**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 andoperates the following television broadcast station (the “Station”) pursuant tocertain authorizations issued by the Federal Communications Commission (the “FCC”):

 

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

 

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

 

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

 

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

 

Agreement

 

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

 

ARTICLE 1:           PURCHASEOF ASSETS

 

1.1.          Station Assets. Onthe 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 acquirefrom Seller, all right, title and interest of Seller in and to all assets andproperties of Seller, real and personal, tangible and intangible, that areowned, 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 PermittedLiens (defined below) including without limitation the following:

 

(a)           all licenses, permitsand other authorizations issued to Seller by the FCC with respect to theStation (the “FCC Licenses”), including those**describedon *Schedule 1.1(a),* and includingany renewals or modifications thereof between the date hereof and Closing, 

 

----

 

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

 

(b)           all of Seller’sequipment, transmitters, antennas, cables, towers, vehicles, furniture,fixtures, machinery and spare parts, notebook and other computers (includingoperating software licenses) and other tangible personal property of every kindand description that are used or held for use in the operation of the Station,including without limitation those listed on *Schedule1.1(b)*, except for any retirements or dispositions thereof made betweenthe date hereof and Closing in the ordinary course of business in accordancewith Article 4 (the “Tangible Personal Property”);

 

(c)           all of Seller’s leasedreal property used or held for use in the operation of the Station (includingany appurtenant easements and improvements located thereon), including withoutlimitation those listed on *Schedule 1.1(c)*(the “Real Property”);

 

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

 

(e)           all of Seller’s rightsin and to the Station’s call letters and Seller’s rights in and to thetrademarks, trade names, service marks, internet domain names, copyrights,programs and programming material, jingles, slogans, logos, and otherintangible property, including applications for any of the foregoing, which areused or held for use in the operation of the Station, including withoutlimitation those listed on *Schedule 1.1(e)*(the “Intangible Property”);

 

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

 

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

 

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

 

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

 

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

 

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

 

2

----

 

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

 

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

 

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

 

(e)           all contracts ofinsurance, all coverages and proceeds thereunder and all rights in connectiontherewith, including without limitation rights arising from any refunds duewith respect to insurance premium payments to the extent related to suchinsurance policies;

 

(f)            all pension, profitsharing plans and trusts and the assets thereof and any other employee benefitplan or arrangement and the assets thereof, if any, maintained by Seller;

 

(g)           the Station’s accountsreceivable and any other rights to payment of cash consideration (includingwithout limitation all rights to payments under the Station’s networkaffiliation agreements, whether or not offset) for goods or services sold orprovided prior to the Effective Time (defined below) or otherwise attributableto any period prior to the Effective Time (the “A/R”);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(o)           the assets described inSection 1.3(c);

 

3

----

 

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

 

(q)           the Tolling Agreementwith the FCC referenced on *Schedule 1.1(a)*.

 

1.3.          Shared Assets.

 

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

 

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

 

(ii)           if none, then anyallocation previously made by Seller in the ordinary course of Stationoperations shall control;

 

(iii)          if none, then thequantifiable proportionate benefit to be received by the parties after Closingshall control;

 

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

 

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

 

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

 

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

 

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

 

(ii)  the items listed on *Schedule1.2* and the other items of tangible personal property at such sitenot described in clause (i) above are Excluded Assets;

 

4

----

 

(iii)  the items used in the master control facility and includedin 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 itemsavailable 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 notlater than December 31, 2006.  Seller shall give Buyer notice of theTransition Date.

 

(d)  Prior to Closing, if requested by Buyer, Seller shall makeavailable to Buyer appropriate Station employees for traffic system training atreasonable times during normal business hours, provided that such training doesnot interfere in any material respect with such employee’s performance ofservices for the Station or WVUE.

 

1.4.          Assumption ofObligations.

 

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

 

(b)           Liabilities NotAssumed. Except for the Assumed Obligations, Buyer does not assume, andwill not be deemed by the execution and delivery of this Agreement or theconsummation of the transactions contemplated hereby to have assumed, any otherliabilities or obligations of Seller of any kind or nature whatsoever,regardless of whether required by generally accepted accounting principles tobe reflected on a balance sheet or disclosed in the related notes (the “RetainedObligations”). Without limiting the generality of the foregoing, the RetainedObligations 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 bySeller of any Environmental Laws (as defined below) or for the Release (asdefined below) of any Hazardous Materials (as defined below) (including,without limitation those arising out of or related to the Studio Site or leasedreal property); (iii) any liabilities or obligations of Seller to any employeesof Seller or its affiliates not employed by Buyer; (iv) any liability relatingto the employment of current or former employees of the Station prior to theClosing, including but not limited to any liabilities or obligations of Sellerfor severance, accrued vacation or sick leave except as set forth in Section5.6 hereof or any liabilities under or in respect of any Employee Benefit Plan(as hereinafter defined); (v) except for the Station Contract with The DailyBuzz, LLC and any other Station Contracts listed on *Schedule 1.1(d)*, any obligations or liabilities of Seller toany other business unit of Seller, any affiliate of Seller, any director orofficer of Seller or any of its affiliates, or the holder of any equity orownership interest in Seller or any of its affiliates; (vi) any litigation,proceeding, or claim by any Person (defined below) to the extent relating tothe business or operations of the Station prior to the Effective Time, whetheror not such litigation or proceeding or claim is pending, threatened orasserted before, on or after the Effective Time; (vii) any 

 

5

----

 

liability for income or othertaxes relating to the Station pertaining to the period prior to the EffectiveTime; (viii) any liability in respect of any note, bond or indebtedness forborrowed money; or (ix) any liability or sanctions imposed by the FCC resultingfrom 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 landuse, air, soil, surface water, groundwater (including the protection, cleanup,removal, remediation or damage thereof), Hazardous Materials, wetlands, publicor employee health or safety or any other environmental matter, including,without limitation, the following laws: (i) Clean Air Act (42 U.S.C. §7401, etseq.); (ii) Clean Water Act (33 U.S.C. §1251, et seq.); (iii) EmergencyPlanning 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) ToxicSubstances Control Act (15 U.S.C. §2601, et seq.); (vi) Occupational Safety andHealth Act (29 U.S.C. §651, et seq.); (vii) Comprehensive EnvironmentalResponse Compensation and Liability Act (42 U.S.C. §9601, et seq.); (viii) SafeDrinking Water Act (42 U.S.C. §300f, et seq.); (ix) Toxic Substances ControlAct (15 U.S.C. §2601, et seq.); (x) Rivers and Harbors Act (33 U.S.C. §401, etseq.), (xi) Endangered Species Act (16 U.S.C. §1531, et seq.); (xii) HazardousMaterial Transportation Act (49 U.S.C. §1801, et seq.); (xiii) any similar orapplicable environmental state law, rule or regulation; and (xiv) any otherlaw, rule or regulation relating to Hazardous Materials; and (xv) any law, ruleor 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 aredefined as “hazardous wastes,” “hazardous substances,” “toxic substances,” “radioactivematerials,” or other similar designations in, or otherwise subject toprohibition 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 andcontaminants.

