Exhibit 10.14


 


OPTION
AGREEMENT


 


THIS OPTION AGREEMENT is made and entered into as of July 19,
2005 by and between SAGAMOREHILL OF CAROLINA
LLC, a Delaware limited liability company (together with its
successors and permitted assigns, “SagamoreHill”), SAGAMOREHILL
OF CAROLINA LICENSES LLC, a Delaware limited liability company
(together with its successor and permitted assigns, “SagamoreHill Licenses,”
and together with SagamoreHill “Grantor”), and BARRINGTON
BROADCASTING SOUTH CAROLINA CORPORATION, a Delaware corporation
(together with its successors and permitted assigns, “Option Holder”).


 


WITNESSETH


 


WHEREAS, Grantor, by way of assignment, has obtained the right
to acquire from Diversified Communications, Inc. and Grand Strand
Communications, Inc. certain assets used in the operation of television
station WWMB-TV, Florence, South Carolina (“WWMB”), including the FCC
licenses relating to WWMB, pursuant to that certain Asset Purchase Agreement,
dated as of the date hereof (the “Purchase Agreement”);


 


WHEREAS, Grantor desires to grant Option Holder an option to
purchase such assets relating to WWMB on the terms and conditions set forth
herein effective as of the consummation of the transactions under the Purchase Agreement
(the “Effective Date”); and


 


WHEREAS, Option Holder desires to acquire from Grantor an
option to purchase such assets relating to WWMB on the terms and conditions set
forth herein.


 


NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties, intending to be legally bound,
agree as follows;


 


1.             Option. Grantor hereby gives, grants, transfers
and conveys to Option Holder, and its successors and assigns, the sole and
exclusive right, privilege and option to purchase (the “Option”), on the
terms and conditions hereinafter set forth and effective as of the Effective
Date, all of the tangible and intangible personal property, licenses,
authorizations and leases, contracts and agreements, owned or held by Grantor
or in which Grantor holds an interest, relating to the operation of WWMB,
including the property described below (and collectively referred to as the “WWMB
Assets”):


 


(a)                                  All of the licenses, construction permits
and other authorizations issued by the Federal Communications Commission (“FCC”)
for the operation of WWMB, including any renewals, extensions or modifications
thereof and additions thereto between the date hereof and the Closing
(collectively, the “FCC Licenses”);


 


(b)                                 All other licenses, permits, construction
permits, approvals, concessions, franchises, certificates, consents,
qualifications, registrations, privileges and other authorizations and other
rights, from any governmental authority to Grantor used in connection with WWMB,
including any renewals, extensions or modifications thereof and additions
thereto between the Effective Date and the Closing (collectively, the “Permits”);


 





















 


(c)                                  All of the tangible personal property
owned by Grantor as of the Effective Date or thereafter acquired by Grantor and
used or useful in the operation of WWMB;


 


(d)                                 All of the intangible personal property
owned by Grantor relating to or used in connection with the operation of WWMB as
of the Effective Date or thereafter acquired by Grantor and used or useful in
the operation of the WWMB, exclusive of all cash on-hand of Grantor and payments
due to Grantor under the Time Brokerage Agreement and all payments to be
retained by Grantor thereunder;


 


(e)                                  Grantor’s rights under that certain Time
Brokerage Agreement, dated April 28, 1994, between Grantor, as assignee of
Atlantic Media Group, Inc., and Option Holder, as assignee of Diversified
Communications, itself assignee of Vision Communications, Inc., as amended
by that certain Amendment to and Extension of Time Brokerage Agreement, dated
as of December 9, 2003, that certain Second Amendment to Time Brokerage
Agreement, between Diversified and Atlantic, and that certain Third Amendment
to Time Brokerage Agreement, between Option Holder and Grantor (such amendment,
the “Third Amendment” and the Time Brokerage Agreement as so amended, the
“TBA”);


 


(f)                                    Grantor’s rights under that certain
Transmission Facilities and Studio Construction and Lease Agreement, dated April 28,
1994, between Grantor, as assignee of Atlantic Media Group, Inc., and
Option Holder, as assignee of Diversified Communications, itself assignee of
Vision Communications, Inc., (the “Lease”);


 


(g)                                 Grantor’s rights and duties as a partial
assignee under the Purchase Agreement; and


 


(h)                                 All of the contracts, leases and other
agreements relating to the ownership and operation of WWMB.


 


2.             Consideration for Option. This Option is granted for the Option
Period (as the same may be extended pursuant to Section 3 hereof) in
return for, among other consideration, the payment by Option Holder to Grantor
of an amount equal to Eighteen Thousand Dollars ($18,000), which shall be due
and payable on the Effective Date.


 


3.             Option Period. The Option shall be effective upon the Effective
Date, and may be exercised by Option Holder at any time during the Option
Period. For purposes hereof, “Option Period” means the period commencing on the
Effective Date and ending on the eighth anniversary of the Effective Date;
provided, that the Option Period may be extended by an additional period of eight
years by Option Holder by delivery by Option Holder to Grantor of written
notice of such extension at any time no earlier than the seventh anniversary of
the Effective Date and no later than 30 days prior to the eighth anniversary of
the Effective Date.


 


4.             Exercise of Option; Withdrawal.


 


(a)                                  Option Holder may exercise the Option by
delivery of written notice thereof (the “Exercise Notice”) to Grantor. Upon
exercise of the Option, Option Holder and Grantor shall be obligated to enter
into the transactions to be consummated hereunder at the Closing, subject to
the provisions of Sections 9 and 10 hereof, and Section 4(b) below.


