Document:

Exhibit
10.2

 

ZENITH NATIONAL INSURANCE CORP.

2004 RESTRICTED STOCK PLAN

RESTRICTED STOCK AWARD AGREEMENT

 

 

THIS
RESTRICTED STOCK AWARD AGREEMENT (the “Award
Agreement”) is made and entered into as of [                      ]
(the “Date of Grant”), by and between
Zenith National Insurance Corp., a Delaware corporation (the “Company”), and [                         ]
(the “Grantee”).  Capitalized terms not defined herein shall
have the meaning ascribed to them in the Zenith National Insurance Corp. 2004
Restricted Stock Plan (the “Plan”).  Where the context permits, references to the
Company or any of its Subsidiaries shall include the successors to the
foregoing.

 

Pursuant
to the Plan, the Administrator has determined that the Grantee is to be granted
Restricted Stock, subject to the terms, conditions and restrictions set forth
in the Plan and herein, and hereby grants such Restricted Stock.

 

1.             Grant of Restricted Stock.  The Company hereby grants to the Grantee [                ]
shares of Restricted Stock (the “Award”)
on the terms, conditions and restrictions set forth in this Award Agreement and
as otherwise provided in the Plan.

 

2.             Purchase Price; Method of
Payment.  The purchase price per
share of Restricted Stock shall be $1.00. 
The purchase price may be paid (i) in cash or its equivalent, (ii)
shares of unrestricted Stock owned by the Grantee for greater than six (6)
months, the Fair Market Value of which on the purchase date is equal to the
purchase price of the Restricted Stock, (iii) to the extent permitted by law,
cancellation of indebtedness, (iv) services rendered or (v) any combination of
the foregoing.  In the absence of any
other form of payment tendered by the Grantee, the purchase price shall be paid
by services rendered.

 

3.             Restrictions with Respect to
Restricted Stock.

 

(a)   Restrictions.  The Restricted Stock granted hereunder and
any interest therein, may not be sold, transferred, pledged, hypothecated,
assigned or otherwise disposed of, except by will or the laws of descent and
distribution, prior to the lapsing of restrictions set forth in the Plan and
this Award Agreement.  Any attempt to
dispose of any Restricted Stock in contravention of any such restrictions shall
be null and void and without effect.

 

(b)   Restricted
Period; Lapse of Restrictions. 
Except as otherwise provided in the Plan or this Award Agreement, the
restrictions set forth in Paragraph 3(a) shall lapse with respect to fifty
percent (50%) of the shares of Restricted Stock granted hereunder on the second
(2nd) anniversary of the Date of Grant, and with respect to the
remaining fifty percent (50%) of such shares on of the fourth (4th)
anniversary of the Date of Grant, so long as the Grantee is employed by the
Company or any Subsidiary as of each such anniversary.

 

 

4.             Form of Restricted Stock.  The Company may, in its discretion, reflect
ownership of Restricted Stock through the issuance of stock certificates, in
book-entry form or any combination thereof, in accordance with Section 5(e) of
the Plan.

 

5.             Unrestricted Shares.  Promptly after each lapse of restrictions
relating to the Restricted Stock without forfeiture, and provided that the
Grantee shall have complied with his or her obligations under Paragraph 9
hereof, the Company shall, with respect to such Unrestricted Shares:

 

(a)   If such Unrestricted Shares were initially
issued in certificated form, issue to the Grantee or the Grantee’s personal
representative a stock certificate representing a number of shares of Stock,
free of the restrictive legend described in Paragraph 7, equal to the number of
shares of Restricted Stock with respect to which such restrictions have
lapsed.  If certificates representing
such Restricted Stock shall have theretofore been delivered to the Grantee,
such certificates shall be returned to the Company, complete with any necessary
signatures or instruments of transfer prior to the issuance by the Company of
such unlegended shares of Stock; or

 

(b)   If such Unrestricted Shares were initially
issued in book-entry form, transfer such Unrestricted Shares to the Grantee in
the form and registration as indicated by the Grantee.

 

6.             Rights as a Stockholder.  Subject to the restrictions set forth in the
Plan and this Award Agreement, the Grantee shall possess all incidents of
ownership with respect to the Restricted Stock granted hereunder, including the
right to vote such Restricted Stock and the right to receive dividends with
respect to such Restricted Stock; provided however, that extraordinary or
non-cash dividends shall be subject to the same restrictions that apply to the
underlying Restricted Stock.

 

7.             Certificate; Restrictive Legend.  Any certificate issued for Restricted Stock
prior to the lapse of any outstanding restrictions relating thereto shall be
inscribed with the following legend, or such other legend as determined by the
Administrator:

 

THIS
CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
AND CONDITIONS, INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST
TRANSFER (THE “RESTRICTIONS”), CONTAINED IN THE ZENITH NATIONAL INSURANCE CORP.
2004 RESTRICTED STOCK PLAN AND THE RESTRICTED STOCK AWARD AGREEMENT ENTERED
INTO BETWEEN THE REGISTERED OWNER AND THE COMPANY.  ANY ATTEMPT TO DISPOSE OF THESE SHARES IN
CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT,
TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND
WITHOUT EFFECT.

 

8.             Termination of Employment.

 

(a)   Upon the Grantee’s death or termination of
employment due to Disability, the restrictions set forth in Paragraph 3(a)
shall lapse.

 

 

(b)   Upon termination of the Grantee’s employment
with the Company or any Subsidiary thereof for any reason (other than death or
Disability) prior to the lapsing of restrictions with respect to any portion of
the Restricted Stock granted hereunder, the Grantee shall forfeit any rights to
the shares of Restricted Stock with respect to which the restrictions have not
lapsed and shall have no further rights thereto.

 

(c)   Upon forfeiture of any shares of Restricted
Stock, to the extent the Grantee paid the purchase price of such forfeited
shares in a manner other than services rendered, the Company shall repurchase
such shares from the Grantee at a price per share equal to the lesser of (i)
the Fair Market Value of such shares at the time of forfeiture or (ii) the
price Grantee paid for such shares initially.

 

9.             Taxes.    Pursuant to Section 9(d) of the Plan, the
Company (or Subsidiary, as the case may be) may require the Grantee to remit to
the Company (or Subsidiary, as the case may be) in cash an amount sufficient to
satisfy any federal, state and local tax withholding requirements related to
the Award.  With the approval of the
Administrator, the Grantee may satisfy the foregoing requirement by electing to
have the Company withhold from delivery shares of Stock or by delivering shares
of Stock already owned by the Grantee for at least 6 months, in each case,
having a value equal to the minimum amount of tax required to be withheld.  Such shares shall be valued at their Fair
Market Value on the date on which the amount of tax to be withheld is
determined, and fractional share amounts shall be settled in cash.  Such an election may be made with respect to
all or any portion of the shares of Stock to be delivered pursuant to the
Award.

 

The
Grantee shall promptly notify the Company of any election made pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended.

 

10.           Adjustments.  The Award and all rights and obligations
under this Award Agreement are subject to Section 3 of the Plan.

 

11.           Notices.  Whenever any notice is required or permitted
hereunder, such notice shall be in writing and shall be given by personal
delivery or first class, certified or registered mail with return receipt
requested.  Any notice required or
permitted to be delivered hereunder shall be deemed to have been duly given on
the date which it is personally delivered or, whether actually received or not,
on the third business day after mailing to the respective parties named below.

 

	
  If to the Company:

  	
  Zenith
  National Insurance Corp.

  
	
   

  	
  21255
  Califa St

  
	
   

  	
  Woodland
  Hills, CA 91367

  
	
   

  	
  Attn.:
   William J. Owen, Sr. Vice President

  
	
   

  	
  and
  Chief Financial Officer

  
	
   

  	
  Facsimile:
   818-592-0480

  
	
   

  	
   

  
	
  If to the Grantee:

  	
  [Name
  of Grantee]

  
	
   

  	
  [Address]

  

 

 

Either
party may change such party’s address for notices by duly giving notice
pursuant hereto.

 

12.           Compliance with Laws.

 

(a)   Shares of Stock shall not be issued pursuant
to the Award granted hereunder unless the issuance or delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933 (the “Securities Act”) and the Exchange Act, shall be subject to the
requirements of any stock exchange upon which the Stock may then be listed, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance.  The Company
shall be under no obligation to effect the registration pursuant to the
Securities Act, of any interests in the Plan or any shares of Stock to be
issued hereunder or to effect similar compliance under any state laws.

 

(b)   All certificates for shares of Stock
delivered under the Plan shall be subject to such stop-transfer orders and
other restrictions as the Administrator may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock may then be listed, and any applicable
federal or state securities law, and the Administrator may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.  The Administrator may
require, as a condition of the issuance or delivery of certificates evidencing
shares of Stock pursuant to the terms hereof, that the recipient of such shares
make such agreements and representations as the Administrator, in its sole
discretion, deems necessary or desirable.

 

13.           Protections Against Violations of
Agreement.  No purported sale,
assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift,
transfer in trust (voting or other) or other disposition of, or creation of a
security interest in or lien on, any of the shares of Stock underlying the
Award by any holder thereof in violation of the provisions of this Award
Agreement, the Plan or the certificate of incorporation or the bylaws of the
Company, will be valid, and the Company will not transfer any such shares on
its books nor will any such shares be entitled to vote, nor will any dividends
be paid thereon, unless and until there has been full compliance with such
provisions to the satisfaction of the Company. 
The foregoing restrictions are in addition to and not in lieu of any
other remedies, legal or equitable, available to enforce said provisions.

 

14.           Failure to Enforce Not a Waiver.  The failure of the Company to enforce at any
time any provision of the Award Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.

 

15.           Governing Law.  The Award Agreement shall be governed by and
construed according to the laws of the State of Delaware without regard to its
principles of conflict of laws.

 

16.           Incorporation of the Plan.   The Plan, as it exists on the date of the
Award Agreement and as amended from time to time, is hereby incorporated by
reference and made a part hereof, and the Award and this Award Agreement shall
be subject to all terms and conditions of the Plan.  In the event of any conflict between the
provisions of

 

 

the
Award Agreement and the provisions of the Plan, the terms of the Plan shall
control, except as expressly stated otherwise. 
The term “Section” generally refers to provisions within the Plan
(except where denoted otherwise); provided, however, the term “Paragraph” shall
refer to a provision of this Award Agreement.

 

17.           Amendments.  This Award Agreement may be amended or
modified at any time, but only by an instrument in writing signed by each of
the parties hereto.

 

18.           Counterparts.   This Award Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

19.           Invalid Provision.   The invalidity or unenforceability of any
particular provision hereof shall not affect the other provisions hereof, and
this Award Agreement shall be construed in all respects as if such invalid or
unenforceable provision had been omitted.

 

20.           Entire Agreement.    This Award Agreement and the Plan, as it
exists on the date of this Award Agreement and as amended from time to time,
contain the entire agreement and understanding of the parties hereto with
respect to the subject matter contained herein and therein and supersede all
prior communications, representations and negotiations in respect thereto.

 

21.           Captions and Headings.   The captions and headings of the paragraphs
and subparagraphs of this Award Agreement are provided for convenience only and
are not to serve as a basis for interpreting or construing this Award
Agreement.

 

22.           Agreement Not a Contract of Employment.  Neither the Plan, the granting of the Award,
the Award Agreement nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Grantee has a right to continue to be employed by, or to
provide services as a director, consultant or advisor to, the Company, any
Subsidiary or affiliate thereof for any period of time or at any specific rate
of compensation.

 

23.           Authority of the Administrator.  The Administrator shall have full authority
to interpret and construe the terms of the Plan and the Award Agreement.  The determination of the Administrator as to
any such matter of interpretation or construction shall be final, binding and
conclusive.

 

24.           Binding Effect.  The Award Agreement shall apply to and bind
the Grantee and the Company and their respective permitted assignees or
transferees, heirs, legatees, executors, administrators and legal successors.

 

25.           Tax Representation.  The Grantee has reviewed with his or her own
tax advisors the federal, state, local and foreign tax consequences of the
transactions contemplated by this Award Agreement.  The Grantee is relying solely on such
advisors and not on any statement or representations of the Company or any of
its agents.  The Grantee understands that
he or she (and not the Company) shall be responsible for any

 

 

tax
liability that may arise as a result of the transactions contemplated by the
Award Agreement.

 

26.           Acceptance.  The Grantee hereby acknowledges receipt of a
copy of the Plan, the prospectus and this Award Agreement.  Grantee has read and understands the terms
and provisions thereof, and accepts the Award subject to all the terms and
conditions of the Plan and the Award Agreement.

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered the Award
Agreement as of the day and year first above written.

 

 

	
   

  	
  ZENITH
  NATIONAL INSURANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social
  Security No.:

  	
   

  
	
   

  	
  Date:EXHIBIT
10.1

 

ASSET PURCHASE AGREEMENT

 

dated as of December 2, 2004

 

among

 

CBS BROADCASTING INC.,

 

SINCLAIR BROADCAST GROUP, INC.,

 

CHESAPEAKE TELEVISION, INC.,

 

and

 

SCI-SACRAMENTO LICENSEE, L.L.C

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
   

  
	
  Section 1.02

  	
  Other
  Defined Terms

  	
   

  
	
  Section 1.03

  	
  Terms
  Generally

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  PURCHASE AND SALE

  	
   

  
	
   

  	
   

  
	
  Section 2.01

  	
  Purchase
  and Sale

  	
   

  
	
  Section 2.02

  	
  Excluded
  Assets

  	
   

  
	
  Section 2.03

  	
  Assumed
  Liabilities

  	
   

  
	
  Section 2.04

  	
  Excluded
  Liabilities

  	
   

  
	
  Section 2.05

  	
  Assignment
  of Contracts and Rights

  	
   

  
	
  Section 2.06

  	
  Puchase
  Price

  	
   

  
	
  Section 2.07

  	
  Collection
  of Accounts Receivable

  	
   

  
	
  Section 2.08

  	
  Closing

  	
   

  
	
  Section 2.09

  	
  General
  Proration

  	
   

  
	
  Section 2.10

  	
  Programming
  Proration

  	
   

  
	
  Section 2.11

  	
  Capital
  Lease Obligation Proration

  	
   

  
	
  Section 2.12

  	
  The
  Benefits Proration

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES OF SELLERS AND PARENT

  	
   

  
	
   

  	
   

  
	
  Section 3.01

  	
  Corporate
  Existence and Power

  	
   

  
	
  Section 3.02

  	
  Corporate
  Authorization

  	
   

  
	
  Section 3.03

  	
  Governmental
  Authorization

  	
   

  
	
  Section 3.04

  	
  Noncontravention

  	
   

  
	
  Section 3.05

  	
  Contracts

  	
   

  
	
  Section 3.06

  	
  Intangible
  Property

  	
   

  
	
  Section 3.07

  	
  Real
  Property

  	
   

  
	
  Section 3.08

  	
  Title to
  Purchased Assets; Liens

  	
   

  
	
  Section 3.09

  	
  Sufficiency
  of Assets

  	
   

  
	
  Section 3.10

  	
  Financial
  Information

  	
   

  
	
  Section 3.11

  	
  Absence of
  Certain Changes or Events

  	
   

  
	
  Section 3.12

  	
  Absence of Litigation

  	
   

  
	
  Section 3.13

  	
  Compliance with Laws

  	
   

  
	
  Section 3.14

  	
  FCC Matters; Qualifications

  	
   

  
	
  Section 3.15

  	
  Cable and Satellite Matters

  	
   

  
	
  Section 3.16

  	
  Employees; Labor Matters

  	
   

  
	
  Section 3.17

  	
  Employee Benefit Plans

  	
   

  
	
  Section 3.18

  	
  Environmental Matters

  	
   

  
	
  Section 3.19

  	
  Taxes

  	
   

  
	
  Section 3.20

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF BUYER

  	
   

  
	
   

  	
   

  
	
  Section 4.01

  	
  Corporate Existence and Power

  	
   

  
	
  Section 4.02

  	
  Corporate Authorization

  	
   

  
	
  Section 4.03

  	
  Governmental Authorization

  	
   

  
	
  Section 4.04

  	
  Noncontravention

  	
   

  
	
  Section 4.05

  	
  Absence of Litigation

  	
   

  

 

 

	
  Section 4.06

  	
  FCC Qualifications

  	
   

  
	
  Section 4.07

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  COVENANTS OF PARENT and SELLERS

  	
   

  
	
   

  	
   

  
	
  Section 5.01

  	
  Operations Pending Closing

  	
   

  
	
  Section 5.02

  	
  Access to Information

  	
   

  
	
  Section 5.03

  	
  Title Insurance and Surveys

  	
   

  
	
  Section 5.04

  	
  Financial Reports

  	
   

  
	
  Section 5.05

  	
  Employees

  	
   

  
	
  Section 5.06

  	
  Estoppel Certificates

  	
   

  
	
  Section 5.07

  	
  Risk of Loss

  	
   

  
	
  Section 5.08

  	
  Transition Services

  	
   

  
	
  Section 5.09

  	
  Obligations of Sellers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  COVENANTS OF BUYER

  	
   

  
	
   

  	
   

  
	
  Section 6.01

  	
  Access to Information

  	
   

  
	
  Section 6.02

  	
  Other Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII COVENANTS OF BUYER,
  PARENT AND SELLERS

  	
   

  
	
   

  	
   

  
	
  Section 7.01

  	
  Commercially Reasonable Efforts;
  Further Assurances

  	
   

  
	
  Section 7.02

  	
  Certain Filings; Further Actions

  	
   

  
	
  Section 7.03

  	
  Control Prior to Closing

  	
   

  
	
  Section 7.04

  	
  Public Announcements

  	
   

  
	
  Section 7.05

  	
  Notices of Certain Events

  	
   

  
	
  Section 7.06

  	
  Disclosure Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII PENSION, EMPLOYEE
  AND UNION MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 8.01

  	
  Employment

  	
   

  
	
  Section 8.02

  	
  Savings Plan

  	
   

  
	
  Section 8.03

  	
  Employee Welfare Plans

  	
   

  
	
  Section 8.04

  	
  Vacation

  	
   

  
	
  Section 8.05

  	
  Bargaining Agreement

  	
   

  
	
  Section 8.06

  	
  Non-Solicitation by Parent and
  Sellers

  	
   

  
	
  Section 8.07

  	
  Sellers’ Stay Bonuses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  TAX MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 9.01

  	
  Bulk Sales

  	
   

  
	
  Section 9.02

  	
  Transfer Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  CONDITIONS TO CLOSING

  	
   

  
	
   

  	
   

  
	
  Section 10.01

  	
  Conditions to Obligations of Buyer,
  Parent and Sellers

  	
   

  
	
  Section 10.02

  	
  Conditions to Obligations of Parent
  and Sellers

  	
   

  
	
  Section 10.03

  	
  Conditions to Obligations of Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  TERMINATION

  	
   

  
	
   

  	
   

  
	
  Section 11.01

  	
  Termination

  	
   

  
	
  Section 11.02

  	
  Effect of Termination

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
  ARTICLE XII SURVIVAL;
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  
	
  Section 12.01

  	
  Survival

  	
   

  
	
  Section 12.02

  	
  Indemnification by Buyer

  	
   

  
	
  Section 12.03

  	
  Indemnification by Parent

  	
   

  
	
  Section 12.04

  	
  Notification of Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  
	
  Section 13.01

  	
  Expenses

  	
   

  
	
  Section 13.02

  	
  Notices

  	
   

  
	
  Section 13.03

  	
  Headings

  	
   

  
	
  Section 13.04

  	
  Severability

  	
   

  
	
  Section 13.05

  	
  Entire Agreement

  	
   

  
	
  Section 13.06

  	
  Successors and Assigns

  	
   

  
	
  Section 13.07

  	
  No Recourse

  	
   

  
	
  Section 13.08

  	
  No Third-Party Beneficiaries

  	
   

  
	
  Section 13.09

  	
  Amendments and Waivers

  	
   

  
	
  Section 13.10

  	
  Governing Law; Jurisdiction

  	
   

  
	
  Section 13.11

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  Section 13.12

  	
  Counterparts

  	
   

  
	
  Section 13.13

  	
  No Presumption

  	
   

  

 

Disclosure
Schedules

 

 

ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of December 2,
2004 among CBS Broadcasting Inc., a New York corporation (“Buyer”), Sinclair
Broadcast Group, Inc., a Maryland corporation (“Parent”), Chesapeake Television, Inc., a Maryland corporation
(“Chesapeake”) and SCI-Sacramento
Licensee, L.L.C., a Maryland limited liability corporation ( “SCI” and together with Chesapeake, “Sellers”).

 

W I T N E S S E T H
:

 

WHEREAS, Sellers are solely engaged in the business
of television broadcasting and together operate and own all of the assets and
licenses used in the operation of commercial television broadcast station
KOVR-TV, Channel 13 (DTV Channel 25), in Stockton, California (the “Station”), under licenses issued by the
Federal Communications Commission (the “FCC”);

 

WHEREAS, Buyer desires to purchase from Sellers
substantially all of the assets and assume certain specified liabilities, and
Sellers desire to sell substantially all of the assets and transfer certain
specified liabilities, related to the conduct of the Station on the terms and
subject to the conditions hereinafter set forth;

 

NOW, THEREFORE, Buyer, Parent and Sellers hereby
agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01                            Definitions.  As
used in this Agreement, the following terms shall have the following meanings:

 

“Accounting Firm”
means (a) an independent certified public accounting firm in the United States
of national recognition (other than a firm that then serves as the independent
auditor for either Seller, Buyer or any of their respective Affiliates)
mutually acceptable to Sellers and Buyer or (b) if Sellers and Buyer are unable
to agree upon such a firm, then the regular independent auditors for Sellers
and Buyer shall mutually agree upon a third independent certified public
accounting firm, in which event, “Accounting Firm” shall mean such third firm.  The parties agree to utilize the same
Accounting Firm for the review of each Adjustment Statement.

 

“Accounts
Receivable” means all accounts receivable (other than accounts
receivable relating to Tradeout Agreements or film and program barter
agreements), and all rights to receive payments under any notes, bonds and
other evidences of indebtedness and all other rights to receive payments, in
each case arising out of sales occurring in the conduct of the Business prior
to the Effective Time for services performed or delivered by the Business prior
to the Effective Time.