 

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

 

1.6.          Prorationsand Adjustments.

 

(a)           Allprepaid and deferred income and expenses relating to the Station Assets andarising from the operation of the Station shall be prorated between Buyer andSeller in accordance with accounting principles generally accepted in theUnited States (“GAAP”) as of 12:01 a.m. on the day of Closing (the “EffectiveTime”). Such prorations shall include without limitation all ad valorem, realestate and other property taxes (except transfer taxes as provided by Section11.1), music and other license fees, make good advertising to be provided byBuyer, employee performance incentives set forth in employment agreements orannual compensation 

 

6

----

 

plans, any vacation for Transferred Employees (defined below) (exceptaccruals for the fiscal year of Seller in which Closing occurs for which thereshall be no adjustment), utility expenses, rent and other amounts under StationContracts and similar prepaid and deferred items. Seller shall receive a creditfor the unapplied portion of all of the Station’s deposits and prepaid expenses.Sales commissions related to the sale of advertisements broadcast on theStation prior to the Effective Time shall be the responsibility of Seller, andsales commissions related to the sale of advertisements broadcast on theStation after the Effective Time shall be the responsibility of Buyer. Allrevenue and operating expenses of the Station shall be further adjusted andallocated between Seller and Buyer to the extent necessary to effect theprinciple that all such income and expenses attributable to the operation ofthe Station on and after the Closing Date shall be for the account of Buyer andall such income and expenses attributable to the operation of the Station priorto the Closing Date shall be for the account of Seller

 

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

 

(c)           Nolater than three (3) Business Days prior to the scheduled Closing date, Sellershall provide Buyer with a statement setting forth a reasonably detailedcomputation of Seller’s reasonable and good faith estimate of the AdjustmentAmount (defined below) as of Closing (the “Preliminary Adjustment Report”). Asused herein, the “Adjustment Amount” means the net amount by which the PurchasePrice is to be increased or decreased in accordance with this Section 1.6. Ifthe Adjustment Amount reflected on the Preliminary Adjustment Report is acredit to Buyer, then the Purchase Price payable at Closing shall be reduced bythe amount of the preliminary Adjustment Amount, and if the Adjustment Amountreflected on the Preliminary Adjustment Report is a charge to Buyer, then thePurchase Price payable at Closing shall be increased by the amount of such preliminaryAdjustment Amount. For a period of ninety (90) days after Closing, Seller andits auditors and Buyer and its auditors may review the Preliminary AdjustmentReport 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 finalAdjustment Amount. If agreement is reached within such 90-day period, thenpromptly thereafter Seller shall pay to Buyer or Buyer shall pay to Seller, asthe case may be, an amount equal to the difference between (i) the agreedAdjustment Amount and (ii) the preliminary Adjustment Amount indicated in thePreliminary Adjustment Report. If agreement is not reached within such 90-dayperiod, then the dispute resolutions of Section 1.6(d) shall apply.

 

(d)           Ifthe parties do not reach an agreement on the Adjustment Amount within the90-day period specified in Section 1.6(c), then Seller and Buyer shall selectan independent accounting firm of recognized national standing (the “ArbitratingFirm”) to resolve the disputed 

 

7

----

 

items. If Seller and Buyer do not agree on the Arbitrating Firm withinfive (5) calendar days after the end of such 90-day period, then theArbitrating Firm shall be a nationally recognized independent accounting firmselected by lot (after excluding one firm designated by Seller and one firmdesignated by Buyer). Buyer and Seller shall each inform the Arbitrating Firmin writing as to their respective positions with respect to the AdjustmentAmount, and each shall make available to the Arbitrating Firm any books andrecords and work papers relevant to the preparation of the Arbitrating Firm’scomputation of the Adjustment Amount. The Arbitrating Firm shall be instructedto complete its analysis within thirty (30) days from the date of itsengagement and upon completion to inform the parties in writing of its owndetermination of the Adjustment Amount, the basis for its determination andwhether 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 theAdjustment Amount. Any determination by the Arbitrating Firm in accordance withthis Section shall be final and binding on the parties. Within five (5) calendardays after the Arbitrating Firm delivers to the parties its writtendetermination of the Adjustment Amount, Seller shall pay to Buyer, or Buyershall pay to Seller, as the case may be, an amount equal to the differencebetween (i) the Adjustment Amount as determined by the Arbitrating Firm and(ii) the preliminary Adjustment Amount indicated in the Preliminary AdjustmentReport.

 

(e)           Ifthe Arbitrating Firm’s determination of the Adjustment Amount is within theMid-Range, then Seller and Buyer shall each pay one-half of the fees anddisbursements of the Arbitrating Firm in connection with its analysis. If not,then (i) if the Arbitrating Firm determines that the written position of Buyerconcerning the Adjustment Amount is closer to its own determination, thenSeller shall pay the fees and disbursements of the Arbitrating Firm inconnection with its analysis, or (ii) if the Arbitrating Firm determines thatthe written position of Seller concerning the Adjustment Amount is closer toits own determination, then Buyer shall pay the fees and disbursements of theArbitrating 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 differencebetween the written positions of Buyer and Seller as to the Adjustment Amountand (ii) has a midpoint equal to the average of such written positions of Buyerand Seller.

 

(f)            Concurrentlywith 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 theClosing Date until the date paid at a rate equal to the prime rate charged byJP Morgan Chase. All payments to be made under Section 1.6 shall be paid bywire transfer in immediately available funds to the account of the payee at afinancial institution in the United States and shall for all purposesconstitute an adjustment to the Purchase Price.

 

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

 

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

 

8

----

 

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 mutuallyagree), in any event subject to satisfaction or waiver of the conditions set forthin Articles 6 and 7 below. The date on which the Closing is to occur isreferred to herein as the “Closing Date.” “Business Day,” whether or not capitalized, shall mean every day of theweek except Saturday, Sunday and days on which banks are closed in the State ofNew York.

 

1.9.          Governmental Consents.

 

(a)           Within five (5)Business Days of the date of this Agreement, Buyer and Seller shall file anapplication with the FCC (the “FCC Application”) requesting FCC consent to theassignment of the FCC Licenses to Buyer. Public notice of FCC consent to theassignment of the main station (both analog and digital) FCC Licenses to Buyerwithout any material adverse conditions other than those of generalapplicability is referred to herein as the “FCC Consent.”  Buyer and Seller shall diligently prosecutethe FCC Application and otherwise use their commercially reasonable efforts toobtain the FCC Consent as soon as possible. Seller shall timely publish and/orbroadcast the notices required by FCC rules and regulations pertaining to theFCC Application. In the event that the FCC imposes any condition upon Buyer orSeller with respect to the FCC Application, the party subject to such conditionshall use its commercially reasonable efforts to comply therewith, provided,however, that the party subject to such condition shall not be required to takeany action if (i) the condition was imposed on it as the result of acircumstance the existence of which does not constitute a breach by the partyof any of its representations, warranties, or covenants under this Agreement,and (ii) compliance with the condition would, in its reasonable judgment, beunduly burdensome on it in any material respect (financial or otherwise). Ifthe Closing shall not have occurred for any reason within the originaleffective period of the FCC Consent, and neither party shall have terminatedthis Agreement under Article 10, the parties shall jointly request an extensionof the effective period of the FCC Consent. No extension of the effectiveperiod of the FCC Consent shall limit the right of a party to exercise itsrights under Article 10.

