Document:

Exhibit
10.9

LEASE

THIS LEASE (this “Lease”),
made as of the 1st day of
September, 2003, by and between G.T.J. CO.,
INC., a corporation organized under the laws of the State of New
York, having an office at 165-25 147th Avenue, Jamaica, New York 11434 (“Landlord”) and VARSITY BUS CO., INC., a corporation organized under the laws
of the State of New York, with its principal place of business located at 626
Wortman Avenue, Brooklyn, New York (“Tenant”).

RECITALS:

WHEREAS, Landlord is the owner of the premises
located at 626 Wortman Avenue, Brooklyn, New York and Cozine Avenue, Brooklyn,
New York (collectively, the “Premises”);
and

WHEREAS, Tenant desires to lease from Landlord a
portion of the Premises as set forth in this Lease; and

W I T N E S S E T H:

NOW,
THEREFORE, in consideration of the rents, covenants and agreements herein
contained, Landlord hereby leases the Demised Premises (as hereinafter defined)
to Tenant, and Tenant hereby rents and hires the Demised Premises from
Landlord, upon the following terms and conditions:

ARTICLE 1 - TENANT’S
PORTION OF THE DEMISED PREMISES

Section 1.01.          Demised
Premises.  Landlord hereby demises unto Tenant the exclusive
right to occupy the portion of the Premises set forth in the Exhibit “A”
annexed hereto subject to Landlord’s right of ingress and egress upon the
portion of the Premises set forth in the Exhibit “A,” along with the use of the
fuel pumps, lifts and office space described below (collectively, the “Demised Premises”). In addition to the
designated parking areas and office space, Tenant shall be entitled to
non-exclusive use, jointly and severally with the other tenants, of the
maintenance facilities on the Premises for the maintenance of its vehicles, as
set forth in Exhibit “B”.

Section 1.02.          Fuel
Pumps.  Tenant shall be entitled to non-exclusive use of the fuel
pumps set forth in Exhibit “C” annexed hereto for the fueling of its vehicles
provided Tenant remains fully responsible for its fuel costs and any attendant
taxes resulting from Tenant’s use.

Section 1.03.          Lifts.  Tenant
shall be entitled to non-exclusive use of the hydraulic lifts set forth in
Exhibit “D” annexed hereto.

Section
1.04.          Office Space.  Tenant
shall be entitled to exclusive use of the office space set forth in Exhibit “E”
annexed hereto.

 

 

Section 1.05.          Easement.  At the request of Landlord, Tenant shall
grant Landlord an easement for ingress and egress that may be located within
the Tenant’s Demised Premises.

ARTICLE 2 -
CONDITION OF THE PREMISES

Section 2.01.          Condition.  Tenant
accepts possession of the Demised Premises in AS-IS condition, without
representation or warranty of any kind from Landlord as to the condition of the
Demised Premises or its fitness for the particular use for which Tenant shall
utilize the Demised Premises.

ARTICLE 3 – TERM

Section 3.01.          Initial
Term.  The term of this Lease (the “Initial Term”) shall commence as of September 1, 2003 (the “Commencement Date”). The Initial Term shall
expire on August 31st, 2010, if not sooner terminated (the “Expiration Date”).

ARTICLE 4 - RENT
AND TAXES

Section 4.01.          Minimum
Annual Rent.

(a)           Tenant
shall pay Landlord or Landlord’s designee annual minimum rent (“Basic Rent”) in equal monthly payments to
be received by Landlord or Landlord’s designee on the first (1st) day of each month in advance, as set forth below:

	
  Lease Year

  	
   

  	
  Annual Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9/1/2003 to
  8/31/2004

  	
   

  	
  $

  	
  200,000.00

  	
   

  
	
  9/1/2004 to
  8/31/2005

  	
   

  	
  $

  	
  200,000.00

  	
   

  
	
  9/1/2005 to
  1/31/2006

  	
   

  	
  $

  	
  231,800.00

  	
   

  
	
  2/1/2006 to 8/31/2006

  	
   

  	
  $

  	
  311,800.00

  	
   

  

 

Thereafter, on the anniversary of the Commencement
Date and for each subsequent year during the Initial Term, Basic Rent shall
increase by the Consumer Price Index (the “CPI”)
for the New York-Northeastern New Jersey area, which is currently published by
the United States Department of Labor, Bureau of Labor Statistics issued in May
of that year (the “CPI Annual Increase”).
All CPI Annual Increases during the term of the Lease shall be cumulative and
compounded as of the anniversary of the Commencement Date based on the Basic
Rent plus CPI Annual Increase for the prior Lease year. If the commencement
date occurs on a day other than the first day of a calendar month, or if the
expiration date occurs on a day other than the last day of a calendar month,
then the Basic Rent for such fractional month shall be prorated on a daily
basis.

(b)           In addition to the Basic Rent
provided for above, all other payments to be made by Tenant to Landlord shall
be deemed to be and shall become additional rent (“Additional Rent”) hereunder whether or not the same be
designated as such, and unless otherwise provided, shall be

 2
 

 

 

due and payable twenty (20) days after demand therefor accompanied with
an invoice and detailed information, if available. In the event Tenant does not
agree with any detailed information provided, Tenant shall nonetheless make
full payment as set forth in the demand presented and the parties shall resolve
any alleged inconsistencies with the invoices presented. Landlord shall have
the same remedies under this Lease for failure to pay Additional Rent as for
the nonpayment of Basic Rent. Tenant’s obligation to pay Basic Rent or
Additional Rent (collectively and individually referred to as “rent” or “Rent”)
for any portion of the term of the Lease shall survive the expiration or
termination of the term of this Lease.

(c)           In
addition to the Basic Rent provided for above, Tenant shall pay to Landlord as
Additional Rent, Tenant’s Proportionate Share (as defined below) of all sums,
charges, fees, expenses incurred by Landlord, whether on a direct metered basis
or prorated from a master meter charge, for all water, electric, gas, sewer or
other utilities consumed in or servicing the Premises. Landlord will make
arrangements for the above utilities to be provided to the Premises. Landlord
shall use commercially reasonable efforts to insure utilities are provided to
the Premises, uninterrupted during the Term.

(d)           In
addition to the Basic Rent provided for above, Tenant shall pay Landlord as
Additional Rent, Tenant’s Proportionate Share of any HVAC contracts,
maintenance contracts, repairs, cleaning charges, common area maintenance
charges, and any charges that Landlord may incur in connection with the
Premises. Landlord will make arrangements for the above contracts to be
provided for the Premises and shall use commercially reasonable efforts to
ensure such services are provided to Tenant uninterrupted during the Term.

(e)           Landlord’s
failure to prepare and deliver any statements or bills, or Landlord’s failure
to make a demand under this Article 4 or under any other provision of this
Lease, shall not in any way be deemed to be a waiver of or cause Landlord to
forfeit or surrender its rights to collect any items of Additional Rent which
may have become due pursuant to this Lease. This provision shall survive the
expiration or termination of this Lease.

(f)            Tenant’s
proportionate share of such Additional Rent and other charges described in this
Article 4 of the Lease shall be sixty (60%) percent (“Tenant’s Proportionate Share”) of the amount
of such Additional Rent and all other charges and costs paid by the Landlord in
connection with the Premises. In the event the Demised Premises is reduced or
increased during the Term, Tenant’s proportionate share shall be pro-rated
according to the increase or decrease of square footage.

(g)           As
Additional Rent, Tenant shall pay Landlord such other sums of money as become
due and payable by Tenant hereunder including but not limited to those items
specified in Articles 1, 4, 10, 11 and 12 of this Lease, all of which sums
shall be payable to Landlord or Landlord’s designee as expressly provided for
in this Lease.

(h)           All services provided by Landlord
under this Lease and any common area maintenance shall be performed in a
non-discriminatory manner for Tenant as compared to other

 3
 

 

 

tenants of the Premises, and Tenant shall have no liability hereunder
to the extent such services and/or maintenance are not provided to Tenant.

ARTICLE 5 -
PERMITTED USE

Section
5.01.          Permitted Use.  The
Demised Premises shall be used and occupied during the Initial Term and any
Renewal Term of this Lease solely for office space and Tenant’s storage,
service and maintenance of school buses used in connection with Tenant’s
business and for no other purpose. Tenant shall not use or occupy, nor permit
or suffer, the Demised Premises or any part thereof to be used or occupied for
any unlawful purpose, nor for any purpose or in any way in violation of any
present or future governmental laws, ordinances, requirements, orders, directions,
rules or regulations or the existing certificate of occupancy.

ARTICLE 6 –
ACCESS

Section 6.01           Access.  Tenant
shall have access to the Demised Premises twenty four (24) hours per day, seven
(7) days per week.

ARTICLE 7 - QUIET
ENJOYMENT

Section 7.01           Quiet
Enjoyment.  Landlord covenants and agrees with Tenant that upon
Tenant paying the Basic Rent and Additional Rent and observing and performing
all the terms, covenants, and conditions, on Tenant’s part to be observed and
performed, Tenant may peaceably and quietly enjoy the Demised Premises,
subject, nevertheless, to the terms and conditions of this Lease.