 

“Action”
means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.

 

“Adjustment
Statements” means each of the Settlement Statement, Programming
Statement, Capital Lease Statement and the Benefits Statement.

 

“Affiliate”
means, with respect to any Person, any other Person directly or indirectly
Controlling, Controlled by or under common Control with such other Person.

 

“Ancillary
Agreements” means, as to any Person, all of the documents and
instruments required to be executed pursuant to this Agreement by such Person.

 

“Balance Sheet
Date” means October 31, 2004.

 

 

“Bargaining
Agreements” means collective bargaining agreements listed on
Disclosure Schedule Section 3.16(b) that the applicable Seller has
with IATSE covering the Station’s bargaining unit employees.

 

“Business”
means the conduct and operation of the Station.

 

“Business Day”
means any day that is not a Saturday, a Sunday or other day on which banks are
required or authorized by Law to be closed in the City of New York.

 

“Capital Lease
Obligation” means any liability or obligation of either Seller as
lessee under leases relating to the Business that have been or should have been
recorded as capital leases in accordance with GAAP.

 

“CERCLA”
means The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. §§ 9601 et seq.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Communications
Act” means the Communications Act of 1934, as amended, the
Telecommunications Act of 1996, the Children’s Television Act and the rules and
regulations promulgated thereunder, in each case, as in effect from time to
time.

 

“Confidentiality
Agreement” means the confidentiality agreement between Buyer and
Parent dated as of August 18, 2004.

 

“Control”
means, as to any Person, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise. 
The terms “Controlled” and “Controlling” shall have a correlative
meaning.

 

“Copyrights”
means all copyrights, copyright applications, registrations and similar rights
used by the Station (other than those included in the Excluded Assets),
including those registered copyrights and copyright applications identified on
Disclosure Schedule Section 3.06(e)(1).

 

“EAT”
means an exchange accommodation titleholder as described in Revenue Procedure
2000-37.

 

“Employee Plan”
means any (i) employee benefit plan, arrangement or policy subject to ERISA,
including without limitation, any retirement, pension, deferred compensation,
severance, profit sharing, savings, group health, dental, life insurance,
disability or cafeteria plan, policy or arrangement, (ii) any stock option,
stock purchase or equity-based compensation plan, (iii) any bonus or incentive
arrangement and (iv) any severance or termination agreements, policies or
arrangements that are not covered by ERISA, in each case maintained or
contributed to by either Seller or any of its Affiliates for the benefit of any
current or former Station Employee.

 

“Environmental
Laws” means any applicable statute, ordinance, rule, regulation,
decision, judgment, decree, permit or license, in each case, in effect on the
date of this Agreement or the Closing Date, as applicable, whether local,
state, or federal relating to: (a) Releases or threatened Releases of Hazardous
Materials into the indoor or outdoor environment; (b) the use, treatment,
storage, disposal, handling, discharging or shipment of Hazardous Material; (c)
the regulation of storage tanks; or (d) otherwise relating to pollution or
protection of human health, occupational safety and the indoor or outdoor environment.

 

“Environmental
Liabilities” means any and all liabilities arising in connection
with or in any way relating to either Seller (or any predecessor of either
Seller or any prior owner of all or part of either Seller’s business and
assets), to the extent relating to the Business, the Real Property or any
property now or previously owned, leased or operated by the Business or either
Seller in connection with the Station (as

 

2

 

currently
or previously conducted), the assets of the Business or any activities or
operations occurring or conducted at the Real Property (including offsite
disposal), whether accrued, contingent, absolute, determined, determinable or
otherwise, which (i) arise under or relate to any Environmental Law and (ii)
relate to actions occurring or conditions existing prior to the Closing
(including any matter disclosed or required to be disclosed in Disclosure Schedule Section 3.18).

 

“Environmental
Permits” means all permits, licenses, franchises, certificates,
approvals and other similar authorizations of Governmental Authorities relating
to or required by Environmental Laws and affecting, or relating in any way to,
the Station or the Business as currently conducted.

 

“Equipment”
means all machinery, equipment, computers, Motor Vehicles, furniture, fixtures,
furnishings, toolings, parts, blank films and tapes and other items of tangible
personal property (other than those included in the Excluded Assets) owned or
leased by either Seller and used in the Business, including those items listed
on Sellers’ Fixed Asset Valuation Analysis (other than such items which are no
longer in use at the Station as a result of obsolescence or having been
replaced by other property), attached hereto as Disclosure Schedule Section 1.01(a).

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder.

 

“ERISA Affiliate”
means, as to any Person any other Person that, together with such Person, would
be treated as a single employer under Section 414 of the Code.

 

“FCC Consent”
means the FCC’s grant of its consent to the assignment of each of the FCC
Licenses from Sellers to Buyer or its permitted assignee pursuant to Section 13.06.

 

“FCC Licenses”
means the FCC licenses, permits and other authorizations identified on
Disclosure Schedule Section 3.14(a)(1), and any other license, permit
or other authorization, including any temporary waiver or special temporary
authorization, issued by the FCC for use in the operation of the Station, and
any renewals thereof or any pending application therefor.

 

“Final Order”
means an action by the FCC (i) that has not been vacated, reversed, stayed,
enjoined, set aside, annulled or suspended, (ii) with respect to which no
request for stay, petition for rehearing, reconsideration or review or appeal
or sua sponte review by the FCC is pending, and (iii) as to which the time for
filing any such request, petition or appeal or for review by the FCC on its own
motion has expired.

 

“GAAP”
means United States generally accepted accounting principles as in effect on
the Balance Sheet Date, consistently applied.

 

“Governmental
Authority” means any federal, state or local or any foreign
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

 

“Governmental
Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental Authority.

 

“Hazardous
Material” means hazardous or toxic wastes, chemicals, substances,
constituents, pollutants or related material, whether solids, liquids, or
gases, defined or regulated under § 101(14) of CERCLA; the Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Toxic
Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Safe Drinking Water
Act, 42 U.S.C. §§ 300f et seq.; the Clean Air Act, as amended, 42 U.S.C. §§ 7401
et seq.; the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et
seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
§§ 11001 et seq.; the Occupational Safety and Health Act of 1970, 29
U.S.C. §§ 651 et seq. or any similar federal, state

 

3

 

or
local Environmental Laws, including polychlorinated biphenyls (PCBs), asbestos,
radioactive materials and wastes, and petroleum products (including crude oil
and any fraction thereof).

 

“HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder.

 

“Intangible
Property” means: (a) the Copyrights; (b) the Patents; (c) the
Trademarks, including all of the rights of each Seller in and to the call
letters “KOVR”; (d) the Trade Secrets;  (e)
all domain names related to the Station; (f) all computer software; and (g) all
goodwill, if any, associated therewith.

 

“IRS”
means the Internal Revenue Service.

 

“Knowledge of
Sellers” or “Knowledge”
of Parent or Seller, means the actual knowledge, after reasonable
investigation, of the President and Chief Executive Officer of Parent, Chief
Financial Officer of Parent, the General Counsel of Parent and the Vice
President of Engineering of Parent and the general manager or business manager
of the Station.

 

“Law”
means any United States (federal, state, local) or foreign statute, law,
ordinance, regulation, rule, code, order, judgment, injunction or decree.

 

“Leases”
means those leases or license agreements (including any and all assignments,
amendments and other modifications of such leases and license agreements)
pertaining to Real Property, as listed on Disclosure Schedule Section 3.05
..

 

“Lien”
means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, whether voluntarily
incurred or arising by operation of Law or otherwise, in respect of such
property or asset.

 

“Material Adverse
Effect” means a material adverse effect on (a) the condition
(financial or otherwise), business, assets or results of operations of the
Business; provided, however, that any material adverse effect primarily
attributable to (i) an event or circumstance affecting the television broadcast
industry generally (including legislative or regulatory matters) or (ii) general
economic conditions, in each case shall not constitute a Material Adverse
Effect; or (b) the ability of either Seller to perform its respective
obligations under this Agreement or any Ancillary Agreement.

 

“Material Consents”
means the consents to the assignment of each of the agreements set forth on
Disclosure Schedule Section 10.03.

 

“Motor Vehicles”
means all motor vehicles owned by Sellers and used in the Business, including
those listed in Disclosure Schedule Section 1.01(c).

 

“Multiemployer Plan”
means each Employee Plan that is a multiemployer plan, as defined in Section 3(37)
of ERISA.

 

“Patents”
means all patents, patent applications, registrations and similar rights used
by the Station, including those patents, patent registrations and patent
applications identified in Disclosure Schedule Section 1.01.

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

“Permitted Liens”
means, as to any property or asset, (A) liens for Taxes, assessments and
governmental charges not yet due and payable, (B) zoning laws and ordinances
and similar Laws that are not violated by any existing improvement or that do
not prohibit the use of the Real Property as currently used in the Business;
(C) any right reserved to any Governmental Authority to regulate the affected
property (including restrictions stated in the Permits); (D) in the case of any
leased asset, (i) the rights of

 

4

 

any
lessor under the applicable lease agreement or any Lien granted by any lessor and
(ii) any statutory Lien for amounts that are not yet due and payable or are
being contested in good faith; (E) inchoate materialmens’, mechanics’, workmen’s,
repairmen’s or other like Liens arising in the ordinary course of business; and
(F) in the case of owned Real Property, minor defects of title, easements,
rights-of-way, restrictions and other similar charges or encumbrances not
materially detracting from the value of the Real Property as currently used or
interfering in any material respect with use of the Real Property as currently
used in the Business, (G) any other Lien, other than a Lien securing a monetary
obligation, that does not, individually or in the aggregate, detract from or
interfere with any use of or impair the value of any such property or asset as
currently used, and (H) such title matters as are set forth on Disclosure Schedule Section 3.07(a).

 

“Person”
means any natural person, general or limited partnership, corporation, limited
liability company, firm, association, trust or other legal entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

 

“Program Rights”
means all rights of either Seller presently existing or obtained after the date
of this Agreement and prior to the Effective Time in accordance with the terms
of this Agreement, to broadcast television programs or shows as part of the
Station’s programming, including all film and program barter agreements, sports
rights agreements, news rights or service agreements and syndication
agreements.

 

“Real Property”
means the real property owned, leased, subleased or licensed by either Seller
used or held for use in the conduct of the Business, as listed in Disclosure Schedule Section 1.01(e),
and all buildings, towers, improvements and fixtures owned, leased, subleased
or licensed thereon, together with all strips and gores, rights of way,
easements, privileges and appurtenances pertaining thereto, including any
right, title and interest of either Seller in and to any street adjoining any
portion of the Real Property.

 

“Release”
means any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.

 

“Representation
Agreement Amount” means the average monthly commission for the
trailing 12 months, measured 5 Business Days prior to the Closing Date, multiplied
by (i) the number of months (including a pro rata portion with respect to
partial months) remaining between the Closing Date and the end of the term in
the Katz Millennium Representation Agreement dated August 13, 2001 and
(ii) the quotient of 1.5 divided by 6.5.

 

“Station Employees”
means the full-time, part-time and per-diem employees employed by either Seller
in the Business.

 

“Subsidiary”
of any Person means any corporation, partnership, joint venture, limited
liability company, trust or estate of which (or in which) more than 50% of (a)
the issued and outstanding capital stock having ordinary voting power to elect
a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate, in each case, is at the time directly or indirectly owned
or Controlled by such Person.

 

“Tax”
or “Taxes” means all income,
excise, gross receipts, ad valorem, sales, use, employment, franchise, profits,
gains, property, transfer, use, payroll, intangibles or other taxes, fees,
stamp taxes, duties, charges, levies or assessments of any kind whatsoever
(whether payable directly or by withholding), together with any interest and
any penalties, additions to tax or additional amounts imposed by any Tax authority
with respect thereto.

 

5

 

“Tax Returns”
means all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns) required to be supplied to a Tax
authority relating to Taxes.

 

“Title Company”
means Chicago Title Insurance Company or such other title insurance company
retained by Buyer.

 

“Title IV Plan”
means an Employee Plan subject to Title IV of ERISA other than any
Multiemployer Plan.

 

“Trademarks”
means all of those trade names, trademarks, service marks, jingles, slogans,
logos, trademark and service mark registrations and trademark and service mark
applications (other than those included in Excluded Assets) owned, used, held
for use, licensed by or leased by either Seller relating to the Station as set
forth on Disclosure Schedule Section 3.06(e)(2) and the goodwill
appurtenant thereto.

 

“Tradeout
Agreement” means any contract, agreement or commitment, oral or
written, other than film and program barter agreements, pursuant to which
either Seller has agreed to sell or trade commercial air time or commercial
production services of the Station in consideration for any property or service
in lieu of or in addition to cash;

 

“Trade Secrets”
means all proprietary information of either Seller necessary to the operation
of the Station (other than as included in the Excluded Assets) that is not
generally known and is used or useful in the Business, as to which reasonable
efforts have been made to prevent unauthorized disclosure, and which provides a
competitive advantage to those who know or use it.

 

“Transfer Taxes”
means all excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, franchise, property, transfer, gains and similar
Taxes, levies, charges and fees.

 

“WARN Act”
means the Workers Adjustment and Retraining Notification Act, as amended.

 

Section 1.02                            Other Defined Terms.  The following terms have the meanings defined for such terms in the
Sections set forth below:

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Active Employees

  	
   

  	
  Section 8.01(a)

  
	
  Antitrust Laws

  	
   

  	
  Section 7.01(d)

  
	
  Assumed Liabilities

  	
   

  	
  Section 2.03

  
	
  Benefits Statement

  	
   

  	
  Section 2.12

  
	
  Benefits Statement Liabilities

  	
   

  	
  Section 2.12

  
	
  Benefits Statement Notice of Disagreement

  	
   

  	
  Section 2.12(b)

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer Indemnified Parties

  	
   

  	
  Section 12.03(a)

  
	
  Buyer Warranty Breach

  	
   

  	
  Section 12.02(a)(i)

  
	
  Buyer’s 401(k) Plan

  	
   

  	
  Section 8.02

  
	
  Capital Lease Statement

  	
   

  	
  Section 2.11

  
	
  Capital Lease Statement Notice of Disagreement

  	
   

  	
  Section 2.11(b)

  
	
  Chesapeake

  	
   

  	
  Preamble

  
	
  Closing

  	
   

  	
  Section 2.08

  
	
  Closing Date

  	
   

  	
  Section 2.08

  
	
  Closing Date Bonus Liability Estimated Amount

  	
   

  	
  Section 2.12

  
	
  Closing Date Cash Amount

  	
   

  	
  Section 2.07(a)

  
	
  Closing Date Estimated Capital Lease Obligations

  	
   

  	
  Section 2.11

  
	
  Closing Date Vacation Liability Estimated Amount

  	
   

  	
  Section 2.12

  
	
  Collection Period

  	
   

  	
  Section 2.07(a)

  
	
  Contracts

  	
   

  	
  Section 2.01(c)

  
	
  DOJ

  	
   

  	
  Section 7.01(d)

  

 

6

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Effective Time

  	
   

  	
  Section 2.09(a)

  
	
  Employment Commencement Date

  	
   

  	
  Section 8.01(a)

  
	
  Excluded Assets

  	
   

  	
  Section 2.02

  
	
  Excluded Liabilities

  	
   

  	
  Section 2.04

  
	
  FCC

  	
   

  	
  Recitals

  
	
  FCC Applications

  	
   

  	
  Section 7.01(c)

  
	
  Final Benefits Statement

  	
   

  	
  Section 2.12(b)

  
	
  Final Capital Lease Statement

  	
   

  	
  Section 2.11(b)

  
	
  Final Programming Statement

  	
   

  	
  Section 2.10(d)

  
	
  Final Settlement Statement

  	
   

  	
  Section 2.09(e)

  
	
  FTC

  	
   

  	
  Section 7.01(d)

  
	
  Inactive Employees

  	
   

  	
  Section 8.01(a)

  
	
  Indemnified Party

  	
   

  	
  Section 12.04(a)

  
	
  Indemnifying Party

  	
   

  	
  Section 12.04(a)

  
	
  Lockbox Accounts

  	
   

  	
  Section 2.01(k)

  
	
  Losses

  	
   

  	
  Section 12.02(a)

  
	
  Market Cable Systems

  	
   

  	
  Section 3.15(a)

  
	
  Parent

  	
   

  	
  Preamble

  
	
  Permits

  	
   

  	
  Section 2.01(h)

  
	
  Programming Statement

  	
   

  	
  Section 2.10

  
	
  Programming Statement Notice of Disagreement

  	
   

  	
  Section 2.10(d)

  
	
  Prorated Assumed Liabilities

  	
   

  	
  Section 2.09(a)

  
	
  Prorated Current Purchased Assets

  	
   

  	
  Section 2.09(a)

  
	
  Prorated Programming Assumed Liabilities

  	
   

  	
  Section 2.10(a)

  
	
  Prorated Programming Purchased Assets

  	
   

  	
  Section 2.10(a)

  
	
  Purchased Assets

  	
   

  	
  Section 2.01

  
	
  Purchase Price

  	
   

  	
  Section 2.06

  
	
  Reference Balance Sheet

  	
   

  	
  Section 3.10(a)

  
	
  Reference Financial Statements

  	
   

  	
  Section 3.10(a)

  
	
  Sacramento DMA

  	
   

  	
  Section 3.15(a)

  
	
  SCI

  	
   

  	
  Preamble

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller Indemnified Parties

  	
   

  	
  Section 12.02(a)

  
	
  Settlement Statement

  	
   

  	
  Section 2.09(c)

  
	
  Settlement Statement Notice of Disagreement

  	
   

  	
  Section 2.09(e)

  
	
  Station

  	
   

  	
  Recitals

  
	
  Termination Date

  	
   

  	
  Section 11.01(b)(i)

  
	
  Title Commitments

  	
   

  	
  Section 5.03(a)

  
	
  Title Policy

  	
   

  	
  Section 5.03(a)

  
	
  Transferred Employees

  	
   

  	
  Section 8.01(a)

  
	
  Web Site

  	
   

  	
  Section 5.08

  

 

Section 1.03                            Terms Generally

 

(a)                                  Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires, (b) the terms “hereof,” “herein,”
and “herewith” and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including the Disclosure Schedules and exhibits hereto)
and not to any particular provision of this Agreement, and Article, Section,
paragraph, Exhibit and Disclosure Schedule references are to the Articles,
Sections, paragraphs, Exhibits and Disclosure Schedules to this Agreement
unless otherwise specified, (c) the word “including”
and words of similar import when used in this Agreement means “including, without limitation,” unless
otherwise specified, and (d) the word “or”
shall not be exclusive.

 

7

 

ARTICLE II

PURCHASE AND SALE

 

Section 2.01                            Purchase and Sale. 
Except as otherwise provided below, upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase from each Seller and
each Seller agrees to sell, convey, transfer, assign and deliver, or cause to
be sold, conveyed, transferred, assigned and delivered, to Buyer at the
Closing, free and clear of all Liens, other than Permitted Liens, all of such
Seller’s right, title and interest in, to and under the assets, contracts,
properties and business, of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, owned, held or used in the conduct
of the Business by such Seller as the same shall exist on the date of this
Agreement, including all assets shown on the Reference Balance Sheet and not
disposed of in accordance with Section 5.01(d), and all assets of the
Business thereafter acquired by such Seller, but excluding the Excluded Assets
(the “Purchased Assets”), and
including, without limitation, all right, title and interest of each Seller in,
to and under:

 

(a)                                  all Real Property;

 

(b)                                 all Equipment;

 

(c)                                  all rights under all contracts, agreements,
leases, licenses, commitments, sales and purchase orders and other instruments,
whether oral or written, relating to the Business, including without limitation
the items listed on Disclosure Schedule Section 3.05 and the Leases
(collectively, the “Contracts”);

 

(d)                                 all prepaid expenses and deposits, including
but not limited to security deposits, ad valorem taxes, leases and rentals;

 

(e)                                  all of such Seller’s rights, claims, credits,
causes of action or rights of set-off against third parties relating to the
Purchased Assets, including unliquidated rights under manufacturers’ and
vendors’ warranties, in each case only to the extent Buyer incurs Losses
relating thereto;

 

(f)                                    all Intangible Property;

 

(g)                                 all internet web sites and related
agreements, content and databases and domain name registrations, as and to the
extent relating to the Business, including those set forth on Disclosure Schedule Section 2.01(g);

 

(h)                                 the FCC Licenses and all transferable
municipal, state and federal franchises, licenses, permits or other
governmental authorization affecting, or relating in any way to, the Business,
including the items listed on Disclosure Schedule Section 2.01(h)
(the “Permits”);

 

(i)                                     all prepayments under advertising sales
contracts for committed air time for advertising that has not been aired prior
to the Effective Time;

 

(j)                                     all books, records, files and papers, whether
in hard copy or computer format, used in the Business, including, without
limitation, engineering information, sales and promotional literature, manuals
and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records for Transferred Employees (to the extent permitted by Law), and any
information relating to any Tax imposed on the Purchased Assets;

 

(k)                                  the lock box accounts utilized in connection
with Sellers’ collection of Accounts Receivable (the “Lockbox Accounts”);

 

8

 

(l)                                     all management and other systems (including
computers and peripheral equipment), databases, computer software, computer
disks and similar assets, related to the Business and all licenses and rights
in relation thereto; and

 

(m)                               any insurance proceeds payable in accordance
with Section 5.07.

 

Section 2.02                            Excluded Assets. 
Buyer expressly understands and agrees that the following assets and
properties of Sellers (the “Excluded Assets”)
shall be excluded from the Purchased Assets:

 

(a)                                  all of such Seller’s cash and cash
equivalents on hand and in banks;

 

(b)                                 insurance policies relating to the Business
and all claims, credits, causes of action or rights thereunder;

 

(c)                                  all rights to insurance proceeds relating to
the Excluded Assets;

 

(d)                                 all Accounts Receivable;

 

(e)                                  all rights to the names Sinclair Broadcast
Group, “Sinclair Communications,” Chesapeake Television, Sinclair, and any logo
or variation thereof and goodwill associated therewith;

 

(f)                                    intercompany accounts receivable and
intercompany accounts payable of Sellers;

 

(g)                                 any assets of any Employee Plan sponsored by
either Seller or any of their respective Affiliates including any amounts due
to such Employee Plan from either Seller or any of their respective Affiliates;

 

(h)                                 all books, records, files and papers, whether
in hard copy or computer format, prepared in connection with this Agreement or
the transactions contemplated hereby and all minute books and corporate records
of each Seller and its Affiliates;

 

(i)                                     all rights of each Seller arising under this
Agreement or the transactions contemplated hereby;

 

(j)                                     any Purchased Asset sold or otherwise
disposed of in accordance with Section 5.01(d); and

 

(k)                                  the assets listed in Disclosure Schedule Section 2.02(k).

