Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of May 5, 2006 among
Emmis Television Broadcasting, L.P., an Indiana limited partnership, and Emmis
Television License, LLC, an Indiana limited liability company (collectively,
“Seller”), Emmis Operating Company, an Indiana corporation (“Guarantor”) and
Hearst-Argyle Television, Inc., a Delaware corporation (“Buyer”).

 

Recitals

 

A.            Seller owns and operates the following television broadcast
station (the “Station”) pursuant to certain authorizations issued by the Federal
Communications Commission (the “FCC”):

 

WKCF(TV), Clermont, Florida (including WKCF-DT)

 

B.            Pursuant to the terms and subject to the conditions set forth in
this Agreement, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Station Assets (defined below).

 

C.            Guarantor desires to unconditionally guarantee any and all
obligations and liabilities of Seller, or Seller’s permitted assignees, under
this Agreement, as an inducement to Buyer to enter into this Agreement.

 

D.            References to the Schedules herein shall constitute references to
Schedules delivered from Seller to Buyer attached to the letter of even date
herewith (the “Disclosure Letter”).

 

Agreement

 

NOW, THEREFORE, taking the foregoing into account, and in consideration of the
mutual covenants and agreements set forth herein, the parties, intending to be
legally bound, hereby agree as follows:

 

ARTICLE 1:           PURCHASE OF ASSETS

 

1.1.          Station Assets. On the terms and subject to the conditions hereof,
at Closing (defined below), except as set forth in Sections 1.2 and 1.3, Seller
shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall
purchase and acquire from Seller, all right, title and interest of Seller in and
to all assets and properties of Seller, real and personal, tangible and
intangible, that are owned, leased, licensed, used or held for use in the
operation of the Station (the “Station Assets”), as and to the extent existing
on the Closing Date (defined below), free and clear of all Liens (defined below)
except Permitted Liens (defined below) including without limitation the
following:

 

(a)           all licenses, permits and other authorizations issued to Seller by
the FCC with respect to the Station (the “FCC Licenses”), including those
described on Schedule 1.1(a), and including any renewals or modifications
thereof between the date hereof and Closing,

 

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together with all other governmental licenses, permits and regulatory approvals
pertaining to the Station (collectively with the FCC Licenses, the “Licenses”);

 

(b)           all of Seller’s equipment, transmitters, antennas, cables, towers,
vehicles, furniture, fixtures, machinery and spare parts, notebook and other
computers (including operating software licenses) and other tangible personal
property of every kind and description that are used or held for use in the
operation of the Station, including without limitation those listed on Schedule
1.1(b), except for any retirements or dispositions thereof made between the date
hereof and Closing in the ordinary course of business in accordance with Article
4 (the “Tangible Personal Property”);

 

(c)           all of Seller’s leased real property used or held for use in the
operation of the Station (including any appurtenant easements and improvements
located thereon), including without limitation those listed on Schedule 1.1(c)
(the “Real Property”);

 

(d)           all agreements for the sale of advertising time on the Station,
and all other contracts, agreements and leases used in the Station’s business,
including without limitation those listed on Schedule 1.1(d), together with all
contracts, agreements and leases made between the date hereof and Closing in
accordance with Article 4 (the “Station Contracts”);

 

(e)           all of Seller’s rights in and to the Station’s call letters and
Seller’s rights in and to the trademarks, trade names, service marks, internet
domain names, copyrights, programs and programming material, jingles, slogans,
logos, and other intangible property, including applications for any of the
foregoing, which are used or held for use in the operation of the Station,
including without limitation those listed on Schedule 1.1(e) (the “Intangible
Property”);

 

(f)            Seller’s rights in and to all the files, documents, records, and
books of account (or copies thereof) relating to the operation of the Station,
including the Station’s local public files, programming information and studies,
engineering data, advertising studies, marketing and demographic data, sales
correspondence, lists of advertisers, credit and sales reports, and logs,
traffic system history records, and general, financial and personnel records,
but excluding records relating primarily to Excluded Assets (defined below);

 

(g)           all of Seller’s goodwill in the Station and its business;

 

(h)           subject to Section 1.6 below, assets, properties and rights set
forth in the February 28, 2006 balance sheet included in the Financial
Statements (defined below); and

 

(i)            all claims, causes of action, rights of recovery and rights of
set-off of Seller, whether mature, contingent or otherwise, arising primarily
out of the business of the Station as and to the extent attributable to any
period after the Effective Time.

 

1.2.          Excluded Assets. Notwithstanding anything to the contrary
contained herein, the Station Assets shall not include the following assets or
any rights, title and interest therein (the “Excluded Assets”):

 

(a)           all cash and cash equivalents of Seller, including without
limitation certificates of deposit, commercial paper, treasury bills, marketable
securities, money market accounts and all such similar accounts or investments;

 

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(b)           all tangible and intangible personal property of Seller retired or
disposed of between the date of this Agreement and Closing in accordance with
Article 4;

 

(c)           all Station Contracts that are terminated or expire prior to
Closing in accordance with Article 4;

 

(d)           Seller’s corporate and trade names not used primarily in the
operation of the Station (including the name “Emmis”), charter documents, and
books and records relating to the organization, existence or ownership of
Seller, duplicate copies of the records of the Station, and all records not
relating to the operation of the Station;

 

(e)           all contracts of insurance, all coverages and proceeds thereunder
and all rights in connection therewith, including without limitation rights
arising from any refunds due with respect to insurance premium payments to the
extent related to such insurance policies;

 

(f)            all pension, profit sharing plans and trusts and the assets
thereof and any other employee benefit plan or arrangement and the assets
thereof, if any, maintained by Seller;

 

(g)           the Station’s accounts receivable and any other rights to payment
of cash consideration (including without limitation all rights to payments under
the Station’s network affiliation agreements, whether or not offset) for goods
or services sold or provided prior to the Effective Time (defined below) or
otherwise attributable to any period prior to the Effective Time (the “A/R”);

 

(h)           any non-transferable shrinkwrapped computer software and any other
non-transferable computer licenses that are not material to the operation of the
Station;

 

(i)            all claims, causes of action, rights of recovery and rights of
set-off of Seller, whether mature, contingent or otherwise, against third
parties with respect to the Station and the Station Assets, to the extent
attributable to any period prior to the Effective Time;

 

(j)            all deposits and prepaid expenses (and rights arising therefrom
or related thereto), except to the extent Seller receives a credit therefor
under Section 1.6;

 

(k)           all claims of Seller with respect to any tax refunds;

 

(l)            computers and other assets located at the Emmis Communications
Corporation headquarters, and the centralized server facility, data links,
payroll system and other operating systems and related assets that are primarily
used in the operation of multiple stations;

 

(m)          the Station’s owned studio site located at 31 Skyline Drive, Lake
Mary, Florida (the “Studio Site”);

 

(n)           all assets primarily used or held for use in the operation of “The
Daily Buzz” and Seller’s ownership interest in The Daily Buzz, LLC;

 

(o)           the assets described in Section 1.3(c);

 

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(p)           the assets listed on Schedule 1.2, and the slogan “Great Media,
Great People, Great Service;” and

 

(q)           the Tolling Agreement with the FCC referenced on Schedule 1.1(a).

 

1.3.          Shared Assets.

 

(a)           Some of the Station Contracts may be used in the operation of
multiple stations or other business units (the “Shared Contracts”). The rights
and obligations under the Shared Contracts shall be equitably allocated among
stations and/or such other business units in a manner reasonably determined by
Seller in accordance with the following equitable allocation principles:

 

(i)            any allocation set forth in the Shared Contract shall control;

 

(ii)           if none, then any allocation previously made by Seller in the
ordinary course of Station operations shall control;

 

(iii)          if none, then the quantifiable proportionate benefit to be
received by the parties after Closing shall control;

 

(iv)          if not quantifiable, then reasonable accommodation shall control;
and

 

(v)           notwithstanding the foregoing, in the case of any Shared Contract
which is a retransmission consent agreement, Buyer shall only assume such
agreement as it relates to the Station and Buyer shall have no obligation to
assume (and the Assumed Obligations (defined below) shall exclude) any
liabilities or obligations under such agreement as they could apply to any other
assets or businesses owned by Buyer or its affiliates now or in the future.

 

(b)           Buyer shall cooperate with Seller (and any third party designated
by Seller) in such allocation, and the Station Contracts (and Assumed
Obligations) will include only Buyer’s allocated portion of the rights and
obligations under the Shared Contracts (without need for further action and
whether such allocation occurs before or after Closing). If designated by
Seller, such allocation will occur by termination of the Shared Contract and
execution of new contracts. Buyer’s allocated portion of the Shared Contracts
will not include any group discounts or similar benefits specific to Seller or
its affiliates. Completion of documentation of any such allocation is not a
condition to Closing.

 

(c)           The Tangible Personal Property located at the Studio Site shall be
allocated and conveyed as follows:

 

(i)  the equipment used in the master control facility and the other items of
Tangible Personal Property that are used primarily in the operation of the
Station are Station Assets;

 

(ii)  the items listed on Schedule 1.2 and the other items of tangible personal
property at such site not described in clause (i) above are Excluded Assets;

 

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(iii)  the items used in the master control facility and included in the Station
Assets shall be conveyed on the Transition Date (defined below) rather than
Closing; and

 

(iv)  upon the Transition Date, Seller shall make such items available to Buyer,
and within ten (10) Business Days (defined below) thereafter, Buyer shall remove
such items from the Studio Site.

 

As used herein, “Transition Date” means the date WVUE(TV), New Orleans,
Louisiana discontinues use of the Station’s master control facility, but not
later than December 31, 2006.  Seller shall give Buyer notice of the Transition
Date.

 

(d)  Prior to Closing, if requested by Buyer, Seller shall make available to
Buyer appropriate Station employees for traffic system training at reasonable
times during normal business hours, provided that such training does not
interfere in any material respect with such employee’s performance of services
for the Station or WVUE.

 

1.4.          Assumption of Obligations.

 

(a)           Assumption of Obligations. On the Closing Date, Buyer shall assume
the obligations of Seller arising during, or attributable to, any period of time
on or after the Closing Date under the Station Contracts and the FCC Licenses,
the obligations described in Section 5.6 and any other liabilities of Seller to
the extent Buyer receives a credit therefor under Section 1.6 (collectively, the
“Assumed Obligations”).