ARTICLE 8 –
SIGNAGE

Section 8.01           Signage.  Tenant
shall not be entitled to erect a sign on or upon the Demised Premises without
Landlord’s prior written consent, which shall not be unreasonably withheld.

ARTICLE 9 -
ASSIGNMENT AND SUBLETTING

Section
9.01.          Restrictions on
Assignment.  Tenant shall not assign this Lease or sublease all
or any part of the Demised Premises, nor permit other persons to occupy or
conduct business in the Demised Premises or any part thereof nor grant any
license, concession management contract or franchise for all or any part of the
Demised Premises without the prior written consent of Landlord, which Landlord
may withhold in its sole and absolute discretion.

Section
9.02.          Transfers of Interests
in Tenant.  Any transfer, by operation of law or otherwise, of
Tenant’s interest in this Lease (in whole or in part) or of a fifty (50%)
percent or greater interest in Tenant or of fifty (50%) percent or more of the
assets of Tenant (whether stock, partnership interest or otherwise) shall be
deemed an assignment of this Lease within the meaning of this Article. If there
has been a previous transfer of less than a fifty (50%) percent interest in
Tenant or Tenant’s assets, then any simultaneous or subsequent transfer of an
interest

 4
 

 

 

in Tenant or Tenant’s assets which, when added to the total percentage
interest previously transferred, totals a transfer of greater than a fifty
(50%) percent interest in Tenant or Tenant’s assets shall be deemed an
assignment of Tenant’s interest in this Lease within the meaning of this
Article. In the event by operation of law or otherwise Tenant (i) sells or
transfers all or substantially all of its assets (whether stock, partnership
interest or otherwise); (ii) sells or transfers a majority interest in the
Tenant, in a single transaction or in a series of transactions, or (iii)
effectuates a change in the current controlling interest of the Tenant, Landlord
has the right to terminate this Lease with thirty (30) days’ prior written
notice to the Tenant and said termination shall be effective as of the date set
forth in Landlord’s notice. In the event Landlord elects to terminate this
Lease pursuant to Section 9.02, Tenant shall have the right, prior to the
expiration of the thirty (30) day period set forth above, to negotiate with
Landlord and enter into a new lease for the Demised Premises with terms that
shall include, among other things, that the Tenant (i) shall pay the Fair
Market Rental rate (as said term is defined in Article 26) for other similarly
situated premises; (ii) Tenant shall pay its proportionate share of any real
estate taxes for the Premises; and (iii) Tenant shall grant Landlord an easement
for ingress and egress that may be located within the Tenant’s Demised Premises.
Landlord shall have no
liability to Tenant in the event that a Lease cannot be completed between the
Landlord and Tenant or Tenant’s successor in interest for any reason.

Section
9.03.          Inter-Family
Transactions.  Tenant may assign this Lease or transfer its stock or assets to an
entity that is wholly owned by the current shareholders of the Tenant or the
Immediate Family of the current shareholders of the Tenant. For the purposes of
this Section, The term “Immediate Family” shall mean the spouse, siblings, or
lineal or adopted descendants of the current shareholders of the Tenant or a
trust for the benefit of the current shareholders of the Tenant, their spouses,
siblings or lineal or adopted descendants (including a trust that includes as
beneficiaries the spouses of such lineal descendants). Tenant shall deliver
notice of any assignment pursuant to this Section 9.03 within thirty (30) days
of the assignment, along with a copy of the assignment document.

ARTICLE 10 – REPAIRS

Section
10.01.        Repairs.

(a)           Tenant shall pay Tenant’s Proportionate Share of all
structural and non-structural repairs and maintenance in and to the Premises,
which Landlord determines are reasonably necessary or desirable in order to
keep the Premises in good order and repair. Tenant shall take good care of the
Premises and Demised Premises and the fixtures and appurtenances therein. All
damage or injury to the Premises and Demised Premises and to such fixtures and
appurtenances, or to the Building, or to its fixtures, appurtenances and
equipment, caused by Tenant’s moving property in and out of the Building, the
Premises or the Demised Premises, or by installation or removal of fixtures,
furniture or other property, or from any other cause, shall be repaired,
restored or replaced promptly by Tenant, at its sole cost and expense. All
repairs, restorations and replacements shall be in quality and class equal to
the original work or installations. If Tenant fails to make such repairs,
restorations or replacements, the same may be made by Landlord, at Tenant’s
expense, and the amounts spent by Landlord (together with interest thereon at
the per annum rate of ten (10%) percent, or if such rate be illegal then at the
highest

 5
 

 

 

permissible rate, from the
date of Landlord’s expenditure through the date of Tenant’s payment in full)
shall be collectible as additional rent, to be paid by Tenant within fifteen
(15) days after rendition of a bill and invoices from any contractor utilized
by Landlord (if any). Notwithstanding anything to the contrary contained in
Section 10.01(a), Tenant shall not be responsible for any structural repairs
(i) necessitated by damage or condition that existed prior to the date of this
Lease, or (ii) requested solely by any other tenant of the Premises, unless
said damage has been caused or increased by the Tenant.

(b)           There shall be no allowance to Tenant
for a diminution of rental value, and no liability on Landlord’s part, by
reason of inconvenience, annoyance or injury to Tenant’s business arising from
the making of repairs, alteration, additions or improvements in or to the
Demised Premises or the Premises, or to the fixtures, appurtenances or
equipment thereof, by Landlord, Tenant or others. Landlord will use
commercially reasonable efforts to not interrupt Tenant’s use and enjoyment of
the Demised Premises when making such repairs, alterations, additions or
improvements, but the obligation to use commercially reasonable efforts shall
not require Landlord to employ overtime labor or pay any premium or surcharge
for labor or materials.

(c)           Business machines and mechanical
equipment belonging to Tenant which cause vibration, noise, cold or heat that
may be transmitted to the Building’s structure, or to any leased space therein,
to such a degree as to be objectionable to Landlord or to any other tenant or
occupant at the Premises, shall be placed and maintained by Tenant, at its sole
expense, in settings of cork, rubber or spring-type vibration eliminators or
other means sufficient to absorb and prevent such vibration, noise, cold or
heat.

ARTICLE 11 -
ELECTRICITY

Section
11.01.        Electricity.

(a)           Tenant agrees to pay to Landlord, as
Additional Rent, Tenant’s Proportionate Share of the cost of the electric
service to be furnished by Landlord and consumed by the Tenant in connection
with Tenant’s use of the Demised Premises and any other portion of the
Premises. The reference herein relating to rates, bills or charges of
electricity and to escalation thereof shall be deemed to include and refer to
any and all components of the bill rendered or to be rendered in the future by
the utility company furnishing such electricity (the “Utility Company”), including, but not
limited to time of day charges, fuel adjustments, demand or other charges, and
taxes.

(b)           Landlord will bill Tenant for said
charges, on a monthly or quarterly basis, at Landlord’s option, and Tenant
shall pay the same within twenty (20) days after its receipt of the bill
therefor. Upon Tenant’s failure to pay any such bill for the foregoing charges,
Landlord shall be entitled to collect such charges as in the case of a failure
to pay rent. The provisions of this Article shall survive the expiration or
earlier termination of this Lease.

(c)           Landlord, at Landlord’s cost and expense, hereby reserves
to itself the right, from time to time, to cause a reputable electric
engineering company (the “Engineer”)
to make a survey of Tenant’s electric energy usage requirements to determine
whether Tenant has exceeded its pro-rata share of electricity for the Premises.
In the event Tenant exceeds its pro-rata share of

 6
 

 

 

electricity, the additional
rent provided for in this Section shall be appropriately increased commencing
with the first day of the month immediately following the completion of such
survey and the submission of a copy thereof to Tenant and the increases shall
be effective as of the date Tenant exceeds its pro-rata share of electricity
use (as determined by the surveyor) with such retroactive payment payable in a
lump sum within thirty (30) days of Landlord’s furnishing Tenant with a bill
therefor.

(d)           Landlord reserves the right to
discontinue furnishing such electric energy to Tenant at any time, upon giving
not less than sixty (60) days prior written notice to Tenant to such effect,
and from and after such effective date of termination, Landlord shall no longer
be obligated to furnish Tenant with electric energy. If Landlord exercises such
right of termination, this Lease shall remain unaffected thereby, and continue
in full force and effect, and thereafter Tenant shall arrange to obtain
electric service direct from the public utility company servicing the Premises,
utilizing the then existing electric feeders, risers and wiring serving the Demised
Premises to the extent that the same are available, suitable and safe for such
purpose. Landlord, at Tenant’s expense, shall do all work necessary to provide
such direct service, including installations of meters, additional wiring and
panel board, as may be necessary therefor, so as to enable Tenant to receive
its electric current directly from the Utility Company without any expense to
Landlord. Landlord shall make a commercially reasonable effort to prevent any
interruption in electrical service in the event Landlord elects to discontinue
furnishing electrical service. In the event Landlord discontinues electric
service pursuant to this Section 11.01(d) and Tenant obtains electrical service
which benefits any non-exclusive portions of the Demised Premises, Tenant shall
have the right to charge Landlord or any other tenants of the Premises their
pro-rata share of such electrical use.