 

(b)           It is acknowledged andagreed that, for purposes of this Section 1.9 and any other provision of thisAgreement, any condition imposed by the FCC or any other governmental authority(including, without limitation, any court or judicial body) requiring thedivestiture of any assets, properties or businesses, including but not limitedto television broadcast station WESH(TV), Daytona Beach, Florida (“WESH”), byBuyer or any of its affiliates would be unduly burdensome in a material respectand therefore not required. Buyer shall not enter into any agreement ortransactions to acquire any other media properties or stations in theOrlando-Daytona-Melbourne, Florida DMA, nor shall Buyer enter into anyoperating agreement, time brokerage agreement, local marketing agreement, jointsales agreement, joint venture or other similar agreement, in each case whichcould reasonably be expected to have the effect of delaying action by the FCCupon the FCC Application or the consummation of the transactions contemplatedhereby.

 

(c)           Within ten (10)Business Days after the date of this Agreement, Buyer and Seller shall make anyrequired filings with the Federal Trade Commission and the United StatesDepartment of Justice pursuant to the Hart-Scott-Rodino Antitrust ImprovementsAct of 1976, as amended (the “HSR Act”) with respect to the transactionscontemplated hereby (including a request for early termination of the waitingperiod thereunder), and shall thereafter promptly 

 

9

----

 

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

 

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

 

ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES

 

Seller makes the following representations and warranties to Buyer:

 

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

 

2.2.          Authorization.The execution, delivery and performance of this Agreement and the SellerAncillary Agreements by Seller have been duly authorized and approved by allnecessary action of Seller and do not require any further authorization orconsent of Seller. This Agreement is, and each Seller Ancillary Agreement whenmade by Seller and the other parties thereto will be, a legal, valid andbinding agreement of Seller enforceable in accordance with its terms, except ineach case as such enforceability may be limited by bankruptcy, moratorium,insolvency, reorganization or other similar laws affecting or limiting theenforcement of creditors’ rights generally and except as such enforceability issubject to general principles of equity (regardless of whether suchenforceability 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 theStation Contracts as set forth on *Schedule 1.1(c)*and *Schedule 1.1(d)*, the execution, deliveryand performance by Seller of this Agreement and the Seller Ancillary Agreementsand the consummation by Seller of any of the transactions contemplated herebyand thereby does not and will not conflict with or violate any organizationaldocuments of Seller or any law, judgment, order, or decree to which Seller issubject, or require the consent or approval of, or a filing by Seller with, anygovernmental 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 andall other material Licenses relating to the operation of the Station orrequired 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 andlegal holder of the Licenses described on *Schedule1.1(a)*. The Licenses are valid and in full force and effect and havenot been revoked, suspended, canceled, rescinded or terminated and have notexpired and constitute all of the material licenses, permits and authorizationsused in or required for the current operation of the Station under applicablelaws including but not limited to the Communications Act (as defined below). Noneof the Licenses is subject to any condition or restriction which would limitthe full operation of the Station as currently operated by Seller. To Seller’sknowledge, there is not pending or threatened, any action, proceeding,complaint, notice of forfeiture, claim or investigation by or before the FCC orany other governmental authority to revoke, suspend, cancel, rescind ormaterially adversely modify any of the Licenses or that would materially impairthe ability of Seller to assign the Licenses to Buyer or which would materiallyimpede Seller’s ability to prosecute the FCC Application or seek the grant ofthe FCC Consent (other than proceedings to amend FCC rules of generalapplicability). 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 oragainst 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 FCCLicenses, 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 ofdigital television (“DTV”) service. The FCC Licenses include a license for amaximized DTV facility on channel 17 and the FCC has tentatively designatedchannel 17 for the Station’s post-transition DTV operation. The Station isbroadcasting the DTV signal in accordance with such authorization in allmaterial respects.

 

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

 

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

 

2.7.          Real Property. *Schedule 1.1(c*) includes a descriptionof each lease of Real Property or similar agreement included in the StationContracts (the “Real Property Leases”). Except for the Studio Site, Seller doesnot own any real property which is primarily used or held for use in theoperation of the Station.

 

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

 

11

----

 

available copies of suchcontracts to Buyer, except as set forth on *Schedule 1.1(d)*,in which case Seller has provided a description of the material terms of suchStation Contracts on *Schedule 1.1(d). Schedule1.1(c)**and**Schedule1.1(d)* identify each such Material Station Contract (including RealProperty Leases) for which consent to assignment is required for the assignmentof the Station Contract to Buyer. Except as set forth on *Schedule1.1(d)*, each of the Station Contracts (including without limitationeach 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 theenforcement of creditors’ rights generally). Seller has performed itsobligations under each of the Station Contracts in all material respects, andis not in material default thereunder, and to Seller’s knowledge, no otherparty to any of the Station Contracts is in default thereunder in any materialrespect.

 

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

 

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

 

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

 

(iii)  contracts and otheragreements calling for future aggregate purchase prices, payments or otherconsideration 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 seriesof contracts and other agreements) other than for sales of advertising in theordinary course of business consistent with past practice;

 

(iv)  contracts and other agreements containingcovenants of Seller prohibiting or materially limiting the right to compete inany line of business, prohibiting or restricting its ability to conductbusiness with any Person or in any geographical area, or requiring theacquisition of goods or services exclusively from a single supplier orprovider; “Person” means any individual, general or limited partnership,corporation, limited liability company, association, trust, unincorporatedorganization or other entity;

 

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

 

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

 

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

 

12

----

 

(viii)  all network affiliationcontracts;

 

(ix)  all sales agency oradvertising representation contracts;

 

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

 

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

 

(xi)    all contracts and otheragreements pursuant to which the Station acquires programming or providesprogramming to third parties; and

 

(xii)  all retransmission consentagreements.

 

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

 

2.10.        Intangible Property.*Schedule 1.1(e)* contains adescription of the material Intangible Property as of the date of thisAgreement included in the Station Assets. Except as set forth on *Schedule 1.1(e)*, (i) Seller’s use of theIntangible Property does not infringe upon any third party rights in anymaterial respect and (ii) none of the material Intangible Property is beinginfringed by any third party. Except as set forth on *Schedule 1.1(e)*, Seller has not received any written noticethat its use of the Intangible Property at the Station is unauthorized orviolates or infringes upon the rights of any other Person or challenging theownership, use, validity or enforceability of any Intangible Property. Exceptas set forth on *Schedule 1.1(b)*,Seller owns or has the right to use the Intangible Property free and clear ofLiens other than Permitted Liens.