 

(b)           Liabilities Not Assumed. Except for the Assumed Obligations, Buyer
does not assume, and will not be deemed by the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby to have
assumed, any other liabilities or obligations of Seller of any kind or nature
whatsoever, regardless of whether required by generally accepted accounting
principles to be reflected on a balance sheet or disclosed in the related notes
(the “Retained Obligations”). Without limiting the generality of the foregoing,
the Retained Obligations include and Buyer shall not assume nor shall Buyer be
liable for: (i) any liabilities or obligations of Seller relating to the
Excluded Assets; (ii) all obligations and liabilities of Seller arising out of
the violation by Seller of any Environmental Laws (as defined below) or for the
Release (as defined below) of any Hazardous Materials (as defined below)
(including, without limitation those arising out of or related to the Studio
Site or leased real property); (iii) any liabilities or obligations of Seller to
any employees of Seller or its affiliates not employed by Buyer; (iv) any
liability relating to the employment of current or former employees of the
Station prior to the Closing, including but not limited to any liabilities or
obligations of Seller for severance, accrued vacation or sick leave except as
set forth in Section 5.6 hereof or any liabilities under or in respect of any
Employee Benefit Plan (as hereinafter defined); (v) except for the Station
Contract with The Daily Buzz, LLC and any other Station Contracts listed on
Schedule 1.1(d), any obligations or liabilities of Seller to any other business
unit of Seller, any affiliate of Seller, any director or officer of Seller or
any of its affiliates, or the holder of any equity or ownership interest in
Seller or any of its affiliates; (vi) any litigation, proceeding, or claim by
any Person (defined below) to the extent relating to the business or operations
of the Station prior to the Effective Time, whether or not such litigation or
proceeding or claim is pending, threatened or asserted before, on or after the
Effective Time; (vii) any

 

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liability for income or other taxes relating to the Station pertaining to the
period prior to the Effective Time; (viii) any liability in respect of any note,
bond or indebtedness for borrowed money; or (ix) any liability or sanctions
imposed by the FCC resulting from violation(s) by the Station of FCC rule(s)
prior to the Effective Time.

 

As used in this Agreement, “Environmental Laws” means any law, rule, regulation,
judgment, decree, stipulation, or injunction pertaining to land use, air, soil,
surface water, groundwater (including the protection, cleanup, removal,
remediation or damage thereof), Hazardous Materials, wetlands, public or
employee health or safety or any other environmental matter, including, without
limitation, the following laws: (i) Clean Air Act (42 U.S.C. §7401, et seq.);
(ii) Clean Water Act (33 U.S.C. §1251, et seq.); (iii) Emergency Planning and
Community Right-to-Know Act (42 U.S.C. §11001, et seq.); (iv) Resource
Conservation and Recovery Act (42 U.S.C. §6901, et seq.); (v) Toxic Substances
Control Act (15 U.S.C. §2601, et seq.); (vi) Occupational Safety and Health Act
(29 U.S.C. §651, et seq.); (vii) Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. §9601, et seq.); (viii) Safe Drinking
Water Act (42 U.S.C. §300f, et seq.); (ix) Toxic Substances Control Act (15
U.S.C. §2601, et seq.); (x) Rivers and Harbors Act (33 U.S.C. §401, et seq.),
(xi) Endangered Species Act (16 U.S.C. §1531, et seq.); (xii) Hazardous Material
Transportation Act (49 U.S.C. §1801, et seq.); (xiii) any similar or applicable
environmental state law, rule or regulation; and (xiv) any other law, rule or
regulation relating to Hazardous Materials; and (xv) any law, rule or regulation
relating to radio radiation.

 

As used in this Agreement, “Hazardous Materials” means any wastes, substances,
chemicals, or materials (whether solids, liquids or gases) that are defined as
“hazardous wastes,” “hazardous substances,” “toxic substances,” “radioactive
materials,” or other similar designations in, or otherwise subject to
prohibition or regulation under, any Environmental Laws. “Hazardous Materials”
includes polychlorinated biphenyls (PCBs), asbestos, asbestos-related products,
radioactive materials and wastes, and petroleum and petroleum products
(including crude oil or any fraction thereof) and other pollutants and
contaminants.

 

As used in this Agreement, “Release” means to pump, pour, empty, eject, spill,
leak, emit, deposit, discharge, disseminate, leach, migrate, dispose, dump,
inject, or place into the environment, or to cause any of the foregoing.

 

1.5.          Purchase Price. In consideration for the sale of the Station
Assets to Buyer, at Closing Buyer shall pay Seller, by wire transfer of
immediately available funds, the sum of Two Hundred Seventeen Million Five
Hundred Thousand Dollars ($217,500,000), subject to adjustment pursuant to
Section 1.6 (the “Purchase Price”).

 

1.6.          Prorations and Adjustments.

 

(a)           All prepaid and deferred income and expenses relating to the
Station Assets and arising from the operation of the Station shall be prorated
between Buyer and Seller in accordance with accounting principles generally
accepted in the United States (“GAAP”) as of 12:01 a.m. on the day of Closing
(the “Effective Time”). Such prorations shall include without limitation all ad
valorem, real estate and other property taxes (except transfer taxes as provided
by Section 11.1), music and other license fees, make good advertising to be
provided by Buyer, employee performance incentives set forth in employment
agreements or annual compensation

 

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plans, any vacation for Transferred Employees (defined below) (except accruals
for the fiscal year of Seller in which Closing occurs for which there shall be
no adjustment), utility expenses, rent and other amounts under Station Contracts
and similar prepaid and deferred items. Seller shall receive a credit for the
unapplied portion of all of the Station’s deposits and prepaid expenses. Sales
commissions related to the sale of advertisements broadcast on the Station prior
to the Effective Time shall be the responsibility of Seller, and sales
commissions related to the sale of advertisements broadcast on the Station after
the Effective Time shall be the responsibility of Buyer. All revenue and
operating expenses of the Station shall be further adjusted and allocated
between Seller and Buyer to the extent necessary to effect the principle that
all such income and expenses attributable to the operation of the Station on and
after the Closing Date shall be for the account of Buyer and all such income and
expenses attributable to the operation of the Station prior to the Closing Date
shall be for the account of Seller

 

(b)           With respect to trade, barter or similar agreements for the sale
of time for goods or services assumed by Buyer pursuant to Section 1.1(d), if at
Closing the Station has an aggregate negative or positive barter balance (i.e.,
the amount by which the value of air time to be provided by the Station after
the Effective Time exceeds, or conversely, is less than, the fair market value
of corresponding goods and services), there shall be no proration or adjustment,
unless the negative or positive barter balance of the Station as an aggregate
exceeds $20,000, in which event such excess or deficiency, as the case may be,
shall be treated either as prepaid time sales or a receivable of Seller, and
adjusted for as a proration in Buyer’s or Seller’s favor, as applicable. In
determining barter balances, the value of air time shall be based upon Seller’s
rates as of Closing, and corresponding goods and services shall include those to
be received by the Station after Closing plus those received by the Station
before Closing to the extent conveyed by Seller to Buyer as a part of the
Station Assets.

 

(c)           No later than three (3) Business Days prior to the scheduled
Closing date, Seller shall provide Buyer with a statement setting forth a
reasonably detailed computation of Seller’s reasonable and good faith estimate
of the Adjustment Amount (defined below) as of Closing (the “Preliminary
Adjustment Report”). As used herein, the “Adjustment Amount” means the net
amount by which the Purchase Price is to be increased or decreased in accordance
with this Section 1.6. If the Adjustment Amount reflected on the Preliminary
Adjustment Report is a credit to Buyer, then the Purchase Price payable at
Closing shall be reduced by the amount of the preliminary Adjustment Amount, and
if the Adjustment Amount reflected on the Preliminary Adjustment Report is a
charge to Buyer, then the Purchase Price payable at Closing shall be increased
by the amount of such preliminary Adjustment Amount. For a period of ninety (90)
days after Closing, Seller and its auditors and Buyer and its auditors may
review the Preliminary Adjustment Report and the related books and records of
Seller with respect to the Station, and Buyer and Seller will in good faith seek
to reach agreement on the final Adjustment Amount. If agreement is reached
within such 90-day period, then promptly thereafter Seller shall pay to Buyer or
Buyer shall pay to Seller, as the case may be, an amount equal to the difference
between (i) the agreed Adjustment Amount and (ii) the preliminary Adjustment
Amount indicated in the Preliminary Adjustment Report. If agreement is not
reached within such 90-day period, then the dispute resolutions of Section
1.6(d) shall apply.

 

(d)           If the parties do not reach an agreement on the Adjustment Amount
within the 90-day period specified in Section 1.6(c), then Seller and Buyer
shall select an independent accounting firm of recognized national standing (the
“Arbitrating Firm”) to resolve the disputed

 

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items. If Seller and Buyer do not agree on the Arbitrating Firm within five (5)
calendar days after the end of such 90-day period, then the Arbitrating Firm
shall be a nationally recognized independent accounting firm selected by lot
(after excluding one firm designated by Seller and one firm designated by
Buyer). Buyer and Seller shall each inform the Arbitrating Firm in writing as to
their respective positions with respect to the Adjustment Amount, and each shall
make available to the Arbitrating Firm any books and records and work papers
relevant to the preparation of the Arbitrating Firm’s computation of the
Adjustment Amount. The Arbitrating Firm shall be instructed to complete its
analysis within thirty (30) days from the date of its engagement and upon
completion to inform the parties in writing of its own determination of the
Adjustment Amount, the basis for its determination and whether its determination
is within the Mid-Range (defined below) or if not, whether it is closer to
Buyer’s or Seller’s written determination of the Adjustment Amount. Any
determination by the Arbitrating Firm in accordance with this Section shall be
final and binding on the parties. Within five (5) calendar days after the
Arbitrating Firm delivers to the parties its written determination of the
Adjustment Amount, Seller shall pay to Buyer, or Buyer shall pay to Seller, as
the case may be, an amount equal to the difference between (i) the Adjustment
Amount as determined by the Arbitrating Firm and (ii) the preliminary Adjustment
Amount indicated in the Preliminary Adjustment Report.

 

(e)           If the Arbitrating Firm’s determination of the Adjustment Amount
is within the Mid-Range, then Seller and Buyer shall each pay one-half of the
fees and disbursements of the Arbitrating Firm in connection with its analysis.
If not, then (i) if the Arbitrating Firm determines that the written position of
Buyer concerning the Adjustment Amount is closer to its own determination, then
Seller shall pay the fees and disbursements of the Arbitrating Firm in
connection with its analysis, or (ii) if the Arbitrating Firm determines that
the written position of Seller concerning the Adjustment Amount is closer to its
own determination, then Buyer shall pay the fees and disbursements of the
Arbitrating Firm in connection with its analysis. As used herein, the term
“Mid-Range” means a range that (i) equals twenty percent (20%) of the absolute
difference between the written positions of Buyer and Seller as to the
Adjustment Amount and (ii) has a midpoint equal to the average of such written
positions of Buyer and Seller.