ARTICLE 12 -
PUBLIC LIABILITY AND INSURANCE

Section 12.01.        Indemnity of Landlord. Tenant shall defend (with
counsel reasonably satisfactory to Landlord) and indemnify and hold harmless
Landlord and Landlord’s directors, officers, employees, members and agents
against any claim, expense, loss, or liability paid, suffered or incurred as
the result of (a) any breach, violation or non-performance by Tenant, its
agents, directors, officers, employees, contractors (and its and their
employees), visitors and/or licensees, guests or customers of any covenant,
condition or agreement of this Lease on Tenant’s part to be fulfilled, kept,
observed and performed, (b) any and all claims against Landlord of whatever
nature arising from any act, omission or negligence of Tenant, its agents,
directors, officers, employees, contractors (and its and their employees),
visitors and/or licensees, guests or customers, (c) all claims against Landlord
arising from any accident, injury or damage whatsoever caused to any person or
to the property of any person and occurring during the term of this Lease in or
about the Demised Premises, excluding, however, such claims resulting from any
work or thing done in or about the Demised Premises by Landlord or Landlord’s
employees, agents or contractors, and (d) all claims against Landlord arising
from any accident, injury or damage occurring outside of the Demised Premises
but anywhere within or about the Building, where such accident, injury or
damage results or is claimed to have resulted from an act or omission of Tenant
or Tenant’s agents, directors, officers, employees, contractors (and its and
their employees), visitors and/or licensees, guests or customers. Tenant’s
obligations under the indemnity described in this Section 12.01 shall not
include any claims resulting from the

 7
 

 

 

negligence of Landlord or Landlord’s
employees, agent or invitees. Tenant shall not be entitled to assert any claims
for damages to personal property, fixtures, installations or improvements, or
to assert a claim that Tenant has been constructively evicted from all or any
portion of the Demised Premises, because of a condition resulting from Landlord’s
fault or from the action or omission of any other tenant of leased space in the
Building, unless Tenant shall have first informed Landlord, and such other
persons as are entitled to notice pursuant to the provisions of Section 18
hereof, in writing, of the objectionable condition or conditions, and Landlord,
or such other persons referred to in Section 18 hereof, shall have failed
within a reasonable time after receipt of such notice to remedy the condition
or conditions complained of. The Tenant’s obligations to Landlord pursuant to
this Article shall survive the termination of this Lease.

Section
12.02.        Liability Insurance.

(a)           Commencing on the Commencement Date,
Tenant shall, at its expense, during the Initial Term, as well as any Renewal
Term of this Lease, maintain comprehensive general public liability insurance
in amounts reasonably required by the Landlord and naming Landlord and its
designees as additional insured parties as their interest may appear;

(b)           Tenant shall maintain at its own cost
and expense:  Comprehensive General Liability Insurance covering the
Demised Premises on an occurrence basis with a deductible not exceeding Five
Thousand ($5,000.00) Dollars, with minimum limits of liability in an amount
equal to One Million ($1,000,000.00) Dollars for bodily injury, personal injury
or death to any one person and One Million ($1,000,000.00) Dollars for bodily
injury, personal injury or death to more than one (1) person, or a single limit
of One Million ($1,000,000.00) Dollars for bodily injury, personal injury or
death per occurrence, and with a separate limit of One Million ($1,000,000.00)
Dollars for Products/Completed Operations per occurrence, such policy shall
name Landlord, the holder of any mortgage and/or over, ground or master lease
on all or any portion of Landlord’s interest in the Premises, as additional
named insureds to the extent of Tenant’s acts or omissions or the acts or
omissions of Tenants’ contractors, agents, its and their employees and its
guests, customers or invitees and shall provide that the same may not be
cancelled or terminated without at least thirty (30) days’ written notice to
Landlord and the additional named insureds by the insurance company issuing
such policy, and that no act or omission to act of Tenant shall invalidate such
insurance as to Landlord and the other additional named insureds;

(c)           Worker’s
Compensation and Employer’s Liability Insurance in accordance with the laws of
the State of New York;

(d)           Umbrella
liability insurance with maximum limits of liability in an amount equal to
Seven Million ($7,000,000.00) Dollars per occurrence with a Seven Million
($7,000,000.00) Dollar minimum aggregate;

(e)           Tenant shall (i) at its sole cost and
expense, and (ii) to the extent that Tenant is able after commercially
reasonable efforts, keep the Demised Premises, and all replacements,
alterations and additions of or to the foregoing, insured for the benefit of
Tenant, Landlord and Landlord’s Mortgagee (if any), as their respective
interests may appear, against all risk of loss or

 8
 

 

 

damage, including loss or damage by fire and other perils included in a
so-called “extended coverage endorsement” or “multi-peril endorsement”, for the
full replacement cost thereof; and

(f)            Tenant
shall deliver to Landlord and to any other party designated by Landlord duly
executed certificates of insurance or endorsements and duplicate original
insurance policies reflecting Tenant’s maintenance of the insurance required
under this Lease. Such policies shall not be subject to cancellation or
modification on less than thirty (30) days’ notice to Landlord.

ARTICLE 13 -
LANDLORD’S ENTRY ON PREMISES

Section
13.01.        Entry.  Landlord
and their respective representatives may enter the Demised Premises at any time
during business hours upon prior notice to the Tenant, to inspect the Demised
Premises, to enforce the provisions of this Lease, to make repairs required of
them hereunder and to rectify defaults of Tenant pursuant to the rights granted
to Landlord hereunder. Nothing herein contained shall be deemed or construed to
impose upon Landlord any obligation or responsibility whatsoever for the care,
maintenance or repair of the Demised Premises, except as otherwise specifically
provided in this Lease.

ARTICLE 14 – ALTERATIONS

Section
14.01.        Alterations.  Tenant
shall make no alterations in or to the Demised Premises without Landlord’s
prior written consent. All alterations shall be accomplished at Tenant’s sole
cost and expense. All permanent installations installed in the Demised Premises
at any time, either by Tenant or by Landlord on behalf of Tenant, shall, upon
installation, become the property of Landlord and shall remain upon and be
surrendered with the Demised Premises unless Landlord, by written notice to
Tenant no later than twenty (20) days prior to the Expiration Date, elects to
have them removed by Tenant, in which event the same shall be removed by Tenant
at Tenant’s expense prior to the Expiration Date.

ARTICLE 15 – COMPLIANCE WITH LAWS

Section 15.01.        Compliance
with Laws.  Tenant, at Tenant’s own expense, shall comply with
all requirements of law, rules, ordinances or regulations, present or future,
of any federal, state, municipal or other public authority having jurisdiction
over the Demised Premises, and with all requirements of the New York Fire
Insurance Exchange, or similar body, and of any liability insurance company
insuring Landlord against liability for accidents in or connected with the
Premises and Demised Premises, and shall not at any time use or occupy the
Demised Premises in violation of the Certificate of Occupancy for the Building,
or be in conflict with fire insurance policies covering the Premises, or the
fixtures and property therein. Tenant shall comply with all reasonable rules,
regulations and orders of Landlord designed to promote the safety, good order
and character of the Premises, and with respect to the placing of safes,
machinery or other heavy material, and with the recommendations of any
insurance carrier. Any increase in the fire insurance premium applicable to the
Premises resulting from Tenant’s failure to comply with the foregoing or from
the manner in which Tenant uses and occupies the Demised Premises, or any other
expense caused to Landlord by reason of Tenant’s failure to comply with

 9
 

 

 

the foregoing, shall be paid by Tenant to Landlord, as additional rent
on the first day of the month immediately following the effective date of such
increase or the incurring of such expense, as the case may be. Tenant shall be
responsible for the cost of any repairs, replacements, upgrades (structural or
non-structural in nature) or any other alterations to both the Premises and the
Demised Premises necessitated by Tenant’s specific manner of use of the Demised
Premises and Tenant’s obligations under this Section. Notwithstanding the
foregoing, if repairs, replacements and upgrades (structural or non-structural
in nature) or any other alterations to the Premises are required in order for
the Premises to be in compliance with applicable laws (as described above) and
are not necessitated by the Tenant’s or any other tenant’s specific manner of
use, the cost of said repairs, replacements, upgrades or alterations shall be
shared on a pro-rata basis between the Landlord and Tenant.

ARTICLE 16 – EFFECT OF CONVEYANCE BY LANDLORD

Section 16.01.        Conveyance by Landlord. If
Landlord shall validly assign or transfer this Lease and deliver to Tenant an
agreement executed by the assignee or transferee whereupon such assignee or
transferee agrees to assume performance of all the covenants to be performed by
Landlord from and after the date of such delivery to Tenant, then Landlord
shall be relieved and discharged from any and all liabilities thereafter
accruing under this Lease and Tenant shall look solely to the assignee or
transferee.