 

2.11.        Employees.

 

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

 

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

 

13

----

 

(c)           As used in thisAgreement, “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, orother “employee welfare benefit plan” or “employee pension benefit plan” asdefined in Sections 3(1) and 3(2) of ERISA) which are maintained or contributedto by Seller for the benefit of, or pursuant to which Seller or any subsidiaryor ERISA Affiliate (defined below) has any liability with respect to anycurrent 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 Sections4001(a)(3) or 3(37) of ERISA or Section 414(f) of the Code), a favorabledetermination letter has been issued by the Internal Revenue Service and noevents have occurred that would adversely affect the tax-qualified status ofany such Employee Benefit Plan.

 

(e)           Seller has at all timescomplied, and currently complies, in all material respects with the applicablehealth care continuation requirements for any Employee Benefit Plan that is awelfare benefit plan (as defined in Section 3(1) of ERISA), including Section4980B of the Code and Sections 601-608 of ERISA (collectively referred to as “COBRA”)and any applicable health care continuation coverage requirements under statelaw.

 

2.12.        Insurance. Sellermaintains insurance policies or other arrangements with respect to the Stationand the Station Assets consistent with its practices for other stations, andwill 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 andregulations, and all decrees and orders of any court or governmental authoritywhich are applicable to the operation of the Station. To Seller’s knowledge,there are no governmental claims or investigations pending or threatenedagainst Seller in respect of the Station except those affecting the industrygenerally.

 

2.14.        Litigation. Thereis no action, suit or proceeding pending or, to Seller’s knowledge, threatenedagainst Seller in respect of the Station that will subject Buyer to liabilityor affect the use or value of the Station Assets or which will affect Seller’sability to perform its obligations under this Agreement.

 

2.15.        Financial Statements.Seller has provided to Buyer copies of its statements of operations for theStation for the years ended February 29, 2004, February 28, 2005 and February28, 2006 and the balance sheets for the Station as of February 29, 2004, February28, 2005 and February 28, 2006 (the “Financial Statements”). The FinancialStatements are the statements included in the audited consolidated financialstatements of Seller and its affiliates (but such statements are not separatelyaudited). The Financial Statements are consistent with the books and records ofthe Station, have been prepared in accordance with GAAP consistently applied,and present fairly in all material respects the financial condition of theStation and the results of operations of the Station for the respective periodscovered thereby, except that (i) the 

 

14

----

 

Financial Statements do notinclude corporate overhead expenses for legal, accounting, human resources andbenefits administration, information technology, engineering, and televisiondivision management services, (ii) insurance expense reflected in thestatements is an estimate of the Station’s share of consolidated insuranceexpense and not necessarily indicative of actual claims activity of the Station,(iii) a portion of employee compensation expenses are paid in stock but arereflected as cash expenses in the statements, (iv) program amortizationadjustments resulting from Seller’s application of purchase accounting inconnection with its acquisition of the Station in 1999, (v) certain revenuesand expenses associated with Seller’s national rep contract, includingamortization of deferred agency buy out payments which reduce agency commissionexpense, amortization of related customer list and payment to the national repfirm based on performance in Seller’s fiscal year ended February 28, 2005 onthe consolidated results of the Seller’s television division, all of which isrecorded on Seller’s books on a consolidated basis, and (vi) such statements donot 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-cashcompensation expenses associated with the discount given to employees on stockpurchases under the Employee Stock Purchase Plan and the Stock CompensationPlan and associated with restricted stock grants made March 1, 2005, andexpenses attributable to the adoption of accounting pronouncements SFAS 142 andEITF Topic D-108. Between February 28, 2006 and the date of this Agreement, theStation has been operated in all material respects in the ordinary course ofbusiness and otherwise in the manner set forth in Section 4.1, as if suchSection applied during such period (other than Section 4.1(g)).

 

2.16.        No UndisclosedLiabilities. There are no liabilities or obligations of Seller that will bebinding upon Buyer after the Effective Time other than the Assumed Obligations.

 

2.17.        Brokers. Except forThe Blackstone Group, whose fees, commissions and expenses are the soleresponsibility of Seller, neither this Agreement nor the purchase and sale ofthe Station Assets or any other transaction contemplated by this Agreement wasinduced or procured through any party acting on behalf of or representingSeller as broker, finder, investment banker, financial advisor, or in anysimilar capacity.

 

2.18.        Transactionswith Affiliates; Entire Business.  Except as disclosed in theFinancial Statements and except for the Station Contract with The Daily Buzz,LLC listed on *Schedule 1.1(d)*and previousarrangements between the Station and RDS/Coopportunities which have sinceexpired and except as set forth in clause (i) of the third sentence of Section2.15 and except for Excluded Assets, since March 1, 2003 neither Seller nor anyaffiliate of Seller has been involved in any business arrangement orrelationship with or in respect of the Station, and, other than for the StationAssets and the assets listed on the Shared Contracts, neither Seller nor anyaffiliate of Seller owns any property or right, tangible or intangible, that isused in the Station’s business or operations.  The conveyance of theStation Assets will convey to Buyer the entire business of the Station, and allthe tangible property and intangible property used by the Station in connectionwith the conduct of the business as heretofore conducted by Seller, except forthe Excluded Assets.

 

15

----

 

2.19.        Disclosure. Neitherthis Agreement nor any Schedule hereto contains an untrue statement of amaterial fact or omits a material fact necessary to make the statementscontained herein or therein misleading.

 

ARTICLE 3: BUYER REPRESENTATIONS ANDWARRANTIES

 

Buyer hereby makes the following representations and warranties toSeller:

 

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

 

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

 

3.3.          No Conflicts. Exceptfor the Governmental Consents, the execution, delivery and performance by Buyerof this Agreement and the Buyer Ancillary Agreements and the consummation byBuyer of any of the transactions contemplated hereby and thereby does not andwill not conflict with or violate any organizational documents of Buyer or anylaw, judgment, order or decree to which Buyer is subject, or require theconsent or approval of, or a filing by Buyer with, any governmental orregulatory authority or any third party or any contract, mortgage or instrumentto which Buyer is a party or is bound or subject.

 

3.4.          Litigation. Thereis no action, suit or proceeding pending or, to its knowledge, threatenedagainst Buyer which questions the legality or propriety of the transactionscontemplated by this Agreement or could materially adversely affect the abilityof Buyer to perform its obligations hereunder.