 

(f)            Concurrently with the payment of any amount required to be paid
under Section 1.6(c) or (d), the payor shall pay the payee interest on such
amount for the period from the Closing Date until the date paid at a rate equal
to the prime rate charged by JP Morgan Chase. All payments to be made under
Section 1.6 shall be paid by wire transfer in immediately available funds to the
account of the payee at a financial institution in the United States and shall
for all purposes constitute an adjustment to the Purchase Price.

 

1.7.          Allocation. After Closing, Buyer and Seller will allocate the
Purchase Price in accordance with the respective fair market values of the
Station Assets and the goodwill being purchased and sold in accordance with the
requirements of Section 1060 of the Internal Revenue Code of 1986, as amended
(the “Code”). Buyer and Seller shall file its federal income tax returns and its
other tax returns reflecting the allocation made pursuant to this Section.

 

1.8.          Closing. The consummation of the sale and purchase of the Station
Assets provided for in this Agreement (the “Closing”) shall take place on the
fifth Business Day after the last to occur of the date of public notice of the
FCC Consent (defined below), satisfaction or

 

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waiver of the condition set forth on Schedule 11.2, HSR Clearance (defined
below) and delivery of the last of the Required Consents (defined below) (or on
such earlier day as Buyer and Seller may mutually agree), in any event subject
to satisfaction or waiver of the conditions set forth in Articles 6 and 7 below.
The date on which the Closing is to occur is referred to herein as the “Closing
Date.”  “Business Day,” whether or not capitalized, shall mean every day of the
week except Saturday, Sunday and days on which banks are closed in the State of
New York.

 

1.9.          Governmental Consents.

 

(a)           Within five (5) Business Days of the date of this Agreement, Buyer
and Seller shall file an application with the FCC (the “FCC Application”)
requesting FCC consent to the assignment of the FCC Licenses to Buyer. Public
notice of FCC consent to the assignment of the main station (both analog and
digital) FCC Licenses to Buyer without any material adverse conditions other
than those of general applicability is referred to herein as the “FCC Consent.” 
Buyer and Seller shall diligently prosecute the FCC Application and otherwise
use their commercially reasonable efforts to obtain the FCC Consent as soon as
possible. Seller shall timely publish and/or broadcast the notices required by
FCC rules and regulations pertaining to the FCC Application. In the event that
the FCC imposes any condition upon Buyer or Seller with respect to the FCC
Application, the party subject to such condition shall use its commercially
reasonable efforts to comply therewith, provided, however, that the party
subject to such condition shall not be required to take any action if (i) the
condition was imposed on it as the result of a circumstance the existence of
which does not constitute a breach by the party of any of its representations,
warranties, or covenants under this Agreement, and (ii) compliance with the
condition would, in its reasonable judgment, be unduly burdensome on it in any
material respect (financial or otherwise). 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 Article 10, the
parties shall jointly request an extension of the effective period of the FCC
Consent. No extension of the effective period of the FCC Consent shall limit the
right of a party to exercise its rights under Article 10.

 

(b)           It is acknowledged and agreed that, for purposes of this Section
1.9 and any other provision of this Agreement, any condition imposed by the FCC
or any other governmental authority (including, without limitation, any court or
judicial body) requiring the divestiture of any assets, properties or
businesses, including but not limited to television broadcast station WESH(TV),
Daytona Beach, Florida (“WESH”), by Buyer or any of its affiliates would be
unduly burdensome in a material respect and therefore not required. Buyer shall
not enter into any agreement or transactions to acquire any other media
properties or stations in the Orlando-Daytona-Melbourne, Florida DMA, nor shall
Buyer enter into any operating agreement, time brokerage agreement, local
marketing agreement, joint sales agreement, joint venture or other similar
agreement, in each case which could reasonably be expected to have the effect of
delaying action by the FCC upon the FCC Application or the consummation of the
transactions contemplated hereby.

 

(c)           Within ten (10) Business Days after the date of this Agreement,
Buyer and Seller shall make any required filings with the Federal Trade
Commission and the United States Department of Justice pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”)
with respect to the transactions contemplated hereby (including a request for
early termination of the waiting period thereunder), and shall thereafter
promptly

 

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respond to all requests received from such agencies for additional information
or documentation. Expiration or termination of any applicable waiting period
under the HSR Act is referred to herein as “HSR Clearance.”

 

(d)           Buyer and Seller shall notify each other and provide copies of all
petitions, pleadings and other documents and correspondence filed with or
received from any governmental agency with respect to this Agreement or the
transactions contemplated hereby. Buyer and Seller shall furnish each other with
such information and assistance as the other may reasonably request in
connection with their preparation of any governmental filing hereunder. The FCC
Consent and HSR Clearance are referred to herein collectively as the
“Governmental Consents.”

 

ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES

 

Seller makes the following representations and warranties to Buyer:

 

2.1.          Organization. Seller is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and is
qualified to do business in each jurisdiction in which the Station Assets are
located. Seller has the requisite power and authority to execute, deliver and
perform this Agreement and all of the other agreements and instruments to be
made by Seller pursuant hereto (collectively, the “Seller Ancillary Agreements”)
and, to its knowledge, to consummate the transactions contemplated hereby.

 

2.2.          Authorization. The execution, delivery and performance of this
Agreement and the Seller Ancillary Agreements by Seller have been duly
authorized and approved by all necessary action of Seller and do not require any
further authorization or consent of Seller. This Agreement is, and each Seller
Ancillary Agreement when made by Seller and the other parties thereto will be, a
legal, valid and binding agreement of Seller enforceable in accordance with its
terms, except in each case as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws affecting or
limiting the enforcement of creditors’ rights generally and except as such
enforceability is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

 

2.3.          No Conflicts. Except for the Governmental Consents and consents to
assign certain of the Station Contracts as set forth on Schedule 1.1(c) and
Schedule 1.1(d), the execution, delivery and performance by Seller of this
Agreement and the Seller Ancillary Agreements and the consummation by Seller of
any of the transactions contemplated hereby and thereby does not and will not
conflict with or violate any organizational documents of Seller or any law,
judgment, order, or decree to which Seller is subject, or require the consent or
approval of, or a filing by Seller with, any governmental or regulatory
authority or any third party or any contract, mortgage or instrument to which
Seller is a party or is bound or subject.

 

2.4.          FCC Licenses. Schedule 1.1(a) lists all FCC Licenses and all other
material Licenses relating to the operation of the Station or required for the
lawful conduct of the business of the Station as now conducted. Except as set
forth on Schedule 1.1(a):

 

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(a)           Seller is the valid and legal holder of the Licenses described on
Schedule 1.1(a). The Licenses are valid and in full force and effect and have
not been revoked, suspended, canceled, rescinded or terminated and have not
expired and constitute all of the material licenses, permits and authorizations
used in or required for the current operation of the Station under applicable
laws including but not limited to the Communications Act (as defined below).
None of the Licenses is subject to any condition or restriction which would
limit the full operation of the Station as currently operated by Seller. To
Seller’s knowledge, there is not pending or threatened, any action, proceeding,
complaint, notice of forfeiture, claim or investigation by or before the FCC or
any other governmental authority to revoke, suspend, cancel, rescind or
materially adversely modify any of the Licenses or that would materially impair
the ability of Seller to assign the Licenses to Buyer or which would materially
impede Seller’s ability to prosecute the FCC Application or seek the grant of
the FCC Consent (other than proceedings to amend FCC rules of general
applicability). There is not issued or outstanding, by or before the FCC, or, to
Seller’s knowledge threatened, any order to show cause, notice of violation,
notice of apparent liability, or order of forfeiture against the Station or
against Seller with respect to the Station that could result in any such action.
The Station is operating in compliance in all material respects with the FCC
Licenses, the Communications Act of 1934, as amended, and the rules, regulations
and policies of the FCC (collectively, the “Communications Act”).

 

(b)           The Station has been assigned channel 17 by the FCC for the
provision of digital television (“DTV”) service. The FCC Licenses include a
license for a maximized DTV facility on channel 17 and the FCC has tentatively
designated channel 17 for the Station’s post-transition DTV operation. The
Station is broadcasting the DTV signal in accordance with such authorization in
all material respects.

 

2.5.          Taxes. Seller has, in respect of the Station’s business, filed all
foreign, federal, state, county and local income, excise, property, sales, use,
franchise and other tax returns and reports which are required to have been
filed by it under applicable law, and has paid all taxes which have become due
pursuant to such returns or applicable law or pursuant to any assessments which
have become payable.

 

2.6.          Personal Property. Schedule 1.1(b) contains a list of material
items of Tangible Personal Property as of the date of this Agreement included in
the Station Assets, subject to Section 1.3(c). Except as set forth on Schedule
1.1(b), Seller has good and marketable title to the Tangible Personal Property
free and clear of liens, claims and encumbrances (“Liens”) other than Permitted
Liens. Except as set forth on Schedule 1.1(b), all material items of Tangible
Personal Property are in good operating condition, ordinary wear and tear
excepted. As used herein, “Permitted Liens” means, collectively, the Assumed
Obligations, liens for taxes not yet due and payable and liens that will be
released at or prior to Closing and are disclosed on Schedule 1.1(b).

 

2.7.          Real Property. Schedule 1.1(c) includes a description of each
lease of Real Property or similar agreement included in the Station Contracts
(the “Real Property Leases”). Except for the Studio Site, Seller does not own
any real property which is primarily used or held for use in the operation of
the Station.

 

2.8.          Contracts. Schedule 1.1(d) is a true, correct and complete listing
of all Material Station Contracts (defined below) existing on the date of this
Agreement, and Seller has made

 

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available copies of such contracts to Buyer, except as set forth on Schedule
1.1(d), in which case Seller has provided a description of the material terms of
such Station Contracts on Schedule 1.1(d). Schedule 1.1(c) and Schedule 1.1(d)
identify each such Material Station Contract (including Real Property Leases)
for which consent to assignment is required for the assignment of the Station
Contract to Buyer. Except as set forth on Schedule 1.1(d), each of the Station
Contracts (including without limitation each of the Real Property Leases) is in
effect and is binding upon Seller and, to Seller’s knowledge, the other parties
thereto (subject to bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors’ rights generally). Seller
has performed its obligations under each of the Station Contracts in all
material respects, and is not in material default thereunder, and to Seller’s
knowledge, no other party to any of the Station Contracts is in default
thereunder in any material respect.