ARTICLE 17 -
DEFAULTS AND REMEDIES

Section
17.01.        Defaults and Remedies.

(a)           Any of the following events shall be
a default of Tenant: (a) Tenant’s default in the payment on the due date of the
Basic Rent and/or additional rent and/or any other payment required of Tenant
by this Lease, unless Tenant shall cure such default within five (5) days after
the due date of such Basic Rent and/or additional rent and/or other payment
required of Tenant hereunder; (b) Tenant’s default in the performance of any of
the other covenants of Tenant or conditions of this Lease, unless Tenant shall
cure such default within thirty (30) days after notice of such default given by
Landlord (or if any such default is of such nature that it cannot be completely
cured within such period, then unless Tenant shall commence such curing within
thirty (30) days after notice of such default given by Landlord and shall
thereafter proceed with reasonable due diligence and in good faith to cure such
default and shall succeed in curing such default within a reasonable period of
time; (c) the sale by or under execution or other legal process of Tenant’s
leasehold interest hereunder and/or substantially all of Tenant’s other assets;
(d) the initiation of legal proceedings 
to effect, or resulting in, the seizure, sequestering or impounding of
any of Tenant’s goods or chattels used in, or incident to, the operation of the
Demised Premises by Tenant; (e) assignment by operation of law of Tenant’s
leasehold interest hereunder; (f) any attempt by Tenant to assign the within
Lease or sublet the Demised Premises without the express prior written consent
of the Landlord; (g) the appointment of a receiver to take possession of all or
substantially all of the assets of Tenant, or (h) a general assignment by
Tenant for the benefit of the creditors; or (i) any action taken or suffered by
Tenant, voluntarily or involuntarily, under any insolvency or bankruptcy or
reorganization act or law.

 10

 

 

(b)           Upon any default of Tenant as set
forth in Section 17.01 of this Lease, Landlord, at Landlord’s sole option, may
elect and enforce any one of the remedies hereinafter provided in this Article
17; provided, however, that Landlord may, at Landlord’s sole option, elect and
enforce multiple remedies from among those remedies hereinafter provided to the
extent such remedies are not inconsistent and are not legally mutually
exclusive and to the extent Landlord, in Landlord’s reasonable judgment, deem
the enforcement of such multiple remedies necessary or appropriate to indemnify
and make Landlord whole from any loss or damage as a result of the default or
defaults of Tenant; and provided further that Landlord, at Landlord’s sole
discretion, may successively elect and enforce any number of the remedies
hereinafter provided to the extent that Landlord, in Landlord’s reasonable
judgment, deems necessary or appropriate to indemnify and make Landlord whole
from any loss or damage as a result of the default or defaults of Tenant:

(i)            Landlord shall have the right to terminate this Lease
forthwith, and upon notice of such termination given by Landlord to Tenant in
accordance with the notice provisions of this Lease, Tenant’s right to
possession, use and enjoyment of the Demised Premises shall cease, and Tenant
shall immediately quit and surrender the Demised Premises to Landlord, but
Tenant shall remain liable to Landlord as hereinafter provided. Upon such
termination of this Lease, Landlord may at any time thereafter re-enter and
resume possession of the Demised Premises by any lawful means and remove Tenant
and/or other occupants and their goods and chattels. In any case where Landlord
has recovered possession of the Demised Premises by reason of Tenant’s default,
Landlord may, at Landlord’s option, occupy the Demised Premises or cause the
Demised Premises to be redecorated, altered, divided, consolidated with other
adjoining Demised Premises, or otherwise changed or prepared for reletting, and
may (but has no obligation to) relet the Demised Premises or any part thereof
as agent of Tenant or otherwise, for a term or terms to expire prior to, at the
same time as, or subsequent to, the original expiration date of this Lease, at
Landlord’s sole option, and Landlord shall receive the rent therefore. Rent so
received shall be applied first to the payment of such expenses as Landlord may
have incurred in connection with the recovery of possession, redecorating,
altering, dividing, consolidating with other adjoining Demised Premises, or
otherwise changing or preparing for reletting, and the reletting, including
brokerage and reasonable attorney’s fees, and then to the payment of the
damages in amounts equal to the rent (Basic and additional) and other payments
required of Tenant hereunder and to the costs and expenses of performance of
the other covenants of Tenant as herein provided. Tenant agrees, in any such
case, whether or not Landlord has relet, to pay to Landlord damage equal to the
Basic and additional rent and other sums herein agreed to be paid by Tenant,
less the net proceeds of the reletting, if any, as ascertained from time to
time, and the same shall be payable by Tenant on the several rent days above
specified. Tenant shall not be entitled to any surplus accruing as a result of
any such reletting. In reletting the Demised Premises as aforesaid, Landlord
may grant rent concessions, and Tenant shall not be credited therewith. No such
reletting shall constitute a surrender and acceptance or be deemed evidenced
thereof.

 11
 

 

 

(ii)           Whether or not Landlord shall have
collected damages as provided in subsection (a) above, Landlord shall be
entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand,
in lieu of any further damages thereunder (other than Landlord’s expenses as
described above), as and for liquidated and agreed final damages, and not as
penalty, a sum equal to the amount by which the sum of the Basic Rent and
additional rent (excluding utilities) reserved in this Lease for the period
which otherwise would have constituted the unexpired portion of the Term,
including any Renewal Term exercised by Tenant prior to the termination of this
Lease or re-entry by Landlord (conclusively presuming the additional rent to be
the same as was payable for the year immediately preceding such termination or
re-entry) exceeds the then fair and reasonable rental value of the Demised
Premises for the same period, both discounted to the then present value of such
sum at the rate equal to the rate of U.S. Treasury obligations having a
maturity closest to such unexpired portion of the Term, and less the aggregate
amount of damages (other than Landlord’s expenses) theretofore collected by
Landlord pursuant to the provisions of subdivision (a) above, for the same
period; it being agreed and understood by Tenant that if before presentation of
proof of such liquidated damages to any court, commission or tribunal, the
Demised Premises, or any part thereof, shall have been relet in a bona fide arm’s length transaction by
Landlord for the period which otherwise would have constituted the unexpired
portion of the Term, or any part thereof, the amount of rent reserved upon such
reletting shall be conclusively deemed, prima
facie, to be fair and reasonable rental value for the part of the
whole of the Demised Premises so relet during the term of the reletting.

(iii)          Landlord may accelerate and recover
all of the Basic Rent and additional rent due and payable after Tenant abandons
the Demised Premises or is evicted or dispossessed.

(iv)          Landlord shall have the right to
enforce Tenant’s specific performance of each and every covenant, condition and
other provision of this Lease.

(v)           Tenant hereby waives all right of
redemption to which Tenant or any person under Tenant might be entitled by any
law now or hereafter in force.

(vi)          Landlord’s remedies hereunder are in
addition to any remedy allowed by law or in equity.

(vii)         The remedies set forth above shall be
non-exclusive and the Landlord’s election to enforce any remedy shall not be
deemed a waiver of any other remedy Landlord may be entitled to hereunder or as
allowed by law or in equity.

ARTICLE 18 -
NOTICES

Section
18.01.        Notices.

(a)           All notices from
either party to the other under this Lease shall be sent by registered or
certified mail, return receipt requested, or shall be hand delivered with
signed receipt or by nationally recognized overnight courier. Whenever in this
Lease reference is made to a notice to be given, such notice shall be deemed to
be given when posted or hand delivered to

 12
 

 

 

the proper notice address of the party to be notified or one day after
delivery to a nationally recognized overnight courier, as the case may be.

(b)           Notices to Landlord shall be
addressed to it at the address above indicated with a copy to be simultaneously
delivered to Landlord’s counsel, Ruskin Moscou Faltischek P.C., 1425 Reckson
Plaza, East Tower, 15th Floor, Uniondale, New York 11556-1425, Attn:
David P. Leno, Esq. Notices to Tenant shall be addressed to it at the Demised
Premises or at the address of Tenant first set forth above with a copy to be
simultaneously delivered to Tenant’s counsel, Kenneth Faltischek, Esq., 26
Harbor Park Drive, Port Washington, New York 11050. Either party may, from time
to time, designate a different address for receiving notices, by giving the
other party notice of the change of address in the manner above specified.

ARTICLE 19 – SUBORDINATION

Section
19.01.        Subordination.  This
Lease is, and at all times shall continue to be, subject and subordinate to (i)
all mortgages and/or over, ground or master leases which may now or hereafter
affect all or any portion of the Land, Premises and other improvements now or
hereafter erected on the Land and any and all further advances on all such
mortgages, and (ii) any renewals, spreaders, increases, modifications,
consolidations, replacements and extensions of such mortgages or leases. This
clause shall be self-operative, and no further instrument of subordination
shall be required, except Tenant, if requested by any such mortgagee or
Landlord or proposed mortgagee or Landlord, agrees to confirm this
subordination by promptly executing (in recordable form) any certificate or
other document that Landlord may reasonably request in confirmation of such
subordination. Landlord shall use commercially reasonable efforts to obtain a
non-disturbance agreement from any lender to which Tenant may provide a
subordination agreement.