 

3.5.          Qualification. ToBuyer’s knowledge, it is legally, financially and otherwise qualified to be thelicensee of, acquire, own and operate the Station under the Communications Actand the rules, regulations and policies of the FCC. To Buyer’s knowledge, thereare no facts that would, under existing law and the existing rules,regulations, policies and procedures of the FCC, disqualify Buyer as anassignee of the FCC Licenses or as the owner and operator of the Station. ToBuyer’s knowledge, no waiver of or exemption from any FCC rule or policy isnecessary for the FCC Consent to be obtained. To Buyer’s knowledge, there areno matters which might reasonably be expected to result in the FCC’s denial ordelay of approval of the FCC Application. To Buyer’s knowledge, as of the date of this Agreement, Buyer’sacquisition 

 

16

----

 

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

 

3.6.          Brokers. Neitherthis Agreement nor the purchase and sale of the Station Assets or any othertransaction contemplated by this Agreement was induced or procured through anyparty acting on behalf of or representing Buyer as broker, finder, investmentbanker, 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 Agreementor with the prior written consent of Buyer, which shall not be unreasonablywithheld, delayed or conditioned, Seller shall:

 

(a)           operate the Station inthe ordinary course of business consistent with past practice (including butnot limited to completion of capital expense projects in accordance with Seller’sfiscal year ended 2007 budget) and in all material respects in accordance withFCC rules and regulations and with all other applicable laws, regulations,rules and orders, and use commercially reasonable efforts to preserve intactthe business, operations and assets of the Station and maintain its relationshipswith employees, suppliers and customers;

 

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

 

(c)           not other than in theordinary course of business, sell, lease or dispose of or agree to sell, leaseor dispose of any of the Station Assets unless replaced with similar items ofsubstantially equal or greater value and utility, or create, assume or permitto 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’sbusiness and the Station Assets, and, through a representative designated bySeller, the Station’s employees, and furnish Buyer with information relating tothe Station Assets and the Station employees that Buyer may reasonably request,provided that such access rights shall not be exercised in a manner thatunreasonably interferes with the operation of the Station;

 

(e)           at Buyer’s sole costand expense, provide Buyer any financial information regarding the Station thatis maintained by Seller on an unconsolidated basis and requested by Buyer thatis reasonably necessary to satisfy any reporting obligations to the Securitiesand Exchange Commission or reasonably necessary to obtain acquisition financingfor the Station;

 

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

 

17

----

 

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

 

(g)           notenter into any contract or other agreement which, if in effect on the datehereof, would be a Material Station Contract or amend any existing MaterialStation Contracts;

 

(h)           notknowingly waive any right of material value under a Station Contract, or changethe manner in which Seller applies GAAP unless required by GAAP or law, andgive Buyer notice of any material change in Seller’s accounting practices andpolicies; and

 

(i)            usecommercially reasonable efforts to cause the Station Contract for the DailyBuzz to be modified or amended so as to extend the term of the Daily BuzzStation Contract through May 2007 and to provide the Station withretransmission consent rights to multi-channel video programming distributorswithin 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 anaffiliate of Buyer on behalf of Buyer) are parties to a non-disclosureagreement with respect to Seller and its television stations (the “NDA”). Tothe extent not already a direct party thereto, Seller and Buyer hereby assumethe NDA and agree to be bound by the provisions thereof. Without limiting theterms of the NDA, subject to the requirements of applicable law, all non-publicinformation regarding the parties and their business and properties that isdisclosed in connection with the negotiation, preparation or performance ofthis Agreement (including without limitation all financial information providedby Seller to Buyer) shall be confidential and shall not be disclosed to anyother Person, except in accordance with the terms of the NDA.

 

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

 

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

 

5.4.          Risk of Loss.

 

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

 

18

----

 

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

 

(i)  Seller shall usecommercially reasonable efforts to repair or replace such item in all materialrespects in the ordinary course of business; and

 

(ii)  if such repair orreplacement is not completed prior to Closing, then the parties shall proceedto Closing and Seller shall promptly repair or replace such item in allmaterial respects after Closing (and Buyer will provide Seller access and anyother reasonable assistance requested by Seller with respect to suchobligation), except that if such damage or destruction has a Material AdverseEffect, then Closing shall be postponed until the date five (5) Business Daysafter such Material Adverse Effect is remedied, subject to Section 10.1.

 

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

 

5.5.          Consents.

 

(a)           Theparties shall use commercially reasonable efforts to obtain (i)  any third party consents necessary for theassignment of any Station Contract (which shall not require any payment to anysuch third party), and (ii) execution of reasonable estoppel certificates bylessors under any Real Property Leases requiring consent to assignment, but nosuch consents or estoppel certificates are conditions to Closing except for theRequired Consents. Receipt of the following consents to assignment, withoutconditions other than the execution of an assumption agreement (collectively,the “Required Consents”) is a condition precedent to Buyer’s obligation toclose under this Agreement: (i) the Station’s WB affiliation agreement, butonly to the extent that Closing occurs prior to the commencement of The CWNetwork programming, (ii) the CW term sheet (including an acknowledgment by theCW Network of such term sheet), but such condition shall be deemed satisfied byeither the acceptance of an assumption agreement from Buyer by The CWNetwork or the delivery to Buyer or Seller of a reasonable form of assumptionagreement by The CW Network (and, in the case of such a delivery, if the formprovides for signature by The CW Network, such assumption agreement shall havebeen executed by The CW Network), (iii) other programming agreements designatedwith a ¶ on *Schedule 1.1(d)*, and(iv) the Station’s main tower lease designated by a diamond on *Schedule 1.1(c)*.

 

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

 

19

----

 

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

 

5.6.          Employees.

 

(a)           Sellerhas provided Buyer a list showing employees’ names, employee positions andannualized pay rates for employees of the Station. Except for the employeesdesignated on *Schedule 5.6,* Buyer shall offer employment to all Personson such list to the extent they are employed by Seller immediately prior toClosing and to any employee hired after the date hereof in the ordinary courseof business to replace any employee on such list with Buyer’s consent, whichshall not be unreasonably withheld. Each such offer shall be at a salary and ata position substantially similar as in effect immediately preceding the Closing,and on other terms and conditions comparable to those provided by Buyer toemployees of WESH. Such offers of employment shall be for employment commencingas of the Closing Date, with the exception of those identified on *Schedule 5.6* as employees to be hired byBuyer on the Transition Date (the “Master Control Employees”), whose employmentoffer will be to commence on the Transition Date. Each employee who accepts such offer is referred to as a “TransferredEmployee”, and, collectively, the “Transferred Employees.”  Unless Buyer enters into a separateemployment agreement with a Transferred Employee, each Transferred Employeeshall be an “at will” employee of Buyer, and no provision contained in thisSection 5.6 shall be construed as an agreement for, or guarantee of, continuedemployment. All Transferred Employees shall be subject to the policiesestablished from time to time by Buyer with respect to employment and employeebenefits, and Buyer shall not be under any obligation to assume, continue, oradopt any liabilities or obligations with respect to any Employee Benefit Plan(as defined in Section 2.11 hereof).