 

“Material Station Contracts” means, with respect to the Station, except for
Retained Obligations:

 

(i)  contracts and other agreements for the future acquisition or sale of any
assets involving $20,000 individually (or in the aggregate, in the case of any
related series of contracts and other agreements), other than for sales of
advertising in the ordinary course of business consistent with past practice;

 

(ii)  contracts and other agreements relating to joint ventures or partnerships;

 

(iii)  contracts and other agreements calling for future aggregate purchase
prices, payments or other consideration to or from Seller in any one year having
a value of more than $20,000 in any one case (or in the aggregate, in the case
of any related series of contracts and other agreements) other than for sales of
advertising in the ordinary course of business consistent with past practice;

 

(iv)  contracts and other agreements containing covenants of Seller prohibiting
or materially limiting the right to compete in any line of business, prohibiting
or restricting its ability to conduct business with any Person or in any
geographical area, or requiring the acquisition of goods or services exclusively
from a single supplier or provider; “Person” means any individual, general or
limited partnership, corporation, limited liability company, association, trust,
unincorporated organization or other entity;

 

(v)  contracts and other agreements relating to the acquisition by Seller of any
operating business, the capital stock of any other Person or, except for
Tangible Property acquired in the ordinary course of business consistent with
past practices, or any other assets or property (real or personal) for a
purchase price of more than $20,000 individually (or in the aggregate, in the
case of any related series of contracts and other agreements);

 

(vi) contracts and other agreements requiring the payment by or to Seller of a
royalty, override or similar commission or fee of more than $20,000 in any one
year;

 

 (vii)  contracts and other agreements relating to the creation of liens or the
guarantee of the payment of liabilities or performance of obligations of any
other Person by Seller;

 

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(viii)  all network affiliation contracts;

 

(ix)  all sales agency or advertising representation contracts;

 

(x)  all contracts with independent contractors other than those not requiring
expenditures of more than $20,000 in any calendar year and having a term of not
more than one (1) year;

 

(xi)  all contracts and other agreements for the sale of broadcast time on the
Station for other than monetary consideration having a value of more than
$20,000;

 

(xi)    all contracts and other agreements pursuant to which the Station
acquires programming or provides programming to third parties; and

 

(xii)  all retransmission consent agreements.

 

2.9.          Environmental. Except as set forth in the Phase I environmental
assessment of the Studio Site provided by Seller to Buyer (“Phase I”), to
Seller’s knowledge, no Hazardous Material has been generated, stored,
transported or Released on, in, from or to the Real Property included in the
Station Assets or the Studio Site. Except as set forth in the Phase I, to
Seller’s knowledge, Seller has complied in all material respects with all
Environmental Laws applicable to the Station.

 

2.10.        Intangible Property. Schedule 1.1(e) contains a description of the
material Intangible Property as of the date of this Agreement included in the
Station Assets. Except as set forth on Schedule 1.1(e), (i) Seller’s use of the
Intangible Property does not infringe upon any third party rights in any
material respect and (ii) none of the material Intangible Property is being
infringed by any third party. Except as set forth on Schedule 1.1(e), Seller has
not received any written notice that its use of the Intangible Property at the
Station is unauthorized or violates or infringes upon the rights of any other
Person or challenging the ownership, use, validity or enforceability of any
Intangible Property. Except as set forth on Schedule 1.1(b), Seller owns or has
the right to use the Intangible Property free and clear of Liens other than
Permitted Liens.

 

2.11.        Employees.

 

(a)           Seller has complied in all material respects with all labor and
employment laws, rules and regulations applicable to the Station’s business,
including without limitation those which relate to prices, wages, hours,
discrimination in employment and collective bargaining. There is no, nor within
the past twelve months has there been any, unfair labor practice charge or
complaint against Seller in respect of the Station’s business pending or to
Seller’s knowledge threatened before the National Labor Relations Board, EEOC or
any federal, state or local labor relations board or any court or tribunal, and
there is no, nor within the past twelve months has there been any, strike,
dispute, request for representation, slowdown or stoppage pending or threatened
in respect of the Station’s business.

 

(b)           Seller has delivered to Buyer the list described in Section
5.6(a). There are no collective bargaining agreements with respect to the
Station. Unused annual vacation and sick leave benefits for Station employees do
not carryover from year-to-year.

 

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(c)           As used in this Agreement, “Employee Benefit Plans” means each
employee benefit plan, policy, program or contract, including, but not limited
to, employment, bonus, incentive compensation, deferred compensation, pension,
profit sharing, retirement, equity-based, leave of absence, vacation, sick
leave, severance, insurance, workers’ compensation, disability, supplemental
unemployment, or other “employee welfare benefit plan” or “employee pension
benefit plan” as defined in Sections 3(1) and 3(2) of ERISA) which are
maintained or contributed to by Seller for the benefit of, or pursuant to which
Seller or any subsidiary or ERISA Affiliate (defined below) has any liability
with respect to any current or former employee. As used in this Agreement, an
“ERISA Affiliate” means any entity required to be aggregated with Seller under
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

 

(d)           For each Employee Benefit Plan intended to qualify under Section
401(a) of the Code (other than any multiemployer plan, as defined in Sections
4001(a)(3) or 3(37) of ERISA or Section 414(f) of the Code), a favorable
determination letter has been issued by the Internal Revenue Service and no
events have occurred that would adversely affect the tax-qualified status of any
such Employee Benefit Plan.

 

(e)           Seller has at all times complied, and currently complies, in all
material respects with the applicable health care continuation requirements for
any Employee Benefit Plan that is a welfare benefit plan (as defined in Section
3(1) of ERISA), including Section 4980B of the Code and Sections 601-608 of
ERISA (collectively referred to as “COBRA”) and any applicable health care
continuation coverage requirements under state law.

 

2.12.        Insurance. Seller maintains insurance policies or other
arrangements with respect to the Station and the Station Assets consistent with
its practices for other stations, and will maintain such policies or
arrangements until the Effective Time.

 

2.13.        Compliance with Law. Except as set forth on Schedule 1.1(a), Seller
has complied in all material respects with all laws, rules and regulations, and
all decrees and orders of any court or governmental authority which are
applicable to the operation of the Station. To Seller’s knowledge, there are no
governmental claims or investigations pending or threatened against Seller in
respect of the Station except those affecting the industry generally.

 

2.14.        Litigation. There is no action, suit or proceeding pending or, to
Seller’s knowledge, threatened against Seller in respect of the Station that
will subject Buyer to liability or affect the use or value of the Station Assets
or which will affect Seller’s ability to perform its obligations under this
Agreement.

 

2.15.        Financial Statements. Seller has provided to Buyer copies of its
statements of operations for the Station for the years ended February 29, 2004,
February 28, 2005 and February 28, 2006 and the balance sheets for the Station
as of February 29, 2004, February 28, 2005 and February 28, 2006 (the “Financial
Statements”). The Financial Statements are the statements included in the
audited consolidated financial statements of Seller and its affiliates (but such
statements are not separately audited). The Financial Statements are consistent
with the books and records of the Station, have been prepared in accordance with
GAAP consistently applied, and present fairly in all material respects the
financial condition of the Station and the results of operations of the Station
for the respective periods covered thereby, except that (i) the

 

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Financial Statements do not include corporate overhead expenses for legal,
accounting, human resources and benefits administration, information technology,
engineering, and television division management services, (ii) insurance expense
reflected in the statements is an estimate of the Station’s share of
consolidated insurance expense and not necessarily indicative of actual claims
activity of the Station, (iii) a portion of employee compensation expenses are
paid in stock but are reflected as cash expenses in the statements, (iv) program
amortization adjustments resulting from Seller’s application of purchase
accounting in connection with its acquisition of the Station in 1999, (v)
certain revenues and expenses associated with Seller’s national rep contract,
including amortization of deferred agency buy out payments which reduce agency
commission expense, amortization of related customer list and payment to the
national rep firm based on performance in Seller’s fiscal year ended February
28, 2005 on the consolidated results of the Seller’s television division, all of
which is recorded on Seller’s books on a consolidated basis, and (vi) such
statements do not include income tax expense or benefit, interest income and
expense, disclosures required by GAAP in notes accompanying the financial
statements, retiree benefit expense (pension, health insurance, etc.), and
non-cash compensation expenses associated with the discount given to employees
on stock purchases under the Employee Stock Purchase Plan and the Stock
Compensation Plan and associated with restricted stock grants made March 1,
2005, and expenses attributable to the adoption of accounting pronouncements
SFAS 142 and EITF Topic D-108. Between February 28, 2006 and the date of this
Agreement, the Station has been operated in all material respects in the
ordinary course of business and otherwise in the manner set forth in Section
4.1, as if such Section applied during such period (other than Section 4.1(g)).

 

2.16.        No Undisclosed Liabilities. There are no liabilities or obligations
of Seller that will be binding upon Buyer after the Effective Time other than
the Assumed Obligations.

 

2.17.        Brokers. Except for The Blackstone Group, whose fees, commissions
and expenses are the sole responsibility of Seller, neither this Agreement nor
the purchase and sale of the Station Assets or any other transaction
contemplated by this Agreement was induced or procured through any party acting
on behalf of or representing Seller as broker, finder, investment banker,
financial advisor, or in any similar capacity.

 

2.18.        Transactions with Affiliates; Entire Business.  Except as disclosed
in the Financial Statements and except for the Station Contract with The Daily
Buzz, LLC listed on Schedule 1.1(d) and previous arrangements between the
Station and RDS/Coopportunities which have since expired and except as set forth
in clause (i) of the third sentence of Section 2.15 and except for Excluded
Assets, since March 1, 2003 neither Seller nor any affiliate of Seller has been
involved in any business arrangement or relationship with or in respect of the
Station, and, other than for the Station Assets and the assets listed on the
Shared Contracts, neither Seller nor any affiliate of Seller owns any property
or right, tangible or intangible, that is used in the Station’s business or
operations.  The conveyance of the Station Assets will convey to Buyer the
entire business of the Station, and all the tangible property and intangible
property used by the Station in connection with the conduct of the business as
heretofore conducted by Seller, except for the Excluded Assets.

 

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2.19.        Disclosure. Neither this Agreement nor any Schedule hereto contains
an untrue statement of a material fact or omits a material fact necessary to
make the statements contained herein or therein misleading.

