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, 


 

















 


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):


 


10

















 


(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 


 


11

















 


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;


 


12

















 


(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.


 


13

















 


(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 


 


14

















 


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.


 


15

















 


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 


 


16

















 


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 


 


17

















 


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.


 


18

















 


(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 


 


19

















 


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

















 


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 


 


21

















 


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 


 


22

















 


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.


 


23

















 


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;


 


24

















 


(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;


 


25

















 


(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


 


26

















 


(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);


 


27

















 


(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.


 


28

















 


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 


 


29

















 


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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