ARTICLE 20 –
MISCELLANEOUS PROVISIONS

Section
20.01.        Entire Agreement.  This
Lease contains the final agreement between the parties hereto. Landlord shall
not have any obligation not expressly set forth herein; and neither party shall
be bound by any promises or representations prior to the date hereof which are
not expressly set forth herein.

Section
20.02.        Obligations Surviving
Termination.  Any termination hereof by reason of a default of
the Tenant shall not affect any obligation or liability of Tenant under this
Lease which accrued prior to the effective date of termination, and all such
obligations and liabilities of Tenant shall survive such termination.

Section 20.03.        Partial Invalidity.  If any term, covenant
or condition of this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, covenant or condition to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and every other term, covenant or
condition of this Lease shall be valid and enforced to the fullest extent
permitted by law.

 13
 

 

 

Section
20.04.        Brokers.  Each
party warrants and represents to the other that the former party dealt with no
broker in connection with this transaction and had no conversations or dealings
with any broker in connection with this transaction and each party hereby
indemnifies the other against any claims of any broker or party by reason of
said broker or party having had any conversations or dealings with the
indemnifying party in connection with this transaction and does hereby
indemnify the other against the same and agrees to reimburse the other for any
damages the other might sustain by reason of such claims including the other’s
cost of defending any action, including reasonable legal fees, in connection
therewith.

Section
20.05.        Surrender of the Demised
Premises.  At the expiration of the tenancy hereby created, or
upon any re-entry by Landlord into the Demised Premises after a default by
Tenant, Tenant shall surrender the Demised Premises in good condition and
repair and shall deliver all keys for the Demised Premises to Landlord at the
place then fixed for the payment of rent, and shall inform Landlord of all
combinations on locks, safes and vaults, if any, in the Demised Premises. Tenant
shall remove all of its personal property which Landlord requires to be removed
before surrendering the Demised Premises as aforesaid, and shall repair any
damage to the Demised Premises caused by such removal. Tenant’s obligations to
observe or perform this covenant shall survive the expiration or other
termination of the term of this Lease.

Section 20.06.        Successors.  The
respective rights and obligations provided in this Lease shall bind and inure
to the benefit of the parties hereto, their successors and assigns; provided,
however, that no rights shall inure to the benefit of any successors of Tenant
unless Landlord’s written consent for the transfer to such successor and/or
assignee has first been obtained as provided in Article 9 hereof or as set
forth in Article 9.03.

Section
20.07.        Governing Law.  This
Lease shall be construed, governed and enforced in accordance with the laws of
the State of New York, without regard to principles relating to conflicts of
law.

Section
20.08.        Captions.  Marginal
captions, titles or exhibits and riders and the table of contents in this Lease
are for convenience and reference only, and are in no way to be construed as
defining, limiting or modifying the scope or intent of the various provisions
of this Lease.

Section
20.09.        Gender.  As
used in this Lease, the word “person”
shall mean and include, where appropriate, an individual, corporation,
partnership or other entity; the plural shall be substituted for the singular,
and the singular for the plural, where appropriate; and the words of any gender
shall mean to include any other gender.

Section
20.10.        Counterparts.  This
Lease may be executed in any number of counterparts, each of which when taken
together shall be deemed to be one and the same instrument.

Section 20.11.        Telefax Signatures.  The
parties acknowledge and agree that notwithstanding any law or presumption to
the contrary a telefaxed signature of either party whether upon this Lease or
any related document shall be deemed valid and binding and admissible by either
party against the other as if same were an original ink signature.

 14
 

 

 

Section
20.12.        Calculation of Time.  In
computing any period of time prescribed or allowed by any provision of this
Lease, the day of the act, event or default from which the designated period of
time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or a legal holiday,
in which event the period runs until the end of the next day which is not a
Saturday, Sunday, or legal holiday. Unless otherwise provided herein, all
Notices and other periods expire as of 5:00 p.m. on the last day of the Notice
or other period.

Section
20.13.        No Merger.  There
shall be no merger of this Lease or of the leasehold estate hereby created with
the fee estate in the Premises or any part thereof by reason of the fact that
the same person, firm, corporation, or other legal entity may acquire or hold,
directly or indirectly, this Lease of the leasehold estate and the fee estate
in the Premises or any interest in such fee estate, without the prior written
consent of Landlord’s mortgagee.

Section
20.14.        No Presumption Against
Drafter.  Landlord and Tenant understand, agree, and acknowledge
that:  (i) this Lease has been freely
negotiated by both parties; and (ii) that, in the event of any controversy,
dispute, or contest over the meaning, interpretation, validity, or
enforceability of this Lease, or any of its terms or conditions, there shall be
no inference, presumption, or conclusion drawn whatsoever against either party
by virtue of that party having drafted this Lease or any portion thereof.

Section
20.15.        WAIVER OF TRIAL BY JURY.
LANDLORD AND TENANT WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS LEASE. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY TENANT AND TENANT
ACKNOWLEDGES THAT NEITHER LANDLORD NOR ANY PERSON ACTING ON BEHALF OF LANDLORD
HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR
IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. TENANT FURTHER ACKNOWLEDGES THAT IT
HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL. TENANT FURTHER ACKNOWLEDGES THAT IT HAS READ
AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION AND AS
EVIDENCE OF SAME HAS EXECUTED THIS LEASE.

Section
20.16.        Consent To Jurisdiction.  Tenant
hereby consents to the exclusive jurisdiction of the state courts located in
Kings and Queens County, New York and to the federal courts located in the in
the Eastern District of New York.

ARTICLE 21 –
ESTOPPEL CERTIFICATES

Section 21.01.        Tenant’s
Estoppel Certificate.  Tenant shall, upon not less than fifteen
(15) days’ prior written request from Landlord, execute and deliver to Landlord
(i) a statement certifying that this Lease is unmodified and in full force and
effect (or if there have been

 15
 

 

 

modifications,
that the same is in full force and effect as so modified) the Commencement
Date, the Expiration Date and the dates to which the Basic Rent, additional
rent and other charges have been paid, and whether or not, to the best
knowledge of the Tenant that there are any then existing defaults on the part
of either Landlord or Tenant in the performance of the covenants, conditions or
other provisions of this Lease, and, if so, specifying the default of which the
Tenant has knowledge; and (ii) any reasonable estoppel certificate or documents
requested by Landlord’s mortgagee, proposed mortgagee or potential purchaser of
the Premises.

ARTICLE 22 –
CONDEMNATION

Section
22.01.        Total Condemnation.  If
all, or substantially all, of the Premises shall be lawfully condemned or taken
in any manner for any public or quasi-public use, this Lease shall cease and
terminate as of the date of vesting of title in the condemnor.

Section
22.02.        Partial Condemnation.
If a portion of the Premises shall be so condemned or taken, but if such taking
shall substantially affect the Demised Premises or if such condemnation or
taking shall be of a substantial part of the Demised Premises, and Tenant is
prevented thereby from operating its business in the Demised Premises, Landlord
and Tenant shall each have the right, by delivery of notice in writing to the
other party, to terminate this lease and the term and estate hereby granted, as
of the date of the vesting of title in the condemnor. If neither party shall so
elect, this Lease shall be and remain unaffected by such condemnation or
taking, except that, effective as of the date of actual taking, the Basic Rent
and/or fixed rent payable by Tenant shall be diminished by an amount which
shall bear the same ratio to the Basic Rent and/or fixed rent as the rentable
square foot floor area of the portion of the Demised Premises taken bears to
the rentable square foot floor area of the Demised Premises.

Section
22.03.        In the event of the
termination of this Lease in accordance with the provisions of Section 22.01 or
22.02 hereof, the Basic Rent, fixed rent and the additional rent shall be
apportioned and prorated accordingly. In the event of any taking, partial or
otherwise, Tenant shall not be entitled to claim or receive any part of any
award or compensation which may be awarded in any such condemnation proceeding,
or as a result of such condemnation or taking, whether the same be for the
value of the unexpired term of this Lease or otherwise, or to any damages
against Landlord and/or the condemning authority.

ARTICLE 23 –
ENVIRONMENTAL COMPLIANCE

DURING PERIOD OF TENANCY; REQUIREMENTS OF LAW.

Section 23.01.        Definitions.