 

ARTICLE 3: BUYER REPRESENTATIONS AND WARRANTIES

 

Buyer hereby makes the following representations and warranties to Seller:

 

3.1.          Organization. Buyer is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and is
qualified to do business in each jurisdiction in which the Station Assets are
located. Buyer has the requisite power and authority to execute, deliver and
perform this Agreement and all of the other agreements and instruments to be
executed and delivered by Buyer pursuant hereto (collectively, the “Buyer
Ancillary Agreements”) and, to its knowledge, to consummate the transactions
contemplated hereby.

 

3.2.          Authorization. The execution, delivery and performance of this
Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized
and approved by all necessary action of Buyer and do not require any further
authorization or consent of Buyer. This Agreement is, and each Buyer Ancillary
Agreement when made by Buyer and the other parties thereto will be, a legal,
valid and binding agreement of Buyer enforceable in accordance with its terms,
except in each case as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws affecting or
limiting the enforcement of creditors’ rights generally and except as such
enforceability is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

 

3.3.          No Conflicts. Except for the Governmental Consents, the execution,
delivery and performance by Buyer of this Agreement and the Buyer Ancillary
Agreements and the consummation by Buyer of any of the transactions contemplated
hereby and thereby does not and will not conflict with or violate any
organizational documents of Buyer or any law, judgment, order or decree to which
Buyer is subject, or require the consent or approval of, or a filing by Buyer
with, any governmental or regulatory authority or any third party or any
contract, mortgage or instrument to which Buyer is a party or is bound or
subject.

 

3.4.          Litigation. There is no action, suit or proceeding pending or, to
its knowledge, threatened against Buyer which questions the legality or
propriety of the transactions contemplated by this Agreement or could materially
adversely affect the ability of Buyer to perform its obligations hereunder.

 

3.5.          Qualification. To Buyer’s knowledge, it is legally, financially
and otherwise qualified to be the licensee of, acquire, own and operate the
Station under the Communications Act and the rules, regulations and policies of
the FCC. To Buyer’s knowledge, there are no facts that would, under existing law
and the existing rules, regulations, policies and procedures of the FCC,
disqualify Buyer as an assignee of the FCC Licenses or as the owner and operator
of the Station. To Buyer’s knowledge, no waiver of or exemption from any FCC
rule or policy is necessary for the FCC Consent to be obtained. To Buyer’s
knowledge, there are no matters which might reasonably be expected to result in
the FCC’s denial or delay of approval of the FCC Application. To Buyer’s
knowledge, as of the date of this Agreement, Buyer’s acquisition

 

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of the Station complies with the FCC’s multiple-ownership rules. Neither Buyer
nor any Person with an attributable ownership interest under FCC rules in Buyer
has any other attributable ownership interest in any media property in the
Orlando-Daytona-Melbourne, Florida DMA other than WESH.

 

3.6.          Brokers. Neither this Agreement nor the purchase and sale of the
Station Assets or any other transaction contemplated by this Agreement was
induced or procured through any party acting on behalf of or representing Buyer
as broker, finder, investment banker, financial advisor, or in any similar
capacity.

 

ARTICLE 4: SELLER COVENANTS

 

4.1.          Seller’s Covenants. Between the date hereof and Closing, and
except as permitted by this Agreement or with the prior written consent of
Buyer, which shall not be unreasonably withheld, delayed or conditioned, Seller
shall:

 

(a)           operate the Station in the ordinary course of business consistent
with past practice (including but not limited to completion of capital expense
projects in accordance with Seller’s fiscal year ended 2007 budget) and in all
material respects in accordance with FCC rules and regulations and with all
other applicable laws, regulations, rules and orders, and use commercially
reasonable efforts to preserve intact the business, operations and assets of the
Station and maintain its relationships with employees, suppliers and customers;

 

(b)           not sell, assign, transfer or materially adversely modify any of
the FCC Licenses;

 

(c)           not other than in the ordinary course of business, sell, lease or
dispose of or agree to sell, lease or dispose of any of the Station Assets
unless replaced with similar items of substantially equal or greater value and
utility, or create, assume or permit to exist any Liens upon the Station Assets,
except for Permitted Liens;

 

(d)           upon reasonable notice, give Buyer reasonable access during normal
business hours to the Station’s business and the Station Assets, and, through a
representative designated by Seller, the Station’s employees, and furnish Buyer
with information relating to the Station Assets and the Station employees that
Buyer may reasonably request, provided that such access rights shall not be
exercised in a manner that unreasonably interferes with the operation of the
Station;

 

(e)           at Buyer’s sole cost and expense, provide Buyer any financial
information regarding the Station that is maintained by Seller on an
unconsolidated basis and requested by Buyer that is reasonably necessary to
satisfy any reporting obligations to the Securities and Exchange Commission or
reasonably necessary to obtain acquisition financing for the Station;

 

(f)            except as otherwise required by law, (i) not enter into any
employment, labor, or union agreement or plan (or amendments of any such
existing agreements or plan) that will be binding upon Buyer after Closing or
(ii) increase the compensation payable (or make any new commitment to pay
severance pay that would be binding on Buyer) to any employee of the Station,
except for bonuses and other compensation payable by Seller in connection with
the

 

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consummation of the transactions contemplated by this Agreement and other
station sales by Seller;

 

(g)           not enter into any contract or other agreement which, if in effect
on the date hereof, would be a Material Station Contract or amend any existing
Material Station Contracts;

 

(h)           not knowingly waive any right of material value under a Station
Contract, or change the manner in which Seller applies GAAP unless required by
GAAP or law, and give Buyer notice of any material change in Seller’s accounting
practices and policies; and

 

(i)            use commercially reasonable efforts to cause the Station Contract
for the Daily Buzz to be modified or amended so as to extend the term of the
Daily Buzz Station Contract through May 2007 and to provide the Station with
retransmission consent rights to multi-channel video programming distributors
within the Station’s DMA and where the Station is significantly viewed.

 

ARTICLE 5:  JOINT COVENANTS

 

Buyer and Seller hereby covenant and agree as follows:

 

5.1.          Confidentiality. Seller (or The Blackstone Group, LLC on behalf of
Seller) and Buyer (or an affiliate of Buyer on behalf of Buyer) are parties to a
non-disclosure agreement with respect to Seller and its television stations (the
“NDA”). To the extent not already a direct party thereto, Seller and Buyer
hereby assume the NDA and agree to be bound by the provisions thereof. Without
limiting the terms of the NDA, subject to the requirements of applicable law,
all non-public information regarding the parties and their business and
properties that is disclosed in connection with the negotiation, preparation or
performance of this Agreement (including without limitation all financial
information provided by Seller to Buyer) shall be confidential and shall not be
disclosed to any other Person, except in accordance with the terms of the NDA.

 

5.2.          Announcements. Prior to Closing, no party shall, without the prior
written consent of the other, issue any press release or make any other public
announcement concerning the transactions contemplated by this Agreement, except
to the extent that such party is so obligated by law or the rules of any stock
exchange, in which case such party shall give advance notice to the other.

 

5.3.          Control. Buyer shall not, directly or indirectly, control,
supervise or direct the operation of the Station prior to Closing. Consistent
with the Communications Act and the FCC rules and regulations, control,
supervision and direction of the operation of the Station prior to Closing shall
remain the responsibility of Seller as the holder of the FCC Licenses.

 

5.4.          Risk of Loss.

 

(a)           Seller shall bear the risk of any loss of or damage to any of the
Station Assets at all times until Closing, and Buyer shall bear the risk of any
such loss or damage thereafter.

 

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(b)           If prior to Closing any item of Tangible Personal Property is
damaged or destroyed or otherwise not in the condition described in Section 2.6
in any material respect, then:

 

(i)  Seller shall use commercially reasonable efforts to repair or replace such
item in all material respects in the ordinary course of business; and

 

(ii)  if such repair or replacement is not completed prior to Closing, then the
parties shall proceed to Closing and Seller shall promptly repair or replace
such item in all material respects after Closing (and Buyer will provide Seller
access and any other reasonable assistance requested by Seller with respect to
such obligation), except that if such damage or destruction has a Material
Adverse Effect, then Closing shall be postponed until the date five (5) Business
Days after such Material Adverse Effect is remedied, subject to Section 10.1.

 

(c)           If prior to Closing the Station (analog and/or digital) is off the
air or operating at power levels that result in a material reduction in coverage
(a “Broadcast Interruption”), then Seller shall use commercially reasonable
efforts to return the Station to the air and restore prior coverage as promptly
as practicable in the ordinary course of business. Notwithstanding anything
herein to the contrary, if on the day otherwise scheduled for Closing, there is
a Broadcast Interruption of the Station, then Closing shall be postponed until
the date five (5) Business Days after the Station returns to the air and prior
coverage is restored in all material respects, subject to Section 10.1. If the
damage, destruction or loss prevents the transmission of the Station’s broadcast
signals, or materially impairs the Station’s signal coverage area, for a period
of more than forty (40) consecutive days, then Buyer may terminate this
Agreement pursuant to Section 10.1 upon written notice to Seller.

 

5.5.          Consents.

 

(a)           The parties shall use commercially reasonable efforts to obtain
(i)  any third party consents necessary for the assignment of any Station
Contract (which shall not require any payment to any such third party), and (ii)
execution of reasonable estoppel certificates by lessors under any Real Property
Leases requiring consent to assignment, but no such consents or estoppel
certificates are conditions to Closing except for the Required Consents. Receipt
of the following consents to assignment, without conditions other than the
execution of an assumption agreement (collectively, the “Required Consents”) is
a condition precedent to Buyer’s obligation to close under this Agreement: (i)
the Station’s WB affiliation agreement, but only to the extent that Closing
occurs prior to the commencement of The CW Network programming, (ii) the CW term
sheet (including an acknowledgment by the CW Network of such term sheet), but
such condition shall be deemed satisfied by either the acceptance of
an assumption agreement from Buyer by The CW Network or the delivery to Buyer or
Seller of a reasonable form of assumption agreement by The CW Network (and, in
the case of such a delivery, if the form provides for signature by The CW
Network, such assumption agreement shall have been executed by The CW Network),
(iii) other programming agreements designated with a ¶ on Schedule 1.1(d), and
(iv) the Station’s main tower lease designated by a diamond on Schedule 1.1(c).

 

(b)           To the extent that any Station Contract may not be assigned
without the consent of any third party, and such consent is not obtained prior
to Closing, this Agreement and any assignment executed pursuant to this
Agreement shall not constitute an assignment of such Station Contract; provided,
however, with respect to each such Station Contract, Seller and

 

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Buyer shall cooperate to the extent feasible in effecting a lawful and
commercially reasonable arrangement under which Buyer shall receive the benefits
under the Station Contract from and after Closing, and to the extent of the
benefits received, Buyer shall pay and perform Seller’s obligations arising
under the Station Contract from and after Closing in accordance with its terms.

