respect thereto as expeditiously as possible. (e) The indemnification rights provided in Section 10.2 and Section 10.3 shall extend to the members, partners, shareholders, officers, directors, employees, representatives and affiliated entities of any Claimant although for the purpose of the procedures set forth in this Section 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 10.5 Certain Limitations. (a) Notwithstanding anything in this Agreement to the contrary, neither party shall indemnify or otherwise be liable to the other party with respect to any claim for any breach of a representation or warranty, or for the breach of any covenant contained in this Agreement, unless notice of the claim is given within the relevant survival period specified in Section 10.1. (b) Notwithstanding anything in this Agreement to the contrary, but except as otherwise 50 provided in this subsection (b) and Schedule 10.5, Sellers shall not be liable to Buyer in respect of any indemnification hereunder except to the extent that (i) the aggregate amount of losses of Buyer, when aggregated with the amount of losses with respect to the Kansas City Stations pursuant to the Kansas City Agreement, if any, exceeds One Million Dollars ($1,000,000) (the "Threshold Amount") (and then only to the extent such losses, when aggregated with the amount of losses with respect to the Kansas City Stations pursuant to the Kansas City Agreement, if any, exceed the excess of Five Hundred Thousand Dollars ($500,000)) over an amount (not in excess of $100,000) which Sellers are not required to expend in environmental remediation as a result of the Environmental Threshold Amount (such excess being the "Excess Amount"), and (ii) the aggregate amount of losses of Buyer, when aggregated with the amount of losses with respect to the Kansas City Stations pursuant to the Kansas City Agreement, if any, is less than the excess of Fifty Million Dollars) ($50,000,000) over any amounts expended by Buyer pursuant to Section 6.15 (as aggregated with the Kansas City Stations as set forth therein), or with respect to which Buyer receives a proration in its favor under Section 6.15 (such excess being the "Indemnity Cap"); provided, the foregoing shall not be applicable to any amounts owed in connection with the Purchase Price or the proration adjustment thereof. In determining whether Sellers shall be obligated to indemnify Buyer under this Section 10, once the Threshold Amount has been satisfied, each representation and warranty and each covenant contained in this Agreement for which indemnity may be sought hereunder shall be read solely for purposes of determining whether a breach of such representation, warranty or covenant has occurred without regard to materiality (including Material Adverse Effect) qualifications that may be contained therein. (c) Notwithstanding any other provision of this Agreement to the contrary, in no event shall a party be entitled to indemnification for such party's consequential or punitive damages, regardless of the theory of recovery. Each party hereto agrees to use reasonable efforts to mitigate any losses which form the basis for any claim for indemnification hereunder. SECTION 11: MISCELLANEOUS 11.1 Fees and Expenses. (a) Buyer and Sellers shall each pay one-half of (i) any fees charged by the FCC in connection with obtaining the FCC Consent, and (ii) any filing fees incurred in connection with any Hart-Scott-Rodino Filings. (b) Buyer and Sellers shall each pay one-half (1/2) of any filing fees, transfer taxes, document stamps, or other charges levied by any governmental entity (other than income Taxes, which shall be the responsibility of Sellers) on account of the transfer of the Assets from Sellers to Buyer. (c) Except as otherwise provided in this Agreement, each party shall pay its own expenses incurred in connection with the authorization, preparation, execution and performance of this Agreement, including all fees and expenses of counsel, accountants, agents and representatives, and each party shall be responsible for all fees or commissions payable to any finder, broker, advisor, or similar Person retained by or on behalf of such party. 51 11.2 Notices. All notices, demands and requests required or permitted to be given under the provisions of this Agreement shall be (a) in writing, (b) sent by telecopy (with receipt personally confirmed by telephone), delivered by personal delivery, or sent by commercial delivery service or certified mail, return receipt requested, (c) deemed to have been given on the date telecopied with receipt confirmed, the date of personal delivery, or the date set forth in the records of the delivery service or on the return receipt, and (d) addressed as follows: To Buyer: Entercom Communications Corp. 401 City Avenue, Suite 409 Bala Cynwyd, Pennsylvania 19004 Attn: David J. Field Telecopy: (610) 660-5620 Telephone: (610) 660-5610 with a copy Latham & Watkins (which shall 1001 Pennsylvania Avenue, Suite 1300 not constitute Washington, D.C. 20004-2505 Attn: Joseph Sullivan, Esquire notice) to: Telecopy: (202) 637-2201 Telephone: (202) 637-2200 To Sellers: c/o Sinclair Broadcast Group, Inc. 10706 Beaver Dam Road Cockeysville, MD 21030 Attn: President Telecopy: (410) 568-1533 Telephone: (410) 568-1506 with a copy Sinclair Communications, Inc. (which shall 10706 Beaver Dam Road not constitute Cockeysville, MD 21030 notice) to: Attn: General Counsel Telecopy: (410) 568-1537 Telephone: (410) 568-1522 with a copy Steven A. Thomas, Esquire (which shall Thomas & Libowitz, P.A. not constitute 100 Light Street, Suite 1100 notice) to: Baltimore, MD 21202-1053 Telecopy: (410) 752-2046 Telephone: (410) 752-2468 or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in accordance with this Section 11.2. 