(a)           The term “Hazardous Materials” includes, but shall not be limited to,
(i) asbestos in any form, except to the extent such asbestos in its present
condition may remain in place pursuant to and in compliance with all
Environmental Laws; (ii) urea formaldehyde foam insulation; (iii) transformers
or other equipment which contain dialectic fluid containing levels of
polychlorinated byphenyls (PCBs) in excess of 50 parts per million; (iv) lead
paint; (v) any substance deemed hazardous or toxic, or required to be
investigated, disclosed, reported, treated, removed, disposed of or cleaned up
by an applicable Environmental Law; (vi) any substance or

 16
 

 

 

mixture which is or shall be listed, defined, or otherwise determined
by any agency or court to be hazardous, toxic, dangerous or otherwise
regulated, affected, controlled or giving rise to liability under any
Environmental Law; (vii) polychlorinated biphenyls (PCBs); (viii) radon gas;
(ix) laboratory wastes; (x) experimental products, including genetically
engineered microbes and other recombinant DNA products; (xi) petroleum, crude
oil, natural gas, natural gas liquid, liquefied natural gas, other petroleum
products, or synthetic gas useable as fuel; and (xii) “source,” “special
nuclear” and “by-products” material, as defined in the Atomic Energy Act of
1954, 42 U.S.C. § 3011 et seq.

(b)           The
term “Environmental Law” shall
mean any federal, state or local environmental or health or safety law,
regulation or rules, as the same may be amended from time to time, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. § 6901
et seq.; the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act of
1976, 15 U.S.C. § 2601 et seq.; the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Clean Air Act of
1966, as amended, 42 U.S.C. § 741 et seq.; the National Environmental Policy
Act of 1975, 42 U.S.C. § 4321; the Rivers and Harbors Act of 1899, 33 U.S.C. §
401 et seq.; the Endangered Species Act of 1973, as amended, 16 U.S.C. § 1531
et seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
§ 651 et seq.; the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §
300(f) et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1471,
1472, 1655m 1801 et seq.; the Federal Insecticide, Fungicide & Rodenticide
Act, 7 U.S.C. § 136 et seq.; the Atomic Energy Act, 42 U.S.C. § 3011 et seq.,
and any other rule, guidance or common law which relates to (i) the existence
and/or remedy of contamination on property, (ii) the protection of persons,
property, animals, or the environment from any exposure to or contamination by
Hazardous Materials radiation or other emanations; (iii) the use generation,
storage, removal, recovery, treatment, transport, disposal, and control of
Hazardous Materials, including hazardous wastes and building materials; (iv)
the prevention of, control of, or response to the exposure of tenants,
employees or other persons to any Hazardous Material or radiation; or (v) the
prevention of, control of, or response to the emission or discharge of
Hazardous Materials in the workplace or environment.

Section 23.02.        Environmental
Compliance During Period of Tenancy, Requirements of Law.

(a)           In the operation and occupancy of its
business on the Demised Premises, Tenant shall promptly execute and comply with
all statutes, ordinances, rules, orders, regulations and requirements
(including those which require structural alterations) of and permits issued by
the federal, state, county and local government and of any and all their
departments and bureaus applicable to the Demised Premises, including, without
limitation, those for the correction, prevention or abatement of nuisances or
other grievances in, upon, or connected with the Demised Premises during the
Term; and shall also promptly comply with and execute all rules, orders and
regulations of the New York Board of Fire Underwriters for the prevention of
fires at

 17
 

 

 

the
Tenant’s own cost and expense. The Tenant’s obligations pursuant to this
provision pertain solely to conditions that, in whole or in part, arise or
develop during the term of its tenancy.

(b)           Tenant
shall operate and occupy the Demised Premises in compliance with all
Environmental Laws. Without limiting the foregoing, Tenant shall not cause or
permit the Demised Premises to be used to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance with all applicable federal, state
and local laws or regulations nor shall Tenant cause or permit, as a result of
any intentional or unintentional act or omission on the part of Tenant or
Tenant’s directors, officers, members, managers, employees, agents and
contractors, a release of Hazardous Materials onto the Demised Premises or onto
any other property. Tenant shall obtain and comply with any and all approvals,
registrations or permits required under applicable Environmental Laws,
including, without limitation, air quality and fuel storage permits.

(c)           In
the event a Hazardous Material in the air, soil, surface water or groundwater,
or in, on and/or under any structure on the Demised Premises is identified at
the Demised Premises and which occurred, was created or aggravated during the
Lease Term and was caused by the Tenant (a “Tenant
Environmental Condition”), Tenant shall (i) conduct and complete all
investigations, studies, samplings, and testing, and all remedial, removal, and
other actions necessary to clean up, remove and/or abate all Tenant
Environmental Conditions in accordance with all applicable federal, state and
local laws, ordinances, rules, regulations, and policies, and (ii) in
accordance with the orders and directives of all federal, state, and local
governmental authorities.

(d)           In
the event a Tenant Environmental Condition has been identified, at the
expiration of this Lease or in the event this Lease is terminated, or Tenant is
dispossessed, Tenant shall be responsible with respect to any and all such
Tenant Environmental Conditions to (i) deliver the Demised Premises to Landlord
in a condition that conforms with all applicable federal, state and local laws,
ordinances, rules or regulations affecting the Demised Premises including,
without limitation, Environmental Laws, and (ii) deliver to Landlord a Phase
One Environmental Report and, if reasonably necessary, a Phase Two
Environmental Report and tank testing reports showing no leaks, prepared by an
environmental consultant reasonably satisfactory to Landlord, or if
commercially reasonable, a no-action letter or closure letter, certifying to
Landlord that the Tenant Environmental Condition or Conditions has been
appropriately remediated or abated.

(e)           In the event a Tenant Environmental
Condition has been identified, Tenant covenants and agrees to defend, indemnify
and hold harmless Landlord, from and against, and pay or reimburse Landlord
for, any and all claims, liabilities, obligations, losses, fines, costs,
royalties, proceedings, deficiencies or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third party claims,
but excluding consequential, special and indirect damages and lost profits),
including out-of-pocket expenses and reasonable attorneys,’ consultants’ and
accountants’ fees incurred in the investigation or defense of any of the same
or in asserting any of their respective rights hereunder resulting from or
arising out of Tenant Environmental Conditions at the Demised Premises,
including the presence of Hazardous Materials, or the discharge or release of
Hazardous Materials, and liabilities under Environmental

 18
 

 

 

Laws that arise from actions, conditions, or the disposal or release of
Hazardous Materials or the actions, operations, activities, or non-compliance
of Tenant, Tenant’s agents, or Tenant’s invitees, with Environmental Laws at
the Demised Premises. The foregoing indemnity shall survive the expiration or
other termination of this Lease.

(f)            In
the event of any environmental condition that is not a Tenant Environmental
Condition or created or aggravated by the Tenant, Landlord covenants and agrees
to defend, indemnify and hold harmless Tenant, from and against, and pay or
reimburse Tenant for, any and all claims, liabilities, obligations, losses,
fines, costs, royalties, proceedings, deficiencies or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims, but excluding consequential, special and indirect damages
and lost profits), including out-of-pocket expenses and reasonable attorneys,’
consultants’ and accountants’ fees incurred in the investigation or defense of
any of the same or in asserting any of their respective rights hereunder  The foregoing indemnity shall survive the
expiration or other termination of this Lease.

(g)           If
Tenant receives any notice of (i) the happening of any event involving the
presence, spill, release, leak, seepage, discharge or cleanup of any Hazardous
Material on, to or from the Demised Premises, or (ii) any complaint, order,
citation or notice with regard to air emissions, water discharge or any other
environmental, health or safety matter affecting Tenant or the Demised
Premises, then Tenant shall promptly notify Landlord in writing of said notice
and shall contemporaneously send to the Landlord a copy of any notice sent to
any governmental agency.

(h)           During
the Term, Landlord or its designee, provided Landlord has a reasonable basis to
believe that the Demised Premises has been affected by Hazardous Materials,
may, at Landlord’s sole cost and expense, and upon prior notice to Tenant,
conduct such investigations and tests as Landlord reasonably deems necessary to
determine whether the Demised Premises and the operation thereof are in compliance
with all Environmental Laws, provided that any such investigations and tests do
not materially interfere with Tenant’s Permitted Use of the Demised Premises or
the operation of its business thereon.

Section 23.03         Environmental
Insurance.

(a)           Except as specifically provided in
this Lease, neither the maintenance of any insurance policy required under this
Lease nor the minimum insurance limits specified herein shall be deemed to
limit or restrict in any way the Tenant’s liability for environmental matters
under this Article 23.

(b)           With respect to third-party claims
arising from or related to, directly or indirectly, in whole or in part: (i)
the threatened or actual release of any Hazardous Materials in, on, under or
from the Demised Premises; and (ii) any environmental liability or remedial
action associated with the Demised Premises for any activities conducted on the
Demised Premises; both parties shall be covered and such losses, costs,
expenses, claims, demands, obligations and liabilities will be satisfied to the
extent environmental insurance provides coverage. This provision shall survive
the Lease Term.

 19

 

 

ARTICLE 24 – RIGHT OF FIRST
OFFER.