 

Section 2.03                            Assumed Liabilities.  Upon
the terms and subject to the conditions of this Agreement, Buyer agrees,
effective at the Effective Time, to assume the following liabilities (the “Assumed Liabilities”):

 

(a)                                  the liabilities and obligations of each
Seller under the Contracts and Permits arising with respect to the operation of
the Station on and after the Effective Time, except those Contracts and
Permits, if any, included in the Excluded Assets; and

 

(b)                                 any liability or obligation to the extent of
the amount of credit received by Buyer under Section 2.09 at Closing.

 

Section 2.04                            Excluded Liabilities. 
Notwithstanding any provision in this Agreement or any other writing to
the contrary, Buyer is assuming only the Assumed Liabilities and is not
assuming any other liability or obligation of Parent or Sellers (or any
predecessor of Parent or Sellers or any prior owner of all or part of Parent or
Seller’s businesses and assets) of whatever nature, whether presently in
existence or arising hereafter.  All such
other liabilities and obligations shall be retained by and remain obligations
and

 

9

 

liabilities
of the applicable Seller (all such liabilities and obligations not being
assumed being herein referred to as the “Excluded
Liabilities”), and, notwithstanding anything to the contrary in Section 2.03,
none of the following shall be Assumed Liabilities for the purposes of this
Agreement:

 

(a)                                  any liability or obligation under or with
respect to any Contract or Permit required by the terms thereof to be
discharged on or prior to the Effective Time;

 

(b)                                 any liability or obligation for which the
applicable Seller has already received the partial or full benefit of the asset
to which such liability or obligation relates, but only to the extent of such
benefit received;

 

(c)                                  any liability or obligation for borrowed
money including interest and fees;

 

(d)                                 any liability or obligation relating to or
arising out of any of the Excluded Assets;

 

(e)                                  any Environmental Liabilities;

 

(f)                                    any liability or obligation relating to
vacation, bonuses and other employee-related benefits including either Seller
stay bonuses pursuant to Section 8.07 earned or put into effect prior to
the Closing Date;

 

(g)                                 any Tax liability or obligation (except as
expressly provided in Section 9.02); and

 

(h)                                 any liability or obligation relating to or
arising out of any Employee Plan.

 

Section 2.05                            Assignment of Contracts and
Rights.  Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Purchased Asset or any claim or right or any benefit arising thereunder or
resulting therefrom if such assignment, without the consent of a third party
thereto, would constitute a breach or other contravention of such Purchased
Asset or in any way adversely affect the rights of Buyer or the applicable
Seller thereunder.  Sellers will use
their commercially reasonable best efforts to obtain the consent of the other
parties to any such Purchased Asset or any claim or right or any benefit arising
thereunder for the assignment thereof to Buyer as Buyer may request.  If such consent is not obtained, or if an
attempted assignment thereof would be ineffective or would adversely affect the
rights of either Seller thereunder so that Buyer would not in fact receive all
such rights, Sellers and Buyer will cooperate in a mutually agreeable
arrangement under which (i) Buyer would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including
sub-contracting, sub-licensing, or sub-leasing to Buyer, or (ii) Sellers
would enforce for the benefit of Buyer, with Buyer assuming the applicable
Seller’s obligations, any and all rights of such Seller against a third party
thereto.  Each Seller will promptly pay
to Buyer when received all monies received by such Seller under any Purchased
Asset or any claim or right or any benefit arising thereunder.

 

Section 2.06                            Puchase Price.  The
purchase price for the purchase of the Purchased Assets shall be Two Hundred
Eighty-Five Million Dollars ($285,000,000) (the “Purchase Price”).  The
Closing Date Cash Amount shall be the Purchase Price less the sum of the
following:  (i) the Closing Date
Estimated Capital Lease Obligations (as set forth in a schedule delivered
by Sellers to Buyer at least five (5) Business Days prior to the Closing Date),
(ii) the Closing Date Vacation Liability Estimated Amount (as set forth in
a schedule delivered by Sellers to Buyer at least five (5) Business Days
prior to the Closing Date), (iii) the Closing Date Bonus Liability
Estimated Amount (as set forth in a schedule delivered by Sellers to Buyer
at least five (5) Business Days prior to the Closing Date) and (iv) the
Representation Agreement Amount (as set forth in a Schedule delivered by
Sellers to Buyer five (5) Business Days prior to the Closing Date).

 

10

 

Section 2.07                            Collection of Accounts
Receivable

 

(a)                                  At the Closing, Sellers shall designate
Buyer, by means of a mutually acceptable agency agreement, as their agent
solely for purposes of collecting on behalf of Sellers the Accounts
Receivable.  Sellers shall deliver to
Buyer, on or immediately after the Closing Date, a complete and detailed
statement of the Accounts Receivable. 
Buyer shall use commercially reasonable best efforts to collect the
Accounts Receivable during the period (the “Collection
Period”) beginning at the Effective Time and ending on the last day
of the fourth full calendar month following the Closing Date consistent with
Buyer’s practices for collection of its accounts receivables; provided,
however, that such efforts shall not include hiring attorneys or collection
agencies to collect such Accounts Receivable. 
Any payment received by Buyer (i) at any time following the Effective
Time, (ii) from a customer of the Station after the Effective Time that was
also a customer of the Station prior to the Effective Time and that is
obligated with respect to any Accounts Receivable and (iii) that is not
designated as a payment of a particular invoice or invoices or as a security deposit
or other prepayment, shall be presumptively applied to the accounts receivable
for such customer outstanding for the longest amount of time and, if such
accounts receivable shall be an Accounts Receivable, remitted to Sellers in
accordance with Section 2.07(b); provided further, however, that if, prior
to the Effective Time, Sellers or, after the Effective Time, Sellers or Buyer
received or receives a written notice of dispute from a customer with respect
to an Accounts Receivable that has not been resolved, then Buyer shall apply
any payments from such customer to such customer’s oldest, non-disputed
accounts receivable, whether or not an Accounts Receivable.  Buyer shall obtain the prior written approval
of Sellers before referring any of the Accounts Receivable to a collection
agency or to an attorney for collection. 
Except as otherwise provided herein, Buyer shall incur no liability to
Sellers for any collected or uncollected Accounts Receivable.  During the Collection Period, neither Seller
nor any of its agents, without the consent of Buyer, shall make any direct
solicitation of any customers owing the Accounts Receivable for collection
purposes.

 

(b)                                 On or before the twentieth day following the
end of each calendar month in the Collection Period, Buyer shall deposit into
an account identified by Sellers at the time of Closing the amounts collected
during the preceding month of the Collection Period with respect to the
Accounts Receivable.  Buyer shall furnish
Sellers with a list of the amounts collected during such calendar month and in
any prior calendar months with respect to the Accounts Receivable and a schedule of
the amount remaining outstanding under each particular account.  Sellers shall be entitled during the
sixty-day period following the Collection Period to inspect and/or audit the
records maintained by Buyer pursuant to this Section 2.07, upon reasonable
advance notice and during normal business hours.

 

(c)                                  Following the expiration of the Collection
Period, Buyer shall have no further obligations under this Section 2.07,
except that Buyer shall immediately pay over to Sellers any amounts
subsequently paid to it with respect to any Accounts Receivable.  Following the Collection Period, after
consultation with Buyer, Sellers may pursue collections of all the Accounts
Receivable, and Buyer shall at Sellers’ expense deliver to Sellers all files,
records, notes and any other materials relating to the Accounts Receivable and
shall otherwise cooperate with Sellers for the purpose of collecting any
outstanding Accounts Receivable.

 

Section 2.08                            Closing.  The
closing (the “Closing”) of the
sale and purchase of the Purchased Assets and the assumption of the Assumed
Liabilities hereunder shall take place at 1:00 P.M. (New York City time) as
soon as possible, but in no event later than five Business Days, following the
satisfaction or waiver of the conditions to the obligations of the parties set
forth in Article X, at the offices of Buyer, 1515 Broadway, New York, New
York, or at such other time or place as Sellers and Buyer may mutually agree
upon in writing (the day on which the Closing takes place being the “Closing Date”).  At the Closing:

 

(a)                                  Buyer shall deliver to Sellers the Closing
Date Cash Amount in immediately available funds by wire transfer to one or more
accounts designated by Sellers, by notice to Buyer, received no later than
three (3) Business Days prior to the Closing Date.

 

(b)                                 Sellers and Buyer shall enter into and
deliver such deeds, bills of sale, instruments of assumption, endorsements,
consents, assignments, releases of Liens other than Permitted Liens and other

 

11

 

good
and sufficient instruments of conveyance and assignment as the parties and
their respective counsel shall deem reasonably necessary to vest in Buyer all
right, title and interest in, to and under the Purchased Assets as provided
under this Agreement.  Buyer shall have
the right to designate an Affiliate of Buyer or any other person described in Section 13.06
to accept title to any Purchased Asset, subject in the case of the FCC
Licenses, to the receipt of any necessary FCC consent.

 

(c)                                  Sellers shall deliver to Buyer valid
signature cards for each Lockbox Account and such other documents reasonably
requested by Buyer in order to transfer ownership and control of the Lockbox
Accounts to Buyer.

 

Section 2.09                            General Proration

 

(a)                                  All Purchased Assets that would be classified
as a current asset in accordance with GAAP and all Assumed Liabilities (other
than Assumed Liabilities and Purchased Assets that are the subject of Section 2.10
and Section 5.07) shall be prorated between Buyer on the one hand and
Sellers on the other hand as of 12:01 A.M. local California time, on the
Closing Date (the “Effective Time”),
including by taking into account the elapsed time or consumption of an asset
during the month in which the Effective Time occurs (respectively, the “Prorated Assumed Liabilities” and the “Prorated Current Purchased Assets”).   Such Prorated Current Purchased Assets and
Prorated Assumed Liabilities relating to the period prior to the Effective Time
shall be for the account of Sellers and those relating to the period on and
after the Effective Time for the account of Buyer and shall be prorated
accordingly.  In accordance with this Section 2.09:  (A) Buyer shall be required to pay to Sellers
the amount of any Prorated Current Purchased Asset, previously paid for by
either Seller, to the extent Buyer will receive a current benefit on and after
the Effective Time, provided that such amount should not have been recognized
as an expense in accordance with GAAP prior to the Effective Time; and (B)
Sellers shall be required to pay to Buyer the amount of any Prorated Assumed
Liabilities to the extent they arise with respect to the operation of the
Station prior to the Effective Time.

 

(b)                                 Such prorations shall include all ad valorem
and other property taxes, utility expenses, FCC regulatory fees, liabilities
and obligations under Contracts, rents and similar prepaid and deferred items
and all other expenses and obligations, such as deferred revenue and
prepayments, attributable to the ownership and operation of the Station that
straddle the period before and after the Effective Time.  If such amounts were prepaid by Sellers prior
to the Effective Time and Buyer will receive a benefit after the Effective
Time, then Sellers shall receive a credit for such amounts.  If Sellers were entitled to receive a benefit
prior to the Effective Time and such amounts will be paid by Buyer after the
Effective Time, Buyer will receive a credit for such amounts.  To the extent not known, FCC regulatory fees,
real estate and personal property taxes shall be apportioned on the basis of
FCC regulatory fees, Taxes assessed for the preceding year, with a
reapportionment as soon as the new FCC regulatory fees, tax rate and valuation
can be ascertained even if such is ascertained after the Final Settlement
Statement is so determined.

 

(c)                                  Within sixty (60) days after the Closing
Date, Buyer shall prepare and deliver to Sellers a proposed pro rata adjustment
of assets and liabilities in the manner described in Section 2.09(a) and Section 2.09(b)
as the case may be, for the Station, as of the Effective Time (the “Settlement Statement”)  setting forth the Prorated Assumed
Liabilities and the Prorated Current Purchased Assets together with a schedule setting
forth, in reasonable detail, the components thereof.

 

(d)                                 During the 30-day period following the
receipt of the Settlement Statement (A) Sellers and their independent auditors,
if any, shall be permitted to review and make copies reasonably required of (i)
the financial statements of Buyer relating to the Settlement Statement (ii) the
working papers of Buyer and its independent auditors, if any, relating to the
Settlement Statement (iii) the books and records of Buyer relating to the
Settlement Statement and (iv) any supporting schedules, analyses and other
documentation relating to the Settlement Statement and (B) Buyer shall provide
reasonable access to such employees of Sellers and their independent auditors,
if any, as Sellers reasonably believe is necessary or desirable in connection
with their review of the Settlement Statement. 
Each of the parties agrees that for purposes of Section 2.09, Section 2.10,
Section 2.11 and Section 2.12, any reference to such party’s

 

12

 

independent
auditors shall mean, as to such party, one and the same firm to be used for the
review, if any, of each Adjustment Statement.

 

(e)                                  The Settlement Statement shall become final
and binding (the “Final Settlement Statement”)
upon the parties on the forty-fifth (45th) day following delivery thereof,
unless Sellers give written notice of their disagreement with the Settlement
Statement (the “Settlement Statement Notice
of Disagreement”) to Buyer prior to such date.  The Settlement Statement Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted.  If a Settlement Statement
Notice of Disagreement is given to Buyer in the period specified, then the
Final Settlement Statement (as revised in accordance with clause (A) or (B)
below) shall become final and binding upon the parties on the earlier of (A)
the date Buyer and Sellers resolve in writing any differences they have with
respect to the matters specified in the Settlement Statement Notice of
Disagreement or (B) the date any disputed matters are finally resolved in
writing by the Accounting Firm.

 

(f)                                    Within 10 Business Days after the Settlement
Statement becomes final and binding upon the parties, (A) Buyer shall be
required to pay to the Sellers the amount, if any, by which (w) the Prorated
Current Purchased Assets exceed the Prorated Assumed Liabilities or (B) Sellers
shall be required to pay to Buyer the amount, if any, by which (y) the Prorated
Assumed Liabilities exceed the Prorated Current Purchased Assets.  All payments made pursuant to this Section 2.09(f)
must be made via wire transfer in immediately available funds to an account
designated by the recipient party, together with interest thereon at the prime
rate (as reported by the Wall Street Journal or, if not reported thereby, by
another authoritative source) as in effect from time to time from the Effective
Time to the date of actual payment.

 

(g)                                 Notwithstanding the foregoing, in the event
that Sellers deliver a Settlement Statement Notice of Disagreement and either
Sellers on the one hand or Buyer on the other hand shall be required to make a
payment of any undisputed amount to the other regardless of the resolution of
the items contained in the Settlement Statement Notice of Disagreement, then
Sellers or Buyer, as applicable, shall within 10 Business Days of the receipt
of the Settlement Statement Notice of Disagreement make payment to the other by
wire transfer in immediately available funds of such undisputed amount owed by
Sellers or Buyer to the other, as the case may be, pending resolution of the
Settlement Statement Notice of Disagreement together with interest thereon,
calculated as described above.

 

(h)                                 During the 30-day period following the
delivery of a Settlement Statement Notice of Disagreement to Buyer that
complies with the preceding paragraphs, Buyer and Sellers shall seek in good
faith to resolve in writing any differences they may have with respect to the
matters specified in the Settlement Statement Notice of Disagreement.  During such period: (A) Buyer and its
independent auditors, if any, at Buyer’s sole cost and expense, shall be, and
Sellers and their independent auditors, if any, at Sellers’ sole cost and
expense, shall be, in each case permitted to review and make copies reasonably
required of: (i) the financial statements of the Sellers, in the case of Buyer,
and Buyer, in the case of Sellers, relating to the Settlement Statement Notice
of Disagreement; (ii) the working papers of the Sellers, in the case of Buyer,
and Buyer, in the case of Sellers, and such other party’s auditors, if any,
relating to the Settlement Statement Notice of Disagreement; (iii) the books
and records of the Sellers, in the case of Buyer, and Buyer, in the case of
Sellers, relating to the Settlement Statement Notice of Disagreement; and (iv)
any supporting schedules, analyses and documentation relating to the Settlement
Statement Notice of Disagreement; and (B) Sellers, in the case of Buyer, and
Buyer, in the case of Sellers, shall provide reasonable access, upon reasonable
advance notice and during normal business hours, to such employees of such
other party and such other party’s independent auditors, if any, as such first
party reasonably believes is necessary or desirable in connection with its
review of the Settlement Statement Notice of Disagreement.

 

(i)                                     If, at the end of such 30-day period, Buyer
and Sellers have not so resolved such differences, Buyer and Sellers shall
submit to the Accounting Firm for review and resolution any and all matters
that remain in dispute and that were properly included in the Settlement
Statement Notice of Disagreement.  Within
sixty (60) days after selection of the Accounting Firm, Buyer and Sellers shall
submit their respective positions to the Accounting Firm, in writing, together
with any other materials relied upon in support of their respective
positions.  Buyer and Sellers shall use
reasonable efforts to cause the Accounting Firm to render a decision resolving
the matters in dispute within thirty (30) days following

 

13

 

the
submission of such materials to the Accounting Firm.  Buyer and Sellers agree that judgment may be
entered upon the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be
enforced.  Except as specified in the
following sentence, the cost of any arbitration (including the fees and
expenses of the Accounting Firm) pursuant to this Section 2.09 shall be
borne equally by Buyer on the one hand and Sellers on the other hand.  The fees and expenses (if any) of Buyer’s
independent auditors and attorneys incurred in connection with the review of
the Settlement Statement Notice of Disagreement shall be borne by Buyer, and
the fees and expenses (if any) of Sellers’ independent auditors and attorneys
incurred in connection with their review of the Settlement Statement shall be
borne by Sellers.

 

Section 2.10                            Programming Proration. 
Within sixty (60)  days after the
Closing Date, Buyer shall prepare and deliver to Sellers a proposed pro rata
adjustment of programming assets and liabilities in the manner described below
as the case may be, for the Station, as of the Effective Time (the “Programming Statement”) setting forth a
balance sheet prepared in accordance with GAAP itemizing such assets and
liabilities with respect to all programs and shows the subject of Program
Rights as of the Effective Time.

 

(a)                                  All Assumed Liabilities and Purchased Assets
that relate to Program Rights in accordance with GAAP shall be prorated between
Buyer on the one hand and Sellers on the other hand as of the Closing Date,
including by taking into account the elapsed time or consumption of an asset
during the month in which the Effective Time occurs (respectively, the “Prorated Programming Assumed Liabilities”
and the “Prorated Programming Purchased
Assets”).  Such Prorated
Programming Purchased Assets and Prorated Programming Assumed Liabilities
relating to the period prior to the Effective Time shall be for the account of
Sellers and those relating to the period on and after the Effective Time for
the account of Buyer and shall be prorated accordingly.  In accordance with Section 2.10(e).  Sellers shall be required to pay to Buyer the
amount of any Prorated Programming Assumed Liabilities assumed by Buyer that
was incurred prior to the Effective Time and that does not arise or relate to
the period on and after the Effective Time to the extent such amount exceeds
the Prorated Programming Purchased Assets, measured and payable on a program by
program basis.

 

(b)                                 The Programming Statement shall include all
program assets and liabilities and obligations attributable to Program Rights
that straddle the period before and after the Effective Time.  If the Seller received a benefit prior to the
Effective Time and such amounts will be paid by Buyer after the Effective Time,
Buyer will receive a credit for such amounts.

 

(c)                                  During the 30-day period following the
receipt of the Programming Statement (A) Sellers and their independent
auditors, if any, shall be permitted to review and make copies reasonably
required of (i) the financial statements of Buyer relating to the Programming
Statement (ii) the working papers of Buyer and its independent auditors, if
any, relating to the Programming Statement (iii) the books and records of Buyer
relating to the Programming Statement and (iv) any supporting schedules,
analyses and other documentation relating to the Programming Statement and (B)
Buyer shall provide reasonable access to such employees of Sellers and their
independent auditors, if any, as Sellers reasonably believe is necessary or
desirable in connection with their review of the Programming Statement.

 

(d)                                 The Programming Statement shall become final
and binding (the “Final Programming Statement”)
upon the parties on the forty-fifth (45th) day following delivery thereof,
unless Sellers give written notice of their disagreement with the Programming
Statement (the “Programming Statement Notice
of Disagreement”) to Buyer prior to such date.  The Programming Statement Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted.  If a Programming Statement
Notice of Disagreement is given to Buyer in the period specified, then the
Final Programming Statement (as revised in accordance with clause (A) or (B)
below) shall become final and binding upon the parties on the earlier of:  (A) the date Buyer and Sellers resolve in
writing any differences they have with respect to the matters specified in the
Programming Statement Notice of Disagreement or (B) the date any disputed
matters are finally resolved in writing by the Accounting Firm.

 

14

 

(e)                                  Within 10 Business Days after the Programming
Statement becomes final and binding upon the parties, Sellers shall be required
to pay to Buyer an amount, if any, equal to the aggregate sum by which the Prorated
Programming Assumed Liabilities exceed the Prorated Programming Purchased
Assets, taking into account only those individual Prorated Programming
Purchased Assets as to which the Prorated Programming Assumed Liabilities
exceed the Prorated Programming Purchased Assets.  All payments made pursuant to this Section 2.10(e)
must be made via wire transfer in immediately available funds to an account
designated by the Buyer, together with interest thereon at the prime rate (as
reported by the Wall Street Journal or, if not reported thereby, by another
authoritative source) as in effect from time to time from the Effective Time to
the date of actual payment.

 

(f)                                    Notwithstanding the foregoing, in the event
that Sellers deliver a Programming Statement Notice of Disagreement and Sellers
shall be required to make a payment of any undisputed amount to Buyer
regardless of the resolution of the items contained in the Programming
Statement Notice of Disagreement, then Sellers shall within 10 Business Days of
the receipt of the Programming Statement Notice of Disagreement make payment to
Buyer by wire transfer in immediately available funds of such undisputed amount
owed by Sellers, pending resolution of the Programming Statement Notice of
Disagreement together with interest thereon, calculated as described above.