 

(b)           With respect to Transferred Employees, Sellershall be responsible for all compensation and benefits arising prior to theEffective Time or Transition Date, as applicable, and Buyer shall beresponsible for all compensation and benefits arising after the Effective Timeor Transition Date, as applicable. Notwithstanding anything herein to thecontrary, effective at the Effective Time or Transition Date, as applicable,Buyer shall provide severance arrangements which are the same as the severancearrangements of Seller on the date hereof (a copy of which has been provided toBuyer) for any Transferred Employee who terminates employment with Sellerduring the twelve (12) month period immediately following the Effective Time orTransition Date, as applicable, provided, however, that Buyer shall have noliability for any obligation, including but not limited to, severance orvacation and sick leave with respect to any employees who are not TransferredEmployees.

 

(c)           As of the Effective Time or Transition Date,as applicable, Buyer shall cause all such Transferred Employees to be eligibleto participate in Buyer’s employment, bonus, incentive compensation, deferredcompensation, pension, profit sharing, retirement, equity-based, leave ofabsence, vacation, severance, insurance, worker’s compensation, disability,supplemental unemployment, and other benefit plan, arrangement, agreement,practice or policy (including, without limitation, “employee welfare benefitplans” and “employee pension benefit plans” as defined in Sections 3(1) and3(2) of ERISA) (collectively, the “Buyer Benefit Plans”) 

 

20

----

 

that, in the aggregate, are equivalent to those benefit plans offeredto similarly situated employees of television station WESH. Buyer shall giveTransferred Employees credit under the Buyer Benefit Plans for any deductiblesor co-payments paid for the current year under any plan maintained by Seller. Inaddition, Seller shall retain responsibility for all hospital, medical, lifeinsurance, disability and other welfare plan expenses and benefits, and for allworkers’ compensation, unemployment compensation and other government mandatedbenefits (collectively referred to herein as “Welfare Type Plan”), in respectof claims that are covered by any Welfare Type Plans maintained by Seller andthat are incurred by Transferred Employees and their dependents prior to theEffective 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, otherthan plans providing vacation or severance benefits, to recognizeservice of the Transferred Employees with Seller for purposes of eligibilityand vesting only.  As of the Effective Time or Transition Date, asapplicable, Buyer shall cause each applicable Buyer Benefit Plan that providesvacation or severance benefits to recognize service of the TransferredEmployees with Seller also for purposes of determining the amount of benefits.

 

(e)           With respect to any Employee Benefit Planthat includes a cash or deferred arrangement under Section 401(k) of the Code (“Seller’s401(k) Plan”), Seller shall (i) fully vest as of the Closing Date all accountsof all participants in the 401(k) Plan who are Transferred Employees, (ii)allow Transferred Employees to elect to receive a complete distribution of allof their accounts under Seller’s 401(k) Plan promptly following the ClosingDate, and (iii) subject to acceptance by Buyer’s 401(k) plan, allow TransferredEmployees to rollover outstanding participant loans under Seller’s 401(k) Planand not treat any such loans rolled-over within 90 days after the date theClosing Date (or, within 90 days after the Transition Date, as may be applicable) as in default, except asotherwise required by law.

 

(f)            Seller shall be responsible for anyobligations or liabilities to Transferred Employees under the WorkersAdjustment and Retraining Notification Act and any similar state or local “plantclosing” law as a result of actions taken by Seller prior to the EffectiveTime.

 

(g)           Sellerwill fully provide or pay for all liabilities or obligations to the employees underall Employee Benefit Plans. Seller shall retain all liability andresponsibility for “COBRA” healthcare continuation coverage required to beoffered and provided under Section 4980B of the Code and Sections 601-608 ofERISA to employees and former employees of Seller and any other COBRA qualifiedbeneficiaries under Seller’s health plan(s) who have elected or are eligible toelect COBRA continuation coverage as of or prior to the Closing Date or whoincur a COBRA qualifying event in connection with the transactions contemplatedby this Agreement.

 

5.7.          Accounting Services.

 

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

 

21

----

 

relating to the A/R that arepaid 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 toSeller. Within ten calendar days after the end of each month, Buyer shalldeliver to Seller a report showing A/R collections for the prior month andBuyer shall make a payment, without offset, to Seller equal to the amount ofall such collections. At the end of the Collection Period, any remaining A/Rshall be returned to Seller for collection.

 

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

 

5.8.          1031 Exchange. Tofacilitate a like-kind exchange under Section 1031 of the Code, Seller mayassign its rights under this Agreement (in whole or in part) to a “qualifiedintermediary” under section 1.1031(k)-1(g)(4) of the treasury regulations (butsuch assignment shall not relieve Seller of its obligations under thisAgreement) and any such qualified intermediary may re-assign to Seller; providedthat no such assignment shall prevent or delay Closing. If Seller gives noticeof such assignment, Buyer shall provide Seller with a written acknowledgment ofsuch notice prior to Closing and pay the Purchase Price (or such portionthereof as is designated in writing by the qualified intermediary) to or onbehalf of the qualified intermediary at Closing and otherwise reasonablycooperate therewith. Buyer’s obligation to cooperate with Seller isspecifically conditioned upon each of the following: (i) all of Buyer’s rightsand all of Seller’s obligations to Buyer respecting all other provisions ofthis Agreement shall not be adversely affected by any such exchange, whether ornot such exchange is consummated by Buyer; and (ii) Buyer shall not in any waybe liable to Seller or any other party whatsoever for any failure of Seller’sproposed transaction to qualify as a tax-free exchange of like-kind propertyunder the Code.

 

5.9.          FinalOrder.

 

(a)           For purposes of thisAgreement, the term “Final Order” means action by the FCC (including actionduly taken by the FCC’s staff, pursuant to delegated authority), which shallnot have been reversed, stayed, enjoined, set aside, annulled, or suspended andwith respect to which no timely request for stay, petition for rehearing,appeal, or certiorari or sua sponte action of the FCC with comparable effectshall 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 actionby the FCC shall have expired.

 

(b)           If the Closing occursprior to a Final Order, and prior to becoming a Final Order the FCC Consent isreversed or otherwise set aside, and there is an order of the FCC (or an orderof a court of competent jurisdiction) requiring the re-assignment of the FCCLicenses to Seller, then, upon the earlier of (i) such re-assignment orderbecoming 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 saleof the Station Assets (the “Rescission Trigger”), the purchase and sale of theStation Assets shall be rescinded. In such event, Buyer shall reconvey toSeller the Station Assets, other than those non-license assets that have beendisposed of after Closing in the 

 

22

----

 

ordinary course of business (the “ReconveyedStation Assets”) and Seller shall repay to Buyer the full Purchase Price andreassume those contracts and leases and obligations assigned and assumed atClosing that continue to exist.