 


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(b)                                 Option Holder may withdraw any Exercise
Notice prior to the Closing by written notice to Grantor of such withdrawal. No
such withdrawal (and no withdrawal of any subsequent Exercise Notice) will
affect Option Holder’s right subsequently to exercise the Option by delivering
to Grantor during the Option Period one or more other Exercise Notices.


 


5.             Purchase of Assets.


 


(a)                                  Transfer of WWMB Assets. Subject to Section 4(b), upon the
exercise of the Option, Grantor shall, on the Closing Date, sell, assign,
transfer, convey and deliver to Option Holder all right, title and interest of
Grantor in and to the WWMB Assets free and clear of liens, claims and
encumbrances (“Liens”), except for Assumed Obligations, liens for taxes
not yet due and payable and any other liens expressly identified and agreed to
by the parties in writing (collectively, “Permitted Liens”).


 


(b)                                 Excluded Assets. Except for those assets specifically
identified in Section 1, the WWMB Assets shall not include any other
assets, properties, interests or rights of any kind or description, including
any fees due or owing to Grantor from Option Holder under the TBA. (the “Excluded
Assets”). The Excluded Assets shall remain the property of Grantor.


 


(c)                                  Assumption of Obligations. On the Closing Date, Option Holder
shall assume and undertake to pay, discharge and perform the following
obligations of Grantor to the extent such obligations arise out of events
occurring on or after the Closing Date (the “Assumed Obligations”) with
respect to the WWMB Assets:


 


(i)                                     obligations of Grantor as the holder of
the Permits and the FCC Licenses, including to make all required FCC filings
with respect thereto, and as the owner of the other WWMB Assets, subject to the
terms of the TBA;


 


(ii)                                  obligations of Grantor as the owner of WWMB
under the TBA;


 


(iii)                               obligations of Grantor as the lessee
under the Lease; and


 


(iv)                              obligations of Grantor as assignee under
the Purchase Agreement and any obligations assumed by Grantor pursuant thereto.


 


Option Holder does not
assume or agree to discharge or perform, and will not be deemed by reason of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, to have assumed or to have agreed to
discharge or perform, and Grantor shall remain liable for, any liabilities,
obligations or commitments of Grantor arising from the business or operation of
WWMB before the Closing Date and any other obligations or liabilities other
than the Assumed Obligations.


 


(d)                                 TBA and Lease Rights. On the Closing Date, the TBA and the Lease
shall remain in full force and effect and, pursuant to the terms of one or more
Assignment and Assumption Agreements substantially in the form of Exhibit A
hereto (the “Assignment Agreement”), Grantor shall assign to Option
Holder (or its designee), and Option Holder shall assume, Grantor’s rights
under the TBA and the Lease.


 


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(e)                                  Purchase Agreement. On the Closing Date, pursuant to the
terms of the Assignment Agreement, Grantor shall assign to Option Holder, and Option
Holder shall assume, Grantor’s rights under the Purchase Agreement (the “Purchase
Agreement Rights”).


 


(f)                                    Purchase Price. At the Closing, and pursuant to the
terms and subject to the conditions set forth in this Agreement, Option Holder
shall pay to Grantor an amount equal to the Cash Purchase Price by federal wire
transfer of same-day funds pursuant to wire instructions delivered to Option
Holder by Grantor at least two business days prior to the Closing Date (or such
other method of funds transfer as may be agreed upon by Option Holder and Grantor).
The “Cash Purchase Price” shall be an amount equal to the sum of (a) the
Base Value (as defined in Schedule 5(f) hereto), plus (b) the Escalation Amount (as defined and
calculated pursuant to Schedule 5(f) hereto), plus (c) to the extent applicable, the Additional
Consideration (as defined and calculated pursuant to Schedule 5(f) hereto).


 


(g)                                 Allocation. Option Holder and Grantor will allocate the Purchase
Price in accordance with the respective fair market values of the WWMB 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
allocation shall be determined by mutual agreement of the parties. Option
Holder and Grantor agree to file their federal income tax returns and their
other tax returns reflecting such allocation and to use such allocation for
accounting and financial reporting purposes.


 


(h)                                 Closing. Upon the exercise of the Option, the consummation of
the sale and purchase of the WWMB Assets provided for in this Agreement (the “Closing”)
shall take place no later than ten business days after the satisfaction or, to
the extent permissible by law, the waiver (by the party for whose benefit the
closing condition is imposed) of, the conditions specified in Sections 9
and 10 hereof. Alternatively, the Closing may take place at such other place,
time or date as the parties may mutually agree upon in writing. The date on
which the Closing is to occur is referred to herein as the “Closing Date.”


 


6.             Representations and
Warranties of Grantor. Grantor represents and warrants to Option Holder as follows; provided, however,
that Grantor make no representation or warranty as to any action, event,
occurrence or circumstance that (i) was or shall be caused by Option
Holder or that arose, or shall arise from any omission by Option Holder to
perform its obligations under the TBA or the Lease, or (ii) constitutes a
breach by Sellers of a representation warranty of Sellers under the Purchase
Agreement:


 


(a)                                  Each of SagamoreHill and SagamoreHill
Licenses is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware.


 


(b)                                 Grantor has the power and authority to
enter into and to perform its obligations under this Agreement.