 

(g)                                 During the 30-day period following the
delivery of a Programming Statement Notice of Disagreement to Buyer that
complies with the preceding paragraphs, Buyer and Sellers shall seek in good
faith to resolve in writing any differences they may have with respect to the
matters specified in the Programming Statement Notice of Disagreement.  During such period: (A) Buyer and its
independent auditors, if any, at Buyer’s sole cost and expense, shall be, and
Sellers and their independent auditors, if any, at Sellers’ sole cost and
expense, shall be, in each case permitted to review and make copies reasonably
required of: (i) the financial statements of the Sellers, in the case of Buyer,
and Buyer, in the case of Sellers, relating to the Programming Statement Notice
of Disagreement; (ii) the working papers of the Sellers, in the case of Buyer,
and Buyer, in the case of Sellers, and such other party’s auditors, if any,
relating to the Programming Statement Notice of Disagreement; (iii) the books
and records of the Sellers, in the case of Buyer, and Buyer, in the case of
Sellers, relating to the Programming Statement Notice of Disagreement; and (iv)
any supporting schedules, analyses and documentation relating to the Programming
Statement Notice of Disagreement; and (B) Sellers, in the case of Buyer, and
Buyer, in the case of Sellers, shall provide reasonable access, upon reasonable
advance notice and during normal business hours, to such employees of such
other party and such other party’s independent auditors, if any, as such first
party reasonably believes is necessary or desirable in connection with its
review of the Programming Statement Notice of Disagreement.

 

(h)                                 If, at the end of such 30-day period, Buyer
and Sellers have not so resolved such differences, Buyer and Sellers shall
submit to the Accounting Firm for review and resolution any and all matters
that remain in dispute and that were properly included in the Programming
Statement Notice of Disagreement.  Within
sixty (60) days after selection of the Accounting Firm, Buyer and Sellers shall
submit their respective positions to the Accounting Firm, in writing, together
with any other materials relied upon in support of their respective positions.  Buyer and Sellers shall use reasonable
efforts to cause the Accounting Firm to render a decision resolving the matters
in dispute within thirty (30) days following the submission of such materials
to the Accounting Firm.  Buyer and
Sellers agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. 
Except as specified in the following sentence, the cost of any
arbitration (including the fees and expenses of the Accounting Firm) pursuant
to this Section 2.10 shall be borne equally by Buyer on the one hand and
Sellers on the other hand.  The fees and
expenses (if any) of Buyer’s independent auditors and attorneys incurred in
connection with the review of the Programming Statement Notice of Disagreement
shall be borne by Buyer, and the fees and expenses (if any) of Sellers’
independent auditors and attorneys incurred in connection with their review of
the Programming Statement shall be borne by Sellers.

 

Section 2.11                            Capital Lease Obligation
Proration.  “Closing
Date Estimated Capital Lease Obligations” shall be the Capital Lease
Obligations outstanding as of the last day in the latest full month preceding
the Closing Date.  Within sixty (60) days
after the Closing Date, Buyer shall prepare and deliver

 

15

 

to
Sellers a statement setting forth the Capital Lease Obligations outstanding as
of the Effective Time (the “Capital Lease
Statement”).  The Capital Lease
Statement shall set forth the Capital Lease Obligation by respective lease.

 

(a)                                  During the 30-day period following the
receipt of the Capital Lease Statement (A) Sellers and their independent
auditors, if any, shall be permitted to review and make copies reasonably
required of (i) the financial statements of Buyer relating to the Capital Lease
Statement (ii) the working papers of Buyer and its independent auditors, if
any, relating to the Capital Lease Statement (iii) the books and records of
Buyer relating to the Capital Lease Statement and (iv) any supporting
schedules, analyses and other documentation relating to the Capital Lease
Statement and (B) Buyer shall provide reasonable access to such employees of
Sellers and their independent auditors, if any, as Sellers reasonably believe
is necessary or desirable in connection with their review of the Capital Lease
Statement.

 

(b)                                 The Capital Lease Statement shall become
final and binding (the “Final Capital Lease
Statement”) upon the parties on the forty-fifth (45th) day following
delivery thereof, unless Sellers give written notice of their disagreement with
the Capital Lease Statement (the “Capital
Lease Statement Notice of Disagreement”) to Buyer prior to such
date.  The Capital Lease Statement Notice
of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted.  If a Capital
Lease Statement Notice of Disagreement is given to Buyer in the period
specified, then the Final Capital Lease Statement (as revised in accordance with
clause (A) or (B) below) shall become final and binding upon the parties on the
earlier of:  (A) the date Buyer and
Sellers resolve in writing any differences they have with respect to the
matters specified in the Capital Lease Statement Notice of Disagreement or (B)
the date any disputed matters are finally resolved in writing by the Accounting
Firm.

 

(c)                                  Within 10 Business Days after the Capital
Lease Statement becomes final and binding upon the parties, (A) Buyer shall be
required to pay to the Sellers the amount, if any, by which (w) Closing Date
Estimated Capital Lease Obligations exceeds the Capital Lease Obligations as
set forth per the Capital Lease Statement, and (B) Sellers shall be required to
pay to Buyer the amount, if any, by which (y) Capital Lease Obligations as set
forth per the Capital Lease Statement exceeds the Closing Date Estimated
Capital Lease Obligations.  All payments
made pursuant to this Section 2.11(c) must be made via wire transfer in
immediately available funds to an account designated by the recipient party,
together with interest thereon at the prime rate (as reported by The Wall Street Journal or, if not
reported thereby, by another authoritative source) as in effect from time to
time from the Effective Time to the date of actual payment.

 

(d)                                 Notwithstanding the foregoing, in the event
that Sellers deliver a Capital Lease Statement Notice of Disagreement and
either Sellers on the one hand or Buyer on the other hand shall be required to
make a payment of any undisputed amount to the other regardless of the
resolution of the items contained in the Capital Lease Statement Notice of
Disagreement, then Sellers or Buyer, as applicable, shall within 10 Business
Days of the receipt of the Capital Lease Statement Notice of Disagreement make
payment to the other by wire transfer in immediately available funds of such
undisputed amount owed by Sellers or Buyer to the other, as the case may be,
pending resolution of the Capital Lease Statement Notice of Disagreement
together with interest thereon, calculated as described above.

 

(e)                                  During the 30-day period following the
delivery of a Capital Lease Statement Notice of Disagreement to Buyer that
complies with the preceding paragraphs, Buyer and Sellers shall seek in good
faith to resolve in writing any differences they may have with respect to the
matters specified in the Capital Lease Statement Notice of Disagreement.  During such period: (A) Buyer and its
independent auditors, if any, at Buyer’s sole cost and expense, shall be, and
Sellers and their independent auditors, if any, at Sellers’ sole cost and
expense, shall be, in each case permitted to review and make copies reasonably
required of: (i) the financial statements of the Sellers, in the case of Buyer,
and Buyer, in the case of Sellers, relating to the Capital Lease Statement
Notice of Disagreement; (ii) the working papers of the Sellers, in the case of
Buyer, and Buyer, in the case of Sellers, and such other party’s auditors, if
any, relating to the Capital Lease Statement Notice of Disagreement; (iii) the
books and records of the Sellers, in the case of Buyer, and Buyer, in the case
of Sellers, relating to the Capital Lease Statement Notice of Disagreement; and
(iv) any supporting schedules, analyses and documentation relating to the
Capital Lease Statement Notice of Disagreement; and (B) Sellers, in the case of
Buyer, and Buyer, in the case of Sellers, shall provide

 

16

 

reasonable
access, upon reasonable advance notice and during normal business hours, to
such employees of such other party and such other party’s independent auditors,
if any, as such first party reasonably believes is necessary or desirable in
connection with its review of the Capital Lease Statement Notice of Disagreement.

 

(f)                                    If, at the end of such 30-day period, Buyer
and Sellers have not so resolved such differences, Buyer and Sellers shall
submit to the Accounting Firm for review and resolution any and all matters
that remain in dispute and that were properly included in the Capital Lease
Statement Notice of Disagreement.  Within
sixty (60) days after selection of the Accounting Firm, Buyer and Sellers shall
submit their respective positions to the Accounting Firm, in writing, together
with any other materials relied upon in support of their respective
positions.  Buyer and Sellers shall use
reasonable efforts to cause the Accounting Firm to render a decision resolving
the matters in dispute within thirty (30) days following the submission of such
materials to the Accounting Firm.  Buyer
and Sellers agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. 
Except as specified in the following sentence, the cost of any
arbitration (including the fees and expenses of the Accounting Firm) pursuant
to this Section 2.11 shall be borne equally by Buyer on the one hand and
Sellers on the other hand.  The fees and
expenses (if any) of Buyer’s independent auditors and attorneys incurred in
connection with the review of the Capital Lease Statement Notice of
Disagreement shall be borne by Buyer, and the fees and expenses (if any) of
Sellers’ independent auditors and attorneys incurred in connection with their
review of the Capital Lease Statement shall be borne by Sellers.

 

Section 2.12                            The Benefits Proration.  “Closing Date Vacation Liability Estimated Amount”
and the “Closing Date Bonus Liability
Estimated Amount” shall be the vacation and bonus amounts earned by
employees of the Station as of the last day in the latest full month preceding
the Closing Date, respectively.  Within
sixty (60) days after the Closing Date, Buyer shall prepare and deliver to
Sellers a statement (the “Benefits Statement”)
prepared in accordance with GAAP setting forth the liabilities for vacation and
bonus liabilities earned by the employees of the Station as of the Effective
Time (the “Benefits Statement Liabilities”)  together with reasonable itemization of all
amounts.

 

(a)                                  During the 30-day period following the
receipt of the Benefits Statement (A) Sellers and their independent auditors,
if any, shall be permitted to review and make copies reasonably required of (i)
the financial statements of Buyer relating to the Benefits Statement (ii) the
working papers of Buyer and its independent auditors, if any, relating to the
Benefits Statement (iii) the books and records of Buyer relating to the
Benefits Statement and (iv) any supporting schedules, analyses and other
documentation relating to the Benefits Statement and (B) Buyer shall provide
reasonable access to such employees of Sellers and their independent auditors,
if any, as Sellers reasonably believe is necessary or desirable in connection
with their review of the Benefits Statement.

 

(b)                                 The Benefits Statement shall become final and
binding (the “Final Benefits Statement”)
upon the parties on the forty-fifth (45th) day following delivery thereof,
unless Sellers give written notice of their disagreement with the Benefits
Statement (the “Benefits Statement Notice of
Disagreement”) to Buyer prior to such date.  The Benefits Statement Notice of Disagreement
shall specify in reasonable detail the nature of any disagreement so
asserted.  If an Benefits Statement
Notice of Disagreement is given to Buyer in the period specified, then the
Final Benefits Statement (as revised in accordance with clause (A) or (B)
below) shall become final and binding upon the parties on the earlier of (A)
the date Buyer and Sellers resolve in writing any differences they have with
respect to the matters specified in the Benefits Statement Notice of
Disagreement or (B) the date any disputed matters are finally resolved in
writing by the Accounting Firm.

 

(c)                                  Within 10 Business Days after the Benefits
Statement becomes final and binding upon the parties, (A) Buyer shall be
required to pay to the Sellers the amount, if any, by which (w) the sum of the
Closing Date Vacation Liability Estimated Amount and the Closing Date Bonus
Liability Estimated Amount exceeds the Benefits Statement Liabilities, and (B)
Sellers shall be required to pay to Buyer the amount, if any, by which (y)
Benefits Statement Liabilities exceed the sum of the Closing Date Vacation
Liability Estimated Amount and the Closing Date Bonus Liability Estimated
Amount.  All payments made

 

17

 

pursuant
to this Section 2.12(c) must be made via wire transfer in immediately
available funds to an account designated by the recipient party, together with
interest thereon at the prime rate (as reported by the Wall Street Journal or,
if not reported thereby, by another authoritative source) as in effect from
time to time from the Effective Time to the date of actual payment.

 

(d)                                 Notwithstanding the foregoing, in the event
that Sellers deliver an Benefits Statement Notice of Disagreement and either
Sellers on the one hand or Buyer on the other hand shall be required to make a
payment of any undisputed amount to the other regardless of the resolution of
the items contained in the Benefits Statement Notice of Disagreement, then
Sellers or Buyer, as applicable, shall within 10 Business Days of the receipt
of the Benefits Statement Notice of Disagreement make payment to the other by
wire transfer in immediately available funds of such undisputed amount owed by
Sellers or Buyer to the other, as the case may be, pending resolution of the
Benefits Statement Notice of Disagreement together with interest thereon,
calculated as described above.

 

(e)                                  During the 30-day period following the
delivery of an Benefits Statement Notice of Disagreement to Buyer that complies
with the preceding paragraphs, Buyer and Sellers shall seek in good faith to
resolve in writing any differences they may have with respect to the matters
specified in the Benefits Statement Notice of Disagreement.  During such period: (A) Buyer and its
independent auditors, if any, at Buyer’s sole cost and expense, shall be, and
Sellers and their independent auditors, if any, at Sellers’ sole cost and
expense, shall be, in each case permitted to review and make copies reasonably
required of: (i) the financial statements of the Sellers, in the case of Buyer,
and Buyer, in the case of Sellers, relating to the Benefits Statement Notice of
Disagreement; (ii) the working papers of the Sellers, in the case of Buyer, and
Buyer, in the case of Sellers, and such other party’s auditors, if any,
relating to the Benefits Statement Notice of Disagreement; (iii) the books and
records of the Sellers, in the case of Buyer, and Buyer, in the case of
Sellers, relating to the Benefits Statement Notice of Disagreement; and (iv)
any supporting schedules, analyses and documentation relating to the Benefits
Statement Notice of Disagreement; and (B) Sellers, in the case of Buyer, and
Buyer, in the case of Sellers, shall provide reasonable access, upon reasonable
advance notice and during normal business hours, to such employees of such
other party and such other party’s independent auditors, if any, as such first
party reasonably believes is necessary or desirable in connection with its
review of the Benefits Statement Notice of Disagreement.

 

(f)                                    If, at the end of such 30-day period, Buyer
and Sellers have not so resolved such differences, Buyer and Sellers shall
submit to the Accounting Firm for review and resolution any and all matters
that remain in dispute and that were properly included in the Benefits
Statement Notice of Disagreement.  Within
sixty (60) days after selection of the Accounting Firm, Buyer and Sellers shall
submit their respective positions to the Accounting Firm, in writing, together
with any other materials relied upon in support of their respective
positions.  Buyer and Sellers shall use
reasonable efforts to cause the Accounting Firm to render a decision resolving
the matters in dispute within thirty (30) days following the submission of such
materials to the Accounting Firm.  Buyer
and Sellers agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. 
Except as specified in the following sentence, the cost of any
arbitration (including the fees and expenses of the Accounting Firm) pursuant
to this Section 2.12 shall be borne equally by Buyer on the one hand and
Sellers on the other hand.  The fees and
expenses (if any) of Buyer’s independent auditors and attorneys incurred in
connection with the review of the Benefits Statement Notice of Disagreement
shall be borne by Buyer, and the fees and expenses (if any) of Sellers
independent auditors and attorneys incurred in connection with their review of
the Benefits Statement shall be borne by Sellers.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF SELLERS AND PARENT

 

As to Sections 3.01, 3.02, 3.03, 3.04, 3.13, 3.14
and 3.20, Parent and Sellers jointly and severally represent and warrant to
Buyer, and as to the remaining Sections, Sellers jointly and severally
represent and warrant to Buyer, in each case as follows:

 

18

 

Section 3.01                            Corporate Existence and
Power.  Each of Parent and Sellers is a corporation
duly incorporated, validly existing and in good standing under the laws of the
state of its incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.  Each of
Parent and Sellers is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.  Each of the
Sellers has heretofore delivered to Buyer true and complete copies of the
certificate of incorporation and bylaws of such Seller as currently in effect.

 

Section 3.02                            Corporate Authorization

 

(a)                                  The execution and delivery of this Agreement
by Parent and each Seller and each Ancillary Agreement to which Parent or such
Seller will be a party, the performance by Parent or such Seller of its
obligations hereunder and thereunder and the consummation by Parent or such
Seller of the transactions contemplated hereby and thereby are within Parent or
such Seller’s corporate powers and have been duly authorized by all requisite
corporate action on the part of Parent or such Seller.

 

(b)                                 This Agreement has been, and at the Closing
each Ancillary Agreement will be, duly executed and delivered by Parent and
each Seller.  This Agreement (assuming
due authorization, execution and delivery by Buyer) constitutes, and each
Ancillary Agreement to which Parent or such Seller will be a party will
constitute when executed and delivered by Parent and each Seller, the legal,
valid and binding obligation of Parent and such Seller, enforceable against
Parent and such Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar Laws
affecting or relating to enforcement of creditors’ rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).

 

Section 3.03                            Governmental Authorization.  The
execution, delivery and performance by Parent and each Seller of this Agreement
and each Ancillary Agreement to which Parent or such Seller will be a party and
the consummation of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing with or notification to, any Governmental
Authority other than (a) as described in Disclosure Schedule Section 3.03,
(b) compliance with any applicable requirements of the HSR Act, (c) the FCC,
and (d) any such action by or in respect of or filing with any Governmental
Authority as to which the failure to take, make or obtain could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

 

Section 3.04                            Noncontravention. 
Except as set forth in Disclosure Schedule Section 3.04, the
execution, delivery and performance of this Agreement by Parent and each Seller
and each Ancillary Agreement to which Parent or such Seller will be a party and
the consummation of the transactions contemplated hereby and thereby do not and
will not (a) violate or conflict with the certificate of incorporation or
by-laws of Parent or such Seller, (b) assuming compliance with the matters
referred to in Section 3.03, conflict with or violate any Law or
Governmental Order applicable to Parent or such Seller, (c) require any consent
or other action by or notification to any Person under, constitute a default
under, or give to any Person any rights of termination, amendment, acceleration
or cancellation of any right or obligation of Parent or such Seller or to a
loss of any benefit relating to the Business to which Parent or such Seller is
entitled under, any provision of any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other agreement or instrument
to which Parent or such Seller is a party or by which any of its or their
assets is or may be bound or (d) result in the creation or imposition of
any Lien on any asset of Parent or the Sellers, except for Permitted Liens,
except, in the cases of clauses (b), (c) and (d), for any such violations,
consents, actions, defaults, rights or losses as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

19

 

Section 3.05                            Contracts.

 

(a)                                  As of the date of this Agreement, the
Contracts listed on Disclosure Schedule Section 3.05(a) constitute
all of the Contracts relating to the Business:

 

(i)                                     for the sale of broadcast time for
advertising or other purposes for cash that was not made in the ordinary course
of business consistent with past practices;

 

(ii)                                  with a term of more than six (6) months from
the date of this Agreement and that involve payments or receipts over the
remaining term of such Contract of more than $25,000 or (B) that involve
payments or receipts over the remaining term of such Contract of more than
$750,000 with respect to any single agreement or group of related agreements;

 

(iii)                               involving the purchase or sale of Real Property;

 

(iv)                              relating to the acquisition or disposition of any business (whether by
merger, sale of stock, sale of assets or otherwise);

 

(v)                                 involving construction, architecture,
engineering or other agreements relating to uncompleted construction projects,
in each case that involve payments in excess of $250,000;

 

(vi)                              all Capital Lease Obligations;

 

(vii)                           under which either Seller has, directly or indirectly made any loan,
extension of credit (other than in the ordinary course of business consistent
with past practices) or capital contribution to, or investment in, any third
party;

 

(viii)                        for any mortgage, pledge or security agreement, deed of trust or other
instrument granting a Lien (other than Permitted Liens) upon any property of
the Station, in each case that may bind Buyer or any of its Affiliates upon or
as a result of the consummation of the transactions contemplated by this
Agreement;

 

(ix)                                containing a guarantee or indemnification by the Station, in each case
that may bind Buyer or any of its Affiliates upon or as a result of the
consummation of the transactions contemplated by this Agreement;

 

(x)                                   containing any material noncompetition or
other business limitation restrictions binding on (A) the Station or its
employees or consultants or (B) any Affiliate of the Station, in each case that
may bind Buyer or any of its Affiliates upon or as a result of the consummation
of the transactions contemplated by this Agreement;

 

(xi)                                involving a material partnership, joint venture or similar agreement
with another party, in each case that may bind Buyer or any of its Affiliates
upon or as a result of the consummation of the transactions contemplated by
this Agreement;

 

(xii)                             with Parent or any of its Affiliates;

 

(xiii)                          with any director or officer of either Seller or with any “associate”
or any member of the “immediate family” (as such terms are respectively defined
in Rules 12b-2 and 16a-1 of the 1934 Act) of any such director or officer;

 

(xiv)                         involving compensation to any employee or consultant in excess of
$300,000 or for the employment of any employee or consultant for a term greater
than three (3) years; and involving any labor agreement or collective
bargaining agreement of the Station; and

 

20

 

(xv)                            relating to the use of the Station’s digital bit stream.

 

(b)                                 No default (with the lapse of time or giving
of a notice or both) on the part of either Seller and, to the Knowledge of
Sellers any other party thereto, exists under any of the Contracts other than
such defaults that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

 

(c)                                  Each Contract is in full force and effect and
constitutes the legal and binding obligation of, and is legally enforceable
against, Parent or such Seller party thereto in accordance with its terms and,
to the Knowledge of the Sellers, is legally enforceable against the other
parties thereto, (except for certain non-compete clauses in contracts governed
by the laws of the State of California), except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(d)                                 Parent or Sellers have previously furnished
to Buyer prior to the date of this Agreement true and complete copies of all
written Contracts listed on Disclosure Schedule Section 3.05(a)
(except as noted thereon), including all amendments, modifications and
supplements thereto, and any assignments thereof, and have previously described
to Buyer the material provisions of all oral and pending Contracts .

 

(e)                                  There are no leasing commissions or similar
payments due, arising out of, resulting from or with respect to any Lease that
are owed by the Sellers.