Section 24.01         Right
of First Offer. Landlord shall notify Tenant (“Landlord’s Initial Notice”) of the availability of any vacant
and available space at the Premises (the “Option Space”) that may become
available during the Term. Landlord’s Initial Notice shall include Landlord’s
good faith proposal of the Rent and additional charges and other material
economic terms for said Option Space. Within fifteen (15) days of receipt of
Landlord’s Initial Notice, Tenant shall have the right to notify Landlord (“Tenant’s Notice”) in the event Tenant
desires to lease the Option Space, TIME BEING OF THE ESSENCE with respect to
such fifteen (15) day period. Tenant’s failure to send Tenant’s Notice within
the fifteen (15) day period shall be deemed to be an automatic expiration of
Tenant’s right of first offer hereunder as to the Option Space identified in
Landlord’s Initial Notice. If Tenant elects not to lease the Option Space, or
fails to respond to Landlord within fifteen (15) days of receipt of Landlord’s
Initial Notice, Landlord shall be free to lease the Option Space to any other
party on any terms Landlord elects. If Landlord does not present a good faith
proposal in Landlord’s Initial Notice, Landlord shall be deemed in default of
this Lease.

Section 24.02         Lease
Agreement. If Tenant elects to lease the Option Space from Landlord
pursuant to the terms hereof, Tenant and Landlord shall promptly enter into a
lease or lease amendment incorporating such terms with Landlord. Such terms shall
include, among other things, that the (i) Tenant shall pay its proportionate
share of any real estate taxes for the Premises; and (ii) Tenant shall grant
Landlord an easement for ingress and egress that may be located within the
Tenant’s Demised Premises.

Section 24.03         No
Default. Landlord’s obligation to offer the Option Space to Tenant shall be
strictly conditioned upon there being no event of default beyond any applicable
cure period on the part of Tenant under this Lease which at the time of Tenant’s
receipt of Landlord’s Initial Notice, is continuing beyond the applicable
period for notice and cure, either at the time of Landlord’s receipt of Tenant’s
Notice or as of the commencement of the term of the lease of the Option Space.
Notwithstanding anything to the contrary contained in this Lease, if, on any of
the dates set forth in this Section 24.01, Tenant is in default beyond any
applicable cure period under the terms of this Lease which continues unremedied
after notice and the expiration of any applicable cure period, then Landlord,
in Landlord’s sole and absolute discretion, may elect, by written notice to
Tenant, to void Tenant’s exercise of its right of first offer under this
Section 24, in which case Tenant’s exercise shall be of no force or effect, and
Tenant’s right of first offer hereunder as to the Option Space shall
automatically expire.

ARTICLE 25 – EARLY TERMINATION
RIGHT.

Section
25.01         Early Termination Right.
Provided (i) this Lease has not been terminated previously pursuant to the provisions
of this Lease or pursuant to law; and (ii) Tenant is not then in default beyond
the applicable period (x) under any of the terms, covenants or conditions of
this Lease on Tenant’s part to be observed or performed (other than the
covenant to pay Fixed Rent) beyond the applicable notice and cure periods set
forth in this Lease or (y) of the covenant to pay Fixed Rent, Tenant shall have
the right to terminate this Lease and the Term as of the last day of any
calendar month (which day is referred to as the “Earlier Termination Date”) by notice to

 20
 

 

 

Landlord exercising such right at least six (6) months prior to the
Earlier Termination Date. Tenant shall continue to pay the Fixed Rent and any
Additional Rent payable by Tenant under the provisions of this Lease up to and
including the Earlier Termination Date. Time is of the essence with respect to
the giving of such notice and any notice given after the date as defined above
purporting to exercise such option shall be void and of no force or effect. Such
notice of termination shall be given in accordance with the provisions of
Article 18. In the event Tenant shall give any such notice of termination
pursuant to the provisions of this Section and shall otherwise comply with the
conditions of the exercise of Tenant’s right to terminate this Lease, this
Lease and the Term shall come to an end and expire on the Tenant’s Earlier
Termination Date with the same force and effect as though said date were the
Expiration Date, unless sooner terminated pursuant to any other term, covenant
or condition of this Lease or pursuant to law.

ARTICLE
26 - RENEWAL OPTION/RENT UPON RENEWAL

Section
26.01         Renewal Option. Provided
that, as of the date of the exercise of the foregoing option to renew and as of
the commencement of the Renewal Term (as hereinafter defined) (i) this Lease is
in full force and effect, and (ii) Tenant shall not then be in default beyond
the applicable period pursuant to the terms of the Lease, Tenant shall have the
right to renew this Lease for four (4) additional renewal terms (each, the “Renewal Term”) of five (5) years each,
commencing on the first day after the Expiration Date or any previous Renewal
Term Expiration Date and ending at midnight on the date which is five (5) years
thereafter (the “Renewal Term Expiration Date”)
(or until such term shall sooner cease and expire as hereinafter provided), by
giving to Landlord written notice of its election to so exercise said option to
renew no later than six (6) months prior to the Expiration Date (or in the
event Tenant has already elected to renew this Lease, six (6) months prior to
the expiration of the Renewal Term Expiration Date) (TIME BEING OF THE ESSENCE
with respect to Tenant’s notice to renew), and further provided, that such
Renewal Term shall be substantially upon the same terms, provisions, covenants,
and conditions as are contained in this Lease, except as for the duration of
the term hereof, the absence of any further right to renew the Term of this
Lease, and the rental rate and such provisions in this Lease which by its terms
are only applicable to the initial Term of the Lease. Notwithstanding the
foregoing, any Renewal Term to be granted by the Landlord shall be subject to
Tenant paying its pro-rata share of any real property taxes (however denominated)
attributable to the Premises.

Section 26.02         Renewal Rent. The rent during
the Renewal Term shall be a sum equal to ninety (90%) percent of the Fair
Market Rental for the Demised Premises subject to annual cumulative and
compounded increases based upon CPI as set forth in Section 4.01 herein. Within
thirty (30) days of the date upon which Tenant shall exercise its renewal
option, Landlord shall give notice (“Valuation
Notice”) to Tenant setting forth an amount which Landlord determines
to be the Fair Market Rental for the Renewal Term. If Tenant shall dispute
Landlord’s determination of Fair Market Rental, Tenant shall give notice to
Landlord of such dispute within fifteen (15) days of Tenant’s receipt of the
Valuation Notice. Notwithstanding the above, with respect to the Renewal Term,
in the event the parties fail to reach an agreement as to the Fair Market
Rental of the Demised Premises to be paid by the Tenant during the Renewal Term
within sixty (60) days after the Tenant delivers written notice to the Landlord
of Tenant’s objection to the Valuation Notice, such amount shall be determined
by appraisers appointed and

 21
 

 

 

who shall qualify and act as
provided in subsections (i) - (iv) hereof. Prior to the determination of the
arbitrators, Tenant shall pay as the Basic Rent and Additional Rent Tenant is
obligated to pay under this Lease, the amount set forth in the Valuation Notice
and in the event the arbitrators determine that the Basic Rent and Additional
Rent payable pursuant to this Section is greater than that set forth in the
Valuation Notice, then Tenant shall pay promptly to Landlord the amount of its
underpayment of Basic Rent and Additional Rent for the period commencing on the
first day of the Renewal Term, or if the arbitrators determine that the Basic
Rent and Additional Rent payable pursuant to this Section is less than that set
forth in the Valuation Notice, then Tenant shall be entitled to a credit in the
amount of its overpayment for the period commencing on the first day of the Renewal
Term with interest on such overpayment at the prime rate as such rate is
published by the Wall Street Journal, which credit shall be applied to the next
succeeding payment or payments of Basic Rent. In no event shall the Basic Rent
payable during the first month of the Renewal Term be less than the Basic Rent
payable in the last month of the term as increased by CPI compounded annually.

(i)            Landlord and Tenant each shall
appoint an appraiser within ten (10) days after either of them shall have
requested an appraisal. If either Landlord or Tenant shall have failed to do so
within a period of five (5) days after the date of the notice from the other
party requesting same, then upon the request of either Landlord or Tenant, as
the case may be, such other appraiser shall be appointed by a Justice of the
Supreme Court of the State of New York, 
Kings County, or any successor court;

(ii)           The two (2) appraisers appointed as above provided shall
select a third appraiser and if they fail to do so within ten (10) days after
their appointment, such third appraiser shall be appointed as above provided
for the appointment of an appraiser where either party has failed to do so;

(iii)        Each appraiser shall be a person with at least ten (10) years
experience in appraising real estate, or in acting as a real estate broker in
the County of Kings, and who is a member in good standing of the American
Institute of Real Estate Appraisers or its successors or of a like body if such
institute is not in existence and has no successor and whose appraisals are
generally acceptable to institutional lenders;

(iv)        The three (3) appraisers selected as aforesaid shall convene
and commence hearings within ten (10) days after the appointment of the third
appraiser and shall proceed to conclude such hearings within a reasonable time
thereafter. The decision of such appraisers shall be in writing and made within
ten (10) days after the final hearing unless extended by agreement between
Landlord and Tenant and the vote of the majority of them shall be the decision
of all and binding upon Landlord and Tenant. Duplicate original counterparts of
the decision shall be sent to both Landlord and Tenant. Landlord and Tenant
each shall pay for the expenses and fees of their respective attorneys and of the
appraiser appointed by or on behalf of each of them. All other expenses of the
appraisal shall be borne by Landlord and Tenant equally.