 


(c)                                  The execution, delivery and performance
of this Agreement by Grantor has been duly authorized and this Agreement
constitutes a valid and binding obligation of Grantor enforceable against Grantor
in accordance with it terms, except as may be limited by 


 


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bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors’ rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).


 


(d)                                 Schedule 6(d) sets forth (i) as of the date
hereof, a complete and accurate list of all of the FCC Licenses anticipated to
be acquired by Grantor under the Purchase Agreement; and (ii) as of the
date of the Closing Date, a complete and accurate list of all FCC Licenses then
in effect.


 


(e)                                  As of the Closing Date Grantor is the
holder of the FCC Licenses.


 


(f)                                    As of the Closing, Grantor has good and
marketable title to the WWMB Assets free and clear of liens other than liens
for taxes not yet due and payable and liens that will be discharged at or prior
to the Closing.


 


(g)                                 As of the Closing Date, Grantor shall
have filed all material returns, reports, and statements that Grantor is
required to file with the FCC and the Federal Aviation Administration. Except
as set forth on Schedule 6(g) hereto, (i) there is no
action, suit or proceeding pending or, to Grantor’s knowledge, threatened in
writing against Grantor in respect of WWMB seeking to enjoin the transactions
contemplated by this Agreement; and (ii) to Grantor’s knowledge, there are
no governmental claims or investigations pending or threatened against Grantor
in respect of WWMB (except those affecting the broadcasting industry
generally).


 


(h)                                 No broker, finder or other person is
entitled to a commission, brokerage fee or other similar payment in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement or action of Grantor or any party acting on Grantor’s behalf.


 


The parties agree that each of Schedule 6(d) and Schedule 6(g) hereto
may be updated by Grantor as of the Closing Date.


 


7.             Representations and
Warranties of Option Holder. Option Holder represents and warrants to Grantor as
follows:


 


(a)                                  Option Holder is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.


 


(b)                                 Option Holder has the power and authority
to enter into and perform its obligations under this Agreement.


 


(c)                                  The execution, delivery and performance
of this Agreement by Option Holder has been duly authorized and this Agreement
constitutes a valid and binding obligation of Option Holder enforceable against
it in accordance with its terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting creditors’ rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).


 


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(d)                                 Option Holder is financially, and as of
the Closing (and subject to the grant of the FCC Consent) shall be legally and
otherwise, qualified to be the licensee of, acquire, own and operate WWMB under
the Communications Act and FCC Rules, with no waiver of any FCC Rule that
shall not have been obtained prior to Closing being necessary.


 


(e)                                  No broker, finder or other person is
entitled to a commission, brokerage fee or other similar payment in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement or action of Option Holder or any party acting on Option Holder’s
behalf.


 


8.             Covenants of Grantor. During the Option Period, and subject to the TBA and
the performance by Option Holder of its obligations thereunder, Grantor covenants
to:


 


(a)                                  Maintain insurance upon the WWMB Assets
and with respect to the operation of WWMB in such amounts and in such nature as
in effect on the date hereof;


 


(b)                                 Operate WWMB in all material respects in
accordance with the terms of the licenses and authorizations issued by the FCC,
the Communications Act of 1934, as amended (the “Communications Act”), the
rules, regulations, policies and procedures of the FCC (“FCC Rules”) and
all other statutes, ordinances, rules and regulations of governmental
authorities;


 


(c)                                  Refrain from taking any action that would
cause the FCC Licenses not to be in full force and effect or to be revoked,
suspended, cancelled, rescinded, terminated or expired;


 


(d)                                 File all material returns, reports, and
statements that Grantor is required to file with the FCC and the Federal Aviation
Administration;


 


(e)                                  Other than pursuant to an Acquisition
Financing Arrangement, not mortgage, pledge, subject to any lien or otherwise
encumber any of the WWMB Assets; and


 


(f)                                    Not sell, lease or otherwise dispose of
any of the WWMB Assets in a manner that is inconsistent with this Agreement,
except for properties and assets sold or replaced with others of like kind and
value in the ordinary course of business in compliance with the terms of the
TBA.


 


Notwithstanding anything to the contrary
contained herein, to the extent that the covenants and obligations of Grantor
hereunder would require the incurrence of an Other Expense as defined in the
TBA, such obligation or covenant shall be subject to the terms and conditions
of Paragraph 1 of Exhibit 4(B) of the TBA


 


9.             Grantor Closing Conditions


 


Subject to the exercise of the Option pursuant to the
terms and subject to the conditions of this Agreement, the obligations of Grantor
hereunder are subject to satisfaction or waiver, at or prior to Closing, of
each of the following conditions:


 


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(a)                                  Representations, Warranties and Covenants. The representations and warranties of Option
Holder made in this Agreement shall be true and correct in all material
respects at and as of the Closing Date except for changes permitted or
contemplated by the terms of this Agreement, and the covenants and agreements
to be complied with and performed by Option Holder at or prior to Closing shall
have been complied with or performed in all material respects. Grantor shall
have received a certificate dated as of the Closing Date from Option Holder,
executed by an authorized officer of Option Holder, to the effect that the
conditions set forth in this Section 9(a) have been satisfied.