 

(c)           Anysuch rescission shall be consummated on a mutually agreeable date within thirtydays of the Rescission Trigger (or, if earlier, within the time required by alawful order). In connection therewith, Buyer and Seller shall each executesuch documents (including execution by Buyer of instruments of conveyance ofthe Reconveyed Station Assets to Seller and execution by Seller of instrumentsof assumption of those contracts and leases and obligations assigned and assumedat Closing that continue to exist) and make such payments (including repaymentby Seller to Buyer of the full Purchase Price) as are necessary to give effectto such rescission. All earnings and profits relating to Buyer’s use of theReconveyed Station Assets between the Closing and the effective time of suchrescission shall belong to Buyer.

 

5.10.        InterimActions. The parties shall use commercially reasonable efforts, and proceeddiligently and in good faith, to take or cause to be taken all actions, and door cause to be done all things necessary and proper or advisable, to consummatethe transactions contemplated by this Agreement and transition the Station’soperations, including, without limitation, obtaining all necessary waivers,consents (including, without limitation, Governmental Consents and third partyconsents to the assignment to Buyer of the Station Contracts pursuant toSection 5.5, and, in the case of Buyer, executing an assumption agreement asreasonably 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 subjectto satisfaction, at or prior to Closing, of each of the following conditions (unlesswaived in writing by Seller):

 

6.1.          Representations andCovenants.

 

(a)           The representations andwarranties of Buyer made in this Agreement, shall be true and correct in allmaterial respects as of the Closing Date with the same force and effect as thoughmade as of the Closing Date, except for changes expressly permitted by theterms of this Agreement.

 

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

 

(c)           Seller shall havereceived a certificate dated as of the Closing Date from Buyer executed by anauthorized officer of Buyer to the effect that the conditions set forth inSections 6.1(a) and (b) have been satisfied.

 

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

 

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

 

6.4.          HartScott 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 subjectto satisfaction, at or prior to Closing, of each of the following conditions(unless waived in writing by Buyer):

 

7.1.          Representations andCovenants.

 

(a)           The representations andwarranties of Seller made in this Agreement shall be true and correct in allmaterial respects as of the Closing Date with the same force and effect asthough made as of the Closing Date, except for changes expressly permitted bythe terms of this Agreement.

 

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

 

(c)           Buyer shall havereceived a certificate dated as of the Closing Date from Seller executed by anauthorized officer of Seller to the effect that the conditions set forth inSections 7.1(a) and (b) have been satisfied.

 

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

 

7.3.          FCC Authorization.The FCC Consent shall have been obtained and shall be in full force and effectwithout any condition materially adverse to the Station or Buyer.

 

7.4.          HartScott 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 standingcertificates issued by the Secretary of State of Seller’s jurisdiction offormation;

 

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

 

24

----

 

(iii)          the certificatedescribed in Section 7.1(c);

 

(iv)          an assignment of FCCauthorizations assigning the FCC Licenses from Seller to Buyer in the formattached as *Exhibit A*hereto;

 

(v)           an assignment andassumption of contracts assigning the Station Contracts from Seller to Buyer inthe form attached as *Exhibit A*hereto;

 

(vi)          an assignment andassumption of leases assigning the Real Property Leases from Seller to Buyer inthe form attached as *Exhibit A*hereto;

 

(vii)         domain name transfersassigning the Station’s domain names listed on *Schedule1.1(e)*from Seller to Buyer following customary procedures of thedomain name administrator;

 

(viii)        endorsed vehicle titlesconveying the vehicles included in the Tangible Personal Property from Sellerto Buyer;

 

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

 

(x)            customary paydown andlien release letter; and

 

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

 

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

 

(i)            the Purchase Price inaccordance with Section 1.5 hereof;

 

(ii)           good standingcertificates issued by the Secretary of State of Buyer’s jurisdiction offormation;

 

(iii)          certified copies of: certificatesof formation and constituent agreements of Buyer; resolutions authorizing theexecution, delivery and performance of this Agreement, including theconsummation of the transactions contemplated hereby; and incumbency andspecimen signatures of officers of Buyer executing the transaction documentscertified by the secretary of Buyer;

 

(iv)          the certificatedescribed in Section 6.1(c);

 

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

 

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

 

25

----

 

(vii)         domain name transfersassuming the Station’s domain names listed on *Schedule1.1(e)* following customary procedures of the domain nameadministrator; and

 

(viii)        such other documents andinstruments of assumption that may be necessary to assume the AssumedObligations.

 

ARTICLE 9:  SURVIVAL;INDEMNIFICATION

 

9.1.          Survival. Therepresentations and warranties and the covenants and agreements to be performedbefore the Closing in this Agreement shall survive Closing for a period ofeighteen (18) months from the Closing Date whereupon they shall expire and beof no further force or effect, except that if within such period theindemnified party gives the indemnifying party written notice of a claim forbreach thereof describing in reasonable detail the nature and basis of suchclaim, then such claim shall survive until the resolution of such claim. Thecovenants and agreements in this Agreement to be performed at or after theClosing shall survive Closing until performed.

 

9.2.          Indemnification.

 

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

 

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

 

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

 

(iii)  the Retained Obligations;or

 

(iv)  the business or operationof the Station before the Effective Time.

 

(b)              Notwithstanding theforegoing or anything else herein to the contrary, after Closing, (i) Sellershall have no liability to Buyer under clause (i) of Section 9.2(a) until, andonly 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 anamount equal to $43,500,000.

 

(c)              Fromand after Closing, Buyer shall defend, indemnify and hold harmless Seller andits affiliates from and against any and all Damages incurred by Seller arisingout of or resulting from:

 

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

 

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

 

26

----

 

(iii)  the Assumed Obligations;or

 

(iv)  the business or operationof the Station after the Effective Time.

 

9.3.          Procedures.

 

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

 

(b)           The indemnifying partyshall have the right to undertake the defense or opposition to such Claim withcounsel selected by it. In the event that the indemnifying party does notundertake such defense or opposition in a timely manner, the indemnified partymay undertake the defense, opposition, compromise or settlement of such Claimwith counsel selected by it at the indemnifying party’s cost (subject to theright of the indemnifying party to assume defense of or opposition to suchClaim at any time prior to settlement, compromise or final determinationthereof).

 

(c)           Anything herein to thecontrary notwithstanding:

 

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

 

(ii)  the indemnifying partyshall not, without the indemnified party’s written consent, settle orcompromise any Claim or consent to entry of any judgment which does not includethe giving by the claimant to the indemnified party of a release from allliability in respect of such Claim; and

 

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

 

ARTICLE 10: TERMINATION AND REMEDIES

 

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

 

(a)           by mutual writtenconsent of Buyer and Seller;

 

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

 

27

----

 

(c)           by written notice ofSeller to Buyer if Buyer breaches its representations or warranties or breachesor defaults in the performance of its covenants contained in this Agreement andsuch breach or default is material in the context of the transactionscontemplated 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 PurchasePrice at Closing, subject to satisfaction of the conditions to such obligation;

 

(d)           by written notice ofSeller 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 ofthe Closing to occur by such date is due to the fault of the party seeking toterminate, then that party shall not have such termination right; or

 

(e)           by Buyer pursuant toSection 5.4(c).