Section 26.03         Factors
for Determination. In determining the fair market annual rental value of
the Demised Premises pursuant to this Article, the appraisers shall take into
consideration as appropriate all of the following:  (i) the Landlord and Tenant are well informed

 22
 

 

 

and well advised and each is acting in what it
considers its own best interest; (ii) a reasonable time under then existing
market conditions is allowed for exposure of the Demised Premises on the open
market; (iii) the Demised Premises are fit for immediate occupancy and use “as
is” and require no additional work by Landlord; (iv) market rents then being charged
for comparable space in other similar properties in the same area; (v) expense
stops and operating expenses and taxes. The appraisers shall consider all
testimony and documentary evidence which may be presented at the hearing.
Landlord and Tenant shall have the right to be represented by counsel and to
cross-examine the witnesses. In no event shall said determination include any
amount for leasehold improvements or free rent in excess of that which are then
being allowed to existing tenants in spaces of similar condition.

Section 26.04         Term. Wherever the word “Term” or “term”
is used in this Lease, it shall be deemed to include the Renewal Term if the
sense of such use shall be appropriate.

Section 26.05         Exercise of Option. The exercise
by the Tenant of the renewal option granted by this Article shall be deemed
irrevocable and not subject to withdrawal.

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 23
 

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Lease under their
respective hands and seals as of the day and year first above written.

	
  

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  G.T.J. CO., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jerome Cooper

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  VARSITY BUS CO., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew Brettschneider

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew
  Brettschneider

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
								

 

 24Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

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

 

Recitals

 

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

 

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

 

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

 

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

 

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

 

Agreement

 

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

 

ARTICLE 1:           PURCHASE
OF ASSETS

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

1.3.          Shared Assets.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

1.4.          Assumption of
Obligations.

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

1.6.          Prorations
and Adjustments.

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

1.9.          Governmental Consents.

 

(a)           Within five (5)
Business Days of the date of this Agreement, Buyer and Seller shall file an
application with the FCC (the “FCC Application”) requesting FCC consent to the
assignment of the FCC Licenses to Buyer. Public notice of FCC consent to the
assignment of the main station (both analog and digital) FCC Licenses to Buyer
without any material adverse conditions other than those of general
applicability is referred to herein as the “FCC Consent.”  Buyer and Seller shall diligently prosecute
the FCC Application and otherwise use their commercially reasonable efforts to
obtain the FCC Consent as soon as possible. Seller shall timely publish and/or
broadcast the notices required by FCC rules and regulations pertaining to the
FCC Application. In the event that the FCC imposes any condition upon Buyer or
Seller with respect to the FCC Application, the party subject to such condition
shall use its commercially reasonable efforts to comply therewith, provided,
however, that the party subject to such condition shall not be required to take
any action if (i) the condition was imposed on it as the result of a
circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (ii) compliance with the condition would, in its reasonable judgment, be
unduly burdensome on it in any material respect (financial or otherwise). If
the Closing shall not have occurred for any reason within the original
effective period of the FCC Consent, and neither party shall have terminated
this Agreement under Article 10, the parties shall jointly request an extension
of the effective period of the FCC Consent. No extension of the effective
period of the FCC Consent shall limit the right of a party to exercise its
rights under Article 10.

 

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

 

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

 

9

 

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

 

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

 

ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES

 

Seller makes the following representations and warranties to Buyer:

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

(viii)  all network affiliation
contracts;

 

(ix)  all sales agency or
advertising representation contracts;

 

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

 

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

 

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

 

(xii)  all retransmission consent
agreements.

 

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

 

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

 

2.11.        Employees.

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

15

 

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

 

ARTICLE 3: BUYER REPRESENTATIONS AND
WARRANTIES

 

Buyer hereby makes the following representations and warranties to
Seller:

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

ARTICLE 4: SELLER COVENANTS 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

ARTICLE 5:  JOINT COVENANTS

 

Buyer and Seller hereby covenant and agree as follows:

 

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

 

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

 

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

 

5.4.          Risk of Loss.

 

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

 

18

 

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

 

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

 

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

 

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

 

5.5.          Consents.

 

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

 

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

 

19

 

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

 

5.6.          Employees.

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

5.7.          Accounting Services.

 

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

 

21

 

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

 

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

 

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

 

5.9.          Final
Order.

 

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

 

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

 

22

 

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

 

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

 

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

 

ARTICLE 6: SELLER CLOSING CONDITIONS 

 

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

 

6.1.          Representations and
Covenants.

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

ARTICLE 7: BUYER CLOSING CONDITIONS 

 

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

 

7.1.          Representations and
Covenants.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 8: CLOSING DELIVERIES

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(x)            customary paydown and
lien release letter; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

Exhibit A hereto;

 

25

 

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

 

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

 

ARTICLE 9:  SURVIVAL;
INDEMNIFICATION

 

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

 

9.2.          Indemnification.

 

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

 

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

 

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

 

(iii)  the Retained Obligations;
or

 

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

 

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

 

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

 

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

 

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

 

26

 

(iii)  the Assumed Obligations;
or

 

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

 

9.3.          Procedures.

 

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

 

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

 

(c)           Anything herein to the
contrary notwithstanding:

 

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

 

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

 

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

 

ARTICLE 10: TERMINATION AND REMEDIES

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 11: MISCELLANEOUS

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

	
  if to Seller:

  	
   

  	
  c/o Emmis Communications Corporation

  
	
   

  	
   

  	
  One Emmis Plaza

  
	
   

  	
   

  	
  40 Monument Circle, Suite 700

  
	
   

  	
   

  	
  Indianapolis, Indiana 46204

  
	
   

  	
   

  	
  Attention: President and CEO

  
	
   

  	
   

  	
  Facsimile: (317) 684-5583

  
	
   

  	
   

  	
   

  
	
  with copies (which shall not

  	
   

  	
  Emmis Communications Corporation

  
	
  constitute notice) to:

  	
   

  	
  3500 W. Olive Avenue, Suite 1450

  
	
   

  	
   

  	
  Burbank, California 91505

  
	
   

  	
   

  	
  Attention: Gary Kaseff

  
	
   

  	
   

  	
  Facsimile: (818) 238-9158

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wiley Rein & Fielding LLP

  
	
   

  	
   

  	
  1776 K Street, N.W.

  
	
   

  	
   

  	
  Washington, D.C. 20006

  
	
   

  	
   

  	
  Attention: Doc Bodensteiner

  
	
   

  	
   

  	
  Facsimile: (202) 719-7049

  
	
   

  	
   

  	
   

  
	
  if to Buyer:

  	
   

  	
  Hearst-Argyle Television, Inc.

  
	
   

  	
   

  	
  888 Seventh Avenue, 27th Floor

  
	
   

  	
   

  	
  New York, New York 10106

  
	
   

  	
   

  	
  Attention: David J. Barrett, President and
  CEO

  
	
   

  	
   

  	
  Facsimile: (212) 887-6835

  
	
   

  	
   

  	
   

  
	
  with a copy
  (which shall not

  	
   

  	
  Hearst-Argyle Television,
  Inc.

  
	
  constitute notice) to:

  	
   

  	
  888 Seventh Avenue, 27th Floor

  
	
   

  	
   

  	
  New York, New York 10106

  
	
   

  	
   

  	
  Attention: 

  	
  Jonathan C. Mintzer, Vice

  
	
   

  	
   

  	
   

  	
  President, General Counsel and Secretary

  
	
   

  	
   

  	
  Facsimile: 

  	
  (212) 887-6855

  

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

Section 11.11.

 

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

 

31

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

32

 

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

 

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

 

 

	
  BUYER:

  	
  HEARST-ARGYLE
  TELEVISION, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ David J. Barrett

  	
   

  
	
   

  	
   

  	
  Name: David J. Barrett

  
	
   

  	
   

  	
  Title: President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  SELLER:

  	
  EMMIS TELEVISION BROADCASTING, L.P.

  
	
   

  	
  By: Emmis Operating Company, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ J. Scott Enright

  	
   

  
	
   

  	
   

  	
  Name: J. Scott Enright

  
	
   

  	
   

  	
  Title: Vice President, Associate General Counsel and

  Secretary

  
	
   

  	
   

  
	
   

  	
  EMMIS TELEVISION LICENSE, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ J. Scott Enright

  	
   

  
	
   

  	
   

  	
  Name: J. Scott Enright

  
	
   

  	
   

  	
  Title: Vice President, Associate General Counsel and

  Secretary

  
	
   

  	
   

  
	
  GUARANTOR:

  	
  EMMIS OPERATING COMPANY

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ J. Scott Enright

  	
   

  
	
   

  	
   

  	
  Name: J. Scott Enright

  
	
   

  	
   

  	
  Title: Vice President, Associate General Counsel and

  Secretary

  
					

 

33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]