 

5.6.          Employees.

 

(a)           Seller has provided Buyer a list showing employees’ names,
employee positions and annualized pay rates for employees of the Station. Except
for the employees designated on Schedule 5.6, Buyer shall offer employment to
all Persons on such list to the extent they are employed by Seller immediately
prior to Closing and to any employee hired after the date hereof in the ordinary
course of business to replace any employee on such list with Buyer’s consent,
which shall not be unreasonably withheld. Each such offer shall be at a salary
and at a position substantially similar as in effect immediately preceding the
Closing, and on other terms and conditions comparable to those provided by Buyer
to employees of WESH. Such offers of employment shall be for employment
commencing as of the Closing Date, with the exception of those identified on
Schedule 5.6 as employees to be hired by Buyer on the Transition Date (the
“Master Control Employees”), whose employment offer will be to commence on the
Transition Date. Each employee who accepts such offer is referred to as a
“Transferred Employee”, and, collectively, the “Transferred Employees.”  Unless
Buyer enters into a separate employment agreement with a Transferred Employee,
each Transferred Employee shall be an “at will” employee of Buyer, and no
provision contained in this Section 5.6 shall be construed as an agreement for,
or guarantee of, continued employment. All Transferred Employees shall be
subject to the policies established from time to time by Buyer with respect to
employment and employee benefits, and Buyer shall not be under any obligation to
assume, continue, or adopt any liabilities or obligations with respect to any
Employee Benefit Plan (as defined in Section 2.11 hereof).

 

(b)           With respect to Transferred Employees, Seller shall be responsible
for all compensation and benefits arising prior to the Effective Time or
Transition Date, as applicable, and Buyer shall be responsible for all
compensation and benefits arising after the Effective Time or Transition Date,
as applicable. Notwithstanding anything herein to the contrary, effective at the
Effective Time or Transition Date, as applicable, Buyer shall provide severance
arrangements which are the same as the severance arrangements of Seller on the
date hereof (a copy of which has been provided to Buyer) for any Transferred
Employee who terminates employment with Seller during the twelve (12) month
period immediately following the Effective Time or Transition Date, as
applicable, provided, however, that Buyer shall have no liability for any
obligation, including but not limited to, severance or vacation and sick leave
with respect to any employees who are not Transferred Employees.

 

(c)           As of the Effective Time or Transition Date, as applicable, Buyer
shall cause all such Transferred Employees to be eligible to participate in
Buyer’s employment, bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, equity-based, leave of absence, vacation,
severance, insurance, worker’s compensation, disability, supplemental
unemployment, and other benefit plan, arrangement, agreement, practice or policy
(including, without limitation, “employee welfare benefit plans” and “employee
pension benefit plans” as defined in Sections 3(1) and 3(2) of ERISA)
(collectively, the “Buyer Benefit Plans”)

 

20

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that, in the aggregate, are equivalent to those benefit plans offered to
similarly situated employees of television station WESH. Buyer shall give
Transferred Employees credit under the Buyer Benefit Plans for any deductibles
or co-payments paid for the current year under any plan maintained by Seller. In
addition, Seller shall retain responsibility for all hospital, medical, life
insurance, disability and other welfare plan expenses and benefits, and for all
workers’ compensation, unemployment compensation and other government mandated
benefits (collectively referred to herein as “Welfare Type Plan”), in respect of
claims that are covered by any Welfare Type Plans maintained by Seller and that
are incurred by Transferred Employees and their dependents prior to the
Effective Time or Transition Date, as applicable.

 

(d)           As of the Effective Time or Transition Date, as applicable, Buyer
shall cause each applicable Buyer Benefit Plan, other than plans providing
vacation or severance benefits, to recognize service of the Transferred
Employees with Seller for purposes of eligibility and vesting only.  As of the
Effective Time or Transition Date, as applicable, Buyer shall cause each
applicable Buyer Benefit Plan that provides vacation or severance benefits to
recognize service of the Transferred Employees with Seller also for purposes of
determining the amount of benefits.

 

(e)           With respect to any Employee Benefit Plan that includes a cash or
deferred arrangement under Section 401(k) of the Code (“Seller’s 401(k) Plan”),
Seller shall (i) fully vest as of the Closing Date all accounts of all
participants in the 401(k) Plan who are Transferred Employees, (ii) allow
Transferred Employees to elect to receive a complete distribution of all of
their accounts under Seller’s 401(k) Plan promptly following the Closing Date,
and (iii) subject to acceptance by Buyer’s 401(k) plan, allow Transferred
Employees to rollover outstanding participant loans under Seller’s 401(k) Plan
and not treat any such loans rolled-over within 90 days after the date the
Closing Date (or, within 90 days after the Transition Date, as may be
applicable) as in default, except as otherwise required by law.

 

(f)            Seller shall be responsible for any obligations or liabilities to
Transferred Employees under the Workers Adjustment and Retraining Notification
Act and any similar state or local “plant closing” law as a result of actions
taken by Seller prior to the Effective Time.

 

(g)           Seller will fully provide or pay for all liabilities or
obligations to the employees under all Employee Benefit Plans. Seller shall
retain all liability and responsibility for “COBRA” healthcare continuation
coverage required to be offered and provided under Section 4980B of the Code and
Sections 601-608 of ERISA to employees and former employees of Seller and any
other COBRA qualified beneficiaries under Seller’s health plan(s) who have
elected or are eligible to elect COBRA continuation coverage as of or prior to
the Closing Date or who incur a COBRA qualifying event in connection with the
transactions contemplated by this Agreement.

 

5.7.          Accounting Services.

 

(a)           For a period of one hundred twenty (120) days after Closing (the
“Collection Period”), Buyer shall, without charge to Seller, use commercially
reasonable efforts to collect the A/R in the ordinary course of business and
shall apply all amounts collected from the Station’s account debtors to the
oldest account first, unless the advertiser disputes in good faith in writing an
older account and designates the payment to a newer account. Any amounts

 

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relating to the A/R that are paid directly to Seller shall be retained by
Seller. Buyer shall not discount, adjust or otherwise compromise any A/R and
Buyer shall refer any disputed A/R to Seller. Within ten calendar days after the
end of each month, Buyer shall deliver to Seller a report showing A/R
collections for the prior month and Buyer shall make a payment, without offset,
to Seller equal to the amount of all such collections. At the end of the
Collection Period, any remaining A/R shall be returned to Seller for collection.

 

(b)           During the first fifteen (15) Business Days after Closing, Buyer
shall provide to Seller at no additional cost the services of the Station’s
business offices, together with reasonable access to related systems and
records, for the purposes of closing the books of the Station for the period
prior to Closing and of facilitating the distribution of any stock compensation
from Seller to the Station’s employees, all in accordance with the procedures
and practices applied by the business offices for periods prior to Closing.

 

5.8.          1031 Exchange. To facilitate a like-kind exchange under Section
1031 of the Code, Seller may assign its rights under this Agreement (in whole or
in part) to a “qualified intermediary” under section 1.1031(k)-1(g)(4) of the
treasury regulations (but such assignment shall not relieve Seller of its
obligations under this Agreement) and any such qualified intermediary may
re-assign to Seller; provided that no such assignment shall prevent or delay
Closing. If Seller gives notice of such assignment, Buyer shall provide Seller
with a written acknowledgment of such notice prior to Closing and pay the
Purchase Price (or such portion thereof as is designated in writing by the
qualified intermediary) to or on behalf of the qualified intermediary at Closing
and otherwise reasonably cooperate therewith. Buyer’s obligation to cooperate
with Seller is specifically conditioned upon each of the following: (i) all of
Buyer’s rights and all of Seller’s obligations to Buyer respecting all other
provisions of this Agreement shall not be adversely affected by any such
exchange, whether or not such exchange is consummated by Buyer; and (ii) Buyer
shall not in any way be liable to Seller or any other party whatsoever for any
failure of Seller’s proposed transaction to qualify as a tax-free exchange of
like-kind property under the Code.

 

5.9.          Final Order.

 

(a)           For purposes of this Agreement, the term “Final Order” means
action by the FCC (including action duly taken by the FCC’s staff, pursuant to
delegated authority), which shall not have been reversed, stayed, enjoined, set
aside, annulled, or suspended and with respect to which no timely request for
stay, petition for rehearing, appeal, or certiorari or sua sponte action of the
FCC with comparable effect shall be pending and as to which the time for filing
any such request, petition, appeal, certiorari, or for the taking of any such
sua sponte action by the FCC shall have expired.

 

(b)           If the Closing occurs prior to a Final Order, and prior to
becoming a Final Order the FCC Consent is reversed or otherwise set aside, and
there is an order of the FCC (or an order of a court of competent jurisdiction)
requiring the re-assignment of the FCC Licenses to Seller, then, upon the
earlier of (i) such re-assignment order becoming a Final Order (or a final order
of a court of competent jurisdiction) or (ii) notice by Buyer to Seller of a
request to rescind the purchase and sale of the Station Assets (the “Rescission
Trigger”), the purchase and sale of the Station Assets shall be rescinded. In
such event, Buyer shall reconvey to Seller the Station Assets, other than those
non-license assets that have been disposed of after Closing in the

 

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ordinary course of business (the “Reconveyed Station Assets”) and Seller shall
repay to Buyer the full Purchase Price and reassume those contracts and leases
and obligations assigned and assumed at Closing that continue to exist.

 

(c)           Any such rescission shall be consummated on a mutually agreeable
date within thirty days of the Rescission Trigger (or, if earlier, within the
time required by a lawful order). In connection therewith, Buyer and Seller
shall each execute such documents (including execution by Buyer of instruments
of conveyance of the Reconveyed Station Assets to Seller and execution by Seller
of instruments of assumption of those contracts and leases and obligations
assigned and assumed at Closing that continue to exist) and make such payments
(including repayment by Seller to Buyer of the full Purchase Price) as are
necessary to give effect to such rescission. All earnings and profits relating
to Buyer’s use of the Reconveyed Station Assets between the Closing and the
effective time of such rescission shall belong to Buyer.

 

5.10.        Interim Actions. The parties shall use commercially reasonable
efforts, and proceed diligently and in good faith, to take or cause to be taken
all actions, and do or cause to be done all things necessary and proper or
advisable, to consummate the transactions contemplated by this Agreement and
transition the Station’s operations, including, without limitation, obtaining
all necessary waivers, consents (including, without limitation, Governmental
Consents and third party consents to the assignment to Buyer of the Station
Contracts pursuant to Section 5.5, and, in the case of Buyer, executing an
assumption agreement as reasonably requested by The CW Network with respect to
the term sheet listed on Schedule 1.1(d)) and approvals.