 

(f)                                    Disclosure Schedule Section 3.05(a)(ii)
sets forth, as of the date set forth thereon, all Contracts relating to Program
Rights, true and complete copies of which Contracts have been previously
furnished to Buyer prior to the date of this Agreement (except as noted
thereon).  Disclosure Schedule Section 3.05(f)
sets forth (i) an accurate schedule of material programming payments and
usage report in respect of Program Rights for calendar year 2004, (ii) an
accurate schedule setting forth the material feature film inventory of the
Station as of October 31, 2004, (iii) an accurate schedule of the
material cash programming assets of the Station dated as of October 31,
2004, (iv) an accurate schedule of the material cash programming
liabilities of the Station dated as of October 31, 2004 and (v) an
accurate schedule of the material barter programming assets dated as of October 31,
2004.

 

Section 3.06                            Intangible Property

 

(a)                                  There are no claims, demands or proceedings
pending or, to the Knowledge of Sellers, threatened by any third party
pertaining to or challenging either Seller’s right to use any of the Intangible
Property or that any Intangible Property or any services provided, process used
or products manufactured, produced or used or sold by either Seller do or may
conflict with, or infringe or otherwise violate the rights of third parties.

 

(b)                                 There is no trademark, trade name, patent or
copyright owned by a third party that either Seller is using in the Business
without valid license to do so.

 

(c)                                  Except for the Excluded Assets, the
Intangible Property includes all Copyrights, Patents and Trademarks, including
rights in and to call letters used in the operation of the Station.

 

(d)                                 Except as set forth on Disclosure Schedule Section 3.06(e),
all material owned Intangible Property, including the call letters necessary
for or used in the Business, has been duly applied for or registered in, filed
in or issued by, as applicable, the appropriate Governmental Authority where
such registration, filing or issuance is necessary for the Business, and all
such filings, registrations and issuances are valid and in good standing.

 

(e)                                  Except for the Excluded Assets and except as
set forth on Disclosure Schedule Section 3.06(e), all material
Copyrights and Trademarks that are registered or filed are described, listed or
set forth on Disclosure Schedule Section 3.06(e)(1) and Section 3.06(e)(2),
respectively, all of which are

 

21

 

transferable
to Buyer without the consent of any third party and none of which have been
licensed to any third party.

 

(f)                                    Sellers have not received any written notice,
or otherwise have Knowledge, that any of the owned Intangible Property is the
subject of a judicial or administrative finding, opinion or office action or
has been adjudged invalid, unenforceable or unregistrable in whole or in part.  To the Knowledge of Sellers each Intangible
Property is valid and enforceable.

 

Section 3.07                            Real Property

 

(a)                                  The applicable Seller has (A) good,
marketable and insurable fee simple absolute or (B) valid leasehold or other
interests, as applicable, in the Real Property, in each case free and clear of
any and all Liens other than (i) Permitted Liens and, (ii) Liens that will be
discharged on or prior to the Closing Date by the Sellers.  Neither of the Sellers owns, leases,
subleases, licenses or uses any real property in the operation of the Station
other than the Real Property.  True and
complete copies of (i) the last deed of record, title insurance policies and
surveys pertaining to any owned Real Property and (ii) the Leases, in each case
have heretofore been furnished by the Sellers to Buyer.  Upon the Closing, all right, title and
interest of Sellers in, to and under the Leases and the Real Property will be
transferred to Buyer free and clear of all Liens other than Permitted Liens.

 

(b)                                 Neither Seller nor any Affiliate thereof has
subjected the Real Property to any easements, rights, duties, obligations,
covenants, conditions, restrictions, limitations or agreements not of record
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(c)                                  Neither Seller has received written notice of
or otherwise has Knowledge of any pending condemnation or similar proceeding
affecting the Real Property or any portion thereof, and to the Knowledge of
Sellers, no such condemnation or similar proceeding is presently contemplated
or threatened that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(d)                                 Neither Seller has received any written
notice from any insurance company of any defects or inadequacies in the Real
Property or any part thereof that would materially adversely affect the
insurability of the Real Property or the premiums for the insurance
thereof.  Neither Seller has received any
notice from any insurance company that has issued or refused to issue a policy
with respect to any portion of the Real Property or by any board of fire
underwriters (or other body exercising similar functions) requesting the
performance of any repairs, alterations or other work with which compliance has
not been made.

 

(e)                                  Except as disclosed on Disclosure Schedule Section 3.07(e),
there are no parties in possession of any portion of the Real Property other
than Sellers, whether as lessees, sublessees, licensees or tenants at will.

 

(f)                                    The current use of the Real Property does not
violate any restrictive covenants affecting the Real Property or otherwise
violate in any material respect any Law. 
To the Knowledge of Sellers, there is no Law now in existence the
operation of which would require either Seller to make any material expenditure
to modify or improve any of the Real Property or to bring such Real Property
into substantial compliance therewith. 
To the Knowledge of Sellers, there are no facts that would prevent any
portion of the Real Property from being occupied after the Closing in
substantially the same manner as currently occupied.

 

(g)                                 The Real Property has reasonably adequate
access to and from completed, dedicated and accepted public roads, and there is
no pending or, to the Knowledge of Sellers, threatened Action that would
materially impair or curtail such access. 
All towers, guy anchors, buildings and other improvements are wholly
within the lot limits of the applicable Real Property and do not encroach on
any adjoining premises, except for such encroachments as could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.  There are no material
encroachments upon any of the owned parcels

 

22

 

of
Real Property or adjoining parcels by buildings, structures or improvements
that could reasonably prevent the use of each such parcel of Real Property as
it is currently used.

 

(h)                                 There are no structural, electrical,
mechanical, plumbing, air conditioning, heating or other defects in the
buildings located on the Real Property, and the roofs of the buildings located
on the Real Property are free from leaks and in good condition, except for such
defects or leaks as could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

(i)                                     All amounts owing to any architect,
contractor, subcontractor or materialman for labor or materials performed,
rendered or supplied to or in connection with the Real Property have been or
shall have been paid prior to Closing.

 

Section 3.08                            Title to Purchased Assets;
Liens.  Sellers have good and valid title to or valid
leasehold interests in all of the Purchased Assets, free and clear of any and
all Liens (other than Permitted Liens and Liens that will be discharged by
Sellers on or prior to the Closing Date). 
At the Closing, all of the Purchased Assets shall be transferred to
Buyer free and clear of any and all Liens (other than Permitted Liens).

 

Section 3.09                            Sufficiency of Assets. 
Other then the Excluded Assets, the Purchased Assets constitute all of
the property and assets used or held for use in the Business and constitute all
of the assets and properties necessary for the continued operation of the
Business as currently conducted.

 

Section 3.10                            Financial Information

 

(a)                                  True and complete copies of the balance
sheets as at December 31, 2002 and 2003 and as at October 31, 2004
for the Station (the October 31, 2004 balance sheet of the Station is
referred to herein as the “Reference Balance
Sheet”) and the related statements of income for each of the years
ended December 31, 2002 and 2003 and in the period ended October 31,
2004 are attached as Disclosure Schedule Section 3.10(a)
(collectively, the “Reference Financial
Statements”).

 

(b)                                 The Reference Financial Statements (A) are in
accordance with the books and records of the Station, (B) have been prepared in
accordance with GAAP (it being understood that the Reference Financial
Statements do not contain footnotes and are subject to normal year-end
adjustments) except as set forth on Disclosure Schedule Section 3.10(b)(1),
(C) fairly present in all material respects the financial condition of the
Station as at the dates indicated and the results of its operations and cash
flows for the periods then ended and (D) do not reflect any (i) unusual or
infrequently occurring items or (ii) related party transactions, in each case,
except as set forth on Disclosure Schedule Section 3.10(b)(2).

 

(c)                                  The books and records of the Station (A) reflect
all items of income and expense and all assets and liabilities required to be
reflected therein in accordance with GAAP except as set forth on Disclosure Schedule Section 3.10(b)(i)  and (B) are in all material respects complete
and correct.

 

(d)                                 A true and complete copy of the 2004 monthly
operating budget is attached hereto as Disclosure Schedule Section 3.10(d).

 

Section 3.11                            Absence of Certain Changes
or Events

 

(a)                                  Except as disclosed in Disclosure Schedule Section 3.11(a),
since the Balance Sheet Date, the Business has been conducted in the ordinary
course consistent with past practice.

 

(b)                                 Since the Balance Sheet Date through the date
hereof and except as set forth in Disclosure Schedule Section 3.11(b)
or as contemplated by this Agreement, there has not been:

 

23

 

(i)                                     any event, occurrence, development or state
of circumstances or facts that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect;

 

(ii)                                  any incurrence, assumption or guarantee by
either Seller of any indebtedness for borrowed money with respect to the
Business other than in the ordinary course of business consistent with past
practices, in each case that may bind or obligate Buyer or any of its
Affiliates in any way upon or as a result of the consummation of the
transactions contemplated hereby;

 

(iii)                               any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances, capital contributions or
investments made in the ordinary course of business consistent with past
practices, in each case that may bind or obligate Buyer or any of its
Affiliates in any way upon or as a result of the consummation of the
transactions contemplated hereby;

 

(iv)                              any damage, destruction or loss, whether or not covered by insurance,
with respect to the property and assets of the Station having a replacement
cost of more than $25,000 for any single loss or $100,000 for all such losses;

 

(v)                                 instituted or settled any material legal
proceeding by either Seller relating to the Business;

 

(vi)                              any transaction or commitment made, or any contract or agreement
entered into, by either Seller relating to the Business or Purchased Assets
(including the acquisition or disposition of any assets) or any relinquishment
by either Seller of any contract or other right, in either case, other than
transactions and commitments in the ordinary course of business consistent with
past practices and those contemplated by this Agreement;

 

(vii)                           any material change in the Station’s usage or pattern of usage of
Program Rights, any material change in the broadcast hours or in the
percentages of types of programming broadcast by the Station or any other
material change in the programming policies of the Station;

 

(viii)                        the creation or other incurrence by either Seller of any Lien on any
asset relating to the Business other than Permitted Liens;

 

(ix)                                any (A) establishment of any bonus, insurance, employment, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including any grant of any stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan (or any amendment to any such existing agreement), (B)
grant of any severance or termination pay to any officer of any Seller or
employee of the Business, or (C) increase or change to the rate or nature of
the compensation (including wages, salaries and bonuses) that is paid or
payable or to become payable to any Person employed by the Station, except (x)
in each case, as may be required by Law or existing contracts or applicable
collective bargaining agreements that have previously been disclosed to Buyer
and (y) in the ordinary course of business consistent with past practices with
respect to Persons who are not either (i) responsible for any principal
administrative, operating or financial function of the Business or (ii) talent;

 

(x)                                   any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Station, which
employees were not subject to a collective bargaining agreement at the Balance
Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to any employees of the Station;

 

(xi)                                any sale of Real Property;

 

24

 

(xii)                             any change in any method of accounting or accounting practice by either
Seller with respect to the Business except for any such change required by
reason of a concurrent change in GAAP; or

 

(xiii)                          any agreement or commitment to do anything set forth in this Section 3.11.

 

Section 3.12                            Absence
of Litigation. 
Except as set forth in Disclosure Schedule Section 3.12(a)(1),
there is no material Action relating to the Station or the Business pending or,
to the Knowledge of Sellers, threatened against or affecting either Seller or
any of its or their properties or assets before any Governmental
Authority.  Except as set forth in
Disclosure Schedule Section 3.12(a)(2), neither Seller nor any of its
or their properties or assets is operating under or subject to any Governmental
Order that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

Section 3.13                            Compliance
with Laws.  Except as set forth in
Disclosure Schedule Section 3.13 and except for matters relating to
the FCC which are addressed by Section 3.14, none of Parent or Sellers is
in material violation of, and has not since January 1, 2003 violated in
any material respect, and, to the Knowledge of Sellers, is not under
investigation with respect to and has not been threatened to be charged with or
given notice of any material violation of, any applicable Law or Governmental
Order, except for violations that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

Section 3.14                            FCC Matters; Qualifications

 

(a)                                  Disclosure Schedule Section 3.14(a)(1)
contains a true and complete list of the FCC Licenses, and there are no other
licenses, permits or other authorizations from the FCC required for the lawful
operation of the Station substantially in the manner now operated.  Sellers have delivered true, correct and
complete copies of the FCC Licenses to Buyer, including any and all amendments
and modifications thereto.  The FCC
Licenses were validly issued by the FCC, are validly held by Sellers and are in
full force and effect.  All FCC actions
with respect to the Station’s main analog and digital licenses are Final
Orders.  The FCC Licenses have been
issued for the full terms customarily issued to a broadcast television station
in the State of California, and the FCC Licenses are not subject to any
condition except for conditions applicable to broadcast television licenses
generally or otherwise disclosed in Disclosure Schedule Section 3.14(a)(2).  All required FCC regulatory fees with respect
to the FCC Licenses have been paid. 
Sellers has filed or made all applications, reports, and other
disclosures required by the FCC to be filed or made by Sellers with respect to
the Station in the current license term. 
Except as set forth on Disclosure Schedule Section 3.14(a),
none of Parent or Sellers have any reason to believe that the FCC will not
renew the FCC Licenses in the ordinary course.

 

(b)                                 Except as set forth on Disclosure Schedule Section 3.14(b),
the Station, including both analog Channel 13 and digital Channel 25, is
operating at full power and not pursuant to any temporary waiver.  Sellers have constructed and are operating
DTV Channel 25 in accordance with its license for that channel.  Except as set forth on Disclosure Schedule Section 3.14(b),
Sellers have no applications pending before the FCC relating to the operation
of the Station.

 

(c)                                  Except as set forth in Disclosure Schedule Section 3.14(c),
no qualifications, registrations, filings, privileges, franchises, licenses,
permits, approvals or authorizations of any Governmental Authority other than
the FCC Licenses are required to own and operate the Station as a television
broadcast station in substantially the same manner as the Station is being
operated as of the date hereof and the Closing Date.

 

(d)                                 Except as set forth on Disclosure Schedule Section 3.14(d)(1),
Sellers have operated the Station, its physical facilities, electrical and
mechanical systems and transmitting and studio equipment substantially in compliance
with the Communications Act and the FCC Licenses.  To the Knowledge of Sellers, all antenna
support structures used in the operation of the Stations have been registered
with the FCC, if registration is required, and comply with all other requirements
of the FCC and the Federal Aviation Administration.  Except as set forth in Disclosure Schedule Section 3.14(d)
(2), to the Knowledge

 

25

 

of
Sellers, there are no applications, petitions, complaints, proceedings or other
actions pending or threatened before the FCC relating to the Station, other
than proceedings affecting the broadcast television industry generally.

 

(e)                                  Sellers are qualified under the
Communications Act to assign the FCC Licenses to Buyer.  To the Knowledge of Sellers, there is no fact
or circumstance relating to the Station or either Seller or any of their
Affiliates that would cause the FCC to deny the FCC Applications.  Except as set forth on Disclosure Schedule Section 3.14(e),
none of Parent or Sellers have any reason to believe that the FCC Applications
might be challenged or might not be granted by the FCC in the ordinary course
due to any fact or circumstance relating to the Sellers’ operation of the
Station or either of Sellers or any of their Affiliates.

 

Section 3.15                            Cable and Satellite Matters

 

(a)                                  Disclosure Schedule Section 3.15(a)
contains a list, including channel positions, of all cable television systems
in the Sacramento/Stockton/Modesto Nielsen Designated Market Area (the “Sacramento DMA”) on which the Station’s
analog signal is presently carried (“Market
Cable Systems”).  Sellers have
timely made must-carry elections or entered into retransmission consent
agreements with respect to the Market Cable Systems.  No Market Cable System has provided written
notice to Sellers of any signal quality issue or failed to respond to a request
for carriage or, to the Knowledge of Sellers, sought any form of relief from
carriage of the Station from the FCC. 
Sellers have not received any written notice of any Market Cable System’s
intention to delete the Station from carriage or to change the Station’s
channel position on such cable system. 
Sellers have no petition pending before the FCC to extend the Station’s
market for cable carriage purposes beyond the Sacramento DMA.

 

(b)                                 Disclosure Schedule Section 3.15(b)
contains a list of the cable systems that, to the Knowledge of Sellers, carry
the Station, including the Station’s channel position, where known, on such
cable systems outside the Sacramento DMA.

 

(c)                                  Disclosure Schedule Section 3.15(c)
contains a list of all retransmission consent, channel positioning or other
agreements with cable systems with respect to the Station, and Sellers have
previously furnished Buyer with true and correct copies of all such agreements.

 

(d)                                 Sellers timely made must-carry elections or
have entered into retransmission consent agreements with DirectTV and EchoStar,
each of which provide local-into-local service in the Sacramento DMA.  Disclosure Schedule Section 3.15(d)(1)
lists these must-carry elections or retransmission consent agreements, and
Sellers have previously furnished Buyer with true and correct copies of these
elections or agreements.  Neither DirecTV
nor EchoStar has advised Sellers or any of their Affiliates of any signal
quality or other issues with respect to the Station’s must-carry or
retransmission consent elections, and the Station is being carried by DirecTV
and EchoStar in the Sacramento DMA on such carrier’s satellite serving such
market.  Except as disclosed on
Disclosure Schedule Section 3.15(d)(2), none of the Sellers nor any
of their Affiliates has unresolved disputes with satellite carriers with
respect to the carriage of the Station.

 

Section 3.16                            Employees; Labor Matters

 

(a)                                  Disclosure Schedule Section 3.16(a)
sets forth a true and complete list, dated as of the date set forth thereon, of
all individuals employed by the Station, including the names, date of hire,
current rate of compensation, employment status (i.e., active, disabled, on
authorized leave and reason therefor), department, title, whether covered by a
Bargaining Agreement and whether full-time, part-time or per-diem.  Each such employee is employed by a Seller.

 

(b)                                 Except as set forth on Disclosure Schedule Section 3.16(b),
the Business is not subject to or bound by any labor agreement or collective
bargaining agreement.  Sellers are in
compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and are not engaged in any unfair labor practice, except for such

 

26

 

compliance
the failure of which or the engagement of which could not reasonably be
expected to have a Material Adverse Effect. 
There is no unfair labor practice complaint pending or, to the Knowledge
of Sellers, threatened against either Seller before the National Labor
Relations Board.  No strike or other
labor dispute involving either Seller is pending or, to the Knowledge of
Sellers, threatened, and, to the Knowledge of Sellers, there is no activity
involving any Station Employee seeking to certify a collective bargaining unit
or engaging in any other organizational activity.

 

Section 3.17                            Employee Benefit Plans

 

(a)                                  Disclosure Schedule Section 3.17(a)(1)
identifies each Employee Plan.  Sellers
have previously furnished to Buyer copies of the Employee Plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof.  Disclosure Schedule Section 3.17(a)(2)
identifies each Employee Plan that is (i) a Multiemployer Plan, (ii) a Title IV
Plan or (iii) maintained in connection with any trust described in Section 501(c)(9)
of the Code.  The Sellers have provided
Buyer with complete age, salary, service and related data as of October 31,
2004 for all employees covered under any Employee Plan.

 

(b)                                 Except as set forth on Disclosure Schedule Section 3.17(b),
neither Seller nor any of its ERISA Affiliates has (i) engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably
expects to incur prior to the Closing Date (A) any liability under Title IV of
ERISA arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(B) any liability under Section 4971 of the Code that in either case could
become a liability of Buyer or any of its ERISA Affiliates after the Closing
Date.  Except as set forth on Disclosure Schedule Section 3.17(b),
no condition exists that (i) could constitute grounds for termination by the
PBGC of any employee benefit plan that is subject to Title IV of ERISA that is
maintained by either Seller or any of its ERISA Affiliates or (ii) presents a
material risk of complete or partial withdrawal from any multiemployer plan, as
defined in Section 3(37) of ERISA, which could result in either Seller or
Buyer or any ERISA Affiliate of any of them incurring a withdrawal liability
within the meaning of Section 4201 of ERISA.  The assets of either Seller are not now, nor
will they after the passage of time be, subject to any Lien imposed under Code Section 412(n)
by reason of a failure of either Seller to make timely installments or other
payments required under Code Section 412. 
Except as set forth on Disclosure Schedule Section 3.17(b), if
a “complete withdrawal” by Sellers and all of their ERISA Affiliates were to
occur as of the Closing Date with respect to all Multiemployer Plans, neither
Seller nor any of its ERISA Affiliates would incur any material withdrawal
liability under Title IV of ERISA.

 

(c)                                  Each Employee Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period since its adoption; each trust created under any
such Plan is exempt from Tax under Section 501(a) of the Code and has been
so exempt since its creation.  Sellers
have previously provided Buyer with the most recent determination letter of the
IRS relating to each such Employee Plan. 
Except as could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, each Employee Plan has been maintained
in substantial compliance with its terms and with the requirements prescribed
by any and all applicable statutes, orders, rules and regulations, including
but not limited to ERISA and the Code.

 

(d)                                 Neither Seller has any current or projected
liability in respect of post-employment or post-retirement health or medical or
life insurance benefits for retired, former or current employees of such or
other Seller, except as required to avoid excise tax under Section 4980B
of the Code.  No condition exists that
would prevent either Seller from amending or terminating any Employee Plan
providing health or medical benefits in respect of any active employee of the
Station other than limitations imposed under the terms of a collective
bargaining agreement.

 

(e)                                  All contributions and payments accrued under
each Employee Plan, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending
on the Closing Date, will be discharged and paid on or prior to the Closing
Date except to the extent (i) reflected as a liability on the Closing Balance
Sheet or (ii) retained by Sellers.  There
has been no

 

27

 

amendment
to, written interpretation of or announcement (whether or not written) by
either Seller or any of its Affiliates relating to, or change in employee
participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such Employee Plan above the level of the
expense incurred in respect thereof for the most recent fiscal year ended prior
to the date hereof.

 

(f)                                    Except as set forth on Disclosure Schedule Section 3.17(f),
there is no contract, plan or arrangement (written or otherwise) covering any
employee or former employee of the Station that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.

 

(g)                                 Except as set forth on Disclosure Schedule Section 3.17(g)
and except as otherwise provided in Section 8.07, no employee or former
employee of the Station will become entitled to any bonus, retirement,
severance, job security or similar benefit or enhanced such benefit (including
acceleration of vesting or exercise of an incentive award) as a result of the
transactions contemplated hereby.