 


(b)                                 FCC Consent. The FCC Consent shall have been
obtained and constitute a Final Order, and no court or governmental order
prohibiting Closing shall be in effect. For purposes hereof, “Final Order”
shall mean an action by the FCC or other regulatory authority having
jurisdiction (i) with respect to which action no timely request for stay,
motion or petition for reconsideration or rehearing, application or request for
review or notice of appeal or other judicial petition for review is pending and
(ii) as to which the time for filing any such request, motion, petition,
application, appeal or notice and for entry of orders staying, reconsidering or
reviewing on the FCC’s or such other regulatory authority’s own motion has
expired.


 


(c)                                  No Prohibitions. No injunction, restraining order or
decree of any nature of any governmental authority of competent jurisdiction
shall be in effect that restrains or prohibits any party from consummating the
transactions contemplated by this Agreement.


 


10.           Option Holder Closing
Conditions


 


Subject to the exercise of the Option pursuant the
terms and subject to the conditions of this Agreement, the obligations of Option
Holder hereunder are subject to satisfaction or waiver, at or prior to Closing,
of each of the following conditions:


 


(a)                                  Representations, Warranties and Covenants. The representations and warranties of Grantor
made in this Agreement shall be true and correct in all material respects at
and as of the Closing Date except for changes permitted or contemplated by the
terms of this Agreement, and the covenants and agreements to be complied with
and performed by Grantor at or prior to Closing shall have been complied with
or performed in all material respects. Option Holder shall have received a
certificate dated as of the Closing Date from Grantor, executed by an
authorized officer of Grantor, to the effect that the conditions set forth in
this Section 10(a) have been satisfied.


 


(b)                                 FCC Consent. The FCC Consent shall have been
obtained and constitute a Final Order, and no court or governmental order
prohibiting Closing shall be in effect.


 


(c)                                  No Prohibitions. No injunction, restraining order or
decree of any nature of any governmental authority of competent jurisdiction
shall be in effect that restrains or prohibits any party from consummating the
transactions contemplated by this Agreement.


 


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11.          Closing Deliveries


 


(a)                                  Grantor Documents. Subject to the exercise of the Option
pursuant the terms and subject to the conditions of this Agreement, at Closing Grantor
shall deliver or cause to be delivered to Option Holder:


 


(i)                                     certified copies of resolutions
authorizing the execution, delivery and performance of this Agreement,
including the consummation of the transactions contemplated hereby, by Grantor;


 


(ii)                                  the certificate described in Section 10(a) hereof;


 


(iii)                               the Assignment Agreement; and


 


(iv)                              such other bills of sale, assignments and
other instruments of conveyance, assignment and transfer as may be necessary to
convey, transfer and assign to Option Holder the WWMB Assets, free and clear of
Liens, except for Permitted Liens.


 


(b)                                 Option Holder Documents. Subject to the exercise of the Option
pursuant the terms and subject to the conditions of this Agreement, at Closing Option
Holder shall deliver or cause to be delivered to Grantor:


 


(i)                                     the certified copies of resolutions
authorizing the execution, delivery and performance of this Agreement,
including the consummation of the transactions contemplated hereby, by Option
Holder;


 


(ii)                                  the certificate described in Section 9(a) hereof;


 


(iii)                               the Cash Purchase Price;


 


(iv)                              the Assignment Agreement; and


 


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


 


12.          Survival; Indemnification


 


(a)                                  Survival. The representations and warranties in this Agreement
shall survive Closing for twelve months after the Closing Date, whereupon they
shall expire and be of no further force or effect, except those under this Section 12
that relate to Damages for which written notice is given by the indemnified
party to the indemnifying party prior to the expiration, which shall survive
until resolved.


 


(b)                                 Indemnification.


 


(i)                                     Subject to the limitations set forth in Section 12(d) below,
from and after Closing, Grantor shall defend, indemnify and hold harmless Option



 


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Holder from and
against any and all losses, costs, damages, claims, suits, actions, judgments,
liabilities and expenses, including reasonable attorneys’ fees and expenses (“Damages”),
incurred by Option Holder arising out of or resulting from:  (A) any material inaccuracy in or breach
or nonfulfillment of any of the representations, warranties, covenants or
agreements made by Grantor in this Agreement or default by Grantor under this
Agreement; or (B) obligations or liabilities of Grantor regarding WWMB
other than the Assumed Obligations.


 


(ii)                                  From and after Closing, Option Holder
shall defend, indemnify and hold harmless Grantor from and against any and all
Damages incurred by Grantor arising out of or resulting from:  (A) any material inaccuracy in or breach
or nonfulfillment of any of the representations, warranties, covenants or
agreements made by Option Holder in this Agreement or default by Option Holder
under this Agreement, the TBA or the Lease; (B) the Assumed Obligations or
the business or operation of WWMB after the Closing Date; (C) any taxes
owed by Option Holder for any period following the Closing Date.