 

ARTICLE 6: SELLER CLOSING CONDITIONS

 

The obligation of Seller to consummate the Closing hereunder is subject to
satisfaction, at or prior to Closing, of each of the following conditions
(unless waived in writing by Seller):

 

6.1.          Representations and Covenants.

 

(a)           The representations and warranties of Buyer made in this
Agreement, shall be true and correct in all material respects as of the Closing
Date with the same force and effect as though made as of the Closing Date,
except for changes expressly permitted by the terms of this Agreement.

 

(b)           The covenants and agreements to be complied with and performed by
Buyer at or prior to Closing shall have been complied with or performed in all
material respects.

 

(c)           Seller shall have received a certificate dated as of the Closing
Date from Buyer executed by an authorized officer of Buyer to the effect that
the conditions set forth in Sections 6.1(a) and (b) have been satisfied.

 

6.2.          Proceedings. Neither Seller nor Buyer shall be subject to any
court or governmental order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby.

 

6.3.          FCC Authorization. The FCC Consent shall have been obtained.

 

6.4.          Hart Scott Rodino. The HSR Clearance shall have been obtained.

 

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6.5.          Deliveries. Buyer shall have complied with its obligations set
forth in Section 8.2.

 

ARTICLE 7: BUYER CLOSING CONDITIONS

 

The obligation of Buyer to consummate the Closing hereunder is subject to
satisfaction, at or prior to Closing, of each of the following conditions
(unless waived in writing by Buyer):

 

7.1.          Representations and Covenants.

 

(a)           The representations and warranties of Seller made in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same force and effect as though made as of the Closing Date,
except for changes expressly permitted by the terms of this Agreement.

 

(b)           The covenants and agreements to be complied with and performed by
Seller at or prior to Closing shall have been complied with or performed in all
material respects.

 

(c)           Buyer shall have received a certificate dated as of the Closing
Date from Seller executed by an authorized officer of Seller to the effect that
the conditions set forth in Sections 7.1(a) and (b) have been satisfied.

 

7.2.          Proceedings. Neither Seller nor Buyer shall be subject to any
court or governmental order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby.

 

7.3.          FCC Authorization. The FCC Consent shall have been obtained and
shall be in full force and effect without any condition materially adverse to
the Station or Buyer.

 

7.4.          Hart Scott Rodino. The HSR Clearance shall have been obtained.

 

7.5.          Deliveries. Seller shall have complied with its obligations set
forth in Section 8.1.

 

7.6.          Consents. The Required Consents shall have been obtained.

 

ARTICLE 8: CLOSING DELIVERIES

 

8.1.          Seller Documents. At Closing, Seller shall deliver or cause to be
delivered to Buyer:

 

(i)            good standing certificates issued by the Secretary of State of
Seller’s jurisdiction of formation;

 

(ii)           certified copies of: certificates of formation and constituent
agreements of Seller; resolutions authorizing the execution, delivery and
performance of this Agreement, including the consummation of the transactions
contemplated hereby; and incumbency and specimen signatures of officers of
Seller executing the transaction documents certified by the secretary of Seller;

 

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(iii)          the certificate described in Section 7.1(c);

 

(iv)          an assignment of FCC authorizations assigning the FCC Licenses
from Seller to Buyer in the form attached as Exhibit A hereto;

 

(v)           an assignment and assumption of contracts assigning the Station
Contracts from Seller to Buyer in the form attached as Exhibit A hereto;

 

(vi)          an assignment and assumption of leases assigning the Real Property
Leases from Seller to Buyer in the form attached as Exhibit A hereto;

 

(vii)         domain name transfers assigning the Station’s domain names listed
on Schedule 1.1(e) from Seller to Buyer following customary procedures of the
domain name administrator;

 

(viii)        endorsed vehicle titles conveying the vehicles included in the
Tangible Personal Property from Seller to Buyer;

 

(ix)           a bill of sale conveying the other Station Assets from Seller to
Buyer in the form attached as Exhibit A hereto;

 

(x)            customary paydown and lien release letter; and

 

(xi)           any other instruments of conveyance, assignment and transfer that
may be reasonably necessary to convey, transfer and assign the Station Assets
from Seller to Buyer, free and clear of Liens, except for Permitted Liens.

 

8.2.          Buyer Documents. At Closing, Buyer shall deliver or cause to be
delivered to Seller:

 

(i)            the Purchase Price in accordance with Section 1.5 hereof;

 

(ii)           good standing certificates issued by the Secretary of State of
Buyer’s jurisdiction of formation;

 

(iii)          certified copies of: certificates of formation and constituent
agreements of Buyer; resolutions authorizing the execution, delivery and
performance of this Agreement, including the consummation of the transactions
contemplated hereby; and incumbency and specimen signatures of officers of Buyer
executing the transaction documents certified by the secretary of Buyer;

 

(iv)          the certificate described in Section 6.1(c);

 

(v)           an assignment and assumption of contracts assuming the Station
Contracts in the form attached as Exhibit A hereto;

 

(vi)          an assignment and assumption of leases assuming the Real Property
Leases in the form attached as
Exhibit A hereto;

 

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(vii)         domain name transfers assuming the Station’s domain names listed
on Schedule 1.1(e) following customary procedures of the domain name
administrator; and

 

(viii)        such other documents and instruments of assumption that may be
necessary to assume the Assumed Obligations.

 

ARTICLE 9:  SURVIVAL; INDEMNIFICATION

 

9.1.          Survival. The representations and warranties and the covenants and
agreements to be performed before the Closing in this Agreement shall survive
Closing for a period of eighteen (18) months from the Closing Date whereupon
they shall expire and be of no further force or effect, except that if within
such period the indemnified party gives the indemnifying party written notice of
a claim for breach thereof describing in reasonable detail the nature and basis
of such claim, then such claim shall survive until the resolution of such claim.
The covenants and agreements in this Agreement to be performed at or after the
Closing shall survive Closing until performed.

 

9.2.          Indemnification.

 

(a)           Subject to Section 9.2(b), from and after Closing, Seller shall
defend, indemnify and hold harmless Buyer and its affiliates from and against
any and all losses, costs, damages, liabilities and expenses, including
reasonable attorneys’ fees and expenses (“Damages”) incurred by Buyer arising
out of or resulting from:

 

(i)  any breach by Seller of its representations and warranties made under this
Agreement or the certificate of Seller delivered pursuant to Section 7.1(c); or

 

(ii)  any breach by Seller of any covenant or agreement made under this
Agreement; or

 

(iii)  the Retained Obligations; or

 

(iv)  the business or operation of the Station before the Effective Time.

 

(b)              Notwithstanding the foregoing or anything else herein to the
contrary, after Closing, (i) Seller shall have no liability to Buyer under
clause (i) of Section 9.2(a) until, and only to the extent that, Buyer’s
aggregate Damages exceed $1,000,000 and (ii) the maximum liability of Seller
under clause (i) of Section 9.2(a) shall be an amount equal to $43,500,000.

 

(c)              From and after Closing, Buyer shall defend, indemnify and hold
harmless Seller and its affiliates from and against any and all Damages incurred
by Seller arising out of or resulting from:

 

(i)  any breach by Buyer of its representations and warranties made under this
Agreement or the certificate to be delivered pursuant to Section 6.1(c); or

 

(ii)  any breach by Buyer of any covenant or agreement made under this
Agreement; or

 

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(iii)  the Assumed Obligations; or

 

(iv)  the business or operation of the Station after the Effective Time.

 

9.3.          Procedures.

 

(a)           The indemnified party shall give prompt written notice to the
indemnifying party of any demand, suit, claim or assertion of liability by third
parties that is subject to indemnification hereunder (a “Claim”), but a failure
to give such notice or delaying such notice shall not affect the indemnified
party’s rights or the indemnifying party’s obligations except to the extent the
indemnifying party’s ability to remedy, contest, defend or settle with respect
to such Claim is thereby prejudiced and provided that such notice is given
within the time period described in Section 9.1.

 

(b)           The indemnifying party shall have the right to undertake the
defense or opposition to such Claim with counsel selected by it. In the event
that the indemnifying party does not undertake such defense or opposition in a
timely manner, the indemnified party may undertake the defense, opposition,
compromise or settlement of such Claim with counsel selected by it at the
indemnifying party’s cost (subject to the right of the indemnifying party to
assume defense of or opposition to such Claim at any time prior to settlement,
compromise or final determination thereof).

 

(c)           Anything herein to the contrary notwithstanding:

 

(i)  the indemnified party shall have the right, at its own cost and expense, to
participate in the defense, opposition, compromise or settlement of the Claim;

 

(ii)  the indemnifying party shall not, without the indemnified party’s written
consent, settle or compromise any Claim or consent to entry of any judgment
which does not include the giving by the claimant to the indemnified party of a
release from all liability in respect of such Claim; and

 

(iii)  in the event that the indemnifying party undertakes defense of or
opposition to any Claim, the indemnified party, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to consult with the indemnifying party and its counsel concerning such
Claim and the indemnifying party and the indemnified party and their respective
counsel shall cooperate in good faith with respect to such Claim.

 

ARTICLE 10: TERMINATION AND REMEDIES

 

10.1.        Termination. Subject to Section 10.3, this Agreement may be
terminated prior to Closing as follows:

 

(a)           by mutual written consent of Buyer and Seller;

 

(b)           by written notice of Buyer to Seller if Seller breaches its
representations or warranties or breaches or defaults in the performance of its
covenants contained in this Agreement and such breach or default is material in
the context of the transactions contemplated hereby and is not cured within the
Cure Period (defined below);

 

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(c)           by written notice of Seller to Buyer if Buyer breaches its
representations or warranties or breaches or defaults in the performance of its
covenants contained in this Agreement and such breach or default is material in
the context of the transactions contemplated hereby and is not cured within the
Cure Period; provided, however, that the Cure Period shall not apply to Buyer’s
obligation to pay the Purchase Price at Closing, subject to satisfaction of the
conditions to such obligation;

 

(d)           by written notice of Seller to Buyer or Buyer to Seller if Closing
does not occur by the date twelve (12) months after the date of this Agreement,
provided that if the failure of the Closing to occur by such date is due to the
fault of the party seeking to terminate, then that party shall not have such
termination right; or

 

(e)           by Buyer pursuant to Section 5.4(c).