 

10.2.        Cure Period. Eachparty shall give the other party prompt written notice upon learning of anybreach or default by the other party under this Agreement. The term “CurePeriod” as used herein means a period commencing on the date Buyer or Sellerreceives from the other written notice of breach or default hereunder andcontinuing 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 becured within such period but can be cured before the date five (5) BusinessDays after the scheduled Closing date, and if diligent efforts to cure promptlycommence, then the Cure Period shall continue as long as such diligent effortsto cure continue, but not beyond the date five (5) Business Days after thescheduled Closing date.

 

10.3.        Survival. Neitherparty may terminate under Sections 10.1(b) or (c) if it is then in materialdefault under this Agreement. The termination of this Agreement shall notrelieve any party of any liability for breach or default under this Agreementprior to the date of termination. Notwithstanding anything contained herein tothe contrary, Sections 5.1 (Confidentiality) and 11.1 (Expenses) shall surviveany termination of this Agreement.

 

10.4.        SpecificPerformance. In the event of failure or threatened failure by either partyto comply with the terms of this Agreement, the other party shall be entitledto an injunction restraining such failure or threatened failure and, subject toobtaining any necessary FCC consent, to enforcement of this Agreement by adecree of specific performance requiring compliance with this Agreement.

 

ARTICLE 11: MISCELLANEOUS

 

11.1.        Expenses. Eachparty shall be solely responsible for all costs and expenses incurred by it inconnection with the negotiation, preparation and performance of and compliancewith the terms of this Agreement. All governmental fees and charges applicableto any requests for Governmental Consents shall be paid one-half by Buyer andone-half by Seller. All governmental taxes, fees and charges applicable to thetransfer of the Station Assets under this Agreement shall be paid one-half byBuyer 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 ofany agreement or action of it or any party acting on its behalf in connectionwith 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 intothis Agreement. After Closing, each party shall from time to time, at therequest of and without further cost or expense to the other, execute anddeliver such other instruments of conveyance and assumption and take such otheractions as may reasonably be requested in order to more effectively consummatethe 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 otherdata of the Seller or relating to the Station’s business, the Station Assets,the Excluded Assets, the Assumed Obligations or the Seller pertaining to theStation in its possession with respect to periods prior to the Closing and theright to make copies and extracts therefrom, to the extent that such access maybe reasonably required by the requesting party (i) to facilitate theinvestigation, litigation and final disposition of any claims which may havebeen or may be made against any party or its affiliates and (ii) for any otherreasonable business purpose.

 

(c)           Each party agrees thatfor a period of not less than seven (7) years following the Closing Date, itshall not destroy or otherwise dispose of any of the books and records relatingto the Station’s business, the Station Assets, the Assumed Obligations, theExcluded Assets or the Seller pertaining to the Station in its possession withrespect to periods prior to the Closing. Each party shall have the right todestroy all or part of such books and records after the seventh anniversary ofthe Closing Date or, at an earlier time by giving each other party heretothirty (30) days prior written notice of such intended disposition and byoffering to deliver to the other parties, at the other party’s expense, custodyof such books and records as such party may intend to destroy.

 

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

 

11.3.        Assignment. Exceptas provided by Section 5.8 (1031 Exchange), neither party may assign thisAgreement without the prior written consent of the other party hereto and anypurported assignment in violation of the foregoing shall be null and void abinitio, provided however, that Buyer may assign its rights and obligationshereunder 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 doesnot delay processing of the FCC Application, grant of the FCC Consent orClosing, (ii) any such assignee delivers to Seller a written assumption of thisAgreement, and (iii) Buyer shall remain liable for all of its obligationshereunder. The terms of this Agreement 

 

29

----

 

shall bind and inure to thebenefit of the parties’ respective successors and any permitted assigns, and noassignment shall relieve any party of any obligation or liability under thisAgreement.

 

11.4.        Notices. Any noticepursuant to this Agreement shall be in writing and shall be deemed delivered onthe date of personal delivery or confirmed facsimile transmission or confirmeddelivery by a nationally recognized overnight courier service, and shall beaddressed as follows (or to such other address as any party may request bywritten 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. Noamendment or waiver of compliance with any provision hereof or consent pursuantto this Agreement shall be effective unless evidenced by an instrument inwriting signed by the party against whom enforcement of such amendment, waiver,or consent is sought.

 

11.6.        EntireAgreement. This Agreement (including the Exhibits hereto and the DisclosureLetter) constitutes the entire agreement and understanding among the partieshereto with respect to the subject matter hereof, and supersedes all prioragreements and understandings 

 

30

----

 

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

 

11.7.        Severability. If anycourt or governmental authority holds any provision in this Agreement invalid,illegal or unenforceable under any applicable law, then, so long as no party isdeprived of the benefits of this Agreement in any material respect, thisAgreement shall be construed with the invalid, illegal or unenforceableprovision deleted and the validity, legality and enforceability of theremaining provisions contained herein shall not be affected or impairedthereby.

 

11.8.        No Beneficiaries. Nothingin this Agreement expressed or implied is intended or shall be construed togive any rights to any Person other than the parties hereto and theirsuccessors and permitted assigns.

 

11.9.        Governing Law. Theconstruction and performance of this Agreement shall be governed by the laws ofthe State of New York without giving effect to the choice of law provisionsthereof.

 

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

 

11.11.      Cooperation. AfterClosing, each party shall cooperate as reasonably requested by the other partyin the investigation, defense or prosecution of any action which is pending orthreatened 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 withrespect to such matter. Without limiting the generality of the foregoing, eachparty shall make available its employees to give depositions or testimony andshall furnish all documentary or other evidence in each case as the other partymay reasonably request. Each party shall reimburse the other for all reasonableand necessary out-of-pocket expenses incurred in connection with theperformance of its obligations under thisSection 11.11.

 

11.12.      Guaranty. Guarantorunconditionally guarantees the payment and performance of any and allobligations and liabilities of Seller under this Agreement and the otheragreements and documents executed and delivered in connection herewith and anypermitted assignees of Seller’s rights or obligations hereunder, including,without limitation, the obligations and liabilities under Section 9.2. Guarantoracknowledges that it has agreed to this unconditional guarantee as aninducement to Buyer to enter into this Agreement.

 

31

----

 

11.13.      Counterparts. ThisAgreement may be executed in separate counterparts, each of which will bedeemed an original and all of which together will constitute one and the sameagreement.

 

[SIGNATURE PAGE FOLLOWS]

 

32

----

 

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of thedate 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 |
|            |                                                  |  |  |  |

 

33

----