 

(h)                                 Neither Seller has currently in place any
stay bonus plan or arrangement relating to the Station.

 

Section 3.18                            Environmental Matters

 

(a)                                  Except as would not have a Material Adverse
Effect or as otherwise disclosed on Disclosure Schedule Section 3.18(a):

 

(i)                                     no notice, demand, request for information,
citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed and no investigation or Action or review is pending
or, to the Knowledge of Sellers, threatened by any Governmental Authority or
other Person with respect to any matters relating to the Station or either
Seller with respect to the Station and relating to or arising out of any Environmental
Law;

 

(ii)                                  there are no liabilities of or relating to
the Station or either Seller with respect to the Station of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, arising under or relating to any Environmental Law, and to the
Knowledge of Sellers there are no facts, conditions, situations or set of
circumstances that could reasonably be expected to result in or be the basis
for any such liability;

 

(iii)                               no Hazardous Material, incinerator, sump, surface impoundment, lagoon,
landfill, septic, wastewater treatment or other disposal system or underground
storage tank (active or inactive) is or has been present at, on or under the
Real Property or any property now or previously owned, leased or operated by
the Station or either Seller with respect to the Station except, in each case,
in compliance with Environmental Laws;

 

(iv)                              no Hazardous Material has been Released in violation of Environmental
Laws at, on or under any property now or previously owned, leased or operated
by either Seller in connection with the Business or the Station;

 

(v)                                 no property now or previously owned, leased
or operated by either Seller in connection with the Business or the Station
nor, to the Knowledge of Sellers, any property to which either Seller (in
connection with the Business) or the Station has, directly or indirectly,
transported or arranged for the transportation of any Hazardous Material is
listed or, to the Knowledge of Sellers, proposed for listing, on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal, state or local list of sites requiring
investigation or clean-up; and

 

28

 

(vi)                              the Business is and the Sellers (to the extent relating to the
Business) are in compliance in all material respects with all Environmental
Laws and have obtained and are in compliance with all Environmental Permits;
such Environmental Permits are valid and in full force and effect and will not
be terminated or impaired or become terminable, in whole or in part, as a
result of the transactions contemplated hereby.

 

(b)                                 Since January 1, 1999, there has been no
environmental investigation, study, audit, test, review or other analysis
conducted of which either Seller has Knowledge in relation to the Station or
any property or facility now or previously owned, leased or operated by the
Station that has not been previously delivered to Buyer.

 

Section 3.19                            Taxes.  Except as set forth in Disclosure Schedule Section 3.19,
(a) Parent and each Seller has timely filed or been included in, or will timely
file or be included in, all material Tax Returns required to be filed by it or
in which it is to be included with respect to Taxes for any period ending on or
before the Closing Date, (b) all material Taxes that are due with respect to
Parent and Sellers have been paid except to the extent such Taxes are being
contested in good faith, (c) no deficiency for any material amount of Tax has been
asserted or assessed by a Tax authority against Parent or either Seller or for
which Parent or either Seller may be liable, (d) there are no judicial
proceedings with respect to material Taxes due from Parent or either Seller;
and (e) there is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, could give rise to the payment of
any amount that would not be deductible by reason of Section 280G of the
Code.

 

Section 3.20                            Brokers.  Except for Bear Stearns & Co. Inc., whose
fees will be paid by Parent or the Sellers, there is no broker, finder,
investment banker or other intermediary that has been retained by or is
authorized to act on behalf of Parent or either Seller who or that might be
entitled to any fee or commission from Buyer or any of its Affiliates in
connection with the transactions contemplated by this Agreement or the
Ancillary Agreements.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Parent and Sellers
as follows:

 

Section 4.01                            Corporate
Existence and Power.  Buyer is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of New York and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.

 

Section 4.02                            Corporate Authorization

 

(a)                                  The execution and delivery of this Agreement
and the Ancillary Agreements by Buyer, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby and thereby are within Buyer’s corporate
powers and have been duly authorized by all requisite corporate action on the
part of Buyer.

 

(b)                                 This Agreement has been, and at the Closing
each Ancillary Agreement will be, duly executed and delivered by Buyer.  This Agreement (assuming due authorization,
execution and delivery by Parent and each Seller) constitutes, and each
Ancillary Agreement to which Buyer will be a party will constitute when
executed and delivered by Buyer, the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar Laws
affecting or relating to enforcement of creditors’ rights generally and general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).

 

29

 

Section 4.03                            Governmental
Authorization. 
The execution, delivery and performance by Buyer of this Agreement and
each Ancillary Agreement and the consummation of the transactions contemplated
hereby and thereby require no action by or in respect of, or filing with or
notification to, any Governmental Authority other than (a) compliance with any
applicable requirements of the HSR Act, (b) the FCC, and (c) any such action by
or in respect of or filing with any Governmental Authority as to which the
failure to take, make or obtain could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Buyer or on
Buyer’s ability to perform its obligations under this Agreement or the Ancillary
Agreements.

 

Section 4.04                            Noncontravention.  The execution, delivery and performance of
this Agreement by Buyer and each Ancillary Agreement to which Buyer will be a
party and the consummation of the transactions contemplated hereby and thereby
do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws of Buyer, (b) assuming compliance with the matters
referred to in Section 4.03, conflict with or violate any Law or
Governmental Order applicable to Buyer, (c) require any consent or other action
by or notification to any Person under, constitute a default under, or give to
any Person any rights of termination, amendment, acceleration or cancellation
of any right or obligation of Buyer or to a loss of any benefit relating to the
Business to which Buyer is entitled under, any provision of any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other agreement or instrument to which Buyer is a party or by which any of
Buyer’s assets is or may be bound or (d) result in the creation or imposition
of any Lien on any asset of Buyer, except for Permitted Liens, except, in the
cases of clauses (b), (c) and (d), for any such violations, consents, actions,
defaults, rights or losses as could not have, individually or in the aggregate,
a material adverse effect on Buyer or on Buyer’s ability to perform its
obligations under this Agreement or the Ancillary Agreements.

 

Section 4.05                            Absence
of Litigation.  There are no Actions
pending against or, to Buyer’s knowledge, threatened against Buyer before any
Governmental Authority that in any manner challenges or seeks to prevent,
enjoin, alter or delay materially the transactions contemplated by this
Agreement.

 

Section 4.06                            FCC
Qualifications.  Except as set forth
on Disclosure Schedule Section 4.06, Buyer is legally, technically,
financially and otherwise qualified under the Communications Act to acquire the
FCC Licenses and own and operate the Station.

 

Section 4.07                            Brokers.  There is no broker, finder, investment banker
or other intermediary that has been retained by or is authorized to act on
behalf of Buyer who or that might be entitled to any fee or commission from
either Seller or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.

 

ARTICLE V

COVENANTS OF PARENT and SELLERS

 

Section 5.01                            Operations
Pending Closing.  Except as otherwise
set forth herein and subject to the provisions of Section 7.03 regarding
control of the Station, after the date of this Agreement and prior to the
Closing, Sellers shall:

 

(a)                                  except as set forth on Schedule Section 5.01(a),
operate or cause the operation of the Station in the ordinary course of
business consistent with past practices and use commercially reasonable best
efforts to preserve substantially intact the relationships of the Station with
its customers, employees, suppliers, licensors, licensees, distributors and
others with whom the Station deals;

 

(b)                                 operate the Station substantially in compliance
with the Communications Act and not cause or permit, or agree or commit to
cause or permit, by act or failure to act, any of the FCC Licenses to expire or
to be revoked, suspended or adversely modified, or take or fail to take, any
action that would be reasonably likely to cause the FCC or any other
Governmental Authority to institute proceedings for the suspension, revocation
or adverse modification of any of the FCC Licenses;

 

30

 

(c)                                  not make any change in any method of
accounting or accounting practice utilized in the preparation of the Reference
Financial Statements, except for any such change required by reason of a
concurrent change in GAAP;

 

(d)                                 not sell, lease, license or otherwise dispose
of any assets or properties relating to the Station except (i) pursuant to
existing contracts or commitments or (ii) in the ordinary course of business
consistent with past practices;

 

(e)                                  not enter into or agree to enter into any
agreement to sell, purchase or encumber any parcel of Real Property;

 

(f)                                    maintain the Equipment in good operating
condition, ordinary wear and tear excepted, and replace with a substantially
equivalent asset of substantially equivalent quality or utility any of the
Equipment that shall not be working or shall be lost, stolen or destroyed;

 

(g)                                 except as otherwise provided in Section 8.07,
(A) not hire any Person without Buyer’s prior written consent, except for
Persons replacing Station Employees at equivalent compensation; (B) not increase
or otherwise change the rate or nature of, or prepay, the compensation
(including wages, salaries and bonuses) that is paid or payable to any Person
employed by the Station, except in the ordinary course of the business
consistent with past practices or pursuant to existing compensation and fringe
benefit plans, practices and arrangements that have been furnished (in the case
of such plans) or disclosed (in the case of such practices and arrangements) to
Buyer prior to the date of this Agreement; (C) not enter into, renew or allow
the renewal of or entering into, any employment or consulting agreement or
other contract or arrangement with respect to the performance of personal
services for the Station without Buyer’s prior written consent; (D) not increase
or otherwise change the rate or nature of severance or other termination
benefits that are paid or payable to any Person employed by the Station; and
(E) not agree or commit to do any of the foregoing provided, however, that with
respect to clauses (A) and (C) of this Section 5.01(g), if Buyer does not
provide its consent, Sellers may nonetheless take such action(s) as described
in such clauses, provided that Buyer does not upon consummation of the
transactions contemplated by this Agreement incur any liability or obligation
relating to or arising from such action(s).

 

(h)                                 except with Buyer’s prior written consent,
such consent not to be unreasonably withheld or delayed and except as otherwise
provided in Section 8.07, (A) not enter into, or become obligated under,
any agreement or commitment on behalf of the Station except for: (x) any
individual Program Rights agreement with a term of six (6) months or less or
that involve payments or receipts of $200,000 or less; provided, however, that
in no event may either Seller enter into Program Rights agreements that in the
aggregate involve payments or receipts of $500,000 or more without Buyer’s
prior written consent and, provided further, that Buyer may not acquire any
Program Rights for which Buyer does not grant its consent pursuant to this Section 5.01(h)
for the benefit of television station KMAX-TV in Sacramento, and (y) any other
agreement or commitment (other than advertising sales contracts for cash only)
with a term of six (6) months or less or that involve payments or receipts of
$50,000 or less; provided, however, that in no event may either Seller enter
into such other agreements or commitments that in the aggregate involve
payments or receipts of $250,000 or more without Buyer’s prior written consent,
or (B) not change, amend, terminate or otherwise modify or agree or commit to
change, amend, terminate or otherwise modify any Contract (other than
advertising sales contracts for cash only) in any material respect except for
those Contracts that terminate or expire prior to the Effective Time by their
own terms; provided, however that neither Seller shall enter into or agree or
commit to enter into any agreements or transactions on behalf of the Station
with one another, with Affiliates of Sellers or with other divisions of either
Seller without Buyer’s prior written consent;

 

(i)                                     without limiting the restrictions contained
in Section 5.01(h): (A) keep Buyer apprised of material developments in
negotiations for existing and proposed Program Rights agreements and promptly
provide Buyer with copies of all Program Rights agreements entered into by or
on behalf of the Station; and (B) use commercially reasonable best efforts to
include the following language in each Program Rights agreement to be negotiated
and executed from and after the date of this Agreement other than such
agreements set forth on Disclosure Schedule Section 3.05(a):  “If Station becomes commonly owned or

 

31

 

operated
with any television station in the Sacramento Nielsen Designated Market Area,
the programs may be broadcast on the Station or such other station(s) or any of
them.”

 

(j)                                     not enter into or agree or commit to enter
into any new Tradeout Agreement with a value in excess of $20,000 individually,
and, $200,000 in the aggregate, relating to the Station prior to Closing that
will not be fully performed prior to the Closing without Buyer’s prior written
consent;

 

(k)                                  (A) utilize the Program Rights only in the
ordinary course of business consistent with past practices and substantially in
accordance with the anticipated usage of such Program Rights as set forth on
Disclosure Schedule Section 3.05(f) and (B) not sell or otherwise
dispose of any such Program Rights and make payments on Program Rights and
agreements on a basis consistent with past practices and otherwise in
accordance with this Agreement;

 

(l)                                     use their commercially reasonable best
efforts to take all appropriate, reasonable action to protect the present
service areas of the Station from increased electrical interference from other
stations, existing or proposed, and to exercise reasonable best efforts to
maintain or cause the maintenance of carriage, if any, of the Station’s signals
on all cable systems and satellite carriers;

 

(m)                               except as otherwise provided in Section 8.07,
not adopt, or agree or commit to adopt, any Employee Plan or other pension,
profit sharing, deferred compensation or similar plan, program or trust on
behalf of personnel of the Station, or modify or agree or commit to modify the
existing Plans insofar as they relate to personnel of the Station, other than
modifications or agreements or commitments to make any adoptions or
modifications that apply to similarly situated employees of Sellers;

 

(n)                                 in the event that the Bargaining Agreements
expire prior to the Effective Time, seek the consent of the appropriate
international and local union(s) to a short-term extension of the expiring
agreement(s) to enable Buyer to negotiate the terms of said agreement(s) after
the Effective Time, and, in the event the consent to such an extension is not
obtained, to confer in advance with Buyer about all applicable issues subject
to bargaining; provided that Sellers shall, to the extent permitted by
applicable Law, propose that such Bargaining Agreements provide for a term of
one year but in no event more than three (3) years;

 

(o)                                 promptly notify Buyer of any attempted or
actual collective bargaining organizing activity with respect to Station
Employees; and not propose, to the extent permitted by Law, that any collective
bargaining agreement applicable to any Station Employees be binding by any “successor”
employer of such employees;

 

(p)                                 follow the Station’s usual and customary
policy with respect to (A) extending credit for sales of broadcast time on the
Station and (B) collecting accounts receivable relating to the Station arising
from such extension of credit;

 

(q)                                 (A) promote and advertise the Station, (B)
promote and advertise, including on-air promotion and advertising, any program
that is currently airing on the Station, in each case consistent with past
practices, and (C) make expenditures or commitments to make expenditures
consistent with past practices;

 

(r)                                    not make or agree or commit to make any
capital expenditure greater than $5,000 in connection with any particular
project or greater than $50,000 in total, without Buyer’s prior written
consent, which consent shall not be unreasonably withheld;

 

(s)                                  timely make any must-carry/retransmission
election that must be made prior to the Closing Date, provided that Sellers
shall not elect must-carry (by default or otherwise) or enter into a
retransmission consent agreement without Buyer’s consent; provided that, after June 30,
2005, Sellers may, without Buyer’s consent, renew any existing retransmission
consent agreements on substantially the same terms; and

 

32

 

(t)                                    timely make the DTV channel election on FCC
Form 382 in accordance with Disclosure Schedule Section 5.01(t).

 

Section 5.02                            Access to Information

 

(a)                                  From the date hereof until the Closing Date,
upon reasonable notice, Sellers shall (i) give Buyer, its counsel, financial
advisors, auditors and other authorized representatives full access during
normal business hours to the offices, properties, books and records of the
Station, (ii) furnish to Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information relating to the Station as such Persons may from time to time
reasonably request and (iii) instruct the employees, counsel and financial
advisors of Sellers to cooperate with Buyer in its investigation of the
Station; provided, however, that Buyer may not communicate with Station Employees
other than the Station’s general manager, chief engineer, chief financial
officer and the Person primarily responsible for employment and labor matters,
in each case, without Sellers’ prior written consent, which consent shall not
be unreasonably withheld and that any investigation pursuant to this Section 5.02
shall be conducted in such manner as not to unreasonably interfere with the
conduct of the Business or any of the businesses or operations of Sellers or
any Affiliate of Sellers.  No investigation
by Buyer or other information received by Buyer shall operate as a waiver or
otherwise affect any representation, warranty or agreement given or made by
Sellers hereunder.

 

(b)                                 On and after the Closing Date, Sellers and
their Affiliates will hold, and will use their commercially reasonable best
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Buyer, Buyer’s Affiliates and the Business.

 

(c)                                  On and after the Closing Date, Sellers will
afford promptly to Buyer and its agents reasonable access to its books of
account, financial and other records (including accountant’s work papers),
information, employees and auditors to the extent necessary or reasonably
useful for Buyer in connection with any audit, investigation, dispute or
litigation or any other reasonable business purpose relating to the Business;
provided that any such access by Buyer shall not unreasonably interfere with
the conduct of the businesses or operations of Sellers or any Affiliate of
Sellers.

 

Section 5.03                            Title
Insurance and Surveys.  From the date
hereof until the Closing Date, Sellers shall cooperate with Buyer so that Buyer
can promptly obtain the following (at Buyer’s expense):

 

(a)                                  Preliminary reports on title covering a date
subsequent to the date of this Agreement, issued by the Title Company, which
preliminary reports shall contain commitments (the “Title Commitments”) of the Title Company to issue an ALTA
title insurance policy or policies insuring that Buyer shall receive good and
marketable fee simple title, as the case may be, to the owned Real Property
subject only to Permitted Liens and the standard pre-printed exceptions
contained in such policy and as otherwise provided for in this Agreement (the “Title Policy”).  The appropriate Seller shall execute a title
affidavit that shall be in form and substance reasonably satisfactory to such
Seller and the Title Company.

 

(b)                                 Surveys of the owned parcels of Real Property
as of a date subsequent to the date of this Agreement.

 

(c)                                  A Phase I Environmental Site Assessment
Report prepared consistent with ASTM Standard 1527-00 concerning the Real
Property from an environmental engineering firm retained by Buyer that shall
confirm, in a manner reasonably satisfactory to Buyer, the non-existence of any
Hazardous Materials, other than those not in violation of any Environmental
Law, on or about the Real Property or any material violation of Environmental
Laws.  Any audit report beyond a Phase I
Report shall be conducted by Buyer only with the prior written consent of
Sellers.

 

33

 

Section 5.04                            Financial
Reports Within twenty-five (25) days after the end of each month following
the date of this Agreement until the Closing Date, Sellers shall furnish Buyer
with a copy of the monthly unaudited financial reports for the Station
(including balance sheet and income statements) for each such month and the
fiscal year to the end of such month). 
All of the foregoing financial statements shall comply with the
requirements concerning financial statements set forth in Section 3.10(b).

 

Section 5.05                            Employees.  Sellers shall deliver to Buyer an updated
list, dated as of a date no more than fifteen (15) days prior to the
anticipated Closing Date, of all individuals employed by the Station, including
the names, date of hire, current rate of compensation, employment status (i.e.,
active, disabled, on leave and reason therefor), department, title, whether
covered by a Bargaining Agreement and whether full-time, part-time or per diem.

 

Section 5.06                            Estoppel
Certificates.  Sellers shall use
commercially reasonable best efforts to obtain promptly estoppel certificates,
in a form reasonably acceptable to Buyer, executed by each of the landlords of
the Leases and upon their receipt of any such estoppels, Sellers shall deliver
such estoppel certificates to Buyer as promptly as practicable but in no event
less than five (5) days prior to the Closing Date.

 

Section 5.07                            Risk of Loss

 

(a)                                  Upon the occurrence prior to the Closing of
any casualty loss, damage or destruction material to the operation of the
Station, Sellers shall promptly give Buyer written notice setting forth in
detail the extent of such loss, damage or destruction and the cause thereof if
known.  Sellers shall use their commercially
reasonable best efforts to commence promptly and thereafter to proceed
diligently to repair or replace any such lost, damaged or destroyed property
whether such loss, damage or destruction occurs prior to, on or after the date
of this Agreement, such efforts to include the payment of any applicable
insurance policy deductibles.  However,
(i) in the event that such repair or replacement is not fully completed
prior to the Closing Date, or (ii) the loss, damage or destruction causes
the Station to be off the air for ninety-six (96) consecutive hours or more (to
the extent such interruption of service was not caused by the Buyer), then
Buyer may elect to (A) consummate the transactions contemplated hereby on
the Closing Date, in which event Sellers shall assign to Buyer the portion of
the insurance proceeds, if any, not previously expended by the Sellers to
repair or replace the damaged or destroyed property, (B) delay the Closing
Date until fifteen (15) days after Sellers give written notice to Buyer of
completion of the repair or replacement of the damaged or destroyed property or
(C) in the case of clause (ii) only, terminate this Agreement;
provided that in no event shall Buyer delay the Closing to a date more than
sixty (60) days after the Termination Date; provided further that if Sellers
are unable through their commercially reasonable best efforts to complete such
repair or replacement within sixty (60) days after the casualty, Buyer may then
terminate this Agreement.

 

(b)                                 If the Closing does occur as contemplated
under Section 5.07(a)(i), the Purchase Price shall not be adjusted by
reason of such casualty or such assignment of the insurance proceeds to Buyer.

 

Section 5.08                            Transition Services

 

(a)                                  To facilitate a smooth transition of the web
content of the website located at Uniform Resource Locator www.kovrtv.com (the “Web Site”), the Sellers shall maintain the
Web Site in substantially the same manner as currently maintained for a period
no longer than ninety days from the Closing Date; provided that Buyer shall
provide Sellers with the information necessary to maintain the Web Site in such
manner.

 

(b)                                 To facilitate a smooth transition of the
centralized software known as PALAS and Oracle, the Sellers shall provide to
the Station for a period not to exceed 90 days after Closing (i) any rights to
such software used by the Station prior to Closing and (ii) access to
applicable employees during normal business hours with respect to the operation
of such software.

 

34

 

Section 5.09                            Obligations
of Sellers.  Parent agrees to cause
the due and punctual performance and observance by each Seller (or its
assignee) of all the terms, covenants, conditions, agreements and undertakings
on the part of such Sellers, to be performed or observed under this Agreement
and the Ancillary Agreements, in accordance with the terms thereof, including
the punctual payment when due of all obligations of such Sellers under this
Agreement and the Ancillary Agreements. 
In the event that such Seller shall fail in any manner whatsoever to
perform or observe any of its obligations hereunder or under the Ancillary
Agreements when the same shall be required to be performed or observed, then
Parent will itself duly and punctually perform or observe, or cause to be duly
and punctually performed or observed, such obligation and it shall not be a
condition to the obligation of Parent hereunder that Buyer shall first make
demand upon, or give notice to, or institute proceedings against, such Sellers.