 

10.2.        Cure Period. Each party shall give the other party prompt written
notice upon learning of any breach or default by the other party under this
Agreement. The term “Cure Period” as used herein means a period commencing on
the date Buyer or Seller receives from the other written notice of breach or
default hereunder and continuing until the earlier of (i) twenty (20) calendar
days thereafter or (ii) five (5) Business Days after the scheduled Closing date;
provided, however, that if the breach or default is non-monetary and cannot
reasonably be cured within such period but can be cured before the date five (5)
Business Days after the scheduled Closing date, and if diligent efforts to cure
promptly commence, then the Cure Period shall continue as long as such diligent
efforts to cure continue, but not beyond the date five (5) Business Days after
the scheduled Closing date.

 

10.3.        Survival. Neither party may terminate under Sections 10.1(b) or (c)
if it is then in material default under this Agreement. The termination of this
Agreement shall not relieve any party of any liability for breach or default
under this Agreement prior to the date of termination. Notwithstanding anything
contained herein to the contrary, Sections 5.1 (Confidentiality) and 11.1
(Expenses) shall survive any termination of this Agreement.

 

10.4.        Specific Performance. In the event of failure or threatened failure
by either party to comply with the terms of this Agreement, the other party
shall be entitled to an injunction restraining such failure or threatened
failure and, subject to obtaining any necessary FCC consent, to enforcement of
this Agreement by a decree of specific performance requiring compliance with
this Agreement.

 

ARTICLE 11: MISCELLANEOUS

 

11.1.        Expenses. Each party shall be solely responsible for all costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement. All governmental
fees and charges applicable to any requests for Governmental Consents shall be
paid one-half by Buyer and one-half by Seller. All governmental taxes, fees and
charges applicable to the transfer of the Station Assets under this Agreement
shall be paid one-half by Buyer and one-half by Seller. Each party is
responsible for any commission, brokerage fee, advisory fee or other similar
payment that arises as a result of any agreement or action of it or any party
acting on its behalf in connection with this Agreement or the transactions
contemplated hereby.

 

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11.2.        Further Assurances; Further Information; Record Retention;
Post-Closing Assistance.

 

(a)           The terms of Schedule 11.2 are hereby incorporated into this
Agreement. After Closing, each party shall from time to time, at the request of
and without further cost or expense to the other, execute and deliver such other
instruments of conveyance and assumption and take such other actions as may
reasonably be requested in order to more effectively consummate the transactions
contemplated hereby.

 

(b)           Following the Closing, each party will afford to the other party,
its counsel and its accountants, during normal business hours, reasonable access
to the books, records and other data of the Seller or relating to the Station’s
business, the Station Assets, the Excluded Assets, the Assumed Obligations or
the Seller pertaining to the Station in its possession with respect to periods
prior to the Closing and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting party (i)
to facilitate the investigation, litigation and final disposition of any claims
which may have been or may be made against any party or its affiliates and (ii)
for any other reasonable business purpose.

 

(c)           Each party agrees that for a period of not less than seven (7)
years following the Closing Date, it shall not destroy or otherwise dispose of
any of the books and records relating to the Station’s business, the Station
Assets, the Assumed Obligations, the Excluded Assets or the Seller pertaining to
the Station in its possession with respect to periods prior to the Closing. Each
party shall have the right to destroy all or part of such books and records
after the seventh anniversary of the Closing Date or, at an earlier time by
giving each other party hereto thirty (30) days prior written notice of such
intended disposition and by offering to deliver to the other parties, at the
other party’s expense, custody of such books and records as such party may
intend to destroy.

 

(d)           Seller, on the one hand, and Buyer, on the other hand, will
provide each other with such assistance as may reasonably be requested in
connection with the preparation of any tax return, any audit or other
examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for taxes, and each will retain and provide
the requesting party with any records or information that may be reasonably
relevant to such return, audit or examination, proceedings or determination. The
party requesting assistance shall reimburse the other party for reasonable
out-of-pocket expenses (other than salaries or wages of any employees of the
parties) incurred in providing such assistance. Any information obtained
pursuant to this Section or providing for the sharing of information or the
review of any tax return or other schedule relating to taxes shall be kept
confidential by the parties hereto.

 

11.3.        Assignment. Except as provided by Section 5.8 (1031 Exchange),
neither party may assign this Agreement without the prior written consent of the
other party hereto and any purported assignment in violation of the foregoing
shall be null and void ab initio, provided however, that Buyer may assign its
rights and obligations hereunder in whole or in part to any affiliate of Buyer
upon written notice to, but without the consent of, Seller, provided that (i)
any such assignment does not delay processing of the FCC Application, grant of
the FCC Consent or Closing, (ii) any such assignee delivers to Seller a written
assumption of this Agreement, and (iii) Buyer shall remain liable for all of its
obligations hereunder. The terms of this Agreement

 

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shall bind and inure to the benefit of the parties’ respective successors and
any permitted assigns, and no assignment shall relieve any party of any
obligation or liability under this Agreement.

 

11.4.        Notices. Any notice pursuant to this Agreement shall be in writing
and shall be deemed delivered on the date of personal delivery or confirmed
facsimile transmission or confirmed delivery by a nationally recognized
overnight courier service, and shall be addressed as follows (or to such other
address as any party may request by written notice):

 

if to Seller:

 

c/o Emmis Communications Corporation

 

 

One Emmis Plaza

 

 

40 Monument Circle, Suite 700

 

 

Indianapolis, Indiana 46204

 

 

Attention: President and CEO

 

 

Facsimile: (317) 684-5583

 

 

 

with copies (which shall not

 

Emmis Communications Corporation

constitute notice) to:

 

3500 W. Olive Avenue, Suite 1450

 

 

Burbank, California 91505

 

 

Attention: Gary Kaseff

 

 

Facsimile: (818) 238-9158

 

 

 

 

 

Wiley Rein & Fielding LLP

 

 

1776 K Street, N.W.

 

 

Washington, D.C. 20006

 

 

Attention: Doc Bodensteiner

 

 

Facsimile: (202) 719-7049

 

 

 

if to Buyer:

 

Hearst-Argyle Television, Inc.

 

 

888 Seventh Avenue, 27th Floor

 

 

New York, New York 10106

 

 

Attention: David J. Barrett, President and CEO

 

 

Facsimile: (212) 887-6835

 

 

 

with a copy (which shall not

 

Hearst-Argyle Television, Inc.

constitute notice) to:

 

888 Seventh Avenue, 27th Floor

 

 

New York, New York 10106

 

 

Attention:

Jonathan C. Mintzer, Vice

 

 

 

President, General Counsel and Secretary

 

 

Facsimile:

(212) 887-6855

 

11.5.        Amendments. No amendment or waiver of compliance with any provision
hereof or consent pursuant to this Agreement shall be effective unless evidenced
by an instrument in writing signed by the party against whom enforcement of such
amendment, waiver, or consent is sought.

 

11.6.        Entire Agreement. This Agreement (including the Exhibits hereto and
the Disclosure Letter) constitutes the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings

 

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with respect to the subject matter hereof, except the NDA, which shall remain in
full force and effect (except that after Closing Buyer shall no longer have any
confidentiality obligations with respect to information and materials pertaining
to Station). No party makes any representation or warranty with respect to the
transactions contemplated by this Agreement except as expressly set forth in
this Agreement. Without limiting the generality of the foregoing, Seller makes
no representation or warranty to Buyer with respect to any projections, budgets
or other estimates of the Station’s revenues, expenses or results of operations,
or, except as expressly set forth in Article 2, any other financial or other
information made available to Buyer with respect to the Station.

 

11.7.        Severability. If any court or governmental authority holds any
provision in this Agreement invalid, illegal or unenforceable under any
applicable law, then, so long as no party is deprived of the benefits of this
Agreement in any material respect, this Agreement shall be construed with the
invalid, illegal or unenforceable provision deleted and the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected or impaired thereby.

 

11.8.        No Beneficiaries. Nothing in this Agreement expressed or implied is
intended or shall be construed to give any rights to any Person other than the
parties hereto and their successors and permitted assigns.

 

11.9.        Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of New York without giving effect to
the choice of law provisions thereof.

 

11.10.      Neutral Construction. Buyer and Seller agree that this Agreement was
negotiated at arms-length and that the final terms hereof are the product of the
parties’ negotiations. This Agreement shall be deemed to have been jointly and
equally drafted by Buyer and Seller, and the provisions hereof should not be
construed against a party on the grounds that the party drafted or was more
responsible for drafting the provision.

 

11.11.      Cooperation. After Closing, each party shall cooperate as reasonably
requested by the other party in the investigation, defense or prosecution of any
action which is pending or threatened against a party or its affiliates with
respect to the Station, whether or not any party has notified the other of a
claim for indemnity with respect to such matter. Without limiting the generality
of the foregoing, each party shall make available its employees to give
depositions or testimony and shall furnish all documentary or other evidence in
each case as the other party may reasonably request. Each party shall reimburse
the other for all reasonable and necessary out-of-pocket expenses incurred in
connection with the performance of its obligations under this
Section 11.11.

 

11.12.      Guaranty. Guarantor unconditionally guarantees the payment and
performance of any and all obligations and liabilities of Seller under this
Agreement and the other agreements and documents executed and delivered in
connection herewith and any permitted assignees of Seller’s rights or
obligations hereunder, including, without limitation, the obligations and
liabilities under Section 9.2. Guarantor acknowledges that it has agreed to this
unconditional guarantee as an inducement to Buyer to enter into this Agreement.

 

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11.13.      Counterparts. This Agreement may be executed in separate
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

 

 

BUYER:

HEARST-ARGYLE TELEVISION, INC.

 

 

 

By:

 /s/ David J. Barrett

 

 

 

Name: David J. Barrett

 

 

Title: President and Chief Financial Officer

 

 

 

 

SELLER:

EMMIS TELEVISION BROADCASTING, L.P.

 

By: Emmis Operating Company, its general partner

 

 

 

By:

 /s/ J. Scott Enright

 

 

 

Name: J. Scott Enright

 

 

Title: Vice President, Associate General Counsel and
Secretary

 

 

 

EMMIS TELEVISION LICENSE, LLC

 

 

 

By:

 /s/ J. Scott Enright

 

 

 

Name: J. Scott Enright

 

 

Title: Vice President, Associate General Counsel and
Secretary

 

 

GUARANTOR:

EMMIS OPERATING COMPANY

 

 

 

By:

 /s/ J. Scott Enright

 

 

 

Name: J. Scott Enright

 

 

Title: Vice President, Associate General Counsel and
Secretary

 

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