 


(iii)                               From and after the date hereof, Option
Holder shall defend, indemnify and hold harmless Grantor from and against any
and all Damages incurred by Grantor arising out of or resulting from (A) the
performance of Licensee’s obligations as partial assignee under the Purchase
Agreement (without limiting the obligation of Grantor pursuant to the terms and
subject to the conditions of that certain letter agreement, dated as of the
date hereof, by and among the parties to this Agreement (the “Side Letter”))
or a breach by Grantor of its representations and warranties to Sellers (as
defined in the Purchase Agreement) contained in Sections 3(B), (C) and (D) of
that certain Assignment and Assumption Agreement, dated as of the date hereof,
among Grantor, Option Holder and Sellers (the “Atlantic Assets Assignment”)
(but without limiting any rights of Option Holder with respect to a breach as
to the representations and warranties made by Grantor to Option Holder under
the Atlantic Assets Assignment, this Agreement, the Side Letter or the Third
Amendment), (B) the negotiation and the document preparation and execution
relating to obtaining the Acquisition Financing Arrangement, and the
Transaction Documents and any amendments thereto; and (C) the operation of
the Station during the Option Period and the term of the TBA (including the
costs and expenses incurred in connection with the performance by Grantor of
the Atlantic Contracts (as such term is defined in the Purchase Agreement));
provided, that this paragraph (iii) shall not extend to Damages to the
extent arising out of or resulting from a breach by Grantor of its
representations, warranties, covenants or agreements in this Agreement or any
Transaction Document, or from Grantor’s gross negligence or willful misconduct.
“Transaction Documents” shall mean this Agreement, the TBA, the Lease, and the
Side Letter.


 


(c)                                  Indemnification Procedures. The indemnified party shall give prompt
written notice to the indemnifying party of any demand, suit, claim or
assertion of liability by third parties or other circumstances that could give
rise to an indemnification obligation hereunder against the indemnifying party
(a “Claim”), but a failure to give such notice or 


 


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delaying such notice shall not affect the indemnified party’s right to
indemnification and the indemnifying party’s obligation to indemnify as set
forth in this Agreement, except to the extent the indemnifying party’s ability
to remedy, contest, defend or settle with respect to such Claim is thereby
prejudiced. The obligations and liabilities of the parties with respect to any
Claim shall be subject to the following additional terms and conditions:


 


(i)                                     The indemnifying party shall have the
right to undertake, by counsel or other representatives of its own choosing,
the defense or opposition to such Claim.


 


(ii)                                  In the event that the indemnifying party
shall elect not to undertake such defense or opposition, or, within 20 days
after written notice (which shall include sufficient description of background
information explaining the basis for such Claim) of any such Claim from the
indemnified party, the indemnifying party shall fail to undertake to defend or
oppose, the indemnified party (upon further written notice to the indemnifying
party) shall have the right to undertake the defense, opposition, compromise or
settlement of such Claim, by counsel or other representatives of its own
choosing, on behalf of and for the account and risk of the indemnifying party
(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).


 


(iii)                               Anything herein to the contrary notwithstanding,
in the event that the indemnifying party undertakes the defense of or
opposition to any Claim:  (A) the
indemnified party, by one counsel or one other representative of its own
choosing, reasonably satisfactory to the indemnifying party, shall have the
right to consult with the indemnifying party and its counsel or other
representative concerning such Claim and to participate in the defense,
opposition, compromise or settlement of the Claim; (B) the indemnifying
party and the indemnified party and their respective counsel shall cooperate in
good faith with respect to such Claim; and (C) 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. With reference to clauses (A) and (B) of
the preceding sentence, the indemnifying party shall bear the reasonable cost
and expense of the indemnified party’s counsel or other representative unless
the indemnifying party shall affirm in writing its obligation to indemnify the
indemnified party for any losses incurred by such parties with respect to such
Claim, and in the event of such written affirmation by the indemnifying party
the indemnified party shall bear the cost and expense of its own counsel or
representatives. The written affirmation to the indemnified party provided
herein shall not be or be deemed to be an admission of liability on the part of
the indemnifying party as against any third-party claimant.


 


(iv)                              All claims not disputed shall be paid by
the indemnifying party within 30 days after receiving notice of the Claim. A “Disputed
Claim” shall mean a claim for Damages by an indemnified party which the
indemnifying party 


 


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objects to in
writing within 30 days after receiving notice of the Claim. In the event there
is a Disputed Claim with respect to any Damages, the indemnifying party shall
be required to pay the indemnified party the amount of such Damages for which
the indemnifying party has, pursuant to a final determination, been found
liable within ten days after there is a final determination with respect to
such Disputed Claim. A final determination of a Disputed Claim shall be:  (A) a judgment of any court with proper
jurisdiction determining the validity of a Disputed Claim, if no appeal is
pending from such judgment and if the time to appeal therefrom has elapsed; (B) an
award of any legally binding arbitration proceeding determining the validity of
such disputed claim, if there is not pending any motion to set aside such award
and if the time within which to move to set aside such award has elapsed; (C) a
written termination of the dispute with respect to such claim signed by the
parties thereto; (D) a written acknowledgment of the indemnifying party
that it no longer disputes the validity of such claim; or (E) such other
evidence of final determination of a disputed claim as shall be acceptable to
the parties. No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to the party
claiming indemnification with respect to the Claim at issue or other similar
Claims.


 


(d)                                 Limitations on Indemnification. Grantor shall not be
obligated to indemnify Option Holder for any amount of indemnifiable Damages
under Section 12(b)(i) until such Damages exceed $25,000 and in any
event shall not be obligated for such Damages in excess of the aggregate
payments of the Base Fee to Grantor under the TBA, provided, that the foregoing
limitations shall not apply to Damages to the extent arising as a result of the
gross negligence or willful misconduct of Grantor.


 


(e)                                  Expenses of
Prevailing Party. In the event that Grantor or Option Holder seeks
indemnity hereunder or otherwise seeks enforcement of this Agreement against
the other party and prevails in such claim, the reasonable out-of-pocket costs
and expenses, including reasonable attorneys’ fees, incurred by such prevailing
party in connection with such claim for indemnification or other enforcement
shall be paid or reimbursed by the other party following receipt by such
indemnifying party of an invoice therefor together with reasonable
documentation of such costs and expenses.