52 11.3 Benefit and Binding Effect. (a) Buyer shall have the right to assign all or any portion of its rights under this Agreement to (i) any entity under common control with Buyer, (ii) a Qualified Intermediary under Section 1031 of the Code, or (iii) any lender or any agent for such lender(s) for collateral purposes only; provided, that no such assignment shall relieve Buyer of its obligations hereunder. Sellers may assign, combine, merge, or consolidate among themselves and any Affiliate of Sellers so long as Sellers or their successors and assigns are bound by the terms and conditions of this Agreement in all respects as if such successors and assigns were original parties hereto, and such assignment, combination, merger, or consolidation does not have an adverse affect on Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No Person, other than the parties hereto, is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder. Other than as expressly set forth in this Section 11.3(a), no party may assign or transfer all or any portion of its rights under this Agreement without the prior written consent of the parties hereto. (b) Sellers acknowledge and agree that at any Closing, Buyer may require that Sellers transfer the Assets and liabilities of any Station to a third party designated in writing by Buyer (a "DESIGNEE") at least ten (10) days prior to the Closing; provided, however, that (a) such Designee shall on or prior to the Closing Date assume all assumed liabilities with respect to the particular Station so transferred; (b) an FCC Order shall have been issued on or prior to the Closing Date authorizing such transfer; (c) the transfer to such Designee would not violate any laws, (d) the transfer to such Designee would not delay in any respect the date for the Closing as required by the terms of this Agreement; (e) such transfer to a Designee shall not relieve Buyer from any of its obligations hereunder; (f) there shall be no assignment or transfer (actual or implied) of this Agreement to the Designee; (g) Sellers shall have no liabilities to any such Designee under this Agreement or otherwise; and (h) such Designee shall deliver to the Sellers a written certificate, pursuant to which the Designee acknowledges and agrees for the benefit of Sellers to the terms and conditions of the designation as described herein. The parties shall cooperate in all reasonable respects in making any modifications to the closing documents and deliveries that may be necessary or appropriate in connection with the transfer of Assets and liabilities of any Station to any Designee pursuant to this Section 11.3(b). 11.4 Further Assurances. The parties shall take any actions and execute any other documents that may be necessary or desirable to the implementation and consummation of this Agreement. 11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF). IN ADDITION, EACH OF THE PARTIES HERETO SUBMITS TO LOCAL JURISDICTION IN THE STATE OF MARYLAND AND AGREES THAT ANY ACTION BY ANY PARTY HEREUNDER SHALL BE INSTITUTED IN THE STATE OF MARYLAND. 53 11.6 Entire Agreement. This Agreement, the Schedules hereto, and all documents, certificates and other documents to be delivered by the parties pursuant hereto, collectively, represent the entire understanding and agreement between Buyer and Sellers with respect to the subject matter of this Agreement. This Agreement supersedes all prior negotiations between the parties and cannot be amended, supplemented, or changed except by an agreement in writing duly executed by each of the parties hereto and by Sinclair. 11.7 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement, or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.7. 11.8 Headings. The headings of the sections and subsections contained in this Agreement are inserted for convenience only and do not form a part or affect the meaning, construction or scope thereof. 11.9 Counterparts. This Agreement may be signed in two or more counterparts with the same effect as if the signature on each counterpart were upon the same instrument. [SIGNATURES BEGIN ON FOLLOWING PAGE] IN WITNESS WHEREOF, this Amended and Restated Asset Purchase Agreement has been executed by the duly authorized officers of Buyer and Sellers as of the date first written above. Buyer: Sellers: Entercom - ---------------------------- SINCLAIR COMMUNICATIONS, INC. By: /s/ John C. Donlevie By /s/ David B. Amy ------------------------- ----------------------------------- Name: John C. Donlevie Name: David B. Amy Title: Executive Vice President Title: Secretary WCGV, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF MILWAUKEE LICENSEE, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF NEW ORLEANS, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF NEW ORLEANS LICENSEE, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF MEMPHIS, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary 55 SINCLAIR RADIO OF MEMPHIS LICENSEE, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR PROPERTIES, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF NORFOLK/ GREENSBORO LICENSEE L.P. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF NORFOLK LICENSEE, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF BUFFALO, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF BUFFALO LICENSEE, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary WLFL, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary 56 SINCLAIR RADIO OF GREENVILLE LICENSEE, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF WILKES-BARRE, INC. By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary SINCLAIR RADIO OF WILKES-BARRE LICENSEE, LLC By: /s/ David B. Amy ----------------------------------- Name: David B. Amy Title: Secretary 57 EX-27 9 FDS --
5 0000912752 SINCLAIR BROADCAST GROUP 1,000 US DOLLAR 9-MOS DEC-31-1998 JAN-01-1999 SEP-30-1999 1 8,362 0 187,484 3,795 0 1,043,002 332,676 82,242 2,985,002 294,730 750,000 200,000 35 970 802,740 3,985,002 0 529,090 0 409,240 2,174 0 132,622 14,946 8,893 (23,839) 12,187 0 0 (11,652) (.20) (.20) a) This information has been prepared in accordance with SFAS No 128, Earnings per Share. The basic and diluted EPS calculations have been entered in place of primary and diluted, respectively.
-----END PRIVACY-ENHANCED MESSAGE-----