 

ARTICLE VI

COVENANTS OF BUYER

 

Section 6.01                            Access
to Information.  On and after the
Closing Date, upon reasonable notice, Buyer will afford promptly to Sellers and
their agents reasonable access to its properties, books and records relating
exclusively to any period ending on or before the Closing Date and to employees
of Buyer to the extent necessary to establish facts related to such period.

 

Section 6.02                            Other
Agreements.  Buyer agrees to divest
(i) a radio station if and as required by the FCC in order to comply with the
FCC’s Radio-Television Cross-Ownership Rule if such Rule remains in effect and
(ii) certain television station(s) as necessary to comply with Section 629
of the Consolidated Appropriation Act, 2004. 
Buyer shall not, subsequent to the date of this Agreement, enter into
any agreement to acquire any other business or property or interest that (A)
would conflict with the transactions contemplated by this Agreement under the
Communications Act as then in effect and (B) would reasonably be expected to
have the effect of materially delaying the receipt of the FCC Consent by reason
of a violation of the Communications Act as then in effect.

 

ARTICLE VII

COVENANTS OF BUYER, PARENT AND SELLERS

 

Section 7.01                            Commercially Reasonable
Efforts; Further Assurances

 

(a)                                  Subject to the terms and conditions of this
Agreement, Buyer, Parent and Sellers will use their commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things reasonably necessary or desirable under applicable Law to
consummate the transactions contemplated by this Agreement; provided that
notwithstanding anything to the contrary contained in this Agreement, except as
set forth on Disclosure Schedule Section 4.06, neither Buyer nor any
of its Affiliates shall be required to sell or otherwise dispose of, hold
separate (through the establishment of a trust or otherwise), divest itself of,
or limit the ownership or operations of all or any portion of its businesses,
assets or operations.

 

(b)                                 In furtherance and not in limitation of Section 7.01(a),
each of Buyer, Parent and Sellers agrees to make appropriate filings pursuant
to applicable Antitrust Laws, including a Notification and Report Form pursuant
to the HSR Act with respect to the transactions contemplated hereby within ten
(10) Business Days after the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable.  Buyer
shall pay all HSR Act filing fees relating to the transactions contemplated
hereby, irrespective of whether the transactions contemplated by this Agreement
are consummated.

 

(c)                                  Also in furtherance and not in limitation of Section 7.01(a),
Buyer, Parent and Sellers shall prepare and file with the FCC as soon as
practicable but in no event later than one Business Day after the execution of
this Agreement, the requisite applications (the “FCC Applications”) and other necessary instruments or
documents requesting the FCC Consent and thereupon prosecute such applications
with all reasonable diligence to obtain the requisite FCC Consent; provided,
however, except as provided in the

 

35

 

following
sentence, none of Buyer, Parent or Sellers shall be required to pay
consideration to any third party to obtain the FCC Consent.  Buyer shall pay one-half (1/2) and Sellers
shall pay one-half (1/2) of the FCC filing fees relating to the transactions
contemplated hereby, irrespective of whether the transactions contemplated by
this Agreement are consummated.  Buyer,
Parent and Sellers each shall oppose any petitions to deny or other objections
filed with respect to the FCC Applications to the extent such petition or
objection relates to such party.  The
parties hereto shall not take any intentional action that would, or
intentionally fail to take any action which such action or failure to take such
action would reasonably be expected to, have the effect of materially delaying
the receipt of the FCC Consent.  If the
Closing shall not have occurred for any reason within the original effective
period of the FCC Consent, and no party shall have terminated this Agreement
under Article XI, the parties hereto shall jointly request an extension of
the effective period of the FCC Consent. 
No extension of the FCC Consent shall limit the right of any party to
exercise its rights under Article XI.

 

(d)                                 In connection with the efforts referenced in Section 7.01(a),
Section 7.01(b) and Section 7.01(c) to obtain (i) all requisite
approvals and authorizations for the transactions contemplated by this
Agreement under the HSR Act or any other Antitrust Law and (ii) the FCC
Consent, Buyer, Parent and each of the Sellers shall use its commercially
reasonable efforts to (A) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (B) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the “FTC”),
the Antitrust Division of the Department of Justice (the “DOJ”), the FCC or any other Governmental
Authority and of any material communication received or given in connection
with any proceeding by a private party and (C) permit the other party to review
any material communication given by it to, and consult with each other in
advance of and be permitted to attend any meeting or conference with, the FTC,
the DOJ, the FCC or any such other Governmental Authority or, in connection
with any proceeding by a private party, with any other Person, in each case
regarding any of the transactions contemplated by this Agreement.  For purposes of this Agreement, “Antitrust Laws” means the Sherman Act, as
amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission
Act, as amended, and all other federal, state and foreign, if any, Laws that
are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.

 

Section 7.02                            Certain
Filings; Further Actions.  The
Sellers and Buyer shall cooperate with one another (i) in determining whether
any action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material Contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers; provided, however, that none of Parent, Sellers
or Buyer shall be required to pay consideration to obtain any such consent, approval
or waiver and Sellers shall not agree to or permit the amendment of any
Contract of the Station or relating to the Business in order to obtain any
consent or approval.

 

Section 7.03                            Control
Prior to Closing.  The parties
acknowledge and agree that, for the purposes of the Communications Act, this
Agreement and, without limitation, the covenants in Article V, are not
intended to and shall not be construed to transfer control of the Station from
Sellers to Buyer.

 

Section 7.04                            Public
Announcements.  The parties shall
agree on the terms of the press release that announces the transactions
contemplated hereby and thereafter agree to consult with each other before
issuing any press release or making any public announcement with respect to
this Agreement or the transactions contemplated hereby, including any press
releases or public statements the making of which may be required by applicable
Law or any listing agreement with any national securities exchange.

 

Section 7.05                            Notices
of Certain Events.  Sellers and Buyer
shall each promptly notify the other of:

 

36

 

(a)                                  any notice or other communication from any
Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;

 

(b)                                 any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement;

 

(c)                                  in the case of Sellers, any Action commenced
or, to the Knowledge of Sellers, threatened against, relating to or involving
or otherwise affecting the Business that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section 3.12
or that relates to the consummation of the transactions contemplated by this
Agreement; and

 

(d)                                 in the case of Buyer, any Action commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting Buyer that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.05 or that relates
to the consummation of the transactions contemplated by this Agreement.

 

Section 7.06                            Disclosure
Schedules.  Buyer and Sellers agree
to comply with any terms contained in the Disclosure Schedules hereto.

 

ARTICLE VIII

PENSION, EMPLOYEE AND UNION MATTERS

 

Section 8.01                            Employment

 

(a)                                  Buyer shall employ as of the Effective Time
each Station Employee employed immediately prior to the Effective Time who is
employed pursuant to an employment agreement, personal services contract or
Bargaining Agreement or who is represented by a union, except for any
employee(s) listed on Disclosure Schedule Section 8.01(a) who shall
remain with Seller.  Buyer shall offer
employment to each other Station Employee employed immediately prior to the
Effective Time who: (x) is not on authorized leave of absence, sick leave,
short or long term disability leave, military leave or layoff with recall
rights (“Active Employees”); or
(y) is on authorized leave of absence, sick leave, short or long term
disability leave, military leave or layoff with recall rights and who returns
to active employment immediately following such absence and within 60 days of
the Closing Date or such later date as required under applicable law (“Inactive Employees”).  For the purposes hereof, all such Active or
Inactive Employees who accept Buyer’s offer of employment, the employees who
are employed pursuant to employment agreements, personal services contracts or
Bargaining Agreements or who are represented by a union are hereinafter
referred to collectively as the “Transferred
Employees”, and the “Employment
Commencement Date” as referred to herein shall mean the Effective
Date for Transferred Employees who are (i) employed pursuant to employment
agreements, personal services contracts or Bargaining Agreements or who are
represented by a union and (ii) Active Employees, and the date on which the
Transferred Employee begins employment with Buyer for Transferred Employees who
are Inactive Employees.  Buyer shall
provide salary or wages, and benefits that are in the aggregate are of a
comparable value to the salary or wages, and benefits provided to similarly
situated employees of the Buyer, subject to enrollment periods, exclusions or
limitations as are generally applied by the Buyer and/or the pertinent employee
benefit plan; provided, however, that Buyer agrees that, for a period of not
less than sixty (60) days beginning as of the Effective Time, Buyer shall
compensate Transferred Employees who are sales department personnel of the
Station at a salary and on terms and conditions (excluding employee benefits)
that are at least as favorable in the aggregate as those provided by the
applicable Seller immediately prior to the Effective Time.

 

(b)                                 Sellers agree to use reasonable efforts to
facilitate the transition of the Transferred Employees to employment with Buyer
as of the Employment Commencement Date. 
Such reasonable efforts shall include affording Buyer reasonable
opportunities prior to the Employment Commencement Date to review employment
records (other than medical and individual performance or evaluation records),
as permitted by Law, of the Transferred Employees, to discuss terms and
conditions of employment with

 

37

 

Buyer
as of the Employment Commencement Date and to distribute to the Transferred
Employees forms and documents relating to employment with Buyer to the
Transferred Employees.

 

(c)                                  Except as prohibited by Law, after the
Closing Sellers shall deliver to Buyer originals or copies of all personnel
files and records (including medical records, if any, but excluding benefit
plan records) related to the Transferred Employees, and Sellers shall have
reasonable continuing access to such files and records thereafter.

 

Section 8.02                            Savings
Plan.  Buyer shall cause one or more
tax-qualified defined contribution plans established or maintained by Buyer (“Buyer’s 401(k) Plan”) to accept rollover
contributions from the Transferred Employees of any account balances
distributed to them by the Parent or Sellers’ 401(k) Plan.  Buyer shall allow any such Transferred
Employees’ outstanding plan loan to be rolled into Buyer’s 401(k) Plan.  The distribution and rollover described
herein shall comply with applicable Law, and each party shall make all filings
and take any actions required of such party by applicable Law in connection
therewith.  Buyer’s 401(k) Plan shall
credit Transferred Employees with service credit for eligibility and vesting
purposes for service recognized for the equivalent purposes under the Parent or
Sellers’ 401(k) Plan.

 

Section 8.03                            Employee
Welfare Plans.  Sellers shall be
responsible for: (x) claims for medical and dental benefits, disability
benefits, life insurance benefits and workers compensation that are incurred
prior to the Employment Commencement Date; and (y) claims related to “COBRA”
coverage attributable to “qualifying events” occurring prior to the Employment
Commencement Date, in each case with respect to any Transferred Employees and
their beneficiaries and dependents. 
Buyer shall be solely responsible for: (i) medical and dental benefits,
disability benefits, life insurance benefits and workers compensation benefits
for claims incurred from and after the Employment Commencement Date for Active
Employees; and (ii) claims relating to “COBRA” coverage attributable to “qualifying
events” occurring from and after the Employment Commencement Date, in each case
with respect to any Transferred Employees and their beneficiaries and dependents.  For purposes of the foregoing, a
medical/dental claim shall be considered incurred when the medical services are
rendered or medical supplies are provided, and not when the condition arose.  A life insurance or workers compensation
claim shall be considered incurred prior to a particular date if the injury or
condition giving rise to the claim occurs prior to such date.  A disability claim shall be deemed to be
incurred when the employee is declared disabled under the terms of the
applicable disability plan.  Transferred
Employees shall be given credit under Buyer’s welfare plans for deductibles and
out-of-pocket expenses incurred while employed by either Seller in the relevant
calendar year.

 

Section 8.04                            Vacation.  Buyer will assume all liabilities for unpaid,
accrued vacation of each Transferred Employee as of the Effective Time to the
extent such accrued vacation does not exceed the vacation to which such
Transferred Employee would be entitled under the terms of Buyer’s vacation
policy as currently in effect, giving credit under Buyer’s vacation policy for
service with the applicable Seller, and shall permit Transferred Employees to
use their vacation entitlement accrued as of the Closing Date until 6 months
from the Closing Date or the end of the calendar year during which the Closing
occurs, whichever is later.  Any
additional unpaid accrued vacation to which any Transferred Employee is
entitled shall be retired in consideration of payment thereof by such Seller to
such Transferred Employee on the Closing Date. 
Service with both such Seller and Buyer shall be taken into account in
determining Transferred Employees’ vacation entitlement under Buyer’s vacation
policy after the Closing Date.

 

Section 8.05                            Bargaining
Agreement.  Buyer shall assume the
Bargaining Agreements including any extension or successor Bargaining
Agreements and any Bargaining Agreements reached with the producers and
writers. Sellers’ responsibility under the Sellers’ Bargaining Agreements with
respect to Sellers’ union employees shall expire at the Effective Time and
Buyer shall indemnify and hold harmless Sellers from any grievance or claim
made under the Sellers’ Bargaining Agreements with regard to Sellers’ union
employees, if asserted after the Effective Time.

 

38

 

Section 8.06                            Non-Solicitation by Parent
and Sellers

 

(a)                                  Parent and each Seller agrees that for a
period of one (1) year after the Closing Date, it will not, and will cause its
Subsidiaries not to, directly or indirectly, solicit for employment or employ,
either as an employee or a consultant, any employee of the Station who was an
employee of the Station at the Closing, unless such person has been terminated
by Buyer; provided that nothing contained in this Section 8.06(a) shall
prohibit Parent or either Seller from general solicitation of employees over
any medium not specifically targeted toward the Station or the Transferred
Employees, including without limitation, newspaper, television, radio and
similar forms of mass media.

 

(b)                                 The parties acknowledge and agree that the
restrictions contained in Section 8.06(a) are a reasonable and necessary
protection of the immediate interests of Buyer, and any violation of these
restrictions would cause substantial injury to Buyer and Buyer would not have
entered into this Agreement without receiving the additional consideration
offered by Parent or Sellers binding itself to these restrictions.  In the event of a breach or a threatened breach
by Parent or either Seller or any of its Subsidiaries of these restrictions,
Buyer shall be entitled to apply to any court of competent jurisdiction for an
injunction restraining such Person from such breach or threatened breach
(without the necessity of proving the inadequacy of money damages as a remedy);
provided, however, that the right to apply for injunctive relief shall not be
construed as prohibiting Buyer from pursuing any other available remedies for
such breach or threatened breach.

 

Section 8.07                            Sellers’
Stay Bonuses.  Sellers agree that if
Parent or either Seller puts into place, any stay bonus plan or arrangement,
such plan or arrangement will provide that any Transferred Employee otherwise
entitled to a stay bonus must continue employment with Buyer for a minimum
period of sixty (60) days to be eligible therefor.  Buyer agrees that Parent or Sellers may put
into place a stay bonus plan, arrangement, or agreement and use such additional
separate sales incentive letter agreements designed to encourage retention, as
Parent or Sellers deem necessary, for one or more Station Employees, whether
individually or for a specific group of employees and whether or not any such
Station Employee may become a Transferred Employee.

 

ARTICLE IX

TAX MATTERS

 

Section 9.01                            Bulk
Sales.  Sellers and Buyer hereby
waive compliance with the provisions of any applicable bulk sales law and no
representations, warranty or covenant contained in this Agreement shall be
deemed to have been breached as a result of such non-compliance.  Parent hereby agrees to indemnify, defend and
hold Buyer harmless from and against any and all Losses arising out of or
relating to claims asserted against Buyer pursuant to any applicable bulk sales
law with respect to the Purchased Assets.

 

Section 9.02                            Transfer
Taxes.  All Transfer Taxes arising
out of or in connection with the transactions effected pursuant to this
Agreement shall be divided equally between (i) Buyer and
(ii) Sellers.  The party that has
the primary responsibility under applicable law for the payment of any particular
Transfer Tax shall prepare and file the relevant Tax Return and notify the
other party in writing of the Transfer Taxes shown on such Tax Return.  The other party shall pay the first party an
amount equal to one-half of such Transfer Taxes in immediately available funds
no later than the date that is the later of (i) five Business Days after
the date of such notice or (ii) two Business Days prior to the due date
for such Transfer Taxes.  The first party
shall promptly remit the Transfer Taxes to the proper Governmental Authority.

 

ARTICLE X

CONDITIONS TO CLOSING

 

Section 10.01                     Conditions
to Obligations of Buyer, Parent and Sellers.  The obligations of Buyer, Parent and Sellers
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment or waiver, at or prior to the Closing, of each of the
following conditions:

 

39

 

(a)                                  Any applicable waiting period, clearance,
approval or filing under the HSR Act or any other Antitrust Law or regulation
relating to the transactions contemplated hereby shall have expired or been
terminated or shall have been obtained or made.

 

(b)                                 No provision of any applicable Law and no
Governmental Order shall prohibit the consummation of the Closing.

 

(c)                                  The FCC Consent shall have been granted and
shall be in full force and effect.

 

(d)                                 There shall not be instituted or pending any
Action challenging this Agreement or the transactions contemplated hereby which
is reasonably likely to restrain, alter, prohibit or otherwise materially
interfere with the Closing by any Person before any Governmental Authority.

 

Section 10.02                     Conditions
to Obligations of Parent and Sellers. 
The obligations of Parent and Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver,
at or prior to the Closing, of each of the following further conditions:

 

(a)                                  (i) Buyer shall have performed and complied
with in all material respects all of its obligations hereunder required to be
performed by it at or prior to the Closing Date; (ii) the representations and
warranties of Buyer contained in this Agreement and in any certificate or other
writing delivered by Buyer pursuant hereto (A) that are qualified by
materiality or Material Adverse Effect shall be true and correct and (B) that
are not qualified by materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case at and as of the Closing Date as
if made at and as of such date (except that representations and warranties that
by their terms speak as of the date of this Agreement or some other date need
be true and correct, or true and correct in all material respects, as the case
may be, only as of such specified date); and (iii) Parent and Sellers
shall have received a certificate signed by a senior executive officer of Buyer
to the foregoing effect.

 

(b)                                 Parent and Sellers shall have received an
opinion of the General Counsel of Buyer dated the Closing Date, in form and
substance reasonably satisfactory to Parent and Sellers, with respect to the
matters specified in Section 4.01, Section 4.02 and Section 4.04.

 

(c)                                  Sellers shall have received all documents
they may reasonably request relating to the existence of Buyer and the
authority of Buyer for this Agreement, all in form and substance reasonably
satisfactory to Sellers, including a true and complete copy, certified by the
Secretary or Assistant Secretary of Buyer, of the resolutions duly and validly
adopted by the Board of Directors of Buyer evidencing its authorization of the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby.

 

Section 10.03                     Conditions
to Obligations of Buyer.  The
obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following further conditions:

 

(a)                                  (i)  Parent and each Seller shall
have performed and complied with in all material respects all of its obligations
hereunder required to be performed by it at or prior to the Closing Date;
(ii) the representations and warranties of Parent and each Seller
contained in this Agreement and in any certificate or other writing delivered
by Parent or such Seller pursuant hereto (A) that are qualified by
materiality or Material Adverse Effect shall be true and correct and
(B) that are not qualified by materiality or Material Adverse Effect shall
be true and correct in all material respects, in each case at and as of the
Closing Date as if made at and as of such date (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date need be true and correct, or true and correct in all material
respects, as the case may be, only as of such specified date); and
(iii) Buyer shall have received a certificate signed by a senior executive
officer of YBI to the foregoing effect.

 

40

 

(b)                                 Buyer shall have received an opinion of
Thomas & Libowitz, counsel to Parent and Sellers, dated the Closing
Date and such other appropriate counsel, in form and substance reasonably
satisfactory to Buyer, with respect to the matters specified in Section 3.01,
Section 3.02 and Section 3.04.

 

(c)                                  Buyer shall have received all documents it
may reasonably request relating to the existence of Parent and Sellers and the
authority of Parent and each Seller for this Agreement, all in form and
substance reasonably satisfactory to Buyer, including a true and complete copy,
certified by the Secretary or Assistant Secretary of Parent and each Seller, of
the resolutions duly and validly adopted by the Board of Directors of Parent
and such Seller evidencing its authorization of the execution and delivery of this
Agreement and consummation of the transactions contemplated hereby.

 

(d)                                 Sellers shall have received all Material
Consents.

 

(e)                                  The FCC Consent shall contain no provision
materially adverse to any of Buyer, Buyer’s Affiliates, or the Station; provided
that the parties understand and agree that (A) the potential divestitures
referred to in Section 6.02 shall not be deemed to be material to Buyer
and (B) the obligation of the parties to consummate the transactions
contemplated by this Agreement is not subject to the condition that the FCC
Consent shall have become a Final Order.

 

(f)                                    Buyer shall have received the Title
Commitments and the Title Policy.

 

(g)                                 During the five (5) days immediately
preceding what would otherwise be the Closing Date, and on the Closing Date,
the Station shall have been and shall be operating continuously with all of its
normal broadcasting capability other than any interruption of a duration no
longer than thirty (30) minutes.

 

ARTICLE XI

TERMINATION

 

Section 11.01                     Termination.  This Agreement may be terminated at any time
prior to the Closing as follows:

 

(a)                                  by the mutual written consent of Sellers and
Buyer;

 

(b)                                 either by Sellers or by Buyer:

 

(i)                                     if the Closing shall not have occurred on or
before December 2, 2005 (the “Termination
Date”) or such other date contemplated by Section 5.07 of this
Agreement; provided, however, that the right to terminate this Agreement under
this Section 11.01(b)(i) shall be suspended (i) until February 2,
2006, as to all parties if the failure to satisfy the condition set forth in Section 10.01(c)
shall have been the cause of or resulted in, the failure of the Closing to
occur on or prior to December 2, 2005, and (ii) as to any party whose
breach, misrepresentation or failure to fulfill any material obligation under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date;

 

(ii)                                  if there shall be any Law that restrains or
prohibits consummation of the transactions contemplated hereby or if a final,
nonappealable Governmental Order is issued restraining or otherwise prohibiting
consummation of the transactions contemplated hereby; or

 

(iii)                               if the FCC has denied the FCC Applications and such denial has become a
Final Order.