 


(f)                                    NEITHER PARTY HERETO SHALL BE LIABLE TO
THE OTHER FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
(EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES).


 


13.           Specific Performance. Grantor and Option Holder acknowledge
and agree that, due to the unique nature of the subject matter of this
Agreement, Option Holder would suffer irreparable damages in the event of
breach of this Agreement, which damages could not adequately be compensated
except by specific performance of this Agreement. Accordingly, without limiting
any other remedy that may be available to Option Holder at law or equity, in
the event of a breach by Grantor of this Agreement, it is agreed that Option
Holder shall be entitled to temporary and permanent injunctive relief,
including, but not limited to, specific performance 


 


11





















 


hereof, without any showing of actual damage or
inadequacy of legal remedy, in any proceeding before a court of law with proper
jurisdiction to hear the matter, which may be brought to enforce this Agreement.
Grantor hereby waives any defense that there is an adequate remedy at law for
such breach of this Agreement.


 


14.           Expenses. Option Holder agrees to reimburse
Grantor, within fifteen days of invoicing with reasonable documentation, for
its reasonable and customary fees, costs and out-of-pocket expenses, including filing
fees and reasonable and customary attorneys’ fees, incurred in connection with
the performance of its covenants and obligations hereunder; provided, that, for
the avoidance of doubt and except as set forth in Section 12(e), Option
Holder shall have no reimbursement obligation with respect to claims, actions
or proceedings brought by or on behalf of Grantor against Option Holder.


 


15.           Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use all commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.


 


16.           Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of Grantor and Option Holder.


 


17.           Waiver of Compliance;
Consents. Except
as otherwise provided in this Agreement, any failure of any of the parties to
comply with any obligation, representation, warranty, covenant, agreement or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever
this Agreement requires or permits consent by or on behalf of any party hereto,
such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliances as set forth in this Section 17.


 


18.           Notices. All notices, requests, demands and
other communications which are required or may be given pursuant to the terms
of this Option Agreement shall be in written or electronic form, and shall be
deemed delivered (a) on the date of delivery when (i) delivered by
hand or (ii) sent by reputable overnight courier maintaining records of
receipt and (b) on the date of transmission when sent by facsimile or
other electronic transmission during normal business hours with confirmation of
transmission by the transmitting equipment; provided,
however, that any such communication delivered by facsimile or other
electronic transmission shall only be effective if such communication is also
delivered by hand or deposited with a reputable overnight courier maintaining
records of receipt within two business days after its delivery by facsimile or
other electronic transmission. All such communications shall be addressed to
the parties at the address set forth in Exhibit B, or at such other address as a party may
designate upon ten days’ prior written notice to the other party.


 


19.           Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted 


 


12





















 


assigns, but, except as provided for herein, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by Grantor without the prior written consent of Option Holder,
which consent shall not be unreasonably withheld. Without the consent of Grantor,
Option Holder may assign its rights and obligations under this Agreement to any
other party or parties; provided that Assignee shall not thereby be released of
its obligations hereunder.


 


20.                                 No Third Party
Beneficiaries.
Except as expressly provided herein, this Agreement is not intended to, and
shall not, confer upon any other person except the parties hereto any rights or
remedies hereunder.


 


21.                                 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.


 


22.                                 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The delivery of an
executed counterpart of the Agreement by facsimile or electronic transmission
will be deemed to be an original counterpart of the Agreement so transmitted.


 


23.                                 Headings. The section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.


 


24.                                 Entire Agreement. This Agreement, including the documents
delivered pursuant to this Agreement or other written agreements referring specifically
to this Agreement, and the TBA, the Lease, the Purchase Agreement and the
Assignment Agreement embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement. The
Schedule(s) and Exhibit(s) hereto are an integral part of this Agreement and
are incorporated by reference herein. This Agreement supersedes all prior
negotiations, agreements and understandings between the parties with respect to
the transactions contemplated by this Agreement and all letters of intent and
other writings executed prior to the date hereof relating to such negotiations,
agreements and understandings.


 


25.                                 Severability. If any provision of this Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid or enforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in any
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the greatest extent possible.


 


26.                                 Publicity. Neither Grantor nor Option Holder shall
make or issue or cause to be made or issued, any announcement (written or oral)
concerning this Agreement or the 


 


13





















 


transactions contemplated hereby for dissemination to
the general public without the prior consent of the other party. This provision
shall not apply, however, to any announcement or written statement required to
be made by law or the regulations of any federal or state governmental agency
or any stock exchange, except that the party required to make such announcement
shall provide a draft copy thereof to the other party hereto, and consult with
such other party concerning the timing and content of such announcement, before
such announcement is made.


 


27.                                 FCC Approval.


 


(a)                                  Notwithstanding any provision to the
contrary herein, Option Holder’s rights under this Agreement are subject to the
Communications Act of 1934, as amended, and the rules, regulations and
published policies of the FCC.


 


(b)                                 As soon as reasonably practicable, but in
no event later than five business days after Option Holder’s delivery of the
Exercise Notice, the parties shall file an application (the “Assignment
Application”) with the FCC requesting the FCC’s written consent to the
assignment of the FCC Licenses from Grantor to Option Holder, including, as
applicable, any waiver of such FCC Rules (a “Waiver Request”). In
addition, each party hereto covenants and agrees to (i) prepare, file and
prosecute any alternative application, petition, motion, request (including any
Waiver Request) or other filing (including, upon the request of Option Holder,
any motion for leave to withdraw or dismiss any Assignment Application or other
filing made by the parties in connection with the transactions contemplated by
this Agreement) (collectively, the “Additional Applications” and,
together with the Assignment Application, the “FCC Applications”); (ii) file
any amendment or modification to the FCC Applications; (iii) provide to Option
Holder any information, documents or other materials reasonably requested by Option
Holder in connection with the preparation of any such FCC Applications,
including without limitation any Waiver Request, (iv) prosecute the FCC
Applications with commercially reasonable diligence and otherwise use their
commercially reasonable efforts to obtain a favorable conclusion with regard to
the FCC Applications; (v) otherwise take any other action with respect to
the FCC as may be reasonably necessary or reasonably requested by Option Holder
in connection with the transactions contemplated hereby; and (vi) cooperate
in good faith with the other party with respect to the foregoing covenants, all
as may be determined by Option Holder to be reasonably necessary or appropriate
or advisable in order to consummate the transactions contemplated hereby upon
the exercise of the Option. Each party shall promptly provide the other with a
copy of any pleading, order or other document served on it relating to the FCC
Applications, shall furnish all information required by the FCC and shall be
represented at all meetings or hearings scheduled to consider the FCC
Application. The FCC’s written consent to the assignment of the FCC Licenses
contemplated hereby is referred to herein as the “FCC Consent.”  The parties each agree to comply with any
condition imposed on them by any FCC Consent, except that no party shall be
required to comply with a condition if such condition requires such party to
divest any of its direct or indirect assets. The parties shall oppose any
petitions to deny or other objections filed with respect to the application for
any FCC Consent and any requests for reconsideration or review of any FCC
Consent.


 


[SIGNATURE PAGE FOLLOWS]


 


14

















 


IN WITNESS WHEREOF, the undersigned have executed this Option Agreement
as of the day and year first written above.


 


 


	
   

  	
  SAGAMOREHILL
  OF CAROLINA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Louis S.
  Well

  	
   

  
	
   

  	
  Name: Louis S.
  Well

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAGAMOREHILL
  OF CAROLINA LICENSES 

  
	
   

  	
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Louis S.
  Well

  	
   

  
	
   

  	
  Name: Louis S.
  Well

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BARRINGTON
  BROADCASTING SOUTH

  
	
   

  	
  CAROLINA
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ K. James Yager

  	
   

  
	
   

  	
  Name: K. James Yager

  
	
   

  	
  Title: President

  



 


 


Signature Page to Option Agreement


 

















 


Exhibit A - Form of Assignment Agreement


 


 


This Assignment and Assumption Agreement (this “Agreement”) is made as of [                   ],
20[      ], by and among SAGAMOREHILL
OF CAROLINA LLC, a Delaware limited liability company and SAGAMOREHILL OF CAROLINA LICENSES LLC (together, “Seller”), and BARRINGTON BROADCASTING
SOUTH CAROLINA CORPORATION, a Delaware corporation ( “Buyer”).


 


W I T N E S S E T H:


 


WHEREAS, Sellers and Buyer are parties to that certain Option
Agreement, dated as of [             ],
2005 (the “Option Agreement”); and


 


WHEREAS, Seller desires to assign to Buyer all of Seller’s
right, title and interest in, to and under, and delegate all of its duties and
obligations in connection with or under the TBA, the Lease and the Purchase Agreement
(collectively, the “Assumed Contracts”),
and Buyer is willing to accept assignment of such rights and assume such duties
and obligations arising under or in connection with the Assumed Contracts, in
each case pursuant to the terms and subject to the conditions of the Option
Agreement and this Agreement (including Section 6 hereof).


 


NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which the parties
acknowledge, Sellers and Buyer, intending to be legally bound, hereby agree as
follows:


 


1.     Defined
Terms; Interpretation. Except as otherwise set forth herein, capitalized terms used herein
have the meanings assigned to them in the Option Agreement.


 


2.     Assignment
and Assumption.
Pursuant to the terms and subject to the conditions of the Option Agreement and
effective as of the date hereof, (a) each Seller hereby conveys, assigns,
and transfers to Buyer, its successors and assigns, all of such Seller’s right,
title and interest in, to and under the Assumed Contracts, free and clear of
any and all liens, and delegates to Buyer all of its duties and obligations to
be performed, or arising on or after the date hereof in connection with or
under the Assumed Contracts, and (b) Buyer hereby accepts the above
assignment of rights and delegation of duties and obligations and agrees to be
bound by and to assume such duties and obligations arising under or in
connection with the Assumed Contracts to be performed or arising on or after the
date hereof.


 


3.     Further
Assurances. Each
party to this Agreement agrees to execute, acknowledge, deliver, file and
record, and to cause to be executed, acknowledged, delivered, filed and
recorded, such further certificates, instruments, and documents and to do, and
cause to be done, all such other acts and things, as may be required by law, or
as may, in the reasonable opinion of the other party hereto, be necessary or
advisable to carry out the purposes of this Agreement.