 

41

 

(c)                                  by Sellers upon a breach of any
representation, warranty, covenant or agreement on the part of Buyer set forth
in this Agreement, or if any representation or warranty of Buyer shall have
become untrue, in either case such that the condition set forth in Section 10.02(a)
would not be satisfied, unless such breach or untruth can be cured prior to
Closing and after receipt of notice thereof Buyer proceeds in good faith to
cure such breach or untruth as promptly as practicable;

 

(d)                                 by Buyer upon a breach of any representation,
warranty, covenant or agreement on the part of Parent or either Seller set
forth in this Agreement, or if any representation or warranty of Parent or
either Seller shall have become untrue, in either case such that the condition
set forth in Section 10.03(a) would not be satisfied, unless such breach
or untruth can be cured prior to Closing and after receipt of notice thereof,
Parent or Sellers proceed in good faith to cure such breach or untruth as
promptly as practicable;

 

(e)                                  by Buyer as set forth in Section 5.07(a);
or

 

(f)                                    by Buyer if the Station shall have for a
period of ninety-six (96) consecutive hours or more (A) ceased broadcasting on
its authorized analog frequency, or (B) been broadcasting at a reduced power
level, which reduction is reasonably likely to materially and adversely affect
the operations or business of the Station; provided that Buyer must exercise
this termination right within thirty (30) days after the date on which the
Station has resumed uninterrupted broadcasting on its authorized analog
frequency or resumed broadcasts at full power, as the case may be.

 

Notwithstanding the foregoing, neither party may
terminate this Agreement pursuant to clause (c) or (d) of this Section 11.01
if any representation or warranty of the party seeking to terminate is
materially inaccurate or breached or such party has failed to comply with or
satisfy, in all material respects, its covenants and agreements made hereunder.

 

The party desiring to terminate this Agreement
pursuant to this Section 11.01 (other than pursuant to Section 11.01(a))
shall give notice of such termination to the other party.

 

Section 11.02                     Effect
of Termination.  If this Agreement is
terminated as permitted by Section 11.01, such termination shall be
without liability of any party hereto (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to any other party
to this Agreement; provided that
if such termination shall result from the willful (i) failure of any party to
fulfill a condition to the performance of the obligations of any other party,
(ii) failure to perform a covenant of this Agreement or (iii) breach by any
party hereto of any representation or warranty or agreement contained herein,
such party shall be fully liable for any and all Losses incurred or suffered by
any other party as a result of such failure or breach.  The provisions of this Section 11.02, Article XIII
and the Confidentiality Agreement shall survive any termination hereof pursuant
to Section 11.01.

 

ARTICLE XII

SURVIVAL; INDEMNIFICATION

 

Section 12.01                     Survival.  The representations and warranties of the
parties hereto contained in or made pursuant to this Agreement or in any
certificate or other writing furnished pursuant hereto or in connection
herewith shall survive in full force and effect until the first anniversary of
the Closing Date; provided that (i) any and all covenants and agreements shall
survive indefinitely, (ii) the representations and warranties in Section 3.01,
Section 3.02, Section 3.20, Section 4.01, Section 4.02 and Section 4.07
shall survive indefinitely; (iii) the representations and warranties in Section 3.16,
Section 3.17, Section 3.18 and Section 3.19 and the covenants,
agreements, representations and warranties contained in Article VIII and Article IX
shall survive until expiration of the statute of limitations applicable to the
matters covered thereby (giving effect to any waiver, mitigation or extension
thereof), if later, and (iv) Section 2.09, Section 2.10, Section 2.11,
and Section 2.12 shall survive until the proration adjustment contemplated
therein has been completed. 
Notwithstanding the preceding sentence, any covenant, agreement,
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy or breach

 

42

 

thereof giving rise to such right of indemnity shall have been given to
the party against whom such indemnity may be sought prior to such time.

 

Section 12.02                     Indemnification by Buyer

 

(a)                                  Buyer shall indemnify against and hold the
Sellers, their Affiliates and their respective employees, officers and
directors (collectively, the “Seller
Indemnified Parties”) harmless from, and agrees to promptly defend
either Seller Indemnified Party from and reimburse either Seller Indemnified
Party for, any and all losses, damages, costs, expenses, liabilities,
obligations and claims of any kind (including any Action brought by any
Governmental Authority or Person and including reasonable attorneys’ fees and
expenses reasonably incurred) (collectively, “Losses”),
which such Seller Indemnified Party may at any time suffer or incur, or become
subject to, as a result of or in connection with:

 

(i)                                     any failure of any representation or warranty
of Buyer (whether made in or pursuant to this Agreement or in any instrument or
certificate delivered by Buyer at the Closing in accordance herewith) to be
true when made and at and as of the Closing Date as if made at and as of such
date (except that representations and warranties that by their terms speak as
of the date of this Agreement or some other date need be true only as of such
specified date), in each case determined without regard to any material adverse
effect qualification contained in any representation or warranty (each such
misrepresentation and breach of warranty, or such failure of any representation
or warranty to be true, a “Buyer Warranty
Breach”);

 

(ii)                                  any failure by Buyer to carry out, perform,
satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement or under any of the documents
and/or other instruments delivered by Buyer pursuant to this Agreement;

 

(iii)                               the Assumed Liabilities; and

 

(iv)                              to the extent arising from the operation of the Station by Buyer from
and after the Effective Time, except to the extent indemnified by Parent under Section 12.03.

 

(b)                                 Notwithstanding any other provision to the
contrary, Buyer shall not be required to indemnify and hold harmless either
Seller Indemnified Party pursuant to Section 12.02(a)(i):  (A) unless such Seller Indemnified Party has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 12.01 and (B) until the aggregate amount of
the Seller Indemnified Parties’ Losses resulting from Buyer Warranty Breach
exceeds $4,400,000, and then only to the extent of such Losses in excess of
such amount; provided, however, that the cumulative indemnification obligation
of Buyer under this Article XII shall in no event exceed the Purchase
Price.

 

Section 12.03                     Indemnification by Parent

 

(a)                                  Parent shall indemnify against and hold
Buyer, its Affiliates and their respective employees, officers and directors
(collectively, the “Buyer Indemnified Parties”)
harmless from, and agrees to promptly defend any Buyer Indemnified Party from
and reimburse any Buyer Indemnified Party for, any and all Losses that such
Buyer Indemnified Party may at any time suffer or incur, or become subject to,
as a result of or in connection with:

 

(i)                                     any failure of any representation or warranty
of Parent or either Seller other than a Seller FCC Warranty Breach (as defined
below) (whether made in or pursuant to this Agreement or in any instrument or
certificate delivered by Parent or Sellers at the Closing in accordance
herewith) to be true when made and at and as of the Closing Date as if made at
and as of such date (except that representations and warranties that by their
terms speak as of the date of this Agreement or some other date need be true
only as of such specified date), in each case determined without regard to any
Material Adverse Effect qualification contained in any representation or
warranty (other than Section 3.11(b)(i)) (each such misrepresentation and
breach

 

43

 

of warranty, or such failure of any representation or warranty to be
true, a “Seller General Warranty Breach”);

 

(ii)                                  any failure of any representation or warranty
of either Seller contained in Section 3.14 to be true when made and at and
as of the Closing Date as if made at and as of such date (each such
misrepresentation and breach of warranty, or such failure of any representation
or warranty to be true, a “Seller FCC
Warranty Breach”);

 

(iii)                               any failure by Parent or either Seller to carry out, perform, satisfy
and discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any of the documents and/or other
instruments delivered by Parent or either Seller pursuant to this Agreement;

 

(iv)                              the Excluded Assets;

 

(v)                                 the Excluded Liabilities; and

 

(vi)                              to the extent arising from the operation of the Station before the
Effective Time other than as a result of or in connection with any Assumed
Liability.

 

(b)                                 Notwithstanding any other provision to the
contrary, Parent shall not be required to indemnify and hold harmless any Buyer
Indemnified Party pursuant to Section 12.03(a)(i):  (A) unless such Buyer Indemnified Party has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 12.01 and (B) until the aggregate amount of
the Buyer Indemnified Parties’ Losses resulting from Seller General Warranty
Breaches and Seller FCC Warranty Breaches exceeds $4,400,000, and then only to
the extent of such Losses in excess of such amount; provided, however, that the cumulative indemnification
obligation of Parent under this Section 12.03(b) shall in no event exceed
50% of the Purchase Price.

 

(c)                                  Notwithstanding any other provision to the
contrary, Parent shall not be required to indemnify and hold harmless any Buyer
Indemnified Party pursuant to Section 12.03(a)(ii):  (A) unless such Buyer Indemnified Party has
asserted a claim with respect to such matters within the applicable survival
period set forth in Section 12.01 and (B) until the aggregate amount of
the Buyer Indemnified Parties’ Losses resulting from Seller FCC Warranty
Breaches and Seller General Warranty Breaches exceeds $4,400,000, and then only
to the extent of such Losses in excess of such amount; provided, however, that
the cumulative indemnification obligation of Parent under this Section 12.03(c)
shall in no event exceed the Purchase Price.

 

Section 12.04                     Notification of Claims

 

(a)                                  A party entitled to be indemnified pursuant
to Section 12.02 or Section 12.03 (the “Indemnified Party”) shall promptly notify the party liable for
such indemnification (the “Indemnifying Party”)
in writing of any claim or demand which the Indemnified Party has determined
has given or could give rise to a right of indemnification under this
Agreement; provided, however, that a failure to give prompt notice or to
include any specified information in any notice will not affect the rights or
obligations of any party hereunder except and only to the extent that, as a
result of such failure, any party which was entitled to receive such notice was
damaged as a result of such failure. 
Subject to the Indemnifying Party’s right to defend in good faith third
party claims as hereinafter provided, the Indemnifying Party shall satisfy its
obligations under this Article XII within 30 days after the receipt of
written notice thereof from the Indemnified Party.

 

(b)                                 If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section 12.04(a),
and if such claim or demand relates to a claim or demand asserted by a third
party against the Indemnified Party which the Indemnifying Party acknowledges
is a claim or demand for which it must indemnify or hold harmless the
Indemnified Party under Section 12.02 or Section 12.03, the

 

44

 

Indemnifying
Party shall have the right to employ counsel reasonably acceptable to the
Indemnified Party to defend any such claim or demand asserted against the
Indemnified Party for so long as the Indemnifying Party shall continue in good
faith to diligently defend against such action or claim.  The Indemnified Party shall have the right to
participate in the defense of any such claim or demand at its own expense.  The Indemnifying Party shall notify the
Indemnified Party in writing, as promptly as possible (but in any case five
Business Days before the due date for the answer or response to a claim) after
the date of the notice of claim given by the Indemnified Party to the
Indemnifying Party under Section 12.04(a) of its election to defend in
good faith any such third party claim or demand.  So long as the Indemnifying Party is
defending in good faith any such claim or demand asserted by a third party
against the Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand without the consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, and the Indemnified Party
shall make available to the Indemnifying Party or its agents all records and
other material in the Indemnified Party’s possession reasonably required by it
for its use in contesting any third party claim or demand.  Whether or not the Indemnifying Party elects
to defend any such claim or demand, the Indemnified Party shall have no obligations
to do so.  In the event the Indemnifying
Party elects not to defend such claim or action or if the Indemnifying Party
elects to defend such claim or action but fails to diligently defend such claim
or action in good faith, the Indemnified Party shall have the right to settle
or compromise such claim or action without the consent of the Indemnifying
Party, except that the Indemnified Party shall not settle or compromise any
such claim or demand, unless the Indemnifying Party is given a full and
completed release of any and all liability by all relevant parties relating
thereto.

 

ARTICLE XIII

GENERAL PROVISIONS

 

Section 13.01                     Expenses.  Except as may be otherwise specified herein,
all costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, whether or not the Closing shall have occurred.

 

Section 13.02                     Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly delivered and received (a) on the date of personal delivery, (b) on
the date of transmission, if sent by facsimile, (c) one Business Day after
having been dispatched via a nationally recognized overnight courier service,
or (d) three Business Days after being sent by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 13.02):

 

(a)                                  if to Sellers:

 

Sinclair Broadcast Group, Inc.

10706 Beaver Dam Road

Cockeysville, MD  21030

Attn:  President

 

Facsimile: (410) 568-1533

Telephone No.: (410) 568-1504

 

With a copy to:

 

Sinclair Broadcast Group, Inc.

10706 Beaver Dam Road

Cockeysville, MD  21030

Attn:  General Counsel

 

45

 

Facsimile: (410) 568-1537

Telephone No.: (410) 568-1524

 

if to Buyer:

 

Viacom Inc.

1515 Broadway

New York, NY  10036

Attention:  General Counsel

Facsimile:  (212) 258-6099

Telephone No.:  (212) 258-6070

 

With a copy to:

 

CBS Broadcasting Inc.

524 West 57th Street

New York, NY  10019

Attention:  President, Viacom Television
Stations Group

Facsimile:  (212) 975-6910

Telephone No.:  (212)  975-4334

 

Section 13.03                     Headings.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

Section 13.04                     Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced because of any Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.

 

Section 13.05                     Entire
Agreement.  This Agreement, the
Confidentiality Agreement, the Ancillary Agreements and any agreements and
other documents entered into contemporaneously with this Agreement constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements and undertakings, both
written and oral, between Parent and Sellers on the one hand and Buyer on the
other hand with respect to the subject matter hereof and thereof, except as
otherwise expressly provided herein.

 

Section 13.06                     Successors
and Assigns.  This Agreement will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto; provided further that
Chesapeake may, without such consent, assign any or all of its rights and
obligations to a wholly owned, direct or indirect subsidiary of Parent; and,
provided further that Buyer may, without such consent, assign any or all of its
rights but not its obligations under this Agreement to any of its Affiliates or
any “qualified intermediary” as
defined in Treas. Reg. Sec. 1.1031(k)-1(g)(4) or to any EAT.

 

Section 13.07                     No
Recourse.  Notwithstanding any of the
terms or provisions of this Agreement, Parent, each Seller and Buyer agree that
neither it nor any Person acting on its behalf may assert any claims or cause
of action against any employee, officer or director of the other party or
stockholder of such other party in connection with or arising out of this
Agreement or the transactions contemplated hereby.

 

46

 

Section 13.08                     No
Third-Party Beneficiaries.  Except as
expressly provided in Articles IX and XII, this Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other Person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.

 

Section 13.09                     Amendments and Waivers

 

(a)                                  This Agreement may not be amended or modified
except by an instrument in writing signed by Parent, Sellers and Buyer.

 

(b)                                 At any time prior to the Closing, any party
may (i) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party hereto contained herein or in
any document delivered pursuant hereto or (iii) waive compliance by the other
party hereto with any of the agreements or conditions contained herein.  Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby.

 

(c)                                  No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

Section 13.10                     Governing
Law; Jurisdiction.  This Agreement
shall be governed by, and construed in accordance with, the Laws of the State
of Delaware.  All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in a
Delaware state court or federal court sitting in the State of Delaware, and the
parties hereto hereby irrevocably submit to the exclusive jurisdiction of such
courts in any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action or proceeding.  Each party agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.

 

Section 13.11                     WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 13.12                     Counterparts.  This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Agreement by facsimile shall be effective as delivery of
a manually executed counterpart of this Agreement.

 

Section 13.13                     No
Presumption.  This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.

 

47

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

 

	
   

  	
  CBS BROADCASTING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael D. Fricklas

  
	
   

  	
   

  	
  Name: Michael D. Fricklas

  
	
   

  	
   

  	
  Title: Executive Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SINCLAIR BROADCAST GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David B. Amy

  
	
   

  	
   

  	
  Name: David B. Amy

  
	
   

  	
   

  	
  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHESAPEAKE TELEVISION INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David B. Amy

  
	
   

  	
   

  	
  Name: David B. Amy

  
	
   

  	
   

  	
  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SCI – SACRAMENTO LICENSEE L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David B. Amy

  
	
   

  	
   

  	
  Name: David B. Amy

  
	
   

  	
   

  	
  Title: Executive Vice President and Chief Financial Officer

  
					

 

48

 

Schedule 4.06

FCC Qualifications

 

Pending Proceedings

 

Buyer and its affiliates have been the subject of
complaints and have received inquiries, notices of apparent liability, and
notices of forfeiture from the FCC regarding alleged violations of the FCC’s
rule prohibiting the broadcast of indecent or profane material.  Individual Commissioners at the FCC, members
of Congress and others have threatened various sanctions for violations of the
indecency rule.  These matters may affect
the timing of the FCC’s action on the FCC Applications.

 

Compliance with Multiple Ownership Rules

 

1.                                       Local TV ownership rule. 
Seller’s acquisition of the FCC Licenses complies with 47 C.F.R. § 73.3555(b)
(2003) (local television ownership rule). 
The effective date of this rule, however, has been stayed by order of
the U.S. Court of Appeals for the Third Circuit in Prometheus Radio Project v. FCC, 373 F.3d 372 (3d Cir.
2004), and the former local TV ownership rule remains in effect.  This rule, as in effect, requires a showing
that, among other things, at least eight independently owned and operating,
full-power commercial and non-commercial TV stations would remain in the
Sacramento DMA following Buyer’s acquisition of the FCC Licenses.  To Buyer’s knowledge, there are nine
independently owned and operating, full-power commercial and non-commercial TV
stations in the Sacramento DMA as of the date of this Agreement.  Buyer’s acquisition of the FCC Licenses might
be precluded under the local TV ownership rule, as in effect, if two TV
stations in the DMA were to combine or announce a previous combination (e.g., by
way of a time brokerage arrangement) or file an application with the FCC to
combine on or before the date that Buyer and Seller file the FCC Applications.

 

2.                                       Radio-TV cross-ownership rule. 
Seller’s acquisition of the FCC Licenses complies with 47 C.F.R. § 73.3555(c)
(2003) (cross-media limits).  The
effective date of this rule, however, has been stayed by order of the U.S.
Court of Appeals for the Third Circuit in Prometheus
Radio Project v. FCC, 373 F.3d 372 (3d Cir. 2004), and the former
radio-TV cross-ownership rule remains in effect.  This rule, as in effect, limits Buyer to
owning no more than two TV stations and 6 radio stations in the Sacramento
Arbitron Metro.  An Affiliate of Buyer
controls 6 radio stations in the Metro. 
In addition, Buyer’s Affiliate controls a radio station in San
Francisco, KFRC(AM), that places a predicted 2 mV/m contour over all of the
City of Sacramento.  Therefore, the FCC
will treat KFRC(AM) as a Sacramento radio station for the purpose of
determining whether Buyer’s acquisition of the FCC Licenses complies with the
radio-TV cross-ownership rule.  As
provided in Section 6.02 of the Agreement, Buyer has agreed to divest a
radio station if and as required by the FCC in order to comply with the
radio-television cross-ownership rule if such rule remains in effect.  After this Agreement is publicly announced,
Buyer may take measurements of KFRC(AM) to determine whether in fact KFRC(AM)
places a 2 mV/m contour over all of the City of Sacramento, and if KFRC(AM)
does not, Buyer will submit this information to the FCC to demonstrate
compliance with the radio-TV cross-ownership rule.

 

3.                                       National television ownership rule. 
Buyer believes that its acquisition of the FCC Licenses complies with 47
C.F.R. § 73.3555(d), as amended by Section 629 of the Consolidated
Appropriation Act, 2004 (the “39% Cap”). 
The 39% Cap limits Buyer and its Affiliates to holding an attributable
interest in television stations which have an aggregate national audience reach
of no more than 39 percent, after taking the 50% UHF discount into
account.  As of the date of this
Agreement, Buyer and its Affiliates own full-power television stations that
reach 38.749% of all U.S. television households as determined by Nielsen.  Buyer’s acquisition of the FCC Licenses will
increase Buyer’s reach by 0.6% to 39.349%, because Buyer will no longer be
entitled to the 50% UHF discount in the Sacramento DMA.  However, Buyer’s current national audience
reach, taking the 50% UHF discount into account, is 38.314% and the acquisition
of the FCC Licenses will increase Buyer’s reach to 38.907%, which is below the
39% Cap, if U.S. television households located outside of markets measured by
Nielsen (e.g., Puerto Rico) are included in the count of total U.S. television
households.  Buyer therefore intends to
take the position in the FCC Applications that its acquisition of the FCC
Licenses complies with the 39% Cap.  As
provided in Section 6.02 of the Agreement, however, Buyer has agreed to
divest certain television station(s) as necessary to comply with the 39% Cap.

 

49

 

4.                                       Request for temporary waiver.  In
order to close the acquisition of the FCC Licenses prior to the closing of any
required radio or television station divestitures, Buyer will request a
six-month waiver of the radio-TV cross-ownership rule in the FCC Applications
as initially filed.  In the waiver
request, Buyer will commit to filing an application and agreement with the FCC
to divest either KFRC(AM) or one radio station in the Sacramento Metro and all
of Buyer’s interests in such station that are attributable to Buyer prior to
the end of the six-month waiver if necessary in order to come into compliance
with the radio-TV cross-ownership rule. 
If the FCC Applications have not been granted by three months after the
date of this Agreement, Buyer will, unless FCC counsel for both parties have
jointly determined that the failure of the FCC to grant the FCC Consent is due
solely to matters unrelated to the radio-television cross-ownership rule, enter
into an agreement to assign and transfer and file an application with the FCC
to assign and transfer and divest its attributable interest in either KFRC(AM)
or one radio station in the Sacramento Metro no later than 5 months and 15 days
after the date of this Agreement.

 

5.                                       39% Cap.  Although Buyer believes that
the acquisition of the FCC Licenses complies with the 39% Cap, Buyer is in
negotiations to sell one or more of its television stations in other
markets.  If the FCC Applications have
not been granted by three months after the date of this Agreement, Buyer will,
unless FCC counsel for both parties have jointly determined that the failure of
the FCC to grant the FCC Consent is due solely to matters unrelated to the 39%
Cap, enter into an agreement to assign and transfer and file an application
with the FCC to assign and transfer and divest its attributable interest in
such television station or stations as necessary to reduce Buyer’s national
audience reach (calculated using Nielsen TV households only and taking into
account Buyer’s acquisition of the FCC Licenses) to no more than 39%.  Buyer will file such application with the FCC
no later than 5 months and 15 days after the date of this Agreement.

 

50

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