 


4.     Binding
Effect; Amendments. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective legal representatives, successors
and assigns. No modification, amendment or waiver of any provision of, or
consent or approval required by, this Agreement, nor any consent to or approval
of any departure herefrom, shall be effective unless it is in writing and
signed by the party against whom enforcement of any such modification,
amendment, waiver, consent or approval is sought.


 

















 


5.     Governing
Law. Construction
and interpretation of this Agreement shall be governed by the laws of the State
of New York, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Agreement to
the substantive law of another jurisdiction.


 


6.     Option
Agreement Controlling. Notwithstanding any other provisions of this
Agreement to the contrary, nothing contained herein shall in any way supersede,
modify, replace, amend, change, rescind, waive, exceed, expand, enlarge or in
any way affect the provisions, including warranties, covenants, agreements,
conditions, representations or, in general, any of the rights and remedies, or
any of the obligations, of Seller or Buyer set forth in the Option Agreement. This
Agreement is subject to and controlled by the terms of the Option Agreement.


 


7.     Counterparts.
This
Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. Delivery of an
executed counterpart of a signature page of this Agreement by facsimile or
other electronic transmission shall be effective as delivery of a manually
executed original counterpart of this Agreement.


 


[Remainder of page intentionally left blank;
signature page follows]


 


17

















 


IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered as of the day and year first above written.


 


 


	
  SAGAMOREHILL
  OF CAROLINA LLC

  	
  SAGAMOREHILL OF CAROLINA LICENSES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  BARRINGTON
  BROADCASTING SOUTH 

  	
   

  
	
  CAROLINA
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


Exhibit B - Notices


 


If to
Option Holder, to:


 


Barrington
Broadcasting South Carolina Corporation


745
Fifth Avenue


24th
Floor


New
York, NY  10151


Attention:  Paul
McNicol


Fax:  (212) 486-2896


 


with a
copy (which shall not constitute notice) to:


 


Barrington Broadcasting LLC


2500 West Higgins Road, Suite 880


Hoffman Estates, IL 60195


Attention:  K.
James Yager


Fax:  847-755-3045


 


and


 


Covington & Burling


1201 Pennsylvania Ave., N.W.


Washington,
D.C. 20004-2401


Fax:  202-662-6291


Attention:  Eric
Dodson Greenberg, Esq.


 


If to Grantor
to:


 


SagamoreHill
of Carolina LLC


3825
Inverness Way


Augusta, Georgia  30907


Attention: Louis Wall


Telecopy:   (706) 855-8747


 


with a
copy (which shall not constitute notice) to:


 


Wiley Rein & Fielding


1776 K
Street, NW


Washington,
DC 20006


Attention:  Brook A. Edinger


Telecopy:   (202)
719-7049


 

















 


Schedule 5(f)


 


1.                                       For purposes of this Agreement, the “Base
Value” shall be an amount equal to $2,366,727, provided that
in the event that Grantor shall have elected to borrow the purchase price with
respect to its acquisition of the Station under the Purchase Agreement pursuant
to an Acquisition Financing Arrangement (as defined in the Time Brokerage
Agreement), the “Base Value” shall equal the total outstanding balance of debt
for borrowed money of Grantor under such Acquisition Financing Arangment.


 


2.                                       For purposes of this Agreement, the “Escalation
Amount” shall be an amount equal to the greater of (A) the Fixed
Appreciation Amount or (B) the Net Broadcast Cash Flow Amount. For
purposes hereof, the “Fixed Appreciation Amount” equals the product of (i) the
number of calendar years (including fractions of years) during the Option
Period prior to the exercise of the Option, times (ii) an
amount equal to $36,000; “Net Broadcast Cash Flow Amount” means the product
of (x) the number of calendar years
(including fractions of years) during the Option Period prior to the exercise
of the Option, times (y)
the average net broadcast cash flow (as determined by Option Holder) for the preceding
12-month period (or if the Option is exercised prior to the first anniversary
of the Effective Date, the average net broadcast cash flow for the period
following the Effective Date), provided that such amount shall not exceed
$60,000.


 


3.                                       Solely with respect to that portion of the
Cash Purchase Price constituting the Escalation Amount, the parties shall apply
as a credit against such amount an amount equal to the aggregate payments of the
Base Fee under the TBA, provided that notwithstanding and independent of the
foregoing, in supplement to the Escalation Amount, and solely in the event that
the Closing hereunder shall occur on a date that is prior to the second
anniversary of the Effective Date, the Cash Purchase Price shall consist of an
additional payment by the Option Holder (the “Additional Consideration”) which
shall be an amount equal to (A) $120,000, less (B) the
product of (i) the number of calendar months during the Option Period
prior to the Closing times (ii) $5,000;
provided that in no event shall the Additional
Consideration be less than zero.


 

















 


 Schedule 6(d) - FCC Licenses


 


	
  Licensee: 

  	
  Atlantic Media Group, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WWMD (3133)

  	
   

  	
  TV Station, Ch. 21

  	
   

  	
  Florence, SC

  	
   

  	
  12/01/2004(1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WWMD-DT

  	
   

  	
  DTV Station, Ch. 20(2)

  	
   

  	
  Florence, SC

  	
   

  	
  12/01/2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Broadcast Auxiliaries used with WWMB:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WMV224
  

  	
  TV
  STL (TS)

  
									



 


 






(1)                                  A timely-filed application for renewal of
license is pending (BRCT-20040730AJM).


(2)                                  WWMD has elected Channel 21 for its
post-transition DTV facilities.